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                                                                    EXHIBIT 10.9

                    STANDARD TERMS AND CONDITIONS RELATING TO
                           NONSTATUTORY STOCK OPTIONS
                     UNDER THE 1998 EQUITY INCENTIVE PLAN OF
                      NETPARTNERS INTERNET SOLUTIONS, INC.

        The following Standard Terms and Conditions Relating to Nonstatutory
Stock Options (the "Terms and Conditions") apply to the Nonstatutory Stock
Options granted under the 1998 Equity Incentive Plan of NetPartners Internet
Solutions, Inc. (the "Plan"), the applicable terms of which are hereby
incorporated by reference and made a part of these standard Terms and
Conditions. In turn, these Terms and Conditions are incorporated by reference
into each such Option. Whenever capitalized terms are used in these Terms and
Conditions, they shall have the meaning specified (i) in the Plan, (ii) in the
NetPartners Internet Solutions, Inc. Notice of Grant of Stock Options (the
"Facing Page") into which these Terms and Conditions are incorporated by
reference, or (iii) below, unless the context clearly indicates to the contrary.
As used herein and in the Plan, the "Option Agreement" shall mean the Notice of
Grant of Stock Options Facing Page and these Terms and Conditions as
incorporated therein. The masculine pronoun shall include the feminine and
neuter, and the singular the plural, where the context so indicates.

        1. TERM OF OPTION. Subject to the maximum time limitations in Article 6
of the Plan, the term of the Option shall be the period commencing on the date
of the Option Agreement and ending on the Expiration Date (as defined in the
Facing Page), unless terminated earlier as provided herein or in the Plan.

        2. EXERCISE PRICE. The exercise price of the Option granted hereby shall
be not less than eighty-five percent (85%) of the Fair Market Value of the
shares of Common Stock acquired upon exercise of each Option (the "Option
Shares") on the date the Option is granted; provided, however, if the Optionee
owns (or is deemed to own pursuant to Section 424(d) of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company (or any of its Affiliates), the exercise price
of the Option shall be not less than one hundred ten percent (110%) of the Fair
Market Value of the Option Shares on the date the Option is granted.

        3. EXERCISE OF OPTION.

           (a) The Facing Page shall set forth the rate at which the Option
Shares shall become subject to purchase by Optionee; provided, however, such
Option Shares shall become subject to purchase ("vest") at an annual rate which
is not less than twenty percent (20%) of the total Option Shares subject to the
Option over the five (5) year period commencing with the date of the grant of
the Option.

           (b) Optionee shall exercise the Option to the extent exercisable, in
whole or in part, by sending written notice to the Company in the form attached
hereto as Exhibit A of his intention to purchase Option Shares hereunder,
together with a check in the amount of the full purchase price of the Option
Shares to be purchased. Except as otherwise provided in the Plan,

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Optionee shall not exercise the Option at any one time with respect to less than
the minimum number of Option Shares as is set forth on the Facing Page.

           (c) Optionee agrees to complete and execute any additional documents
which the Company reasonably requests that Optionee complete in order to comply
with applicable federal, state and local securities laws, rules and regulations.

           (d) Subject to the Company's compliance with all applicable laws,
rules and regulations relating to the issuance of such Option Shares and
Optionee's compliance with all the terms and conditions of the Option Agreement,
these Terms and Conditions and the Plan, the Company shall promptly deliver the
Option Shares to the Optionee.

           (e) Except as otherwise provided herein or in the Plan, the Option
may be exercised during the lifetime of the Optionee only by the Optionee.

        4. OPTION NOT TRANSFERABLE. The Option granted hereunder shall not be
transferable in any manner other than upon the death of Optionee as provided in
the Plan. More particularly (but without limiting the foregoing), the Option may
not be assigned, transferred (except as expressly provided herein), pledged or
hypothecated in any way, shall not be assignable by operation of law and shall
not be subject to execution, attachment or similar process. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the Option
contrary to the provisions hereof, or the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.

        5. TERMINATION OF OPTION.

           (a) To the extent not previously exercised, the Option shall
terminate on the Expiration Date; provided, however, that except as otherwise
provided in this Section 5 the Option may not be exercised more than thirty (30)
days after the Termination of Employment or Consulting Relationship of Optionee
for any reason (other than upon Optionee's death or disability). Within such
thirty (30) day period, Optionee may exercise the Option only to the extent the
same was exercisable on the date of such termination and said right to exercise
shall terminate at the end of such period.

           (b) In the event of the Termination of Employment or Consulting
Relationship of Optionee as a result of Optionee's disability, the Option shall
be exercisable for a period of twelve (12) months from the date of such
termination, but in no event later than the Expiration Date and only to the
extent that the Option was exercisable on the date of such termination.

           (c) In the event of the Termination of Employment or Consulting
Relationship of Optionee as a result of Optionee's death, the Option shall be
exercisable by the Optionee's estate (or by the person who acquires the right to
exercise the Option by will or by the laws of descent and distribution) for a
period of twelve (12) months from the date of such termination, but in no event
later than the Expiration Date and only to the extent that the Optionee was
entitled to exercise the Option on the date of death.

           (d) Notwithstanding the preceding paragraphs of this Section 5, if
the Company's Board of Directors determines in good faith that Optionee has
committed an act of

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fraud, theft, other act of dishonesty, act of moral turpitude, or any other act
materially inimical to the interest of the Company, the Option (including the
right to purchase Option Shares hereunder which have accrued but remain
unexercised) shall cease to be exercisable simultaneously with such act.

