S-8

As filed with the Securities and Exchange Commission on December 21, 2001

Registration No. 333-______

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

JUNIPER NETWORKS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION) 77-0422528
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)

1194 NORTH MATHILDA AVENUE
SUNNYVALE, CA 94089
(ADDRESS, INCLUDING ZIP CODE, OF REGISTRANT’S PRINCIPAL EXECUTIVE OFFICES)

PACIFIC BROADBAND COMMUNICATIONS, INC. 2000 STOCK INCENTIVE PLAN
PACIFIC BROADBAND COMMUNICATIONS, INC. 2000 SUB-PLAN
(FULL TITLE OF THE PLANS)

LISA C. BERRY
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
1194 NORTH MATHILDA AVENUE
SUNNYVALE, CA 94089
(408) 745-2000
(NAME, ADDRESS, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)

CALCULATION OF REGISTRATION FEE

					PROPOSED
		PROPOSED			MAXIMUM
		MAXIMUM			AGGREGATE			AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES	AMOUNT TO BE	OFFERING PRICE			OFFERING			REGISTRATION
TO BE REGISTERED	REGISTERED	PER SHARE			PRICE			FEE
Common Stock, $0.00001 par value per share, to be issued under the Pacific Broadband Communications, Inc. 2000 Stock Incentive Plan	1,114,040 shares	$	5.56	(1)	$	6,194,062	(1)	$	1480
Common Stock, $0.00001 par value per share, to be issued under the Pacific Broadband Communications, Inc. 2000 Sub-Plan	362,902 shares	$	5.56	(1)	$	2,017,735	(1)	$	482

(1) Estimated in accordance with Rule 457(h) solely for the purpose of calculating the registration fee based upon the price at which the options may be exercised.

         This Registration Statement will become effective upon filing in accordance with Rule 462 under the Securities Act of 1933.

TABLE OF CONTENTS

PART II: INFORMATION REQUIRED IN REGISTRATION STATEMENT
	ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
	ITEM 4. DESCRIPTION OF SECURITIES
	ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
	ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
	ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
	ITEM 8. EXHIBITS
	ITEM 9. UNDERTAKINGS
SIGNATURES
INDEX TO EXHIBITS
EXHIBIT 4.1
EXHIBIT 4.2
EXHIBIT 5.1
EXHIBIT 23.2

PART II: INFORMATION REQUIRED IN REGISTRATION STATEMENT

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE

         Juniper Networks, Inc. hereby incorporates by reference in this registration statement the following documents:

1.	Annual Report on Form 10-K for the fiscal year ended December 31, 2000 filed with the Securities and Exchange Commission on March 27, 2001.
2.	Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2001 filed with the Securities and Exchange Commission on May 8, 2001.
3.	Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2001 filed with the Securities and Exchange Commission on August 6, 2001.
4.	Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2001 filed with the Securities and Exchange Commission on November 1, 2001.
5.	The description of Juniper Networks, Inc. common stock contained in its Registration Statement on Form 8-A as filed with the Securities and Exchange Commission on June 11, 1999 pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended.

         All documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended, prior to the filing of a post-effective amendment to this registration statement which indicates that all Securities offered hereby have been sold or which deregisters all Securities remaining unsold, shall be deemed to be incorporated by reference in this registration statement and to be a part hereof from the date of filing of such documents.

ITEM 4. DESCRIPTION OF SECURITIES

         Not applicable.

ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL

         The validity of the shares of Common Stock offered hereby has been passed upon for Juniper Networks, Inc. by Lisa C. Berry, Vice President, General Counsel and Secretary of the Company.

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS

         Section 145 of the Delaware General Corporation Law permits a corporation to include in its charter documents, and in agreements between the corporation and its directors and officers, provisions expanding the scope of indemnification beyond that specifically provided by the current law.

         Article EIGHTH of our amended and restated certificate of incorporation provides for the indemnification of directors and officers to the fullest extent permissible under Delaware law.

         Article VI of our bylaws provides for the indemnification of officers, directors and third parties acting on behalf of Juniper Networks if such person acted in good faith and in a manner reasonably believed to be in and not opposed to our best interest, and, with respect to any criminal action or proceeding, the indemnified party had no reason to believe his or her conduct was unlawful.

         We have entered into indemnification agreements with our directors and executive officers, in addition to indemnification provided for in our bylaws, and intend to enter into indemnification agreements with any new directors and executive officers in the future. The indemnification agreements may require us, among other things, to indemnify our directors and officers against certain liabilities that may arise by reason of their status or service as directors and officers (other than liabilities arising from willful misconduct of culpable nature), to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified, and to obtain directors and officers’ insurance, if available on reasonable terms.

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ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED

         Not applicable.

ITEM 8. EXHIBITS

EXHIBIT
NUMBER	DOCUMENTS
4.1	Pacific Broadband Communications, Inc. 2000 Stock Incentive Plan
4.2	Pacific Broadband Communications, Inc. 2000 Sub-Plan
5.1	Opinion of Lisa C. Berry, Vice President, General Counsel and Secretary
23.1	Consent of Counsel (contained in Exhibit 5.1)
23.2	Consent of Ernst & Young, LLP, Independent Auditors
24.1	Power of Attorney (see page 4)

ITEM 9. UNDERTAKINGS

                  (a) The undersigned registrant hereby undertakes:

                           (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

                           (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

                           (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

                  (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

                  (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registration pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a directors, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Sunnyvale, State of California, on this 21st day of December, 2001.

JUNIPER NETWORKS, INC.

By:     /s/ Marcel Gani                                                     
           Marcel Gani
           Chief Financial Officer

POWER OF ATTORNEY

         KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Marcel Gani and Lisa C. Berry, and each of them, as his or her attorney-in-fact, with full power of substitution in each, for him or her in any and all capacities, to sign any amendments to this Registration Statement on Form S-8 and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

         PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE	TITLE	DATE
/s/ Scott Kriens Scott Kriens	President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer)	December 21, 2001
/s/ Marcel Gani Marcel Gani	Chief Financial Officer (Principal Financial and Accounting Officer)	December 21, 2001
/s/ Pradeep Sindhu Pradeep Sindhu	Chief Technical Officer and Vice Chairman of Board	December 21, 2001
/s/ William R. Hearst III William R. Hearst III	Director	December 21, 2001
/s/ Vinod Khosla Vinod Khosla	Director	December 21, 2001
/s/ C. Richard Kramlich C. Richard Kramlich	Director	December 21, 2001
/s/ Stratton Sclavos Stratton Sclavos	Director	December 21, 2001
/s/ William Stensrud William Stensrud	Director	December 21, 2001

4

JUNIPER NETWORKS, INC.

REGISTRATION STATEMENT ON FORM S-8

INDEX TO EXHIBITS

EXHIBIT
NUMBER	DOCUMENTS
4.1	Pacific Broadband Communications, Inc. 2000 Stock Incentive Plan
4.2	Pacific Broadband Communications, Inc. 2000 Sub-Plan
5.1	Opinion of Lisa C. Berry, Vice President, General Counsel and Secretary
23.1	Consent of Counsel (contained in Exhibit 5.1)
23.2	Consent of Ernst & Young LLP, Independent Auditors
24.1	Power of Attorney (see page 4)

EX-4.1 3 f78000orex4-1.txt EXHIBIT 4.1 EXHIBIT 4.1 PACIFIC BROADBAND COMMUNICATIONS, INC. 2000 STOCK INCENTIVE PLAN TABLE OF CONTENTS

Page ---- SECTION 1. PURPOSE ......................................................... 1 SECTION 2. DEFINITIONS ..................................................... 1 (a) "Award" ....................................................... 1 (b) "Board" ....................................................... 1 (c) "Change in Control" ........................................... 1 (d) "Code" ........................................................ 1 (e) "Committee" ................................................... 2 (f) "Common-Law Employee" ......................................... 2 (g) "Common Stock" ................................................ 2 (h) "Company" ..................................................... 2 (i) "Consultant" .................................................. 2 (j) "Employee" .................................................... 2 (k) "Exchange Act" ................................................ 2 (l) "Exercise Price" .............................................. 2 (m) "Fair Market Value" ........................................... 2 (n) "Incentive Stock Option" or "ISO" ............................. 3 (o) "Non-Employee Director" ....................................... 3 (p) "Nonstatutory Option" or "NSO" ................................ 3 (q) "Offeree" ..................................................... 3 (r) "Option" ...................................................... 3 (s) "Optionee" .................................................... 3 (t) "Parent" ...................................................... 3 (u) "Participant" ................................................. 3 (v) "Plan" ........................................................ 3 (w) "Purchase Price" .............................................. 3 (x) "Restricted Share" ............................................ 3 (y) "Service" ..................................................... 3 (z) "Stock Award Agreement" ....................................... 3 (aa) "Stock Option Agreement" ...................................... 4 (bb) "Stock Purchase Agreement" .................................... 4 (cc) "Subsidiary" .................................................. 4 (dd) "10% Stockholder" ............................................. 4 (ee) "Total and Permanent Disability" .............................. 4 (ff) "W-2 Payroll" ................................................. 4 SECTION 3. ADMINISTRATION .................................................. 4 (a) Committees of the Board ....................................... 4 (b) Committee Procedures .......................................... 5 (c) Administrative Powers ......................................... 5 (d) Effect of Board's Decision .................................... 6 (e) Limitation on Liability ....................................... 6 SECTION 4. ELIGIBILITY ..................................................... 6

