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                                 EXHIBIT 10.22



                                 PACKETEER, INC.
                            1999 STOCK INCENTIVE PLAN


                AMENDED AND RESTATED EFFECTIVE AS OF MAY 22, 2002



                                   ARTICLE ONE

                               GENERAL PROVISIONS


          I.        PURPOSE OF THE PLAN

                    This 1999 Stock Incentive Plan is intended to promote the
interests of Packeteer, Inc., a Delaware corporation, by providing eligible
persons in the Corporation's service with the opportunity to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Corporation as an incentive for them to remain in such service.

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

           II.      STRUCTURE OF THE PLAN

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

                           - the Discretionary Option Grant Program under which
           eligible persons may, at the discretion of the Plan Administrator, be
           granted options to purchase shares of Common Stock,

                           - the Salary Investment Option Grant Program under
           which eligible employees may elect to have a portion of their base
           salary invested each year in special option grants,

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

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



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                           - the Director Fee Option Grant Program under which
           non-employee Board members may elect to have all or any portion of
           their annual retainer fee otherwise payable in cash applied to a
           special stock option grant.

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

           III.     ADMINISTRATION OF THE PLAN

                    A. The Primary Committee shall have sole and exclusive
authority to administer the Discretionary Option Grant and Stock Issuance
Programs with respect to Section 16 Insiders. Administration of the
Discretionary Option Grant and Stock Issuance Programs with respect to all other
persons eligible to participate in those programs may, at the Board's
discretion, be vested in the Primary Committee or a Secondary Committee, or the
Board may retain the power to administer those programs with respect to all such
persons. However, any discretionary option grants or stock issuances for members
of the Primary Committee shall be made by a disinterested majority of the Board.

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

                    C. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Discretionary Option Grant and
Stock Issuance Programs and to make such determinations under, and issue such
interpretations of, the provisions of those programs and any outstanding options
or stock issuances thereunder as it may deem necessary or advisable. Decisions
of the Plan Administrator within the scope of its administrative functions under
the Plan shall be final and binding on all parties who have an interest in the
Discretionary Option Grant and Stock Issuance Programs under its jurisdiction or
any option or stock issuance thereunder.

                    D. The Primary Committee shall have the sole and exclusive
authority to determine which Section 16 Insiders and other highly compensated
Employees shall be eligible for participation in the Salary Investment Option
Grant Program for one or more calendar years. However, all option grants under
the Salary Investment Option Grant Program shall be made in accordance with the
express terms of that program, and the Primary Committee shall not exercise any
discretionary functions with respect to the option grants made under that
program.

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



                                       2.
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                    F. Administration of the Automatic Option Grant and Director
Fee Option Grant Programs shall be self-executing in accordance with the terms
of those programs, and no Plan Administrator shall exercise any discretionary
functions with respect to any option grants or stock issuances made under those
programs.

           IV.      ELIGIBILITY

                    A. The persons eligible to participate in the Discretionary
Option Grant and Stock Issuance Programs are as follows:

                           (i) Employees,

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

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

                    B. Only Employees who are Section 16 Insiders or other
highly compensated individuals shall be eligible to participate in the Salary
Investment Option Grant Program.

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

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

                    E. The individuals who shall be eligible to participate in
the Automatic Option Grant Program shall be limited to (i) those individuals who
first become non-employee Board members on or after the Underwriting Date,
whether through appointment by the Board or election by the Corporation's
stockholders, and (ii) those individuals who continue to serve as non-employee
Board members at one or more Annual Stockholders Meetings held after the
Underwriting Date. A non-employee Board member who has previously been in the
employ of the Corporation (or any Parent or Subsidiary) shall NOT be eligible to
receive the initial automatic option grant under the Automatic Option Grant
Program at the time he or she first becomes a non-employee Board member, but
shall be eligible to receive one or more annual automatic option grants under
the Automatic Option Grant Program while he or she continues to serve as a
non-employee Board member.



                                       3.
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                    F. All non-employee Board members shall be eligible to
participate in the Director Fee Option Grant Program.

           V.       STOCK SUBJECT TO THE PLAN

                    A. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Corporation on the open market. The number of shares of Common Stock
reserved for issuance over the term of the Plan shall not exceed the sum of (i)
8,156,779 shares plus (ii) the additional shares of Common Stock automatically
added to the share reserve each year pursuant to the provisions of Section V.B.
of this Article One. As of January 2, 2002, the 8,156,779-share reserve
consisted of (i) the 2,945,917 shares which remained available for issuance, as
of the Plan Effective Date, under the Predecessor Plan as last approved by the
Corporation's stockholders, including the shares subject to outstanding options
under that Predecessor Plan, (ii) an additional increase of 900,000 shares of
Common Stock approved by the Corporation's stockholders prior to the
Underwriting Date, (iii) the January 3, 2000 automatic increase of 1,340,000
shares of Common Stock, (iv) the January 2, 2001 automatic increase of 1,473,311
shares of Common Stock, and (v) the January 2, 2002 automatic increase of
1,497,551 shares of Common Stock.

