<PAGE>

                                                                    Exhibit 10.1


                           ESSEX PROPERTY TRUST, INC.
                     1994 STOCK INCENTIVE PLAN, AS AMENDED

           (amended and restated as of February 15, 2000 and formerly
                known as the 1994 Employee Stock Incentive Plan)

     1.  Purposes of the Plan. The purposes of this Stock Incentive Plan are to
         --------------------
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Company's business.

     2.  Definitions. As used herein, the following definitions shall apply:
         -----------

         (a)  "Administrator" means the Board or any of the Committees appointed
               -------------
to administer the Plan.

         (b)  "Affiliate" and "Associate" shall have the respective meanings
               ---------       ---------
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act. All
references to "Affiliates" in any Award Agreement issued prior to the date of
adoption by the Board of this April 3, 1997 amendment and restatement of the
Plan shall be deemed to refer to Parents and Subsidiaries.

         (c)  "Applicable Laws" means the legal requirements relating to the
               ---------------
administration of stock incentive plans, if any, under applicable provisions of
federal securities laws, state corporate and securities laws, the Code, the
rules of any applicable stock exchange or national market system, and the rules
of any foreign jurisdiction applicable to Awards granted to residents therein.

         (d)  "Award" means the grant of an Option, SAR, Dividend Equivalent
               -----
Right, Restricted Stock, Performance Unit, Performance Share, or other right or
benefit under the Plan.

         (e)  "Award Agreement" means the written agreement evidencing the grant
               ---------------
of an Award executed by the Company and the Grantee, including any amendments
thereto.

         (f)  "Board" means the Board of Directors of the Company.
               -----

         (g)  "Change in Control" means a change in ownership or control of the
               -----------------
Company effected through either of the following transactions:

              (i)  the direct or indirect acquisition by any person or related
group of persons (other than an acquisition from or by the Company or by a
Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than twenty percent (20%) of the
total combined voting power of the Company's outstanding securities, or

              (ii) a change in the composition of the Board over a calendar year
or less such that a majority of the Board members (rounded up to the next whole
number) ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who are Continuing Directors.

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

         (i)  "Committee" means any committee appointed by the Board to
               ---------
administer the Plan. All references to the "Committee" in any Award Agreement
shall be deemed to refer to the Administrator.

         (j)  "Common Stock" means the common stock of the Company.
               ------------

         (k)  "Company" means Essex Property Trust, Inc., a Maryland
               -------
corporation.
<PAGE>

         (l)  "Consultant" means any person who is engaged by the Company or any
               ----------
Related Entity to render consulting or advisory services as an independent
contractor and is compensated for such services.

         (m)  "Continuing Directors" means members of the Board who either (i)
               --------------------
have been Board members continuously for a period of at least a calendar year or
(ii) have been Board members for less than a calendar year and were elected or
nominated for election as Board members by at least a majority of the Board
members described in clause (i) who were still in office at the time such
election or nomination was approved by the Board.

         (n)  "Continuous Status as an Employee, Director or Consultant" means
               --------------------------------------------------------
that the provision of services to the Company or a Related Entity in any
capacity of Employee, Director or Consultant, is not interrupted or terminated.
Continuous Status as an Employee, Director or Consultant shall not be considered
interrupted in the case of (i) any approved leave of absence or (ii) transfers
between locations of the Company or among the Company, any Related Entity, or
any successor in any capacity of Employee, Director or Consultant. An approved
leave of absence shall include sick leave, military leave, or any other
authorized personal leave. For purposes of Incentive Stock Options, no such
leave may exceed ninety (90) days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract.

         (o)  "Corporate Transaction" means any of the following stockholder-
               ---------------------
approved transactions to which the Company is a party:

              (i)   a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;

              (ii)  the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations) in connection with the complete
liquidation or dissolution of the Company; or

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

         (p)  "Covered Employee" means an Employee who is a "covered employee"
               ----------------
under Section 162(m)(3) of the Code.

