Document:

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                                                                     EXHIBIT 4.3

               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT

                                CACHEFLOW INC.

                                 June 5, 2000
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                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
1.   Registration Rights...................................................    1
         1.1  Definitions..................................................    1
         1.2  Request for Registration.....................................    2
         1.3  Company Registration.........................................    4
         1.4  Obligations of the Company...................................    4
         1.5  Furnish Information..........................................    5
         1.6  Expenses of Demand Registration..............................    5
         1.7  Expenses of Company Registration.............................    6
         1.8  Underwriting Requirements....................................    6
         1.9  Delay of Registration........................................    7
         1.10  Indemnification.............................................    7
         1.11  Reports Under Securities Exchange Act of 1934...............    9
         1.12  Form S-3 Registration.......................................    9
         1.13  Assignment of Registration Rights...........................   10
         1.14  "Market Stand-Off" Agreement Rights.........................   11
         1.15  Termination of Registration Rights..........................   11

2.  Additional Covenants...................................................   12
         2.1  Internal Revenue Code(S)1202.................................   12

3.  Miscellaneous..........................................................   12
         3.1  Successors and Assigns.......................................   12
         3.2  Governing Law................................................   12
         3.3  Counterparts.................................................   12
         3.4  Titles and Subtitles.........................................   12
         3.5  Notices......................................................   13
         3.6  Expenses.....................................................   13
         3.7  Amendments and Waivers.......................................   13
         3.8  Severability.................................................   13
         3.9  Aggregation of Stock.........................................   13
         3.10  Entire Agreement............................................   13
         3.11  Prior Agreement.............................................   13
</TABLE>

Schedule A     Schedule of Investors
Schedule B     Schedule of Founders
Schedule C     Schedule of Acquisition Holders
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               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT

          THIS AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT (this
"Agreement") is made as of June 5, 2000, by and among CacheFlow Inc., a Delaware
corporation (the "Company"), the investors listed on Schedule A hereto, each of
                                                     ----------
which is herein referred to as an "Investor," the founders listed on Schedule B
                                                                     ----------
hereto, each of which is herein referred to as a "Founder" and the holders of
Acquisition Shares (as defined below) listed on Schedule C hereto, each of which
                                                ----------
is herein referred to as an "Acquisition Holder."

                                   RECITALS
                                   --------

          WHEREAS, the Investors (the "Prior Investors") and the Founders
possess registration rights and the Investors possess other investor rights
granted pursuant to that certain Amended and Restated Investors' Rights
Agreement, dated May 28, 1999, among the Company, the Founders and the persons
listed on the Schedule of Investors attached thereto (the "Prior Agreement");

          WHEREAS, pursuant to the Agreement and Plan of Reorganization dated
June 3, 2000 by and among the Company, Wildcat Merger Corporation, Springbank
Networks, Inc. and Soren Christensen (as Stockholders' Agent) (the "Merger
Agreement"), the Company agreed to issue shares of Common Stock to the
Acquisition Holders;

          WHEREAS, under the terms of the Merger Agreement, the Company agreed
to make the Acquisition Holders parties to this Agreement and grant certain
rights hereunder; and

          WHEREAS, in order to induce the Company and the Acquisition Holders to
enter into the Merger Agreement, the Investors and Founders agree to amend their
rights under this Agreement and the Investors, Founders, Company and Acquisition
Holders hereby agree that this Agreement, as amended, shall govern the rights of
the Investors, Founders and Acquisition Holders to cause the company to register
shares of Common Stock issued or issuable to such persons and other matters as
set forth herein;

          NOW, THEREFORE, in consideration of the promises, covenants, and
conditions set forth herein, the parties hereto hereby agree as follows:

          1.   Registration Rights. The Company covenants and agrees as follows:
               -------------------

          1.1  Definitions. For purposes of this Section 1:
               -----------

          (a)  The term "Act" means the Securities Act of 1933, as amended.

          (b)  The term "Acquisition Shares" means those shares of Common Stock
issued to certain individuals pursuant to the Merger Agreement, which
individuals are listed on Schedule C hereto.
                          ----------

          (c)  The term "Form S-3" means such form under the Act as in effect on
the date hereof or any registration form under the Act subsequently adopted by
the SEC that permits
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either (i) inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC or (ii) such registration
statement to become effective without review by the SEC.

          (d)  The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance with
Section 1.13 hereof.

          (e)  The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.

          (f)  The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.

          (g)  The term "Registrable Securities" means: (i) the Common Stock
issuable or issued upon conversion of the Series A Preferred Stock, Series B
Preferred Stock and the Series C Preferred Stock; (ii) the shares of Common
Stock held by the Founders; provided, however, that such shares of Common Stock
shall not be deemed Registrable Securities and the Founders shall not be deemed
Holders for the purposes of Section 1.2, 1.12 and 3.7 (except as provided
therein); (iii) the Acquisition Shares; and (iv) any Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security that is issued as) a dividend or other distribution with respect
to, or in exchange for, or in replacement of, the shares referenced in (i), (ii)
and (iii) above, excluding in all cases, however, any Registrable Securities
sold by a person in a transaction in which his rights under this Section 1 are
not assigned.

          (h)  The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Common Stock outstanding that
are, and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities that are, Registrable Securities.

          (i)  The term "Rule 144" shall mean Rule 144 promulgated under the
Act.

          (j)  The term "SEC" shall mean the Securities and Exchange Commission.

          1.2  Request for Registration.
               ------------------------

          (a)  If the Company shall receive at any time after the earlier of (i)
December 19, 2002, or (ii) three (3) months after the effective date of the
first registration statement for a public offering of securities of the Company
(other than a registration statement relating either to the sale of securities
to employees of the Company pursuant to a stock option, stock purchase or
similar plan or a SEC Rule 145 transaction), a written request from the Holders
of a majority of the Registrable Securities then outstanding that the Company
file a registration statement under the Act covering the registration of at
least fifty percent (50%) of the Registrable Securities then outstanding (or
covering the registration of a lesser percent of such Registrable Securities if
the anticipated aggregate offering price, net of underwriting discounts and
commissions, would exceed $7,500,000), then the Company shall:

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                 (i)   within ten (10) days of the receipt thereof, give written
notice of such request to all Holders; and

                 (ii)  effect as soon as practicable, and in any event within
sixty (60) days of the receipt of such request, the registration under the Act
of all Registrable Securities that the Holders request to be registered, subject
to the limitations of subsection 1.2(b), within twenty (20) days of the mailing
of such notice by the Company in accordance with Section 3.5.

          (b)  If the Holders initiating the registration request hereunder
("Initiating Holders") intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall so advise the Company
as a part of their request made pursuant to subsection 1.2(a) and the Company
shall include such information in the written notice referred to in subsection
1.2(a). The underwriter will be selected by the Company and shall be reasonably
acceptable to a majority in interest of the Initiating Holders. In such event,
the right of any Holder to include his Registrable Securities in such
registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 1.4(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities that would otherwise be underwritten pursuant hereto, and
the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting.

          (c)  Notwithstanding the foregoing, if the Company shall furnish to
Holders requesting a registration statement pursuant to this Section 1.2, a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such registration statement
to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer taking action
with respect to such filing for a period of not more than one hundred twenty
(120) days after receipt of the request of the Initiating Holders; provided,
however, that the Company may not utilize this right more than once in any
twelve (12) month period.