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

                    C. No one person participating in the Plan may receive
options, separately exercisable stock appreciation rights and direct stock
issuances for more than 750,000 shares of Common Stock in the aggregate per
calendar year.

                    D. Shares of Common Stock subject to outstanding options
(including options incorporated into this Plan from the Predecessor Plan) shall
be available for subsequent issuance under the Plan to the extent (i) those
options expire or terminate for any reason prior to exercise in full or (ii) the
options are cancelled in accordance with the cancellation-regrant provisions of
Article Two. Unvested shares issued under the Plan and subsequently cancelled or
repurchased by the Corporation at the original issue price paid per share,
pursuant to the Corporation's repurchase rights under the Plan shall be added
back to the number of shares of Common Stock reserved for issuance under the
Plan and shall accordingly be available for reissuance through one or more
subsequent option grants or direct stock issuances under the Plan. However,
should the exercise price of an option under the Plan be paid with shares of
Common Stock or should shares of Common Stock otherwise issuable under the Plan
be withheld by the Corporation in satisfaction of the withholding taxes incurred
in connection with the exercise of an option or the vesting of a stock issuance
under the Plan, then the number of shares of Common Stock available for issuance
under the Plan shall be reduced by the gross number of shares for which the
option is exercised or which vest under the stock issuance, and not by the net
number of shares of Common Stock issued to the holder of such option or stock
issuance. Shares of Common Stock underlying one or more stock appreciation
rights exercised



                                       4.
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under Section V of Article Two, Section III of Article Three, Section II of
Article Five or Section III of Article Six of the Plan shall NOT be available
for subsequent issuance under the Plan.

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



                                       5.
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                                   ARTICLE TWO

                       DISCRETIONARY OPTION GRANT PROGRAM



           I.       OPTION TERMS

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

                    A. EXERCISE PRICE.

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

                       2. The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section I of
Article Seven and the documents evidencing the option, be payable in one or more
of the forms specified below:

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

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

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

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

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



                                       6.
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                    C. EFFECT OF TERMINATION OF SERVICE.

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

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

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

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

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

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

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

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



                                       7.
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                    D. STOCKHOLDER RIGHTS. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.

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

                    F. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime
of the Optionee, Incentive Options shall be exercisable only by the Optionee and
shall not be assignable or transferable other than by will or by the laws of
descent and distribution following the Optionee's death. However, a
Non-Statutory Option may, in connection with the Optionee's estate plan, be
assigned in whole or in part during the Optionee's lifetime to one or more
members of the Optionee's immediate family or to a trust established exclusively
for one or more such family members. The assigned portion may only be exercised
by the person or persons who acquire a proprietary interest in the option
pursuant to the assignment. The terms applicable to the assigned portion shall
be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate. Notwithstanding the foregoing, the
Optionee may also designate one or more persons as the beneficiary or
beneficiaries of his or her outstanding options under this Article Two, and
those options shall, in accordance with such designation, automatically be
transferred to such beneficiary or beneficiaries upon the Optionee's death while
holding those options. Such beneficiary or beneficiaries shall take the
transferred options subject to all the terms and conditions of the applicable
agreement evidencing each such transferred option, including (without
limitation) the limited time period during which the option may be exercised
following the Optionee's death.

           II.      INCENTIVE OPTIONS

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

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

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



                                       8.
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To the extent the Employee holds two (2) or more such options which become
exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such options as Incentive Options shall be
applied on the basis of the order in which such options are granted.

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

           III.     CORPORATE TRANSACTION/CHANGE IN CONTROL

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

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

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

                    D. Each option which is assumed in connection with a
Corporate Transaction shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply to the number and class of securities which
would have been issued to the Optionee had the option been exercised immediately
prior to such Corporate Transaction. If the holders of Common Stock receive cash
consideration in connection with the Corporate Transaction, the assumed option
may be adjusted, at the option of the successor corporation, to apply to the
number of shares of its common stock with a fair market value equivalent to the
cash consideration paid per share of Common Stock in such Corporate Transaction.
Appropriate adjustments to reflect such Corporate Transaction shall also be made
to (i) the exercise price payable per share under each outstanding option,
provided the aggregate exercise price payable for such securities shall remain
the same, (ii) the maximum number and/or class of securities available for
issuance over the



                                       9.
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remaining term of the Plan and (iii) the maximum number and/or class of
securities for which any one person may be granted stock options, separately
exercisable stock appreciation rights and direct stock issuances under the Plan
per calendar year and (iv) the maximum number and/or class of securities by
which the share reserve is to increase automatically each calendar year.

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

                    F. The Plan Administrator shall have full power and
authority to structure one or more outstanding options under the Discretionary
Option Grant Program so that those options shall become fully exercisable for
the total number of shares of Common Stock at the time subject to those options
in the event the Optionee's Service is subsequently terminated by reason of an
Involuntary Termination within a designated period (not to exceed eighteen (18)
months) following the effective date of any Corporate Transaction in which those
options are assumed and do not otherwise accelerate. Any options so accelerated
shall remain exercisable for fully vested shares until the earlier of (i) the
expiration of the option term or (ii) the expiration of the one (1) year period
measured from the effective date of the Involuntary Termination. In addition,
the Plan Administrator may structure one or more of the Corporation's repurchase
rights so that those rights shall immediately terminate with respect to any
shares held by the Optionee at the time of his or her Involuntary Termination,
and the shares subject to those terminated repurchase rights shall accordingly
vest in full at that time.