           (e) Notwithstanding anything herein to the contrary, no portion of
any Option which is not exercisable by the Optionee upon the Termination of
Employment or Consulting Relationship of such Optionee shall thereafter become
exercisable, regardless of the reason for such termination.

        6. NO RIGHT TO CONTINUED RELATIONSHIP. The Option does not confer upon
Optionee any right to continue in his capacity as an Employee, Consultant or
Director of the Company, nor does it limit in any way the right of the Company
to terminate Optionee's relationship with the Company at any time, with or
without cause.

        7. RIGHT OF REPURCHASE OF OPTION SHARES.

           (a) Notwithstanding any provision herein to the contrary, the Option
Shares issued pursuant to the Option shall be subject to a right, but not an
obligation, of repurchase by the Company (the "Right of Repurchase"), at the
price determined under subsection (b) below, if prior to the Expiration Date or
the termination of the Right of Repurchase as provided in Section 9(d) below, a
Termination of Employment or Consulting Relationship occurs for any reason,
including as a result of Optionee's death or disability. Option Shares issued by
the Company shall not be transferable by the Optionee during the period during
which the Right of Repurchase applies, and the Company may take such steps as it
deems necessary to ensure compliance with this restriction.

           (b) The price per share at which the Company may exercise the Right
of Repurchase (the "Repurchase Price") shall be the higher of (i) the price the
Optionee paid for such Option Shares or (ii) the Fair Market Value of such
Option Shares on the date the Company exercises its Right of Repurchase, as
determined in good faith by the Company's Board of Directors (or an officer
appointed by the Board of Directors for such purpose).

           (c) The Company's Right of Repurchase shall terminate if not
exercised by written notice from the Company to the Optionee within ninety (90)
days of the Termination of Employment or Consulting Relationship, unless the
Termination of Employment or Consulting Relationship occurs under section 5(b),
or 5(c), in which case, within fifteen (15) months. If the Company exercises its
Right of Repurchase, it shall give notice thereof to the Optionee within such
ninety (90) day (or 15 month) period, and, upon receipt of such notice, the
Optionee shall immediately endorse and deliver to the Company the stock
certificate(s) representing the Option Shares being repurchased, and the Company
shall then promptly pay, pursuant to the provisions of Section 7(d) below, the
total Repurchase Price to the Optionee. If the Company exercises its Right of
Repurchase it shall exercise its right with respect to all (not some) of such
Option Shares.

           (d) The Repurchase Price shall be paid first by cancellation of any
obligation for accrued but unpaid interest outstanding under notes issued by the
Optionee upon purchase of

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the Option Shares (if any), next by cancellation of principal outstanding under
such notes (if any), and finally by payment in cash of the balance due.

           (e) In the event the Company does not elect to exercise its Right of
Repurchase within the specific period as outlined in section 7(b), the Option
Shares shall no longer be subject to repurchase by the Company pursuant to this
Section 7.

        8. RIGHT OF FIRST REFUSAL. Optionee agrees that he will not sell or
otherwise transfer any Option Shares (including transfer by operation of law) at
any time after the expiration of the Right of Repurchase and prior to the
termination of this section pursuant to Section 9(d) below unless such Option
Shares shall first be offered to the Company as follows:

           (a) The Optionee shall deliver a notice (the "Notice") to the
Company, stating (i) the Optionee's bona fide intention to sell or transfer such
Option Shares, (ii) the number of such Option Shares to be sold or transferred,
(iii) the consideration for which the Optionee proposes to sell or transfer such
Option Shares, (iv) the terms of payment of such consideration and any other
terms and conditions of sale, and (v) the name of the proposed purchaser or
transferee.

           (b) Within thirty (30) days after receipt of the Notice, the Company
may elect to purchase any or all of the Option Shares to which the Notice
refers, for the consideration per share and upon the terms and conditions
specified in the Notice, except as set forth in Section 8(e) below for transfers
involving non-cash consideration. If the Company elects not to purchase all such
Option Shares, the Company may assign its right to purchase the remaining Option
Shares. The Company's assignees may elect, within thirty (30) days after receipt
by the Company of the Notice, to purchase any or all Option Shares to which the
Notice refers which the Company has not elected to purchase, for the
consideration per share and upon the terms and conditions specified in the
Notice, except as set forth in Section 8(e) below. An election to purchase shall
be made by written notice to the Optionee, specifying the number of Option
Shares to be purchased. If the Company and/or its assignees elect to so purchase
the offered Option Shares, they shall complete the purchase of such shares
within sixty (60) days after receipt by the Company of the Notice, unless a
longer period is set forth in the Notice.

           (c) If the Company and/or its assignees do not elect to so purchase
all of such offered Option Shares within such thirty (30) day period, Optionee
shall have no obligation to transfer such Option Shares to the Company and/or
its assignees and Optionee shall have a period of thirty (30) days thereafter to
transfer all (but not less than all) of such Option Shares to the transferee
referred to in the Notice and for the same consideration and on the other terms
as set forth therein; provided, however, that prior to any transfer of such
Option Shares, the proposed transferee shall execute and deliver to the Company
an agreement with the Company, in form and substance satisfactory to the
Company, pursuant to which such transferee agrees to be subject to the relevant
provisions of the Option Agreement.

           (d) In the event that such Option Shares are not transferred to the
transferee referred to in the Notice and in accordance with the terms of the
Option Agreement within such 30-day period, the restrictions on transfer
provided in this Section 8 shall again become applicable to the Option Shares.

