Exhibit 10.30

PACKETEER, INC.
1999 STOCK INCENTIVE PLAN

Amended and Restated Effective as of May 24, 2005

ARTICLE ONE

GENERAL PROVISIONS

  I.   PURPOSE OF THE PLAN

         This 1999 Stock Incentive Plan is intended to promote the interests of
Packeteer, Inc., a Delaware corporation, by providing eligible persons in the
Corporation’s service 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 such service.

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

  II.   STRUCTURE OF THE PLAN

          A. The Plan shall be divided into four separate equity programs:

                   - the Discretionary Option/SAR Program under which eligible
persons may, at the discretion of the Plan Administrator, be granted Options
and/or Stock Appreciation Rights;

                   - the Restricted Stock/Restricted Stock Unit Program under
which eligible persons may, at the discretion of the Plan Administrator, be
granted Restricted Stock Purchase Rights, Restricted Stock Bonuses and/or
Restricted Stock Units;

                   - the Performance Award Program under which eligible persons
may, at the discretion of the Plan Administrator, be granted Performance Shares
and/or Performance Units; and

                   - the Automatic Option Grant Program under which eligible
non-employee Board members shall automatically receive Option grants at
designated intervals over their period of continued Board service.

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

  III.   ADMINISTRATION OF THE PLAN

 

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               A. The Primary Committee shall have sole and exclusive authority
to administer the Discretionary Option/SAR Grant Program, Restricted
Stock/Restricted Stock Unit Program and Performance Award Program with respect
to Section 16 Insiders and Covered Employees. Administration of the
Discretionary Option/SAR Grant Program, Restricted Stock/Restricted Stock Unit
Program and Performance Award Program with respect to all other persons eligible
to participate in those programs may, at the Board’s discretion, be vested in
the Primary Committee or a Secondary Committee, or the Board may retain the
power to administer those programs with respect to all such persons. However,
any Awards granted to members of the Primary Committee under the Discretionary
Option/SAR Grant Program, Restricted Stock/Restricted Stock Unit Program or
Performance Award Program shall be made by a disinterested majority of the
Board.

               B. The Board may, in its discretion by resolution adopted by the
Board, authorize one or more officers of the Corporation to grant one or more
Options or SARs under the Discretionary Option/SAR Grant Program, without
further approval of the Board or the Primary or Secondary Committee, to any
Employee, other than a person who, at the time of such grant, is a Section 16
Insider or a Covered Employee, and to determine the number and vesting terms of
shares of Common Stock to be subject to such Options and SARs; provided,
however, that (1) no such Options or SARs shall be granted to any Employee in
any calendar year for more than 50,000 shares of Common Stock, (2) the number of
shares of Common Stock subject to each such Option and SAR shall comply with
guidelines established from time to time by the Board or the Primary Committee,
and (3) each such Option and SAR shall be subject to the terms and conditions of
the appropriate standard form of Award Agreement approved by the Board or the
Primary Committee and shall conform to the provisions of the Plan and such other
guidelines as shall be established from time to time by the Board or the Primary
Committee. Any officer or officers so authorized by the Board shall be deemed
the Plan Administrator solely for the purpose of granting such Options and SARs.

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

               D. Except for an officer delegated limited authority pursuant to
Section III.B above, each Plan Administrator shall, within the scope of its
administrative functions under the Plan, 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 Discretionary Option/SAR Grant
Program, Restricted Stock/Restricted Stock Unit Program and Performance Award
Program and to make such determinations under, and issue such interpretations
of, the provisions of those programs and any outstanding Awards thereunder as it
may deem necessary or advisable. Decisions of the Plan Administrator within the
scope of its administrative functions under the Plan shall be final and binding
on all parties who have an interest in the Discretionary Option/SAR Grant
Program, Restricted Stock/Restricted Stock Unit Program or Performance Award
Program under its jurisdiction or any Award thereunder.

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

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

  IV.   ELIGIBILITY

                 A. The persons eligible to participate in the Discretionary
Option/SAR Grant Program, Restricted Stock/Restricted Stock Unit Program and
Performance Award Program are as follows:

                        (i) Employees,

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

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

                 B. Except for an officer delegated limited authority pursuant
to Section III.B above, each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority to determine
with respect to Awards granted under the Discretionary Option/SAR Grant Program,
Restricted Stock/Restricted Stock Unit Program and Performance Award Program
(i) the type of Award to be granted, (ii) which eligible persons are to receive
such Awards, (iii) the time or times when those Awards are to be granted,
(iv) the number of shares to be covered by each such Award, (v) the exercise or
purchase price, if any, under each such Award, (vi) the timing, terms and
conditions of the exercisability or vesting (if any) of each such Award or any
shares acquired pursuant thereto, (vii) the maximum term for which the Award is
to remain outstanding, (viii) the Performance Measures, Performance Period,
Performance Award Formula and Performance Goals applicable to any Award and the
extent to which such Performance Goals have been attained, (ix) the effect of
the Participant’s termination of Service on any of the foregoing, and (x) all
other terms, conditions and restrictions applicable to any Award or Shares
acquired pursuant thereto not inconsistent with the terms of the Plan.

                 C. The individuals who shall be eligible to participate in the
Automatic Option Grant Program shall be limited to (i) those individuals who
first become non-employee Board members on or after the Underwriting 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 at one or more Annual Stockholders Meetings held after the
Underwriting Date. A non-employee Board member who has previously been in the
employ of the Corporation (or any Parent or Subsidiary) shall not be eligible to
receive the initial automatic Option grant under the Automatic Option Grant
Program at the time he or she first becomes a

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non-employee Board member, but shall be eligible to receive one or more annual
automatic Option grants under the Automatic Option Grant Program while he or she
continues to serve as a non-employee Board member.

  V.   STOCK SUBJECT TO THE PLAN

               A. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Corporation on the open market. The number of shares of Common Stock
reserved for issuance over the term of the Plan shall not exceed the sum of
(i) 3,845,917 shares plus (ii) the additional shares of Common Stock
automatically added to the share reserve each year pursuant to the provisions of
Section V.B. of this Article One.

               B. The number of shares of Common Stock available for issuance
under the Plan shall automatically increase on the first trading day of January
each calendar year during the term of the Plan, beginning with calendar year
2000, by an amount equal to five percent (5 %) of the total number of shares of
Common Stock outstanding on the last trading day in December of the immediately
preceding calendar year, but in no event shall any such annual increase exceed
3,000,000 shares.

               C. No Participant may be granted Options or Freestanding SARs for
more than 1,000,000 shares of Common Stock in the aggregate per calendar year.
No Participant may be granted Restricted Stock Awards or Awards of Restricted
Stock Units intended, in either case, to result in the payment of
Performance-Based Compensation for more than 500,000 shares of Common Stock in
the aggregate per calendar year. No Participant may be granted Performance
Shares intended to result in the payment of Performance-Based Compensation for
more than 150,000 shares of Common Stock in the aggregate for each year
contained in the Performance Period with respect to such Award. No Participant
may be granted Performance Units intended to result in the payment of
Performance-Based Compensation for more than $1,500,000 for each year contained
in the Performance Period with respect to such Award.

               D. Shares of Common Stock subject to outstanding Options
(including Options incorporated into this Plan from the Predecessor Plan) or
Freestanding SARs shall be available for subsequent issuance under the Plan to
the extent those Options or Freestanding SARs expire or terminate for any reason
prior to exercise in full. Unvested shares issued under the Plan and
subsequently forfeited, cancelled or repurchased by the Corporation at the
original issue price paid per share and unvested shares subject to Restricted
Stock Unit Awards or Performance Share Awards cancelled prior to settlement
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 Awards granted under the Plan. However, should
the exercise price of an Option under the Plan be paid with shares of Common
Stock or should shares of Common Stock otherwise issuable under the Plan be
withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise, vesting or settlement of an Award under the Plan,
then the number of shares of Common Stock available for issuance under the Plan
shall be reduced by the gross number of shares for which the Award is exercised,
becomes vested or is settled, and not by the net number of shares of Common
Stock

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issued to the holder of such Award. Shares of Common Stock underlying one or
more SARs exercised under the Plan shall not be available for subsequent
issuance under the Plan.

               E. If any change is made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation’s receipt of consideration, appropriate adjustments
shall be made by the Plan Administrator to (i) the maximum number and/or class
of securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one person may be granted one or more Awards under the
Plan within a specified period of time as provided in Section V.C of this
Article One, (iii) the number and/or class of securities for which grants are
subsequently to be made under the Automatic Option Grant Program to new and
continuing non-employee Board members, (iv) the number and/or class of
securities and the exercise price per share in effect under each outstanding
Option and SAR under the Plan, (v) the number and/or class of securities in
effect under each outstanding Restricted Stock Award, Restricted Stock Unit
Award and Performance Share Award under the Plan, (vi) the number and/or class
of securities and price per share in effect under each outstanding Option
incorporated into this Plan from the Predecessor Plan and (vii) the maximum
number and/or class of securities by which the share reserve is to increase
automatically each calendar year pursuant to the provisions of Section V.B. of
this Article One. Such adjustments to the outstanding Awards are to be effected
in a manner which shall preclude the enlargement or dilution of rights and
benefits under such Awards. The adjustments determined by the Plan Administrator
shall be final, binding and conclusive.

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ARTICLE TWO

DISCRETIONARY OPTION/SAR GRANT PROGRAM

  I.   OPTION TERMS

          Each Option shall be evidenced by an Award Agreement in the form
approved by the Plan Administrator; provided, however, that the Award Agreement
shall comply with the terms specified below. Each Award Agreement evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such Options.

          A. Exercise Price.

               1. The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the Option grant date.

               2. The exercise price shall become immediately due upon exercise
of the Option and shall, subject to the provisions of the Award Agreement
evidencing the Option, be payable in one or more of the forms specified below:

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

            (ii) shares of Common Stock held for the requisite period (if any)
necessary to avoid a charge to the Corporation’s earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date, or

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

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

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

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          C. Effect of Termination of Service.

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

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

           (ii) Any Option held by the Participant at the time of death and
exercisable in whole or in part at that time may be subsequently exercised by
the personal representative of the Participant’s estate or by the person or
persons to whom the Option is transferred pursuant to the Participant’s will or
in accordance with the laws of descent and distribution or by the Participant’s
designated beneficiary or beneficiaries of that Option.