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




                                      10.
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until the earlier of (i) the expiration of the option term or (ii) the
expiration of the one (1) year period measured from the effective date of
Optionee's cessation of Service.

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

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

           IV.      CANCELLATION AND REGRANT OF OPTIONS

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

           V.       STOCK APPRECIATION RIGHTS

                    A. The Plan Administrator shall have full power and
authority to grant to selected Optionees tandem stock appreciation rights and/or
limited stock appreciation rights.

                    B. The following terms shall govern the grant and exercise
of tandem stock appreciation rights:

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



                                      11.
<PAGE>
                           (ii) No such option surrender shall be effective
           unless it is approved by the Plan Administrator, either at the time
           of the actual option surrender or at any earlier time. If the
           surrender is so approved, then the distribution to which the Optionee
           shall be entitled may be made in shares of Common Stock valued at
           Fair Market Value on the option surrender date, in cash, or partly in
           shares and partly in cash, as the Plan Administrator shall in its
           sole discretion deem appropriate.

                           (iii) If the surrender of an option is not approved
           by the Plan Administrator, then the Optionee shall retain whatever
           rights the Optionee had under the surrendered option (or surrendered
           portion thereof) on the option surrender date and may exercise such
           rights at any time prior to the later of (a) five (5) business days
           after the receipt of the rejection notice or (b) the last day on
           which the option is otherwise exercisable in accordance with the
           terms of the documents evidencing such option, but in no event may
           such rights be exercised more than ten (10) years after the option
           grant date.

                    C. The following terms shall govern the grant and exercise
of limited stock appreciation rights:

                           (i) One or more Section 16 Insiders may be granted
           limited stock appreciation rights with respect to their outstanding
           options.

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

                           (iii) At the time such limited stock appreciation
           right is granted, the Plan Administrator shall pre-approve any
           subsequent exercise of that right in accordance with the terms of
           this Paragraph C. Accordingly, no further approval of the Plan
           Administrator or the Board shall be required at the time of the
           actual option surrender and cash distribution.



                                      12.
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                                  ARTICLE THREE

                     SALARY INVESTMENT OPTION GRANT PROGRAM


           I.       OPTION GRANTS

                    The Primary Committee shall have the sole and exclusive
authority to determine the calendar year or years (if any) for which the Salary
Investment Option Grant Program is to be in effect and to select the Section 16
Insiders and other highly compensated Employees eligible to participate in the
Salary Investment Option Grant Program for such calendar year or years. Each
selected individual who elects to participate in the Salary Investment Option
Grant Program must, prior to the start of each calendar year of participation,
file with the Plan Administrator (or its designate) an irrevocable authorization
directing the Corporation to reduce his or her base salary for that calendar
year by an amount not less than Ten Thousand Dollars ($10,000.00) nor more than
Fifty Thousand Dollars ($50,000.00). Each individual who files such a timely
authorization shall automatically be granted an option under the Salary
Investment Option Grant Program on the first trading day in January of the
calendar year for which the salary reduction is to be in effect.

           II.      OPTION TERMS

                    Each option shall be a Non-Statutory Option evidenced by one
or more documents in the form approved by the Plan Administrator; provided,
however, that each such document shall comply with the terms specified below.

                    A. EXERCISE PRICE.

                       1. The exercise price per share shall be thirty-three and
one-third percent (33-1/3%) of the Fair Market Value per share of Common Stock
on the option grant date.

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

                    B. NUMBER OF OPTION SHARES. The number of shares of Common
Stock subject to the option shall be determined pursuant to the following
formula (rounded down to the nearest whole number):

                          X = A divided by (B x 66-2/3%), where

                          X is the number of option shares,

                          A is the dollar amount of the reduction in the
                Optionee's base salary for the calendar year to be in
                effect pursuant to this program, and



                                      13.
<PAGE>


                          B is the Fair Market Value per share of Common Stock
                on the option grant date.

                    C. EXERCISE AND TERM OF OPTIONS. The option shall become
exercisable in a series of twelve (12) successive equal monthly installments
upon the Optionee's completion of each calendar month of Service in the calendar
year for which the salary reduction is in effect. Each option shall have a
maximum term of ten (10) years measured from the option grant date.

