Document:

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                                                                   EXHIBIT 10.01

                          NETSCREEN TECHNOLOGIES, INC.

         FORM OF RESTATED FOUNDER'S RESTRICTED STOCK PURCHASE AGREEMENT

     THIS FOUNDER'S RESTRICTED STOCK PURCHASE AGREEMENT (the "Agreement") is
made and entered into as of this __ day of _______, _____ (the "Effective Date")
between NetScreen Technologies, Inc., a Delaware corporation (the "Company"),
and ______ ("Founder").

     1.   Purchase of Shares.

          Subject to the terms and conditions of this Agreement, Founder hereby
purchases ___________ (_______) shares of the Company's $___ par value Common
Stock (the "Shares") from the Company, and the Company hereby sells the Shares
to Founder at an aggregate purchase price of _____________ Dollars
($____________) payable in cash.

     2.   Market Standoff.

          Founder agrees that if so requested by the Company or any
representative of the underwriters in connection with any registration of the
offering of any securities of the Company under the Securities Act of 1933, as
amended (the "Securities Act"), Founder shall not sell or otherwise transfer any
Shares of other securities of the Company during such period (not to exceed 180
days) following the effective date of a registration statement of the Company
filed under the Securities Act as may be requested by the representative of the
underwriters; provided, however, that such restriction shall apply only to the
first two registration statements of the Company to become effective under the
Securities Act which include securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Act. The Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of each such period.

     3.   Vesting; Company Right to Repurchase; Acceleration.

          3.1  Vesting. As of the Effective Date, _________of the Shares will be
deemed "Vested" and the balance of the Shares will be deemed "Unvested."
Although all of the Shares (whether Vested or Unvested) will entitle the Founder
to all of the rights accorded to a holder of Common Stock of the Company, those
Shares which are Unvested remain subject to repurchase by the Company pursuant
to Section 3.2 below. Such Unvested Shares will become Vested on the following
schedule: ___________ of the Shares will become Vested six months after the
Effective Date; an additional _____________ of the Shares will become Vested one
year after the Effective Date; and, thereafter, ______________________ and 2/3
additional Shares will become Vested, on a cumulative basis, on the last day of
each month, such that as of _______, all of the Shares will have become Vested.

          3.2  Company Right to Repurchase Unvested Shares. Subject to the
acceleration provisions set forth in Section 3.3, in the event that Founder is
no longer employed

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or retained by the Company or any of its affiliates as either a director, an
officer or an employee, or in any such capacity, for any reason whatsoever
(whether due to death, total disability, voluntary resignation, involuntary
termination or any other reason, then for a period of 90 days after the date of
such event the Company will have an assignable right, but not an obligation, to
repurchase any Shares owned by Founder that remain Unvested as of such
termination event (after giving effect to any accelerated vesting provided in
Section 3.3 below) for a price equal to $0.01 per share, subject to appropriate
adjustment for stock splits, stock dividends and combinations; provided that if
the Company determines that exercise of its right to repurchase could cause the
Company to cease to qualify as a "small business" under Section 1202 of the
Internal Revenue Code as to prior or subsequent stock issuances by the Company
and if the Company so notifies Founder within such 90-day period, the Company
may (a) exercise its right of repurchase set forth in this Section 3 by written
notice to Founder at any time within one year after the date on which Founder
ceases to serve and provided further, that if the Company so notifies Founder,
during the period between the date of receipt of such notice and the earlier of
exercise of the Company's right to repurchase and expiration of such one-year
period, Founder hereby grants the Chairman of the Board (or in the absence of a
Chairman, the Chief Executive Officer) of the Company, with full power of
substitution, an irrevocable proxy to vote such shares (or execute a written
consent) on all matters submitted to a vote of shareholders or (b) assign all or
a portion of its repurchase right pro rata to the Company's three largest
shareholders (other than Founder). If the Company (or its assignees) exercises
its right of repurchase, Founder shall, if necessary, endorse and deliver to the
Company (or its assignees) the stock certificates representing the Shares being
repurchased, and the Company (or its assignees) shall pay Founder the total
repurchase price in cash upon such delivery. Founder shall cease to have any
rights with respect to such repurchased Shares immediately upon receipt of the
repurchase price.

          3.3  Acceleration of Vesting upon Certain Events. Notwithstanding the
Vesting provisions set forth in Section 3.1 above:

          (a) In the event that Founder's employment with the Company or its
affiliates is terminated by the Company without cause, then immediately prior
to such event, additional Unvested Shares equal to the greater of (i) the number
of Unvested Shares scheduled to become Vested during the succeeding twelve
months from the date of termination, and (ii) the number of Unvested Shares
scheduled to become Vested on or before October 31, 1999, shall become Vested
and the Company will have no right to repurchase such Shares pursuant to Section
3.2 above, and Founder shall be entitled to receive a severance payment of
$100,000 payable in equal monthly installments over a twelve-month period
commencing with the date of termination. For such purposes, the term "Cause"
means (i) the conviction of any felony or (ii) participation in a fraud against
the Company which, in the determination of the Company's Board of Directors,
adversely affects the Company in a material way. For the above purposes, a
termination by the Company without Cause includes a termination of employment by
the Founder within 30 days following any of the following events; (x) the
assignment of any duties to Founder inconsistent with, or reflecting a
materially adverse change in, Founder's position, duties, responsibilities or
status with the Company, or the removal of Founder from, such position; or (y)
the relocation of the Company's principal executive offices, or relocating
Founder's principal place of business, in excess of fifty (50) miles from the
Company's executive offices located in Santa Clara, California.

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          (b)  In the event of a Sale of the Company, then 100% of the Shares
that are Unvested as of the consummation of such Sale of the Company will become
Vested immediately prior to such consummation. For such purposes, the term "Sale
of the Company" means any sale, lease or disposition of all or substantially all
of the assets of the Company, or any merger or consolidation of the Company with
or into any other corporation or corporations or other entity, or any other
corporate reorganization where the shareholders of the Company immediately prior
to such event do not retain at least 50% of the voting power of and interest in
the successor entity, or any transaction or series of related transactions in
which more than 50% of the Company's voting power is transferred.

     4.   Right of First Refusal.

          The Shares shall be subject to a right of first refusal by the Company
in the event that Founder or any transferee of the Shares proposes to sell,
pledge, or otherwise transfer the Shares or any interest in the Shares to any
person or entity. Any holder of the Shares desiring to transfer the Shares or
any interest in the Shares shall give a written notice to the Company describing
the proposed transfer, including the number of Shares proposed to be
transferred, the price and terms at which such Shares are proposed to be
transferred, and the name and address of the proposed transferee. Unless
otherwise agreed by the Company and the holder of such Shares, repurchases by
the Company under this Section shall be at the proposed price and terms,
including the number of Shares to be repurchased, specified in the notice to the
Company. The Company's rights under this Section shall be freely assignable. If
the Company fails to exercise its right of first refusal within 30 days from the
date on which the Company receives the shareholder's notice, the shareholder
may, within the next 90 days, conclude a transfer to the proposed transferee of
the exact number of Shares covered by that notice on terms not more favorable to
the transferee than those described in the notice. Any subsequent proposed
transfer shall again be subject to the Company's right of first refusal. If the
Company exercises its right of first refusal, the shareholder shall endorse and
deliver to the Company the stock certificates representing the Shares being
repurchased and the Company shall promptly pay the shareholder the total
repurchase price. The holder of the Shares being repurchased shall cease to have
any rights with respect to such Shares immediately upon receipt of the
repurchase price. The right of first refusal set forth in this Section shall
terminate upon the earlier of (i) consummation of an underwritten public
offering of the Company's Common Stock registered under the Securities Act, or
(ii) registration of the Company's Common Stock under the Securities Exchange
Act of 1934, as amended.

     5.   Representations and Acknowledgments of Founder.

          Founder hereby represents, warrants, acknowledges, and agrees that:

          (a)  Investment. Founder is acquiring the Shares for Founder's own
account and not with a view to or for sale in connection with any distribution
of the Shares. Founder

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understands that he must bear the economic risk of the investment for an
indefinite period of time because the Shares have not been registered under the
Securities Act or qualified under the California Corporate Securities Law of
1968 or the securities laws of any other state.

          (b)  Investment Experience; Pre-existing Relationship. Founder has (i)
a pre-existing personal or business relationship with the Company or one or more
of its directors that is of a nature and duration which enable him to be aware
of the character, business acumen, and general business and financial
circumstances of the Company or the director(s) with whom such relationship
exists and (ii) such knowledge and experience in financial and business matters
that he is capable of evaluating the merits and risks of the purchase of the
Shares.

          (c)  Limited Operating History. Founder is aware that the Company has
only recently been formed and has conducted only limited business activities to
date.

          (d)  Speculative Investment. Founder's investment in the Company
represented by the Shares is highly speculative in nature and is subject to a
high degree of risk of loss in whole or in part; the amount of such investment
is within Founder's risk capital means and is not so great in relation to
Founder's total financial resources as would jeopardize the personal financial
needs of Founder or Founder's family in the event such investment were lost in
whole or in part.

          (e)  Tax Advice. The Company has made no warranties or representation
to Founder with respect to the income tax consequences of the transactions
contemplated by this Agreement and Founder is in no manner relying on the
Company or its representatives for an assessment of any tax consequences related
to ownership, purchase, or disposition of the Shares. Founder shall assume full
responsibility for all such consequences and for the preparation and filing of
all tax returns and elections which may or must be filed in connection with such
Shares.

          (f)  Unregistered Securities.

               (i)  Founder must bear the economic risk of investment for an
indefinite period of time because the Shares have not be registered under the
Securities Act and therefore cannot and will not be sold unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. The Company has made no agreements, covenants, or
undertakings whatsoever to register any of the shares under the Securities Act.
The Company has made no representations, warranties, or covenants whatsoever as
to whether any exemption from the Securities Act, including without limitation
any exemption for limited sales in routine brokers' transactions pursuant to
Rule 144 under the Securities Act, will become available and any such exemption
pursuant to Rule 144, if available at all, will not be available unless: (x) a
public trading market then exists in the Company's Common Stock, (y) adequate
information as to the company's financial and other affairs and operations is
then available to the public, and (z) all other terms and conditions of Rule 144
have been satisfied. Founder understands that the resale provisions of Rule 701
will not apply until 90 days after the Company becomes subject to the reporting
obligations of the Securities Exchange Act of 1934 (typically upon the effective
date of a public offering).

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               (ii)  Transfer of the Shares has not been registered or qualified
under any applicable state law regulating securities and therefore the Shares
cannot and will not be sold unless they are subsequently registered or qualified
under any such law or an exemption therefrom is available. The Company has made
no agreements, covenants, or undertakings whatsoever to register or qualify any
of the Shares under any such law. The Company has made no representations,
warranties, or covenants whatsoever as to whether any exemption from any such
law will become available.

          (g)  Public Trading. The Common Stock is not presently publicly
traded, and the Company has made no representation, covenant, or agreement as to
whether any such market for the Common Stock will develop.

     6.   Legends.

          Stock certificates evidencing the Shares may bear such restrictive
legends as the Company and the Company's counsel deem necessary or advisable
under applicable law or pursuant to this Agreement, including without
limitation, the following legends:

               "The Securities represented hereby may be subject to a right of
          repurchase by the Company pursuant to the provisions of the Restricted
          Stock Purchase Agreement between the Company and the original
          purchaser of such Securities, should the person initially issued there
          Securities cease to be employed by and/or render services as a
          consultant to the Company or any affiliate thereof, and such
          securities may not be sold or otherwise transferred if such securities
          are subject to such right or repurchase."

               "The Securities represented hereby are subject to restrictions on
          transfer for a period of 180 days following the effective date of a
          registration statement under the Securities Act of 1933, as amended,
          for an offering of the Company's securities pursuant to the market
          standoff provisions of the Restricted Stock Purchase Agreement between
          the Company and the original purchaser of such securities."