           (iii) Should the Participant’s Service be terminated for Misconduct,
then all outstanding Options held by the Participant shall terminate immediately
and cease to be outstanding.

           (iv) 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 Participant’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 Participant’s
cessation of Service, terminate and cease to be outstanding to the extent the
Option is not otherwise at that time exercisable for vested shares.

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

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

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

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

           E. Repurchase Rights. The Plan Administrator shall have the
discretion to grant Options which are exercisable for unvested shares of Common
Stock. Should the Participant cease Service while holding such unvested shares,
the Corporation shall have the right to repurchase, at the exercise price paid
per share, any or all of those unvested shares. The terms upon which such
repurchase right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares) shall be
established by the Plan Administrator and set forth in the document evidencing
such repurchase right.

           F. Limited Transferability of Options. During the lifetime of the
Participant, Incentive Options shall be exercisable only by the Participant and
shall not be assignable or transferable other than by will or by the laws of
descent and distribution following the Participant’s death. However, a
Non-Statutory Option may, in connection with the Participant’s estate plan, be
assigned in whole or in part during the Participant’s lifetime to one or more
members of the Participant’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. Notwithstanding the foregoing, the
Participant may also designate one or more persons as the beneficiary or
beneficiaries of his or her outstanding Options under this Article Two, and
those Options shall, in accordance with such designation, automatically be
transferred to such beneficiary or beneficiaries upon the Participant’s death
while holding those Options. Such beneficiary or beneficiaries shall take the
transferred Options subject to all the terms and conditions of the applicable
agreement evidencing each such transferred Option, including (without
limitation) the limited time period during which the Option may be exercised
following the Participant’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 Six shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options when
issued under the Plan shall not be subject to the terms of this Section II.

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

           B. Dollar Limitation. The aggregate Fair Market Value of the shares
of Common Stock (determined as of the respective date or dates of grant) for
which one or more Options granted to any Employee under the Plan (or any other
Option plan of the Corporation or any Parent or Subsidiary) may for the first
time become exercisable as Incentive Options during any one calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($100,000).

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To the extent the Employee holds two (2) or more such Options which become
exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such Options as Incentive Options shall be
applied on the basis of the order in which such Options are granted.

           C. 10% Stockholder. If any Employee to whom an Incentive Option is
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the Option grant date, and the Option term shall not exceed five
(5) years measured from the Option grant date.

     III. STOCK APPRECIATION RIGHTS

           Each SAR shall be evidenced by an Award Agreement in the form
approved by the Plan Administrator; provided, however, that the Award Agreement
shall comply with the terms specified below.

           A. Types of SARs Authorized. A SAR may be a Freestanding SAR granted
independently of any Option, a Tandem SAR granted in tandem with all or any
portion of a related Option, or a Limited SAR granted to a Section 16 Insider
with respect to an outstanding Option. A Tandem SAR or a Limited SAR may be
granted either concurrently with the grant of the related Option or at any time
thereafter prior to the complete exercise, termination, expiration or
cancellation of such related Option.

           B. Terms and Conditions of Freestanding SARs.

               1. Exercise Price. The exercise price per share subject to a
Freestanding SAR shall be fixed by the Plan Administrator but shall not be less
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the grant date.

               2. Exercisability and Term of Freestanding SARs. Each
Freestanding SAR 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 Award Agreement evidencing such Award. However, no
Freestanding SAR shall have a term in excess of ten (10) years measured from the
grant date.

               3. Exercise of Freestanding SARs and Settlement in Stock. Upon
the exercise (or deemed exercise pursuant to paragraph 5 below) of a
Freestanding SAR authorizing settlement solely in shares of stock, the
Participant (or the Participant’s legal representative or other person who
acquired the right to exercise such SAR by reason of the Participant’s death)
shall be entitled to receive payment of an amount for each share with respect to
which such SAR is exercised equal to the excess, if any, of the Fair Market
Value of a share of Common Stock on the Exercise Date of such SAR over the
exercise price. Payment of such amount shall be made in whole shares of Common
Stock as soon as practicable following the Exercise Date. The number of shares
to be issued shall be determined on the basis of the Fair Market Value of a
share of Common Stock on the Exercise Date of the Freestanding SAR.

               4. Exercise of Freestanding SARs and Settlement in Cash. Subject
to the provisions of Section I of Article Six with respect to Code Section 409A,
the Plan

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Administrator may grant Freestanding SARs that provide for payment in cash. The
Exercise Date(s) applicable to any such SAR shall be established in compliance
with the provisions of Section I of Article Six with respect to Code
Section 409A either by the Plan Administrator in granting such SAR, or, if
permitted by the Plan Administrator, by an advance election of the Participant
in a manner complying with the requirements of Code Section 409A. Upon the
exercise (or deemed exercise pursuant to paragraph 5 below) of any such
Freestanding SAR, the Participant (or the Participant’s legal representative or
other person who acquired the right to exercise such SAR by reason of the
Participant’s death) shall be entitled to receive payment of an amount for each
share with respect to which such SAR is exercised equal to the excess, if any,
of the Fair Market Value of a share of Common Stock on the Exercise Date of such
SAR over the exercise price. Payment of such amount shall be made in cash as
soon as practicable following the Exercise Date.

               5. Deemed Exercise of Freestanding SARs. If, on the date on which
a Freestanding SAR would otherwise terminate or expire, such SAR by its terms
remains exercisable immediately prior to such termination or expiration and, if
so exercised, would result in a payment to the holder of such SAR, then any
portion of such SAR which has not previously been exercised shall automatically
be deemed to be exercised as of such date with respect to such portion.

               6. Effect of Termination of Service. Subject to earlier
termination of a Freestanding SAR as otherwise provided herein and unless
otherwise provided by the Plan Administrator in the Award Agreement evidencing
such SAR, a Freestanding SAR shall be exercisable after a Participant’s
termination of Service only during the applicable time period determined in
accordance with Section I.C of this Article Two (treating the SAR as if it were
an Option) and thereafter shall terminate.

          C. Terms and Conditions of Tandem SARs.

               1. One or more Participants may be granted the right, exercisable
upon such terms as the Plan Administrator may establish, to elect between the
exercise of the underlying Option for shares of Common Stock and the surrender
of that Option in exchange for a distribution from the Corporation in an amount
equal to the excess of (a) the Fair Market Value (on the Option surrender date)
of the number of shares in which the Participant is at the time vested under the
surrendered Option (or surrendered portion thereof) over (b) the aggregate
exercise price payable for such shares.

               2. No such Option surrender shall be effective unless it is
approved by the Plan Administrator, either at the time of the actual Option
surrender or at any earlier time. If the surrender is so approved, then the
distribution to which the Participant shall be entitled shall be made solely in
whole shares of Common Stock valued at Fair Market Value on the Option surrender
date.

               3. If the surrender of an Option is not approved by the Plan
Administrator, then the Participant shall retain whatever rights the Participant
had under the surrendered Option (or surrendered portion thereof) on the Option
surrender date and may exercise such rights at any time prior to the later of
(a) five (5) business days after the receipt of

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the rejection notice or (b) the last day on which the Option is otherwise
exercisable in accordance with the terms of the Award Agreement evidencing such
Option, but in no event may such rights be exercised more than ten (10) years
after the Option grant date.

          D. Terms and Conditions of Limited SARs.

               1. Subject to the provisions of Section I of Article Six with
respect to Code Section 409A, one or more Section 16 Insiders may be granted
Limited SARs with respect to their outstanding Options.

               2. Upon the occurrence of a Hostile Take-Over, each individual
holding one or more Options with such a Limited SAR shall have the unconditional
right (exercisable for a thirty (30)-day period following such Hostile
Take-Over) to surrender each such Option to the Corporation. In return for the
surrendered Option, the Participant shall receive a cash distribution from the
Corporation in an amount equal to the excess of (A) the Take-Over Price of the
shares of Common Stock at the time subject to such Option (whether or not the
Participant is otherwise vested in those shares) over (B) the aggregate exercise
price payable for those shares. Such cash distribution shall be paid within five
(5) days following the Option surrender date.

               3. At the time such Limited SAR is granted, the Plan
Administrator shall pre-approve any subsequent exercise of that right in
accordance with the terms of this Paragraph D. Accordingly, no further approval
of the Plan Administrator or the Board shall be required at the time of the
actual Option surrender and cash distribution.

          E. Stockholder Rights. The holder of an SAR shall have no stockholder
rights with respect to the shares subject to the SAR until such person shall
have exercised the SAR and become a holder of record of the shares issued in
payment of such SAR.

          F. Limited Transferability of SARs. During the lifetime of the
Participant, an SAR shall be exercisable only by the Participant and shall not
be assignable or transferable other than by will or by the laws of descent and
distribution following the Participant’s death. However, a Tandem SAR related to
a Non-Statutory Option or a Freestanding SAR to be settled in shares of Common
Stock may, in connection with the Participant’s estate plan, be assigned in
whole or in part during the Participant’s lifetime to one or more members of the
Participant’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 Freestanding SAR or
both the Tandem SAR and related Non-Statutory Option pursuant to the assignment.
The terms applicable to the assigned portion shall be the same as those in
effect for the SAR immediately prior to such assignment and shall be set forth
in such documents issued to the assignee as the Plan Administrator may deem
appropriate. Notwithstanding the foregoing, the Participant may also designate
one or more persons as the beneficiary or beneficiaries of his or her
outstanding SARs under this Article Two, and those SARs shall, in accordance
with such designation, automatically be transferred to such beneficiary or
beneficiaries upon the Participant’s death while holding those SARs. Such
beneficiary or beneficiaries shall take the transferred SARs subject to all the
terms and conditions of the applicable agreement evidencing each such
transferred SAR, including (without

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limitation) the limited time period during which the SAR may be exercised
following the Participant’s death.

     IV. CORPORATE TRANSACTION/CHANGE IN CONTROL

          A. In the event of any Corporate Transaction, each outstanding Option
and SAR shall automatically accelerate so that each such Award shall,
immediately prior to the effective date of the Corporate Transaction, become
fully exercisable for the total number of shares of Common Stock at the time
subject to such Award and may be exercised for any or all of those shares as
fully vested shares of Common Stock. However, an outstanding Option or SAR shall
not become exercisable on such an accelerated basis if and to the extent:
(i) such Award is, in connection with the Corporate Transaction, to be assumed
by the successor corporation (or parent thereof) or (ii) subject to compliance
with the provisions of Section I of Article Six with respect to Code Section
409A, such Award is to be replaced with a cash incentive program of the
successor corporation which preserves the spread existing at the time of the
Corporate Transaction on any shares for which the Award is not otherwise at that
time exercisable and provides for subsequent payout in accordance with the same
exercise/vesting schedule applicable to those Award shares or (iii) the
acceleration of such Award is subject to other limitations imposed by the Plan
Administrator at the time of the Award grant.

