PROGRESS SOFTWARE CORP /MA
EX-10.11 PEERDIRECT CORPORATION 2003 STOCK INCENTIVE PLAN
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<TYPE>EX-10.11
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<FILENAME>b53540psexv10w11.txt
<DESCRIPTION>EX-10.11 PEERDIRECT CORPORATION 2003 STOCK INCENTIVE PLAN
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                             PEERDIRECT CORPORATION

                            2003 STOCK INCENTIVE PLAN

      1. PURPOSE.

      The purpose of this plan (the "Plan") is to secure for PeerDirect
Corporation, a Delaware corporation (the "Company"), and its shareholders the
benefits arising from capital stock ownership by employees, officers and
directors of, and consultants or advisors to, the Company and its parent and
subsidiary corporations who are expected to contribute to the Company's future
growth and success. Under the Plan recipients may be awarded both (i) Options
(as defined in Section 2.1) to purchase the Company's common stock, par value
$.01 ("Common Stock"), and (ii) shares of the Company's Common Stock
("Restricted Stock Awards"). Except where the context otherwise requires, the
term "Company" shall include the parent and all present and future subsidiaries
of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue
Code of 1986, as amended or replaced from time to time (the "Code"). Those
provisions of the Plan which make express reference to Section 422 of the Code
shall apply only to Incentive Stock Options (as that term is defined in the
Plan). Appendix A to this Plan shall apply only to participants in the Plan who
are residents of the State of California.

      2. TYPES OF AWARDS AND ADMINISTRATION.

            2.1 OPTIONS. Options granted pursuant to the Plan ("Options") shall
be authorized by action of the Board of Directors of the Company and may be
either incentive stock options ("Incentive Stock Options") meeting the
requirements of Section 422 of the Code or non-statutory Options which are not
intended to meet the requirements of Section 422. The vesting of Options may be
conditioned upon the completion of a specified period of employment with the
Company and/or such other conditions or events as the Board may determine. The
Board may also provide that Options are immediately exercisable subject to
certain repurchase rights in the Company dependent upon the continued employment
of the optionee and/or such other conditions or event as the Board may
determine.

                2.1.1 INCENTIVE STOCK OPTIONS. All Options when granted are
intended to be non-statutory Options, unless the applicable Option Agreement (as
defined in Section 5.1) explicitly states that the Option is intended to be an
Incentive Stock Option. Incentive Stock Options may only be granted to employees
of the Company. For so long as the Code shall so provide, Options granted to any
employee under the Plan (and any other incentive stock option plans of the
Company) which are intended to constitute Incentive Stock Options shall not
constitute Incentive Stock Options to the extent that such Options, in the
aggregate, become exercisable for the first time in any one calendar year for
shares of Common Stock with an aggregate fair market value (determined as of the
respective date or dates of grant) of more than $100,000. If an Option is
intended to be an Incentive Stock Option, and if for any reason such Option (or
any portion thereof) shall not qualify as an Incentive Stock Option, then, to
the extent of such nonqualification, such Option (or portion thereof) shall be
regarded as a non-statutory

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Option appropriately granted under the Plan provided that such Option (or
portion thereof) otherwise meets the Plan's requirements relating to
non-statutory Options.

            2.2 RESTRICTED STOCK AWARDS. The Board in its discretion may grant
Restricted Stock Awards, entitling the recipient to acquire, for a purchase
price determined by the Board, shares of Common Stock subject to such
restrictions and conditions as the Board may determine at the time of grant
("Restricted Stock"), including continued employment and/or achievement of
pre-established performance goals and objectives.

            2.3 ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company, whose construction and interpretation of the terms and
provisions of the Plan shall be final and conclusive. The Board of Directors may
in its sole discretion issue Restricted Stock and grant Options to purchase
shares of Common Stock, and issue shares upon exercise of such Options as
provided in the Plan. The Board shall have authority, subject to the express
provisions of the Plan, to construe Restricted Stock Agreements (as defined in
Section 5.2), Option Agreements and the Plan, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the terms and
provisions of Restricted Stock Agreements and Option Agreements, and to make all
other determinations in the judgment of the Board of Directors necessary or
desirable for the administration of the Plan. The Board of Directors may correct
any defect or supply any omission or reconcile any inconsistency in the Plan or
in any Restricted Stock Agreement or Option Agreement in the manner and to the
extent it shall deem expedient to carry the Plan into effect and it shall be the
sole and final judge of such expediency. No director or person acting pursuant
to authority delegated by the Board of Directors shall be liable for any action
or determination under the Plan made in good faith. The Board of Directors may,
to the full extent permitted by or consistent with applicable laws or
regulations (including, without limitation, applicable state law), delegate any
or all of its powers under the Plan to a committee (the "Committee") appointed
by the Board of Directors, and if the Committee is so appointed all references
to the Board of Directors in the Plan shall mean and relate to such Committee.

