Exhibit 10.2

DATA DOMAIN, INC.

2007 EQUITY INCENTIVE PLAN

(AS ADOPTED EFFECTIVE UPON THE IPO)

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TABLE OF CONTENTS

 

          Page ARTICLE 1.   

INTRODUCTION

   1 ARTICLE 2.   

ADMINISTRATION

   1 2.1   

Committee Composition

   1 2.2   

Committee Responsibilities

   1 2.3   

Committee for Non-Officer Grants

   2 ARTICLE 3.   

SHARES AVAILABLE FOR GRANTS

   2 3.1   

Basic Limitation

   2 3.2   

Annual Increase in Shares

   2 3.3   

Shares Returned to Reserve

   2 3.4   

Dividend Equivalents

   3 ARTICLE 4.   

ELIGIBILITY

   3 4.1   

Incentive Stock Options

   3 4.2   

Other Grants

   3 ARTICLE 5.   

OPTIONS

   3 5.1   

Stock Option Agreement

   3 5.2   

Number of Shares

   3 5.3   

Exercise Price

   3 5.4   

Exercisability and Term

   3 5.5   

Modification or Assumption of Options

   4 5.6   

Buyout Provisions

   4 ARTICLE 6.   

PAYMENT FOR OPTION SHARES

   4 6.1   

General Rule

   4 6.2   

Surrender of Stock

   4 6.3   

Exercise/Sale

   4 6.4   

Promissory Note

   4 6.5   

Other Forms of Payment

   4 ARTICLE 7.   

STOCK APPRECIATION RIGHTS

   5 7.1   

SAR Agreement

   5 7.2   

Number of Shares

   5 7.3   

Exercise Price

   5 7.4   

Exercisability and Term

   5 7.5   

Exercise of SARs

   5 7.6   

Modification or Assumption of SARs

   5 ARTICLE 8.   

RESTRICTED SHARES

   6 8.1   

Restricted Stock Agreement

   6 8.2   

Payment for Awards

   6 8.3   

Vesting Conditions

   6

 

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8.4   

Voting and Dividend Rights

   6 ARTICLE 9.   

STOCK UNITS

   6 9.1   

Stock Unit Agreement

   6 9.2   

Payment for Awards

   7 9.3   

Vesting Conditions

   7 9.4   

Voting and Dividend Rights

   7 9.5   

Form and Time of Settlement of Stock Units

   7 9.6   

Death of Recipient

   7 9.7   

Creditors’ Rights

   8 ARTICLE 10.   

PROTECTION AGAINST DILUTION

   8 10.1   

Adjustments

   8 10.2   

Dissolution or Liquidation

   8 10.3   

Reorganizations

   9 10.4   

Acceleration

   10 ARTICLE 11.   

AWARDS UNDER OTHER PLANS

   10 ARTICLE 12.   

PAYMENT OF DIRECTOR’S FEES IN SECURITIES

   10 12.1   

Effective Date

   10 12.2   

Elections to Receive NSOs, Restricted Shares or Stock Units

   10 12.3   

Number and Terms of NSOs, Restricted Shares or Stock Units

   10 ARTICLE 13.   

LIMITATION ON RIGHTS

   11 13.1   

Retention Rights

   11 13.2   

Stockholders’ Rights

   11 13.3   

Regulatory Requirements

   11 ARTICLE 14.   

WITHHOLDING TAXES

   11 14.1   

General

   11 14.2   

Share Withholding

   11 ARTICLE 15.   

FUTURE OF THE PLAN

   11 15.1   

Term of the Plan

   11 15.2   

Amendment or Termination

   12 15.3   

Stockholder Approval

   12 ARTICLE 16.   

DEFINITIONS

   12

 

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DATA DOMAIN, INC.

2007 EQUITY INCENTIVE PLAN

ARTICLE 1. INTRODUCTION.

The Plan was adopted by the Board to be effective at the IPO. The purpose of the
Plan is to promote the long-term success of the Company and the creation of
stockholder value by (a) encouraging Employees, Outside Directors and
Consultants to focus on critical long-range objectives, (b) encouraging the
attraction and retention of Employees, Outside Directors and Consultants with
exceptional qualifications and (c) linking Employees, Outside Directors and
Consultants directly to stockholder interests through increased stock ownership.
The Plan seeks to achieve this purpose by providing for Awards in the form of
Restricted Shares, Stock Units, Options (which may constitute ISOs or NSOs) or
stock appreciation rights.

The Plan shall be governed by, and construed in accordance with, the laws of the
State of Delaware (except their choice-of-law provisions).

ARTICLE 2. ADMINISTRATION.

2.1 Committee Composition. The Committee shall administer the Plan. The
Committee shall consist exclusively of two or more directors of the Company, who
shall be appointed by the Board. In addition, each member of the Committee shall
meet the following requirements:

(a) Any listing standards prescribed by the principal securities market on which
the Company’s equity securities are traded;

(b) Such requirements as the Internal Revenue Service may establish for outside
directors acting under plans intended to qualify for exemption under section
162(m)(4)(C) of the Code;

(c) Such requirements as the Securities and Exchange Commission may establish
for administrators acting under plans intended to qualify for exemption under
Rule 16b-3 (or its successor) under the Exchange Act; and

(d) Any other requirements imposed by applicable law, regulations or rules.