i SECTION 5. STOCK SUBJECT TO PLAN .......................................... 6 (a) Basic Limitation ............................................. 6 (b) Additional Shares ............................................ 6 SECTION 6. TERMS AND CONDITIONS OF GRANTS OR SALES ........................ 7 (a) Stock Purchase Agreement ..................................... 7 (b) Duration of Offers ........................................... 7 (c) Purchase Price ............................................... 7 (d) Restrictions on Transfer of Common Stock ..................... 7 SECTION 7. ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED SHARES ........... 7 (a) Form and Amount of Award ..................................... 7 (b) Exercisability ............................................... 7 (c) Effect of Change in Control .................................. 8 (d) Voting Rights ................................................ 8 SECTION 8. TERMS AND CONDITIONS OF OPTIONS ................................ 8 (a) Stock Option Agreement ....................................... 8 (b) Number of Shares ............................................. 8 (c) ISO or NSO ................................................... 8 (d) Exercise Price ............................................... 8 (e) Exercisability ............................................... 9 (f) Effect of Change in Control .................................. 9 (g) Term ......................................................... 9 (h) Exercise of Options on Termination of Service ................ 9 (i) No Rights as a Stockholder ................................... 9 (j) Modification, Extension and Assumption of Options ............ 9 (k) Buyout Provisions ............................................ 10 (l) Restrictions on Transfer ..................................... 10 SECTION 9. FORMS OF PAYMENT ............................................... 10 (a) General Rule ................................................. 10 (b) Surrender of Stock ........................................... 10 (c) Promissory Notes ............................................. 10 (d) Cashless Exercise ............................................ 10 (e) Other Forms of Payment ....................................... 11 SECTION 10. ADJUSTMENTS UPON CHANGES IN COMMON STOCK ...................... 11 (a) General ...................................................... 11 (b) Mergers and Consolidations ................................... 11 (c) Reservation of Rights ........................................ 12 SECTION 11. WITHHOLDING TAXES ............................................. 12 (a) General ...................................................... 12 (b) Common Stock Withholding ..................................... 12 (c) Cashless Exercise/Pledge ..................................... 12 (d) Other Forms of Payment ....................................... 12 ii SECTION 12. LEGAL REQUIREMENTS ............................................ 13 (a) Restrictions on Issuance ..................................... 13 (b) Financial Reports ............................................ 13 SECTION 13. ASSIGNMENT OR TRANSFER OF AWARDS .............................. 13 (a) General ...................................................... 13 (b) Trusts ....................................................... 13 SECTION 14. NO EMPLOYMENT RIGHTS .......................................... 13 SECTION 15. DURATION AND AMENDMENTS ....................................... 14 (a) Term of the Plan ............................................. 14 (b) Right to Amend or Terminate the Plan ......................... 14 (c) Effect of Amendment or Termination ........................... 14 SECTION 16. EXECUTION ..................................................... 14 iii PACIFIC BROADBAND COMMUNICATIONS, INC. 2000 STOCK INCENTIVE PLAN SECTION 1. PURPOSE. The purpose of the Plan is to offer selected employees, directors and consultants an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, to encourage such persons to remain in the employ of the Company and to attract new employees with outstanding qualifications. The Plan seeks to achieve this purpose by providing for the direct grant or sale of Common Stock and for the grant of Options to purchase Common Stock. Options granted under the Plan may include Nonstatutory Stock Options as well as Incentive Stock Options intended to qualify under section 422 of the Internal Revenue Code. While this Plan is intended to satisfy federal Rule 701 and Section 25102(o) of the California Corporations Code, Awards may be granted under this Plan in reliance upon other federal and state securities law exemptions and to the extent another exemption is relied upon, the terms of this Plan which are required only because of Rule 701 or Section 25102(o) need not apply to the extent provided by the Board in the award agreement. SECTION 2. DEFINITIONS. (a) "Award" shall mean any award of an Option, Restricted Share or other right under the Plan. (b) "Board" shall mean the Board of the Company, as constituted from time to time. (c) "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 more than 50% of the combined voting power of the continuing or surviving entity's securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization; 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: (a) its sole purpose is to change the state of the Company's incorporation, (b) its sole purpose is 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 or (c) such transaction constitutes the Company's initial public offering. (d) "Code" shall mean the Internal Revenue Code of 1986, as amended. - 1 - (e) "Committee" shall mean a committee consisting of one or more members of the Board that is appointed by the Board to administer the Plan under Section 3. (f) "Common-Law Employee" shall mean an individual paid from W-2 Payroll of the Company or a Subsidiary. If, during any period, the Company (or Subsidiary, as applicable) has not treated an individual as a Common-Law Employee and, for that reason, has not paid such individual in a manner which results in the issuance of a Form W-2 and withheld taxes with respect to him or her, then that individual shall not be an eligible Employee for that period, even if any person, court or government agency determines, retroactively, that that individual is or was a Common-Law Employee during all or any portion of that period. (g) "Common Stock" means the Company's common stock. (h) "Company" shall mean Pacific Broadband Communications, Inc., a Delaware corporation. (i) "Consultant" shall mean an individual who performs bona fide services to the Company, a Parent or a Subsidiary other than as an Employee or a member of the Board. (j) "Employee" shall mean (i) any individual who is a Common-Law Employee of the Company, a Parent or a Subsidiary, (ii) a member of the Board, including (without limitation) a Non-Employee Director, or an affiliate of a member of the Board; (iii) a member of the board of directors of a Subsidiary, or (iv) a Consultant. Service as a member of the Board, a member of the board of directors of a Subsidiary or a Consultant shall be considered employment for all purposes of the Plan except the second sentence of Section 4(a). (k) "Exchange Act" shall mean the Securities and Exchange Act of 1934, as amended. (l) "Exercise Price" shall mean the amount for which one share of Common Stock may be purchased upon exercise of an Option, as specified by the Board in the applicable Stock Option Agreement. (m) "Fair Market Value" shall mean the market price of Common Stock, determined by the Board as follows: (i) If the Shares were traded over-the-counter on the date in question but were not traded on the Nasdaq Stock Market or the Nasdaq National Market System, then the Fair Market Value shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which the Shares are quoted or, if the Shares are not quoted on any such system, by the "Pink Sheets" published by the National Quotation Bureau, Inc.; (ii) If the Shares were traded over-the-counter on the date in question and were traded on the Nasdaq Stock Market or the Nasdaq National Market System, then the Fair Market Value shall be equal to the last-transaction price quoted for such date by the Nasdaq Stock Market or the Nasdaq National Market; - 2 - (iii) If the Shares were traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported by the applicable composite transactions report for such date; and (iv) If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Board in good faith on such basis as it deems appropriate. In all cases, the determination of Fair Market Value by the Board shall be conclusive and binding on all persons. (n) "Incentive Stock Option" or "ISO" shall mean an incentive stock option described in Code section 422(b). (o) "Non-Employee Director" shall mean a member of the Board who is not a Common-Law Employee of the Company or a Subsidiary. (p) "Nonstatutory Option" or "NSO" shall mean a stock option that is not an ISO. (q) "Offeree" shall mean an individual to whom the Board has offered the right to acquire Common Stock under the Plan (other than upon exercise of an Option). (r) "Option" shall mean an ISO or NSO granted under the Plan entitling the holder to purchase Common Stock. (s) "Optionee" shall mean an individual, entity or estate who holds an Option. (t) "Parent" shall have the meaning set forth in Section 424(e) of the Code. (u) "Participant" shall mean an individual, entity or estate who holds an Award. (v) "Plan" shall mean this 2000 Stock Incentive Plan of Pacific Broadband Communications, Inc. (w) "Purchase Price" shall mean the consideration for which one share of Common Stock may be acquired under the Plan (other than upon exercise of an Option) pursuant to a grant or sale under Section 6, as specified by the Board. (x) "Restricted Share" shall mean a share of Common Stock sold or granted to an eligible Employee which is nontransferable and subject to substantial risk of forfeiture until restrictions lapse. (y) "Service" shall mean service as an Employee. (z) "Stock Award Agreement" shall mean the agreement between the Company and the recipient of a Restricted Share which contains the terms, conditions and restrictions pertaining to such Restricted Share. - 3 - (aa) "Stock Option Agreement" shall mean the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to an Option. (bb) "Stock Purchase Agreement" shall mean the agreement between the Company and an Offeree who acquires Common Stock under the Plan (other than pursuant to an Option) that contains the terms, conditions and restrictions pertaining to the acquisition of such Common Stock. (cc) "Subsidiary" shall have the meaning set forth in Section 424(f) of the Code. (dd) "10% Stockholder" shall mean 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. For purposes of this Subsection (dd), in determining stock ownership, the attribution rules of Section 424(d) of the Code shall be applied. For purposes of this Subsection (dd), "outstanding stock" shall include all stock actually issued and outstanding immediately after the grant. "Outstanding stock" shall not include Common Stock authorized for issuance under outstanding Options held by the Employee or by any other person. (ee) "Total and Permanent 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. (ff) "W-2 Payroll" shall mean whatever mechanism or procedure that the Company or a Subsidiary utilizes to pay any individual which results in the issuance of Form W-2 to the individual. "W-2 Payroll" does not include any mechanism or procedure which results in the issuance of any form other than a Form W-2 to an individual, including, but not limited to, any Form 1099 which may be issued to an independent contractor, an agency employee or a consultant. Whether a mechanism or procedure qualifies as a "W-2 Payroll" shall be determined in the absolute discretion of the Company (or Subsidiary, as applicable), and the Company or Subsidiary determination shall be conclusive and binding on all persons. SECTION 3. ADMINISTRATION. (a) COMMITTEES OF THE BOARD. The Plan shall be administered by the Board. However, any or all administrative functions otherwise exercisable by the Board may be delegated to a Committee. Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee. Any reference to the Board in the Plan shall be construed as a reference to the Committee (if any) to whom the Board has assigned a particular function. In the event that the Company's Common Stock becomes publicly traded, the Board may appoint a Committee which, if appointed, shall be comprised solely of two or more Non-Employee Directors (although Committee functions may be delegated to officers to the extent the Awards relate to persons who are not subject to the reporting requirements of Section 16 of the Exchange Act). - 4 - (b) COMMITTEE PROCEDURES. The Board shall designate one of the members of the Committee as chairperson. The Committee may hold meetings at such times and places as it shall determine. The acts of a majority of the Committee members present at meetings at which a quorum exists, or acts reduced to or approved in writing by all Committee members, shall be valid acts of the Committee. (c) ADMINISTRATIVE POWERS. Subject to the provisions of the Plan, the Board shall have full authority and discretion to take any actions it deems necessary or advisable for the administration of the Plan, including the authority in its discretion: (i) to determine the Fair Market Value; (ii) to select the Employees to whom Options and other Awards may from time to time be granted hereunder; (iii) to determine the number of shares to be covered by each such Award granted hereunder; (iv) to approve forms of agreement for use under the Plan; (v) to determine the terms and conditions of any Option or other Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options or other Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or other Award or the Common Stock relating thereto, based in cash case on such factors as the Board, in its sole discretion, shall determine; (vi) to determine whether and under what circumstances an Option may be settled in cash under subsection 8(j) instead of Common Stock; (vii) to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option has declined since the date the Option was granted; (viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws; (ix) to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the shares of Common Stock to be issued upon exercise of an Option or other Award that number of shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Optionees to have shares withheld for this purpose shall be made in such form and under such conditions as the Board may deem necessary or advisable; and - 5 - (x) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan. (d) EFFECT OF BOARD'S DECISION. All decisions, interpretations and other actions of the Board shall be final, conclusive and binding on all parties who have an interest in the Plan or any Option or shares issued thereunder. (e) LIMITATION ON LIABILITY. No member of the Board or the Committee will be liable for any action or determination made in good faith by the Board or Committee with respect to the Plan or any Award made under the Plan. SECTION 4. ELIGIBILITY. Only Employees shall be eligible for designation as Participants by the Board. In addition, only individuals who are employed as Common-Law Employees by the Company or a Subsidiary shall be eligible for the grant of ISOs. SECTION 5. STOCK SUBJECT TO PLAN. (a) BASIC LIMITATION. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock. The maximum number of shares of Common Stock which may be issued under the Plan shall not exceed two million three hundred seventy-six thousand (2,376,000) shares, subject to adjustment pursuant to Section 10. In any event, (i) the number of shares of Common Stock which are subject to Awards or other rights outstanding at any time under the Plan shall not exceed the number of shares which then remain available for issuance under the Plan; and (ii) to the extent an award is made in reliance upon the exemption available under Section 25102(o) of the California Corporations Code, the number of shares of Common Stock which are subject to Awards or other rights outstanding at any time under the Plan or otherwise shall not exceed the limitation imposed by Section 260.140.45 of Title 10 of the California Code of Regulations. The Company, during the term of the Plan, shall at all times reserve and keep available sufficient shares of Common Stock to satisfy the requirements of the Plan. (b) ADDITIONAL SHARES. If any outstanding Option or other right to acquire Common Stock for any reason expires or is canceled, forfeited or otherwise terminated, the Common Stock allocable to the unexercised portion of such Option or other right shall again be available for the purposes of the Plan. If shares of Common Stock issued under the Plan are reacquired by the Company pursuant to any right of repurchase or right of first refusal, such shares of Common Stock shall again be available for the purposes of the Plan, except that the aggregate number of shares of Common Stock that may be issued upon the exercise of ISOs shall in no event exceed the number of shares of Common Stock reserved for issuance pursuant to paragraph (a) above plus the number of previously optioned shares returned to the Plan pursuant to the first sentence of this paragraph, as adjusted pursuant to Section 10. - 6 - SECTION 6. TERMS AND CONDITIONS OF GRANTS OR SALES. (a) STOCK PURCHASE AGREEMENT. Each grant or sale of Common Stock under the Plan (other than upon exercise of an Option) shall be evidenced by a Stock Purchase Agreement between the Offeree and the Company. Such grant or sale shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions that are not inconsistent with the Plan and that the Board 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. Any right to acquire Common Stock under the Plan other than an Option shall automatically expire if not exercised by the Offeree within thirty (30) days after the grant of such right was communicated by the Board to the Offeree. (c) PURCHASE PRICE. The Purchase Price of Common Stock offered under the Plan shall be established by the Board and set forth in the Stock Purchase Agreement and, to the extent required by applicable law, including the California Corporations Code or the regulations thereunder, shall not be less than 85% of Fair Market Value (100% for 10% Stockholders). The Purchase Price shall be payable in a form described in Section 9 or, in the discretion of the Board, in consideration for past services rendered to the Company or for its benefit. (d) RESTRICTIONS ON TRANSFER OF COMMON STOCK. No Common Stock granted or sold under the Plan may be sold or otherwise transferred or disposed of by the Offeree during the one hundred eighty (180) day period following the effective date of a registration statement covering securities of the Company filed under the Securities Act of 1933 (unless such restriction is consented to or waived by the managing underwriter). Subject to the preceding sentence, any Common Stock granted or sold under the Plan shall be subject to such special conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Board may determine. Such restrictions shall apply in addition to any general restrictions that may apply to all holders of Common Stock. SECTION 7. ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED SHARES. (a) FORM AND AMOUNT OF AWARD. Each Stock Award Agreement shall specify the number of shares of Common Stock that are subject to the Award. Restricted Shares may be awarded in combination with NSOs and such an Award may provide that the Restricted Shares will be forfeited in the event that the related NSOs are exercised. (b) EXERCISABILITY. Each Stock Award Agreement shall specify the conditions upon which Restricted Shares shall become vested, in full or in installments. To the extent required by applicable law, each Restricted Share Award shall become vested no less rapidly than the rate of 20% per year for each of the first five years from the date of grant. Subject to the preceding sentence, the vesting of any Restricted Share Award shall be determined by the Board in its sole discretion. - 7 - (c) EFFECT OF CHANGE IN CONTROL. The Board may determine at the time of making an Award or thereafter, that such Award shall become fully vested, in whole or in part, in the event that a Change in Control occurs with respect to the Company. (d) VOTING RIGHTS. Holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company's other stockholders. A Stock Award Agreement, however, may require that the holders invest any cash dividends received in additional Restricted Shares. Such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid. Such additional Restricted Shares shall not reduce the number of Shares available under Section 5. SECTION 8. 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 that are not inconsistent with the Plan and that the Board 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 of Common Stock that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 10. (c) ISO OR NSO. The Stock Option Agreement shall also specify whether the Option is an ISO or an NSO. The aggregate Fair Market Value of the shares of Common Stock with respect to which an Optionee may exercise the Option for the first time during any calendar year, when added to the aggregate Fair Market Value of the shares of Common Stock subject to any other options designated as ISOs and granted to such Optionee under any stock option plan of the Company or an Affiliate prior to the date of grant with respect to which such options are exercisable for the first time during the same calendar year, shall not exceed $100,000 (the "ISO Exercise Limitation") unless applicable law requires that your option be exercisable sooner. Notwithstanding the foregoing, if the ISO Exercise Limitation would prevent the Optionee from exercising the Option as to vested shares, then the ISO Exercise Limitation shall terminate as to such vested shares as such shares vest, and such Optionee may exercise the Option as to such vested shares. Upon such termination of the ISO Exercise Limitation, the Option shall be deemed a NSO to the extent of the number of vested shares subject to the Option that would otherwise exceed the ISO Exercise Limitation. (d) EXERCISE PRICE. An Option's Exercise Price shall be established by the Board and set forth in a Stock Option Agreement. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value (110% for 10% Stockholders) on the date of grant. The Exercise Price of an NSO shall not be less than 85% of the Fair Market Value (110% for 10% Stockholders) on the date of grant. The Exercise Price shall be payable in a form described in Section 9. Notwithstanding the foregoing, an Option may be granted with an exercise price lower than that prescribed in this paragraph if the Option grant is attributable to the issuance or assumption of an option in a transaction to which Code section 424(a) applies. - 8 - (e) EXERCISABILITY. Each Stock Option Agreement shall specify the date when all or any installment of the Option is to vest or become exercisable. To the extent required by applicable law, including the California Corporations Code and the regulations thereunder, an Option granted to Employees who are not officers shall vest and become exercisable no less rapidly than the rate of 20% per year for each of the first five (5) years from the date of grant. Subject to the preceding sentence, the vesting of any Option shall be determined by the Board in its sole discretion. A Stock Option Agreement may permit an Optionee to exercise an Option before it is vested, subject to the Company's right of repurchase over any shares acquired under the unvested portion of the Option (an "early exercise"), which right of repurchase shall lapse at the same rate the Option would have vested had there been no early exercise. Any partial exercise of an "early exercise" option shall be deemed to cover first vested shares and then the earliest vesting installment(s) of unvested shares. (f) EFFECT OF CHANGE IN CONTROL. The Board may determine, at the time of granting an Option or thereafter, that such Option shall become fully exercisable as to all, or any portion of the shares of Common Stock subject to such Option in the event that a Change in Control occurs with respect to the Company. (g) TERM. The Stock Option Agreement shall specify the term of the Option. The term shall not exceed ten (10) years from the date of grant (5 years in the case of an ISO granted to a Ten Percent Stockholder). Subject to the preceding sentence, the Board at its sole discretion shall determine when an Option is to expire. (h) EXERCISE OF OPTIONS ON TERMINATION OF SERVICE. Each Option shall set forth the extent to which the Optionee shall have the right to exercise the Option following termination of the Optionee's Service with the Company and its Subsidiaries. Such provisions shall be determined in the sole discretion of the Board, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service. Notwithstanding the foregoing in this Section 8(h), to the extent required by applicable law, including the California Corporations Code and the regulations thereunder, each Stock Option Agreement shall provide that the Optionee shall have the right to exercise the Option following termination of the Optionee's Service, during the Option's term, for at least thirty (30) days following termination of Service for any reason except cause, death or disability, and for at least six (6) months following termination of Service due to death or disability. (i) NO RIGHTS AS A STOCKHOLDER. An Optionee, or a transferee of an Optionee, shall have no rights as a stockholder with respect to any Common Stock covered by an Option until such person becomes entitled to receive such Common Stock by filing a notice of exercise and paying the Exercise Price pursuant to the terms of such Option. (j) MODIFICATION, EXTENSION AND ASSUMPTION OF OPTIONS. Within the limitations of the Plan, the Board may modify, extend or assume outstanding Options or may accept the cancellation of outstanding Options (whether granted by the Company or another issuer) in return for the grant of new Options for the same or a different number of shares of Common Stock and at the same or a different Exercise Price. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, impair the Optionee's rights or increase the Optionee's obligations under such Option. - 9 - (k) BUYOUT PROVISIONS. The Board may at any time offer to buy out for a payment in cash or shares, an Option previously granted, based on such terms and conditions as the Board shall establish and communicate to the Optionee at the time that such offer is made. (l) RESTRICTIONS ON TRANSFER. No shares of Common Stock issued upon exercise of an Option may be sold or otherwise transferred or disposed of by the Optionee during the one hundred eighty (180) day period following the effective date of a registration statement covering securities of the Company filed under the Securities Act of 1933 (unless such restriction is consented to or waived by the managing underwriter). Subject to the preceding sentence, any Common Stock issued upon exercise of an Option shall be subject to such rights of repurchase, rights of first refusal and other transfer restrictions as the Board may determine. Such restrictions shall apply in addition to any restrictions that may apply to holders of Common Stock generally. Any right to repurchase an Optionee's Common Stock at the original Exercise Price upon termination of the Optionee's Service shall lapse at least as rapidly as the schedule set forth in Subsection (e) above. Any such repurchase right may be exercised only within ninety (90) days after the termination of the Optionee's Service for cash or for cancellation of indebtedness incurred in purchasing the Common Stock. SECTION 9. FORMS OF PAYMENT. (a) GENERAL RULE. The entire Purchase Price or Exercise Price shall be payable in cash or cash equivalents acceptable to the Company at the time of exercise or purchase, except as otherwise provided in this Section 9. (b) SURRENDER OF STOCK. To the extent that a Stock Option Agreement or Stock Purchase Agreement so provides, payment may be made all or in part with Common Stock that has already been owned by the Optionee or the Optionee's representative for any time period specified by the Board and that are surrendered to the Company in good form for transfer. Such Common Stock shall be valued at Fair Market Value on the date when the new Common Stock is purchased under the Plan. (c) PROMISSORY NOTES. To the extent that a Stock Option Agreement or Stock Purchase agreement so provides, payment may be made all or in part with a full recourse promissory note executed by the Optionee or Offeree. The interest rate and other terms and conditions of such note shall be determined by the Board. The Board may require that the Optionee pledge to the Company shares of Common Stock or other property of Optionee for the purpose of securing the payment of such note. In no event shall the stock certificate(s) representing such Common Stock be released to the Optionee or Offeree until such note is paid in full, unless otherwise provided in the Stock Option Agreement or Stock Purchase Agreement. (d) CASHLESS EXERCISE. To the extent that a Stock Option Agreement so provides and a public market for the Common Stock exists, payment may be made all or in part by delivery (on a form acceptable to the Board) of an irrevocable direction to a securities broker to sell Common Stock and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price. - 10 - (e) OTHER FORMS OF PAYMENT. To the extent provided in the Stock Option Agreement, payment may be made in any other form that is consistent with applicable laws, regulations and rules. SECTION 10. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. (a) GENERAL. In the event of a subdivision of the outstanding Common Stock, a declaration of a dividend payable in Common Stock, a declaration of an extraordinary dividend payable in a form other than Common Stock in an amount that has a material effect on the value of Common Stock, a combination or consolidation of the outstanding Common Stock into a lesser number of shares, a recapitalization, a reclassification or a similar occurrence, the Board shall make appropriate adjustments, subject to the limitations set forth in Section 10(c), in one or more of (i) the number of shares of Common Stock available for future grants of Options or other rights to acquire Common Stock under Section 5, (ii) the number of shares of Common Stock covered by each outstanding Option or other right to acquire Common Stock or (iii) the Exercise Price of each outstanding Option or the Purchase Price of each other right to acquire Common Stock. (b) MERGERS AND CONSOLIDATIONS. In the event that the Company is a party to a merger or consolidation or the sale of substantially all of the assets of the Company, outstanding Options or other rights to acquire Common Stock shall be subject to the agreement of merger or reorganization or sale of assets. Such agreement, without an Optionee's 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 (iv) The cancellation of such outstanding Options without payment of any consideration, provided that in such event vesting of all Options will accelerate in full. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Company shall notify the Optionee in writing or electronically that the Option shall be fully exercisable for a period of ten (10) days from the date of such notice, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase or receive, for each share of Common Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash or other securities or property) received in the merger or sale of assets by holders of Common Stock for each share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration - 11 - received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Company may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each share of Common Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets. (c) RESERVATION OF RIGHTS. Except as provided in this Section 10, an Optionee or Offeree 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 issue 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 of shares of Common Stock subject to an Option, or the number of shares subject to any other right to acquire Common Stock and/or the Exercise Price or Purchase Price. The grant of an Option or other right to acquire Common Stock 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 11. WITHHOLDING TAXES. (a) GENERAL. To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Committee for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied. (b) COMMON STOCK WITHHOLDING. The Committee may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having the Company withhold all or a portion of any shares of Common Stock that otherwise would be issued to him or her or by surrendering all or a portion of any shares of Common Stock that he or she previously acquired. Notwithstanding the previous sentence in this Section 11(b), the maximum amount that may be subject to common stock withholding under this Section 11(b) shall be determined by the Committee based upon the minimum rates of federal, state and employment withholding applicable under the circumstances. Shares of Common Stock that are withheld or surrendered pursuant to this Section 11 shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. Any payment of taxes by assigning shares of Common Stock to the Company may be subject to restrictions, including any restrictions required by rules of any federal or state regulatory body or other authority. (c) CASHLESS EXERCISE/PLEDGE. The Committee may provide that if Company shares of Common Stock are publicly traded at the time of exercise, arrangements may be made to meet the Optionee's withholding obligation by cashless exercise or pledge. (d) OTHER FORMS OF PAYMENT. The Committee may permit such other means of tax withholding as it deems appropriate. - 12 - SECTION 12. LEGAL REQUIREMENTS. (a) RESTRICTIONS ON ISSUANCE. Common Stock shall not be issued under the Plan unless the issuance and delivery of such Common Stock complies with (or is 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 on which the