      3. ELIGIBILITY.

      Options may be granted, and Restricted Stock may be issued, to persons who
are, at the time of such grant or issuance, employees, officers or directors of,
or consultants or advisors to, the Company; provided, that the class of persons
to whom Incentive Stock Options may be granted shall be limited to employees of
the Company.

            3.1 10% SHAREHOLDER. If any employee to whom an Incentive Stock
Option is to be granted is, at the time of the grant of such Option, the owner
of stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company (after taking into account the attribution of
stock ownership rules of Section 424(d) of the Code) ("10% Shareholder"), any
Incentive Stock Option granted to such individual must: (i) have an exercise
price per share of not less than 110% of the fair market value of one share of
Common Stock at the time of grant; and (ii) expire by its terms not more than
five years from the date of grant.

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      4. STOCK SUBJECT TO PLAN.

      Subject to adjustment as provided in Section 14.2 below, the maximum
number of shares of Common Stock which may be issued under the Plan is 5,000,000
shares. If an Option shall expire or terminate for any reason without having
been exercised in full, the unpurchased shares subject to such Option shall
again be available for subsequent Option grants or Restricted Stock awards under
the Plan. If shares of Restricted Stock shall be forfeited to, or otherwise
repurchased by, the Company pursuant to a Restricted Stock Agreement, such
purchased shares shall again be available for subsequent Option grants or
Restricted Stock awards under the Plan. If shares issued upon exercise of an
Option are tendered to the Company in payment of the exercise price of an
Option, such tendered shares shall again be available for subsequent Option
grants or Restricted stock awards under the Plan.

      5. FORMS OF RESTRICTED STOCK AGREEMENTS AND OPTION AGREEMENTS.

            5.1 OPTION AGREEMENT. As a condition to the grant of an Option, each
recipient of an Option shall execute an option agreement ("Option Agreement") in
such form not inconsistent with the Plan as may be approved by the Board of
Directors. Such Option Agreements may differ among recipients.

            5.2 RESTRICTED STOCK AGREEMENT. As a condition to the issuance of
Restricted Stock, each recipient thereof shall execute an agreement ("Restricted
Stock Agreement") in such form not inconsistent with the Plan as may be approved
by the Board of Directors. Such Restricted Stock Agreements may differ among
recipients and need not be entitled "Restricted Stock Agreements."

            5.3 "STAND-OFF" AGREEMENT. Unless the Board of Directors specifies
otherwise, each Restricted Stock Agreement and Option Agreement shall provide
that upon the request of the Company or the managing underwriter(s), the holder
of any Option or the purchaser of any Restricted Stock shall, in connection with
any registrations of securities of the Company, agree in writing that for a
period of time (not to exceed 180 days) from the effective date of the
Securities and Exchange Commission registration statement for such offering, the
holder or purchaser will not sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any shares of the common
stock of the Company owned or controlled by him.

      6. PURCHASE PRICE.

            6.1 GENERAL. The purchase price per share of Restricted Stock and
per share of stock deliverable upon the exercise of an Option shall be
determined by the Board of Directors, provided, however, that in the case of an
Incentive Stock Option, the exercise price shall not be less than 100% of the
fair market value of such stock, as determined by the Board of Directors, at the
time of grant of such Option, or less than 110% of such fair market value in the
case of any Incentive Stock Option granted to a 10% Shareholder.