          (d)  In addition, the Company shall not be obligated to effect, or to
take any action to effect, any registration pursuant to this Section 1.2:

                 (i)   After the Company has effected two (2) registrations
pursuant to this Section 1.2 and such registrations have been declared or
ordered effective;

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                 (ii)  During the period starting with the date ninety (90) days
prior to the Company's good faith estimate of the date of filing of, and ending
on a date ninety (90) days after the effective date of, a registration subject
to Section 1.3 hereof; provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective; or

                 (iii) If the Initiating Holders propose to dispose of shares of
Registrable Securities that may be immediately registered on Form S-3 pursuant
to a request made pursuant to Section 1.12 below.

          1.3  Company Registration. If (but without any obligation to do so)
               --------------------
the Company proposes to register any of its stock or other securities under the
Act in connection with the public offering of such securities solely for cash
(other than a registration relating solely to the sale of securities to
participants in a Company stock plan, a registration on any form that does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of the Registrable Securities or a
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities that are also being registered), the
Company shall, at such time, promptly give each Holder written notice of such
registration. Upon the written request of each Holder given within twenty (20)
days after mailing of such notice by the Company in accordance with Section 3.5,
the Company shall, subject to the provisions of Section 1.8, cause to be
registered under the Act all of the Registrable Securities that each such Holder
has requested to be registered.

          1.4  Obligations of the Company. Whenever required under this Section
               --------------------------
1 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:

          (a)  Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period of up to one hundred twenty (120)
days or until the distribution contemplated in the Registration Statement has
been completed; provided, however, that if the Registration Statement filed on
Form S-3 is the Acquisition S-3 (as defined in Section 1.12), such Registration
Statement shall be kept effective until such time as the Acquisition Holders may
utilize Rule 144 to sell any portion of their Acquisition Shares (the
"Acquisition S-3 Period"). Notwithstanding the preceding sentence, the Company
shall have the right to suspend the effectiveness of the S-3 for a total of
forty five (45) days during the Acquisition S-3 Period.

          (b)  Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.

          (c)  Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other

                                       4
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documents as they may reasonably request in order to facilitate the disposition
of Registrable Securities owned by them.

          (d)  Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holders;
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.

          (e)  In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.

          (f)  Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.

          (g)  Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.

          (h)  Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.

          1.5  Furnish Information.
               -------------------

          (a)  It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable Securities.

          (b)  The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.12 if, due to the
operation of subsection 1.5(a), the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in subsection 1.2(a) or subsection
1.12(b)(2), whichever is applicable.

          1.6  Expenses of Demand Registration. All expenses other than
               -------------------------------
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company and the

                                       5
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reasonable fees and disbursements of one counsel for the selling Holders shall
be borne by the Company; provided, however, that the Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to Section 1.2 if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable Securities to be
registered (in which case all participating Holders shall bear such expenses),
unless the Holders of a majority of the Registrable Securities agree to forfeit
their right to one demand registration pursuant to Section 1.2 or unless the
registration request is withdrawn after a material adverse change affecting the
Company that was not known to the Holders at the time of their request pursuant
to Section 1.2.

          1.7  Expenses of Company Registration. The Company shall bear and pay
               --------------------------------
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as provided
in Section 1.13), including (without limitation) all registration, filing, and
qualification fees, printers and accounting fees relating or apportionable
thereto and the fees and disbursements of one counsel for the selling Holders
selected by them, but excluding underwriting discounts and commissions relating
to Registrable Securities.

          1.8  Underwriting Requirements. In connection with any offering
               -------------------------
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, that the underwriters determine in their sole discretion
will not jeopardize the success of the offering; provided, however, that in the
event of such a limitation by the underwriters (i) no securities held by the
Company's security holders, other than the Holders, shall be included in such
registration unless all shares requested to be included by Holders are included,
(ii) if the securities to be included by Holders are limited, then each Holder
shall be entitled to include in such registration its pro rata share (which
shall be the proportion that the number of shares requested to be included by a
Holder bears to the total number of shares requested to be included by all
Holders) of the securities to be included in such registration for the account
of Holders, and (iii) in no event shall (A) the amount of securities of the
selling Holders included in the offering be reduced below twenty-five percent
(25%) of the total amount of securities included in such offering, unless such
offering is the initial public offering of the Company's securities, in which
case the selling stockholders may be excluded if the underwriters make the
determination described above and no other stockholder's securities are included
or (B) notwithstanding (A) above, any shares being sold by a stockholder
exercising a demand registration right similar to that granted in Section 1.2 be
excluded from such offering. For purposes of the preceding parenthetical
concerning apportionment, for any selling stockholder that is a holder of
Registrable Securities and that is a partnership or corporation, the partners,
retired partners and stockholders of such holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing

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persons shall be deemed to be a single "selling stockholder," and any pro-rata
reduction with respect to such "selling stockholder" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "selling stockholder," as defined in this
sentence.

          1.9  Delay of Registration. No Holder shall have any right to obtain
               ---------------------
or seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.

          1.10 Indemnification. In the event any Registrable Securities are
               ---------------
included in a registration statement under this Section 1:

          (a)  To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, any underwriter (as defined in the Act) for such
Holder, and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the 1934 Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act,
the 1934 Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities law; and the Company will pay to each such Holder, underwriter or
controlling person, as incurred, any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this subsection 1.10(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation that occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.

          (b)  To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages or liabilities (joint or several) to which any of the foregoing persons
may become subject under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses

                                       7
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reasonably incurred by any person intended to be indemnified pursuant to this
subsection 1.10(b) in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this subsection 1.10(b) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided that, in no event shall any indemnity
under this subsection 1.10(b) exceed the gross proceeds from the offering
received by such Holder.

          (c)  Promptly after receipt by an indemnified party under this Section
1.10 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 1.10, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.10, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.10.

          (d)  If the indemnification provided for in this Section 1.10 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

          (e)  Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting agreement
shall control.

                                       8
<PAGE>

          (f)  The obligations of the Company and Holders under this Section
1.10 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.

          1.11 Reports Under Securities Exchange Act of 1934. With a view to
               ---------------------------------------------
making available to the Holders the benefits of Rule 144 and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities of
the Company to the public without registration or pursuant to a registration on
Form S-3, the Company agrees to:

          (a)  make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after the effective date of the
first registration statement filed by the Company for the offering of its
securities to the general public;

          (b)  take such action, including the voluntary registration of its
Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;

          (c)  file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and

          (d)  furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144 (at any time after
ninety (90) days after the effective date of the first registration statement
filed by the Company), the Act and the 1934 Act (at any time after it has become
subject to such reporting requirements), or that it qualifies as a registrant
whose securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing any Holder of
any rule or regulation of the SEC that permits the selling of any such
securities without registration or pursuant to such form.

          1.12 Form S-3 Registration. During the forty five (45) day period
               ---------------------
beginning when the Company first qualifies as a registrant whose securities may
be resold pursuant to Form S-3, the Company shall, unless waived by a majority
in interest of the Acquisition Holders, effect a registration on Form S-3 (the
"Acquisition S-3") for the benefit of the Acquisition Holders and any other
Holders that request inclusion of Registrable Securities pursuant to the
provisions of this Section 1.12. Holders other than the Acquisition Holders may
not request a registration on Form S-3 during this forty five (45) day period
without the consent of a majority in interest of the Acquisition Holders. In
case the Company shall receive from any Holder or Holders a written request or
requests that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holder or Holders, the Company will:

          (a)  promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders; and

                                       9
<PAGE>

          (b)  as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this section 1.12: (1) if
Form S-3 is not available for such offering by the Holders; (2) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $1,000,000; (3) if the
Company shall furnish to the Holders a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
stockholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than one hundred twenty (120)
days after receipt of the request of the Holder or Holders under this Section
1.12; provided, however, that the Company shall not utilize this right more than
once in any twelve (12) month period; (4) if the Company has, within the twelve
(12) month period preceding the date of such request, already effected one (1)
registration on Form S-3 for the Holders pursuant to this Section 1.12; or (5)
in any particular jurisdiction in which the Company would be required to qualify
to do business or to execute a general consent to service of process in
effecting such registration, qualification or compliance; provided further, that
the provisions set forth in this Section 1.12 (b)(3) and 1.12 (b)(4) shall not
be applicable to the Acquisition S-3.

