KABIRA TECHNOLOGIES INC, S-1, EX-10.4, 2000-07-14

KABIRA TECHNOLOGIES INC
S-1, EX-10.4, 2000-07-14

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<PAGE> 1
EXHIBIT 10.4

OBJECTSWITCH CORPORATION

1998 STOCK PLAN

ADOPTED ON AUGUST 21, 1998

AMENDED ON APRIL 29, 1999

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<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 1. ESTABLISHMENT AND PURPOSE..........................................1

SECTION 2. ADMINISTRATION.....................................................1

(a) Committees of the Board of Directors...................................1
(b) Authority of the Board of Directors....................................1

SECTION 3. ELIGIBILITY........................................................1

(a) General Rule...........................................................1
(b) Ten-Percent Shareholders...............................................1

SECTION 4. STOCK SUBJECT TO PLAN..............................................2

(a) Basic Limitation.......................................................2
(b) Additional Shares......................................................2

SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES............................2

(a) Stock Purchase Agreement...............................................2
(b) Duration of Offers and Nontransferability of Rights....................2
(c) Purchase Price.........................................................2
(d) Withholding Taxes......................................................3
(e) Restrictions on Transfer of Shares and Minimum Vesting.................3
(f) Accelerated Vesting....................................................3

SECTION 6. TERMS AND CONDITIONS OF OPTIONS....................................3

(a) Stock Option Agreement.................................................3
(b) Number of Shares.......................................................3
(c) Exercise Price.........................................................4
(d) Withholding Taxes......................................................4
(e) Exercisability.........................................................4
(f) Accelerated Exercisability.............................................4
(g) Basic Term.............................................................4
(h) Nontransferability.....................................................4
(i) Termination of Service (Except by Death)...............................4
(j) Leaves of Absence......................................................5
(k) Death of Optionee......................................................5
(l) No Rights as a Shareholder.............................................5
(m) Modification, Extension and Assumption of Options......................5
(n) Restrictions on Transfer of Shares and Minimum Vesting.................6
(o) Accelerated Vesting....................................................6
</TABLE>

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<TABLE>
<S> <C> <C>
SECTION 7. PAYMENT FOR SHARES.................................................6

(a) General Rule...........................................................6
(b) Surrender of Stock.....................................................6
(c) Services Rendered......................................................6
(d) Promissory Note........................................................7
(e) Exercise/Sale..........................................................7
(f) Exercise/Pledge........................................................7

SECTION 8. ADJUSTMENT OF SHARES...............................................7

(a) General................................................................7
(b) Mergers and Consolidations.............................................7
(c) Reservation of Rights..................................................8

SECTION 9. SECURITIES LAWS REQUIREMENTS.......................................8

(a) General................................................................8
(b) Financial Reports......................................................8

SECTION 10. NO RETENTION RIGHTS...............................................8

SECTION 11. DURATION AND AMENDMENTS...........................................8

(a) Term of the Plan.......................................................8
(b) Right to Amend or Terminate the Plan...................................9
(c) Effect of Amendment or Termination.....................................9

SECTION 12. DEFINITIONS.......................................................9
</TABLE>

<PAGE> 4

OBJECTSWITCH CORPORATION 1998 STOCK PLAN

SECTION 1. ESTABLISHMENT AND PURPOSE.

The purpose of the Plan is to offer selected individuals an opportunity
to acquire a proprietary interest in the success of the Company, or to increase
such interest, by purchasing Shares of the Company's Stock. The Plan provides
both for the direct award or sale of Shares and for the grant of Options to
purchase Shares. Options granted under the Plan may include Nonstatutory Options
as well as ISOs intended to qualify under Section 422 of the Code.

Capitalized terms are defined in Section 12.

SECTION 2. ADMINISTRATION.

(a) COMMITTEES OF THE BOARD OF DIRECTORS. The Plan may be administered
by one or more Committees. Each Committee shall consist of two or more members
of the Board of Directors who have been appointed by the Board of Directors.
Each Committee shall have such authority and be responsible for such functions
as the Board of Directors has assigned to it. If no Committee has been
appointed, the entire Board of Directors shall administer the Plan. Any
reference to the Board of Directors in the Plan shall be construed as a
reference to the Committee (if any) to whom the Board of Directors has assigned
a particular function.

(b) AUTHORITY OF THE BOARD OF DIRECTORS. Subject to the provisions of
the Plan, the Board of Directors shall have full authority and discretion to
take any actions it deems necessary or advisable for the administration of the
Plan. All decisions, interpretations and other actions of the Board of Directors
shall be final and binding on all Purchasers, all Optionees and all persons
deriving their rights from a Purchaser or Optionee.

SECTION 3. ELIGIBILITY.

(a) GENERAL RULE. Only Employees, Outside Directors and Consultants
shall be eligible for the grant of Options or the direct award or sale of
Shares. Only Employees shall be eligible for the grant of ISOs.

(b) TEN-PERCENT SHAREHOLDERS. An individual who owns more than 10% of
the total combined voting power of all classes of outstanding stock of the
Company, its Parent or any of its Subsidiaries shall not be eligible for
designation as an Optionee or Purchaser unless (i) the Exercise Price is at
least 110% of the Fair Market Value of a Share on the date of grant, (ii) the
Purchase Price (if any) is at least 100% of the Fair Market Value of a Share and
(iii) in the case of an ISO, such ISO by its terms is not exercisable after the
expiration of five years from the date of grant. For purposes of this Subsection
(b), in determining stock ownership, the attribution rules of Section 424(d) of
the Code shall be applied.

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SECTION 4. STOCK SUBJECT TO PLAN.

(a) BASIC LIMITATION. The aggregate number of Shares that may be issued
under the Plan (upon exercise of Options or other rights to acquire Shares)
shall not exceed 4,055,2631 Shares, subject to adjustment pursuant to Section 8.
The initial authorized share reserve is comprised of (i) the number of shares
which remained available for issuance, as of the Plan Effective Date, under the
Predecessor Plan as last approved by the Company's shareholders prior to such
date, including the shares subject to the outstanding options incorporated into
the Plan and any other shares which would have been available for future option
grants under the Predecessor Plan, plus (ii) an additional increase of 600,000
shares. The number of Shares that are subject to Options or other rights
outstanding at any time under the Plan shall not exceed the number of Shares
that then remain available for issuance under the Plan. The Company, during the
term of the Plan, shall at all times reserve and keep available sufficient
Shares to satisfy the requirements of the Plan.

(b) ADDITIONAL SHARES. In the event that any outstanding Option or other
right for any reason expires or is canceled or otherwise terminated, the Shares
allocable to the unexercised portion of such Option (including any options
incorporated from the Predecessor Plan) or other right shall again be available
for the purposes of the Plan. In the event that Shares issued under the Plan are
reacquired by the Company pursuant to any forfeiture provision, right of
repurchase or right of first refusal, such Shares shall again be available for
the purposes of the Plan, except that the aggregate number of Shares which may
be issued upon the exercise of ISOs shall in no event exceed 4,055,263 Shares
(subject to adjustment pursuant to Section 8).

SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES.

(a) STOCK PURCHASE AGREEMENT. Each award or sale of Shares under the
Plan (other than upon exercise of an Option) shall be evidenced by a Stock
Purchase Agreement between the Purchaser and the Company. Such award or sale
shall be subject to all applicable terms and conditions of the Plan and may be
subject to any other terms and conditions which are not inconsistent with the
Plan and which the Board of Directors deems appropriate for inclusion in a Stock
Purchase Agreement. The provisions of the various Stock Purchase Agreements
entered into under the Plan need not be identical.

(b) DURATION OF OFFERS AND NONTRANSFERABILITY OF RIGHTS. Any right to
acquire Shares under the Plan (other than an Option) shall automatically expire
if not exercised by the Purchaser within 30 days after the grant of such right
was communicated to the Purchaser by the Company. Such right shall not be
transferable and shall be exercisable only by the Purchaser to whom such right
was granted.

(c) PURCHASE PRICE. The Purchase Price of Shares to be offered under the
Plan shall not be less than 85% of the Fair Market Value of such Shares, and a
higher percentage may be required by Section 3(b). Subject to the preceding
sentence, the Purchase Price shall be determined by the Board of Directors at
its sole discretion. The Purchase Price shall be payable in a form described in
Section 7.

--------
1 Number reflects 1,670,000-share increase approved by the Board of Directors on
April 29, 1999.

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(d) WITHHOLDING TAXES. As a condition to the purchase of Shares, the
Purchaser shall make such arrangements as the Board of Directors may require for
the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such purchase.

(e) RESTRICTIONS ON TRANSFER OF SHARES AND MINIMUM VESTING. Any Shares
awarded or sold under the Plan shall be subject to such special forfeiture
conditions, rights of repurchase, rights of first refusal and other transfer
restrictions as the Board of Directors may determine. Such restrictions shall be
set forth in the applicable Stock Purchase Agreement and shall apply in addition
to any restrictions that may apply to holders of Shares generally. In the case
of a Purchaser who is not an officer of the Company, an Outside Director or a
Consultant, any right to repurchase the Purchaser's Shares at the original
Purchase Price (if any) upon termination of the Purchaser's Service shall lapse
at least as rapidly as 20% per year over the five-year period commencing on the
date of the award or sale of the Shares. Any such right may be exercised only
within 90 days after the termination of the Purchaser's Service for cash or for
cancellation of indebtedness incurred in purchasing the Shares.

(f) ACCELERATED VESTING. Unless the applicable Stock Purchase Agreement
provides otherwise, any right to repurchase a Purchaser's Shares at the original
Purchase Price (if any) upon termination of the Purchaser's Service shall lapse
and all of such Shares shall become vested if (i) the Company is subject to a
Change in Control before the Purchaser's Service terminates and (ii) the
repurchase right is not assigned to the entity that employs the Purchaser
immediately after the Change in Control or to its parent or subsidiary.

SECTION 6. TERMS AND CONDITIONS OF OPTIONS.

(a) STOCK OPTION AGREEMENT. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms and conditions of the Plan
and may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Board of Directors deems appropriate for inclusion
in a Stock Option Agreement. The provisions of the various Stock Option
Agreements entered into under the Plan need not be identical.

(b) NUMBER OF SHARES. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 8. The Stock Option
Agreement shall also specify whether the Option is an ISO or a Nonstatutory
Option.

(c) EXERCISE PRICE. Each Stock Option Agreement shall specify the
Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the
Fair Market Value of a Share on the date of grant, and a higher percentage may
be required by Section 3(b). The Exercise Price of a Nonstatutory Option shall
not be less than 85% of the Fair Market Value of a Share on the date of grant,
and a higher percentage may be required by Section 3(b). Subject to the
preceding two sentences, the Exercise Price under any Option shall be determined
by the Board of Directors at its sole discretion. The Exercise Price shall be
payable in a form described in Section 7.

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(d) WITHHOLDING TAXES. As a condition to the exercise of an Option, the
Optionee shall make such arrangements as the Board of Directors may require for
the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such exercise. The Optionee shall
also make such arrangements as the Board of Directors may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with the disposition of Shares acquired by
exercising an Option.

(e) EXERCISABILITY. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to become exercisable. In the case
of an Optionee who is not an officer of the Company, an Outside Director or a
Consultant, an Option shall become exercisable at least as rapidly as 20% per
year over the five-year period commencing on the date of the grant. Subject to
the preceding sentence, the exercisability provisions of any Stock Option
Agreement shall be determined by the Board of Directors at its sole discretion.

(f) ACCELERATED EXERCISABILITY. Unless the applicable Stock Option
Agreement provides otherwise, all of an Optionee's Options shall become
exercisable in full if (i) the Company is subject to a Change in Control before
the Optionee's Service terminates, (ii) such Options do not remain outstanding,
(iii) such Options are not assumed by the surviving corporation or its parent
and (iv) the surviving corporation or its parent does not substitute options
with substantially the same terms for such Options.

(g) BASIC TERM. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed 10 years from the date of grant, and a shorter
term may be required by Section 3(b). Subject to the preceding sentence, the
Board of Directors at its sole discretion shall determine when an Option is to
expire.

(h) NONTRANSFERABILITY. No Option shall be transferable by the Optionee
other than by beneficiary designation, will or the laws of descent and
distribution. An Option may be exercised during the lifetime of the Optionee
only by the Optionee or by the Optionee's guardian or legal representative. No
Option or interest therein may be transferred, assigned, pledged or hypothecated
by the Optionee during the Optionee's lifetime, whether by operation of law or
otherwise, or be made subject to execution, attachment or similar process.