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

          C. Immediately following the consummation of the Corporate
Transaction, all outstanding Options and SARs (other than a Limited SAR to the
extent provided by Section III.F of this Article Two) shall terminate and cease
to be outstanding, except to the extent assumed by the successor corporation (or
parent thereof).

          D. Each Option and SAR 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 issued to the Participant had such Award been exercised immediately prior
to such Corporate Transaction. If the holders of Common Stock receive cash
consideration in connection with the Corporate Transaction, the assumed Option
or SAR may be adjusted, at the option of the successor corporation, to apply to
the number of shares of its common stock with a fair market value equivalent to
the cash consideration paid per share of Common Stock in such Corporate
Transaction. Appropriate adjustments to reflect such Corporate Transaction shall
also be made to (i) the exercise price per share under each outstanding Option
and SAR, provided the aggregate exercise price for such securities shall remain
the same, (ii) the maximum number and/or class of securities available for
issuance over the remaining term of the Plan and (iii) the maximum number and/or
class of securities for which any one person may be granted Awards under the
Plan per calendar year and (iv) the maximum number and/or class of securities by
which the share reserve is to increase automatically each calendar year. All
such adjustments shall be made in compliance with the

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requirements of Code Sections 409A, 422 and 424 and any related guidance issued
by the U.S. Treasury Department, if applicable.

          E. The Plan Administrator shall have the discretionary authority to
structure one or more outstanding Options or SARs under the Discretionary
Option/SAR Grant Program so that those Awards shall, immediately prior to the
effective date of such Corporate Transaction, become fully exercisable for the
total number of shares of Common Stock at the time subject to those Awards and
may be exercised for any or all of those shares as fully vested shares of Common
Stock, whether or not those Awards are to be assumed in the Corporate
Transaction. In addition, the Plan Administrator shall have the discretionary
authority to structure one or more of the Corporation’s repurchase rights under
the Discretionary Option/SAR Grant Program so that those rights shall not be
assignable in connection with such Corporate Transaction and shall accordingly
terminate upon the consummation of such Corporate Transaction, and the shares
subject to those terminated rights shall thereupon vest in full.

          F. The Plan Administrator shall have full power and authority to
structure one or more outstanding Options or SARs under the Discretionary
Option/SAR Grant Program so that those Awards shall become fully exercisable for
the total number of shares of Common Stock at the time subject to those Awards
in the event the Participant’s Service is subsequently terminated 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 Awards are assumed and do not otherwise accelerate. Any Options or SARs so
accelerated shall remain exercisable for fully vested shares until the earlier
of (i) the expiration of the Award term or (ii) the expiration of the one
(1) year period measured from the effective date of the Involuntary Termination.
In addition, the Plan Administrator may structure one or more of the
Corporation’s repurchase rights so that those rights shall immediately terminate
with respect to any shares held by the Participant at the time of his or her
Involuntary Termination, and the shares subject to those terminated repurchase
rights shall accordingly vest in full at that time.

          G. The Plan Administrator shall have the discretionary authority to
structure one or more outstanding Options or SARs under the Discretionary
Option/SAR Grant Program so that those Awards shall, immediately prior to the
effective date of a Change in Control, become fully exercisable for the total
number of shares of Common Stock at the time subject to those Awards and may be
exercised for any or all of those shares as fully vested shares of Common Stock.
In addition, the Plan Administrator shall have the discretionary authority to
structure one or more of the Corporation’s repurchase rights under the
Discretionary Option/SAR Grant Program so that those rights shall terminate
automatically upon the consummation of such Change in Control, and the shares
subject to those terminated rights shall thereupon vest in full. Alternatively,
the Plan Administrator may condition the automatic acceleration of one or more
outstanding Options or SARs under the Discretionary Option/SAR Grant Program and
the termination of one or more of the Corporation’s outstanding repurchase
rights under such program upon the subsequent termination of the Participant’s
Service by reason of an Involuntary Termination within a designated period (not
to exceed eighteen (18) months) following the effective date of such Change in
Control. Each Option or SAR so accelerated shall remain exercisable for fully
vested shares until the earlier of (i) the expiration of the Award term or
(ii) the expiration of the one (1) year period measured from the effective date
of Participant’s cessation of Service.

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              H. The portion of any Incentive Option accelerated in connection
with a Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
($100,000) limitation is not exceeded. To the extent such dollar limitation is
exceeded, the accelerated portion of such Option shall be exercisable as a
Nonstatutory Option under the Federal tax laws.

              I. The outstanding Options and SARs 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.

  V.   PROHIBITION OF OPTION OR SAR REPRICING WITHOUT STOCKHOLDER APPROVAL

              Without the affirmative vote of holders of a majority of the
shares of Common Stock cast in person or by proxy at a meeting of the
stockholders of the Corporation at which a quorum representing a majority of all
outstanding shares of Common Stock is present or represented by proxy, the Plan
Administrator shall not approve a program providing for either (a) the
cancellation of outstanding Options or SARs and the grant in substitution
therefore of new Options or SARs having a lower exercise price or (b) the
amendment of outstanding Options or SARs to reduce the exercise price thereof.
This paragraph shall not be construed to apply to “issuing or assuming a stock
option in a transaction to which section 424(a) applies,” within the meaning of
Code Section 424.

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ARTICLE THREE

RESTRICTED STOCK/RESTRICTED STOCK UNIT PROGRAM

  I.   RESTRICTED STOCK AWARDS

              Shares of Common Stock may be issued under the Restricted
Stock/Restricted Stock Unit Program through direct and immediate issuances
without any intervening Option or SAR Award. Restricted Stock Awards shall be
evidenced by Award Agreements specifying whether the Award is a Restricted Stock
Bonus or a Restricted Stock Purchase Right and the number of shares of Common
Stock subject to the Award, in such form as the Plan Administrator shall from
time to time establish. Award Agreements evidencing Restricted Stock Awards may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:

              A. Types of Restricted Stock Awards Authorized. Restricted Stock
Awards may be in the form of either a Restricted Stock Bonus or a Restricted
Stock Purchase Right. Restricted Stock Awards may be granted upon such
conditions as the Plan Administrator shall determine, including, without
limitation, upon the attainment of one or more Performance Goals described in
Section I.D of Article Four. If either the grant or vesting of a Restricted
Stock Award is to be contingent upon the attainment of one or more Performance
Goals and is to result in the payment of Performance-Based Compensation, the
Plan Administrator shall follow procedures substantially equivalent to those set
forth in Sections I.C through I.E.1 of Article Four.

              B. Purchase Price. The purchase price for shares of Common Stock
issuable under each Restricted Stock Purchase Right shall be established by the
Plan Administrator in its discretion. No monetary payment (other than applicable
tax withholding) shall be required as a condition of receiving shares of Common
Stock pursuant to a Restricted Stock Bonus, the consideration for which shall be
services actually rendered to the Corporation (or any Parent or Subsidiary) or
for its benefit. Notwithstanding the foregoing, if required by applicable state
corporations law, the Participant shall furnish consideration in the form of
cash or past services rendered to the Corporation (or any Parent or Subsidiary)
or for its benefit having a value not less than the par value of the shares of
Common Stock subject to such Restricted Stock Award.

              C. Purchase Period. A Restricted Stock Purchase Right shall be
exercisable within a period established by the Plan Administrator, which shall
in no event exceed thirty (30) days from the effective date of the grant of the
Restricted Stock Purchase Right.

              D. Payment of Purchase Price. Payment of the purchase price for
the number of shares of Common Stock being purchased pursuant to any Restricted
Stock Purchase Right shall be made (a) in cash or cash equivalent or by check
made payable to the Corporation or (b) by past services rendered to the
Corporation (or any Parent or Subsidiary) or for its benefit.

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              E. Vesting Provisions.

                 1. Shares of Common Stock issued pursuant to a Restricted Stock
Award 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, including, without limitation, Performance Goals described in
Section I.D of Article Four. The elements of the vesting schedule applicable to
any unvested shares of Common Stock issued pursuant to a Restricted Stock Award
shall be determined by the Plan Administrator and incorporated into the Award
Agreement.

                 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 pursuant to a
Restricted Stock Award, 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 pursuant to a
Restricted Stock Award or should the performance objectives or Performance Goals
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, the
Corporation shall repay to the Participant the cash consideration paid for the
surrendered shares.

                 5. The Plan Administrator may in its discretion waive the
surrender and cancellation of one or more unvested shares of Common Stock which
would otherwise occur upon the cessation of the Participant’s Service or the
non-attainment of the performance objectives or Performance Goals applicable to
those shares. Such waiver shall result in the immediate vesting of the
Participant’s interest in the shares of Common Stock as to which the waiver
applies. Such waiver may be effected at any time, whether before or after the
Participant’s cessation of Service or the attainment or non-attainment of the
applicable performance objectives or Performance Goals.

  II.   RESTRICTED STOCK UNIT AWARDS

               Subject to the provisions of Section I of Article Six with
respect to Code Section 409A, shares of Common Stock may be issued under the
Restricted Stock/Restricted Stock Unit

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Program on a deferred basis through the grant of Restricted Stock Units.
Restricted Stock Unit Awards shall be evidenced by Award Agreements specifying
the number of shares of Common Stock subject to the Award, in such form as the
Plan Administrator shall from time to time establish. Award Agreements
evidencing Restricted Stock Unit Awards may incorporate all or any of the terms
of the Plan by reference and shall comply with and be subject to the following
terms and conditions:

               A. Grant of Restricted Stock Unit Awards. Restricted Stock Unit
Awards may be granted upon such conditions as the Plan Administrator shall
determine, including, without limitation, upon the attainment of one or more
Performance Goals described in Section I.D of Article Four. If either the grant
or vesting of a Restricted Stock Unit Award is to be contingent upon the
attainment of one or more Performance Goals, the Plan Administrator shall follow
procedures substantially equivalent to those set forth in Sections I.C through
I.E.1 of Article Four.

