<SUBMISSION>
<ACCESSION-NUMBER>0000950129-01-502213
<TYPE>S-8
<PUBLIC-DOCUMENT-COUNT>4
<FILING-DATE>20010731
<EFFECTIVENESS-DATE>20010731
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>LEXICON GENETICS INC/TX
<CIK>0001062822
<ASSIGNED-SIC>2835
<IRS-NUMBER>760474169
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-8
<ACT>33
<FILE-NUMBER>333-66380
<FILM-NUMBER>1694189
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>4000 RESEARCH FOREST DRIVE
<STREET2>281-364-0100
<CITY>THE WOODLANDS
<STATE>TX
<ZIP>77381
<PHONE>2813640100
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>4000 RESEARCH FOREST DR
<CITY>THE WOODLANDS
<STATE>TX
<ZIP>77381
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>S-8
<SEQUENCE>1
<FILENAME>h89380s-8.txt
<DESCRIPTION>LEXICON GENETICS INCORPORATED
<TEXT>
<PAGE>   1
           AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 31, 2001
                                                      REGISTRATION NO. 333-
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

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

                          LEXICON GENETICS INCORPORATED
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<Table>
<S>                                                    <C>
                DELAWARE                                    76-0474169
      (State or other jurisdiction of                     (I.R.S. Employer
      incorporation or organization)                    Identification No.)

        4000 RESEARCH FOREST DRIVE
           THE WOODLANDS, TEXAS                                77381
 (Address of Principal Executive Offices)                    (Zip Code)
</Table>


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

                         2000 EQUITY INCENTIVE PLAN AND
                 2000 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
                  COELACANTH CORPORATION 1999 STOCK OPTION PLAN
                           (Full titles of the plans)

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

                          ARTHUR T. SANDS, M.D., PH.D.
                      PRESIDENT AND CHIEF EXECUTIVE OFFICER
                           4000 RESEARCH FOREST DRIVE
                           THE WOODLANDS, TEXAS 77381
                     (Name and address of agent for service)

                                 (281) 364-0100
          (Telephone number, including area code, of agent for service)

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


                                   copies to:

<Table>
<S>                                           <C>
          DAVID P. OELMAN                                   JEFFREY L. WADE
        VINSON & ELKINS L.L.P.                 EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
  1001 FANNIN, 2300 FIRST CITY TOWER                   LEXICON GENETICS INCORPORATED
      HOUSTON, TEXAS 77002-6760                        4000 RESEARCH FOREST DRIVE
            (713) 758-3708                              THE WOODLANDS, TEXAS 77381
                                                             (281) 364-0100
</Table>
                            -----------------------

                         CALCULATION OF REGISTRATION FEE
 <Table>
 <Caption>
============================================================================================================================
                                                                                           PROPOSED MAXIMUM
                                                            AMOUNT TO    PROPOSED MAXIMUM     AGGREGATE        AMOUNT OF
                                                          BE REGISTERED   OFFERING PRICE    OFFERING PRICE    REGISTRATION
          TITLE OF SECURITIES TO BE REGISTERED               (1)(2)        PER SHARE (3)         (4)            FEE (4)
<S>                                                      <C>                <C>             <C>               <C>
----------------------------------------------------------------------------------------------------------------------------
 Common Stock, par value $0.001 per share............... 122,650 shares           $2.71          $332,381         $83
============================================================================================================================
 </Table>

(1)  Pursuant to Rule 416(a), this registration statement shall cover any
     additional securities issued to prevent dilution resulting from stock
     splits, stock dividends or similar transactions.
(2)  In connection with its acquisition by merger of Coelacanth Corporation, the
     Registrant has assumed the outstanding stock options under the Coelacanth
     Corporation 1999 Stock Option Plan.
(3)  Calculated by dividing the proposed maximum aggregate offering price by
     122,650, the amount of shares being registered.
(4)  Pursuant to Rule 457(h), the proposed maximum offering price and the
     registration fee were calculated based on the average exercise price at
     which the assumed stock options may be exercised.