               "The Securities represented hereby are subject to a right of
          first refusal in favor of the Company pursuant to a Restricted Stock
          Purchase Agreement between the Company and the original purchaser of
          such Securities, and may not be sold or otherwise transferred except
          in compliance with the terms of such right of first refusal."

               "The Securities represented hereby have not been registered under
          the Securities Act of 1933, as amended (the "Securities Act"). Such
          Securities may not be transferred unless a Registration Statement
          under the Securities Act is in effect as to such transfer or, in the
          opinion of counsel for the Company, such transfer may be made pursuant
          to Rule 144 or registration under the Securities Act is otherwise
          unnecessary in order for such transfer to comply with the Securities
          Act."

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     7.   Binding Effect.

          Subject to the limitations set forth in this Agreement, this Agreement
shall be binding upon, and inure to the benefit of, the executors,
administrators, heirs, legal representatives, successors, and assigns of the
parties hereto.

     8.   Taxes.

          Founder shall execute and deliver to the Company with this executed
Agreement a copy of the Acknowledgment and Statement of Decision Regarding
Election Pursuant to Section 83(b) of the Internal Revenue Code (the
"Acknowledgment") attached hereto as Exhibit 8A and a copy of the Election
Pursuant to Section 83(b) of the Code, attached hereto as Exhibit 8B, if Founder
has indicated in the Acknowledgment his or her decision to make such an
election. Founder should consult his tax advisor to determine if there is a
comparable election to file in the state of his or her residence and whether
such filing is desirable under the circumstances.

     9.   Damages.

          Founder shall be liable to the Company for all costs and damages,
including incidental and consequential damages, resulting from a disposition of
shares which is not in conformity with the provisions of this Agreement.

     10.  Governing Law.

          This Agreement shall be governed by, and construed in accordance with,
the laws of the State of California excluding those laws that direct the
application of the laws of another jurisdiction.

     11.  Notices.

          All notices and other communications under this Agreement shall be in
writing. Unless and until Founder is notified in writing to the contrary, all
notices, communications, and documents directed to the Company and related to
the Agreement, if not delivered by hand, shall be mailed, addressed as follows:

                          NetScreen Technologies, Inc.
                          350 Oakmead Parkway
                          Sunnyvale, CA  94085
                          Attention: President

Unless and until the Company is notified in writing to the contrary, all
notices, communications, and documents intended for Founder and related to this
Agreement, if not delivered by hand, shall be mailed to Founder's last known
address as shown on the Company's books. Notices and communications shall be
mailed by certified mail, return receipt requested, postage prepaid. All

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mailings and deliveries related to this Agreement shall be deemed received only
when actually received, if by personal delivery, and two business days after
mailing, if by mail.

     12.  Entire Agreement.

          This Restricted Stock Purchase Agreement constitutes the entire
agreement of the parties pertaining to the purchase of the Shares by Founder
from the Company and the rate at which Unvested Shares become Vested Shares, and
supersedes and merges all prior and contemporaneous agreements, representations,
and understandings of the parties relating to such subject matter.

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          IN WITNESS WHEREOF, the parties hereto have executed this Founder's
Restricted Stock Purchase Agreement as of the date and year first above written.

                                       NETSCREEN TECHNOLOGIES, INC.

                                       By:
                                           -------------------------------------
                                                      , President
                                           -----------

                                       FOUNDER

                                       -----------------------------------------

          Founder's spouse indicates by the execution of this Agreement his or
her consent to be bound by the terms herein as to his or her interests,
whether as community property or otherwise, if any, in the shares hereby
purchased.

                                Founder's Spouse

                                       This Certificate for the Shares
                                       is to be registered as follows:

                                       -----------------------------------------

                                       -----------------------------------------

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                                   EXHIBIT 8A
                          ACKNOWLEDGMENT AND STATEMENT
                         OF DECISION REGARDING ELECTION
                          PURSUANT TO Section 83(b) OF
                            THE INTERNAL REVENUE CODE

          The undersigned (which term includes the undersigned's spouse), a
purchaser of _______________ shares of Common Stock of NetScreen Technologies,
Inc., a Delaware corporation (the "Company") and a party to a Restricted Stock
Purchase Agreement with the Company (the "Agreement"), hereby states as follows:

     l.   The undersigned acknowledges receipt of a copy of the Agreement. The
undersigned has carefully reviewed the Agreement.

     2.   The undersigned either [check as applicable]:

          ____   (a)   has consulted, and has been fully advised by, the
                       undersigned's own tax advisor, _______________, whose
                       business address is ___________________________________
                       _______________, regarding the federal, state, and local
                       tax consequences of purchasing shares under the
                       Agreement, and particularly regarding the advisability of
                       making elections pursuant to Section 83(b) of the
                       Internal Revenue Code of 1986 (the "Code"), and pursuant
                       to the corresponding provisions, if any, of applicable
                       state laws; or

          ____   (b)   has knowingly chosen not to consult such a tax advisor.

     3.   The undersigned hereby states that the undersigned has decided [check
 as applicable]:

          ____   (a)   to make an election pursuant to Section 83(b) of the Code
                       and is submitting to the Company, together with the
                       undersigned's executed Agreement, an executed form which
                       is attached as Exhibit 8B to the Agreement; or

                 (b)   not to make an election pursuant to Section 83(b) of the
                       Code.

     4.   Neither the Company nor any subsidiary or representative of the
Company has made any warranty or representation to the undersigned with respect
to the tax consequences of the undersigned's purchase of shares and execution of
the Agreement in connection therewith or of the making or failure to make an
election pursuant to Section 83(b) of the Code or the corresponding provisions,
if any, of applicable state law.

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     5.   The undersigned is also submitting to the Company, together with the
Agreement, an executed original of an election, if any is made, of the
undersigned pursuant to provisions of state law corresponding to Section 83(b)
of the Code, if any, which are applicable to the undersigned's purchase of
shares under the Agreement.

Date:
      ------------------------      -------------------------------------------
                                    Founder

Date:
      ------------------------      -------------------------------------------
                                    [Spouse]

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                    ELECTION PURSUANT TO SECTION 83(b) OF THE
                INTERNAL REVENUE CODE OT INCLUDE IN GROSS INCOME
                   THE EXCESS OVER THE PURCHASE PRICE, IF ANY,
                      OF THE VALUE OF PROPERTY TRANSFERRED
                           IN CONNECTION WITH SERVICES

     The undersigned hereby elects pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended, to include in the undersigned's gross income
for the 1997 taxable year the excess (if any) of the fair market value of the
property described below, over the amount the undersigned paid for such
property, and supplies herewith the following information in accordance with the
Treasury regulations promulgated under Section 83(b):

l.   The undersigned's name, address and taxpayer identification (social
     security) number are:

      Name:
               -----------------------------------------

      Address:
               -----------------------------------------

               -----------------------------------------

      Social Security #:
                        --------------------------------

2.   The property with respect to which the election is made consists of
     _______________ common shares of NetScreen Technologies, Inc., A Delaware
     corporation (the "Company").

3.   The date on which the above property was transferred to the undersigned was
     ________________, and the taxable year to which this election relates is
     ______.

4.   The above property is subject to a right of repurchase by the Company at
     the initial purchase price, if the undersigned ceases to be an employee of,
     or a consultant to, the Company or an affiliate of the Company.

5.   The fair market value of the above property at the time of transfer
     (determined without regard to any restrictions other than those which by
     their terms will never lapse) is $___ per share.

6.   The amount paid for the above property by the undersigned was $__ per
     share.

7.   A copy of this election has been furnished to the Company, and a copy will
     be filed with the income tax return of the undersigned to which this
     election relates.

Date:
      -----------------------       -----------------------------------
                                    (Signature)

                                       11<PAGE>

                                                                   EXHIBIT 10.02

                          NETSCREEN TECHNOLOGIES, INC.

                    1997 EQUITY INCENTIVE PLAN (as amended)

                           Adopted November 17, 1997

     1. PURPOSE. The purpose of this Plan is to provide incentives to attract,
retain and motivate eligible persons whose present and potential contributions
are important to the success of the Company, its Parent and Subsidiaries, by
offering them an opportunity to participate in the Company's future performance
through awards of Options and Restricted Stock. Capitalized terms not defined in
the text are defined in Section 22. This Plan is intended to be a written
compensatory benefit plan within the meaning of Rule 701 promulgated under the
Securities Act.

     2. SHARES SUBJECT TO THE PLAN.

          2.1  Number of Shares Available. Subject to Sections 2.2 and 17, the
total number of Shares reserved and available for grant and issuance pursuant to
this Plan will be 23,200,014 Shares or such lesser number of Shares as permitted
under Section 260.140.45 of Title 10 of the California Code of Regulations.
Subject to Sections 2.2 and 17, Shares will again be available for grant and
issuance in connection with future Awards under this Plan that: (a) are subject
to issuance upon exercise of an Option but cease to be subject to such Option
for any reason other than exercise of such Option or (b) are subject to an Award
that otherwise terminates without Shares being issued. At all times the Company
will reserve and keep available a sufficient number of Shares as will be
required to satisfy the requirements of all Awards granted under this Plan.

          2.2  Adjustment of Shares. In the event that the number of outstanding
shares of the Company's Common Stock is changed by a stock dividend,
recapitalization, stock split, reverse stock split, subdivision, combination,
reclassification or similar change in the capital structure of the Company
without consideration, then (a) the number of Shares reserved for issuance under
this Plan, (b) the Exercise Prices of and number of Shares subject to
outstanding Options, and (c) the Purchase Prices of and number of Shares subject
to other outstanding Awards will be proportionately adjusted, subject to any
required action by the Board or the stockholders of the Company and compliance
with applicable securities laws; provided, however, that fractions of a Share
will not be issued but will either be paid in cash at Fair Market Value of such
fraction of a Share or will be rounded down to the nearest whole Share, as
determined by the Committee; and provided, further, that the Exercise Price of
any Option may not be decreased to below the par value of the Shares.

     3.   ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted only
to employees (including officers and directors who are also employees) of the
Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors and consultants of the Company or any
Parent or Subsidiary of the Company; provided such consultants render bona fide
services not in connection with the offer and sale of securities in a
capital-raising transaction. A person may be granted more than one Award under
this Plan.

     4. ADMINISTRATION.

          4.1  Committee Authority. This Plan will be administered by the
Committee or the Board acting as the Committee. Subject to the general purposes,
terms and conditions of this Plan, and to the direction of the Board, the
Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:

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          (a)  construe and interpret this Plan, any Award Agreement and any
               other agreement or document executed pursuant to this Plan;

          (b)  prescribe, amend and rescind rules and regulations relating to
               this Plan;

          (c)  select persons to receive Awards;

          (d)  determine the form and terms of Awards;

          (e)  determine the number of Shares or other consideration subject to
               Awards;

          (f)  determine whether Awards will be granted singly, in combination
               with, in tandem with, in replacement of, or as alternatives to,
               other Awards under this Plan or awards under any other incentive
               or compensation plan of the Company or any Parent or Subsidiary
               of the Company;

          (g)  grant waivers of Plan or Award conditions;

          (h)  determine the vesting, exercisability and payment of Awards;

          (i)  correct any defect, supply any omission, or reconcile any
               inconsistency in this Plan, any Award, any Award Agreement, any
               Exercise Agreement or any Restricted Stock Purchase Agreement;

          (j)  determine whether an Award has been earned; and

          (k)  make all other determinations necessary or advisable for the
               administration of this Plan.

          4.2  Committee Discretion. Any determination made by the Committee
with respect to any Award will be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of this Plan
or Award, and subject to Section 5.9, at any later time, and such determination
will be final and binding on the Company and on all persons having an interest
in any Award under this Plan. The Committee may delegate to one or more officers
of the Company the authority to grant an Award under this Plan.

