GRIC COMMUNICATIONS INC, S-1/A, 1999-10-29

GRIC COMMUNICATIONS INC
S-1/A, 1999-10-29
BUSINESS SERVICES, NEC

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 29, 1999

REGISTRATION NO. 333-87497

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

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------------

AMENDMENT NO. 1
TO
FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

GRIC COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
------------------------------

<TABLE>
<S> <C> <C>
DELAWARE 334410 77-0368092
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) classification code number) identification no.)
</TABLE>

GRIC COMMUNICATIONS, INC.
1421 MCCARTHY BOULEVARD
MILPITAS, CALIFORNIA 95035
(408) 955-1920
(Address and telephone number of Registrant's principal executive offices)

JOSEPH M. ZAELIT
SENIOR VICE PRESIDENT, FINANCE & ADMINISTRATION
AND CHIEF FINANCIAL OFFICER
GRIC COMMUNICATIONS, INC.
1421 MCCARTHY BOULEVARD
MILPITAS, CALIFORNIA 95035
(408) 955-1920
(Name, address and telephone number of agent for service)
------------------------------

COPIES TO:

<TABLE>
<S> <C>
DAVID W. HEALY, ESQ. KENNETH LAMB, ESQ.
HORACE L. NASH, ESQ. RICHARD A. STRONG, ESQ.
WILLIAM R. SCHREIBER, ESQ. STANLEY SZE, ESQ.
THOMAS J. HALL, ESQ. TILDA CHO, ESQ.
JOSHUA N. SUN, ESQ. JOHN Z. CHEN, ESQ.
H. DANIEL KIM, ESQ. GIBSON, DUNN & CRUTCHER LLP
KYLE M. CHIN, ESQ. ONE MONTGOMERY STREET
FENWICK & WEST LLP SAN FRANCISCO, CALIFORNIA 94104
TWO PALO ALTO SQUARE (415) 393-8200
PALO ALTO, CALIFORNIA 94306
(650) 494-0600
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / _________

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _________

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE(3)
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value.............. 5,290,000 $12.00 $63,480,000 $17,648
</TABLE>

(1) Includes 690,000 shares which the Underwriters have the option to purchase
to cover over-allotments, if any.

(2) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(a) under the Securities Act of 1933.

(3) Of this fee, $13,900 has been paid previously.

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>

SUBJECT TO COMPLETION, DATED OCTOBER 29, 1999

THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

4,600,000 SHARES

[LOGO]

COMMON STOCK

$ PER SHARE

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

This is an initial public offering of common stock of GRIC Communications, Inc.
This is a firm commitment underwriting.

GRIC expects that the price to the public in the offering will be between $10.00
and $12.00 per share.

We have applied to include the common stock on the Nasdaq National Market under
the symbol "GRIC."

INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 7.

<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----------
<S> <C> <C>
Price to the public............................ $ $
Underwriting discount..........................
Proceeds to GRIC...............................
</TABLE>

GRIC has granted an over-allotment option to the underwriters. Under this
option, the underwriters may elect to purchase a maximum of 690,000 additional
shares from GRIC within 30 days following the date of this prospectus to cover
over-allotments.

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

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

CIBC WORLD MARKETS
U.S. BANCORP PIPER JAFFRAY
VOLPE BROWN WHELAN & COMPANY

The date of this prospectus is , 1999.
<PAGE>
INSIDE FRONT COVER:

[GRIC logo]

Headline: GRIC Alliance Network

[picture of our network footprint for Internet roaming and telephony showing
countries covered by roaming points of presence (POPs), and gateway locations
for telephony]

INSIDE FRONT SPREAD:

[GRIC logo]

Headline: Multiple Internet Services. One Global Solution.

[picture shows how we operate our network and GRIC CSP to manage the GRIC
Alliance, and how service providers in the GRIC Alliance provide Internet
services to their end users]

Text:

We manage the network and provide infrastructure technology empowering
telecommunications companies and Internet service providers to deploy
value-added Internet services which keep their end users connected globally.

1. WE CREATE software and technology, known as GRIC Convergent Services
Platform (GRIC CSP), to facilitate delivery of multiple Internet-based services.
Using GRIC CSP, we operate as a global clearinghouse to handle worldwide
authentication, authorization, route origination and termination, provisioning
and settlement services.

2. WE MANAGE a global network called the GRIC Alliance, which we created by
forming relationships that allow our customers to share their communications
networks, expand their global presence and increase their revenue opportunities.
The GRIC Alliance has over 300 members, including such companies as America
Online, MindSpring, Singapore Telecommunications and others.

3. WE ENABLE service providers to quickly and economically deliver to their end
users multiple Internet-based services such as global Internet roaming,
corporate remote access and voice, fax and prepaid Internet telephony.

INSIDE BACK COVER:

[GRIC logo]
[picture of a globe]

Text: Multiple Internet services
One global solution

<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary.......................................... 4
Risk Factors................................................ 7
Forward-Looking Statements.................................. 15
Use of Proceeds............................................. 16
Dividend Policy............................................. 16
Capitalization.............................................. 17
Dilution.................................................... 18
Selected Consolidated Financial Data........................ 19
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 21
Business.................................................... 31
Management.................................................. 48
Related Party Transactions.................................. 58
Principal Stockholders...................................... 59
Description of Capital Stock................................ 61
Shares Eligible for Future Sale............................. 64
Underwriting................................................ 66
Legal Matters............................................... 68
Experts..................................................... 68
Where You Can Find Additional Information................... 68
Index to Consolidated Financial Statements.................. F-1
</TABLE>

3
<PAGE>
PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED IN OTHER PARTS OF THIS PROSPECTUS.
BECAUSE IT IS A SUMMARY, IT DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU
SHOULD CONSIDER BEFORE INVESTING IN THE SHARES. YOU SHOULD READ THE ENTIRE
PROSPECTUS CAREFULLY. GRIC COMMUNICATIONS IS A START-UP COMPANY WITH A HISTORY
OF LOSSES, AN ACCUMULATED DEFICIT OF APPROXIMATELY $40.5 MILLION AS OF
SEPTEMBER 30, 1999 AND AN EXPECTATION OF CONTINUED LOSSES.

GRIC COMMUNICATIONS, INC.

OVERVIEW

We provide services and technology that enable our customers to offer
Internet-based products and services, such as Internet telephony and Internet
roaming, to their end users worldwide. We also provide clearinghouse settlement
services to our customers, from which we generate a majority of our revenues.
Our customers include telecommunications companies, Internet service providers
and newly-emerging communications service providers. We provide our services and
technology through a global network that we call the GRIC Alliance. We created
the GRIC Alliance by forming relationships with our customers that allow them to
share their communications networks. We use our internally-developed software
platform, which we call GRIC Convergent Services Platform or GRIC CSP, to manage
this shared network and to provide clearinghouse services. As a clearinghouse we
have established common technical, service and payment standards to settle
charges that our customers incur when their end users access the networks of
other GRIC Alliance members to initiate Internet access outside their home
territory (Internet roaming) or to place a telephone call through the Internet
(Internet telephony).

As of September 30, 1999, the GRIC Alliance included the communications networks
of over 300 GRIC Alliance members and more than 4,000 Internet access points
located in over 140 countries. Current members of the GRIC Alliance include
Chunghwa Telecom, Fujitsu Nifty, Globus, MindSpring, Primus Telecommunications,
Singapore Telecommunications and Telstra's On Australia subsidiary, as well as
America Online, which recently began offering our Internet roaming service to
its subscribers.

GRIC CSP is a software platform that we designed and created to facilitate the
introduction, deployment and management of new Internet-based services across
the disparate networks that form the GRIC Alliance. Through GRIC CSP, which
operates in multiple hardware and software environments, we provide our
customers with transaction management services, end user authentication and
authorization, route termination and clearinghouse services.

A number of factors have combined to create new opportunities for providers of
Internet-based services. These factors include improvements in technology,
greater efficiency of Internet-based communications, global deregulation of the
communications industry and the convergence of Internet-based communications and
traditional telecommunications markets. For example, according to International
Data Corporation, voice minutes transmitted over Internet-based networks are
expected to increase from 300 million minutes in 1998 to 135 billion minutes in
2004. In addition, the Yankee Group estimates that the worldwide market for
remote access services, including Internet roaming, will increase from
approximately $460 million in 1998 to approximately $1.98 billion in 2002.

STRATEGY

Our goal is to become the preferred global provider of Internet-based
communications infrastructure and clearinghouse services. In order to achieve
this goal, we intend to:

- continue to add members to the GRIC Alliance;

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- cross-sell products and services to GRIC Alliance members;

- enhance our technology leadership;

- promote the adoption of GRIC CSP;

- leverage strategic relationships; and

- increase transaction-based revenue.

PRODUCTS AND SERVICES

Our Internet telephony service enables our customers to offer their end users
the opportunity to make low-cost, high quality, Internet-based phone calls. Our
Internet roaming solution, which includes GRICtraveler and GRICdial software,
allows our customers to provide their end users with low cost access to the
Internet throughout the world by dialing a local number, eliminating the need
for costly international calls to their "home" Internet service provider. We
generate settlement revenues when we provide clearinghouse services to customers
whose end users initiate Internet roaming services or place Internet telephone
calls. We intend to make significant investments to enhance GRIC CSP and to
develop and market additional Internet-based products and services.

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

RECENT EVENT

On November , 1999 we issued 600,240 shares of our Series E Preferred Stock,
convertible into 600,240 shares of common stock, to Nokia Holdings, Inc. for an
aggregate purchase price of $6.0 million.

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

Our principal executive offices are located at 1421 McCarthy Blvd., Milpitas,
California 95035 and our telephone number is (408) 955-1920.

GRIC is our registered trademark and GRIC Alliance, GRIC Network, GRIC Alliance
Network, Global Reach Internet Connection, GRICprepaid, GRICtraveler, GRICphone,
GRICfax, GRIC CSP, GRIC Convergent Services Platform, the GRIC logo and
"Technology that brings intelligence to the Internet" are our trademarks. This
prospectus also contains trademarks of other companies and organizations.

UNLESS OTHERWISE INDICATED, ALL INFORMATION CONTAINED IN THIS PROSPECTUS
ASSUMES:

- OUR REINCORPORATION IN DELAWARE PRIOR TO COMPLETION OF THIS OFFERING AND THE
ASSOCIATED EXCHANGE OF SHARES OF COMMON STOCK AND PREFERRED STOCK IN THE
CALIFORNIA PREDECESSOR FOR SHARES OF COMMON STOCK AND PREFERRED STOCK IN THE
DELAWARE CORPORATION THAT HAS THE EFFECT OF A 1-FOR-2.8 REVERSE STOCK SPLIT;

- THE CONVERSION OF EACH OUTSTANDING SHARE OF PREFERRED STOCK INTO ONE SHARE
OF COMMON STOCK;

- THE ADOPTION OF A 1999 EQUITY INCENTIVE PLAN AND A 1999 EMPLOYEE STOCK
PURCHASE PLAN;

- THAT THE UNDERWRITERS WILL NOT EXERCISE THEIR OVER-ALLOTMENT OPTION;

- EXERCISE OF WARRANTS TO PURCHASE 223,206 SHARES OF COMMON STOCK, WHICH WOULD
OTHERWISE EXPIRE UPON THE COMPLETION OF THIS OFFERING; AND

- NO EXERCISE OF WARRANTS TO PURCHASE 132,208 SHARES OF COMMON STOCK WHICH
SURVIVE THE COMPLETION OF THIS OFFERING.

5
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THE OFFERING

<TABLE>
<S> <C>
Common stock offered..................................... 4,600,000 shares

Common stock to be outstanding after the offering........ 17,723,311 shares

Use of proceeds.......................................... For general corporate purposes, capital
expenditures and working capital. See
"Use of Proceeds."

Proposed Nasdaq National Market symbol................... GRIC
</TABLE>

The number of shares of common stock to be outstanding after the offering is
based on the number of shares outstanding as of September 30, 1999. This number
does not include 600,240 shares of our Series E Preferred Stock (convertible
into 600,240 shares of common stock) that were issued on November , 1999.

SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands, except share and per share data)

<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
-------------------------------------------------------------- -------------------------
1994 1995 1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Total revenues............ $ -- $ -- $ 403 $ 1,534 $ 2,549 $ 1,713 $ 5,437
Operating loss............ -- -- (1,035) (8,206) (17,487) (11,105) (14,255)
Loss from discontinued
operations.............. (93) (726) (1,683) (774) -- -- --
Net loss.................. $ (93) $ (726) $ (2,614) $ (3,842) $ (17,902) $ (11,013) $ (15,287)

Basic and diluted net
loss per share from
continuing
operations............ $ -- $ -- $ (0.52) $ (4.42) $ (9.19) $ (5.66) $ (7.61)
========== ========== ========== ========== ========== ========== ===========
Shares used to compute
basic and diluted net
loss per share.......... 1,925,636 1,998,043 1,788,684 1,851,140 1,948,424 1,946,870 2,009,596

Pro forma basic and
diluted net loss per
share from continuing
operations(1)........... $ (2.27) $ (1.42)
========== ===========
Shares used to compute pro
forma basic and diluted
net loss per share(1)... 7,889,323 10,782,381
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
-------------------------
ACTUAL AS ADJUSTED(2)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $10,181 $57,001
Working capital............................................. 6,013 52,833
Total assets................................................ 16,438 63,258
Long-term debt and capital lease obligations, less current
portion................................................... 1,116 1,116
Redeemable convertible preferred stock...................... 8,590 --
Total stockholders' equity (deficit)........................ (260) 46,560
</TABLE>

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

(1) The pro forma information gives effect to the conversion of all outstanding
shares of preferred stock on September 30, 1999 into 10,673,854 shares of
common stock and the exercise of warrants to purchase 223,206 shares of
common stock upon the closing of this offering at a price per share of
$7.00.

(2) The as adjusted data give effect to the sale of the 4,600,000 shares of
common stock that we are offering under this prospectus at an assumed
initial public offering price of $11.00 per share after deducting the
estimated underwriting discounts and estimated offering expenses. See
"Capitalization."

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<PAGE>
RISK FACTORS

YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS AND OTHER INFORMATION IN
THIS PROSPECTUS BEFORE DECIDING TO INVEST IN THE SHARES. THESE RISKS ARE THE
ONES WE CONSIDER TO BE SIGNIFICANT TO YOUR DECISION WHETHER TO INVEST IN OUR
COMMON STOCK AT THIS TIME. WE MIGHT BE WRONG. THERE MAY BE RISKS THAT YOU IN
PARTICULAR VIEW DIFFERENTLY THAN WE DO, AND THERE ARE OTHER RISKS AND
UNCERTAINTIES THAT ARE NOT PRESENTLY KNOWN TO US OR THAT WE CURRENTLY DEEM
IMMATERIAL, BUT THAT MAY IN FACT IMPAIR OUR BUSINESS OPERATIONS.

RISKS RELATED TO OUR BUSINESS

OUR OPERATING HISTORY IS MORE LIMITED THAN THAT OF MANY OTHER COMPANIES, SO YOU
MAY FIND IT DIFFICULT TO EVALUATE OUR BUSINESS IN MAKING AN INVESTMENT DECISION.

We have limited experience in developing and providing our products and
services. Since our inception, we have had limited revenues from our current
Internet-based communications software products and services, and have never
generated revenues from licensing our GRIC Convergent Services Platform, or GRIC
CSP software, as a separately licensed product. Many members of our senior
management team and other employees have worked with us for only a short period
of time. Consequently, we have not demonstrated that our business can succeed.

WE HAVE NOT BEEN PROFITABLE TO DATE, WE MAY NEVER BE PROFITABLE AND WE
ANTICIPATE CONTINUED LOSSES FOR THE FORESEEABLE FUTURE.

To date, we have not been profitable. We cannot assure you that we will ever
achieve or sustain profitability. We reported operating losses of $14.3 million
for the first nine months of 1999, $17.5 million for 1998 and $8.2 million for
1997. As of September 30, 1999, our accumulated deficit was $40.5 million. We
expect to incur operating losses for the foreseeable future. In particular, we
expect to continue to invest heavily in research and development and sales and
marketing, and we expect to face pressure to adopt new pricing arrangements,
including volume discounts, that may lower our gross margins. If revenues do not
meet levels we anticipate, or if our costs and expenses exceed our expectations,
we will continue to sustain losses, and our business and the price of our common
stock may be harmed. See "Selected Consolidated Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" for detailed information on our history of losses and anticipation
of continued losses.

IF WE FAIL TO DEVELOP GRIC CSP SOFTWARE PRODUCTS OR WE OR OTHERS FAIL TO DEVISE
AN APPROPRIATE PRICING MODEL FOR THESE PRODUCTS, WE ARE UNLIKELY TO ACHIEVE OUR
REVENUE GOALS.

Our future growth and profitability, if any, depend, to a great extent, on our
being able to develop and market future versions of our GRIC CSP software that
can be licensed to current and potential customers as a separate product. This
is a complex, long-term development effort in a rapidly changing and competitive
arena. We may not be able to complete the effort successfully or in a timely
fashion, particularly given our lack of experience in development projects of
this magnitude.

Even if we succeed in developing future versions of our GRIC CSP software, we do
not know whether they will achieve market acceptance at all or, if they do, that
they will support the pricing levels or generate the revenues we anticipate. We
have not yet established pricing for any GRIC CSP software products or related
services. We have limited experience with the transaction-based revenue models
that we hope to use with our GRIC CSP software. If we fail to establish a
pricing model acceptable to our customers, our GRIC CSP software products will
not be commercially successful. Further, we do not know whether third-party
developers of Internet communications applications will be willing to develop
new applications that interface with our GRIC CSP software platform, or that we
will be able to develop any applications of this type ourselves. If no such
applications are developed, the GRIC CSP software will not achieve market
acceptance. These uncertainties make it difficult to make any judgment about our
future business prospects.

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<PAGE>

OUR SUCCESS DEPENDS ON OUR ABILITY TO MAINTAIN AND INCREASE OUR CUSTOMER BASE.

Our goal of achieving profitability depends on our ability to maintain and
expand our customer base. However, our customers are generally free to use
competing products and services, and the costs of switching are low, so we could
face significant customer losses. Our customers are generally not obligated to
generate minimum revenues, and some generate very little revenue for us. These
factors make it difficult to anticipate what our future revenues from existing
customers will be. In addition, our success depends on our ability to expand our
customer base. World Access Telecommunications accounted for approximately 10%
of our total revenues for the nine months ended September 30, 1999. If we lose
any significant customer or are unable to expand our customer base and to
increase our average revenues per customer, our business will be harmed.

WE DEPEND ON OUR CUSTOMERS TO MARKET NEW INTERNET-BASED SERVICES TO THEIR END
USERS, SO OUR REVENUES DEPEND ON THE ACTIVITIES OF OTHERS AND THE MARKET
ACCEPTANCE OF THOSE NEW SERVICES.

Our business depends on the efforts and success of our customers in marketing
Internet-based services to their end users. Our ability to promote those
services is limited. Many Internet-based services, such as Internet telephony,
are new and have not achieved widespread acceptance in the marketplace. As a
result, our customers may be reluctant to promote these services until they gain
greater commercial acceptance, which may never occur. If our customers fail to
market Internet-based services effectively, for any reason, our revenues would
be reduced.

WE FACE SIGNIFICANT COMPETITION IN THE MARKETS IN WHICH WE OPERATE, INCLUDING
COMPETITION FROM LARGE TELEPHONE COMPANIES, WHICH COULD MAKE IT MORE DIFFICULT
FOR US TO SUCCEED.

There are low barriers to entry by new or existing businesses seeking to offer
services on the Internet. As a result, our business environment is intensely
competitive, highly fragmented and rapidly changing. Competition can come from
many sources and may be focused on different segments of our business. For
example, we compete directly with iPass in the market for Internet roaming and
related settlement services, and iPass has a network that competes with the GRIC
Alliance. Our competitor, Transnexus, offers a clearinghouse service for
Internet telephony and, like us, their service operates in multiple hardware and
software environments. Providers of Internet telephony services, such as iBasis
(formerly VIP Calling) and ITXC, compete with our Internet telephony offerings.
Potential competitors to future stand-alone products based on GRIC CSP may
include independent software vendors and vendors of operations support system
software, such as CAP Gemini, EDS and Lucent Technologies. Large telephone
companies such as AT&T and MCI Worldcom have the ability and resources to
compete in any or all of our markets or future markets if they choose to do so.

Many of our competitors have substantially greater resources, larger customer
bases, longer operating histories, greater name recognition and more established
relationships in the industry than we have. Any of these competitors may combine
or form strategic partnerships, gaining competitive advantages as a result. Our
competitors may be able to develop and market products and services that are
superior to our own in terms of features, quality, pricing or other factors. In
that event, our products and services may not achieve the market acceptance
necessary for us to achieve success. See "Business--Competition."

IF WE ARE UNABLE TO MANAGE RAPID GROWTH, THE GRIC ALLIANCE AND OUR PRODUCT
DEVELOPMENT EFFORTS EFFECTIVELY, OUR BUSINESS AND THE PRICE OF OUR STOCK WILL BE
HARMED.

In recent periods, rapid growth of the GRIC Alliance and acceleration of our
product development efforts have strained our network operations, product
development and other managerial, operating and financial resources. We expect
these strains to continue if we continue our growth, and our

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<PAGE>

financial performance and our ability to compete effectively will depend, in
part, on our ability to manage any future growth effectively. To that end, we
must:

- manage our research and development efforts;

- expand the capacity, scalability and performance of our network and software
infrastructure;

- develop our administrative, accounting and management information systems
and controls;

- improve coordination among our engineering, accounting, finance, marketing
and operations personnel; and

- hire and train additional qualified personnel.

We may not be able to accomplish these tasks, which would harm our business and
the price of our stock.

INTERNET TELEPHONY HAS NOT ACHIEVED, AND MAY NEVER ACHIEVE, WIDESPREAD MARKET
ACCEPTANCE.

Using Internet telephony for voice traffic may never achieve widespread
acceptance. The Internet telephony market is relatively new; less than 1% of all
voice calls worldwide are currently transmitted over Internet-based networks. We
expect both telecommunications companies and telephone users to resist changing
to Internet-based telephony unless it offers clear benefits. Historically, the
sound quality of Internet telephone calls has been poor. Due to capacity
constraints on the Internet over which Internet telephone calls travel, callers
sometimes experience transmission delays or transmission errors. If Internet
telephone calls do not achieve commercial acceptance at all or as soon as
anticipated, our efforts to increase our Internet telephone call business, which
is key to our business strategy, could suffer.

THE SUCCESS OF OUR INTERNET TELEPHONY BUSINESS DEPENDS ON RELATIONSHIPS WITH
THIRD PARTIES, WHICH MAY BE DIFFICULT TO ESTABLISH AND MAINTAIN.

The development of our Internet telephony business will depend on our ability to
establish and maintain strategic relationships with technology leaders. For
example, we must maintain compatibility of our products with the Internet
telephony equipment of Lucent Technologies and Cisco Systems since they are
currently the most significant manufacturers of Internet telephony equipment. We
must also remain compliant with industry standards set by third parties.
Further, to increase traffic for our Internet telephony service, we must
continue to make arrangements with third parties to originate and terminate
customer calls and to expand our network. If we fail to develop and maintain
relationships of this sort, we will be unable to increase our Internet telephony
business, which is key to our business strategy.

WE EXPECT THE PRICING ADVANTAGE OF INTERNET TELEPHONY TO DECLINE, WHICH WOULD
HAMPER OUR EFFORTS TO EXPAND THIS KEY COMPONENT OF OUR BUSINESS.

Today, Internet telephony generally enjoys a price advantage over traditional
international long distance rates. We expect this price differential to decline,
and it may decline more rapidly than we expect. If prices of traditional
international long distance calls decline to a point where Internet telephony no
longer offers a price advantage, Internet telephony will lose an important
competitive advantage and the prospects for this key component of our business
will decline.

OUR INTERNET TELEPHONY REVENUE IS CONCENTRATED IN ONLY A SMALL NUMBER OF
CUSTOMERS, THE LOSS OF ANY ONE OF WHICH COULD HARM OUR REVENUES AND
PROFITABILITY.

Only a small number of customers have end users that originate or terminate
Internet telephone calls using our Internet telephony services. The loss of any
of these customers could have a material adverse effect on our Internet
telephony business because it would be difficult to replace that

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business. Any future growth depends in large part on our ability to establish
relationships with new customers wishing to originate or terminate Internet
telephone calls.

OUR CUSTOMERS REQUIRE A HIGH DEGREE OF RELIABILITY IN THE DELIVERY OF OUR
SERVICES, AND IF WE CANNOT MEET THEIR EXPECTATIONS FOR ANY REASON, DEMAND FOR
OUR PRODUCTS AND SERVICES WILL SUFFER.

Our success depends in large part on our ability to assure generally error-free
clearinghouse services, uninterrupted operation of our network and software
infrastructure, and a satisfactory experience for our customers' end users when
they use Internet-based communications services. To achieve these objectives, we
depend on the quality, performance and scalability of our products and services,
the responsiveness of our technical support and the capacity, reliability and
security of our network operations. We also depend on third parties over which
we have no control. For example, our ability to serve approximately
66 countries is based solely on our network access agreement with one service
provider and on that service provider's ability to provide reliable Internet
access points in those countries. In the past, we have experienced problems due
to our inability to detect system malfunctions and due to errors in collecting
or processing account usage and settlement data. Due to the high level of
performance required for critical communications traffic, any failure to deliver
a satisfactory experience to end users, whether or not caused by our own
failures, and any failure to provide accurate settlement data in connection with
acting as a clearinghouse, could reduce demand for our products and services.

AS A CLEARINGHOUSE, WE HAVE GREATER COLLECTION RISKS THAN MOST COMPANIES.

Difficulties in collecting accounts receivable will harm our financial results,
and this collection risk is inherently greater for us as a clearinghouse service
provider because we are obligated to pay amounts owed to each customer whether
or not we have collected all the amounts due to us from other customers. In
addition, if end users or unauthorized third parties engage in unauthorized or
otherwise fraudulent roaming or telephony activity, we may face difficulty
collecting the resulting accounts receivable. If we are not able to manage this
problem, our financial results will suffer.

IF WE ARE UNABLE TO DEVELOP AND INTRODUCE NEW PRODUCTS AND SERVICES, WE WILL BE
LESS LIKELY TO ATTRACT OR RETAIN CUSTOMERS.

We expect the market for Internet communications products and services to
continue to change rapidly. To succeed, we will be required to adapt to those
changes by improving and enhancing our existing products and services, and
developing and introducing new products and services. We have not demonstrated
that we can consistently develop and market product enhancements and new
products or services on a timely or on a cost-effective basis. On several
occasions, we have altered the course of our product development efforts or
discontinued products after their introduction, which has resulted in delays and
increased research and development expenses. If we fail to produce
technologically competitive products and services in a cost-effective manner and
on a timely basis, our business will be harmed.

OUR OPERATING RESULTS FLUCTUATE AND ARE DIFFICULT TO PREDICT, SO WE MAY FAIL TO
SATISFY THE EXPECTATIONS OF INVESTORS OR MARKET ANALYSTS AND OUR STOCK PRICE MAY
DECLINE.

Our quarterly operating results have fluctuated in the past, and we expect them
to continue to fluctuate in the future. Factors that cause these fluctuations,
many of which are beyond our control, include:

- the volume of transaction-based revenues;

- management of growth;

- the rate at which customers use our services;

10
<PAGE>

- our dependence on the timely and successful launch of future products,
including future versions of our stand-alone GRIC CSP software products;

- the mix of services used by our customers' end users;

- economic conditions specific to the Internet, as well as general economic
and market conditions;

- our ability to avoid problems in managing the GRIC Alliance network;

- intense competition;

- our ability to collect accounts receivable; and

- the international regulatory environment.

Business models relying on the Internet to provide Internet-based communications
services are still evolving. As a result, we believe that period-to-period
comparisons of our historical operating results are not meaningful.
Additionally, if our operating results in one or more quarters do not meet or
exceed securities analysts' or market expectations, the price of our common
stock is likely to decline.

OUR LONG SALES CYCLE MAKES IT PARTICULARLY DIFFICULT FOR US TO FORECAST
REVENUES, REQUIRES US TO INCUR HIGH COSTS OF SALES, AND AGGRAVATES FLUCTUATIONS
IN QUARTERLY FINANCIAL RESULTS.

Our business is characterized by a long sales cycle between the time a potential
customer is contacted and a new customer relationship is established, and
between the time the new customer is won and when we begin to realize
significant transaction-based revenues. In part this is because the markets for
Internet-based communications services are new and demand is uncertain. This
makes it difficult for us to predict future revenues. In addition, we incur
substantial sales costs before we win a customer or recognize any related
revenues, which increases the volatility of our results because we may have high
costs without associated offsetting revenues.

BECAUSE MUCH OF OUR BUSINESS IS INTERNATIONAL, WE ENCOUNTER SPECIAL PAYMENT AND
REGULATORY DIFFICULTIES, WHICH MAY REDUCE OUR PROFITABILITY AND HARM THE PRICE
OF OUR COMMON STOCK.

Because we generate most of our revenues from business conducted
internationally, we are subject to special risks. Those risks include:

- longer payment cycles for foreign customers, including delays due to
currency controls and fluctuations;

- negative impacts of changes in foreign currency exchange rates;

- potentially high taxes in foreign countries;

- difficulties complying with a variety of foreign laws, trade standards and
tariffs and of overcoming trade barriers; and

- difficulties complying with telecommunications and other Internet-related
regulations in many foreign jurisdictions.

We are also exposed to general geopolitical risks, such as political and
economic instability and changes in diplomatic and trade relationships. Any of
these factors may reduce our profitability and harm the price of our common
stock.

11
<PAGE>

WE NEED TO HIRE AND RETAIN QUALIFIED PERSONNEL TO SUSTAIN THE GROWTH OF OUR
BUSINESS, WHICH IS PARTICULARLY DIFFICULT FOR US BECAUSE WE COMPETE WITH OTHER
INTERNET-RELATED COMPANIES IN THE SAN FRANCISCO BAY AREA WHERE WE ARE BASED.

Our future success depends, in part, on the continued service of our key
executive, management and technical personnel, many of whom we hired only
recently, and our ability to attract new skilled employees. From time to time we
have experienced difficulty in hiring and retaining highly skilled employees,
and we expect to continue to experience this sort of difficulty. Competition for
employees in our industry is intense, particularly in the San Francisco Bay area
where we are located, and we have experienced significant attrition. Declines in
the market price of our common stock could also hurt employee morale and
retention. If we are not able to retain our key employees or to attract,
assimilate or retain other highly qualified employees in the future, our
business could be harmed because our growth might be slowed or executive
leadership might be disrupted.

LITIGATION ARISING OUT OF INTELLECTUAL PROPERTY INFRINGEMENT OR OTHER COMMERCIAL
DISPUTES COULD BE EXPENSIVE AND DISRUPT OUR BUSINESS.

We cannot be certain that our products do not, or will not, infringe upon
patents, trademarks, copyrights or other intellectual property rights held by
third parties. See "Business--Intellectual Property." In addition, since we rely
on third parties to help us develop, market and support our product and service
offerings, we cannot assure you that litigation will not arise from disputes
involving those third parties. From time to time we have been, and we expect to
continue to be, parties to disputes with these third parties. We may incur
substantial expenses in defending against these claims, regardless of their
merit. Successful claims against us may result in substantial monetary
liability, significantly impact our results of operations in one or more
quarters or materially disrupt the conduct of our business. See Note 5 of notes
to consolidated financial statements.

WE ANTICIPATE THE NEED FOR ADDITIONAL CAPITAL TO FUND OUR OPERATIONS AND GROWTH;
IF FINANCING IS NOT AVAILABLE ON ACCEPTABLE TERMS, OUR ABILITY TO SUCCEED WILL
BE HAMPERED.

We expect to be required to raise additional capital to fund our operations, to
finance investments in the equipment and corporate infrastructure needed for the
expansion of our network, to enhance and expand the range of products and
services we offer and to respond to competitive pressures and perceived
opportunities. To date, our cash flow from operations has not been sufficient to
cover our expenses and capital needs, and we cannot assure you that it will be
sufficient in the future. We also cannot assure you that any financing will be
available on terms favorable to us or at all. If adequate funds are not
available on acceptable terms or at all, we may be forced to curtail or cease
our operations. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."

OUR EXECUTIVE OFFICERS AND DIRECTORS HOLD A SIGNIFICANT PERCENTAGE OF OUR STOCK
AND WILL BE ABLE TO CONTROL MATTERS REQUIRING STOCKHOLDER APPROVAL.

Immediately after the closing of the offering, our executive officers and
directors and their affiliated entities will own approximately 35.0% of our
outstanding common stock. Accordingly, these stockholders, acting together, will
have a substantial influence on all matters requiring approval by our
stockholders, including the election of directors and the approval of
significant corporate transactions. This concentration could also have the
effect of delaying or preventing a change in control of our company.

12
<PAGE>

OUR CERTIFICATE OF INCORPORATION AND BYLAWS AND DELAWARE LAW CONTAIN PROVISIONS
THAT COULD DISCOURAGE A TAKEOVER AND DEPRESS OUR STOCK PRICE.

Provisions of our certificate of incorporation, bylaws and Delaware law make it
difficult for a third party to acquire us, despite the possible benefit to our
stockholders, and this may potentially lower the price of our common stock.
These provisions of our certificate of incorporation and bylaws:

- authorize the board to issue preferred stock without stockholder approval;

- prohibit cumulative voting in the election of directors;

- limit the persons who may call special meetings of stockholders; and

- establish advance notice requirements for nominations for the election of
the board of directors or for proposing matters that can be acted on by
stockholders at stockholder meetings.

In addition, we may adopt a shareholder rights plan, or "poison pill," and we
have elected to remain subject to the anti-takeover provisions of the Delaware
General Corporation Law. These factors may discourage takeover attempts.

THE YEAR 2000 RISKS WE FACE ARE PARTICULARLY COMPLEX AND UNPREDICTABLE BECAUSE
WE INTERFACE WITH MANY OTHER SYSTEMS, WHICH INCREASES THE RISK OF LOSS FROM
INTERRUPTIONS OF OUR BUSINESS OR FROM YEAR 2000 LITIGATION.

Computer systems and software used by many companies in a wide variety of
industries may produce erroneous results or fail unless they correctly process
date information associated with the millennium. We may face claims based on
year 2000 issues arising from the integration of multiple products or services,
including ours, within an overall system or network. In addition, we rely on
networks, including the Internet, the circuit-switched telephone network and
private data networks, and computer hardware and software, owned and maintained
by third parties, some of which may not be year 2000 compliant. We have not
assessed the year 2000 compliance of the many parties with which we interface.
Failure of any of these parties' systems or software to process date information
related to year 2000 could detract from our ability to deliver services, or
involve us in expensive litigation. We do not currently have a contingency plan
to deal with the worst-case scenario that might occur if technologies upon which
we depend are not year 2000 compliant and fail to operate effectively as a
result. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Year 2000 Compliance."

RISKS RELATED TO OUR INDUSTRY

FUTURE DEVELOPMENTS IN INTERNET-BASED COMMUNICATIONS SERVICES, WHICH ARE
CRITICAL TO OUR SUCCESS, ARE UNCERTAIN.

For us to increase our revenues, the Internet must be validated as an effective
medium for the delivery of Internet roaming, Internet telephony and other
Internet-based communications services. The infrastructure of the public
Internet may not be able to support increased demands placed on it, and the
performance of the Internet may be adversely affected. Our business will be
harmed if the Internet does not continue to grow as a telecommunications medium,
and that growth may be inhibited by factors such as:

- unreliability of the Internet infrastructure;

- inability of vendors to develop Internet networking equipment that offers
telecommunications-grade communications services over the Internet;

- security concerns;

- new regulatory requirements;

13
<PAGE>

- inconsistent quality of service; and

- lack of availability of cost-effective service.

SECURITY CONCERNS MAY DETER THE USE OF THE INTERNET FOR INTERNET-BASED
COMMUNICATIONS WHICH WOULD REDUCE DEMAND FOR OUR PRODUCTS AND SERVICES.

The secure transmission of confidential information over public networks is a
significant barrier to widespread adoption of electronic commerce and
communications. The Internet is a public network and information is sent over
this network from many sources. Advances in computer capabilities, new
discoveries in the field of cryptography or other developments could result in
compromised security on our network or the networks of others. If any
well-publicized compromises of confidential information were to occur, it could
reduce demand for Internet-based communications and our products and services.

U.S. OR FOREIGN GOVERNMENTAL REGULATIONS REGARDING INTERNET TELEPHONY OR THE
INTERNET GENERALLY MAY BE ENACTED, WHICH COULD IMPEDE OUR BUSINESS.

To date, governmental laws and regulations applicable to access to or commerce
on the Internet or use of the Internet to provide telephone service have not
materially restricted use of the Internet in our markets. However, the legal and
regulatory environment that pertains to the Internet is uncertain and may
change. For example, the Federal Communications Commission has at times
considered proposals to impose surcharges or other common carrier regulations
upon direct providers of Internet telephony to end users located within the U.S.
It is also possible that the FCC may adopt a regulatory framework, other than
traditional common carrier regulation, that would apply to Internet telephony
providers. In addition, Congress and other federal entities have adopted or are
considering other legislative and regulatory proposals that would further
regulate the Internet. Further, a number of foreign countries prohibit Internet
telephony or permit but regulate Internet telephony. Other foreign countries
have considered or are considering whether to regulate Internet telephony. The
European Union has also enacted several directives relating to the Internet,
including one which affects U.S. companies that collect or transmit information
over the Internet from individuals in European Union Member States. New domestic
or foreign taxes could also be adopted that would apply to the delivery or use
of communications services over the Internet. Uncertainty about and adoption of
new regulations could increase our costs of doing business, or prevent us from
delivering our products and services over the Internet or significantly slow the
growth of the Internet. This could delay growth in demand for our products and
services and harm our business. See "Business--Government Regulation."

RISKS RELATED TO THIS OFFERING

THE MARKET FOR OUR COMMON STOCK MAY BE ILLIQUID AND VOLATILE, WHICH INCREASES
YOUR RISK OF OWNING OUR STOCK.

Prior to this offering, there has been no public market for our common stock. We
cannot predict the extent to which investor interest in us will lead to the
development of an active trading market in our common stock or how liquid that
market might become. Illiquidity in that market may make it more difficult for
you to sell your shares. The initial public offering price for our shares,
determined by negotiations between us and the representatives of the
underwriters, may not be indicative of prices that will prevail in any future
trading market.

The stock market frequently experiences extreme price and volume fluctuations.
In particular, the market prices of the securities of Internet-related companies
have been especially volatile recently, and often these fluctuations have been
unrelated or disproportionate to operating performance. This increases the risk
that if you wish to sell our stock the market price may be lower than the price
to the public in this offering. If the market value of our stock experiences
adverse fluctuations and we

14
<PAGE>

become involved in class actions lawsuits by security holders, we could incur
substantial legal costs and management's attention could be diverted, to the
detriment of our operations and results.

OUR STOCK PRICE MAY BE SUBJECT TO WIDE FLUCTUATIONS DUE TO BUSINESS OR MARKET
DEVELOPMENTS OR STOCK SALES BY CURRENT STOCKHOLDERS WHICH INCREASES YOUR RISKS
OF HOLDING OUR STOCK.

We expect the market price for our common stock to be subject to wide
fluctuations as a result of factors including:

- quarterly variations in our operating results;

- announcements of technological innovations by us or our competitors;

- announcements of new products or services by us or our competitors;

- investor perception of us, the market for Internet-based communications
services or the Internet in general;

- changes in financial estimates by securities analysts; and

- general economic and market conditions.

In addition, the market price of our common stock could decrease as a result of
sales of substantial amounts of common stock in the public market after the
closing of this offering or the perception that substantial sales could occur.
The risk of sales will increase substantially when the underwriter lockup
agreements or equivalent contractual restrictions expire 180 days after closing
of this offering and approximately 12,277,294 shares will then become eligible
for public sale. See "Shares Eligible for Future Sale."

DILUTION INHERENT IN INVESTORS' PURCHASE OF SHARES IN THIS OFFERING MEANS THAT
THEY ARE GIVING UP VALUE THAT MAY NEVER BE RETURNED.

Purchasers of shares of our common stock in this offering will incur immediate
and substantial dilution in the net tangible book value of their shares. There
can be no assurance that net tangible book value of the shares will increase.
See "Dilution."

FORWARD-LOOKING STATEMENTS

Some of the statements under "Prospectus Summary," "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
"Business" and elsewhere in this prospectus constitute forward-looking
statements that involve substantial uncertainties. These statements include,
among others, statements concerning the following:

- use of proceeds;

- projected increases in sales and marketing, research and development and
capital expenditures;

- liquidity;

- the expansion of the GRIC Alliance;

- our strategy of enhancing our current products and services and expanding
into new products and services;

- our efforts to increase brand awareness;

- our development of strategic relationships; and

- our strategy to encourage widespread adoption of GRIC CSP and to make GRIC
CSP a preferred platform.

15
<PAGE>

We have based these forward-looking statements on our current expectations and
projections about future events. In some cases, you can identify forward-looking
statements by terms such as "may," "will," "should," "expect," "plan,"
"anticipate," "believe," "estimate," "predict," "potential" or "continue," the
negative of these terms or other comparable terminology. The forward-looking
statements contained in this prospectus involve known and unknown risks,
uncertainties and other factors that may cause industry trends or our actual
results, level of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these statements. These factors include,
among others, those listed under "Risk Factors" and elsewhere in this
prospectus.

In addition, this prospectus includes data relating to the long-distance
telephone, Internet telephony, Internet roaming and Internet-based
communications markets. Some of this data was obtained from industry
publications and reports, such as reports by TeleGeography, International Data
Corporation and the Yankee Group. These reports assume certain events, trends
and activities will occur and they project information based on those
assumptions. We have not independently verified this data. Also, we have not
sought the consent of all of these organizations to refer to their reports in
this prospectus.

We cannot guarantee future results, levels of activity, performance or
achievements. Moreover, neither we nor any other person assumes responsibility
for the accuracy and completeness of these statements. We are under no duty to
update any of the forward-looking statements after the date of this prospectus
to conform these statements to actual results. You should not place undue
reliance on these forward-looking statements, which apply only as of the date of
this prospectus.

USE OF PROCEEDS

We estimate that we will receive net proceeds of approximately $46.8 million
from the exercise of certain outstanding preferred stock warrants and the sale
of the shares of our common stock that we are offering under this prospectus
($53.9 million if the underwriters' over-allotment option is exercised in full)
at an assumed initial public offering price of $11.00 per share and after
deducting the estimated underwriting discounts and commissions and estimated
offering expenses.

We currently intend to use approximately $15 million of the proceeds from this
offering for capital expenditures to continue the expansion of our network
infrastructure as well as our increasing employee base. We currently intend to
use the remaining proceeds to fund operations, including for working capital and
general corporate requirements. We may use the proceeds for acquisitions of
technologies, product lines or businesses that are complementary to our
business. We have no current acquisition plans. Pending these uses, we plan to
invest the net proceeds in interest-bearing, investment grade securities.
Management will have broad discretion over the allocation of the net proceeds
from this offering.

DIVIDEND POLICY

We have never declared or paid cash dividends on our common stock or other
securities. A current equipment financing arrangement prohibits us from paying
cash dividends. We do not anticipate paying a cash dividend in the foreseeable
future.

16
<PAGE>
CAPITALIZATION

The following table sets forth the following information, as of September 30,
1999:

- our actual capitalization;

- our pro forma capitalization after giving effect to the conversion of all
outstanding shares of preferred stock into shares of common stock upon the
closing of this offering; and

- our pro forma as adjusted capitalization to give effect to the sale of the
4,600,000 shares of common stock that we are offering under this prospectus
at an assumed initial public offering price of $11.00 per share, after
deducting the estimated underwriting discount and estimated offering
expenses.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
-------------------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
----------- ----------- -------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C>
Current portion of long-term debt..................... $ 513 $ 513 $ 513
-------- -------- --------

Long-term debt and capital lease obligations.......... 1,116 1,116 1,116
-------- -------- --------

Redeemable convertible preferred stock, $0.001 par
value, 6,025,000 shares authorized, 5,213,109 shares
issued and outstanding, actual; no shares
authorized, issued or outstanding, pro forma or pro
forma as adjusted................................... 8,590 -- --
-------- -------- --------

Stockholders' equity (deficit):
Convertible preferred stock, $0.001 par value,
6,250,000 shares authorized, actual; 5,460,745
shares issued and outstanding, actual; none pro
forma; 5,000,000 shares authorized, issued or
outstanding, pro forma as adjusted................ 5 -- --
Common stock, $0.001 par value, 21,428,571 shares
authorized, 2,226,251 shares issued and
outstanding, actual; 50,000,000 shares authorized,
12,900,105 shares issued and outstanding, pro
forma; 50,000,000 shares authorized, 17,723,311
shares issued and outstanding, pro forma as
adjusted.......................................... 2 13 18
Additional paid-in capital.......................... 41,784 50,368 97,183
Deferred stock-based compensation................... (1,586) (1,586) (1,586)
Accumulated deficit................................. (40,465) (40,465) (40,465)
-------- -------- --------
Total stockholders' equity (deficit).............. (260) 8,330 55,150
-------- -------- --------
Total capitalization............................ $ 9,959 $ 9,959 $ 56,779
======== ======== ========
</TABLE>

The shares outstanding in the actual, pro forma and pro forma as adjusted
columns exclude:

- 2,051,859 shares of common stock issuable upon the exercise of options
outstanding at September 30, 1999 under our stock option plans and 5,192,385
shares available for future issuance under those plans;

- 102,699 shares of common stock and 29,509 shares of Series D Preferred Stock
issuable upon the exercise of outstanding warrants as of September 30, 1999;
and

- 600,240 shares of Series E Preferred Stock that were issued on November ,
1999 for an aggregate purchase price of $6.0 million.

17
<PAGE>
DILUTION

The pro forma net tangible book value of our common stock as of September 30,
1999, after giving effect to the exercise of warrants to purchase 223,206 shares
of preferred stock and the conversion of all outstanding shares of preferred
stock into common stock, was $8,887,000, or approximately $0.68 per share. Pro
forma net tangible book value per share represents the amount of our total
tangible assets less total liabilities, divided by 13,123,311 shares of common
stock outstanding (pro forma to reflect the conversion of all outstanding shares
of preferred into common stock upon the closing of this offering and the assumed
exercise and conversion of preferred stock warrants for 223,206) before the
offering. Dilution per share represents the difference between the amount per
share paid by investors in this offering and the pro forma net tangible book
value per share after the offering. After giving effect to this offering, our
pro forma net tangible book value as of September 30, 1999 would have been
$55,707,000, or $3.14 per share. This represents an immediate increase in pro
forma net tangible book value of $2.46 per share to existing stockholders and an
immediate dilution in net tangible book value of $7.86 per share to new
investors purchasing shares at the initial public offering price. Investors
participating in this offering will incur immediate, substantial dilution. The
following table illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $11.00
Pro forma net tangible book value per share as of
September 30, 1999...................................... $0.68
Increase in pro forma net tangible book value per share
attributable to new investors........................... $2.46
-----
Pro forma net tangible book value per share after
offering.................................................. $ 3.14
------
Dilution per share to new investors......................... $ 7.86
======
</TABLE>

The following table summarizes, on a pro forma basis as of September 30, 1999,
the differences between the number of shares of common stock purchased from us,
the total consideration paid and the average price per share paid by existing
stockholders and by the new investors purchasing shares in this offering. We
have assumed an initial public offering price of $11.00 per share before
deducting the estimated underwriting discount and estimated offering expenses in
our calculations.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------- --------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders.............. 13,123,311 74.0% 47,300,000 48.3% $ 3.60
New investors...................... 4,600,000 26.0% 50,600,000 51.7% $11.00
---------- ----- ---------- -----
Total............................ 17,723,311 100% 97,900,000 100%
========== ===== ========== =====
</TABLE>

The discussion and tables above excludes:

- 102,699 shares of common stock and 29,509 shares of Series D Preferred Stock
issuable upon the exercise of outstanding warrants as of September 30, 1999;
and

- 600,240 shares of Series E Preferred Stock that were issued on November ,
1999 at an aggregate purchase price of $6.0 million.

