Sample Business Contracts


2001 Equity Incentive Plan - NetScreen Technologies Inc.


                          NETSCREEN TECHNOLOGIES, INC.


                           2001 Equity Incentive Plan

                          As Adopted September 28, 2001

     1.   PURPOSE. The purpose of this Plan is to provide incentives to attract,
          -------
retain and motivate eligible persons whose present and potential contributions
are important to the success of the Company, its Parent and Subsidiaries, by
offering them an opportunity to participate in the Company's future performance
through awards of Options, Restricted Stock and Stock Bonuses. Capitalized terms
not defined in the text are defined in Section 23.

     2.   SHARES SUBJECT TO THE PLAN.
          --------------------------

          2.1       Number of Shares Available. Subject to Sections 2.2 and 18,
                    --------------------------
the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 20,000,000 Shares plus Shares that are subject to:
(a) issuance upon exercise of an Option but cease to be subject to such Option
for any reason other than exercise of such Option; (b) an Award granted
hereunder but are forfeited or are repurchased by the Company at the original
issue price; and (c) an Award that otherwise terminates without Shares being
issued. Also, any authorized shares not issued or subject to outstanding grants
under the Company's 1997 Equity Incentive Plan (the "Prior Plan") on the
Effective Date (as defined below) and any shares issued under the Prior Plan
that are forfeited or repurchased by the Company or that are issuable upon
exercise of options granted pursuant to the Prior Plan that expire or become
unexercisable for any reason without having been exercised in full, will no
longer be available for grant and issuance under the Prior Plan, but will be
available for grant and issuance under this Plan. In addition, on each October
1, the aggregate number of Shares reserved and available for grant and issuance
pursuant to this Plan will be increased automatically by a number of Shares
equal to 5% of the total outstanding shares of the Company as of the immediately
preceding September 30; provided, that the Board may in its sole discretion
                        --------
reduce the amount of the increase in any particular year; and, provided,
                                                               --------
further, provided that no more than 50,000,000 shares shall be issued as ISOs
-------
(as defined in Section 5 below). At all times the Company shall reserve and keep
available a sufficient number of Shares as shall be required to satisfy the
requirements of all outstanding Options granted under this Plan and all other
outstanding but unvested Awards granted under this Plan.

          2.2       Adjustment of Shares. In the event that the number of
                    --------------------
outstanding shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification, similar
change in the capital structure of the Company without consideration or other
change in the corporate structure or capitalization affecting the Company's
present Common Stock, then (a) the number and the type of Shares reserved for
issuance under this Plan, (b) the number and the type of Shares that may be
granted pursuant to Sections 3 and 9 below, (c) the Exercise Prices, the number
and the type of Shares subject to outstanding Options, and (d) the number and
the type of Shares subject to other outstanding Awards may, upon approval of the
Board in its discretion, be proportionately adjusted in compliance with
applicable securities laws; provided, however, that fractions of a Share will
                            --------  -------
not be issued but will either be replaced by a cash payment equal to the Fair
Market Value of such fraction of a Share or will be rounded up to the nearest
whole Share, as determined by the Committee.

     3.   ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted
          -----------
only to employees (including officers and directors who are also employees) of
the Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors, consultants, independent contractors
and advisors of the Company or any Parent or Subsidiary of the Company; provided
                                                                        --------
such consultants, contractors and advisors render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction. No person will be eligible to receive more than 250,000 Shares in
any calendar year under this Plan pursuant to the grant of Awards hereunder,
other than new employees of the Company or of a Parent or Subsidiary of the
Company (including new employees who are also officers and directors of the
Company or any Parent or Subsidiary of the Company), who are eligible to receive
up to a maximum of 500,000 Shares in the calendar year in which they commence
their employment. A person may be granted more than one Award under this Plan.

<PAGE>

     4.   ADMINISTRATION.
          --------------

          4.1       Committee Authority. This Plan will be administered by the
                    -------------------
Committee or by the Board acting as the Committee. Except for automatic grants
to Outside Directors pursuant to Section 9 hereof, and subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan. Except
for automatic grants to Outside Directors pursuant to Section 9 hereof, the
Committee will have the authority to:

          (a)  construe and interpret this Plan, any Award Agreement and any
               other agreement or document executed pursuant to this Plan;

          (b)  prescribe, amend and rescind rules and regulations relating to
               this Plan or any Award;

          (c)  select persons to receive Awards;

          (d)  determine the form and terms of Awards;

          (e)  determine the number of Shares or other consideration subject to
               Awards;

          (f)  determine whether Awards will be granted singly, in combination
               with, in tandem with, in replacement of, or as alternatives to,
               other Awards under this Plan or any other incentive or
               compensation plan of the Company or any Parent or Subsidiary of
               the Company;

          (g)  grant waivers of Plan or Award conditions;

          (h)  determine the vesting, exercisability and payment of Awards;

          (i)  correct any defect, supply any omission or reconcile any
               inconsistency in this Plan, any Award or any Award Agreement;

          (j)  determine whether an Award has been earned; and

          (k)  make all other determinations necessary or advisable for the
               administration of this Plan.

          4.2       Committee Discretion. Except for automatic grants to Outside
                    --------------------
Directors pursuant to Section 9 hereof, any determination made by the Committee
with respect to any Award will be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of this Plan
or Award, at any later time, and such determination will be final and binding on
the Company and on all persons having an interest in any Award under this Plan.
The Committee may delegate to one or more officers of the Company the authority
to grant and to determine the form or term of an Award under this Plan to
Participants who are not Insiders of the Company.

     5.   OPTIONS. The Committee may grant Options to eligible persons and will
          -------
determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISO") or Nonqualified Stock Options ("NQSOs"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:

          5.1       Form of Option Grant. Each Option granted under this Plan
                    --------------------
will be evidenced by an Award Agreement which will expressly identify the Option
as an ISO or an NQSO ("Stock Option Agreement"), and, except as otherwise
required by the terms of Section 9 hereof, will be in such form and contain such
provisions (which need not be the same for each Participant) as the Committee
may from time to time approve, and which will comply with and be subject to the
terms and conditions of this Plan.


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<PAGE>

          5.2       Date of Grant. The date of grant of an Option will be the
                    -------------
date on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.