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           (e) If part or all of the purchase consideration specified in a
Notice delivered by the Optionee pursuant to this Section 8 is other than cash
or purchaser's promissory note or other evidence of indebtedness, the Company
and its assignee(s) shall have the right to purchase any or all of the Option
Shares specified in the Notice for a cash price equal to the Fair Market Value
of the number of Option Shares to be so purchased by the Company and/or its
assignee(s). The Fair Market Value of any Option Shares shall be as determined
in good faith by the Company's Board of Directors (or an officer appointed by
the Board of Directors for such purposes).

        9. OTHER PROVISIONS REGARDING TRANSFER.

           (a) Optionee, as a condition for accepting any Option Shares, shall
not sell, transfer or pledge any Option Shares subject to the Right of
Repurchase described in Section 7 or the right of first refusal described in
Section 8 hereof, other than in the manner expressly permitted in the Option
Agreement, and any such sale, transfer or pledge of the Option Shares in
violation of this Agreement shall be void. The Company shall not be required (i)
to transfer on its books any Option Shares which shall have been sold or
transferred in violation of any of the provisions set forth in the Option
Agreement or (ii) to treat as the owner of such Option Shares or accord the
right to vote or pay dividends to any transferee to whom such Option Shares
shall have been so transferred.

           (b) Notwithstanding anything to the contrary contained herein,
Optionee is under no restrictions as to the transfer by him of any or all of the
issued Option Shares to his Related Transferees (as defined herein) provided
that each such Related Transferee shall first (i) execute a written consent to
be bound by all of the relevant provisions of the Option Agreement in form and
substance satisfactory to the Company and (ii) give a duplicate original of such
consent to the Company. The "Related Transferees" of the Optionee as used herein
shall consist of the Optionee's spouse, his lineal descendants, and trusts for
the benefit of any Optionee or of the foregoing, Optionee and/or his minor
lineal descendants. In the event of any transfer by the Optionee to his Related
Transferees of all or any part of the Option Shares (or in the event of any
subsequent transfer by any such Related Transferee to another Related Transferee
of the Optionee), such Related Transferees shall receive and hold the Option
Shares subject to the relevant terms of the Option Agreement and the Optionee's
rights and obligations hereunder as though the Option Shares were still owned by
the Optionee and shall together with the Optionee continue to be deemed to be
the "Optionee" for purposes of the Option Agreement, including without
limitation restrictions on the transfer of Option Shares. There shall be no
further transfer of the Option Shares by a Related Transferee except between and
among such Related Transferee, the Optionee and other Related Transferees of the
Optionee, or except as permitted by the Option Agreement. The Company advises
the Optionee to seek independent tax counsel prior to transferring any Option
Shares to any Related Transferee.

           (c) The Optionee hereby grants to the Company a security interest in
the Option Shares for the purpose of ensuring that a transfer in violation of
the restrictions set forth in Sections 7, 8 and 9 of this Agreement does not
occur. In furtherance of such security interest, the Company may, at its option,
retain the certificate(s) evidencing the Option Shares, together with stock
assignments executed in blank by the Optionee, until such transfer restrictions
terminate in accordance with Section 9(d). The Optionee hereby grants to any
officer(s) of the

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Company the power of attorney to cause the Option Shares to be transferred on
the books of the Company in the event the Company and/or its assignees
repurchase some or all of the Option Shares in accordance with the Option
Agreement.

           (d) The transfer restrictions provided in Sections 7, 8 and 9 hereof
shall terminate upon the earlier to occur of (i) the effectiveness of a
registration statement (other than a registration statement pursuant to any
employee, purchase, savings, option, bonus, appreciation, profit sharing,
thrift, incentive or similar plan of the Company) filed by the Company under the
Securities Act in connection with the initial public offering of its securities,
and the completion of the sale of securities made pursuant to such registration
statement for an aggregate amount of at least $10,000,000, and (ii) such other
conditions as the Board of Directors may determine in its sole discretion.

        10. NOTICE OF TAX ELECTION. If Optionee makes any tax election relating
to the treatment of the Option Shares under the Internal Revenue Code of 1986,
as amended, Optionee shall promptly notify the Company of such election.

        11. MARKET STAND-OFF.

           (a) In connection with any underwritten public offering by the
Company of its equity securities pursuant to an effective registration statement
filed under the Securities Act, including the Company's initial public offering,
Optionee shall not sell, make any short sale of, loan, hypothecate, pledge,
grant any option for the purchase of, or otherwise dispose of or transfer for
value or otherwise agree to engage in any of the foregoing transactions with
respect to any of the Option Shares without the prior written consent of the
Company and its underwriters, for such period of time from and after the
effective date of such registration statement as may be requested by the Company
or such underwriters. This Section 11 shall only remain in effect for the one
hundred and eighty (180) day period immediately following the effective date of
the Company's initial public offering and shall thereafter terminate.

           (b) Notwithstanding the foregoing, Optionee shall be subject to the
market stand-off provisions of this Section 11 only if the executive officers
and directors of the Company are also subject to similar arrangements which are
no less restrictive.

           (c) In order to enforce the provisions of this Section 11, the
Company may impose stop-transfer instructions with respect to the Option Shares
until the end of the applicable stand-off period.

        12. ACKNOWLEDGMENTS OF OPTIONEE. Optionee acknowledges and agrees that:

            (a) Optionee and his transferees shall have no rights as a
shareholder with respect to any Option Shares until the date of the issuance of
a stock certificate evidencing such Option Shares. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued, except as provided in Article 14 of
the Plan.