                    D. EFFECT OF TERMINATION OF SERVICE. Should the Optionee
cease Service for any reason while holding one or more options under this
Article Three, then each such option shall remain exercisable, for any or all of
the shares for which the option is exercisable at the time of such cessation of
Service, until the earlier of (i) the expiration of the ten (10)-year option
term or (ii) the expiration of the three (3)-year period measured from the date
of such cessation of Service. Should the Optionee die while holding one or more
options under this Article Three, then each such option may be exercised, for
any or all of the shares for which the option is exercisable at the time of the
Optionee's cessation of Service (less any shares subsequently purchased by
Optionee prior to death), by the personal representative of the Optionee's
estate or by the person or persons to whom the option is transferred pursuant to
the Optionee's will or in accordance with the laws of descent and distribution
or by the designated beneficiary or beneficiaries of such option. Such right of
exercise shall lapse, and the option shall terminate, upon the earlier of (i)
the expiration of the ten (10)-year option term or (ii) the three (3)-year
period measured from the date of the Optionee's cessation of Service. However,
the option shall, immediately upon the Optionee's cessation of Service for any
reason, terminate and cease to remain outstanding with respect to any and all
shares of Common Stock for which the option is not otherwise at that time
exercisable.

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

                    A. In the event of any Corporate Transaction while the
Optionee remains in Service, each outstanding option held by such Optionee under
this Salary Investment Option Grant Program shall automatically accelerate so
that each such option shall, immediately prior to the effective date of the
Corporate Transaction, become fully exercisable for the total number of shares
of Common Stock at the time subject to such option and may be exercised for any
or all of those shares as fully-vested shares of Common Stock. Each such
outstanding option shall terminate immediately following the Corporate
Transaction, except to the extent assumed by the successor corporation (or
parent thereof) in such Corporate Transaction. Any option so assumed and shall
remain exercisable for the fully-vested shares until the earliest of (i) the
expiration of the ten (10)-year option term, (ii) the expiration of the three
(3)-year period measured from the date of the Optionee's cessation of Service or
(iii) the surrender of the option in connection with a Hostile Take-Over.

                    B. In the event of a Change in Control while the Optionee
remains in Service, each outstanding option held by such Optionee under this
Salary Investment Option Grant Program shall automatically accelerate so that
each such option shall immediately become fully exercisable for the total number
of shares of Common Stock at the time subject to such option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.



                                      14.
<PAGE>
The option shall remain so exercisable until the earliest to occur of (i) the
expiration of the ten (10)-year option term, (ii) the expiration of the three
(3)-year period measured from the date of the Optionee's cessation of Service,
(iii) the termination of the option in connection with a Corporate Transaction
or (iv) the surrender of the option in connection with a Hostile Take-Over.

                    C. Upon the occurrence of a Hostile Take-Over while the
Optionee remains in Service, the Optionee shall have a thirty (30)-day period in
which to surrender to the Corporation each outstanding option granted him or her
under the Salary Investment Option Grant Program. The Optionee shall in return
be entitled to a cash distribution from the Corporation in an amount equal to
the excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to the surrendered option (whether or not the Optionee is otherwise at
the time vested in those shares) over (ii) the aggregate exercise price payable
for such shares. Such cash distribution shall be paid within five (5) days
following the surrender of the option to the Corporation. The Primary Committee
shall, at the time the option with such limited stock appreciation right is
granted under the Salary Investment Option Grant Program, pre-approve any
subsequent exercise of that right in accordance with the terms of this Paragraph
C. Accordingly, no further approval of the Primary Committee or the Board shall
be required at the time of the actual option surrender and cash distribution.

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

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

           IV.      REMAINING TERMS

                    The remaining terms of each option granted under the Salary
Investment Option Grant Program shall be the same as the terms in effect for
option grants made under the Discretionary Option Grant Program.



                                      15.
<PAGE>
                                  ARTICLE FOUR

                             STOCK ISSUANCE PROGRAM


           I.       STOCK ISSUANCE TERMS

                    Shares of Common Stock may be issued under the Stock
Issuance Program through direct and immediate issuances without any intervening
option grants. Each such stock issuance shall be evidenced by a Stock Issuance
Agreement which complies with the terms specified below. Shares of Common Stock
may also be issued under the Stock Issuance Program pursuant to share right
awards which entitle the recipients to receive those shares upon the attainment
of designated performance goals.

                    A. PURCHASE PRICE.

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

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

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

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

                    B. VESTING PROVISIONS.

                       1. Shares of Common Stock issued under the Stock Issuance
Program may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested
shares of Common Stock issued under the Stock Issuance Program shall be
determined by the Plan Administrator and incorporated into the Stock Issuance
Agreement. Shares of Common Stock may also be issued under the Stock Issuance
Program pursuant to share right awards which entitle the recipients to receive
those shares upon the attainment of designated performance goals.

                       2. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or



                                      16.
<PAGE>
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration shall be issued subject to (i) the same
vesting requirements applicable to the Participant's unvested shares of Common
Stock and (ii) such escrow arrangements as the Plan Administrator shall deem
appropriate.

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

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

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

                       6. Outstanding share right awards under the Stock
Issuance Program shall automatically terminate, and no shares of Common Stock
shall actually be issued in satisfaction of those awards, if the performance
goals established for such awards are not attained. The Plan Administrator,
however, shall have the discretionary authority to issue shares of Common Stock
under one or more outstanding share right awards as to which the designated
performance goals have not been attained.

