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                                                                    EXHIBIT 10.2

                               BEA SYSTEMS, INC.
                           1997 STOCK INCENTIVE PLAN

                           Adopted on March 19, 1997
                      Amended and Restated on May 13, 1998
                      Amended and Restated on May 12, 1999
                     Amended and Restated on July 14, 1999

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

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

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

    (b)  "Affiliate" and "Associate" shall have the respective meanings
          ---------       ---------
          ascribed to such terms in Rule 12b-2 promulgated under the Exchange
          Act.

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

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

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

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

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

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

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Continuing Directors who are not Affiliates or Associates of the offeror do not
recommend such stockholders accept, or

          (ii) a change in the composition of the Board over a period of
thirty-six (36) months or less such that a majority of the Board members
(rounded up to the next whole number) ceases, by reason of one or more
contested elections for Board membership, to be comprised of individuals who
are Continuing Directors.

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

     (i)  "Committee" means any committee appointed by the Board to administer
           ---------
          the Plan.

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

     (k)  "Company" means BEA Systems, Inc., a Delaware corporation.
           -------

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

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

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

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

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

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

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

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

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

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

     (s)  "Employee" means any person, including an Officer or Director, who is
           --------
          an employee of the Company or any Parent or Subsidiary of the Company
          for purposes of Section 422 of the Code. The payment of a director's
          fee by the Company shall not be sufficient to constitute "employment"
          by the Company.

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

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

          (i) Where there exists a public market for the Common Stock, the Fair
Market Value shall be (A) the closing price for a Share for the last market
trading day prior to the time of the determination (or, if no closing price was
reported on that date, on the last trading date on which a closing price was
reported) on the stock exchange determined by the Administrator to be the
primary market for the Common Stock or the Nasdaq National Market, whichever is
applicable or (B) if the Common Stock is not traded on any such exchange or
national market system, the average of the closing bid and asked prices of a
Share on the Nasdaq Small Cap Market for the day prior to the time of the
determination (or, if no such prices were reported on that date, on the last
date on which such prices were reported), in each case, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable; or

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

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

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    (w)  "Immediate Family" means any child, stepchild, grandchild, parent,
          ----------------
         stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
         mother-in-law, father-in-law, son-in law, daughter-in-law, brother-in-
         law, or sister-in-law, including adoptive relationships, any person
         sharing the Grantee's household (other than a tenant or employee), a
         trust in which these persons have more than fifty percent (50%) of the
         beneficial interest, a foundation in which these persons (or the
         Grantee) control the management of assets, and any other entity in
         which these persons (or the Grantee) own more than fifty percent (50%)
         of the voting interests.

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

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

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

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

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

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

    (dd) "Performance Shares" means Shares or an award denominated in Shares

          ------------------
         which may be earned in whole or in part upon attainment of performance
         criteria established by the Administrator.

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

    (ff) "Plan" means this 1997 Stock Incentive Plan.
          ----

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

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

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

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

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

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

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

    (a)  Subject to the provisions of Section 10, below, the maximum aggregate
         number of Shares which may be issued pursuant to Awards shall be twelve
         million fifty two thousand one hundred eighty seven (12,052,187)
         Shares, and annually, commencing with the first business day of each
         fiscal year of the Company beginning with February 1, 2000 and
         thereafter, such maximum aggregate number of Shares shall be increased
         by a number of Shares equal to the lesser of (i) six million
         (6,000,000) Shares, (ii) six percent (6%) of the number of Shares
         outstanding as of the last day of the immediately preceding fiscal year
         of the Company, or (iii) a lesser number of Shares determined by the
         Administrator. The Shares to be issued pursuant to Awards may be
         authorized, but unissued, or reacquired Common Stock.

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

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

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

         (i)  Administration with Respect to Directors and Officers.  With
              -----------------------------------------------------
respect to grants of Awards to Directors or Employees who are also Officers or
Directors of the Company, the Plan shall be administered by (A) the Board or (B)
a Committee designated by the Board, which Committee shall be constituted in
such a manner as to satisfy the Applicable Laws and to permit such grants and
related transactions under the Plan to be exempt from Section

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16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board.