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            (b) All certificates representing the Option Shares shall have
endorsed thereon the following legends, the provisions of which are hereby
incorporated into the Option Agreement:

        THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
        THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES
        LAWS OF ANY STATE AND HAVE BEEN ISSUED AND SOLD PURSUANT TO AN EXEMPTION
        FROM THE ACT AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED BY
        THE HOLDERS THEREOF AT ANY TIME EXCEPT (1) PURSUANT TO AN EFFECTIVE
        REGISTRATION STATEMENT FILED UNDER THE ACT COVERING THE SECURITIES, OR
        (2) IF, IN THE REASONABLE OPINION OF COUNSEL TO THE CORPORATION, SUCH
        SHARES MAY BE TRANSFERRED WITHOUT SUCH REGISTRATION.

        IN ADDITION, SALE, TRANSFER OR HYPOTHECATION OF THIS SECURITY IS
        RESTRICTED BY THE PROVISIONS OF A NONSTATUTORY STOCK OPTION AGREEMENT
        (AND THE STANDARD TERMS AND CONDITIONS RELATING TO NONSTATUTORY STOCK
        OPTIONS INCORPORATED THEREIN) ENTERED INTO BY THE CORPORATION AND THIS
        SHAREHOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
        CORPORATION AND ALL OF THE PROVISIONS OF WHICH ARE INCORPORATED HEREIN.

        13. INVESTMENT REPRESENTATIONS. As an inducement to the Company to grant
the Option and issue the Option Shares to the Optionee, the Optionee hereby
makes the following representations and warranties, and authorizes the Company
to rely upon the same:

            (a) The Optionee will acquire the Option Shares for investment for
his own account, not for resale, without any intention of or view toward or for
participating, directly or indirectly, in a distribution of the Option Shares or
any portion thereof.

            (b) The Optionee understands that an investment in the Company is
speculative, that any possible profits therefrom are uncertain, and that he must
bear the economic risks of the investment in the Company for an indefinite
period of time.

            (c) The Optionee understands that the Option Shares have not been
registered under the Securities Act in reliance on the exemption provided by
Rule 701 promulgated thereunder for compensatory benefit plans; and that the
Option Shares have not been registered or qualified under the "blue sky" laws of
any state.

            (d) The Optionee understands that the Option Shares may have to be
held indefinitely unless they are subsequently registered under the Securities
Act and qualified or registered under other applicable securities laws, rules
and regulations, which is unlikely, or unless an exemption from such
qualification or registration is available.

            (e) The Optionee understands and agrees that (i) the legends set
forth in Section 12(b) hereof will be placed on the certificate(s) evidencing
the Option Shares and, except

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as otherwise provided in Section 12(b), on certificate(s) issued to transferees;
(ii) the stock records of the Company will be noted with respect to such
restrictions; (iii) the Company will not be under any obligation to register the
Option Shares or to comply with any exemption available for sale of the Option
Shares without registration; and (iv) the information or conditions necessary to
permit routine sales of securities of the Company under Rule 144 of the
Securities Act are not now available and it is not likely that they will become
available in the foreseeable future.

            (f) The Optionee is a bona fide resident and domiciliary of, not a
temporary transient resident of, and has his principal residence in, the state
or other jurisdiction set forth under Optionee's signature in the Option
Agreement, and Optionee does not have any present intention of moving his
principal residence from such state or jurisdiction.

        14. WITHHOLDING TAXES. Whenever Option Shares are to be issued under the
Option Agreement, the Company shall have the right to require Optionee to remit
to the Company an amount sufficient to satisfy federal, state and local
withholding tax requirements prior to issuance and/or delivery of any
certificate or certificates for such Option Shares.

        15. FINANCIAL INFORMATION. The Corporation shall provide to each
Optionee on an annual basis a copy of the annual financial report prepared by
the Company's independent certified public accountants.

        16. MISCELLANEOUS.

            (a) The Option Agreement shall bind and inure to the benefit of the
parties' heirs, legal representatives, successors and permitted assigns.

            (b) The Option Agreement, the Plan, and these Terms and Conditions
constitute the entire agreement between the parties pertaining to the subject
matter contained herein and they supersede all prior and contemporaneous
agreements, representations and understandings of the parties. No supplement,
modification or amendment of the Option Agreement shall be binding unless
executed in writing by all of the parties. No waiver of any of the provisions of
the Option Agreement shall be deemed or shall constitute a waiver of any other
provisions, whether or not similar, nor shall any waiver constitute a continuing
waiver. No waiver shall be binding unless executed in writing by the party
making the waiver. In the event there exists any conflict or discrepancy between
any of the terms in the Plan and the Option Agreement, the terms of the Plan
shall be controlling. A copy of the Plan has been delivered to the Optionee and
also may be inspected by Optionee at the principal office of the Company.

            (c) Should any portion of the Plan, the Option Agreement or these
Terms and Conditions be declared invalid and unenforceable, then such portion
shall be deemed to be severable from the Option Agreement and shall not affect
the remainder hereof.

            (d) All notices to be sent hereunder shall be delivered in person or
sent by United States Mail, certified and postage prepaid, to Optionee at the
address set forth on the Facing Page of the Option Agreement or to the Company
at its principal place of business, Attention: President. Any change in the
address to which notices shall be sent under the Option

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Agreement to the Optionee shall be made by the Optionee upon ten (10) days'
written notice to the Company.