          (c)  Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities and other securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Holders. All expenses incurred in connection with a registration
requested pursuant to Section 1.12, including (without limitation) all
registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of counsel for the selling Holder or Holders
and counsel for the Company and including any underwriters' discounts or
commissions associated with Registrable Securities, shall be borne pro rata by
the Holder or Holders participating in the Form S-3 Registration; provided,
however, that all expenses other than underwriting discounts and commissions
incurred in connection with the Acquisition S-3, including (without limitation)
all registration, filing and qualification fees, printers and accounting fees,
fees and disbursements of counsel for the Company and the reasonable fees and
disbursements of one counsel for the selling Acquisition Holders shall be borne
by the Company. Registrations effected pursuant to this Section 1.12 shall not
be counted as demands for registration or registrations effected pursuant to
Sections 1.2 or 1.3, respectively.

          1.13 Assignment of Registration Rights. The rights to cause the
               ---------------------------------
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such securities who, after such assignment or transfer, holds at
least 50,000 shares of Registrable Securities (subject to appropriate adjustment
for stock splits, stock dividends, combinations and other recapitalizations),
provided: (a) the Company is, within a reasonable time after such transfer,

                                       10
<PAGE>

furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned; (b) such transferee or assignee agrees in writing to be bound by
and subject to the terms and conditions of this Agreement, including without
limitation the provisions of Section 1.14 below; and (c) such assignment shall
be effective only if immediately following such transfer the further disposition
of such securities by the transferee or assignee is restricted under the Act.
For the purposes of determining the number of shares of Registrable Securities
held by a transferee or assignee, the holdings of transferees and assignees of a
partnership who are partners or retired partners of such partnership (including
spouses and ancestors, lineal descendants and siblings of such partners or
spouses who acquire Registrable Securities by gift, will or intestate
succession) shall be aggregated together and with the partnership; provided that
all assignees and transferees who would not qualify individually for assignment
of registration rights shall have a single attorney-in-fact for the purpose of
exercising any rights, receiving notices or taking any action under this Section
1.

          1.14 "Market Stand-Off" Agreement Rights. Each Investor and Founder
                ----------------------------------
hereby agrees that, during the period of duration specified by the Company and
an underwriter of Common Stock or other securities of the Company, following the
effective date of a registration statement of the Company filed under the Act,
it shall not, to the extent requested by the Company and such underwriter,
directly or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any
Registrable Securities or other securities (excluding securities acquired in any
registered offering (other than shares acquired through a directed share program
if the underwriters of such offering require that shares acquired in such
program be subject to a lock-up agreement) or after such offering in the public
market in a broker transaction)) of the Company held by it at any time during
such period, except Common Stock included in such registration; provided,
however, that:

          (a)  such agreement shall be applicable only to the first such
registration statement of the Company that covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;

          (b)  all officers and directors of the Company and all holders of at
least one percent (1%) of the aggregate voting power of the Company enter into
similar agreements; and

          (c)  such market stand-off time period shall not exceed one hundred
eighty (180) days.

          In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the securities of each Investor and
Founder (and the shares or securities of every other person subject to the
foregoing restriction) subject to this Section 1.14 until the end of such
period.

          1.15 Termination of Registration Rights. No Holder shall be entitled
               ----------------------------------
to exercise any right provided for in this Section 1 after three (3) years
following the consummation of the sale of securities pursuant to a registration
statement filed by the Company under the Act in connection with the initial firm
commitment underwritten offering of its securities to the

                                       11
<PAGE>

general public or, as to any Holder, such earlier time at which all Registrable
Securities held by such Holder (aggregated with all affiliates of such Holder)
can be sold in any three (3) month period without registration in compliance
with Rule 144 of the Act so long the Company is a reporting company under the
1934 Act.

          2.   Additional Covenants.
               --------------------

          2.1  Internal Revenue Code (S)1202. The Company shall furnish to each
               -----------------------------
Investor and shall make such filings with the Internal Revenue Service, as shall
from time to time be required pursuant to Section 1202(d)(1) of the Code. In
addition, within ten (10) days after any Investor has delivered to the Company a
written request therefor, the Company shall deliver to such Investor a
certificate informing the Investor whether such Investor's interest in the
Company constitutes "qualified small business stock" as defined in Section 1202
of the Code. The Company's obligation to furnish this certificate pursuant to
this Section 2.1 shall continue notwithstanding the fact that a class of the
Company's stock may be traded on an established securities market. In addition,
the Company agrees that it will not make any purchases of its stock within the
meaning of and which would exceed the limitation contained in Section
1202(c)(3)(B) of the Code until May 31, 2000, unless such purchases have been
consented to by holders of a majority of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock (voting together as a single class
and not as separate series, and on an as-converted basis) or are required by
contractual obligations entered into prior to the Closing. Any such information
provided to the Investors under this Section 2.1 shall not be disclosed by any
Investor to any party except as required and solely in order for such Investor
to claim any benefits under Section 1202 of the Code.

          3.   Miscellaneous.
               -------------

          3.1  Successors and Assigns. Except as otherwise provided herein, the
               ----------------------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.

          3.2  Governing Law. This Agreement shall be governed by and construed
               -------------
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.

          3.3  Counterparts. This Agreement may be executed in two or more
               ------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

          3.4  Titles and Subtitles. The titles and subtitles used in this
               --------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

                                       12
<PAGE>

          3.5  Notices. Unless otherwise provided, any notice required or
               -------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed facsimile transmission or nationally recognized overnight
courier service or three days after deposit with the United States Post Office,
by registered or certified mail, postage prepaid and addressed to the party to
be notified at the address indicated for such party on the signature page
hereof, or at such other address as such party may designate by ten (10) days'
advance written notice to the other parties.

          3.6  Expenses. If any action at law or in equity is necessary to
               --------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.

          3.7  Amendments and Waivers. Any term of this Agreement may be amended
               ----------------------
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of a majority of the
Registrable Securities then outstanding; provided, however, that in the event
such amendment or waiver adversely affects the rights and/or obligations of the
Founders under this Agreement in a different manner than the other Holders, such
amendment or waiver shall also require the written consent of a majority of the
Common Stock held by the Founders then employed by the Company; provided further
that any term of this Agreement regarding the Acquisition S-3 may be amended or
waived only with the written consent of the Company and the holders of a
majority of the Acquisition Shares that have not been sold into the public
market. Any amendment or waiver effected in accordance with this paragraph shall
be binding upon each holder of any Registrable Securities then outstanding, each
future holder of all such Registrable Securities, and the Company.

          3.8  Severability. If one or more provisions of this Agreement are
               ------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.

          3.9  Aggregation of Stock. All shares of Registrable Securities held
               --------------------
or acquired by affiliated entities or persons shall be aggregated together for
the purpose of determining the availability of any rights under this Agreement.

          3.10 Entire Agreement. This Agreement (including the Exhibits hereto,
               ----------------
if any) constitutes the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.