================================================================================

<PAGE>   2

                                EXPLANATORY NOTE

         Pursuant to the Agreement and Plan of Merger dated June 13, 2001 (the
"Merger Agreement") by and among Lexicon Genetics Incorporated ("Registrant"),
its wholly-owned subsidiary Angler Acquisition Corp. ("Merger Sub") and
Coelacanth Corporation ("Coelacanth"), Merger Sub was merged with and into
Coelacanth on July 12, 2001 (the "Merger"). Each share of Coelacanth capital
stock issued and outstanding immediately prior to the effective time of the
Merger was converted into the right to receive that number of shares of common
stock, par value $.001 per share, of the Registrant ("Registrant Common Stock")
described in the Merger Agreement. In addition, at the effective time of the
Merger, each outstanding option to purchase or acquire a share of common stock,
par value $.0001 per share, of Coelacanth ("Coelacanth Common Stock"), under the
Coelacanth Corporation 1999 Stock Option Plan (the "Coelacanth Plan") was
converted into an option to purchase that number of shares of Registrant Common
Stock that the option holder would have been entitled to receive pursuant to the
Merger Agreement had such option been exercised immediately prior to the
effective time of the Merger. No additional awards will be granted under the
Coelacanth Plan. Immediately before the Merger, 4,287,857 shares of Coelacanth
Common Stock were reserved for issuance and delivery under the Coelacanth Plan,
and immediately thereafter 122,650 shares of Registrant Common Stock were so
reserved.

         Pursuant to the instructions to Part I of Form S-8, the prospectus
which is to be used for the Registrant's issuance of the shares of Registrant
Common Stock subject to the Coelacanth Plan is omitted from this Registration
Statement.

                                     PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.  INCORPORATION OF DOCUMENTS BY REFERENCE.

         The following documents filed with the Securities and Exchange
Commission (the "Commission") by the Registrant are incorporated by reference in
this Registration Statement:

         (a)      The Registrant's Annual Report on Form 10-K filed on March 15,
                  2001 for the fiscal year ended December 31, 2000;

         (b)      The Registrant's Current Report on Form 8-K filed on June 13,
                  2001 announcing the Merger Agreement;

         (c)      The Registrant's Quarterly Report on Form 10-Q filed on May
                  14, 2001 for the fiscal quarter ended March 31, 2001; and

         (d)      The description of the Registrant Common Stock contained in
                  the Registrant's Registration Statement on Form 8-A filed with
                  the Commission on March 27, 2000 pursuant to Section 12 of the
                  Securities Exchange Act of 1934, as amended (the "Exchange
                  Act"), including any amendments and reports filed for the
                  purpose of updating such description.

         All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all shares of Common Stock offered
hereby have been sold or which deregisters all shares of Common Stock then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be part hereof from the date of the 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
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Registration Statement.

                                      II-2
<PAGE>   3


ITEM 4.  DESCRIPTION OF SECURITIES.

         The information required by Item 4 is not applicable to this
registration statement because the class of securities to be offered is
registered under Section 12 of the Exchange Act.

ITEM 5.  INTERESTS OF NAMED EXPERTS AND COUNSEL.

         The information required by Item 5 is not applicable to this
registration statement.

ITEM 6.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

         Section 145 of the Delaware General Corporation Law ("DGCL") provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 145 further provides that a corporation similarly may indemnify any such
person serving in any such capacity who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or such other
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all of the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Delaware Court of Chancery or such other
court shall deem proper.

         The Registrant's certificate of incorporation and bylaws provide that
indemnification shall be to the fullest extent permitted by the DGCL for all
current or former directors or officers. As permitted by the DGCL, the
certificate of incorporation provides that directors of the Registrant shall
have no personal liability to the Registrant or its stockholders for monetary
damages for breach of fiduciary duty as a director, except (1) for any breach of
the director's duty of loyalty to the Registrant or its stockholders, (2) for
acts or omissions not in good faith or which involve intentional misconduct or
knowing violation of law, (3) under Section 174 of the DGCL or (4) for any
transaction from which a director derived an improper personal benefit.

         The Registrant has entered into indemnification agreements with each of
its officers and directors. Each such agreement provides that each party to the
agreement shall have no personal liability to the Registrant or its stockholders
for monetary damages for breach of fiduciary duty as a director, except (1) for
any breach of the director's duty of loyalty to the Registrant or its
stockholders, (2) for acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of law, (3) under Section 174 of the
DGCL or (4) for any transaction from which a director derived an improper
personal benefit. Each such agreement also provides an indemnification to each
party to the agreement against damages and expenses arising from claims against
such party for a breach of such party's fiduciary duty to the Registrant or its
stockholders.

ITEM 7.  EXEMPTION FROM REGISTRATION CLAIMED.

         The information required by Item 7 is not applicable to this
registration statement.

                                      II-3
<PAGE>   4


ITEM 8.  EXHIBITS.

EXHIBIT NUMBER   DESCRIPTION
--------------   -----------
    4.1+         Restated Certificate of Incorporation (incorporated by
                 reference to Exhibit 3.1 to the Registrant's Registration
                 Statement on Form S-1 (No. 333-96469), originally filed on
                 February 9, 2000 (the "Registration Statement")).