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

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

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

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

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

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

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

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

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

        (vi) to amend the terms of any outstanding Award granted under the Plan,
including a reduction in the exercise price (or base amount on which
appreciation is measured) of any Award to reflect a reduction in the Fair Market
Value of the Common Stock since the grant date of the Award, provided that any
amendment that would adversely affect the

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Grantee's rights under an outstanding Award shall not be made without the
Grantee's written consent;

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

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

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

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

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

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

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

    (b)  Designation of Award.  Each Award shall be designated in the Award
         --------------------
         Agreement. In the case of an Option, the Option shall be designated as
         either an Incentive Stock Option or a Non-Qualified Stock Option.
         However, notwithstanding such designation, to the extent that the
         aggregate Fair Market Value of Shares subject to Options designated as
         Incentive Stock Opti ons which become exercisable for the first time by
         a Grantee during any calendar year (under all plans of the Company or
         any Parent or Subsidiary) exceeds $100,000, such excess Options, to the
         extent of the Shares covered thereby in excess of the foregoing
         limitation, shall be treated as Non-Qualified Stock Options. For this
         purpose, Incentive Stock Options shall be

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         taken into account in the order in which they were granted, and the
         Fair Market Value of the Shares shall be determined as of the date the
         Option with respect to such Shares is granted.

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

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

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

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

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

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    (h)  Transferability of Awards.  Incentive Stock Options may not be sold,
         -------------------------
         pledged, assigned, hypothecated, transferred, or disposed of in any
         manner other than by will or by the laws of descent or distribution and
         may be exercised, during the lifetime of the Grantee, only by the
         Grantee; provided, however, that Grantee may designate a beneficiary of
         the Grantee's Incentive Stock Option in the event of the Grantee's
         death on a beneficiary designation form approved by the Administrator.
         Other Awards may be transferred by gift or through a domestic relations
         order to members of the Grantee's Immediate Family to the extent
         provided in the Award Agreement or in the manner and to the extent
         determined by the Administrator.

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

    (j)  Individual Option and SAR Limit.  The maximum number of Shares with
         -------------------------------
         respect to which Options and SARs may be granted to any Employee in any
         fiscal year of the Company shall be one million (1,000,000) Shares. The
         foregoing limitation shall be adjusted proportionately in connection
         with any change in the Company's capitalization pursuant to Section 10,
         below. To the extent required by Section 162(m) of the Code or the
         regulations thereunder, in applying the foregoing limitation with
         respect to an Employee, if any Option or SAR is canceled, the canceled
         Option or SAR shall continue to count against the maximum number of
         Shares with respect to which Options and SARs may be granted to the
         Employee. For this purpose, the repricing of an Option (or in the case
         of a SAR, the base amount on which the stock appreciation is calculated
         is reduced to reflect a reduction in the Fair Market Value of the
         Common Stock) shall be treated as the cancellation of the existing
         Option or SAR and the grant of a new Option or SAR.

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

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

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

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

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

                                       9
<PAGE>

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

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

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

         (i)  cash;

         (ii)  check;

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

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

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

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

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

    (d)  Reload Options.  In the event the exercise price or tax withholding of
         --------------
         an Option is satisfied by the Company or the Grantee's employer
         withholding Shares otherwise

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<PAGE>

         deliverable to the Grantee, the Administrator may issue the Grantee an
         additional Option, with terms identical to the Award Agreement under
         which the Option was exercised, but at an exercise price as determined
         by the Administrator in accordance with the Plan.

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

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

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

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

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

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

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

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

                                       11
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    (c)  Buyout Provisions.  The Administrator may at any time offer to buy out
         -----------------
         for a payment in cash or Shares, an Award previously granted, based on
         such terms and conditions as the Administrator shall establish and
         communicate to the Grantee at the time that such offer is made.