          3.11 Prior Agreement. The Prior Agreement is hereby superseded in its
               ---------------
entirety and shall be of no further force or effect.

                                       13
<PAGE>

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                   CACHEFLOW INC.

                                   By: /s/ Brian NeSmith
                                       -----------------------------------------
                                       Brian NeSmith
                                       President and Chief Executive Officer

                    Address:       650 Almanor Avenue
                                   Sunnyvale, California 94086

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                     INVESTORS:

                                     U.S. Venture Partners V, L.P.
                                     USVP V International, L.P.
                                     2180 Associates Fund V, L.P.
                                     USVP V Entrepreneur Partners, L.P.

                                     By Presidio Management Group V, L.L.C.
                                     Its General Partner

                                     By: /s/ Presidio Management Group V, L.L.C.
                                        -------------------------------------

                         Address:    2180 Sand Hill Road, Suite 300
                                     Menlo Park, California 94025

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                BENCHMARK CAPITAL PARTNERS, L.P.

                                By: BENCHMARK CAPITAL MANAGEMENT
                                    CO., L.L.C.
                                    Its General Partner

                                By: /s/ Benchmark Capital Management Co., L.L.C.
                                    --------------------------------------------
                                    Member

                                BENCHMARK FOUNDERS' FUND, L.P.

                                By: BENCHMARK CAPITAL MANAGEMENT
                                    CO., L.L.C.
                                    Its General Partner

                                By: /s/ Benchmark Capital Management Co., L.L.C.
                                    --------------------------------------------
                                    Member

                         Address:   2480 Sand Hill Road, Suite 200
                                    Menlo Park, California 94025

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                        K-H INVESTORS (1996-B), L.P.

                                        By: /s/ David W. Hanna
                                            ------------------------------------

                                        Print Name: David W. Hanna
                                                    ----------------------------

                                        Title: Chairman, Kelly, Hanna Capital
                                               Management, Inc. as General
                                               Partner
                                               ---------------------------------

                         Address:       c/o Hanna Capital Management
                                        620 Newport Center Drive, Suite 500
                                        Newport Beach, California 92660

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                   HANNA VENTURES - CACHEFLOW III, L.P.

                                   By: /s/ David W. Hanna
                                       -----------------------------------------

                                   Print Name: David W. Hanna
                                               ---------------------------------

                                   Title: Chief Executive, Hanna Ventures, LLC
                                          as General Partner
                                          --------------------------------------

                         Address:  c/o Hanna Capital Management
                                   620 Newport Center Drive, Suite 500
                                   Newport Beach, California 92660

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                        K-H INVESTORS (1998-A), L.P.

                                        By: /s/ David W. Hanna
                                            ------------------------------------

                                        Print Name: David W. Hanna
                                                    ----------------------------

                                        Title: Chairman, Kelly, Hanna Capital
                                               Management, Inc. as General
                                               Partner
                                               ---------------------------------

                              Address:  c/o Hanna Capital Management
                                        620 Newport Center Drive, Suite 500
                                        Newport Beach, California 92660

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                        DAVID WILLIAM HANNA TRUST
                                        DATED 10/30/89

                                        By: /s/ David William Hanna
                                            ------------------------------------

                                        Print Name: David William Hanna
                                                    ----------------------------

                                        Title: Trustee
                                               ---------------------------------

                         Address:       c/o Hanna Capital Management
                                        620 Newport Center Drive, Suite 500
                                        Newport Beach, California 92660

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                             /s/ David W. Hanna
                                             -----------------------------------
                                             David W. Hanna

                              Address:       c/o Hanna Capital Management, Inc.
                                             620 Newport Center Drive, Suite 500
                                             Newport Beach, California 92660

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                        /s/ Virginia L. Hanna
                                        ----------------------------------------
                                        Virginia L. Hanna

                         Address:       c/o Hanna Capital Management
                                        620 Newport Center Drive, Suite 500
                                        Newport Beach, California 92660

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                             /s/ Brian NeSmith
                                             -----------------------------------
                                             Brian NeSmith

                                 Address:    c/o CacheFlow Inc.
                                             650 Almanor Avenue
                                             Sunnyvale, California  94086

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                             /s/ Michael A. Malcolm
                                             -----------------------------------
                                             Michael A. Malcolm

                                 Address:    P.O. Box 1666
                                             Los Altos, California  94023-1666

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                               G & H Partners

                               By: /s/ Anthony McCusker
                                   --------------------------------
                                   Partner

              Address:         c/o Gunderson Dettmer Stough Villeneuve Franklin
                               & Hachigian, LLP
                               155 Constitution Drive
                               Menlo Park, California  94025

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                        /s/ Ray Myers
                                        ------------------------------
                                        Ray Myers

                                        /s/ Janet Myers
                                        -------------------------------
                                        Janet Myers

                       Address:         783 West Greenwich Place
                                        Palo Alto, California  94303

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                    FOUNDERS:
                                    --------

                                              /s/ Michael A. Malcolm
                                              -----------------------------
                                              Michael A. Malcolm

                             Address:         P.O. Box 1666
                                              Los Altos, California  94023-1666

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                              /s/ Douglas Crow
                                              _______________________________
                                              Douglas Crow

                             Address:         24133 Southeast 45th Place
                                              Issaquah, Washington  98029

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                  /s/ Brian NeSmith
                                  -----------------------------
                                  Brian NeSmith

                    Address:      c/o CacheFlow Inc.
                                  650 Almanor Avenue
                                  Sunnyvale, California 94086

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                               ACQUISITION HOLDER:

                               By:____________________________________
                               Print Name:____________________________
                               Title:_________________________________

                 Address:   __________________________________________
                            __________________________________________
                 Telephone: __________________________________________
                 Facsimile: __________________________________________

             PLEASE PROVIDE ALL OF THE ABOVE-REQUESTED INFORMATION
             -----------------------------------------------------

                       SIGNATURE PAGE TO CACHEFLOW INC.
               AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
<PAGE>

                                  Schedule A
                                  ----------

                             Schedule of Investors

INVESTORS:
---------

TCV III (GP)
TCV III, L.P.
TCV III (Q), L.P.
TCV III Strategic Partners, L.P.
c/o Robert C. Bensky
Technology Crossover Ventures
56  Main Street, Suite 210
Millburn, NJ 07041

U.S. Venture Partners V, L.P.
USVP V International, L.P.
2180 Associates Fund V, L.P.
USVP V Entrepreneur Partners, L.P.
2180 Sand Hill Road, Suite 300
Menlo Park, California 94025

Benchmark Capital Partners, L.P.
Benchmark Founders' Fund, L.P.
2480 Sand Hill Road, Suite 200
Menlo Park, California 94025

K-H Investors (1996-B), L.P.
K-H Investors (1998-A), L.P.
Hanna Capital Management, Inc.
620 Newport Center Drive, Suite 500
Newport Beach, California 92660

Robert D. Kelly Living Trust DTD 12/7/89,
Robert D. Kelly Trustee
Robert Kelly Clients
3102 Flavin Lane
Pebble Beach, California 93953

David W. Hanna
c/o Hanna Capital Management, Inc.
620 Newport Center Drive, Suite 500
Newport Beach, California 92660

                                      S-1
<PAGE>

INVESTORS:
---------

Virginia L. Hanna
c/o Hanna Capital Management, Inc.
620 Newport Center Drive, Suite 500
Newport Beach, California 92660