         (q)  "Director" means a member of the Board.
               --------

         (r)  "Dividend Equivalent Right" means a right entitling the Grantee to
               -------------------------
compensation measured by dividends paid with respect to Common Stock.

         (s)  "Employee" means any person, including an Officer or Director, who
               --------
is an employee of the Company or any Related Entity. The payment of a director's
fee by the Company shall not be sufficient to constitute "employment" by the
Company.

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

         (u)  "Fair Market Value" means, as of any date, the value of Common
               -----------------
Stock determined as follows:

              (i)  Where there exists a public market for the Common Stock, the
Fair Market Value shall be (A) the closing price for a Share for the last market
trading day prior to the time of the determination (or, if no closing price was
reported on that date, on the last trading date on which a closing price was
reported) on the stock exchange determined by the Administrator to be the
primary market for the Common Stock or the Nasdaq National Market, whichever is
applicable or (B) if the Common Stock is not traded on any such exchange or
<PAGE>

national market system, the average of the closing bid and asked prices of a
Share on the Nasdaq Small Cap Market for the day prior to the time of the
determination (or, if no such prices were reported on that date, on the last
date on which such prices were reported), in each case, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable; or


              (ii) In the absence of an established market of the type described
in (i), above, for the Common Stock, the Fair Market Value thereof shall be
determined by the Administrator in good faith.

         (v)  "Grantee" means an Employee, Director or Consultant who receives
               -------
an Award under the Plan .

         (w)  "Incentive Stock Option" means an Option intended to qualify as an
               ----------------------
incentive stock option within the meaning of Section 422 of the Code.

         (x)  "Non-Qualified Stock Option" means an Option not intended to
               --------------------------
qualify as an Incentive Stock Option.

         (y)  "Officer" means a person who is an officer of the Company within
               -------
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

         (z)  "Option" means a stock option granted pursuant to the Plan.
               ------

         (aa) "Parent" means a "parent corporation," whether now or hereafter
               ------
existing, as defined in Section 424(e) of the Code.

         (bb) "Performance - Based Compensation" means compensation qualifying
               --------------------------------
as "performance-based compensation" under Section 162(m) of the Code.

         (cc) "Performance Shares" means Shares or an award denominated in
               ------------------
Shares which may be earned in whole or in part upon attainment of performance
criteria established by the Administrator.

         (dd) "Performance Units" means an award which may be earned in whole or
               -----------------
in part upon attainment of performance criteria established by the Administrator
and which may be settled for cash, Shares or other securities or a combination
of cash, Shares or other securities as established by the Administrator.

         (ee) "Plan" means this 1994 Stock Incentive Plan, as amended and
               ----
restated. All references to the "1994 Employee Stock Incentive Plan" in any
Award Agreement shall be deemed to refer to the Plan.

         (ff) "Related Entity" means any Parent, Subsidiary and any business,
               --------------
corporation, partnership, limited liability company or other entity in which the
Company, a Parent or a Subsidiary holds an ownership interest, directly or
indirectly, and including but not limited to Summerhill Development and Marcus &
Millichap Real Estate Investment Brokerage Company.

         (gg) "Restricted Stock" means Shares issued under the Plan to the
               ----------------
Grantee for such consideration, if any, and subject to such restrictions on
transfer, rights of first refusal, repurchase provisions, forfeiture provisions,
and other terms and conditions as established by the Administrator.

         (hh) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act
               ----------
or any successor thereto.

         (ii) "SAR" means a stock appreciation right entitling the Grantee to
               ---
Shares or cash compensation, as established by the Administrator, measured by
appreciation in the value of Common Stock.

         (jj) "Share" means a share of the Common Stock.
               -----
<PAGE>

         (kk) "Subsidiary" means a "subsidiary corporation," whether now or
               ----------
hereafter existing, as defined in Section 424(f) of the Code.