            6.2 PAYMENT OF PURCHASE PRICE. Option Agreements may provide for the
payment of the exercise price by (i) delivery of a personal, certified or bank
check or postal money order payable to the order of the Company in an amount
equal to the exercise price of

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such Option, (ii) delivery to the Company of shares of Common Stock of the
Company already owned by the optionee for a period of six months and having a
fair market value equal in amount to the exercise price of the Option being
exercised, (iii) a personal recourse note issued by the optionee to the Company
in a principal amount equal to such aggregate exercise price and with such other
terms, including interest rate and maturity, as the Company may determine in its
discretion; provided, however, that the interest rate borne by such note shall
not be less than the lowest applicable federal rate, as defined in Section
1274(d) of the Code, (iv) any other means which the Board of Directors
determines are consistent with the purpose of the Plan and with applicable laws
and regulations or (v) any combination of such methods of payment. The fair
market value of any shares of Common Stock or other non-cash consideration which
may be delivered upon exercise of an Option shall be determined by the Board of
Directors. Restricted Stock Agreements may provide for the payment of any
purchase price in any manner approved by the Board of Directors at the time of
authorizing the issuance thereof.

      7. OPTION PERIOD.

      Notwithstanding any other provision of the Plan or any Option Agreement,
each Option and all rights thereunder shall expire on the date specified in the
applicable Option Agreement, provided that such date shall not be later than 10
years after the date on which the Option is granted (or five years in the case
of an Incentive Stock Option granted to a 10% Shareholder), and in either case,
shall be subject to earlier termination as provided in the Plan.

      8. EXERCISE OF OPTIONS.

            8.1 GENERAL. Each Option shall be exercisable either in full or in
installments at such time or times and during such period as shall be set forth
in the agreement evidencing such Option, subject to the provisions of the Plan.
To the extent not exercised, installments shall accumulate and be exercisable,
in whole or in part, at any time after becoming exercisable, but not later than
the date the Option expires.

            8.2 NOTICE OF EXERCISE. Any option granted under the Plan may be
exercised by the optionee by delivering to the Company on any business day a
written notice specifying the number of Common Shares the optionee then desires
to purchase (the "Notice"), accompanied by payment for such shares.

            8.3 DELIVERY. As promptly as practicable after receipt of such
written notification and payment, the Company shall deliver or cause to be
delivered to the optionee certificates for the number of shares with respect to
which such Option has been so exercised, issued in the optionee's name or, at
the Company's election, the Company shall deposit such shares into an electronic
share account maintained for the benefit of the optionee; provided, however,
that such delivery of certificates shall be deemed effected for all purposes
when the Company or a stock transfer agent shall have deposited such
certificates in the United States mail, addressed to the optionee, at the
address specified in the Notice; and that such deposit of shares shall be deemed
effected for all purposes when the deposit is reflected in the optionee's
account.

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      9. NONTRANSFERABILITY OF OPTIONS.

      No Option shall be assignable or transferable by the person to whom it is
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution. During the life of an optionee, an Option shall be
exercisable only by the optionee.

      10. TERMINATION OF EMPLOYMENT; DISABILITY; DEATH. Except as may be
otherwise expressly provided in the terms and conditions of the Option
Agreement, Options shall terminate on the earliest to occur of:

            (i)   the date of expiration thereof;

            (ii)  immediately upon termination of the optionee's employment with
                  or services to the Company by the Company for Cause (as
                  hereinafter defined), or upon voluntary termination of
                  employment by the optionee (other than for death or permanent
                  disability as defined below); or

            (iii) 90 days after the date of termination of the optionee's
                  employment with or services to the Company by the Company
                  without Cause (other than for death or permanent and total
                  disability as defined below).

Until the date on which the Option so expires, the optionee may exercise that
portion of his Option which is exercisable at the time of termination of the
employment or service relationship.

      An employment relationship between the Company and the optionee shall be
deemed to exist during any period during which the optionee is employed by the
Company or by a parent or any Subsidiary of the Company. Whether an authorized
leave of absence or an absence due to military or government service shall
constitute termination of the employment relationship between the Company and
the optionee shall be determined by the Board at the time thereof.

      For purposes of this Section 10, the term "Cause" shall mean (a) any
material breach by the optionee of any agreement to which the optionee and the
Company are both parties, (b) any act (other than retirement) or omission to act
by the optionee which may have a material and adverse effect on the Company's
business or on the optionee's ability to perform services for the Company,
including, without limitation, the commission of any crime (other than minor
traffic violations), or (c) any material misconduct or material neglect of
duties by the optionee in connection with the business or affairs of the
Company, its parent or any Subsidiary or affiliate of the Company.