     5.   OPTIONS. The Committee may grant Options to eligible persons and will
determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:

          5.1  Form of Option Grant. Each Option granted under this Plan will be
evidenced by an Award Agreement which will expressly identify the Option as an
ISO or an NQSO ("Stock Option Agreement"), and will be in such form and contain
such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.

          5.2  Date of Grant. The date of grant of an Option will be the date on
which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.

          5.3  Exercise Period. Options may be exercisable immediately (subject
to repurchase pursuant to Section 11 of this Plan) or may be exercisable within
the times or upon the events determined by the

                                      -2-

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Committee as set forth in the Stock Option Agreement governing such Option;
provided, however, that no Option will be exercisable after the expiration of
ten (10) years from the date the Option  is granted; and provided further that
no ISO granted to a person who directly or by attribution owns more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any Parent or Subsidiary of the Company ("Ten Percent
Stockholder") will be exercisable after the expiration of five (5) years from
the date the ISO is granted. The Committee also may provide for Options to
become exercisable at one time or from time to time, periodically or otherwise,
in such number of Shares or percentage of Shares as  the Committee determines.
Subject to earlier termination of the Option as  provided herein, each
Participant who is not an officer, director or consultant of the Company or of
a Parent or Subsidiary of the Company shall have the right to exercise an
Option granted hereunder at the rate of at least twenty percent (20%) per year
over five (5) years from the date such Option is granted.

          5.4  Exercise Price. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may not be less than
85% of the Fair Market Value of the Shares on the date of grant; provided that
(i) the Exercise Price of an ISO will not be less than 100% of the Fair Market
Value of the Shares on the date of grant and (ii) the Exercise Price of any
Option granted to a Ten Percent Stockholder will not be less than 110% of the
Fair Market Value of the Shares on the date of grant. Payment for the Shares
purchased must be made in accordance with Section 7 of this Plan.

          5.5  Method of Exercise. Options may be exercised only by delivery to
the Company of a written stock option exercise agreement (the "Exercise
Agreement") in a form approved by the Committee (which need not be the same for
each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price, and any applicable taxes, for the
number of Shares being purchased.

          5.6  Termination. Subject to earlier termination pursuant to Sections
17 and 18 and notwithstanding the exercise periods set forth in the Stock Option
Agreement, exercise of an Option will always be subject to the following:

               (a)  If the Participant is Terminated for any reason except
                    death, Disability or for Cause, then the Participant may
                    exercise such Participant's Options only to the extent that
                    such Options are exercisable upon the Termination Date no
                    later than three (3) months after the Termination Date (or
                    within such shorter time period, not less than thirty (30)
                    days, or within such longer time period, not exceeding five
                    (5) years, after the Termination Date as may be determined
                    by the Committee, with any exercise beyond three (3) months
                    after the Termination Date deemed to be an NQSO) but in any
                    event, no later than the expiration date of the Options.

               (b)  If the Participant is Terminated because of Participant's
                    death or Disability (or the Participant dies within three
                    (3) months after a Termination other than because of
                    Participant's Disability or Cause), then Participant's
                    Options may be exercised only to the extent that such
                    Options are exercisable by Participant on the Termination
                    Date and must be exercised by Participant (or Participant's
                    legal representative or authorized assignee) no later than
                    twelve (12) months after the Termination Date (or within
                    such shorter time period, not less than six (6) months, or
                    within such longer time period, not exceeding five (5)
                    years, after the Termination Date as may be determined by
                    the Committee, with any exercise beyond (a) three (3) months
                    after the Termination Date when the Termination is for any
                    reason other than the Participant's death or disability,
                    within the meaning of Section 22(e)(3) of the Code, or (b)
                    twelve (12) months after the Termination Date when the
                    Termination is for Participant's disability, within the
                    meaning of

                                      -3-

<PAGE>

                    Section 22(e)(3) of the Code, deemed to be an NQSO) but in
                    any event no later than the expiration date of the Options.

               (c)  If the Participant is terminated for Cause, then
                    Participant's Options shall expire on such Participant's
                    Termination Date, or at such later time and on such
                    conditions as are determined by the Committee.

          5.7  Limitation on Exercise. The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent Participant from exercising
the Option for the full number of Shares for which it is then exercisable.

          5.8  Limitation on ISOs. The aggregate Fair Market Value (determined
as of the date of grant) of Shares with respect to which ISOs are exercisable
for the first time by a Participant during any calendar year (under this Plan or
under any other incentive stock option plan of the Company or any Parent or
Subsidiary of the Company) will not exceed $100,000. If the Fair Market Value of
Shares on the date of grant with respect to which ISOs are exercisable for the
first time by a Participant during any calendar year exceeds $100,000, then the
Options for the first $100,000 worth of Shares to become exercisable in such
calendar year will be ISOs and the Options for the amount in excess of $100,000
that become exercisable in that calendar year will be NQSOs. In the event that
the Code or the regulations promulgated thereunder are amended after the
Effective Date (as defined in Section 18 below) to provide for a different limit
on the Fair Market Value of Shares permitted to be subject to ISOs, then such
different limit will be automatically incorporated herein and will apply to any
Options granted after the effective date of such amendment.

          5.9  Modification, Extension or Renewal. The Committee may modify,
extend or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
any Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered will be treated in accordance with Section 424(h)
of the Code. The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them;
provided, however, that the Exercise Price may not be reduced below the minimum
Exercise Price that would be permitted under Section 5.4 of this Plan for
Options granted on the date the action is taken to reduce the Exercise Price;
provided, further, that the Exercise Price will not be reduced below the par
value of the Shares, if any.

          5.10 No Disqualification. Notwithstanding any other provision in this
Plan, no term of this Plan relating to ISOs will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.

     6.   RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company
to sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares the
person may purchase, the Purchase Price, the restrictions to which the Shares
will be subject, and all other terms and conditions of the Restricted Stock
Award, subject to the following:

          6.1  Form of Restricted Stock Award. All purchases under a Restricted
Stock Award made pursuant to this Plan will be evidenced by an Award Agreement
("Restricted Stock Purchase Agreement") that will be in such form (which need
not be the same for each Participant) as the Committee will from time to time
approve, and will comply with and be subject to the terms and conditions of this
Plan. The Restricted Stock Award will be accepted by the Participant's execution
and delivery of the Restricted Stock Purchase Agreement and full payment for the
Shares to the Company within thirty (30) days from the date the Restricted Stock
Purchase Agreement is delivered to the person. If such person does not execute
and deliver the Restricted Stock Purchase Agreement along with full payment for
the Shares to the Company within thirty (30) days, then the offer will
terminate, unless otherwise determined by the Committee.

                                      -4-

<PAGE>

          6.2  Purchase Price. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award will be determined by the Committee and will be at least
85% of the Fair Market Value of the Shares on the date the Restricted Stock
Award is granted or at the time the purchase is consummated, except in the case
of a sale to a Ten Percent Stockholder, in which case the Purchase Price will be
100% of the Fair Market Value on the date the Restricted Stock Award is granted
or at the time the purchase is consummated. Payment of the Purchase Price must
be made in accordance with Section 7 of this Plan.

          6.3  Restrictions. Restricted Stock Awards may be subject to the
restrictions set forth in Section 11 of this Plan or such other restrictions not
inconsistent with Section 25102(o) of the California Corporations Code.

     7.   PAYMENT FOR SHARE PURCHASES.

          7.1  Payment. Payment for Shares purchased pursuant to this Plan may
be made in cash (by check) or, where expressly approved for the Participant by
the Committee and where permitted by law:

          (a)  by cancellation of indebtedness of the Company to the
               Participant;

          (b)  by surrender of shares that either: (1) have been owned by
               Participant for more than six (6) months and have been paid for
               within the meaning of SEC Rule 144 (and, if such shares were
               purchased from the Company by use of a promissory note, such note
               has been fully paid with respect to such shares); or (2) were
               obtained by Participant in the public market;

          (c)  by tender of a full recourse promissory note having such terms as
               may be approved by the Committee and bearing interest at a rate
               sufficient to avoid imputation of income under Sections 483 and
               1274 of the Code; provided, however, that Participants who are
               not employees or directors of the Company will not be entitled to
               purchase Shares with a promissory note unless the note is
               adequately secured by collateral other than the Shares; provided,
               further, that the portion of the Exercise Price or Purchase
               Price, as the case may be, equal to the par value of the Shares
               must be paid in cash or other legal consideration permitted by
               Delaware General Corporation Law.

          (d)  by waiver of compensation due or accrued to the Participant for
               services rendered;

          (e)  with respect only to purchases upon exercise of an Option, and
               provided that a public market for the Company's stock exists:

               (1)  through a "same day sale" commitment from the Participant
                    and a broker-dealer that is a member of the National
                    Association of Securities Dealers (an "NASD Dealer") whereby
                    the Participant irrevocably elects to exercise the Option
                    and to sell a portion of the Shares so purchased to pay for
                    the Exercise Price, and whereby the NASD Dealer irrevocably
                    commits upon receipt of such Shares to forward the Exercise
                    Price directly to the Company; or

               (2)  through a "margin" commitment from the Participant and an
                    NASD Dealer whereby the Participant irrevocably elects to
                    exercise the Option and to pledge the Shares so purchased to
                    the NASD Dealer in a margin account as security for a loan
                    from the NASD Dealer in the amount of the Exercise Price,
                    and whereby the NASD Dealer irrevocably commits upon receipt
                    of such Shares to forward the Exercise Price directly to the
                    Company; or

          (f)  by any combination of the foregoing.

                                      -5-

<PAGE>

          7.2  Loan Guarantees. The Committee may help the Participant pay for
Shares purchased under this Plan by authorizing a guarantee by the Company of a
third-party loan to the Participant.

     8.   WITHHOLDING TAXES.

          8.1  Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.

          8.2  Stock Withholding. When, under applicable tax laws, a Participant
incurs tax liability in connection with the exercise or vesting of any Award
that is subject to tax withholding and the Participant is obligated to pay the
Company the amount required to be withheld, the Committee may in its sole
discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee for such elections and be in writing in a form
acceptable to the Committee.

     9.   PRIVILEGE OF STOCK OWNERSHIP.

          9.1  Voting and Dividends. No Participant will have any of the rights
of a stockholder with respect to any Shares until the Shares are issued to the
Participant. After Shares are issued to the Participant, the Participant will be
a stockholder and have all the rights of a stockholder with respect to such
Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Unvested
Shares that are repurchased pursuant to Section 11. The Company will comply with
Section 260.140.1 of Title 10 of the California Code of Regulations with respect
to the voting rights of Common Stock.

          9.2  Financial Statements. The Company will provide financial
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding, or as otherwise required or permitted under
Section 260.140.46 of Title 10 of the California Code of Regulations.
Notwithstanding the foregoing, the Company will not be required to provide such
financial statements to key employees whose services in connection with the
Company assure them access to equivalent information.

     10.  TRANSFERABILITY. Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution. During the lifetime of the
Participant an Award will be exercisable only by the Participant or
Participant's legal representative and any elections with respect to an Award,
may be made only by the Participant or Participant's legal representative.

     11.  RESTRICTION ON SHARES.

          11.1 Right of First Refusal. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right of first refusal to purchase all Shares that a Participant (or a
subsequent transferee) may propose to transfer to a third party, unless
otherwise not permitted by Section 25102(o) of the California Corporations Code,
provided, that such right of first refusal terminates upon the Company's initial
public offering of Common Stock pursuant an effective registration statement
filed under the Securities Act.

                                      -6-

<PAGE>

          11.2 Right of Repurchase. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right to repurchase Unvested Shares held by a Participant for cash and/or
cancellation of purchase money indebtedness following such Participant's
Termination at any time within the later of ninety (90) days after the
Participant's Termination Date and the date the Participant purchases Shares
under the Plan at the Participant's Exercise Price or Purchase Price, as the
case may be, provided, that unless the Participant is an officer, director or
consultant of the Company or of a Parent or Subsidiary of the Company, such
right of repurchase lapses at the rate of at least twenty percent (20%) per year
over five (5) years from: (A) the date of grant of the Option or (B) in the case
of Restricted Stock, the date the Participant purchases the Shares.