         (ll) "Subsidiary Disposition" means the disposition by the Company of
               ----------------------
its equity holdings in any subsidiary corporation effected by a merger or
consolidation involving that subsidiary corporation, the sale of all or
substantially all of the assets of that subsidiary corporation or the Company's
sale or distribution of substantially all of the outstanding capital stock of
such subsidiary corporation.

     3.  Stock Subject to the Plan.
         ----------------------------

         (a)  Subject to the provisions of Section 10, below, the maximum
aggregate number of Shares which may be issued pursuant to all Awards (including
Incentive Stock Options) is one million three hundred seventy-five thousand four
hundred (1,375,400) Shares. The Shares to be issued pursuant to Awards may be
authorized, but unissued, or reacquired Common Stock.

         (b)  If an Award expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Award exchange program, or
if any unissued Shares are retained by the Company upon exercise of an Award in
order to satisfy the exercise price for such Award or any withholding taxes due
with respect to such Award, such unissued or retained Shares shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that actually have been issued under the Plan pursuant to an
Award shall not be returned to the Plan and shall not become available for
future distribution under the Plan, except that if unvested Shares are
forfeited, or repurchased by the Company at their original purchase price, such
Shares shall become available for future grant under the Plan.

     4.  Administration of the Plan.
         ---------------------------

         (a)  Plan Administrator.
              ------------------

              (i)   Administration with Respect to Directors and Officers. With
                    -----------------------------------------------------
respect to grants of Awards to Directors or Employees who are also Officers or
Directors of the Company, the Plan shall be administered by (A) the Board or (B)
a Committee designated by the Board, which Committee shall be constituted in
such a manner as to satisfy the Applicable Laws and to permit such grants and
related transactions under the Plan to be exempt from Section 16(b) of the
Exchange Act in accordance with Rule 16b-3. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board.

              (ii)  Administration With Respect to Consultants and Other
                    ---------------------------------------------------
Employees. With respect to grants of Awards to Employees or Consultants who are
----------
neither Directors nor Officers of the Company, the Plan shall be administered by
(A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. The Board may authorize one or more
Officers to grant such Awards and may limit such authority as the Board
determines from time to time.

              (iii) Administration With Respect to Covered Employees.
                    ------------------------------------------------
Notwithstanding the foregoing, grants of Awards to any Covered Employee intended
to qualify as Performance-Based Compensation shall be made only by a Committee
(or subcommittee of a Committee) which is comprised solely of two or more
Directors eligible to serve on a committee making Awards qualifying as
Performance-Based Compensation. In the case of such Awards granted to Covered
Employees, references to the "Administrator" or to a "Committee" shall be deemed
to be references to such Committee or subcommittee.

              (iv)  Administration Errors. In the event an Award is granted in a
                    ----------------------
manner inconsistent with the provisions of this subsection (a), such Award shall
be presumptively valid as of its grant date to the extent permitted by the
Applicable Laws .
<PAGE>

         (b)  Powers of the Administrator. Subject to Applicable Laws and the
              ---------------------------
provisions of the Plan (including any other powers given to the Administrator
hereunder), and except as otherwise provided by the Board, the Administrator
shall have the authority, in its discretion:

              (i)    to select the Employees, Directors and Consultants to whom
Awards may be granted from time to time hereunder;

              (ii)   to determine whether and to what extent Awards are granted
hereunder;

              (iii)  to determine the number of Shares or the amount of other
consideration to be covered by each Award granted hereunder;

              (iv)   to approve forms of Award Agreement for use under the Plan;

              (v)    to determine the terms and conditions of any Award granted
hereunder;

              (vi)   to amend the terms of any outstanding Award granted under
the Plan, provided that any amendment that would adversely affect the Grantee's
rights under an outstanding Award shall not be made without the Grantee's
written consent ;

              (vii)  to construe and interpret the terms of the Plan and Awards
granted pursuant to the Plan;

              (viii) to establish additional terms, conditions, rules or
procedures to accommodate the rules or laws of applicable foreign jurisdictions
and to afford Grantees favorable treatment under such laws; provided, however,
that no Award shall be granted under any such additional terms, conditions,
rules or procedures with terms or conditions which are inconsistent with the
provisions of the Plan; and

              (ix)   to take such other action, not inconsistent with the terms
of the Plan, as the Administrator deems appropriate.