      In the event of the permanent and total disability or death of an optionee
while in an employment or other relationship with the Company and before the
date of expiration of such option, such option shall terminate on the earlier of
such date of expiration or one year following the date of such disability or
death. After disability or death, the optionee (or in the case of death, his
executor, administrator or any person or persons to whom his option may be
transferred by will or by laws of descent and distribution) shall have the
right, at any time prior to such termination, to exercise the option to the
extent the optionee was entitled to exercise such

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option as of the date of his disability or death. An optionee is permanently and
totally disabled if he is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which can
be expected to last for a continuous period of not less than 12 months;
permanent and total disability shall be determined in accordance with Section
22(e)(3) of the Code and the regulations issued thereunder.

      11. RIGHTS AS A SHAREHOLDER. The holder of an Option shall have no rights
as a shareholder with respect to any shares covered by the Option (including,
without limitation, any rights to receive dividends or non-cash distributions
with respect to such shares) until the date of issue of a stock certificate to
him or her for such shares or the date of deposit of such shares in an
electronic deposit account for the benefit of him or her. No adjustment shall be
made for dividends or other rights for which the record date is prior to the
date such stock certificate is issued or such shares deposited.

      12. ADDITIONAL PROVISIONS. The Board of Directors may, in its sole
discretion, include additional provisions in Restricted Stock Agreements and
Option Agreements, including, without limitation, restrictions on transfer,
rights of the Company to repurchase shares of Restricted Stock or shares of
Common Stock acquired upon exercise of Options, commitments to pay cash bonuses,
to make, arrange for or guaranty loans or to transfer other property to
optionees upon exercise of Options, or such other provisions as shall be
determined by the Board of Directors; provided that such additional provisions
shall not be inconsistent with any other term or condition of the Plan and such
additional provisions shall not be such as to cause any Incentive Stock Option
to fail to qualify as an Incentive Stock Option within the meaning of Section
422 of the Code.

      13. ACCELERATION, EXTENSION, ETC. The Board of Directors may, in its sole
discretion, (i) accelerate the date or dates on which all or any particular
Option or Options may be exercised or (ii) extend the dates during which all, or
any particular, Option or Options may be exercised.

      14. ADJUSTMENT UPON CHANGES IN CAPITALIZATION

            14.1 NO EFFECT OF OPTIONS UPON CERTAIN CORPORATE TRANSACTIONS. The
existence of outstanding Options shall not affect in any way the right or power
of the Company to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation, or any issue of Common Shares, or any
issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Shares or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.

            14.2 ADJUSTMENT PROVISIONS. If, through or as a result of any
merger, consolidation, sale of all or substantially all of the assets of the
Company, reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split or other similar transaction, (i) the
outstanding shares of Common Stock are increased, decreased or exchanged for a
different number or kind of shares or other securities of the Company, or (ii)
additional shares or new or different shares or other securities of the Company
or other non-cash assets are distributed with respect to such shares of Common
Stock or other securities, an appropriate and

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proportionate adjustment may be made in (x) the maximum number and kind of
shares reserved for issuance under the Plan, (y) the number and kind of shares
or other securities subject to any then outstanding Options, and (z) the price
for each share subject to any then outstanding Options, without changing the
aggregate purchase price as to which such Options remain exercisable.
Notwithstanding the foregoing, no adjustment shall be made pursuant to this
Section 14 if such adjustment would cause the Plan to fail to comply with
Section 422 of the Code.

            14.3 NO ADJUSTMENT IN CERTAIN CASES. Except as hereinbefore
expressly provided, the issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefore, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock then subject to outstanding options.

            14.4 BOARD AUTHORITY TO MAKE ADJUSTMENTS. Any adjustments under this
Section 14 will be made by the Board of Directors, whose determination as to
what adjustments, if any, will be made and the extent thereof will be final,
binding and conclusive. No fractional shares will be issued under the Plan on
account of any such adjustments.