          5.3       Exercise Period. Options may be exercisable within the times
                    ---------------
or upon the events determined by the Committee as set forth in the Stock Option
Agreement governing such Option; provided, however, that no Option will be
                                 --------  -------
exercisable after the expiration of ten (10) years from the date the Option is
granted; and provided further that no ISO granted to a person who directly or by
             -------- -------
attribution owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of any Parent or Subsidiary of the
Company ("Ten Percent Stockholder") will be exercisable after the expiration of
five (5) years from the date the ISO is granted. The Committee also may provide
for Options to become exercisable at one time or from time to time, periodically
or otherwise, in such number of Shares or percentage of Shares as the Committee
determines.

          5.4       Exercise Price. The Exercise Price of an Option will be
                    --------------
determined by the Committee when the Option is granted; provided that: (i) the
Exercise Price of an ISO will be not less than 100% of the Fair Market Value of
the Shares on the date of grant; and (ii) the Exercise Price of any ISO granted
to a Ten Percent Stockholder will not be less than 110% of the Fair Market Value
of the Shares on the date of grant. Payment for the Shares purchased may be made
in accordance with Section 8 of this Plan.

          5.5       Method of Exercise. Options may be exercised only by
                    ------------------
delivery to the Company of a written stock option exercise agreement (the
"Exercise Agreement") in a form approved by the Committee (which need not be the
same for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.

          5.6       Termination. Notwithstanding the exercise periods set forth
                    -----------
in the Stock Option Agreement, exercise of an Option will always be subject to
the following:

          (a)  If the Participant is Terminated for any reason except death,
               Disability or Cause, then the Participant may exercise such
               Participant's Options only to the extent that such Options would
               have been exercisable upon the Termination Date no later than
               three (3) months after the Termination Date (or such shorter or
               longer time period not exceeding five (5) years as may be
               determined by the Committee, with any exercise beyond three (3)
               months after the Termination Date deemed to be an NQSO), but in
               any event, no later than the expiration date of the Options.

          (b)  If the Participant is Terminated because of Participant's death
               or Disability (or the Participant dies within three (3) months
               after a Termination other than for Cause or because of
               Participant's Disability), then Participant's Options may be
               exercised only to the extent that such Options would have been
               exercisable by Participant on the Termination Date and must be
               exercised by Participant (or Participant's legal representative
               or authorized assignee) no later than twelve (12) months after
               the Termination Date (or such shorter or longer time period not
               exceeding five (5) years as may be determined by the Committee,
               with any such exercise beyond twelve (12) months after the
               Termination Date when the Termination is for Participant's
               Disability deemed to be an NQSO), but in any event no later than
               the expiration date of the Options.

          (c)  If the Participant is terminated for Cause, then Participant's
               Options shall expire immediately on such Participant's
               Termination Date, or at such later time and on such conditions as
               are determined by the Committee, but in any event no later than
               the expiration date of the Options.


                                       3

<PAGE>

          5.7       Limitations on Exercise. The Committee may specify a
                    -----------------------
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.

          5.8       Limitations on ISO. The aggregate Fair Market Value
                    ------------------
(determined as of the date of grant) of Shares with respect to which ISO are
exercisable for the first time by a Participant during any calendar year (under
this Plan or under any other incentive stock option plan of the Company, Parent
or Subsidiary of the Company) will not exceed $100,000. If the Fair Market Value
of Shares on the date of grant with respect to which ISO are exercisable for the
first time by a Participant during any calendar year exceeds $100,000, then the
Options for the first $100,000 worth of Shares to become exercisable in such
calendar year will be ISO and the Options for the amount in excess of $100,000
that become exercisable in that calendar year will be NQSOs. In the event that
the Code or the regulations promulgated thereunder are amended after the
Effective Date of this Plan to provide for a different limit on the Fair Market
Value of Shares permitted to be subject to ISO, such different limit will be
automatically incorporated herein and will apply to any Options granted after
the effective date of such amendment.

          5.9       Modification, Extension or Renewal. The Committee may
                    ----------------------------------
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of a Participant, impair any of such Participant's rights
under any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in accordance with
Section 424(h) of the Code. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants affected by a written
notice to them; provided, however, that the Exercise Price may not be reduced
                --------  -------
below the minimum Exercise Price that would be permitted under Section 5.4 of
this Plan for Options granted on the date the action is taken to reduce the
Exercise Price.

          5.10      No Disqualification. Notwithstanding any other provision in
                    -------------------
this Plan, no term of this Plan relating to ISO will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.

     6.   RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company
          ----------------
to sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares the
person may purchase, the price to be paid (the "Purchase Price"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:

          6.1       Form of Restricted Stock Award. All purchases under a
                    ------------------------------
Restricted Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement ("Restricted Stock Purchase Agreement") that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. The offer of Restricted Stock will be accepted by the
Participant's execution and delivery of the Restricted Stock Purchase Agreement
and full payment for the Shares to the Company within thirty (30) days from the
date the Restricted Stock Purchase Agreement is delivered to the person. If such
person does not execute and deliver the Restricted Stock Purchase Agreement
along with full payment for the Shares to the Company within thirty (30) days,
then the offer will terminate, unless otherwise determined by the Committee.

          6.2       Purchase Price. The Purchase Price of Shares sold pursuant
                    --------------
to a Restricted Stock Award will be determined by the Committee on the date the
Restricted Stock Award is granted, except in the case of a sale to a Ten Percent
Stockholder, in which case the Purchase Price will be 100% of the Fair Market
Value. Payment of the Purchase Price may be made in accordance with Section 8 of
this Plan.

          6.3       Terms of Restricted Stock Awards. Restricted Stock Awards
                    --------------------------------
shall be subject to such restrictions as the Committee may impose. These
restrictions may be based upon completion of a specified number of years of
service with the Company or upon completion of the performance goals as set out
in advance in the Participant's individual Restricted Stock Purchase Agreement.
Restricted Stock Awards may vary from Participant to Participant and between
groups of Participants. Prior to the grant of a Restricted Stock Award, the
Committee


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<PAGE>

shall: (a) determine the nature, length and starting date of any Performance
Period for the Restricted Stock Award; (b) select from among the Performance
Factors to be used to measure performance goals, if any; and (c) determine the
number of Shares that may be awarded to the Participant. Prior to the payment of
any Restricted Stock Award, the Committee shall determine the extent to which
such Restricted Stock Award has been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Restricted Stock
Awards that are subject to different Performance Periods and having different
performance goals and other criteria.

