EXHIBIT 99.1

                          BORLAND SOFTWARE CORPORATION

                            2002 STOCK INCENTIVE PLAN
                            -------------------------


                                  ARTICLE ONE

                               GENERAL PROVISIONS
                               ------------------


I.   PURPOSE OF THE PLAN

     This 2002 Stock Incentive Plan is intended to promote the interests of
Borland Software Corporation, 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. Should any relevant date under the Plan fall on a date on
which there is no trading on the securities exchange or Nasdaq National Market
(as applicable) on which the Common Stock is at that time traded, then the
relevant date for purposes of the Plan shall be the immediately preceding
trading date.

II.  STRUCTURE OF THE PLAN

     A. The Plan shall be divided into four separate equity incentives 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), and

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

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

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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. Other than with
respect to Section 16 Insiders, the Board may also appoint an Executive Officer
Committee to administer the Discretionary Option and Stock Issuance Programs,
subject to the applicable limitations and requirements of the Delaware Corporate
Law. However, any discretionary option grants or stock issuances for members of
the Primary Committee must be authorized by a disinterested majority of the
Board.

     B. Members of the Primary Committee or any Secondary Committee or any
Executive Officer 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 stock 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 or the Executive Officer 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.


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     F. Administration of the Automatic Option Grant Program 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 that program.


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.


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<PAGE>


     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 Plan Effective 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 after the
Plan Effective 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 an initial 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 annual option grants under the Automatic Option Grant Program while
he or she continues to serve as a non-employee Board member.

V.   STOCK SUBJECT TO THE PLAN

     A. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The number of shares of Common Stock initially
reserved for issuance over the term of the Plan shall not exceed Two Million
Five Hundred Thousand (2,500,000) shares.

     B. No one person participating in the Plan may receive stock options and
direct stock issuances for more than 1,000,000 shares of Common Stock in the
aggregate per calendar year.

     C. Shares of Common Stock subject to outstanding options 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 a price per share not greater than 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.


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     D. 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 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 and (iv) the number
and/or class of securities and the exercise price per share in effect under each
outstanding option under the Plan. 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.


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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 Six 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 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.


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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 the laws of inheritance or by the Optionee's
          designated beneficiary or beneficiaries of that option.

               (iii) Should the Optionee's Service be terminated for Misconduct
          or should the Optionee otherwise engage in Misconduct while holding
          one or more outstanding options under this Article Two, then all those
          options 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


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               (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.

     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, but not the obligation, to repurchase any or all of those
unvested shares at a price per share equal to the lower of (i) the exercise
price paid per share or (ii) the Fair Market Value per share of Common Stock at
the time of the Optionee's cessation of Service. 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 the laws of inheritance
following the Optionee's death. Non-Statutory Options shall be subject to the
same restriction, except that the Plan Administrator may structure one or more
Non-Statutory Options under the Discretionary Option Grant Program so that each
such option may be assigned in whole or in part during the Optionee's lifetime
to one or more members of the Optionee's family or to a trust established
exclusively for one or more such family members or to Optionee's former spouse,
to the extent such assignment is in connection with the Optionee's estate plan
or pursuant to a domestic relations order. 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.


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II.  INCENTIVE OPTIONS

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

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

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

     A. Except as otherwise provided in this Section III, none of the
outstanding options under the Discretionary Option Grant Program shall vest in
whole or in part on an accelerated basis upon the occurrence of a Change in
Control, and those options shall be assumable by any successor corporation in
the Change in Control. However, the Plan Administrator shall have the
discretionary authority to structure one or more options grants under the
Discretionary Option Grant Program so that each of those particular options
shall automatically accelerate in whole or in part, immediately prior to the
effective date of that Change in Control, and become exercisable for all the
shares of Common Stock at the time subject to the accelerated portion of such
option and may be exercised for any or all of those accelerated shares as fully
vested shares of Common Stock.

     B. Except as otherwise provided in this Section III, none of the
outstanding repurchase rights under the Discretionary Option Grant Program shall
terminate on an accelerated basis upon the occurrence of a Change in Control,
and those rights shall be assignable to any successor corporation in the Change
in Control. However, the Plan Administrator shall have the discretionary
authority to structure one or more repurchase rights under the Discretionary
Option Grant Program so that those particular 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 of a Change in Control.


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     C. Immediately following the consummation of the Change in Control, all
outstanding options under the Discretionary Option Grant Program shall terminate
and cease to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof) or otherwise continued in full force and effect
pursuant to the terms of the Change in Control transaction.