      15. EFFECT OF CERTAIN TRANSACTIONS

            15.1 GENERAL. In the event of a consolidation or merger or sale of
all or substantially all of the assets of the Company in which outstanding
shares of Common Stock are exchanged for securities, cash or other property of
any other corporation or business entity, or in the event of a liquidation of
the Company, the Board of Directors of the Company, or the board of directors of
any corporation assuming the obligations of the Company, may, in its discretion,
take any one or more of the following actions, as to some or all outstanding
Options (and need not take the same action as to each such Option): (i) provide
that such Options shall be assumed, or equivalent Options shall be substituted,
by the acquiring or succeeding corporation (or an affiliate thereof), provided
that any such Options substituted for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, (ii) upon written notice to the
optionees, provide that all unexercised Options will terminate immediately prior
to the consummation of such transaction unless exercised by the optionee (to the
extent otherwise then exercisable) within a specified period following the date
of such notice, (iii) in the event of a merger under the terms of which holders
of the Common Stock of the Company will receive upon consummation thereof a cash
payment for each share surrendered in the merger (the "Merger Price"), make or
provide for a cash payment to the optionees equal to the difference between (A)
the Merger Price times the number of shares of Common Stock subject to such
outstanding Options (to the extent then exercisable at prices not in excess of
the Merger Price) and (B) the aggregate exercise price of all such outstanding
Options, in exchange for the termination of such Options, and (iv) provide that
all or any outstanding Options shall become exercisable in full immediately
prior to such event.

            15.2 SUBSTITUTE OPTIONS. The Company may grant Options in
substitution for Options held by employees of another corporation who become
employees of the Company, or a

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subsidiary of the Company, as the result of a merger or consolidation of the
employing corporation with the Company or a subsidiary of the Company, or as a
result of the acquisition by the Company, or one of its subsidiaries, of
property or stock of the employing corporation. The Company may direct that
substitute Options be granted on such terms and conditions as the Board of
Directors considers appropriate in the circumstances.

            15.3 RESTRICTED STOCK. In the event of a business combination or
other transaction of the type detailed in Section 15.1, any securities, cash or
other property received in exchange for shares of Restricted Stock shall
continue to be governed by the provisions of any Restricted Stock Agreement
pursuant to which they were issued, including any provision regarding vesting,
and such securities, cash, or other property may be held in escrow on such terms
as the Board of Directors may direct, to insure compliance with the terms of any
such Restricted Stock Agreement.

      16. NO SPECIAL EMPLOYMENT RIGHTS. Nothing contained in the Plan or in any
Option or Restricted Stock Agreement shall confer upon any optionee any right
with respect to the continuation of his or her employment by the Company or
interfere in any way with the right of the Company at any time to terminate such
employment or to increase or decrease the compensation of the optionee.

      17. OTHER EMPLOYEE BENEFITS. The amount of any compensation deemed to be
received by an employee as a result of the issuance of shares of Restricted
Stock or the grant or exercise of an Option or the sale of shares received upon
such award or exercise will not constitute compensation with respect to which
any other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board of Directors.

      18. AMENDMENT OF THE PLAN.

            18.1 The Board of Directors may at any time, and from time to time,
modify or amend the Plan in any respect, except that if at any time the approval
of the shareholders of the Company is required under Section 422 of the Code or
any successor provision with respect to Incentive Stock Options, the Board of
Directors may not effect such modification or amendment without such approval.

            18.2 The termination or any modification or amendment of the Plan
shall not, without the consent of an optionee or the recipient of Restricted
Stock, affect his or her rights under an Option or Restricted Stock award
previously granted to him or her. With the consent of the recipient of
Restricted Stock or optionee affected, the Board of Directors may amend
outstanding Restricted Stock Agreements or Option Agreements in a manner not
inconsistent with the Plan. The Board of Directors shall have the right to amend
or modify the terms and provisions of the Plan and of any outstanding Incentive
Stock Options to the extent necessary to qualify any or all such Options for
such favorable federal income tax treatment (including deferral of taxation upon
exercise) as may be afforded incentive stock options under Section 422 of the
Code.

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      19. WITHHOLDING. The Company shall have the right to deduct from payments
of any kind otherwise due to the optionee or recipient of Restricted Stock, any
federal, state or local taxes of any kind required by law to be withheld with
respect to issuance of any shares of Restricted Stock or shares issued upon
exercise of Options. Subject to the prior approval of the Company, which may be
withheld by the Company in its sole discretion, the obligor may elect to satisfy
such minimum withholding obligations, in whole or in part, (i) by causing the
Company to withhold shares of Common Stock otherwise issuable or (ii) by
delivering to the Company shares of Common Stock already owned by the obligor.
The shares so delivered or withheld shall have a fair market value equal to such
withholding obligation. The fair market value of the shares used to satisfy such
withholding obligation shall be determined by the Company as of the date that
the amount of tax to be withheld is to be determined. A person who has made an
election pursuant to this Section 19 may only satisfy his or her withholding
obligation with shares of Common Stock which are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements.