Company's securities may then be listed, and the Company has obtained the approval or favorable ruling from any governmental agency that the Company determines is necessary or advisable. (b) FINANCIAL REPORTS. To the extent required to comply with the California Corporations Code or the regulations thereunder, not less often than annually the Company shall furnish to Optionees and Offerees Company summary financial information including a balance sheet regarding the Company's financial condition and results of operations, unless such Optionees or Offerees have duties with the Company that assure them access to equivalent information. Such financial statements need not be audited. SECTION 13. ASSIGNMENT OR TRANSFER OF AWARDS. (a) General. An Award granted under the Plan shall not be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor's process, whether voluntarily, involuntarily or by operation of law, except as approved by the Committee. Notwithstanding the foregoing, ISOs may not be transferable. Also notwithstanding the foregoing, while the shares of Common Stock are subject to California Corporations Code Section 25102(o), (i) Offerees and Optionees may not transfer their rights hereunder except by will, beneficiary designation or the laws of descent and distribution, and (ii) any rights of repurchase in favor of the Company shall take into account the provisions of Sections 260.140.41 or 260.140.42 of Title 10 of the California Code of Regulations, as applicable. (b) Trusts. Neither this Section 13 nor any other provision of the Plan shall preclude a Participant from transferring or assigning Restricted Shares to (a) the trustee of a trust that is revocable by such Participant alone, both at the time of the transfer or assignment and at all times thereafter prior to such Participant's death, or (b) the trustee of any other trust to the extent approved by the Committee in writing. A transfer or assignment of Restricted Shares from such trustee to any other person than such Participant shall be permitted only to the extent approved in advance by the Committee in writing, and Restricted Shares held by such trustee shall be subject to all the conditions and restrictions set forth in the Plan and in the applicable Stock Award Agreement, as if such trustee were a party to such Agreement. SECTION 14. NO EMPLOYMENT RIGHTS. No provision of the Plan, nor any Option granted or other right to acquire Common Stock granted under the Plan, shall be construed to give any person any right to become, to be treated as, or to remain an Employee. The Company and its Subsidiaries reserve the right to terminate any person's Service at any time and for any reason. - 13 - SECTION 15. 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, subject to the approval of the Company's stockholders. In the event that the stockholders fail to approve the Plan within twelve (12) months after its adoption by the Board, any Option grants or other right to acquire Common Stock already made shall be null and void, and no additional Option grants or other right to acquire Common Stock shall be made after such date. The Plan shall terminate automatically ten (10) years after its adoption by the Board and may be terminated on any earlier date pursuant to Subsection (b) below. (b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board may amend or terminate the Plan at any time. Rights under any Option granted or other right to acquire Common Stock granted before amendment of the Plan shall not be materially impaired by any amendment or termination, except with consent of the Optionee or Offeree. An amendment of the Plan shall be subject to the approval of the Company's stockholders only to the extent required by applicable laws, regulations or rules. (c) EFFECT OF AMENDMENT OR TERMINATION. No Common Stock 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 Common Stock previously issued or Option previously granted under the Plan. SECTION 16. EXECUTION. To record the adoption of the Plan, the Company has caused its authorized officer to execute the same. PACIFIC BROADBAND COMMUNICATIONS, INC. By --------------------------------------- Title ------------------------------------ - 14 - EX-4.2 4 f78000orex4-2.txt EXHIBIT 4.2 EXHIBIT 4.2 PACIFIC BROADBAND COMMUNICATIONS INC. 2000 SUB-PLAN FOR FRENCH EMPLOYEES This Pacific Broadband Communications Inc. 2000 Sub-Plan for French employees is a sub-plan (the "Sub-Plan") created for the benefit of Employees of PBC EURL, a French subsidiary (the "French Subsidiary") of Pacific Broadband Communications, Inc., a Delaware corporation (the "Company"), under and pursuant to the Pacific Broadband Communications Inc. 2000 Stock Plan (the "PBC Plan"), which provides that employees of the Company's subsidiaries may benefit under the PBC Plan. The PBC Plan is incorporated herein for all purposes. Options shall be granted under the Sub-Plan at the discretion of the Board of Directors or Option Plan Committee of the Board of Directors of the Company, as the case may be (hereafter, the "Administrator") and as reflected in terms of written option agreements, and are intended to qualify for preferred treatment under French tax and social security laws. A. DEFINITIONS. For the purpose of the options granted under this Sub-Plan, the following terms shall have, where the context so permits, the meaning set forth below and, unless otherwise defined therein, shall have the same meaning in any Option Agreement, Exercise Notice or other document relating to the Sub-Plan. Unless otherwise defined herein, the terms defined in the PBC Plan shall have the same defined meanings in this Sub-Plan. To the extent of any inconsistencies between the terms of this PBC Plan and this Sub-Plan, the terms of this Sub-Plan shall control with respect to option grants to French employees of the French Subsidiary. (1) "Disability" means a disability corresponding to the ranking in the second or third category provided in article 310 of the French social security code ("code de la securite sociale"). (2) "Employee" means any person (including a director holding a salaried employment) employed by the Company or any Parent or Subsidiary of the Company in a salaried position, who does not own more than 10% of the voting power of all classes of stock of the Company at the date of grant of any Option and who is a resident of the Republic of France for tax purposes. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company or any Parent or Subsidiary of the Company. (3) "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: (a) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or the Nasdaq SmallCap Market of the Nasdaq Stock Market, its Fair Market Value shall be the average opening price for such stock as quoted on such exchange or system over the twenty (20) market trading days preceding the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; - 1 - (b) If the Common Stock is regularly quoted by a recognized securities dealer but opening prices are not reported, its Fair Market Value shall be the average mean between the high bid and low asked prices for the Common Stock over the twenty (20) market trading days preceding the day of determination; or (c) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator. (4) "Holding Period" is defined in Article 4(e) of Part B of this Sub-Plan. (5) "Option" means a stock option granted pursuant to this Sub-Plan which is intended to qualify for preferred tax and social security treatment under applicable French tax laws. (6) "Parent" means a "parent corporation", whether now or hereafter existing, as defined in article 355-1 of the Law n degrees 66-537 of July 24, 1966. (7) "Retirement" means the situation where any person employed by the Company or any Parent or Subsidiary of the Company in a salaried position, upon reaching the age of 60 or 65 or any other age provided under the terms of his or her contract of employment, a relevant collective bargaining agreement, or the applicable law, and being entitled to a full pension, is required by his or her employer to retire. (8) "Subsidiary" means a "subsidiary corporation", whether now or hereafter existing, as defined in article 355-1 of the Law n degrees 66-537 of July 24, 1966. B. FOR THE PURPOSE OF OPTIONS GRANTED UNDER THIS SUB-PLAN, THE FOLLOWING PROVISIONS OF THE PBC PLAN SHALL BE MODIFIED AS FOLLOWS. ALL PROVISIONS OF THE PBC PLAN NOT MODIFIED HEREIN SHALL APPLY TO OPTIONS GRANTED UNDER THIS SUB-PLAN. 1. Eligibility: (a) Options granted pursuant to this Sub-Plan may be granted only to Employees. (b) The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted. (c) Neither the Sub-Plan nor any Option shall confer upon any Optionee any right with respect to continuing the Optionee's relationship as an Employee with the Company or any Parent or Subsidiary of the Company, nor shall it interfere in any way with his or her right or the Company's or any Parent or Subsidiary of the Company's right to terminate such relationship. - 2 - 2. Term of Option. The term of each Option shall be stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. 3. Option Exercise Price and Consideration. (a) The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be no less than 100% of the Fair Market Value per Share on the date of grant. The exercise price cannot be modified while the Option is outstanding except as set forth under Section 6(a) of this Part B as modified herein. (b) The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator at the time of grant. Such consideration may consist of (i) cash, (ii) check, (iii) promissory note, (iv) other Shares which (x) in the case of Shares acquired upon exercise of an Option, have been owned by the Optionee for more than six months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (v) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the PBC Plan or the Sub-Plan, or (vi) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company. 4. Exercise of Option/Restriction on Sale. (a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder may be exercised to the extent it has become exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. No Option shall become exercisable prior to the second anniversary of the date of grant of the Option (the "Initial Exercise Date"), except in the specific circumstances defined in subsections 4 (b), (c) or (d) hereafter. An Option may not be exercised for a fraction of a Share. An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Sub-Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No - 3 - adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 10 of the PBC Plan, as modified herein. Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. (b) Termination of Relationship as an Employee. If an Optionee ceases to be an Employee, such Optionee may exercise such portion of his or her Option as is specified in the Option Agreement and within such period of time as is specified in the Option Agreement (of at least thirty (30) days). In the absence of a specified time in the Option Agreement, the relevant portion of the Option shall remain exercisable for ninety (90) days following the Optionee's termination. If, on the date of termination, the Optionee is not entitled to exercise his or her entire Option, the Shares covered by the unexercisable portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (c) Disability of Optionee. If an Optionee ceases to be an Employee as a result of the Optionee's Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for ninety (90) days following the Optionee's termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (d) Death of Optionee. If an Optionee dies while an Employee, the Option may be exercised within six (6) months from the date of his or her death to the extent that the Option is vested on the date of death by the Optionee's heirs. If, at the time of death, the Optionee is not vested as to the entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (e) Restriction on Sale. The Shares subject to the Option may not be transferred, assigned or hypothecated in any manner otherwise than by the laws of descent before three (3) years from the Initial Exercise Date (the "Holding Period"); provided, however, that the Holding Period shall be waived in the following cases: (i) Death of the Optionee; (ii) Disability of the Optionee; (iii) Retirement of the Optionee provided the Shares have been acquired as a result of the exercise of the Option no less than three (3) months prior to the date of cessation of the employment contract; - 4 - (iv) Dismissal of the Optionee provided the Shares have been acquired as a result of the exercise of the Option no less than three (3) months prior to the date on which the Optionee received notice of his or her dismissal. Provided the Optionee falls within either of the four above-mentioned cases, the Shares shall be transferable immediately after the date of termination of the employment contract. 5. Non-Transferability of Options. The Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by the laws of descent and may be exercised, during the lifetime of the Optionee, only by the Optionee. 6. Adjustments Upon Changes in Capitalization, Merger or Asset Sale. (a) Changes in Capitalization. The number of Shares of Common Stock covered by each outstanding Option as well as the price per share of Common Stock covered by each such outstanding Option shall be proportionally adjusted for any operation mentioned in article 195, Section 5 and Section 6 and in article 196 Section 1 and Section 3 of the Law n degrees 66-537 of July 24, 1966. The operations currently listed in article 195 Section 5 and Section 6 and in article 196 Section 1 and Section 3 of the Law n degrees 66-537 of July 24, 1966 are the following: - Issuance of new shares to be subscribed in cash by existing shareholders; - Issuance of convertible or exchangeable bonds reserved for existing shareholders; - Incorporation into the share capital of reserves, profits or issuance premiums leading to a distribution of free shares; - distribution of reserves in cash or in shares; - capital reduction motivated by losses and realized by way of a reduction of the number of outstanding shares; 7. Amendment and Termination of the Plan. (a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan. The Board shall have power at any time or times to modify or vary the exercise schedule and/or the Holding Period applicable to Options granted under this Sub-Plan to adjust to any changes under French corporate, securities and tax laws applicable to Options granted hereunder which would have the effect that either the Holding Period would be reduced or social charges would no longer be due. C. FOR THE PURPOSE OF OPTIONS GRANTED UNDER THIS SUB-PLAN, THE FOLLOWING PROVISIONS OF THE PLAN SHALL NOT BE APPLICABLE: - Section 3 (c) (vii) - Section 8 (j) - Sections 6 and 7, as well as all references to Stock Purchase Rights in the Plan. - 5 - EX-5.1 5 f78000orex5-1.txt EXHIBIT 5.1 EXHIBIT 5.1 December 21, 2001 Juniper Networks, Inc. 1194 North Mathilda Avenue Sunnyvale, CA 94089 Re: Registration Statement on Form S-8 Ladies and Gentlemen: I have examined the Registration Statement on Form S-8 to be filed by Juniper Networks, Inc. (the "Company") with the Securities and Exchange Commission on December 21, 2001 (the "Registration Statement"), in connection with the registration under the Securities Act of 1933, as amended, of 1,476,942 shares of the Company's common stock (the "Shares"), all of which are authorized, 1,114,040 of which are to be issued pursuant to the Pacific Broadband Communications 2000 Stock Incentive Plan and 362,902 of which are to be issued pursuant to the Pacific Broadband Communications 2000 Sub-Plan. I am of the opinion that all proper corporate proceedings have been taken prior to the registration of the Shares, including such proceedings to be carried out in accordance with the securities laws of the various states, where required, such that the Shares, when issued and sold (and the consideration is received therefor) pursuant to the provisions of option agreements assumed under the Plans, will be legally and validly issued, fully paid and nonassessable. I hereby consent to the filing of this opinion with the Securities and Exchange Commission in connection with the registration statement referred to above. This opinion is limited to the laws of the State of Delaware and the federal law of the United States of America. Very truly yours, /s/ Lisa C. Berry --------------------------------------------- Lisa C. Berry Vice President, General Counsel and Secretary EX-23.2 6 f78000orex23-2.txt EXHIBIT 23.2 EXHIBIT 23.2 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement on Form S-8 pertaining to the Pacific Broadband Communications, Inc. 2000 Stock Incentive Plan and the Pacific Broadband Communications, Inc. Sub-Plan of our report dated January 15, 2001, with respect to the consolidated financial statements of Juniper Networks, Inc. included in its Annual Report (Form 10-K) for the year ended December 31, 2000, and the related financial statement schedule included therein, filed with the Securities and Exchange Commission. /s/ ERNST & YOUNG LLP Palo Alto, California December 19, 2001 -----END PRIVACY-ENHANCED MESSAGE-----