    4.2+         Restated Bylaws (incorporated by reference to Exhibit 3.2 to
                 the Registration Statement).

    5.1*         Opinion of Vinson & Elkins L.L.P.

   23.1*         Consent of Vinson & Elkins L.L.P. (included in Exhibit 5.1).

   23.2*         Consent of Arthur Andersen LLP.

   24.1*         Power of Attorney (set forth on the signature page contained in
                 Part II of this Registration Statement).

   99.1*         Coelacanth Corporation 1999 Stock Option Plan.

--------------------
+ Incorporated herein by reference.
* Filed herewith.

ITEM 9.  UNDERTAKINGS.

         (a)      The undersigned Registrant hereby undertakes:

                  (1) To file, during any period in which offers or sales are
         being made, a post-effective amendment to this registration statement:

                           (i) To include any prospectus required by Section
                  10(a)(3) of the Securities Act of 1933, as amended (the
                  "Securities 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;

                           (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 paragraphs (a)(1)(i) and (a)(1)(ii) above do
         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 in the
         registration statement.

                  (2) That, for the purpose of determining any liability under
         the Securities 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.

                  (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 offering.


                                      II-4
<PAGE>   5


         (b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in 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
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities 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 Securities Act and will be governed by the final
adjudication of such issue.



                                      II-5
<PAGE>   6


                                   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 Woodlands, in the State of Texas, on July 31, 2001.

                                       LEXICON GENETICS INCORPORATED


                                       By: /s/ ARTHUR T. SANDS
                                         ---------------------------------------
                                           Arthur T. Sands, M.D., Ph.D.
                                           President and Chief Executive Officer


                                POWER OF ATTORNEY

         The person whose signature appears below appoints Arthur T. Sands,
M.D., Ph.D., Julia P. Gregory and Jeffrey L. Wade, and each of them, any of whom
may act without the joinder of the other, as his true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement and to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he might or would do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them or their or his substitute and substitutes, may lawfully do or cause to be
done by virtue hereof.

         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 BELOW.

<Table>
<Caption>

      SIGNATURE                                                      TITLE                          DATE
      ---------                                                      -----                          ----
<S>                                                     <C>                                     <C>
/s/ ARTHUR T. SANDS                                         President, Chief Executive          July 31, 2001
------------------------------------                           Officer and Director
Arthur T. Sands, M.D., Ph.D.                              (principal executive officer)




/s/ JULIA P. GREGORY                                       Executive Vice President and         July 31, 2001
------------------------------------                         Chief Financial Officer
Julia P. Gregory                                             (principal financial and
                                                               accounting officer)



/s/ SAM L. BARKER                                                    Director                   July 31, 2001
------------------------------------
Sam L. Barker, Ph.D.
</TABLE>



                                      II-6
<PAGE>   7
<Table>
<Caption>

      SIGNATURE                                                      TITLE                          DATE
      ---------                                                      -----                          ----
<S>                                                     <C>                                     <C>
/s/ PATRICIA M. CLOHERTY                                             Director                   July 31, 2001
---------------------------
Patricia M. Cloherty


/s/ ROBERT J. LEFKOWITZ                                              Director                   July 31, 2001
---------------------------
Robert J. Lefkowitz, M.D.


/s/ WILLIAM A. MCMINN                                                Director                   July 31, 2001
---------------------------
William A. McMinn
</Table>




                                      II-7
<PAGE>   8
                                  EXHIBIT INDEX

EXHIBIT NUMBER   DESCRIPTION
--------------   -----------
    4.1+         Restated Certificate of Incorporation (incorporated by
                 reference to Exhibit 3.1 to the Registrant's Registration
                 Statement on Form S-1 (No. 333-96469), originally filed on
                 February 9, 2000 (the "Registration Statement")).

    4.2+         Restated Bylaws (incorporated by reference to Exhibit 3.2 to
                 the Registration Statement).

    5.1*         Opinion of Vinson & Elkins L.L.P.

   23.1*         Consent of Vinson & Elkins L.L.P. (included in Exhibit 5.1).

   23.2*         Consent of Arthur Andersen LLP.

   24.1*         Power of Attorney (set forth on the signature page contained in
                 Part II of this Registration Statement).

   99.1*         Coelacanth Corporation 1999 Stock Option Plan.

--------------------
+ Incorporated herein by reference.
* Filed herewith.