     12.  CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.

     13.  ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.

     14.  EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or from
time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, shares of Common
Stock of the Company (including restricted stock) or other consideration, based
on such terms and conditions as the Committee and the Participant may agree.

     15.  SECURITIE LAW AND OTHER REGULATORY COMPLIANCE. This Plan is intended
to comply with Section 25102(o) of the California Corporations Code. Any
provision of this Plan which is inconsistent with Section 25102(o) shall,
without further act or amendment by the Company or the Board, be reformed to
comply with the requirements of Section 25102(o). An Award will not be effective
unless such Award is in compliance with all applicable federal and state
securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance; provided,
however, that notwithstanding the foregoing provisions of this Section 15, at
the discretion of the Committee, Awards may be made under this Plan that do not
comply with the requirements of Section 25102(o); and provided, further, that
the provisions, if any, of this Plan that are included herein solely in order to
comply with the requirements of Section 25102(o) and/or Rule 701 promulgated
under the Securities Act may be waived by the Committee with respect to such
Awards. Notwithstanding any other provision in this Plan, the Company will have
no obligation to issue or deliver certificates for Shares under this Plan prior
to (a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable, and/or (b) compliance with any exemption,
completion of any registration or other qualification of such Shares under any
state or federal law or ruling of any governmental body that the Company
determines to be necessary or advisable. The Company will be under no obligation
to register the Shares with the SEC or to effect compliance with the exemption,
registration,

                                      -7-

<PAGE>

qualification or listing requirements of any state securities laws, stock
exchange or automated quotation system, and the Company will have no liability
for any inability or failure to do so.

     16.  NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
Cause.

     17.  CORPORATE TRANSACTIONS.

          17.1 Assumption or Replacement of Awards by Successor. In the event of
(a) a dissolution or liquidation of the Company, (b) a merger or consolidation
in which the Company is not the surviving corporation (other than a merger or
consolidation with a wholly-owned subsidiary, a reincorporation of the Company
in a different jurisdiction, or other transaction in which there is no
substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption, conversion or
replacement will be binding on all Participants), (c) a merger in which the
Company is the surviving corporation but after which the stockholders of the
Company immediately prior to such merger (other than any stockholder which
merges with the Company in such merger, or which owns or controls another
corporation which merges, with the Company in such merger) cease to own their
shares or other equity interests in the Company, or (d) the sale of all or
substantially all of the assets of the Company, any or all outstanding Awards
may be assumed, converted or replaced by the successor corporation (if any),
which assumption, conversion or replacement will be binding on all Participants.
In the alternative, the successor corporation may substitute equivalent Awards
or provide substantially similar consideration to Participants as was provided
to stockholders (after taking into account the existing provisions of the
Awards). The successor corporation may also issue, in place of outstanding
Shares of the Company held by the Participant, substantially similar shares or
other property subject to repurchase restrictions and other provisions no less
favorable to the Participant than those which applied to such outstanding Shares
immediately prior to such transaction described in this Subsection 17.1. In the
event such successor corporation (if any) does not assume or substitute Awards,
as provided above, pursuant to a transaction described in this Subsection 17.1,
then notwithstanding any other provision in this Plan to the contrary, the
vesting of such Awards will accelerate and the Options will become exercisable
in full prior to the consummation of such event at such times and on such
conditions as the Committee determines, and if such Options are not exercised
prior to the consummation of the corporate transaction, they shall terminate in
accordance with the provisions of this Plan.

          17.2 Other Treatment of Awards. Subject to any greater rights granted
to Participants under the foregoing provisions of this Section 17, in the event
of the occurrence of any transaction described in Section 17.1, any outstanding
Awards will be treated as provided in the applicable agreement or plan of
merger, consolidation, dissolution, liquidation or sale of assets.

          17.3 Assumption of Awards by the Company. The Company, from time to
time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either (a) granting an Award under this Plan in substitution of
such other company's award or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.

     18.  ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective on
the date that it is adopted by the Board (the "Effective Date"). This Plan will
be approved by the stockholders of the

                                      -8-

<PAGE>

Company (excluding Shares issued pursuant to this Plan), consistent with
applicable laws, within twelve (12) months before or after the Effective Date.
Upon the Effective Date, the Board may grant Awards pursuant to this Plan;
provided, however, that: (a) no Option may be exercised prior to initial
stockholder approval of this Plan; (b) no Option granted pursuant to an increase
in the number of Shares approved by the Board shall be exercised prior to the
time such increase has been approved by the stockholders of the Company;
(c) in the event that initial stockholder approval is not obtained within the
time period provided herein, all Awards granted hereunder shall be canceled,
any Shares issued pursuant to any Award shall be canceled and any purchase of
Shares issued hereunder shall be rescinded; and (d) Awards granted pursuant to
an increase in the number of Shares approved by the Board which increase is not
timely approved by stockholders shall be canceled, any Shares issued pursuant to
any such Awards shall be canceled, and any purchase of Shares subject to any
such Award shall be rescinded. In the event that initial stockholder approval
is not obtained within twelve (12) months before or after the date this Plan is
adopted by the Board, all Awards granted hereunder will be canceled, any Shares
issued pursuant to any Award will be canceled and any purchase of Shares
hereunder will be rescinded.

     19.  TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided
herein, this Plan will terminate ten (10) years from the Effective Date or, if
earlier, the date of stockholder approval. This Plan and all agreements
hereunder shall be governed by and construed in accordance with the laws of the
State of California.

     20.  AMENDMENT OR TERMINATION OF PLAN. Subject to Section 5.9, the Board
may at any time terminate or amend this Plan in any respect, including without
limitation amendment of any form of Award Agreement or instrument to be executed
pursuant to this Plan; provided, however, that the Board will not, without the
approval of the stockholders of the Company, amend this Plan in any manner that
requires such stockholder approval pursuant to Section 25102(o) of the
California Corporations Code or the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans.

     21.  NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the
Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and other equity awards otherwise than under this
Plan, and such arrangements may be either generally applicable or applicable
only in specific cases.

     22.  DEFINITIONS. As used in this Plan, the following terms will have the
following meanings:

          "Award" means any award under this Plan, including any Option or
          Restricted Stock Award.

          "Award Agreement" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.

          "Board" means the Board of Directors of the Company.

          "Cause" means Termination because of (i) any willful material
violation by the Participant of any law or regulation applicable to the business
of the Company or a Parent or Subsidiary of the Company, the Participant's
conviction for, or guilty plea to, a felony or a crime involving moral
turpitude, any willful perpetration by the Participant of a common law fraud,
(ii) the Participant's commission of an act of personal dishonesty which
involves personal profit in connection with the Company or any other entity
having a business relationship with the Company, (iii) any material breach by
the Participant of any provision of any agreement or understanding between the
Company or any Parent or Subsidiary of the Company and the Participant regarding
the terms of the Participant's service as an employee, director or consultant to
the Company or a Parent or Subsidiary of the Company, including without
limitation, the willful and continued failure or refusal of the Participant to
perform the material duties required of such Participant as an employee,
director or consultant of the Company or a Parent or Subsidiary of the Company,
other than as a result of having a Disability, or a breach of any applicable
invention assignment and confidentiality agreement or similar agreement between
the Company and the Participant, (iv) Participant's disregard of the policies of
the Company or any Parent or Subsidiary of the Company so as to cause

                                      -9-

<PAGE>

loss, damage or injury to the property, reputation or employees of the Company
or a Parent or Subsidiary of the Company, or (v) any other misconduct by the
Participant which is materially injurious to the financial condition or business
reputation of, or is otherwise materially injurious to, the Company or a Parent
or Subsidiary of the Company.

          "Code" means the Internal Revenue Code of 1986, as amended.

          "Committee" means the committee appointed by the Board to administer
this Plan, or if no committee is appointed, the Board.

          "Company" means NetScreen Technologies, Inc., or any successor
corporation.

          "Disability" means a disability, whether temporary or permanent,
partial or total, as determined by the Committee.

          "Exercise Price" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.

          "Fair Market Value" means, as of any date, the value of a share of the
Company's Common Stock determined as follows:

          (a)  if such Common Stock is then quoted on the Nasdaq National
               Market, its closing price on the Nasdaq National Market on the
               date of determination as reported in The Wall Street Journal;

          (b)  if such Common Stock is publicly traded and is then listed on a
               national securities exchange, its closing price on the date of
               determination on the principal national securities exchange on
               which the Common Stock is listed or admitted to trading as
               reported in The Wall Street Journal;

          (c)  if such Common Stock is publicly traded but is not quoted on the
               Nasdaq National Market nor listed or admitted to trading on a
               national securities exchange, the average of the closing bid and
               asked prices on the date of determination as reported by The Wall
               Street Journal (or, if not so reported, as otherwise reported by
               any newspaper or other source as the Board may determine); or

          (d)  if none of the foregoing is applicable, by the Committee in good
               faith.

          "Option" means an award of an option to purchase Shares pursuant to
Section 5.

          "Parent" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if each of such corporations other
than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.

          "Participant" means a person who receives an Award under this Plan.

          "Plan" means this NetScreen Technologies, Inc. 1997 Equity Incentive
Plan, as amended from time to time.

          "Purchase Price" the price at which a Participant may purchase
Restricted Stock.

          "Restricted Stock" means Shares purchased pursuant to a Restricted
Stock Award.

          "Restricted Stock Award" means an award of Shares pursuant to
Section 6.

                                      -10-

<PAGE>

          "SEC" means the Securities and Exchange Commission.

          "Securitie Act" means the Securities Act of 1933, as amended.

          "Shares" means shares of the Company's Common Stock, $0.001 par value,
reserved for issuance under this Plan, as adjusted pursuant to Sections 2 and
17, and any successor security.

          "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

          "Termination" or "Terminated" means, for purposes of this Plan with
respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director or consultant to the Company
or a Parent or Subsidiary of the Company. A Participant will not be deemed to
have ceased to provide services in the case of (i) sick leave, (ii) military
leave, or (iii) any other leave of absence approved by the Committee, provided
that such leave is for a period of not more than ninety (90) days unless
reinstatement (or, in the case of an employee with an ISO, reemployment) upon
the expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to formal policy adopted from time to time by the
Company and issued and promulgated in writing. In the case of any Participant on
(i) sick leave, (ii) military leave or (iii) an approved leave of absence, the
Committee may make such provisions respecting suspension of vesting of the Award
while on leave from the Company or a Parent or Subsidiary of the Company as it
may deem appropriate, except that in no event may an Option be exercised after
the expiration of the term set forth in the Stock Option Agreement. The
Committee will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the "Termination Date").

          "Unvested Shares" means "Unvested Shares" as defined in the Award
Agreement.

          "Vested Shares" means "Vested Shares" as defined in the Award
Agreement.

                                      -11-

<PAGE>

                              FORM OF OPTION GRANT

<PAGE>

                                                                   No. _________

                          NETSCREEN TECHNOLOGIES, INC.

                           1997 EQUITY INCENTIVE PLAN

                             STOCK OPTION AGREEMENT

     This Stock Option Agreement ("Agreement") is made and entered into as of
the date of grant set forth below (the "Date of Grant") by and between NetScreen
Technologies, Inc., a Delaware corporation (the "Company"), and the participant
named below ("Participant"). Capitalized terms not defined herein shall have the
meaning ascribed to them in the Company's 1997 Equity Incentive Plan (the
"Plan").