         (c)  Effect of Administrator's Decision. All decisions, determinations
              ----------------------------------
and interpretations of the Administrator shall be conclusive and binding on all
persons.

     5.  Eligibility. Awards other than Incentive Stock Options may be granted
         -----------
to Employees, Directors and Consultants. Incentive Stock Options may be granted
only to Employees of the Company, a Parent or a Subsidiary. An Employee,
Director or Consultant who has been granted an Award may, if otherwise eligible,
be granted additional Awards. Awards may be granted to such Employees, Directors
or Consultants who are residing in foreign jurisdictions as the Administrator
may determine from time to time.

     6.  Terms and Conditions of Awards.
         ------------------------------

         (a)  Type of Awards. The Administrator is authorized under the Plan to
              --------------
award any type of arrangement to an Employee, Director or Consultant that is not
inconsistent with the provisions of the Plan and that by its terms involves or
might involve the issuance of (i) Shares, (ii) an Option, a SAR or similar right
with an exercise or conversion privilege at a fixed or variable price related to
the Common Stock and/or the passage of time, the occurrence of one or more
events, or the satisfaction of performance criteria or other conditions, or
(iii) any other security with the value derived from the value of the Common
Stock or other securities issued by a Related Entity. Such awards include,
without limitation, Options, SARs, sales or bonuses of Restricted Stock,
Dividend Equivalent Rights, Performance Units or Performance Shares, and an
Award may consist of one such security or benefit, or two or more of them in any
combination or alternative.

         (b)  Designation of Award. Each Award shall be designated in the Award
              --------------------
Agreement. In the case of an Option, the Option shall be designated as either an
Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of Shares
<PAGE>

subject to Options designated as Incentive Stock Options which become
exercisable for the first time by a Grantee during any calendar year (under all
plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess
Options, to the extent of the Shares covered thereby in excess of the foregoing
limitation, shall be treated as Non-Qualified Stock Options. For this purpose,
Incentive Stock Options shall be taken into account in the order in which they
were granted, and the Fair Market Value of the Shares shall be determined as of
the date the Option with respect to such Shares is granted.

         (c)  Conditions of Award. Subject to the terms of the Plan, the
              -------------------
Administrator shall determine the provisions, terms, and conditions of each
Award including, but not limited to, the Award vesting schedule, repurchase
provisions, rights of first refusal, forfeiture provisions, form of payment
(cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance
criteria established by the Administrator may be based on any one of, or
combination of, increase in share price, earnings per share, total stockholder
return, return on equity, return on assets, return on investment, net operating
income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator.
Partial achievement of the specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the Award Agreement.

         (d)  Deferral of Award Payment. The Administrator may establish one or
              -------------------------
more programs under the Plan to permit selected Grantees the opportunity to
elect to defer receipt of consideration upon exercise of an Award, satisfaction
of performance criteria, or other event that absent the election would entitle
the Grantee to payment or receipt of Shares or other consideration under an
Award. The Administrator may establish the election procedures, the timing of
such elections, the mechanisms for payments of, and accrual of interest or other
earnings, if any, on amounts, Shares or other consideration so deferred, and
such other terms, conditions, rules and procedures that the Administrator deems
advisable for the administration of any such deferral program.

         (e)  Award Exchange Programs. The Administrator may establish one or
              -----------------------
more programs under the Plan to permit selected Grantees to exchange an Award
under the Plan for one or more other types of Awards under the Plan on such
terms and conditions as determined by the Administrator from time to time.

         (f)  Separate Programs. The Administrator may establish one or more
              -----------------
separate programs under the Plan for the purpose of issuing particular forms of
Awards to one or more classes of Grantees on such terms and conditions as
determined by the Administrator from time to time.