2.2 Committee Responsibilities. The Committee shall (a) select the Employees,
Outside Directors and Consultants who are to receive Awards under the Plan,
(b) determine the type, number, vesting requirements and other features and
conditions of such Awards, (c) interpret the Plan, (d) make all other decisions
relating to the operation of the Plan and (e) carry out any other duties
delegated to it by the Board. The Committee may adopt such

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rules or guidelines as it deems appropriate to implement the Plan. The
Committee’s determinations under the Plan shall be final and binding on all
persons.

2.3 Committee for Non-Officer Grants. The Board may also appoint a secondary
committee of the Board, which shall be composed of the entire Board or of one or
more directors of the Company who need not satisfy the requirements of
Section 2.1. Such secondary committee may administer the Plan with respect to
Employees and Consultants who are not Outside Directors and are not considered
executive officers of the Company under section 16 of the Exchange Act, may
grant Awards under the Plan to such Employees and Consultants and may determine
all features and conditions of such Awards. Within the limitations of this
Section 2.3, any reference in the Plan to the Committee shall include such
secondary committee.

ARTICLE 3. SHARES AVAILABLE FOR GRANTS.

3.1 Basic Limitation. Common Shares issued pursuant to the Plan may be
authorized but unissued shares or treasury shares. The aggregate number of
Common Shares issued under the Plan shall not exceed (a) 6,000,000 plus the
number of Common Shares remaining available for issuance under the 2002 Stock
Plan on the date of the IPO plus (b) the additional Common Shares described in
Sections 3.2 and 3.3. The number of Common Shares that are subject to Awards
outstanding at any time under the Plan shall not exceed the number of Common
Shares that then remain available for issuance under the Plan. All Common Shares
available under the Plan may be issued upon the exercise of ISOs. No more than
5,000,000 Common Shares may be issued under the Plan as Restricted Shares. The
limitations of this Section 3.1 and Section 3.2 shall be subject to adjustment
pursuant to Article 10.

3.2 Annual Increase in Shares. As of the first day of each fiscal year of the
Company, commencing on January 1, 2008 and ending on January 1, 2012, the
aggregate number of Common Shares that may be issued under the Plan shall
automatically increase by a number equal to the lowest of (a) 5% of the total
number of Common Shares then outstanding, (b) 5,000,000 Common Shares or (c) the
number determined by the Board.

3.3 Shares Returned to Reserve. If Options, SARs or Stock Units under this Plan
or the 2002 Stock Plan are forfeited or terminate for any other reason before
being exercised or settled, then the Common Shares subject to such Options, SARs
or Stock Units shall again become available for issuance under this Plan. If
Restricted Shares or Common Shares issued upon the exercise of Options under
this Plan or the 2002 Stock Plan are reacquired by the Company pursuant to a
forfeiture provision or for any other reason, then such Common Shares shall
again become available for issuance under this Plan. If SARs are exercised, then
only the number of Common Shares (if any) actually issued in settlement of such
SARs shall reduce the number available under Section 3.1 and the balance shall
again become available for issuance under the Plan. If Stock Units are settled,
then only the number of Common Shares (if any) actually issued in settlement of
such Stock Units shall reduce the number available under Section 3.1 and the
balance shall again become available for issuance under the Plan.

 

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3.4 Dividend Equivalents. Any dividend equivalents paid or credited under the
Plan shall not be applied against the number of Common Shares that may be issued
under the Plan, whether or not such dividend equivalents are converted into
Stock Units.

ARTICLE 4. ELIGIBILITY.

4.1 Incentive Stock Options. Only Employees who are common-law employees of the
Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs. In
addition, an Employee who owns more than 10% of the total combined voting power
of all classes of outstanding stock of the Company or any of its Parents or
Subsidiaries shall not be eligible for the grant of an ISO unless the
requirements set forth in section 422(c)(5) of the Code are satisfied.

4.2 Other Grants. Only Employees, Outside Directors and Consultants shall be
eligible for the grant of Restricted Shares, Stock Units, NSOs or SARs. The
Committee may provide that instead of granting an Award to an Outside Director,
such Award may instead be granted to an affiliate of such Outside Director. Such
affiliate shall then be deemed to be an Outside Director for purposes of the
Plan, provided that any Service-related vesting and termination provisions
pertaining to an Award shall be applied with regard to the Service of the
Outside Director.

ARTICLE 5. OPTIONS.