Joseph J. Pruskowski
18109 236/th/ Avenue N.E.
Woodinville, Washington 98072

F Terry Eger & Carol E Eger Trust
U/T/A DTD 10/17/91
P.O. Box 1624
Los Altos, California 94023-1624

R. Randolph Scott
312 Coleridge Avenue
Palo Alto, California 94301

John S. Troedson
165 Sausal Drive
Portola Valley, California 94028

Michael A. Malcolm
P.O. Box 1666
Los Altos, California 94023-1666

Douglas Richardson
3328 99/th/ NE
Bellevue, Washington 98004

Earl Anderson
2304 Killarney Way S.E.
Bellevue, Washington 98004

David Hartley
3025 52/nd/ Avenue, Southwest
Seattle, Washington 98116

Bruce Milne
10500 N.E. 8/th/ Street, Suite 1910
Bellevue, Washington 98004-4300

Gordon Bell
450 Old Oak Court
Los Altos, California 94022

                                      S-2
<PAGE>

INVESTORS:
---------

G & H Partners
c/o Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, California 94025

Karl Johnson
544 Tennyson Avenue
Palo Alto, California 94301

Ray Myers and Janet Myers
783 West Greenwich Place
Palo Alto, California 94303

Katzman Revocable Trust under Agreement
dated June 11, 1997, as amended
Barton Investments LLC
19607 Farwell Avenue
Saratoga, California 95070

The McMurtry Family Trust
2480 Sand Hill Road, Suite 101
Menlo Park, California 94025

Brent Silver
139 Hillcrest Terrace
Santa Cruz, California 95060

Walter Loewenstern, Jr. Separate Property Trust
c/o Walter Loewenstern, Jr., Trustee
825 Holden Road
P.O. Box 1499
Avon, Colorado 81620

Vinod Vyas
1568 Country Club Drive
Los Altos, California 94024

Murat Divringi
12411 N.E. 36/th/ Place
Bellevue, Washington 98005

                                      S-3
<PAGE>

INVESTORS:
---------

Gresham Venture Partners, L.L.C.
c/o Larry R. Jasper, Manager
11 McBride Corporate Center Drive, Suite 250
Chesterfield, Missouri 63005-1407

Service Co LLC
(An "Investor" only for purposes of Section 1 and Section 2.1 of the May 28,
1999 Agreement, and specifically not for any other sections of this Agreement)
____________________________
____________________________
____________________________

                                      S-4
<PAGE>

                                  SCHEDULE B
                                  ----------

                             Schedule of Founders

Name and Address
----------------

Joseph J. Pruskowski
18109 236/th/ Avenue N.E.
Woodinville, Washington 98072

Michael A. Malcolm
P.O. Box 1666
Los Altos, California 94023-1666

Douglas Crow
24133 Southeast 45/th/ Place
Issaquah, Washington 98029

Brian NeSmith
c/o CacheFlow Inc.
650 Almanor Avenue
Sunnyvale, California 94086

                                      S-5
<PAGE>

                                  SCHEDULE C
                                  ----------

                      Schedule of the Acquisition Holders

-------------------------------------------------------------------------------
 INVESTORS:
 ----------

-------------------------------------------------------------------------------
 Don Jaworski
 609 Arboleda Drive
 Los Altos, CA 94024
-------------------------------------------------------------------------------
 Bill Roberson
 1360 El Solyo Avenue
 Campbell, CA 95008
-------------------------------------------------------------------------------
 Greg Snyder
 1600 Villa Street #305
 Mountain View, CA 94041
-------------------------------------------------------------------------------
 J. Herschel Shermis
 750 Hamilton Avenue
 Palo Alto, CA 94501
-------------------------------------------------------------------------------
 Robert Minnear
 1079 Los Altos Avenue
 Los Altos, CA 94022
-------------------------------------------------------------------------------
 Soren Christensen
 10095 Judy Avenue
 Cupertino, CA 95014
-------------------------------------------------------------------------------
 Robert Gilligan
 1518 Burlingame Avenue
 Burlingame, CA 94010
-------------------------------------------------------------------------------
 Dave Robles
 112 Roxbury Lane
 Alameda, CA 94502
-------------------------------------------------------------------------------
 Peter Grehan
 37 Brakes Circle
 Miami QLD 4220, Australia
-------------------------------------------------------------------------------
 Frank Cabri

-------------------------------------------------------------------------------
 Andy Norton
 2307 Danuth Street
 Oakland, CA 94602
-------------------------------------------------------------------------------
 Peter Snyder
 185 Santa Margarita Avenue
 Menlo Park, CA 94025
-------------------------------------------------------------------------------
 John Battle
 5138 Narvaez Avenue
 San Jose, CA 95136
-------------------------------------------------------------------------------

                                      S-6
<PAGE>

-------------------------------------------------------------------------------
 Alexander Goss
 1301-2 Palos Verdes Drive
 San Mateo, CA 94403
-------------------------------------------------------------------------------
 Tom Herbert
 2323 Ben Hur Court
 San Jose, CA 95124
-------------------------------------------------------------------------------
 Juan Alemany
 1166 Pimento Avenue
 Sunnyvale, CA 94087
-------------------------------------------------------------------------------
 Ravi Duvvri
 10578 E. Estates Drive
 Cupertino, CA 95014
-------------------------------------------------------------------------------
 Eric Tucker
 938 Clark Avenue, #32
 Mountain View, CA 94040
-------------------------------------------------------------------------------
 Gerald Stanton
 4231 Avon Court
 San Jose, CA 95136
-------------------------------------------------------------------------------
 Marko Kiiskila
 660 Harvard Avenue #7
 Santa Clara, CA 95051
-------------------------------------------------------------------------------
 Elkova Icenogle
 870 San Ardo Way
 Mountain View, CA 94043
-------------------------------------------------------------------------------
 Sara Johnson
 1166 Pimento Avenue
 Sunnyvale, CA 94087
-------------------------------------------------------------------------------
 Gaurav Garg
 107 Westhill Drive
 Los Gatos, CA 95032
-------------------------------------------------------------------------------
 Vince Russo
 36 Farmington Drive
 Shrewsbury, MA 01545
-------------------------------------------------------------------------------
 Roni Turner
 1890 Ferrari Drive
 Felton, CA 95018
-------------------------------------------------------------------------------
 Marshall Smith
 26535 Weston Drive
 Los Altos Hills, CA 94022
-------------------------------------------------------------------------------
 Joanne Knight
 793 View Street
 Mountain View, CA 9404
-------------------------------------------------------------------------------
 Namish Shah

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

                                      S-7
<PAGE>

-------------------------------------------------------------------------------
 Sarah Moussa

-------------------------------------------------------------------------------
 Sequoia Capital IX
 3000 Sand Hill Road
 Building 4, Suite #280
 Menlo Park, CA 94025
-------------------------------------------------------------------------------
 Sequoia Capital IX Principals Fund
 3000 Sand Hill Road
 Building 4, Suite #280
 Menlo Park, CA 94025
-------------------------------------------------------------------------------
 Sequoia Capital Entrepreneurs Fund
 3000 Sand Hill Road
 Building 4, Suite #280
 Menlo Park, CA 94025
-------------------------------------------------------------------------------
 Caroline M. Christensen Trust
 Giselle Sutter Sponholtz, Trustee
 76 Prospect Avenue
 Sausalito, CA 94965
-------------------------------------------------------------------------------
 Mathias M. Christensen Trust
 Giselle Sutter Sponholtz, Trustee
 76 Prospect Avenue
 Sausalito, CA 94965
-------------------------------------------------------------------------------
 Ana E. and Christopher J. Jaworski Trust
 Bruce E. Khachadoorian
 35 Kings Hwy N, #C
 Westport, CT 00880
-------------------------------------------------------------------------------
 Herschel Shermis GRAT
 J. Herschel Shermis, Trustee
 750 Hamilton Avenue
 Palo Alto, CA 94501
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

                                      S-8<PAGE>

                                                                    EXHIBIT 10.3

                                LOUDCLOUD, INC

                           2000 INCENTIVE STOCK PLAN

     1.   Purposes of the Plan.  The purposes of this 2000 Stock Plan are:
          --------------------

          .    to attract and retain the best available personnel,

          .    to provide additional incentive to Employees, Directors and

          .    Consultants, and to promote the success of the Company's
business.

     Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights and Stock Appreciation Rights may also be granted
under the Plan.

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

          (a)  "Administrator" means the Board or any of its Committees as shall
                -------------
be administering the Plan, in accordance with Section 4 of the Plan.

          (b)  "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.

          (c)  "Award" means, individually or collectively, a grant under the
                -----
Plan of Options, Stock Purchase Rights, or Stock Appreciation Rights.

          (d)  "Award Agreement" means a written or electronic agreement between
                ---------------
the Company and a Participant evidencing the terms and conditions of each Award
granted under the Plan. The Award Agreement is subject to the terms and
conditions of the Plan.

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

          (f)  "Change of Control" means the occurrence of any of the following
                -----------------
events:

               (i)  Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule
13d-3 of the Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting power represented
by the Company's then outstanding voting securities; or
<PAGE>

               (ii)   The consummation of the sale or disposition by the Company
of all or substantially all of the Company's assets; or

               (iii)  The consummation of a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or its parent) at
least fifty percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation.

               (iv)   A change in the composition of the Board, as a result of
which fewer than a majority of the Directors are Incumbent Directors. "Incumbent
Directors" shall mean Directors who either (A) are Directors of the Company as
of the date hereof, or (B) are elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of those Directors whose
election or nomination was not in connection with any transaction described in
subsections (i), (ii) or (iii) or in connection with an actual or threatened
proxy contest relating to the election of directors of the Company.

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

          (h)  "Committee"  means a committee of Directors appointed by the
                ---------
Board in accordance with Section 4 of the Plan.

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

          (j)  "Company" means Loudcloud, Inc., a Delaware corporation.
                -------

          (k)  "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity;
provided however, that an individual providing services only as a Director shall
not be considered a Consultant.

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

          (m)  "Disability" means total and permanent disability as defined in
                ----------
Section 22(e)(3) of the Code.

          (n)  "Employee" means any person, including Officers and Directors,
                --------
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither
<PAGE>

service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.

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

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

               (i)    If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;

               (ii)   If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable; or

               (iii)  In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.

          (q)  "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

          (r)  "Inside Director" means a Director who is an Employee.
                ---------------

          (s)  "IPO Effective Date" means the date upon which the Securities and
                ------------------
Exchange Commission declares the initial public offering of the Company's Common
Stock as effective.

          (t)  "Nonstatutory Stock Option" means an Option not intended to
                -------------------------
qualify as an Incentive Stock Option.

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

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

          (w)  "Option Exchange Program" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.

          (x)  "Optioned Stock" means the Common Stock subject to an Option or
Stock Purchase Right granted under the Plan.

                                      -3-
<PAGE>

          (y)  "Outside Director" means a Director who is not an Employee.
                ----------------

          (z)  "Participant" means the holder of an outstanding Award granted
                -----------
under the Plan.

          (aa) "Plan" means this 2000 Incentive Stock Plan, as amended and
                ----
restated.

          (bb) "Restricted Stock" means shares of Common Stock acquired pursuant
                ----------------
to a grant of Stock Purchase Rights under Section 11 of the Plan.

          (cc) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
                ----------
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.

          (dd) "Section 16(b)" means Section 16(b) of the Exchange Act.
                -------------

          (ee) "Service Provider" means an Employee, Director or Consultant.
                ----------------

          (ff) "Share" means a share of the Common Stock, as adjusted in
                -----
accordance with Section 14 of the Plan.

          (gg) "Stock Appreciation Right" or "SAR", means an award granted
                ------------------------
alone, in connection or in tandem with a related Option, that pursuant to
Section 14 is designated as a SAR.

          (hh) "Stock Purchase Right" means the right to purchase Common Stock
                --------------------
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.

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

     3.   Stock Subject to the Plan.  Subject to the provisions of Section 14 of
          -------------------------
the Plan, the initial number of Shares that may be optioned and sold under the
Plan is 12,500,000 Shares, plus any Shares available for future issuance under
the Company's 1999 Stock Plan and the Company's 2000 Stock Plan on the date the
Securities and Exchange Commission declares the company's registration statement
effective and any Shares returned to the 1999 Stock Plan and the 2000 Stock
Plan.

          The number of Shares reserved for issuance under the Plan shall
increase annually on the first day of the Company's fiscal year beginning in
2003 by an amount of Shares equal to the lesser of (i) 9,000,000 Shares, (ii)
8% of the outstanding Shares on such date (which percentage shall decrease to 6%
for fiscal years beginning after 2007 and remain constant thereafter) or (iii)
an amount determined by the Board. The Shares may be authorized, but unissued,
or reacquired Common Stock.

          If an Award expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated). However, Shares
that have actually been issued under the Plan, pursuant to an Award, shall not
be returned to the Plan and shall not become available for future distribution
under the Plan,

                                      -4-
<PAGE>

except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.

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

          (a)  Procedure.
               ---------

               (i)    Multiple Administrative Bodies. The Plan may be
                      ------------------------------
administered by different Committees with respect to different groups of Service
Providers.

               (ii)   Section 162(m). To the extent that the Administrator
                      --------------
determines it to be desirable to qualify Awards granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.

               (iii)  Rule 16b-3.  To the extent desirable to qualify
                      ----------
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.

               (iv)   Other Administration. Other than as provided above, the
                      --------------------
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.

          (b)  Powers of the Administrator. Subject to the provisions of the
               --------------------------
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:

               (i)    to determine the Fair Market Value;

               (ii)   to select the Service Providers to whom Awards may be
granted hereunder;

               (iii)  to determine the number of shares of Common Stock to be
covered by each Award granted hereunder;

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

               (v)    to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any Award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Awards may be exercised (which may be based on performance criteria),
any vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Award or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;

               (vi)   to reduce the exercise price of any Award to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Award shall have declined since the date the Award was granted;

                                      -5-
<PAGE>

               (vii)  to institute an Option Exchange Program;

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

               (ix)   to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;

               (x)    to modify or amend each Award (subject to Section 17(c) of
the Plan), including the discretionary authority to extend the post-termination
exercisability period of Awards longer than is otherwise provided for in the
Plan;

               (xi)   to allow Participants to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Award that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be 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 shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable;

               (xii)  to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Award previously
granted by the Administrator;

               (xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.

          (c)  Effect of Administrator's Decision. The Administrator's
               ----------------------------------
decisions, determinations and interpretations shall be final and binding on all
Participants.

     5.   Eligibility.  Nonstatutory Stock Options, Stock Purchase Rights  and
          -----------
Stock Appreciation Rights may be granted to Service Providers.  Incentive Stock
Options may be granted only to Employees.

     6.   Limitations.
          -----------

          (a)  Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

          (b)  Neither the Plan nor any Award shall confer upon a Participant
any right with respect to continuing the Participant's relationship as a Service
Provider with the Company, nor shall

                                      -6-
<PAGE>

they interfere in any way with the Participant's right or the Company's right to
terminate such relationship at any time, with or without Cause.