EX-4.1

                                                                     EXHIBIT 4.1










                     PACIFIC BROADBAND COMMUNICATIONS, INC.

                            2000 STOCK INCENTIVE PLAN























                                TABLE OF CONTENTS



                                                                            Page
                                                                            ----
                                                                      
SECTION 1. PURPOSE .........................................................   1


SECTION 2. DEFINITIONS .....................................................   1
        (a)  "Award" .......................................................   1
        (b)  "Board" .......................................................   1
        (c)  "Change in Control" ...........................................   1
        (d)  "Code" ........................................................   1
        (e)  "Committee" ...................................................   2
        (f)  "Common-Law Employee" .........................................   2
        (g)  "Common Stock" ................................................   2
        (h)  "Company" .....................................................   2
        (i)  "Consultant" ..................................................   2
        (j)  "Employee" ....................................................   2
        (k)  "Exchange Act" ................................................   2
        (l)  "Exercise Price" ..............................................   2
        (m)  "Fair Market Value" ...........................................   2
        (n)  "Incentive Stock Option" or "ISO" .............................   3
        (o)  "Non-Employee Director" .......................................   3
        (p)  "Nonstatutory Option" or "NSO" ................................   3
        (q)  "Offeree" .....................................................   3
        (r)  "Option" ......................................................   3
        (s)  "Optionee" ....................................................   3
        (t)  "Parent" ......................................................   3
        (u)  "Participant" .................................................   3
        (v)  "Plan" ........................................................   3
        (w)  "Purchase Price" ..............................................   3
        (x)  "Restricted Share" ............................................   3
        (y)  "Service" .....................................................   3
        (z)  "Stock Award Agreement" .......................................   3
        (aa) "Stock Option Agreement" ......................................   4
        (bb) "Stock Purchase Agreement" ....................................   4
        (cc) "Subsidiary" ..................................................   4
        (dd) "10% Stockholder" .............................................   4
        (ee) "Total and Permanent Disability" ..............................   4
        (ff) "W-2 Payroll" .................................................   4


SECTION 3. ADMINISTRATION ..................................................   4
        (a)  Committees of the Board .......................................   4
        (b)  Committee Procedures ..........................................   5
        (c)  Administrative Powers .........................................   5
        (d)  Effect of Board's Decision ....................................   6
        (e)  Limitation on Liability .......................................   6


SECTION 4. ELIGIBILITY .....................................................   6




                                       i


                                                                      
SECTION 5. STOCK SUBJECT TO PLAN ..........................................    6
        (a)  Basic Limitation .............................................    6
        (b)  Additional Shares ............................................    6


SECTION 6. TERMS AND CONDITIONS OF GRANTS OR SALES ........................    7
        (a)  Stock Purchase Agreement .....................................    7
        (b)  Duration of Offers ...........................................    7
        (c)  Purchase Price ...............................................    7
        (d)  Restrictions on Transfer of Common Stock .....................    7


SECTION 7. ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED SHARES ...........    7
        (a)  Form and Amount of Award .....................................    7
        (b)  Exercisability ...............................................    7
        (c)  Effect of Change in Control ..................................    8
        (d)  Voting Rights ................................................    8


SECTION 8. TERMS AND CONDITIONS OF OPTIONS ................................    8
        (a)  Stock Option Agreement .......................................    8
        (b)  Number of Shares .............................................    8
        (c)  ISO or NSO ...................................................    8
        (d)  Exercise Price ...............................................    8
        (e)  Exercisability ...............................................    9
        (f)  Effect of Change in Control ..................................    9
        (g)  Term .........................................................    9
        (h)  Exercise of Options on Termination of Service ................    9
        (i)  No Rights as a Stockholder ...................................    9
        (j)  Modification, Extension and Assumption of Options ............    9
        (k)  Buyout Provisions ............................................   10
        (l)  Restrictions on Transfer .....................................   10


SECTION 9. FORMS OF PAYMENT ...............................................   10
        (a)  General Rule .................................................   10
        (b)  Surrender of Stock ...........................................   10
        (c)  Promissory Notes .............................................   10
        (d)  Cashless Exercise ............................................   10
        (e)  Other Forms of Payment .......................................   11


SECTION 10. ADJUSTMENTS UPON CHANGES IN COMMON STOCK ......................   11
        (a)  General ......................................................   11
        (b)  Mergers and Consolidations ...................................   11
        (c)  Reservation of Rights ........................................   12


SECTION 11. WITHHOLDING TAXES .............................................   12
        (a)  General ......................................................   12
        (b)  Common Stock Withholding .....................................   12
        (c)  Cashless Exercise/Pledge .....................................   12
        (d)  Other Forms of Payment .......................................   12





                                       ii


                                                                      
SECTION 12. LEGAL REQUIREMENTS ............................................   13
        (a)  Restrictions on Issuance .....................................   13
        (b)  Financial Reports ............................................   13


SECTION 13. ASSIGNMENT OR TRANSFER OF AWARDS ..............................   13
        (a)  General ......................................................   13
        (b)  Trusts .......................................................   13


SECTION 14. NO EMPLOYMENT RIGHTS ..........................................   13


SECTION 15. DURATION AND AMENDMENTS .......................................   14
        (a)  Term of the Plan .............................................   14
        (b)  Right to Amend or Terminate the Plan .........................   14
        (c)  Effect of Amendment or Termination ...........................   14


SECTION 16. EXECUTION .....................................................   14






                                      iii


                     PACIFIC BROADBAND COMMUNICATIONS, INC.

                            2000 STOCK INCENTIVE PLAN

SECTION 1. PURPOSE.

        The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to acquire a proprietary interest in the success of
the Company, or to increase such interest, to encourage such persons to remain
in the employ of the Company and to attract new employees with outstanding
qualifications. The Plan seeks to achieve this purpose by providing for the
direct grant or sale of Common Stock and for the grant of Options to purchase
Common Stock. Options granted under the Plan may include Nonstatutory Stock
Options as well as Incentive Stock Options intended to qualify under section 422
of the Internal Revenue Code. While this Plan is intended to satisfy federal
Rule 701 and Section 25102(o) of the California Corporations Code, Awards may be
granted under this Plan in reliance upon other federal and state securities law
exemptions and to the extent another exemption is relied upon, the terms of this
Plan which are required only because of Rule 701 or Section 25102(o) need not
apply to the extent provided by the Board in the award agreement.

SECTION 2. DEFINITIONS.

        (a) "Award" shall mean any award of an Option, Restricted Share or other
right under the Plan.

        (b) "Board" shall mean the Board of the Company, as constituted from
time to time.

        (c) "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
        more than 50% of the combined voting power of the continuing or
        surviving entity's securities outstanding immediately after such merger,
        consolidation or other reorganization is owned by persons who were not
        stockholders of the Company immediately prior to such merger,
        consolidation or other reorganization; 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: (a) its sole purpose
is to change the state of the Company's incorporation, (b) its sole purpose is
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 or (c) such transaction constitutes the Company's initial
public offering.

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




                                     - 1 -


        (e) "Committee" shall mean a committee consisting of one or more members
of the Board that is appointed by the Board to administer the Plan under Section
3.

        (f) "Common-Law Employee" shall mean an individual paid from W-2 Payroll
of the Company or a Subsidiary. If, during any period, the Company (or
Subsidiary, as applicable) has not treated an individual as a Common-Law
Employee and, for that reason, has not paid such individual in a manner which
results in the issuance of a Form W-2 and withheld taxes with respect to him or
her, then that individual shall not be an eligible Employee for that period,
even if any person, court or government agency determines, retroactively, that
that individual is or was a Common-Law Employee during all or any portion of
that period.

        (g) "Common Stock" means the Company's common stock.

        (h) "Company" shall mean Pacific Broadband Communications, Inc., a
Delaware corporation.

        (i) "Consultant" shall mean an individual who performs bona fide
services to the Company, a Parent or a Subsidiary other than as an Employee or a
member of the Board.

        (j) "Employee" shall mean (i) any individual who is a Common-Law
Employee of the Company, a Parent or a Subsidiary, (ii) a member of the Board,
including (without limitation) a Non-Employee Director, or an affiliate of a
member of the Board; (iii) a member of the board of directors of a Subsidiary,
or (iv) a Consultant. Service as a member of the Board, a member of the board of
directors of a Subsidiary or a Consultant shall be considered employment for all
purposes of the Plan except the second sentence of Section 4(a).

        (k) "Exchange Act" shall mean the Securities and Exchange Act of 1934,
as amended.

        (l) "Exercise Price" shall mean the amount for which one share of Common
Stock may be purchased upon exercise of an Option, as specified by the Board in
the applicable Stock Option Agreement.

        (m) "Fair Market Value" shall mean the market price of Common Stock,
determined by the Board as follows:

                (i) If the Shares were traded over-the-counter on the date in
        question but were not traded on the Nasdaq Stock Market or the Nasdaq
        National Market System, then the Fair Market Value shall be equal to the
        mean between the last reported representative bid and asked prices
        quoted for such date by the principal automated inter-dealer quotation
        system on which the Shares are quoted or, if the Shares are not quoted
        on any such system, by the "Pink Sheets" published by the National
        Quotation Bureau, Inc.;

                (ii) If the Shares were traded over-the-counter on the date in
        question and were traded on the Nasdaq Stock Market or the Nasdaq
        National Market System, then the Fair Market Value shall be equal to the
        last-transaction price quoted for such date by the Nasdaq Stock Market
        or the Nasdaq National Market;



                                     - 2 -


                (iii) If the Shares were traded on a stock exchange on the date
        in question, then the Fair Market Value shall be equal to the closing
        price reported by the applicable composite transactions report for such
        date; and

                (iv) If none of the foregoing provisions is applicable, then the
        Fair Market Value shall be determined by the Board in good faith on such
        basis as it deems appropriate.

        In all cases, the determination of Fair Market Value by the Board shall
be conclusive and binding on all persons.

        (n) "Incentive Stock Option" or "ISO" shall mean an incentive stock
option described in Code section 422(b).

        (o) "Non-Employee Director" shall mean a member of the Board who is not
a Common-Law Employee of the Company or a Subsidiary.

        (p) "Nonstatutory Option" or "NSO" shall mean a stock option that is not
an ISO.

        (q) "Offeree" shall mean an individual to whom the Board has offered the
right to acquire Common Stock under the Plan (other than upon exercise of an
Option).

        (r) "Option" shall mean an ISO or NSO granted under the Plan entitling
the holder to purchase Common Stock.

        (s) "Optionee" shall mean an individual, entity or estate who holds an
Option.

        (t) "Parent" shall have the meaning set forth in Section 424(e) of the
Code.

        (u) "Participant" shall mean an individual, entity or estate who holds
an Award.

        (v) "Plan" shall mean this 2000 Stock Incentive Plan of Pacific
Broadband Communications, Inc.

        (w) "Purchase Price" shall mean the consideration for which one share of
Common Stock may be acquired under the Plan (other than upon exercise of an
Option) pursuant to a grant or sale under Section 6, as specified by the Board.

        (x) "Restricted Share" shall mean a share of Common Stock sold or
granted to an eligible Employee which is nontransferable and subject to
substantial risk of forfeiture until restrictions lapse.