5.1 Stock Option Agreement. Each grant of an Option under the Plan shall be
evidenced by a Stock Option Agreement between the Optionee and the Company. Such
Option shall be subject to all applicable terms of the Plan and may be subject
to any other terms that are not inconsistent with the Plan. The Stock Option
Agreement shall specify whether the Option is an ISO or an NSO. The provisions
of the various Stock Option Agreements entered into under the Plan need not be
identical. Options may be granted in consideration of a reduction in the
Optionee’s other compensation. A Stock Option Agreement may provide that a new
Option will be granted automatically to the Optionee when he or she exercises a
prior Option and pays the Exercise Price in the form described in Section 6.2.

5.2 Number of Shares. Each Stock Option Agreement shall specify the number of
Common Shares subject to the Option and shall provide for the adjustment of such
number in accordance with Article 10. Options granted to any Optionee in a
single calendar year shall not cover more than 1,000,000 Common Shares, except
that Options granted to a new Employee in the calendar year in which his or her
Service as an Employee first commences shall not cover more than 2,500,000
Common Shares. The limitation set forth in the preceding sentence shall be
subject to adjustment in accordance with Article 10.

5.3 Exercise Price. Each Stock Option Agreement shall specify the Exercise
Price; provided that the Exercise Price shall in no event be less than 100% of
the Fair Market Value of a Common Share on the date of grant.

5.4 Exercisability and Term. Each Stock Option Agreement shall specify the date
or event when all or any installment of the Option is to become exercisable. The
Stock Option Agreement shall also specify the term of the Option; provided that
the term of an ISO

 

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shall in no event exceed 10 years from the date of grant. A Stock Option
Agreement may provide for accelerated exercisability in the event of the
Optionee’s death, disability or retirement or other events and may provide for
expiration prior to the end of its term in the event of the termination of the
Optionee’s Service. Options may be awarded in combination with SARs, and such an
Award may provide that the Options will not be exercisable unless the related
SARs are forfeited.

5.5 Modification or Assumption of Options. Within the limitations of the Plan,
the Committee may modify, reprice, extend or assume outstanding options or may
accept the cancellation of outstanding options (whether granted by the Company
or by another issuer) in return for the grant of new options for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of an Option shall, without the
consent of the Optionee, alter or impair his or her rights or obligations under
such Option.

5.6 Buyout Provisions. The Committee may at any time (a) offer to buy out for a
payment in cash or cash equivalents an Option previously granted or
(b) authorize an Optionee to elect to cash out an Option previously granted, in
either case at such time and based upon such terms and conditions as the
Committee shall establish.

ARTICLE 6. PAYMENT FOR OPTION SHARES.

6.1 General Rule. The entire Exercise Price of Common Shares issued upon
exercise of Options shall be payable in cash or cash equivalents at the time
when such Common Shares are purchased, except that the Committee at its sole
discretion may accept payment of the Exercise Price in any other form(s)
described in this Article 6. However, if the Optionee is an Outside Director or
executive officer of the Company, he or she may pay the Exercise Price in a form
other than cash or cash equivalents only to the extent permitted by section
13(k) of the Exchange Act.

6.2 Surrender of Stock. With the Committee’s consent, all or any part of the
Exercise Price may be paid by surrendering, or attesting to the ownership of,
Common Shares that are already owned by the Optionee. Such Common Shares shall
be valued at their Fair Market Value on the date when the new Common Shares are
purchased under the Plan.

6.3 Exercise/Sale. With the Committee’s consent, all or any part of the Exercise
Price and any withholding taxes may be paid by delivering (on a form prescribed
by the Company) an irrevocable direction to a securities broker approved by the
Company to sell all or part of the Common Shares being purchased under the Plan
and to deliver all or part of the sales proceeds to the Company.

6.4 Promissory Note. With the Committee’s consent, all or any part of the
Exercise Price and any withholding taxes may be paid by delivering (on a form
prescribed by the Company) a full-recourse promissory note.

6.5 Other Forms of Payment. With the Committee’s consent, all or any part of the
Exercise Price and any withholding taxes may be paid in any other form that is
consistent with applicable laws, regulations and rules.

 

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ARTICLE 7. STOCK APPRECIATION RIGHTS.

7.1 SAR Agreement. Each grant of an SAR under the Plan shall be evidenced by an
SAR Agreement between the Optionee and the Company. Such SAR shall be subject to
all applicable terms of the Plan and may be subject to any other terms that are
not inconsistent with the Plan. The provisions of the various SAR Agreements
entered into under the Plan need not be identical. SARs may be granted in
consideration of a reduction in the Optionee’s other compensation.

7.2 Number of Shares. Each SAR Agreement shall specify the number of Common
Shares to which the SAR pertains and shall provide for the adjustment of such
number in accordance with Article 10. SARs granted to any Optionee in a single
calendar year shall in no event pertain to more than 1,000,000 Common Shares,
except that SARs granted to a new Employee in the calendar year in which his or
her Service as an Employee first commences shall not pertain to more than
2,500,000 Common Shares. The limitation set forth in the preceding sentence
shall be subject to adjustment in accordance with Article 10.

7.3 Exercise Price. Each SAR Agreement shall specify the Exercise Price;
provided that the Exercise Price shall in no event be less than 100% of the Fair
Market Value of a Common Share on the date of grant.