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>3
<FILENAME>h89380ex5-1.txt
<DESCRIPTION>OPINION OF VINSON & ELKINS L.L.P.
<TEXT>
<PAGE>   1

                                                                     EXHIBIT 5.1





                                  July 31, 2001


Board of Directors
Lexicon Genetics Incorporated
4000 Research Forest Drive
The Woodlands, Texas 77381

Ladies and Gentlemen:

         We have acted as counsel to Lexicon Genetics Incorporated (the
"Company") in connection with the preparation of the Company's Registration
Statement on Form S-8 (the "Registration Statement") to be filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to 122,650 shares (the "Shares") of Common
Stock issuable under the Coelacanth Corporation 1999 Stock Option Plan (the
"Plan").

         We have examined such corporate records, other documents and such
questions of law as we considered necessary or appropriate for purposes of this
opinion and, upon the basis of such examination, advise you that in our opinion
all necessary corporate proceedings by the Company have been duly taken to
authorize the issuance of the Shares pursuant to the Plan and that the Shares
being registered pursuant to the Registration Statement, when issued and paid
for under the Plan in accordance with the terms of the Plan will be duly
authorized, validly issued, fully paid and non-assessable.

         We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. This consent, is not to be construed as an admission
that we are a person whose consent is required to be filed with the Registration
Statement under the provisions of the Securities Act.

                                       Very truly yours,

                                       /s/ VINSON & ELKINS L.L.P.

                                       VINSON & ELKINS L.L.P.





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>4
<FILENAME>h89380ex23-2.txt
<DESCRIPTION>CONSENT OF ARTHUR ANDERSEN LLP
<TEXT>
<PAGE>   1

                                                                    EXHIBIT 23.2

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


         As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
February 27, 2001 included in the Registrant's Form 10-K for the fiscal year
ended December 31, 2000, originally filed with the Securities and Exchange
Commission on March 15, 2001, and to all references to our Firm included in this
registration statement.


ARTHUR ANDERSEN LLP

/s/ ARTHUR ANDERSEN LLP

Houston, Texas
July 30, 2001






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>5
<FILENAME>h89380ex99-1.txt
<DESCRIPTION>COELACANTH CORPORATION 1999 STOCK OPTION PLAN
<TEXT>
<PAGE>   1

                                                                    EXHIBIT 99.1


                         COELACANTH CHEMICAL CORPORATION
                      1999 STOCK OPTION/STOCK ISSUANCE PLAN

                                   ARTICLE ONE

                               GENERAL PROVISIONS

I.    PURPOSE OF THE PLAN

      This 1999 Stock Option/Stock Issuance Plan is intended to promote the
interests of Coelacanth Chemical Corporation, a Delaware corporation, by
providing eligible persons in the Corporation's employ or service with the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to continue in
such employ or service.

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

II.   STRUCTURE OF THE PLAN

      A. The Plan shall be divided into two (2) separate equity programs:

            (i) the Option Grant Program under which eligible persons may, at
      the discretion of the Plan Administrator, be granted options to purchase
      shares of Common Stock, and

            (ii) the Stock Issuance Program under which eligible persons may, at
      the discretion of the Plan Administrator, be issued shares of Common Stock
      directly, either through the immediate purchase of such shares or as a
      bonus for services rendered the Corporation (or any Parent or Subsidiary).

      B. The provisions of Articles One and Four shall apply to both equity
programs under the Plan and shall accordingly govern the interests of all
persons under the Plan.

III.  ADMINISTRATION OF THE PLAN

      A. The Plan shall be administered by the Board. However, any or all
administrative functions otherwise exercisable by the Board may be delegated to
the Committee. 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. The Board may also at any time terminate the functions of the Committee
and reassume all powers and authority previously delegated to the Committee.

      B. The Plan Administrator shall have full power and authority (subject to
the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Plan and to make such
determinations under, and issue such interpretations of, the Plan and any
outstanding options or stock issuances thereunder 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 option grant or stock issuance
thereunder.
<PAGE>   2
IV.   ELIGIBILITY

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

            (i) Employees;

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

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

      B. The Plan Administrator shall have full authority to determine, (i) with
respect to the grants made under the Option Grant Program, which eligible
persons are to receive such grants, the time or times when those grants are to
be made, the number of shares to be covered by each such grant, the status of
the granted option as either an Incentive Option or a Non-Statutory Option, the
time or times when each option is to become exercisable, the vesting schedule
(if any) applicable to the option shares and the maximum term for which the
option is to remain outstanding, and (ii) with respect to stock issuances made
under the Stock Issuance Program, which eligible persons are to receive such
issuances, the time or times when those issuances are to be made, the number of
shares to be issued to each Participant, the vesting schedule (if any)
applicable to the issued shares and the consideration to be paid by the
Participant for such shares.

      C. The Plan Administrator shall have the absolute discretion either to
grant options in accordance with the Option Grant Program or to effect stock
issuances in accordance with the Stock Issuance Program.