     D. Each option which is assumed in connection with a Change in Control or
otherwise continued in effect shall be appropriately adjusted, immediately after
such Change in Control, to apply to the number and class of securities which
would have been issuable to the Optionee in consummation of such Change in
Control had the option been exercised immediately prior to such Change in
Control. Appropriate adjustments to reflect such Change in Control 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 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 and
direct stock issuances under the Plan per calendar year. To the extent the
actual holders of the Corporation's outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Change in Control,
the successor corporation may, in connection with the assumption of the
outstanding options under the Discretionary Option Grant Program, substitute one
or more shares of its own common stock with a fair market value equivalent to
the cash consideration paid per share of Common Stock in such Change in Control
transaction.

     E. 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 exercisable for all the 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 Change in Control transaction in which those options do not
otherwise accelerate. 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 such Involuntary Termination, and the shares subject to those terminated
repurchase rights shall accordingly vest in full at that time.


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     F. 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 Hostile Take-Over, become exercisable for all the 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
Hostile Take-Over, 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 Hostile Take-Over.

     G. The portion of any Incentive Option accelerated in connection with a
Change in Control or Hostile Take-Over 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 applicable Federal and state tax laws.

     H. 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.


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<PAGE>

                                 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 Thirty Thousand Dollars ($30,000.00) nor more
than Two Hundred Thousand Dollars ($200,000.00). 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.

     However, for the 2002 calendar year, the election to reduce base salary
must be submitted by June 30, 2002 and shall be in effect only for the salary
which would otherwise payable to the participant for the period beginning July
1, 2002 and ending December 31, 2002. In addition, the option grants under the
Salary Investment Option Grant Program for the 2002 calendar year shall be made
shall be made on July 1, 2002.

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):


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

               X is the number of option shares,

               A is the dollar amount by which the Optionee's base salary is to
          be reduced for the calendar year pursuant to his or her election under
          the Salary Investment Option Grant Program, and

               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. However, each option granted under the Salary
Investment Option Grant Program for the 2002 calendar year shall become
exercisable in a series of six (6) successive equal monthly installments upon
the Optionee's completion of each calendar month of Service over the six
(6)-month period commencing July 1, 2002. 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 two (2)-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 the laws of inheritance or by the designated beneficiary or
beneficiaries of the 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 two (2)-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.


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III. CHANGE IN CONTROL/HOSTILE TAKE-OVER

     A. 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 prior to the effective date of the Change in Control,
become exercisable for all the 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 Change in Control, except to the extent assumed by the successor
corporation (or parent thereof) or otherwise continued in effect pursuant to the
terms of the Change in Control transaction. Any option so assumed or continued
shall remain exercisable for the fully vested shares until the earlier of (i)
the expiration of the ten (10)-year option term or (ii) the expiration of the
two (2)-year period measured from the date of the Optionee's cessation of
Service.

     B. In the event of a Hostile Take-Over 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 Hostile Take-Over,
become exercisable for all the 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 two (2)-year period measured from the date of the
Optionee's cessation of Service, (iii) the termination of the option in
connection with a subsequent Change in Control or (iv) the surrender of the
option in connection with a Hostile Take-Over.

     C. Each option which is assumed in connection with a Change in Control or
otherwise continued in effect shall be appropriately adjusted, immediately after
such Change in Control, to apply to the number and class of securities which
would have been issuable to the Optionee in consummation of such Change in
Control had the option been exercised immediately prior to such Change in
Control. 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. To the extent the
actual holders of the Corporation's outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Change in Control,
the successor corporation may, in connection with the assumption of the
outstanding options under the Salary Investment Option Grant Program, substitute
one or more shares of its own common stock with a fair market value equivalent
to the cash consideration paid per share of Common Stock in such Change in
Control.

     D. 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.


                                       14
<PAGE>


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. In
no event, however, may more than fifteen percent (15%) of the total number of
shares of Common Stock from time to time authorized for issuance under the Plan
be issued pursuant to the Stock Issuance Program. Each stock issuance under the
program 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 or the
satisfaction of specified Service requirements.

     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 grant date.

          2. Subject to the provisions of Section I of Article Six, 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 or the satisfaction of specified Service requirements.