        (y) "Service" shall mean service as an Employee.

        (z) "Stock Award Agreement" shall mean the agreement between the Company
and the recipient of a Restricted Share which contains the terms, conditions and
restrictions pertaining to such Restricted Share.



                                     - 3 -


        (aa) "Stock Option Agreement" shall mean the agreement between the
Company and an Optionee that contains the terms, conditions and restrictions
pertaining to an Option.

        (bb) "Stock Purchase Agreement" shall mean the agreement between the
Company and an Offeree who acquires Common Stock under the Plan (other than
pursuant to an Option) that contains the terms, conditions and restrictions
pertaining to the acquisition of such Common Stock.

        (cc) "Subsidiary" shall have the meaning set forth in Section 424(f) of
the Code.

        (dd) "10% Stockholder" shall mean 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. For purposes of this Subsection
(dd), in determining stock ownership, the attribution rules of Section 424(d) of
the Code shall be applied. For purposes of this Subsection (dd), "outstanding
stock" shall include all stock actually issued and outstanding immediately after
the grant. "Outstanding stock" shall not include Common Stock authorized for
issuance under outstanding Options held by the Employee or by any other person.

        (ee) "Total and Permanent 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.

        (ff) "W-2 Payroll" shall mean whatever mechanism or procedure that the
Company or a Subsidiary utilizes to pay any individual which results in the
issuance of Form W-2 to the individual. "W-2 Payroll" does not include any
mechanism or procedure which results in the issuance of any form other than a
Form W-2 to an individual, including, but not limited to, any Form 1099 which
may be issued to an independent contractor, an agency employee or a consultant.
Whether a mechanism or procedure qualifies as a "W-2 Payroll" shall be
determined in the absolute discretion of the Company (or Subsidiary, as
applicable), and the Company or Subsidiary determination shall be conclusive and
binding on all persons.

SECTION 3. ADMINISTRATION.

        (a) COMMITTEES OF THE BOARD. The Plan shall be administered by the
Board. However, any or all administrative functions otherwise exercisable by the
Board may be delegated to a Committee. Members of the Committee shall serve for
such period of time as the Board may determine and shall be subject to removal
by the Board at any time. The Board may also at any time terminate the functions
of the Committee and reassume all powers and authority previously delegated to
the Committee. Any reference to the Board in the Plan shall be construed as a
reference to the Committee (if any) to whom the Board has assigned a particular
function.

        In the event that the Company's Common Stock becomes publicly traded,
the Board may appoint a Committee which, if appointed, shall be comprised solely
of two or more Non-Employee Directors (although Committee functions may be
delegated to officers to the extent the Awards relate to persons who are not
subject to the reporting requirements of Section 16 of the Exchange Act).



                                     - 4 -


        (b) COMMITTEE PROCEDURES. The Board shall designate one of the members
of the Committee as chairperson. The Committee may hold meetings at such times
and places as it shall determine. The acts of a majority of the Committee
members present at meetings at which a quorum exists, or acts reduced to or
approved in writing by all Committee members, shall be valid acts of the
Committee.

        (c) ADMINISTRATIVE POWERS. Subject to the provisions of the Plan, the
Board shall have full authority and discretion to take any actions it deems
necessary or advisable for the administration of the Plan, including the
authority in its discretion:

                (i) to determine the Fair Market Value;

                (ii) to select the Employees to whom Options and other Awards
        may from time to time be granted hereunder;

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

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

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

                (vi) to determine whether and under what circumstances an Option
        may be settled in cash under subsection 8(j) instead of Common Stock;

                (vii) to reduce the exercise price of any Option to the then
        current Fair Market Value if the Fair Market Value of the Common Stock
        covered by such Option has declined since the date the Option was
        granted;

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

                (ix) to allow Optionees to satisfy withholding tax obligations
        by electing to have the Company withhold from the shares of Common Stock
        to be issued upon exercise of an Option or other Award that number of
        shares having a Fair Market Value equal to the amount required to be
        withheld. The Fair Market Value of the shares to be withheld shall be
        determined on the date that the amount of tax to be withheld is to be
        determined. All elections by Optionees to have shares withheld for this
        purpose shall be made in such form and under such conditions as the
        Board may deem necessary or advisable; and



                                     - 5 -


                (x) to construe and interpret the terms of the Plan and Awards
        granted pursuant to the Plan.

        (d) EFFECT OF BOARD'S DECISION. All decisions, interpretations and other
actions of the Board shall be final, conclusive and binding on all parties who
have an interest in the Plan or any Option or shares issued thereunder.

        (e) LIMITATION ON LIABILITY. No member of the Board or the Committee
will be liable for any action or determination made in good faith by the Board
or Committee with respect to the Plan or any Award made under the Plan.

SECTION 4. ELIGIBILITY.

        Only Employees shall be eligible for designation as Participants by the
Board. In addition, only individuals who are employed as Common-Law Employees by
the Company or a Subsidiary shall be eligible for the grant of ISOs.

SECTION 5. STOCK SUBJECT TO PLAN.

        (a) BASIC LIMITATION. The stock issuable under the Plan shall be shares
of authorized but unissued or reacquired Common Stock. The maximum number of
shares of Common Stock which may be issued under the Plan shall not exceed two
million three hundred seventy-six thousand (2,376,000) shares, subject to
adjustment pursuant to Section 10.

        In any event, (i) the number of shares of Common Stock which are subject
to Awards or other rights outstanding at any time under the Plan shall not
exceed the number of shares which then remain available for issuance under the
Plan; and (ii) to the extent an award is made in reliance upon the exemption
available under Section 25102(o) of the California Corporations Code, the number
of shares of Common Stock which are subject to Awards or other rights
outstanding at any time under the Plan or otherwise shall not exceed the
limitation imposed by Section 260.140.45 of Title 10 of the California Code of
Regulations. The Company, during the term of the Plan, shall at all times
reserve and keep available sufficient shares of Common Stock to satisfy the
requirements of the Plan.

        (b) ADDITIONAL SHARES. If any outstanding Option or other right to
acquire Common Stock for any reason expires or is canceled, forfeited or
otherwise terminated, the Common Stock allocable to the unexercised portion of
such Option or other right shall again be available for the purposes of the
Plan. If shares of Common Stock issued under the Plan are reacquired by the
Company pursuant to any right of repurchase or right of first refusal, such
shares of Common Stock shall again be available for the purposes of the Plan,
except that the aggregate number of shares of Common Stock that may be issued
upon the exercise of ISOs shall in no event exceed the number of shares of
Common Stock reserved for issuance pursuant to paragraph (a) above plus the
number of previously optioned shares returned to the Plan pursuant to the first
sentence of this paragraph, as adjusted pursuant to Section 10.



                                     - 6 -


SECTION 6. TERMS AND CONDITIONS OF GRANTS OR SALES.

        (a) STOCK PURCHASE AGREEMENT. Each grant or sale of Common Stock under
the Plan (other than upon exercise of an Option) shall be evidenced by a Stock
Purchase Agreement between the Offeree and the Company. Such grant or sale shall
be subject to all applicable terms and conditions of the Plan and may be subject
to any other terms and conditions that are not inconsistent with the Plan and
that the Board 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. Any right to acquire Common Stock under the Plan
other than an Option shall automatically expire if not exercised by the Offeree
within thirty (30) days after the grant of such right was communicated by the
Board to the Offeree.

        (c) PURCHASE PRICE. The Purchase Price of Common Stock offered under the
Plan shall be established by the Board and set forth in the Stock Purchase
Agreement and, to the extent required by applicable law, including the
California Corporations Code or the regulations thereunder, shall not be less
than 85% of Fair Market Value (100% for 10% Stockholders). The Purchase Price
shall be payable in a form described in Section 9 or, in the discretion of the
Board, in consideration for past services rendered to the Company or for its
benefit.

        (d) RESTRICTIONS ON TRANSFER OF COMMON STOCK. No Common Stock granted or
sold under the Plan may be sold or otherwise transferred or disposed of by the
Offeree during the one hundred eighty (180) day period following the effective
date of a registration statement covering securities of the Company filed under
the Securities Act of 1933 (unless such restriction is consented to or waived by
the managing underwriter). Subject to the preceding sentence, any Common Stock
granted or sold under the Plan shall be subject to such special conditions,
rights of repurchase, rights of first refusal and other transfer restrictions as
the Board may determine. Such restrictions shall apply in addition to any
general restrictions that may apply to all holders of Common Stock.

SECTION 7. ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED SHARES.

        (a) FORM AND AMOUNT OF AWARD. Each Stock Award Agreement shall specify
the number of shares of Common Stock that are subject to the Award. Restricted
Shares may be awarded in combination with NSOs and such an Award may provide
that the Restricted Shares will be forfeited in the event that the related NSOs
are exercised.

        (b) EXERCISABILITY. Each Stock Award Agreement shall specify the
conditions upon which Restricted Shares shall become vested, in full or in
installments. To the extent required by applicable law, each Restricted Share
Award shall become vested no less rapidly than the rate of 20% per year for each
of the first five years from the date of grant. Subject to the preceding
sentence, the vesting of any Restricted Share Award shall be determined by the
Board in its sole discretion.



                                     - 7 -


        (c) EFFECT OF CHANGE IN CONTROL. The Board may determine at the time of
making an Award or thereafter, that such Award shall become fully vested, in
whole or in part, in the event that a Change in Control occurs with respect to
the Company.

        (d) VOTING RIGHTS. Holders of Restricted Shares awarded under the Plan
shall have the same voting, dividend and other rights as the Company's other
stockholders. A Stock Award Agreement, however, may require that the holders
invest any cash dividends received in additional Restricted Shares. Such
additional Restricted Shares shall be subject to the same conditions and
restrictions as the Award with respect to which the dividends were paid. Such
additional Restricted Shares shall not reduce the number of Shares available
under Section 5.

SECTION 8. 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 that are not inconsistent
with the Plan and that the Board 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 of Common Stock that are subject to the Option and shall
provide for the adjustment of such number in accordance with Section 10.

        (c) ISO OR NSO. The Stock Option Agreement shall also specify whether
the Option is an ISO or an NSO. The aggregate Fair Market Value of the shares of
Common Stock with respect to which an Optionee may exercise the Option for the
first time during any calendar year, when added to the aggregate Fair Market
Value of the shares of Common Stock subject to any other options designated as
ISOs and granted to such Optionee under any stock option plan of the Company or
an Affiliate prior to the date of grant with respect to which such options are
exercisable for the first time during the same calendar year, shall not exceed
$100,000 (the "ISO Exercise Limitation") unless applicable law requires that
your option be exercisable sooner. Notwithstanding the foregoing, if the ISO
Exercise Limitation would prevent the Optionee from exercising the Option as to
vested shares, then the ISO Exercise Limitation shall terminate as to such
vested shares as such shares vest, and such Optionee may exercise the Option as
to such vested shares. Upon such termination of the ISO Exercise Limitation, the
Option shall be deemed a NSO to the extent of the number of vested shares
subject to the Option that would otherwise exceed the ISO Exercise Limitation.

        (d) EXERCISE PRICE. An Option's Exercise Price shall be established by
the Board and set forth in a Stock Option Agreement. The Exercise Price of an
ISO shall not be less than 100% of the Fair Market Value (110% for 10%
Stockholders) on the date of grant. The Exercise Price of an NSO shall not be
less than 85% of the Fair Market Value (110% for 10% Stockholders) on the date
of grant. The Exercise Price shall be payable in a form described in Section 9.
Notwithstanding the foregoing, an Option may be granted with an exercise price
lower than that prescribed in this paragraph if the Option grant is attributable
to the issuance or assumption of an option in a transaction to which Code
section 424(a) applies.



                                     - 8 -


        (e) EXERCISABILITY. Each Stock Option Agreement shall specify the date
when all or any installment of the Option is to vest or become exercisable. To
the extent required by applicable law, including the California Corporations
Code and the regulations thereunder, an Option granted to Employees who are not
officers shall vest and become exercisable no less rapidly than the rate of 20%
per year for each of the first five (5) years from the date of grant. Subject to
the preceding sentence, the vesting of any Option shall be determined by the
Board in its sole discretion. A Stock Option Agreement may permit an Optionee to
exercise an Option before it is vested, subject to the Company's right of
repurchase over any shares acquired under the unvested portion of the Option (an
"early exercise"), which right of repurchase shall lapse at the same rate the
Option would have vested had there been no early exercise. Any partial exercise
of an "early exercise" option shall be deemed to cover first vested shares and
then the earliest vesting installment(s) of unvested shares.