(i) TERMINATION OF SERVICE (EXCEPT BY DEATH). If an Optionee's Service
terminates for any reason other than the Optionee's death, then the Optionee's
Options shall expire on the earliest of the following occasions:

(i) The expiration date determined pursuant to Subsection (g)
above;

(ii) The date three months after the termination of the
Optionee's Service for any reason other than Disability, or such later
date as the Board of Directors may determine; or

(iii) The date six months after the termination of the Optionee's
Service by reason of Disability, or such later date as the Board of
Directors may determine.

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The Optionee may exercise all or part of the Optionee's Options at any time
before the expiration of such Options under the preceding sentence, but only to
the extent that such Options had become exercisable before the Optionee's
Service terminated (or became exercisable as a result of the termination) and
the underlying Shares had vested before the Optionee's Service terminated (or
vested as a result of the termination). The balance of such Options shall lapse
when the Optionee's Service terminates. In the event that the Optionee dies
after the termination of the Optionee's Service but before the expiration of the
Optionee's Options, all or part of such Options may be exercised (prior to
expiration) by the executors or administrators of the Optionee's estate or by
any person who has acquired such Options directly from the Optionee by
beneficiary designation, bequest or inheritance, but only to the extent that
such Options had become exercisable before the Optionee's Service terminated (or
became exercisable as a result of the termination) and the underlying Shares had
vested before the Optionee's Service terminated (or vested as a result of the
termination).

(j) LEAVES OF ABSENCE. For purposes of Subsection (i) above, Service
shall be deemed to continue while the Optionee is on a bona fide leave of
absence, if such leave was approved by the Company in writing and if continued
crediting of Service for this purpose is expressly required by the terms of such
leave or by applicable law (as determined by the Company).

(k) DEATH OF OPTIONEE. If an Optionee dies while the Optionee is in
Service, then the Optionee's Options shall expire on the earlier of the
following dates:

(i) The expiration date determined pursuant to Subsection (g)
above; or

(ii) The date 12 months after the Optionee's death.

All or part of the Optionee's Options may be exercised at any time before the
expiration of such Options under the preceding sentence by the executors or
administrators of the Optionee's estate or by any person who has acquired such
Options directly from the Optionee by beneficiary designation, bequest or
inheritance, but only to the extent that such Options had become exercisable
before the Optionee's death or became exercisable as a result of the death. The
balance of such Options shall lapse when the Optionee dies.

(l) NO RIGHTS AS A SHAREHOLDER. An Optionee, or a transferee of an
Optionee, shall have no rights as a shareholder with respect to any Shares
covered by the Optionee's Option until such person becomes entitled to receive
such Shares by filing a notice of exercise and paying the Exercise Price
pursuant to the terms of such Option.

(m) MODIFICATION, EXTENSION AND ASSUMPTION OF OPTIONS. Within the
limitations of the Plan, the Board of Directors may modify, extend or assume
outstanding Options or may accept the cancellation of outstanding Options
(whether granted by the Company or another issuer, including outstanding options
incorporated from the Predecessor Plan) in return for the grant of new Options
for the same or a different number of Shares and at the same or a different
Exercise Price. The foregoing notwithstanding, no modification of an Option
shall, without the

5
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consent of the Optionee, impair the Optionee's rights or increase the Optionee's
obligations under such Option.

(n) RESTRICTIONS ON TRANSFER OF SHARES AND MINIMUM VESTING. Any Shares
issued upon exercise of an Option shall be subject to such special forfeiture
conditions, rights of repurchase, rights of first refusal and other transfer
restrictions as the Board of Directors may determine. Such restrictions shall be
set forth in the applicable Stock Option Agreement and shall apply in addition
to any restrictions that may apply to holders of Shares generally. In the case
of an Optionee who is not an officer of the Company, an Outside Director or a
Consultant:

(i) Any right to repurchase the Optionee's Shares at the original
Exercise Price upon termination of the Optionee's Service shall lapse at
least as rapidly as 20% per year over the five-year period commencing on
the date of the option grant;

(ii) Any such right may be exercised only for cash or for
cancellation of indebtedness incurred in purchasing the Shares; and

(iii) Any such right may be exercised only within 90 days after
the later of (A) the termination of the Optionee's Service or (B) the
date of the option exercise.

(o) ACCELERATED VESTING. Unless the applicable Stock Option Agreement
provides otherwise, any right to repurchase an Optionee's Shares at the original
Exercise Price upon termination of the Optionee's Service shall lapse and all of
such Shares shall become vested if (i) the Company is subject to a Change in
Control before the Optionee's Service terminates and (ii) the repurchase right
is not assigned to the entity that employs the Optionee immediately after the
Change in Control or to its parent or subsidiary.

SECTION 7. PAYMENT FOR SHARES.

(a) GENERAL RULE. The entire Purchase Price or Exercise Price of Shares
issued under the Plan shall be payable in cash or cash equivalents at the time
when such Shares are purchased, except as otherwise provided in this Section 7.

(b) SURRENDER OF STOCK. To the extent that a Stock Option Agreement so
provides, all or any part of the Exercise Price may be paid by surrendering, or
attesting to the ownership of, Shares that are already owned by the Optionee.
Such Shares shall be surrendered to the Company in good form for transfer and
shall be valued at their Fair Market Value on the date when the Option is
exercised. The Optionee shall not surrender, or attest to the ownership of,
Shares in payment of the Exercise Price if such action would cause the Company
to recognize compensation expense (or additional compensation expense) with
respect to the Option for financial reporting purposes.

(c) SERVICES RENDERED. At the discretion of the Board of Directors,
Shares may be awarded under the Plan in consideration of services rendered to
the Company, a Parent or a Subsidiary prior to the award.

6
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(d) PROMISSORY NOTE. To the extent that a Stock Option Agreement or
Stock Purchase Agreement so provides, all or a portion of the Exercise Price or
Purchase Price (as the case may be) of Shares issued under the Plan may be paid
with a full-recourse promissory note. The Shares shall be pledged as security
for payment of the principal amount of the promissory note and interest thereon.
The interest rate payable under the terms of the promissory note shall not be
less than the minimum rate (if any) required to avoid the imputation of
additional interest under the Code. Subject to the foregoing, the Board of
Directors (at its sole discretion) shall specify the term, interest rate,
amortization requirements (if any) and other provisions of such note.

(e) EXERCISE/SALE. To the extent that a Stock Option Agreement so
provides, and if Stock is publicly traded, payment may be made all or in part by
the delivery (on a form prescribed by the Company) of an irrevocable direction
to a securities broker approved by the Company to sell Shares and to deliver all
or part of the sales proceeds to the Company in payment of all or part of the
Exercise Price and any withholding taxes.

(f) EXERCISE/PLEDGE. To the extent that a Stock Option Agreement so
provides, and if Stock is publicly traded, payment may be made all or in part by
the delivery (on a form prescribed by the Company) of an irrevocable direction
to pledge Shares to a securities broker or lender approved by the Company, as
security for a loan, and to deliver all or part of the loan proceeds to the
Company in payment of all or part of the Exercise Price and any withholding
taxes.

SECTION. 8 ADJUSTMENT OF SHARES.

(a) GENERAL. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of an extraordinary
dividend payable in a form other than Shares in an amount that has a material
effect on the Fair Market Value of the Stock, a combination or consolidation of
the outstanding Stock into a lesser number of Shares, a recapitalization, a
spin-off, a reclassification or a similar occurrence, the Board of Directors
shall make appropriate adjustments in one or more of (i) the number of Shares
available for future grants under Section 4, (ii) the number of Shares covered
by each outstanding Option or (iii) the Exercise Price under each outstanding
Option.

(b) MERGERS AND CONSOLIDATIONS. In the event that the Company is a party
to a merger or consolidation, outstanding Options shall be subject to the
agreement of merger or consolidation. Such agreement, without the Optionees'
consent, may provide for:

(i) The continuation of such outstanding Options by the Company
(if the Company is the surviving corporation);

(ii) The assumption of the Plan and such outstanding Options by
the surviving corporation or its parent;

(iii) The substitution by the surviving corporation or its parent
of options with substantially the same terms for such outstanding
Options; or

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(iv) The cancellation of such outstanding Options without payment
of any consideration.

(c) RESERVATION OF RIGHTS. Except as provided in this Section 8, an
Optionee or Purchaser shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any dividend
or (iii) any other increase or decrease in the number of shares of stock of any
class. Any issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.

SECTION 9. SECURITIES LAW REQUIREMENTS.

(a) GENERAL. Shares shall not be issued under the Plan unless the
issuance and delivery of such Shares comply with (or are exempt from) all
applicable requirements of law, including (without limitation) the Securities
Act of 1933, as amended, the rules and regulations promulgated thereunder, state
securities laws and regulations, and the regulations of any stock exchange or
other securities market on which the Company's securities may then be traded.

(b) FINANCIAL REPORTS. The Company each year shall furnish to Optionees,
Purchasers and shareholders who have received Stock under the Plan its balance
sheet and income statement, unless such Optionees, Purchasers or shareholders
are key Employees whose duties with the Company assure them access to equivalent
information. Such balance sheet and income statement need not be audited.

SECTION 10. NO RETENTION RIGHTS.

Nothing in the Plan or in any right or Option granted under the Plan
shall confer upon the Purchaser or Optionee any right to continue in Service for
any period of specific duration or interfere with or otherwise restrict in any
way the rights of the Company (or any Parent or Subsidiary employing or
retaining the Purchaser or Optionee) or of the Purchaser or Optionee, which
rights are hereby expressly reserved by each, to terminate his or her Service at
any time and for any reason, with or without cause.

SECTION 11. DURATION AND AMENDMENTS.

(a) TERM OF THE PLAN. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's shareholders. In the event that the shareholders fail
to approve the Plan within 12 months after its adoption by the Board of
Directors, any grants of Options or sales or awards of Shares that have already
occurred shall be rescinded, and no additional grants, sales or awards shall be
made thereafter under the Plan. The Plan shall terminate automatically 10 years
after its adoption by

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the Board of Directors and may be terminated on any earlier date pursuant to
Subsection (b) below.

(b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board of Directors may
amend, suspend or terminate the Plan at any time and for any reason; provided,
however, that any amendment of the Plan which increases the number of Shares
available for issuance under the Plan (except as provided in Section 8), or
which materially changes the class of persons who are eligible for the grant of
ISOs, shall be subject to the approval of the Company's shareholders.
Shareholder approval shall not be required for any other amendment of the Plan.

(c) EFFECT OF AMENDMENT OR TERMINATION. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Share previously issued or any Option
previously granted under the Plan. The Plan shall serve as the successor to the
Predecessor Plan, and no further option grants shall be made under the
Predecessor Plan after the Plan Effective Date. All options outstanding under
the Predecessor Plan as of such date shall, immediately upon approval of the
Plan by the Company's shareholders, be incorporated into the Plan and treated as
outstanding options under the Plan. However, each outstanding option so
incorporated shall continue to be governed solely by the terms of the documents
evidencing such option, and no provision of the Plan shall be deemed to affect
or otherwise modify the rights or obligations of the holders of such
incorporated options with respect to their acquisition of Shares. Rights and
features under this Plan, including the option/vesting acceleration provisions
relating to Change in Control may, in the Plan Administrator's discretion, be
extended to one or more options incorporated from the Predecessor Plan which do
not otherwise provide for such acceleration.

SECTION 12. DEFINITIONS.

(a) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company, as constituted from time to time.

(b) "CHANGE IN CONTROL" shall mean:

(i) The consummation of a merger or consolidation of the Company
with or into another entity or any other corporate reorganization, if
persons who were not shareholders of the Company immediately prior to
such merger, consolidation or other reorganization own immediately after
such merger, consolidation or other reorganization 50% or more of the
voting power of the outstanding securities of each of (A) the continuing
or surviving entity and (B) any direct or indirect parent corporation of
such continuing or surviving entity; or

(ii) The sale, transfer or other disposition of all or
substantially all of the Company's assets.

A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially

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the same proportions by the persons who held the Company's securities
immediately before such transaction.

(d) "COMMITTEE" shall mean a committee of the Board of Directors, as
described in Section 2(a).

(e) "COMPANY" shall mean ObjectSwitch Corporation, a California
corporation.

(f) "CONSULTANT" shall mean a person who performs bona fide services for
the Company, a Parent or a Subsidiary as a consultant or advisor, excluding
Employees and Outside Directors.