V.    STOCK SUBJECT TO THE PLAN

      A. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed five
million two hundred fifty-one thousand six hundred seventy-two (5,251,672)
shares.

      B. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the options
are cancelled in accordance with the cancellation-regrant provisions of Article
Two. Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the option exercise or direct issue price paid per share,
pursuant to the Corporation's repurchase rights under the Plan shall be added
back to the number of shares of Common Stock reserved for issuance under the
Plan and shall accordingly be available for reissuance through one or more
subsequent option grants or direct stock issuances under the Plan.

      C. Should any change be made to the Common Stock by reason of any
stocksplit, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without
the Corporation's receipt of consideration, appropriate adjustments shall be
made to (i) the maximum number and/or class of securities issuable under the
Plan and (ii) the number and/or class of securities and the exercise price per
share in effect under each outstanding option in order to prevent the dilution
or enlargement of benefits thereunder. The adjustments determined by the Plan
Administrator shall

                                       2
<PAGE>   3
be final, binding and conclusive. In no event shall any such adjustments be made
in connection with the conversion of one or more outstanding shares of the
Corporation's preferred stock into shares of Common Stock.

                                   ARTICLE TWO

                              OPTION GRANT PROGRAM

I.    OPTION TERMS

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

A.    EXERCISE PRICE.

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

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

            (ii) If the person to whom the option is granted is a 10%
      Stockholder, then the exercise price per share shall not be less than one
      hundred ten percent (110%) of the Fair Market Value per share of Common
      Stock on the option grant date.

      2. The exercise price shall become immediately due upon exercise of the
option and shall, subject to the provisions of Section I of Article Four and the
documents evidencing the option, be payable in cash or check made payable to the
Corporation. Should the Common Stock be registered under Section 12 of the 1934
Act at the time the option is exercised, then the exercise price may also be
paid as follows:

            (i) 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,
      or

            (ii) to the extent the option is exercised for vested shares,
      through a special sale and remittance procedure pursuant to which the
      Optionee shall concurrently provide irrevocable instructions (A) to a
      Corporation designated brokerage firm to effect the immediate sale of the
      purchased shares and remit to the Corporation, out of the sale proceeds
      available on the settlement date, sufficient funds to cover the aggregate
      exercise price payable for the purchased shares plus all applicable
      Federal, state and local income and employment taxes required to be
      withheld by the Corporation by reason of such exercise and (B) to the
      Corporation to deliver the certificates for the purchased shares directly
      to such brokerage firm in order to complete the sale.

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

                                       3
<PAGE>   4
      B. EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable at such
time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option grant. However, no option shall have a term in excess often (10)
years measured from the option grant date.

      C.    EFFECT OF TERMINATION OF SERVICE.

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

            (i) Should the Optionee cease to remain in Service for any reason
      other than death. Disability or Misconduct, then the Optionee shall have a
      period of three (3) months following the date of such cessation of Service
      during which to exercise each outstanding option held by such Optionee.

            (ii) Should Optionee's Service terminate by reason of Disability,
      then the Optionee shall have a period of twelve (12) months following the
      date of such cessation of Service during which to exercise each
      outstanding option held by such Optionee.

            (iii) If the Optionee dies while holding an outstanding option, then
      the personal representative of his or her estate or the person or persons
      to whom the option is transferred pursuant to the Optionee's will or the
      laws of inheritance shall have a twelve (12)-month period following the
      date of the Optionee's death to exercise such option.

            (iv) Under no circumstances, however, shall any such option be
      exercisable after the specified expiration of the option term.

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

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

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

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

            (ii) permit the option to be exercised, during the applicable
      post-Service exercise period, not only with respect to the number of
      vested shares of Common Stock

                                       4
<PAGE>   5
      for which such option is exercisable at the time of the Optionee's
      cessation of Service but also with respect to one or more additional
      installments in which the Optionee would have vested under the option had
      the Optionee continued in Service.

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

      E. UNVESTED SHARES. The Plan Administrator shall have the discretion to
grant options which are exercisable for unvested shares of Common Stock. Should
the Optionee cease Service while holding such unvested shares, the Corporation
 .shall have the right to repurchase, at the exercise price paid per share, any
or all of those unvested shares. The terms upon which such repurchase right
shall be exercisable (including the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares) shall be established by
the Plan Administrator and set forth in the document evidencing such repurchase
right. The Plan Administrator may not impose a vesting schedule upon any option
grant or the shares of Common Stock subject to that option which is more
restrictive than twenty percent (20%) per year vesting, with the initial vesting
to occur not later than one (1) year after the option grant date. However, such
limitation shall not be applicable to any option grants made to individuals who
are officers of the Corporation, non-employee Board members or independent
consultants.