          6.4       Termination During Performance Period. If a Participant is
                    -------------------------------------
Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Restricted Stock Award only to the extent earned as of the date of
Termination in accordance with the Restricted Stock Purchase Agreement, unless
the Committee will determine otherwise.

     7.   STOCK BONUSES.
          -------------

          7.1       Awards of Stock Bonuses. A Stock Bonus is an award of Shares
                    -----------------------
(which may consist of Restricted Stock) for services rendered to the Company or
any Parent or Subsidiary of the Company. A Stock Bonus may be awarded for past
services already rendered to the Company, or any Parent or Subsidiary of the
Company pursuant to an Award Agreement (the "Stock Bonus Agreement") that will
be in such form (which need not be the same for each Participant) as the
Committee will from time to time approve, and will comply with and be subject to
the terms and conditions of this Plan. A Stock Bonus may be awarded upon
satisfaction of such performance goals as are set out in advance in the
Participant's individual Award Agreement (the "Performance Stock Bonus
Agreement") that will be in such form (which need not be the same for each
Participant) as the Committee will from time to time approve, and will comply
with and be subject to the terms and conditions of this Plan. Stock Bonuses may
vary from Participant to Participant and between groups of Participants, and may
be based upon the achievement of the Company, Parent or Subsidiary and/or
individual performance factors or upon such other criteria as the Committee may
determine.

          7.2       Terms of Stock Bonuses. The Committee will determine the
                    ----------------------
number of Shares to be awarded to the Participant. If the Stock Bonus is being
earned upon the satisfaction of performance goals pursuant to a Performance
Stock Bonus Agreement, then the Committee will: (a) determine the nature, length
and starting date of any Performance Period for each Stock Bonus; (b) select
from among the Performance Factors to be used to measure the performance, if
any; and (c) determine the number of Shares that may be awarded to the
Participant. Prior to the payment of any Stock Bonus, the Committee shall
determine the extent to which such Stock Bonuses have been earned. Performance
Periods may overlap and Participants may participate simultaneously with respect
to Stock Bonuses that are subject to different Performance Periods and different
performance goals and other criteria. The number of Shares may be fixed or may
vary in accordance with such performance goals and criteria as may be determined
by the Committee. The Committee may adjust the performance goals applicable to
the Stock Bonuses to take into account changes in law and accounting or tax
rules and to make such adjustments as the Committee deems necessary or
appropriate to reflect the impact of extraordinary or unusual items, events or
circumstances to avoid windfalls or hardships.

          7.3       Form of Payment. The earned portion of a Stock Bonus may be
                    ---------------
paid currently or on a deferred basis with such interest or dividend equivalent,
if any, as the Committee may determine. Payment may be made in the form of cash
or whole Shares or a combination thereof, either in a lump sum payment or in
installments, all as the Committee will determine.

     8.   PAYMENT FOR SHARE PURCHASES.
          ---------------------------

          8.1       Payment. Payment for Shares purchased pursuant to this Plan
                    -------
may be made in cash (by check) or, where expressly approved for the Participant
by the Committee and where permitted by law:

          (a)  by cancellation of indebtedness of the Company to the
               Participant;


                                       5

<PAGE>

          (b)  by surrender of shares that either: (1) have been owned by
               Participant for more than six (6) months and have been paid for
               within the meaning of SEC Rule 144 (and, if such shares were
               purchased from the Company by use of a promissory note, such note
               has been fully paid with respect to such shares); or (2) were
               obtained by Participant in the public market;

          (c)  by tender of a full recourse promissory note having such terms as
               may be approved by the Committee and bearing interest at a rate
               sufficient to avoid (i) imputation of income under Sections 483
               and 1274 of the Code and (ii) variable accounting treatment under
               Financial Accounting Standards Board Interpretation No. 44 to APB
               No. 25; provided, however, that Participants who are not
                       --------  -------
               employees or directors of the Company will not be entitled to
               purchase Shares with a promissory note unless the note is
               adequately secured by collateral other than the Shares; provided,
               further, that the portion of the Exercise Price or Purchase
               Price, as the case may be, equal to the par value of the Shares
               must be paid in cash or other legal consideration permitted by
               Delaware General Corporation Law; provided, further, that
                                                 --------  -------
               Participants who are not employees or directors of the Company
               will not be entitled to purchase Shares with a promissory note
               unless the note is adequately secured by collateral other than
               the Shares;

          (d)  by waiver of compensation due or accrued to the Participant for
               services rendered;

          (e)  with respect only to purchases upon exercise of an Option, and
               provided that a public market for the Company's stock exists:

               (1)  through a "same day sale" commitment from the Participant
                    and a broker-dealer that is a member of the National
                    Association of Securities Dealers (an "NASD Dealer") whereby
                    the Participant irrevocably elects to exercise the Option
                    and to sell a portion of the Shares so purchased to pay for
                    the Exercise Price, and whereby the NASD Dealer irrevocably
                    commits upon receipt of such Shares to forward the Exercise
                    Price directly to the Company; or

               (2)  through a "margin" commitment from the Participant and a
                    NASD Dealer whereby the Participant irrevocably elects to
                    exercise the Option and to pledge the Shares so purchased to
                    the NASD Dealer in a margin account as security for a loan
                    from the NASD Dealer in the amount of the Exercise Price,
                    and whereby the NASD Dealer irrevocably commits upon receipt
                    of such Shares to forward the Exercise Price directly to the
                    Company; or

          (f)  by any combination of the foregoing.

          8.2       Loan Guarantees. The Committee may help the Participant pay
                    ---------------
for Shares purchased under this Plan by authorizing a guarantee by the Company
of a Third-party loan to the Participant.

     9.   AUTOMATIC GRANTS TO OUTSIDE DIRECTORS.
          -------------------------------------

          9.1       Types of Options and Shares. Options granted under this Plan
                    ---------------------------
and subject to this Section 9 shall be NQSOs.

          9.2       Eligibility. Options subject to this Section 9 shall be
                    -----------
granted only to Outside Directors.

          9.3       Initial Grant. Each Outside Director who first becomes a
                    -------------
member of the Board after the Effective Date will automatically be granted an
option for 30,000 Shares (an "Initial Grant") on the date such Outside Director
first becomes a member of the Board.