               B. Purchase Price. No monetary payment (other than applicable tax
withholding, if any) shall be required as a condition of receiving a Restricted
Stock Unit Award, the consideration for which shall be services actually
rendered to the Corporation (or any Parent or Subsidiary) or for its benefit.
Notwithstanding the foregoing, if required by applicable state corporations law,
the Participant shall furnish consideration in the form of cash or past services
rendered to the Corporation (or any Parent or Subsidiary) or for its benefit
having a value not less than the par value of the shares of Common Stock issued
upon settlement of the Restricted Stock Unit Award.

               C. Vesting Provisions. Restricted Stock Units may or may not be
made subject to vesting conditions based upon the satisfaction of such Service
requirements, conditions, restrictions or performance objectives , including,
without limitation, Performance Goals as described in Section I.D of
Article Four, as shall be established by the Plan Administrator and set forth in
the Award Agreement evidencing such Award.

               D. Voting Rights, Dividend Equivalent Rights and Distributions.
Participants shall have no voting rights with respect to shares of Common Stock
represented by Restricted Stock Units until the date of the issuance of such
shares (as evidenced by the appropriate entry on the books of the Corporation or
of a duly authorized transfer agent of the Corporation). However, the Plan
Administrator, in its discretion, may grant Dividend Equivalent Rights pursuant
to the Award Agreement evidencing any Restricted Stock Unit Award with respect
to the payment of cash dividends on Common Stock paid prior to the date on which
Restricted Stock Units held by such Participant are settled. A Participant
granted Dividend Equivalent Rights shall be credited with additional whole
Restricted Stock Units as of the date of payment of such cash dividends on
Common Stock. The number of additional Restricted Stock Units (rounded to the
nearest whole number) to be so credited shall be determined by dividing (a) the
amount of cash dividends paid on such date with respect to the number of shares
of Common Stock represented by the Restricted Stock Units previously credited to
the Participant by (b) the Fair Market Value per share of Common Stock on such
date. Such additional Restricted Stock Units shall be subject to the same terms
and conditions and shall be settled in the same manner and at the same time (or
as soon thereafter as practicable) as the Restricted Stock Units originally
subject to the Restricted Stock Unit Award. In the event of a dividend or

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distribution paid in shares of Common Stock or any other adjustment made upon a
change to the Common Stock as described in Section V.E of Article One,
appropriate adjustments shall be made in the Participant’s Restricted Stock Unit
Award so that it represents the right to receive upon settlement any and all
new, substituted or additional securities or other property (other than normal
cash dividends) to which the Participant would entitled by reason of the shares
of Common Stock issuable upon settlement of the Award, and all such new,
substituted or additional securities or other property shall be immediately
subject to the same vesting conditions as are applicable to the Award.

               E. Effect of Termination of Service. Unless otherwise provided by
the Plan Administrator and set forth in the Award Agreement evidencing a
Restricted Stock Unit Award, if a Participant’s Service terminates for any
reason, whether voluntary or involuntary (including the Participant’s death or
disability), then the Participant shall forfeit to the Corporation any
Restricted Stock Units pursuant to the Award which remain subject to vesting
conditions as of the date of the Participant’s termination of Service.

               F. Settlement of Restricted Stock Unit Awards. The Corporation
shall issue to a Participant on the date on which Restricted Stock Units subject
to the Participant’s Restricted Stock Unit Award vest or, subject to the
provisions of Section I of Article Six with respect to Code Section 409A, on
such other date determined by the Plan Administrator, in its discretion, and set
forth in the Award Agreement one (1) share of Common Stock (and/or any other
new, substituted or additional securities or other property pursuant to an
adjustment described in Section II.D above) for each Restricted Stock Unit then
becoming vested or otherwise to be settled on such date, subject to the
withholding of applicable taxes. If permitted by the Plan Administrator, and
subject to the provisions of Section I of Article Six with respect to Code
Section 409A, the Participant may elect to defer receipt of all or any portion
of the shares of Common Stock or other property otherwise issuable to the
Participant pursuant to this Section, and such deferred issuance date(s) elected
by the Participant shall be set forth in the Award Agreement. Notwithstanding
the foregoing, the Plan Administrator, in its discretion, may provide for
settlement of any Restricted Stock Unit Award by payment to the Participant in
cash of an amount equal to the Fair Market Value on the payment date of the
shares of Common Stock or other property otherwise issuable to the Participant
pursuant to this Section.

               G. Nontransferability of Restricted Stock Unit Awards. Prior to
the settlement of a Restricted Stock Unit Award, the Award shall not be subject
in any manner to anticipation, alienation, sale, exchange, transfer, assignment,
pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant’s beneficiary, except transfer by will or by the laws of descent and
distribution. All rights with respect to a Restricted Stock Unit Award granted
to a Participant hereunder shall be exercisable during his or her lifetime only
by such Participant or the Participant’s guardian or legal representative.

  III.   CORPORATE TRANSACTION/CHANGE IN CONTROL

               A. All of the Corporation’s outstanding repurchase rights under
Restricted Stock Awards shall terminate automatically, and all the shares of
Common Stock subject to those terminated rights and outstanding Restricted Stock
Unit Awards shall immediately vest in full, in the event of any Corporate
Transaction, except to the extent (i) those repurchase rights are to be

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assigned to the successor corporation (or parent thereof) in connection with
such Corporate Transaction, (ii) substantially equivalent rights for stock of
the successor corporation (or parent thereof) are substituted for outstanding
Restricted Stock Units in connection with such Corporate Transaction or
(iii) such accelerated vesting is precluded by other limitations imposed in the
Award Agreement.

               B. The Plan Administrator shall have the discretionary authority
to structure one or more of the Corporation’s repurchase rights under Restricted
Stock Awards so that those rights shall automatically terminate in whole or in
part, and the shares of Common Stock subject to those terminated rights or to
Restricted Stock Unit Awards 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)
or substantially equivalent rights for stock of the successor corporation (or
parent thereof) are substituted for outstanding Restricted Stock Units in
connection with such Corporate Transaction.

               C. The Plan Administrator shall also have the discretionary
authority to structure one or more of the Corporation’s repurchase rights under
Restricted Stock Awards so that those rights shall automatically terminate in
whole or in part, and the shares of Common Stock subject to those terminated
rights or to Restricted Stock Unit Awards 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 Change in Control.

  IV.   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.

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ARTICLE ONE

PERFORMANCE AWARD PROGRAM

     I. TERMS OF PERFORMANCE AWARDS

          Subject to the provisions of Section I of Article Six with respect to
Code Section 409A, Performance Awards may be granted to Participants in such
amount and upon such terms as shall be determined by the Plan Administrator, in
its sole discretion. Performance Awards shall be evidenced by Award Agreements
in such form as the Plan Administrator shall from time to time establish. Award
Agreements evidencing Performance Awards may incorporate all or any of the terms
of the Plan by reference and shall comply with and be subject to the following
terms and conditions:

          A. Types of Performance Awards Authorized. Performance Awards may be
in the form of either Performance Shares or Performance Units. Each Award
Agreement evidencing a Performance Award shall specify the number of Performance
Shares or Performance Units subject thereto, the Performance Award Formula, the
Performance Goal(s) and Performance Period applicable to the Award, and the
other terms, conditions and restrictions of the Award.

          B. Initial Value of Performance Shares and Performance Units. Unless
otherwise provided by the Plan Administrator in granting a Performance Award,
each Performance Share shall have an initial value equal to the Fair Market
Value of one (1) share of Stock, subject to adjustment as provided in
Section V.E of Article One, on the effective date of grant of the Performance
Share. Each Performance Unit shall have an initial monetary value determined by
the Plan Administrator at the time of grant. The final value payable to the
Participant in settlement of a Performance Award determined on the basis of the
applicable Performance Award Formula will depend on the extent to which
Performance Goals established by the Plan Administrator are attained within the
applicable Performance Period established by the Plan Administrator.

          C. Establishment of Performance Period, Performance Goals and
Performance Award Formula. In granting each Performance Award, the Plan
Administrator shall establish in writing the applicable Performance Period,
Performance Award Formula and one or more Performance Goals which, when measured
at the end of the Performance Period, shall determine on the basis of the
Performance Award Formula the final value of the Performance Award to be paid to
the Participant. Unless otherwise permitted in compliance with the requirements
under Code Section 162(m), with respect to each Performance Award intended to
result in the payment of Performance-Based Compensation, the Plan Administrator
shall establish the Performance Goal(s) and the Performance Award Formula
applicable to the Performance Award no later than the earlier of (a) the date
ninety (90) days after the commencement of the applicable Performance Period or
(b) the date on which 25% of the Performance Period has elapsed, and, in any
event, at a time when the outcome of the Performance Goals remains substantially
uncertain. Once established, the Performance Goals and Performance Award Formula
applicable to a Performance Award intended to result in the

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payment of Performance-Based Compensation shall not be changed during the
Performance Period. The Corporation shall notify each Participant granted a
Performance Award of the terms of such Award, including the Performance Period,
Performance Goal(s) and Performance Award Formula.

     D. Measurement of Performance Goals. Performance Goals shall be established
by the Plan Administrator on the basis of targets to be attained (“Performance
Targets”) with respect to one or more measures of business or financial
performance (each, a “Performance Measure”), subject to the following:

          1. Performance Measures. Performance Measures shall have the same
meanings as used in the Corporation’s financial statements, or, if such terms
are not used in the Corporation’s financial statements, they shall have the
meaning applied pursuant to generally accepted accounting principles, or as used
generally in the Corporation’s industry. Performance Measures shall be
calculated with respect to the Corporation and each Subsidiary consolidated
therewith for financial reporting purposes or such division or other business
unit as may be selected by the Plan Administrator. For purposes of the Plan, the
Performance Measures applicable to a Performance Award shall be calculated in
accordance with generally accepted accounting principles, but prior to the
accrual or payment of any Performance Award for the same Performance Period and
excluding the effect (whether positive or negative) of any change in accounting
standards or any extraordinary, unusual or nonrecurring item, as determined by
the Plan Administrator, occurring after the establishment of the Performance
Goals applicable to the Performance Award. Each such adjustment, if any, shall
be made solely for the purpose of providing a consistent basis from period to
period for the calculation of Performance Measures in order to prevent the
dilution or enlargement of the Participant’s rights with respect to a
Performance Award. Performance Measures may be one or more of the following, as
determined by the Plan Administrator:

               (i) revenue;

               (ii) sales;

               (iii) expenses;

               (iv) operating income;

               (v) gross margin;

               (vi) operating margin;

               (vii) earnings before any one or more of: stock-based
compensation expense, interest, taxes and depreciation, and amortization;

               (viii) pre-tax profit;

               (ix) operating income;

               (x) net income;

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               (xi) economic value added;

               (xii) free cash flow;

               (xiii) operating cash flow;

               (xiv) the market price of the Common Stock;

               (xv) earnings per share;

               (xvi) return on stockholder equity;

               (xvii) return on capital;

               (xviii) return on assets;

               (xix) return on investment;

               (xx) balance of cash, cash equivalents and marketable securities;

               (xxi) market share;

               (xxii) number of customers;

               (xxiii) customer satisfaction;

               (xxiv) product development; and

               (xxv) completion of a joint venture or other corporate
transaction.