7.4 Exercisability and Term. Each SAR Agreement shall specify the date when all
or any installment of the SAR is to become exercisable. The SAR Agreement shall
also specify the term of the SAR. An SAR Agreement may provide for accelerated
exercisability in the event of the Optionee’s death, disability or retirement or
other events and may provide for expiration prior to the end of its term in the
event of the termination of the Optionee’s Service. SARs may be awarded in
combination with Options, and such an Award may provide that the SARs will not
be exercisable unless the related Options are forfeited. An SAR may be included
in an ISO only at the time of grant but may be included in an NSO at the time of
grant or thereafter. An SAR granted under the Plan may provide that it will be
exercisable only in the event of a Change in Control.

7.5 Exercise of SARs. Upon exercise of an SAR, the Optionee (or any person
having the right to exercise the SAR after his or her death) shall receive from
the Company consideration in the form of (a) Common Shares, (b) cash or (c) a
combination of Common Shares and cash, as the Committee shall determine. Each
SAR Agreement shall specify the amount and/or Fair Market Value of the
consideration that the Optionee will receive upon exercising the SAR; provided
that the aggregate consideration shall not exceed the amount by which the Fair
Market Value (on the date of exercise) of the Common Shares subject to the SAR
exceeds the Exercise Price of the SAR. If, on the date when an SAR expires, the
Exercise Price of the SAR is less than the Fair Market Value of the Common
Shares subject to the SAR on such date but any portion of the SAR has not been
exercised, then the SAR shall automatically be deemed to be exercised as of such
date with respect to such portion. An SAR Agreement may also provide for an
automatic exercise of the SAR on an earlier date.

7.6 Modification or Assumption of SARs. Within the limitations of the Plan, the
Committee may modify, reprice, extend or assume outstanding SARs or may accept
the cancellation of outstanding SARs (whether granted by the Company or by
another issuer) in

 

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return for the grant of new SARs for the same or a different number of shares
and at the same or a different exercise price. The foregoing notwithstanding, no
modification of an SAR shall, without the consent of the Optionee, alter or
impair his or her rights or obligations under such SAR.

ARTICLE 8. RESTRICTED SHARES.

8.1 Restricted Stock Agreement. Each grant of Restricted Shares under the Plan
shall be evidenced by a Restricted Stock Agreement between the recipient and the
Company. Such Restricted Shares shall be subject to all applicable terms of the
Plan and may be subject to any other terms that are not inconsistent with the
Plan. The provisions of the various Restricted Stock Agreements entered into
under the Plan need not be identical.

8.2 Payment for Awards. Restricted Shares may be sold or awarded under the Plan
for such consideration as the Committee may determine, including (without
limitation) cash, cash equivalents, property, full-recourse promissory notes,
past services and future services. If the Participant is an Outside Director or
executive officer of the Company, he or she may pay for Restricted Shares with a
promissory note only to the extent permitted by section 13(k) of the Exchange
Act. Within the limitations of the Plan, the Committee may accept the
cancellation of outstanding options in return for the grant of Restricted
Shares.

8.3 Vesting Conditions. Each Award of Restricted Shares may or may not be
subject to vesting. Vesting shall occur, in full or in installments, upon
satisfaction of the conditions specified in the Restricted Stock Agreement. The
Committee may include among such conditions the requirement that the performance
of the Company or a business unit of the Company for a specified period of one
or more fiscal years equal or exceed a target determined in advance by the
Committee. The Committee shall determine such performance. Such target shall be
based on one or more of the criteria set forth in Appendix A. The Committee
shall identify such target not later than the 90th day of such period. In no
event shall more than 500,000 Restricted Shares that are subject to
performance-based vesting conditions be granted to any Participant in a single
fiscal year of the Company, subject to adjustment in accordance with Article 10.
A Restricted Stock Agreement may provide for accelerated vesting in the event of
the Participant’s death, disability or retirement or other events.

8.4 Voting and Dividend Rights. The holders of Restricted Shares awarded under
the Plan shall have the same voting, dividend and other rights as the Company’s
other stockholders. A Restricted Stock Agreement, however, may require that the
holders of Restricted Shares invest any cash dividends received in additional
Restricted Shares. Such additional Restricted Shares shall be subject to the
same conditions and restrictions as the Award with respect to which the
dividends were paid.

ARTICLE 9. STOCK UNITS.

9.1 Stock Unit Agreement. Each grant of Stock Units under the Plan shall be
evidenced by a Stock Unit Agreement between the recipient and the Company. Such
Stock Units shall be subject to all applicable terms of the Plan and may be
subject to any other terms that are not inconsistent with the Plan. The
provisions of the various Stock Unit Agreements

 

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entered into under the Plan need not be identical. Stock Units may be granted in
consideration of a reduction in the recipient’s other compensation.

9.2 Payment for Awards. To the extent that an Award is granted in the form of
Stock Units, no cash consideration shall be required of the Award recipients.