            (e) The Option Agreement shall be construed according to the laws of
the State of Delaware.

        17. VESTING ACCELERATION FOR ONE YEAR EMPLOYEES.

            (a) In the event of a Change in Control (as defined herein) any
surviving corporation or acquiring corporation shall assume this Option
Agreement or shall substitute a similar Option Agreement. In the event any
surviving or acquiring corporation refuses to assume this Option Agreement or to
substitute a similar Option Agreement, and if the Optionee has been employed by
the Company for a minimum of a consecutive twelve (12) month period, then (i)
the vesting (and, if applicable, the exercisability) of this Option Agreement
shall be accelerated immediately prior to such event, and (ii) any Company
repurchase option or reacquisition right with respect to shares acquired by the
Optionee under this Option Agreement shall lapse immediately prior to such event
and the shares shall be fully vested.

            (b) In addition, if the Optionee has been employed by the Company
for a minimum of a consecutive twelve (12) month period, and if the surviving or
acquiring corporation assumes this Option Agreement, and if within twenty-four
(24) months following a Change in Control one of the following events occurs:
(i) Optionee's Continuous Service is terminated by the acquiror or successor
without Cause (as defined herein); (ii) the principal place of the performance
of Optionee's responsibilities (the "Principal Location") is changed to a
location more than fifty (50) miles from Optionee's Principal Location
immediately prior to the Change in Control; or (iii) there is a material
reduction in Optionee's compensation or responsibilities (not involving a
termination of Continuous Service for Cause); then the unvested portion of
Optionee's Options shall immediately become fully vested and exercisable and any
Company repurchase option or reacquisition right with respect to shares acquired
by the Optionee under this Option Agreement shall immediately lapse and the
shares shall be fully vested.

            (c) For the purposes of this Option Agreement, "Cause" shall mean:
(i) conviction of any felony or any crime involving moral turpitude or
dishonesty; (ii) participation in a fraud or act of dishonesty against the
Company; (iii) willful and material breach of the Company's policies; (iv)
intentional and material damage to the Company's property; (v) material breach
of the Optionee's Proprietary Information and Inventions Agreement; or (vi)
death and physical or mental disability.

            (d) For purposes of this Option Agreement, a "Change in Control"
shall mean: (i) any consolidation or merger of the Company with or into any
other corporation or other entity or person, or any other corporate
reorganization, in which the shareholders of the Company immediately prior to
such consolidation, merger or reorganization, own less than 50% of the company's
voting power immediately after such consolidation, merger or reorganization, or
any transaction of series of related transactions in which in excess of fifty
percent (50%) of the Company's voting power is transferred; or (ii) a sale,
lease or other disposition of all or substantially all of the assets of the
Company.

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            (e) For purposes of this Option Agreement, "Continuous Service"
shall mean Optionee's service with the Company or an Affiliate, whether as an
Employee, Director or Consultant is not interrupted or terminated. The Board or
the Chief Executive Officer of the Company may determine, in that party's sole
discretion, whether Continuous Service shall be considered interrupted in the
case of: (i) any leave of absence approved by the Board or the Chief Executive
Officer of the Company, including sick leave, military leave, or any other
personal leave; or (ii) transfers between locations of the Company or between
the Company, Affiliates or their successors.

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                                    EXHIBIT A

                 NOTICE OF EXERCISE OF NONSTATUTORY STOCK OPTION

To:   NETPARTNERS INTERNET SOLUTIONS, INC.
      ____________________________________
      ____________________________________
      Attention:  President

        I, a resident of the State of _________________________, hereby exercise
my nonstatutory stock option granted by NETPARTNERS INTERNET SOLUTIONS, INC., a
Delaware corporation (the "Company"), pursuant to a Nonstatutory Stock Option
Agreement dated _________________________, subject to all the terms and
provisions thereof and notify the Company of my desire to purchase ____________
shares of Common Stock of the Company at the exercise price of
__________________ Dollars ($__________) per share pursuant to said option.

        I agree to complete and execute any additional documents which the
Company may request that I complete in order to comply with applicable federal,
state and local securities laws, rules and regulations.

Dated:  __________________

________________________________               ________________________________
Social Security or                             Name:
Taxpayer I.D. Number
                                               Address:
                                               ________________________________
                                               ________________________________
                                               ________________________________<PAGE>   1
                                                                   EXHIBIT 10.10

                                 WEBSENSE, INC.

                            2000 STOCK INCENTIVE PLAN

                                   ARTICLE ONE

                               GENERAL PROVISIONS

     I.   PURPOSE OF THE PLAN

          This 2000 Stock Incentive Plan is intended to promote the interests of
Websense, Inc., a Delaware corporation, by providing eligible persons in the
Corporation's service with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in such service.

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

     II.  STRUCTURE OF THE PLAN

          A. The Plan shall be divided into five separate equity 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),

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

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

<PAGE>   2

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

     III. ADMINISTRATION OF THE PLAN

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

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

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

                                       2
<PAGE>   3

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

     IV.  ELIGIBILITY

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

               (i) Employees,

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

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

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

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

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

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

                                       3
<PAGE>   4

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 periodic option
grants under the Automatic Option Grant Program while he or she continues to
serve as a non-employee Board member.