                                       16
<PAGE>


          2. The Plan Administrator shall also have the discretionary authority,
     consistent with Code Section 162(m), to structure one or more share right
     awards so that the shares of Common Stock subject to those awards shall
     only be issuable upon the achievement of certain pre-established corporate
     performance goals based on one or more of the following criteria: (1)
     return on total stockholder equity; (2) earnings per share of Common Stock;
     (3) net income (before or after taxes); (4) earnings before interest,
     taxes, depreciation and amortization; (5) sales or revenues; (6) return on
     assets, capital or investment; (7) market share; (8) cost reduction goals;
     (9) budget comparisons; (10) implementation or completion of critical
     projects or processes; (11) customer satisfaction; (12) any combination of,
     or a specified increase in, any of the foregoing; and (13) the formation of
     joint ventures, research or development collaborations, or the completion
     of other corporate transactions. In addition, such performance goals may be
     based upon the attainment of specified levels of the Corporation's
     performance under one or more of the measures described above relative to
     the performance of other entities and may also be based on the performance
     of any of the Corporation's business units or divisions or any Parent or
     Subsidiary. Performance goals may include a minimum threshold level of
     performance below which no award will be earned, levels of performance at
     which specified portions of an award will be earned and a maximum level of
     performance at which an award will be fully earned.

          3. Any new, substituted or additional securities or other property
     (including money paid other than as a regular cash dividend) which the
     Participant may have the right to receive with respect to the Participant's
     unvested shares of Common Stock by reason of any stock dividend, stock
     split, recapitalization, combination of shares, exchange of shares or other
     change affecting the outstanding Common Stock as a class without the
     Corporation's receipt of consideration shall be issued subject to (i) the
     same vesting requirements applicable to the Participant's unvested shares
     of Common Stock and (ii) such escrow arrangements as the Plan Administrator
     shall deem appropriate.

          4. 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.

          5. 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 lower of (i) the cash consideration paid
     for the surrendered shares or (ii) the Fair Market Value of those shares at
     the time of cancellation and shall cancel the unpaid principal balance of
     any outstanding purchase-money note of the Participant attributable to the
     surrendered shares by the applicable clause (i) or (ii) amount.


                                       17
<PAGE>


          6. 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.

          7. 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 or
     Service requirements established for such awards are not attained or
     satisfied. 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 or Service
     requirements have not been attained or satisfied.

II.  CHANGE IN CONTROL/HOSTILE TAKE-OVER

     A. Except as otherwise provided in this Section II, none of the outstanding
repurchase rights under the Stock Issuance Program shall terminate on an
accelerated basis upon the occurrence of a Change in Control, and those rights
shall be assignable to any successor corporation in the Change in Control.
However, the Plan Administrator shall have the discretionary authority to
structure one or more repurchase rights under the Stock Issuance Program so that
those particular rights shall automatically terminate in whole or in part, and
the shares of Common Stock subject to those terminated rights shall immediately
vest in full, in the event of a Change in Control.

     B. 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
following the effective date of any Change in Control transaction in which those
repurchase rights are assigned to the successor corporation (or parent thereof)
or are otherwise continued in effect.

     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, either upon the occurrence of a Hostile Take-Over or upon the
subsequent termination of the Participant's Service by reason of an Involuntary
Termination within a designated period following the effective date of that
Hostile Take-Over.


                                       18
<PAGE>


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.


                                       19
<PAGE>


                                  ARTICLE FIVE

                         AUTOMATIC OPTION GRANT PROGRAM
                         ------------------------------


I.   OPTION TERMS

     A.  Automatic Grants. The Automatic Option Grant Program under this Plan
         ----------------
shall supersede and replace the automatic option grant program currently in
effect for the non-employee Board members under the Corporation's 1997 Stock
Option Plan. Accordingly, upon stockholder approval of the Plan at the 2002
Annual Stockholders Meeting, the automatic option grant program under the 1997
Stock Option Plan shall immediately terminate, and no further option grants
shall be made to the non-employee Board members under that program. All options
granted to the non-employee Board members on or after the date of the 2002
Annual Stockholders Meeting shall be effected solely and exclusively in
accordance with the terms and provisions of this Article Five. Should
stockholder approval of the Plan not be obtained at the 2002 Annual Stockholder
Meeting, then the automatic option grant program under the Corporation's 1997
Stock Option Plan shall remain in full force and effect.