The exercise of outstanding stock options or warrants would increase the
dilutive effect to new investors.

18
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data should be read in conjunction
with, and is qualified by reference to, the consolidated financial statements
and notes thereto "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and other financial data included elsewhere in this
prospectus.

The statements of operations data for the years ended December 31, 1996, 1997
and 1998, and for the nine months ended September 30, 1999, and the balance
sheet data at December 31, 1997 and 1998 and at September 30, 1999, are derived
from our consolidated financial statements that have been audited by Ernst &
Young LLP, independent auditors, which are included elsewhere in this
prospectus. The balance sheet data at December 31, 1996 is derived from our
audited balance sheet not included in this prospectus. The statements of
operations data for the nine months ended September 30, 1998, are derived from
unaudited consolidated financial statements included elsewhere in this
prospectus and, in our opinion, include all adjustments, consisting solely of
normal recurring accruals, which are necessary to present fairly the data for
such periods. The statements of operations data for the years ended
December 31, 1994 and 1995 and the balance sheet data at December 31, 1994 and
1995 are derived from unaudited consolidated financial statements not included
in this prospectus and, in our opinion, include all adjustments, consisting of
normal recurring accruals, that are necessary to present fairly the data for
such periods. Historical results are not necessarily indicative of future
results, and the results for interim periods are not necessarily indicative of
results to be expected for the entire year.

Costs and expenses:
Cost of settlement revenues................ -- -- -- 156 1,444 872 3,329
Cost of software and other revenues........ -- -- -- 708 982 489 96
Network and operations..................... -- -- -- 837 1,117 729 2,027
Research and development................... -- -- 998 2,314 5,080 3,718 5,852
Sales and marketing........................ -- -- 49 3,723 6,373 4,524 5,844
General and administrative................. -- -- 391 2,002 3,540 2,486 3,276
Other operating expenses (expense
reversals)............................... -- -- -- -- 1,500 -- (925)
Amortization of stock-based compensation... -- -- -- -- -- -- 193
--------- --------- --------- --------- --------- --------- ----------
Total costs and expenses................. -- -- 1,438 9,740 20,036 12,818 19,692
--------- --------- --------- --------- --------- --------- ----------
Operating loss............................... -- -- (1,035) (8,206) (17,487) (11,105) (14,255)
Interest income and other, net............... -- -- 104 79 192 153 298
Interest expense............................. -- -- -- -- (575) (33) (1,292)
--------- --------- --------- --------- --------- --------- ----------
Loss from continuing operations before income
taxes...................................... -- -- (931) (8,127) (17,870) (10,985) (15,249)
Provision for income taxes from continuing
operations................................. -- -- -- 59 32 28 38
--------- --------- --------- --------- --------- --------- ----------
Net loss from continuing operations.......... -- -- (931) (8,186) (17,902) (11,013) (15,287)

Discontinued operations:
Loss from discontinued operations.......... (93) (726) (1,683) (774) -- -- --
Gain on disposal of discontinued
operations............................... -- -- -- 5,118 -- -- --
--------- --------- --------- --------- --------- --------- ----------
Net loss..................................... $ (93) $ (726) $ (2,614) $ (3,842) $ (17,902) $ (11,013) $ (15,287)
========= ========= ========= ========= ========= ========= ==========
</TABLE>

19
<PAGE>

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------------------- ----------------------
1994 1995 1996 1997 1998 1998 1999
--------- --------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Basic and diluted net loss per share from
continuing operations...................... $ -- $ -- $ (0.52) $ (4.42) $ (9.19) $ (5.66) $ (7.61)
========= ========= ========= ========= ========= ========= ==========
Basic and diluted net loss per share......... $ (0.05) $ (3.63) $ (1.46) $ (2.08) $ (9.19) $ (5.66) $ (7.61)
========= ========= ========= ========= ========= ========= ==========
Shares used to compute basic and diluted net
loss per share............................. 1,925,636 1,998,043 1,788,684 1,851,140 1,948,424 1,946,870 2,009,596
Pro forma basic and diluted net loss per
share from continuing operations(1)(2)..... $ (2.27) $ (1.42)
========= ==========
Shares used to compute pro forma basic and
diluted net loss per share(1)(2)........... 7,889,323 10,782,381
</TABLE>

<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, -------------
--------------------------------------------------------- SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996 1997 1998 1999 1999(2)
--------- --------- --------- --------- --------- ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents.............. $ -- $ -- $ 3,342 $ 8,481 $ 1,362 $ 10,181 $ 10,181
Working capital
(deficit)................ -- -- 4,026 7,839 (7,509) 6,013 6,013
Net assets of discontinued
operations............... 367 3,100 1,563 -- -- -- --
Total assets............... 367 3,100 5,796 9,855 4,740 16,438 16,438
Long-term debt and capital
lease obligations, less
current portion.......... -- -- -- 19 1,069 1,116 1,116
Redeemable convertible
preferred stock.......... 430 3,888 8,590 8,590 8,590 8,590 --
Total stockholders' equity
(deficit)................ 367 3,100 (3,402) 61 (14,806) (260) 8,330
</TABLE>

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

(1) See Note 2 of notes to consolidated financial statements for information
concerning the calculation of pro forma basic and diluted net loss per
share.

(2) The pro forma data give effect to the conversion of all outstanding shares
of preferred stock outstanding on September 30, 1999 into 10,673,854 shares
of common stock and the exercise of warrants to purchase 223,206 shares of
common stock upon the closing of this offering.

20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

YOU SHOULD READ THIS DISCUSSION TOGETHER WITH THE FINANCIAL STATEMENTS AND OTHER
FINANCIAL INFORMATION INCLUDED IN THIS PROSPECTUS. THIS DISCUSSION AND ANALYSIS
CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS, UNCERTAINTIES AND
ASSUMPTIONS. SEE "FORWARD-LOOKING STATEMENTS." OUR ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A
RESULT OF A NUMBER OF FACTORS, INCLUDING THOSE DESCRIBED UNDER "RISK FACTORS"
AND ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

We provide services and technology that enable our customers to offer
Internet-based products and services. Our customers include telecommunications
companies, Internet service providers and other emerging communication service
providers. They deploy Internet-based products and services through the GRIC
Alliance, which allows our customers to share their communications networks. We
manage this shared network and provide clearinghouse services using our GRIC CSP
software. Our clearinghouse services allow us to settle charges that our
customers incur when their end users access the networks of other GRIC Alliance
members for Internet communications.

Settlement revenues are generated when we provide clearinghouse services to
customers whose end users initiate Internet communications. For each global
Internet roaming transaction, we use our software to track the usage, collect
the amount that a roamer's "home" service provider owes us, pay the appropriate
amount to the service provider enabling local access, and provide the underlying
usage data to our customer to enable billing of its end user. For each Internet
telephony call, we use our software to track the usage, settle the amounts owed
to GRIC and owed by GRIC as a result of the transaction, and provide the
underlying usage data to our customers to enable billing of their end users.

We have incurred substantial losses since our inception as a result of expenses
associated with building our GRIC Alliance and related network infrastructure
and developing our software products. As of September 30, 1999, we had an
accumulated deficit of approximately $40.5 million. We anticipate that our
operating expenses will increase substantially in the future as we continue to
expand our network and develop our software products. Accordingly, we expect to
incur additional losses for the foreseeable future, and we cannot assure you
that we will achieve or sustain profitability. See "Risk Factors--We have not
been profitable to date, we may never be profitable and we anticipate continued
losses for the foreseeable future."

From our inception until 1997 we were both an Internet service provider in
Northern California and an independent software developer for the Internet
service provider community. In 1997, we sold our local Internet service provider
business and related assets. Operations through 1997 that related to our
Internet service provider business are reflected as discontinued operations. We
first recognized clearinghouse settlement revenues in 1997, and since 1998 we
have derived our revenues primarily from clearinghouse settlement services.

Our business model has evolved in the course of our development and we believe
that period-to-period comparisons of our operating results should not be relied
upon as indicative of future performance. Our prospects must be considered in
light of the risks, expenses and difficulties frequently encountered by
companies in early stages of development, particularly companies in new and
rapidly evolving markets. See "Risk Factors--Our operating history is more
limited than that of many other companies, so you may find it difficult to
evaluate our business in making an investment decision."

RECENT EVENT

On November , 1999, we issued 600,240 shares of our Series E Preferred Stock
to Nokia Holdings, Inc. for an aggregate purchase price of $6.0 million.

21
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth certain statements of operations data as a
percentage of total revenues for the periods indicated. Data for 1994 and 1995
have not been presented as no revenues were generated from continuing operations
during these periods.

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------------------ ----------------------
1996 1997 1998 1998 1999
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues:
Settlement...................................... --% 17% 65% 63% 76%
Software and other.............................. 100 83 35 37 24
---- ---- ---- ---- ----
Total revenues................................ 100 100 100 100 100
---- ---- ---- ---- ----

Costs and expenses:
Cost of settlement revenues..................... -- 10 57 51 61
Cost of software and other revenues............. -- 46 38 29 2
Network and operations.......................... -- 55 44 42 37
Research and development........................ 248 151 199 217 108
Sales and marketing............................. 12 243 250 264 107
General and administrative...................... 97 130 139 145 60
Other operating expenses (expense reversals).... -- -- 59 -- (17)
Amortization of stock-based compensation........ -- -- -- -- 4
---- ---- ---- ---- ----
Total costs and expenses...................... 357 635 786 748 362
---- ---- ---- ---- ----
Operating loss.................................. (257)% (535)% (686)% (648)% (262)%
==== ==== ==== ==== ====
</TABLE>

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1998

REVENUES

Total revenues increased to $5.4 million for the first nine months of 1999 from
$1.7 million for the first nine months of 1998, representing an increase of
217%. Both settlement revenues and software and other revenues grew
significantly during these periods.

SETTLEMENT REVENUES. Settlement revenues increased to $4.1 million for the first
nine months of 1999 from $1.1 million for the first nine months of 1998, an
increase of 284%. This increase reflects higher volumes of both Internet roaming
and Internet telephony transactions. We expect settlement revenues from Internet
telephony to increase in the future at a faster rate than revenues from Internet
roaming.

SOFTWARE AND OTHER REVENUES. Software and other revenues increased to
$1.3 million for the first nine months of 1999 from $640,000 for the first nine
months of 1998, representing an increase of 105%. This increase is primarily due
to higher sales of our prepaid Internet telephony software and related services,
which we introduced in February 1999, and higher sales of our Internet roaming
software and related services, offset by a reduction of hardware sales which
were discontinued in June 1999.

COSTS AND EXPENSES

COST OF SETTLEMENT REVENUES. Cost of settlement revenues represents the amounts
we pay to access the Internet for Internet roaming services for our customers,
and to terminate Internet telephony services for our customers. Cost of
settlement revenues increased to $3.3 million for the first nine months of 1999
from $872,000 for the first nine months of 1998, an increase of 282%. The
increase was due to higher sales volumes, primarily for our Internet roaming and
Internet telephony services.

COST OF SOFTWARE AND OTHER REVENUES. Cost of software and other revenues
represents license fees for third-party software that is incorporated into our
software products, and the cost of Internet telephony equipment. Cost of
software and other revenues decreased to $96,000 for the first nine

22
<PAGE>

months of 1999 from $489,000 for the first nine months of 1998, a decrease of
80%. This decrease is primarily attributable to our decision no longer to sell
certain software and hardware products.

NETWORK AND OPERATIONS. Network and operations expenses include salaries,
benefits, allocated facility and management information systems costs associated
with operating our network, costs of co-location of network equipment and leased
telecommunication lines, and depreciation on network equipment. Network and
operations expenses increased to $2.0 million for the first nine months of 1999
from $729,000 for the first nine months of 1998, representing an increase of
178%. This increase was due to higher business activity and higher costs
associated with the expansion of our customer support and network operation
centers to a 24 hours-a-day, seven days-a-week basis. We expect that network and
operations expenses will continue to increase in absolute dollars as we expand
our network infrastructure to meet anticipated increases in transaction
processing volume.

RESEARCH AND DEVELOPMENT. Research and development expenses include salaries,
benefits and recruiting costs of employees and outside consultants and quality
assurance and allocated facility, management information systems and
depreciation costs. Research and development increased to $5.9 million for the
first nine months of 1999 from $3.7 million for the first nine months of 1998,
representing an increase of 57%. This increase was primarily due to the
development of our GRIC CSP software. To date, all software development costs
have been expensed in the period incurred. We believe that continued investment
in research and development is critical to achieving our strategic objectives,
and we expect that research and development expenses will increase significantly
in absolute dollars in the future.

SALES AND MARKETING. Sales and marketing expenses include salaries, benefits and
commissions earned by sales and marketing personnel, allocated facility,
management information systems and depreciation costs, cost for marketing and
promotional programs, and costs associated with our domestic and international
sales offices. Sales and marketing expenses increased to $5.8 million for the
first nine months of 1999 from $4.5 million for the first nine months of 1998,
representing an increase of 29%. This increase reflects the hiring of additional
personnel to expand the geographic coverage of and support Internet telephony,
which was introduced in the fourth quarter of 1998. We expect that sales and
marketing expenses will increase significantly in absolute dollars in the future
as we seek to expand our customer base and increase brand awareness.

GENERAL AND ADMINISTRATIVE. General and administrative expenses consist of
general corporate and facility costs as well as salary, benefits and related
costs for executive, finance, legal, administrative, human resources and
management information systems functions, as well as provisions for
uncollectible receivables. General and administrative expenses increased to $3.3
million for the first nine months of 1999 from $2.5 million for the first nine
months of 1998, representing an increase of 32%. This increase reflects the
hiring of additional personnel, including key executives, to provide the
infrastructure to support future growth. We expect that general and
administrative expenses will continue to increase in absolute dollars in the
future as a result of the continued expansion of our administrative staff and
the expenses associated with becoming a public company, including annual and
other public reporting costs, directors' and officers' liability insurance,
investor relations programs and professional services fees.

OTHER OPERATING EXPENSES (EXPENSE REVERSALS). Other operating expenses (expense
reversals) of $925,000 reflects a reduction of a previously expensed commitment
to purchase software, as a result of the completion of a settlement agreement
with the software vendor. The previous expense was recorded in the fourth
quarter of 1998 when we determined that the software product was not salable and
expensed $1.5 million.

AMORTIZATION OF STOCK-BASED COMPENSATION. Some stock options granted during the
last 12 months are considered compensatory, as the estimated fair value for
accounting purposes was greater than the stock exercise price as determined by
the board of directors on the date of grant. As a result, we have recorded in
general and administrative, expenses of $193,000 for the nine months ended
September 30, 1999 relating to the amortization of deferred compensation expense
and had an

23
<PAGE>

aggregate of $1,586,000 of deferred compensation remaining to be amortized as of
that date. Deferred compensation is amortized on a straight-line basis over the
vesting period of the options. We expect amortization of approximately $107,000
in the three months ending December 31, 1999, and $427,000 in fiscal 2000,
$427,000 in fiscal 2001, $427,000 in fiscal 2002 and $198,000 in fiscal 2003.

INTEREST INCOME AND OTHER, NET

Interest income and other, net primarily represents interest income on cash
balances. Interest income and other, net increased to $298,000 for the first
nine months of 1999 from $153,000 for the first nine months of 1998, an increase
of 95%. This increase was primarily due to higher average cash balances during
the first nine months of 1999.

INTEREST EXPENSE

Interest expense consists of amortization of warrant expense associated with the
fair value of warrants issued in connection with our financing activities and
interest expense associated with capital leases and bridge financing. Interest
expense increased to $1.3 million for the first nine months of 1999 from $33,000
for the first nine months of 1998.

INCOME TAXES

The provision for income taxes consists of foreign taxes. FASB Statement No. 109
provides for the recognition of deferred tax assets if realization of these
assets is more likely than not. We intend to evaluate the ability to realize the
deferred tax assets on a quarterly basis.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997 COMPARED
TO YEAR ENDED DECEMBER 31, 1996

REVENUES

Total revenues increased to $2.5 million in 1998 from $1.5 million in 1997, an
increase of 66%, and to $1.5 million in 1997 from $403,000 in 1996, an increase
of 281%.

SETTLEMENT REVENUES. Settlement revenues increased to $1.7 million in 1998 from
$254,000 in 1997, an increase of 556%. We recognized no settlement revenues in
1996. These increases were due to higher volumes of transactions.

SOFTWARE AND OTHER REVENUES. Software and other revenues decreased to $883,000
in 1998 from $1.3 million in 1997, a decrease of 31%, and increased to
$1.3 million in 1997 from $403,000 in 1996, an increase of 218%. The decrease in
1998 from 1997 was primarily attributable to our decision no longer to sell
certain customized software, offset by an increase in sales of
telecommunications equipment. The increase in 1997 from 1996 was primarily due
to increased sales of Internet fax hardware and software and, to a lesser
extent, increased sales of Internet roaming software and related services.

COSTS AND EXPENSES

COST OF SETTLEMENT REVENUES. Cost of settlement revenues increased to $1.4
million in 1998 from $156,000 in 1997, an increase of 826%. We incurred no cost
of settlement revenues in 1996. The increases during these periods were due to
higher volumes of transactions, primarily for Internet roaming.

COST OF SOFTWARE AND OTHER REVENUES. The cost of software and other revenues
increased to $982,000 in 1998 from $708,000 in 1997, an increase of 39%. We
incurred no cost of software and other revenues in 1996. The increase in 1998
from 1997 was primarily due to costs related to Internet telephony hardware. The
increase in 1997 from 1996 was primarily due to higher volumes of fax software
licenses.

24
<PAGE>

NETWORK AND OPERATIONS. Network and operations expenses increased to $1.1
million in 1998 from $837,000 in 1997, an increase of 33%. We incurred no
network and operations expenses in 1996. The increases during the periods were
due to an expansion of our network operation centers.

RESEARCH AND DEVELOPMENT. Research and development expenses increased to $5.1
million in 1998 from $2.3 million in 1997, an increase of 120%, and to $2.3
million in 1997 from $998,000 in 1996, an increase of 132%. The increases are
primarily due to increased spending on development of our GRIC CSP software.

SALES AND MARKETING. Sales and marketing expenses increased to $6.4 million in
1998 from $3.7 million in 1997, an increase of 71%. We incurred sales and
marketing expenses of $49,000 in 1996. These increases are due to the costs of
establishing and expanding our sales and marketing departments.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased to
$3.5 million in 1998 from $2.0 million in 1997, an increase of 77%, and to $2.0
million in 1997 from $391,000 in 1996, representing an increase of 412%. These
increases were primarily due to the recruiting and hiring of additional
personnel, including key executives.

OTHER OPERATING EXPENSES (EXPENSE REVERSALS). Other operating expenses (expense
reversals) of $1.5 million reflects a charge for a commitment to purchase
software that we do not expect to utilize. In the fourth quarter of 1998, we
determined that a recently delivered software product from a third party was not
salable and accordingly we expensed the contractual minimum purchase commitment.

INTEREST INCOME AND OTHER, NET

Interest income and other, net, increased to $192,000 in 1998 from $79,000 in
1997, an increase of 143%, and decreased to $79,000 in 1997 from $104,000 in
1996, a decrease of 24%. These fluctuations were due to changes in our average
cash balances during these years.

INTEREST EXPENSE

Interest expense of $575,000 in 1998 primarily represents amortization of
warrants. We had no interest expense in 1997 and 1996.

INCOME TAXES

Income taxes decreased to $32,000 in 1998 from $59,000 in 1997, representing a
decrease of 46%. We incurred no income taxes in 1996.

DISCONTINUED OPERATIONS

In 1997, we sold our interest in our Internet service provider business and
related assets that we operated as a separate segment of the business. The sale
has been accounted for as discontinued operations. Losses from discontinued
operations were $774,000 in 1997 and $1.7 million in 1996. Gain on disposal of
this operation was $5.1 million in 1997.

QUARTERLY RESULTS OF OPERATIONS

The following table sets forth certain unaudited consolidated statement of
operations data for the seven quarters ended September 30, 1999. This data is
also expressed as a percentage of our total revenues for the relevant quarter.
This data has been derived from unaudited consolidated financial statements that
have been prepared on the same basis as the audited consolidated financial
statements and, in the opinion of management, include all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
the information when read in conjunction with the consolidated financial
statements and notes thereto. Our quarterly results have in the past been and
may in the future be subject to significant fluctuations. As a result, we
believe that results of

25
<PAGE>

operations for interim periods should not be relied upon as an indication of the
results to be expected in future periods.

<TABLE>
<CAPTION>
QUARTERS ENDED
----------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPT 30, DEC 31, MARCH 31, JUNE 30, SEPT 30,
1998 1998 1998 1998 1999 1999 1999
--------- -------- -------- -------- --------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Settlement..................................... $ 284 $ 345 $ 444 $ 593 $ 736 $ 1,230 $ 2,156
Software and other............................. 176 134 330 243 431 561 323
------- ------- ------- ------- ------- ------- -------
Total revenues............................... 460 479 774 836 1,167 1,791 2,479
------- ------- ------- ------- ------- ------- -------
Costs and Expenses:
Cost of settlement revenues.................... 171 220 481 572 631 892 1,806
Cost of software and other revenues............ 88 131 270 493 25 50 21
Network and operations......................... 195 216 318 388 561 602 864
Research and development....................... 1,047 1,350 1,321 1,362 1,458 1,969 2,425
Sales and marketing............................ 1,430 1,502 1,592 1,849 1,645 1,917 2,282
General and administrative..................... 617 871 998 1,054 924 942 1,410
Other operating expenses (expense reversals)... -- -- -- 1,500 -- -- (925)
Amortization of stock-based compensation....... -- -- -- -- 24 62 107
------- ------- ------- ------- ------- ------- -------
Total costs and expenses..................... 3,548 4,290 4,980 7,218 5,268 6,434 7,990
Operating loss................................... (3,088) (3,811) (4,206) (6,382) (4,101) (4,643) (5,511)
Interest income and other, net................... 75 62 16 39 40 119 139
Interest expense................................. -- -- (33) (542) (391) (850) (51)
------- ------- ------- ------- ------- ------- -------
Loss before income taxes......................... (3,013) (3,749) (4,223) (6,885) (4,452) (5,374) (5,423)
Provision for income taxes....................... 5 12 11 4 8 10 20
------- ------- ------- ------- ------- ------- -------
Net loss......................................... $(3,018) $(3,761) $(4,234) $(6,889) $(4,460) $(5,384) $(5,443)
======= ======= ======= ======= ======= ======= =======

Percentage of Revenue:

Revenues:
Settlement..................................... 62% 72% 57% 71% 63% 69% 87%
Software and other............................. 38 28 43 29 37 31 13
------- ------- ------- ------- ------- ------- -------
Total revenues............................... 100 100 100 100 100 100 100
------- ------- ------- ------- ------- ------- -------
Costs and Expenses:
Cost of settlement revenues.................... 37 46 62 69 54 50 73
Cost of software and other revenues............ 19 27 35 59 2 3 1
Network and operations......................... 42 45 41 46 48 34 35
Research and development....................... 228 282 171 163 125 110 98
Sales and marketing............................ 311 314 205 221 141 107 92
General and administrative..................... 134 182 129 126 79 52 56
Other operating expenses (expense reversals)... -- -- -- 179 -- -- (37)
Amortization of stock-based compensation....... -- -- -- -- 2 3 4
------- ------- ------- ------- ------- ------- -------
Total costs and expenses..................... 771 896 643 863 451 359 322
------- ------- ------- ------- ------- ------- -------
Operating loss................................... (671)% (796)% (543)% (763)% (351)% (259)% (222)%
======= ======= ======= ======= ======= ======= =======
</TABLE>

The discussions of the annual and nine-month operating results for the periods
ended September 30, 1999 apply generally to the comparisons of results of
operations for the seven quarters ended September 30, 1999.

Our quarterly operating results have fluctuated significantly in the past, and
will continue to fluctuate in the future, as a result of a number of factors,
many of which are outside our control. These factors include:

- changes in the number of the GRIC Alliance members;

- our ability to establish and maintain relationships with service providers
and strategic partners;

- the demand for our products and services;

- software defects and other product quality problems;

- the size and timing of specific sales;

- the length of our sales cycles;

26
<PAGE>
- budgeting cycles of our customers;

- the delay of customer purchases caused by the announcement of new hardware
or software platforms;

- the level of product and price competition;

- changes in our pricing policies;

- the timing and market acceptance of our new product and service
introductions and enhancements;

- our ability to hire, train and retain sales and consulting personnel to meet
demand;

- personnel changes;

- the mix of international and domestic revenues;

- changes in our sales force incentives;

- changes in our strategy; and

- general domestic and international economic and political conditions.

We have in the past experienced delays in the planned release dates of new
software products or upgrades, have discovered software defects in new products
after their introduction and have discontinued products after introduction. We
cannot assure you that new products or upgrades will be released according to
schedule or that, when released, they will not contain defects or be
discontinued. Any of these situations could result in adverse publicity, loss of
revenues, delay in market acceptance or claims by customers brought against us,
any of which could have a material adverse effect on our business, results of
operations and financial condition.

LIQUIDITY AND CAPITAL RESOURCES

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS
DECEMBER 31, ENDED
------------------- SEPTEMBER 30,
1997 1998 1999
-------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents................................... $ 8,481 $ 1,362 $10,181
Net cash used in operating activities....................... (6,815) (12,806) (13,260)
Net cash provided by (used in) investing activities......... 4,649 (2,283) (1,739)
Net cash provided by financing activities................... 7,305 7,970 23,818
</TABLE>

OPERATING ACTIVITIES. Net cash used in operating activities was $13.3 million
for the nine months ended September 30, 1999, $12.8 million in 1998 and $6.8
million in 1997. Net cash used in operating activities for the first nine months
of 1999, and for the years ended December 31, 1998 and 1997, respectively, was
primarily a result of net operating losses.

INVESTING ACTIVITIES. Our recent investing activities have consisted primarily
of capital expenditures for computer hardware relating to the network
infrastructure and computer hardware and software for our increasing employee
base. Net cash used in investing activities was $1.7 million for the nine months
ended September 30, 1999 and $2.3 million in 1998. Net cash provided by
investing activities totaled $4.6 million in 1997 primarily due to the sale for
$5.4 million of our interest in our Internet service provider business and
related assets that we operated as a separate segment of the business. We expect
that capital expenditures will increase due to continued expansion of our
network infrastructure as well as our increasing employee base.

FINANCING ACTIVITIES. Net cash provided by financing activities was $23.8
million in the first nine months of 1999, $8.0 million in 1998 and $7.3 million
in 1997. We have funded our operations primarily through private placement of
our preferred stock, through which we have raised net proceeds of approximately
$47.1 million since inception. We have also financed our operations through
equipment promissory notes.

27
<PAGE>

COMMITMENTS. We lease all of our facilities under operating leases that expire
at various dates through 2003. As of September 30, 1999, we had $2.9 million in
future operating lease commitments. As of September 30, 1999, we had
$1.6 million of capital lease obligations and equipment promissory notes. In the
future we expect to continue to finance the acquisition of computer and network
equipment through additional capital lease arrangements.

At September 30, 1999, our principal source of liquidity was approximately $10.2
million of cash and cash equivalents.

We believe that the net proceeds of this offering, together with existing cash
and cash equivalents, and funds available under existing credit facilities, will
be sufficient to meet our working capital requirements for at least the next 12
months. Thereafter, we may require additional funds to support our working
capital requirements or for other purposes and may seek to raise these
additional funds through public or private debt or equity financing or from
other sources. We cannot assure you that additional financing will be available
on acceptable terms, if at all. If adequate funds are not available or are not
available on acceptable terms, we may be unable to develop or enhance our
products, take advantage of future opportunities, or respond to competitive
pressures or unanticipated requirements, which could have a material adverse
effect on our business, financial condition and operating results.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 1998, the AICPA issued SOP No. 98-1, ACCOUNTING FOR THE COSTS OF
COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE. SOP No. 98-1 requires
entities to capitalize selected costs related to internal-use software once
specified criteria have been met. We expect that the adoption of SOP No. 98-1
will not have a material impact on our financial position or operating results.
We will be required to implement SOP No. 98-1 for the year ending December 31,
1999.

In April 1998, the AICPA issued SOP No. 98-5, REPORTING ON THE COSTS OF START-UP
ACTIVITIES. SOP No. 98-5 requires that all start-up costs related to new
operations must be expensed as incurred. In addition, all start-up costs that
were capitalized in the past must be written off when SOP No. 98-5 is adopted.
We expect that the adoption of SOP No. 98-5 will not have a material impact on
our financial position or results of operations. We will be required to
implement SOP No. 98-5 for the year ending December 31, 1999.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. SFAS No. 133
establishes methods for derivative financial instruments and hedging activities
related to those instruments, as well as other hedging activities. Because we do
not currently hold any derivative instruments and do not engage in hedging
activities, we expect that the adoption of SFAS No. 133 will not have a material
impact on our financial position or results of operations. We will be required
to implement SFAS No. 133 for the year ending December 31, 2000.

QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISKS

We have limited exposure to financial market risks, including changes in foreign
currency exchange rates and interest rates. We have foreign operations in Europe
and Asia. To date, our exposure to foreign currency fluctuations has not been
significant.

Our interest income and interest expense is sensitive to changes in the general
level of U.S. interest rates. An increase or decrease in interest rates would
not significantly increase or decrease interest income on cash balances due to
our cash being primarily invested in demand deposits.

Due to the short-term nature of our investments and the immaterial amount of our
debt obligations, we believe that there is no material exposure to interest rate
fluctuation. Therefore, no accompanying table has been provided.

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<PAGE>
YEAR 2000 COMPLIANCE

BACKGROUND OF YEAR 2000 ISSUES.

The "year 2000" issue refers generally to the problems that some date-sensitive
computer systems and software may have in recognizing and processing date
information beyond the year 1999, and in particular distinguishing whether "00"
means 1900 or 2000, which may result in failures or the creation of erroneous
results. As a result, many companies' computer and communications systems and
software may need to be upgraded or replaced to become "year 2000 compliant."

We have defined "year 2000 compliant" as the ability to:

- correctly handle date information needed for the December 31, 1999 to
January 1, 2000 date change;

- function according to the product documentation provided for this date
change, without changes in operation resulting from the advent of a new
century, assuming correct configuration;

- respond to two-digit date input in a way that resolves the ambiguity as to
century in a disclosed, defined and predetermined manner;

- store and provide output of date information in ways that are unambiguous
regarding century if the date elements in interfaces and data storage
specify the century; and

- recognize year 2000 as a leap year.

STATE OF READINESS

OUR SOFTWARE. We have conducted a review regarding year 2000 compliance for the
current generally available and immediately preceding versions of our software.
The review included assessment, validation testing, contingency planning and
implementation, including remediation, upgrading and replacement of some
software versions.

We have substantially completed all phases of our review, except for contingency
planning, with respect to the current generally available and immediately
preceding versions of our software. We believe that, as a result, the current
generally available and immediately preceding versions of our software are year
2000 compliant when configured and used in accordance with the related
documentation, provided that the underlying operating system of the host machine
and any other software used with or in the host machine or our software are also
year 2000 compliant and assuming any data received from third parties has been
properly processed by that party's hardware and software. We have not tested our
software on all platforms or all versions of operating systems that it currently
supports.

THIRD-PARTY SOFTWARE. We are currently either testing software obtained from
third parties (licensed software, shareware, and freeware) that is incorporated
into our products or sold in conjunction with our products or seeking to confirm
that this software is year 2000 compliant. We have not yet received confirmation
that all of our vendors' licensed software is year 2000 compliant. Despite our
testing, our products may contain undetected errors or defects associated with
year 2000 date functions. Known or unknown errors or defects in our products
could result in delay or loss of revenue, diversion of development resources,
damage to our reputation increased service and warranty costs, or liability from
our customers, any of which could seriously harm our business.

THE NETWORKS INCLUDED IN THE GRIC ALLIANCE. We have initiated a year 2000
assessment of those components of the networks included in the GRIC Alliance
that are under our control. We expect to complete this assessment in the fourth
quarter of 1999. Although we are not currently aware of any material operational
issues or costs associated with making our internal systems year 2000 compliant,
we may experience unanticipated problems and costs caused by undetected errors
or defects in the technology used in our internal systems.

We may experience problems to the extent that members of the GRIC Alliance and
other telecommunications carriers whose networks connect with or are a part of
the networks included in the GRIC Alliance are not year 2000 compliant. Our
ability to determine the year 2000 compliance of

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GRIC Alliance members and telecommunications carriers that are not members of
the GRIC Alliance is limited. Even if we receive assurances, these third parties
may still experience year 2000 problems with their software or systems, and
these problems could have a materially harmful effect on our business.

END USERS. We currently have only limited information concerning the year 2000
compliance status of our end users. As is the case with other similarly situated
companies, if our current or future end users fail to achieve year 2000
compliance, our business could be harmed.

OUR INTERNAL BUSINESS SYSTEMS. We have initiated an assessment of all of our
business critical internal systems. We expect to complete testing of our
internal systems in the fourth quarter of 1999. To the extent that we are not
able to test the technology provided by third-party vendors, we are seeking
assurances from these vendors that their systems are year 2000 compliant.
Although we are not currently aware of any material operational issues or costs
associated with making our internal systems year 2000 compliant, we may
experience unanticipated problems and costs caused by undetected errors or
defects in the technology used in our internal systems.

RISKS RELATED TO YEAR 2000 ISSUES

Although we are taking steps to make our private managed network and our
software and internal systems year 2000 compliant and to evaluate the year 2000
compliance of telecommunications providers on which our business depends, the
most reasonably likely worst-case year 2000 scenario is that our settlement,
authentication and other services, or the Internet communications services we
enable, may not operate properly or at all. If these disruptions occur and are
frequent or lengthy in duration, we could lose settlement revenues and customer
confidence, we may have to refund amounts paid by customers and we may lose
members of the GRIC Alliance. Other potential year 2000 risks include the
following:

- the loss or alteration of data regarding usage of the Internet
communications services we enable, with resulting inaccuracy of information
used in connection with our clearinghouse and settlement revenues;

- an inability to properly authenticate or connect end users desiring to
engage in Internet roaming; and

- the inability to properly originate or terminate Internet telephony calls.

In addition, our future business depends on the successful operation of the
Internet following the commencement of the year 2000. If the Internet is
inaccessible for an appreciable period of time, our business and revenues could
be materially harmed. We are also subject to external forces that might
generally affect industry and commerce, such as telecommunications, utility or
transportation company year 2000 compliance failures, related service
interruptions and the economic impact that these failures could have on GRIC
Alliance members and end users.

Some commentators have predicted significant litigation regarding year 2000
compliance issues, and we are aware of these lawsuits against other Internet and
software-related companies. Because of the unprecedented nature of this
litigation, we are uncertain whether, or to what extent, we may be affected by
it.

CONTINGENCY PLAN

The year 2000 compliance of third-party global, national and local
communications networks and the compliance of individual Internet service
providers is not within our control. Accordingly, a contingency plan for this
worst-case scenario does not exist and we do not believe we will be able to
develop one.

COSTS

Costs related to our efforts to address year 2000 issues have been expensed as
incurred and have not been material to date. We expect to incur additional costs
related to the year 2000 plan for administrative personnel to manage the
project, outside contractor assistance, technical support for our software,
product engineering and customer satisfaction. We do not expect year
2000-related costs to have a materially harmful effect on our liquidity or
results of operations. Our estimates of the cost of these efforts are partially
based on numerous assumptions about future events. We cannot assure you that
these estimates will be correct. Actual costs could differ materially from these
estimates.

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BUSINESS

OVERVIEW

We provide technology and services that enable our customers to offer
Internet-based products and services, such as Internet telephony and Internet
roaming, to their end users worldwide. Our customers include telecommunications
companies, Internet service providers and newly-emerging communications service
providers. We provide our services and technology through a global network that
we call the GRIC Alliance. We created the GRIC Alliance by forming relationships
with our customers that allow them to share their communications networks. We
use our internally-developed software platform, which we call GRIC Convergent
Services Platform or GRIC CSP, to manage this shared network and to provide
clearinghouse services. As a clearinghouse we have established common technical,
service and payment standards to settle charges that our customers incur when
their end users access the networks of other GRIC Alliance members. These end
users access these networks in order to initiate Internet communications, such
as Internet roaming and Internet telephony. Internet roaming is a method by
which end users access the Internet using the network facilities of a provider
other than the Internet service provider with which they have established an
access account. Internet telephony is a method of transmitting telephone calls
over the Internet rather than through traditional telephone networks.

As of September 30, 1999, the GRIC Alliance included the communications networks
of over 300 GRIC Alliance members and over 4,000 Internet access points located
in over 140 countries. By joining the GRIC Alliance, members allow their end
users to access a global network consisting of the local, regional and
international networks of the GRIC Alliance members. Through our strategic
relationships with Internet telephony equipment vendors, such as Lucent
Technologies and Cisco Systems, we help ensure that members can readily adopt
and deploy new technology across the networks in the GRIC Alliance. Current
members of the GRIC Alliance include Chunghwa Telecom, Fujitsu Nifty, Globus,
MindSpring, Primus Telecommunications, Singapore Telecommunications and
Telstra's On Australia subsidiary, as well as America Online, which recently
began offering our Internet roaming service to its subscribers.

GRIC CSP is a software platform that we developed to operate in multiple
hardware and software environments. We use GRIC CSP to manage our global
infrastructure and to provide our customers with transaction management
services, end user authentication and authorization, route termination and
clearinghouse services. GRIC CSP is designed to facilitate the introduction,
deployment and management of new Internet-based services on a global scale
across the multiple networks that constitute the GRIC Alliance. Through GRIC
CSP, we also provide multi-service transaction management, user authentication
and authorization, route termination and clearinghouse services.

INDUSTRY BACKGROUND

GROWTH OF THE INTERNET-BASED SERVICES MARKET.

Improvements in technology, the efficiency of Internet-based communications,
global deregulation of the communications industry and the convergence of the
Internet-based communications and traditional telecommunications markets all
have combined to create significant new opportunities for providers of
Internet-based services including the opportunity to address the large and
growing telecommunications market. TeleGeography, a market research firm,
estimates the amount of international long distance traffic is expected to grow
from approximately 94 billion minutes in 1998 to approximately 143 billion
minutes in 2001.

The convergence of the Internet-based communications and traditional
telecommunications markets is gaining momentum because technological
improvements have recently made it more practical to utilize Internet protocol
technology for telephone connections, particularly international calls, and not
just to transmit data over the Internet. It is now possible to transmit
phone-to-phone calls over Internet-based networks with quality approaching that
of traditional, switch-based voice networks.

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Transmitting voice over the Internet, or "Internet telephony," presents a
significant opportunity because it allows telecommunications providers to bypass
incumbent long distance telephone tariff and rate structures and greatly reduces
the cost of connecting international calls. Internet telephony is also more
cost-effective and efficient than traditional switched telephony because
Internet-based networks allow voice and data calls to be pooled, enabling
telecommunications providers to carry more calls over lines with the same amount
of bandwidth. As a result of these factors, Internet telephony is expected to
capture an increasing share of the international long distance telephone market.
According to International Data Corporation, voice minutes transmitted over
Internet-based networks are expected to increase from 300 million minutes in
1998 to 135 billion minutes in 2004.

Demand for a wide variety of other Internet-based communications services, such
as Internet roaming, is also expected to increase. Internet roaming enables end
users to access the Internet by using the network facilities and services of a
provider other than their "home provider" or provider with whom they have an
Internet access account. This demand for Internet roaming services is being
driven by a number of factors including the rapid growth of Internet users
worldwide, the increase in global consumer and business travel and the
prevalence of e-mail as a medium for the exchange of information. According to
the Yankee Group, the worldwide market for remote access services, including
Internet roaming, will increase from approximately $430 million in 1998 to
approximately $1.98 billion in 2002.

Finally, we believe demand for all Internet-based services, including Internet
telephony and Internet roaming, will increase as a result of deregulation in
global telecommunications markets. Global deregulation has also compelled
communications service providers to offer additional services as a means to
differentiate themselves from their competitors and to generate increased
revenues.

CHALLENGES ASSOCIATED WITH PROVIDING INTERNET-BASED COMMUNICATIONS SERVICES.

In order for providers of communications services to offer Internet-based
communications services on a commercial basis, a number of needs must be met.

ACCESS TO GLOBAL INTERNET-BASED NETWORK. Access to, or ownership of, an
Internet-based network with Internet access points around the world is required
to enable the global delivery of multiple Internet-based services. The capital
and lead time required for any one service provider to establish such a global
network can be significant. Legal and regulatory impediments can create further
barriers. Therefore, many individual providers must partner and share networks
with multiple providers in order to enable a broad range of Internet-based
services on a global basis.

NUMEROUS GLOBAL RELATIONSHIPS. As more service providers attempt to provide
global services, the number and complexity of relationships among such providers
will likely increase. Establishing the necessary contracts, service and payment
standards, cross-marketing rights and access rights can be a costly and time
consuming process.

INTERNET COMMUNICATIONS INFRASTRUCTURE. Traditional telecommunications companies
require software, hardware and network management solutions, known as Operations
Support System solutions, to enable them to provide their services. The market
for Operations Support System solutions in the telecommunications industry is
large and is currently addressed by numerous vendors. We believe that as
Internet communications services become more widespread and continue to converge
with traditional telecommunication services, a similar need for an Internet
Operations Support System infrastructure is emerging. We believe this Internet
communications infrastructure will need to include the following key functions:

- CONFIGURATION--assigning a user name and password to establish a person's
account;

- PROVISIONING--designating one or more Internet-based services that a person
is authorized to use once an account is established;

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- AUTHENTICATION--determining whether a person is authorized to use a
particular service and then connecting that person to the appropriate
authorized service;

- ROUTE ORIGINATION AND TERMINATION--determining the appropriate network
routing of an Internet connection, including the point from which it is
initiated and the point it is received, based on applicable cost and quality
of service parameters;

- TRACKING--tracking each end user's individual Internet communication and
service quality and collecting the corresponding accounting data necessary
to bill customers; and

- CLEARINGHOUSE AND SETTLEMENT--billing and collecting amounts owed by one
communications service provider whose end users access a second provider's
facilities or services, and paying that second provider for that access.
Settlement becomes more complex as the number of parties involved increases,
because all parties must agree on common rules for settlement and payment. A
settlement clearinghouse is important because it establishes these common
rules and provides settlement services.

Until recently no single company has had the combined expertise as an
infrastructure and service provider to successfully address each of these
challenges.

THE GRIC SOLUTION

We are a leading provider of Internet-based communications infrastructure
products and services, including clearinghouse services, that enable
telecommunications service providers, Internet service providers, and emerging
communications providers to offer Internet-based products and services to their
customers worldwide. Our Internet-based platform consists of a global network,
our GRIC CSP software and the GRIC Alliance. We use this Internet-based platform
to offer transaction management and clearinghouse services to our customers. Our
combination of software, network infrastructure and business relationships
allows our customers to provide to their end users, on a global basis,
Internet-based services such as global Internet roaming, including secure
corporate remote access capability, and Internet telephony, including voice, fax
and prepaid capabilities. As a clearinghouse managing a global alliance, we
establish critical business relationships and processes and implement common
technical, service and payment standards needed to enable our customers to
provide services through a shared global network.

Our infrastructure platform enhances our customers' service offerings and end
user relationships in several ways:

- ENABLES BUNDLING OF MULTIPLE INTERNET-BASED SERVICES. Our solution enables
new Internet-based communications services, either alone or in bundled
offerings, such as global Internet roaming, including secure corporate
remote access capability, and Internet telephony. We believe the ability to
bundle services will also allow our customers to more easily cross-sell
other Internet-based services to each end user and reduce end user turnover.

- PROVIDES GLOBAL NETWORK TO EXPAND GEOGRAPHIC REACH. Each of our customers
gains an immediate global presence for the benefit of its end users. By
accessing an existing network, each customer avoids the cost and time
required to negotiate, build and maintain its own network of relationships,
becoming a global service provider through the GRIC Alliance.

- LOWERS COSTS. Our customers can gain a competitive advantage or maintain
competitive parity by expanding their end user service offerings without
incurring the substantial capital investments and operating costs that would
otherwise be required to build and deploy their own global Internet-based
multiple-service network.

- FACILITATES COMMUNICATION AMONG MANY NETWORKS. We have designed our
software, structured our business and formed the GRIC Alliance to allow our
customers, the members of the GRIC Alliance, to share their network
facilities. Our technical, service and payment standards facilitate this
network sharing by enhancing business and technical interoperability.

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Utilizing our GRIC CSP software, we administer and monitor the GRIC Alliance
network and provide transaction management and clearinghouse services to our
customers. We believe GRIC CSP benefits our customers in the following ways:

- PROVIDES FUNCTIONALITY NECESSARY TO MANAGE A GLOBAL NETWORK. GRIC CSP
provides configuration, authentication, route origination and termination,
tracking, settlement and other clearinghouse services, which are essential
to integrate the dispersed networks of the GRIC Alliance members into a
global interconnected network which we manage.

- SUPPORTS EFFICIENT BILLING AND TRANSACTION MANAGEMENT. By tracking usage
data through the networks in the GRIC Alliance, we use GRIC CSP to provide
the information necessary for our members to bill their end users with the
convenience of a single bill.

- FACILITATES ADDITION OF NEW INTERNET-BASED SERVICES. GRIC CSP is designed to
enable the introduction of new Internet-based services. This ensures that
our customers can develop and quickly deploy new service offerings to their
end users.

STRATEGY

Our goal is to become the preferred global provider of Internet-based
communications infrastructure and clearinghouse services. In order to achieve
this goal, we intend to:

- CONTINUE TO ADD GRIC ALLIANCE MEMBERS. We believe that the benefits of the
GRIC Alliance increase as the number and quality of GRIC Alliance members
increase. Accordingly, we will continue to focus our efforts on identifying
new GRIC Alliance members with attributes that enhance the GRIC Alliance,
such as extensive network facilities, a diverse array of Internet-based
service offerings and large subscriber bases, particularly those with a high
percentage of roaming and telephony subscribers.

- CROSS-SELL TO GRIC ALLIANCE MEMBERS. We intend to focus on opportunities to
cross-sell our products and services to GRIC Alliance members that do not
currently offer the full range of services that we enable. We are well
positioned for such cross-selling because our infrastructure readily enables
and supports the delivery of bundled and new Internet-based services. Our
existing Internet telephony infrastructure should make it easier for us to
offer new Internet telephony services, such as personal
computer-to-telephone, video conferencing and collaboration, as they become
available.