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<PAGE>

          9.4       Succeeding Grant. Each Outside Director will automatically
                    ----------------
be granted an option for 10,000 Shares (a "Succeeding Grant"), immediately after
each annual meeting of the Company (after the Effective Date) if the Outside
Director has served continuously as a member of the Board since the preceding
annual meeting. The Board may also make discretionary grants to any Outside
Director with at least one year of service on the board provided that no Outside
Director may receive total grants (including Initial or Succeeding Grants) of
more than 40,000 Shares in any calendar year.

          9.5       Vesting and Exercisability. The date an Outside Director
                    --------------------------
receives an Initial Grant or a Succeeding Grant is referred to in this Plan as
the "Start Date" for such option.

          (a)  Initial Grant. Each Initial Grant will vest and be exercisable as
               -------------
               to 2.78% of the Shares at the end of each full succeeding month
               from the Start Date, so long as the Outside Director continuously
               remains a director or a consultant of the Company.

          (b)  Succeeding Grant. Each Succeeding Grant will vest and be
               ----------------
               exercisable as to 2.78% of the Shares at the end of each full
               succeeding month from the Start Date, so long as the Outside
               Director continuously remains a director or a consultant of the
               Company.

Notwithstanding any provision to the contrary, in the event of a Corporate
Transaction described in Section 18.1, the vesting of all options granted to
Outside Directors pursuant to this Section 9 will accelerate and such options
will become exercisable in full prior to the consummation of such event at such
times and on such conditions as the Committee determines, and must be exercised,
if at all, within three (3) months of the consummation of said event. Any
options not exercised within such three-month period shall expire.

          9.6       Exercise Price. The exercise price of an option pursuant to
                    --------------
an Initial Grant and Succeeding Grant shall be the Fair Market Value of the
Shares, at the time that the option is granted.

     10.  WITHHOLDING TAXES.
          -----------------

          10.1      Withholding Generally. Whenever Shares are to be issued in
                    ---------------------
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.

          10.2      Stock Withholding. When, under applicable tax laws, a
                    -----------------
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee and be in writing in a form acceptable to the
Committee.

     11.  TRANSFERABILITY.
          ---------------

          11.1      Except as otherwise provided in this Section 11, Awards
granted under this Plan, and any interest therein, will not be transferable or
assignable by Participant, and may not be made subject to execution, attachment
or similar process, otherwise than by will or by the laws of descent and
distribution or as determined by the Committee and set forth in the Award
Agreement with respect to Awards that are not ISOs.

          11.2      All Awards other than NQSO's. All Awards other than NQSO's
                    ----------------------------
shall be exercisable: (i) during the Participant's lifetime, only by (A) the
Participant, or (B) the Participant's guardian or legal representative; and (ii)
after Participant's death, by the legal representative of the Participant's
heirs or legatees.


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<PAGE>

          11.3      NQSOs. Unless otherwise restricted by the Committee, an NQSO
                    -----
shall be exercisable: (i) during the Participant's lifetime only by (A) the
Participant, (B) the Participant's guardian or legal representative, (C) a
Family Member of the Participant who has acquired the NQSO by "permitted
transfer;" and (ii) after Participant's death, by the legal representative of
the Participant's heirs or legatees. "Permitted transfer" means, as authorized
by this Plan and the Committee in an NQSO, any transfer effected by the
Participant during the Participant's lifetime of an interest in such NQSO but
only such transfers which are by gift or domestic relations order. A permitted
transfer does not include any transfer for value and neither of the following
are transfers for value: (a) a transfer of under a domestic relations order in
settlement of marital property rights or (b) a transfer to an entity in which
more than fifty percent of the voting interests are owned by Family Members or
the Participant in exchange for an interest in that entity.

     12.  PRIVILEGES OF STOCK OWNERSHIP; RESTRICTIONS ON SHARES
          -----------------------------------------------------

          12.1      Voting and Dividends. No Participant will have any of the
                    --------------------
rights of a stockholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
                                                        --------
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
                  --------  -------
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's Purchase Price or Exercise Price pursuant
to Section 12.

          12.2      Financial Statements. The Company will provide financial
                    --------------------
statements to each Participant prior to such Participant's purchase of Shares
under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company will not be
                                    --------  -------
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.

          12.3      Restrictions on Shares. At the discretion of the Committee,
                    ----------------------
the Company may reserve to itself and/or its assignee(s) in the Award Agreement
a right to repurchase a portion of or all Unvested Shares held by a Participant
following such Participant's Termination at any time within ninety (90) days
after the later of Participant's Termination Date and the date Participant
purchases Shares under this Plan, for cash and/or cancellation of purchase money
indebtedness, at the Participant's Exercise Price or Purchase Price, as the case
may be.

     13.  CERTIFICATES. All certificates for Shares or other securities
          ------------
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.

     14.  ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
          ------------------------
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
                                   --------  -------
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee


                                       8

<PAGE>

will from time to time approve. The Shares purchased with the promissory note
may be released from the pledge on a pro rata basis as the promissory note is
paid.

     15.  EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or from
          -----------------------------
time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.

     16.  SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be
          ----------------------------------------------
effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to: (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable; and/or (b) completion of any registration or other qualification
of such Shares under any state or federal law or ruling of any governmental body
that the Company determines to be necessary or advisable. The Company will be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
will have no liability for any inability or failure to do so.

     17.  NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
          -----------------------
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.

     18.  CORPORATE TRANSACTIONS.
          ----------------------

          18.1      Assumption or Replacement of Awards by Successor. Except for
                    ------------------------------------------------
automatic grants to Outside Directors pursuant to Section 9 hereof, in the event
of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their
shares or other equity interest in the Company, (d) the sale of substantially
all of the assets of the Company, or (e) the acquisition, sale, or transfer of
more than 50% of the outstanding shares of the Company by tender offer or
similar transaction (each, a "Corporate Transaction"), any or all outstanding
Awards may be assumed, converted or replaced by the successor corporation (if
any), which assumption, conversion or replacement will be binding on all
Participants. In the alternative, the successor corporation may substitute
equivalent Awards or provide substantially similar consideration to Participants
as was provided to stockholders (after taking into account the existing
provisions of the Awards). The successor corporation may also issue, in place of
outstanding Shares of the Company held by the Participants, substantially
similar shares or other property subject to repurchase restrictions no less
favorable to the Participant. In the event such successor corporation (if any)
does not assume or substitute Awards, as provided above, pursuant to a
transaction described in this Subsection 18.1, the vesting with respect to such
Awards will fully and immediately accelerate. Notwithstanding anything in this
Plan to the contrary, the Committee may, in its sole discretion, provide that
the vesting of any or all Awards granted pursuant to this Plan will accelerate
upon a transaction described in this Section 18. If the Committee exercises such
discretion with respect to Options, such Options will become exercisable in full
prior to the consummation of such event at such time and on such conditions


                                       9

<PAGE>

as the Committee determines, and if such Options are not exercised prior to the
consummation of the corporate transaction, they shall terminate at such time as
determined by the Committee.