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

     V.   STOCK SUBJECT TO THE PLAN

          A. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The number of shares of Common Stock initially
reserved for issuance over the term of the Plan shall not exceed 4,500,000
shares. Such reserve shall consist of (i) the number of shares estimated to
remain available for issuance, as of the Plan Effective Date, under the
Predecessor Plan as last approved by the Corporation's stockholders, including
the shares subject to outstanding options under the Predecessor Plan, (ii) plus
an additional increase of approximately 1,000,000 shares to be approved by the
Corporation's stockholders prior to the Underwriting Date.

          B. The number of shares of Common Stock available for issuance under
the Plan shall automatically increase on the first trading day of January each
calendar year during the term of the Plan, beginning with calendar year 2001, by
an amount equal to four percent (4%) of the total number of shares of Common
Stock outstanding on the last trading day in December of the immediately
preceding calendar year, but in no event shall any such annual increase exceed
1,500,000 shares.

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

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

                                       4
<PAGE>   5

issuance. Shares of Common Stock underlying one or more stock appreciation
rights exercised under Section IV of Article Two, Section III of Article Three,
Section II of Article Five or Section III of Article Six of the Plan shall NOT
be available for subsequent issuance under the Plan.

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

                                       5

<PAGE>   6

                                   ARTICLE TWO

                       DISCRETIONARY OPTION GRANT PROGRAM

     I.   OPTION TERMS

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

          A. EXERCISE PRICE.

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

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

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

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

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

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

          B. EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable at
such time or times, during such period and for such number of shares as shall be
determined by the

                                       6
<PAGE>   7

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.

          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

                                       7
<PAGE>   8

                    (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 to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right.

          F. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or the laws of inheritance
following the Optionee's death. Non-Statutory Options shall be subject to the
same restriction, except that a Non-Statutory 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.

     II.  INCENTIVE OPTIONS

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

                                       8
<PAGE>   9

          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. CORPORATE TRANSACTION/CHANGE IN CONTROL

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

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

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

                                       9
<PAGE>   10

          D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments to reflect such Corporate Transaction shall also be made
to (i) the exercise price payable per share under each outstanding option,
provided the aggregate exercise price payable for such securities shall remain
the same, (ii) the maximum number and/or class of securities available for
issuance over the remaining term of the Plan and (iii) the maximum number and/or
class of securities for which any one person may be granted stock options,
separately exercisable stock appreciation rights and direct stock issuances
under the Plan per calendar year and (iv) the maximum number and/or class of
securities by which the share reserve is to increase automatically each calendar
year. To the extent the actual holders of the Corporation's outstanding Common
Stock receive cash consideration for their Common Stock in consummation of the
Corporate Transaction, 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 Corporate Transaction.

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

          F. The Plan Administrator shall have full power and authority to
structure one or more outstanding options under the Discretionary Option Grant
Program so that those options shall become 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 Corporate Transaction in which those options are assumed
and 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 his or her Involuntary Termination, and the shares
subject to those terminated repurchase rights shall accordingly vest in full at
that time.

                                       10
<PAGE>   11

          G. The Plan Administrator shall have the discretionary authority to
structure one or more outstanding options under the Discretionary Option Grant
Program so that those options shall, immediately prior to the effective date of
a Change in Control, become 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
Change in Control, and the shares subject to those terminated rights shall
thereupon vest in full. Alternatively, the Plan Administrator may condition the
automatic acceleration of one or more outstanding options under the
Discretionary Option Grant Program and the termination of one or more of the
Corporation's outstanding repurchase rights under such program upon the
subsequent termination of the Optionee's Service by reason of an Involuntary
Termination within a designated period (not to exceed eighteen (18) months)
following the effective date of such Change in Control.

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

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

     IV.  CANCELLATION AND REGRANT OF OPTIONS

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

     V.   STOCK APPRECIATION RIGHTS

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

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

               (i) One or more Optionees may be granted the right, exercisable
     upon such terms as the Plan Administrator may establish, to elect between
     the exercise of the underlying option for shares of Common Stock and

                                       11
<PAGE>   12

     the surrender of that option in exchange for a distribution from the
     Corporation in an amount equal to the excess of (a) the Fair Market Value
     (on the option surrender date) of the number of shares in which the
     Optionee is at the time vested under the surrendered option (or surrendered
     portion thereof) over (b) the aggregate exercise price payable for such
     shares.

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

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

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

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

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

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

                                       12
<PAGE>   13

                                  ARTICLE THREE

                     SALARY INVESTMENT OPTION GRANT PROGRAM

     I.   OPTION GRANTS

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

     II.  OPTION TERMS

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

          A.   EXERCISE PRICE.

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

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

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

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

               X is the number of option shares,

                                       13
<PAGE>   14

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

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

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

          A. In the event of any Corporate Transaction while the Optionee
remains in Service, each outstanding option held by such Optionee under this
Salary Investment Option Grant Program shall automatically accelerate so that
each such option shall, immediately prior to the effective date of the Corporate
Transaction, become 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 Corporate Transaction, except to the extent
assumed by the successor corporation (or parent thereof) in such Corporate
Transaction. Any option so assumed and shall remain exercisable for the fully
vested shares until the earlier of (i) the expiration of the ten (10)-year
option term or (ii) the expiration of the three (3)-year period measured from
the date of the Optionee's cessation of Service.