          2. Performance Targets. Performance Targets may include a minimum,
maximum, target level and intermediate levels of performance, with the final
value of a Performance Award determined under the applicable Performance Award
Formula by the level attained during the applicable Performance Period. A
Performance Target may be stated as an absolute value or as a value determined
relative to an index, budget or other standard selected by the Plan
Administrator.

     E. Settlement of Performance Awards.

          1. Determination of Final Value. As soon as practicable following the
completion of the Performance Period applicable to a Performance Award, the Plan
Administrator shall certify in writing the extent to which the applicable
Performance Goals have been attained and the resulting final value of the Award
earned by the Participant and to be paid upon its settlement in accordance with
the applicable Performance Award Formula.

          2. Discretionary Adjustment of Award Formula. In its discretion, the
Plan Administrator may, either at the time it grants a Performance Award or at
any time

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thereafter, provide for the positive or negative adjustment of the Performance
Award Formula applicable to a Performance Award granted to any Participant who
is not a Covered Employee to reflect such Participant’s individual performance
in his or her position with the Corporation or such other factors as the Plan
Administrator may determine. If permitted under a Covered Employee’s Award
Agreement, the Plan Administrator shall have the discretion, on the basis of
such criteria as may be established by the Plan Administrator, to reduce some or
all of the value of the Performance Award that would otherwise be paid to the
Covered Employee upon its settlement notwithstanding the attainment of any
Performance Goal and the resulting value of the Performance Award determined in
accordance with the Performance Award Formula. No such reduction may result in
an increase in the amount payable upon settlement of another Participant’s
Performance Award.

          3. Effect of Leaves of Absence. Unless otherwise required by law,
payment of the final value, if any, of a Performance Award held by a Participant
who has taken in excess of thirty (30) days in leaves of absence during a
Performance Period shall be prorated on the basis of the number of days of the
Participant’s Service during the Performance Period during which the Participant
was not on a leave of absence.

          4. Notice to Participants. As soon as practicable following the Plan
Administrator’s determination and certification in accordance with paragraphs 1
and 2 above, the Corporation shall notify each Participant of the determination
of the Plan Administrator.

          5. Payment in Settlement of Performance Awards. Subject to the
provisions of Section I of Article Six with respect to Code Section 409A, as
soon as practicable following the Plan Administrator’s determination and
certification in accordance with paragraphs 1 and 2 above or on such other
date(s) determined by the Plan Administrator, in its discretion, and set forth
in the Award Agreement, payment shall be made to each eligible Participant of
the final value of the Participant’s Performance Award. Payment of such amount
shall be made in the form of cash, Shares, or a combination thereof as
determined by the Plan Administrator. Unless otherwise provided in the Award
Agreement evidencing a Performance Award, payment shall be made in a lump sum.
If permitted by the Plan Administrator, and subject to the provisions of
Section I of Article Six with respect to Code Section 409A, the Participant may
elect to defer receipt of all or any portion of the payment to be made to the
Participant pursuant to this paragraph, and such deferred payment date(s)
elected by the Participant shall be set forth in the Award Agreement.

          6. Provisions Applicable to Payment in Shares. If payment is to be
made in shares of Common Stock, the number of such shares shall be determined by
dividing the final value of the Performance Award by the value of a share of
Common Stock determined by the method specified in the Award Agreement. Such
methods may include, without limitation, the closing market price on a specified
date (such as the settlement date) or an average of market prices over a series
of trading days. Shares of Common Stock issued in payment of any Performance
Award may be fully vested and freely transferable shares or may be subject to
vesting conditions as provided in Section I.E.1 of Article Three.

     F. Voting Rights; Dividend Equivalent Rights and Distributions.
Participants shall have no voting rights with respect to shares of Common Stock
represented by

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Performance Share Awards until the date of the issuance of such shares, if any
(as evidenced by the appropriate entry on the books of the Corporation or of a
duly authorized transfer agent of the Corporation). However, the Plan
Administrator, in its discretion, may grant Dividend Equivalent Rights pursuant
to the Award Agreement evidencing any Performance Share Award with respect to
the payment of cash dividends on Common Stock paid prior to the date on which
the Performance Shares are settled or forfeited. A Participant granted Dividend
Equivalent Rights shall be credited with additional whole Performance Shares as
of the date of payment of such cash dividends on Common Stock. The number of
additional Performance Shares (rounded to the nearest whole number) to be so
credited shall be determined by dividing (a) the amount of cash dividends paid
on such date with respect to the number of shares of Common Stock represented by
the Performance Shares previously credited to the Participant by (b) the Fair
Market Value per share of Common Stock on such date. Such additional Performance
Shares shall be subject to the same terms, conditions and restrictions and shall
be settled in the same manner and at the same time (or as soon thereafter as
practicable) as the shares originally subject to the Award. Dividend Equivalent
Rights shall not be granted with respect to Performance Units. In the event of a
dividend or distribution paid in shares of Common Stock or any other adjustment
made upon a change to the Common Stock as described in Section V.E of
Article One, appropriate adjustments shall be made in the Participant’s
Performance Share Award so that it represents the right to receive upon
settlement any and all new, substituted or additional securities or other
property (other than normal cash dividends) to which the Participant would
entitled by reason of the shares of Common Stock issuable upon settlement of the
Performance Share Award, and all such new, substituted or additional securities
or other property shall be immediately subject to the same Performance Goals as
are applicable to the Award.

          G. Effect of Termination of Service. Unless otherwise provided by the
Plan Administrator and set forth in the Award Agreement evidencing a Performance
Award, if a Participant’s Service terminates for any reason, whether voluntary
or involuntary (including the Participant’s death or disability) before
completion of the Performance Period applicable to the Performance Award, then
the Participant shall forfeit the Award in its entirety.

          H. Nontransferability of Performance Awards. Prior to settlement in
accordance with the provisions of the Plan, no Performance Award shall be
subject in any manner to anticipation, alienation, sale, exchange, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of the Participant
or the Participant’s beneficiary, except transfer by will or by the laws of
descent and distribution. All rights with respect to a Performance Award granted
to a Participant hereunder shall be exercisable during his or her lifetime only
by such Participant or the Participant’s guardian or legal representative.

     II. CORPORATE TRANSACTION/CHANGE IN CONTROL

          The Plan Administrator may, in its discretion, provide in any Award
Agreement evidencing a Performance Award that, in the event of a Corporate
Transaction or Change in Control, the Performance Award held by a Participant
whose Service has not terminated prior to the Change in Control or whose Service
terminated by reason of the Participant’s death or Permanent Disability shall
become vested and payable effective as of the date of the Corporate Transaction
or Change in Control to such extent as specified in such Award Agreement.

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ARTICLE FIVE

AUTOMATIC OPTION GRANT PROGRAM

          The provisions of the Automatic Option Grant Program have been revised
as of February 8, 2002, subject to approval by the Corporation’s stockholders at
the 2002 Annual Stockholders Meeting.

     I. OPTION TERMS

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

               1. Each individual who is first elected or appointed as a
non-employee Board member at any time on or after the 2002 Annual Stockholders
Meeting shall automatically be granted, on the date of such initial election or
appointment, a Non-Statutory Option to purchase 30,000 shares of Common Stock,
provided that individual has not previously been in the employ of the
Corporation or any Parent or Subsidiary.

               2. On the date of each Annual Stockholders Meeting, beginning
with the 2002 Annual Stockholders Meeting, each individual who is to continue to
serve as a non-employee Board member, whether or not that individual is standing
for re-election to the Board at that particular Annual Stockholders Meeting,
shall automatically be granted a Non-Statutory Option to purchase 15,000 shares
of Common Stock. There shall be no limit on the number of such annual automatic
Option grants any one non-employee Board member may receive over his or her
period of Board service, and a non-employee Board member who has previously been
in the employ of the Corporation (or any Parent or Subsidiary) or who has
otherwise received one or more stock Option grants from the Corporation shall be
eligible to receive one or more such annual automatic Option grants over his or
her period of continued Board service.

               3. Stockholder approval of the amendment contained in this 2002
Restatement at the 2002 Annual Stockholders Meeting shall constitute
pre-approval of each Option granted on or after that Annual Stockholders Meeting
pursuant to the express terms of this Automatic Option Grant Program on the
basis of the amendments to this program effected by such Restatement and the
subsequent exercise of that Option in accordance with its terms.

          B. Exercise Price.

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

               2. The exercise price shall be payable in one or more of the
alternative forms authorized under the Discretionary Option/SAR Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.

          C. Option Term. Each Option shall have a term of ten (10) years
measured from the Option grant date.

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          D. Exercise and Vesting of Options. Each Option shall be immediately
exercisable for any or all of the Option shares. However, any shares purchased
under the Option shall be subject to repurchase by the Corporation, at the
exercise price paid per share, upon the Participant’s cessation of Board service
prior to vesting in those shares. The shares subject to each initial automatic
Option grant shall vest, and the Corporation’s repurchase right shall lapse, in
a series of six (6) successive equal semi-annual installments upon the
Participant’s completion of each six (6)-month period of service as a Board
member over the thirty-six (36)-month period measured from the Option grant
date. The shares subject to each annual automatic Option grant shall vest, and
the Corporation’s repurchase right shall lapse, in a series of two
(2) successive equal annual installments upon the Participant’s completion of
each twelve (12)-month period of service as a Board member over the twenty-four
(24)-month period measured from the Option grant date.