(g) "DISABILITY" shall mean that the Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment.

(h) "EMPLOYEE" shall mean any individual who is a common-law employee of
the Company, a Parent or a Subsidiary.

(i) "EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Board of Directors in
the applicable Stock Option Agreement.

(j) "FAIR MARKET VALUE" shall mean the fair market value of a Share, as
determined by the Board of Directors in good faith. Such determination shall be
conclusive and binding on all persons.

(k) "ISO" shall mean an employee incentive stock option described in
Section 422(b) of the Code.

(l) "NONSTATUTORY OPTION" shall mean a stock option not described in
Sections 422(b) or 423(b) of the Code.

(m) "OPTION" shall mean an ISO or Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.

(n) "OPTIONEE" shall mean an individual who holds an Option.

(o) "OUTSIDE DIRECTOR" shall mean a member of the Board of Directors who
is not an Employee.

(p) "PARENT" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
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. A corporation that attains the status of a Parent on
a date after the adoption of the Plan shall be considered a Parent commencing as
of such date.

10
<PAGE> 14

(q) "PLAN" shall mean this ObjectSwitch Corporation 1998 Stock Plan.

(r) "PREDECESSOR PLAN" shall mean the Company's existing 1996 Stock
Option Plan.

(s) "PURCHASE PRICE" shall mean the consideration for which one Share
may be acquired under the Plan (other than upon exercise of an Option), as
specified by the Board of Directors.

(t) "PURCHASER" shall mean an individual to whom the Board of Directors
has offered the right to acquire Shares under the Plan (other than upon exercise
of an Option).

(u) "SERVICE" shall mean service as an Employee, Outside Director or
Consultant.

(v) "SHARE" shall mean one share of Stock, as adjusted in accordance
with Section 8 (if applicable).

(w) "STOCK" shall mean the Common Stock of the Company.

(x) "STOCK OPTION AGREEMENT" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to the Optionee's Option.

(y) "STOCK PURCHASE AGREEMENT" shall mean the agreement between the
Company and a Purchaser who acquires Shares under the Plan which contains the
terms, conditions and restrictions pertaining to the acquisition of such Shares.

(z) "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. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.

<PAGE> 15

OBJECTSWITCH CORPORATION 1998 STOCK PLAN

NOTICE OF STOCK OPTION GRANT

You have been granted the following option to purchase Common Stock
of ObjectSwitch Corporation (the "Company"):

<TABLE>
<S> <C>
Name of Optionee: <<Name>>

Total Number of Shares Granted: <<TotalShares>>

Type of Option: <<ISO>> Incentive Stock Option

<<NSO>> Nonstatutory Stock Option

Exercise Price Per Share: $<<PricePerShare>>

Date of Grant: <<DateGrant>>

Date Exercisable: This option may be exercised, in whole or
in part, for 100% of the Shares subject to
this option at any time after the Date of
Grant.

Vesting Commencement Date: <<VestComDate>>

Vesting Schedule: The Right of Repurchase shall lapse with
respect to the first 12.5% of the Shares
subject to this option when the Optionee
completes six months of continuous Service
after the Vesting Commencement Date. The
Right of Repurchase shall lapse with
respect to an additional 2.0833% of the
Shares subject to this option when the
Optionee completes each month of
continuous Service thereafter.

Expiration Date: <<ExpDate>>
</TABLE>

By your signature and the signature of the Company's representative below, you
and the Company agree that this option is granted under and governed by the
terms and conditions of the 1998 Stock Plan and the Stock Option Agreement, both
of which are attached to and made a part of this document.

OPTIONEE: OBJECTSWITCH CORPORATION

By:
----------------------------------- ----------------------------------

Title:
----------------------------------- -------------------------------
Print Name

<PAGE> 16

THE OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.

OBJECTSWITCH CORPORATION 1998 STOCK PLAN:
STOCK OPTION AGREEMENT

SECTION 1. GRANT OF OPTION.

(A) OPTION. On the terms and conditions set forth in the Notice of Stock
Option Grant and this Agreement, the Company grants to the Optionee on the Date
of Grant the option to purchase at the Exercise Price the number of Shares set
forth in the Notice of Stock Option Grant. The Exercise Price is agreed to be at
least 100% of the Fair Market Value per Share on the Date of Grant (110% of Fair
Market Value if Section 3(b) of the Plan applies). This option is intended to be
an ISO or a Nonstatutory Option, as provided in the Notice of Stock Option
Grant.

(b) STOCK PLAN AND DEFINED TERMS. This option is granted pursuant to the
Plan, a copy of which the Optionee acknowledges having received. The provisions
of the Plan are incorporated into this Agreement by this reference. Capitalized
terms are defined in Section 14 of this Agreement.

SECTION 2. RIGHT TO EXERCISE.

(a) EXERCISABILITY. Subject to Subsections (b) and (c) below and the
other conditions set forth in this Agreement, all or part of this option may be
exercised prior to its expiration at the time or times set forth in the Notice
of Stock Option Grant. Shares purchased by exercising this option may be subject
to the Right of Repurchase under Section 7.

(b) $100,000 LIMITATION. If this option is designated as an ISO in the
Notice of Stock Option Grant, then the Optionee's right to exercise this option
shall be deferred to the extent (and only to the extent) that this option
otherwise would not be treated as an ISO by reason of the $100,000 annual
limitation under Section 422(d) of the Code, except that:

(i) The Optionee's right to exercise this option shall in any event
become exercisable at least as rapidly as 20% per year over the
five-year period commencing on the Date of Grant, unless the Optionee is
an officer of the Company, an Outside Director or a Consultant; and

(ii) The Optionee's right to exercise this option shall no longer
be deferred if (A) the Company is subject to a Change in Control before
the

<PAGE> 17

Optionee's Service terminates, (B) this option does not remain
outstanding, (C) this option is not assumed by the surviving corporation
or its parent and (D) the surviving corporation or its parent does not
substitute an option with substantially the same terms for this option.

(c) SHAREHOLDER APPROVAL. Any other provision of this Agreement
notwithstanding, no portion of this option shall be exercisable at any time
prior to the approval of the Plan by the Company's shareholders.

SECTION 3. NO TRANSFER OR ASSIGNMENT OF OPTION.

Except as otherwise provided in this Agreement, this option and the
rights and privileges conferred hereby shall not be sold, pledged or otherwise
transferred (whether by operation of law or otherwise) and shall not be subject
to sale under execution, attachment, levy or similar process.

SECTION 4. EXERCISE PROCEDURES.

(a) NOTICE OF EXERCISE. The Optionee or the Optionee's representative
may exercise this option by giving written notice to the Company pursuant to
Section 13(c). The notice shall specify the election to exercise this option,
the number of Shares for which it is being exercised and the form of payment.
The notice shall be signed by the person exercising this option. In the event
that this option is being exercised by the representative of the Optionee, the
notice shall be accompanied by proof (satisfactory to the Company) of the
representative's right to exercise this option. The Optionee or the Optionee's
representative shall deliver to the Company, at the time of giving the notice,
payment in a form permissible under Section 5 for the full amount of the
Purchase Price.

(b) ISSUANCE OF SHARES. After receiving a proper notice of exercise, the
Company shall cause to be issued a certificate or certificates for the Shares as
to which this option has been exercised, registered in the name of the person
exercising this option (or in the names of such person and his or her spouse as
community property or as joint tenants with right of survivorship). The Company
shall cause such certificate or certificates to be deposited in escrow or
delivered to or upon the order of the person exercising this option.

(c) WITHHOLDING TAXES. In the event that the Company determines that it
is required to withhold any tax as a result of the exercise of this option, the
Optionee, as a condition to the exercise of this option, shall make arrangements
satisfactory to the Company to enable it to satisfy all withholding
requirements. The Optionee shall also make arrangements satisfactory to the
Company to enable it to satisfy any withholding requirements that may arise in
connection with the vesting or disposition of Shares purchased by exercising
this option.

SECTION 5. PAYMENT FOR STOCK.

(a) CASH. All or part of the Purchase Price may be paid in cash or cash
equivalents.

2
<PAGE> 18

(b) SURRENDER OF STOCK. All or any part of the Purchase Price may be
paid by surrendering, or attesting to the ownership of, Shares that are already
owned by the Optionee. Such Shares shall be surrendered to the Company in good
form for transfer and shall be valued at their Fair Market Value on the date
when this option is exercised. The Optionee shall not surrender, or attest to
the ownership of, Shares in payment of the Purchase Price if such action would
cause the Company to recognize compensation expense (or additional compensation
expense) with respect to this option for financial reporting purposes.

(c) EXERCISE/SALE. If Stock is publicly traded, all or part of the
Purchase Price and any withholding taxes may be paid by the delivery (on a form
prescribed by the Company) of an irrevocable direction to a securities broker
approved by the Company to sell Shares and to deliver all or part of the sales
proceeds to the Company.

(d) EXERCISE/PLEDGE. If Stock is publicly traded, all or part of the
Purchase Price and any withholding taxes may be paid by the delivery (on a form
prescribed by the Company) of an irrevocable direction to pledge Shares to a
securities broker or lender approved by the Company, as security for a loan, and
to deliver all or part of the loan proceeds to the Company.

SECTION 6. TERM AND EXPIRATION.

(a) BASIC TERM. This option shall in any event expire on the expiration
date set forth in the Notice of Stock Option Grant, which date is 10 years after
the Date of Grant (five years after the Date of Grant if this option is
designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the
Plan applies).

(b) TERMINATION OF SERVICE (EXCEPT BY DEATH). If the Optionee's Service
terminates for any reason other than death, then this option shall expire on the
earliest of the following occasions:

(i) The expiration date determined pursuant to Subsection (a)
above;

(ii) The date three months after the termination of the Optionee's
Service for any reason other than Disability; or

(iii) The date six months after the termination of the Optionee's
Service by reason of Disability.

The Optionee may exercise all or part of this option at any time before its
expiration under the preceding sentence, but only to the extent that this option
had become exercisable before the Optionee's Service terminated. When the
Optionee's Service terminates, this option shall expire immediately with respect
to the number of Shares for which this option is not yet exercisable and with
respect to any Restricted Shares. In the event that the Optionee dies after
termination of Service but before the expiration of this option, all or part of
this option may be exercised (prior to expiration) by the executors or
administrators of the Optionee's estate or by any person who has acquired this
option directly from the Optionee by beneficiary designation, bequest or
inheritance, but only to the extent that this option had become exercisable
before the Optionee's Service terminated.

3
<PAGE> 19

(c) DEATH OF THE OPTIONEE. If the Optionee dies while in Service, then
this option shall expire on the earlier of the following dates:

(i) The expiration date determined pursuant to Subsection (a)
above; or

(ii) The date 12 months after the Optionee's death.

All or part of this option may be exercised at any time before its expiration
under the preceding sentence by the executors or administrators of the
Optionee's estate or by any person who has acquired this option directly from
the Optionee by beneficiary designation, bequest or inheritance, but only to the
extent that this option had become exercisable before the Optionee's death. When
the Optionee dies, this option shall expire immediately with respect to the
number of Shares for which this option is not yet exercisable and with respect
to any Restricted Shares.

(d) LEAVES OF ABSENCE. For any purpose under this Agreement, Service
shall be deemed to continue while the Optionee is on a bona fide leave of
absence, if such leave was approved by the Company in writing and if continued
crediting of Service for such purpose is expressly required by the terms of such
leave or by applicable law (as determined by the Company).

(e) NOTICE CONCERNING ISO TREATMENT. If this option is designated as an
ISO in the Notice of Stock Option Grant, it ceases to qualify for favorable tax
treatment as an ISO to the extent it is exercised (i) more than three months
after the date the Optionee ceases to be an Employee for any reason other than
death or permanent and total disability (as defined in Section 22(e)(3) of the
Code), (ii) more than 12 months after the date the Optionee ceases to be an
Employee by reason of such permanent and total disability or (iii) after the
Optionee has been on a leave of absence for more than 90 days, unless the
Optionee's reemployment rights are guaranteed by statute or by contract.

SECTION 7. RIGHT OF REPURCHASE.

