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Exhibit 10.7  


 
 

DITECH COMMUNICATIONS CORPORATION    
    
    1999 NON-OFFICER EQUITY INCENTIVE PLAN    
  


ADOPTED OCTOBER 4, 1999

AMENDED NOVEMBER 9, 1999

AMENDED NOVEMBER 22, 2000

AMENDED NOVEMBER 15, 2002

STOCKHOLDER APPROVAL NOT REQUIRED  



1.    Purposes.  


        (a)  The
purpose of the Plan is to provide a means by which selected Employees of and Consultants to the Company and its Affiliates who are not Officers or members of the
Boards of Directors of the Company or any of its Affiliates, may be given an opportunity to benefit from increases in value of the stock of the Company through the granting of (i) Nonstatutory
Stock Options, (ii) stock bonuses and (iii) rights to purchase restricted stock, all as described below. The Plan is also intended to provide a means by which the Company may grant
options to persons not previously employed by the Company as an inducement essential to those persons' entering employment contracts with the Company. These inducement grants may be made to persons
who ultimately are employed by the Company as Officers. 


        The
Company, by means of the Plan, seeks to retain the services of persons who are now Employees of or Consultants to the Company or an Affiliate and to provide incentives for such
persons to exert maximum efforts for the success of the Company and its Affiliates. 


        The
Company intends that the Stock Awards issued under the Plan shall, in the discretion of the Board or any Committee to which responsibility for administration of the Plan has been
delegated pursuant to subsection 3(c), be either (i) Options granted pursuant to Section 6 hereof or (ii) stock bonuses or rights to purchase restricted stock granted pursuant to
Section 7 hereof. 


2.    Definitions.  


        (a)  "Affiliate" means any parent corporation or subsidiary corporation, whether now or hereafter existing, as those terms are
defined in Sections 424(e) and (f) respectively, of the Code. 


        (b)  "Board" means the Board of Directors of the Company. 


        (c)  "Code" means the Internal Revenue Code of 1986, as amended. 


        (d)  "Committee" means a Committee appointed by the Board in accordance with subsection 3(c) of the Plan. 


        (e)  "Company" means Ditech Communications Corporation, a Delaware corporation. 



        (f)    "Consultant" means any person, including an advisor, engaged by the Company or an Affiliate to render consulting services
and who is compensated for such services, provided that the term "Consultant" shall not include Directors. 


        (g)  "Continuous Service" means that the service of an individual to the Company, whether as an Employee, Officer, Director or
Consultant, is not interrupted or terminated. The Board or the chief executive officer of the Company may determine, in that party's sole discretion, whether Continuous
Service shall be considered interrupted in the case of any leave of absence approved by the Board or the chief executive officer of the Company, including sick leave, military leave, or any other
personal leave. Continuous Service shall not be deemed to have terminated merely because of a change in the 





 




capacity in which a person renders service to the Company or an Affiliate, whether such service is as an Employee, Officer, Director or Consultant or a change in the entity for which the person
renders such service, provided that there is no interruption in the person's service relationship with the Company or an Affiliate. 


        (h)  "Director" means a member of the Board. 


        (i)    "Employee" means any person employed by the Company or any Affiliate of the Company; provided
that except as provided below, Officers and Directors of the Company shall not be considered Employees for purposes of the Plan. Notwithstanding the foregoing, an Officer shall
be considered an Employee for purposes of granting a Stock Award to that Officer as an inducement essential to such Officer's entering into an employment contract with the Company if such Officer was
not an employee of the Company immediately prior to the date on which such Stock Award is granted. 


        (j)    "Exchange Act" means the Securities Exchange Act of 1934, as amended. 


        (k)  "Fair Market Value" means, as of any date, the value of the common stock of the Company determined as follows: 



        (1)  If the common stock is listed on any established stock exchange or traded on the Nasdaq National Market or The Nasdaq
SmallCap Market, the Fair Market Value of a share of common stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market
(or the exchange or market with the greatest volume of trading in the Company's common stock) on the last market trading day prior to the day of determination, as reported in  The Wall Street Journal or
such other source as the Board deems reliable. 