          E. Limited Transferability of Options. Each Option under this
Article Five may, in connection with the Participant’s estate plan, be assigned
in whole or in part during the Participant’s lifetime to one or more members of
the Participant’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. The Participant may also designate one or more persons as
the beneficiary or beneficiaries of his or her outstanding Options under this
Article Five, and those Options shall, in accordance with such designation,
automatically be transferred to such beneficiary or beneficiaries upon the
Participant’s death while holding those Options. Such beneficiary or
beneficiaries shall take the transferred Options subject to all the terms and
conditions of the applicable agreement evidencing each such transferred Option,
including (without limitation) the limited time period during which the Option
may be exercised following the Participant’s death.

          F. Termination of Board Service. The following provisions shall govern
the exercise of any Options held by the Participant at the time the Participant
ceases to serve as a Board member:

                    (i) The Participant (or, in the event of Participant’s
death, the personal representative of the Participant’s estate or the person or
persons to whom the Option is transferred pursuant to the Participant’s will or
in accordance with the laws of descent and distribution or by the designated
beneficiary or beneficiaries of such Option) shall have a twelve (12)-month
period following the date of such cessation of Board service in which to
exercise each such Option.

                    (ii) During the twelve (12)-month exercise period, the
Option may not be exercised in the aggregate for more than the number of vested
shares of Common Stock for which the Option is exercisable at the time of the
Participant’s cessation of Board service.

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                    (iii) Should the Participant cease to serve as a Board
member by reason of death or Permanent Disability, then all shares at the time
subject to the Option shall immediately vest so that such Option may, during the
twelve (12)-month exercise period following such cessation of Board service, be
exercised for all or any portion of those shares as fully-vested shares of
Common Stock.

                    (iv) In no event shall the Option remain exercisable after
the expiration of the Option term. Upon the expiration of the twelve (12)-month
exercise period or (if earlier) upon the expiration of the Option term, the
Option shall terminate and cease to be outstanding for any vested shares for
which the Option has not been exercised. However, the Option shall, immediately
upon the Participant’s cessation of Board service for any reason other than
death or Permanent Disability, terminate and cease to be outstanding to the
extent the Option is not otherwise at that time exercisable for vested shares.

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

          A. In the event of any Corporate Transaction while the Participant
remains in Service, the shares of Common Stock at the time subject to each
outstanding Option held by such Participant under this Automatic Option Grant
Program but not otherwise vested 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 such Option and may be exercised for all or any portion of
those shares as fully-vested shares of Common Stock. Immediately following the
consummation of the Corporate Transaction, each automatic Option grant shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof).

          B. In connection with any Change in Control while the Participant
remains in Service, the shares of Common Stock at the time subject to each
outstanding Option held by such Participant under this Automatic Option Grant
Program but not otherwise vested shall automatically vest in full so that each
such Option shall, immediately prior to the effective date of the Change in
Control, become fully exercisable for all of the shares of Common Stock at the
time subject to such Option and may be exercised for all or any portion of those
shares as fully-vested shares of Common Stock. Each such Option shall remain
exercisable for such fully-vested Option shares until the expiration or sooner
termination of the Option term or the surrender of the Option in connection with
a Hostile Take-Over.

          C. All outstanding repurchase rights under this Automatic Option Grant
Program shall automatically terminate, and the shares of Common Stock subject to
those terminated rights shall immediately vest in full, in the event of any
Corporate Transaction or Change in Control.

          D. Subject to the provisions of Section I of Article Six with respect
to Code Section 409A, upon the occurrence of a Hostile Take-Over while the
Participant remains in Service, the Participant shall have a thirty (30)-day
period in which to surrender to the

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Corporation each of his or her outstanding Options under this Automatic Option
Grant Program. The Participant 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 each
surrendered Option (whether or not the Participant is otherwise at the time
vested in those shares) over (ii) the aggregate exercise price payable for such
shares. Such cash distribution shall be paid within five (5) days following the
surrender of the Option to the Corporation. No approval or consent of the Board
or any Plan Administrator shall be required at the time of the actual Option
surrender and cash distribution.

          E. Each Option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Participant in consummation of such Corporate Transaction
had the Option been exercised immediately prior to such Corporate Transaction.
If the holders of Common Stock receive cash consideration in connection with the
Corporate Transaction, the assumed Option may be adjusted, at the Option of the
successor corporation, to apply to the number of shares of its common stock with
a fair market value equivalent to the cash consideration paid per share of
Common Stock in such Corporate Transaction. Appropriate adjustments shall also
be made to the exercise price payable per share under each outstanding Option,
provided the aggregate exercise price payable for such securities shall remain
the same. All such adjustments shall be made in compliance with the requirements
of Code Section 409A, if applicable.

          F. The grant of Options under the Automatic Option Grant Program 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.

     III. REMAINING TERMS

          The remaining terms of each Option granted under the Automatic Option
Grant Program shall be the same as the terms in effect for Option grants made
under the Discretionary Option/SAR Grant Program.

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ARTICLE SIX

MISCELLANEOUS

     I. COMPLIANCE WITH CODE SECTION 409A

          A. Awards Subject to Code Section 409A. The provisions of this
Section I shall apply to any Award or portion thereof that is or becomes subject
to Code Section 409A. Awards subject to Code Section 409A include, without
limitation:

               1. Any Non-Statutory Option or SAR that permits the deferral of
compensation other than the deferral of recognition of income until the exercise
of the Award.

               2. Any Restricted Stock Unit Award or Performance Award that
either (a) provides by its terms for settlement of all or any portion of the
Award on one or more dates following the Short-Term Deferral Period (as defined
below) or (b) permits or requires the Participant to elect one or more dates on
which the Award will be settled.

          Subject to any applicable U.S. Treasury Regulations promulgated
pursuant to Code Section 409A or other applicable guidance, the term “Short-Term
Deferral Period” means the period ending on the later of (i) the date that is
two and one-half months from the end of the taxable year of the Corporation in
which the applicable portion of the Award is no longer subject to a substantial
risk of forfeiture or (ii) the date that is two and one-half months from the end
of the Participant’s taxable year in which the applicable portion of the Award
is no longer subject to a substantial risk of forfeiture. For this purpose, the
term “substantial risk of forfeiture” shall have the meaning set forth in any
applicable U.S. Treasury Regulations promulgated pursuant to Code Section 409A
or other applicable guidance.

          B. Deferral and/or Distribution Elections. Except as otherwise
permitted or required by Section 409A or any applicable U.S. Treasury
Regulations promulgated pursuant to Code Section 409A or other applicable
guidance, the following rules shall apply to any deferral and/or distribution
elections (each, an “Election”) that may be permitted or required by the Plan
Administrator pursuant to an Award subject to Code Section 409A:

               1. All Elections must be in writing and specify the amount of the
distribution in settlement of an Award being deferred, as well as the time and
form of distribution as permitted by this Plan.

               2. All Elections shall be made by the end of the Participant’s
taxable year prior to the year in which services commence for which an Award may
be granted to such Participant; provided, however, that if the Award qualifies
as “performance-based compensation” for purposes of Code Section 409A and is
based on services performed over a period of at least twelve (12) months, then
the Election may be made no later than six (6) months prior to the end of such
period.

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               3. Elections shall continue in effect until a written election to
revoke or change such Election is received by the Corporation, except that a
written election to revoke or change such Election must be made prior to the
last day for making an Election determined in accordance with paragraph 2 above
or as permitted by Section I.C below.

          C. Subsequent Elections. Any Award subject to Code Section 409A which
permits a subsequent Election to delay the distribution or change the form of
distribution in settlement of such Award shall comply with the following
requirements:

               1. No subsequent Election may take effect until at least twelve
(12) months after the date on which the subsequent Election is made;

               2. Each subsequent Election related to a distribution in
settlement of an Award not described in Section I.D.2, I.D.3, or I.D.6 below
must result in a delay of the distribution for a period of not less than five
(5) years from the date such distribution would otherwise have been made; and

               3. No subsequent Election related to a distribution pursuant to
Section I.D.4 below shall be made less than twelve (12) months prior to the date
of the first scheduled payment under such distribution.

          D. Distributions Pursuant to Deferral Elections. No distribution in
settlement of an Award subject to Code Section 409A may commence earlier than:

               1. Separation from service (as determined by the Secretary of the
United States Treasury);

               2. The date the Participant becomes Disabled (as defined below);

               3. Death;

               4. A specified time (or pursuant to a fixed schedule) that is
either (i) specified by the Plan Administrator upon the grant of an Award and
set forth in the Award Agreement evidencing such Award or (ii) specified by the
Participant in an Election complying with the requirements of Section I.B and/or
I.C above, as applicable;

               5. To the extent provided by the Secretary of the U.S. Treasury,
a change in the ownership or effective control of the Corporation or in the
ownership of a substantial portion of the assets of the Corporation; or

               6. The occurrence of an Unforeseeable Emergency (as defined
below).

          Notwithstanding anything else herein to the contrary, to the extent
that a Participant is a “Specified Employee” (as defined in Code
Section 409A(a)(2)(B)(i)) of the Corporation, no distribution pursuant to
Section I.D.1 above in settlement of an Award subject to Code Section 409A may
be made before the date which is six (6) months after such Participant’s date of
separation from service, or, if earlier, the date of the Participant’s death.

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          E. Unforeseeable Emergency. The Plan Administrator shall have the
authority to provide in any Award subject to Code Section 409A for distribution
in settlement of all or a portion of such Award in the event that a Participant
establishes, to the satisfaction of the Plan Administrator, the occurrence of an
Unforeseeable Emergency. In such event, the amount(s) distributed with respect
to such Unforeseeable Emergency cannot exceed the amounts necessary to satisfy
such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably
anticipated as a result of such distribution(s), after taking into account the
extent to which such hardship is or may be relieved through reimbursement or
compensation by insurance or otherwise or by liquidation of the Participant’s
assets (to the extent the liquidation of such assets would not itself cause
severe financial hardship). All distributions with respect to an Unforeseeable
Emergency shall be made in a lump sum as soon as practicable following the Plan
Administrator’s determination that an Unforeseeable Emergency has occurred.

          The occurrence of an Unforeseeable Emergency shall be judged and
determined by the Plan Administrator. The Plan Administrator’s decision with
respect to whether an Unforeseeable Emergency has occurred and the manner in
which, if at all, the distribution in settlement of an Award shall be altered or
modified, shall be final, conclusive, and not subject to approval or appeal.