         Option grants shall be made pursuant to the Automatic Option Grant
Program in effect under this Plan as follows:

         Initial Grant: Each individual who is first elected or appointed as a
non-employee Board member at any time on or after the Plan Effective Date shall
automatically be granted, on the date of such initial election or appointment, a
Non-Statutory Option to purchase thirty thousand (30,000) shares of Common
Stock, provided that individual has not previously been in the employ of the
Corporation or any Parent or Subsidiary.

         Annual Grants: On the first trading day in July each year, beginning
with the 2002 calendar year, the following automatic option grants shall be made
to each individual serving at that time as a non-employee Board member:

         1. Each individual serving as a non-employee Board member on such grant
date shall receive an automatic option grant for 12,500 shares of Common Stock,
except that the individual serving as the Chairperson of the Board at the time
of such annual grant shall receive an automatic option grant for 17,500 shares.

         2. Each non-employee Board member who is serving as a member of any of
the Board committees on such grant date shall receive an additional automatic
option grant for 1,000 shares of Common Stock for each Board committee on which
he or she is serving on that grant date.

         3. Each non-employee Board member who is also serving as the
chairperson of any of Board committee on such grant date shall receive an
additional automatic option grant for 1,000 shares of Common Stock for each
Board committee on which he or she is serving as chairperson on that grant date.


                                       20
<PAGE>


         There shall be no limit on the number of such annual option grants any
one non-employee Board member may receive over his or her period of continued
Board service, and non-employee Board members who have previously been in the
employ of the Corporation (or any Parent or Subsidiary) shall be eligible to
receive one or more such option grants over their period of continued Board
service.

     B.  Exercise Price.
         --------------

         1. The exercise price per share for each option grant made under the
Automatic Option Grant Program, 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 grant under the Automatic Option Grant Program
         -----------
shall have a term of ten (10) years measured from the option grant date.

     D.  Exercise and Vesting of Options. Each option under the Automatic Option
         -------------------------------
Grant Program shall be immediately exercisable for any or all of the option
shares. However, any unvested shares purchased under the option shall be subject
to repurchase by the Corporation, at the lower of (i) the exercise price paid
per share or (ii) the Fair Market Value per share of Common Stock at the time of
the Optionee's cessation of Board service, should the Optionee cease such Board
service prior to vesting in those shares. The shares subject to each initial and
annual automatic option grant shall vest, and the Corporation's repurchase right
with respect to those shares shall lapse, in a series of installments over the
optionee's period of Board service as follows: one-third of the option shares
shall vest upon the Optionee's completion of one (1) year of Board service
measured from the grant date of such option, and the remaining option shares
shall vest in a series of twenty-four (24) successive equal monthly installments
upon the optionee's completion of each additional month of Board service over
the twenty-four (24) month period measured from the one (1) year anniversary of
the grant date of that option.


                                       21
<PAGE>


     E.  Limited Transferability of Options. Each option under the Automatic
         ----------------------------------
Option Grant Program may be assigned in whole or in part during the Optionee's
lifetime to one or more members of the Optionee's family or to a trust
established exclusively for one or more such family members or to Optionee's
former spouse, to the extent such assignment is in connection with the
Optionee's estate plan or pursuant to a domestic relations order. 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 the Automatic Option Grant Program, 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 under the Automatic Option
Grant Program 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 the laws of
     inheritance following Optionee's death or to whom the option is transferred
     during Optionee's lifetime pursuant to a permitted transfer under Section
     1.G of this Article V or the designated beneficiary or beneficiaries of
     such option (as the case may be)) shall have a twelve (12)-month period
     following the date of such cessation of Board service in which to exercise
     each such option.

          (ii) In the event the Optionee should be precluded by federal or state
     securities laws from selling the shares subject to such option for a period
     in excess of twelve (12) months following his or her cessation of Board
     service, then the period for exercising that option following such
     cessation of Board service shall automatically be extended by an additional
     period of up to three (3) months measured from the date the Optionee is
     first free to sell such shares.

          (iii) During the twelve (12)-month or longer 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.


                                       22
<PAGE>


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

          (v) In no event shall the option remain exercisable after the
     expiration of the option term. Upon the expiration of the twelve (12)-month
     or longer 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.  CHANGE IN CONTROL/HOSTILE TAKE-OVER

     A. In the event of a Change in Control while the Optionee remains a Board
member, the shares of Common Stock at the time subject to each outstanding
option held by such Optionee under the 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
exercisable for all the option shares as fully vested shares of Common Stock and
may be exercised for any or all of those vested shares. Immediately following
the consummation of the Change in Control, each automatic option grant shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) or otherwise continued in effect
pursuant to the terms of the Change in Control transaction.