(a) SCOPE OF REPURCHASE RIGHT. Unless they have become vested in
accordance with the Notice of Stock Option Grant and Subsection (c) below, the
Shares acquired under this Agreement initially shall be Restricted Shares and
shall be subject to a right (but not an obligation) of repurchase by the
Company. The Optionee shall not transfer, assign, encumber or otherwise dispose
of any Restricted Shares, except as provided in the following sentence. The
Optionee may transfer Restricted Shares (i) by beneficiary designation, will or
intestate succession or (ii) to the Optionee's spouse, children or grandchildren
or to a trust established by the Optionee for the benefit of the Optionee or the
Optionee's spouse, children or grandchildren, provided in either case that the
Transferee agrees in writing on a form prescribed by the Company to be bound by
all provisions of this Agreement. If the Optionee transfers any Restricted
Shares, then this Section 7 shall apply to the Transferee to the same extent as
to the Optionee.

(b) CONDITION PRECEDENT TO EXERCISE. The Right of Repurchase shall be
exercisable with respect to any Restricted Shares only during the 60-day period
next following the later of:

4
<PAGE> 20

(i) The date when the Optionee's Service terminates for any reason,
with or without cause, including (without limitation) death or
disability; or

(ii) The date when such Restricted Shares were purchased by the
Optionee, the executors or administrators of the Optionee's estate or
any person who has acquired this option directly from the Optionee by
bequest, inheritance or beneficiary designation.

(c) LAPSE OF REPURCHASE RIGHT. The Right of Repurchase shall lapse with
respect to the Shares subject to this option in accordance with the vesting
schedule set forth in the Notice of Stock Option Grant. In addition, the Right
of Repurchase shall lapse and all of the remaining Restricted Shares shall
become vested if (i) the Company is subject to a Change in Control before the
Optionee's Service terminates and (ii) the Right of Repurchase is not assigned
to the acquiring entity or to its parent or subsidiary. Furthermore, if (i) the
Company is subject to a Change in Control before the Optionee's Service
terminates, (ii) the Right of Repurchase is assigned to the acquiring entity or
to its parent or subsidiary and (iii) there is an Involuntary Termination of
Optionee's Service within twelve (12) months following the Change in Control,
the Right of Repurchase shall automatically lapse and all of Optionee's Shares
shall become vested.

(d) REPURCHASE COST. If the Company exercises the Right of Repurchase,
it shall pay the Optionee an amount equal to the Exercise Price for each of the
Restricted Shares being repurchased.

(e) EXERCISE OF REPURCHASE RIGHT. The Right of Repurchase shall be
exercisable only by written notice delivered to the Optionee prior to the
expiration of the 60-day period specified in Subsection (b) above. The notice
shall set forth the date on which the repurchase is to be effected. Such date
shall not be more than 30 days after the date of the notice. The certificate(s)
representing the Restricted Shares to be repurchased shall, prior to the close
of business on the date specified for the repurchase, be delivered to the
Company properly endorsed for transfer. The Company shall, concurrently with the
receipt of such certificate(s), pay to the Optionee the purchase price
determined according to Subsection (d) above. Payment shall be made in cash or
cash equivalents or by canceling indebtedness to the Company incurred by the
Optionee in the purchase of the Restricted Shares. The Right of Repurchase shall
terminate with respect to any Restricted Shares for which it has not been timely
exercised pursuant to this Subsection (e).

(f) ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any Restricted Shares or into which such Restricted
Shares thereby become convertible shall immediately be subject to the Right of
Repurchase. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the
Restricted Shares. Appropriate adjustments shall also, after each such
transaction, be made to

5
<PAGE> 21

the price per share to be paid upon the exercise of the Right of Repurchase in
order to reflect any change in the Company's outstanding securities effected
without receipt of consideration therefor; provided, however, that the aggregate
purchase price payable for the Restricted Shares shall remain the same.

(g) TERMINATION OF RIGHTS AS SHAREHOLDER. If the Company makes
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Restricted Shares to be repurchased in
accordance with this Section 7, then after such time the person from whom such
Restricted Shares are to be repurchased shall no longer have any rights as a
holder of such Restricted Shares (other than the right to receive payment of
such consideration in accordance with this Agreement). Such Restricted Shares
shall be deemed to have been repurchased in accordance with the applicable
provisions hereof, whether or not the certificate(s) therefor have been
delivered as required by this Agreement.

(h) ESCROW. Upon issuance, the certificates for Restricted Shares shall
be deposited in escrow with the Company to be held in accordance with the
provisions of this Agreement. Any new, substituted or additional securities or
other property described in Subsection (f) above shall immediately be delivered
to the Company to be held in escrow, but only to the extent the Shares are at
the time Restricted Shares. All regular cash dividends on Restricted Shares (or
other securities at the time held in escrow) shall be paid directly to the
Optionee and shall not be held in escrow. Restricted Shares, together with any
other assets or securities held in escrow hereunder, shall be (i) surrendered to
the Company for repurchase and cancellation upon the Company's exercise of its
Right of Repurchase or Right of First Refusal or (ii) released to the Optionee
upon the Optionee's request to the extent the Shares are no longer Restricted
Shares (but not more frequently than once every six months). In any event, all
Shares which have vested (and any other vested assets and securities
attributable thereto) shall be released within 60 days after the earlier of (i)
the Optionee's cessation of Service or (ii) the lapse of the Right of First
Refusal.

SECTION 8. RIGHT OF FIRST REFUSAL.

(a) RIGHT OF FIRST REFUSAL. In the event that the Optionee proposes to
sell, pledge or otherwise transfer to a third party any Shares acquired under
this Agreement, or any interest in such Shares, the Company shall have the Right
of First Refusal with respect to all (and not less than all) of such Shares. If
the Optionee desires to transfer Shares acquired under this Agreement, the
Optionee shall give a written Transfer Notice to the Company describing fully
the proposed transfer, including the number of Shares proposed to be
transferred, the proposed transfer price, the name and address of the proposed
Transferee and proof satisfactory to the Company that the proposed sale or
transfer will not violate any applicable federal or state securities laws. The
Transfer Notice shall be signed both by the Optionee and by the proposed
Transferee and must constitute a binding commitment of both parties to the
transfer of the Shares. The Company shall have the right to purchase all, and
not less than all, of the Shares on the terms of the proposal described in the
Transfer Notice (subject, however, to any change in such terms permitted under
Subsection (b) below) by delivery of a notice of exercise of the Right of First
Refusal within 30 days after the date when the Transfer Notice was received by
the Company. The Company's rights under this Subsection (a) shall be freely
assignable, in whole or in part.

6
<PAGE> 22

(b) TRANSFER OF SHARES. If the Company fails to exercise its Right of
First Refusal within 30 days after the date when it received the Transfer
Notice, the Optionee may, not later than 90 days following receipt of the
Transfer Notice by the Company, conclude a transfer of the Shares subject to the
Transfer Notice on the terms and conditions described in the Transfer Notice,
provided that any such sale is made in compliance with applicable federal and
state securities laws and not in violation of any other contractual restrictions
to which the Optionee is bound. Any proposed transfer on terms and conditions
different from those described in the Transfer Notice, as well as any subsequent
proposed transfer by the Optionee, shall again be subject to the Right of First
Refusal and shall require compliance with the procedure described in Subsection
(a) above. If the Company exercises its Right of First Refusal, the parties
shall consummate the sale of the Shares on the terms set forth in the Transfer
Notice within 60 days after the date when the Company received the Transfer
Notice (or within such longer period as may have been specified in the Transfer
Notice); provided, however, that in the event the Transfer Notice provided that
payment for the Shares was to be made in a form other than cash or cash
equivalents paid at the time of transfer, the Company shall have the option of
paying for the Shares with cash or cash equivalents equal to the present value
of the consideration described in the Transfer Notice.

(c) ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any Shares subject to this Section 8 or into which
such Shares thereby become convertible shall immediately be subject to this
Section 8. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the Shares
subject to this Section 8.

(d) TERMINATION OF RIGHT OF FIRST REFUSAL. Any other provision of this
Section 8 notwithstanding, in the event that the Stock is readily tradable on an
established securities market when the Optionee desires to transfer Shares, the
Company shall have no Right of First Refusal, and the Optionee shall have no
obligation to comply with the procedures prescribed by Subsections (a) and (b)
above.

(e) PERMITTED TRANSFERS. This Section 8 shall not apply to (i) a
transfer by beneficiary designation, will or intestate succession or (ii) a
transfer to the Optionee's spouse, children or to a trust established by the
Optionee for the benefit of the Optionee or the Optionee's spouse, children or
grandchildren, provided in either case that the Transferee agrees in writing on
a form prescribed by the Company to be bound by all provisions of this
Agreement. If the Optionee transfers any Shares acquired under this Agreement,
either under this Subsection (e) or after the Company has failed to exercise the
Right of First Refusal, then this Section 8 shall apply to the Transferee to the
same extent as to the Optionee.

(f) TERMINATION OF RIGHTS AS SHAREHOLDER. If the Company makes
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Shares to be purchased in accordance with
this Section 8, then after such time the person

7
<PAGE> 23

from whom such Shares are to be purchased shall no longer have any rights as a
holder of such Shares (other than the right to receive payment of such
consideration in accordance with this Agreement). Such Shares shall be deemed to
have been purchased in accordance with the applicable provisions hereof, whether
or not the certificate(s) therefor have been delivered as required by this
Agreement.

SECTION 9. LEGALITY OF INITIAL ISSUANCE.

No Shares shall be issued upon the exercise of this option unless and
until the Company has determined that:

(a) It and the Optionee have taken any actions required to register the
Shares under the Securities Act or to perfect an exemption from the registration
requirements thereof;

(b) Any applicable listing requirement of any stock exchange or other
securities market on which Stock is listed has been satisfied; and

SECTION 10. NO REGISTRATION RIGHTS.

The Company may, but shall not be obligated to, register or qualify the
sale of Shares under the Securities Act or any other applicable law. The Company
shall not be obligated to take any affirmative action in order to cause the sale
of Shares under this Agreement to comply with any law.

SECTION 11. RESTRICTIONS ON TRANSFER.

(a) SECURITIES LAW RESTRICTIONS. Regardless of whether the offering and
sale of Shares under the Plan have been registered under the Securities Act or
have been registered or qualified under the securities laws of any state, the
Company at its discretion may impose restrictions upon the sale, pledge or other
transfer of such Shares (including the placement of appropriate legends on stock
certificates or the imposition of stop-transfer instructions) if, in the
judgment of the Company, such restrictions are necessary or desirable in order
to achieve compliance with the Securities Act, the securities laws of any state
or any other law.

(b) MARKET STAND-OFF. In connection with any underwritten public
offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act, including the Company's
initial public offering, the Optionee shall not directly or indirectly sell,
make any short sale of, loan, hypothecate, pledge, offer, grant or sell any
option or other contract for the purchase of, purchase any option or other
contract for the sale of, or otherwise dispose of or transfer, or agree to
engage in any of the foregoing transactions with respect to, any Shares acquired
under this Agreement without the prior written consent of the Company or its
underwriters. Such restriction (the "Market Stand-Off") shall be in effect for
such period of time following the date of the final prospectus for the offering
as may be requested by the Company or such underwriters. In no event, however,
shall such period exceed 180 days. The Market Stand-Off shall in any event
terminate two years after the date of the Company's initial public offering. In
the event of the declaration of a stock dividend, a spin-off,

8
<PAGE> 24

a stock split, an adjustment in conversion ratio, a recapitalization or a
similar transaction affecting the Company's outstanding securities without
receipt of consideration, any new, substituted or additional securities which
are by reason of such transaction distributed with respect to any Shares subject
to the Market Stand-Off, or into which such Shares thereby become convertible,
shall immediately be subject to the Market Stand-Off. In order to enforce the
Market Stand-Off, the Company may impose stop-transfer instructions with respect
to the Shares acquired under this Agreement until the end of the applicable
stand-off period. The Company's underwriters shall be beneficiaries of the
agreement set forth in this Subsection (b). This Subsection (b) shall not apply
to Shares registered in the public offering under the Securities Act, and the
Optionee shall be subject to this Subsection (b) only if the directors and
officers of the Company are subject to similar arrangements.

(c) INVESTMENT INTENT AT GRANT. The Optionee represents and agrees that
the Shares to be acquired upon exercising this option will be acquired for
investment, and not with a view to the sale or distribution thereof.

(d) INVESTMENT INTENT AT EXERCISE. In the event that the sale of Shares
under the Plan is not registered under the Securities Act but an exemption is
available which requires an investment representation or other representation,
the Optionee shall represent and agree at the time of exercise that the Shares
being acquired upon exercising this option are being acquired for investment,
and not with a view to the sale or distribution thereof, and shall make such
other representations as are deemed necessary or appropriate by the Company and
its counsel.