        (2)  In the absence of such markets for the common stock, the Fair Market Value shall be determined in good faith by the
Board. 




        (l)    "Non-Employee Director" means a Director who either (i) is not a current Employee or Officer of the
Company or its parent or subsidiary, does not receive compensation (directly or indirectly) from the Company or its parent or subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other transaction as to which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee director" for purposes of Rule 16b-3. 


        (m)  "Nonstatutory Stock Option" means a stock option not intended to qualify as an incentive stock option within the meaning
of Section 422 of the Code and the regulations promulgated thereunder. 


        (n)  "Officer" means a person who is an officer of the Company, including any corporate officer with a title of Vice President
or above or any other Employee of the Company whom the Board or the Committee classifies as an "Officer." 


        (o)  "Option" means a Nonstatutory Stock Option granted pursuant to the Plan. 


        (p)  "Option Agreement" means a written agreement between the Company and an Optionee evidencing the terms and conditions of
an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan. 



        (q)  "Optionee" means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who
holds an outstanding Option. 


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        (r)  "Plan" means this 1999 Non-Officer Equity Incentive Plan. 


        (s)  "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect with respect to the Company at the time discretion is being exercised regarding the Plan. 


        (t)  "Securities Act" means the Securities Act of 1933, as amended. 


        (u)  "Stock Award" means any right granted under the Plan, including any Option, any stock bonus, and any right to purchase
restricted stock. 


        (v)  "Stock Award Agreement" means a written agreement between the Company and a holder of a Stock Award evidencing the terms
and conditions of an individual Stock Award grant. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan. 


3.    Administration.  


        (a)  The Plan shall be administered by the Board unless and until the Board delegates administration to a Committee, as
provided in subsection 3(c). 


        (b)  The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan: 



        (1)  To determine from time to time which of the persons eligible under the Plan shall be granted Stock Awards; when and how
each Stock Award shall be granted; whether a Stock Award will be an Option, a stock bonus, a right to purchase restricted stock, or a combination of the foregoing; the provisions of each Stock Award
granted (which need not be identical), including the time or times when a person shall be permitted to receive stock pursuant to a Stock Award; and the number of shares with respect to which a Stock
Award shall be granted to each such person. 


        (2)  To effect, at any time and from time to time, with the consent of any adversely affected Optionee, (i) the
reduction of the exercise price of any outstanding Option under the Plan, (ii) the cancellation of any outstanding Option under the Plan and the grant in substitution therefor of (A) a
new Option under the Plan covering the same or a different number of shares of common stock, (B) a stock bonus, (C) the right to restricted stock, and/or (D) cash, or
(iii) any other action that is treated as a repricing under generally accepted accounting principles. 


        (3)  To construe and interpret the Plan and Stock Awards granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective. 


        (4)  To amend the Plan or a Stock Award as provided in Section 12. 


        (5)  To terminate or suspend the Plan as provided in Section 13. 


        (6)  Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best
interests of the Company which are not in conflict with the provisions of the Plan. 




        (c)  The Board may delegate administration of the Plan to a committee of the Board composed of two (2) or more members
(the "Committee"), all of the members of which Committee may be, in the discretion of the Board, Non-Employee Directors. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee
is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or such a subcommittee), subject, however, to such resolutions, not 


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inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and revest in the Board the administration of the Plan.
In addition, notwithstanding anything in this Section 3 to the contrary, the Board or the Committee may delegate to a committee of one or more members of the Board the authority to grant Stock
Awards to eligible persons who are not then subject to Section 16 of the Exchange Act. 