9.3 Vesting Conditions. Each Award of Stock Units may or may not be subject to
vesting. Vesting shall occur, in full or in installments, upon satisfaction of
the conditions specified in the Stock Unit Agreement. The Committee may include
among such conditions the requirement that the performance of the Company or a
business unit of the Company for a specified period of one or more fiscal years
equal or exceed a target determined in advance by the Committee. The Committee
shall determine such performance. Such target shall be based on one or more of
the criteria set forth in Appendix A. The Committee shall identify such target
not later than the 90th day of such period. In no event shall more than 250,000
Stock Units that are subject to performance-based vesting conditions be granted
to any Participant in a single fiscal year of the Company, subject to adjustment
in accordance with Article 10. A Stock Unit Agreement may provide for
accelerated vesting in the event of the Participant’s death, disability or
retirement or other events.

9.4 Voting and Dividend Rights. The holders of Stock Units shall have no voting
rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan
may, at the Committee’s discretion, carry with it a right to dividend
equivalents. Such right entitles the holder to be credited with an amount equal
to all cash dividends paid on one Common Share while the Stock Unit is
outstanding. Dividend equivalents may be converted into additional Stock Units.
Settlement of dividend equivalents may be made in the form of cash, in the form
of Common Shares, or in a combination of both. Prior to distribution, any
dividend equivalents that are not paid shall be subject to the same conditions
and restrictions as the Stock Units to which they attach.

9.5 Form and Time of Settlement of Stock Units. Settlement of vested Stock Units
may be made in the form of (a) cash, (b) Common Shares or (c) any combination of
both, as determined by the Committee. The actual number of Stock Units eligible
for settlement may be larger or smaller than the number included in the original
Award, based on predetermined performance factors. Methods of converting Stock
Units into cash may include (without limitation) a method based on the average
Fair Market Value of Common Shares over a series of trading days. Vested Stock
Units may be settled in a lump sum or in installments. The distribution may
occur or commence when all vesting conditions applicable to the Stock Units have
been satisfied or have lapsed, or it may be deferred to any later date. The
amount of a deferred distribution may be increased by an interest factor or by
dividend equivalents. Until an Award of Stock Units is settled, the number of
such Stock Units shall be subject to adjustment pursuant to Article 10.

9.6 Death of Recipient. Any Stock Units Award that becomes payable after the
recipient’s death shall be distributed to the recipient’s beneficiary or
beneficiaries. Each recipient of a Stock Units Award under the Plan shall
designate one or more beneficiaries for this purpose by filing the prescribed
form with the Company. A beneficiary designation may be changed by filing the
prescribed form with the Company at any time before the Award recipient’s death.
If no beneficiary was designated or if no designated beneficiary survives the

 

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Award recipient, then any Stock Units Award that becomes payable after the
recipient’s death shall be distributed to the recipient’s estate.

9.7 Creditors’ Rights. A holder of Stock Units shall have no rights other than
those of a general creditor of the Company. Stock Units represent an unfunded
and unsecured obligation of the Company, subject to the terms and conditions of
the applicable Stock Unit Agreement.

ARTICLE 10. PROTECTION AGAINST DILUTION.

10.1 Adjustments. In the event of a subdivision of the outstanding Common
Shares, a declaration of a dividend payable in Common Shares or a combination or
consolidation of the outstanding Common Shares (by reclassification or
otherwise) into a lesser number of Common Shares, corresponding adjustments
shall automatically be made in each of the following:

(a) The number of Options, SARs, Restricted Shares and Stock Units available for
future Awards under Article 3, including the 5,000,000-share limitation set
forth in Section 3.1 and the 5,000,000-share limitation set forth in
Section 3.2;

(b) The limitations set forth in Sections 5.2, 7.2, 8.3 and 9.3;

(c) The number of Common Shares covered by each outstanding Option and SAR;

(d) The Exercise Price under each outstanding Option and SAR; or

(e) The number of Stock Units included in any prior Award that has not yet been
settled.

In the event of a declaration of an extraordinary dividend payable in a form
other than Common Shares in an amount that has a material effect on the price of
Common Shares, a recapitalization, a spin-off or a similar occurrence, the
Committee shall make such adjustments as it, in its sole discretion, deems
appropriate in one or more of the foregoing. Except as provided in this Article
10, a Participant shall have no rights by reason of any issuance by the Company
of stock of any class or securities convertible into stock of any class, any
subdivision or consolidation of shares of stock of any class, the payment of any
stock dividend or any other increase or decrease in the number of shares of
stock of any class.

10.2 Dissolution or Liquidation. To the extent not previously exercised or
settled, Options, SARs and Stock Units shall terminate immediately prior to the
dissolution or liquidation of the Company.

 

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10.3 Reorganizations. In the event that the Company is a party to a merger or
consolidation, all outstanding Awards shall be subject to the agreement of
merger or consolidation approved by the Board of Directors, provided that such
agreement shall provide for one or more of the following:

(a) The continuation of such outstanding Awards by the Company (if the Company
is the surviving corporation).