                                       14
<PAGE>   15

          B. In the event of a Change in Control while the Optionee remains in
Service, each outstanding option held by such Optionee under this Salary
Investment Option Grant Program shall automatically accelerate so that each such
option shall, immediately 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. The option shall remain so exercisable until the
earliest to occur of (i) the expiration of the ten (10)-year option term, (ii)
the expiration of the three (3)-year period measured from the date of the
Optionee's cessation of Service, (iii) the termination of the option in
connection with a Corporate Transaction or (iv) the surrender of the option in
connection with a Hostile Take-Over.

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

          D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
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 Corporate Transaction, 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 Corporate Transaction.

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

                                       15
<PAGE>   16

     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.

                                       16
<PAGE>   17

                                  ARTICLE FOUR

                             STOCK ISSUANCE PROGRAM

     I.   STOCK ISSUANCE TERMS

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

          A.   PURCHASE PRICE.

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

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

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

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

          B.   VESTING PROVISIONS.

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

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

                                       17
<PAGE>   18

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

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

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

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

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

     II.  CORPORATE TRANSACTION/CHANGE IN CONTROL

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

                                       18
<PAGE>   19

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

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

     III. SHARE ESCROW/LEGENDS

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

                                       19
<PAGE>   20

                                  ARTICLE FIVE

                         AUTOMATIC OPTION GRANT PROGRAM

     I.   OPTION TERMS

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

               1. Each individual who is first elected or appointed as a
non-employee Board member at any time on or after the Underwriting Date shall
automatically be granted, on the date of such initial election or appointment, a
Non-Statutory Option to purchase 50,000 shares of Common Stock, provided that
individual has not previously been in the employ of the Corporation or any
Parent or Subsidiary.

               2. On the date of each Annual Stockholders Meeting held after the
Underwriting Date, each individual who is to continue to serve as a non-employee
Board member, whether or not that individual is standing for re-election to the
Board at that particular Annual Meeting, shall automatically be granted a
Non-Statutory Option to purchase 2,500 shares of Common Stock, provided such
individual has served as a non-employee Board member for at least six (6)
months. There shall be no limit on the number of such 2,500-share option grants
any one non-employee Board member may receive over his or her period of Board
service, and non-employee Board members who have previously been in the employ
of the Corporation (or any Parent or Subsidiary) or who have otherwise received
one or more stock option grants from the Corporation prior to the Underwriting
Date shall be eligible to receive one or more such annual option grants over
their period of continued Board service.

          B.   EXERCISE PRICE.

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

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

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

          D.   EXERCISE AND VESTING OF OPTIONS. Each option 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 exercise price paid per share, upon the Optionee's cessation of Board
service prior to vesting in those shares. The shares subject to each initial
50,000-share grant shall vest, and the Corporation's repurchase right shall

                                       20
<PAGE>   21

lapse, in a series of four (4) successive equal annual installments upon the
Optionee's completion of each year of service as a Board member over the four
(4)-year period measured from the option grant date. The shares subject to each
annual 2,500-share option grant shall vest in one installment upon the
Optionee's completion of the one (1)-year period of service measured from the
grant date.

          E. LIMITED TRANSFERABILITY OF OPTIONS. Each option under this Article
Five 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 this Article Five, and those options shall, in accordance with
such designation, automatically be transferred to such beneficiary or
beneficiaries upon the Optionee's death while holding those options. Such
beneficiary or beneficiaries shall take the transferred options subject to all
the terms and conditions of the applicable agreement evidencing each such
transferred option, including (without limitation) the limited time period
during which the option may be exercised following the Optionee's death.

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

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

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

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

                                       21
<PAGE>   22

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

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

          A. In the event of any Corporate Transaction while the Optionee
remains a Board member, the shares of Common Stock at the time subject to each
outstanding option 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 Corporate Transaction, 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 Corporate Transaction, each automatic option grant shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof).

          B. In connection with any Change in Control while the Optionee remains
a Board member, the shares of Common Stock at the time subject to each
outstanding option 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. Each such option shall
remain exercisable for such fully vested option shares until the expiration or
sooner termination of the option term or the surrender of the option in
connection with a Hostile Take-Over.

          C. All outstanding repurchase rights under 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
Corporate Transaction or Change in Control.

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

                                       22
<PAGE>   23

          E. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
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 Corporate Transaction, 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 Corporate Transaction.

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

     III. REMAINING TERMS

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

                                       23
<PAGE>   24

                                   ARTICLE SIX

                        DIRECTOR FEE OPTION GRANT PROGRAM

     I.   OPTION GRANTS

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

     II.  OPTION TERMS

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

          A. EXERCISE PRICE.

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

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

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

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

               X is the number of option shares,

               A is the portion of the annual retainer fee subject to the
          non-employee Board member's election under the Director Fee Option
          Grant Program, and

                                       24
<PAGE>   25

               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) equal monthly installments upon the Optionee's
completion of each calendar month of Board service during the calendar year for
which the retainer fee election is in effect. Each option shall have a maximum
term of ten (10) years measured from the option grant date.

          D. LIMITED TRANSFERABILITY OF OPTIONS. Each option under this Article
Six may 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 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 this
Article Six, and those options shall, in accordance with such designation,
automatically be transferred to such beneficiary or beneficiaries upon the
Optionee's death while holding those options. Such beneficiary or beneficiaries
shall take the transferred options subject to all the terms and conditions of
the applicable agreement evidencing each such transferred option, including
(without limitation) the limited time period during which the option may be
exercised following the Optionee's death.