Participant:                              ________________________________

Social Security Number:                   ________________________________

Address:                                  ________________________________

                                          ________________________________

                                          ________________________________

Total Option Shares:                      ________________________________

Exercise Price Per Share:                 $_______________________________

Date of Grant:                            ________________________________

First Vesting Date:                       ________________________________

Expiration Date:                          ________________________________
                                          (unless earlier terminated under
                                                 Section 3 below)

Type of Stock Option

(Check one):                              [ ] Incentive Stock Option

                                          [ ] Nonqualified Stock Option

     1. Grant of Option. The Company hereby grants to Participant an option
(this "Option") to purchase the total number of shares of Common Stock $0.001
par value, of the Company set forth above as Total Option Shares (the "Shares")
at the Exercise Price Per Share set forth above (the "Exercise Price"), subject
to all of the terms and conditions of this Agreement and the Plan. If designated
as an Incentive Stock Option above, the Option is intended to qualify as an
"incentive stock option" ("ISO") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").

<PAGE>

          2.   Exercise Period.

               2.1  Exercise Period of Option. Provided Participant continues to
provide services to the Company or any Subsidiary or Parent of the Company, the
Option will become vested and exercisable as to portions of the Shares as
follows: (a) This Option shall not vest nor be exercisable with respect to any
of the Shares until November 23, 1999 (the "First Vesting Date"); (b) on the
First Vesting Date the Option will become vested and exercisable as to
twenty-five percent (25%) of the Shares and (c) thereafter at the end of each
full succeeding month the Option will become vested and exercisable as to
2.08333% of the Shares. If application of the vesting percentage causes a
fractional share, such share shall be rounded down to the nearest whole share.

               2.2  Vesting of Options. Shares that are vested pursuant to the
schedule set forth in Section 2.1 are "Vested Shares." Shares that are not
vested pursuant to the schedule set forth in Section 2.1 are "Unvested Shares."

               2.3  Expiration. The Option shall expire on the Expiration Date
set forth above or earlier as provided in Section 3 below.

          3.   Termination.

               3.1  Termination for Any Reason Except Death, Disability or
Cause. If Participant is Terminated for any reason, except death, Disability or
for Cause, the Option, to the extent (and only to the extent) that it would have
been exercisable by Participant on the Termination Date, may be exercised by
Participant no later than three (3) months after the Termination Date, but in
any event no later than the Expiration Date.

               3.2  Termination Because of Death or Disability. If Participant
is Terminated because of death or Disability of Participant (or Participant dies
within three (3) months of Termination other than because of Participant's
Disability or for Cause), the Option, to the extent that it is exercisable by
Participant on the Termination Date, may be exercised by Participant (or
Participant's legal representative) no later than twelve (12) months after the
Termination Date, but in any event no later than the Expiration Date. Any
exercise beyond (a) three (3) months after the Termination Date when the
Termination is for any reason other than the Participant's death or disability,
within the meaning of Section 22(e)(3) of the Code; or (b) twelve (12) months
after the Termination Date when the termination is for Participant's disability,
within the meaning of Section 22(e)(3) of the Code, is deemed to be an NQSO.

               3.3  Termination for Cause. If Participant is Terminated for
Cause, then the Option will expire on Participant's Termination Date, or at such
later time and on such conditions as are determined by the Committee.

               3.4  No Obligation to Employ. Nothing in the Plan or this
Agreement shall confer on Participant any right to continue in the employ of, or
other relationship with, the Company or any Parent or Subsidiary of the Company,
or limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Participant's employment or other relationship at any time,
with or without Cause.

                                       2

<PAGE>

     4. Manner of Exercise.

           4.1 Stock Option Exercise Agreement. To exercise this Option,
Participant (or in the case of exercise after Participant's death or incapacity,
Participant's executor, administrator, heir or legatee, as the case may be) must
deliver to the Company an executed stock option exercise agreement in the form
attached hereto as Exhibit A, or in such other form as may be approved by the
Company from time to time (the "Exercise Agreement"), which shall set forth,
inter alia, Participant's election to exercise the Option, the number of Shares
being purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Participant's investment intent and access
to information as may be required by the Company to comply with applicable
securities law. If someone other than Participant exercises the Option, then
such person must submit documentation reasonably acceptable to the Company that
such person has the right to exercise the Option.

          4.2 Limitations on Exercise. The Option may not be exercised unless
such exercise is in compliance with all applicable federal and state securities
laws, as they are in effect on the date of exercise. The Option may not be
exercised as to fewer than one hundred (100) Shares unless it is exercised as to
all Shares as to which the Option is then exercisable.

          4.3 Payment. The Exercise Agreement shall be accompanied by full
payment of the Exercise Price for the shares being purchased in cash (by check),
or where permitted by law:

          (a)  provided that a public market for the Company's stock exists, (1)
               through a "same day sale" commitment from Participant and a
               broker-dealer that is a member of the National Association of
               Securities Dealers (an "NASD Dealer" whereby Participant
               irrevocably elects to exercise the Option and to sell a portion
               of the Shares so purchased to pay for the Exercise Price and
               whereby the NASD Dealer irrevocably commits upon receipt of such
               Shares to forward the Exercise Price directly to the Company, or
               (2) through a "margin" commitment from Participant and an NASD
               Dealer whereby Participant irrevocably elects to exercise the
               Option and to pledge the Shares so purchased to the NASD Dealer
               in a margin account as security for a loan from the NASD Dealer
               in the amount of the Exercise Price, and whereby the NASD Dealer
               irrevocably commits upon receipt of such Shares to forward the
               Exercise Price directly to the Company; or

          (b)  by any combination of the foregoing.

          4.4 Tax Withholding. Prior to the issuance of the Shares upon exercise
of the Option, Participant must pay or provide for any applicable federal, state
and local withholding obligations of the Company. If the Committee permits,
Participant may provide for payment of witholding taxes upon exercise of the
Option by requesting that the Company retain Shares with a Fair Market Value
equal to the  minimum amount of taxes required to be withheld. In such case,
the Company shall issue the net number of Shares to the Participant by deducting
the Shares retained from the Shares issuable upon exercise.

          4.5 Issuance of Shares. Provided that the Exercise Agreement and
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.

                                       3

<PAGE>

     5.   Notice of Disqualifying Disposition of ISO Shares. If the Option is an
ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (a) the date two (2)
years after the date of Grant, and (b) the date one (1) year after transfer of
such Shares to Participant upon exercise of the Option, Participant shall
immediately notify the Company in writing of such disposition. Participant
agrees that Participant may be subject to income tax withholding by the Company
on the compensation income recognized by Participant from the early disposition
by payment in cash or out of current wages or other compensation payable to
Participant.

     6.   Compliance with Laws and Regulations. The Plan and this Agreement are
intended to comply with Section 25102(o) of the California Corporations Code.
Any provision of this Agreement which is inconsistent with Section 25102(o)
shall, without further act or amendment by the Company or the Board, be reformed
to comply with the requirements of Section 25102(o). The exercise of the Option
and the issuance and transfer of Shares shall be subject to compliance by the
Company and Participant with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Participant understands that the Company is under no obligation to
register or qualify the Shares with the SEC, any state securities commission or
any stock exchange to effect such compliance.

     7.   Nontransferability of Option. The Option may not be transferred in any
manner other than by will or by the laws of descent and distribution and may be
exercised during the lifetime of Participant only by Participant or in the event
of Participant's incapacity, by Participant's legal representative. The terms of
the Option shall be binding upon the executors, administrators, successors and
assigns of Participant.

     8.   [Intentionally Omitted]

     9.   Company's Right of First Refusal. Before any Vested Shares held by
Participant or any transferee of such Vested Shares may be sold or otherwise
transferred (including without limitation a transfer by gift or operation of
law), the Company and/or its assignee(s) shall have an assignable right of
first refusal to purchase the Vested Shares to be sold or transferred on the
terms and conditions set forth in the Exercise Agreement (the "Right of First
Refusal"). The Company's Right of First Refusal will terminate when the
Company's securities become publicly traded.

     10. Tax Consequences. Set forth below is a brief summary as of the
Effective Date of the Plan of some of the federal and California tax
consequences of exercise of the Option and disposition of the Shares. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION
OR DISPOSING OF THE SHARES.

          10.1  Exercise of ISO. If the Option qualifies as an ISO, there will
be no regular federal or California income tax liability upon the exercise of
the Option, although the excess, if any, of the Fair Market Value of the Shares
on the date of exercise over the Exercise Price will be treated as a tax
preference item for federal alternative minimum tax purposes and may subject the
Participant to the alternative minimum tax in the year of exercise.

          10.2  Exercise of Nonqualified Stock Option. If the Option does not
qualify as an ISO, there may be a regular federal and California income tax
liability upon the exercise of the Option. Participant will be treated as having
received compensation income (taxable at ordinary income

                                       4

<PAGE>

tax rates) equal to the excess, if any, of the Fair Market Value of the Shares
on the date of exercise over the Exercise Price. If Participant is a current or
former employee of the Company, the Company may be required to withhold from
Participant's compensation or collect from Participant and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.

          10.3 Disposition of Shares. The following tax consequences may apply
 upon disposition of the Shares.

               a. Incentive Stock Options. If the Shares are held for more than
than twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of an ISO and are disposed of more than two (2) years after the
Date of Grant, any gain realized on disposition of the Shares will be treated as
capital gain for federal and California income tax purposes. The maximum federal
capital gain tax rates are twenty eight percent (28%) for Shares held more than
twelve (12) months, but not more than eighteen (18) month ("Mid-Term Capital
Gain"), and twenty percent (20%) for Shares held for more than eighteen (18)
months ("Long-Term Capital Gain"). If Shares purchased under an ISO are disposed
of within the applicable one (1) year or two (2) year period, any gain realized
on such disposition will be treated as compensation income (taxable at ordinary
income rates) to the extent of the excess, if any, of the Fair Market Value of
the Shares on the date of exercise over the Exercise Price.

               b. Nonqualified Stock Options. If the Shares are held for more
than twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of an NQSO, any gain realized on disposition of the Shares will be
treated as Mid-Term Capital Gain or Long-Term Capital Gain, as the case my be.

               c. Withholding. The Company may be required to withhold from
Participant's compensation or collect from the Participant and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income.

     11. Privileges of Stock Ownership. Participant shall not have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to Participant.

     12. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Participant.

     13. Entire Agreement. The Plan is incorporated herein by reference. This
Agreement and the Plan constitute the entire agreement of the parties and
supersede all prior undertakings and agreements with respect to the subject
matter hereof.

     14. Notices. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return

                                        5

<PAGE>

receipt express courier (prepaid); or one (1) business day after transmission by
facsimile, rapifax or telecopier.

     15. Successors and Assigns. The Company may assign any of its rights under
this Agreement. This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of the Company. Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon Participant and
Participant's heirs, executors, administrators, legal representatives,
successors and assigns.

     16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California. If any provision of this Agreement is determined by
a court of law to be illegal or unenforceable, then such provision will be
enforced to the maximum extent possible and the other provisions will remain
fully effective and enforceable.

     17. Acceptance. Participant hereby acknowledges receipt of a copy of the
Plan and this Agreement. Participant has read and understands the terms and
provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that there
may be adverse tax consequences upon exercise of the Option or disposition of
the Shares and that Participant should consult a tax adviser prior to such
exercise or disposition.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate by its authorized representative and Participant has executed this
Agreement in duplicate as of the Date of Grant.

NETSCREEN TECHNOLOGIES, INC            PARTICIPANT

By: ________________________           _________________________________
                                       (Signature)

____________________________           _________________________________
(Please print name)                    (Please print name)

____________________________
(Please print title)

    [Signature Page to NetScreen Technologies, Inc. Stock Option Agreement]

                                       6

<PAGE>

                                   EXHIBIT A

                    FORM OF STOCK OPTION EXERCISE AGREEMENT

<PAGE>
                                                                No.
                                                                   ------------

                          NETSCREEN TECHNOLOGIES, INC.

                           1997 EQUITY INCENTIVE PLAN

                         STOCK OPTION EXERCISE AGREEMENT

     This Stock Option Exercise Agreement (the "Exercise Agreement") is made and
entered into as of ______________, ___ (the "Effective Date") by and between
NetScreen Technologies, Inc., a Delaware corporation (the "Company"), and the
purchaser named below (the "Purchaser"). Capitalized terms not defined herein
shall have the meanings ascribed to them in the Company's 1997 Equity Incentive
Plan (the "Plan").