(b) The assumption of such outstanding Awards by the surviving corporation or
its parent, provided that the assumption of Options or SARs shall comply with
section 424(a) of the Code (whether or not the Options are ISOs).

(c) The substitution by the surviving corporation or its parent of new awards
for such outstanding Awards, provided that the substitution of Options or SARs
shall comply with section 424(a) of the Code (whether or not the Options are
ISOs).

(d) The acceleration of the exercisability of 25% of the then unexercisable
portion of such Options and SARs and acceleration of vesting of 25% of the then
unvested portion of the Common Shares subject to such Options and SARs, followed
by the cancellation of all outstanding Options and SARs. The acceleration of
exercisability of such Options and SARs and vesting of such Common Shares may be
contingent on the closing of such merger or consolidation. The Optionees shall
be able to exercise such Options and SARs during a period of not less than five
full business days preceding the closing date of such merger or consolidation,
unless (i) a shorter period is required to permit a timely closing of such
merger or consolidation and (ii) such shorter period still offers the Optionees
a reasonable opportunity to exercise such Options and SARs. Any exercise of such
Options and SARs during such period may be contingent on the closing of such
merger or consolidation.

(e) The cancellation of outstanding Options and SARs and a payment to the
Optionees equal to the excess of (i) the Fair Market Value of the Common Shares
subject to such Options and SARs (whether or not such Options and SARs are then
exercisable or such Common Shares are then vested) as of the closing date of
such merger or consolidation over (ii) their Exercise Price. Such payment shall
be made in the form of cash, cash equivalents, or securities of the surviving
corporation or its parent with a Fair Market Value equal to the required amount.
Such payment may be made in installments and may be deferred until the date or
dates when such Options and SARs would have become exercisable or such Common
Shares would have vested. Such payment may be subject to vesting based on the
Optionee’s continuing Service, provided that the vesting schedule shall not be
less favorable to the Optionee than the schedule under which such Options and
SARs would have become exercisable or such Common Shares would have vested. If
the Exercise Price of the Common Shares subject to such Options and SARs exceeds
the Fair Market Value of such Common Shares, then such Options and SARs may be
cancelled without making a payment to the

 

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Optionees. For purposes of this Subsection (e), the Fair Market Value of any
security shall be determined without regard to any vesting conditions that may
apply to such security.

(f) The cancellation of outstanding Stock Units and a payment to the
Participants equal to the Fair Market Value of the Common Shares subject to such
Stock Units (whether or not such Stock Units are then vested) as of the closing
date of such merger or consolidation. Such payment shall be made in the form of
cash, cash equivalents, or securities of the surviving corporation or its parent
with a Fair Market Value equal to the required amount. Such payment may be made
in installments and may be deferred until the date or dates when such Stock
Units would have vested. Such payment may be subject to vesting based on the
Participant’s continuing Service, provided that the vesting schedule shall not
be less favorable to the Participant than the schedule under which such Stock
Units would have vested. For purposes of this Subsection (f), the Fair Market
Value of any security shall be determined without regard to any vesting
conditions that may apply to such security.

10.4 Acceleration. The Committee shall have the discretion, exercisable either
at the time the Award is granted or at any time while the Award remains
outstanding, to provide for the automatic acceleration of vesting upon the
occurrence of a Change in Control, whether or not the Award is to be assumed or
replaced in the Change in Control, or in connection with a termination of a
Participant’s Service following a Change in Control.

ARTICLE 11. AWARDS UNDER OTHER PLANS.

The Company may grant awards under other plans or programs. Such awards may be
settled in the form of Common Shares issued under this Plan. Such Common Shares
shall be treated for all purposes under the Plan like Common Shares issued in
settlement of Stock Units and shall, when issued, reduce the number of Common
Shares available under Article 3.

ARTICLE 12. PAYMENT OF DIRECTOR’S FEES IN SECURITIES.

12.1 Effective Date. No provision of this Article 12 shall be effective unless
and until the Board has determined to implement such provision.

12.2 Elections to Receive NSOs, Restricted Shares or Stock Units. An Outside
Director may elect to receive his or her annual retainer payments and/or meeting
fees from the Company in the form of cash, NSOs, Restricted Shares or Stock
Units, or a combination thereof, as determined by the Board. Such NSOs,
Restricted Shares and Stock Units shall be issued under the Plan. An election
under this Article 12 shall be filed with the Company on the prescribed form.

12.3 Number and Terms of NSOs, Restricted Shares or Stock Units. The number of
NSOs, Restricted Shares or Stock Units to be granted to Outside Directors in
lieu of annual retainers and meeting fees that would otherwise be paid in cash
shall be calculated in a manner determined by the Board. The Board shall also
determine the terms of such NSOs, Restricted Shares or Stock Units.

 

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ARTICLE 13. LIMITATION ON RIGHTS.