         (g)  Individual Option and SAR Limit. The maximum number of Shares with
              -------------------------------
respect to which Options and SARs may be granted to any Employee in any calendar
year shall be one hundred thousand (100,000) Shares. The foregoing limitation
shall be adjusted proportionately in connection with any change in the Company's
capitalization pursuant to Section 10, below. To the extent required by Section
162(m) of the Code or the regulations thereunder, in applying the foregoing
limitation with respect to an Employee, if any Option or SAR is canceled, the
canceled Option or SAR shall continue to count against the maximum number of
Shares with respect to which Options and SARs may be granted to the Employee.

         (h)  Early Exercise. The Award may, but need not, include a provision
              --------------
whereby the Grantee may elect at any time while an Employee, Director or
Consultant to exercise any part or all of the Award prior to full vesting of the
Award. Any unvested Shares received pursuant to such exercise may be subject to
a repurchase right in favor of the Company or to any other restriction the
Administrator determines to be appropriate.

         (i)  Term of Award. The term of each Award shall be the term stated in
              -------------
the Award Agreement, provided, however, that the term of an Incentive Stock
Option shall be no more than ten (10) years from the date of grant thereof.
However, in the case of an Incentive Stock Option granted to a Grantee who, at
the time the Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the term of the Incentive Stock Option shall be five (5) years
from the date of grant thereof or such shorter term as may be provided in the
Award Agreement.

         (j)  Transferability of Awards. Incentive Stock Options may not be
              -------------------------
sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution
<PAGE>

and may be exercised, during the lifetime of the Grantee, only by the Grantee;
provided, however, that the Grantee may designate a beneficiary of the Grantee's
Incentive Stock Option in the event of the Grantee's death on a beneficiary
designation form provided by the Administrator. Other Awards shall be
transferable to the extent provided in the Award Agreement.

         (k)  Time of Granting Awards. The date of grant of an Award shall for
              -----------------------
all purposes be the date on which the Administrator makes the determination to
grant such Award, or such other date as is determined by the Administrator.
Notice of the grant determination shall be given to each Employee, Director or
Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.

     7.  Award Exercise or Purchase Price, Consideration, Taxes and Reload
         -----------------------------------------------------------------
Options.
-------

         (a)  Exercise or Purchase Price. The exercise or purchase price, if
              --------------------------
any, for an Award shall be as follows:

              (i)   In the case of an Incentive Stock Option:

                   (A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be not less than one hundred ten
percent (110%) of the Fair Market Value per Share on the date of grant.

                   (B) granted to any Employee other than an Employee described
in the preceding paragraph, the per Share exercise price shall be not less than
one hundred percent (100%) of the Fair Market Value per Share on the date of
grant.

              (ii)  In the case of a Non-Qualified Stock Option, the per Share
exercise price shall be not less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant unless otherwise determined by the
Administrator.

              (iii) In the case of Awards intended to qualify as Performance-
Based Compensation, the exercise or purchase price, if any, shall be not less
than one hundred percent (100%) of the Fair Market Value per Share on the date
of grant.

              (iv)  In the case of other Awards, such price as is determined by
the Administrator.

         (b)  Consideration. Subject to Applicable Laws, the consideration to be
              -------------
paid for the Shares to be issued upon exercise or purchase of an Award including
the method of payment, shall be determined by the Administrator (and, in the
case of an Incentive Stock Option, shall be determined at the time of grant). In
addition to any other types of consideration the Administrator may determine,
the Administrator is authorized to accept as consideration for Shares issued
under the Plan the following:

              (i)   cash;

              (ii)  check;

              (iii) delivery of Grantee's promissory note with such recourse,
interest, security, and redemption provisions as the Administrator determines as
appropriate;

              (iv)  surrender of Shares or delivery of a properly executed form
of attestation of ownership of Shares as the Administrator may require
(including withholding of Shares otherwise deliverable upon exercise of the
Award) which have a Fair Market Value on the date of surrender or attestation
equal to the aggregate exercise price of the Shares as to which said Award shall
be exercised (but only to the extent that such exercise of the Award would not
result in an accounting compensation charge with respect to the Shares used to
pay the exercise price unless otherwise determined by the Administrator);
<PAGE>

              (v)   delivery of a properly executed exercise notice together
with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Award and delivery to the
Company of the sale or loan proceeds required to pay the exercise price; or

              (vi)  any combination of the foregoing methods of payment.