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

          F. DEATH OR PERMANENT DISABILITY. Should the Optionee's service as a
Board member cease by reason of death or Permanent Disability, then each option
held by such Optionee under this Director Fee Option Grant Program shall
immediately become exercisable for all the shares of Common Stock at the time
subject to that option, and the option may be exercised for any or all of those
shares as fully vested shares until the earlier of (i) the expiration of the ten
(10)-year option term or (ii) the expiration of the three (3)-year period
measured from

                                       25
<PAGE>   26

the date of such cessation of Board service. To the extent such option is held
by the Optionee at the time of his or her death, that option may be 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 designated beneficiary or beneficiaries of such option.

               Should the Optionee die after cessation of Board service but
while holding one or more options under this Director Fee Option Grant Program,
then each such option may be exercised, for any or all of the shares for which
the option is exercisable at the time of the Optionee's cessation of Board
service (less any shares subsequently purchased by Optionee prior to death), by
the personal representative of the Optionee's estate or by the person or persons
to whom the option is transferred pursuant to the Optionee's will or the laws of
inheritance or by the designated beneficiary or beneficiaries of such option.
Such right of exercise shall lapse, and the option shall terminate, upon the
earlier of (i) the expiration of the ten (10)-year option term or (ii) the three
(3)-year period measured from the date of the Optionee's cessation of Board
service.

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

          A. In the event of any Corporate Transaction while the Optionee
remains a Board member, each outstanding option held by such Optionee under this
Director Fee Option Grant Program shall automatically accelerate so that each
such option shall, immediately prior to the effective date of the Corporate
Transaction, become 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 Corporate Transaction, except to the extent
assumed by the successor corporation (or parent thereof) in such Corporate
Transaction. Any option so assumed and shall remain exercisable for the fully
vested shares until the earlier of (i) the expiration of the ten (10)-year
option term or (ii) the expiration of the three (3)-year period measured from
the date of the Optionee's cessation of Board service.

          B. In the event of a Change in Control while the Optionee remains in
Service, each outstanding option held by such Optionee under this Director Fee
Option Grant Program shall automatically accelerate so that each such option
shall, immediately 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. The option shall remain so exercisable until the
earliest to occur of (i) the expiration of the ten (10)-year option term, (ii)
the expiration of the three (3)-year period measured from the date of the
Optionee's cessation of Board service, (iii) the termination of the option in
connection with a Corporate Transaction or (iv) the surrender of the option in
connection with a Hostile Take-Over.

          C. Upon the occurrence of a Hostile Take-Over, the Optionee shall have
a thirty (30)-day period in which to surrender to the Corporation each
outstanding option granted him or her under the Director Fee Option Grant
Program. The Optionee shall in return be

                                       26
<PAGE>   27

entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to each surrendered option (whether or not the option is otherwise at
the time exercisable for those shares) over (ii) the aggregate exercise price
payable for such shares. Such cash distribution shall be paid within five (5)
days following the surrender of the option to the Corporation. No approval or
consent of the Board or any Plan Administrator shall be required at the time of
the actual option surrender and cash distribution.

          D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
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 Corporate Transaction, the
successor corporation may, in connection with the assumption of the outstanding
options under the Director Fee 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 Corporate Transaction.

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

     IV.  REMAINING TERMS

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

                                       27
<PAGE>   28

                                  ARTICLE SEVEN

                                  MISCELLANEOUS

     I.   FINANCING

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

     II.  TAX WITHHOLDING

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

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

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

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

                                       28
<PAGE>   29

     III. EFFECTIVE DATE AND TERM OF THE PLAN

          A. The Plan shall become effective immediately on the Plan Effective
Date. However, the Salary Investment Option Grant Program and the Director Fee
Option Grant Program shall not be implemented until such time as the Primary
Committee may deem appropriate. 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 non-employee Board members eligible for such grants
at that time. However, no options granted under the Plan may be exercised, and
no shares shall be issued under the Plan, until the Plan is approved by the
Corporation's stockholders. If such stockholder approval is not obtained within
twelve (12) months after the Plan Effective Date, then all options previously
granted under this Plan shall terminate and cease to be outstanding, and no
further options shall be granted and no shares shall be issued under the Plan.

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

          C. One or more provisions of the Plan, including (without limitation)
the option/vesting acceleration provisions of Article Two relating to Corporate
Transactions and Changes in Control, may, in the Plan Administrator's
discretion, be extended to one or more options incorporated from the Predecessor
Plan which do not otherwise contain such provisions.

          D. The Plan shall terminate upon the earliest to occur of (i) January
31, 2010, (ii) the date on which all shares available for issuance under the
Plan shall have been issued as fully vested shares or (iii) the termination of
all outstanding options in connection with a Corporate Transaction. Should the
Plan terminate on January 31, 2010, 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

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

                                       29
<PAGE>   30

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

     V.   USE OF PROCEEDS

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

     VI.  REGULATORY APPROVALS

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

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

     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.

                                       30
<PAGE>   31

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

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

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

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

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

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

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

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

                                      A-1.
<PAGE>   32

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

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

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

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

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

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

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

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

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

                                      A-2.
<PAGE>   33

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

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

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

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

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

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

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

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

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

                                      A-3.
<PAGE>   34

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

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

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

          W. PLAN shall mean the Corporation's 2000 Stock Incentive Plan, as set
forth in this document.

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

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

          Z. PREDECESSOR PLAN shall mean the Corporation's 1998 Equity Incentive
Plan in effect immediately prior to the Plan Effective Date hereunder.

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

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

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

                                      A-4.
<PAGE>   35

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

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

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

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

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

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

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

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

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

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

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

                                      A-5.

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