Purchaser:
                           ----------------------------------------------------
Social Security Number:
                           ----------------------------------------------------
Address:
                           ----------------------------------------------------

                           ----------------------------------------------------
Total Number of Shares:
                           ----------------------------------------------------
Exercise Price Per Share:
                           ----------------------------------------------------
First Vesting Date:
                           ----------------------------------------------------
Expiration Date:
                           ----------------------------------------------------
                           (Unless earlier terminated under Section 5.6 of the
                           Plan)

Type of Stock Option:      [  ]  Incentive Stock Option
(Check One)                [  ]  Nonqualified Stock Option

     1. Exercise of Option.

          1.1 Exercise. Pursuant to exercise of that certain option (the
"Option") granted to Purchaser under the Plan and subject to the terms and
conditions of this Exercise Agreement, Purchaser hereby purchases from the
Company, and the Company hereby sells to Purchaser, the Total Number of Shares
set forth above (the "Shares") of the Company's Common Stock at the Exercise
Price Per Share set forth above (the "Exercise Price"). As used in this

<PAGE>

Exercise Agreement, the term "Shares" refers to the Shares purchased under this
Exercise Agreement and includes all securities received (i) in replacement of
the Shares, (ii) as a result of stock dividends or stock splits with respect to
the Shares, and (iii) all securities received in replacement of the Shares in a
merger, recapitalization, reorganization or similar corporate transaction.

          1.2 Title to Shares. The exact spelling of the name(s) under which
Purchaser will take title to the Shares is:

               ---------------------------------------------------
               ---------------------------------------------------

          Purchaser desires to take title to the Shares as
follows:

               [ ] Individual, as separate property
               [ ] Husband and wife, as community property
               [ ] Joint Tenants
               [ ] Other; please specify: ------------------------
               ---------------------------------------------------

          To assign the Shares to a trust, a stock transfer agreement in the
form then in use by the Company must be completed and executed.

          1.3 Payment. Purchaser hereby delivers payment of the Exercise Price
in cash (by check) in the amount of $____________, receipt of which is
acknowledged by the Company.

     2. Delivery.

          2.1 Deliveries by Purchaser. Purchaser hereby delivers to the Company
(i) this Exercise Agreement, (ii) two (2) copies of a blank Stock Power and
Assignment Separate from Stock Certificate in the form of Exhibit 1 attached
hereto (the "Stock Powers"), both executed by Purchaser (and Purchaser's spouse,
if any), (iii) if Purchaser is married, a Consent of Spouse in the form of
Exhibit 2 attached hereto (the "Spouse Consent") executed by Purchaser's spouse,
and (iv) the Exercise Price and payment or other provision for any applicable
tax obligations in the form of a check.

          2.2 Deliveries by the Company. Upon its receipt of the Exercise Price,
payment or other provision for any applicable tax obligations and all the
documents to be executed and delivered by Purchaser to the Company under Section
2.1, the Company will issue a duly executed stock certificate evidencing the
Shares in the name of Purchaser to be placed in escrow as provided in Section 11
until expiration or termination of the Company's Repurchase Option and Right of
First Refusal described in Sections 8, 9 and 10.

     3. Representations and Warranties of Purchaser. Purchaser represents and
warrants to the Company that:

                                       2

<PAGE>

          3.1 Agrees to Terms of the Plan. Purchaser has received a copy of the
Plan and the Stock Option Agreement, has read and understands the terms of the
Plan, the Stock Option Agreement and this Exercise Agreement, and agrees to be
bound by their terms and conditions. Purchaser acknowledges that there may be
adverse tax consequences upon exercise of the Option or disposition of the
Shares, and that Purchaser should consult a tax adviser prior to such exercise
or disposition.

          3.2 Purchase for Own Account for Investment. Purchaser is purchasing
the Shares for Purchaser's own account for investment purposes only and not with
a view to, or for sale in connection with, a distribution of the Shares within
the meaning of the Securities Act. Purchaser has no present intention of selling
or otherwise disposing of all or any portion of the Shares and no one other than
Purchaser has any beneficial ownership of any of the Shares.

          3.3 Access to Information. Purchaser has had access to all information
regarding the Company and its present and prospective business, assets,
liabilities and financial condition that Purchaser reasonably considers
important in making the decision to purchase the Shares, and Purchaser has had
ample opportunity to ask questions of the Company's representatives concerning
such matters and this investment.

          3.4 Understanding of Risks. Purchaser is fully aware of: (i) the
highly speculative nature of the investment in the Shares; (ii) the financial
hazards involved; (iii) the lack of liquidity of the Shares and the restrictions
on transferability of the Shares (e.g., that Purchaser may not be able to sell
or dispose of the Shares or use them as collateral for loans); (iv) the
qualifications and backgrounds of the management of the Company; and (v) the tax
consequences of investment in the Shares. Purchaser is capable of evaluating the
merits and risks of this investment, has the ability to protect Purchaser's own
interests in this transaction and is financially capable of bearing a total loss
of this investment.

          3.5 No General Solicitation. At no time was Purchaser presented with
or solicited by any publicly issued or circulated newspaper, mail, radio,
television or other form of general advertising or solicitation in connection
with the offer, sale and purchase of the Shares.

     4. Compliance with Securities Laws.

          4.1 Compliance with U.S. Federal Securities Laws. Purchaser
understands and acknowledges that the Shares have not been registered with the
SEC under the Securities Act and that, notwithstanding any other provision of
the Stock Option Agreement to the contrary, the exercise of any rights to
purchase any Shares is expressly conditioned upon compliance with the Securities
Act and all applicable state securities laws. Purchaser agrees to cooperate with
the Company to ensure compliance with such laws. The Shares are being issued
under the Securities Act pursuant to the exemption provided by SEC Rule 701.

          4.2 Compliance with California Securities Laws. The Plan, The stock
option agreement, and this Exercise Agreement are intended to comply with
Section 25102(o) of the California Corporations Code

                                       3

<PAGE>

AND ANY RULES (INCLUDING COMMISSIONER RULES, IF APPLICABLE) OR REGULATIONS
PROMULGATED THEREUNDER BY THE CALIFORNIA DEPARTMENT OF CORPORATIONS (THE
"REGULATIONS"). ANY PROVISION OF THIS EXERCISE AGREEMENT WHICH IS INCONSISTENT
WITH SECTION 25102(o) SHALL, WITHOUT FURTHER ACT OR AMENDMENT BY THE COMPANY OR
THE BOARD, BE REFORMED TO COMPLY WITH THE REQUIREMENTS OF SECTION 25102(o). THE
SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS EXERCISE AGREEMENT, IF NOT
YET QUALIFIED WITH THE CALIFORNIA COMMISSIONER OF CORPORATIONS AND NOT EXEMPT
FROM SUCH QUALIFICATION, IS SUBJECT TO SUCH QUALIFICATION, AND THE ISSUANCE OF
SUCH SECURITIES, AND THE RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR
TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE IS EXEMPT. THE RIGHTS OF THE
PARTIES TO THIS EXERCISE AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH
QUALIFICATION BEING OBTAINED OR AN EXEMPTION BEING AVAILABLE.

     5. Restricted Securities.

          5.1 No Transfer Unless Registered or Exempt. Purchaser understands
that Purchaser may not transfer any Shares unless such Shares are registered
under the Securities Act or qualified under applicable state securities laws or
unless, in the opinion of counsel to the Company, exemptions from such
registration and qualification requirements are available. Purchaser understands
that only the Company may file a registration statement with the SEC and that
the Company is under no obligation to do so with respect to the Shares.
Purchaser has also been advised that exemptions from registration and
qualification may not be available or may not permit Purchaser to transfer all
or any of the Shares in the amounts or at the times proposed by Purchaser.

          5.2 SEC Rule 144. In addition, Purchaser has been advised that SEC
Rule 144 promulgated under the Securities Act, which permits certain limited
sales of unregistered securities, is not presently available with respect to the
Shares and, in any event, requires that the Shares be held for a minimum of one
(1) year, and in certain cases two (2) years, after they have been purchased and
paid for (within the meaning of Rule 144). Purchaser understands that Rule 144
may indefinitely restrict transfer of the Shares so long as Purchaser remains an
"affiliate" of the Company or if "current public information" about the Company
(as defined in Rule 144) is not publicly available.

          5.3 SEC Rule 701. The Shares are issued pursuant to SEC Rule 701
promulgated under the Securities Act and may become freely tradeable by
non-affiliates (under limited conditions regarding the method of sale) ninety
(90) days after the first sale of Common Stock of the Company to the general
public pursuant to a registration statement filed with and declared effective by
the SEC, subject to the lengthier market standoff agreement contained in Section
7 of this Exercise Agreement or any other agreement entered into by Purchaser.
Affiliates must comply with the provisions (other than the holding period
requirements) of Rule 144.

                                       4

<PAGE>

     6. Restrictions on Transfers.

          6.1 Disposition of Shares. Purchaser hereby agrees that Purchaser
shall make no disposition of the Shares (other than as permitted by this
Exercise Agreement) unless and until:

               (a) Purchaser shall have notified the Company of the proposed
disposition and provided a written summary of the terms and conditions of the
proposed disposition;

               (b) Purchaser shall have complied with all requirements of this
Exercise Agreement applicable to the disposition of the Shares;

               (c) Purchaser shall have provided the Company with written
assurances, in form and substance satisfactory to counsel for the Company, that
(i) the proposed disposition does not require registration of the Shares under
the Securities Act or (ii) all appropriate actions necessary for compliance with
the registration requirements of the Securities Act or of any exemption from
registration available under the Securities Act (including Rule 144) have been
taken; and

               (d) Purchaser shall have provided the Company with written
assurances, in form and substance satisfactory to the Company, that the proposed
disposition will not result in the contravention of any transfer restrictions
applicable to the Shares pursuant to the provisions of the Regulations referred
to in Section 4.2 hereof.

          6.2 Restriction on Transfer. Purchaser shall not transfer, assign,
grant a lien or security interest in, pledge, hypothecate, encumber or otherwise
dispose of any of the Shares which are subject to the Company's Repurchase
Option or the Company's Right of First Refusal described below, except as
permitted by this Exercise Agreement.

          6.3 Transferee Obligations. Each person (other than the Company) to
whom the Shares are transferred by means of one of the permitted transfers
specified in this Exercise Agreement must, as a condition precedent to the
validity of such transfer, acknowledge in writing to the Company that such
person is bound by the provisions of this Exercise Agreement and that the
transferred Shares are subject to (i) both the Company's Repurchase Option and
the Company's Right of First Refusal granted hereunder and (ii) the market
stand-off provisions of Section 7 hereof, to the same extent such Shares would
be so subject if retained by the Purchaser.

     7. Market Standoff Agreement. Purchaser agrees in connection with any
registration of the Company's securities that, upon the request of the Company
or the underwriters managing any public offering of the Company's securities,
Purchaser will not sell or otherwise dispose of any Shares without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed one hundred eighty (180) days) after the
effective date of such registration requested by such managing underwriters and
subject to all restrictions as the Company or the underwriters may specify.
Purchaser further

                                       5

<PAGE>

agrees to enter into any agreement reasonably required by the underwriters to
implement the foregoing.

     8. Company's Repurchase Option for Unvested Shares. The Company, or its
assignee, shall have the option to repurchase all or part of the Purchaser's
Unvested Shares (as defined in Section 2.2 of the Stock Option Agreement) on the
terms and conditions set forth in this Section (the "Repurchase Option") if
Purchaser is Terminated (as defined in the Plan) for any reason, or no reason,
including, without limitation, Purchaser's death, Disability (as defined in the
Plan), voluntary resignation or termination by the Company with or without
Cause. Notwithstanding the foregoing, the Company shall retain the Repurchase
Option for Unvested Shares only as to that number of Unvested Shares (whether or
not exercised) that exceeds the number of shares which remain unexercised.