      F. FIRST REFUSAL RIGHTS. Until such time as the Common Stock is first
registered under Section 12 of the 1934 Act, the Corporation shall have the
right of first refusal with respect to any proposed disposition by the Optionee
(or any successor in interest) of any shares of Common Stock issued under the
Plan. Such right of first refusal shall be exercisable in accordance with the
terms established by the Plan Administrator and set forth in the document
evidencing such right.

      G. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, the option shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death.

II.   INCENTIVE OPTIONS

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

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

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

      C. DOLLAR LIMITATION. The aggregate Fair Market Value of the shares of
Common Stock (determined as of the respective date or dates of grant) for which
one or more options granted to any Employee under the Plan (or any other option
plan of the Corporation or any Parent or Subsidiary) may for the first time
become exercisable as Incentive Options during any one (1) calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the

                                       5
<PAGE>   6
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

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

III.  CORPORATE TRANSACTION

      A. The shares subject to each option outstanding under the Plan at the
time of a Corporate Transaction shall automatically vest in full so that each
such option shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable for all of the shares of Common Stock at
the time subject to that option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. However, the shares subject to an
outstanding option shall not vest on such an accelerated basis if and to the
extent: (i) such option is assumed by the successor corporation (or parent
thereof) in the Corporate Transaction and any repurchase rights of the
Corporation with respect to the unvested option shares are concurrently to be
assigned to such successor corporation (or parent thereof) or (ii) such option
is to be replaced with a cash incentive program of the successor corporation
which preserves the spread existing on the unvested option shares at the time of
the Corporate Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to those unvested option shares or (iii)
the acceleration of such option is subject to other limitations imposed by the
Plan Administrator at the time of the option grant.

      B. All outstanding repurchase rights shall also terminate automatically,
and the shares of Common Stock subject to those terminated rights shall
immediately vest in full, in the event of any Corporate Transaction, except to
the extent: (i) those repurchase rights are assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed by the
Plan Administrator at the time the repurchase right is issued.

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

      D. Each option which is assumed in connection with a Corporate Transaction
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply to the number and class of securities which would have been issuable to
the Optionee in consummation of such Corporate Transaction, had the option been
exercised immediately prior to such Corporate Transaction. Appropriate
adjustments shall also be made to (i) the number and class of securities
available for issuance under the Plan following the consummation of such
Corporate Transaction and (ii) the exercise price payable per share under each
outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same.

      E. The Plan Administrator shall have the discretion, exercisable either at
the time the option is granted or at any time while the option remains
outstanding, to structure one or more options so that those options shall
automatically accelerate and vest in full (and any repurchase rights of the
Corporation with respect to the unvested shares subject to those options shall
immediately terminate) upon the occurrence of a Corporate Transaction, whether
or not those options are to be assumed in the Corporate Transaction.

                                       6
<PAGE>   7
      F. The Plan Administrator shall also have full power and authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to structure such option so that the shares subject
to that option will automatically vest on an accelerated basis should the
Optionee's Service terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Corporate Transaction in which the option is assumed and the
repurchase rights applicable to those shares do not otherwise terminate. Any
option so accelerated shall remain exercisable for the fully-vested option
shares until the expiration or sooner termination of the option term. In
addition, the Plan Administrator may provide that one or more of the
Corporation's outstanding repurchase rights with respect to shares held by the
Optionee at the time of such Involuntary Termination shall immediately terminate
on an accelerated basis, and the shares subject to those terminated rights shall
accordingly vest at that time.

      G. The portion of any Incentive Option accelerated in connection with a
Corporate Transaction shall remain exercisable as an Incentive Option only to
the extent the applicable One Hundred Thousand Dollar limitation is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-Statutory Option under the
Federal tax laws.

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

IV.   CANCELLATION AND REGRANT OF OPTIONS

      The Plan Administrator shall have the authority to effect, at any time and
from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefore new options covering the same or different number of
shares of Common Stock but with an exercise price per share based on the Fair
Market Value per share of Common Stock on the new option grant date.


                                  ARTICLE THREE

                             STOCK ISSUANCE PROGRAM

I.    STOCK ISSUANCE TERMS

      Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate issuances without any intervening option grants.
Each such stock issuance shall be evidenced by a Stock Issuance Agreement which
complies with the terms specified below.

      A. PURCHASE PRICE.

      1. The purchase price per share shall be fixed by the Plan Administrator
but shall not be less than eighty-five percent (85%) of the Fair Market Value
per share of Common Stock on the issue date. However, the purchase price per
share of Common Stock issued to a 10%

                                       7
<PAGE>   8
Stockholder shall not be less than one hundred and ten percent (110%) of such
Fair Market Value.