4.    Shares Subject To The Plan.  



        (a)  Subject to the provisions of Section 11 relating to adjustments upon changes in stock, the stock that may be
issued pursuant to Stock Awards shall not exceed in the aggregate Five Hundred Thousand (500,000) shares of the Company's Common Stock. If any Stock Award shall for any reason expire or otherwise
terminate, in whole or in part, without having been exercised in full, the stock not acquired under such Stock Award shall revert to and again become available for issuance under the Plan. 


        (b)  The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise. 


5.    Eligibility.  


        (a)  Stock Awards may be granted only to Employees or Consultants. 


        (b)  A Consultant shall not be eligible for the grant of a Stock Award if, at the time of grant, a Form S-8
Registration Statement under the Securities Act ("Form S-8") is not available to register either the offer or the sale of the Company's securities to such Consultant because of the
nature of the services that the Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by the rules governing the use of
Form S-8, unless the Company determines both (i) that such grant (A) shall be registered in another manner under the Securities Act
(e.g., on a Form S-3 Registration Statement) or (B) does not require registration under the Securities Act in order to comply
with the requirements of the Securities Act, if applicable, and (ii) that such grant complies with the securities laws of all other relevant jurisdictions. 



6.    Option Provisions.  


        Each Option shall be in such form and shall contain such terms and conditions as the Board shall deem appropriate. The provisions of separate Options need not be
identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions: 


        (a)    Term.    No Option shall be exercisable after the expiration of ten (10) years from the date it was
granted. 


        (b)    Price.    The exercise price of each Option shall be not less than eighty-five percent (85%) of the
Fair Market Value of the stock subject to the Option on the date of grant. 


        (c)    Consideration.    The purchase price of stock acquired pursuant to an Option shall be paid, to the extent
permitted by applicable statutes and regulations, either (i) in cash at the time the Option is exercised, or (ii) at the discretion of the Board or the Committee, at the time of the
grant of the Option, (A) by delivery to the Company of other common stock of the Company, (B) according to a deferred payment arrangement (however, in the event the Company is then
incorporated in the state of Delaware, then payment of the common stock's "par value" as defined in the Delaware General Corporation Law shall not be made by deferred payment), or other arrangement
(which may include,
without limiting the generality of the foregoing, the use of other common stock of the Company) with the person to whom the Option is granted or to whom the Option is transferred pursuant to
subsection 


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6(d) or (C) in any other form of legal consideration that may be acceptable to the Board. In the case of any deferred payment arrangement, interest shall be compounded at least annually and
shall be charged at not less than the minimum rate of interest necessary to avoid the treatment as interest, under any applicable provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred payment arrangement. 


        (d)    Transferability.    An Option may be transferable to the extent provided in the Option Agreement; provided,
however, that if the Option Agreement does not specifically provide for transferability, then such Option shall not be transferable except by will or by the laws of descent and distribution.
Notwithstanding the foregoing, the person to whom the Option is granted may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the
event of the death of the Optionee, shall thereafter be entitled to exercise the Option. 


        (e)    Vesting.    The total number of shares of stock subject to an Option may, but need not, be allotted in periodic
installments (which may, but need not, be equal). The Option Agreement may provide that from time to time during each of such installment periods, the Option may become exercisable ("vest") with
respect to some or all of the shares allotted to that period, and may be exercised with respect to some or all of the shares allotted to such period and/or any prior period as to which the Option
became vested but was not fully exercised. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other
criteria) as the Board may deem appropriate. The provisions of this subsection 6(e) are subject to any Option provisions governing the minimum number of shares as to which an Option may be exercised. 


        (f)    Termination of Employment or Relationship as a Director or Consultant.    In the event an Optionee's Continuous
Service terminates (other than upon the Optionee's death or disability), the Optionee may exercise the Option (to the extent that the Optionee was entitled to exercise it as of the date of
termination) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionee's Continuous Service (or such longer
period as specified in the Option Agreement), or (ii) the expiration of the term of the Option as set forth in the Option Agreement; provided, however, if the Optionee is terminated for cause,
then the Option shall terminate on the date Optionee's Continuous Service ceases. If, at the date of termination, the Optionee is not entitled to exercise the entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after termination, the Optionee does not exercise the Option within the time specified
in the Option Agreement, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. 