- ENHANCE OUR TECHNOLOGY LEADERSHIP. We intend to continue to enhance our
technology leadership by devoting significant resources to developing GRIC
CSP's features and functionality, enhancing our existing Internet-based
service offerings and introducing new Internet-based services. We expect
that new enhancements of GRIC CSP will offer integration with third party
provisioning and billing systems and the ability to allow future proprietary
and third-party Internet-based services to operate on the GRIC CSP platform.
We also plan to increase functionality of GRIC CSP to enable it to operate
with a greater range of computing devices as well as offering fault
tolerance, remote network management capabilities and improved scalability.

- PROMOTE THE ADOPTION OF GRIC CSP. We intend to encourage the adoption of
GRIC CSP as the preferred platform worldwide for delivery of multiple
Internet-based services. We expect this to lead to increased settlement
revenues. In addition to continuing to use GRIC CSP to manage the GRIC
Alliance and provide our clearinghouse services, we intend to license future
versions of GRIC CSP directly to our customers. By licensing to our
customers an enhanced GRIC CSP solution with a broader range of
functionality, we hope to enable them to provide better service to their
customers and to increase their transaction volume. We plan to create and
market a software developer kit for GRIC CSP. Future GRIC CSP-compatible
Internet-based services may include e-commerce, personal
computer-to-telephone, unified messaging, multimedia, wireless and customer
management software and services.

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- LEVERAGE STRATEGIC RELATIONSHIPS. To expand our sales channels we intend to
leverage the capabilities, resources, expertise and market presence of our
customers and strategic partners through joint marketing and original
equipment manufacturer arrangements. For example, we intend to bundle our
products and services with the offerings of hardware vendors such as Cisco
Systems, Hewlett-Packard Company and Lucent Technologies, or integrate GRIC
CSP with third-party billing, Internet telephony or e-commerce software
solutions. We also intend to work with system integrators, who could
integrate GRIC CSP into a complete Internet communications solution, and
network computer system vendors, who could serve as an original equipment
manufacturer or sales channel to deliver settlement services to corporate
enterprises and large organizations.

- INCREASE TRANSACTION-BASED REVENUE. By supporting and promoting the
development of new Internet-based products and services, we expect to
facilitate the growth of Internet transactions generated by our customers.
We intend to adopt flexible pricing models to include transaction-based fees
and transaction revenue sharing. For example, we are designing GRIC CSP to
enable settlement of e-commerce micropayments, so as to allow content
providers who operate Internet Web sites to charge very small amounts for
Web site services and collect these charges using our clearinghouse service.

PRODUCTS AND SERVICES

OVERVIEW

Our products and services enable our customers to offer multiple Internet-based
services, such as global Internet roaming and Internet telephony, to their
customers worldwide. Our infrastructure includes our GRIC CSP software, our
worldwide managed network and the GRIC Alliance. The GRIC Alliance functions
because its members generally operate in accordance with technical, quality,
payment and business rules and procedures that we establish and implement
through contracts and our role as a global clearinghouse. In addition to
enabling our customers to expand their service offerings to include multiple
Internet-based services, we also provide comprehensive clearinghouse services to
our customers.

The table below summarizes our current products and services.

<TABLE>
<CAPTION>
INTERNET-BASED SERVICE GRIC PRODUCTS AND SERVICES FEATURES
<S> <C> <C>
Global Internet Roaming - GRICtraveler software - Over 4,000 Internet access points in over 140 countries
- GRICdial software - Worldwide private backbone network for enhanced quality
- Clearinghouse services of service
- 82% of Internet access points offer 56k access speed
- Easy to use
-Automatic update feature
- Network quality monitored by dialer software and 24x7
network operations centers
-Secure corporate remote access

Internet Telephony - GRICphone service - Allows phone-to-phone Internet telephony, including
- GRICprepaid software voice, prepaid and fax
- Clearinghouse services - Provides worldwide termination
- Supports Lucent and Cisco gateways
- Worldwide private backbone network for enhanced quality
of service
- Network quality monitored by dialer software and 24x7
network operations centers
</TABLE>

GLOBAL INTERNET ROAMING

We enable our customers to offer global Internet roaming through the combination
of our GRICtraveler, GRICdial and GRIC CSP software. Our global Internet roaming
solution allows our customers to provide their end users with low cost access to
the Internet throughout the world by dialing a local number, thereby eliminating
the need for costly international calls to their "home" Internet service
provider.

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GRICTRAVELER. Our GRICtraveler software normally resides on our customer's
server and enables the customer to provide global Internet roaming to end users
who have installed GRICdial software. We can also host the GRICtraveler software
at our facilities, enabling a customer to offer global Internet roaming to its
end users as a virtual service provider. GRICtraveler authenticates end users'
access to the networks included in the GRIC Alliance, enables access to services
offered by other GRIC Alliance members and sends a record of the transaction to
our central clearinghouse server for settlement. Settlement records may be
reviewed by our customers at any time using our Web site.

GRICDIAL. After our customers' end users install our GRICdial software on their
computer, they are able to use the global Internet roaming service to access the
Internet through the networks included in the GRIC Alliance. GRICdial can be
customized for branding purposes, which benefits our customers by allowing them
to create special or premium-rate access services. Three steps are needed to
access the Internet using our roaming product:

LAUNCH GRICdial, which automatically updates an electronic phone book of
available Internet access points to ensure the most current listing;

CHOOSE an Internet access point by entering the country and city and
selecting among the phone numbers listed by GRICdial or automatically
using a number that has been previously bookmarked; and

CONNECT and be authenticated using the name and password information
previously stored in GRICdial.

Secure corporate remote access provides a business traveler with an integrated
solution for secure remote access to his or her corporate network through a
public Internet connection. We enable our customers to offer this service
through a combination of our GRICtraveler and GRICdial software as well as
third-party virtual private networking software. Our GRICdial software is
compatible with and launches a variety of industry-leading, third-party virtual
private networking software.

INTERNET TELEPHONY

Our Internet telephony services enable our customers to offer their end users
low-cost, high quality, Internet-based phone calls.

GRICPHONE. Our GRICphone is a phone-to-phone Internet telephony service enabling
phone calls to be made across the Internet to many locations throughout the
world. Generally, end users make an Internet telephony call in the same way as
they would make a traditional telephone call. GRICphone requires our customers
to operate an Internet telephony gateway from GRIC-compatible vendors, which
currently are Cisco Systems and Lucent Technologies. Our GRIC CSP software and
these Internet telephony gateways handle authentication, routing of phone calls
based on quality of service and cost parameters, and settlement services. Our
customers may elect to originate or terminate calls, select the countries to
which calls may be made and offer different quality of service levels. To help
ensure the quality of our Internet telephony service, we operate a worldwide,
private asynchronous transfer mode network over which calls can be routed.

GRICPREPAID. GRICprepaid software enables our customers to offer prepaid
Internet telephony services to their end users. The convenience to end users and
the reduced collection risk for customers have made prepaid services
increasingly popular. Utilizing our GRICprepaid software together with an
Internet telephony gateway from a GRIC-supported vendor, our customers can
immediately enter the prepaid telecommunications market at a fraction of the
cost associated with traditional prepaid telephony systems and offer their end
users access to our existing international Internet telephony network.
Additional functions allow our customers to perform administrative tasks such as
monitoring balances, increasing balances or changing the status of accounts.

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CLEARINGHOUSE SERVICES

The combination of our clearinghouse services and GRIC CSP software establishes
critical business relationships and processes needed to enable our customers to
provide services through a shared global network. We generate settlement
revenues when we provide clearinghouse services to customers whose end users
initiate Internet roaming services or originate Internet telephony
communications. For each global Internet roaming transaction, we use GRIC CSP to
track the usage, collect the amount that a roamer's "home" service provider owes
us, pay the appropriate amount to the service provider enabling local access,
and provide the underlying usage data to our customer to enable billing of its
end user. For each Internet telephony call, we use GRIC CSP to monitor usage,
settle the amounts owed for use of the networks available through the GRIC
Alliance between participating customers and provide the underlying usage data
to facilitate our customer's billing of its end user.

FUTURE PRODUCTS AND SERVICES

We intend to make significant investments to enhance GRIC CSP and to develop and
market other products and services. However, we cannot assure you that we will
be able to successfully develop or implement any new or enhanced product or
service in the future, and we may offer new products not listed below.

GRIC CSP AS A LICENSED PRODUCT. We currently use GRIC CSP internally to
administer and monitor the networks included in the GRIC Alliance. However, we
are developing an enhanced version of GRIC CSP that we expect to license
directly to our customers. We expect to offer our next generation of GRIC CSP
software in three editions:

- We are designing one edition to be offered to our current installed base of
GRIC Alliance members to support both global Internet roaming and Internet
telephony, as well as future Internet-based services. This edition will add
significant features and functionality over our current GRIC CSP software,
including enhanced scalability, extensibility, portability, security and
remote network management capabilities, fault tolerance, and integration
with third-party provisioning and billing systems. Two important benefits of
this edition are the ability to update GRIC CSP features remotely to ease
network administration and allow future proprietary and third-party
Internet-based services to operate on and plug into GRIC CSP so that they
can be deployed throughout an existing marketing channel--the GRIC Alliance.
Given the substantially increased functionality to be offered by this
edition, we believe our customers will view GRIC CSP as a flexible platform
for quickly adding and bundling new Internet-based services for use by their
end users.

- We intend to license a GRIC CSP software development kit to independent
software vendors and hardware companies that wish to develop new or improve
existing Internet-based services to be deployed throughout the GRIC
Alliance. This software development kit will consist of documentation and
software tools, bundled with consulting and training. We expect that third
party developers will enhance the value of GRIC CSP by increasing the number
of available Internet-based services, making it a more attractive and widely
adopted platform for GRIC Alliance members.

- We intend to license a third edition of GRIC CSP that will enable large
service providers, principally telecommunications companies, to use GRIC CSP
to provide Internet-based services and clearinghouse services within their
own network domain. We are designing this edition of GRIC CSP to allow us
and our customers to partition the networks included in the GRIC Alliance
into multiple sub-networks. We intend to continue to provide clearinghouse
services and to track and price transactions among and between these
sub-networks and to allocate payments among multiple parties.

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E-COMMERCE. We intend to enhance our GRIC CSP software capability to enable us
to provide clearinghouse services for e-commerce transactions. We believe that
this will be attractive to e-commerce companies in a variety of settings,
including high volume settlement of business-to-business transactions among more
than two parties and settling of micro-payments, which are typically very small,
high volume payments for products and services offered over a Web site.

PERSONAL COMPUTER-TO-PHONE, UNIFIED MESSAGING AND OTHER INTERNET-BASED
SERVICES. We intend to partner with leading hardware and software vendors to
facilitate the development of other new GRIC CSP-compatible Internet-based
services, which may include personal computer-to-telephone, unified messaging,
call center, multimedia, wireless and customer management solutions.

OUR INTERNET-BASED TECHNOLOGY AND COMMUNICATIONS INFRASTRUCTURE

Our Internet-based infrastructure consists of a worldwide managed network,
distributed software and the GRIC Alliance. Using this infrastructure, we
provide clearinghouse services for, and enable our customers to offer, multiple
Internet-based services.

GRIC CONVERGENT SERVICES PLATFORM

GRIC CSP currently consists of software that we use to manage and operate the
networks included in the GRIC Alliance, provide clearinghouse services, and
enable our customers to offer Internet-based communications services to their
end users. GRIC CSP's capabilities and features fall into the following three
categories:

OPERATIONS. GRIC CSP provides the functionality to support our network operation
by providing:

- AUTHENTICATION. GRIC CSP determines whether a user is permitted to use a
particular service, based upon that user's name and password.

- TRACKING. GRIC CSP monitors each end user's individual service transaction
and service quality, collects the corresponding accounting data necessary to
bill customers and forwards it to our central settlement server.

- ROUTE ORIGINATION AND TERMINATION. For Internet telephony, GRIC CSP helps
locate and process the information that an Internet telephony gateway needs
to route an Internet communication over the network of GRIC Alliance members
for the lowest cost and quality.

- CLEARINGHOUSE AND SETTLEMENT. GRIC CSP currently provides the functionality
that we need to settle charges through our central clearinghouse server.

CONFIGURATION. These services perform functions such as defining subscribers and
their account information and defining the use, configuration and provisioning
of Internet-based services such as global Internet roaming, secure corporate
remote access and Internet telephony.

ARCHITECTURE. We have designed GRIC CSP to support a distributed network
architecture, which means the servers and software are located around the globe.
GRIC CSP supports several widely-adopted Internet protocols, which enable our
customers and their end users to transfer information across our customers'
network boundaries in a reliable manner without sacrificing the security of our
customers' networks. GRIC CSP supports the Open Standards Protocol, which is a
specification designed to facilitate inter-domain communications for future
Internet telephony architectures, and which we use to facilitate the interface
between GRIC CSP and Internet telephony gateways and gatekeepers. We believe our
adoption of this standard will facilitate compliance with new Internet telephony
standards in the future.

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GRIC ALLIANCE

As of September 30, 1999, the combined network of over 300 GRIC Alliance members
included over 4,000 Internet access points located in over 140 countries. GRIC
Alliance members that connect their networks to the GRIC Alliance enable their
end users to access the networks of other members. Current members of the GRIC
Alliance include Chunghwa Telecom, Fujitsu Nifty, Globus, MindSpring, Primus
Telecommunications, Singapore Telecommunications, Telstra's On Australia
subsidiary and America Online, which recently began offering our Internet
roaming service to its subscribers.

OUR PHYSICAL NETWORK

The following is a summary of the primary components of our physical network:

- our central clearinghouse, phone-book and network management servers in
Milpitas, California;

- our regionally distributed servers and Internet routing equipment in Los
Angeles, New York, San Jose, Washington, D.C., London and Singapore;

- Lucent Technologies and Cisco Systems Internet routing equipment owned
either by us or our customers, through which we have the capability to
terminate calls in 27 countries; and

- our worldwide private asynchronous transfer mode-based network, which we use
to maintain quality of service for Internet telephony calls. This network
has hubs in Los Angeles, New York, London and Singapore that are connected
by leased lines.

To ensure the quality of our network, we monitor the performance of each
Internet access point. This information enables us to identify the highest
quality Internet access points, update routes and remove poor quality Internet
access points from the electronic phone book contained in GRICdial and from the
network.

Prior to permitting new customers to enter the GRIC Alliance, we evaluate the
quality of their Internet telephony capabilities to help ensure call quality.
Routing tables are established that facilitate routing of Internet telephony
calls through the public Internet, our worldwide, private asynchronous transfer
mode-based network or traditional switch-based phone networks depending on our
customer's desired call quality. We monitor our network 24 hours-a-day, seven
days-a-week using a Hewlett-Packard OpenView system. Additionally, each new GRIC
Alliance member desiring to provide Internet telephony agrees to maintain
specified quality levels for that service.

STRATEGIC RELATIONSHIPS

LUCENT TECHNOLOGIES. We have been enabling Internet telephony service over the
networks included in the GRIC Alliance with Lucent Technologies ITS-SP gateways
since 1997. These Lucent Technologies ITS-SP gateways are configured to
interface with our GRIC CSP software. We believe the deployment of more than 100
Internet telephony gateways owned either by our GRIC Alliance members or by us
makes the GRIC Alliance one of the largest alliance networks of Lucent
Technologies ITS-SP gateways in the world. Our GRIC prepaid software has been
available on the Lucent Technologies ITS-SP gateway since February 1999. We
co-market and recruit customers for the GRIC Alliance with the Lucent
Technologies sales force.

CISCO SYSTEMS. Working together with Cisco Systems, we have developed
standards-based inter-domain settlement software, based on the widely supported
standard known as Open Settlement Protocol, which is used to enable Cisco
Systems' AS5300 Internet telephony gateways and 36xx series gatekeepers to
interface with our GRIC CSP software. In many instances, our customers will be
able to utilize their existing Cisco Systems equipment, such as routers and
gateways, to support Internet telephony through inexpensive hardware and
software upgrades. Beta testing of the GRICphone

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network with Cisco Systems Internet telephony gateways began in September 1999.
We are involved in joint sales and marketing activities with the Cisco Systems
sales force.

CUSTOMERS

Our typical customers are service providers that benefit from a global
multi-service network built over an Internet-based infrastructure for providing
and managing Internet-based services. As of September 30, 1999, the GRIC
Alliance comprised over 300 members.

Our top ten customers by revenue during the period from January 1, 1999 to
September 30, 1999, by geographic region, were:

<TABLE>
<CAPTION>
ASIA-PACIFIC EUROPE, MIDDLE EAST AND AFRICA AMERICAS
<S> <C> <C>
ACCOS Belgacom Cernet
Amtel Communications Emirates Telecommunications Globus
Caltran France Telecom Interactive HCI Technologies
Chembell Technology Nacamar Interpath
Chunghwa Telecom Net Vision KF Communications
Circlecom o.tel.o MindSpring
Fujitsu Nifty Sovam Teleport New Global Telecom
NEC Biglobe TeleDanmark Primus Telecommunications
On Australia U-NET WinStar Communications
Singapore Telecommunications UUNET France World Access Telecommunications
</TABLE>

SALES, MARKETING AND CUSTOMER SERVICE AND SUPPORT

SALES

Our sales strategy is to pursue targeted accounts both directly through our
internal sales force and indirectly through our strategic partners. To date, we
have targeted our sales efforts at medium and large Internet service providers,
Internet divisions of traditional telecommunications providers and other
providers of Internet-based services. In many instances, we have initially
established a customer relationship based on our Internet roaming capabilities
and subsequently sold additional value-added services, such as Internet
telephony and prepaid Internet telephony services. As our service offerings have
expanded, we have broadened our sales focus to include regional and emerging
telephone companies and telecommunications providers.

We maintain direct sales personnel domestically in our Milpitas, California
headquarters, Florida, Texas and Virginia, and internationally in France,
Germany, Jordan, Malaysia, Singapore, South Korea, Taiwan and the United
Kingdom. The direct sales force is organized into individual regional account
teams, which include both sales representatives and systems and marketing
engineers. As of September 30, 1999, our direct sales force comprised 22
individuals. We intend to increase the size of our direct sales force and
establish additional sales offices domestically and internationally.

We complement our direct sales force with value-added resellers, systems
integrators, and hardware and software developers such as Lucent Technologies
and Cisco Systems. These parties provide a global extension of our direct sales
force and serve as a source of leads and referrals.

We also maintain an extensive Web site which, among other things, provides
information to prospective customers and affiliates concerning the technical and
other requirements for becoming a member of the GRIC Alliance.

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MARKETING

Our marketing programs are targeted at providers of Internet-based services and
are currently focused on creating awareness of, and generating interest in, GRIC
CSP and our services. We engage in a variety of marketing activities, including:

- conducting direct mailings and ongoing public relations campaigns;

- conducting seminars;

- creating and placing advertisements;

- managing and maintaining our Web site; and

- establishing and maintaining close relationships with recognized industry
analysts.

We are an active participant in technology-related conferences and demonstrate
our products at trade shows targeted at providers of Internet-based services. We
also focus on a range of joint marketing strategies and programs with our
partners in order to leverage their existing strategic relationships and
resources.

CUSTOMER SERVICE AND SUPPORT

We believe that customer service and support are critical to maintaining
existing customer relationships and developing relationships with new customers.
Our customer service group performs pre-sales support, product installation and
customization, technical support and consulting services, customer training and
product maintenance. Through our network operation centers in California,
Malaysia and France, we have established a globally distributed sales and
support capability that provides support coverage 24 hours-a-day, seven
days-a-week.

RESEARCH AND DEVELOPMENT

Our research and development efforts are currently focused on improving the
functionality and performance of our existing products and developing new
products, such as a stand-alone, separately licensable version of GRIC CSP. See
"Future Products and Services." We obtain extensive product development input
from our customers and monitor our customers' needs and changes in the
marketplace. We are currently working on key areas such as electronic commerce
and the interoperability of our products with those of other vendors. In
addition, we are developing improved network management capabilities and
enhanced end users features.

We believe our success will depend, in part, on our ability to develop and
introduce new products and enhancements to our existing products. In the past we
have made, and intend to continue to make, significant investments in research
and development. Our research and development expenditures were approximately
$5.9 million for the first nine months of 1999, $5.1 million in 1998,
$2.3 million in 1997 and $1.0 million in 1996. If we are unable to develop new
products or enhancements to existing products on a timely basis, or if the new
products or enhancements fail to achieve market acceptance, our business,
prospects and results of operations will suffer.

COMPETITION

We compete in markets that are new, intensely competitive, highly fragmented and
rapidly changing, primarily on the basis of the following factors:

- breadth of geographic presence;

- availability and breadth of Internet-based communications services;

- ease of integration;

- ability to offer turnkey solutions;

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- price;

- performance;

- flexibility;

- customer service;

- scalability;

- reliability; and

- network quality and capacity.

There are low barriers to entry to new or existing businesses seeking to offer
services on the Internet. As a result, our business environment is intensely
competitive, highly fragmented and rapidly changing. Competition can come from
many sources and may be focused on different segments of our business. We
presently compete directly with iPass in the market for Internet roaming and
related settlement services and iPass has formed a competing alliance. Providers
of Internet telephony services such as iBasis (formerly VIP Calling) and ITXC
compete with our Internet telephony services. Transnexus offers a clearinghouse
service for Internet telephony that supports the Open Standards Protocol.
Potential competitors to future stand-alone GRIC CSP products include operations
support system vendors, such as CAP Gemini, EDS and Lucent Technologies. AT&T
and other large telecommunications companies, such as MCI Worldcom, may compete,
or have the ability and resources to compete, in each of our markets, including
by offering clearinghouse and roaming services. Some companies, such as AT&T,
may in the future develop an intelligent platform network that competes with
existing or planned future versions of our GRIC CSP software.

Other companies specialize only in a single Internet-based service, such as
Internet roaming or Internet telephony. While we believe that the multi-service
nature of our product offering may give us a competitive advantage in general,
the narrower focus of these competing companies may give them the ability to
compete more effectively in the market for their respective individual products
and services.

The long distance telephony market and the Internet telephony market are highly
competitive. There are several large and numerous small competitors, and we
expect to face continuing competition for Internet telephony based on price and
service offerings from existing competitors and new market entrants in the
future. Our competitors in these markets include major and emerging
telecommunications carriers in the United States and foreign telecommunications
carriers. These include AT&T Global Clearinghouse, iBasis and ITXC, which
compete in both the business and retail segments, and other Internet telephony
service providers which currently focus only on a retail customer base. In
addition, companies currently in related markets have begun to enter the
Internet telephony market.

Many of our competitors have substantially greater financial, technical and
marketing resources, larger customer bases, longer operating histories, greater
name recognition and more established relationships in the industry than we
have. In addition, a number of these competitors may merge or form strategic
partnerships. As a result, certain of these competitors may be able to offer, or
bring to market earlier, products or services that are superior to our own in
terms of features, quality, pricing or other factors. Our failure to compete
successfully in any of the markets in which we compete could have a material
adverse effect on our business, prospects, results of operations or financial
condition or on the price of our common stock.

GOVERNMENT REGULATION

We are not currently subject to federal or state telecommunications common
carrier regulation, and we do not believe that we are subject to local
regulation or laws or regulations applicable to access to

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or commerce on the Internet or use of the Internet to provide telephone service,
other than regulations applicable to businesses generally.

REGULATION OF INTERNET TELEPHONY

The use of the Internet to provide telephone service is a recent market
development. We are currently aware of no domestic and few foreign, laws or
regulations that prohibit voice communications over the Internet.

UNITED STATES. We believe that, under United States law, the Internet-related
services that we provide constitute information services and are not regulated
as telecommunications services and therefore are not currently actively
regulated by the Federal Communications Commission, or any state agencies
charged with regulating telecommunications carriers. We cannot assure you that
Internet-related services will not be actively regulated in the future. Several
efforts have been made in the U.S. to enact federal legislation that would
either regulate or exempt from regulation services provided over the Internet.
Increased regulation of the Internet generally may slow our growth, particularly
if other countries also impose regulations. Such regulation could materially
adversely affect our business, prospects, operating results and financial
condition.

Recently, the FCC has considered whether to impose surcharges or other common
carrier regulations upon certain providers of Internet telephony, primarily
those that, unlike us, provide Internet telephony services to end users located
within the U.S. While the FCC has presently decided that information service
providers, including Internet telephony providers, are not telecommunications
carriers, various companies have challenged that decision. Congressional
dissatisfaction with FCC conclusions could result in legislation requiring that
the FCC impose greater or lesser regulation, which in turn could materially
adversely affect our business, financial condition, operating results and future
prospects. On April 10, 1998, the FCC issued a report to Congress discussing the
implementation of certain universal service provisions contained in 1996
amendments to the Communications Act of 1934. In the report, the FCC indicated
that it would examine the question of whether certain forms of phone-to-phone
Internet protocol telephony are information services, which are exempt from
Universal Service Fund contribution requirements, or telecommunications
services, which must make these contributions. The FCC noted that it did not
have, as of the date of the report, an adequate record on which to make a
definitive pronouncement, but that the record suggested that certain forms of
phone-to-phone Internet telephony appear to have the same functionality as
non-Internet protocol telecommunications services and lack the characteristics
that would render them classified as information services, which are exempt from
Universal Service Fund contribution requirements, or telecommunications
services, which must make such contributions. The FCC previously has expressly
found that at least one kind of data communications service using the frame
relay protocol should be regulated as a basic telecommunications service. This
means that any service provider that is providing voice over frame relay service
could be classified as a telecommunications common carrier and therefore subject
to regulation, including being required to contribute to universal service
subsidies. The FCC has not expressly made any similar regulatory determination
with respect to transmissions made over asynchronous transfer mode protocols.
Additionally, to the present time, transmission services provided over leased
lines that are "contaminated" with true information services have been
categorized by the FCC as unregulated. Any determination by the FCC that the
simple transmission of voice over asynchronous transfer mode or Internet
protocols constitutes a basic telecommunications service similar to frame relay
could affect the regulatory treatment of our customers, particularly customers
that operate their own transmission facilities. A determination by the FCC that
we or any of our customers should be regulated as telecommunications service
providers could materially affect the way we conduct our business.

On February 25, 1999, the FCC ruled that telephone traffic bound for Internet
service providers is predominantly "interstate" traffic that is subject to
federal jurisdiction. Incumbent local exchange carriers, also known as "ILECs,"
have since argued on this basis that Internet service providers should

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be required to pay the same kinds of access charges that are presently applied
to traditional-style interstate voice telephone services. However, having found
that most Internet service-bound traffic is jurisdictionally interstate, the FCC
has clarified that its jurisdictional determination does not preclude states
from continuing to apply local service tariffs to calls made by end users to
Internet service providers. The FCC emphasized that its finding that dial-up
calls to Internet service providers are subject to federal jurisdiction did not
compel it to hold that dial-up calls to Internet service providers must be
federally tariffed. The FCC could later change its position on this issue,
however, or be compelled to do so by a court or directed to do so by Congress.
For the time being, despite its acknowledgement that state authorities may
regulate the dial-up portion of voice calls made to Internet service providers,
the FCC has continued to make statements supporting the continued treatment of
Internet-related services as "unregulated" information services. However, the
FCC is continuing to examine these issues, and expanded reliance on
Internet-protocol or Internet-based services by traditional telephone carriers
may result in changes to FCC policies in the future.

If the FCC were to determine that Internet-based telephony services are subject
to FCC regulations as telecommunications services, the FCC could require
providers of Internet telephony services to be subject to traditional common
carrier regulation, make Universal Service Contributions or pay access charges.
It is also possible that the FCC may adopt a regulatory framework other than
traditional common carrier regulation that would apply to Internet telephony
providers. Any FCC regulatory regime could materially adversely affect our
business, prospects, operating results and financial condition to the extent
that it would negatively affect the cost of doing business over the Internet or
otherwise slow the growth of the Internet.

The FCC has the jurisdiction to determine that enhanced services, such as
Internet services, should be treated as unregulated information services. To the
extent that the Internet telephony services provided by our customers are
inseparable from other Internet services, they are subject exclusively to
federal jurisdiction. Consequently, currently, state regulatory authorities may
not assert jurisdiction to regulate the provision of such intrastate Internet
telephony services. In the event FCC policies change, however or to the extent
that phone-to-phone Internet telephony is separable from other Internet services
state authorities may assert jurisdiction to regulate intrastate Internet
telephony.

INTERNATIONAL. The regulatory treatment of Internet telephony outside of the
U.S. varies widely from country to country. A number of countries that currently
prohibit competition in the provision of voice telephony also prohibit Internet
telephony. Other countries permit but regulate Internet telephony. Some
countries will evaluate proposed Internet telephony service on a case-by-case
basis and determine whether it should be regulated, for example, as a voice
service or as another telecommunications service. In many countries, Internet
telephony has not yet been addressed by legislation. Increased regulation of the
Internet or Internet telephony providers or the prohibition of or significant
restrictions upon Internet telephony in one or more countries could materially
adversely affect our business, prospects, operating results and financial
condition.

The European Union regulatory regime, for example, distinguishes between voice
telephony services and other telecommunications services. In Services Directive
90/388/EEC, issued in 1990, the European Commission required its Member States
to allow competition for all telecommunications services except voice telephony
and certain other services. The Services Directive was amended in 1996 by
Commission Directive 96/19/EC, which required the liberalization of all
telecommunications services, including voice telephony, by January 1, 1998. In
addition, Services Directive 96/19/EC held that services other than voice
telephony could be subjected to no more than a general authorization or
declaration procedure. In contrast, voice telephony may be subject to individual
licenses. For purposes of these Services Directives, "voice telephony" is
defined as the commercial provision for the public of the direct transport and
switching of speech in real time between public switch network termination
points.

On January 10, 1998, the European Commission issued a communication that
addressed whether Internet telephony was voice telephony and thus subject to
regulation by the Member States.

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Consistent with its earlier directives, the European Commission stated that
Internet telephony could properly be considered voice telephony, and thus
subject to regulation by the Member States, only if all elements of its "voice
telephony" definition were met. In this January 1998 communication, the European
Commission concluded that no form of Internet telephony currently meets the
definition of "voice telephony." The European Commission stated that only
phone-to-phone communications reasonably could be considered voice telephony and
that, at present, even phone-to-phone Internet telephony does not meet all
elements of its voice telephony definition. Therefore, the European Commission
concluded that voice over Internet services cannot "for the time being" be
classified as "voice telephony."

Under the European Commission's analysis, Internet telephony must be permitted
and providers of Internet telephony should be subjected to no more than a
general authorization or declaration requirement by the Member States. However,
in practice more stringent regulatory requirements may be imposed by individual
Member States, since European Commission communications, unlike directives, are
not binding on the Member States. The Member States therefore are not obligated
to reach the same conclusions as the European Commission on this subject so long
as they adhere to the definition of "voice telephony" in the Services Directive.
In fact, some countries have moved forward through national regulatory
procedures to adopt an individual licensing requirement for certain types of
Internet telephony providers. In Germany the national regulator has looked at
Internet telephony providers on an individual basis and has found that several
of them meet the "real time" standard and required them to obtain an individual
license. The United Kingdom has not formally pronounced Internet telephony as
voice telephony however in the context of international voice resale, the
Department of Trade and Industry recommends that providers obtain an individual
resale license. Finally, France recently has taken comments on a consultation
document concerning the regulation of Internet telephony, although no formal
decision or regulation has been released. Thus, services provided over our
global network could be deemed voice telephony subject to heightened regulation
by one or more European Union Member States. Our failure or the failure of any
of our customers or affiliates to obtain any necessary authorizations could have
a material adverse effect on our business, prospects, operating results and
financial condition. Moreover, the European Commission is continuing to examine
the regulatory treatment of Internet telephony in inquiries on convergence of
telecommunications and information services technologies.

As our services are made available in foreign countries, and as we facilitate
sales by our customers and affiliates to end users located in foreign countries,
these countries may claim that we or our customers are required to qualify to do
business in the particular foreign country, that we are otherwise subject to
regulation, including requirements to obtain authorization, or that we or our
customers are prohibited in all cases from conducting business as currently
conducted in that foreign country. Our failure to qualify as a foreign
corporation in a jurisdiction in which we are required to do so or to comply
with foreign laws and regulations could subject us to taxes and penalties or
preclude us from, or limit our ability in, enforcing contracts in these
jurisdictions, which could materially adversely affect our business, prospects,
operating results and financial condition.

Our customers and affiliates may also currently be, or in the future may become,
subject to requirements to qualify to do business in a particular foreign
country, to comply with regulations, including requirements to obtain
authorization, or to cease from conducting their business as conducted in that
foreign country. We cannot be certain that our customers and affiliates are
currently in compliance with any of these requirements, will be able to comply
with any of these requirements, or will continue in compliance with any of these
requirements. The failure of our customers and affiliates to comply with these
requirements could materially adversely affect our business, prospects,
operating results and financial condition.

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OTHER REGULATIONS AFFECTING THE INTERNET

UNITED STATES. Congress has recently adopted legislation that regulates certain
aspects of the Internet, including online content, user privacy and taxation. In
addition, Congress and other federal entities are considering other legislative
and regulatory proposals that would further regulate the Internet. Congress is,
for example, currently considering legislation on a wide range of issues
including Internet spamming, database privacy, gambling, pornography and child
protection, Internet fraud, privacy and digital signatures. Various states have
adopted and are considering Internet-related legislation. Increased U.S.
regulation of the Internet may slow our growth, particularly if other
governments follow suit, which may negatively impact the cost of doing business
over the Internet and materially adversely affect our business, prospects,
results of operations and financial condition.

INTERNATIONAL. The European Union has also enacted several directives relating
to the Internet. The European Union has, for example, adopted a directive that
imposes restrictions on the collection and use of personal data. Under the
directive, citizens of the European Union are guaranteed rights to access their
data, rights to know where the data originated, rights to have inaccurate data
rectified, rights to recourse in the event of unlawful processing and rights to
withhold permission to use their data for direct marketing. The directives
could, among other things, affect U.S. companies that collect or transmit
information over the Internet from individuals in Member States, and will impose
restrictions that are more stringent than current Internet privacy standards in
the U.S. In particular, companies with offices located in European Union
countries will not be allowed to send personal information to countries that do
not maintain adequate standards of privacy. Although we do not engage in the
collection of data for purposes other than routing our services and billing for
our services, the directive is broad and the European Union privacy standards
are stringent. Accordingly, the potential effect on us is uncertain.

In response to the European Union directive, the U.S. has entered into
negotiations with the European Union to establish certain "Safe Harbor"
principles which will provide companies operating in the U.S. that choose to
adhere to them a presumption of adequate protection of privacy. These Safe
Harbor principles will likely include requirements, for example, that the host
of a web site or other providers of information services and collectors of
personal data, including billing and collection data, establish certain
procedures to disclose and provide notice to users of privacy and security
policies, obtain consent from users for certain collection and use of
information and provide users with the ability to access, correct and delete
personal information that is being stored. The principles may also include
enforcement and redress provisions. The U.S. information services industry has
advocated that the principles be implemented through self-regulation and
industry certification. In the future, however, the requirements embodied in the
principles may become mandatory under U.S. law. Additionally, the European Union
directive requirements are likely to be supplemented in the U.S. by other state
and federal privacy legislation. In conducting our business internationally, we
must comply with similar privacy and data protection rules in all countries in
which we do business. Any such requirements may adversely affect our ability to
collect demographic and personal information from users, which could have an
adverse effect on our ability to provide targeted advertisements. Although we
will endeavor to meet the requirements of the European Union directive and any
U.S. regulations, we cannot guarantee that adequacy of our compliance will not
be subject to challenge.

INTELLECTUAL PROPERTY

We rely on a combination of patent, copyright, trademark and trade secret
protection, nondisclosure agreements and licensing restrictions and arrangements
to establish and protect our proprietary rights. We cannot assure you that these
forms of protection will be effective. We have been issued United States Patent
Number 5,898,780 dated April 27, 1999 for "Method and Apparatus for Authorizing
Remote Internet Access," and have two other U.S. patents pending relating to
Internet telephony and Internet settlement. We cannot assure you that patents
will issue from the pending applications or, if any patents are issued, that
they will be sufficiently broad to protect our technology adequately. We

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have a number of trademarks and trademark applications and use copyright and
trade secret protection to protect our software and other original works.

We enter into confidentiality and proprietary information and invention
agreements with our customers, employees and consultants, and control access to
and distribution of our software, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights, unauthorized
parties may attempt to copy, reverse engineer or otherwise obtain and use our
products or technology or otherwise appropriate our proprietary network
information. Monitoring unauthorized use of our products is difficult, and we
cannot be certain that the steps we have taken will prevent misappropriation of
our technology. The laws of some foreign countries do not protect our
proprietary rights to as great an extent as the laws of the United States, and
many United States companies have encountered substantial infringement problems
in these countries, some of which are countries in which we operate.

From time to time, third parties may assert exclusive patent, copyright,
trademark and other intellectual property rights to technologies and may assert
claims or initiate litigation against us or our manufacturers, suppliers or
customers with respect to existing or future products or services. We have not
conducted an exhaustive search of patents issued to others. Because of the
number of patents issued and patent applications filed relating to the
transmission of voice over packet-switched networks, current or potential
customers, competitors and other third parties may have filed, or may file
applications for, or may have received or in the future receive, patents or
obtain additional intellectual property rights relating to materials or
processes that we use or intend to use. If these third-party patents or other
proprietary rights have been or are issued, or are otherwise asserted by third
parties, the holders of these patents or other proprietary rights may bring
infringement claims against us. Furthermore, former employers of our current or
future employees may assert that our employees have improperly disclosed
confidential or proprietary information to us. We may in the future initiate
claims or litigation against third parties for infringement of our proprietary
rights or to determine the scope and validity of our proprietary rights and the
rights of others. Any of these claims, with or without merit, may be
time-consuming, may result in costly litigation, may divert technical and
management personnel, or may require us to develop non-infringing technology,
which may be costly and time consuming. Alternatively, others may claim that we
infringe their intellectual property rights, and we may be required to obtain a
license or royalty agreement from those parties claiming the infringement. We
cannot assure you that any license or royalty agreement would be available. The
terms of any license or royalty agreement that is available may be very
unfavorable to us. In addition, an adverse ruling could result in substantial
damages or the issuance of an injunction against us requiring that we cease
development and withdraw some products and services from the marketplace.
Limitations on our ability to market our products and services, and delays and
costs associated with monetary damages and redesigns in compliance with an
adverse judgment or settlement, could seriously harm our business, prospects,
results of operations and financial condition.

EMPLOYEES

As of September 30, 1999, we had 151 employees: 14 in network and operations, 52
in research and development, 56 in sales and marketing and 29 in finance,
administration and management information systems. Our future performance
depends, in significant part, on our ability to retain existing personnel in key
areas such as engineering, technical support, sales and senior management. The
competition for these individuals in the San Francisco Bay area, and in the
Internet field in particular, is intensely competitive, and we cannot assure you
that we will be able to attract and retain enough qualified employees in the
future. None of our employees is subject to a collective bargaining agreement.
We consider our relationships with our employees to be good.

FACILITIES

We occupy approximately 31,000 square feet of space in Milpitas, California
under a lease that expires in February 2003. We also lease sales and support
offices in France, Malaysia and South Korea. In the event that existing
facilities are not adequate for our needs, we anticipate that additional
facilities will be available on commercially reasonable terms.

47
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

Our executive officers and directors, and their ages and positions as of
September 30, 1999, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- --------
<S> <C> <C>
Roger L. Peirce (1)....................... 58 Chairman

Dr. Hong Chen............................. 36 President, Chief Executive Officer and
Director

Lynn Y. Liu............................... 40 Regional President, Asia Pacific and
Director

Joseph M. Zaelit.......................... 54 Senior Vice President, Finance and
Administration and Chief Financial Officer

Philip M. Sakakihara...................... 56 Senior Vice President, Engineering and
Network Operations

Kristin L. Steinmetz...................... 39 Senior Vice President, Marketing and
Business Development

Christophe J. Culine...................... 35 Regional President, Europe, Americas and
Africa

David L. Teichmann........................ 43 Vice President, General Counsel and
Secretary

Barron B. Cox............................. 46 Vice President, Human Resources

Dr. Ta-Lin Hsu............................ 56 Director

Dr. Yen-Son (Paul) Huang (2).............. 53 Director

Kheng Nam Lee............................. 52 Director

Jozef Lernout............................. 51 Director

Stanley J. Meresman (1) (2)............... 52 Director
</TABLE>

- ---------------------
(1) Member of the audit committee
(2) Member of the compensation committee

ROGER L. PEIRCE has served as our Chairman since July 1999 and as a director
since March 1998. From August 1998 to March 1999, Mr. Peirce was Chairman and
Chief Executive Officer of U.S. Wireless Data, a wireless point-of-sale services
provider. From January 1994 to June 1998, he was Group President of Merchant
Services for First Data Corp., a credit card processing services company. From
1981 to January 1994, he held various positions at VISA International, a credit
card company, most recently as Chief Operating Officer. Mr. Peirce holds a B.A.
degree in Mathematics from San Jose State University.

DR. HONG CHEN, one of our co-founders, has served as our Chief Executive Officer
since our inception in February 1994 and as our President since July 1999. Dr.
Chen also served as Chairman from February 1994 to July 1999 and continues to
serve as a director. From February 1993 to February 1994, Dr. Chen was Senior
Consultant with TRW Financial Systems, a systems integrator. Dr. Chen also
serves as a technical advisory board member for the Industry Technology Research
Institute in Taiwan. Dr. Chen holds a B.S. degree in Computer Science from Xian
Jiaotong University and M.S. and Ph.D degrees in Computer Science from State
University of New York at Stony Brook. Dr. Chen is married to Ms. Liu.

48
<PAGE>
LYNN Y. LIU, one of our co-founders, has served as our Regional President, Asia
Pacific since December 1998 and as a director since our inception in
February 1994. From our inception to November 1998, she was our Chief Operating
Officer and Executive Vice President responsible for product management, network
operations and engineering. From October 1991 to October 1994, she held the
positions of architect and engineering manager at MARCorp, a multimedia library
software company. Ms. Liu holds a B.SA. degree in Library Science from National
Taiwan University and an M.S. degree in Computer Science from State University
of New York at Stony Brook. Ms. Liu is married to Dr. Chen.

JOSEPH M. ZAELIT has served as our Senior Vice President, Finance and
Administration and Chief Financial Officer since January 1999. From June 1994 to
June 1998, he was employed by VeriFone, Inc., a manufacturer of electronic
payment equipment, most recently as Senior Vice President, Finance and
Administration and Chief Financial Officer. From 1973 to 1993, Mr. Zaelit held a
variety of senior financial positions at Hewlett-Packard Company, most recently
as Corporate Treasury Manager. Mr. Zaelit holds a B.S. degree in Accounting and
an M.B.A. degree, each from the University of Utah, and is a Certified Public
Accountant in California.

PHILIP M. SAKAKIHARA has served as our Senior Vice President, Engineering and
Network Operations since December 1998. From December 1995 to November 1998, he
was Vice President, Engineering and Worldwide Support for Prism Solutions, Inc.,
an enterprise software solutions company. From July 1994 to December 1995, he
was Vice President, Engineering for Viewstar Corporation, an enterprise software
solutions company. From May 1972 to July 1994, Mr. Sakakihara held various
senior engineering and management positions with Hewlett-Packard Company,
including General Manager of the Distributed Computing Products Operation.
Mr. Sakakihara holds a B.S. degree in Applied Mathematics from San Jose State
University and an M.S. degree in Applied Mathematics from Santa Clara
University.

KRISTIN L. STEINMETZ has served as our Senior Vice President, Marketing and
Business Development since July 1999. From June 1991 to July 1999, she served in
various positions at AT&T Corporation, a global telecommunications company, most
recently as Vice President of Global Services, Consumer Marketing Vice President
and Director of Strategy and Business Planning. From 1989 to 1991, she held the
position of Senior Management Consultant at Edgar, Dunn and Company, a
consulting firm. Ms. Steinmetz holds a B.A. degree in Zoology from the
University of California at Berkeley and an M.B.A. degree from Cornell
University.

CHRISTOPHE J. CULINE has served as our Regional President, Europe, Americas and
Africa since December 1998. From September 1996 to November 1998, he was our
Vice President, Worldwide Sales. From April 1991 to August 1996, Mr. Culine held
various positions, including Vice President, Worldwide Sales and Vice President,
European Sales, with NCD Software, a wholly-owned subsidiary of NCD Corporation,
an Internet software company. Mr. Culine holds a diploma from EUDIL (the
University of Lille) in France.

DAVID L. TEICHMANN has served as our Vice President, General Counsel and
Secretary since July 1998. From October 1993 to July 1998, he served in various
positions at Sybase, Inc., a software company, including Vice President,
International Law as well as Director of European Legal Affairs based out of
Sybase's Netherlands headquarters. From March 1989 to October 1993,
Mr. Teichmann was Assistant General Counsel handling legal matters in
Asia-Pacific, Japan, Canada and Latin America for Tandem Computers Corporation,
a computer company. Mr. Teichmann holds a B.A. degree in Political Science from
Trinity College, an M.A.L.D. degree in Law & Diplomacy from the Fletcher School
of Law & Diplomacy and a J.D. degree from the University of Hawaii School of
Law.

BARRON B. COX has served as our Vice President of Human Resources since August
1999. From May 1999 to July 1999, Mr. Cox served as our Senior Director of Human
Resources. From September 1997 to April 1999, he was Vice President of Human
Resources at Prism Solutions. From 1993 to

49
<PAGE>

1997, he was Director of Human Resources at Scios, Inc., a biopharmaceutical
company. From 1988 to 1993, Mr. Cox held various positions at Apple Computer's
Enterprise Systems Division, most recently as its Director of Human Resources.
From 1984 to 1988, Mr. Cox served in various human resources positions at
Digital Equipment Corporation. Mr. Cox holds a B.S. degree in Political Science
from Northeastern University.

DR. TA-LIN HSU has served as a director since August 1996. Since 1986, Dr. Hsu
has served as Chairman of H & Q Asia Pacific. Dr. Hsu holds a B.S. degree in
Physics from National Taiwan University and a Ph.D in Electrical Engineering
from the University of California at Berkeley.

DR. YEN-SON (PAUL) HUANG has served as a director since August 1995. Since June
1996, Dr. Huang has served as Chairman and Chief Executive Officer of Novas
Software, Inc., an integrated circuit debugging company. From January 1990 to
May 1996, Dr. Huang was a co-founder and Vice President of Quickturn Design
Systems, an integrated circuit emulation company. Dr. Huang is the author of
Dracula, one of the leading design verification programs of the EDA industry.
Dr. Huang serves on the board of directors of Quickturn Design Systems.
Dr. Huang holds B.S. and M.S. degrees in Electrical Engineering from the
National Chiao-Tung University in Taiwan and a Ph.D degree in Electrical
Engineering from Santa Clara University.

KHENG NAM LEE has served as a director since August 1999. Since 1983, Mr. Lee
has served Vertex Group in several capacities, including as President of Vertex
Management (II) Pte Ltd., a consulting firm, since March 1995. Mr. Lee holds a
B.S. degree in Mechanical Engineering from Queen's University in Canada, an M.S.
degree in Operations Research and System Analysis from the U.S. Naval
Postgraduate School and a degree in Business Administration from the University
of Singapore.