      2. Subject to the provisions of Section I of Article Four, shares of
Common Stock may be issued under the Stock Issuance Program for any of the
following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:

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

            (ii) past services rendered to the Corporation (or any Parent or
      Subsidiary).

      B.    VESTING PROVISIONS.

      1. Shares of Common Stock issued under the Stock Issuance Program may, in
the discretion of the Plan Administrator, be fully and immediately vested upon
issuance or may vest in one or more installments over the Participant's period
of Service or upon attainment of specified performance objectives. However, the
Plan Administrator may not impose a vesting schedule upon any stock issuance
affected under the Stock Issuance Program which is more restrictive than twenty
percent (20%) per year vesting, with initial vesting to occur not later than one
(1) year after the issuance date. Such limitation shall not apply to any Common
Stock issuances made to the officers of the Corporation, non-employee Board
members or independent consultants.

      2. Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.

      3. The Participant shall have full stockholder rights with respect to any
shares of Common Stock issued to the Participant under the Stock Issuance
Program, whether or not the Participant's interest in those shares is vested.
Accordingly, the Participant shall have the right to vote such shares and to
receive any regular cash dividends paid on such shares.

      4. Should the Participant cease to remain in Service while holding one or
more unvested shares of Common Stock issued under the Stock Issuance Program or
should the performance objectives not be attained with respect to one or more
such unvested shares of Common Stock, then those shares shall be immediately
surrendered to the Corporation for cancellation, and the Participant shall have
no further stockholder rights with respect to those shares. To the extent the
surrendered shares were previously issued to the Participant for consideration
paid in cash or cash equivalent (including the Participant's purchase-money
indebtedness), the Corporation shall repay to the Participant the cash
consideration paid for the surrendered shares and shall cancel the unpaid
principal balance of any outstanding purchase-money note of the Participant
attributable to such surrendered shares.

      5. The Plan Administrator may in its discretion waive the surrender and
cancellation of one or more unvested shares of Common Stock (or other assets
attributable thereto) which would otherwise occur upon the non-completion of the
vesting schedule applicable

                                       8
<PAGE>   9
to those shares. Such waiver shall result in the immediate vesting of the
Participant's interest in the shares of Common Stock as to which the waiver
applies. Such waiver may be effected at any time, whether before or after the
Participant's cessation of Service or the attainment or non-attainment of the
applicable performance objectives.

      6. FIRST REFUSAL RIGHTS. Until such time as the Common Stock is first
registered under Section 12 of the 1934 Act, the Corporation shall have the
right of first refusal with respect to any proposed disposition by the
Participant (or any successor in interest) of any shares of Common Stock issued
under the Stock Issuance Program. Such right of first refusal shall be
exercisable in accordance with the terms established by the Plan Administrator
and set forth in the document evidencing such right.

II.   CORPORATE TRANSACTION

      A. Upon the occurrence of a Corporate Transaction, all outstanding
repurchase rights under the Stock Issuance Program shall terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, except to the extent: (i) those repurchase
rights are assigned to the successor corporation (or parent thereof) in
connection with such Corporate Transaction or (ii) such accelerated vesting is
precluded by other limitations imposed by the Plan Administrator at the time the
repurchase right is issued.

      B. The Plan Administrator shall have the discretionary authority,
exercisable either t the time the unvested shares are issued or any time while
the Corporation's repurchase rights with respect to those shares remain
outstanding, to provide that those rights shall automatically terminate on an
accelerated basis, and the shares of Common Stock subject to those terminated
rights shall immediately vest, in the event the Participant's Service should
subsequently terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Corporate Transaction in which those repurchase rights are assigned
to the successor corporation (or parent thereof).

III.  SHARE ESCROW/LEGENDS

      Unvested shares may, in the Plan Administrator's discretion, be held in
escrow by the Corporation until the Participant's interest in such shares vests
or may be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.

                                  ARTICLE FOUR

                                  MISCELLANEOUS

I.    FINANCING

      The Plan Administrator may permit any Optionee or Participant to pay the
option exercise price under the Option Grant Program or the purchase price for
shares issued under the Stock Issuance Program by delivering a full-recourse,
interest bearing promissory note payable in one or more installments and secured
by the purchased shares. The terms of any such promissory note (including the
interest rate and the terms of repayment) shall be established by the Plan
Administrator in its sole discretion. In no event may the maximum credit
available to the Optionee or Participant exceed the sum of (i) the aggregate
option exercise price or purchase price payable for the purchased shares (less
the par value of those shares) plus (ii) any Federal,

                                       9
<PAGE>   10
state and local income and employment tax liability incurred by the Optionee or
the Participant in connection with the option exercise or share purchase.