        An
Optionee's Option Agreement may also provide that if the exercise of the Option following the termination of the Optionee's Continuous Service (other than upon the Optionee's death or
disability) would result in liability under Section 16(b) of the Exchange Act, then the Option shall terminate on
the earlier of (i) the expiration of the term of the Option set forth in the Option Agreement, or (ii) the tenth (10th) day after the last date on which such exercise would result in
such liability under Section 16(b) of the Exchange Act. Finally, an Optionee's Option Agreement may also provide that if the exercise of the Option following the termination of the Optionee's
Continuous Service (other than upon the Optionee's death or disability) would be prohibited at any time solely because the issuance of shares would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the expiration of the term of the Option set forth in the first paragraph of this subsection 6(f), or (ii) the
expiration of a period of three (3) months after the termination of the Optionee's Continuous Service during which the exercise of the Option would not be in violation of such registration
requirements. 


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        (g)    Disability of Optionee.    In the event an Optionee's Continuous Service terminates as a result of the
Optionee's disability, the Optionee may exercise the Option (to the extent that the Optionee was entitled to exercise it as of the date of termination), but only within such period of time ending on
the earlier of (i) the date twelve (12) months following such termination (or such longer or shorter period specified in the Option Agreement), or (ii) the expiration of the term
of the Option as set forth in the Option Agreement. If, at the date of termination, the Optionee is not entitled to exercise the entire Option, the shares covered by the unexercisable portion of the
Option shall revert to and again become available for issuance under the Plan. If, after termination, the Optionee does not exercise the Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. 



        (h)    Death of Optionee.    In the event of the death of an Optionee during, or within a period specified in the
Option Agreement after the termination of, the Optionee's Continuous Service, the Option may be exercised (to the extent the Optionee was entitled to exercise the Option as of the date of death) by
the Optionee's estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the option upon the Optionee's death pursuant to
subsection 6(d), but only within the period ending on the earlier of (i) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the
Option Agreement), or (ii) the expiration of the term of such Option as set forth in the Option Agreement. If, at the time of death, the Optionee was not entitled to exercise the entire Option,
the shares covered by the unexercisable portion of the Option shall revert to and again become available for issuance under the Plan. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate, and the shares covered by such Option shall revert to and again become available for issuance under the Plan. 


        (i)    Early Exercise.    The Option may, but need not, include a provision whereby the Optionee may elect at any time
before the Optionee's Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the Option prior to the full vesting of the Option. Any
unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Board determines to be appropriate. The Company will not
exercise its repurchase option until at least six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) have elapsed
following exercise of the Option unless the Board otherwise specifically provides in the Option. 


7.    Terms Of Stock Bonuses And Purchases Of Restricted Stock.  



        Each stock bonus or restricted stock purchase agreement shall be in such form and shall contain such terms and conditions as the Board or the Committee shall deem
appropriate. The terms and conditions of stock bonus or restricted stock purchase agreements may change from time to time, and the terms and conditions of separate agreements need not be identical,
but each stock bonus or restricted stock purchase agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following
provisions as appropriate: 


        (a)    Purchase Price.    The purchase price under each restricted stock purchase agreement shall be such amount as
the Board or Committee shall determine and designate in such Stock Award Agreement, but in no event shall the purchase price be less than eighty-five percent (85%) of the stock's Fair
Market Value on the date such Stock Award is made. Notwithstanding the foregoing, the Board or the Committee may determine that eligible participants in the Plan may be awarded stock pursuant to a
stock bonus agreement in consideration for past services actually rendered to the Company or for its benefit. 


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        (b)    Transferability.    Rights under a stock bonus or restricted stock purchase agreement shall be transferable
only by will or the laws of descent and distribution, so long as stock awarded under such Stock Award Agreement remains subject to the terms of the agreement. 