           II.      CORPORATE TRANSACTION/CHANGE IN CONTROL

                    A. All of the Corporation's outstanding repurchase rights
under the Stock Issuance Program shall terminate automatically, and all the
shares of Common Stock subject to those terminated rights shall immediately vest
in full, in the event of any Corporate Transaction, except to the extent (i)
those repurchase rights are to be assigned to the successor corporation (or
parent thereof) in connection with such Corporate Transaction or (ii) such
accelerated vesting is precluded by other limitations imposed in the Stock
Issuance Agreement.



                                      17.
<PAGE>
                    B. The Plan Administrator shall have the discretionary
authority to structure one or more of the Corporation's repurchase rights under
the Stock Issuance Program so that those rights shall automatically terminate in
whole or in part, and the shares of Common Stock subject to those terminated
rights shall immediately vest, in the event the Participant's Service should
subsequently terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Corporate Transaction in which those repurchase rights are assigned
to the successor corporation (or parent thereof).

                    C. The Plan Administrator shall also have the discretionary
authority to structure one or more of the Corporation's repurchase rights under
the Stock Issuance Program so that those rights shall automatically terminate in
whole or in part, and the shares of Common Stock subject to those terminated
rights shall immediately vest, in the event the Participant's Service should
subsequently terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Change in Control.

           III.     SHARE ESCROW/LEGENDS

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




                                      18.
<PAGE>
                                  ARTICLE FIVE

                         AUTOMATIC OPTION GRANT PROGRAM

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

           I.       OPTION TERMS

                    A. GRANT DATES. Option grants shall be made on the dates
specified below:

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

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

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

                    B. EXERCISE PRICE.

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

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

                    C. OPTION TERM. Each option shall have a term of ten (10)
years measured from the option grant date.




                                      19.
<PAGE>
                    D. EXERCISE AND VESTING OF OPTIONS. Each option shall be
immediately exercisable for any or all of the option shares. However, any shares
purchased under the option shall be subject to repurchase by the Corporation, at
the exercise price paid per share, upon the Optionee's cessation of Board
service prior to vesting in those shares. The shares subject to each initial
automatic option grant shall vest, and the Corporation's repurchase right shall
lapse, in a series of six (6) successive equal semi-annual installments upon the
Optionee's completion of each six (6)-month period of service as a Board member
over the thirty-six (36)-month period measured from the option grant date. The
shares subject to each annual automatic option grant shall vest, and the
Corporation's repurchase right shall lapse, in a series of two (2) successive
equal annual installments upon the Optionee's completion of each twelve
(12)-month period of service as a Board member over the twenty-four (24)-month
period measured from the option grant date.

                    E. LIMITED TRANSFERABILITY OF OPTIONS. Each option under
this Article Five may, in connection with the Optionee's estate plan, be
assigned in whole or in part during the Optionee's lifetime to one or more
members of the Optionee's immediate family or to a trust established exclusively
for one or more such family members. The assigned portion may only be exercised
by the person or persons who acquire a proprietary interest in the option
pursuant to the assignment. The terms applicable to the assigned portion shall
be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate. The Optionee may also designate one
or more persons as the beneficiary or beneficiaries of his or her outstanding
options under this Article Five, and those options shall, in accordance with
such designation, automatically be transferred to such beneficiary or
beneficiaries upon the Optionee's death while holding those options. Such
beneficiary or beneficiaries shall take the transferred options subject to all
the terms and conditions of the applicable agreement evidencing each such
transferred option, including (without limitation) the limited time period
during which the option may be exercised following the Optionee's death.

                    F. TERMINATION OF BOARD SERVICE. The following provisions
shall govern the exercise of any options held by the Optionee at the time the
Optionee ceases to serve as a Board member:

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

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

                           (iii) Should the Optionee cease to serve as a Board
           member by reason of death or Permanent Disability, then all shares at
           the time



                                      20.
<PAGE>
           subject to the option shall immediately vest so that such option may,
           during the twelve (12)-month exercise period following such cessation
           of Board service, be exercised for all or any portion of those shares
           as fully-vested shares of Common Stock.

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

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

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

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

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

                    D. Upon the occurrence of a Hostile Take-Over while the
Optionee remains in Service, the Optionee shall have a thirty (30)-day period in
which to surrender to the Corporation each of his or her outstanding options
under this Automatic Option Grant Program. The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject



                                      21.
<PAGE>
to each surrendered option (whether or not the Optionee is otherwise at the time
vested in those shares) over (ii) the aggregate exercise price payable for such
shares. Such cash distribution shall be paid within five (5) days following the
surrender of the option to the Corporation. No approval or consent of the Board
or any Plan Administrator shall be required at the time of the actual option
surrender and cash distribution.