          F. Disabled. The Plan Administrator shall have the authority to
provide in any Award subject to Code Section 409A for distribution in settlement
of such Award in the event that the Participant becomes Disabled. A Participant
shall be considered “Disabled” if either:

               1. the Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months, or

               2. the Participant is, by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than three
(3) months under an accident and health plan covering employees of the
Participant’s employer.

          All distributions payable by reason of a Participant becoming Disabled
shall be paid in a lump sum or in periodic installments as established by the
Participant’s Election, commencing as soon as practicable following the date the
Participant becomes Disabled. If the Participant has made no Election with
respect to distributions upon becoming Disabled, all such distributions shall be
paid in a lump sum as soon as practicable following the date the Participant
becomes Disabled.

          G. Death. If a Participant dies before complete distribution of
amounts payable upon settlement of an Award subject to Code Section 409A, such
undistributed amounts shall be distributed to his or her beneficiary under the
distribution method for death established by the Participant’s Election as soon
as administratively possible following receipt by the Plan Administrator of
satisfactory notice and confirmation of the Participant’s death. If the

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Participant has made no Election with respect to distributions upon death, all
such distributions shall be paid in a lump sum as soon as practicable following
the date of the Participant’s death.

          H. No Acceleration of Distributions. Notwithstanding anything to the
contrary herein, this Plan does not permit the acceleration of the time or
schedule of any distribution under this Plan, except as provided by Code
Section 409A and/or the Secretary of the U.S. Treasury.

     II. TAX WITHHOLDING

          A. The Corporation’s obligation to deliver shares of Common Stock upon
the exercise of Options or the issuance or vesting of such shares under the Plan
or payment of cash in settlement of any Award shall be subject to the
satisfaction of all applicable Federal, state and local income and employment
tax withholding requirements.

          B. The Plan Administrator may, in its discretion, provide any or all
Participants holding Awards under the Plan (other than the Options granted or
the shares issued under the Automatic Option Grant Program) with the right to
use shares of Common Stock in satisfaction of all or part of the Withholding
Taxes to which such Participants may become subject in connection with the
exercise, vesting, issuance of shares or other settlement of their Awards. Such
right may be provided to any such holder in either or both of the following
formats:

               Stock Withholding: The election to have the Corporation withhold,
from the shares of Common Stock otherwise issuable upon the exercise or
settlement of an Award, a portion of those shares which are fully vested and
which have an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes (not to exceed one hundred percent (100%)) designated by the
holder, but not in any event in excess of the amount determined by the
applicable minimum statutory withholding rates.

               Stock Delivery: The election to deliver to the Corporation, at
the time shares of Common Stock previously issued vest, one or more such shares
of Common Stock with an aggregate Fair Market Value equal to the percentage of
the Withholding Taxes (not to exceed one hundred percent (100%)) designated by
the holder, but not in any event in excess of the amount determined by the
applicable minimum statutory withholding rates.

     III. EFFECTIVE DATE AND TERM OF THE PLAN

          A. The Plan shall become effective immediately on the Plan Effective
Date.

          B. The Plan shall serve as the successor to the Predecessor Plan, and
no further Option grants or direct stock issuances shall be made under the
Predecessor Plan after the Plan Effective Date. All Options outstanding under
the Predecessor Plan on the Plan Effective Date shall be incorporated into the
Plan at that time and shall be treated as outstanding Options under the Plan.
However, each outstanding Option so incorporated shall continue to be governed
solely by the terms of the Award Agreement evidencing such Option, and no
provision of the Plan shall be deemed to affect or otherwise modify the rights
or obligations of the holders of such incorporated Options with respect to their
acquisition of shares of Common Stock.

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          C. One or more provisions of the Plan, including (without limitation)
the Option/vesting acceleration provisions of Article Two relating to Corporate
Transactions and Changes in Control, may, in the Plan Administrator’s
discretion, be extended to one or more Options incorporated from the Predecessor
Plan which do not otherwise contain such provisions.

          D. The Plan shall terminate upon the earliest to occur of (i) May 18,
2009, (ii) the date on which all shares available for issuance under the Plan
shall have been issued as fully-vested shares or (iii) the termination of all
outstanding Options in connection with a Corporate Transaction. Should the Plan
terminate on May 18, 2009, then all Option grants and unvested stock issuances
outstanding at that time shall continue to have force and effect in accordance
with the provisions of the Award Agreements evidencing such grants or issuances.

     IV. AMENDMENT OF THE PLAN

          A. The Board shall have complete and exclusive power and authority to
amend or modify the Plan or any Award Agreement in any or all respects. However,
except as provided in Section V.B below, no such amendment or modification shall
adversely affect the rights and obligations with respect to Awards at the time
outstanding under the Plan unless the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval
pursuant to applicable laws or regulations.

          B. Notwithstanding any other provision of this Plan to the contrary,
the Board may, in its sole and absolute discretion and without the consent of
any Participant, amend the Plan or any Award Agreement, to take effect
retroactively or otherwise, as it deems necessary or advisable for the purpose
of conforming the Plan or such Award Agreement to any present or future law
relating to plans of this or similar nature (including, but not limited to, Code
Section 409A), and to the administrative regulations and rulings promulgated
thereunder.

          C. Options to purchase shares of Common Stock may be granted under the
Discretionary Option/SAR Grant and shares of Common Stock may be issued under
the Restricted Stock Awards that are in each instance in excess of the number of
shares then available for issuance under the Plan, provided any excess shares
actually issued under those programs shall be held in escrow until there is
obtained stockholder approval of an amendment sufficiently increasing the number
of shares of Common Stock available for issuance under the Plan. If such
stockholder approval is not obtained within twelve (12) months after the date
the first such excess issuances are made, then (i) any unexercised Options
granted on the basis of such excess shares shall terminate and cease to be
outstanding and (ii) the Corporation shall promptly refund to the 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.

     V. USE OF PROCEEDS

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

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     VI. REGULATORY APPROVALS

          A. The implementation of the Plan, the granting of any stock Option
under the Plan and the issuance of any shares of Common Stock pursuant to any
Award shall be subject to the Corporation’s procurement of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan.

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

     VII. NO EMPLOYMENT/SERVICE RIGHTS

          Nothing in the Plan shall confer upon the 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 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.

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APPENDIX

          The following definitions shall be in effect under the Plan:

          A. Automatic Option Grant Program shall mean the automatic Option
grant program in effect under Article Five of the Plan.

          B. Award shall mean an Option, Stock Appreciation Right, Restricted
Stock Purchase Right, Restricted Stock Bonus, Restricted Stock Unit, Performance
Share or Performance Unit granted under the Plan.

          C. Award Agreement shall mean one or more written or electronic
documents constituting an agreement between the Corporation and a Participant
and setting forth the terms, conditions and restrictions of an Award granted to
the Participant.

          D. Board shall mean the Corporation’s Board of Directors.

          E. Change in Control shall mean a change in ownership or control of
the Corporation effected through either of the following transactions:

          (i) the acquisition, directly or indirectly by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation’s outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation’s stockholders, or

          (ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months (twelve (12) months in the case of any Award
subject to Code Section 409A) or less such that a majority of the Board members
ceases, by reason of one or more contested elections for Board membership, to be
comprised of individuals who either (A) have been Board members continuously
since the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of the Board
members described in clause (A) who were still in office at the time the Board
approved such election or nomination.

          F. Code shall mean the Internal Revenue Code of 1986, as amended, and
any applicable regulations promulgated thereunder.

          G. Common Stock shall mean the Corporation’s common stock.

          H. Corporate Transaction shall mean any of the following transactions
to which the Corporation is a party:

 

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          (i) a stockholder-approved 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) a merger or consolidation (whether or not stockholder-approved)
following a Change in Control in which voting securities of the Corporation are
transferred to the person or persons (or affiliates of such persons) who
acquired ownership or control of the Corporation pursuant to the Change in
Control; or

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

          I. Corporation shall mean Packeteer, Inc., a Delaware corporation, and
any corporate successor to all or substantially all of the assets or voting
stock of Packeteer, Inc. which shall by appropriate action adopt the Plan.

          J. Covered Employee shall mean any Employee who is or may become a
“covered employee,” as defined in Code Section 162(m), or any successor statute,
and who is designated, either as an individual Employee or member of a class of
Employees, by the Primary Committee no later than the earlier of (i) the date
ninety (90) days after the beginning of the Performance Period, or (ii) the date
on which twenty-five percent (25%) of the Performance Period has elapsed, as a
“Covered Employee” under the Plan for such applicable Performance Period.

          K. Discretionary Option/SAR Grant Program shall mean the discretionary
Option and Stock Appreciation Right grant program in effect under Article Two of
the Plan.

          L. Dividend Equivalent Right shall mean the right of a Participant,
granted at the discretion of the Plan Administrator or as otherwise provided by
the Plan, to receive a credit for the account of such Participant in an amount
equal to the cash dividends paid on one share of Common Stock represented by an
Award held by such Participant.

          M. 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.

          N. Exercise Date shall mean the date on which the Corporation shall
have received written notice of the Option or SAR exercise.

          O. 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

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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 and published in The Wall Street Journal. If there is no closing
selling price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for which
such quotation exists.

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

          (iii) For purposes of any Option grants made on the Underwriting Date,
the Fair Market Value shall be deemed to be equal to the price per share at
which the Common Stock is to be sold in the initial public offering pursuant to
the Underwriting Agreement.

          P. Freestanding SAR shall mean an SAR that is granted independently of
any Options, as described in Article Two.

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

          R. Incentive Option shall mean an Option which satisfies the
requirements of Code Section 422.

          S. 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 bonus under any corporate-performance based
bonus or incentive programs) by more than fifteen percent (15%) or (C) a
relocation of such individual’s place of employment by more than fifty
(50) miles,

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provided and only if such change, reduction or relocation is effected by the
Corporation without the individual’s consent.

          T. Misconduct shall mean the commission of any act of fraud,
embezzlement or dishonesty by the 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 Participant or other person in the Service of the
Corporation (or any Parent or Subsidiary).

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

          V. Non-Statutory Option shall mean an Option not intended to satisfy
the requirements of Code Section 422.

          W. Option shall mean an Option to purchase Common Stock granted under
the Plan. An Option may be either an Incentive Option or a Non-Statutory Option.

          X. 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.

          Y. Participant shall mean any person who has been granted an Award.

          Z. Performance Award shall mean and Award of Performance Shares or
Performance Units.

          AA. Performance Award Formula shall mean, for any Performance Award, a
formula or table established by the Plan Administrator which provides the basis
for computing the value of a Performance Award at one or more threshold levels
of attainment of the applicable Performance Goal(s) measured as of the end of
the applicable Performance Period.