        (c)    Consideration.    The purchase price of stock acquired pursuant to a stock purchase agreement shall be paid
either: (i) in cash at the time of purchase; (ii) at the discretion of the Board or the Committee, according to a deferred payment arrangement (however, in the event the Company is then
incorporated in the state of Delaware, then payment of the common stock's "par value" as defined in the Delaware General Corporation Law shall not be made by deferred payment), or other arrangement
with the person to whom the stock is sold; or (iii) in any other form of legal consideration that may be acceptable to the Board or the Committee in its discretion. Notwithstanding the
foregoing, the Board or the Committee to which administration of the Plan has been delegated may award stock pursuant to a stock bonus agreement in consideration for past services actually rendered to
the Company or for its benefit. 


        (d)    Vesting.    Shares of stock sold or awarded under the Plan may, but need not, be subject to a repurchase option
in favor of the Company in accordance with a vesting schedule to be determined by the Board or the Committee. 


        (e)    Termination of Employment or Relationship as a Director or Consultant.    In the event a Participant's
Continuous Service terminates, the Company may repurchase or otherwise reacquire any or all of the shares of stock held by that person which have not vested as of the date of termination under the
terms of the stock bonus or restricted stock purchase agreement between the Company and such person. 


8.    Covenants Of The Company.  


        (a)  During the terms of the Stock Awards, the Company shall keep available at all times the number of shares of stock
required to satisfy such Stock Awards. 


        (b)  The Company shall seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of stock upon exercise of the Stock Award; provided, however, that this undertaking shall not require the Company to register under the Securities
Act either the Plan, any Stock Award or any stock issued or issuable pursuant to any such Stock Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission
or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of stock under the Plan, the Company shall be relieved from any liability for failure to issue
and sell stock upon exercise of such Stock Awards unless and until such authority is obtained. 



9.    Use Of Proceeds From Stock.  


        Proceeds from the sale of stock pursuant to Stock Awards shall constitute general funds of the Company. 


10.    Miscellaneous.  


        (a)  The Board shall have the power to accelerate the time at which a Stock Award may first be exercised or the time during
which a Stock Award or any part thereof will vest pursuant to subsection 6(e) or 7(d), notwithstanding the provisions in the Stock Award stating the time at which it may first be exercised or the time
during which it will vest. 


        (b)  Neither an Employee nor a Consultant nor any person to whom a Stock Award is transferred under subsection 6(d) or 7(b)
shall be deemed to be the holder of, or to have any of the rights of a 


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holder with respect to, any shares subject to such Stock Award unless and until such person has satisfied all requirements for exercise of the Stock Award pursuant to its terms. 


        (c)  Nothing in the Plan or any instrument executed or Stock Award granted pursuant thereto shall confer upon any Employee or
Consultant or other holder of Stock Awards any right to continue in the employ of the Company or any Affiliate (or to continue serving as a Consultant) or shall affect the right of the Company or any
Affiliate to terminate the employment of any Employee with or without cause or the right to terminate the relationship of any Consultant subject to the terms of such Consultant's agreement with the
Company or any Affiliate. 


        (d)  The Company may require any person to whom a Stock Award is granted, or any person to whom a Stock Award is transferred
pursuant to subsection 6(d) or 7(b), as a condition of exercising or acquiring stock under any Stock Award, (1) to give written assurances satisfactory to the Company as to such person's
knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and
business matters, and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Stock Award; and (2) to give written
assurances satisfactory to the Company stating that such person is acquiring the stock subject to the Stock Award for such person's own account and not with any present intention of selling or
otherwise distributing the stock. The foregoing requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares upon the exercise or
acquisition of stock under the Stock Award has been registered under a then currently effective registration statement under the Securities Act, or (ii) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to,
legends restricting the transfer of the stock. 