          18.2      Other Treatment of Awards. Subject to any greater rights
                    -------------------------
granted to Participants under the foregoing provisions of this Section 18, in
the event of the occurrence of any Corporate Transaction described in Section
18.1, any outstanding Awards will be treated as provided in the applicable
agreement or plan of merger, consolidation, dissolution, liquidation, or sale of
assets.

          18.3      Assumption of Awards by the Company. The Company, from time
                    -----------------------------------
to time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either; (a) granting an Award under this Plan in substitution of
such other company's award; or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of Shares issuable
 ------
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.

     19.  ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective on
          ---------------------------------
the date on which the registration statement filed by the Company with the SEC
under the Securities Act registering the initial public offering of the
Company's Common Stock is declared effective by the SEC (the "Effective Date").
This Plan shall be approved by the stockholders of the Company (excluding Shares
issued pursuant to this Plan), consistent with applicable laws, within twelve
(12) months before or after the date this Plan is adopted by the Board. Upon the
Effective Date, the Committee may grant Awards pursuant to this Plan; provided,
                                                                      --------
however, that: (a) no Option may be exercised prior to initial stockholder
-------
approval of this Plan; (b) no Option granted pursuant to an increase in the
number of Shares subject to this Plan approved by the Board will be exercised
prior to the time such increase has been approved by the stockholders of the
Company; (c) in the event that initial stockholder approval is not obtained
within the time period provided herein, all Awards granted hereunder shall be
cancelled, any Shares issued pursuant to any Awards shall be cancelled and any
purchase of Shares issued hereunder shall be rescinded; and (d) in the event
that stockholder approval of such increase is not obtained within the time
period provided herein, all Awards granted pursuant to such increase will be
cancelled, any Shares issued pursuant to any Award granted pursuant to such
increase will be cancelled, and any purchase of Shares pursuant to such increase
will be rescinded.

     20.  TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided
          --------------------------
herein, this Plan will terminate ten (10) years from the date this Plan is
adopted by the Board or, if earlier, the date of stockholder approval. This Plan
and all agreements thereunder shall be governed by and construed in accordance
with the laws of the State of California.

     21.  AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate
          --------------------------------
or amend this Plan in any respect, including without limitation amendment of any
form of Award Agreement or instrument to be executed pursuant to this Plan;
provided, however, that the Board will not, without the approval of the
--------  -------
stockholders of the Company, amend this Plan in any manner that requires such
stockholder approval.

     22.  NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the
          --------------------------
Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.

     23.  DEFINITIONS. As used in this Plan, the following terms will have the
          -----------
following meanings:

          "Award" means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.


                                       10

<PAGE>

          "Award Agreement" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.

          "Board" means the Board of Directors of the Company.

          "Cause" means (i) the commission of an act of theft, embezzlement,
fraud, dishonesty, (b) a breach of fiduciary duty to the Company or a Parent or
Subsidiary of the Company or (c) a failure to materially perform the customary
duties of employee's employment.

          "Code" means the Internal Revenue Code of 1986, as amended.

          "Committee" means the Compensation Committee of the Board.

          "Company" means Netscreen Technologies, Inc. or any successor
corporation.

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

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "Exercise Price" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.

          "Fair Market Value" means, as of any date, the value of a share of the
Company's Common Stock determined as follows:

          (a)  if such Common Stock is then quoted on the Nasdaq National
               Market, its closing price on the Nasdaq National Market on the
               date of determination as reported in The Wall Street Journal;
                                                    -----------------------

          (b)  if such Common Stock is publicly traded and is then listed on a
               national securities exchange, its closing price on the date of
               determination on the principal national securities exchange on
               which the Common Stock is listed or admitted to trading as
               reported in The Wall Street Journal;
                           -----------------------

          (c)  if such Common Stock is publicly traded but is not quoted on the
               Nasdaq National Market nor listed or admitted to trading on a
               national securities exchange, the average of the closing bid and
               asked prices on the date of determination as reported in The Wall
                                                                        --------
               Street Journal;
               --------------

          (d)  in the case of an Award made on the Effective Date, the price per
               share at which shares of the Company's Common Stock are initially
               offered for sale to the public by the Company's underwriters in
               the initial public offering of the Company's Common Stock
               pursuant to a registration statement filed with the SEC under the
               Securities Act; or

          (e)  if none of the foregoing is applicable, by the Committee in good
               faith.

          "Family Member" includes any of the following:

          (a)  child, stepchild, grandchild, parent, stepparent, grandparent,
               spouse, former spouse, sibling, niece, nephew, mother-in-law,
               father-in-law, son-in-law, daughter-in-law, brother-in-law, or
               sister-in-law of the Participant, including any such person with
               such relationship to the Participant by adoption;

          (b)  any person (other than a tenant or employee) sharing the
               Participant's household;

                                       11

<PAGE>

          (c)  a trust in which the persons in (a) and (b) have more than fifty
               percent of the beneficial interest;

          (d)  a foundation in which the persons in (a) and (b) or the
               Participant control the management of assets; or

          (e)  any other entity in which the persons in (a) and (b) or the
               Participant own more than fifty percent of the voting interest.

          "Insider" means an officer or director of the Company or any other
person whose transactions in the Company's Common Stock are subject to Section
16 of the Exchange Act.

          "Option" means an award of an option to purchase Shares pursuant to
Section 5.

          "Outside Director" means a member of the Board who is not an employee
of the Company or any Parent or Subsidiary.

          "Parent" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if each of such corporations other
than the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.

          "Participant" means a person who receives an Award under this Plan.