13.1 Retention Rights. Neither the Plan nor any Award granted under the Plan
shall be deemed to give any individual a right to remain an Employee, Outside
Director or Consultant. The Company and its Parents, Subsidiaries and Affiliates
reserve the right to terminate the Service of any Employee, Outside Director or
Consultant at any time, with or without cause, subject to applicable laws, the
Company’s certificate of incorporation and by-laws and a written employment
agreement (if any).

13.2 Stockholders’ Rights. A Participant shall have no dividend rights, voting
rights or other rights as a stockholder with respect to any Common Shares
covered by his or her Award prior to the time when a stock certificate for such
Common Shares is issued or, if applicable, the time when he or she becomes
entitled to receive such Common Shares by filing any required notice of exercise
and paying any required Exercise Price. No adjustment shall be made for cash
dividends or other rights for which the record date is prior to such time,
except as expressly provided in the Plan.

13.3 Regulatory Requirements. Any other provision of the Plan notwithstanding,
the obligation of the Company to issue Common Shares under the Plan shall be
subject to all applicable laws, rules and regulations and such approval by any
regulatory body as may be required. The Company reserves the right to restrict,
in whole or in part, the delivery of Common Shares pursuant to any Award prior
to the satisfaction of all legal requirements relating to the issuance of such
Common Shares, to their registration, qualification or listing or to an
exemption from registration, qualification or listing.

ARTICLE 14. WITHHOLDING TAXES.

14.1 General. To the extent required by applicable federal, state, local or
foreign law, a Participant or his or her successor shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. The Company shall not be
required to issue any Common Shares or make any cash payment under the Plan
until such obligations are satisfied.

14.2 Share Withholding. To the extent that applicable law subjects a Participant
to tax withholding obligations, the Committee may permit such Participant to
satisfy all or part of such obligations by having the Company withhold all or a
portion of any Common Shares that otherwise would be issued to him or her or by
surrendering all or a portion of any Common Shares that he or she previously
acquired. Such Common Shares shall be valued at their Fair Market Value on the
date when they are withheld or surrendered.

ARTICLE 15. FUTURE OF THE PLAN.

15.1 Term of the Plan. The Plan, as set forth herein, shall become effective on
the effective date of the IPO. The Plan shall remain in effect until the earlier
of (a) the date when the Plan is terminated under Section 15.2 or (b) the 10th
anniversary of the date when the Board adopted the Plan. The Plan shall serve as
the successor to the 2002 Stock Plan, and no further option grants shall be made
under the 2002 Stock Plan after the Plan effective date. All options outstanding
under the 2002 Stock Plan as of such date shall, immediately upon effectiveness
of

 

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the Plan, remain outstanding in accordance with their terms. Each outstanding
option under the 2002 Stock Plan shall continue to be governed solely by the
terms of the documents evidencing such option, and no provision of the Plan
shall be deemed to affect or otherwise modify the rights or obligations of the
holders of such options with respect to their acquisition of Common Shares.

15.2 Amendment or Termination. The Board may, at any time and for any reason,
amend or terminate the Plan. No Awards shall be granted under the Plan after the
termination thereof. The termination of the Plan, or any amendment thereof,
shall not affect any Award previously granted under the Plan.

15.3 Stockholder Approval. An amendment of the Plan shall be subject to the
approval of the Company’s stockholders only to the extent required by applicable
laws, regulations or rules. However, section 162(m) of the Code may require that
the Company’s stockholders approve:

(a) The Plan not later than the first regular meeting of stockholders that
occurs in the fourth calendar year following the calendar year in which the
Company’s initial public offering occurred; and

(b) The performance criteria set forth in Appendix A not later than the first
meeting of stockholders that occurs in the fifth year following the year in
which the Company’s stockholders previously approved such criteria.

ARTICLE 16. DEFINITIONS.

16.1 “2002 Stock Plan” means the Company’s existing 2002 Stock Plan.

16.2 “Affiliate” means any entity other than a Subsidiary, if the Company and/or
one or more Subsidiaries own not less than 50% of such entity.

16.3 “Award” means any award of an Option, an SAR, a Restricted Share or a Stock
Unit under the Plan.

16.4 “Board” means the Company’s Board of Directors, as constituted from time to
time.

16.5 “Change in Control” means:

(a) The consummation of a merger or consolidation of the Company with or into
another entity or any other corporate reorganization, if persons who were not
stockholders of the Company immediately prior to such merger, consolidation or
other reorganization own immediately after such merger, consolidation or other
reorganization 50% or more of the voting power of the outstanding securities of
each of (i) the continuing or surviving entity and (ii) any direct or indirect
parent corporation of such continuing or surviving entity;

 

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(b) The sale, transfer or other disposition of all or substantially all of the
Company’s assets;

(c) A change in the composition of the Board, as a result of which fewer than
50% of the incumbent directors are directors who either:

(i) Had been directors of the Company on the date 24 months prior to the date of
such change in the composition of the Board (the “Original Directors”); or

(ii) Were appointed to the Board, or nominated for election to the Board, with
the affirmative votes of at least a majority of the aggregate of (A) the
Original Directors who were in office at the time of their appointment or
nomination and (B) the directors whose appointment or nomination was previously
approved in a manner consistent with this Paragraph (ii); or

(d) Any transaction as a result of which any person is the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing at least 50% of the total voting power
represented by the Company’s then outstanding voting securities. For purposes of
this Subsection (d), the term “person” shall have the same meaning as when used
in sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or of a Parent or Subsidiary and (ii) a corporation owned directly or
indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of the common stock of the Company.