        (e)  To the extent provided by the terms of a Stock Award Agreement, the person to whom a Stock Award is granted may satisfy
any federal, state or local tax withholding obligation relating to the exercise or acquisition of stock under a Stock Award by any of the following means or by a combination of such means:
(1) tendering a cash payment; (2) authorizing the Company to withhold shares from the shares of the common stock otherwise issuable to the participant as a result of the exercise or
acquisition of stock under the Stock Award; or (3) delivering to the Company owned and unencumbered shares of Company common stock. Notwithstanding the foregoing, the Company shall not be
authorized to withhold shares of Common Stock at rates in excess of the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes. 


11.    Adjustments Upon Changes In Stock.  


        (a)  If any change is made in the stock subject to the Plan, or subject to any Stock Award (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in
corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan will be appropriately adjusted in the type(s) and maximum number of securities subject to
the Plan pursuant to subsection 4(a) and the outstanding Stock Awards will be appropriately adjusted in the type(s) and number of securities and price per share of stock subject to such outstanding
Stock Awards. Such adjustments shall be made by the Board or the Committee, the determination of which shall be final, binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a "transaction not involving the receipt of consideration by the Company.") 


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        (b)  In the event of (1) a dissolution or liquidation of the Company; (2) a merger or consolidation in which the
Company is not the surviving corporation; (3) a reverse merger in which the Company is the surviving corporation but the shares of the Company's common stock outstanding immediately preceding
the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise; or (4) any other capital reorganization in which more than fifty
percent (50%) of the shares of the Company entitled to vote are exchanged, excluding in each case a capital reorganization in which the sole purpose is to change the state of incorporation of the
Company (individually, a "Corporate Transaction"), then any surviving corporation or acquiring corporation shall assume any Stock Awards outstanding under the Plan or shall substitute similar stock
awards (including an award to acquire the same consideration paid to the shareholders in the Corporate Transaction for those outstanding under the Plan). In the event any surviving corporation or
acquiring corporation refuses to assume such Stock Awards or to substitute similar stock awards for those outstanding under the Plan, then with respect to Stock Awards held by Participants whose
Continuous Service has not terminated, the vesting of such Stock Awards (and, if applicable, the time during which such Stock Awards may be exercised) shall be accelerated in full, and the Stock
Awards shall terminate if not exercised (if applicable) at or prior to the Corporate Transaction. With respect to any other Stock Awards outstanding under the Plan, such Stock Awards shall terminate
if not exercised (if applicable) prior to the Corporate Transaction. 


12.    Amendment Of The Plan and Stock Awards.  


        (a)  The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 11
relating to adjustments upon changes in stock, the Board in its discretion may submit an amendment for approval by the stockholders of the Company to the extent stockholder approval is necessary for
the Plan to satisfy Rule 16b-3 under the Exchange Act or any Nasdaq or securities exchange listing requirements. The Board may in its sole discretion submit any other amendment to
the Plan for stockholder approval. 


        (b)  Rights and obligations under any Stock Award granted before amendment of the Plan shall not be impaired by any amendment
of the Plan unless (i) the Company requests the consent of the person to whom the Stock Award was granted and (ii) such person consents in writing. 



        (c)  The Board at any time, and from time to time, may amend the terms of any one or more Stock Award; provided, however, that
the rights and obligations under any Stock Award shall not be impaired by any such amendment unless (i) the Company requests the consent of the person to whom the Stock Award was granted and
(ii) such person consents in writing. 


13.    Termination Or Suspension Of The Plan.  



        (a)  The Board may suspend or terminate the Plan at any time. No Stock Awards may be granted under the Plan while the Plan is
suspended or after it is terminated. 


        (b)  Rights and obligations under any Stock Award granted while the Plan is in effect shall not be impaired by suspension or
termination of the Plan, except with the written consent of the person to whom the Stock Award was granted. 



14.    Effective Date Of Plan.  


        The Plan shall become effective on the date on which it is adopted by the Board. 


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DITECH COMMUNICATIONS CORPORATION 1999 NON-OFFICER EQUITY INCENTIVE PLAN