JOZEF LERNOUT has served as a director since April 1999. Mr. Lernout has served
as Co-Chairman and Managing Director of Lernout & Hauspie, a speech recognition
software company, since its inception in December 1987, as President from
January 1994 until November 1996, as Co-Chairman of the Board since
November 1996, as a member of the Office of the Chief Executive since
February 1996 and as Co-Chairman in the Office of Chief Executive since
October 1996. Mr. Lernout holds a B.Sc. degree in Physics from the Vlerick
School in Ghent, Belgium.

STANLEY J. MERESMAN has served as a director since August 1997. From May 1989 to
May 1997, Mr. Meresman was Senior Vice President and Chief Financial Officer of
Silicon Graphics, Inc., a computer manufacturer. Mr. Meresman serves on the
board of directors of Polycom, Inc., a teleconference and video conferencing
equipment company, and a number of private companies. Mr. Meresman holds a B.S.
degree in Industrial Engineering and Operations Research from the University of
California at Berkeley and an M.B.A. degree from Stanford University.

Executive officers are appointed by the board of directors and serve until their
successors are qualified and appointed. Except for Dr. Chen and Ms. Liu, who are
married, there are no family relationships among any of our directors or
executive officers.

BOARD COMPOSITION

We currently have eight directors. Directors are elected by the stockholders at
each annual meeting of stockholders and serve for one year or until their
successors are duly elected and qualified. Our bylaws provide that the
authorized number of directors may be changed by resolution of the board of
directors.

BOARD COMMITTEES

Our board of directors has a compensation committee and an audit committee.

COMPENSATION COMMITTEE. The current members of our compensation committee are
Dr. Huang and Mr. Meresman. The compensation committee reviews and makes
recommendations to our board

50
<PAGE>
concerning salaries and incentive compensation for our officers and employees.
The compensation committee also administers our stock plans.

AUDIT COMMITTEE. The current members of our audit committee are Messrs. Meresman
and Peirce. Our audit committee reviews and monitors our financial statements
and accounting practices, makes recommendations to our board regarding the
selection of independent auditors and reviews the results and scope of the audit
and other services provided by our independent auditors.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of our executive officers currently serves, or has previously served, as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving on our board or compensation
committee. Prior to the creation of our compensation committee, compensation
decisions with respect to officers and directors and with respect to option
grants to employees were made by our full board.

DIRECTOR COMPENSATION

Mr. Peirce's offer letter, dated July 22, 1999, provides for an annual salary of
$50,000 and a grant of a stock option to purchase 17,857 shares. The option
vests at a rate of 8.3% per month over the next 12 months and will be fully
vested on July 19, 2000.

Each non-employee director who is a member of our board on the date of this
prospectus or becomes a member of our board after that date will be granted an
option to purchase 10,000 shares under our 1999 Equity Incentive Plan, unless
that director has received an option grant before the effective date.
Immediately following each annual meeting of our stockholders, each eligible
director will automatically be granted an additional option to purchase 7,500
shares under the plan if the director has served continuously as a member of the
board for at least one year. Each of these options will have a ten-year term and
will terminate three months following the date the director ceases to be one of
our directors or consultants or 12 months if the termination is due to death or
disability. All options granted under the plan will be immediately exercisable.
For initial grants, we will have a right to repurchase the option shares subject
to the option at the exercise price. This option will expire as to 20% of the
shares 10 months after the date of grant and as to the remainder in equal
monthly installments over the next 40 months. Grants subsequent to the initial
grant to directors will also be subject to repurchase. For these grants, our
right to repurchase the shares will lapse in equal installments over 50 months.

EXECUTIVE COMPENSATION

The following table shows compensation awarded to, earned by or paid for
services rendered to GRIC in all capacities during 1998 by our Chief Executive
Officer and each of our other executive officers whose salary and bonus for 1998
was more than $100,000.

51
<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------
NAME AND PRINCIPAL POSITIONS SALARY BONUS
- ---------------------------- -------- ----------
<S> <C> <C>
Dr. Hong Chen............................................... $180,551 --
Chairman and Chief Executive Officer

Christophe J. Culine........................................ 207,322 --
Regional President, Europe, Americas and Africa

Lynn Y. Liu................................................. 160,490 --
Regional President, Asia Pacific

Thomas Oswold............................................... 197,856 --
Former Senior Vice President, Finance and Chief Financial
Officer
</TABLE>

Mr. Oswold's employment with us terminated as of April 1999.

Philip M. Sakakihara, our Senior Vice President, Engineering and Network
Operations, was compensated at an annual rate of $200,000 in 1998.

David L. Teichmann, our Vice President, General Counsel and Secretary, was
compensated at an annual rate of $160,000 in 1998.

OPTION GRANTS IN 1998

We did not grant any stock options in 1998 to any of the officers named in the
summary compensation table above. Mr. Sakakihara was granted options to purchase
178,571 shares at an exercise price of $2.80 per share in 1998.
Mr. Sakakihara's options represented 12.9% of the total options granted to our
employees in 1998. Mr. Teichmann was granted options to purchase 35,714 shares
at an exercise price of $2.80 per share in 1998. Mr. Teichmann's options
represented 2.6% of the total options granted to our employees in 1998.

OPTION VALUES AT DECEMBER 31, 1998

No officer named in the summary compensation table above exercised an option in
1998. The following provides information concerning unexercised options held by
these officers as of this date that are "in-the-money", meaning that the assumed
initial public offering price of $11.00 per share exceeds the exercise price per
share. In the following table, the heading "vested" refers to the number of
shares as to which the option can be exercised.

<TABLE>
<CAPTION>
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 31, 1998 AT DECEMBER 31, 1998
------------------- ---------------------
NAME VESTED UNVESTED VESTED UNVESTED
- ---- -------- -------- --------- ---------
<S> <C> <C> <C> <C>
Dr. Hong Chen.......................................... -- -- $ -- $ --
Christophe J. Culine................................... 40,178 31,250 430,708 335,000
Lynn Y. Liu............................................ -- -- -- --
Thomas Oswold.......................................... 18,571 52,857 162,682 463,027
</TABLE>

Upon the termination of Mr. Oswold's employment with us in April 1999, all of
his unvested options were returned to our available option pool.

52
<PAGE>
EMPLOYEE BENEFIT PLANS

1995 STOCK OPTION PLAN. As of September 30, 1999, options to purchase 184,166
shares of common stock were outstanding under the 1995 Stock Option Plan and
options to purchase 304,181 shares had been exercised, of which 15,290 shares
remained subject to our repurchase right. No additional options will be granted
under this plan. Options granted under plan are subject to terms substantially
similar to those described below with respect to options granted under the 1999
Equity Incentive Plan.

1997 STOCK OPTION PLAN. As of September 30, 1999, options to purchase 1,867,693
shares of common stock were outstanding under the 1997 Stock Option Plan and
options to purchase 118,494 shares had been exercised, of which 56,001 shares
remained subject to our right of repurchase. No additional options will be
granted under this plan. Options granted under the plan are subject to terms
substantially similar to those described below with respect to options granted
under the 1999 Equity Incentive Plan.

1999 EQUITY INCENTIVE PLAN. In September 1999, the board adopted, subject to
stockholder approval, the 1999 Equity Incentive Plan and reserved 4,500,000
shares of common stock to be issued under this plan. On each January 1,
beginning in 2001, the aggregate number of shares reserved for issuance under
this plan will automatically increase by a number of shares equal to 5% of our
outstanding shares on December 31 of the preceding year. In addition, 692,385
shares under the 1995 Stock Option Plan and the 1997 Stock Option Plan not
issued on the date of this prospectus and any shares issued under these plans
that are forfeited or repurchased by us or that are issuable upon exercise of
options that expire or become unexercisable for any reason without having been
exercised in full will be available for grant and issuance under the Equity
Incentive Plan. In addition, shares will again be available for grant and
issuance under the Equity Incentive Plan that:

- are subject to issuance upon exercise of an option granted under the equity
incentive plan and that cease to be subject to the option for any reason
other than exercise of the option;

- have been issued upon the exercise of an option granted under the equity
incentive plan that are subsequently forfeited or repurchased by us at the
original purchase price;

- are subject to an award granted pursuant to a restricted stock purchase
agreement under the equity incentive plan that are subsequently forfeited or
repurchased by us at the original issue price; or

- are subject to stock bonuses granted under the equity incentive plan that
terminate without shares being issued.

This plan will become effective on the consummation of this offering and will
terminate after ten years, unless it is terminated earlier by our board. The
plan authorizes the award of options, restricted stock awards and stock bonuses.
No person will be eligible to receive more than 3,000,000 shares in any calendar
year under the plan.

The plan will be administered by our compensation committee, all of the members
of which are "non-employee directors" under applicable federal securities laws
and "outside directors" as defined under applicable federal tax laws. The
compensation committee will have the authority to construe and interpret the
plan, grant awards and make all other determinations necessary or advisable for
the administration of the plan. Also, our non-employee directors are entitled to
receive automatic annual grants of fully vested options to purchase shares of
our common stock, as described under "Director Compensation."

The plan provides for the grant of both incentive stock options that qualify
under Section 422 of the Internal Revenue Code and nonqualified stock options.
Incentive stock options may be granted only to our employees or employees of our
parent or subsidiary, if any. All awards other than incentive stock options may
be granted to employees, officers, directors, consultants, independent
contractors and advisors of ours or of our parent or subsidiary, if any,
provided the consultants, independent

53
<PAGE>

contractors and advisors render bona fide services not in connection with the
offer and sale of securities in a capital-raising transaction. The exercise
price of incentive stock options must be at least equal to the fair market value
of our common stock on the date of grant. The exercise price of incentive stock
options granted to 10% stockholders must be at least equal to 110% of that
value, and the exercise price of nonqualified stock options must be at least
equal to 85% of that value.

Options may either be exercisable only as they vest or be immediately
exercisable with the shares issued subject to our right of repurchase that
lapses as the shares vest. In general, options will vest over a 50-month period.
The maximum term of options granted under the plan is ten years.

Awards granted under the plan may not be transferred in any manner other than by
will or by the laws of descent and distribution. They may be exercised during
the lifetime of the optionee only by the optionee. The compensation committee
could determine otherwise and provide for these provisions in the award
agreement, but only with respect to awards that are not incentive stock options.
Options granted under the plan generally may be exercised for a period of time
after the termination of the optionee's service to us or to our parent or
subsidiary, if any. Options will generally terminate immediately upon
termination of employment for cause.

The purchase price for restricted stock will be determined by our compensation
committee. Stock bonuses may be issued for past services or may be awarded upon
the completion of certain services or performance goals.

If we are dissolved or liquidated or have a "change in control" transaction,
outstanding awards may be assumed or substituted by the successor corporation,
if any. In the discretion of the compensation committee, the vesting of these
awards may accelerate upon one of these transactions.

1999 EMPLOYEE STOCK PURCHASE PLAN. In September 1999, the board adopted, subject
to stockholder approval, the 1999 Employee Stock Purchase Plan and reserved
500,000 shares for issuance under this plan. On each January 1, the aggregate
number of shares reserved for issuance under this plan will automatically
increase by a number of shares equal to 1% of our outstanding shares on
December 31 of the preceding year. The plan will be administered by our
compensation committee, which will have the authority to construe and interpret
the plan.

Employees generally will be eligible to participate in the plan if they are
employed ten days before the beginning of an offering period and they are
customarily employed by us, or our parent or any subsidiaries that we designate,
for more than 20 hours per week and more than five months in a calendar year and
are not, and would not become as a result of being granted an option under the
plan, 5% stockholders of us or any designated parent or subsidiary.

Under the plan, eligible employees will be permitted to acquire shares of our
common stock through payroll deductions. Eligible employees will select a rate
of payroll deduction between 2% and 15% of their compensation and be subject to
maximum purchase limitations. Participation in the plan will end automatically
upon termination of employment for any reason.

Each offering period under the plan will be for two years and consist of four
six-month purchase periods. The first offering period is expected to begin on
the first business day on which price quotations for our common stock are
available on the Nasdaq National Market. Offering periods and purchase periods
will begin on February 1 and August 1 of each year. However, because the first
day on which price quotations for our common stock will be available on the
Nasdaq National Market may not be February 1 and August 1, the length of the
first offering period may be more or less than two years, and the length of the
first purchase period may be more or less than six months.

The plan provides that, in the event of our proposed dissolution or liquidation,
each offering period that commenced prior to the closing of the proposed event
will terminate immediately prior to the consummation of such proposed event,
provided that the compensation committee may fix a different date for
termination of the plan. The purchase price for our common stock purchased under
the plan will be 85% of the lesser of the fair market value of our common stock
on the first day of the

54
<PAGE>

applicable offering period or the last day of the applicable purchase period.
The compensation committee will have the power to change the duration of
offering periods without stockholder approval, if the change is announced at
least 15 days prior to the beginning of the affected offering period.

The plan is intended to qualify as an "employee stock purchase plan" under
Section 423 of the Internal Revenue Code. Rights granted under the plan will not
be transferable by a participant other than by will or the laws of descent and
distribution.

The plan will terminate ten years from its inception, unless it is terminated
earlier under the terms of the plan. The board will have the authority to amend,
terminate or extend the term of the plan, except that no action may adversely
affect any options previously granted under the plan. Except for the automatic
annual increase of shares described above, stockholder approval is required to
increase the number of shares that may be issued or to change the terms of
eligibility under the plan. The board may make amendments to the plan that it
determines to be advisable if the financial accounting treatment for the plan is
different from the financial accounting treatment in effect on the date the plan
was adopted by the board.

401(k) Plan. We sponsor a defined contribution plan intended to qualify under
Section 401(k) of the Internal Revenue Code. Employees are generally eligible to
participate and may enter the plan as of the first day of each calendar quarter.
Participants may make pre-tax contributions to the plan up to the statutorily
prescribed annual limit. Each participant is fully vested in his or her
contributions and the investment earnings. Contributions to the plan by the
participants or by us, and the income earned on these contributions, are
generally not taxable to the participants until withdrawn. Contributions by us,
if any, are generally deductible by us when made. Participant and company
contributions are held in trust as required by law. Individual participants may
direct the trustee to invest their accounts in authorized investment
alternatives.

EMPLOYMENT AGREEMENTS

On March 1, 1994, we entered into an employment agreement with Dr. Hong Chen.
The employment agreement provides that Dr. Chen will receive a salary and
additional compensation such as a bonus or stock options as determined by our
board.

On March 1, 1994, we entered into an employment agreement with Lynn Y. Liu. The
employment agreement provides that Ms. Liu will receive a salary and additional
compensation such as a bonus or stock options as determined by our board.

OFFER LETTERS AND SEVERANCE AND CHANGE OF CONTROL AGREEMENTS

Mr. Zaelit's offer letter, dated January 15, 1999, provides for an initial
annual salary of $190,000 and an annual bonus of up to 25% of his annual salary.
Mr. Zaelit also received options to purchase 160,713 shares of our common stock,
of which options to purchase 32,142 shares will vest in November 1999 and
options to purchase 3,214 shares will vest monthly thereafter. Mr. Zaelit also
has the right to receive options to purchase an additional 53,571 shares of our
common stock that will be granted upon the fulfillment of certain objectives. In
the event we are acquired and Mr. Zaelit's employment is terminated without
cause, the outstanding options will become fully vested. If Mr. Zaelit's
employment is terminated without cause, he will receive a severance payment
equivalent to six months' base salary. If Mr. Zaelit's employment is terminated
with cause and the termination is not due to a violation of state or federal
law, he will receive a severance payment equivalent to three months' base
salary. If Mr. Zaelit's employment is terminated without cause within the first
ten months of his employment date we will immediately vest the portion of the
stock options that would have vested in November 1999, at the same price and
terms, except in the event we engage in a change of control transaction.
Mr. Zaelit's employment is at will and may be terminated at any time, with or
without cause.

55
<PAGE>

Mr. Sakakihara's offer letter, dated October 15, 1998, provides for an initial
annual salary of $200,000 and an annual bonus of up to 30% of his annual salary.
Mr. Sakakihara received options to purchase 124,999 shares of common stock, of
which options to purchase 25,000 shares vested in September 1999 and options to
purchase 2,500 shares vest monthly thereafter. In the event we are acquired,
one-half of the then unvested options will become fully vested. If
Mr. Sakakihara's employment is terminated without cause, he will receive a
severance payment equivalent to six months' base salary. If Mr. Sakakihara's
employment is terminated with cause and the termination is not due to a
violation of state or federal law, he will receive a severance payment
equivalent to three months' base salary. Mr. Sakakihara's employment is at will
and may be terminated at any time, with or without cause.

Mr. Culine's offer letter, dated August 21, 1996, provides for an initial annual
salary of $100,000. The letter provides for additional annual compensation of
$100,000 to be mutually agreed upon. Mr. Culine received options to purchase
71,428 shares of common stock, which vest over a four-year period. In the event
we are acquired and Mr. Culine's employment is terminated, 50% of the then
unvested options will become fully vested. In addition, if Mr. Culine's
employment is terminated, he will receive a severance payment equivalent to
three months' base salary. Mr. Culine's employment is at will and may be
terminated by either party with two weeks' notice.

Ms. Steinmetz's offer letter, dated July 28, 1999, provides for an initial
annual salary of $192,310 per year and a one-time sign-on bonus of $50,000.
Ms. Steinmetz received options to purchase 124,999 shares of common stock, of
which options to purchase 25,000 shares will vest in May 2000 and options to
purchase 2,500 shares will vest monthly thereafter. In the event we are acquired
and Ms. Steinmetz's employment is terminated without cause, the options will
become fully vested. If Ms. Steinmetz's employment is terminated without cause,
she will receive a severance payment equivalent to six months' base salary. If
Ms. Steinmetz's employment is terminated with cause and the termination is not
due to a violation of state or federal law, she will receive a severance payment
equivalent to six months' base salary. Ms. Steinmetz's employment is at will and
may be terminated at any time, with or without cause.

Mr. Teichmann's offer letter, dated June 8, 1998, provides for an initial annual
salary of $160,000 and an annual bonus of up to $30,000. Mr. Teichmann received
options to purchase 35,714 shares of common stock, of which options to purchase
7,142 shares vested in July 1999 and options to purchase 714 shares vest monthly
thereafter. In the event we are acquired, the options will become fully vested.
In the event we are acquired and Mr. Teichmann's employment is terminated, Mr.
Teichmann will receive a severance payment equivalent to six months' base salary
and bonuses. If Mr. Teichmann's employment is terminated without cause, he will
receive a severance payment equivalent to three months' base salary and bonuses.
Mr. Teichmann's employment is at will and may be terminated at any time, with or
without cause.

Mr. Cox's offer letter, dated May 11, 1999, provides for an initial annual
salary of $140,000 and an annual bonus of up to 20% of his annual salary. Mr.
Cox received options to purchase 30,357 shares of common stock, of which options
to purchase 6,071 shares will vest in March 2000 and options to purchase 607
shares will vest monthly thereafter. In the event that we are acquired and
Mr. Cox's employment is terminated, the options will become fully vested. If
Mr. Cox's employment is terminated without cause, he will receive a severance
payment equivalent to three months' base salary. If Mr. Cox's employment is
terminated with cause and the termination is not due to a violation of state or
federal law, he will receive a severance payment equivalent to three months'
base salary. Mr. Cox's employment is at will and may be terminated at any time,
with or without cause.

56
<PAGE>
INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION OF LIABILITY

Our certificate of incorporation that will be effective upon the completion of
this offering includes a provision that eliminates the personal liability of our
directors for monetary damages resulting from breach of fiduciary duty as a
director, except for liability:

- for any breach of the director's duty of loyalty to us or our stockholders;

- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;

- under Section 174 of the Delaware General Corporation Law (regarding
unlawful dividends and stock purchases); or

- for any transaction from which the director derived an improper personal
benefit.

Our bylaws that will be effective upon the completion of this offering provide
that:

- we must indemnify our directors and officers to the fullest extent permitted
by Delaware law, subject to limited exceptions;

- we may indemnify our other employees and agents to the same extent that we
indemnify our directors and officers, unless otherwise required by law, our
certificate of incorporation or agreements;

- we must advance expenses, as incurred, to our directors and officers in
connection with a legal proceeding to the fullest extent permitted by
Delaware law, subject to limited exceptions;

- the rights conferred in the bylaws are not exclusive; and

- we may not retroactively amend the bylaws' provisions relating to indemnity.

Prior to the completion of this offering, we intend to enter into
indemnification agreements with each of our current directors and executive
officers to give them additional contractual assurances regarding the scope of
the indemnification provided in our certificate of incorporation and bylaws and
to provide additional procedural protections.

We maintain liability insurance for our directors and officers and expect to
obtain additional coverage for securities matters.

The above items limiting the liability of our directors may discourage
stockholders from bringing a lawsuit against our directors for breach of their
fiduciary duty. They may also reduce the likelihood of derivative litigation
against directors and officers, even though an action, if successful, might
benefit us and other stockholders. Furthermore, a stockholder's investment may
be adversely affected to the extent we pay the costs of settlement for and
damage awards against directors and officers as required by these items.

Presently, there is no pending litigation or proceeding involving any of our
directors, executive officers or employees for which indemnification is sought,
nor are we aware of any threatened litigation that may result in claims for
indemnification.

57
<PAGE>

RELATED PARTY TRANSACTIONS

Other than the employment agreements, offer letters and severance and change of
control agreements described in "Management," and the transactions described
below, since January 1, 1996 there has not been nor is there currently proposed,
any transaction or series of similar transactions to which we were or will be a
party:

- in which the amount involved exceeded or will exceed $60,000; and

- in which any director, executive officer, holder of more than 5% of our
common stock or any member of their immediate family had or will have a
direct or indirect material interest.

SERIES D PREFERRED STOCK AND BRIDGE FINANCINGS

Between December 1997 and June 1999, we sold an aggregate of 5,460,745 shares of
Series D Preferred Stock at an effective purchase price of $7.00 per share, as
adjusted by subsequent repricing amendments. Between September 1998 and March
1999, in connection with our bridge financings, we issued warrants to purchase
an aggregate of 223,206 shares of our Series D Preferred Stock at a purchase
price of $7.00 per share as adjusted by subsequent repricing amendments. See
Note 4 of notes to consolidated financial statements.

The following directors, executive officers and holders of more than 5% of our
common stock participated in our preferred stock and bridge financings. Share
numbers reflect the number of shares of common stock into which the preferred
stock or warrants are convertible.

<TABLE>
<CAPTION>
SERIES D WARRANT
STOCKHOLDER SHARES SHARES
- ----------- -------- --------
<S> <C> <C>
Vertex Investment (II) Ltd.................................. 71,428 --
Vertex Technology Fund Ltd.................................. 588,241 100,000
SingTel Ventures (Cayman) Pte. Ltd.......................... 932,473 21,428
L&H Investment Company N.V.................................. 525,908 26,071
Asia Pacific Growth Fund II L.P............................. 142,856 --
Dr. Yen-Son (Paul) Huang.................................... 29,193 2,857
</TABLE>

Kheng Nam Lee, a director, is the President of Vertex Investment (II) Ltd. and
Vertex Technology Fund Ltd. Jozef Lernout, a director, is the Co-Chairman and
Managing Director of L&H Investment Company N.V. Dr. Ta-Lin Hsu, a director, is
a member of H&Q Asia Pacific II LLC, the general partner of Asia Pacific Growth
Fund II L.P.

SINGAPORE TELECOMMUNICATIONS LTD. AGREEMENT

In August 1999, we entered into an agreement with Singapore
Telecommunications Ltd. SingTel Ventures (Cayman) Pte. Ltd., a subsidiary of
Singapore Telecommunications Ltd., is the holder of more than 5% of our common
stock. Under this agreement, we provide GRIC CSP settlement services in exchange
for licensing, maintenance, settlement and training and professional fees. The
term of this agreement is two years and is automatically renewed on an annual
basis unless sooner terminated for breach.

EMPLOYMENT AGREEMENTS AND OFFER LETTERS

Several of our officers have entered into employment agreements with us or
accepted offer letters from us. See "Management--Employment Agreements" and
"Management--Offer Letters and Severance and Change of Control Agreements."

58
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table presents information as to the beneficial ownership of our
common stock as of September 30, 1999 and as adjusted to reflect the sale of the
common stock in this offering by:

- each stockholder known by us to be the beneficial owner of more than 5% of
our common stock;

- each of our directors;

- each of our executive officers; and

- all executive officers and directors as a group.

Beneficial ownership is determined under the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. Unless indicated below, to our knowledge, the persons and
entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable. Shares of common stock subject to options and warrants that
are currently exercisable or exercisable within 60 days of September 30, 1999
are deemed to be outstanding and to be beneficially owned by the person holding
the options or warrants for the purpose of computing the percentage ownership of
such person but are not treated as outstanding for the purpose of computing the
percentage ownership of any other person. Unless indicated below, the address
for each listed stockholder is c/o GRIC Communications, Inc., 1421 McCarthy
Boulevard, Milpitas, California 95035.

The number of shares of common stock outstanding after this offering includes
the shares of common stock being offered under this prospectus but does not
include the shares that are subject to the underwriters' over-allotment option.
The percentage of common stock outstanding as of September 30, 1999 is based on
12,900,105 shares of common stock outstanding on that date.

<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES OUTSTANDING
SHARES -------------------
BENEFICIALLY BEFORE AFTER
NAME OF BENEFICIAL OWNER OWNED OFFERING OFFERING
- ------------------------ ------------ -------- --------
<S> <C> <C> <C>
Kheng Nam Lee (1)........................................... 2,634,668 20.4% 14.9%
Dr. Hong Chen (2)........................................... 1,242,857 9.6 7.0
SingTel Ventures (Cayman) Pte. Ltd. (3)..................... 953,901 7.4 5.4
Dr. Ta-Lin Hsu (4).......................................... 696,428 5.4 3.9
Jozef Lernout (5)........................................... 551,979 4.3 3.1
Lynn Y. Liu (6)............................................. 535,714 4.2 3.0
Dr. Yen-Son (Paul) Huang (7)................................ 233,834 1.8 1.3
Roger L. Peirce (8)......................................... 82,142 * *
Stanley J. Meresman (9)..................................... 64,285 * *
Christophe J. Culine (10)................................... 62,680 * *
Philip M. Sakakihara (10)................................... 43,034 * *
Joseph M. Zaelit (10)....................................... 35,892 * *
David L. Teichmann (10)..................................... 13,928 * *
Barron B. Cox (10).......................................... 856 * *
Kristin L. Steinmetz........................................ -- -- --
All 14 directors and executive officers as a group (11)..... 6,198,297 48.0% 35.0%
</TABLE>

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

* Represents less than 1% of our outstanding common stock.

(1) Represents 1,946,427 shares held of record by Vertex Investment (II) Ltd.
and 588,241 shares and immediately exercisable warrants to purchase 100,000
shares held of record by Vertex Technology Fund Ltd. Mr. Lee is the
President of these entities. Mr. Lee disclaims beneficial

59
<PAGE>

ownership of the shares held by these entities, except to the extent he has
a pecuniary interest in these entities. The address of these entities is 77
Science Park Drive, #02-15 Cintech III, Singapore Science Park, Singapore
118256.

(2) Does not include 535,714 shares held by Dr. Chen's spouse, Lynn Y. Liu.

(3) Represents 932,473 shares and immediately exercisable warrants to purchase
21,428 shares. The address of SingTel Ventures (Cayman) Pte. Ltd. is 31
Exeter Road, Comcentre, Singapore, 239732.

(4) Represents 696,428 shares held by Asia Pacific Growth Fund II L.P. Dr. Hsu
is a member of H&Q Asia Pacific II LLC, the General Partner of Asia Pacific
Growth Fund II L.P.

(5) Represents 525,908 shares and immediately exercisable warrants to purchase
26,071 shares held of record by L&H Investment Company, N.V., of which
Mr. Lernout is Co-chairman and Managing Director. Mr. Lernout disclaims
beneficial ownership of these shares.

(6) Does not include 1,242,857 shares held by Ms. Liu's spouse, Dr. Hong Chen.

(7) Includes 94,642 shares held of record by The Huang Revocable Living Trust
dated February 7, 1996, of which Mr. Huang is a trustee. Also includes
immediately exercisable warrants to purchase 2,857 shares held of record by
Mr. Huang.

(8) Represents shares subject to options currently exercisable.

(9) Includes 10,714 shares held of record by Stanley J. Meresman and Sharon A.
Meresman, Trustees of the Meresman Family Trust U/D/T dated September 19,
1989, as amended, of which Mr. Meresman is a trustee. Also includes 25,000
shares held of record by Mr. Meresman, and 28,571 shares subject to options
currently exercisable.

(10) Represents shares subject to options exercisable within 60 days of
September 30, 1999.

(11) Includes 156,390 shares subject to options exercisable within 60 days of
September 30, 1999, and immediately exercisable warrants to purchase
128,928 shares.

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<PAGE>
DESCRIPTION OF CAPITAL STOCK

Immediately following the closing of this offering, our authorized capital stock
will consist of 50,000,000 shares of common stock, $0.001 par value per share,
and 5,000,000 shares of preferred stock, $0.001 par value per share.

Prior to the effectiveness of this offering, we will reincorporate in the State
of Delaware. Following the closing of this offering, we intend to amend and
restate our certificate of incorporation. Our certificate of incorporation,
bylaws and fourth amended and restated registration rights agreement, described
below, are included as exhibits to the registration statement of which this
prospectus forms a part.

COMMON STOCK

As of September 30, 1999, 2,226,251 shares of common stock were outstanding and
held of record by approximately 69 stockholders.

DIVIDEND RIGHTS. Subject to preferences that may apply to shares of preferred
stock outstanding at the time, the holders of outstanding shares of common stock
are entitled to receive dividends out of assets legally available at the times
and in the amounts that our board may from time to time determine.

VOTING RIGHTS. Each common stockholder is entitled to one vote for each share of
common stock held on all matters submitted to a vote of stockholders. Cumulative
voting for the election of directors is not provided for in our certificate of
incorporation, which means that the holders of a majority of the shares voted
can elect all of the directors then standing for election.

NO PREEMPTIVE OR SIMILAR RIGHTS. The common stock is not entitled to preemptive
rights and is not subject to conversion or redemption.

RIGHT TO RECEIVE LIQUIDATION DISTRIBUTIONS. Upon a liquidation, dissolution or
winding-up of our company, the assets legally available for distribution to
stockholders would be distributable ratably among the holders of the common
stock and any participating preferred stock outstanding at that time after
payment of liquidation preferences, if any, on any outstanding preferred stock
and payment of other claims of creditors.

PREFERRED STOCK

Upon the closing of this offering, each outstanding share of preferred stock
will be converted into one share of common stock. See Note 7 of notes to
consolidated financial statements for a description of this preferred stock.

Following this offering, our board will be authorized, subject to the limits
imposed by Delaware law, to issue preferred stock in one or more series, to
establish from time to time the number of shares to be included in each series,
to fix the rights, preferences and privileges of the shares of each wholly
unissued series and any of its qualifications, limitations or restrictions. The
board will also be able to increase or decrease the number of shares of any
series, but not below the number of shares of that series then outstanding,
without any further vote or action by the stockholders.

The board will be able to authorize the issuance of preferred stock with voting
or conversion rights that could adversely affect the voting power or other
rights of the holders of the common stock. The issuance of preferred stock,
while providing flexibility in connection with possible acquisitions and other
corporate purposes, could, among other things, have the effect of delaying,
deferring or preventing a change in control and might adversely affect the
market price of our common stock and the voting and other rights of the holders
of common stock. We have no current plan to issue any shares of preferred stock.

61
<PAGE>
WARRANTS

As of September 30, 1999, we had outstanding warrants to purchase:

- 102,699 shares of common stock at an exercise price of $7.00 per share,
which will expire on the earlier of November 11, 2003 or the first
anniversary of the date on which the roaming agreement with the holder is
terminated;

- 223,206 shares of Series D Preferred Stock at an exercise price of $7.00,
which will terminate on the closing of this offering if they are not
exercised;

- 17,724 shares of Series D Preferred Stock at an exercise price of $11.20 per
share, which will expire in November 2003; and

- 11,785 shares of Series D Preferred Stock at an exercise price of $7.00
which will expire as to 1,785 shares in December 2003 and as to 10,000
shares on the fifth anniversary of the completion of this offering.

REGISTRATION RIGHTS

The holders of 12,682,773 shares of common stock will have the right to require
us to register their shares with the Securities and Exchange Commission so that
those shares may be publicly resold or to include their shares in any
registration statement we file.

RIGHT TO DEMAND REGISTRATION. At any time six months after this offering, these
stockholders can request that we file a registration statement so they can
publicly sell their shares. The underwriters of any underwritten offering will
have the right to limit the number of shares to be included in that registration
statement.

WHO MAY MAKE A DEMAND. America Online initially will be able to require that we
file a registration statement on a form other than Form S-3. After we are
eligible to use Form S-3, America Online can only require that we file a
registration statement on a form other than Form S-3 if the anticipated offering
price per share exceeds $5.00. America Online also can require that we file a
registration statement on Form S-3 if the reasonably anticipated offering price
exceeds $500,000.

Holders of registrable shares may request a registration of their shares in an
offering in which the anticipated offering price per share exceeds $5.00.
Holders that will register shares in an offering in which the reasonably
anticipated aggregate offering price exceeds $500,000, or holders of at least
20% of the shares, can require that we file a registration statement on a Form
S-3. If the anticipated offering price exceeds $10,000,000, holders of at least
20% of the shares can require that we file a registration statement on a form
other than a Form S-3.

NUMBER OF TIMES HOLDERS CAN MAKE DEMANDS. We can be required to file up to two
registration statements on a form other than a Form S-3 for America Online and
up to five total registration statements, excluding any registration statements
that are filed at the request of Dr. Chen, Ms. Liu and their affiliated
entities. However, we cannot be required to file more than one registration
statement during any six-month period.

POSTPONEMENT. We have the ability to postpone the filing of a registration
statement for up to 120 days on one occasion before we comply with a request to
file a registration statement if we determine that the filing would be seriously
detrimental to us or our stockholders.

PIGGYBACK REGISTRATION RIGHTS. If we register any securities for public sale,
the stockholders with the registration rights described above will have the
right to include their shares in the registration statement. We have the right
to limit the number of shares to be so included in a registration statement to a
maximum of 70% of the total value of the securities to be registered.

EXPENSES OF REGISTRATION. We will pay for the expenses relating to any demand or
piggyback registration. However, we will not pay for any expenses of any demand
registration if the request is subsequently withdrawn by the holders of a
majority of the shares having registration rights, subject to certain limited
exceptions.

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<PAGE>
EXPIRATION OF REGISTRATION RIGHTS. The registration rights described above will
expire on December 31, 2009. The registration rights will terminate earlier with
respect to a particular stockholder if that holder owns less than 1% of our
outstanding securities or can resell all of its securities in a three month
period under Rule 144 of the Securities Act and we are subject to the reporting
requirements of the Securities Exchange Act of 1934.

ANTI-TAKEOVER PROVISIONS

The provisions of Delaware law, our amended and restated certificate of
incorporation and our bylaws described below may have the effect of delaying,
deferring or preventing a change in control of our company or changes in
management.

DELAWARE LAW

We are subject to the provisions of Section 203 of the Delaware General
Corporation Law regulating corporate takeovers. This section prevents certain
Delaware corporations from engaging, under limited circumstances, in a "business
combination," which includes a merger or sale of more than 10% of the
corporation's assets, with any "interested stockholder," or a stockholder who
owns 15% or more of the corporation's outstanding voting stock, as well as
affiliates and associates of any such stockholder, for three years following the
date that the stockholder became an "interested stockholder" unless:

- the transaction is approved by the board prior to the date the "interested
stockholder" attained that status;

- upon the closing of the transaction that resulted in the stockholder's
becoming an "interested stockholder," the "interested stockholder" owned at
least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced; or

- on or subsequent to that date the "business combination" is approved by the
board and authorized at an annual or special meeting of stockholders by at
least two-thirds of the outstanding voting stock that is not owned by the
"interested stockholder."

A Delaware corporation may "opt out" of this provision with an express provision
in its original certificate of incorporation or an express provision in its
certificate of incorporation or bylaws resulting from a stockholders' amendment
approved by at least a majority of the outstanding voting shares. However, we
have not "opted out" of this provision. Section 203 could prohibit or delay
mergers or other takeover or change-in-control attempts and, accordingly, might
discourage attempts to acquire us.

CHARTER AND BYLAW PROVISIONS

Our bylaws provide that any action required or permitted to be taken by our
stockholders at an annual meeting or a special meeting of the stockholders may
only be taken if it is properly brought before the meeting. Thus, our
stockholders may only take actions at a stockholders meeting and may not take
any action by written consent. Our bylaws and certificate of incorporation
provide that special meetings of the stockholders may only be called by our
board, the chairman of our board, our chief executive officer or our president.

Our certificate of incorporation provides that our board of directors may issue
preferred stock with voting or other rights without stockholder action. This
provision may have the effect of delaying, deferring or preventing a takeover
attempt.

Our bylaws provide that we will indemnify officers and directors against losses
that they may incur in investigations and legal proceedings resulting from their
services to us, which may include services in connection with takeover defense
measures. These provisions may have the effect of preventing changes in our
management.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is Equiserve LLC.

LISTING

We have applied for our common stock to be quoted on The Nasdaq National Market
under the symbol "GRIC."

63
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of our common stock, including sales of shares
issued upon exercise of outstanding warrants or options, in the public market
after this offering could adversely affect market prices prevailing from time to
time and could impair our ability to raise capital through the sale of our
equity securities. No shares currently outstanding will be available for sale
immediately after this offering due to contractual restrictions on resale.
However, sales of substantial amounts of our common stock in the public market
after these restrictions lapse could adversely affect the prevailing market
price and our ability to raise equity capital in the future.

Upon completion of this offering, based on shares outstanding at September 30,
1999, we will have outstanding 17,723,311 shares of common stock. Of these
shares, the 4,600,000 shares sold in this offering will be freely tradable
without restriction under the Securities Act unless purchased by our
"affiliates."

The remaining shares will become eligible for public sale as follows:

<TABLE>
<CAPTION>
APPROXIMATE NUMBER OF
ADDITIONAL SHARES THAT
DATE MAY BE SOLD COMMENT
- ---- ---------------------- ----------------------------------------
<S> <C> <C>
Date of this prospectus 0 Freely tradable shares.

181 days after the date of this 12,277,294 Underwriters' lock-up released. These
prospectus shares may be sold under Rules 144,
144(k) or 701.

Various times thereafter 846,017 Restricted securities held for at least
one year may be sold under Rule 144.
</TABLE>

In addition, 600,240 shares that were issued to Nokia Holdings, Inc. on
November , 1999 may be sold under Rule 144 beginning on November , 2000.

LOCK-UP AGREEMENTS

All of our officers and directors and substantially all of our shareholders have
signed lock-up agreements under which they agreed not to sell, dispose of, loan,
pledge or grant any rights with respect to any shares of common stock or any
securities convertible into or exercisable or exchangeable for shares of common
stock without the prior written consent of CIBC World Markets for a period of
180 days after the date of this prospectus.

CIBC World Markets may choose to release some of these shares from these
restrictions prior to the expiration of this 180-day period, although it has no
current intention to do so.

RIGHT OF REPURCHASE

Directors who are granted options under our option plans may immediately
exercise such options and acquire the total number of shares of common stock
subject to such options. We have a right of repurchase on shares of common stock
acquired by such directors to the extent that the number of shares acquired
exceeds the number of shares that have vested.

RULE 144

In general, under Rule 144 as currently in effect, beginning 90 days after the
date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of:

- 1% of the number of shares of common stock then outstanding, which will
equal approximately 17,700 shares immediately after this offering; or

64
<PAGE>
- the average weekly trading volume of the common stock on the Nasdaq National
Market during the four calendar weeks preceding the filing of a notice on
Form 144 with respect to the sale.

Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about us.

RULE 144(k)

Under Rule 144(k), a person who has not been one of our affiliates at any time
during the 90 days preceding a sale, and who has beneficially owned the shares
proposed to be sold for at least two years, is entitled to sell those shares
without complying with the manner of sale, public information, volume limitation
or notice provisions of Rule 144. Therefore, unless otherwise restricted, shares
that have been held by a non-affiliate for at least two years may be sold in the
open market immediately after the lock-up agreements expire.

RULE 701

Any of our employees, officers, directors or consultants who purchased his or
her shares under a written compensatory plan or contract may be entitled to sell
his or her shares in reliance on Rule 701. Rule 701 permits affiliates to sell
their Rule 701 shares under Rule 144 without complying with the holding period
requirements of Rule 144. Rule 701 further provides that non-affiliates may sell
these shares in reliance on Rule 144 without having to comply with the holding
period, public information, volume limitation or notice provisions of Rule 144.
All holders of Rule 701 shares are required to wait until 90 days after the date
of this prospectus before selling those shares. However, all shares issued under
Rule 701 are subject to lock-up agreements or other contractual resale
restrictions and will only become eligible for sale when the 180-day lock-up
agreements or other contractual resale restrictions expire.

REGISTRATION RIGHTS

Upon completion of this offering, the holders of 12,682,773 shares of common
stock, or their transferees, will be entitled to certain rights with respect to
the registration of those shares under the Securities Act. For a discussion of
these rights please see "Description of Capital Stock--Registration Rights."
After these shares are registered, they will be freely tradable without
restriction under the Securities Act.

STOCK OPTIONS

Immediately after this offering, we intend to file a registration statement on
Form S-8 under the Securities Act covering shares of common stock reserved for
issuance under our stock option and employee stock purchase plans. Shares
registered under this registration statement will, subject to Rule 144 volume
limitations applicable to our affiliates and our repurchase rights applicable to
certain shares held by directors, be available for sale in the open market
immediately after the lock-up agreements expire. As of September 30, 1999,
options to purchase 2,051,859 shares of common stock were issued and outstanding
of which options to purchase 389,215 shares were immediately exercisable.

WARRANTS

Upon completion of this offering, we will have outstanding warrants to purchase
132,208 shares of common stock. If these warrants are exercised and the exercise
price is paid in cash, the shares must be held for one year before they can be
sold under Rule 144. Each of the warrants also contains cashless, or net,
exercise provisions. If these warrants are exercised pursuant to these cashless,
or net, exercise provisions, the shares must be held until one year from the
date the warrant was issued. After the lock-up agreements described above
expire, each of the outstanding warrants will have been outstanding for at least
one year.

65
<PAGE>
UNDERWRITING

We have entered into an underwriting agreement with the underwriters named
below. CIBC World Markets Corp., U.S. Bancorp Piper Jaffray Inc. and Volpe Brown
Whelan & Company, LLC are acting as representatives of the underwriters.

The underwriting agreement provides for the purchase of a specific number of
shares of common stock by each of the underwriters. The underwriters'
obligations are several, which means that each underwriter is required to
purchase a specified number of shares, but is not responsible for the commitment
of any other underwriter to purchase shares. Subject to the terms and conditions
of the underwriting agreement, each underwriter has severally agreed to purchase
the number of shares of common stock set forth opposite its name below:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- ----------- ----------------
<S> <C>
CIBC World Markets Corp.....................................
U.S. Bancorp Piper Jaffray Inc..............................
Volpe Brown Whelan & Company, LLC...........................

---------
Total................................................... 4,600,000
=========
</TABLE>

This is a firm commitment underwriting. This means that the underwriters have
agreed to purchase all of the shares offered by this prospectus (other than
those covered by the over-allotment option described below) if any are
purchased. Under the underwriting agreement, if an underwriter defaults in its
commitment to purchase shares, the commitments of non-defaulting underwriters
may be increased or the underwriting agreement may be terminated, depending on
the circumstances.

The shares should be ready for delivery on or about against
payment in immediately available funds. The representatives have advised GRIC
that the underwriters propose to offer the shares directly to the public at the
public offering price that appears on the cover page of this prospectus. In
addition, the representatives may offer some of the shares to other securities
dealers at such price less a concession of $ per share. The underwriters
may also allow, and such dealers may reallow, a concession not in excess of
$ per share to other dealers. After the shares are released for sale to
the public, the representatives may change the offering price and other selling
terms at various times.

GRIC has granted the underwriters an over-allotment option. This option, which
is exercisable for up to 30 days after the date of this prospectus, permits the
underwriters to purchase a maximum of 690,000 additional shares from GRIC to
cover over-allotments. If the underwriters exercise all or part of this option,
they will purchase shares covered by the option at the initial public offering
price that appears on the cover page of this prospectus, less the underwriting
discount. If this option is exercised in full, the total price to public will be
$ , and the total proceeds to GRIC will be $ . The underwriters
have severally agreed that, to the extent the over-allotment option is
exercised, they will each purchase a number of additional shares proportionate
to the underwriter's initial amount reflected in the foregoing table.

The following table provides information regarding the amount of the discount to
be paid to the underwriters by us.

<TABLE>
<CAPTION>
TOTAL WITHOUT TOTAL WITH FULL
EXERCISE OF EXERCISE OF
OVER-ALLOTMENT OVER-ALLOTMENT
PER SHARE OPTION OPTION
--------- -------------- ---------------
<S> <C> <C> <C>
GRIC................................................... $ $ $
------ ----------- -----------
</TABLE>

66
<PAGE>

We estimate that our total expenses of the offering, excluding the underwriting
discount, will be approximately $1.8 million.

We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.

We, our officers and directors, and substantially all securityholders have
agreed to a 180-day "lock up" with respect to 13,123,311 shares of common stock
and certain other GRIC securities that they beneficially own, including
securities that are convertible into shares of common stock and securities that
are exchangeable or exercisable for shares of common stock. This "lock up" means
that, subject to certain exceptions, for a period of 180 days following the date
of this prospectus, GRIC and such persons may not offer, sell, pledge or
otherwise dispose of these GRIC securities.

The representatives have informed us that they do not expect discretionary sales
by the underwriters to exceed five percent of the shares offered by this
prospectus.

The underwriters have reserved for sale up to 300,000 shares for employees,
directors and other persons associated with GRIC. These reserved shares will be
sold at the initial public offering price that appears on the cover page of this
prospectus. The number of shares available for sale to the general public in
this offering will be reduced to the extent reserved shares are purchased by
such persons. The underwriters will offer to the general public, on the same
terms as other shares offered by this prospectus, any reserved shares that are
not purchased by such persons.

There is no established trading market for the shares. The offering price for
the shares has been determined by GRIC and the representatives, based on the
following factors:

- our record of operations;

- our current financial position and future prospects;

- the experience of our management;

- the economics of our industry in general; and

- prevailing market and economic conditions.

Rules of the Securities and Exchange Commission may limit the ability of the
underwriters to bid for or purchase shares before the distribution of the shares
is completed. However, the underwriters may engage in the following activities
in accordance with the rules:

- Stabilizing transactions--The representatives may make bids or purchases for
the purpose of pegging, fixing or maintaining the price of the shares, so
long as stabilizing bids do not exceed a specified maximum.

- Over-allotments and syndicate covering transactions--The underwriters may
create a short position in the shares by selling more shares than are set
forth on the cover page of this prospectus. If a short position is created
in connection with the offering, the representatives may engage in syndicate
covering transactions by purchasing shares in the open market. The
representatives may also elect to reduce any short position by exercising
all or part of the over-allotment option.

- Penalty bids--If the representatives purchase shares in the open market in a
stabilizing transaction or syndicate covering transaction, they may reclaim
a selling concession from the underwriters and selling group members who
sold those shares as part of this offering.