          "Performance Factors" means the factors selected by the Committee from
among the following measures to determine whether the performance goals
established by the Committee and applicable to Awards have been satisfied:

          (a)  Net revenue and/or net revenue growth;

          (b)  Earnings before income taxes and amortization and/or earnings
               before income taxes and amortization growth;

          (c)  Operating income and/or operating income growth;

          (d)  Net income and/or net income growth;

          (e)  Earnings per share and/or earnings per share growth;

          (f)  Total stockholder return and/or total stockholder return growth;

          (g)  Return on equity;

          (h)  Operating cash flow return on income;

          (i)  Adjusted operating cash flow return on income;

          (j)  Economic value added; and

          (k)  Individual confidential business objectives.

          "Performance Period" means the period of service determined by the
Committee, not to exceed five years, during which years of service or
performance is to be measured for Restricted Stock Awards or Stock Bonuses.


                                       12

<PAGE>

          "Plan" means this Netscreen Technologies, Inc. 2001 Equity Incentive
Plan, as amended from time to time.

          "Restricted Stock Award" means an award of Shares pursuant to Section
6.

          "SEC" means the Securities and Exchange Commission.

          "Securities Act" means the Securities Act of 1933, as amended.

          "Shares" means shares of the Company's Common Stock reserved for
issuance under this Plan, as adjusted pursuant to Sections 2 and 18, and any
successor security.

          "Stock Bonus" means an award of Shares, or cash in lieu of Shares,
pursuant to Section 7.

          "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

          "Termination" or "Terminated" means, for purposes of this Plan with
respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director, consultant, independent
contractor, or advisor to the Company or a Parent or Subsidiary of the Company.
An employee will not be deemed to have ceased to provide services in the case of
(i) sick leave, (ii) military leave, or (iii) any other leave of absence
approved by the Committee, provided, that such leave is for a period of not more
than 90 days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute or unless provided otherwise pursuant to
formal policy adopted from time to time by the Company and issued and
promulgated to employees in writing. In the case of any employee on an approved
leave of absence, the Committee may make such provisions respecting suspension
of vesting of the Award while on leave from the employ of the Company or a
Subsidiary as it may deem appropriate, except that in no event may an Option be
exercised after the expiration of the term set forth in the Option agreement.
The Committee will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the "Termination Date").

          "Unvested Shares" means "Unvested Shares" as defined in the Award
Agreement.

          "Vested Shares" means "Vested Shares" as defined in the Award
Agreement.


                                       13

<PAGE>
                                                                          No. __

                          NETSCREEN TECHNOLOGIES, INC.

                           2001 EQUITY INCENTIVE PLAN

                             STOCK OPTION AGREEMENT
                             ----------------------
                                 (for employees)

     This Stock Option Agreement (this "Agreement") is made and entered into as
of the Date of Grant set forth below (the "Date of Grant") by and between
Netscreen Technologies, Inc., a Delaware corporation (the "Company"), and the
Optionee named below ("Optionee"). Capitalized terms not defined herein shall
have the meanings ascribed to them in the Company's 2001 Equity Incentive Plan
(the "Plan").

Optionee:
                              --------------------------------------------------
Social Security Number:
                              --------------------------------------------------
Optionee's Address:
                              --------------------------------------------------

                              --------------------------------------------------
Total Option Shares:
                              --------------------------------------------------
Exercise Price Per Share:
                              --------------------------------------------------
Date of Grant:
                              --------------------------------------------------

Expiration Date:
                              --------------------------------------------------
                              (unless earlier terminated under Section 3 hereof)

Type of Stock Option
(Check one):                  [ ] Incentive Stock Option
                              [ ] Nonqualified Stock Option

     1.   Grant of Option. The Company hereby grants to Optionee an option (this
          ---------------
"Option") to purchase up to the total number of shares of Common Stock of the
Company set forth above as Total Option Shares (collectively, the "Shares") at
the Exercise Price Per Share set forth above (the "Exercise Price"), subject to
all of the terms and conditions of this Agreement and the Plan. If designated as
an Incentive Stock Option above, this Option is intended to qualify as an
"incentive stock option" ("ISO") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), to the extent permitted
under Code Section 422.

     2.   Vesting; Exercise Period.
          ------------------------

          2.1       Vesting of Shares. This Option shall be exercisable as it
                    -----------------
vests. Subject to the terms and conditions of the Plan and this Agreement, this
Option shall vest and become exercisable as to portions of the Shares as
follows: (a) this Option shall not be exercisable with respect to any of the
Shares until _________________, 200__ (the "First


                                       14

<PAGE>

Vesting Date"); (b) if Optionee has continuously provided services to the
Company, or any Parent or Subsidiary of the Company, then on the First Vesting
Date, this Option shall become exercisable as to _______________% of the Shares;
and (c) thereafter this Option shall become exercisable as to an additional
_____________% of the Shares on each monthly anniversary of the First Vesting
Date, provided that Optionee has continuously provided services to the Company,
or any Parent or Subsidiary of the Company, at all times during the relevant
month. This Option shall cease to vest upon Optionee's Termination and Optionee
shall in no event be entitled under this Option to purchase a number of shares
of the Company's Common Stock greater than the "Total Option Shares."

          2.2       Vesting of Options. Shares that are vested pursuant to the
                    ------------------
schedule set forth in Section 2.1 hereof are "Vested Shares." Shares that are
not vested pursuant to the schedule set forth in Section 2.1 hereof are
"Unvested Shares."

          2.3       Expiration. This Option shall expire on the Expiration Date
                    ----------
set forth above and must be exercised, if at all, on or before the earlier of
the Expiration Date or the date on which this Option is earlier terminated in
accordance with the provisions of Section 3 hereof.

     3.   Termination.
          -----------

          3.1       Termination for Any Reason Except Death, Disability or
                    ------------------------------------------------------
Cause. If Optionee is Terminated for any reason except Optionee's death,
-----
Disability or Cause, then this Option, to the extent (and only to the extent)
that it is vested in accordance with the schedule set forth in Section 2.1
hereof on the Termination Date, may be exercised by Optionee no later than three
(3) months after the Termination Date, but in any event no later than the
Expiration Date.

          3.2       Termination Because of Death or Disability. If Optionee is
                    ------------------------------------------
Terminated because of death or Disability of Optionee (or the Optionee dies
within three (3) months after Termination other than for Cause or because of
Disability), then this Option, to the extent that it is vested in accordance
with the schedule set forth in Section 2.1 hereof on the Termination Date, may
be exercised by Optionee (or Optionee's legal representative or authorized
assignee) no later than twelve (12) months after the Termination Date, but in
any event no later than the Expiration Date. Any exercise after three months
after the Termination Date when the Termination is for any reason other than
Optionee's death or disability, within the meaning of Code Section 22(e)(3),
shall be deemed to be the exercise of a nonqualified stock option.