A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company’s incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company’s securities immediately before such transaction.

16.6 “Code” means the Internal Revenue Code of 1986, as amended.

16.7 “Committee” means a committee of the Board, as described in Article 2.

16.8 “Common Share” means one share of the common stock of the Company.

16.9 “Company” means Data Domain, Inc., a Delaware corporation.

16.10 “Consultant” means a consultant or adviser who provides bona fide services
to the Company, a Parent, a Subsidiary or an Affiliate as an independent
contractor.

16.11 “Employee” means a common-law employee of the Company, a Parent, a
Subsidiary or an Affiliate.

 

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16.12 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

16.13 “Exercise Price,” in the case of an Option, means the amount for which one
Common Share may be purchased upon exercise of such Option, as specified in the
applicable Stock Option Agreement. “Exercise Price,” in the case of an SAR,
means an amount, as specified in the applicable SAR Agreement, which is
subtracted from the Fair Market Value of one Common Share in determining the
amount payable upon exercise of such SAR.

16.14 “Fair Market Value” means the market price of Common Shares, determined by
the Committee in good faith on such basis as it deems appropriate. Whenever
possible, the determination of Fair Market Value by the Committee shall be based
on the prices reported in The Wall Street Journal. Such determination shall be
conclusive and binding on all persons.

16.15 “IPO” means the initial public offering of the Company’s Common Stock.

16.16 “ISO” means an incentive stock option described in section 422(b) of the
Code.

16.17 “NSO” means a stock option not described in sections 422 or 423 of the
Code.

16.18 “Option” means an ISO or NSO granted under the Plan and entitling the
holder to purchase Common Shares.

16.19 “Optionee” means an individual or estate who holds an Option or SAR.

16.20 “Outside Director” means a member of the Board who is not an Employee.

16.21 “Parent” means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, if each of the corporations other
than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain. A
corporation that attains the status of a Parent on a date after the adoption of
the Plan shall be considered a Parent commencing as of such date.

16.22 “Participant” means an individual or estate who holds an Award.

16.23 “Plan” means this Data Domain, Inc. 2007 Equity Incentive Plan, as amended
from time to time.

16.24 “Restricted Share” means a Common Share awarded under the Plan.

 

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16.25 “Restricted Stock Agreement” means the agreement between the Company and
the recipient of a Restricted Share that contains the terms, conditions and
restrictions pertaining to such Restricted Share.

16.26 “SAR” means a stock appreciation right granted under the Plan.

16.27 “SAR Agreement” means the agreement between the Company and an Optionee
that contains the terms, conditions and restrictions pertaining to his or her
SAR.

16.28 “Service” means service as an Employee, Outside Director or Consultant.

16.29 “Stock Option Agreement” means the agreement between the Company and an
Optionee that contains the terms, conditions and restrictions pertaining to his
or her Option.

16.30 “Stock Unit” means a bookkeeping entry representing the equivalent of one
Common Share, as awarded under the Plan.

16.31 “Stock Unit Agreement” means the agreement between the Company and the
recipient of a Stock Unit that contains the terms, conditions and restrictions
pertaining to such Stock Unit.

16.32 “Subsidiary” means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company, if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing 50%
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. A corporation that attains the status of a
Subsidiary on a date after the adoption of the Plan shall be considered a
Subsidiary commencing as of such date.

 

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APPENDIX A

PERFORMANCE CRITERIA FOR RESTRICTED SHARES AND STOCK UNITS

The performance goals that may be used by the Committee for such awards shall
consist of: operating profits (including EBITDA), net profits, earnings per
share, profit returns and margins, revenues, stockholder return and/or value,
stock price and working capital. Performance goals may be measured solely on a
corporate, subsidiary or business unit basis, or a combination thereof. Further,
performance criteria may reflect absolute entity performance or a relative
comparison of entity performance to the performance of a peer group of entities
or other external measure of the selected performance criteria. Profit, earnings
and revenues used for any performance goal measurement shall exclude: gains or
losses on operating asset sales or dispositions; asset write-downs; litigation
or claim judgments or settlements; accruals for historic environmental
obligations; effect of changes in tax law or rate on deferred tax liabilities;
accruals for reorganization and restructuring programs; uninsured catastrophic
property losses; the cumulative effect of changes in accounting principles; and
any extraordinary non-recurring items as described in Accounting Principles
Board Opinion No. 30 and/or in management’s discussion and analysis of financial
performance appearing in the Company’s annual report to stockholders for the
applicable year.