          8.1 Termination and Termination Date. In case of any dispute as to
whether Purchaser is Terminated, the Committee shall have discretion to
determine whether Purchaser has been Terminated and the effective date of such
Termination (the "Termination Date").

          8.2 Exercise of Repurchase Option. At any time within ninety (90) days
after the Purchaser's Termination Date (or, in the case of securities issued
upon exercise of an Option after the Purchaser's Termination Date, within ninety
(90) days after the date of such exercise), the Company, or its assignee, may
elect to repurchase any or all of the Purchaser's Unvested Shares by giving
Purchaser written notice of exercise of the Repurchase Option.

          8.3 Calculation of Repurchase Price for Unvested Shares. The Company
or its assignee shall have the option to repurchase from Purchaser (or from
Purchaser's personal representative as the case may be) the Unvested Shares at
the Purchaser's Exercise Price, proportionately adjusted for any stock split or
similar change in the capital structure of the Company as set forth in Section
2.2 of the Plan (the "Repurchase Price").

          8.4 Payment of Repurchase Price. The Repurchase Price shall be
payable, at the option of the Company or its assignee, by check or by
cancellation of all or a portion of any outstanding indebtedness owed by
Purchaser to the Company or such assignee, or by any combination thereof. The
Repurchase Price shall be paid without interest within sixty (60) days after
exercise of the Repurchase Option.

          8.5 Right of Termination Unaffected. Nothing in this Exercise
Agreement shall be construed to limit or otherwise affect in any manner
whatsoever the right or power of the Company (or any Parent or Subsidiary of the
Company) to terminate Purchaser's employment or other relationship with Company
(or the Parent or Subsidiary of the Company) at any time, for any reason or no
reason, with or without Cause.

     9. Company's Right of First Refusal. Unvested Shares may not be sold or
otherwise transferred by Purchaser without the Company's prior written consent.
Before any Vested Shares held by Purchaser or any transferee of such Vested
Shares (either sometimes referred to herein as the "Holder") may be sold or
otherwise transferred (including, without

                                       6

<PAGE>

limitation, a transfer by gift or operation of law), the Company and/or its
assignee(s) will have a right of first refusal to purchase the Vested Shares to
be sold or transferred (the "Offered Shares") on the terms and conditions set
forth in this Section (the "Right of First Refusal").

          9.1 Notice of Proposed Transfer. The Holder of the Offered Shares will
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer the Offered Shares; (ii) the
name and address of each proposed purchaser or other transferee (the "Proposed
Transferee"); (iii) the number of Offered Shares to be transferred to each
Proposed Transferee; (iv) the bona fide cash price or other consideration for
which the Holder proposes to transfer the Offered Shares (the "Offered Price");
and (v) that the Holder acknowledges this Notice is an offer to sell the Offered
Shares to the Company and/or its assignee(s) pursuant to the Company's Right of
First Refusal at the Offered Price as provided for in this Exercise Agreement.

          9.2 Exercise of Right of First Refusal. At any time within thirty (30)
days after the date of the Notice, the Company and/or its assignee(s) may, by
giving written notice to the Holder, elect to purchase all (or, with the consent
of the Holder, less than all) the Offered Shares proposed to be transferred to
any one or more of the Proposed Transferees named in the Notice, at the purchase
price, determined as specified below.

          9.3 Purchase Price. The purchase price for the Offered Shares
purchased under this Section will be the Offered Price, provided that if the
Offered Price consists of no legal consideration (as, for example, in the case
of a transfer by gift), the purchase price will be the fair market value of the
Offered Shares as determined in good faith by the Company's Board of Directors.
If the Offered Price includes consideration other than cash, then the value of
the non-cash consideration, as determined in good faith by the Company's Board
of Directors, will conclusively be deemed to be the cash equivalent value of
such non-cash consideration.

          9.4 Payment. Payment of the purchase price for the Offered Shares will
be payable, at the option of the Company and/or its assignee(s) (as applicable),
by check or by cancellation of all or a portion of any outstanding indebtedness
owed by the Holder to the Company (or to such assignee, in the case of a
purchase of Offered Shares by such assignee) or by any combination thereof. The
purchase price will be paid without interest within sixty (60) days after the
Company's receipt of the Notice, or, at the option of the Company and/or its
assignee(s), in the manner and at the time(s) set forth in the Notice.

          9.5 Holder's Right to Transfer. If all of the Offered Shares proposed
in the Notice to be transferred to a given Proposed Transferee are not purchased
by the Company and/or its assignee(s) as provided in this Section, then the
Holder may sell or otherwise transfer such Offered Shares to each Proposed
Transferee at the Offered Price or at a higher price, provided that (i) such
sale or other transfer is consummated within one hundred twenty (120) days after
the date of the Notice, (ii) any such sale or other transfer is effected in
compliance with all applicable securities laws, and (iii) each Proposed
Transferee agrees in writing that the provisions of this Section will continue
to apply to the Offered Shares in the hands of such Proposed Transferee. If the
Offered Shares described in the Notice are not transferred to each

                                       7

<PAGE>

Proposed Transferee within such one hundred twenty (120) day period, then a new
Notice must be given to the Company, pursuant to which the Company will again be
offered the Right of First Refusal before any Shares held by the Holder may be
sold or otherwise transferred.

          9.6 Exempt Transfers. Notwithstanding anything to the contrary in this
Section, the following transfers of Vested Shares will be exempt from the Right
of First Refusal: (i) the transfer of any or all of the Vested Shares during
Purchaser's lifetime by gift or on Purchaser's death by will or intestacy to
Purchaser's "Immediate Family" (as defined below) or to a trust for the benefit
of Purchaser or Purchaser's Immediate Family, provided that each transferee or
other recipient agrees in a writing satisfactory to the Company that the
provisions of this Section will continue to apply to the transferred Vested
Shares in the hands of such transferee or other recipient; (ii) any transfer of
Vested Shares made pursuant to a statutory merger or statutory consolidation of
the Company with or into another corporation or corporations (except that the
Right of First Refusal will continue to apply thereafter to such Vested Shares,
in which case the surviving corporation of such merger or consolidation shall
succeed to the rights of the Company under this Section unless the agreement of
merger or consolidation expressly otherwise provides); or (iii) any transfer of
Vested Shares pursuant to the winding up and dissolution of the Company. As used
herein, the term "Immediate Family" will mean Purchaser's spouse, the lineal
descendant or antecedent, father, mother, brother or sister, child, adopted
child, grandchild or adopted grandchild of the Purchaser or the Purchaser's
spouse, or the spouse of any child, adopted child, grandchild or adopted
grandchild of Purchaser or the Purchaser's spouse.

          9.7 Termination of Right of First Refusal. The Right of First Refusal
will terminate as to all Shares on the effective date of the first sale of
Common Stock of the Company to the general public pursuant to a registration
statement filed with and declared effective by the SEC under the Securities Act
(other than a registration statement relating solely to the issuance of Common
Stock pursuant to a business combination or an employee incentive or benefit
plan).

          9.8 Encumbrances on Vested Shares. Purchaser may grant a lien or
security interest in, or pledge, hypothecate or encumber Vested Shares only if
each party to whom such lien or security interest is granted, or to whom such
pledge, hypothecation or other encumbrance is made, agrees in a writing
satisfactory to the Company that: (i) such lien, security interest, pledge,
hypothecation or encumbrance will not apply to such Vested Shares after they are
acquired by the Company and/or its assignees under this Section; and (ii) the
provisions of this Section will continue to apply to such Vested Shares in the
hands of such party and any transferee of such party. Purchaser may not grant a
lien or security interest in, or pledge, hypothecate or encumber, any Unvested
Shares.

     10. Rights as a Shareholder. Subject to the terms and conditions of this
Exercise Agreement, Purchaser will have all of the rights of a shareholder of
the Company with respect to the Shares from and after the date that Shares are
issued to Purchaser until such time as Purchaser disposes of the Shares or the
Company and/or its assignee(s) exercise(s) the Repurchase Option or Right of
First Refusal. Upon an exercise of the Repurchase Option or the

                                       8

<PAGE>

Right of First Refusal, Purchaser will have no further rights as a holder of the
Shares so purchased upon such exercise, other than the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Exercise Agreement, and Purchaser will promptly surrender the stock
certificate(s) evidencing the Shares so purchased to the Company for transfer or
cancellation.

     11. Escrow. As security for Purchaser's faithful performance of this
Exercise Agreement, Purchaser agrees, immediately upon receipt of the stock
certificate(s) evidencing the Shares, to deliver such certificate(s), together
with the Stock Powers executed by Purchaser and by Purchaser's spouse, if any
(with the date and number of Shares left blank), to the Secretary of the Company
or other designee of the Company (the "Escrow Holder"), who is hereby appointed
to hold such certificate(s) and Stock Powers in escrow and to take all such
actions and to effectuate all such transfers and/or releases of such Shares as
are in accordance with the terms of this Exercise Agreement. Purchaser and the
Company agree that Escrow Holder will not be liable to any party to this
Exercise Agreement (or to any other party) for any actions or omissions unless
Escrow Holder is grossly negligent or intentionally fraudulent in carrying out
the duties of Escrow Holder under this Exercise Agreement. Escrow Holder may
rely upon any letter, notice or other document executed with any signature
purported to be genuine and may rely on the advice of counsel and obey any order
of any court with respect to the transactions contemplated by this Exercise
Agreement. The Shares will be released from escrow upon termination of both the
Repurchase Option and the Right of First Refusal.

     12. Restrictive Legends and Stop-Transfer Orders.

          12.1 Legends. Purchaser understands and agrees that the Company will
place the legends set forth below or similar legends on any stock certificate(s)
evidencing the Shares, together with any other legends that may be required by
state or U.S. Federal securities laws, the Company's Articles of Incorporation
or Bylaws, any other agreement between Purchaser and the Company or any
agreement between Purchaser and any third party:

               THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
               THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
               UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE
               SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
               BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES
               ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
               REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE
               THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
               INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE
               SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
               SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
               PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES
               ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

                                       9

<PAGE>

               THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
               RESTRICTIONS ON PUBLIC RESALE AND TRANSFER, INCLUDING THE RIGHT
               OF REPURCHASE AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE
               ISSUER AND/OR ITS ASSIGNEE(S) AS SET FORTH IN A STOCK OPTION
               EXERCISE AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF
               THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL
               OFFICE OF THE ISSUER. SUCH PUBLIC SALE AND TRANSFER RESTRICTIONS
               INCLUDING THE RIGHT OF REPURCHASE AND RIGHT OF FIRST REFUSAL ARE
               BINDING ON TRANSFEREES OF THESE SHARES.

               THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A 180
               DAY MARKET STANDOFF RESTRICTION AS SET FORTH IN A CERTAIN
               AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE
               SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE
               OF THE ISSUER. AS A RESULT OF SUCH AGREEMENT, THESE SHARES MAY
               NOT BE TRADED PRIOR TO 180 DAYS AFTER THE EFFECTIVE DATE OF THE
               INITIAL PUBLIC OFFERING OF THE COMMON STOCK OF THE ISSUER HEREOF.
               SUCH RESTRICTION IS BINDING ON TRANSFEREES OF THESE SHARES.

          12.2 Stop-Transfer Instructions. Purchaser agrees that, to ensure
compliance with the restrictions imposed by this Exercise Agreement, the Company
may issue appropriate "stop-transfer" instructions to its transfer agent, if
any, and if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

          12.3 Refusal to Transfer. The Company will not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Exercise Agreement or (ii) to treat
as owner of such Shares, or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares have been so transferred.