        (f) EFFECT OF CHANGE IN CONTROL. The Board may determine, at the time of
granting an Option or thereafter, that such Option shall become fully
exercisable as to all, or any portion of the shares of Common Stock subject to
such Option in the event that a Change in Control occurs with respect to the
Company.

        (g) TERM. The Stock Option Agreement shall specify the term of the
Option. The term shall not exceed ten (10) years from the date of grant (5 years
in the case of an ISO granted to a Ten Percent Stockholder). Subject to the
preceding sentence, the Board at its sole discretion shall determine when an
Option is to expire.

        (h) EXERCISE OF OPTIONS ON TERMINATION OF SERVICE. Each Option shall set
forth the extent to which the Optionee shall have the right to exercise the
Option following termination of the Optionee's Service with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Board, need not be uniform among all Options issued pursuant to the Plan, and
may reflect distinctions based on the reasons for termination of Service.
Notwithstanding the foregoing in this Section 8(h), to the extent required by
applicable law, including the California Corporations Code and the regulations
thereunder, each Stock Option Agreement shall provide that the Optionee shall
have the right to exercise the Option following termination of the Optionee's
Service, during the Option's term, for at least thirty (30) days following
termination of Service for any reason except cause, death or disability, and for
at least six (6) months following termination of Service due to death or
disability.

        (i) NO RIGHTS AS A STOCKHOLDER. An Optionee, or a transferee of an
Optionee, shall have no rights as a stockholder with respect to any Common Stock
covered by an Option until such person becomes entitled to receive such Common
Stock by filing a notice of exercise and paying the Exercise Price pursuant to
the terms of such Option.

        (j) MODIFICATION, EXTENSION AND ASSUMPTION OF OPTIONS. Within the
limitations of the Plan, the Board may modify, extend or assume outstanding
Options or may accept the cancellation of outstanding Options (whether granted
by the Company or another issuer) in return for the grant of new Options for the
same or a different number of shares of Common Stock and at the same or a
different Exercise Price. The foregoing notwithstanding, no modification of an
Option shall, without the consent of the Optionee, impair the Optionee's rights
or increase the Optionee's obligations under such Option.



                                     - 9 -


        (k) BUYOUT PROVISIONS. The Board may at any time offer to buy out for a
payment in cash or shares, an Option previously granted, based on such terms and
conditions as the Board shall establish and communicate to the Optionee at the
time that such offer is made.

        (l) RESTRICTIONS ON TRANSFER. No shares of Common Stock issued upon
exercise of an Option may be sold or otherwise transferred or disposed of by the
Optionee during the one hundred eighty (180) day period following the effective
date of a registration statement covering securities of the Company filed under
the Securities Act of 1933 (unless such restriction is consented to or waived by
the managing underwriter). Subject to the preceding sentence, any Common Stock
issued upon exercise of an Option shall be subject to such rights of repurchase,
rights of first refusal and other transfer restrictions as the Board may
determine. Such restrictions shall apply in addition to any restrictions that
may apply to holders of Common Stock generally. Any right to repurchase an
Optionee's Common Stock at the original Exercise Price upon termination of the
Optionee's Service shall lapse at least as rapidly as the schedule set forth in
Subsection (e) above. Any such repurchase right may be exercised only within
ninety (90) days after the termination of the Optionee's Service for cash or for
cancellation of indebtedness incurred in purchasing the Common Stock.

SECTION 9. FORMS OF PAYMENT.

        (a) GENERAL RULE. The entire Purchase Price or Exercise Price shall be
payable in cash or cash equivalents acceptable to the Company at the time of
exercise or purchase, except as otherwise provided in this Section 9.

        (b) SURRENDER OF STOCK. To the extent that a Stock Option Agreement or
Stock Purchase Agreement so provides, payment may be made all or in part with
Common Stock that has already been owned by the Optionee or the Optionee's
representative for any time period specified by the Board and that are
surrendered to the Company in good form for transfer. Such Common Stock shall be
valued at Fair Market Value on the date when the new Common Stock is purchased
under the Plan.

        (c) PROMISSORY NOTES. To the extent that a Stock Option Agreement or
Stock Purchase agreement so provides, payment may be made all or in part with a
full recourse promissory note executed by the Optionee or Offeree. The interest
rate and other terms and conditions of such note shall be determined by the
Board. The Board may require that the Optionee pledge to the Company shares of
Common Stock or other property of Optionee for the purpose of securing the
payment of such note. In no event shall the stock certificate(s) representing
such Common Stock be released to the Optionee or Offeree until such note is paid
in full, unless otherwise provided in the Stock Option Agreement or Stock
Purchase Agreement.

        (d) CASHLESS EXERCISE. To the extent that a Stock Option Agreement so
provides and a public market for the Common Stock exists, payment may be made
all or in part by delivery (on a form acceptable to the Board) of an irrevocable
direction to a securities broker to sell Common Stock and to deliver all or part
of the sale proceeds to the Company in payment of the aggregate Exercise Price.



                                     - 10 -


        (e) OTHER FORMS OF PAYMENT. To the extent provided in the Stock Option
Agreement, payment may be made in any other form that is consistent with
applicable laws, regulations and rules.

SECTION 10. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.

        (a) GENERAL. In the event of a subdivision of the outstanding Common
Stock, a declaration of a dividend payable in Common Stock, a declaration of an
extraordinary dividend payable in a form other than Common Stock in an amount
that has a material effect on the value of Common Stock, a combination or
consolidation of the outstanding Common Stock into a lesser number of shares, a
recapitalization, a reclassification or a similar occurrence, the Board shall
make appropriate adjustments, subject to the limitations set forth in Section
10(c), in one or more of (i) the number of shares of Common Stock available for
future grants of Options or other rights to acquire Common Stock under Section
5, (ii) the number of shares of Common Stock covered by each outstanding Option
or other right to acquire Common Stock or (iii) the Exercise Price of each
outstanding Option or the Purchase Price of each other right to acquire Common
Stock.

        (b) MERGERS AND CONSOLIDATIONS. In the event that the Company is a party
to a merger or consolidation or the sale of substantially all of the assets of
the Company, outstanding Options or other rights to acquire Common Stock shall
be subject to the agreement of merger or reorganization or sale of assets. Such
agreement, without an Optionee's 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

                (iv) The cancellation of such outstanding Options without
        payment of any consideration, provided that in such event vesting of all
        Options will accelerate in full.

        If an Option becomes fully vested and exercisable in lieu of assumption
or substitution in the event of a merger or sale of assets, the Company shall
notify the Optionee in writing or electronically that the Option shall be fully
exercisable for a period of ten (10) days from the date of such notice, and the
Option shall terminate upon the expiration of such period. For the purposes of
this paragraph, the Option shall be considered assumed if, following the merger
or sale of assets, the option or right confers the right to purchase or receive,
for each share of Common Stock subject to the Option immediately prior to the
merger or sale of assets, the consideration (whether stock, cash or other
securities or property) received in the merger or sale of assets by holders of
Common Stock for each share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding shares); provided,
however, that if such consideration



                                     - 11 -


received in the merger or sale of assets is not solely common stock of the
successor corporation or its Parent, the Company may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option, for each share of Common Stock subject to the Option, to
be solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common Stock
in the merger or sale of assets.

        (c) RESERVATION OF RIGHTS. Except as provided in this Section 10, an
Optionee or Offeree 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 issue 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 of shares
of Common Stock subject to an Option, or the number of shares subject to any
other right to acquire Common Stock and/or the Exercise Price or Purchase Price.
The grant of an Option or other right to acquire Common Stock 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 11. WITHHOLDING TAXES.

        (a) GENERAL. To the extent required by applicable federal, state, local
or foreign law, a Participant or his or her successor shall make arrangements
satisfactory to the Committee for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. The Company shall not be
required to issue any Shares or make any cash payment under the Plan until such
obligations are satisfied.

        (b) COMMON STOCK WITHHOLDING. The Committee may permit a Participant to
satisfy all or part of his or her withholding or income tax obligations by
having the Company withhold all or a portion of any shares of Common Stock that
otherwise would be issued to him or her or by surrendering all or a portion of
any shares of Common Stock that he or she previously acquired. Notwithstanding
the previous sentence in this Section 11(b), the maximum amount that may be
subject to common stock withholding under this Section 11(b) shall be determined
by the Committee based upon the minimum rates of federal, state and employment
withholding applicable under the circumstances. Shares of Common Stock that are
withheld or surrendered pursuant to this Section 11 shall be valued at their
Fair Market Value on the date when taxes otherwise would be withheld in cash.
Any payment of taxes by assigning shares of Common Stock to the Company may be
subject to restrictions, including any restrictions required by rules of any
federal or state regulatory body or other authority.

        (c) CASHLESS EXERCISE/PLEDGE. The Committee may provide that if Company
shares of Common Stock are publicly traded at the time of exercise, arrangements
may be made to meet the Optionee's withholding obligation by cashless exercise
or pledge.

        (d) OTHER FORMS OF PAYMENT. The Committee may permit such other means of
tax withholding as it deems appropriate.



                                     - 12 -


SECTION 12. LEGAL REQUIREMENTS.

        (a) RESTRICTIONS ON ISSUANCE. Common Stock shall not be issued under the
Plan unless the issuance and delivery of such Common Stock complies with (or is
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 on which the Company's securities may then be listed, and the
Company has obtained the approval or favorable ruling from any governmental
agency that the Company determines is necessary or advisable.

        (b) FINANCIAL REPORTS. To the extent required to comply with the
California Corporations Code or the regulations thereunder, not less often than
annually the Company shall furnish to Optionees and Offerees Company summary
financial information including a balance sheet regarding the Company's
financial condition and results of operations, unless such Optionees or Offerees
have duties with the Company that assure them access to equivalent information.
Such financial statements need not be audited.

SECTION 13. ASSIGNMENT OR TRANSFER OF AWARDS.

        (a) General. An Award granted under the Plan shall not be anticipated,
assigned, attached, garnished, optioned, transferred or made subject to any
creditor's process, whether voluntarily, involuntarily or by operation of law,
except as approved by the Committee. Notwithstanding the foregoing, ISOs may not
be transferable. Also notwithstanding the foregoing, while the shares of Common
Stock are subject to California Corporations Code Section 25102(o), (i) Offerees
and Optionees may not transfer their rights hereunder except by will,
beneficiary designation or the laws of descent and distribution, and (ii) any
rights of repurchase in favor of the Company shall take into account the
provisions of Sections 260.140.41 or 260.140.42 of Title 10 of the California
Code of Regulations, as applicable.

        (b) Trusts. Neither this Section 13 nor any other provision of the Plan
shall preclude a Participant from transferring or assigning Restricted Shares to
(a) the trustee of a trust that is revocable by such Participant alone, both at
the time of the transfer or assignment and at all times thereafter prior to such
Participant's death, or (b) the trustee of any other trust to the extent
approved by the Committee in writing. A transfer or assignment of Restricted
Shares from such trustee to any other person than such Participant shall be
permitted only to the extent approved in advance by the Committee in writing,
and Restricted Shares held by such trustee shall be subject to all the
conditions and restrictions set forth in the Plan and in the applicable Stock
Award Agreement, as if such trustee were a party to such Agreement.

SECTION 14. NO EMPLOYMENT RIGHTS.

        No provision of the Plan, nor any Option granted or other right to
acquire Common Stock granted under the Plan, shall be construed to give any
person any right to become, to be treated as, or to remain an Employee. The
Company and its Subsidiaries reserve the right to terminate any person's Service
at any time and for any reason.



                                     - 13 -


SECTION 15. 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, subject to the approval of
the Company's stockholders. In the event that the stockholders fail to approve
the Plan within twelve (12) months after its adoption by the Board, any Option
grants or other right to acquire Common Stock already made shall be null and
void, and no additional Option grants or other right to acquire Common Stock
shall be made after such date. The Plan shall terminate automatically ten (10)
years after its adoption by the Board and may be terminated on any earlier date
pursuant to Subsection (b) below.