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

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

           III.     REMAINING TERMS

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



                                      22.
<PAGE>
                                   ARTICLE SIX

                        DIRECTOR FEE OPTION GRANT PROGRAM


           I.       OPTION GRANTS

                    The Primary Committee shall have the sole and exclusive
authority to determine the calendar year or years for which the Director Fee
Option Grant Program is to be in effect. For each such calendar year the program
is in effect, each non-employee Board member may elect to apply all or any
portion of the annual retainer fee otherwise payable in cash for his or her
service on the Board for that year to the acquisition of a special option grant
under this Director Fee Option Grant Program. Such election must be filed with
the Corporation's Chief Financial Officer prior to first day of the calendar
year for which the annual retainer fee which is the subject of that election is
otherwise payable. Each non-employee Board member who files such a timely
election shall automatically be granted an option under this Director Fee Option
Grant Program on the first trading day in January in the calendar year for which
the annual retainer fee which is the subject of that election would otherwise be
payable in cash.

           II.      OPTION TERMS

                    Each option shall be a Non-Statutory Option governed by the
terms and conditions specified below.

                    A. EXERCISE PRICE.

                       1. The exercise price per share shall be thirty-three and
one-third percent (33-1/3%) of the Fair Market Value per share of Common Stock
on the option grant date.

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

                    B. NUMBER OF OPTION SHARES. The number of shares of Common
Stock subject to the option shall be determined pursuant to the following
formula (rounded down to the nearest whole number):

                           X = A divided by (B x 66-2/3%), where

                           X is the number of option shares,

                           A is the portion of the annual retainer fee subject
                     to the non-employee Board member's election, and

                           B is the Fair Market Value per share of Common Stock
                     on the option grant date.



                                      23.
<PAGE>
                    C. EXERCISE AND TERM OF OPTIONS. The option shall become
exercisable in a series of twelve (12) equal monthly installments upon the
Optionee's completion of each month of Board service over the twelve (12)-month
period measured from the grant date. Each option shall have a maximum term of
ten (10) years measured from the option grant date.

                    D. LIMITED TRANSFERABILITY OF OPTIONS. Each option under
this Article Six may, in connection with the Optionee's estate plan, be assigned
in whole or in part during the Optionee's lifetime to one or more members of the
Optionee's immediate family or to a trust established exclusively for one or
more such family members. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to
the assignment. The terms applicable to the assigned portion shall be the same
as those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate. The Optionee may also designate one or more persons as the
beneficiary or beneficiaries of his or her outstanding options under this
Article Six, and those options shall, in accordance with such designation,
automatically be transferred to such beneficiary or beneficiaries upon the
Optionee's death while holding those options. Such beneficiary or beneficiaries
shall take the transferred options subject to all the terms and conditions of
the applicable agreement evidencing each such transferred option, including
(without limitation) the limited time period during which the option may be
exercised following the Optionee's death.

                    E. TERMINATION OF BOARD SERVICE. Should the Optionee cease
Board service for any reason (other than death or Permanent Disability) while
holding one or more options under this Director Fee Option Grant Program, then
each such option shall remain exercisable, for any or all of the shares for
which the option is exercisable at the time of such cessation of Board service,
until the earlier of (i) the expiration of the ten (10)-year option term or (ii)
the expiration of the three (3)-year period measured from the date of such
cessation of Board service. However, each option held by the Optionee under this
Director Fee Option Grant Program at the time of his or her cessation of Board
service shall immediately terminate and cease to remain outstanding with respect
to any and all shares of Common Stock for which the option is not otherwise at
that time exercisable.

                    F. DEATH OR PERMANENT DISABILITY. Should the Optionee's
service as a Board member cease by reason of death or Permanent Disability, then
each option held by such Optionee under this Director Fee Option Grant Program
shall immediately become exercisable for all the shares of Common Stock at the
time subject to that option, and the option may be exercised for any or all of
those shares as fully-vested shares until the earlier of (i) the expiration of
the ten (10)-year option term or (ii) the expiration of the three (3)-year
period measured from the date of such cessation of Board service. Should the
Optionee die after cessation of Board service but while holding one or more
options under this Director Fee Option Grant Program, then each such option may
be exercised, for any or all of the shares for which the option is exercisable
at the time of the Optionee's cessation of Board service (less any shares
subsequently purchased by Optionee prior to death), by the personal
representative of the Optionee's estate or by the person or persons to whom the
option is transferred pursuant to the Optionee's will or in accordance with the
laws of descent and distribution or by the designated beneficiary or
beneficiaries of such option. Such right of exercise shall lapse, and the option
shall terminate,



                                      24.
<PAGE>
upon the earlier of (i) the expiration of the ten (10)-year option term or (ii)
the three (3)-year period measured from the date of the Optionee's cessation of
Board service.

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

                    A. In the event of any Corporate Transaction while the
Optionee remains a Board member, each outstanding option held by such Optionee
under this Director Fee Option Grant Program shall automatically accelerate so
that each such option shall, immediately prior to the effective date of the
Corporate Transaction, become fully exercisable for the total number of shares
of Common Stock at the time subject to such option and may be exercised for any
or all of those shares as fully-vested shares of Common Stock. Each such
outstanding option shall terminate immediately following the Corporate
Transaction, except to the extent assumed by the successor corporation (or
parent thereof) in such Corporate Transaction. Any option so assumed and shall
remain exercisable for the fully-vested shares until the earliest of (i) the
expiration of the ten (10)-year option term, (ii) the expiration of the three
(3)-year period measured from the date of the Optionee's cessation of Board
service or (iii) the surrender of the option in connection with a Hostile
Take-Over.