          (c)  The following limitations shall apply to grants of Options:

               (i)    No Service Provider shall be granted, in any fiscal year
of the Company, Options to purchase more than 500,000 Shares.

               (ii)   In connection with his or her initial service, a Service
Provider may be granted Options to purchase up to an additional 1,000,000
Shares, which shall not count against the limit, set forth in subsection (i)
above.

               (iii)  The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 14.

               (iv)   In applying the limits of subsections (i) and (ii), the
Administrator, to the extent required to qualify Options as "performance-based
compensation" within the meaning of Section 162(m) of the Code, shall apply the
rules of Section 162(m) as necessary or appropriate to reflect an Option that is
cancelled or the exercise price of which is reduced.

     7.   Term of Plan. Subject to Section 21 of the Plan, the Plan shall become
          ------------
effective upon its adoption by the Board. It shall continue in effect for a term
of ten (10) years unless terminated earlier under Section 17 of the Plan.

     8.   Term of Option.  The term of each Option shall be stated in the Award
          --------------
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Award Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Award Agreement.

     9.   Option Exercise Price and Consideration.
          ---------------------------------------

          (a)  Exercise Price. The per share exercise price for the Shares to be
               --------------
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

               (i)    In the case of an Incentive Stock Option

                      (A)  granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.

                                      -7-
<PAGE>

                      (B)  granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.

               (ii)   In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator.  In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

               (iii)  Notwithstanding the preceding, in the event that the
Company or a Subsidiary consummates a transaction described in section 424(a) of
the Code (e.g., the acquisition of property or stock from an unrelated
corporation), persons who become Employees, Directors or Consultants on account
of such transaction may be granted Options in substitution for options granted
by their former employer. If such substitute Options are granted, the
Administrator, in its sole discretion and consistent with section 424(a) of the
Code, shall determine the exercise price of such substitute Options.

          (b)  Waiting Period and Exercise Dates. At the time an Option is
               ---------------------------------
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied before the
Option may be exercised.

          (c)  Form of Consideration.  The Administrator shall determine the
               ---------------------
acceptable form of consideration for exercising an Option, including the method
of payment.  In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant.  Such
consideration may consist entirely of:

               (i)    cash;

               (ii)   check;

               (iii)  promissory note;

               (iv)   other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Participant for more than six
months on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;

               (v)    consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;

               (vi)   a reduction in the amount of any Company liability to the
Participant, including any liability attributable to the Participant's
participation in any Company-sponsored deferred compensation program or
arrangement;

               (vii)  any combination of the foregoing methods of payment; or

                                      -8-
<PAGE>

               (viii)  such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.

     10.  Exercise of Option.
          ------------------

          (a)  Procedure for Exercise; Rights as a Stockholder. Any Option
               -----------------------------------------------
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Award Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.

               An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Award Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Participant or, if
requested by the Participant, in the name of the Participant and his or her
spouse. Until the Shares are issued (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the Company),
no right to vote or receive dividends or any other rights as a Stockholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such Shares promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are
issued, except as provided in Section 14 of the Plan.

               Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.

          (b)  Termination of Relationship as a Service Provider. Subject to
               -------------------------------------------------
Section 14, if a Participant ceases to be a Service Provider (but not in the
event of a Participant's change of status from Employee to Consultant (in which
case an Employee's Incentive Stock Option shall automatically convert to a
Nonstatutory Stock Option on the ninety-first (91/st/) day following such change
of status) or from Consultant to Employee), such Participant may, but only
within such period of time as is specified in the Award Agreement (but in no
event later than the expiration date of the term of such Option as set forth in
the Award Agreement), exercise his or her Option to the extent that the
Participant was entitled to exercise it at the date of such termination. In the
absence of a specified time in the Award Agreement, the Option shall remain
exercisable for three (3) months following the Participant's termination. If, on
the date of termination, the Participant is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall revert to
the Plan. If, after termination, the Participant does not exercise his or her
Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

          (c)  Disability of Optionee.  If a Participant ceases to be a Service
               ----------------------
Provider as a result of the Participant's Disability, the Participant may, but
only within twelve (12) months from

                                      -9-
<PAGE>

the date of such termination (and in no event later than the expiration date of
the term of such Option as set forth in the Award Agreement), exercise his or
her Option to the extent that the Option is vested on the date of termination.
If, on the date of termination, the Participant is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Participant does not exercise his
or her Option within the time specified herein, the Option shall terminate, and
the Shares covered by such Option shall revert to the Plan.

          (d)  Death of Optionee. If a Participant dies while a Service
               -----------------
Provider, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Award Agreement), by the Participant's
estate or by a person who acquires the right to exercise the Option by bequest
or inheritance, but only to the extent that the Option is vested on the date of
death. If, at the time of death, the Participant is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. The Option may be exercised by the executor or
administrator of the Participant's estate or, if none, by the person(s) entitled
to exercise the Option under the Participant's will or the laws of descent or
distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.

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

     11.  Stock Purchase Rights.
          ---------------------

          (a)  Rights to Purchase. Stock Purchase Rights may be issued either
               ------------------
alone, in addition to, or in tandem with other Awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
Participant in writing or electronically, of the terms, conditions and
restrictions related to the offer, including the number of Shares that the
offeree shall be entitled to purchase, the price to be paid, and the time within
which the offeree must accept such offer. The offer shall be accepted by
execution of an Award Agreement in the form determined by the Administrator.

          (b)  Repurchase Option. Unless the Administrator determines otherwise,
               -----------------
the Award Agreement shall grant the Company a repurchase option exercisable upon
the voluntary or involuntary termination of the purchaser's service with the
Company for any reason (including death or Disability). The purchase price for
Shares repurchased pursuant to the Award Agreement shall be the original price
paid by the purchaser and may be paid by cancellation of any indebtedness of the
purchaser to the Company. The repurchase option shall lapse at a rate determined
by the Administrator.

          (c)  Other Provisions. The Award Agreement shall contain such other
               ----------------
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator in its sole discretion.

                                      -10-
<PAGE>

          (d)  Rights as a Stockholder. Once the Stock Purchase Right is
               -----------------------
exercised, the purchaser shall have the rights equivalent to those of a
Stockholder, and shall be a Stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 14
of the Plan.

     12.  Non-Transferability of Awards.  Unless determined otherwise by the
          -----------------------------
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Participant, only by the Participant.  If the Administrator makes an Award
transferable, such Award shall contain such additional terms and conditions as
the Administrator deems appropriate.

     13.  Formula Option Grants to Outside Directors. Outside Directors shall be
          ------------------------------------------
granted Options in accordance with the following provisions:

          (a)  All Options granted pursuant to this Section shall be
Nonstatutory Stock Options and, except as otherwise provided herein, shall be
subject to the other terms and conditions of the Plan.

          (b)  Except as provided in subsection (d) below:

               (i)   Each individual who first becomes an Outside Director after
the IPO Effective Date but on or before the date which is six (6) months
following the IPO Effective Date automatically shall, on the date he or she
first becomes an Outside Director, be granted an Option to purchase 50,000
Shares.

               (ii)  Each individual who first becomes an Outside Director after
six (6) months following the IPO Effective shall be granted an Option to
purchase 30,000 Shares on the date such individual first becomes an Outside
Director (the Option in clause (i) above and this clause (ii) is referred to as
the "First Option").