          3.3       Termination for Cause. If Optionee is Terminated for Cause,
                    -----------------------
this Option will expire on the Optionee's date of Termination.

          3.4       No Obligation to Employ. Nothing in the Plan or this
                    -----------------------
Agreement shall confer on Optionee any right to continue in the employ of, or
other relationship with, the Company or any Parent or Subsidiary of the Company,
or limit in any way the right of the Company or any Parent or Subsidiary of the
Company to terminate Optionee's employment or other relationship at any time,
with or without Cause.


                                       15

<PAGE>

     4.   Manner of Exercise.
          ------------------

          4.1       Stock Option Exercise Agreement. To exercise this Option,
                    -------------------------------
Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in the form attached
hereto as Exhibit A, or in such other form as may be approved by the Company
          ---------
from time to time (the "Exercise Agreement"), which shall set forth, inter alia,
                                                                     ----- ----
Optionee's election to exercise this Option, the number of shares being
purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Optionee's investment intent and access to
information as may be required by the Company to comply with applicable
securities laws. If someone other than Optionee exercises this Option, then such
person must submit documentation reasonably acceptable to the Company that such
person has the right to exercise this Option.

          4.2       Limitations on Exercise. This Option may not be exercised
                    -----------------------
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. This Option may
not be exercised as to fewer than 100 Shares unless it is exercised as to all
Shares as to which this Option is then exercisable.

          4.3       Payment. The Exercise Agreement shall be accompanied by full
                    -------
payment of the Exercise Price for the Shares being purchased in cash (by check),
or where permitted by law:

          (a)  by cancellation of indebtedness of the Company to the Optionee;

          (b)  by surrender of shares of the Company's Common Stock that either:
               (1) have been owned by Optionee for more than six (6) months and
               have been paid for within the meaning of SEC Rule 144 (and, if
               such shares were purchased from the Company by use of a
               promissory note, such note has been fully paid with respect to
               such shares); or (2) were obtained by Optionee in the open public
               market; and (3) are clear of all liens, claims, encumbrances or
                       ---
               security interests;

          (c)  by waiver of compensation due or accrued to Optionee for services
               rendered;

          (d)  provided that a public market for the Company's stock exists: (1)
               through a "same day sale" commitment from Optionee and a
               broker-dealer that is a member of the National Association of
               Securities Dealers (an "NASD Dealer") whereby Optionee
               irrevocably elects to exercise this Option and to sell a portion
               of the Shares so purchased to pay for the Exercise Price and
               whereby the NASD Dealer irrevocably commits upon receipt of such
               Shares to forward the exercise price directly to the Company; or
                                                                             --
               (2) through a "margin" commitment from Optionee and an NASD
               Dealer whereby Optionee irrevocably elects to exercise this
               Option and to pledge the Shares so purchased to the NASD Dealer
               in a margin account as security for a loan from the NASD Dealer
               in the amount of the Exercise Price, and whereby the

                                       16

<PAGE>

               NASD Dealer irrevocably commits upon receipt of such Shares to
               forward the Exercise Price directly to the Company; or

          (e)  by any combination of the foregoing.

          4.4       Tax Withholding. Prior to the issuance of the Shares upon
                    ---------------
exercise of this Option, Optionee must pay or provide for any applicable federal
or state withholding obligations of the Company. If the Committee permits,
Optionee may provide for payment of withholding taxes upon exercise of this
Option by requesting that the Company retain Shares with a Fair Market Value
equal to the minimum amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Optionee by deducting the
Shares retained from the Shares issuable upon exercise.

          4.5       Issuance of Shares. Provided that the Exercise Agreement and
                    ------------------
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Optionee, Optionee's
authorized assignee, or Optionee's legal representative, and shall deliver
certificates representing the Shares with the appropriate legends affixed
thereto.

     5.   Notice of Disqualifying Disposition of ISO Shares. To the extent this
          -------------------------------------------------
Option is an ISO, if Optionee sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (a) the date two (2)
years after the Date of Grant, and (b) the date one (1) year after transfer of
such Shares to Optionee upon exercise of this Option, then Optionee shall
immediately notify the Company in writing of such disposition.

     6.   Compliance with Laws and Regulations. The exercise of this Option and
          ------------------------------------
the issuance and transfer of Shares shall be subject to compliance by the
Company and Optionee with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Optionee understands that the Company is under no obligation to
register or qualify the Shares with the SEC, any state securities commission or
any stock exchange to effect such compliance.

     7.   Nontransferability of Option. This Option may not be transferred in
          ----------------------------
any manner other than under the terms and conditions of the Plan or by will or
by the laws of descent and distribution and may be exercised during the lifetime
of Optionee only by Optionee. The terms of this Option shall be binding upon the
executors, administrators, successors and assigns of Optionee.

     8.   Tax Consequences. Set forth below is a brief summary as of the date
          ----------------
the Board adopted the Plan of some of the federal tax consequences of exercise
of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.


                                       17

<PAGE>

          8.1       Exercise of Incentive Stock Option. To the extent this
                    ----------------------------------
Option qualifies as an ISO, there will be no regular federal income tax
liability upon the exercise of this Option, although the excess, if any, of the
fair market value of the Shares on the date of exercise over the Exercise Price
will be treated as a tax preference item for federal income tax purposes and may
subject the Optionee to the alternative minimum tax in the year of exercise.

          8.2       Exercise of Nonqualified Stock Option. To the extent this
                    -------------------------------------
Option does not qualify as an ISO, there may be a regular federal income tax
liability upon the exercise of this Option. Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the fair market value of the Shares on the date of exercise
over the Exercise Price. The Company may be required to withhold from Optionee's
compensation or collect from Optionee and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income at the
time of exercise.

          8.3       Disposition of Shares. The following tax consequences may
                    ---------------------
apply upon disposition of the Shares.

                    a. Incentive Stock Options. If the Shares are held for
                       -----------------------
twelve (12) months or more after the date of the transfer of the Shares pursuant
to the exercise of an ISO and are disposed of two (2) years or more after the
Date of Grant, any gain realized on disposition of the Shares will be treated as
capital gain for federal income tax purposes. If Shares purchased under an ISO
are disposed of within the applicable one (1) year or two (2) year period, any
gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the excess, if any, of the
fair market value of the Shares on the date of exercise over the Exercise Price.

                    b. Nonqualified Stock Options. If the Shares are held for
                       --------------------------
more than twelve (12) months after the date of the transfer of the Shares
pursuant to the exercise of an NQSO, any gain realized on disposition of the
Shares will be treated as long-term capital gain.

                    c. Withholding. The Company may be required to withhold from
                       -----------
Optionee's compensation or collect from the Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income.