Stabilization and syndicate covering transactions may cause the price of the
shares to be higher than it would be in the absence of such transactions. The
imposition of a penalty bid might also have an effect on the price of the shares
if it discourages resales of the shares.

Neither we nor the underwriters make any representation or prediction as to the
effect that the transactions described above may have on the price of the
shares. These transactions may occur on

67
<PAGE>

The Nasdaq National Market or otherwise. If such transactions are commenced,
they may be discontinued without notice at any time.

LEGAL MATTERS

Fenwick & West LLP, Palo Alto, California, will provide a legal opinion
regarding the validity of the issuance of the shares of common stock offered
under this prospectus. Gibson, Dunn & Crutcher LLP, San Francisco, California,
will pass upon specified legal matters on behalf of the underwriters. A
partnership comprised of partners of Fenwick & West LLP owns 10,714 shares of
our Series D Preferred Stock.

EXPERTS

Ernst & Young LLP, independent auditors, have audited our consolidated financial
statements and schedule at December 31, 1997, 1998, and September 30, 1999 and
for the three years in the period ended December 31, 1998 and nine-month period
ended September 30, 1999 as set forth in their report. We have included our
financial statements and schedule in the prospectus and elsewhere in the
registration statement in reliance on Ernst & Young LLP's report, given on their
authority as experts in accounting and auditing.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to our common stock.
This prospectus does not contain all of the information set forth in the
registration statement and the exhibits and schedule to the registration
statement. For further information with respect to us and our common stock, we
refer you to the registration statement and the exhibits and schedule filed as a
part of the registration statement. Statements contained in this prospectus
concerning the contents of any contract or any other document are not
necessarily complete. If a contract or document has been filed as an exhibit to
the registration statement, we refer you to the copy of the contract or document
that has been filed. Each statement in this prospectus relating to a contract or
document filed as an exhibit is qualified in all respects by the filed exhibit.

The registration statement, including exhibits and schedule, may be inspected
without charge at the principal office of the Securities and Exchange Commission
in Washington, D.C., and copies of all or any part of it may be obtained from
that office after payment of fees prescribed by the Securities and Exchange
Commission. The Securities and Exchange Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Securities and Exchange
Commission at http://www.sec.gov.

We intend to provide our stockholders with annual reports containing financial
statements audited by an independent public accounting firm and quarterly
reports containing unaudited financial data for the first three quarters of each
year.

68
<PAGE>
GRIC COMMUNICATIONS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Ernst & Young LLP, Independent Auditors........... F-2

Consolidated Balance Sheets................................. F-3

Consolidated Statements of Operations....................... F-4

Consolidated Statements of Redeemable Convertible Preferred
Stock and Stockholders' Equity (Deficit).................. F-5

Consolidated Statements of Cash Flows....................... F-6

Notes to Consolidated Financial Statements.................. F-7
</TABLE>

F-1
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
GRIC Communications, Inc.

We have audited the accompanying consolidated balance sheets of GRIC
Communications, Inc. as of December 31, 1997 and 1998 and September 30, 1999,
and the related consolidated statements of operations, redeemable convertible
preferred stock and stockholders' equity (deficit), and cash flows for each of
the three years in the period ended December 31, 1998 and the nine-month period
ended September 30, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of GRIC
Communications, Inc. at December 31, 1997 and 1998 and September 30, 1999, and
the consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1998 and nine-month period ended
September 30, 1999, in conformity with generally accepted accounting principles.

San Jose, California
October 25, 1999

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

The preceding report is in the form that will be signed upon approval by the
Company's stockholders of the reincorporation of the Company in Delaware as
described in Note 8 to the Consolidated Financial Statements.

/s/ Ernst & Young LLP

San Jose, California
October 28, 1999

F-2
<PAGE>
GRIC COMMUNICATIONS, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
EQUITY AT
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
------------------- ------------- -------------
1997 1998 1999 1999
-------- -------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 8,481 $ 1,362 $ 10,181
Accounts receivable, net of allowances of $214, $384, and
$628 at December 31, 1997 and 1998, and September 30,
1999.................................................... 395 750 1,604
Inventories............................................... 102 125 56
Other current assets...................................... 46 141 1,164
------- -------- --------
Total current assets........................................ 9,024 2,378 13,005
Property and equipment...................................... 778 2,055 3,114
Other assets................................................ 53 307 319
------- -------- --------
Total assets................................................ $ 9,855 $ 4,740 $ 16,438
======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable.......................................... $ 670 $ 3,975 $ 4,569
Accrued compensation and benefits......................... 345 881 1,027
Other current liabilities................................. 170 595 883
Current portion of long-term debt and capital lease
obligations ($2,700 and $0 in stockholder notes at
December 31, 1998 and September 30, 1999,
respectively--see Note 4)............................... -- 4,436 513
------- -------- --------
Total current liabilities................................... 1,185 9,887 6,992
Long-term debt and capital lease obligations................ 19 1,069 1,116
Commitments and contingencies
Redeemable convertible preferred stock, $0.001 par value:
Authorized shares--6,025,000 issuable in series and none
pro forma
Issued and outstanding shares--5,213,109 at December 31,
1997 and 1998, and September 30, 1999, respectively
(aggregate liquidation preference of $8,642); pro
forma--none............................................. 8,590 8,590 8,590 --
Stockholders' equity (deficit):
Convertible preferred stock, $0.001 par value:
Authorized shares--Series D 1,190,476, 1,190,476 and
6,250,000 at December 31, 1997, 1998 and September 30,
1999, respectively; pro forma--none
Issued and outstanding shares--431,547 and 870,535 at
December 31, 1997 and 1998, respectively, and
5,460,745 at September 30, 1999, (aggregate
liquidation preferences of $7,250, $9,750, and $38,225
at December 31, 1997 and 1998, and September 30, 1999
respectively); pro forma--none........................ -- -- 5 --
Common stock, $0.001 par value:
Authorized shares--10,714,285, 10,714,285 and 21,428,571
at December 31, 1997 and 1998, and September 30, 1999
respectively; pro forma 50,000,000
Issued and outstanding shares--1,952,059, 1,980,994 and
2,226,251 at December 31, 1997 and 1998, and September
30, 1999, respectively; pro forma 12,900,105.......... 2 2 2 13
Additional paid-in capital................................ 7,335 10,370 41,784 50,368
Deferred stock-based compensation......................... -- -- (1,586) (1,586)
Accumulated deficit....................................... (7,276) (25,178) (40,465) (40,465)
------- -------- -------- --------
Total stockholders' equity (deficit)........................ 61 (14,806) (260) $ 8,330
------- -------- -------- ========
Total liabilities and stockholders' equity (deficit)........ $ 9,855 $ 4,740 $ 16,438
======= ======== ========
</TABLE>

See accompanying notes.

F-3
<PAGE>
GRIC COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
---------------------------------- -------------------------
1996 1997 1998 1998 1999
--------- --------- ---------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Settlement........................................ $ -- $ 254 $ 1,666 $ 1,073 $ 4,122
Software and other................................ 403 1,280 883 640 1,315
--------- --------- ---------- --------- ----------
Total revenues.................................. 403 1,534 2,549 1,713 5,437
--------- --------- ---------- --------- ----------
Costs and Expenses:
Cost of settlement revenues....................... -- 156 1,444 872 3,329
Cost of software revenues and others.............. -- 708 982 489 96
Network and operations............................ -- 837 1,117 729 2,027
Research and development.......................... 998 2,314 5,080 3,718 5,852
Sales and marketing............................... 49 3,723 6,373 4,524 5,844
General and administrative........................ 391 2,002 3,540 2,486 3,276
Other operating expenses (expense reversals)...... -- -- 1,500 -- (925)
Amortization of stock-based compensation.......... -- -- -- -- 193
--------- --------- ---------- --------- ----------
Total costs and expenses........................ 1,438 9,740 20,036 12,818 19,692
--------- --------- ---------- --------- ----------
Operating loss...................................... (1,035) (8,206) (17,487) (11,105) (14,255)

Interest income and other, net...................... 104 79 192 153 298
Interest expense.................................... -- -- (575) (33) (1,292)
--------- --------- ---------- --------- ----------
Loss from continuing operations before income
taxes............................................. (931) (8,127) (17,870) (10,985) (15,249)

Provision for income taxes from continuing
operations........................................ -- 59 32 28 38
--------- --------- ---------- --------- ----------
Net loss from continuing operations................. (931) (8,186) (17,902) (11,013) (15,287)

Discontinued operations:
Loss from discontinued operations................. (1,683) (774) -- -- --
Gain on disposal of discontinued operations....... -- 5,118 -- -- --
--------- --------- ---------- --------- ----------
Net loss............................................ $ (2,614) $ (3,842) $ (17,902) $ (11,013) $ (15,287)
========= ========= ========== ========= ==========
Basic and diluted net loss per share from continuing
operations........................................ $ (0.52) $ (4.42) $ (9.19) $ (5.66) $ (7.61)
========= ========= ========== ========= ==========
Basic and diluted net loss per share................ $ (1.46) $ (2.08) $ (9.19) $ (5.66) $ (7.61)
========= ========= ========== ========= ==========
Shares used to compute basic and diluted net loss
per share......................................... 1,788,684 1,851,140 1,948,424 1,946,870 2,009,596
========= ========= ========== ========= ==========
Pro forma basic and diluted net loss per share from
continuing operations............................. $ (2.27) $ (1.42)
========== ==========
Shares used to compute pro forma basic and diluted
net loss per share................................ 7,889,323 10,782,381
========== ==========
</TABLE>

See accompanying notes.

F-4
<PAGE>
GRIC COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

REDEEMABLE CONVERTIBLE PREFERRED STOCK
---------------------------------------------------------------------------
SERIES A SERIES B SERIES C TOTAL
----------------- ----------------- ----------------- ------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------ --------- ------ --------- ------ ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1995................... 1,214,282 $680 2,310,705 $3,208 -- $ -- 3,524,987 $3,888
Issuance of Series C
convertible preferred
stock to investors
for cash, exercise of
warrants, and
conversion of bridge
loans at $2.80 per
share, net of
issuance costs of
$25.................. -- -- -- -- 1,688,122 4,702 1,688,122 4,702
Issuance of common
stock upon exercise
of employee stock
options for cash..... -- -- -- -- -- -- -- --
Net loss............... -- -- -- -- -- -- -- --
--------- ---- --------- ------ --------- ------ ---------- ------
Balance at December 31,
1996................... 1,214,282 $680 2,310,705 $3,208 1,688,122 $4,702 5,213,109 $8,590
Issuance of Series D
convertible preferred
stock to investors
for cash and
cancellation of notes
payable at $16.80 per
share................ -- -- -- -- -- -- -- --
Issuance of common
stock upon exercise
of employee stock
options for cash..... -- -- -- -- -- -- -- --
Net loss............... -- -- -- -- -- -- -- --
--------- ---- --------- ------ --------- ------ ---------- ------
Balance at December 31,
1997................... 1,214,282 680 2,310,705 3,208 1,688,122 4,702 5,213,109 8,590
Issuance of Series D
convertible preferred
stock to adjust the
cost of previously
issued shares from
$16.80 to $11.20 per
share................ -- -- -- -- -- -- -- --
Issuance of Series D
convertible preferred
stock to investors
for cash and
cancellation of notes
payable at $11.20 per
share, net of
issuance costs of
$15.................. -- -- -- -- -- -- -- --
Issuance of common
stock upon exercise
of employee stock
options for cash..... -- -- -- -- -- -- -- --
Issuance of Series D
warrants and common
stock warrants....... -- -- -- -- -- -- -- --
Net loss............... -- -- -- -- -- -- -- --
--------- ---- --------- ------ --------- ------ ---------- ------
Balance at December 31,
1998................... 1,214,282 680 2,310,705 3,208 1,688,122 4,702 5,213,109 8,590
Conversion of 1998
bridge financing to
Series D convertible
preferred stock at
$7.00 per share...... -- -- -- -- -- -- -- --
Issuance of Series D
convertible preferred
stock to adjust the
cost of previously
issued shares from
$11.20 to $7.00 per
share................ -- -- -- -- -- -- -- --
Issuance of Series D
convertible preferred
stock at $7.00 per
share, net of
issuance costs of
$326................. -- -- -- -- -- -- -- --
Issuance of Series D
warrants............. -- -- -- -- -- -- -- --
Issuance of common
stock upon exercise
of employee stock
options for cash..... -- -- -- -- -- -- -- --
Warrant revaluation.... -- -- -- -- -- -- -- --
Deferred stock-based
compensation......... -- -- -- -- -- -- -- --
Amortization of
stock-based
compensation......... -- -- -- -- -- -- -- --
Issuance of common
stock to previous
board member......... -- -- -- -- -- -- -- --
Net loss............... -- -- -- -- -- -- -- --
--------- ---- --------- ------ --------- ------ ---------- ------
Balance at September 30,
1999................... 1,214,282 $680 2,310,705 $3,208 1,688,122 $4,702 5,213,109 $8,590
========= ==== ========= ====== ========= ====== ========== ======

<CAPTION>
STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------------------------------------
SERIES D
CONVERTIBLE TOTAL
PREFERRED STOCK COMMON STOCK ADDITIONAL DEFERRED STOCKHOLDERS'
------------------ ----------------- PAID-IN STOCK-BASED ACCUMULATED EQUITY
SHARES AMOUNT SHARES AMOUNT CAPITAL COMPENSATION DEFICIT (DEFICIT)
---------- ------ --------- ------ ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1995................... -- $-- 1,785,719 $ 2 $ 29 -- $ (820) $ (789)
Issuance of Series C
convertible preferred
stock to investors
for cash, exercise of
warrants, and
conversion of bridge
loans at $2.80 per
share, net of
issuance costs of
$25.................. -- -- -- -- -- -- -- --
Issuance of common
stock upon exercise
of employee stock
options for cash..... -- -- 4,910 -- 1 -- -- 1
Net loss............... -- -- -- -- $ -- -- (2,614) (2,614)
---------- --- --------- --- ------- -------- -------- -------
Balance at December 31,
1996................... -- $-- 1,790,629 $ 2 30 -- $ (3,434) $(3,402)
Issuance of Series D
convertible preferred
stock to investors
for cash and
cancellation of notes
payable at $16.80 per
share................ 431,523 -- -- -- 7,250 -- -- 7,250
Issuance of common
stock upon exercise
of employee stock
options for cash..... -- -- 161,430 -- 55 -- -- 55
Net loss............... -- -- -- -- -- -- (3,842) (3,842)
---------- --- --------- --- ------- -------- -------- -------
Balance at December 31,
1997................... 431,523 -- 1,952,059 2 7,335 -- (7,276) 61
Issuance of Series D
convertible preferred
stock to adjust the
cost of previously
issued shares from
$16.80 to $11.20 per
share................ 215,774 -- -- -- -- -- -- --
Issuance of Series D
convertible preferred
stock to investors
for cash and
cancellation of notes
payable at $11.20 per
share, net of
issuance costs of
$15.................. 223,214 -- -- -- 2,486 -- -- 2,486 2.50
Issuance of common
stock upon exercise
of employee stock
options for cash..... -- -- 28,935 -- 13 -- -- 13
Issuance of Series D
warrants and common
stock warrants....... -- -- -- 536 -- -- 536
Net loss............... -- -- -- -- -- -- (17,902) (17,902)
---------- --- --------- --- ------- -------- -------- -------
Balance at December 31,
1998................... 870,511 -- 1,980,994 2 10,370 -- (25,178) (14,806)
Conversion of 1998
bridge financing to
Series D convertible
preferred stock at
$7.00 per share...... 250,010 -- -- -- 2,801 -- -- 2,801
Issuance of Series D
convertible preferred
stock to adjust the
cost of previously
issued shares from
$11.20 to $7.00 per
share................ 672,328 1 -- -- (1) -- -- --
Issuance of Series D
convertible preferred
stock at $7.00 per
share, net of
issuance costs of
$326................. 3,667,896 4 -- -- 25,345 -- -- 25,349
Issuance of Series D
warrants............. -- -- -- -- 689 -- -- 689
Issuance of common
stock upon exercise
of employee stock
options for cash..... -- -- 227,400 -- 324 -- -- 324
Warrant revaluation.... -- -- -- -- 327 -- -- 327
Deferred stock-based
compensation......... -- -- -- -- 1,779 (1,779) -- --
Amortization of
stock-based
compensation......... -- -- -- -- -- 193 -- 193
Issuance of common
stock to previous
board member......... -- -- 17,857 -- 150 -- -- 150
Net loss............... -- -- -- -- -- -- (15,287) (15,287)
---------- --- --------- --- ------- -------- -------- -------
Balance at September 30,
1999................... 5,460,745 $ 5 2,226,251 $ 2 $41,784 $ (1,586) $(40,465) $ (260)
========== === ========= === ======= ======== ======== =======
</TABLE>

See accompanying notes.

F-5
<PAGE>
GRIC COMMUNICATIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
------------------------------ -------------------------
1996 1997 1998 1998 1999
-------- -------- -------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss............................................... $ (2,614) $ (3,842) $(17,902) $(11,013) $(15,287)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization of property and
equipment.......................................... 557 272 1,006 701 1,182
Amortization of stock-based compensation............. -- -- -- -- 193
Gain on sale of discontinued operations.............. -- (5,118) -- -- --
Noncash interest expense............................. -- -- -- -- 275
Noncash issuance of stock............................ -- -- -- -- 150
Noncash warrant expense--preferred stock............. -- -- 408 -- 922
Noncash warrant expense--common stock................ -- -- 1 -- 81
Net changes in assets and liabilities:
Accounts receivable................................ (184) (210) (355) (365) (854)
Inventories........................................ -- (101) (23) (305) 69
Other current assets............................... (43) (2) (95) (101) (1,023)
Other assets....................................... -- (53) (127) (121)
Net assets relating to discontinued operations..... (372) 1,236 -- -- --
Accounts payable................................... 169 500 3,305 1,017 594
Accrued compensation and benefits.................. 32 312 536 293 146
Other current liabilities.......................... -- 171 425 292 288
Other long-term liabilities........................ -- 20 15 2 4
-------- -------- -------- -------- --------
Net cash used in operating activities.................. (2,455) (6,815) (12,806) (9,600) (13,260)

INVESTING ACTIVITIES
Capital expenditures................................... (819) (797) (2,283) (1,624) (1,739)
Proceeds from sale of discontinued operations.......... -- 5,446 -- -- --
-------- -------- -------- -------- --------
Net cash provided by (used in) investing activities.... (819) 4,649 (2,283) (1,624) (1,739)

FINANCING ACTIVITIES
Proceeds from issuance of debt......................... -- -- 5,753 3,742 --
Payment of debt........................................ -- -- (282) -- (1,680)
Proceeds from sales of preferred stock................. 4,702 7,250 2,486 2,486 25,174
Proceeds from sales of common stock.................... 1 55 13 10 324
-------- -------- -------- -------- --------
Net cash provided by financing activities.............. 4,703 7,305 7,970 6,238 23,818
-------- -------- -------- -------- --------

Net increase (decrease) in cash and cash equivalents... 1,429 5,139 (7,119) (4,986) 8,819
Cash and cash equivalents at beginning of period....... 1,913 3,342 8,481 8,481 1,362
-------- -------- -------- -------- --------
Cash and cash equivalents at end of period............. $ 3,342 $ 8,481 $ 1,362 $ 3,495 $ 10,181
======== ======== ======== ======== ========

SUPPLEMENTAL DISCLOSURES OF CASH PAID DURING THE PERIOD
Tax paid............................................... $ -- $ 9 $ 7 $ 2 $ 1
Interest paid.......................................... $ -- $ -- $ 165 $ -- $ 436
SUPPLEMENTAL DISCLOSURES OF NONCASH FINANCING
ACTIVITIES
Conversion of 1999 bridge notes interest into Series D
preferred stock...................................... $ -- $ -- $ -- $ -- $ 175
Conversion of 1998 bridge notes (principal and
interest) into Series D preferred stock.............. $ -- $ -- $ -- $ -- $ 2,801
Purchase of equipment under capital leases............. $ -- $ -- $ -- $ -- $ 502
</TABLE>

See accompanying notes.

F-6
<PAGE>
GRIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION FOR THE NINE MONTHS ENDED

SEPTEMBER 30, 1998 IS UNAUDITED)

1. DESCRIPTION OF BUSINESS

GRIC Communications, Inc. ("GRIC" or the "Company") is a global provider of
Internet-based products and services that enable telecommunication companies,
Internet service providers, and emerging telecommunications service providers,
to offer Internet-based products and services, such as Internet roaming and
Internet telephony, to their end users worldwide.

GRIC's predecessor corporation, incorporated in California in 1994, was both an
Internet service provider in Northern California and an independent software
provider for the Internet service provider community. In 1997, the local
Internet service provider business and related assets were sold. Operations
through 1997 related to the Internet service provider business are reflected as
discontinued operations. We first recognized clearinghouse settlement revenues
in 1997, and since then we have derived our revenues primarily from
clearinghouse settlement services and software licenses.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The consolidated financial statements include all the accounts of GRIC and its
wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated.

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited interim consolidated financial statements for the
nine-month period ended September 30, 1998 have been prepared in accordance with
generally accepted accounting principles for interim financial information. In
the opinion of management, the accompanying unaudited consolidated financial
statements have been prepared on the same basis as the audited consolidated
financial statements and include all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of the Company's
results of its operations and its cash flows for the nine months ended
September 30, 1998. Results for the nine-month period ended September 30, 1998
are not necessarily indicative of results for the full fiscal year of 1998 or
any future period.

DISCONTINUED OPERATIONS

In May 1997, the Company sold a 55% interest in its local internet access
service provider subsidiary, Aimnet, in exchange for approximately $2,004,000 of
cash and in September 1997, it sold the remaining 45% for approximately
$3,442,000 of cash. Aimnet operated as a separate segment of the business as an
Internet service provider and its operations have been accounted for as
discontinued operations. Revenues earned by Aimnet were approximately $3,010,000
and $1,632,000 in the years ended December 31, 1996 and 1997, respectively.

USE OF ESTIMATES

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

F-7
<PAGE>
GRIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED

SEPTEMBER 30, 1998 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FOREIGN CURRENCY REMEASUREMENT

Adjustments resulting from the process of remeasurement into U.S. dollars of the
foreign currency financial statements of the Company's wholly-owned foreign
subsidiaries, for which the U.S. dollar is the functional currency, are included
in operations and have not been material.

REVENUE RECOGNITION

The Company derives revenues primarily from settlement services it provides to
customers through its network. The Company also derives revenues from licenses
of software to customers seeking to offer Internet roaming and Internet
telephony services to their end users, and from sales of maintenance and support
services and hardware.

Settlement revenues are generated when customers' end users initiate Internet
roaming services or originate Internet telephony communications. Cost of
settlement revenues represents the amounts paid to access our customers network
for the completion of services provided. The Company recognizes roaming services
revenue and related costs at the time services are rendered to users. The
Company has minimum purchase commitments with some alliance members that it
expects to utilize provided the supplier maintains the required pricing under
the contract. In addition, the Company bears the risk of loss related to
collection for services.

Software and other revenues consist primarily of revenues from software licenses
and, to a lessor extent related services, maintenance and support and hardware
revenue. In accordance with Statement of Position (SOP 97-2), Software Revenue
Recognition, revenue earned on software arrangements involving multiple elements
is required to be allocated to each element based upon the relative fair values
of the elements. Software revenues consist of license revenues which are
recognized upon the delivery of application products, provided no significant
vendor obligation or contingencies remain, and collection of the receivable is
probable, or where the license is for enabling software, ratably over the
contractual services period as enabling licenses have not been sold separately.
Maintenance and support service includes technical support, consulting,
installation and training services. Revenue allocated to maintenance is
recognized ratably over the maintenance term and revenue allocated to training
and other service elements is recognized as the services are performed. Hardware
revenue related to telephony gateways, internet dialers and fax cards is
recognized upon shipment of the equipment.

CASH AND CASH EQUIVALENTS

GRIC considers all highly liquid instruments purchased with an original maturity
of 90 days or less at the date of purchase to be cash equivalents. The Company's
cash and cash equivalents consist solely of monies held in demand deposits.

INVENTORIES

Inventories, which consist of finished goods, are valued at the lower of cost or
market on a first-in, first-out basis.

F-8
<PAGE>
GRIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED

SEPTEMBER 30, 1998 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, net of accumulated depreciation and
amortization. Depreciation and amortization are provided on a straight-line
basis over the estimated useful lives of the respective assets, generally the
shorter of the lease term or two to three years.

INCOME TAXES

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"), which provides for the

establishment of deferred tax assets and liabilities based on the difference
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of cash equivalents and accounts receivable. The
Company maintains its cash and cash equivalents principally in domestic
financial institutions of high credit standing. The Company is exposed to credit
risks in the event of default by these institutions to the extent of the amount
recorded on the balance sheet. The credit risk in the Company's accounts
receivable is mitigated by the Company's credit evaluation process. The Company
generally does not require collateral and maintains adequate reserves for
potential credit losses.

ADVERTISING EXPENSES

Advertising expenditures are charged to operations as incurred and were not
material for any of the periods presented.

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred until technological
feasibility has been established. To date, the Company's service offerings have
been available for general release concurrent with the establishment of
technological feasibility and, accordingly, no development costs have been
capitalized.

COMPREHENSIVE INCOME

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130"). SFAS 130 establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements and is effective for fiscal years beginning after December
15, 1997. The Company adopted SFAS 130 in the year ended December 31, 1998. The
Company had no items of other comprehensive income to report in any of the
periods presented.

SEGMENT INFORMATION

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS

F-9
<PAGE>
GRIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED

SEPTEMBER 30, 1998 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

131"). SFAS 131 changes the way companies report selected segment information in
annual financial statements and requires companies to report selected segment
information in interim financial reports to stockholders. The Company adopted
SFAS 131 in the year ended December 1998. The Company operates solely in one
segment, providing a global network for Internet service providers and
telecommunications companies and, therefore, there is no impact to the Company's
consolidated financial statements from the adoption of SFAS 131.

The following is a summary of revenue and long-lived assets by geographical area
for the periods presented (in thousands):

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------ -----------------------
1996 1997 1998 1998 1999
-------- -------- -------- ----------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue by external customers:
United States............................... $ 12 $ 407 $ 640 $ 584 $1,802
South East Asia............................. 309 415 623 352 1,280
Japan....................................... 39 151 454 265 894
Europe...................................... -- 193 282 244 534
China....................................... 39 223 212 119 359
Rest of World............................... 4 145 338 149 568
---- ------ ------ ------ ------
$403 $1,534 $2,549 $1,713 $5,437
==== ====== ====== ====== ======
Long-lived assets:
United States............................... $255 $ 705 $1,954 $1,614 $3,015
Rest of World............................... -- 73 101 86 99
---- ------ ------ ------ ------
$255 $ 778 $2,055 $1,700 $3,114
==== ====== ====== ====== ======
</TABLE>

Revenue by external customer is based on the customer's billing locations.
Long-lived assets are those assets used in each geographic location. For the
nine-month period ended September 30, 1999, one customer accounted for 10% of
consolidated revenues. No single customer accounted for 10% of consolidated
revenues for the year ended December 31, 1998. For the year ended December 31,
1997, one customer accounted for 22% of consolidated revenues. For the year
ended December 31, 1996, another customer accounted for 12% of consolidated
revenues.

STOCK-BASED COMPENSATION

The Company has elected to account for employee stock-based compensation in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB Opinion No. 25"), using an intrinsic value
approach to measure compensation expense, if any. Appropriate disclosures using
a fair-value based method, as provided by Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), are
also reflected in the accompanying notes to the consolidated financial
statements. Options issued to non-employees are accounted for in accordance with
SFAS 123 using a fair value approach.

NET LOSS PER SHARE

Basic net loss per share and diluted net loss per share are presented in
conformity with the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128") for
all periods presented.

F-10
<PAGE>
GRIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED

SEPTEMBER 30, 1998 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In accordance with SFAS 128, basic and diluted net loss per share has been
computed using the weighted-average number of shares of common stock outstanding
during the period. Potentially dilutive securities have been excluded from the
computation of basic and diluted net loss per share as their effect is
antidilutive.

UNAUDITED PRO FORMA PRESENTATIONS

As more fully discussed in Note 7, all preferred stock will automatically be
converted into shares of common stock in the event of the Company's undertaking
an initial public offering. The Company intends to obtain from the preferred
stockholders waivers or consents sufficient to ensure the automatic conversion
of all preferred stock to common stock upon the Company's initial public
offering. The unaudited pro forma stockholders' equity included on the balance
sheet reflects the conversion of the preferred stock into 10,673,854 shares of
common stock as if the conversion had occurred on September 30, 1999.

Unaudited basic and diluted pro forma net loss per share, as presented in the
consolidated statements of operations, has been computed using the weighted
average number of common stock outstanding, adjusted to include the pro forma
effects of the conversion of the preferred stock to common stock as if such
conversion had occurred on January 1, 1998 for the year ended December 31, 1998
and on January 1, 1999 for the nine-month period ended September 30, 1999, or at
the date of original issuance, if later.

RECENT ACCOUNTING PRONOUNCEMENTS

In March 1998, the American Institute of Certified Public Accountants ("AICPA")
issued Statement of Position 98-1, "Accounting for the Cost of Computer Software
Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 is effective for
financial statements for years beginning after December 15, 1998. SOP 98-1
provides guidance regarding accounting for computer software developed or
obtained for internal use, including the requirement to capitalize specified
costs and amortize such costs. The Company does not expect the adoption of this
standard to have a significant impact on the Company's results of operations,
financial position or cash flows.

In April 1998, the AICPA issued Statement of Position 98-5, "Reporting on the
Costs of Start-Up Activities" ("SOP 98-5"). SOP 98-5, effective for fiscal years
beginning after December 15, 1998, provides guidance on the financial reporting
of start-up costs and organization costs. It requires costs of start-up
activities and organization costs to be expensed as incurred. Since the Company
has expensed these costs as incurred, the adoption of this standard had no
impact on the Company's results of operations, financial position, or cash
flows.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivatives and Hedging
Activities" ("SFAS 133"), which establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as "derivatives") and for hedging
activities. SFAS 133 is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. As the Company does not currently engage in
derivatives or hedging transactions, there would be no current impact to the
Company's results of operations, financial position, or cash flows upon the
adoption of SFAS 133.

F-11
<PAGE>
GRIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 IS UNAUDITED)

3. PROPERTY AND EQUIPMENT

Property and equipment comprised the following (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------- SEPTEMBER 30,
1997 1998 1999
-------- -------- -------------
<S> <C> <C> <C>
Computer hardware and software........................ $ 749 $ 2,515 $ 4,197
Office furniture and equipment........................ 363 834 869
Leased equipment...................................... -- -- 502
Leasehold improvements................................ -- 46 68
------ ------- -------
1,112 3,395 5,636
Less accumulated depreciation and amortization........ (334) (1,340) (2,522)
------ ------- -------
$ 778 $ 2,055 $ 3,114
====== ======= =======
</TABLE>

4. DEBT

BRIDGE LOAN

On November 5, 1998, the Company entered into an agreement with a bank for a
short-term loan of up to $1.5 million with a maturity date of December 31, 1998
(the "Bridge Loan"). On December 31, 1998, this agreement was extended to the
earlier of March 31, 1999 or the sale of preferred stock equal to or greater
than the loan amount. The maximum amount available during the renewal period was
$1 million. The interest rate during the initial period was 0.50 percentage
points above the lender's prime rate and the interest rate changed to 1.25
percentage points above the lender's prime rate during the renewal period.

Substantially all of the Company's assets were pledged as collateral for the
Bridge Loan, other than assets held under permitted liens, which included
purchase money liens on equipment incurred for financing of the equipment.

At December 31, 1998, $1.5 million was outstanding under this facility. The
lenders' prime rate at December 31, 1998 was 7.75%. Prior to March 20, 1999 the
outstanding amount was repaid.

CONVERTIBLE PROMISSORY NOTES

On September 1, 1998, certain stockholders of the Company advanced loans to the
Company totaling $2.7 million in exchange for convertible promissory notes, (the
1998 Bridge Financing). The loans bore interest at 1% above the Bank of America
reference rate and were convertible into shares of Series D preferred stock at a
conversion price of $4.00 per share at the earlier of the initial closing of the
first preferred stock financing following September 1, 1998 and January 31,
1999. The warrants issued in connection with the promissory notes incorporated
antidilution protection.

At December 31, 1998, $2.7 million was outstanding under these notes. On
January 31, 1999, $2.7 million in principal and approximately $101,000 in
accrued interest were converted into 250,010 shares of Series D preferred stock.

F-12
<PAGE>
GRIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 IS UNAUDITED)

4. DEBT (CONTINUED)

During the period from January through March 1999, certain stockholders of the
Company and additional third parties advanced loans to the Company totaling
$12.75 million in exchange for convertible promissory notes (the "1999 Bridge
Financing"). The loans bore interest at 1% above the Bank of America reference
rate and, together with interest thereon of approximately $175,000, were
converted into 1,846,468 shares of Series D preferred stock at a conversion
price of $7.00 per share in April 1999.

5. COMMITMENTS AND CONTINGENCIES

GRIC leases all of its facilities under operating leases that expire at various
dates through 2003. The Company also leases certain equipment under capital
lease arrangements and equipment promissory notes. The future minimum operating
lease and capital lease commitments (including equipment promissory notes) were
as follows at September 30, 1999 (in thousands):

<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
--------- --------
<S> <C> <C>
1999........................................................ $ 197 $ 178
2000........................................................ 814 685
2001........................................................ 839 686
2002........................................................ 893 374
2003........................................................ 150 --
------ ------
$2,893 1,923
======
Less amounts representing interest.......................... 330
------
Present value of future lease payments...................... 1,593
Less current portion........................................ 513
------
Long-term portion........................................... $1,080
======
</TABLE>

Rent expense charged to operations totaled approximately $32,000, $263,000,
$688,000 and $602,000 for the years ended December 31, 1996, 1997 and 1998, and
the nine months ended September 30, 1999, respectively. The cost and accumulated
depreciation of assets under capital lease was $502,000 and $29,700 respectively
at September 30, 1999. In addition, the Company has collateralized equipment
purchased for $1.3 million under the equipment promissory notes.

During the year ended December 31, 1998, the Company recorded a charge of $1.5
million related to a commitment to purchase licenses of certain customized
software as the Company does not anticipate the utilization of the required
volume of purchases. In October 1999, the Company settled with the third party
for $600,000 and recorded the adjustment of $925,000 in the quarter ended
September 30, 1999.

LEGAL MATTERS

The Company is involved in certain claims and legal actions arising in the
normal course of business. Management does not expect that the outcome of these
cases will have a material effect on the Company's financial position or results
of operations.

F-13
<PAGE>
GRIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 IS UNAUDITED)

6. INCOME TAXES

The provision for income taxes attributable to continuing operations consists of
foreign income and withholding taxes of approximately $59,000, $32,000 and
$38,000 for the years ended December 31, 1997 and 1998, and the nine-month
period ended September 30, 1999, respectively.

The difference between the provision for income taxes and the amount computed by
applying the federal statutory income tax rate (35%) to income before taxes is
as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31 SEPTEMBER 30
------------------- ------------
1997 1998 1999
-------- -------- ------------
<S> <C> <C> <C>
Tax at federal statutory rate......................... $(2,844) $(6,255) $(5,337)
Unutilized net operating losses....................... 2,844 6,255 5,337
Foreign tax........................................... 59 32 38
------- ------- -------
Total................................................. $ 59 $ 32 $ 38
======= ======= =======
</TABLE>

Significant components of the Company's deferred tax assets are as follows (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30
------------------- ------------
1997 1998 1999
-------- -------- ------------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards................... $ 2,682 $ 8,912 $ 12,621
Tax credit carryforwards........................... 257 400 600
Accruals and reserves not currently deductible..... 203 1,210 1,854
------- -------- --------
Total deferred tax assets............................ 3,142 10,522 15,075
Valuation allowance.................................. (3,142) (10,522) (15,075)
------- -------- --------
Net deferred tax assets.............................. $ -- $ -- $ --
======= ======== ========
</TABLE>

SFAS 109 provides for the recognition of deferred tax assets if realization of
such assets is more likely than not. Based upon the weight of available
evidence, which includes the Company's historical operating performance and the
reported cumulative net losses in all prior years, the Company has provided a
full valuation allowance against its net deferred tax assets.

The valuation allowance increased by approximately $1.7 million, $7.4 million
and $4.6 million during the years ended December 31, 1997 and 1998, and the
nine-month period ended September 30, 1999, respectively.

As of September 30, 1999, the Company had net operating loss carryforwards for
federal and state tax purposes of approximately $33,100,000 and $17,500,000,
respectively. The Company also had federal and state research and development
tax credit carryforwards of approximately $400,000 and $380,000, respectively.
The federal and state net operating loss carryforwards and tax credit
carryforwards will expire at various dates beginning in 2002 through 2019, if
not utilized.

F-14
<PAGE>
GRIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 IS UNAUDITED)

6. INCOME TAXES

Utilization of the net operating loss and tax credit carryforwards may be
subject to a substantial annual limitation due to the ownership change
limitations provided by the Internal Revenue Code and similar state provisions.
The annual limitation may result in the expiration of the net operating loss and
tax credit carryforwards before utilization.

7. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

The Company has convertible preferred stock that consists of (i) Series A, B and
C redeemable convertible preferred stock and (ii) Series D convertible preferred
stock, collectively referred to as "preferred stock."

REDEEMABLE CONVERTIBLE PREFERRED STOCK

Redeemable convertible preferred stock at December 31, 1997 and 1998, and
September 30, 1999 was as follows:

<TABLE>
<CAPTION>
SHARES ISSUED AND OUTSTANDING
---------------------------------------
PER SHARE DECEMBER 31,
LIQUIDATION AUTHORIZED ----------------------- SEPTEMBER 30,
SERIES PREFERENCE SHARES 1997 1998 1999
--------------------- ----------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
A.......... $0.56 1,214,285 1,214,282 1,214,282 1,214,282
B.......... $1.40 2,310,715 2,310,705 2,310,705 2,310,705
C.......... $2.80 2,500,000 1,688,122 1,688,122 1,688,122
---------- ---------- ---------- ----------
6,025,000 5,213,109 5,213,109 5,213,109
========== ========== ========== ==========
</TABLE>

At any time after August 16, 2001, the holders of a majority of the then
outstanding shares of Series C convertible preferred stock may request the
redemption of all of the outstanding shares of Series C convertible preferred
stock. If so requested, the Company must redeem those shares at a price per
share of $2.80 plus any declared and unpaid dividends for Series C convertible
preferred stock.

At any time after the Series C convertible preferred stockholders have requested
redemption, the holders of a majority of the then outstanding Series A and B
convertible preferred stock may request the redemption of all the outstanding
shares of Series A and B convertible preferred stock. If so requested, the
Company must redeem those shares at a price per share of $0.56 and $1.40 for the
Series A and B Convertible Preferred Stock, respectively, plus any declared and
unpaid dividends for the Series A and B convertible preferred stock,
respectively.

If the Company chooses not to redeem the Series A, B or C convertible preferred
stock when requested by the majority holders of such outstanding shares, the
Series A, B and C convertible preferred stock would begin accruing dividends
equal to 8% of the redemption price per annum.

F-15
<PAGE>
GRIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 IS UNAUDITED)

7. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (CONTINUED)
CONVERTIBLE PREFERRED STOCK

Convertible preferred stock at December 31, 1997 and 1998 and September 30, 1999
was as follows:

<TABLE>
<CAPTION>
SHARES ISSUED AND OUTSTANDING
---------------------------------------
PER SHARE DECEMBER 31,
LIQUIDATION AUTHORIZED ----------------------- SEPTEMBER 30,
SERIES PREFERENCE SHARES 1997 1998 1999
--------------------- ----------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
D.......... $ 16.80 1,190,476 431,523 -- --
D.......... $ 11.20 1,190,476 -- 870,511 --
D.......... $ 7.00 6,250,000 -- -- 5,460,745
</TABLE>

The holders of the preferred stock are entitled to receive noncumulative
dividends, when and if declared by the Board of Directors, out of legally
available funds, in an amount per share of preferred stock equal to 10% per
annum of their respective liquidation values, payable before any dividends may
be paid on common stock. As of September 30, 1999, no dividends had been
declared or paid by the Company.

The holders of the preferred stock have the right to convert their shares into a
like number of shares of common stock, subject to adjustments for future
dilution. The preferred stock automatically converts into common stock, at the
then applicable conversion price, at the earlier of (i) the Company's
undertaking an initial public offering at a price per share of not less than
$14.00 per share (as to the Series A, B, and C convertible preferred stock only)
or not less than $28.00 per share (as to the Series D convertible preferred
stock only) and with aggregate proceeds in excess of $10,000,000 or (ii) the
affirmative vote or written consent of holders of at least two-thirds of the
outstanding shares of all series of preferred stock voting as a single class and
the holders of at least two-thirds of the outstanding shares of Series D
preferred stock voting as a separate class. The Company intends to obtain from
the preferred stockholders waivers or consents sufficient to ensure the
automatic conversion of all preferred stock to common stock upon the Company's
initial public offering. All preferred stockholders are entitled to vote on all
matters in the same manner and with the same effect as if their stock had been
converted into common stock. At December 31, 1998 and September 30, 1999, the
Company had reserved 7,215,476 and 12,275,000 shares of common stock for
issuance upon the conversion of the preferred stock, respectively.

In the event of liquidation, the preferred stockholders are entitled to a per
share liquidation preference distribution plus declared and unpaid dividends, if
any, on each share of preferred stock. The remaining balance of proceeds is to
be paid ratably to common stockholders and preferred stockholders, as if
converted into common stock.

In April 1999, the Board of Directors and stockholders of the Company authorized
the sale and issuance of additional shares of Series D convertible preferred
stock at a price of $7.00 per share. In addition, the Board of Directors and
stockholders of the Company approved the repricing of the Series D convertible
preferred stock sold to investors prior to April 1999 from $11.20 to $7.00, and
the Company entered into agreements with those investors to amend the purchase
price accordingly and issue the requisite additional shares resulting therefrom
(the 1999 Series D Convertible Repricing). The Board of Directors also approved
the repricing of the warrants issued in connection with the 1998 Bridge
Financing from $11.20 per share to $7.00 per share, which in turn results in a

F-16
<PAGE>
GRIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 IS UNAUDITED)

7. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (CONTINUED)

modification of the number of shares that may be purchased upon exercise of the
warrants such that the aggregate number of shares of Series D convertible
preferred stock purchasable increased from 60,268 to 96,427 shares.

Pursuant to an additional Series D convertible preferred stock purchase
agreement, the Company issued and sold a total of 1,821,428 shares of Series D
convertible preferred stock in a series of closings from April 1999 through June
1999. In addition, the Company converted bridge loan principal and interest from
the 1999 Bridge Financing into 1,846,468 shares of Series D convertible
preferred stock and issued 672,328 shares of Series D convertible preferred
stock due to the 1999 Series D convertible Repricing. As of September 30, 1999,
an aggregate total of 5,460,745 shares of Series D convertible preferred stock
had been issued and were outstanding.

PREFERRED STOCK WARRANTS

In connection with the granting of the Bridge Loan, the Company issued a warrant
to purchase 16,071 shares of Series D preferred stock at $11.20 per share. The
warrant was fully exercisable at December 31, 1998, and expires on November 5,
2003. In connection with the original terms of the warrant, the number of shares
of Series D Preferred Stock purchasable upon exercise of the warrants was
increased from 16,071 to 17,724 as a result of the 1999 Series D Convertible
Repricing. The warrant was valued utilizing the Black-Scholes option pricing
model, and resulted in a fair market value of $9.30 per share utilizing a
volatility factor of 1.02, interest rate of 5.18% and expected life of 4 years.

In connection with the extension of the Bridge Loan in December 1998, the
Company issued an additional warrant to purchase up to 7,142 shares of Series D
preferred stock, subject to adjustment, at the price per share at which the
Company closed its Series D preferred stock financing ($7.00). In the first
quarter of 1999, the warrant became exercisable as to 1,785 shares only, based
upon the conditions in the original warrant. The warrant was valued utilizing
the Black-Scholes option pricing model, and resulted in a fair value of $9.30
per share utilizing a volatility of 1.02, interest rate of 5.18% and expected
life of 4 years. The warrant expires on December 31, 2003.

In connection with the equipment promissory notes, the Company issued fully
exercisable warrants for the purchase of 10,000 shares of Series D preferred
stock at $11.20 per share. The warrants expire on the earlier of August 10, 2008
or the fifth anniversary of an initial public offering of the Company's common
stock and were exercisable at December 31, 1998. The Company repriced these
warrants from $11.20 to $7.00 in the third quarter of fiscal 1999. The warrants
were valued utilizing the Black-Scholes option pricing model, and resulted in a
fair value of $8.34 per share utilizing a volatility of 1.02, interest rate of
5.18% and an expected life of 9 years.

In connection with the 1998 Bridge Financing from certain stockholders, the
Company issued fully exercisable warrants for the purchase of 60,267 shares of
the Company's Series D preferred stock at $11.20 per share. These warrants
expire on the earliest of five years from the date of the warrants
(September 1998), the date of a firm commitment for an initial public offering
of Company's common stock, a merger or sale of the Company, or the liquidation
of the Company. In connection with the 1999 Series D convertible repricing, the
number of warrants to purchase Series D convertible preferred stock was
increased from 60,267 to 96,427, and the exercise price per share was adjusted

F-17
<PAGE>
GRIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 IS UNAUDITED)

7. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (CONTINUED)

from $11.20 to $7.00. The additional warrants and change in exercise price was
effective in July 1999. The warrants were valued utilizing the Black-Scholes
option pricing model, and resulted in a fair value of $1.94 per share utilizing
a volatility of 1.02, interest rate of 5.18% and an expected life of
5.43 years.

In connection with the 1999 Bridge Financing, the Company issued fully
exercisable warrants for the purchase of 126,779 shares of Series D preferred
stock at $7.00 per share. These warrants expire on the earliest of five years
from the date of the warrants (between January and March 2004), the date of a
firm commitment for an initial public offering of the Company's common stock,
the merger or sale of the Company, and the liquidation of the Company. The
warrants were valued utilizing the Black-Scholes option pricing model, and
resulted in a fair value of $1.99 per share utilizing a volatility of 1.02,
interest rate of 5.12% and an expected life of 5.57 years.

The Company had recorded approximately $531,000 at December 31, 1998 and an
additional $837,000 at September 30, 1999 to reflect the fair value of the above
warrants, which are being amortized over the lives of the respective underlying
arrangements. Amortization of approximately $408,000 and $925,000 has been
included in the year ended December 31, 1998 and nine-month period ended
September 30, 1999, respectively. The fair value of the warrants was calculated
using the Black-Scholes option pricing model.

As of December 31, 1998 and September 30, 1999 the Company had reserved 93,480
and 252,715 shares of Series D convertible preferred stock for the exercise of
these warrants, respectively.

COMMON STOCK WARRANTS

In connection with entering into a roaming agreement with a certain customer,
the Company issued a warrant for the purchase of 92,857 shares of the Company's
common stock at the lower of the last price at which Series D preferred stock is
issued or $11.20 per share. As a result of the $7.00 per share issuance of
Series D preferred stock in 1999, the warrant was adjusted pursuant to its terms
such that the number of shares exercisable increased to 102,699 effective
May 1999. The warrant, which will expire on the earlier of November 12, 2003 or
the first anniversary of the date on which the roaming agreement with the
customer is terminated, was exercisable at December 31, 1998.