         (c)  Taxes. No Shares shall be delivered under the Plan to any Grantee
              -----
or other person until such Grantee or other person has made arrangements
acceptable to the Administrator for the satisfaction of any foreign, federal,
state, or local income and employment tax withholding obligations, including,
without limitation, obligations incident to the receipt of Shares or the
disqualifying disposition of Shares received on exercise of an Incentive Stock
Option. Upon exercise of an Award, the Company shall withhold or collect from
Grantee an amount sufficient to satisfy such tax obligations.

         (d)  Reload Options. In the event the exercise price or tax withholding
              --------------
of an Option is satisfied by the Company or the Grantee's employer withholding
Shares otherwise deliverable to the Grantee, the Administrator may issue the
Grantee an additional Option, with terms identical to the Award Agreement under
which the Option was exercised, but at an exercise price as determined by the
Administrator in accordance with the Plan.

     8.  Exercise of Award.
         ------------------

         (a)  Procedure for Exercise; Rights as a Stockholder.
              -----------------------------------------------

              (i)  Any Award granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator under the
terms of the Plan and specified in the Award Agreement.

              (ii) An Award shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Award by the person entitled to exercise the Award and full payment for the
Shares with respect to which the Award is exercised has been received by the
Company. Until the issuance (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to vote or receive dividends
or any other rights as a stockholder shall exist with respect to Shares subject
to an Award, notwithstanding the exercise of an Option or other Award. The
Company shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Award. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in the Award Agreement or Section 10, below.

         (b)  Exercise of Award Following Termination of Employment, Director or
              ------------------------------------------------------------------
Consulting Relationship.
-----------------------

              (i)   An Award may not be exercised after the termination date of
such Award set forth in the Award Agreement and may be exercised following the
termination of a Grantee's Continuous Status as an Employee, Director or
Consultant only to the extent provided in the Award Agreement.

              (ii)  Where the Award Agreement permits a Grantee to exercise an
Award following the termination of the Grantee's Continuous Status as an
Employee, Director or Consultant for a specified period, the Award shall
terminate to the extent not exercised on the last day of the specified period or
the last day of the original term of the Award, whichever occurs first.

              (iii) Any Award designated as an Incentive Stock Option to the
extent not exercised within the time permitted by law for the exercise of
Incentive Stock Options following the termination of a Grantee's Continuous
Status as an Employee, Director or Consultant shall convert automatically to a
Non-Qualified Stock Option and thereafter shall be exercisable as such to the
extent exercisable by its terms for the period specified in the Award Agreement.
<PAGE>

         (c)  Buyout Provisions. The Administrator may at any time offer to buy
              -----------------
out for a payment in cash or Shares, an Award previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to the
Grantee at the time that such offer is made.

     9.  Conditions Upon Issuance of Shares.
         ----------------------------------

         (a)  Shares shall not be issued pursuant to the exercise of an Award
unless the exercise of such Award and the issuance and delivery of such Shares
pursuant thereto shall comply with all Applicable Laws, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

         (b)  As a condition to the exercise of an Award, the Company may
require the person exercising such Award to represent and warrant at the time of
any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any
Applicable Laws.

     10. Adjustments Upon Changes in Capitalization. Subject to any required
         ------------------------------------------
action by the stockholders of the Company, the number of Shares covered by each
outstanding Award, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Awards have yet been granted or which
have been returned to the Plan, as well as the price per share of Common Stock
covered by each such outstanding Award, shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other similar event resulting in
an increase or decrease in the number of issued shares of Common Stock. Except
as expressly provided herein, no issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to, the
number or price of Shares subject to an Award.