     B. In the event of a Hostile Take-Over while the Optionee remains a Board
member, the shares of Common Stock at the time subject to each outstanding
option held by such Optionee under the 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 Hostile Take-Over, become
exercisable for all the option shares as fully vested shares of Common Stock and
may be exercised for any or all of those vested shares. 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 Tender-Offer.

     C. All outstanding repurchase rights under this under the 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 Change in Control or Hostile Take-Over.


                                       23
<PAGE>


     D. Each option which is assumed in connection with a Change in Control or
otherwise continued in effect shall be appropriately adjusted, immediately after
such Change in Control, to apply to the number and class of securities which
would have been issuable to the Optionee in consummation of such Change in
Control had the option been exercised immediately prior to such Change in
Control. 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. To the extent the
actual holders of the Corporation's outstanding Common Stock receive cash
consideration for their Common Stock in consummation of the Change in Control,
the successor corporation may, in connection with the assumption of the
outstanding options under the Automatic Option Grant Program, substitute one or
more shares of its own common stock with a fair market value equivalent to the
cash consideration paid per share of Common Stock in such Change in Control
transaction.

     E. 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.


                                       24
<PAGE>

                                  ARTICLE SIX

                                  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, which must be at market, 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 applicable 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 income and employment tax
withholding requirements. The Corporation shall also make appropriate
arrangements to satisfy all applicable foreign tax withholding requirements
which may be imposed in connection with the grant or exercise of options under
the Plan or the issuance or vesting of shares of Common Stock under the Plan.

     B. The Plan Administrator may, in its discretion, provide any or all
Optionees or Participants under the Plan (other than the non-employee Board
members) with the right to use shares of Common Stock in satisfaction of all or
part of the Withholding Taxes to which such individuals may become subject in
connection with the grant or exercise of their options or the issuance or
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 options
or the issuance 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 option is granted or exercised or the shares are issued or 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.


                                       25
<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 shall be implemented as of
July 1, 2002. Options may be granted under the Discretionary Option Grant at any
time on or after the Plan Effective Date, and the initial option grants under
the Automatic Option Grant Program shall also be made on the Plan Effective Date
to any individuals joining the Board as non-employee Board members at that time.

     B. The Plan shall terminate upon the earliest to occur of (i) March 15,
2012, (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 Change in Control. Should the Plan
terminate on March 15, 2012, 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.

IV.  AMENDMENT OF THE PLAN

     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.

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 applicable 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.


                                       26
<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.


                                       27
<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 Article Five of the Plan.

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

     C.  Code shall mean the U.S. Internal Revenue Code of 1986, as amended.
         ----

     D.  Change in Control shall mean a change in ownership or control of the
         -----------------
Corporation effected through any of the following transactions:

               (i) there is consummated a merger, consolidation or other
          reorganization, unless securities representing more than fifty percent
          (50%) of the total combined voting power of the voting securities of
          the successor corporation are immediately thereafter beneficially
          owned, directly or indirectly and in substantially the same
          proportion, by the persons who beneficially owned the Corporation's
          outstanding voting 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 other than a sale or disposition by
          the Corporation of all or substantially all of the Corporation's
          assets to an entity, at least 50% of the combined voting power of the
          voting securities of which are owned by stockholders of the
          Corporation in substantially the same proportions as their ownership
          of the Corporation immediately prior to such sale, or

               (iii) 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 thirty percent (30%) 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.

         Notwithstanding the foregoing, a "Change in Control" shall not be
deemed to have occurred by virtue of the consummation of any transaction or
series of integrated transactions immediately following which the record holders
of the Common Stock immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Corporation
immediately following such transaction or series of transactions.

     E.  Common Stock shall mean the Corporation's common stock.
         ------------


                                       A-1
<PAGE>


     F.  Corporation shall mean Borland Software Corporation, a Delaware
         -----------
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Borland Software Corporation which shall by
appropriate action adopt the Plan.

     G.  Discretionary Option Grant Program shall mean the discretionary option
         ----------------------------------
grant program in effect under Article Two of the Plan.

     H.  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.

     I.  Executive Officer Committee shall mean the committee comprised of two
         ---------------------------
(2) or more executive officers of the Corporation appointed by the Board to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to persons other than Section 16 Insiders, but subject to the applicable
limitations and requirements of the Delaware Corporate Law.