          BB. Performance-Based Compensation shall mean compensation realized by
a Participant under an Award that constitutes performance-based compensation
within the meaning of Code Section 162(m) and the applicable treasury
regulations thereunder.

          CC. Performance Measures shall mean one or more measures of business
or financial performance described in Article Four which are approved by the
Corporation’s stockholders pursuant to this Plan in order to qualify
compensation payable under Awards based upon the attainment of Performance Goals
established with respect to such Performance Measures as Performance-Based
Compensation.

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          DD. Performance Period shall mean the period of time at the end of
which the attainment of one or more Performance Goals is measured in order to
determine the extent of the vesting of an Award or the amount of the payment to
be made upon the settlement of an Award.

          EE. Performance Share shall mean a bookkeeping unit granted to a
Participant pursuant to an Award described in Article Four, representing the
right to receive a value denominated in shares and in an amount, determined at
the time such unit becomes payable, which is a function of the extent to which
one or more Performance Goals established with respect to the Award have been
achieved.

          FF. Performance Unit shall mean a bookkeeping unit granted to a
Participant pursuant to an Award described in Article Four, representing the
right to receive a value denominated in money and in an amount, determined at
the time such unit becomes payable, which is a function of the extent to which
one or more Performance Goals established with respect to the Award have been
achieved.

          GG. Permanent Disability or Permanently Disabled shall mean the
inability of the Participant to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.
However, solely for purposes of the Automatic Option Grant Program, Permanent
Disability or Permanently Disabled shall mean the inability of the non-employee
Board member to perform his or her usual duties as a Board member by reason of
any medically determinable physical or mental impairment expected to result in
death or to be of continuous duration of twelve (12) months or more.

          HH. Plan shall mean the Corporation’s 1999 Stock Incentive Plan, as
set forth in this document.

          II. Plan Administrator shall mean the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Plan with respect to one or more classes of eligible persons, to
the extent such entity is carrying out its administrative functions with respect
to the persons under its jurisdiction. Plan Administrator shall also mean any
officer or officers to the extent authorized by the Board pursuant to Section
III.A of Article One to grant Options and SARs under the Discretionary
Option/SAR Grant Program.

          JJ. Plan Effective Date shall mean the date the Plan shall become
effective and shall be coincident with the Underwriting Date.

          KK. Predecessor Plan shall mean the Corporation’s 1996 Equity
Incentive Plan in effect immediately prior to the Plan Effective Date hereunder.

          LL. Primary Committee shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Discretionary Option/SAR Grant Program, Restricted Stock/Restricted Stock Unit
Program and Performance Award Program with respect to Section 16 Insiders and
Covered Employees.

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          MM. Restricted Stock Award shall mean an Award of a Restricted Stock
Bonus or a Restricted Stock Purchase Right.

          NN. Restricted Stock Bonus shall mean shares of Common Stock granted
to a Participant pursuant to Article Three of the Plan.

          OO. Restricted Stock Purchase Right shall mean a right to purchase
shares of Common Stock granted to a Participant to Article Three of the Plan.

          PP. Restricted Stock/Restricted Stock Unit Program shall mean the
Restricted Stock Purchase Right, Restricted Stock Bonus and Restricted Stock
Unit program in effect under Article Four of the Plan.

          QQ. Restricted Stock Unit shall mean a bookkeeping unit granted to a
Participant pursuant to an Award described in Article Three, representing the
right to receive one share of Common Stock or its equivalent in cash at a date
following the date of grant.

          RR. Secondary Committee shall mean a committee of one or more Board
members appointed by the Board to administer the Discretionary Option/SAR Grant
Program, Restricted Stock/Restricted Stock Unit Program and Performance Award
Program with respect to eligible persons other than Section 16 Insiders and
Covered Employees.

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

          TT. Service shall mean the performance of services for the Corporation
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the Award
Agreement evidencing an Award. A Participant’s Service shall not be deemed to
have terminated merely because of a change in the capacity in which the
Participant renders such Service, provided that such change is from Employee to
non-employee member of the Board, from non-employee member of the Board to
Employee or from consultant or other independent advisor to Employee or
non-employee member of the Board, provided that there is no interruption or
termination of the Participant’s Service. However, a Participant’s Service shall
be deemed terminated upon a change from Employee to consultant or other
independent advisor. A Participant’s Service shall not be deemed to have
terminated merely because of a change in the entity within the group consisting
of the Corporation, any Parent and all Subsidiaries for which the Participant
renders Service, provided that there is no interruption or termination of the
Participant’s Service. Furthermore, a Participant’s Service shall not be deemed
to have terminated if the Participant takes any military leave, sick leave, or
other bona fide leave of absence approved by the Corporation. However, if any
such leave taken by a Participant exceeds ninety (90) days, then on the
ninety-first (91st) day following the commencement of such leave the
Participant’s Service shall be deemed to have terminated unless the
Participant’s right to return to Service is guaranteed by statute or contract.
Notwithstanding the foregoing, unless otherwise designated by the Corporation or
required by law, a leave of absence shall not be treated as Service for purposes
of determining vesting under the Participant’s Award Agreement. A Participant’s
Service shall be deemed to have terminated

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either upon an actual termination of Service or upon the entity for which the
Participant performs Service ceasing to be the group consisting of the
Corporation, any Parent and all Subsidiaries. Subject to the foregoing, the
Corporation, in its discretion, shall determine whether the Participant’s
Service has terminated and the effective date of such termination.

          UU. Stock Appreciation Right or SAR shall mean a bookkeeping entry
representing, for each share of Common Stock subject to such Award, a right to
receive payment of an amount equal to the excess, if any, of the Fair Market
Value of such share on the date of exercise of the Award over the exercise price
for such share. A Stock Appreciation Rights may be a Freestanding SAR, a Tandem
SAR or a Limited SAR.

          VV. Stock Exchange shall mean either the American Stock Exchange or
the New York Stock Exchange.

          WW. 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.

          XX. Take-Over Price shall mean the greater of (i) the Fair Market
Value per share of Common Stock on the date the Option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over. However, if the surrendered Option is an Incentive Option,
the Take-Over Price shall not exceed the clause (i) price per share.

          YY. Tandem SAR shall mean an SAR that is granted in connection with a
related Option pursuant to Article Two, the exercise of which shall require
forfeiture of the right to purchase a share under the related Option (and when a
share is purchased under the Option, the Tandem SAR shall similarly be
canceled).

          ZZ. 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).

          AAA. Underwriting Agreement shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.

          BBB. Underwriting Date shall mean the date on which the Underwriting
Agreement is executed and priced in connection with an initial public offering
of the Common Stock.

          CCC. Withholding Taxes shall mean the Federal, state and local income
and employment withholding taxes to which a Participant may become subject in
connection with an Award.

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PLAN HISTORY

     
May 19, 1999
  Board adopts Plan, with an initial reserve of 3,845,917 shares.
 
   
May 19, 1999
  Stockholders approve Plan, with an initial reserve of 3,845,917 shares.
 
   
July 27, 1999
  Plan Effective Date.
 
   
January 3, 2000
  Automatic increase in share reserve by 1,340,000 shares, bringing the total
cumulative reserve to 5,185,917 shares.
 
   
January 2, 2001
  Automatic increase in share reserve by 1,473,311 shares, bringing the total
cumulative reserve to 6,659,228 shares.
 
   
March 16, 2001
  Board adopts restatement of Plan (the “2001 Restatement”) to (a) effect
certain changes to the provisions of the plan document in order to facilitate
the administration of the Plan and (b) make the following changes to the
Automatic Option Grant Program: (i) increase the number of shares of Common
Stock for which each new non-employee Board member is to be granted a stock
Option at the time of his or her initial election or appointment to the Board
from 12,000 shares to 20,000 shares, (ii) increase the number of shares of
Common Stock for which each continuing non-employee Board member is to be
granted stock Options at each Annual Stockholders Meeting from 3,000 shares to
5,000 shares, beginning with the 2001 Annual Stockholders Meeting, and
(iii) eliminate, effective with the annual automatic Option grants to be made to
the continuing non-employee Board members at the 2001 Annual Stockholders
Meeting, the requirement that a non-employee Board member serve in that capacity
for at least six (6) months before that individual first becomes eligible to
receive his or her first annual automatic Option grant.
 
   
May 23, 2001
  Stockholders approve the 2001 Restatement.
 
   
January 2, 2002
  Automatic increase in share reserve by 1,497,551 shares, bringing the total
cumulative reserve to 8,156,779 shares.
 
   
February 8, 2002
  Board adopts restatement of Plan (the “2002 Restatement”) to make the
following changes to the Automatic Option Grant Program: (i) increase the number
of shares of Common Stock for which each new non-employee Board member is to be
granted a stock Option at the time of his or her initial election or appointment
to the Board from 20,000 shares to 30,000 shares, (ii) increase the number of
shares of Common Stock for which each continuing non-employee Board member is to
be granted stock Options at each Annual Stockholders

 

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  Meeting from 5,000 shares to 15,000 shares, beginning with the 2002 Annual
Stockholders Meeting, and (iii) add, effective with the annual automatic Option
grants to be made to the continuing non-employee Board members at the 2002
Annual Stockholders Meeting, a twenty-four (24) month vesting period to such
annual Option grants whereby such Option would vest in a series of two
(2) successive equal annual installments upon the Participant’s completion of
each twelve (12)-month period of service as a Board member over the twenty-four
(24)-month period measured from the Option grant date. All Option grants made
prior to the 2002 Restatement shall remain outstanding in accordance with the
terms and conditions of the respective instruments evidencing those Options, and
nothing in the 2002 Restatement shall be deemed to modify or in any way affect
those outstanding Options.
 
   
May 22, 2002
  Stockholders approve the 2002 Restatement.
 
   
January 2, 2003
  Automatic increase in share reserve by 1,529,941 shares, bringing the total
cumulative reserve to 9,686,720 shares.
 
   
January 2, 2004
  Automatic increase in share reserve by 1,625,059 shares, bringing the total
cumulative reserve to 11,311,779 shares.
 
   
January 3, 2005
  Automatic increase in share reserve by 1,670,918 shares, bringing the total
cumulative reserve to 12,982,697 shares.

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