               (iii) Notwithstanding (i) and (ii) above, an Inside Director who
ceases to be an Inside Director but who remains a Director shall not receive a
First Option.

          (c)  Except as provided in subsection (d) below, each Outside Director
shall be automatically granted an Option to purchase 10,000 Shares (a
"Subsequent Option") following each annual meeting of the stockholders of the
Company occurring after the end of the Company's fiscal year 2001, if
immediately after such meeting, he or she shall continue to serve on the Board
and shall have served on the Board for at least the preceding six (6) months.

          (d)  Notwithstanding the provisions of subsections (b) and (c) hereof,
any exercise of an Option granted before the Company has obtained stockholder
approval of the Plan in accordance with Section 21 hereof shall be conditioned
upon obtaining such stockholder approval of the Plan in accordance with Section
21 hereof.

                                      -11-
<PAGE>

          (e)  The terms of each First Option granted pursuant to this Section
shall be as follows:

               (i)   the term of the Option shall be ten (10) years.

               (ii)  the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Option.

               (iii) 25% of the Shares subject to the Option shall vest twelve
months after the date of grant and 1/48 of the Shares subject to the Option
shall vest each month thereafter provided that the Outside Director shall
continue to serve on the Board on such dates.

          (f)  The terms of each Subsequent Option granted pursuant to this
Section shall be as follows:

               (i)   the term of the Option shall be ten (10) years.

               (ii)  the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Option.

               (iii) 25% of the Shares subject to the Option shall vest twelve
months after the date of grant and 1/48 of the Shares subject to the Option
shall vest each month thereafter provided that the Outside Director shall
continue to serve on the Board on such dates.

     14.  Stock Appreciation Rights.
          -------------------------

          (a)  Grant of SARs. Subject to the terms and conditions of the Plan,
               -------------
SARs may be granted to Service Providers at any time and from time to time as
shall be determined by the Administrator, in its sole discretion. The
Administrator shall have complete discretion to determine the number of SARs
granted to any Participant.

          (b)  Exercise Price and Other Terms. The Administrator, subject to the
               ------------------------------
provisions of the Plan, shall have complete discretion to determine the terms
and conditions of SARs granted under the Plan. However, the exercise price of an
SAR shall be not less than one hundred percent (100%) of the Fair Market Value
of a Share on the Grant Date.

          (c)  SAR Agreement. Each SAR grant shall be evidenced by an Award
               -------------
Agreement that shall specify the exercise price, the term of the SAR, the
conditions of exercise, and such other terms and conditions as the
Administrator, in its sole discretion, shall determine.

          (d)  Expiration of SARs. A SAR granted under the Plan shall expire
               ------------------
upon the date determined by the Administrator, in its sole discretion, and set
forth in the Award Agreement. Notwithstanding the foregoing, the rules of
Section 10(b), 10(c) and 10(d) also shall apply to SARs.

          (e)  Payment of SAR Amount. Upon exercise of a SAR, a Participant
shall be entitled to receive payment from the Company in an amount determined by
multiplying:

                                      -12-
<PAGE>

               (i)   The difference between the Fair Market Value of a Share on
the date of exercise over the exercise price; times

               (ii)  The number of Shares with respect to which the SAR is
exercised.

          (f)  Payment Upon Exercise of SAR. At the discretion of the
               ----------------------------
Administrator, payment for a SAR may be in cash, Shares or a combination
thereof.

     15.  Adjustments Upon Changes in Capitalization, Merger or Asset Sale.
          ----------------------------------------------------------------

          (a)  Changes in Capitalization.  Subject to any required action by the
               -------------------------
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Award and the number of shares of Common Stock which have been
authorized for issuance under the Plan but as to which no Awards have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Award, as well as the price per share of Common Stock covered by each such
outstanding Award, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company.
The conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration."  Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive.  Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Award.

          (b)  Dissolution or Liquidation. In the event of the proposed
               --------------------------
dissolution or liquidation of the Company, the Administrator shall notify each
Participant as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for a Participant
to have the right to exercise his or her Award for a number of days (determined
by the Administrator in its sole discretion) prior to such transaction as to all
of the Optioned Stock covered thereby, including Shares as to which the Award
would not otherwise be exercisable. In addition, the Administrator may provide
that any Company repurchase option applicable to any Shares purchased upon
exercise of an Award shall lapse as to all such Shares, provided the proposed
dissolution or liquidation takes place at the time and in the manner
contemplated. To the extent it has not been previously exercised, an Award will
terminate immediately prior to the consummation of such proposed action.

          (c)  Merger or Asset Sale. In the event of a merger of the Company
               --------------------
with or into another corporation, or the sale of all or substantially all of the
assets of the Company (a "Merger"), each outstanding Award shall be assumed or
an equivalent award substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation (the "Successor Corporation"). In the
event that the Successor Corporation refuses to assume or substitute for the
Award, the Optionee shall fully vest in and have the right to exercise the Award
as to all of the Optioned Stock, including Shares as to which it would not
otherwise be vested or exercisable. If an Award becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a Merger, the

                                      -13-
<PAGE>

Administrator shall notify the Optionee in writing or electronically that the
Award shall be fully vested and exercisable for a period of time (determined by
the Administrator in its sole discretion) from the date of such notice, and the
Award shall terminate upon the expiration of such period. For the purposes of
this Section 14(c), the Award shall be considered assumed if, following the
Merger, the award confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Award immediately prior to the Merger, the
consideration (whether stock, cash, or other securities or property) received in
the Merger by holders of Common Stock for each Share held on the effective date
of the transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the Merger is
not solely common stock of the Successor Corporation or its Parent, the
Administrator may, with the consent of the Successor Corporation, provide for
the consideration to be received upon the exercise of the Award, for each Share
of Optioned Stock subject to the Award, to be solely common stock of the
Successor Corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Merger.

     16.  Change of Control. In the event of a Change of Control, each
          -----------------
outstanding Option held by an Outside Director shall vest and become exercisable
in full as to all of the Optioned Stock, including Shares as to which the
Outside Director would not otherwise be vested or exercisable. If an Option
becomes fully vested and exercisable as provided in this paragraph, the
Administrator shall notify the Optionee in writing or electronically that the
Option shall be fully vested and exercisable for a period of time (determined by
the Administrator in its sole discretion) from the date of such notice, and the
Option shall terminate upon the expiration of such period.

     17.  Date of Grant. The date of grant of an Award shall be, for all
          -------------
purposes, the date on which the Administrator makes the determination granting
such Award, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.

     18.  Amendment and Termination of the Plan.
          -------------------------------------

          (a)  Amendment and Termination. The Board may at any time amend,
               -------------------------
alter, suspend or terminate the Plan.

          (b)  Stockholder Approval. The Company shall obtain Stockholder
               --------------------
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws .

          (c)  Effect of Amendment or Termination.  No amendment, alteration,
               ----------------------------------
suspension or termination of the Plan shall impair the rights of any
Participant, unless mutually agreed otherwise between the Participant and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company.  Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Options
granted under the Plan prior to the date of such termination.

                                      -14-
<PAGE>

     19.  Conditions Upon Issuance of Shares.
          ----------------------------------

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

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

     20.  Inability to Obtain Authority.  The inability of the Company to obtain
          -----------------------------
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

     21.  Reservation of Shares. The Company, during the term of this Plan, will
          ---------------------
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     22.  Stockholder Approval.  The Plan shall be subject to approval by the
          --------------------
Stockholders of the Company within twelve (12) months after the date the Plan is
adopted.  Such Stockholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.

                                      -15-

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