The warrant was valued utilizing the Black-Scholes option pricing model. The
Company was required to reevaluate the warrant fair value for all periods
through September 30, 1999 at which point a final measurement date existed. The
fair value of the warrant at September 30, 1999 was determined to be $184,000
utilizing a volatility of 1.02, interest rate of 5.12% and expected life of
5 years. The fair value of the warrant is being amortized over the life of the
agreement. The Company included an immaterial charge to operations for all
periods presented.

At December 31, 1998 and September 30, 1999, the Company had reserved 92,857 and
102,699 shares of common stock for the exercise of the warrant, respectively.

STOCK OPTION PLANS

On July 17, 1995, the Company adopted the 1995 Stock Option Plan (the 1995
Plan), which provides for the granting of incentive stock options to employees
and directors and nonqualified stock options

F-18
<PAGE>
GRIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 IS UNAUDITED)

7. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (CONTINUED)

to employees, consultants, and directors. Under the 1995 Plan, the Board of
Directors determines the term of each award and the award price. In the case of
incentive stock options, the exercise price may be established at an amount not
less than the fair market value at the date of grant, while nonstatutory stock
options may have exercise prices 85% of the fair market value as of the date of
grant. The exercise price of each option granted to individuals who, at the time
the option is granted, own stock representing more than 10% of the combined
voting power of all stock of the Company, shall be at least 110% of the fair
market value. Options generally vest with respect to 25% of the shares twelve
months after the options' grant date and the remainder ratably over the
following twelve calendar quarters and expire no later than ten years from the
date of grant.

On August 20, 1997, the Company adopted the 1997 Stock Option Plan (the 1997
Plan), which provides for the granting of incentive stock options to employees
and directors and nonqualified stock options to employees, consultants, and
directors. The first grants under the 1997 Plan were made as of November 1997.
Under the 1997 Plan, the Board of Directors determines the term of each award
and the award price. In the case of incentive stock options, the exercise price
may be established at an amount not less than the fair market value at the date
of grant, while nonstatutory stock options may have exercise prices not less
than 85% of the fair market value as of the date of grant. The exercise price of
any option granted to a 10% shareholder will not be less than 110% of the fair
market value of the shares on the date of grant. Options granted under the 1997
Plan for new employees generally vest with respect to 20% of the shares ten
months after the employee's hire date and the remainder vesting ratably over the
following forty months and options generally expire no later than ten years from
the date of grant. As of April 1999, follow-on grants to existing employees
generally vest ratably over fifty months from the date of grant. Prior to
April 1999, follow-on grants to employees vested on the same schedule as grants
made to new employees.

F-19
<PAGE>
GRIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 IS UNAUDITED)

7. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (CONTINUED)

Stock option activity was as follows:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
---------------------------
WEIGHTED
NUMBER AVERAGE
OF SHARES EXERCISE PRICE
---------- --------------
<S> <C> <C>
Outstanding at December 31, 1995............................ 300,353 $0.28
Granted................................................... 342,289 $0.28
Exercised................................................. (4,910) $0.28
Canceled.................................................. (23,725) $0.28
----------
Outstanding at December 31, 1996............................ 614,007 $0.28
Granted................................................... 464,604 $1.65
Exercised................................................. (161,430) $0.34
Canceled.................................................. (229,507) $0.31
----------
Outstanding at December 31, 1997............................ 687,674 $1.20
Granted................................................... 1,383,005 $2.63
Exercised................................................. (28,935) $0.48
Canceled.................................................. (190,575) $1.88
----------
Balance at December 31, 1998................................ 1,851,169 $2.21
Granted................................................... 1,492,376 $5.46
Exercised................................................. (227,400) $1.43
Canceled.................................................. (1,064,286) $2.88
----------
Balance at September 30, 1999............................... 2,051,859 $4.28
==========
</TABLE>

The following tables summarize information about options outstanding at
September 30, 1999:

<TABLE>
<CAPTION>
OUTSTANDING OPTIONS EXERCISABLE OPTIONS
---------------------------------- --------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
RANGE OF NUMBER OF CONTRACTUAL EXERCISE NUMBER OF EXERCISE
EXERCISE PRICE SHARES LIFE PRICE SHARES PRICE
--------------------- --------- ----------- -------- --------- --------
(YEARS)
<S> <C> <C> <C> <C> <C>
$0.28............... 177,952 6.95 $ 0.28 132,619 $ 0.28
$0.70............... 5,824 7.74 $ 0.70 3,012 $ 0.70
$1.68--$2.24........ 246,030 8.48 $ 2.21 101,846 $ 2.20
$2.80--$8.40........ 1,566,524 9.52 $ 4.80 151,641 $ 3.43
$12.60.............. 55,529 9.90 $12.60 97 $12.60
</TABLE>

In connection with the grant of share options to employees through
September 30, 1999, the Company recorded deferred compensation of $1,779,000 for
the aggregate differences between the exercise prices of options at their dates
of grant and the deemed fair value for accounting purposes of the common shares
subject to these options. Such amount is included as a reduction of
stockholders' equity and is being amortized on a straight-line basis over the
option vesting periods, which are

F-20
<PAGE>
GRIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 IS UNAUDITED)

7. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (CONTINUED)

generally four years. The compensation expense of $193,000 through
September 30, 1999 relates to options awarded to employees in all operating
expense categories. This amount has not been separately allocated to these
categories.

COMMON STOCK RESERVED FOR FUTURE ISSUANCE

Shares of common stock of the Company reserved for future issuance at
September 30, 1999 were as follows:

<TABLE>
<S> <C>
Warrants.................................................... 355,414
Stock options............................................... 2,791,609
Series A redeemable convertible preferred stock............. 1,214,285
Series B redeemable convertible preferred stock............. 2,310,715
Series C redeemable convertible preferred stock............. 2,500,000
Series D convertible preferred stock........................ 6,250,000
----------
15,422,023
==========
</TABLE>

PRO FORMA INFORMATION

The Company has elected to follow APB Opinion No. 25 in accounting for its
employee stock options because, as discussed below, the alternative fair value
accounting provided for under SFAS 123 requires the use of option valuation
models that were not developed for use in valuing employee stock options. Under
APB Opinion No. 25, because the exercise price of the Company's employee stock
options equals the fair market value of the underlying stock on the date of
grant, no compensation expense is recognized in the Company's financial
statements.

Pro forma information regarding net income and earnings per share is required by
SFAS 123. The fair value of options granted in fiscal years 1996, 1997 and 1998
and the nine months ended September 30, 1999 reported below has been estimated
at the date of grant using the minimum value method assuming no expected
dividends and the following weighted average assumptions:

<TABLE>
<CAPTION>
EMPLOYEE STOCK OPTIONS
-----------------------------------------------------
DECEMBER 31,
------------------------------------ SEPTEMBER 30,
1996 1997 1998 1999
---------- ---------- ---------- --------------
<S> <C> <C> <C> <C>
Expected life (years)........................ 4-5 4-5 4-5 4-5
Risk-free interest rate (percentage)......... 7-8 7-8 7-8 5-6
</TABLE>

Existing option valuation models were developed for use in estimating the fair
value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected life of the option. Because the
Company's options have characteristics significantly different from those of
traded options and because changes in the subjective input assumptions can
materially affect the fair value estimate, in the opinion of management, the
existing models do not necessarily provide a reliable single measure of the fair
value of its employee stock options.

F-21
<PAGE>
GRIC COMMUNICATIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 IS UNAUDITED)

7. REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (CONTINUED)

The weighted average estimated fair values of employee stock options for fiscal
years 1996, 1997 and 1998 and the nine months ended September 30, 1999 were
$0.03, $0.18, $0.27 and $0.43 per share, respectively.

The effect of applying the minimum value option valuation model to the Company's
stock option grants did not result in pro forma net income materially different
from historical amounts reported. Therefore, this pro forma information is not
separately presented herein.

8. SUBSEQUENT EVENTS

REINCORPORATION AND PUBLIC OFFERING

In September 1999, the Board of Directors approved (i) the Company's
reincorporation in the state of Delaware and an associated exchange of shares of
common stock and preferred stock in the California predecessor for shares of
common stock and preferred stock in the Delaware corporation that has the effect
of a 1-for-2.8 reverse stock split, (ii) the designation of common stock and
preferred stock with $0.001 par value per share and (iii) the filing of a
Registration Statement with the Securities and Exchange Commission permitting
the Company to sell up to $80,000,000 of its common stock to the public. The
accompanying consolidated financial statements have been retroactively restated
to give effect to the reincorporation and reverse stock split.

STOCK OPTION AND EMPLOYEE STOCK PURCHASE PLAN

In September 1999, the Board of Directors approved, effective upon the date of
the Company's initial public offering of its common stock, (i) the termination
of the 1995 Plan and the 1997 Plan such that no new options may be granted under
these plans, (ii) the adoption of the 1999 Equity Incentive Plan (the "Equity
Plan") and the reservation of 4,500,000 shares for issuance under the Equity
Plan and (iii) the adoption of the 1999 Employee Stock Purchase Plan (the
"Purchase Plan") and the reservation of 500,000 shares of the Company's common
stock for issuance under the Purchase Plan.

F-22
<PAGE>
- --------------------------------------------------------------------------------

[LOGO]

COMMON STOCK

-------------------
PROSPECTUS
-------------------

, 1999

CIBC WORLD MARKETS
U.S. BANCORP PIPER JAFFRAY
VOLPE BROWN WHELAN & COMPANY

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

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. NO DEALER,
SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE INFORMATION THAT IS NOT
CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT
SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR
SALE IS NOT PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT
ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF THE DELIVERY
OF THIS PROSPECTUS OR ANY SALE OF THESE SECURITIES.

UNTIL , 1999 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING), ALL
DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table lists the costs and expenses to be paid by the Registrant in
connection with the sale of the shares of common stock being registered under
this registration statement. All amounts are estimates except for the Securities
and Exchange Commission registration fee, the NASD filing fee and the Nasdaq
National Market filing fee.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 17,648
NASD filing fee............................................. 6,848
Nasdaq National Market filing fee........................... 95,000
Legal fees and expenses..................................... 550,000
Accounting fees and expenses................................ 700,000
Printing and engraving expenses............................. 250,000
Road show expenses.......................................... 130,000
Blue sky fees and expenses.................................. 10,000
Transfer agent and registrar fees and expenses.............. 5,000
Miscellaneous............................................... 35,504
----------
Total................................................. $1,800,000
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law authorizes a court to award,
or a corporation's board of directors to grant, indemnity to directors and
officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities, including reimbursement for expenses
incurred, arising under the Securities Act of 1933, as amended (the "Securities
Act").

As permitted by the Delaware General Corporation Law, the Registrant's
Certificate of Incorporation includes a provision that eliminates the personal
liability of its directors for monetary damages for breach of fiduciary duty as
a director, except for liability:

- for any breach of the director's duty of loyalty to the Registrant or its
stockholders;

- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;

- under Section 174 of the Delaware General Corporation Law (regarding
unlawful dividends and stock purchases); or

- for any transaction from which the director derived an improper personal
benefit.

As permitted by the Delaware General Corporation Law, the Registrant's Bylaws
also provide that:

- the Registrant is required to indemnify its directors and officers to the
fullest extent permitted by the Delaware General Corporation Law, subject to
limited exceptions;

- the Registrant may indemnify its agents as set forth in the Delaware General
Corporation Law, unless otherwise required by law, our certificate of
incorporation or agreements;

- the Registrant is required to advance expenses, as incurred, to its
directors and officers in connection with a legal proceeding to the fullest
extent permitted by the Delaware General Corporation Law, subject to limited
exceptions;

- the rights conferred in the Bylaws are not exclusive; and

- the Registrant may not retroactively amend the Bylaws provisions relating to
indemnity.

II-1
<PAGE>
The Registrant intends to enter into Indemnification Agreements with each of its
current directors and officers to give such directors and officers additional
contractual assurances regarding the scope of the indemnification set forth in
the Registrant's Certificate of Incorporation and to provide additional
procedural protections. At present, there is no pending litigation or proceeding
involving a director, officer or employee of the Registrant regarding which
indemnification is sought, nor is the Registrant aware of any threatened
litigation that may result in claims for indemnification.

Reference is also made to Section 7 of the Underwriting Agreement, which
provides for the indemnification of officers, directors and controlling persons
of the Registrant against certain liabilities. The indemnification provision in
the Registrant's Certificate of Incorporation, Bylaws and the Indemnity
Agreements entered into between the Registrant and each of its directors and
officers may be sufficiently broad to permit indemnification of the Registrant's
directors and officers for liabilities arising under the Securities Act.

The Registrant maintains directors' and officers' liability insurance and
expects to obtain a rider to such coverage for securities matters.

See also "Undertakings" in Item 17.

Reference is made to the following documents filed as exhibits to this
Registration Statement regarding relevant indemnification provisions described
above and elsewhere herein:

<TABLE>
<CAPTION>
EXHIBIT DOCUMENT NUMBER
- ---------------- --------
<S> <C>
Underwriting Agreement...................................... 1.01
Registrant's Bylaws......................................... 3.02
Registrant's Second Amended and Restated Certificate of
Incorporation............................................. 3.04
Fourth Amended and Restated Registration Rights Agreement
dated April 16, 1999...................................... 4.02
Form of Indemnification Agreement........................... 10.01
</TABLE>

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The Registrant sold the following securities in the past three years.

1. As of September 30, 1999, the Registrant has issued 422,675 shares of our
common stock for an aggregate purchase price of $394,450 to employees,
directors and consultants pursuant to option exercises under its stock
option plans.

2. In July 1997, the Registrant sold 25,000 shares of common stock to Stanley
J. Meresman for an aggregate purchase price of $17,500.

3. Between December 1997 and June 1999, we issued 5,460,745 shares of Series D
Preferred Stock to a group of investors for an aggregate purchase price of
$38,225,398.

4. In August 1998, the Registrant issued warrants to purchase an aggregate of
10,000 shares of Series D Preferred Stock to Phoenix Leasing Corporation in
connection with an equipment financing.

5. In September 1998, the Registrant issued warrants to purchase an aggregate
of 60,267 shares of Series D Preferred Stock to a group of investors in
connection with a bridge loan financing. The number of shares that may be
acquired upon exercise of this warrant is currently 96,427.

6. In September 1998, in connection with a bridge financing, the Registrant
issued convertible promissory notes aggregating $2,700,000 to a group of
investors. In January 1999, the convertible notes and all related interest
were converted into 400,017 shares of Series D Preferred Stock, which are
included in the aggregate number of shares referred to in paragraph 3 above.

II-2
<PAGE>

7. In November 1998, the Registrant issued a warrant to purchase 16,071 shares
of Series D Preferred Stock to Silicon Valley Bank. The number of shares
that may be acquired upon exercise of this warrant was later adjusted to
17,724.

8. In November 1998, the Registrant issued a warrant to purchase 92,857 shares
of common stock to America Online, Inc. in connection with a strategic
alliance. The number of shares which may be acquired upon exercise of this
warrant was later adjusted to 102,699.

9. In December 1998, the Registrant issued a warrant to purchase 7,142 shares
of Series D Preferred Stock to Silicon Valley Bank. The number of shares
that may be acquired upon exercise of this warrant was later adjusted to
1,785.

10. Between January 1999 and March 1999 we issued warrants to purchase an
aggregate of 126,779 shares of Series D Preferred Stock to a group of
investors in connection with a bridge loan financing.

11. Between January 1999 and March 1999, in connection with a bridge loan
financing, we issued convertible promissory notes aggregating $12,750,000 to
a group of investors. In April 1999, the convertible notes and all related
interest were converted into 1,846,468 shares of Series D Preferred Stock,
which are included in the aggregate number of shares referred to in
paragraph 3 above.

All sales of common stock made pursuant to the exercise of stock options were
made in reliance on Rule 701 under the Securities Act or on Section 4(2) of the
Securities Act.

All other sales were made in reliance on Section 4(2) of the Securities Act
and/or Regulation D promulgated under the Securities Act. These sales were made
without general solicitation or advertising. Each purchaser was a sophisticated
investor with access to all relevant information necessary to evaluate the
investment and represented to the Registrant that the shares were being acquired
for investment.

ITEM 16. EXHIBITS.

(a) The following exhibits are filed with this registration statement:

<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
NUMBER TITLE
- --------------------- -----
<C> <S>
1.01 Form of Underwriting Agreement.**

3.01 The Registrant's Certificate of Incorporation.

3.02 The Registrant's First Amended and Restated Bylaws.

3.03 The Registrant's First Amended and Restated Certificate of
Incorporation.**

3.04 The Registrant's Second Amended and Restated Certificate of
Incorporation.

4.01 Form of specimen certificate for the Registrant's common
stock.**

4.02 Fourth Amended and Restated Registration Rights Agreement,
dated April 16, 1999, among Registrant and the security
holders listed in the agreement.*

4.03 Amendment to Fourth Amended and Restated Registration Rights
Agreement, dated April 16, 1999, among Registrant and the
security holders listed in the agreement dated
November , 1999.**

5.01 Opinion of Fenwick & West LLP regarding the legality of the
shares of common stock being registered.

10.01 Form of Indemnification Agreement between the Registrant and
each of its directors and executive officers.
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
NUMBER TITLE
- --------------------- -----
<C> <S>
10.02 Employee Agreement effective March 1, 1994 between Aimnet
Corporation and Dr. Hong Chen.*

10.03 Employee Agreement effective March 1, 1994 between Aimnet
Corporation and Lynn Y. Liu.*

10.04 Offer letter dated August 21, 1996 by the Registrant to
Christophe U. Culine.*

10.05 Offer letter dated June 8, 1998 by the Registrant to David
L. Teichmann.*

10.06 Offer letter dated October 15, 1998 by the Registrant to
Phillip M. Sakakihara.*

10.07 Offer letter dated January 15, 1999 by the Registrant to
Joseph M. Zaelit.*

10.08 Offer letter dated May 11, 1999 by the Registrant to Barron
B. Cox.*

10.09 Offer letter dated July 28, 1999 by the Registrant to
Kristin L. Steinmetz.*

10.10 Offer letter dated July 22, 1999 by the Registrant to Roger
L. Peirce.*

10.11 Aimnet Corporation 1995 Stock Option Plan.*

10.12 GRIC Communications, Inc. (formerly Aimquest Corporation)
1997 Stock Option Plan.*

10.13 The Registrant's 1999 Equity Incentive Plan.

10.14 The Registrant's 1999 Employee Stock Purchase Plan.

10.15 Restricted Stock Purchase dated July 1997 between Aimquest
Corporation and Stanley J. Meresman.*

10.16 Warrant to purchase common stock of the Registrant issued to
America Online, Inc. dated as of November 12, 1998.*

10.17 Warrant to purchase Series D Preferred Stock of the
Registrant issued to Silicon Valley Bank dated as of
December 31, 1998.*

10.18 Warrant to purchase Series D Preferred Stock of the
Registrant issued to Silicon Valley Bank dated as of
November 5, 1998.*

10.19 Warrant to purchase Series D Preferred Stock of the
Registrant issued to Phoenix Leasing Incorporated dated as
of August 10, 1998.*

10.20 Warrant to purchase Series D Preferred Stock of the
Registrant issued to Robert A. Kingsbook dated as of
August 10, 1998.*

10.21 Loan and Security Agreement dated November 5, 1998 between
the Registrant and Silicon Valley Bank, together with
Intellectual Property Agreement dated November 5, 1998.*

10.22 Senior Loan and Security Agreement dated August 10, 1998
between the Registrant and Phoenix Leasing Incorporated,
together with a form of Senior Secured Promissory Note.*

10.23 Lease dated January 6, 1998 among the Registrant,
John Arrillaga Survivor's Trust and Richard T. Peery
Separate Property Trust.*

10.24 Agreement dated August 3, 1999 between the Registrant and
Singapore Telecommunications Ltd.*

23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).

23.02 Consent of Independent Auditors.

24.01 Power of attorney.*

27.01 Financial Data Schedule.
</TABLE>

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

* Previously filed

** To be filed by amendment

(b) The following financial statement is filed with this registration statement:

Schedule II--Valuation and Qualifying Accounts

II-4
<PAGE>
Other financial statement schedules are omitted because the information called
for is not required or is shown either in the financial statements or the notes
thereto.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the Underwriters at
the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions described under Item 14 above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.

II-5
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Milpitas, State of California, on the 29th day of October, 1999.

<TABLE>
<S> <C> <C>
GRIC COMMUNICATIONS, INC.

By: * DR. HONG CHEN
----------------------------------------
Dr. Hong Chen
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to Registration Statement has been signed on October 29, 1999 by
the following persons in the capacities:

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
PRINCIPAL EXECUTIVE OFFICER:

* DR. HONG CHEN
------------------------------------------- President, Chief Executive Officer and
Dr. Hong Chen Director

PRINCIPAL FINANCIAL OFFICER:

/s/ JOSEPH M. ZAELIT
------------------------------------------- Senior Vice President, Finance and
Joseph M. Zaelit Administration and Chief Financial Officer

PRINCIPAL ACCOUNTING OFFICER:

* KIM S. SILVERMAN
------------------------------------------- Corporate Controller
Kim S. Silverman
</TABLE>

II-6
<PAGE>

<TABLE>
<CAPTION>
ADDITIONAL DIRECTORS:
<C> <S>

* ROGER L. PEIRCE Chairman
-------------------------------------------
Roger L. Peirce

* LYNN Y. LIU Director
-------------------------------------------
Lynn Y. Liu

* DR. TA-LIN HSU Director
-------------------------------------------
Dr. Ta-Lin Hsu

* DR. YEN-SON (PAUL) HUANG Director
-------------------------------------------
Dr. Yen-Son (Paul) Huang

* KHENG NAM LEE Director
-------------------------------------------
Kheng Nam Lee

* JOZEF LERNOUT Director
-------------------------------------------
Jozef Lernout

* STANLEY J. MERESMAN Director
-------------------------------------------
Stanley J. Meresman
</TABLE>

<TABLE>
<S> <C> <C> <C>
*By: /s/ JOSEPH M. ZAELIT
--------------------------------------
Joseph M. Zaelit,
AS ATTORNEY-IN-FACT
</TABLE>

II-7
<PAGE>
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNT

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
DESCRIPTION BEGINNING OF PERIOD EXPENSE DEDUCTIONS(1) END OF PERIOD
- ----------- ------------------- ---------- ------------- --------------
<S> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Nine months ended September 30,
1999........................... $384,000 $431,000 $(187,000) $628,000
Year ended December 31, 1998..... 214,000 406,000 236,000 384,000
Year ended December 31, 1997..... 35,000 220,000 41,000 214,000
Year ended December 31, 1996..... -- 35,000 -- 35,000
</TABLE>

(1) Uncollectible accounts written off net of recoveries.

S-1
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
NUMBER TITLE
- --------------------- -----
<C> <S>
3.01 The Registrant's Certificate of Incorporation.

3.02 The Registrant's First Amended and Restated Bylaws.

3.04 The Registrant's Second Amended and Restated Certificate of
Incorporation.

5.01 Opinion of Fenwick & West LLP regarding the legality of the
shares of common stock being registered.

10.01 Form of Indemnification Agreement between the Registrant and
each of its directors and executive officers.

10.13 The Registrant's 1999 Equity Incentive Plan.

10.14 The Registrant's 1999 Employee Stock Purchase Plan.

23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).

23.02 Consent of Independent Auditors.

27.01 Financial Data Schedule.
</TABLE>

<PAGE>

CERTIFICATE OF INCORPORATION

GRIC COMMUNICATIONS, INC.

ARTICLE I

The name of the corporation is GRIC Communications, Inc.

ARTICLE II

The address of the registered office of the corporation in the State of
Delaware is 15 East North Street, Dover, 19901, County of Kent. The name of its
registered agent at that address is Incorporating Services Ltd.

ARTICLE III

The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.

ARTICLE IV

The total number of shares of stock which the corporation has authority
to issue is 100 shares, all of which shall be Common Stock, $0.01 par value per
share.

ARTICLE V

The Board of Directors of the corporation shall have the power to
adopt, amend or repeal Bylaws of the corporation.

ARTICLE VI

Election of directors need not be by written ballot unless the Bylaws
of the corporation shall so provide.

ARTICLE VII

To the fullest extent permitted by law, no director of the corporation
shall be personally liable for monetary damages for breach of fiduciary duty as
a director. Without limiting the effect of the preceding sentence, if the
Delaware General Corporation Law is hereafter amended to authorize the further
elimination or limitation of the liability of a director, then the liability of
a director of the corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.

<PAGE>

Neither any amendment nor repeal of this Article VII, nor the adoption
of any provision of this Certificate of Incorporation inconsistent with this
Article VII, shall eliminate, reduce or otherwise adversely affect any
limitation on the personal liability of a director of the corporation existing
at the time of such amendment, repeal or adoption of such an inconsistent
provision.

ARTICLE VIII

The name and mailing address of the incorporator is Lynda Twomey, c/o
Fenwick & West LLP, Two Palo Alto Square, Palo Alto, California 94306.

The undersigned incorporator hereby acknowledges that the foregoing certificate
is her act and deed and that the facts stated herein are true.

Dated: April 15, 1998

Lynda Twomey, Incorporator

<PAGE>
Exhibit 3.02

FIRST AMENDED AND RESTATED BYLAWS

GRIC COMMUNICATIONS, INC.

(a Delaware corporation)

As adopted September 13, 1999

<PAGE>

FIRST AMENDED AND RESTATED BYLAWS

GRIC COMMUNICATIONS, INC.

a Delaware corporation

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I - STOCKHOLDERS

Section 1.1: Annual Meetings....................................................... 1

Section 1.2: Special Meetings...................................................... 1

Section 1.3: Notice of Meetings.................................................... 1

Section 1.4: Adjournments.......................................................... 1

Section 1.5: Quorum................................................................ 2

Section 1.6: Organization.......................................................... 2

Section 1.7: Voting; Proxies....................................................... 2

Section 1.8: Fixing Date for Determination of Stockholders of Record............... 3

Section 1.9: List of Stockholders Entitled to Vote................................. 4

Section 1.10: Inspectors of Elections............................................... 4

Section 1.11: Notice of Stockholder Business; Nominations........................... 5

Section 1.12 Notice of Stockholder Business; Nominations........................... 6

ARTICLE II - BOARD OF DIRECTORS

Section 2.1: Number; Qualifications................................................ 8

Section 2.2: Election; Resignation; Removal; Vacancies............................. 8

Section 2.3: Regular Meetings...................................................... 8

Section 2.4: Special Meetings..................................................... 9

Section 2.5: Telephonic Meetings Permitted........................................ 9

Section 2.6: Quorum; Vote Required for Action..................................... 9
</TABLE>
-i-

<PAGE>

FIRST AMENDED AND RESTATED BYLAWS

GRIC COMMUNICATIONS, INC.

a Delaware corporation

TABLE OF CONTENTS (CONT'D)

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 2.7: Organization......................................................... 9

Section 2.8: Written Action by Directors.......................................... 9

Section 2.9: Powers............................................................... 9

Section 2.10: Compensation of Directors............................................ 9

ARTICLE III - COMMITTEES

Section 3.1: Committees........................................................... 10

Section 3.2: Committee Rules...................................................... 10

ARTICLE IV - OFFICERS

Section 4.1: Generally............................................................ 10

Section 4.2: Chief Executive Officer.............................................. 11

Section 4.3: Chairperson of the Board............................................. 11

Section 4.4: President............................................................ 11

Section 4.5: Vice President....................................................... 12

Section 4.6: Chief Financial Officer.............................................. 12

Section 4.7: Treasurer............................................................ 12

Section 4.8: Secretary............................................................ 12

Section 4.9: Delegation of Authority.............................................. 12

Section 4.10: Removal.............................................................. 12
</TABLE>

-ii-

<PAGE>

FIRST AMENDED AND RESTATED BYLAWS

GRIC COMMUNICATIONS, INC.

a Delaware corporation

TABLE OF CONTENTS (CONT'D)

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE V - STOCK

Section 5.l: Certificates......................................................... 12

Section 5.2: Lost, Stolen or Destroyed Stock Certificates;
Issuance of New Certificate.......................................... 13

Section 5.3: Other Regulations.................................................... 13

ARTICLE VI - INDEMNIFICATION

Section 6.1: Indemnification of Officers and Directors............................ 13

Section 6.2: Advance of Expenses.................................................. 13

Section 6.3: Non-Exclusivity of Rights............................................ 14

Section 6.4: Indemnification Contracts............................................ 14

Section 6.5: Effect of Amendment.................................................. 14

ARTICLE VII - NOTICES

Section 7.l: Notice............................................................... 14

Section 7.2: Waiver of Notice..................................................... 15

ARTICLE VIII - INTERESTED DIRECTORS

Section 8.1: Interested Directors; Quorum......................................... 15

ARTICLE IX - MISCELLANEOUS .....................................................................

Section 9.1: Fiscal Year.......................................................... 16

Section 9.2: Seal................................................................. 16

Section 9.3: Form of Records...................................................... 16
</TABLE>

-iii-

<PAGE>

FIRST AMENDED AND RESTATED BYLAWS

GRIC COMMUNICATIONS, INC.

a Delaware corporation

TABLE OF CONTENTS (CONT'D)

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 9.4: Reliance Upon Books and Records...................................... 16

Section 9.5: Certificate of Incorporation Governs................................. 16

Section 9.6: Severability......................................................... 15

ARTICLE X - AMENDMENT

Section 10.1: Amendments........................................................... 17
</TABLE>

-iv-

<PAGE>

FIRST AMENDED AND RESTATED BYLAWS

GRIC COMMUNICATIONS, INC.

(a Delaware corporation)

As adopted September 13, 1999

ARTICLE I

STOCKHOLDERS

SECTION 1.1: ANNUAL MEETINGS. Unless directors are elected by written
consent in lieu of an annual meeting as permitted by Section 211 of the Delaware
General Corporation Law, an annual meeting of stockholders shall be held for the
election of directors at such date, time and place, either within or without the
State of Delaware, as the Board of Directors shall each year fix. Any other
proper business may be transacted at the annual meeting.

SECTION 1.2: SPECIAL MEETINGS. Special meetings of stockholders for any
purpose or purposes may be called at any time by the Board of Directors, and
shall be called upon the request of the Chairperson of the Board of Directors,
the Chief Executive Officer, the President, a majority of the members of the
Board of Directors or, until the Corporation is authorized for listing on the
National Market System of Nasdaq Stock Market (or any successor to such entity),
by the holders of shares of the Corporation that are entitled to cast not less
than ten percent (10%) of the total number of votes entitled to be cast by all
stockholders at such meeting. Special meetings may not be called by any other
person or persons. If a special meeting of stockholders is called at the request
of any person or persons OTHER THAN by a majority of the members of the Board of
Directors, then such person or persons shall request such meeting by delivering
a written request to call such meeting to each member of the Board of Directors,
and the Board of Directors shall then determine the time, date and place of such
special meeting, which shall be held not more than one hundred twenty (120) nor
less than thirty-five (35) days after the written request to call such special
meeting was delivered to each member of the Board of Directors.

SECTION 1.3: NOTICE OF MEETINGS. Written notice of all meetings of
stockholders shall be given stating the place, date and time of the meeting and,
in the case of a special meeting, the purpose or purposes for which the meeting
is called. Unless otherwise required by applicable law or the Certificate of
Incorporation of the Corporation, such notice shall be given not less than ten
(10) nor more than sixty (60) days before the date of the meeting to each
stockholder of record entitled to vote at such meeting.

<PAGE>

SECTION 1.4: ADJOURNMENTS. Any meeting of stockholders may adjourn from
time to time to reconvene at the same or another place, and notice need not be
given of any such adjourned meeting if the time, date and place thereof are
announced at the meeting at which the adjournment is taken; PROVIDED, HOWEVER,
that if the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, then a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting. At the adjourned meeting the Corporation may transact
any business that might have been transacted at the original meeting.

SECTION 1.5: QUORUM. At each meeting of stockholders the holders of a
majority of the shares of stock entitled to vote at the meeting, present in
person or represented by proxy, shall constitute a quorum for the transaction of
business, except if otherwise required by applicable law. If a quorum shall fail
to attend any meeting, the chairperson of the meeting or the holders of a
majority of the shares entitled to vote who are present, in person or by proxy,
at the meeting may adjourn the meeting. Shares of the Corporation's stock
belonging to the Corporation (or to another corporation, if a majority of the
shares entitled to vote in the election of directors of such other corporation
are held, directly or indirectly, by the Corporation), shall neither be entitled
to vote nor be counted for quorum purposes; PROVIDED, HOWEVER, that the
foregoing shall not limit the right of the Corporation or any other corporation
to vote any shares of the Corporation's stock held by it in a fiduciary
capacity.

SECTION 1.6: ORGANIZATION. Meetings of stockholders shall be presided
over by such person as the Board of Directors may designate, or, in the absence
of such a person, the Chairperson of the Board of Directors, or, in the absence
of such person, the President of the Corporation, or, in the absence of such
person, such person as may be chosen by the holders of a majority of the shares
entitled to vote who are present, in person or by proxy, at the meeting. Such
person shall be chairperson of the meeting and, subject to Section 1.11 hereof,
shall determine the order of business and the procedure at the meeting,
including such regulation of the manner of voting and the conduct of discussion
as seems to him or her to be in order. The Secretary of the Corporation shall
act as secretary of the meeting, but in such person's absence the chairperson of
the meeting may appoint any person to act as secretary of the meeting.

SECTION 1.7: VOTING; PROXIES. Unless otherwise provided by law or the
Certificate of Incorporation, and subject to the provisions of Section 1.8 of
these First Amended and Restated Bylaws ("BYLAWS"), each stockholder shall be
entitled to one (1) vote for each share of stock held by such stockholder. Each
stockholder entitled to vote at a meeting of stockholders, or to express consent
or dissent to corporate action in writing without a meeting, may authorize
another person or persons to act for such stockholder by proxy. Such a proxy may
be prepared, transmitted and delivered in any manner permitted by applicable
law. Voting at meetings of stockholders need not be by written ballot unless
such is demanded at the meeting before voting begins by a stockholder or
stockholders holding shares representing at least one percent (1%) of the votes
entitled to vote at such meeting, or by such stockholder's or stockholders'
proxy; PROVIDED, HOWEVER, that an election of directors shall be by written
ballot if demand is so made by any stockholder at the meeting before voting
begins. If a vote is to be taken by written ballot, then each such ballot shall
state the name of the stockholder or proxy voting and such other

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<PAGE>

information as the chairperson of the meeting deems appropriate. Directors
shall be elected by a plurality of the votes of the shares present in person
or represented by proxy at the meeting and entitled to vote on the election
of directors. Unless otherwise provided by applicable law, the Certificate of
Incorporation or these Bylaws, every matter other than the election of
directors shall be decided by the affirmative vote of the holders of a
majority of the shares of stock entitled to vote thereon that are present in
person or represented by proxy at the meeting and are voted for or against
the matter.

SECTION 1.8: FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF
RECORD.

(a) GENERALLY. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not precede the date upon which the resolution fixing the record
date is adopted by the Board of Directors and which shall not be more than sixty
(60) nor less than ten (10) days before the date of such meeting, nor more than
sixty (60) days prior to any other action. If no record date is fixed by the
Board of Directors, then the record date shall be as provided by applicable law.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; PROVIDED,
HOWEVER, that the Board of Directors may fix a new record date for the adjourned
meeting.

(b) STOCKHOLDER REQUEST FOR ACTION BY WRITTEN CONSENT. Any stockholder
of record seeking to have the stockholders authorize or take corporate action by
written consent without a meeting shall, by written notice to the Secretary of
the Corporation, request the Board of Directors to fix a record date for such
consent. Such request shall include a brief description of the action proposed
to be taken. The Board of Directors shall, within ten (10) days after the date
on which such a request is received, adopt a resolution fixing the record date.
Such record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and shall not be more than ten
(10) days after the date upon which the resolution fixing the record date is
adopted by the Board of Directors. If no record date has been fixed by the Board
of Directors within ten (10) days after the date on which such a request is
received, then the record date for determining stockholders entitled to consent
to corporate action in writing without a meeting, when no prior action by the
Board of Directors is required by applicable law, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the Corporation by delivery to its registered office in
the State of Delaware, to its principal place of business, or to any officer or
agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. If no record date has been fixed by the Board of Directors
and prior action by the Board of Directors is required by applicable law, then
the record date for determining stockholders entitled to consent to corporate
action in writing without a meeting shall be at the close of business on the
date on which the Board of Directors adopts the

-3-

<PAGE>

resolution taking such prior action. This Section 1.8(b) will no longer be in
effect following the closing of the Corporation's initial public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, covering the offer and sale of Common Stock to the public
(the "INITIAL PUBLIC OFFERING").

SECTION 1.9: LIST OF STOCKHOLDERS ENTITLED TO VOTE. A complete list of
stockholders entitled to vote at any meeting of stockholders, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in the name of each stockholder, shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present at the meeting.

SECTION 1.10: ACTION BY WRITTEN CONSENT OF STOCKHOLDERS.

(a) PROCEDURE. Unless otherwise provided by the Certificate of
Incorporation, and except as set forth in Section 1.8(b) above, any action
required or permitted to be taken at any annual or special meeting of the
stockholders may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Written stockholder consents shall bear the date of signature of each
stockholder who signs the consent and shall be delivered to the Corporation by
delivery to its registered office in the State of Delaware, to its principal
place of business or to any officer or agent of the Corporation having custody
of the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the Corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. No written consent shall
be effective to take the action set forth therein unless, within sixty (60) days
of the earliest dated consent delivered to the Corporation in the manner
provided above, written consents signed by a sufficient number of stockholders
to take the action set forth therein are delivered to the Corporation in the
manner provided above.

(b) NOTICE OF CONSENT. Prompt notice of the taking of corporate action
by stockholders without a meeting by less than unanimous written consent of the
stockholders shall be given to those stockholders who have not consented thereto
in writing and who, if the action had been taken at a meeting, would have been
entitled to notice of the meeting if the record date for such meeting had been
the date that written consents signed by a sufficient number of holders to take
the action were delivered to the Corporation. In the case of a Certificate
Action (as defined below), if the Delaware General Corporation Law so requires,
such notice shall be given prior to filing of the certificate in question. If
the action which is consented to requires the filing of a certificate under the
Delaware General Corporation Law (a "CERTIFICATE ACTION"), then if the Delaware
General Corporation Law so requires, the certificate so filed shall state that
written stockholder consent has been given in accordance with Section 228 of the
Delaware General

-4-

<PAGE>

Corporation Law and that written notice of the taking of corporate action by
stockholders without a meeting as described herein has been given as provided
in such section.

(c) TERMINATION OF THIS SECTION. Immediately following the Initial
Public Offering, this Section 1.10 shall no longer be in effect.

SECTION 1.11: INSPECTORS OF ELECTIONS.

(a) APPLICABILITY. Unless otherwise provided in the Corporation's
Certificate of Incorporation or required by the Delaware General Corporation
Law, the following provisions of this Section 1.11 shall apply only if and when
the Corporation has a class of voting stock that is: (i) listed on a national
securities exchange; (ii) authorized for quotation on an automated interdealer
quotation system of a registered national securities association; or (iii) held
of record by more than 2,000 stockholders; in all other cases, observance of the
provisions of this Section 1.11 shall be optional, and at the discretion of the
Corporation.

(b) APPOINTMENT. The Corporation shall, in advance of any meeting of
stockholders, appoint one or more inspectors of election to act at the meeting
and make a written report thereof. The Corporation may designate one or more
persons as alternate inspectors to replace any inspector who fails to act. If no
inspector or alternate is able to act at a meeting of stockholders, the person
presiding at the meeting shall appoint one or more inspectors to act at the
meeting.

(c) INSPECTOR'S OATH. Each inspector of election, before entering upon
the discharge of his duties, shall take and sign an oath faithfully to execute
the duties of inspector with strict impartiality and according to the best of
such inspector's ability.

(d) DUTIES OF INSPECTORS. At a meeting of stockholders, the inspectors
of election shall (i) ascertain the number of shares outstanding and the voting
power of each share, (ii) determine the shares represented at a meeting and the
validity of proxies and ballots, (iii) count all votes and ballots, (iv)
determine and retain for a reasonable period of time a record of the disposition
of any challenges made to any determination by the inspectors, and (v) certify
their determination of the number of shares represented at the meeting, and
their count of all votes and ballots. The inspectors may appoint or retain other
persons or entities to assist the inspectors in the performance of the duties of
the inspectors.

(e) OPENING AND CLOSING OF POLLS. The date and time of the opening and
the closing of the polls for each matter upon which the stockholders will vote
at a meeting shall be announced by the chairperson of the meeting. No ballot,
proxies or votes, nor any revocations thereof or changes thereto, shall be
accepted by the inspectors after the closing of the polls unless the Court of
Chancery upon application by a stockholder shall determine otherwise.

(f) DETERMINATIONS. In determining the validity and counting of proxies
and ballots, the inspectors shall be limited to an examination of the proxies,
any envelopes submitted with those proxies, any information provided in
connection with proxies in accordance with Section 212(c)(2) of the Delaware
General Corporation Law, ballots and the regular books and records of

-5-

<PAGE>

the Corporation, except that the inspectors may consider other reliable
information for the limited purpose of reconciling proxies and ballots
submitted by or on behalf of banks, brokers, their nominees or similar
persons which represent more votes than the holder of a proxy is authorized
by the record owner to cast or more votes than the stockholder holds of
record. If the inspectors consider other reliable information for the limited
purpose permitted herein, the inspectors at the time they make their
certification of their determinations pursuant to this Section 1.11 shall
specify the precise information considered by them, including the person or
persons from whom they obtained the information, when the information was
obtained, the means by which the information was obtained and the basis for
the inspectors' belief that such information is accurate and reliable.

SECTION 1.12: NOTICE OF STOCKHOLDER BUSINESS; NOMINATIONS.

(a) ANNUAL MEETING OF STOCKHOLDERS.

(i) Nominations of persons for election to the Board of
Directors and the proposal of business to be considered by the stockholders
shall be made at an annual meeting of stockholders (A) pursuant to the
Corporation's notice of such meeting, (B) by or at the direction of the Board of
Directors or (C) by any stockholder of the Corporation who was a stockholder of
record at the time of giving of the notice provided for in this Section 1.12,
who is entitled to vote at such meeting and who complies with the notice
procedures set forth in this Section 1.12.

(ii) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (C) of subparagraph
(a)(i) of this Section 1.12, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation and such other business
must otherwise be a proper matter for stockholder action. To be timely, a
stockholder's notice must be delivered to the Secretary at the principal
executive offices of the Corporation not later than the close of business on the
sixtieth (60th) day nor earlier than the close of business on the ninetieth
(90th) day prior to the first anniversary of the preceding year's annual meeting
(except in the case of the 2000 annual meeting, for which such notice shall be
timely if delivered in the same time period as if such meeting were a special
meeting governed by subparagraph (b) of this Section 1.12); PROVIDED, HOWEVER,
that in the event that the date of the annual meeting is more than thirty (30)
days before or more than sixty (60) days after such anniversary date, notice by
the stockholder to be timely must be so delivered not earlier than the close of
business on the ninetieth (90th) day prior to such annual meeting and not later
than the close of business on the later of the sixtieth (60th) day prior to such
annual meeting or the close of business on the tenth (10th) day following the
day on which public announcement of the date of such meeting is first made by
the Corporation. Such stockholder's notice shall set forth: (a) as to each
person whom the stockholder proposes to nominate for election or reelection as a
director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected; (b) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for

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<PAGE>

conducting such business at the meeting and any material interest in such
business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the stockholder giving the notice
and the beneficial owner, if any, on whose behalf the nomination or proposal
is made (1) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner, and (2) the class and
number of shares of the Corporation that are owned beneficially and held of
record by such stockholder and such beneficial owner.

(iii) Notwithstanding anything in the second sentence of
subparagraph (a)(ii) of this Section 1.12 to the contrary, in the event that the
number of directors to be elected to the Board of Directors of the Corporation
is increased and there is no public announcement by the Corporation naming all
of the nominees for director or specifying the size of the increased board of
directors at least seventy (70) days prior to the first anniversary of the
preceding year's annual meeting (or, if the annual meeting is held more than
thirty (30) days before or sixty (60) days after such anniversary date, at least
seventy (70) days prior to such annual meeting), a stockholder's notice required
by this Section 1.12 shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it shall be
delivered to the Secretary of the Corporation at the principal executive office
of the Corporation not later than the close of business on the tenth (10th) day
following the day on which such public announcement is first made by the
Corporation.

(b) SPECIAL MEETINGS OF STOCKHOLDERS. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of such meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the
Corporation's notice of such meeting (i) by or at the direction of the Board of
Directors or (ii) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice of
the special meeting, who shall be entitled to vote at the meeting and who
complies with the notice procedures set forth in this Section 1.12. In the event
the Corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board of Directors, any such stockholder
may nominate a person or persons (as the case may be), for election to such
position(s) as specified in the Corporation's notice of meeting, if the
stockholder's notice required by subparagraph (a)(ii) of this Section 1.12 shall
be delivered to the Secretary of the Corporation at the principal executive
offices of the Corporation not earlier than the ninetieth (90th) day prior to
such special meeting and not later than the close of business on the later of
the sixtieth (60th) day prior to such special meeting or the tenth (10th) day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting.

(i) Only such persons who are nominated in accordance with the
procedures set forth in this Section 1.12 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in

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<PAGE>

accordance with the procedures set forth in this Section 1.12. Except as
otherwise provided by law or these Bylaws, the chairperson of the meeting
shall have the power and duty to determine whether a nomination or any
business proposed to be brought before the meeting was made or proposed, as
the case may be, in accordance with the procedures set forth in this Section
1.12 and, if any proposed nomination or business is not in compliance
herewith, to declare that such defective proposal or nomination shall be
disregarded.

(ii) For purposes of this Section 1.12, the term "PUBLIC
ANNOUNCEMENT" shall mean disclosure in a press release reported by the Dow Jones
News Service, Associated Press or comparable national news service or in a
document publicly filed by the Corporation with the Securities and Exchange
Commission pursuant to section 13, 14 or 15(d) of the Exchange Act.

(iii) Notwithstanding the foregoing provisions of this Section 1.12, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth herein. Nothing in this Section 1.12 shall be deemed to affect any rights
of stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.

ARTICLE II

BOARD OF DIRECTORS

SECTION 2.1: NUMBER; QUALIFICATIONS. The Board of Directors shall
consist of one or more members. Upon the date of adoption of these Bylaws, the
number of directors shall be eight (8), and thereafter shall be fixed from time
to time by resolution of the Board of Directors. No decrease in the authorized
number of directors constituting the Board of Directors shall shorten the term
of any incumbent director. Directors need not be stockholders of the
Corporation.

SECTION 2.2: ELECTION; RESIGNATION; REMOVAL; VACANCIES. The Board of
Directors shall initially consist of the person or persons elected by the
incorporator or named in the Corporation's initial Certificate of Incorporation.
Each director shall hold office until the next annual meeting of stockholders
and until such director's successor is elected and qualified, or until such
director's earlier death, resignation or removal. Any director may resign at any
time upon written notice to the Corporation. Subject to the rights of the
holders of any series of Preferred Stock, any director or the entire Board of
Directors may be removed, with or without cause, by the holders of a majority of
the shares then entitled to vote at an election of directors. Subject to the
rights of the holders of any series of Preferred Stock, any vacancy occurring in
the Board of Directors for any cause, and any newly created directorship
resulting from any increase in the authorized number of directors, shall, unless
as otherwise provided by law, be filled only by the affirmative vote of a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director, and not by the stockholders.