                    B. In the event of a Change in Control while the Optionee
remains in Service, each outstanding option held by such Optionee under this
Director Fee Option Grant Program shall automatically accelerate so that each
such option shall immediately become fully exercisable for the total number of
shares of Common Stock at the time subject to such option and may be exercised
for any or all of those shares as fully-vested shares of Common Stock. The
option shall remain so exercisable until the earliest to occur of (i) the
expiration of the ten (10)-year option term, (ii) the expiration of the three
(3)-year period measured from the date of the Optionee's cessation of Board
service, (iii) the termination of the option in connection with a Corporate
Transaction or (iv) the surrender of the option in connection with a Hostile
Take-Over.

                    C. Upon the occurrence of a Hostile Take-Over while the
Optionee remains in Service, the Optionee shall have a thirty (30)-day period in
which to surrender to the Corporation each outstanding option granted him or her
under the Director Fee Option Grant Program. The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to each surrendered option (whether or not the Optionee is otherwise at
the time vested in those shares) over (ii) the aggregate exercise price payable
for such shares. Such cash distribution shall be paid within five (5) days
following the surrender of the option to the Corporation. No approval or consent
of the Board or any Plan Administrator shall be required at the time of the
actual option surrender and cash distribution.

                    D. Each option which is assumed in connection with a
Corporate Transaction shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply to the number and class of securities which
would have been issuable to the Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction. If the holders of Common Stock receive cash consideration in
connection with the Corporate Transaction, the assumed option may be adjusted,
at the option of the successor corporation, to apply to the number of shares of
its common stock with a fair



                                      25.
<PAGE>
market value equivalent to the cash consideration paid per share of Common Stock
in such Corporate Transaction. Appropriate adjustments shall also be made to the
exercise price payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the same.

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

           IV.      REMAINING TERMS

                    The remaining terms of each option granted under this
Director Fee Option Grant Program shall be the same as the terms in effect for
option grants made under the Discretionary Option Grant Program.



                                      26.
<PAGE>
                                  ARTICLE SEVEN

                                  MISCELLANEOUS


           I.       FINANCING

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

           II.      TAX WITHHOLDING

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

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

                           Stock Withholding: The election to have the
Corporation withhold, from the shares of Common Stock otherwise issuable upon
the exercise of such Non-Statutory Option or the vesting of such shares, a
portion of those shares with an aggregate Fair Market Value equal to the
percentage of the Withholding Taxes (not to exceed one hundred percent (100%))
designated by the holder.

                           Stock Delivery: The election to deliver to the
Corporation, at the time the Non-Statutory Option is exercised or the shares
vest, one or more shares of Common Stock previously acquired by such holder
(other than in connection with the option exercise or share vesting triggering
the Withholding Taxes) with an aggregate Fair Market Value equal to the
percentage of the Withholding Taxes (not to exceed one hundred percent (100%))
designated by the holder.



                                      27.
<PAGE>
           III.     EFFECTIVE DATE AND TERM OF THE PLAN

                    A. The Plan shall become effective immediately on the Plan
Effective Date. However, the Salary Investment Option Grant Program and the
Director Fee Option Grant Program shall not be implemented until such time as
the Primary Committee may deem appropriate.

                    B. The Plan shall serve as the successor to the Predecessor
Plan, and no further option grants or direct stock issuances shall be made under
the Predecessor Plan after the Plan Effective Date. All options outstanding
under the Predecessor Plan on the Plan Effective Date shall be incorporated into
the Plan at that time and shall be treated as outstanding options under the
Plan. However, each outstanding option so incorporated shall continue to be
governed solely by the terms of the 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 incorporated options with respect to their
acquisition of shares of Common Stock.