      20. EFFECTIVE DATE AND DURATION OF THE PLAN.

            20.1 EFFECTIVE DATE. The Plan shall become effective when adopted by
the Board of Directors, but no Incentive Stock Option shall become exercisable
unless and until the Plan shall have been approved by the Company's
shareholders. If such shareholder approval is not obtained within twelve months
after the date of the Board's adoption of the Plan, no Options previously
granted under the Plan shall be deemed to be Incentive Stock Options and no
Incentive Stock Options shall be granted thereafter. Amendments to the Plan not
requiring shareholder approval shall become effective when adopted by the Board
of Directors; amendments requiring shareholder approval (as provided in Section
18.1) shall become effective when adopted by the Board of Directors, but no
Incentive Stock Option granted after the date of such amendment shall become
exercisable (to the extent that such amendment to the Plan was required to
enable the Company to grant such Incentive Stock Option to a particular
optionee) unless and until such amendment shall have been approved by the
Company's shareholders. If such shareholder approval is not obtained within
twelve months of the Board's adoption of such amendment, any Incentive Stock
Options granted on or after the date of such amendment shall terminate to the
extent that such amendment to the Plan was required to enable the Company to
grant such Option to a particular optionee. Subject to this limitation, Options
may be granted under the Plan at any time after the effective date and before
the date fixed for termination of the Plan.

            20.2 TERMINATION. Unless sooner terminated by action of the Board of
Directors, the Plan shall terminate upon the close of business on the day next
preceding the tenth anniversary of the date of its adoption by the Board of
Directors.

      21. PROVISION FOR FOREIGN PARTICIPANTS. The Board of Directors may,
without amending the Plan, modify the terms of Option or Restricted Stock
Agreements to differ from those specified in the Plan with respect to
participants who are foreign nationals or employed outside the United States to
recognize differences in laws, rules, regulations or customs of such foreign
jurisdictions with respect to tax, securities, currency, employee benefit or
other matters.

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      22. REQUIREMENTS OF LAW. The Company shall not be required to sell or
issue any shares under any Option or Restricted Stock Agreement if the issuance
of such shares shall constitute a violation by the optionee or by the Company of
any provisions of any law or regulation of any governmental authority. In
addition, in connection with the Securities Act of 1933, as now in effect or
hereafter amended (the "Act"), the Company shall not be required to issue any
shares upon exercise of any Option unless the Company has received evidence
satisfactory to it to the effect that the holder of such Option will not
transfer such shares except pursuant to a registration statement in effect under
the Act or unless an opinion of counsel satisfactory to the Company has been
received by the Company to the effect that such registration is not required in
connection with any such transfer. Any determination in this connection by the
Board shall be final, binding and conclusive. In the event the shares issuable
on exercise of an Option are not registered under the Act or under the
securities laws of each relevant state or other jurisdiction, the Company may
imprint on the certificate(s) appropriate legends that counsel for the Company
considers necessary or advisable to comply with the Act or any such state or
other securities law and in the instance of shares that are deposited in an
electronic account, the Company may restrict transactions associated with such
shares as the Company considers necessary or advisable to comply with the Act or
any such state or other securities law. The Company may register, but in no
event shall be obligated to register, any securities covered by the Plan
pursuant to the Act; and in the event any shares are so registered the Company
may remove any legend on certificates representing such shares and remove any
restrictions on transactions associated with such shares. The Company shall not
be obligated to take any affirmative action in order to cause the exercise of an
Option or the issuance of shares pursuant thereto to comply with any law or
regulation of any governmental authority.

      23. GOVERNING LAW. This Plan and each Option or Restricted Stock Agreement
shall be governed by the laws of the Commonwealth of Massachusetts, without
regard to its principles of conflicts of law.