II.   EFFECTIVE DATE AND TERM OF PLAN

      A. The Plan shall become effective when adopted by the Board, but no
option granted under the Plan may be exercised, and no shares shall be issued
under the Plan, until the Plan is approved by the Corporation's stockholders. If
such stockholder approval is not obtained within twelve (12) months after the
date of the Board's adoption of the Plan, then all options previously granted
under the Plan shall terminate and cease to be outstanding, and no further
options shall be granted and no shares shall be issued under the Plan. Subject
to such limitation, the Plan Administrator may grant options and issue shares
under the Plan at any time after the effective date of the Plan and before the
date fixed herein for termination of the Plan.

      B. The Plan shall terminate upon the earliest of (i) the expiration of the
ten (10)-year period measured from the date the Plan is adopted by the Board,
(ii) the date on which all shares available for issuance under the Plan shall
have been issued as vested shares or (iii) the termination of all outstanding
options in connection with a Corporate Transaction. All options and unvested
stock issuances outstanding at the time of a clause (i) termination event shall
continue to have full force and effect in accordance with the provisions of the
documents evidencing those options or issuances.

III.  AMENDMENT OF THE PLAN

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

      B. Options may be granted under the Option Grant Program and shares may be
issued under the Stock Issuance Program which are in each instance in excess of
the number of shares of Common Stock then available for issuance under the Plan,
provided any excess shares actually issued under those programs shall be held in
escrow until there is obtained stockholder approval of an amendment sufficiently
increasing the number of shares of Common Stock available for issuance under the
Plan. If such stockholder approval is not obtained within twelve (12) months
after the date the first such excess grants or issuances are made, then (i) any
unexercised options granted on the basis of such excess shares shall terminate
and cease to be outstanding and (ii) the Corporation shall promptly refund to
the Optionees and the Participants the exercise or purchase price paid for any
excess shares issued under the Plan and held in escrow, together with interest
(at the applicable Short Term Federal Rate) for the period the shares were held
in escrow, and such shares shall thereupon be automatically cancelled and cease
to be outstanding.

IV.   USE OF PROCEEDS

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

                                       10
<PAGE>   11
V.    WITHHOLDING

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

VI.   REGULATORY APPROVALS

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

VII.  NO EMPLOYMENT OR SERVICE RIGHTS

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

VIII. FINANCIAL REPORTS

      The Corporation shall deliver a balance sheet and an income statement at
least annually to each individual holding an outstanding option under the Plan,
unless such individual is a key Employee whose duties in connection with the
Corporation (or any Parent or Subsidiary) assure such individual access to
equivalent information.

                                       11
<PAGE>   12

                                    APPENDIX

      The following definitions shall be in effect under the Plan:

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

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

      C. COMMITTEE shall mean a committee of two (2) or more Board members
appointed by the Board to exercise one or more administrative functions under
the Plan.

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

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

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

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

      F. CORPORATION shall mean Coelacanth Chemical Corporation, a Delaware
corporation, and any successor corporation to all or substantially all of the
assets or voting stock of Coelacanth Chemical Corporation which shall by
appropriate action adopt the Plan.

      G. DISABILITY shall mean the inability of the Optionee or the Participant
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment and shall be determined by the Plan
Administrator on the basis of such medical evidence as the Plan Administrator
deems warranted under the circumstances.

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

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

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

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

                                       12
<PAGE>   13

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

            (iii) If the Common Stock is at the time neither listed on any Stock
      Exchange nor traded on the Nasdaq National Market, then the Fair Market
      Value shall be determined by the Plan Administrator after taking into
      account such factors as the Plan Administrator shall deem appropriate.

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

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

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

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

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

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

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

      P. OPTION GRANT PROGRAM shall mean the option grant program in effect
under the Plan.

      Q. OPTIONEE shall mean any person to whom an option is granted under the
Plan.
                                       13
<PAGE>   14

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

      S. PARTICIPANT shall mean any person who is issued shares of Common Stock
under the Stock Issuance Program.

      T. PLAN shall mean the Corporation's 1999 Stock Option/Stock Issuance
Plan, as set forth in this document.

      U. PLAN ADMINISTRATOR shall mean either the Board or the Committee acting
in its capacity as administrator of the Plan.

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

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

      X. STOCK ISSUANCE AGREEMENT shall mean the agreement entered into by the
Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.

      Y. STOCK ISSUANCE PROGRAM shall mean the stock issuance program in effect
under the Plan.

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

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

                                       14

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