     11. Corporate Transactions/Changes in Control/Subsidiary Dispositions.
         -----------------------------------------------------------------

         (a)  In the event of a Corporate Transaction, each Award which is at
the time outstanding under the Plan automatically shall become fully vested and
exercisable and be released from any restrictions on transfer and repurchase or
forfeiture rights, immediately prior to the specified effective date of such
Corporate Transaction, for all of the Shares at the time represented by such
Award. Effective upon the consummation of the Corporate Transaction, all
outstanding Awards under the Plan shall terminate unless assumed by the
successor company or its Parent.

         (b)  In the event of a Change in Control (other than a Change in
Control which also is a Corporate Transaction), each Award which is at the time
outstanding under the Plan automatically shall become fully vested and
exercisable and be released from any restrictions on transfer and repurchase or
forfeiture rights, immediately prior to the specified effective date of such
Change in Control, for all of the Shares at the time represented by such Award.
Each such Award shall remain so exercisable until the expiration or sooner
termination of the applicable Award term.

         (c)  In the event of a Subsidiary Disposition, each Award with respect
to those Grantees who are at the time engaged primarily in Continuous Status as
an Employee or Consultant with the subsidiary corporation involved in such
Subsidiary Disposition which is at the time outstanding under the Plan
automatically shall become fully vested and exercisable and be released from any
restrictions on transfer and repurchase or forfeiture rights, immediately prior
to the specified effective date of such Subsidiary Disposition, for all of the
Shares at the time represented by such Award Each such Award shall remain so
exercisable until the expiration or sooner termination of the Award term.

         (d)  Notwithstanding the foregoing, the Administrator, in its
discretion, may prevent the acceleration of vesting and release from any
restrictions on transfer and repurchase or forfeiture rights of any outstanding
Award with respect to any Corporate Transaction, Change in Control or Subsidiary
Disposition.
<PAGE>

         (e)  The portion of any Incentive Stock Option accelerated under this
Section 11 in connection with a Corporate Transaction, Change in Control or
Subsidiary Disposition shall remain exercisable as an Incentive Stock Option
under the Code only to the extent the $100,000 dollar limitation of Section
422(d) of the Code is not exceeded. To the extent such dollar limitation is
exceeded, the accelerated excess portion of such Option shall be exercisable as
a Non-Qualified Stock Option.

     12. Term of Plan. The Plan shall terminate on March 16, 2004 unless sooner
         ------------
terminated .
-----------

     13. Amendment, Suspension or Termination of the Plan.
         ------------------------------------------------

         (a)  The Board may at any time amend, suspend or terminate the Plan. To
the extent necessary to comply with Applicable Laws, the Company shall obtain
stockholder approval of any Plan amendment in such a manner and to such a degree
as required.

         (b)  No Award may be granted during any suspension of the Plan or after
termination of the Plan.

         (c)  Any amendment, suspension or termination of the Plan shall not
affect Awards already granted, and such Awards shall remain in full force and
effect as if the Plan had not been amended, suspended or terminated, unless
mutually agreed otherwise between the Grantee and the Administrator, which
agreement must be in writing and signed by the Grantee and the Company.

     14. Reservation of Shares.
         ------------------------

         (a)  The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.

         (b)  The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.

     15. No Effect on Terms of Employment. The Plan shall not confer upon any
         --------------------------------
Grantee any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his or her
right or the Company's right to terminate his or her employment or consulting
relationship at any time, with or without cause.

     16. Stockholder Approval. On February 15, 2000, the Board adopted and
         --------------------
approved an amendment to the Plan, subject to stockholder approval, to increase
the maximum aggregate number of Shares that may be issued pursuant to Awards
(the "Amendment"). The Amendment shall not be given effect until it shall have
been approved by the Company's stockholders.