        (b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board may amend or
terminate the Plan at any time. Rights under any Option granted or other right
to acquire Common Stock granted before amendment of the Plan shall not be
materially impaired by any amendment or termination, except with consent of the
Optionee or Offeree. An amendment of the Plan shall be subject to the approval
of the Company's stockholders only to the extent required by applicable laws,
regulations or rules.

        (c) EFFECT OF AMENDMENT OR TERMINATION. No Common Stock 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 Common Stock previously issued or Option
previously granted under the Plan.

SECTION 16. EXECUTION.

        To record the adoption of the Plan, the Company has caused its
authorized officer to execute the same.

                                       PACIFIC BROADBAND COMMUNICATIONS, INC.



                                       By
                                         ---------------------------------------
                                       Title
                                            ------------------------------------





                                     - 14 -

EX-4.2

                                                                     EXHIBIT 4.2


                      PACIFIC BROADBAND COMMUNICATIONS INC.

                       2000 SUB-PLAN FOR FRENCH EMPLOYEES

        This Pacific Broadband Communications Inc. 2000 Sub-Plan for French
employees is a sub-plan (the "Sub-Plan") created for the benefit of Employees of
PBC EURL, a French subsidiary (the "French Subsidiary") of Pacific Broadband
Communications, Inc., a Delaware corporation (the "Company"), under and pursuant
to the Pacific Broadband Communications Inc. 2000 Stock Plan (the "PBC Plan"),
which provides that employees of the Company's subsidiaries may benefit under
the PBC Plan. The PBC Plan is incorporated herein for all purposes. Options
shall be granted under the Sub-Plan at the discretion of the Board of Directors
or Option Plan Committee of the Board of Directors of the Company, as the case
may be (hereafter, the "Administrator") and as reflected in terms of written
option agreements, and are intended to qualify for preferred treatment under
French tax and social security laws.

A. DEFINITIONS. For the purpose of the options granted under this Sub-Plan, the
following terms shall have, where the context so permits, the meaning set forth
below and, unless otherwise defined therein, shall have the same meaning in any
Option Agreement, Exercise Notice or other document relating to the Sub-Plan.
Unless otherwise defined herein, the terms defined in the PBC Plan shall have
the same defined meanings in this Sub-Plan. To the extent of any inconsistencies
between the terms of this PBC Plan and this Sub-Plan, the terms of this Sub-Plan
shall control with respect to option grants to French employees of the French
Subsidiary.

        (1) "Disability" means a disability corresponding to the ranking in the
second or third category provided in article 310 of the French social security
code ("code de la securite sociale").

        (2) "Employee" means any person (including a director holding a salaried
employment) employed by the Company or any Parent or Subsidiary of the Company
in a salaried position, who does not own more than 10% of the voting power of
all classes of stock of the Company at the date of grant of any Option and who
is a resident of the Republic of France for tax purposes. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company or any Parent or Subsidiary of the
Company.

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

                (a) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or the Nasdaq SmallCap Market of the Nasdaq Stock Market, its
Fair Market Value shall be the average opening price for such stock as quoted on
such exchange or system over the twenty (20) market trading days preceding the
time of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;



                                     - 1 -


                (b) If the Common Stock is regularly quoted by a recognized
securities dealer but opening prices are not reported, its Fair Market Value
shall be the average mean between the high bid and low asked prices for the
Common Stock over the twenty (20) market trading days preceding the day of
determination; or

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

        (4) "Holding Period" is defined in Article 4(e) of Part B of this
Sub-Plan.

        (5) "Option" means a stock option granted pursuant to this Sub-Plan
which is intended to qualify for preferred tax and social security treatment
under applicable French tax laws.

        (6) "Parent" means a "parent corporation", whether now or hereafter
existing, as defined in article 355-1 of the Law n degrees 66-537 of July 24,
1966.

        (7) "Retirement" means the situation where any person employed by the
Company or any Parent or Subsidiary of the Company in a salaried position, upon
reaching the age of 60 or 65 or any other age provided under the terms of his or
her contract of employment, a relevant collective bargaining agreement, or the
applicable law, and being entitled to a full pension, is required by his or her
employer to retire.

        (8) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in article 355-1 of the Law n degrees 66-537 of
July 24, 1966.

B. FOR THE PURPOSE OF OPTIONS GRANTED UNDER THIS SUB-PLAN, THE FOLLOWING
PROVISIONS OF THE PBC PLAN SHALL BE MODIFIED AS FOLLOWS. ALL PROVISIONS OF THE
PBC PLAN NOT MODIFIED HEREIN SHALL APPLY TO OPTIONS GRANTED UNDER THIS SUB-PLAN.

        1. Eligibility:

                (a) Options granted pursuant to this Sub-Plan may be granted
only to Employees.

                (b) The Fair Market Value of the Shares shall be determined as
of the time the Option with respect to such Shares is granted.

                (c) Neither the Sub-Plan nor any Option shall confer upon any
Optionee any right with respect to continuing the Optionee's relationship as an
Employee with the Company or any Parent or Subsidiary of the Company, nor shall
it interfere in any way with his or her right or the Company's or any Parent or
Subsidiary of the Company's right to terminate such relationship.



                                     - 2 -


        2. Term of Option. The term of each Option shall be stated in the Option
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof.

        3. Option Exercise Price and Consideration.

                (a) The per share exercise price for the Shares to be issued
upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be no less than 100% of the Fair Market Value per Share
on the date of grant. The exercise price cannot be modified while the Option is
outstanding except as set forth under Section 6(a) of this Part B as modified
herein.

                (b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator at the time of grant. Such consideration may consist of (i)
cash, (ii) check, (iii) promissory note, (iv) other Shares which (x) in the case
of Shares acquired upon exercise of an Option, have been owned by the Optionee
for more than six months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which such Option shall be exercised, (v) consideration received by
the Company under a cashless exercise program implemented by the Company in
connection with the PBC Plan or the Sub-Plan, or (vi) any combination of the
foregoing methods of payment. In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.

        4. Exercise of Option/Restriction on Sale.

                (a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder may be exercised to the extent it has become exercisable
according to the terms hereof at such times and under such conditions as
determined by the Administrator and set forth in the Option Agreement. No Option
shall become exercisable prior to the second anniversary of the date of grant of
the Option (the "Initial Exercise Date"), except in the specific circumstances
defined in subsections 4 (b), (c) or (d) hereafter. An Option may not be
exercised for a fraction of a Share.

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



                                     - 3 -


adjustment will be made for a dividend or other right for which the record date
is prior to the date the Shares are issued, except as provided in Section 10 of
the PBC Plan, as modified herein.

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

                (b) Termination of Relationship as an Employee. If an Optionee
ceases to be an Employee, such Optionee may exercise such portion of his or her
Option as is specified in the Option Agreement and within such period of time as
is specified in the Option Agreement (of at least thirty (30) days). In the
absence of a specified time in the Option Agreement, the relevant portion of the
Option shall remain exercisable for ninety (90) days following the Optionee's
termination. If, on the date of termination, the Optionee is not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.

                (c) Disability of Optionee. If an Optionee ceases to be an
Employee as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for ninety (90) days following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

                (d) Death of Optionee. If an Optionee dies while an Employee,
the Option may be exercised within six (6) months from the date of his or her
death to the extent that the Option is vested on the date of death by the
Optionee's heirs. If, at the time of death, the Optionee is not vested as to the
entire Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. If the Option is not so exercised within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

                (e) Restriction on Sale. The Shares subject to the Option may
not be transferred, assigned or hypothecated in any manner otherwise than by the
laws of descent before three (3) years from the Initial Exercise Date (the
"Holding Period"); provided, however, that the Holding Period shall be waived in
the following cases:

                        (i) Death of the Optionee;

                        (ii) Disability of the Optionee;

                        (iii) Retirement of the Optionee provided the Shares
have been acquired as a result of the exercise of the Option no less than three
(3) months prior to the date of cessation of the employment contract;



                                     - 4 -


                        (iv) Dismissal of the Optionee provided the Shares have
been acquired as a result of the exercise of the Option no less than three (3)
months prior to the date on which the Optionee received notice of his or her
dismissal.

        Provided the Optionee falls within either of the four above-mentioned
cases, the Shares shall be transferable immediately after the date of
termination of the employment contract.

        5. Non-Transferability of Options. The Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
the laws of descent and may be exercised, during the lifetime of the Optionee,
only by the Optionee.

        6. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.

                (a) Changes in Capitalization. The number of Shares of Common
Stock covered by each outstanding Option as well as the price per share of
Common Stock covered by each such outstanding Option shall be proportionally
adjusted for any operation mentioned in article 195, Section 5 and Section 6 and
in article 196 Section 1 and Section 3 of the Law n degrees 66-537 of July 24,
1966. The operations currently listed in article 195 Section 5 and Section 6 and
in article 196 Section 1 and Section 3 of the Law n degrees 66-537 of July 24,
1966 are the following:

       -       Issuance of new shares to be subscribed in cash by existing
               shareholders;

       -       Issuance of convertible or exchangeable bonds reserved for
               existing shareholders;

       -       Incorporation into the share capital of reserves, profits or
               issuance premiums leading to a distribution of free shares;

       -       distribution of reserves in cash or in shares;

       -       capital reduction motivated by losses and realized by way of a
               reduction of the number of outstanding shares;

       7.      Amendment and Termination of the Plan.

                (a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan. The Board shall have power at any time or
times to modify or vary the exercise schedule and/or the Holding Period
applicable to Options granted under this Sub-Plan to adjust to any changes under
French corporate, securities and tax laws applicable to Options granted
hereunder which would have the effect that either the Holding Period would be
reduced or social charges would no longer be due.

C. FOR THE PURPOSE OF OPTIONS GRANTED UNDER THIS SUB-PLAN, THE FOLLOWING
PROVISIONS OF THE PLAN SHALL NOT BE APPLICABLE:

       -       Section 3 (c) (vii)

       -       Section 8 (j)

       -       Sections 6 and 7, as well as all references to Stock Purchase
               Rights in the Plan.



                                     - 5 -

EX-5.1

                                                                     EXHIBIT 5.1


                                     December 21, 2001


Juniper Networks, Inc.
1194 North Mathilda Avenue
Sunnyvale, CA 94089

   Re:  Registration Statement on Form S-8

Ladies and Gentlemen:

      I have examined the Registration Statement on Form S-8 to be filed by
Juniper Networks, Inc. (the "Company") with the Securities and Exchange
Commission on December 21, 2001 (the "Registration Statement"), in connection
with the registration under the Securities Act of 1933, as amended, of 1,476,942
shares of the Company's common stock (the "Shares"), all of which are
authorized, 1,114,040 of which are to be issued pursuant to the Pacific
Broadband Communications 2000 Stock Incentive Plan and 362,902 of which are to
be issued pursuant to the Pacific Broadband Communications 2000 Sub-Plan.

      I am of the opinion that all proper corporate proceedings have been taken
prior to the registration of the Shares, including such proceedings to be
carried out in accordance with the securities laws of the various states, where
required, such that the Shares, when issued and sold (and the consideration is
received therefor) pursuant to the provisions of option agreements assumed under
the Plans, will be legally and validly issued, fully paid and nonassessable.

      I hereby consent to the filing of this opinion with the Securities and
Exchange Commission in connection with the registration statement referred to
above. This opinion is limited to the laws of the State of Delaware and the
federal law of the United States of America.

                                   Very truly yours,

                                   /s/  Lisa C. Berry
                                   ---------------------------------------------
                                   Lisa C. Berry
                                   Vice President, General Counsel and Secretary

EX-23.2

                                                                    EXHIBIT 23.2


               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS


We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the Pacific Broadband Communications, Inc. 2000 Stock
Incentive Plan and the Pacific Broadband Communications, Inc. Sub-Plan of our
report dated January 15, 2001, with respect to the consolidated financial
statements of Juniper Networks, Inc. included in its Annual Report (Form 10-K)
for the year ended December 31, 2000, and the related financial statement
schedule included therein, filed with the Securities and Exchange Commission.


/s/ ERNST & YOUNG LLP



Palo Alto, California
December 19, 2001