(e) LEGENDS. All certificates evidencing Shares purchased under this
Agreement shall bear the following legend:

"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED,
ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE
TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED
HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES).
SUCH AGREEMENT GRANTS TO THE COMPANY CERTAIN RIGHTS OF FIRST REFUSAL
UPON AN ATTEMPTED TRANSFER OF THE SHARES AND CERTAIN REPURCHASE RIGHTS
UPON TERMINATION OF SERVICE WITH THE COMPANY. THE SECRETARY OF THE
COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO
THE HOLDER HEREOF WITHOUT CHARGE."

All certificates evidencing Shares purchased under this Agreement in an
unregistered transaction shall bear the following legend (and such other
restrictive legends as are required or deemed advisable under the provisions of
any applicable law):

9
<PAGE> 25

OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED."

(f) REMOVAL OF LEGENDS. If, in the opinion of the Company and its
counsel, any legend placed on a stock certificate representing Shares sold under
this Agreement is no longer required, the holder of such certificate shall be
entitled to exchange such certificate for a certificate representing the same
number of Shares but without such legend.

(g) ADMINISTRATION. Any determination by the Company and its counsel in
connection with any of the matters set forth in this Section 11 shall be
conclusive and binding on the Optionee and all other persons.

SECTION 12. ADJUSTMENT OF SHARES.

In the event of any transaction described in Section 8(a) of the Plan,
the terms of this option (including, without limitation, the number and kind of
Shares subject to this option and the Exercise Price) shall be adjusted as set
forth in Section 8(a) of the Plan. In the event that the Company is a party to a
merger or consolidation, this option shall be subject to the agreement of merger
or consolidation, as provided in Section 8(b) of the Plan.

SECTION 13. MISCELLANEOUS PROVISIONS.

(a) RIGHTS AS A SHAREHOLDER. Neither the Optionee nor the Optionee's
representative shall have any rights as a shareholder with respect to any Shares
subject to this option until the Optionee or the Optionee's representative
becomes entitled to receive such Shares by filing a notice of exercise and
paying the Purchase Price pursuant to Sections 4 and 5.

(b) NO RETENTION RIGHTS. Nothing in this option or in the Plan shall
confer upon the Optionee any right to continue in Service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Company (or any Parent or Subsidiary employing or retaining the Optionee)
or of the Optionee, which rights are hereby expressly reserved by each, to
terminate his or her Service at any time and for any reason, with or without
cause.

(c) NOTICE. Any notice required by the terms of this Agreement shall be
given in writing and shall be deemed effective upon personal delivery or upon
deposit with the United States Postal Service, by registered or certified mail,
with postage and fees prepaid. Notice shall be addressed to the Company at its
principal executive office and to the Optionee at the address that he or she
most recently provided to the Company.

(d) ENTIRE AGREEMENT. The Notice of Stock Option Grant, this Agreement
and the Plan constitute the entire contract between the parties hereto with
regard to the subject matter hereof. They supersede any other agreements,
representations or understandings (whether oral or written and whether express
or implied) which relate to the subject matter hereof.

(e) CHOICE OF LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California, as such laws are applied
to contracts entered into and performed in such State.

10
<PAGE> 26

SECTION 14. DEFINITIONS.

(a) "AGREEMENT" shall mean this Stock Option Agreement.

(b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company, as constituted from time to time or, if a Committee has been appointed,
such Committee.

(ii) The sale, transfer or other disposition of all or
substantially all of the Company's assets.

A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.

(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended.

(e) "COMMITTEE" shall mean a committee of the Board of Directors, as
described in Section 2 of the Plan.

(f) "COMPANY" shall mean ObjectSwitch Corporation, a California
corporation.

(g) "CONSULTANT" shall mean a person who performs bona fide services for
the Company, a Parent or a Subsidiary as a consultant or advisor, excluding
Employees and Outside Directors.

(h) "DATE OF GRANT" shall mean the date specified in the Notice of Stock
Option Grant, which date shall be the later of (i) the date on which the Board
of Directors resolved to grant this option or (ii) the first day of the
Optionee's Service.

(i) "DISABILITY" shall mean that the Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment.

(j) "EMPLOYEE" shall mean any individual who is a common-law employee of
the Company, a Parent or a Subsidiary.

11
<PAGE> 27

(k) "EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of this option, as specified in the Notice of Stock
Option Grant.

(l) "FAIR MARKET VALUE" shall mean the fair market value of a Share, as
determined by the Board of Directors in good faith. Such determination shall be
conclusive and binding on all persons.

(m) "ISO" shall mean an employee incentive stock option described in
Section 422(b) of the Code.

(n) "INVOLUNTARY TERMINATION" means the termination of the Service of
any individual which occurs by reason of:

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

(ii) such individual's voluntary resignation following (A) a
reduction in his or her level of compensation (including base salary and
participation in bonus or incentive programs) or (B) a relocation of
such individual's place of employment by more than fifty (50) miles,
provided and only if such reduction or relocation is effected by the
Company without the individual's consent.

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

(p) "NONSTATUTORY OPTION" shall mean a stock option not described in
Sections 422(b) or 423(b) of the Code.

(q) "NOTICE OF STOCK OPTION GRANT" shall mean the document so entitled
to which this Agreement is attached.

(r) "OPTIONEE" shall mean the individual named in the Notice of Stock
Option Grant.

(s) "OUTSIDE DIRECTOR" shall mean a member of the Board of Directors who
is not an Employee.

(t) "PARENT" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
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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<PAGE> 28

(u) "PLAN" shall mean the ObjectSwitch Corporation 1998 Stock Plan, as
in effect on the Date of Grant.

(v) "PURCHASE PRICE" shall mean the Exercise Price multiplied by the
number of Shares with respect to which this option is being exercised.

(w) "RESTRICTED SHARE" shall mean a Share that is subject to the Right
of Repurchase.

(x) "RIGHT OF FIRST REFUSAL" shall mean the Company's right of first
refusal described in Section 8.

(y) "RIGHT OF REPURCHASE" shall mean the Company's right of repurchase
described in Section 7.

(z) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

(aa) "SERVICE" shall mean service as an Employee, Outside Director or
Consultant.

(bb) "SHARE" shall mean one share of Stock, as adjusted in accordance
with Section 8 of the Plan (if applicable).

(cc) "STOCK" shall mean the Common Stock of the Company.

(dd) "SUBSIDIARY" shall mean 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.

(ee) "TRANSFEREE" shall mean any person to whom the Optionee has
directly or indirectly transferred any Share acquired under this Agreement.

(ff) "TRANSFER NOTICE" shall mean the notice of a proposed transfer of
Shares described in Section 8.

<PAGE> 29

OBJECTSWITCH CORPORATION 1998 STOCK PLAN:

SUMMARY OF STOCK PURCHASE

By your signature and the signature of the Company's representative below, you
and the Company agree that you are purchasing shares subject to the terms and
conditions of the 1998 Stock Plan and the Stock Purchase Agreement, both of
which are attached to and made a part of this document.

Name of Purchaser: <<Name>>

Total Number of Purchased Shares: <<TotalShares>>

Purchase Price Per Share: $<<PricePerShare>>

Date of Purchase: <<DatePurchase>>

Vesting Commencement Date: <<VestComDate>>

Vesting Schedule: The Right of Repurchase shall lapse
with respect to the
first<<Percent>>% of the Purchased
Shares when the Purchaser
completes<<CliffPeriod>>months of
continuous Service after the Vesting
Commencement Date. The Right of
Repurchase shall lapse with respect
to an additional<<Fraction>>% of the
Purchased Shares when the Purchaser
completes each month of continuous
Service thereafter.

PURCHASER: OBJECTSWITCH CORPORATION

___________________________________ By:_________________________________

___________________________________ Title:______________________________
Print Name

<PAGE> 30

OBJECTSWITCH CORPORATION 1998 STOCK PLAN:

STOCK PURCHASE AGREEMENT

SECTION 1. ACQUISITION OF SHARES.

(a) TRANSFER. On the terms and conditions set forth in the Summary of
Stock Purchase and this Agreement, the Company agrees to transfer to the
Purchaser the number of Shares set forth in the Summary of Stock Purchase. The
transfer shall occur at the offices of the Company on the date of purchase set
forth in the Summary of Stock Purchase or at such other place and time as the
parties may agree.

(b) CONSIDERATION. The Purchaser agrees to pay the Purchase Price set
forth in the Summary of Stock Purchase for each Purchased Share. The Purchase
Price is agreed to be at least 100% of the Fair Market Value of the Purchased
Shares. Payment shall be made on the transfer date in cash or cash equivalents.

(c) STOCK PLAN AND DEFINED TERMS. The transfer of the Purchased Shares
is subject to the Plan, a copy of which the Purchaser acknowledges having
received. The provisions of the Plan are incorporated into this Agreement by
this reference. Capitalized terms are defined in Section 12 of this Agreement.

SECTION 2. RIGHT OF REPURCHASE.

(a) SCOPE OF REPURCHASE RIGHT. All Purchased Shares initially shall be
Restricted Shares and shall be subject to a right (but not an obligation) of
repurchase by the Company. The Purchaser shall not transfer, assign, encumber or
otherwise dispose of any Restricted Shares, except as provided in the following
sentence. The Purchaser may transfer Restricted Shares (i) by beneficiary
designation, will or intestate succession or (ii) to the Purchaser's spouse,
children or grandchildren or to a trust established by the Purchaser for the
benefit of the Purchaser or the Purchaser's spouse, children or grandchildren,
provided in either case that the Transferee agrees in writing on a form
prescribed by the Company to be bound by all provisions of this Agreement. If
the Purchaser transfers any Restricted Shares, then this Section 2 shall apply
to the Transferee to the same extent as to the Purchaser.

(b) CONDITION PRECEDENT TO EXERCISE. The Right of Repurchase shall be
exercisable only during the 60-day period next following the date when the
Purchaser's Service terminates for any reason, with or without cause, including
(without limitation) death or disability.

(c) LAPSE OF REPURCHASE RIGHT. The Right of Repurchase shall lapse with
respect to the Purchased Shares in accordance with the vesting schedule set
forth in the Summary of Stock Purchase. In addition, the Right of Repurchase
shall lapse and all of the remaining Restricted Shares shall become vested if
(i) the Company is subject to a Change in Control

<PAGE> 31

before the Purchaser's Service terminates and (ii) the Right of Repurchase is
not assigned to the entity that employs the Purchaser immediately after the
Change in Control or to its parent or subsidiary.

(d) REPURCHASE COST. If the Company exercises the Right of Repurchase,
it shall pay the Purchaser an amount equal to the Purchase Price for each of the
Restricted Shares being repurchased.

(e) EXERCISE OF REPURCHASE RIGHT. The Right of Repurchase shall be
exercisable only by written notice delivered to the Purchaser prior to the
expiration of the 60-day period specified in Subsection (b) above. The notice
shall set forth the date on which the repurchase is to be effected. Such date
shall not be more than 30 days after the date of the notice. The certificate(s)
representing the Restricted Shares to be repurchased shall, prior to the close
of business on the date specified for the repurchase, be delivered to the
Company properly endorsed for transfer. The Company shall, concurrently with the
receipt of such certificate(s), pay to the Purchaser the purchase price
determined according to Subsection (d) above. Payment shall be made in cash or
cash equivalents or by canceling indebtedness to the Company incurred by the
Purchaser in the purchase of the Restricted Shares. The Right of Repurchase
shall terminate with respect to any Restricted Shares for which it has not been
timely exercised pursuant to this Subsection (e).

(g) TERMINATION OF RIGHTS AS SHAREHOLDER. If the Company makes
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Restricted Shares to be repurchased in
accordance with this Section 2, then after such time the person from whom such
Restricted Shares are to be repurchased shall no longer have any rights as a
holder of such Restricted Shares (other than the right to receive payment of
such consideration in accordance with this Agreement). Such Restricted Shares
shall be deemed to have been repurchased in accordance with the applicable
provisions hereof, whether or not the certificate(s) therefor have been
delivered as required by this Agreement.