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                                   APPENDIX A
               TO PEERDIRECT CORPORATION 2003 STOCK INCENTIVE PLAN
                          FOR CALIFORNIA RESIDENTS ONLY

      This Appendix to the PeerDirect Corporation 2003 Stock Incentive Plan (the
"Plan") shall have application only to participants in the Plan who are
residents of the State of California. Capitalized terms contained herein shall
have the same meanings given to them in the Plan, unless otherwise provided in
this Appendix. NOTWITHSTANDING ANY PROVISION CONTAINED IN THE PLAN TO THE
CONTRARY AND TO THE EXTENT REQUIRED BY APPLICABLE LAW, THE FOLLOWING TERMS AND
CONDITIONS SHALL APPLY TO ALL OPTIONS AND RESTRICTED STOCK AWARDS (COLLECTIVELY
"AWARDS") GRANTED TO RESIDENTS OF THE STATE OF CALIFORNIA, UNTIL SUCH TIME AS
THE COMMON STOCK BECOMES SUBJECT TO REGISTRATION UNDER THE SECURITIES ACT OF
1933:

      1. Nonqualified Stock Options shall have an exercise price that is not
less than 85% of the Fair Market Value of the stock at the time the Option is
granted, as determined by the Board, except that the exercise price shall be
110% of the Fair Market Value in the case of any person who owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or its parent or subsidiary corporations.

      2. The purchase price for any Stock Awards that may be purchased under the
Plan ("Stock Purchase Rights") shall be at least 85% of the Fair Market Value of
the Common Stock at the time the Participant is granted the Stock Purchase Right
or at the time the purchase is consummated. Notwithstanding the foregoing, the
purchase price shall be 100% of the Fair Market Value of the Common Stock at the
time the Participant is granted the Stock Purchase Right or at the time the
purchase is consummated in the case of any person who owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or its parent or subsidiary corporations.

      3. Options shall have a term of not more than ten years from the date the
Option is granted.

      4. Awards shall be nontransferable other than by will or the laws of
descent and distribution. Notwithstanding the foregoing, and to the extent
permitted by Section 422 of the Code, the Plan Administrator, in its discretion,
may permit distribution of an Option to an inter vivos or testamentary trust in
which the Option is to be passed to beneficiaries upon the death of the trustor
(settlor), or by gift to "immediate family" as that term is defined in Rule
16a-1(e) of the Exchange Act.

      5. Options shall become exercisable at the rate of at least 20% per year
over five years from the date the Option is granted, subject to reasonable
conditions such as continued employment. However, in the case of an Option
granted to officers, directors or consultants of the Company or any of its
affiliates, the Option may become fully exercisable, subject to reasonable
conditions such as continued employment, at any time or during any period
established by the Company or any of its affiliates.

                                       A-1
<PAGE>

      6. Unless employment is terminated for Cause, the right to exercise an
Option in the event of termination of employment, to the extent that the
Participant is otherwise entitled to exercise an Option on the date employment
terminates, shall be

            (a) at least six months from the date of termination of employment
if termination was caused by death or Disability; and

            (b) at least 30 days from the date of termination if termination of
employment was caused by other than death or Disability;

            (c) but in no event later than the remaining term of the Option.

      7. No Award may be granted to a resident of California more than ten years
after the earlier of the date of adoption of the Plan and the date the Plan is
approved by the shareholders.

      8. Any Award exercised before shareholder approval is obtained shall be
rescinded if shareholder approval is not obtained within 12 months before or
after the Plan is adopted. Such shares shall not be counted in determining
whether such approval is obtained.

      9. The Company shall provide annual financial statements of the Company to
each California resident holding an outstanding Award under the Plan. Such
financial statements need not be audited and need not be issued to key employees
whose duties at the Company assure them access to equivalent information.

      10. Any right of repurchase on behalf of the Company in the event of a
Participant's termination of employment shall be at a purchase price that is (a)
not less than the Fair Market Value of the securities upon termination of
employment, and the right to repurchase shall be exercised for cash or
cancellation of purchase money indebtedness for the shares within 90 days of
termination of employment (or in the case of securities issued upon exercise of
Options after the date of termination, within 90 days after the date of the
exercise), and the right shall terminate when the stock at issue becomes
publicly traded; or (b) at the original purchase price, provided that the right
to repurchase at the original purchase price lapses at the rate of at least 20%
of the shares per year over five years from the date the Option or Stock
Purchase Right is granted (without respect to the date the Option or Stock
Purchase Right was exercised or became exercisable) and the right to repurchase
shall be exercised for cash or cancellation of purchase money indebtedness for
the shares within 90 days of termination of employment (or in the case of
securities issued upon exercise of Options after the date of termination, within
90 days after the date of the exercise). In addition to the restrictions set
forth in clauses (a) and (b), the securities held by an officer, direct or
consultant of the Company or an affiliate of the Company may be subject to
additional or greater restrictions.

                                       A-2
</TEXT>
</DOCUMENT>