     13. Tax Consequences. PURCHASER UNDERSTANDS THAT PURCHASER MAY SUFFER
ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER'S PURCHASE OR DISPOSITION OF
THE SHARES. PURCHASER REPRESENTS: (i) THAT PURCHASER HAS CONSULTED WITH ANY TAX
ADVISER THAT PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE SHARES AND (ii) THAT PURCHASER IS NOT RELYING ON THE COMPANY
FOR ANY TAX ADVICE. IN PARTICULAR, IF UNVESTED SHARES ARE SUBJECT TO REPURCHASE
BY THE COMPANY, PURCHASER REPRESENTS THAT PURCHASER HAS CONSULTED WITH
PURCHASER'S OWN TAX ADVISER CONCERNING THE ADVISABILITY OF FILING AN 83(b)
ELECTION WITH THE INTERNAL REVENUE SERVICE WHICH MUST BE FILED WITHIN THIRTY
(30) DAYS OF THE PURCHASE OF SHARES TO BE EFFECTIVE. Set forth below is a brief
summary as of the date the Plan was adopted by the Board of some of the U.S.
Federal and California tax consequences of exercise of

                                       10

<PAGE>

the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PURCHASER
SHOULD CONSULT HIS OR HER OWN TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.

          13.1 Exercise of Incentive Stock Option. If the Option qualifies as an
ISO, there will be no regular U.S. Federal income tax liability or California
income tax liability upon the exercise of the Option, although the excess, if
any, of the Fair Market Value of the Shares on the date of exercise over the
Exercise Price will be treated as a tax preference item for U.S. Federal
alternative minimum tax purposes and may subject Purchaser to the alternative
minimum tax in the year of exercise.

          13.2 Exercise of Nonqualified Stock Option. If the Option does not
qualify as an ISO, there may be a regular U.S. Federal income tax liability and
a California income tax liability upon the exercise of the Option. Purchaser
will be treated as having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price. If Purchaser is or was
an employee of the Company, the Company may be required to withhold from
Purchaser's compensation or collect from Purchaser and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.

          13.3 Disposition of Shares. The following tax consequences may apply
upon disposition of the Shares.

               (a) Incentive Stock Options. If the Shares are held for more than
twelve (12) months after the date of the transfer of the Shares pursuant to the
exercise of an ISO and are disposed of more than two (2) years after the Date of
Grant, any gain realized on disposition of the Shares will be treated as long
term capital gain for federal and California income tax purposes. If Shares
purchased under an ISO are disposed of within the applicable one (1) year or two
(2) year period, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price.

               (b) Nonqualified Stock Options. If the Shares are held for more
than twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of an NQSO, any gain realized on disposition of the Shares will be
treated as long term capital gain.

               (c) Withholding. The Company may be required to withhold from the
Purchaser's compensation or collect from the Purchaser and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income.

          13.4. Section 83(b) Election for Unvested Shares. With respect to
Unvested Shares, which are subject to the Repurchase Option, unless an election
is filed by the Purchaser with the Internal Revenue Service (and, if necessary,
the proper state taxing authorities), within 30 days of the purchase of the
Unvested Shares, electing pursuant to

                                       11

<PAGE>

Section 83(b) of the Code (and similar state tax provisions, if applicable) to
be taxed currently on any difference between the Exercise Price of the Unvested
Shares and their Fair Market Value on the date of purchase, there may be a
recognition of taxable income (including, where applicable, alternative minimum
taxable income) to the Purchaser, measured by the excess, if any, of the Fair
Market Value of the Unvested Shares at the time they cease to be Unvested
Shares, over the Exercise Price of the Unvested Shares. A form of Election under
Section 83(b) is attached hereto as Exhibit 4 for reference.

     14. Compliance with Laws and Regulations. The issuance and transfer of the
Shares will be subject to and conditioned upon compliance by the Company and
Purchaser with all applicable state and U.S. Federal laws and regulations and
with all applicable requirements of any stock exchange or automated quotation
system on which the Company's Common Stock may be listed or quoted at the time
of such issuance or transfer.

     15. Successors and Assigns. The Company may assign any of its rights under
this Exercise Agreement, including its rights to purchase Shares under the
Repurchase Option and the Right of First Refusal. This Exercise Agreement shall
be binding upon and inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer herein set forth, this Exercise
Agreement will be binding upon Purchaser and Purchaser's heirs, executors,
administrators, legal representatives, successors and assigns.

     16. Governing Law; Severability. This Exercise Agreement shall be governed
by and construed in accordance with the internal laws of the State of California
as such laws are applied to agreements between California residents entered into
and to be performed entirely within California. If any provision of this
Exercise Agreement is determined by a court of law to be illegal or
unenforceable, then such provision will be enforced to the maximum extent
possible and the other provisions will remain fully effective and enforceable.

     17. Notices. Any notice required to be given or delivered to the Company
shall be in writing and addressed to the Corporate Secretary of the Company at
its principal corporate offices. Any notice required to be given or delivered to
Purchaser shall be in writing and addressed to Purchaser at the address
indicated above or to such other address as Purchaser may designate in writing
from time to time to the Company. All notices shall be deemed effectively given
upon personal delivery, (i) three (3) days after deposit in the United States
mail by certified or registered mail (return receipt requested), (ii) one (1)
business day after its deposit with any return receipt express courier
(prepaid), or (iii) one (1) business day after transmission by rapifax or
telecopier.

     18. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Exercise Agreement.

     19. Headings. The captions and headings of this Exercise Agreement are
included for ease of reference only and will be disregarded in interpreting or
construing this Exercise Agreement. All references herein to Sections will refer
to Sections of this Exercise Agreement.

                                       12

<PAGE>

     20. Entire Agreement. The Plan, the Stock Option Agreement and this
Exercise Agreement, together with all Exhibits thereto, constitute the entire
agreement and understanding of the parties with respect to the subject matter of
this Exercise Agreement, and supersede all prior understandings and agreements,
whether oral or written, between the parties hereto with respect to the specific
subject matter hereof.

                                       13

<PAGE>

     IN WITNESS WHEREOF, the Company has caused this Exercise Agreement to be
executed in duplicate by its duly authorized representative and Purchaser has
executed this Exercise Agreement in duplicate as of the Effective Date,
indicated above.

NETSCREEN TECHNOLOGIES, INC.                     PURCHASER

By:__________________________________            ______________________________
                                                 (Signature)

-------------------------------------            ------------------------------
(Please print name)                              (Please print name)

-------------------------------------
(Please print title)

[Signature page to NetScreen Technologies, Inc. Stock Option Exercise Agreement]

                                       14

<PAGE>

                                LIST OF EXHIBITS

Exhibit 1:        Stock Power and Assignment Separate from Stock Certificate

Exhibit 2:        Spouse Consent

Exhibit 3:        Copy of Purchaser's Check

Exhibit 4:        Section 83(b) Election

<PAGE>

                                    EXHIBIT 1

                           STOCK POWER AND ASSIGNMENT

                         SEPARATE FROM STOCK CERTIFICATE

<PAGE>

                           Stock Power and Assignment

                         Separate from Stock Certificate

     FOR VALUE RECEIVED and pursuant to that certain Stock Option Exercise
Agreement No. _____ [TO BE COMPLETED AT THE TIME OF EXERCISE] dated as of
_______________, _____, [TO BE COMPLETED AT THE TIME OF EXERCISE] (the
"Agreement"), the undersigned hereby sells, assigns and transfers unto
_______________________________, __________ shares of the Common Stock of
NetScreen Technologies, Inc., a Delaware corporation (the "Company"), standing
in the undersigned's name on the books of the Company represented by Certificate
No(s). ______ [TO BE COMPLETED AT THE TIME OF EXERCISE] delivered herewith, and
does hereby irrevocably constitute and appoint the Secretary of the Company as
the undersigned's attorney-in-fact, with full power of substitution, to transfer
said stock on the books of the Company. THIS ASSIGNMENT MAY ONLY BE USED AS
AUTHORIZED BY THE AGREEMENT AND ANY EXHIBITS THERETO.

Dated: _______________, _____

                                                    PURCHASER

                                                    ----------------------------
                                                    (Signature)

                                                    ----------------------------
                                                    (Please Print Name)

                                                    ----------------------------
                                                    (Spouse's Signature, if any)

                                                    ----------------------------
                                                    (Please Print Spouse's Name)

Instructions to Purchaser: Please do not fill in any blanks other than the
signature line. The purpose of this Stock Power and Assignment is to enable the
Company to acquire the shares pursuant to its "Repurchase Option" and/or "Right
of First Refusal" set forth in the Exercise Agreement without requiring
additional signatures on the part of the Purchaser or Purchaser's Spouse.

<PAGE>

                                    EXHIBIT 2

                                 SPOUSE CONSENT

<PAGE>

                                 Spouse Consent

     The undersigned spouse of ____________________ (the "Purchaser") has read,
understands, and hereby approves the Stock Option Exercise Agreement between
Purchaser and the Company (the "Agreement"). In consideration of the Company's
granting my spouse the right to purchase the Shares as set forth in the
Agreement, the undersigned hereby agrees to be irrevocably bound by the
Agreement and further agrees that any community property interest I may have in
the Shares shall similarly be bound by the Agreement. The undersigned hereby
appoints Purchaser as my attorney-in-fact with respect to any amendment or
exercise of any rights under the Agreement.

Date:---------------------                    ----------------------------------
                                              Print Name of Purchaser's Spouse

                                              ----------------------------------
                                              Signature of Purchaser's Spouse

                                      Address:
                                              ----------------------------------
                                              ----------------------------------
                                              ----------------------------------

<PAGE>

                                    EXHIBIT 3

                            COPY OF PURCHASER'S CHECK

<PAGE>

                                    EXHIBIT 4

                             SECTION 83(b) ELECTION

<PAGE>

[FOR REGULAR INCOME TAX - NONQUALIFIED OPTIONS]
[FOR AMT AND DISQUALIFYING DISPOSITION PURPOSES - INCENTIVE STOCK OPTION]

     ELECTION UNDER SECTION 83(b) OF THE INTERNAL REVENUE CODE

The undersigned Taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include the excess, if any, of the
fair market value of the property described below at the time of transfer over
the amount paid for such property, as compensation for services in the
calculation of: (1) regular gross income; (2) alternative minimum taxable income
or (3) disqualifying disposition gross income, as the case may be.

1.   TAXPAYER'S NAME:
                             -----------------------------------------------
     TAXPAYER'S ADDRESS:
                             -----------------------------------------------

                             -----------------------------------------------

     SOCIAL SECURITY NUMBER:
                             -----------------------------------------------

2.   The property with respect to which the election is made is described as
     follows: _______ shares of Common Stock of NetScreen Technologies, Inc., a
     Delaware corporation (the "Company") which were transferred upon exercise
     of an option by Company, which is Taxpayer's employer or the corporation
     for whom the Taxpayer performs services.

3.   The date on which the shares were transferred pursuant to the exercise of
     the option was _______________, _____ and this election is made for
     calendar year _____.

4.   The shares received upon exercise of the option are subject to the
     following restrictions: The Company may repurchase all or a portion of the
     shares at the Taxpayer's original purchase price under certain conditions
     at the time of Taxpayer's termination of employment or services.

5.   The fair market value of the shares (without regard to restrictions other
     than restrictions which by their terms will never lapse) was $___ per share
     at the time of exercise of the option.

6.   The amount paid for such shares upon exercise of the option was $___ per
     share.

7.   The Taxpayer has submitted a copy of this statement to the Company.

THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE ("IRS"), AT THE
OFFICE WHERE THE TAXPAYER FILES ANNUAL INCOME TAX RETURNS, WITHIN 30 DAYS AFTER
THE DATE OF TRANSFER OF THE SHARES, AND MUST ALSO BE FILED WITH THE TAXPAYER'S
INCOME TAX RETURNS FOR THE CALENDAR YEAR. THE ELECTION CANNOT BE REVOKED WITHOUT
THE CONSENT OF THE IRS.

Dated:
      -------------------------              -----------------------------------
                                             Taxpayer's Signature

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