(h) ESCROW. Upon issuance, the certificates for Restricted Shares shall
be deposited in escrow with the Company to be held in accordance with the
provisions of this Agreement. Any

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<PAGE> 32

new, substituted or additional securities or other property described in
Subsection (f) above shall immediately be delivered to the Company to be held in
escrow, but only to the extent the Purchased Shares are at the time Restricted
Shares. All regular cash dividends on Restricted Shares (or other securities at
the time held in escrow) shall be paid directly to the Purchaser and shall not
be held in escrow. Restricted Shares, together with any other assets or
securities held in escrow hereunder, shall be (i) surrendered to the Company for
repurchase and cancellation upon the Company's exercise of its Right of
Repurchase or Right of First Refusal or (ii) released to the Purchaser upon the
Purchaser's request to the extent the Purchased Shares are no longer Restricted
Shares (but not more frequently than once every six months). In any event, all
Purchased Shares which have vested (and any other vested assets and securities
attributable thereto) shall be released within 60 days after the earlier of (i)
the Purchaser's cessation of Service or (ii) the lapse of the Right of First
Refusal.

SECTION 3. RIGHT OF FIRST REFUSAL.

(a) RIGHT OF FIRST REFUSAL. In the event that the Purchaser proposes to
sell, pledge or otherwise transfer to a third party any Purchased Shares, or any
interest in such Purchased Shares, the Company shall have the Right of First
Refusal with respect to all (and not less than all) of such Purchased Shares. If
the Purchaser desires to transfer Purchased Shares, the Purchaser shall give a
written Transfer Notice to the Company describing fully the proposed transfer,
including the number of Purchased Shares proposed to be transferred, the
proposed transfer price, the name and address of the proposed Transferee and
proof satisfactory to the Company that the proposed sale or transfer will not
violate any applicable federal or state securities laws. The Transfer Notice
shall be signed both by the Purchaser and by the proposed Transferee and must
constitute a binding commitment of both parties to the transfer of the Purchased
Shares. The Company shall have the right to purchase all, and not less than all,
of the Purchased Shares on the terms of the proposal described in the Transfer
Notice (subject, however, to any change in such terms permitted under Subsection
(b) below) by delivery of a notice of exercise of the Right of First Refusal
within 30 days after the date when the Transfer Notice was received by the
Company. The Company's rights under this Subsection (a) shall be freely
assignable, in whole or in part.

(b) TRANSFER OF SHARES. If the Company fails to exercise its Right of
First Refusal within 30 days after the date when it received the Transfer
Notice, the Purchaser may, not later than 90 days following receipt of the
Transfer Notice by the Company, conclude a transfer of the Purchased Shares
subject to the Transfer Notice on the terms and conditions described in the
Transfer Notice, provided that any such sale is made in compliance with
applicable federal and state securities laws and not in violation of any other
contractual restrictions to which the Purchaser is bound. Any proposed transfer
on terms and conditions different from those described in the Transfer Notice,
as well as any subsequent proposed transfer by the Purchaser, shall again be
subject to the Right of First Refusal and shall require compliance with the
procedure described in Subsection (a) above. If the Company exercises its Right
of First Refusal, the parties shall consummate the sale of the Purchased Shares
on the terms set forth in the Transfer Notice within 60 days after the date when
the Company received the Transfer Notice (or within such longer period as may
have been specified in the Transfer Notice); provided, however, that in the
event the Transfer Notice provided that payment for the Purchased Shares was to
be made in a form other than cash or cash equivalents paid at the time

3
<PAGE> 33

of transfer, the Company shall have the option of paying for the Purchased
Shares with cash or cash equivalents equal to the present value of the
consideration described in the Transfer Notice.

(c) ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any Purchased Shares subject to this Section 3 or
into which such Purchased Shares thereby become convertible shall immediately be
subject to this Section 3. Appropriate adjustments to reflect the distribution
of such securities or property shall be made to the number and/or class of
Purchased Shares subject to this Section 3.

(d) TERMINATION OF RIGHT OF FIRST REFUSAL. Any other provision of this
Section 3 notwithstanding, in the event that the Stock is readily tradable on an
established securities market when the Purchaser desires to transfer Purchased
Shares, the Company shall have no Right of First Refusal, and the Purchaser
shall have no obligation to comply with the procedures prescribed by Subsections
(a) and (b) above.

(e) PERMITTED TRANSFERS. This Section 3 shall not apply to (i) a
transfer by beneficiary designation, will or intestate succession or (ii) a
transfer to the Purchaser's spouse, children or grandchildren or to a trust
established by the Purchaser for the benefit of the Purchaser or the Purchaser's
spouse, children or grandchildren, provided in either case that the Transferee
agrees in writing on a form prescribed by the Company to be bound by all
provisions of this Agreement. If the Purchaser transfers any Purchased Shares,
either under this Subsection (e) or after the Company has failed to exercise the
Right of First Refusal, then this Section 3 shall apply to the Transferee to the
same extent as to the Purchaser.

(f) TERMINATION OF RIGHTS AS SHAREHOLDER. If the Company makes
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Purchased Shares to be purchased in
accordance with this Section 3, then after such time the person from whom such
Purchased Shares are to be purchased shall no longer have any rights as a holder
of such Purchased Shares (other than the right to receive payment of such
consideration in accordance with this Agreement). Such Purchased Shares shall be
deemed to have been purchased in accordance with the applicable provisions
hereof, whether or not the certificate(s) therefor have been delivered as
required by this Agreement.

SECTION 4. OTHER RESTRICTIONS ON TRANSFER.

(a) PURCHASER REPRESENTATIONS. In connection with the issuance and
acquisition of Shares under this Agreement, the Purchaser hereby represents and
warrants to the Company as follows:

(i) The Purchaser is acquiring and will hold the Purchased Shares
for investment for his or her account only and not with a view to, or
for resale in connection with, any "distribution" thereof within the
meaning of the Securities Act.

4
<PAGE> 34

(ii) The Purchaser understands that the Purchased Shares have not
been registered under the Securities Act by reason of a specific
exemption therefrom and that the Purchased Shares must be held
indefinitely, unless they are subsequently registered under the
Securities Act or the Purchaser obtains an opinion of counsel, in form
and substance satisfactory to the Company and its counsel, that such
registration is not required. The Purchaser further acknowledges and
understands that the Company is under no obligation to register the
Purchased Shares.

(iii) The Purchaser is aware of the adoption of Rule 144 by the
Securities and Exchange Commission under the Securities Act, which
permits limited public resales of securities acquired in a non-public
offering, subject to the satisfaction of certain conditions, including
(without limitation) the availability of certain current public
information about the issuer, the resale occurring only after the
holding period required by Rule 144 has been satisfied, the sale
occurring through an unsolicited "broker's transaction," and the amount
of securities being sold during any three-month period not exceeding
specified limitations. The Purchaser acknowledges and understands that
the conditions for resale set forth in Rule 144 have not been satisfied
and that the Company has no plans to satisfy these conditions in the
foreseeable future.

(iv) The Purchaser will not sell, transfer or otherwise dispose
of the Purchased Shares in violation of the Securities Act, the
Securities Exchange Act of 1934, or the rules promulgated thereunder,
including Rule 144 under the Securities Act. The Purchaser agrees that
he or she will not dispose of the Purchased Shares unless and until he
or she has complied with all requirements of this Agreement applicable
to the disposition of Purchased Shares and he or she has provided the
Company with written assurances, in substance and form satisfactory to
the Company, that (A) the proposed disposition does not require
registration of the Purchased Shares under the Securities Act or all
appropriate action necessary for compliance with the registration
requirements of the Securities Act or with any exemption from
registration available under the Securities Act (including Rule 144) has
been taken and (B) the proposed disposition will not result in the
contravention of any transfer restrictions applicable to the Purchased
Shares under the Rules of the California Corporations Commissioner.

(v) The Purchaser has been furnished with, and has had access to,
such information as he or she considers necessary or appropriate for
deciding whether to invest in the Purchased Shares, and the Purchaser
has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the issuance of the
Purchased Shares.

(vi) The Purchaser is aware that his or her investment in the
Company is a speculative investment which has limited liquidity and is
subject to the risk of complete loss. The Purchaser is able, without
impairing his or her financial condition, to hold the Purchased Shares
for an indefinite period and to suffer a complete loss of his or her
investment in the Purchased Shares.

(b) SECURITIES LAW RESTRICTIONS. Regardless of whether the offering and
sale of Shares under the Plan have been registered under the Securities Act or
have been registered or

5
<PAGE> 35

qualified under the securities laws of any state, the Company at its discretion
may impose restrictions upon the sale, pledge or other transfer of the Purchased
Shares (including the placement of appropriate legends on stock certificates or
the imposition of stop-transfer instructions) if, in the judgment of the
Company, such restrictions are necessary or desirable in order to achieve
compliance with the Securities Act, the securities laws of any state or any
other law.

(c) MARKET STAND-OFF. In connection with any underwritten public
offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act, including the Company's
initial public offering, the Purchaser shall not directly or indirectly sell,
make any short sale of, loan, hypothecate, pledge, offer, grant or sell any
option or other contract for the purchase of, purchase any option or other
contract for the sale of, or otherwise dispose of or transfer, or agree to
engage in any of the foregoing transactions with respect to, any Purchased
Shares without the prior written consent of the Company or its underwriters.
Such restriction (the "Market Stand-Off") shall be in effect for such period of
time following the date of the final prospectus for the offering as may be
requested by the Company or such underwriters. In no event, however, shall such
period exceed 180 days. The Market Stand-Off shall in any event terminate two
years after the date of the Company's initial public offering. In the event of
the declaration of a stock dividend, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities which are by reason of such transaction
distributed with respect to any Shares subject to the Market Stand-Off, or into
which such Shares thereby become convertible, shall immediately be subject to
the Market Stand-Off. In order to enforce the Market Stand-Off, the Company may
impose stop-transfer instructions with respect to the Purchased Shares until the
end of the applicable stand-off period. The Company's underwriters shall be
beneficiaries of the agreement set forth in this Subsection (c). This Subsection
(c) shall not apply to Shares registered in the public offering under the
Securities Act, and the Purchaser shall be subject to this Subsection (c) only
if the directors and officers of the Company are subject to similar
arrangements.

(d) RIGHTS OF THE COMPANY. The Company shall not be required to (i)
transfer on its books any Purchased Shares that have been sold or transferred in
contravention of this Agreement or (ii) treat as the owner of Purchased Shares,
or otherwise to accord voting, dividend or liquidation rights to, any transferee
to whom Purchased Shares have been transferred in contravention of this
Agreement.

SECTION 5. SUCCESSORS AND ASSIGNS.

Except as otherwise expressly provided to the contrary, the
provisions of this Agreement shall inure to the benefit of, and be binding upon,
the Company and its successors and assigns and be binding upon the Purchaser and
the Purchaser's legal representatives, heirs, legatees, distributees, assigns
and transferees by operation of law, whether or not any such person has become a
party to this Agreement or has agreed in writing to join herein and to be bound
by the terms, conditions and restrictions hereof.

6
<PAGE> 36

SECTION 6. NO RETENTION RIGHTS.

Nothing in this Agreement or in the Plan shall confer upon the
Purchaser any right to continue in Service for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Company (or
any Parent or Subsidiary employing or retaining the Purchaser) or of the
Purchaser, which rights are hereby expressly reserved by each, to terminate his
or her Service at any time and for any reason, with or without cause.

SECTION 7. TAX ELECTION.

The acquisition of the Purchased Shares may result in adverse tax
consequences that may be avoided or mitigated by filing an election under Code
Section 83(b). Such election may be filed only within 30 days after the date of
purchase set forth in the Summary of Stock Purchase. The form for making the
Code Section 83(b) election is attached to this Agreement as an Exhibit. THE
PURCHASER SHOULD CONSULT WITH HIS OR HER TAX ADVISOR TO DETERMINE THE TAX
CONSEQUENCES OF ACQUIRING THE PURCHASED SHARES AND THE ADVANTAGES AND
DISADVANTAGES OF FILING THE CODE SECTION 83(b) ELECTION. THE PURCHASER
ACKNOWLEDGES THAT IT IS HIS OR HER SOLE RESPONSIBILITY, AND NOT THE COMPANY'S,
TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF THE PURCHASER
REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER
BEHALF.

SECTION 8. LEGENDS.

All certificates evidencing Purchased Shares shall bear the
following legends:

"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."

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<PAGE> 37

If required by the authorities of any state in connection with the issuance of
the Purchased Shares, the legend or legends required by such state authorities
shall also be endorsed on all such certificates.

SECTION 9. NOTICE.

Any notice required by the terms of this Agreement shall be given in
writing and shall be deemed effective upon personal delivery or upon deposit
with the United States Postal Service, by registered or certified mail, with
postage and fees prepaid. Notice shall be addressed to the Company at its
principal executive office and to the Purchaser at the address that he or she
most recently provided to the Company.

SECTION 10. ENTIRE AGREEMENT.