     J.  Exercise Date shall mean the date on which the Corporation shall have
         -------------
received written notice of the option exercise.

     K.  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 last sale
          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 sale price for the Common Stock on the date in question,
          then the Fair Market Value shall be the last sale 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 last sale 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 sale price for the Common Stock on the date in
          -------
          question, then the Fair Market Value shall be the last sale price on
          the last preceding date for which such quotation exists.

     L.  Hostile Take-Over shall mean a change in ownership or control of the
         -----------------
Corporation effected through either of the following transactions:

               (i) a change in the composition of the Board such that the
          following individuals cease for any reason to constitute a majority of
          the number of directors then serving: individuals who, on the date
          hereof, constitute the Board


                                       A-2
<PAGE>


          and any new director (other than a director whose initial assumption
          of office is in connection with an actual or threatened election
          contest, including but not limited to a consent solicitation, relating
          to the election of directors of the Corporation) whose appointment or
          election by the Board or nomination for election by the Corporation's
          stockholders was approved or recommended by a vote of at least
          two-thirds (2/3) of the directors then still in office who either were
          directors on the date hereof or whose appointment, election or
          nomination for election was previously so approved or recommended, or

               (ii) 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 thirty percent (30%) 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.

     M.  Incentive Option shall mean an option which satisfies the requirements
         ----------------
of Code Section 422.

     N.  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.

     O.  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
in any way preclude or restrict the right of the Corporation (or any Parent or
Subsidiary) to discharge or dismiss any Optionee, Participant or other person in
the Service of the Corporation (or any Parent or Subsidiary) for any other acts



                                       A-3
<PAGE>


or omissions, but such other acts or omissions shall not be deemed, for purposes
of the Plan, to constitute grounds for termination for Misconduct.

     P.  1934 Act shall mean the Securities Exchange Act of 1934, as amended or
         --------
any successor statute.

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

     R.  Optionee shall mean any person to whom an option is granted under the
         --------
Discretionary Option Grant, Salary Investment Option Grant or Automatic Option
Grant Program.

     S.  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.

     T.  Participant shall mean any person who is issued shares of Common Stock
         -----------
under the Stock Issuance Program.

     U.  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.

     V.  Person shall have the meaning given in Section 3(a)(9) of the
         ------
Securities Exchange Act of 1934, as modified and use in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) the Corporation or any of
its subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Corporation in substantially the same proportions as their
ownership of stock of the Corporation.

     W.  Plan shall mean the Corporation's 2002 Stock Incentive Plan, as set
         ----
forth in this document.

     X.  Plan Administrator shall mean the particular entity, whether the Board,
         ------------------
the Primary Committee, the Secondary Committee or the Executive Officer
Committee, which is authorized to administer the Discretionary Option Grant and
Stock Issuance Programs with


                                       A-4
<PAGE>

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 becomes effective and
         -------------------
shall be coincidental with the date the Plan is approved by the Corporation's
stockholders. The Plan Effective Date shall accordingly be the date of the 2002
Annual Stockholders Meeting, provided the stockholders approve the Plan at such
meeting.

     Z.  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.

     AA. Salary Investment Option Grant Program shall mean the salary investment
         --------------------------------------
option grant program in effect under Article Three of the Plan.

     BB. 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.

     CC. 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.

     DD. 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. Service shall not be deemed to
cease during a period of military leave, sick leave or other personal leave
approved by the Corporation; provided, however, that for a leave which exceeds
ninety (90) days, Service shall be deemed to cease, for purposes of any
outstanding Incentive Options held by the Optionee in question, on the
ninety-first (91st) day of such leave, unless the right of that Optionee to
return to Service following such leave is guaranteed by law or statute. Unless
otherwise required by law, no Service credit shall be given for vesting purposes
for any period the Optionee or Participant is on a leave of absence.

     EE. Stock Exchange shall mean either the American Stock Exchange or the New
         --------------
York Stock Exchange.

     FF. 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.

     GG. Stock Issuance Program shall mean the stock issuance program in effect
         ----------------------
under Article Four of the Plan.


                                       A-5
<PAGE>


     HH. 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.

     II. 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).

     JJ. Withholding Taxes shall mean the applicable income and employment
         -----------------
withholding taxes to which the holder of an option or shares of Common Stock
under the Plan may become subject in connection with the grant or exercise of
those options or the issuance or vesting of those shares.



                                       A-6