                    C. The Plan was first amended on March 16, 2001 (the "2001
Restatement") to (a) effect certain changes to the provisions of the plan
document in order to facilitate the administration of the Plan and (b) make the
following changes to the Automatic Option Grant Program: (i) increase the number
of shares of Common Stock for which each new non-employee Board member is to be
granted a stock option at the time of his or her initial election or appointment
to the Board from 12,000 shares to 20,000 shares, (ii) increase the number of
shares of Common Stock for which each continuing non-employee Board member is to
be granted stock options at each Annual Stockholders Meeting from 3,000 shares
to 5,000 shares, beginning with the 2001 Annual Stockholders Meeting, and (iii)
eliminate, effective with the annual automatic option grants to be made to the
continuing non-employee Board members at the 2001 Annual Stockholders Meeting,
the requirement that a non-employee Board member serve in that capacity for at
least six (6) months before that individual first becomes eligible to receive
his or her first annual automatic option grant. The Plan was further amended and
restated by the Board on February 8, 2002 (the "2002 Restatement") to make the
following changes to the Automatic Option Grant Program: (i) increase the number
of shares of Common Stock for which each new non-employee Board member is to be
granted a stock option at the time of his or her initial election or appointment
to the Board from 20,000 shares to 30,000 shares, (ii) increase the number of
shares of Common Stock for which each continuing non-employee Board member is to
be granted stock options at each Annual Stockholders Meeting from 5,000 shares
to 15,000 shares, beginning with the 2002 Annual Stockholders Meeting, and (iii)
add, effective with the annual automatic option grants to be made to the
continuing non-employee Board members at the 2002 Annual Stockholders Meeting, a
twenty-four (24) month vesting period to such annual option grants whereby such
option would vest in a series of two (2) successive equal annual installments
upon the Optionee's completion of each twelve (12)-month period of service as a
Board member over the twenty-four (24)-month period measured from the option
grant date. All option grants made prior to the 2002 Restatement shall remain
outstanding in accordance with the terms and conditions of the respective
instruments evidencing those options, and nothing in the 2002 Restatement shall
be deemed to modify or in any way affect those outstanding options.

                    D. One or more provisions of the Plan, including (without
limitation) the option/vesting acceleration provisions of Article Two relating
to Corporate Transactions and



                                      28.
<PAGE>
Changes in Control, may, in the Plan Administrator's discretion, be extended to
one or more options incorporated from the Predecessor Plan which do not
otherwise contain such provisions.

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



                                      29.
<PAGE>
           IV.      AMENDMENT OF THE PLAN

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

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

           V.       USE OF PROCEEDS

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

           VI.      REGULATORY APPROVALS

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

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



                                      30.
<PAGE>
           VII.     NO EMPLOYMENT/SERVICE RIGHTS

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



                                      31.
<PAGE>
                                    APPENDIX


                    The following definitions shall be in effect under the
Plan:

                    A. AUTOMATIC OPTION GRANT PROGRAM shall mean the automatic
option grant program in effect under the Plan.

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

                    C. CHANGE IN CONTROL shall mean a change in ownership or
control of the Corporation effected through either of the following
transactions:

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

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

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

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

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

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

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



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

                    H. DIRECTOR FEE OPTION GRANT PROGRAM shall mean the special
stock option grant in effect for non-employee Board members under Article Six of
the Plan.

                    I. DISCRETIONARY OPTION GRANT PROGRAM shall mean the
discretionary option grant program in effect under the Plan.

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

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

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

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

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

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



                                      A-1.
<PAGE>
                    M. HOSTILE TAKE-OVER shall mean the acquisition, directly or
indirectly, by any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Corporation) of beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation's stockholders which the Board does not recommend such
stockholders to accept.

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

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

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

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

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

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

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

                    S. OPTIONEE shall mean any person to whom an option is
granted under the Discretionary Option Grant, Salary Investment Option Grant,
Automatic Option Grant or Director Fee Option Grant Program.




                                      A-2.
<PAGE>
                    T. PARENT shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations ending with the Corporation,
provided each corporation in the unbroken chain (other than the Corporation)
owns, at the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

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

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

                    W. PLAN shall mean the Corporation's 1999 Stock Incentive
Plan, as set forth in this document.

                    X. PLAN ADMINISTRATOR shall mean the particular entity,
whether the Primary Committee, the Board or the Secondary Committee, which is
authorized to administer the Discretionary Option Grant and Stock Issuance
Programs with respect to one or more classes of eligible persons, to the extent
such entity is carrying out its administrative functions under those programs
with respect to the persons under its jurisdiction.

                    Y. PLAN EFFECTIVE DATE shall mean the date the Plan shall
become effective and shall be coincident with the Underwriting Date.

                    Z. PREDECESSOR PLAN shall mean the Corporation's 1996 Equity
Incentive Plan in effect immediately prior to the Plan Effective Date hereunder.

                    AA. PRIMARY COMMITTEE shall mean the committee of two (2) or
more non-employee Board members appointed by the Board to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section
16 Insiders and to administer the Salary Investment Option Grant Program solely
with respect to the selection of the eligible individuals who may participate in
such program.

                    BB. SALARY INVESTMENT OPTION GRANT PROGRAM shall mean the
salary investment option grant program in effect under the Plan.

                    CC. SECONDARY COMMITTEE shall mean a committee of one or
more Board members appointed by the Board to administer the Discretionary Option
Grant and Stock Issuance Programs with respect to eligible persons other than
Section 16 Insiders.



                                      A-3.
<PAGE>
                    DD. SECTION 16 INSIDER shall mean an officer or director of
the Corporation subject to the short-swing profit liabilities of Section 16 of
the 1934 Act.

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

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

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

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

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

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

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

                    LL. UNDERWRITING AGREEMENT shall mean the agreement between
the Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.

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

                    NN. WITHHOLDING TAXES shall mean the Federal, state and
local income and employment withholding taxes to which the holder of
Non-Statutory Options or unvested shares of Common Stock may become subject in
connection with the exercise of those options or the vesting of those shares.



                                      A-4.