The Summary of Stock Purchase, this Agreement and the Plan
constitute the entire contract between the parties hereto with regard to the
subject matter hereof. They supersede any other agreements, representations or
understandings (whether oral or written and whether express or implied) which
relate to the subject matter hereof.

SECTION 11. CHOICE OF LAW.

This Agreement shall be governed by, and construed in accordance
with, the laws of the State of California, as such laws are applied to contracts
entered into and performed in such State.

SECTION 12. DEFINITIONS.

(a) "AGREEMENT" shall mean this Stock Purchase Agreement.

(b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company, as constituted from time to time or, if a Committee has been appointed,
such Committee.

(ii) The sale, transfer or other disposition of all or
substantially all of the Company's assets.

8
<PAGE> 38

(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended.

(e) "COMMITTEE" shall mean a committee of the Board of Directors, as
described in Section 2 of the Plan.

(f) "COMPANY" shall mean ObjectSwitch Corporation, a California
corporation.

(g) "CONSULTANT" shall mean a person who performs bona fide services for
the Company, a Parent or a Subsidiary as a consultant or advisor, excluding
Employees and Outside Directors.

(h) "EMPLOYEE" shall mean any individual who is a common-law employee of
the Company, a Parent or a Subsidiary.

(i) "FAIR MARKET VALUE" shall mean the fair market value of a Share, as
determined by the Board of Directors in good faith. Such determination shall be
conclusive and binding on all persons.

(j) "OUTSIDE DIRECTOR" shall mean a member of the Board of Directors who
is not an Employee.

(k) "PARENT" shall mean any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
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.

(l) "PLAN" shall mean the ObjectSwitch Corporation 1998 Stock Plan, as
amended.

(m) "PURCHASED SHARES" shall mean the Shares purchased by the Purchaser
pursuant to this Agreement.

(n) "PURCHASE PRICE" shall mean the amount for which one Share may be
purchased pursuant to this Agreement, as specified in the Summary of Stock
Purchase.

(o) "PURCHASER" shall mean the individual named in the Summary of Stock
Purchase.

(p) "RESTRICTED SHARE" shall mean a Purchased Share that is subject to
the Right of Repurchase.

(q) "RIGHT OF FIRST REFUSAL" shall mean the Company's right of first
refusal described in Section 3.

9
<PAGE> 39

(r) "RIGHT OF REPURCHASE" shall mean the Company's right of repurchase
described in Section 2.

(s) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

(t) "SERVICE" shall mean service as an Employee, Outside Director or
Consultant.

(u) "SHARE" shall mean one share of Stock, as adjusted in accordance
with Section 8 of the Plan (if applicable).

(v) "STOCK" shall mean the Common Stock of the Company.

(w) "SUBSIDIARY" shall mean any corporation (other than the Company) in
an unbroken chain or 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.

(x) "SUMMARY OF STOCK PURCHASE" shall mean the document so entitled to
which this Agreement is attached.

(y) "TRANSFEREE" shall mean any person to whom the Purchaser has
directly or indirectly transferred any Purchased Share.

(z) "TRANSFER NOTICE" shall mean the notice of a proposed transfer of
Purchased Shares described in Section 3.

10
<PAGE> 40

EXHIBIT I

SECTION 83(b) ELECTION

This statement is made under Section 83(b) of the Internal Revenue Code of 1986,
as amended, pursuant to Treasury Regulations Section 1.83-2.

(1) The taxpayer who performed the services is:

Name:

Address:

Social Security No.:

(2) The property with respect to which the election is made is ______ shares
of the common stock of ObjectSwitch Corporation.

(3) The property was transferred on ________ __, 1998_.

(4) The taxable year for which the election is made is the calendar year
1998_.

(5) The property is subject to a repurchase right pursuant to which the
issuer has the right to acquire the property at the original purchase
price if for any reason taxpayer's service with the issuer is
terminated. The issuer's repurchase right lapses in a series of
installments over a ______-year period ending on ___________ ____,
_____.

(6) The fair market value of such property at the time of transfer
(determined without regard to any restriction other than a restriction
which by its terms will never lapse) is $___ per share.

(7) The amount paid for such property is $____ per share.

(8) A copy of this statement was furnished to ObjectSwitch Corporation, for
whom taxpayer rendered the services underlying the transfer of such
property.

(9) This statement is executed on _______ __, 1998__.

___________________________________ _______________________________________
Spouse (if any) Taxpayer

This election must be filed with the Internal Revenue Service Center with which
the Purchaser files his or her Federal income tax returns and must be filed
within 30 days after the date of purchase. This filing should be made by
registered or certified mail, return receipt requested. The Purchaser must
retain two copies of the completed form for filing with his or her Federal and
state tax returns for the current tax year and an additional copy for his or her
records.

<PAGE> 41
OBJECTSWITCH CORPORATION 1998 STOCK PLAN
NOTICE OF STOCK OPTION EXERCISE

OPTIONEE INFORMATION:

Name:_______________________ Social Security Number:____ -____ -____

Address:____________________ Employee Number: _______________________
____________________

OPTION INFORMATION:

Date of Grant:_____________,___19____ Type of Option: [ ] Nonstatutory (NSO) or
[ ] Incentive (ISO)
Exercise Price per Share: $______

Total number of shares of Common Stock of
ObjectSwitch Corporation (the "Company")
covered by option: _____________________ shares

EXERCISE INFORMATION:

Number of shares of Common Stock of the Company for which option is being
exercised now: _______________________. (These shares are referred to below as
the "Purchased Shares.")

Total Exercise Price for the Purchased Shares: $_______________

Form of payment enclosed [CHECK ALL THAT APPLY]:

Check for $____________________, [ ] Certificate(s) for_______shares of
made payable to the Common Stock of the Company that
"ObjectSwitch Corporation" I have owned for at least six months.
(These shares will be valued as of
the date when this notice is received
by the Company.)

[ ] (Attestation Form covering) shares of
the Common Stock of the Company.
(These shares will be valued as of
the date when this notice is received
by the Company.)

Names in which the Purchased Shares should be registered [YOU MUST CHECK ONE]:

[ ] In my name only

[ ] In the names of my spouse and My spouse's name (if applicable):
myself as community property

[ ] In the names of my spouse and myself as joint tenants with the right of
survivorship

The certificate for the Purchased ________________________________________
Shares should be sent to the ________________________________________
following address: ________________________________________

YOU MUST SIGN THIS NOTICE ON THE SECOND PAGE BEFORE SUBMITTING IT TO THE
COMPANY.

<PAGE> 42

REPRESENTATIONS AND ACKNOWLEDGMENTS OF THE OPTIONEE:

1. I represent and warrant to the Company that I am acquiring and will hold
the Purchased Shares for investment for my account only, and not with a
view to, or for resale in connection with, any "distribution" of the
Purchased Shares within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").

2. I understand that the Purchased Shares have not been registered under
the Securities Act by reason of a specific exemption therefrom and that
the Purchased Shares must be held indefinitely, unless they are
subsequently registered under the Securities Act or I obtain an opinion
of counsel (in form and substance satisfactory to the Company and its
counsel) that registration is not required.

3. I acknowledge that the Company is under no obligation to register the
Purchased Shares.

4. I am aware of the adoption of Rule 144 by the Securities and Exchange
Commission under the Securities Act, which permits limited public
resales of securities acquired in a non-public offering, subject to the
satisfaction of certain conditions. These conditions include (without
limitation) that certain current public information about the issuer is
available, that the resale occurs only after the holding period required
by Rule 144 has been satisfied, that the sale occurs through an
unsolicited "broker's transaction" and that the amount of securities
being sold during any three-month period does not exceed specified
limitations. I understand that the conditions for resale set forth in
Rule 144 have not been satisfied and that the Company has no plans to
satisfy these conditions in the foreseeable future.

5. I will not sell, transfer or otherwise dispose of the Purchased Shares
in violation of the Securities Act, the Securities Exchange Act of 1934,
or the rules promulgated thereunder, including Rule 144 under the
Securities Act.

6. I acknowledge that I have received and had access to such information as
I consider necessary or appropriate for deciding whether to invest in
the Purchased Shares and that I had an opportunity to ask questions and
receive answers from the Company regarding the terms and conditions of
the issuance of the Purchased Shares.

7. I am aware that my investment in the Company is a speculative investment
which has limited liquidity and is subject to the risk of complete loss.
I am able, without impairing my financial condition, to hold the
Purchased Shares for an indefinite period and to suffer a complete loss
of my investment in the Purchased Shares.

8. I acknowledge that the Purchased Shares remain subject to the Company's
right of first refusal and may remain subject to the Company's right of
repurchase at the exercise price, all in accordance with the applicable
Notice of Stock Option Grant and Stock Option Agreement.

9. I acknowledge that I am acquiring the Purchased Shares subject to all
other terms of the Notice of Stock Option Grant and Stock Option
Agreement.

10. I acknowledge that I have received a copy of the Company's memorandum
regarding the federal income tax consequences of an option exercise and
the tax election under section 83(b) of the Internal Revenue Code. In
the event that I choose to make a section 83(b) election, I acknowledge
that it is my responsibility--and not the Company's responsibility--to
file the election in a timely manner, even if I ask the Company or its
agents to make the filing on my behalf. I acknowledge that the Company
has encouraged me to consult my own adviser to determine the tax
consequences of acquiring the Purchased Shares at this time.

11. I agree to seek the consent of my spouse to the extent required by the
Company to enforce the foregoing.

SIGNATURE:

_________________________________ _______________,____19___

2
<PAGE> 43

FEDERAL INCOME TAX CONSEQUENCES AND
SECTION 83(b) ELECTION
(Current as of October 1998)

PURPOSE OF THIS MEMORANDUM

The purpose of this memorandum is to provide you with a brief summary of the tax
consequences of exercising your option. For a number of reasons, this memorandum
is no substitute for personal tax advice:

- To make the memorandum short and readable, only the highlights are
covered. Some tax rules are not addressed, even though they may be
important in particular cases.

- While the summary attempts to deal with the most common situations, your
own tax situation may well be different from the norm.

- State or foreign income taxes are not addressed at all, even though they
could have a significant impact on your tax planning. Likewise, federal
gift and estate taxes and state inheritance taxes are not discussed.

- Tax planning involving incentive stock options is exceedingly complex,
in part because of the possible application of the alternative minimum
tax.

- The memorandum assumes that you are paying the exercise price of your
option in cash (or in the form of a full-recourse promissory note with
an interest rate that meets IRS requirements). If you are paying the
exercise price in the form of stock, you become subject to special rules
that are not addressed here.

- The tax rules change often, and the Company is not responsible for
updating this summary.

FOR THESE REASONS, THE COMPANY STRONGLY ENCOURAGES YOU TO CONSULT YOUR OWN TAX
ADVISER BEFORE EXERCISING YOUR OPTION AND BEFORE MAKING A DECISION ABOUT FILING
OR NOT FILING A SECTION 83(b) ELECTION.

LIMIT ON ISO TREATMENT

The Notice of Stock Option Grant indicates whether your option is a nonstatutory
stock option (NSO) or an incentive stock option (ISO). But the favorable tax
treatment for ISOs is limited, regardless of what the Notice of Stock Option
Grant indicates. Of the options that become exercisable in any calendar year,
only options covering the first $100,000 of stock are eligible for ISO
treatment. The excess over $100,000 automatically receives NSO treatment. For
this purpose, stock is valued at the time of grant. This means that the value is
generally equal to the exercise price.

For example, assume that you hold an option to buy 50,000 shares for $4 per
share. Assume further that the entire option is exercisable immediately after
the date of grant. (It is irrelevant when the underlying stock vests.) Only the
first 25,000 shares qualify for ISO treatment.

3
<PAGE> 44

(25,000 times $4 equals $100,000.) The remaining 25,000 shares will be treated
as if they had been acquired by exercising an NSO. This is true regardless of
when the option is actually exercised; what matters is when it first could have
been exercised.

EXERCISE OF NONSTATUTORY STOCK OPTION TO PURCHASE VESTED SHARES

The Notice of Stock Option Grant indicates whether your Purchased Shares are
already vested. Vested shares are no longer subject to the Company's right to
repurchase them at the exercise price, although they are still subject to the
Company's right of first refusal. If you know that your Purchased Shares are
already vested, there is no need to file a section 83(b) election.