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

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

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

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

11.  Corporate Transactions/Changes in Control/Subsidiary Dispositions.  Except
     -----------------------------------------------------------------
as may be provided in an Award Agreement:

     (a)  Effective upon the consummation of a Corporate Transaction, all
          outstanding Awards under the Plan shall terminate unless assumed by
          the successor company or its Parent. For the purposes of this
          subsection, the Award shall be considered assumed if, following the
          Corporate Transaction, the Award confers, for each Share subject to
          the Award immediately prior to the Corporate Transaction, (i) the
          consideration (whether stock, cash, or other securities or property)
          received in the Corporate Transaction by holders of Common Stock for
          each Share subject to the Award held on the effective date of the
          Corporate Transaction (and if holders were offered a choice of
          consideration, the type of consideration chosen by the holders of a
          majority of the outstanding Shares), or (ii) the right to purchase
          such consideration in the

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<PAGE>

          case of an Option or similar Award; provided, however, that if such
          consideration received in the Corporate Transaction was not solely
          common stock of the successor corporation or its Parent, the
          Administrator may, with the consent of the successor corporation,
          provide for the consideration to be received upon the exercise or
          exchange of the Award for each Share subject to the Award to be solely
          common stock of the successor corporation or its Parent equal in fair
          market value to the per share consideration received by holders of
          Common Stock in the Corporate Transaction.

     (b)  In the event of a Change in Control (other than a Change in Control
          which also is a Corporate Transaction), each Award which is at the
          time outstanding under the Plan shall remain exercisable until the
          expiration or sooner termination of the applicable Award term.

     (c)  In the event of a Subsidiary Disposition, each Award with respect to
          those Grantees who are at the time engaged primarily in Continuous
          Status as an Employee or Consultant with the subsidiary corporation
          involved in such Subsidiary Disposition which is at the time
          outstanding under the Plan shall remain so exercisable until the
          expiration or sooner termination of the Award term.

12.  Term of Plan.  The Plan shall become effective upon the earlier to occur of
     ------------
its adoption by the Board or its approval by the stockholders of the Company.
It shall continue in effect for a term of ten (10) years unless sooner
terminated.

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

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

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

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

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

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

     (b) The inability of the Company to obtain authority from any regulatory
         body having jurisdiction, which authority is deemed by the Company's
         counsel to be necessary to the lawful issuance and sale of any Shares
         hereunder, shall relieve the Company of any liability in

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<PAGE>

         respect of the failure to issue or sell such Shares as to which such
         requisite authority shall not have been obtained.

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

16.  Stockholder Approval.  The Plan became effective when adopted by the Board
     --------------------
on March 19, 1997, and was approved by the Company's stockholders on March 31,
1997.  On May 13, 1998, the Board adopted and approved an amendment and
restatement of the Plan (a) to include Incentive Stock Options within the class
of Awards subject to the formula for determining the maximum aggregate number of
Shares that may be issued pursuant to Awards under the Plan, (b) to place a cap
on the annual increase in such maximum aggregate number of Shares determined
under the formula, (c) to permit the grant of Incentive Stock Options with
respect to the two million two hundred sixty nine thousand six hundred fifty
eight (2,269,658) Shares that became available for issuance under the Plan
pursuant to the formula on January 2, 1998 and (d) to adopt a limit on the
maximum number of Shares with respect to which Options and SARs may be granted
to any Employee in any fiscal year of the Company and certain other
administrative provisions to comply with the performance-based compensation
exception to the deduction limit of Section 162(m) of the Code, which amendments
were approved by the stockholders of the Company on June 25, 1998.  On May 12,
1999, the Board adopted an amendment and restatement of the Plan to increase the
number of Shares available for issuance under the Plan and to adjust the formula
that provides an annual automatic increase in the number of Shares of Common
Stock available for issuance under the Plan, such amendments conditioned upon
and not to take effect until stockholder approval of the amendments is obtained.
On July 14, 1999, the Board adopted an amendment and restatement of the Plan to
allow Awards to be transferred to the extent provided in the Award Agreement or
as determined by the Administrator.

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