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<PAGE>

SECTION 2.3: REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such places, within or without the State of Delaware,
and at such times as the Board of Directors may from time to time determine.
Notice of regular meetings need not be given if the date, times and places
thereof are fixed by resolution of the Board of Directors.

SECTION 2.4: SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Chairperson of the Board of Directors, the
President or a majority of the members of the Board of Directors then in office
and may be held at any time, date or place, within or without the State of
Delaware, as the person or persons calling the meeting shall fix. Notice of the
time, date and place of such meeting shall be given, orally or in writing, by
the person or persons calling the meeting to all directors at least four (4)
days before the meeting if the notice is mailed, or at least twenty-four (24)
hours before the meeting if such notice is given by telephone, hand delivery,
telegram, telex, mailgram, facsimile or similar communication method. Unless
otherwise indicated in the notice, any and all business may be transacted at a
special meeting.

SECTION 2.5: TELEPHONIC MEETINGS PERMITTED. Members of the Board of
Directors, or any committee of the Board, may participate in a meeting of the
Board or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to
conference telephone or similar communications equipment shall constitute
presence in person at such meeting.

SECTION 2.6: QUORUM; VOTE REQUIRED FOR ACTION. At all meetings of the
Board of Directors a majority of the total number of authorized directors shall
constitute a quorum for the transaction of business. Except as otherwise
provided herein or in the Certificate of Incorporation, or required by law, the
vote of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.

SECTION 2.7: ORGANIZATION. Meetings of the Board of Directors shall be
presided over by the Chairperson of the Board of Directors, or in such person's
absence by the President, or in such person's absence by a chairperson chosen at
the meeting. The Secretary shall act as secretary of the meeting, but in such
person's absence the chairperson of the meeting may appoint any person to act as
secretary of the meeting.

SECTION 2.8: WRITTEN ACTION BY DIRECTORS. Any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board
or such committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board or
committee, respectively.

SECTION 2.9: POWERS. The Board of Directors may, except as otherwise
required by law or the Certificate of Incorporation, exercise all such powers
and do all such acts and things as may be exercised or done by the Corporation.

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<PAGE>

SECTION 2.10: COMPENSATION OF DIRECTORS. Directors, as such, may
receive, pursuant to a resolution of the Board of Directors, fees and other
compensation for their services as directors, including without limitation
their services as members of committees of the Board of Directors.

ARTICLE III

COMMITTEES

SECTION 3.1: COMMITTEES. The Board of Directors may designate one or
more committees, each committee to consist of one or more of the directors of
the Corporation. The Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of the committee, the member or members thereof
present at any meeting of such committee who are not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member. Any such
committee, to the extent provided in a resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation
and may authorize the seal of the Corporation to be affixed to all papers
that may require it; but no such committee shall have the power or authority
in reference to the following matters: (i) approving or adopting, or
recommending to the stockholders, any action or matter expressly required by
the Delaware General Corporation Law to be submitted to stockholders for
approval or (ii) adopting, amending or repealing any bylaw of the Corporation.

SECTION 3.2: COMMITTEE RULES. Unless the Board of Directors
otherwise provides, each committee designated by the Board of Directors may
make, alter and repeal rules for the conduct of its business. In the absence
of such rules each committee shall conduct its business in the same manner as
the Board of Directors conducts its business pursuant to Article II of these
Bylaws.

ARTICLE IV

OFFICERS

SECTION 4.1: GENERALLY. The officers of the Corporation shall consist
of a Chief Executive Officer and/or a President, one or more Vice Presidents, a
Secretary, a Treasurer and such other officers, including a Chairperson of the
Board of Directors and/or Chief Financial Officer, as may from time to time be
appointed by the Board of Directors. All officers shall be elected by the Board
of Directors; PROVIDED, HOWEVER, that the Board of Directors may empower the
Chief Executive Officer of the Corporation to appoint officers other than the
Chairperson of the Board, the Chief Executive Officer, the President, the Chief
Financial Officer or the Treasurer. Each officer shall hold office until such
person's successor is elected and qualified or until such person's earlier
resignation or removal. Any number of offices may be held by the same person.
Any officer may resign at any time upon written notice to the Corporation. Any

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vacancy occurring in any office of the Corporation by death, resignation,
removal or otherwise may be filled by the Board of Directors.

SECTION 4.2: CHIEF EXECUTIVE OFFICER. Subject to the control of the
Board of Directors and such supervisory powers, if any, as may be given by
the Board of Directors, the powers and duties of the Chief Executive Officer
of the Corporation are:

(a) To act as the general manager and, subject to the control
of the Board of Directors, to have general supervision, direction and
control of the business and affairs of the Corporation;

(b) To preside at all meetings of the stockholders;

(c) To call meetings of the stockholders to be held at such
times and, subject to the limitations prescribed by law or by these Bylaws,
at such places as he or she shall deem proper; and

(d) To affix the signature of the Corporation to all deeds,
conveyances, mortgages, guarantees, leases, obligations, bonds,
certificates and other papers and instruments in writing which have been
authorized by the Board of Directors or which, in the judgment of the Chief
Executive Officer, should be executed on behalf of the Corporation; to sign
certificates for shares of stock of the Corporation; and, subject to the
direction of the Board of Directors, to have general charge of the property
of the Corporation and to supervise and control all officers, agents and
employees of the Corporation.

The President shall be the Chief Executive Officer of the
Corporation unless the Board of Directors shall designate another officer to be
the Chief Executive Officer. If there is no President, and the Board of
Directors has not designated any other officer to be the Chief Executive
Officer, then the Chairperson of the Board of Directors shall be the Chief
Executive Officer.

SECTION 4.3: CHAIRPERSON OF THE BOARD. The Chairperson of the Board of
Directors shall have the power to preside at all meetings of the Board of
Directors and shall have such other powers and duties as provided in these
Bylaws and as the Board of Directors may from time to time prescribe.

SECTION 4.4: PRESIDENT. The President shall be the Chief Executive
Officer of the Corporation unless the Board of Directors shall have
designated another officer as the Chief Executive Officer of the Corporation.
Subject to the provisions of these Bylaws and to the direction of the Board
of Directors, and subject to the supervisory powers of the Chief Executive
Officer (if the Chief Executive Officer is an officer other than the
President), and subject to such supervisory powers and authority as may be
given by the Board of Directors to the Chairperson of the Board of Directors,
and/or to any other officer, the President shall have the responsibility for
the general management the control of the business and affairs of the
Corporation and the general supervision and direction of all of the officers,
employees and agents of the Corporation (other than the Chief Executive
Officer, if the Chief Executive Officer is an officer other than the

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<PAGE>

President) and shall perform all duties and have all powers that are commonly
incident to the office of President or that are delegated to the President by
the Board of Directors.

SECTION 4.5: VICE PRESIDENT. Each Vice President shall have all such
powers and duties as are commonly incident to the office of Vice President, or
that are delegated to him or her by the Board of Directors or the Chief
Executive Officer. A Vice President may be designated by the Board to perform
the duties and exercise the powers of the Chief Executive Officer in the event
of the Chief Executive Officer's absence or disability.

SECTION 4.6: CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
be the Treasurer of the Corporation unless the Board of Directors shall have
designated another officer as the Treasurer of the Corporation. Subject to the
direction of the Board of Directors and the Chief Executive Officer, the Chief
Financial Officer shall perform all duties and have all powers that are commonly
incident to the office of Chief Financial Officer.

SECTION 4.7: TREASURER. The Treasurer shall have custody of all monies
and securities of the Corporation. The Treasurer shall make such disbursements
of the funds of the Corporation as are authorized and shall render from time to
time an account of all such transactions. The Treasurer shall also perform such
other duties and have such other powers as are commonly incident to the office
of Treasurer, or as the Board of Directors or the Chief Executive Officer may
from time to time prescribe.

SECTION 4.8: SECRETARY. The Secretary shall issue or cause to be issued
all authorized notices for, and shall keep, or cause to be kept, minutes of all
meetings of the stockholders and the Board of Directors. The Secretary shall
have charge of the corporate minute books and similar records and shall perform
such other duties and have such other powers as are commonly incident to the
office of Secretary, or as the Board of Directors or the Chief Executive Officer
may from time to time prescribe.

SECTION 4.9: DELEGATION OF AUTHORITY. The Board of Directors may
from time to time delegate the powers or duties of any officer to any other
officers or agents, notwithstanding any provision hereof.

SECTION 4.10: REMOVAL. Any officer of the Corporation shall serve at
the pleasure of the Board of Directors and may be removed at any time, with or
without cause, by the Board of Directors. Such removal shall be without
prejudice to the contractual rights of such officer, if any, with the
Corporation.

ARTICLE V

STOCK

SECTION 5.1: CERTIFICATES. Every holder of stock shall be entitled to
have a certificate signed by or in the name of the Corporation by the
Chairperson or Vice-Chairperson of the Board

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<PAGE>

of Directors, or the President or a Vice President, and by the Treasurer or
an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the
Corporation, certifying the number of shares owned by such stockholder in the
Corporation. Any or all of the signatures on the certificate may be a
facsimile.

SECTION 5.2: LOST, STOLEN OR DESTROYED STOCK CERTIFICATES; ISSUANCE OF
NEW CERTIFICATES. The Corporation may issue a new certificate of stock in the
place of any certificate previously issued by it, alleged to have been lost,
stolen or destroyed, and the Corporation may require the owner of the lost,
stolen or destroyed certificate, or such owner's legal representative, to agree
to indemnify the Corporation and/or to give the Corporation a bond sufficient to
indemnify it, against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate.

SECTION 5.3: OTHER REGULATIONS. The issue, transfer, conversion and
registration of stock certificates shall be governed by such other
regulations as the Board of Directors may establish.

ARTICLE VI

INDEMNIFICATION

SECTION 6.1 INDEMNIFICATION OF OFFICERS AND DIRECTORS. Each person
who was or is made a party to, or is threatened to be made a party to, or is
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "PROCEEDING"), by reason of the fact that
such person (or a person of whom such person is the legal representative), is
or was a director or officer of the Corporation or a Reincorporated
Predecessor (as defined below) or is or was serving at the request of the
Corporation or a Reincorporated Predecessor (as defined below) as a director
or officer of another corporation, or of a partnership, joint venture, trust
or other enterprise, including service with respect to employee benefit
plans, shall be indemnified and held harmless by the Corporation to the
fullest extent permitted by the Delaware General Corporation Law, against all
expenses, liability and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes and penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in connection
therewith, provided such person acted in good faith and in a manner which the
person reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe the person's conduct was unlawful. Such
indemnification shall continue as to a person who has ceased to be a director
or officer and shall inure to the benefit of such person's heirs, executors
and administrators. Notwithstanding the foregoing, the Corporation shall
indemnify any such person seeking indemnity in connection with a Proceeding
(or part thereof) initiated by such person only if such Proceeding (or part
thereof) was authorized by the Board of Directors of the Corporation. As used
herein, the term "REINCORPORATED PREDECESSOR" means a corporation that is
merged with and into the Corporation in a statutory merger where (a) the
Corporation is the surviving corporation of such merger; (b) the primary
purpose of such merger is to change the corporate domicile of the
Reincorporated Predecessor to Delaware.

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SECTION 6.2: ADVANCE OF EXPENSES. The Corporation shall pay all
expenses (including attorneys' fees) incurred by such a director or officer
in defending any such Proceeding as they are incurred in advance of its final
disposition; PROVIDED, HOWEVER, that if the Delaware General Corporation Law
then so requires, the payment of such expenses incurred by such a director or
officer in advance of the final disposition of such Proceeding shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of
such director or officer, to repay all amounts so advanced if it should be
determined ultimately that such director or officer is not entitled to be
indemnified under this Article VI or otherwise; and PROVIDED, FURTHER, that
the Corporation shall not be required to advance any expenses to a person
against whom the Corporation directly brings a claim, in a Proceeding,
alleging that such person has breached such person's duty of loyalty to the
Corporation, committed an act or omission not in good faith or that involves
intentional misconduct or a knowing violation of law, or derived an improper
personal benefit from a transaction.

SECTION 6.3: NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any
person in this Article VI shall not be exclusive of any other right that such
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, Bylaws, agreement, vote or consent of
stockholders or disinterested directors, or otherwise. Additionally, nothing
in this Article VI shall limit the ability of the Corporation, in its
discretion, to indemnify or advance expenses to persons whom the Corporation
is not obligated to indemnify or advance expenses pursuant to this Article VI.

SECTION 6.4: INDEMNIFICATION CONTRACTS. The Board of Directors is
authorized to cause the Corporation to enter into indemnification contracts
with any director, officer, employee or agent of the Corporation, or any
person serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, including employee benefit plans, providing
indemnification rights to such person. Such rights may be greater than those
provided in this Article VI.

SECTION 6.5: EFFECT OF AMENDMENT. Any amendment, repeal or
modification of any provision of this Article VI shall be prospective only,
and shall not adversely affect any right or protection conferred on a person
pursuant to this Article VI and existing at the time of such amendment,
repeal or modification.

ARTICLE VII

NOTICES

SECTION 7.1: NOTICE. Except as otherwise specifically provided herein
or required by law, all notices required to be given pursuant to these Bylaws
shall be in writing and may in every instance be effectively given by hand
delivery (including use of a delivery service), by depositing such notice in the
mail, postage prepaid, or by sending such notice by prepaid telegram, telex,
overnight express courier, mailgram or facsimile. Any such notice shall be
addressed to the person to whom notice is to be given at such person's address
as it appears on the records of the Corporation. The notice shall be deemed
given (i) in the case of hand delivery,

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when received by the person to whom notice is to be given or by any person
accepting such notice on behalf of such person, (ii) in the case of delivery
by mail, upon deposit in the mail, (iii) in the case of delivery by overnight
express courier, when dispatched, and (iv) in the case of delivery via
telegram, telex, mailgram or facsimile, when dispatched.

SECTION 7.2: WAIVER OF NOTICE. Whenever notice is required to be
given under any provision of these Bylaws, a written waiver of notice, signed
by the person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or members of a committee of directors need be
specified in any written waiver of notice.

ARTICLE VIII

INTERESTED DIRECTORS

SECTION 8.1: INTERESTED DIRECTORS; QUORUM. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be
void or voidable solely for this reason, or solely because the director or
officer is present at or participates in the meeting of the Board of
Directors or committee thereof that authorizes the contract or transaction,
or solely because his, her or their votes are counted for such purpose, if:
(i) the material facts as to his, her or their relationship or interest and
as to the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; (ii) the material facts as to his, her or
their relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the
Corporation as of the time it is authorized, approved or ratified by the
Board of Directors, a committee thereof, or the stockholders. Interested
directors may be counted in determining the presence of a quorum at a meeting
of the Board of Directors or of a committee which authorizes the contract or
transaction.

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ARTICLE IX

MISCELLANEOUS

SECTION 9.1: FISCAL YEAR. The fiscal year of the Corporation shall
be determined by resolution of the Board of Directors.

SECTION 9.2: SEAL. The Board of Directors may provide for a corporate
seal, which shall have the name of the Corporation inscribed thereon and shall
otherwise be in such form as may be approved from time to time by the Board of
Directors.

SECTION 9.3: FORM OF RECORDS. Any records maintained by the
Corporation in the regular course of its business, including its stock
ledger, books of account and minute books, may be kept on, or be in the form
of, magnetic tape, diskettes, photographs, microphotographs or any other
information storage device, provided that the records so kept can be
converted into clearly legible form within a reasonable time. The Corporation
shall so convert any records so kept upon the request of any person entitled
to inspect the same.

SECTION 9.4: RELIANCE UPON BOOKS AND RECORDS. A member of the Board
of Directors, or a member of any committee designated by the Board of
Directors shall, in the performance of such person's duties, be fully
protected in relying in good faith upon records of the Corporation and upon
such information, opinions, reports or statements presented to the
Corporation by any of the Corporation's officers or employees, or committees
of the Board of Directors, or by any other person as to matters the member
reasonably believes are within such other person's professional or expert
competence and who has been selected with reasonable care by or on behalf of
the Corporation.

SECTION 9.5: CERTIFICATE OF INCORPORATION GOVERNS. In the event of
any conflict between the provisions of the Corporation's Certificate of
Incorporation and Bylaws, the provisions of the Certificate of Incorporation
shall govern.

SECTION 9.6: SEVERABILITY. If any provision of these Bylaws shall be
held to be invalid, illegal, unenforceable or in conflict with the provisions
of the Corporation's Certificate of Incorporation, then such provision shall
nonetheless be enforced to the maximum extent possible consistent with such
holding and the remaining provisions of these Bylaws (including without
limitation, all portions of any section of these Bylaws containing any such
provision held to be invalid, illegal, unenforceable or in conflict with the
Certificate of Incorporation, that are not themselves invalid, illegal,
unenforceable or in conflict with the Certificate of Incorporation) shall
remain in full force and effect.

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ARTICLE X

AMENDMENT

SECTION 10.1: AMENDMENTS.

Following the Initial Public Offering, stockholders of the
Corporation holding at least sixty-six and two-thirds percent (66-2/3%) of
the Corporation's outstanding voting stock then entitled to vote at an
election of directors shall have the power to adopt, amend or repeal these
Bylaws. Prior to the Initial Public Offering, stockholders of the Corporation
holding a majority of the Corporation's outstanding voting stock then
entitled to vote at an election of directors shall have the power to adopt,
amend or repeal these Bylaws. To the extent provided in the Corporation's
Certificate of Incorporation, the Board of Directors of the Corporation shall
also have the power to adopt, amend or repeal these Bylaws.

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CERTIFICATION OF FIRST AMENDED AND RESTATED BYLAWS

GRIC COMMUNICATIONS, INC.

(A DELAWARE CORPORATION)

KNOW ALL BY THESE PRESENTS:

I, David L. Teichmann, certify that I am Secretary of GRIC
Communications, Inc., a Delaware corporation (the "CORPORATION"), that I am
duly authorized to make and deliver this certification, that the attached
document is a true and correct copy of the First Amended and Restated Bylaws
of the Corporation in effect as of the date of this certificate.

Dated: _________________________, 1999

_____________________________
David L. Teichmann, Secretary

<PAGE>
Exhibit 3.04

SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GRIC COMMUNICATIONS, INC.

(Originally incorporated on April 15, 1998)

GRIC Communications, Inc., a Delaware corporation, hereby certifies
that the Second Amended and Restated Certificate of Incorporation of the
corporation attached hereto as EXHIBIT "A", which is incorporated herein by this
reference, has been duly adopted by the corporation's Board of Directors and
stockholders in accordance with Sections 242 and 245 of the Delaware General
Corporation Law, with the approval of the corporation's stockholders having been
given by written consent without a meeting in accordance with Section 228 of the
Delaware General Corporation Law.

IN WITNESS WHEREOF, said corporation has caused this Second Amended and
Restated Certificate of Incorporation to be signed by its by duly authorized
officer.

Dated: , 1999 GRIC COMMUNICATIONS, INC.
------------

-------------------------------------
Dr. Hong Chen,
CHIEF EXECUTIVE OFFICER AND PRESIDENT

<PAGE>

EXHIBIT "A"
-----------

SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GRIC COMMUNICATIONS, INC.

ARTICLE I

The name of the corporation is GRIC Communications, Inc.

ARTICLE II

The address of the registered office of the corporation in the State of
Delaware is 15 East North Street, City of Dover, County of Kent. The name of its
registered agent at that address is Incorporating Services, Ltd.

ARTICLE III

The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.

ARTICLE IV

The total number of shares of all classes of stock which the
corporation has authority to issue is 55,000,000 shares, consisting of two
classes: 50,000,000 shares of Common Stock, $0.001 par value per share, and
5,000,000 shares of Preferred Stock, $0.001 par value per share.

The Board of Directors is authorized, subject to any limitations
prescribed by the law of the State of Delaware, to provide for the issuance of
the shares of Preferred Stock in one or more series, and, by filing a
Certificate of Designation pursuant to the applicable law of the State of
Delaware, to establish from time to time the number of shares to be included in
each such series, to fix the designation, powers, preferences and rights of the
shares of each such series and any qualifications, limitations or restrictions
thereof, and to increase or decrease the number of shares of any such series
(but not below the number of shares of such series then outstanding). The number
of authorized shares of Preferred Stock may also be increased or decreased (but
not below the number of shares thereof then outstanding) by the affirmative vote
of the holders of a majority of the stock of the corporation entitled to vote,
unless a vote of any other holders is required pursuant to a Certificate or
Certificates establishing a series of Preferred Stock.

Except as otherwise expressly provided in any Certificate of
Designation designating any series of Preferred Stock pursuant to the foregoing
provisions of this Article IV, any new series of Preferred Stock may be
designated, fixed and determined as provided herein by the Board of Directors
without approval of the holders of Common Stock or the holders of Preferred
Stock, or any series thereof, and any such new series may have powers,
preferences and rights, including,

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<PAGE>

without limitation, voting rights, dividend rights, liquidation rights,
redemption rights and conversion rights, senior to, junior to or pari passu with
the rights of the Common Stock, the Preferred Stock, or any future class or
series of Preferred Stock or Common Stock.

ARTICLE V

The Board of Directors of the corporation shall have the power to
adopt, amend or repeal the Bylaws of the corporation.

ARTICLE VI

For the management of the business and for the conduct of the affairs
of the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:

(A) The conduct of the affairs of the corporation shall be managed
under the direction of the Board of Directors. The number of directors shall be
fixed from time to time exclusively by resolution of the Board of Directors.

(B) Notwithstanding the foregoing provision of this Article VI, each
director shall hold office until such director's successor is elected and
qualified, or until such director's earlier death, resignation or removal. No
decrease in the authorized number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.

(C) Subject to the rights of the holders of any series of Preferred
Stock, any vacancy occurring in the Board of Directors for any cause, and any
newly created directorship resulting from any increase in the authorized number
of directors, shall, unless (i) the Board of Directors determines by resolution
that any such vacancies or newly created directorships shall be filled by the
stockholders, or (ii) as otherwise provided by law, be filled only by the
affirmative vote of a majority of the directors then in office, although less
than a quorum, or by a sole remaining director, and not by the stockholders. Any
director elected in accordance with the preceding sentence shall hold office for
the remainder of the full term of the director for which the vacancy was created
or occurred.

(D) Subject to the rights of the holders of any series of Preferred
Stock, any director or the entire Board of Directors may be removed, with or
without cause, by the holders of a majority of the shares then entitled to vote
at an election of directors.

(E) Election of directors need not be by written ballot unless the
Bylaws of the corporation shall so provide.

(F) No action shall be taken by the stockholders of the corporation
except at an annual or special meeting of stockholders called in accordance with
the Bylaws of the corporation, and no action shall be taken by the stockholders
by written consent.

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<PAGE>

(G) Advance notice of stockholder nominations for the election of
directors of the corporation and of business to be brought by stockholders
before any meeting of stockholders of the corporation shall be given in the
manner provided in the Bylaws of the corporation. Business transacted at special
meetings of stockholders shall be confined to the purpose or purposes stated in
the notice of meeting.

(H) Subject to Section 6.5 of the Bylaws of the corporation,
stockholders of the corporation holding at least sixty-six and two-thirds
percent (66-2/3%) of the corporation's outstanding voting stock then entitled to
vote at an election of directors shall have the power to adopt, amend or repeal
Bylaws of the corporation.

The affirmative vote of the holders of at least sixty-six and
two-thirds percent (66-2/3%) of the corporation's outstanding voting stock then
entitled to vote at an election of directors, voting together as a single class,
shall be required to alter, change, amend, repeal or adopt any provision
inconsistent with this Article VI.

ARTICLE VII

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<PAGE>
EXHIBIT 5.01

October 29, 1999

GRIC Communications, Inc.
1421 McCarthy Boulevard
Milpitas, CA 95035

Ladies and Gentleman:

At your request, we have examined the Registration Statement on Form S-1 (File
Number 333-87497) (the "REGISTRATION STATEMENT") filed by you with the
Securities and Exchange Commission (the "COMMISSION") on September 21, 1999, as
subsequently amended, in connection with the registration under the Securities
Act of 1933, as amended (the "ACT"), of an aggregate of 4,600,000 shares of your
Common Stock (the "STOCK").

In rendering this opinion, we have examined the following:

1) your registration statement on Form 8-A filed with the Commission on
October 29, 1999 (the "1934 ACT REGISTRATION STATEMENT");

2) the Registration Statement, together with the Exhibits filed as a part
thereof;

3) the Prospectuses prepared in connection with the Registration Statement;

4) the minutes of meetings and actions by written consent of the stockholders
and Board of Directors that are contained in your minute books and the
minute books of your predecessor, GRIC Communications, Inc., a California
corporation ("GRIC CALIFORNIA"), that are in our possession;

5) the stock records for both you and GRIC California that we have maintained
in the course of our representation of you (consisting of a list of
stockholders and a list of warrant holders prepared by us and dated as of
October 29, 1999 and a list of option holders that you provided to us and
dated as of October 29, 1999, each of which you have represented to us are
true and complete as of their dates); and

6) a Management Certificate addressed to us and dated of even date herewith
executed by the Company containing certain factual and other
representations.

In our examination of documents for purposes of this opinion, we have assumed,
and express no opinion as to, the genuineness of all signatures on original
documents, the authenticity and completeness of all documents submitted to us as
originals, the conformity to originals and completeness of all documents
submitted to us as copies, the legal capacity of all natural persons executing
the same, the lack of any undisclosed termination, modification, waiver or
amendment to any document reviewed by us and the due authorization, execution
and delivery of all documents where due authorization, execution and delivery
are prerequisites to the effectiveness thereof.

As to matters of fact relevant to this opinion, we have relied solely upon our
examination of the documents referred to above and have assumed the current
accuracy and completeness of the information obtained from records referred to
above. We have made no independent investigation or other attempt to verify the
accuracy of any of such information or to determine the existence or
non-existence of any other factual matters; HOWEVER, we are not aware of any
facts that would cause us to believe that the opinion expressed herein is not
accurate.

We are admitted to practice law in the State of California, and we express no
opinion herein with respect to the application or effect of the laws of any
jurisdiction other than the existing laws of the United States of America and
the State of California and (without reference to case law or secondary sources)
the existing Delaware General Corporation Law.

In connection with our opinion expressed below, we have assumed that, at or
prior to the time of the delivery of any shares of Stock, the Registration
Statement will have been declared effective under the Act, that the registration
will apply to such shares of Stock and will not have been modified or
<PAGE>
GRIC Communications, Inc.
October 29, 1999
Page 2

rescinded, that the 1934 Act Registration Statement will have become effective
and that there will not have occurred any change in law affecting the validity
or enforceability of such shares of Stock.

Based upon the foregoing, it is our opinion that the up to 4,600,000 shares of
Stock to be issued and sold by you, when issued and sold in accordance with and
in the manner referred to in the Prospectus associated with the Registration
Statement, will be validly issued, fully paid and nonassessable.

We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us, if any, in the
Registration Statement, the Prospectus constituting a part thereof and any
amendments thereto.

This opinion speaks only as of its date and we assume no obligation to update
this opinion should circumstances change after the date hereof after the time of
effectiveness of the Registration Statement. This opinion is intended solely for
your use as an exhibit to the Registration Statement for the purpose of the
above sale of the Stock and is not to be relied upon for any other purpose.

Very truly yours,
FENWICK & WEST LLP
By: /s/ FENWICK & WEST LLP
-------------------------------------

<PAGE>
Exhibit 10.01
INDEMNITY AGREEMENT

This Indemnity Agreement (this "AGREEMENT"), dated as of November __,
1999, is made by and between GRIC Communications, Inc., a Delaware corporation
(the "COMPANY"), and _________ a director and/or officer of the Company (the
"INDEMNITEE").

RECITALS

A. The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors or officers of corporations unless
they are protected by comprehensive liability insurance and/or indemnification,
due to increased exposure to litigation costs and risks resulting from their
service to such corporations, and due to the fact that the exposure frequently
bears no reasonable relationship to the compensation of such directors and
officers;

B. Based on their experience as business managers, the Board of
Directors of the Company (the "BOARD") has concluded that, to retain and attract
talented and experienced individuals to serve as officers and directors of the
Company, and to encourage such individuals to take the business risks necessary
for the success of the Company, it is necessary for the Company contractually to
indemnify officers and directors and to assume for itself maximum liability for
expenses and damages in connection with claims against such officers and
directors in connection with their service to the Company;

C. Section 145 of the Delaware General Corporation Law (the "DGCL")
empowers the Company to indemnify by agreement its officers, directors,
employees and agents, and persons who serve, at the request of the Company, as
directors, officers, employees or agents of other corporations or enterprises,
and expressly provides that the indemnification provided by the DGCL is not
exclusive; and

D. The Company desires and has requested the Indemnitee to serve or
continue to serve as a director or officer of the Company free from undue
concern for claims for damages arising out of or related to such services to the
Company.

NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:

1. DEFINITIONS.

1.1 "AGENT" of the Company means any person who is or was a
director or officer of the Company or a subsidiary of the Company; or is or was
serving at the request of, for the convenience of, or to represent the interest
of the Company or a subsidiary of the Company as a director or officer of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise or an affiliate of the Company; or was a director or officer of
a foreign or domestic corporation which was a predecessor corporation of the
Company, including, without limitation, Aimnet Corporation, AimQuest Corporation
and GRIC Communications, Inc., each a California corporation, or was a director
or officer of another enterprise or affiliate of the Company at the request of,
for the convenience of, or to represent the interests of such

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<PAGE>

predecessor corporation. The term "ENTERPRISE" includes any employee benefit
plan of the Company, its subsidiaries, affiliates and predecessor corporations.

1.2 "EXPENSES" includes all direct and indirect costs of any
type or nature whatsoever (including, without limitation, all attorneys' fees
and related disbursements and other out-of-pocket costs) actually and reasonably
incurred by the Indemnitee in connection with the investigation, defense or
appeal of a proceeding or establishing or enforcing a right to indemnification
or advancement of expenses under this Agreement, Section 145 or otherwise;
PROVIDED, HOWEVER, that expenses shall not include any judgments, fines, ERISA
excise taxes or penalties or amounts paid in settlement of a proceeding.

1.3 "PROCEEDING" means any threatened, pending or completed
action, suit or other proceeding, whether civil, criminal, administrative,
investigative or any other type whatsoever.

1.4 "SUBSIDIARY" means any corporation of which more than 50%
of the outstanding voting securities is owned directly or indirectly by the
Company, by the Company and one or more of its subsidiaries or by one or more of
the Company's subsidiaries.

2. AGREEMENT TO SERVE. The Indemnitee agrees to serve and/or continue
to serve as an agent of the Company, at the will of the Company (or under
separate agreement, if such agreement exists), in the capacity the Indemnitee
currently serves as an agent of the Company, faithfully and to the best of his
ability, so long as he is duly appointed or elected and qualified in accordance
with the applicable provisions of the charter documents of the Company or any
subsidiary of the Company; PROVIDED, HOWEVER, that the Indemnitee may at any
time and for any reason resign from such position (subject to any contractual
obligation that the Indemnitee may have assumed apart from this Agreement), and
the Company or any subsidiary shall have no obligation under this Agreement to
continue to indemnify the Indemnitee in any such position.

3. DIRECTORS' AND OFFICERS' INSURANCE. The Company shall, to the extent
that the Board determines it to be economically reasonable, maintain a policy of
directors' and officers' liability insurance ("D&O INSURANCE"), on such terms
and conditions as may be approved by the Board.

4. MANDATORY INDEMNIFICATION. Subject to Section 9 below, the Company
shall indemnify the Indemnitee:

4.1 THIRD PARTY ACTIONS. If the Indemnitee is a person who was
or is a party or is threatened to be made a party to any proceeding (other than
an action by or in the right of the Company) by reason of the fact that he is or
was an agent of the Company, or by reason of anything done or not done by him in
any such capacity, against any and all expenses and liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes
or penalties and amounts paid in settlement) actually and reasonably incurred by
him in connection with the investigation, defense, settlement or appeal of such
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Company and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful; and

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<PAGE>

4.2 DERIVATIVE ACTIONS. If the Indemnitee is a person who was
or is a party or is threatened to be made a party to any proceeding by or in the
right of the Company to procure a judgment in its favor by reason of the fact
that he is or was an agent of the Company, or by reason of anything done or not
done by him in any such capacity, against any amounts paid in settlement of any
such proceeding and all expenses actually and reasonably incurred by him in
connection with the investigation, defense, settlement or appeal of such
proceeding if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, the best interests of the Company; EXCEPT that no
indemnification under this subsection shall be made in respect of any claim,
issue or matter as to which such person shall have been finally adjudged to be
liable to the Company by a court of competent jurisdiction due to willful
misconduct of a culpable nature in the performance of his duty to the Company,
unless and only to the extent that the Court of Chancery or the court in which
such proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such amounts which the
Court of Chancery or such other court shall deem proper; and

4.3 EXCEPTION FOR AMOUNTS COVERED BY INSURANCE.
Notwithstanding the foregoing, the Company shall not be obligated to indemnify
the Indemnitee for expenses or liabilities of any type whatsoever (including,
but not limited to, judgments, fines, ERISA excise taxes or penalties and
amounts paid in settlement) to the extent such have been paid directly to the
Indemnitee by D&O Insurance.

5. PARTIAL INDEMNIFICATION AND CONTRIBUTION.

5.1 PARTIAL INDEMNIFICATION. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company for some
or a portion of any expenses or liabilities of any type whatsoever (including,
but not limited to, judgments, fines, ERISA excise taxes or penalties and
amounts paid in settlement) incurred by him in the investigation, defense,
settlement or appeal of a proceeding but is not entitled, however, to
indemnification for all of the total amount thereof, then the Company shall
nevertheless indemnify the Indemnitee for such total amount except as to the
portion thereof to which the Indemnitee is not entitled to indemnification.

5.2 CONTRIBUTION. If the Indemnitee is not entitled to the
indemnification provided in Section 4 for any reason other than the statutory
limitations set forth in the DGCL, then in respect of any threatened, pending or
completed proceeding in which the Company is jointly liable with the Indemnitee
(or would be if joined in such proceeding), the Company shall contribute to the
amount of expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred and paid or payable by the
Indemnitee in such proportion as is appropriate to reflect (a) the relative
benefits received by the Company on the one hand and the Indemnitee on the other
hand from the transaction from which such proceeding arose, and (b) the relative
fault of the Company on the one hand and of the Indemnitee on the other hand in
connection with the events which resulted in such expenses, judgments, fines or
settlement amounts, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of the Indemnitee on the other
hand shall be determined by reference to, among other things, the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent the circumstances resulting in such

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<PAGE>

expenses, judgments, fines or settlement amounts. The Company agrees that it
would not be just and equitable if contribution pursuant to this Section 5 were
determined by pro rata allocation or any other method of allocation which does
not take account of the foregoing equitable considerations.

6. MANDATORY ADVANCEMENT OF EXPENSES.

6.1 ADVANCEMENT. Subject to Section 9 below, the Company shall
advance all expenses incurred by the Indemnitee in connection with the
investigation, defense, settlement or appeal of any proceeding to which the
Indemnitee is a party or is threatened to be made a party by reason of the fact
that the Indemnitee is or was an agent of the Company or by reason of anything
done or not done by him in any such capacity. The Indemnitee hereby undertakes
to promptly repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined that the Indemnitee is not entitled to be
indemnified by the Company under the provisions of this Agreement, the
Certificate of Incorporation or Bylaws of the Company, the DGCL or otherwise.
The advances to be made hereunder shall be paid by the Company to the Indemnitee
within thirty (30) days following delivery of a written request therefor by the
Indemnitee to the Company.

6.2 EXCEPTION. Notwithstanding the foregoing provisions of
this Section 6, the Company shall not be obligated to advance any expenses to
the Indemnitee arising from a lawsuit filed directly by the Company against the
Indemnitee if an absolute majority of the members of the Board reasonably
determines in good faith, within thirty (30) days of the Indemnitee's request to
be advanced expenses, that the facts known to them at the time such
determination is made demonstrate clearly and convincingly that the Indemnitee
acted in bad faith. If such a determination is made, the Indemnitee may have
such decision reviewed by another forum, in the manner set forth in Sections
8.3, 8.4 and 8.5 hereof, with all references therein to "indemnification" being
deemed to refer to "advancement of expenses," and the burden of proof shall be
on the Company to demonstrate clearly and convincingly that, based on the facts
known at the time, the Indemnitee acted in bad faith. The Company may not avail
itself of this Section 6.2 as to a given lawsuit if, at any time after the
occurrence of the activities or omissions that are the primary focus of the
lawsuit, the Company has undergone a change in control. For this purpose, a
change in control shall mean a given person or group of affiliated persons or
groups increasing their beneficial ownership interest in the Company by at least
twenty (20) percentage points without advance Board approval.

7. NOTICE AND OTHER INDEMNIFICATION PROCEDURES.

7.1 Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that indemnification with respect thereto may
be sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement thereof.

7.2 If, at the time of the receipt of a notice of the
commencement of a proceeding pursuant to Section 7.1 hereof, the Company has D&O
Insurance in effect, the Company shall give prompt notice of the commencement of
such proceeding to the insurers in accordance with the procedures set forth in
the respective policies. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of the Indemnitee,

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<PAGE>

all amounts payable as a result of such proceeding in accordance with the terms
of such D&O Insurance policies.

7.3 In the event the Company shall be obligated to advance the
expenses for any proceeding against the Indemnitee, the Company, if appropriate,
shall be entitled to assume the defense of such proceeding, with counsel
approved by the Indemnitee (which approval shall not be unreasonably withheld),
upon the delivery to the Indemnitee of written notice of its election to do so.
After delivery of such notice, approval of such counsel by the Indemnitee and
the retention of such counsel by the Company, the Company will not be liable to
the Indemnitee under this Agreement for any fees of counsel subsequently
incurred by the Indemnitee with respect to the same proceeding, PROVIDED that:
(a) the Indemnitee shall have the right to employ his own counsel in any such
proceeding at the Indemnitee's expense; (b) the Indemnitee shall have the right
to employ his own counsel in connection with any such proceeding, at the expense
of the Company, if such counsel serves in a review, observer, advice and
counseling capacity and does not otherwise materially control or participate in
the defense of such proceeding; and (c) if (i) the employment of counsel by the
Indemnitee has been previously authorized by the Company, (ii) the Indemnitee
shall have reasonably concluded that there may be a conflict of interest between
the Company and the Indemnitee in the conduct of any such defense or (iii) the
Company shall not, in fact, have employed counsel to assume the defense of such
proceeding, then the fees and expenses of the Indemnitee's counsel shall be at
the expense of the Company.

8. DETERMINATION OF RIGHT TO INDEMNIFICATION.

8.1 To the extent the Indemnitee has been successful on the
merits or otherwise in defense of any proceeding referred to in Section 4.1 or
4.2 of this Agreement or in the defense of any claim, issue or matter described
therein, the Company shall indemnify the Indemnitee against expenses actually
and reasonably incurred by him in connection with the investigation, defense or
appeal of such proceeding, or such claim, issue or matter, as the case may be.

8.2 In the event that Section 8.1 is inapplicable, or does not
apply to the entire proceeding, the Company shall nonetheless indemnify the
Indemnitee unless the Company shall prove by clear and convincing evidence to a
forum listed in Section 8.3 below that the Indemnitee has not met the applicable
standard of conduct required to entitle the Indemnitee to such indemnification.

8.3 The Indemnitee shall be entitled to select the forum in
which the validity of the Company's claim under Section 8.2 hereof that the
Indemnitee is not entitled to indemnification will be heard from among the
following, EXCEPT that the Indemnitee can select a forum consisting of the
stockholders of the Company only with the approval of the Company:

(a) A quorum of the Board consisting of directors who are not
parties to the proceeding for which indemnification is being sought;

(b) The stockholders of the Company;

(c) Legal counsel mutually agreed upon by the Indemnitee and
the Board, which counsel shall make such determination in a written
opinion;

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<PAGE>

(d) A panel of three arbitrators, one of whom is selected by
the Company, another of whom is selected by the Indemnitee and the last
of whom is selected by the first two arbitrators so selected; or

(e) The Court of Chancery of Delaware or other court having
jurisdiction of subject matter and the parties.

8.4 As soon as practicable, and in no event later than thirty
(30) days after the forum has been selected pursuant to Section 8.3 above, the
Company shall, at its own expense, submit to the selected forum its claim that
the Indemnitee is not entitled to indemnification, and the Company shall act in
the utmost good faith to assure the Indemnitee a complete opportunity to defend
against such claim.

8.5 If the forum selected in accordance with Section 8.3
hereof is not a court, then after the final decision of such forum is rendered,
the Company or the Indemnitee shall have the right to apply to the Court of
Chancery of Delaware, the court in which the proceeding giving rise to the
Indemnitee's claim for indemnification is or was pending or any other court of
competent jurisdiction, for the purpose of appealing the decision of such forum,
PROVIDED that such right is executed within sixty (60) days after the final
decision of such forum is rendered. If the forum selected in accordance with
Section 8.3 hereof is a court, then the rights of the Company or the Indemnitee
to appeal any decision of such court shall be governed by the applicable laws
and rules governing appeals of the decision of such court.

8.6 Notwithstanding any other provision in this Agreement to
the contrary, the Company shall indemnify the Indemnitee against all expenses
incurred by the Indemnitee in connection with any hearing or proceeding under
this Section 8 involving the Indemnitee and against all expenses incurred by the
Indemnitee in connection with any other proceeding between the Company and the
Indemnitee involving the interpretation or enforcement of the rights of the
Indemnitee under this Agreement unless a court of competent jurisdiction finds
that each of the material claims and/or defenses of the Indemnitee in any such
proceeding was frivolous or not made in good faith.

9. EXCEPTIONS. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

9.1 CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance
expenses to the Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by the Indemnitee and not by way of defense, EXCEPT with
respect to proceedings specifically authorized by the Board or brought to
establish or enforce a right to indemnification and/or advancement of expenses
arising under this Agreement, the charter documents of the Company or any
subsidiary or any statute or law or otherwise, but such indemnification or
advancement of expenses may be provided by the Company in specific cases if the
Board finds it to be appropriate; or

9.2 UNAUTHORIZED SETTLEMENTS. To indemnify the Indemnitee
hereunder for any amounts paid in settlement of a proceeding unless the Company
consents in advance in writing to such settlement, which consent shall not be
unreasonably withheld; or

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<PAGE>

9.3 SECURITIES LAW ACTIONS. To indemnify the Indemnitee on
account of any suit in which judgment is rendered against the Indemnitee for an
accounting of profits made from the purchase or sale by the Indemnitee of
securities of the Company pursuant to the provisions of Section l6(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions of
any federal, state or local statutory law; or

9.4 UNLAWFUL INDEMNIFICATION. To indemnify the Indemnitee if a
final decision by a court having jurisdiction in the matter shall determine that
such indemnification is not lawful. In this respect, the Company and the
Indemnitee have been advised that the Securities and Exchange Commission takes
the position that indemnification for liabilities arising under the federal
securities laws is against public policy and is, therefore, unenforceable and
that claims for indemnification should be submitted to appropriate courts for
adjudication.

10. NON-EXCLUSIVITY. The provisions for indemnification and advancement
of expenses set forth in this Agreement shall not be deemed exclusive of any
other rights which the Indemnitee may have under any provision of law, the
Company's Certificate of Incorporation or Bylaws, the vote of the Company's
stockholders or disinterested directors, other agreements or otherwise, both as
to action in the Indemnitee's official capacity and to action in another
capacity while occupying his position as an agent of the Company, and the
Indemnitee's rights hereunder shall continue after the Indemnitee has ceased
acting as an agent of the Company and shall inure to the benefit of the heirs,
executors and administrators of the Indemnitee.

11. GENERAL PROVISIONS.

11.1 INTERPRETATION OF AGREEMENT. It is understood that the
parties hereto intend this Agreement to be interpreted and enforced so as to
provide indemnification and advancement of expenses to the Indemnitee to the
fullest extent now or hereafter permitted by law, except as expressly limited
herein.

11.2 SEVERABILITY. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, then: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, all portions of any
paragraphs of this Agreement containing any such provision held to be invalid,
illegal or unenforceable that are not themselves invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and (b) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, all portions of any paragraphs of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or
unenforceable and to give effect to Section 11.1 hereof.

11.3 MODIFICATION AND WAIVER. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver.

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<PAGE>

11.4 SUBROGATION. In the event of full payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of the Indemnitee, who shall execute all documents
required and shall do all acts that may be necessary or desirable to secure such
rights and to enable the Company effectively to bring suit to enforce such
rights.

11.5 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, which shall together constitute one agreement.

11.6 SUCCESSORS AND ASSIGNS. The terms of this Agreement shall
bind, and shall inure to the benefit of, the successors and assigns of the
parties hereto.

11.7 NOTICE. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed duly
given: (a) if delivered by hand and signed for by the party addressee; or (b) if
mailed by certified or registered mail, with postage prepaid, on the third
business day after the mailing date. Addresses for notice to either party are as
shown on the signature page of this Agreement or as subsequently modified by
written notice.

11.8 GOVERNING LAW. This Agreement shall be governed
exclusively by and construed according to the laws of the State of California,
as applied to contracts between California residents entered into and to be
performed entirely within California.

11.9 CONSENT TO JURISDICTION. The Company and the Indemnitee
each hereby irrevocably consent to the jurisdiction of the courts of the State
of California for all purposes in connection with any action or proceeding which
arises out of or relates to this Agreement.

11.10 ATTORNEYS' FEES. In the event Indemnitee is required to
bring any action to enforce rights under this Agreement (including, without
limitation, the expenses of any Proceeding described in Section 3), the
Indemnitee shall be entitled to all reasonable fees and expenses in bringing and
pursuing such action, unless a court of competent jurisdiction finds each of the
material claims of the Indemnitee in any such action was frivolous and not made
in good faith.

-8-
<PAGE>

IN WITNESS WHEREOF, the parties hereto have entered into this Indemnity
Agreement effective as of the date first written above.

GRIC COMMUNICATIONS, INC. INDEMNITEE:

Signature:
-------------------- --------------------------------------
Printed Name:
------------------ --------------------------------------
Title:
------------------------- --------------------------------------
Address: Address:
----------------------- ------------------------------

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

-9-

<PAGE>
Exhibit 10.13
GRIC COMMUNICATIONS, INC.

1999 EQUITY INCENTIVE PLAN

As Adopted September 13, 1999

1. PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent and
Subsidiaries, by offering them an opportunity to participate in the Company's
future performance through awards of Options, Restricted Stock and Stock
Bonuses. Capitalized terms not defined in the text are defined in Section 23.