If you are exercising an NSO to purchase vested shares, you will be taxed now.
You will recognize ordinary income in an amount equal to the difference between
(a) the fair market value of the Purchased Shares on the date of exercise and
(b) the exercise price you are paying. If you are an employee or former employee
of the Company, this amount is subject to withholding for income and payroll
taxes. Your tax basis in the Purchased Shares (to calculate capital gain when
you sell the shares) is equal to their fair market value on the date of
exercise.

EXERCISE OF NSO TO PURCHASE NON-VESTED SHARES

If you are exercising an NSO to purchase non-vested shares, and if you do not
file a timely election under section 83(b) of the Tax Code, then you will not be
taxed now. Instead, you will be taxed whenever an increment of Purchased Shares
vests--in other words, when the Company no longer has the right to repurchase
those shares at the exercise price. The Notice of Stock Option Grant indicates
when this occurs, generally over a period of several years. Whenever an
increment of Purchased Shares vests, you will recognize ordinary income in an
amount equal to the difference between (a) the fair market value of those
Purchased Shares on the date of vesting and (b) the exercise price you are
paying for those Purchased Shares. If you are an employee or former employee of
the Company, this amount will be subject to withholding for income and payroll
taxes. Your tax basis in the Purchased Shares (to calculate capital gain when
you sell the shares) will be equal to their fair market value on the date of
vesting.

If you are exercising an NSO to purchase non-vested shares, and if you file a
timely election under section 83(b) of the Tax Code, then you will be taxed now.
You will recognize ordinary income in an amount equal to the difference between
(a) the fair market value of the Purchased Shares on the date of exercise and
(b) the exercise price you are paying. If you are an employee or former employee
of the Company, this amount is subject to withholding for income and payroll
taxes. Your tax basis in the Purchased Shares (to calculate capital gain when
you sell the shares) is equal to their fair market value on the date of
exercise. Even if the fair market value of the Purchased Shares on the date of
exercise equals the exercise price (and thus no tax is payable), the 83(b)
election must be made in order to avoid having any subsequent appreciation taxed
as ordinary income at the time of vesting.

AN 83(b) ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE WITHIN 30 DAYS
AFTER THE NOTICE OF EXERCISE OF STOCK OPTION IS SIGNED. The 30-day filing period
cannot be extended. If you miss the deadline, you will be taxed as the Purchased
Shares vest, based on the value of the shares at that time. (See above.) The
form for making the 83(b) election is attached.

4
<PAGE> 45

EXERCISE OF ISO AND ISO HOLDING PERIODS

If you are exercising an ISO, you will not be taxed under the regular tax rules
until you dispose of the Purchased Shares.(1) (The alternative minimum tax rules
are described below.) The tax treatment at the time of disposition depends on
how long you hold the shares. You will satisfy the ISO holding periods if you
hold the Purchased Shares until the later of the following dates:

- The date two years after the ISO was granted, and

- The date one year after the ISO is exercised.

DISPOSITION OF ISO SHARES

If you dispose of the Purchased Shares after satisfying both of the ISO holding
periods, then you will recognize only a long-term capital gain at the time of
disposition. The amount of the capital gain is equal to the difference between
(a) the sales proceeds and (b) the exercise price. In general, the maximum
marginal federal income tax rate on long-term capital gains is 20%.

If you dispose of the Purchased Shares when either or both of the ISO holding
periods are not met, then you will recognize ordinary income at the time of
disposition. The calculation of the ordinary income amount depends on whether
the shares are vested at the time of exercise.

- SHARES VESTED. If the shares are vested at the time of exercise, the
amount of ordinary income will be equal to the difference between (a)
the fair market value of the Purchased Shares on the date of exercise
and (b) the exercise price. But if the disposition is an arm's length
sale to an unrelated party, the amount of ordinary income will not
exceed the total gain from the sale. Under current IRS rules, the
ordinary income will not be subject to withholding for income or payroll
taxes. Your tax basis in the Purchased Shares will be equal to their
fair market value on the date of exercise. Any gain in excess of your
basis will be taxed as a capital gain--either long-term or short-term,
depending on how long you hold the Purchased Shares after the date of
exercise.

- SHARES NOT VESTED--NO 83(b) ELECTION FILEd. If the Purchased Shares are
not vested at the time of exercise, and if you do not file a timely
election under section 83(b) of the Tax Code, then the amount of
ordinary income will be equal to the difference between (a) the fair
market value of the Purchased Shares on the date of vesting and (b) the
exercise price. But if the disposition is an arm's length sale to an
unrelated party, the amount of ordinary income will not exceed the total
gain from the sale. Under current IRS rules, the ordinary income will
not be subject to withholding for income or payroll taxes. Your tax
basis in the Purchased Shares will be equal to their fair market value
on the date of vesting. Any gain in excess of your basis will be taxed
as a capital gain--either long-term or short-term, depending on how long
you hold the Purchased Shares after the date of vesting.

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

1 Generally, a "disposition" of shares purchased under an ISO encompasses any
transfer of legal title, such as a transfer by sale, exchange or gift, but does
not include a transfer to your spouse, a transfer into joint ownership with
right of survivorship (if you remain one of the joint owners), a pledge, a
transfer by bequest or inheritance, or certain tax free exchanges permitted
under the Tax Code.

5
<PAGE> 46
- SHARES NOT VESTED--TIMELY 83(B) ELECTION FILEd. If the shares are not
vested at the time of exercise, and if you file a timely election under
section 83(b) of the Tax Code, then the amount of ordinary income will
be equal to the difference between (a) the fair market value of the
Purchased Shares on the date of exercise and (b) the exercise price. In
other words, the 83(b) election causes the ordinary income to be
calculated as if the shares were vested at the time of exercise. All
other rules described above for the purchase of vested shares by
exercising an ISO apply here as well. AN 83(B) ELECTION MUST BE FILED
WITH THE INTERNAL REVENUE SERVICE WITHIN 30 DAYS AFTER THE NOTICE OF
EXERCISE OF STOCK OPTION IS SIGNED. The 30-day filing period cannot be
extended. Note that, in the case of an ISO, the 83(b) election does not
trigger an immediate tax; it merely affects how the ordinary income is
calculated when you dispose of the Purchased Shares. If you miss the
filing deadline, the amount of your ordinary income will be based on the
value of the Purchased Shares at the time they vest. (See above.) The
form for making the 83(b) election is attached.

You may not know at this time whether you will dispose of your Purchased Shares
before meeting the two holding periods. You should nevertheless consider filing
an 83(b) election. If you meet the holding periods, the election will be moot
for purposes of the regular tax system, since you will have no ordinary income.
(The effect of the election under the alternative minimum tax system is
discussed below.) If you do not satisfy the holding periods, then the election
will take effect and will limit your ordinary income to the gain that existed at
the time of exercise.

SUMMARY OF ALTERNATIVE MINIMUM TAX

The alternative minimum tax (AMT) must be paid if it exceeds your regular income
tax. The AMT is equal to 26% of your alternative minimum tax base up to $175,000
and 28% of the excess over $175,000. (In the case of married individuals filing
separately, the breakpoint is $87,500 rather than $175,000.) Your alternative
minimum tax base is equal to your alternative minimum taxable income (AMTI)
minus your exemption amount.

- ALTERNATIVE MINIMUM TAXABLE INCOME. Your AMTI is equal to your regular
taxable income, subject to certain adjustments and increased by items of
tax preference. Among the many adjustments made in computing AMTI are
the following:

- State and local income and property taxes are not allowed as a
deduction.

- Miscellaneous itemized deductions are not allowed.

- Medical expenses are not allowed as a deduction until they
exceed 10% of adjusted gross income (as opposed to the 7.5%
floor that applies to regular income taxes).

- Certain interest deductions are not allowed.

- The standard deduction and personal exemptions are not allowed.

- When an ISO is exercised, the spread is treated as if the option
were an NSO. (See discussion below.)

- EXEMPTION AMOUNT. Before AMT is calculated, AMTI is reduced by the
exemption amount. The exemption amount is as follows:

6
<PAGE> 47

<TABLE>
<S> <C> <C>
Joint Returns: $45,000 Single Returns: $33,750 Separate Returns: $22,500
</TABLE>

The exemption amount is phased out by 25 cents for each $1 by which AMTI
exceeds the following levels:

<TABLE>
<S> <C> <C>
Joint Returns: $150,000 Single Returns: $112,500 Separate Returns: $75,000
</TABLE>

This means, for example, that the entire $45,000 exemption amount
disappears for married individuals filing joint returns when AMTI reaches
$330,000.

APPLICATION OF AMT WHEN ISO IS EXERCISED

As noted above, when an ISO is exercised, the spread is treated for AMT purposes
as if the option were an NSO. In other words, the spread is included in AMTI at
the time of exercise, unless the Purchased Shares are not yet vested at the time
of exercise. If the Purchased Shares are not yet vested, the value of the shares
minus the exercise price is included in AMTI when the shares vest. If you makes
an election under section 83(b) within 30 days after exercise, then the spread
should be included in AMTI at the time of exercise. AN 83(B) ELECTION MUST BE
FILED WITH THE INTERNAL REVENUE SERVICE WITHIN 30 DAYS AFTER THE NOTICE OF
EXERCISE OF STOCK OPTION IS SIGNED. The 30-day filing period cannot be extended.

A special rule applies if you dispose of the Purchased Shares in the same year
in which you exercised the ISO. If the amount you realize on the sale is less
than the value of the stock at the time of exercise, then the amount includable
in AMTI on account of the ISO exercise is limited to the gain realized on the
sale. (2)

To the extent that a your AMT is attributable to the spread on exercising an ISO
(and certain other items), the AMT paid may be applied as a credit against your
regular income tax liability in future years. But this tax credit cannot reduce
your regular income tax liability in any future tax year below your AMT for that
year. The AMT credit may be carried forward indefinitely, but it may not be
carried back. (In practice, many optionees who paid AMT upon exercising an ISO
find that they cannot fully use this tax credit for many years, if at all.)

When Purchased Shares are sold, your basis for purposes of computing the capital
gain or loss under the AMT system is increased by the option spread that exists
at the time of exercise. Again, an ISO is treated under the AMT system much like
an NSO is treated under the regular tax system. But your basis in the ISO shares
for purposes of computing gain or loss under the regular tax system is equal to
the exercise price; it does not reflect any AMT that you pay on the spread at
exercise. Therefore, if you pay AMT in the year of the ISO exercise and regular
income tax in the year of selling the Purchased Shares, you could pay tax twice
on the same gain (except to the extent that you can use the AMT credit described
above).

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

2 This is similar to the rule that applies under the regular tax system in the
event of a disqualifying disposition of ISO stock. The amount of ordinary income
that must be recognized in that case generally does not exceed the amount of the
gain realized in the disposition.

7
<PAGE> 48

SECTION 83(b) ELECTION

This statement is made under Section 83(b) of the Internal Revenue Code of 1986,
as amended, pursuant to Treasury Regulations Section 1.83-2.

(1) The taxpayer who performed the services is:

Name: ___________________________________

Address: ___________________________________

Social Security No.: _______________________

(2) The property with respect to which the election is made is
______ shares of the common stock of ObjectSwitch Corporation.

(3) The property was transferred on ________ __, _____.

(4) The taxable year for which the election is made is the calendar
year _____.

(5) The property is subject to a repurchase right pursuant to which
the issuer has the right to acquire the property at the original
purchase price if for any reason taxpayer's employment with the
issuer is terminated. The issuer's repurchase right lapses in a
series of installments over a ______-year period ending on
___________ ____, _____.

(6) The fair market value of such property at the time of transfer
(determined without regard to any restriction other than a
restriction which by its terms will never lapse) is $_____ per
share.

(7) The amount paid for such property is $_____ per share.

(8) A copy of this statement was furnished to ObjectSwitch
Corporation, for whom taxpayer rendered the services underlying
the transfer of such property.

(9) This statement is executed on _______ __, _____.

________________________________ ________________________________
Spouse (if any) Taxpayer

THIS ELECTION MUST BE FILED WITH THE INTERNAL REVENUE SERVICE CENTER WITH WHICH
THE OPTIONEE FILES HIS OR HER FEDERAL INCOME TAX RETURNS AND MUST BE FILED
WITHIN 30 DAYS AFTER THE DATE OF PURCHASE. THIS FILING SHOULD BE MADE BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED. THE OPTIONEE MUST RETAIN
TWO COPIES OF THE COMPLETED FORM FOR FILING WITH HIS OR HER FEDERAL AND STATE
TAX RETURNS FOR THE CURRENT TAX YEAR AND AN ADDITIONAL COPY FOR HIS OR HER
RECORDS.