2. SHARES SUBJECT TO THE PLAN.

2.1 NUMBER OF SHARES AVAILABLE. Subject to Sections 2.2 and
18, the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 4,500,000 Shares plus Shares that are subject to:
(a) issuance upon exercise of an Option but cease to be subject to such Option
for any reason other than exercise of such Option; (b) an Award granted
hereunder but are forfeited or are repurchased by the Company at the original
issue price; and (c) an Award that otherwise terminates without Shares being
issued. In addition, any authorized shares not issued or subject to outstanding
grants under the 1995 Stock Option Plan and the 1997 Stock Option Plan (the
"PRIOR PLANS") on the Effective Date (as defined below) and any shares issued
under the Prior Plans that are forfeited or repurchased by the Company or that
are issuable upon exercise of options granted pursuant to the Prior Plans that
expire or become unexercisable for any reason without having been exercised in
full, will no longer be available for grant and issuance under the Prior Plans,
but will be available for grant and issuance under this Plan. In addition, on
January 1, 2000 and each anniversary thereafter, the aggregate number of Shares
reserved and available for grant and issuance pursuant to this Plan will be
increased automatically by a number of Shares equal to 5% of the total
outstanding shares of the Company as of the immediately preceding December 31,
provided that no more than 20,000,000 shares shall qualify as ISOs (as defined
in Section 5 below). At all times the Company shall reserve and keep available a
sufficient number of Shares as shall be required to satisfy the requirements of
all outstanding Options granted under this Plan and all other outstanding but
unvested Awards granted under this Plan.

2.2 ADJUSTMENT OF SHARES. In the event that the number of
outstanding shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the stockholders of the
Company and compliance with applicable securities laws; PROVIDED, HOWEVER, that
fractions of a Share will not be issued but will either be replaced by a cash
payment equal to the Fair Market Value of such fraction of a Share or will be
rounded up to the nearest whole Share, as determined by the Committee.

3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be
granted only to employees (including officers and directors who are also
employees) of the Company or of a Parent or Subsidiary of the Company. All other
Awards may be granted to employees, officers, directors, consultants,
independent contractors and advisors of the Company or any Parent or Subsidiary
of the Company; PROVIDED such consultants, contractors and advisors render bona
fide services not in connection with the offer and sale of securities in a
capital-raising transaction. No person will be eligible to receive more than
3,000,000 Shares in any calendar year under this Plan pursuant to the grant of
Awards hereunder. A person may be granted more than one Award under this Plan.
<PAGE>
GRIC Communications, Inc.
1999 Equity Incentive Plan
4. ADMINISTRATION.

4.1 COMMITTEE AUTHORITY. This Plan will be administered by
the Committee or by the Board acting as the Committee. Except for automatic
grants to Outside Directors pursuant to Section 9 hereof, and subject to the
general purposes, terms and conditions of this Plan, and to the direction of the
Board, the Committee will have full power to implement and carry out this Plan.
Except for automatic grants to Outside Directors pursuant to Section 9 hereof,
the Committee will have the authority to:

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

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

(d) determine the form and terms of Awards;

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

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

(g) grant waivers of Plan or Award conditions;

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

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

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

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

4.2 COMMITTEE DISCRETION. Except for automatic grants to
Outside Directors pursuant to Section 9 hereof, any determination made by the
Committee with respect to any Award will be made in its sole discretion at the
time of grant of the Award or, unless in contravention of any express term of
this Plan or Award, at any later time, and such determination will be final and
binding on the Company and on all persons having an interest in any Award under
this Plan. The Committee may delegate to one or more officers of the Company the
authority to grant an Award under this Plan to Participants who are not Insiders
of the Company.

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

5.1 FORM OF OPTION GRANT. Each Option granted under
this Plan will be evidenced by an Award Agreement which will expressly identify
the Option as an ISO or an NQSO ("STOCK OPTION AGREEMENT"), and, except as
otherwise required by the terms of Section 9 hereof, will be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.

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GRIC Communications, Inc.
1999 Equity Incentive Plan

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

5.3 EXERCISE PERIOD. Options may be exercisable within the
times or upon the events determined by the Committee as set forth in the Stock
Option Agreement governing such Option; PROVIDED, HOWEVER, that no Option will
be exercisable after the expiration of ten (10) years from the date the Option
is granted; and PROVIDED FURTHER that no ISO granted to a person who directly or
by attribution owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of any Parent or Subsidiary of
the Company ("TEN PERCENT STOCKHOLDER") will be exercisable after the expiration
of five (5) years from the date the ISO is granted. The Committee also may
provide for Options to become exercisable at one time or from time to time,
periodically or otherwise, in such number of Shares or percentage of Shares as
the Committee determines.

5.4 EXERCISE PRICE. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may be not less than
85% of the Fair Market Value of the Shares on the date of grant; provided that:
(i) the Exercise Price of an ISO will be not less than 100% of the Fair Market
Value of the Shares on the date of grant; and (ii) the Exercise Price of any ISO
granted to a Ten Percent Stockholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 8 of this Plan.

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

5.6 TERMINATION. Notwithstanding the exercise periods set
forth in the Stock Option Agreement, exercise of an Option will always be
subject to the following:

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

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

3
<PAGE>

GRIC Communications, Inc.
1999 Equity Incentive Plan

death or Disability, deemed to be an NQSO), but in any event
no later than the expiration date of the Options.

(c) Notwithstanding the provisions in paragraph 5.6(a) above, if a
Participant is terminated for Cause, neither the Participant,
the Participant's estate nor such other person who may then
hold the Option shall be entitled to exercise any Option with
respect to any Shares whatsoever, after termination of
service, whether or not after termination of service the
Participant may receive payment from the Company or Subsidiary
for vacation pay, for services rendered prior to termination,
for services rendered for the day on which termination occurs,
for salary in lieu of notice, or for any other benefits. In
making such determination, the Board shall give the
Participant an opportunity to present to the Board evidence on
his behalf. For the purpose of this paragraph, termination of
service shall be deemed to occur on the date when the Company
dispatches notice or advice to the Participant that his
service is terminated.

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

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

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

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

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

6.1 FORM OF RESTRICTED STOCK AWARD. All purchases under a
Restricted Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement ("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time

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GRIC Communications, Inc.
1999 Equity Incentive Plan

approve, and will comply with and be subject to the terms and conditions of this
Plan. The offer of Restricted Stock will be accepted by the Participant's
execution and delivery of the Restricted Stock Purchase Agreement and full
payment for the Shares to the Company within thirty (30) days from the date the
Restricted Stock Purchase Agreement is delivered to the person. If such person
does not execute and deliver the Restricted Stock Purchase Agreement along with
full payment for the Shares to the Company within thirty (30) days, then the
offer will terminate, unless otherwise determined by the Committee.

6.2 PURCHASE PRICE. The Purchase Price of Shares sold
pursuant to a Restricted Stock Award will be determined by the Committee on the
date the Restricted Stock Award is granted, except in the case of a sale to a
Ten Percent Stockholder, in which case the Purchase Price will be 100% of the
Fair Market Value. Payment of the Purchase Price may be made in accordance with
Section 8 of this Plan.

6.3 TERMS OF RESTRICTED STOCK AWARDS. Restricted Stock Awards
shall be subject to such restrictions as the Committee may impose. These
restrictions may be based upon completion of a specified number of years of
service with the Company or upon completion of the performance goals as set out
in advance in the Participant's individual Restricted Stock Purchase Agreement.
Restricted Stock Awards may vary from Participant to Participant and between
groups of Participants. Prior to the grant of a Restricted Stock Award, the
Committee shall: (a) determine the nature, length and starting date of any
Performance Period for the Restricted Stock Award; (b) select from among the
Performance Factors to be used to measure performance goals, if any; and (c)
determine the number of Shares that may be awarded to the Participant. Prior to
the payment of any Restricted Stock Award, the Committee shall determine the
extent to which such Restricted Stock Award has been earned. Performance Periods
may overlap and Participants may participate simultaneously with respect to
Restricted Stock Awards that are subject to different Performance Periods and
having different performance goals and other criteria.

6.4 TERMINATION DURING PERFORMANCE PERIOD. If a Participant
is Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Restricted Stock Award only to the extent earned as of the date of
Termination in accordance with the Restricted Stock Purchase Agreement, unless
the Committee will determine otherwise.

7. STOCK BONUSES.

7.1 AWARDS OF STOCK BONUSES. A Stock Bonus is an award of
Shares (which may consist of Restricted Stock) for services rendered to the
Company or any Parent or Subsidiary of the Company. A Stock Bonus may be awarded
for past services already rendered to the Company, or any Parent or Subsidiary
of the Company pursuant to an Award Agreement (the "STOCK BONUS AGREEMENT") that
will be in such form (which need not be the same for each Participant) as the
Committee will from time to time approve, and will comply with and be subject to
the terms and conditions of this Plan. A Stock Bonus may be awarded upon
satisfaction of such performance goals as are set out in advance in the
Participant's individual Award Agreement (the "PERFORMANCE STOCK BONUS
AGREEMENT") that will be in such form (which need not be the same for each
Participant) as the Committee will from time to time approve, and will comply
with and be subject to the terms and conditions of this Plan. Stock Bonuses may
vary from Participant to Participant and between groups of Participants, and may
be based upon the achievement of the Company, Parent or Subsidiary and/or
individual performance factors or upon such other criteria as the Committee may
determine.

7.2 TERMS OF STOCK BONUSES. The Committee will determine the
number of Shares to be awarded to the Participant. If the Stock Bonus is being
earned upon the satisfaction of performance goals pursuant to a Performance
Stock Bonus Agreement, then the Committee will: (a) determine the nature, length
and starting date of any Performance Period for each Stock Bonus; (b) select
from among the Performance Factors to be used to measure the performance, if
any; and (c) determine the number of Shares that may be awarded to the
Participant. Prior to the payment of any Stock Bonus, the Committee shall
determine the extent to which such Stock Bonuses have been earned. Performance
Periods may overlap and Participants may participate simultaneously with respect
to Stock Bonuses that are subject to different Performance Periods and different
performance goals and other criteria. The number of Shares may be fixed or may
vary in accordance with such

5
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GRIC Communications, Inc.
1999 Equity Incentive Plan

performance goals and criteria as may be determined by the Committee. The
Committee may adjust the performance goals applicable to the Stock Bonuses to
take into account changes in law and accounting or tax rules and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid
windfalls or hardships.

7.3 FORM OF PAYMENT. The earned portion of a Stock Bonus may
be paid currently or on a deferred basis with such interest or dividend
equivalent, if any, as the Committee may determine. Payment may be made in the
form of cash or whole Shares or a combination thereof, either in a lump sum
payment or in installments, all as the Committee will determine.

8. PAYMENT FOR SHARE PURCHASES.

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

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

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

(c) by tender of a full recourse promissory note having
such terms as may be approved by the Committee and
bearing interest at a rate sufficient to avoid
imputation of income under Sections 483 and 1274 of the
Code; PROVIDED, HOWEVER, that Participants who are not
employees or directors of the Company will not be
entitled to purchase Shares with a promissory note
unless the note is adequately secured by collateral
other than the Shares;

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

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

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

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

(f) by any combination of the foregoing.

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

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GRIC Communications, Inc.
1999 Equity Incentive Plan

9. AUTOMATIC GRANTS TO OUTSIDE DIRECTORS.

9.1 TYPES OF OPTIONS AND SHARES. Options granted under this
Plan and subject to this Section 9 shall be NQSOs.

9.2 ELIGIBILITY. Options subject to this Section 9 shall be
granted only to Outside Directors.

9.3 INITIAL GRANTS. Each Outside Director who was a member of
the Board before the Effective Date will automatically be granted an Option for
10,000 Shares on the Effective Date, unless such Outside Director received a
grant of Options before the Effective Date. Each Outside Director who first
becomes a member of the Board on or after the Effective Date will automatically
be granted an Option for 10,000 Shares on the date such Outside Director first
becomes a member of the Board (in either case an "INITIAL GRANT").

9.4 SUCCEEDING GRANTS. Immediately following each Annual
Meeting of stockholders, each Outside Director will automatically be granted an
Option for 7,500 Shares (a "SUCCEEDING GRANT"), provided the Outside
Director is a member of the Board on such date and has served continuously as a
member of the Board for a period of at least one year since the date of such
Outside Director's Initial Grant.

9.5 VESTING. The date an Outside Director receives an Initial
Grant or a Succeeding Grant is referred to in this Plan as the "START DATE" for
such Option.

(a) INITIAL GRANTS. Each Initial Grant will vest as
to twenty percent (20%) of the Shares on the ten (10) month anniversary of the
Start Date for such Initial Grant, and as to 2% of the Shares on each subsequent
monthly anniversary of the Start Date, so long as the Optionee continuously
remains a director of the Company.

(b) SUCCEEDING GRANTS. Each Succeeding Grant will
vest as to 2% of the Shares on each monthly anniversary of the Start Date, so
long as the Optionee continuously remains a director of the Company.

Notwithstanding any provision to the contrary, in the event of a corporate
transaction described in Section 18.1, the vesting of all options granted to
Outside Directors pursuant to this Section 9 will accelerate and such options
will become exercisable in full prior to the consummation of such event at such
times and on such conditions as the Committee determines, and must be exercised,
if at all, within three months of the consummation of said event. Any options
not exercised within such three-month period shall expire.

9.6 EXERCISE PRICE. The exercise price of an Option pursuant
to an Initial Grant or Succeeding Grant shall be the Fair Market Value of the
Shares, at the time that the Option is granted.

10. WITHHOLDING TAXES.

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

10.2 STOCK WITHHOLDING. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company

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GRIC Communications, Inc.
1999 Equity Incentive Plan

withhold from the Shares to be issued that number of Shares having a Fair Market
Value equal to the minimum amount required to be withheld, determined on the
date that the amount of tax to be withheld is to be determined. All elections by
a Participant to have Shares withheld for this purpose will be made in
accordance with the requirements established by the Committee and be in writing
in a form acceptable to the Committee

11. TRANSFERABILITY.

11.1 Except as otherwise provided in this Section 11, Awards
granted under this Plan, and any interest therein, will not be transferable or
assignable by Participant, and may not be made subject to execution, attachment
or similar process, otherwise than by will or by the laws of descent and
distribution or as determined by the Committee and set forth in the Award
Agreement with respect to Awards that are not ISOs.

11.2 ALL AWARDS OTHER THAN NQSO'S. All Awards other than
NQSO's shall be exercisable: (i) during the Participant's lifetime, only by (A)
the Participant, or (B) the Participant's guardian or legal representative; and
(ii) after Participant's death, by the legal representative of the Participant's
heirs or legatees.

11.3 NQSOS. Unless otherwise restricted by the Committee, an
NQSO shall be exercisable: (i) during the Participant's lifetime only by (A) the
Participant, (B) the Participant's guardian or legal representative, (C) a
Family Member of the Participant who has acquired the NQSO by "permitted
transfer;" and (ii) after Participant's death, by the legal representative of
the Participant's heirs or legatees. "Permitted transfer" means, as authorized
by this Plan and the Committee in an NQSO, any transfer effected by the
Participant during the Participant's lifetime of an interest in such NQSO but
only such transfers which are by gift or domestic relations order. A permitted
transfer does not include any transfer for value and neither of the following
are transfers for value: (a) a transfer of under a domestic relations order in
settlement of marital property rights or (b) a transfer to an entity in which
more than fifty percent of the voting interests are owned by Family Members or
the Participant in exchange for an interest in that entity.

12. PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES..

12.1 VOTING AND DIVIDENDS. No Participant will have any of
the rights of a stockholder with respect to any Shares until the Shares are
issued to the Participant. After Shares are issued to the Participant, the
Participant will be a stockholder and have all the rights of a stockholder with
respect to such Shares, including the right to vote and receive all dividends or
other distributions made or paid with respect to such Shares; PROVIDED, that if
such Shares are Restricted Stock, then any new, additional or different
securities the Participant may become entitled to receive with respect to such
Shares by virtue of a stock dividend, stock split or any other change in the
corporate or capital structure of the Company will be subject to the same
restrictions as the Restricted Stock; PROVIDED, FURTHER, that the Participant
will have no right to retain such stock dividends or stock distributions with
respect to Shares that are repurchased at the Participant's Purchase Price or
Exercise Price pursuant to Section 12.

12.2 FINANCIAL STATEMENTS. The Company will provide financial
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; PROVIDED, HOWEVER, the Company will not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.

12.3 RESTRICTIONS ON SHARES. At the discretion of the
Committee, the Company may reserve to itself and/or its assignee(s) in the Award
Agreement a right to repurchase a portion of or all Unvested Shares held by a
Participant following such Participant's Termination at any time within ninety
(90) days after the later of Participant's Termination Date and the date
Participant purchases Shares under this Plan, for cash and/or

8
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GRIC Communications, Inc.
1999 Equity Incentive Plan

cancellation of purchase money indebtedness, at the Participant's Exercise Price
or Purchase Price, as the case may be.

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

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

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

16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award
will not be effective unless such Award is in compliance with all applicable
federal and state securities laws, rules and regulations of any governmental
body, and the requirements of any stock exchange or automated quotation system
upon which the Shares may then be listed or quoted, as they are in effect on the
date of grant of the Award and also on the date of exercise or other issuance.
Notwithstanding any other provision in this Plan, the Company will have no
obligation to issue or deliver certificates for Shares under this Plan prior to:
(a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable; and/or (b) completion of any registration
or other qualification of such Shares under any state or federal law or ruling
of any governmental body that the Company determines to be necessary or
advisable. The Company will be under no obligation to register the Shares with
the SEC or to effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or automated quotation
system, and the Company will have no liability for any inability or failure to
do so.

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

18. CORPORATE TRANSACTIONS.

18.1 ASSUMPTION OR REPLACEMENT OF AWARDS BY SUCCESSOR. In
the event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving

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GRIC Communications, Inc.
1999 Equity Incentive Plan

corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of
the Company or their relative stock holdings and the Awards granted under this
Plan are assumed, converted or replaced by the successor corporation, which
assumption will be binding on all Participants), (c) a merger in which the
Company is the surviving corporation but after which the stockholders of the
Company immediately prior to such merger (other than any stockholder that
merges, or which owns or controls another corporation that merges, with the
Company in such merger) cease to own their shares or other equity interest in
the Company, (d) the sale of substantially all of the assets of the Company, or
(e) the acquisition, sale, or transfer of more than 50% of the outstanding
shares of the Company by tender offer or similar transaction, any or all
outstanding Awards may be assumed, converted or replaced by the successor
corporation (if any), which assumption, conversion or replacement will be
binding on all Participants. In the alternative, the successor corporation may
substitute equivalent Awards or provide substantially similar consideration to
Participants as was provided to stockholders (after taking into account the
existing provisions of the Awards). The successor corporation may also issue, in
place of outstanding Shares of the Company held by the Participants,
substantially similar shares or other property subject to repurchase
restrictions no less favorable to the Participant. In the event such successor
corporation (if any) refuses to assume or substitute Awards, as provided above,
pursuant to a transaction described in this Subsection 18.1, such Awards will
expire on such transaction at such time and on such conditions as the Committee
will determine. Notwithstanding anything in this Plan to the contrary, the
Committee may, in its sole discretion, provide that the vesting of any or all
Awards granted pursuant to this Plan will accelerate upon a transaction
described in this Section 18. If the Committee exercises such discretion with
respect to Options, such Options will become exercisable in full prior to the
consummation of such event at such time and on such conditions as the Committee
determines, and if such Options are not exercised prior to the consummation of
the corporate transaction, they shall terminate at such time as determined by
the Committee.

18.2 OTHER TREATMENT OF AWARDS. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 18, in
the event of the occurrence of any transaction described in Section 18.1, any
outstanding Awards will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, or sale of assets.

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

19. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become
effective on the date on which the registration statement filed by the Company
with the SEC under the Securities Act registering the initial public offering of
the Company's Common Stock is declared effective by the SEC (the "EFFECTIVE
DATE"). This Plan shall be approved by the stockholders of the Company
(excluding Shares issued pursuant to this Plan), consistent with applicable
laws, within twelve (12) months before or after the date this Plan is adopted by
the Board. Upon the Effective Date, the Committee may grant Awards pursuant to
this Plan; PROVIDED, HOWEVER, that: (a) no Option may be exercised prior to
initial stockholder approval of this Plan; (b) no Option granted pursuant to an
increase in the number of Shares subject to this Plan approved by the Board will
be exercised prior to the time such increase has been approved by the
stockholders of the Company; (c) in the event that initial stockholder approval
is not obtained within the time period provided herein, all Awards granted
hereunder shall be cancelled, any Shares issued pursuant to any Awards shall be
cancelled and any purchase of Shares issued hereunder shall be rescinded;

10
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GRIC Communications, Inc.
1999 Equity Incentive Plan

and (d) in the event that stockholder approval of such increase is not obtained
within the time period provided herein, all Awards granted pursuant to such
increase will be cancelled, any Shares issued pursuant to any Award granted
pursuant to such increase will be cancelled, and any purchase of Shares pursuant
to such increase will be rescinded.

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

21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to this Plan; PROVIDED, HOWEVER, that the Board will not, without the approval
of the stockholders of the Company, amend this Plan in any manner that requires
such stockholder approval.

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

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

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

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

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

"CAUSE" means the commission of an act of theft,
embezzlement, fraud, dishonesty or a breach of fiduciary duty to the Company or
a Parent or Subsidiary of the Company.

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

"COMMITTEE" means the Compensation Committee of the
Board.

"COMPANY" means GRIC Communications, Inc. or any
successor corporation.

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

"EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.

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

"FAIR MARKET VALUE" means, as of any date, the value of
a share of the Company's Common Stock determined as follows:

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GRIC Communications, Inc.
1999 Equity Incentive Plan

(a) if such Common Stock is then quoted on the Nasdaq
National Market, its closing price on the Nasdaq
National Market on the date of determination as
reported in THE WALL STREET JOURNAL;

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

(c) if such Common Stock is publicly traded but is not
quoted on the Nasdaq National Market nor listed or
admitted to trading on a national securities exchange,
the average of the closing bid and asked prices on the
date of determination as reported in THE WALL STREET
JOURNAL;

(d) in the case of an Award made on the Effective Date, the
price per share at which shares of the Company's Common
Stock are initially offered for sale to the public by
the Company's underwriters in the initial public
offering of the Company's Common Stock pursuant to a
registration statement filed with the SEC under the
Securities Act; or

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

"FAMILY MEMBER" includes any of the following:

(a) child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece,
nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law of
the Participant, including any such person with such
relationship to the Participant by adoption;

(b) any person (other than a tenant or employee) sharing
the Participant's household;

(d) a foundation in which the persons in (a) and (b) or
the Participant control the management of assets; or

(e) any other entity in which the persons in (a) and (b) or
the Participant own more than fifty percent of the
voting interest.

"INSIDER" means an officer or director of the Company
or any other person whose transactions in the Company's Common Stock are subject
to Section 16 of the Exchange Act.

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

"OUTSIDE DIRECTOR" means a member of the Board who is
not an employee of the Company or any Parent, Subsidiary or Affiliate of the
Company.

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

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GRIC Communications, Inc.
1999 Equity Incentive Plan

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

"PERFORMANCE FACTORS" means the factors selected by the
Committee from among the following measures to determine whether the performance
goals established by the Committee and applicable to Awards have been satisfied:

(a) Net revenue and/or net revenue growth;

(b) Earnings before income taxes and amortization
and/or earnings before income taxes and
amortization growth;

(d) Net income and/or net income growth;

(e) Earnings per share and/or earnings per share
growth;

(f) Total stockholder return and/or total stockholder
return growth;

(g) Return on equity;

(h) Operating cash flow return on income;

(i) Adjusted operating cash flow return on income;

(j) Economic value added; and

(k) Individual confidential business objectives.

"PERFORMANCE PERIOD" means the period of service
determined by the Committee, not to exceed five years, during which years of
service or performance is to be measured for Restricted Stock Awards or Stock
Bonuses.

"PLAN" means this GRIC Communications, Inc. 1999 Equity
Incentive Plan, as amended from time to time.

"RESTRICTED STOCK AWARD" means an award of Shares
pursuant to Section 6.

"SEC" means the Securities and Exchange Commission.

"SECURITIES ACT" means the Securities Act of 1933, as
amended.

"SHARES" means shares of the Company's Common Stock
reserved for issuance under this Plan, as adjusted pursuant to Sections 2 and
18, and any successor security.

"STOCK BONUS" means an award of Shares, or cash in lieu
of Shares, pursuant to Section 7.

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

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GRIC Communications, Inc.
1999 Equity Incentive Plan

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

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

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

<PAGE>

EXHIBIT 10.14

GRIC COMMUNICATIONS, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN

As Adopted September 15, 1999

1. ESTABLISHMENT OF PLAN. GRIC Communications, Inc. (the "COMPANY")
proposes to grant options for purchase of the Company's Common Stock to eligible
employees of the Company and its Participating Subsidiaries (as hereinafter
defined) pursuant to this Employee Stock Purchase Plan (this "PLAN"). For
purposes of this Plan, "PARENT CORPORATION" and "SUBSIDIARY" shall have the same
meanings as "parent corporation" and "subsidiary corporation" in Sections 424(e)
and 424(f), respectively, of the Internal Revenue Code of 1986, as amended (the
"CODE"). "PARTICIPATING SUBSIDIARIES" are Parent Corporations or Subsidiaries
that the Board of Directors of the Company (the "BOARD") designates from time to
time as corporations that shall participate in this Plan. The Company intends
this Plan to qualify as an "employee stock purchase plan" under Section 423 of
the Code (including any amendments to or replacements of such Section), and this
Plan shall be so construed. Any term not expressly defined in this Plan but
defined for purposes of Section 423 of the Code shall have the same definition
herein. A total of 500,000 shares of the Company's Common Stock is reserved for
issuance under this Plan. In addition, on each January 1, the aggregate number
of shares of the Company's Common Stock reserved for issuance under the Plan
shall be increased automatically by a number of shares equal to 1% of the total
number of outstanding shares of the Company Common Stock on the immediately
preceding December 31; PROVIDED that the aggregate number of shares issued over
the term of this Plan shall not exceed 5,000,000 shares. Such number shall be
subject to adjustments effected in accordance with Section 14 of this Plan.

2. PURPOSE. The purpose of this Plan is to provide eligible employees
of the Company and Participating Subsidiaries with a convenient means of
acquiring an equity interest in the Company through payroll deductions, to
enhance such employees' sense of participation in the affairs of the Company and
Participating Subsidiaries, and to provide an incentive for continued
employment.

3. ADMINISTRATION. This Plan shall be administered by the Compensation
Committee of the Board (the "COMMITTEE"). Subject to the provisions of this Plan
and the limitations of Section 423 of the Code or any successor provision in the
Code, all questions of interpretation or application of this Plan shall be
determined by the Committee and its decisions shall be final and binding upon
all participants. Members of the Committee shall receive no compensation for
their services in connection with the administration of this Plan, other than
standard fees as established from time to time by the Board for services
rendered by Board members serving on Board committees. All expenses incurred in
connection with the administration of this Plan shall be paid by the Company.

4. ELIGIBILITY. Any employee of the Company or the Participating
Subsidiaries is eligible to participate in an Offering Period (as hereinafter
defined) under this Plan except the following:

(a) employees who are not employed by the Company or a
Participating Subsidiary (10) days before the beginning of such Offering Period,
except that employees who are employed on the Effective Date of the Registration
Statement filed by the Company with the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended (the "SECURITIES ACT")
registering the initial public offering of the Company's Common Stock shall be
eligible to participate in the first Offering Period under the Plan;

(b) employees who are customarily employed for twenty (20) hours or
less per week;

(d) employees who, together with any other person whose stock would
be attributed to such employee pursuant to Section 424(d) of the Code, own stock
or hold options to purchase stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Company or
any of its Participating Subsidiaries or who, as a result of being granted an
option under this Plan with respect to such Offering Period,

<PAGE>

would own stock or hold options to purchase stock possessing five percent (5%)
or more of the total combined voting power or value of all classes of stock of
the Company or any of its Participating Subsidiaries; and

(e) individuals who provide services to the Company or any of its
Participating Subsidiaries as independent contractors who are reclassified as
common law employees for any reason EXCEPT FOR federal income and employment tax
purposes.

5. OFFERING DATES. The offering periods of this Plan (each, an
"OFFERING PERIOD") shall be of twenty-four (24) months duration commencing on
February 1 and August 1 of each year and ending on January 31 and July 31 of
each year; PROVIDED, HOWEVER, that notwithstanding the foregoing, the first such
Offering Period shall commence on the first business day on which price
quotations for the Company's Common Stock are available on the Nasdaq National
Market (the "FIRST OFFERING DATE") and shall end on July 31, 2001. Except for
the first Offering Period, each Offering Period shall consist of four (4) six
month purchase periods (individually, a "PURCHASE PERIOD") during which payroll
deductions of the participants are accumulated under this Plan. The first
Offering Period shall consist of no more than five and no fewer than three
Purchase Periods, any of which may be greater or less than six months as
determined by the Committee. The first business day of each Offering Period is
referred to as the "OFFERING DATE". The last business day of each Purchase
Period is referred to as the "PURCHASE DATE". The Committee shall have the power
to change the duration of Offering Periods with respect to offerings without
stockholder approval if such change is announced at least fifteen (15) days
prior to the scheduled beginning of the first Offering Period to be affected.

6. PARTICIPATION IN THIS PLAN. Eligible employees may become
participants in an Offering Period under this Plan on the first Offering Date
after satisfying the eligibility requirements by delivering a subscription
agreement to the Company's treasury department (the "TREASURY DEPARTMENT") not
later than five (5) days before such Offering Date. Notwithstanding the
foregoing, the Committee may set a later time for filing the subscription
agreement authorizing payroll deductions for all eligible employees with respect
to a given Offering Period. An eligible employee who does not deliver a
subscription agreement to the Treasury Department by such date after becoming
eligible to participate in such Offering Period shall not participate in that
Offering Period or any subsequent Offering Period unless such employee enrolls
in this Plan by filing a subscription agreement with the Treasury Department not
later than five (5) days preceding a subsequent Offering Date. Once an employee
becomes a participant in an Offering Period, such employee will automatically
participate in the Offering Period commencing immediately following the last day
of the prior Offering Period unless the employee withdraws or is deemed to
withdraw from this Plan or terminates further participation in the Offering
Period as set forth in Section 11 below. Such participant is not required to
file any additional subscription agreement in order to continue participation in
this Plan.

7. GRANT OF OPTION ON ENROLLMENT. Enrollment by an eligible employee in
this Plan with respect to an Offering Period will constitute the grant (as of
the Offering Date) by the Company to such employee of an option to purchase on
the Purchase Date up to that number of shares of Common Stock of the Company
determined by dividing (a) the amount accumulated in such employee's payroll
deduction account during such Purchase Period by (b) the lower of (i)
eighty-five percent (85%) of the fair market value of a share of the Company's
Common Stock on the Offering Date (but in no event less than the par value of a
share of the Company's Common Stock), or (ii) eighty-five percent (85%) of the
fair market value of a share of the Company's Common Stock on the Purchase Date
(but in no event less than the par value of a share of the Company's Common
Stock), PROVIDED, HOWEVER, that the number of shares of the Company's Common
Stock subject to any option granted pursuant to this Plan shall not exceed the
lesser of (x) the maximum number of shares set by the Committee pursuant to
Section 10(c) below with respect to the applicable Purchase Date, or (y) the
maximum number of shares which may be purchased pursuant to Section 10(b) below
with respect to the applicable Purchase Date. The fair market value of a share
of the Company's Common Stock shall be determined as provided in Section 8
below.

8. PURCHASE PRICE. The purchase price per share at which a share of
Common Stock will be sold in any Offering Period shall be eighty-five percent
(85%) of the lesser of:

(a) The fair market value on the Offering Date; or

<PAGE>

(b) The fair market value on the Purchase Date.

For purposes of this Plan, the term "FAIR MARKET VALUE" means, as
of any date, the value of a share of the Company's Common Stock determined as
follows:

(a) if such Common Stock is then quoted on the Nasdaq
National Market, its closing price on the Nasdaq
National Market on the date of determination as
reported in THE WALL STREET JOURNAL;

(d) if none of the foregoing is applicable, by the Board in
good faith, which in the case of the First Offering
Date will be the price per share at which shares of the
Company's Common Stock are initially offered for sale
to the public by the Company's underwriters in the
initial public offering of the Company's Common Stock
pursuant to a registration statement filed with the SEC
under the Securities Act.

9. PAYMENT OF PURCHASE PRICE; CHANGES IN PAYROLL DEDUCTIONS; ISSUANCE
OF SHARES.

(a) The purchase price of the shares is accumulated by regular
payroll deductions made during each Offering Period. The deductions are made as
a percentage of the participant's compensation in one percent (1%) increments
not less than two percent (2%), nor greater than fifteen percent (15%) or such
lower limit set by the Committee. Compensation shall mean all W-2 cash
compensation, including, but not limited to, base salary, wages, commissions,
overtime, shift premiums and bonuses, plus draws against commissions, PROVIDED,
HOWEVER, that for purposes of determining a participant's compensation, any
election by such participant to reduce his or her regular cash remuneration
under Sections 125 or 401(k) of the Code shall be treated as if the participant
did not make such election. Payroll deductions shall commence on the first
payday of the Offering Period and shall continue to the end of the Offering
Period unless sooner altered or terminated as provided in this Plan.

(b) A participant may increase or decrease the rate of payroll
deductions during an Offering Period by filing with the Treasury Department a
new authorization for payroll deductions, in which case the new rate shall
become effective for the next payroll period commencing more than fifteen (15)
days after the Treasury Department's receipt of the authorization and shall
continue for the remainder of the Offering Period unless changed as described
below. Such change in the rate of payroll deductions may be made at any time
during an Offering Period, but not more than one (1) change may be made
effective during any Purchase Period. A participant may increase or decrease the
rate of payroll deductions for any subsequent Offering Period by filing with the
Treasury Department a new authorization for payroll deductions not later than
fifteen (15) days before the beginning of such Offering Period.

(c) A participant may reduce his or her payroll deduction
percentage to zero during an Offering Period by filing with the Treasury
Department a request for cessation of payroll deductions. Such reduction shall
be effective beginning with the next payroll period commencing more than fifteen
(15) days after the Treasury Department's receipt of the request and no further
payroll deductions will be made for the duration of the Offering Period. Payroll
deductions credited to the participant's account prior to the effective date of
the request shall be used to purchase shares of Common Stock of the Company in
accordance with Section (e) below. A participant

<PAGE>

may not resume making payroll deductions during the Offering Period in which he
or she reduced his or her payroll deductions to zero.

(d) All payroll deductions made for a participant are credited to
his or her account under this Plan and are deposited with the general funds of
the Company. No interest accrues on the payroll deductions. All payroll
deductions received or held by the Company may be used by the Company for any
corporate purpose, and the Company shall not be obligated to segregate such
payroll deductions.

(e) On each Purchase Date, so long as this Plan remains in effect
and provided that the participant has not submitted a signed and completed
withdrawal form before that date which notifies the Company that the participant
wishes to withdraw from that Offering Period under this Plan and have all
payroll deductions accumulated in the account maintained on behalf of the
participant as of that date returned to the participant, the Company shall apply
the funds then in the participant's account to the purchase of whole shares of
Common Stock reserved under the option granted to such participant with respect
to the Offering Period to the extent that such option is exercisable on the
Purchase Date. The purchase price per share shall be as specified in Section 8
of this Plan. Any cash remaining in a participant's account after such purchase
of shares shall be refunded to such participant in cash, without interest;
provided, however that any amount remaining in such participant's account on a
Purchase Date which is less than the amount necessary to purchase a full share
of Common Stock of the Company shall be carried forward, without interest, into
the next Purchase Period or Offering Period, as the case may be. In the event
that this Plan has been oversubscribed, all funds not used to purchase shares on
the Purchase Date shall be returned to the participant, without interest. No
Common Stock shall be purchased on a Purchase Date on behalf of any employee
whose participation in this Plan has terminated prior to such Purchase Date.

(f) As promptly as practicable after the Purchase Date, the Company
shall issue shares for the participant's benefit representing the shares
purchased upon exercise of his or her option.

(g) During a participant's lifetime, his or her option to purchase
shares hereunder is exercisable only by him or her. The participant will have no
interest or voting right in shares covered by his or her option until such
option has been exercised.

10. LIMITATIONS ON SHARES TO BE PURCHASED.

(a) No participant shall be entitled to purchase stock under this
Plan at a rate which, when aggregated with his or her rights to purchase stock
under all other employee stock purchase plans of the Company or any Subsidiary,
exceeds $25,000 in fair market value, determined as of the Offering Date (or
such other limit as may be imposed by the Code) for each calendar year in which
the employee participates in this Plan. The Company shall automatically suspend
the payroll deductions of any participant as necessary to enforce such limit
provided that when the Company automatically resumes such payroll deductions,
the Company must apply the rate in effect immediately prior to such suspension.

(b) No more than two hundred percent (200%) of the number of
shares determined by using eighty-five percent (85%) of the fair market value of
a share of the Company's Common Stock on the Offering Date as the denominator
may be purchased by a participant on any single Purchase Date.

(c) No participant shall be entitled to purchase more than the
Maximum Share Amount (as defined below) on any single Purchase Date. Not less
than thirty (30) days prior to the commencement of any Offering Period, the
Committee may, in its sole discretion, set a maximum number of shares which may
be purchased by any employee at any single Purchase Date (hereinafter the
"MAXIMUM SHARE AMOUNT"). Until otherwise determined by the Committee, there
shall be no Maximum Share Amount. In no event shall the Maximum Share Amount
exceed the amounts permitted under Section 10(b) above. If a new Maximum Share
Amount is set, then all participants must be notified of such Maximum Share
Amount prior to the commencement of the next Offering Period. The Maximum Share
Amount shall continue to apply with respect to all succeeding Purchase Dates and
Offering Periods unless revised by the Committee as set forth above.

<PAGE>

(d) If the number of shares to be purchased on a Purchase Date by
all employees participating in this Plan exceeds the number of shares then
available for issuance under this Plan, then the Company will make a pro rata
allocation of the remaining shares in as uniform a manner as shall be reasonably
practicable and as the Committee shall determine to be equitable. In such event,
the Company shall give written notice of such reduction of the number of shares
to be purchased under a participant's option to each participant affected.

(e) Any payroll deductions accumulated in a participant's account
which are not used to purchase stock due to the limitations in this Section 10
shall be returned to the participant as soon as practicable after the end of the
applicable Purchase Period, without interest.

11. WITHDRAWAL.

(a) Each participant may withdraw from an Offering Period under
this Plan by signing and delivering to the Treasury Department a written notice
to that effect on a form provided for such purpose. Such withdrawal may be
elected at any time at least fifteen (15) days prior to the end of an Offering
Period.

(b) Upon withdrawal from this Plan, the accumulated payroll
deductions shall be returned to the withdrawn participant, without interest, and
his or her interest in this Plan shall terminate. In the event a participant
voluntarily elects to withdraw from this Plan, he or she may not resume his or
her participation in this Plan during the same Offering Period, but he or she
may participate in any Offering Period under this Plan which commences on a date
subsequent to such withdrawal by filing a new authorization for payroll
deductions in the same manner as set forth in Section 6 above for initial
participation in this Plan.

(c) If the Fair Market Value on the first day of the current
Offering Period in which a participant is enrolled is higher than the Fair
Market Value on the first day of any subsequent Offering Period, the Company
will automatically enroll such participant in the subsequent Offering Period.
Any funds accumulated in a participant's account prior to the first day of such
subsequent Offering Period will be applied to the purchase of shares on the
Purchase Date immediately prior to the first day of such subsequent Offering
Period, if any.

12. TERMINATION OF EMPLOYMENT. Termination of a participant's
employment for any reason, including retirement, death or the failure of a
participant to remain an eligible employee of the Company or of a Participating
Subsidiary, immediately terminates his or her participation in this Plan. In
such event, the payroll deductions credited to the participant's account will be
returned to him or her or, in the case of his or her death, to his or her legal
representative, without interest. For purposes of this Section 12, an employee
will not be deemed to have terminated employment or failed to remain in the
continuous employ of the Company or of a Participating Subsidiary in the case of
sick leave, military leave, or any other leave of absence approved by the Board;
PROVIDED that such leave is for a period of not more than ninety (90) days or
reemployment upon the expiration of such leave is guaranteed by contract or
statute.

13. RETURN OF PAYROLL DEDUCTIONS. In the event a participant's interest
in this Plan is terminated by withdrawal, termination of employment or
otherwise, or in the event this Plan is terminated by the Board, the Company
shall deliver to the participant all payroll deductions credited to such
participant's account. No interest shall accrue on the payroll deductions of a
participant in this Plan.

14. CAPITAL CHANGES. Subject to any required action by the stockholders
of the Company, the number of shares of Common Stock covered by each option
under this Plan which has not yet been exercised and the number of shares of
Common Stock which have been authorized for issuance under this Plan but have
not yet been placed under option (collectively, the "RESERVES"), as well as the
price per share of Common Stock covered by each option under this Plan which has
not yet been exercised, shall be proportionately adjusted for any increase or
decrease in the number of issued and outstanding shares of Common Stock of the
Company resulting from a stock split or the payment of a stock dividend (but
only on the Common Stock) or any other increase or decrease in the number of
issued and outstanding shares of Common Stock effected without receipt of any
consideration by the Company; PROVIDED, HOWEVER, that 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
Committee, whose determination

<PAGE>

shall be final, binding and conclusive. Except as expressly provided herein, no
issue 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 option.

In the event of the proposed dissolution or liquidation of the Company,
the Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Committee. The Committee may,
in the exercise of its sole discretion in such instances, declare that this Plan
shall terminate as of a date fixed by the Committee and give each participant
the right to purchase shares under this Plan prior to such termination. In the
event of (i) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the stockholders of
the Company or their relative stock holdings and the options under this Plan are
assumed, converted or replaced by the successor corporation, which assumption
will be binding on all participants), (ii) a merger in which the Company is the
surviving corporation but after which the stockholders of the Company
immediately prior to such merger (other than any stockholder that merges, or
which owns or controls another corporation that merges, with the Company in such
merger) cease to own their shares or other equity interest in the Company, (iii)
the sale of all or substantially all of the assets of the Company or (iv) the
acquisition, sale, or transfer of more than 50% of the outstanding shares of the
Company by tender offer or similar transaction, the Plan will continue with
regard to Offering Periods that commenced prior to the closing of the proposed
transaction and shares will be purchased based on the Fair Market Value of the
surviving corporation's stock on each Purchase Date, unless otherwise provided
by the Committee consistent with pooling of interests accounting treatment.

The Committee may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event that
the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding Common
Stock, or in the event of the Company being consolidated with or merged into any
other corporation.

15. NONASSIGNABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under this Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 22 below) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be void and
without effect.

16. REPORTS. Individual accounts will be maintained for each
participant in this Plan. Each participant shall receive promptly after the end
of each Purchase Period a report of his or her account setting forth the total
payroll deductions accumulated, the number of shares purchased, the per share
price thereof and the remaining cash balance, if any, carried forward to the
next Purchase Period or Offering Period, as the case may be.

17. NOTICE OF DISPOSITION. Each participant shall notify the Company in
writing if the participant disposes of any of the shares purchased in any
Offering Period pursuant to this Plan if such disposition occurs within two (2)
years from the Offering Date or within one (1) year from the Purchase Date on
which such shares were purchased (the "NOTICE PERIOD"). The Company may, at any
time during the Notice Period, place a legend or legends on any certificate
representing shares acquired pursuant to this Plan requesting the Company's
transfer agent to notify the Company of any transfer of the shares. The
obligation of the participant to provide such notice shall continue
notwithstanding the placement of any such legend on the certificates.

18. NO RIGHTS TO CONTINUED EMPLOYMENT. Neither this Plan nor the grant
of any option hereunder shall confer any right on any employee to remain in the
employ of the Company or any Participating Subsidiary, or restrict the right of
the Company or any Participating Subsidiary to terminate such employee's
employment.

19. EQUAL RIGHTS AND PRIVILEGES. All eligible employees shall have
equal rights and privileges with respect to this Plan so that this Plan
qualifies as an "employee stock purchase plan" within the meaning of Section 423
or any successor provision of the Code and the related regulations. Any
provision of this Plan which is

<PAGE>

inconsistent with Section 423 or any successor provision of the Code shall,
without further act or amendment by the Company, the Committee or the Board, be
reformed to comply with the requirements of Section 423. This Section 19 shall
take precedence over all other provisions in this Plan.

20. NOTICES. All notices or other communications by a participant to
the Company under or in connection with this Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.

21. TERM; STOCKHOLDER APPROVAL. After this Plan is adopted by the
Board, this Plan will become effective on the First Offering Date (as defined
above). This Plan shall be approved by the stockholders of the Company, in any
manner permitted by applicable corporate law, within twelve (12) months before
or after the date this Plan is adopted by the Board. No purchase of shares
pursuant to this Plan shall occur prior to such stockholder approval. This Plan
shall continue until the earlier to occur of (a) termination of this Plan by the
Board (which termination may be effected by the Board at any time), (b) issuance
of all of the shares of Common Stock reserved for issuance under this Plan, or
(c) ten (10) years from the adoption of this Plan by the Board.

22. DESIGNATION OF BENEFICIARY.

(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under this Plan in the event of such participant's death
subsequent to the end of an Purchase Period but prior to delivery to him of such
shares and cash. In addition, a participant may file a written designation of a
beneficiary who is to receive any cash from the participant's account under this
Plan in the event of such participant's death prior to a Purchase Date.

(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under this
Plan who is living at the time of such participant's death, the Company shall
deliver such shares or cash to the executor or administrator of the estate of
the participant, or if no such executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its discretion, may deliver such
shares or cash to the spouse or to any one or more dependents or relatives of
the participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.

23. CONDITIONS UPON ISSUANCE OF SHARES; LIMITATION ON SALE OF SHARES.
Shares shall not be issued with respect to an option unless the exercise of such
option and the issuance and delivery of such shares pursuant thereto shall
comply with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange or automated quotation system upon which the shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

24. APPLICABLE LAW. The Plan shall be governed by the substantive laws
(excluding the conflict of laws rules) of the State of California.

25. AMENDMENT OR TERMINATION OF THIS PLAN. The Board may at any time
amend, terminate or extend the term of this Plan, except that any such
termination cannot affect options previously granted under this Plan, nor may
any amendment make any change in an option previously granted which would
adversely affect the right of any participant, nor may any amendment be made
without approval of the stockholders of the Company obtained in accordance with
Section 21 above within twelve (12) months of the adoption of such amendment (or
earlier if required by Section 21) if such amendment would:

(a) increase the number of shares that may be issued under this Plan;
or

(b) change the designation of the employees (or class of employees)
eligible for participation in this Plan.

<PAGE>

Notwithstanding the foregoing, the Board may make such amendments to
the Plan as the Board determines to be advisable, if the continuation of the
Plan or any Offering Period would result in financial accounting treatment for
the Plan that is different from the financial accounting treatment in effect on
the date this Plan is adopted by the Board.

<PAGE>
EXHIBIT 23.02

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Selected Financial
Data" and "Experts" and to the use of our report dated October 25, 1999 in
Amendment No. 1 to the Registration Statement (Form S-1 No. 333-87497) and
related Prospectus of GRIC Communications, Inc. dated October 29, 1999.

Our audits also included the financial statement schedule listed in Item 16(b)
of this Registration Statement. This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.

San Jose, California

The foregoing consent is in the form that will be signed upon the approval by
the Company's stockholders, of the reincorporation of the Company in Delaware as
described in Note 8 to the Consolidated Financial Statements.

/s/ Ernst & Young LLP

San Jose, California
October 28, 1999

<PAGE>
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