     9.   Privileges of Stock Ownership. Optionee shall not have any of the
          -----------------------------
rights of a stockholder with respect to any Shares until the Shares are issued
to Optionee.

     10.  Interpretation. Any dispute regarding the interpretation of this
          --------------
Agreement shall be submitted by Optionee or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Optionee.

     11.  Entire Agreement. The Plan is incorporated herein by reference. This
          ----------------
Agreement and the Plan and the Exercise Agreement constitute the entire
agreement and


                                       18

<PAGE>

understanding of the parties hereto with respect to the subject matter hereof
and supersede all prior understandings and agreements with respect to such
subject matter.

     12.  Notices. Any notice required to be given or delivered to the Company
          -------
under the terms of this Agreement shall be in writing and addressed to the
Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated above or to such other address as
such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile.

     13.  Successors and Assigns. The Company may assign any of its rights under
          ----------------------
this Agreement. This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of the Company. Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon Optionee and
Optionee's heirs, executors, administrators, legal representatives, successors
and assigns.

     14.  Governing Law. This Agreement shall be governed by and construed in
          -------------
accordance with the internal laws of the State of California, without regard to
that body of law pertaining to choice of law or conflict of law.

     15.  Acceptance. Optionee hereby acknowledges receipt of a copy of the Plan
          ----------
and this Agreement. Optionee has read and understands the terms and provisions
thereof, and accepts this Option subject to all the terms and conditions of the
Plan and this Agreement. Optionee acknowledges that there may be adverse tax
consequences upon exercise of this Option or disposition of the Shares and that
the Company has advised Optionee to consult a tax advisor prior to such exercise
or disposition.


                                       19

<PAGE>

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate by its duly authorized representative and Optionee has executed this
Agreement in duplicate as of the Date of Grant.


NETSCREEN TECHNOLOGIES, INC.               OPTIONEE


By:
     --------------------------------      -------------------------------------
                                           (Signature)


-------------------------------------      -------------------------------------
(Please print name)                        (Please print name)


-------------------------------------
(Please print title)


                                       20

<PAGE>

                                    EXHIBIT A
                                    ---------

                         STOCK OPTION EXERCISE AGREEMENT

<PAGE>

                                    Exhibit A
                                    ---------

                          NETSCREEN TECHNOLOGIES, INC.
                     2001 EQUITY INCENTIVE PLAN (the "Plan")
                         STOCK OPTION EXERCISE AGREEMENT
                         -------------------------------

I hereby elect to purchase the number of shares of Common Stock of Netscreen
Technologies, Inc. (the "Company") as set forth below:
<TABLE>
<S>                                                             <C>
Optionee:                                                       Number of Shares Purchased:
         -------------------------------------------------                                  ----------------------------------------
Social Security Number:                                         Purchase Price per Share:
                       -----------------------------------                                ------------------------------------------
Address:                                                        Aggregate Purchase Price:
        --------------------------------------------------                                ------------------------------------------
                                                                Date of Option Agreement:
        --------------------------------------------------                                ------------------------------------------

Type of Option:     [ ]   Incentive Stock Option                Exact Name of Title to Shares:
                    [ ]   Nonqualified Stock Option                                            -------------------------------------

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

</TABLE>

1.   Delivery of Purchase Price. Optionee hereby delivers to the Company the
Aggregate Purchase Price, to the extent permitted in the Option Agreement (the
"Option Agreement") as follows (check as applicable and complete):


[ ]  in cash (by check) in the amount of $_____________________, receipt of
     which is acknowledged by the Company;

[ ]  by cancellation of indebtedness of the Company to Optionee in the amount of
     $___________________________________;

[ ]  by delivery of ______________________________ fully-paid, nonassessable and
     vested shares of the Common Stock of the Company owned by Optionee for at
     least six (6) months prior to the date hereof (and which have been paid for
     within the meaning of SEC Rule 144), or obtained by Optionee in the open
     public market, and owned free and clear of all liens, claims, encumbrances
     or security interests, valued at the current Fair Market Value of
     $____________________ per share;

[ ]  by the waiver hereby of compensation due or accrued to Optionee for
     services rendered in the amount of $____________________________________ ;

[ ]  through a "same-day-sale" commitment, delivered herewith, from Optionee and
     the NASD Dealer named therein, in the amount of
     $_______________________________; or

[ ]  through a "margin" commitment, delivered herewith from Optionee and the
     NASD Dealer named therein, in the amount of
     $_________________________________________.

2.   Market Standoff Agreement. Optionee, if requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, agrees not to
sell or otherwise transfer or dispose of any Common Stock (or other securities)
of the Company held by Optionee during the period requested by the managing
underwriter following the effective date of a registration statement of the
Company filed under the Securities Act, provided that all officers and directors
of the Company are required to enter into similar agreements. Such agreement
shall be in writing in a form satisfactory to the Company and such underwriter.
The Company may impose stop-transfer instructions with respect to the shares (or
other securities) subject to the foregoing restriction until the end of such
period.

3.   Tax Consequences. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE TAX
CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF THE SHARES.
OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX CONSULTANT(S)
OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE
SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.

4.   Entire Agreement. The Plan and Option Agreement are incorporated herein by
reference. This Exercise Agreement, the Plan and the Option Agreement constitute
the entire agreement and understanding of the parties and supersede in their
entirety all prior understandings and agreements of the Company and Optionee
with respect to the subject matter hereof, and are governed by California law
except for that body of law pertaining to choice of law or conflict of law.

Date:
     ---------------------         ---------------------------------------------
                                   Signature of Optionee

<PAGE>

                                 Spousal Consent

     I acknowledge that I have read the foregoing Stock Option Exercise
Agreement (the "Agreement") and that I know its contents. I hereby consent to
and approve all of the provisions of the Agreement, and agree that the shares of
the Common Stock of Netscreen Technologies, Inc. purchased thereunder (the
"Shares") and any interest I may have in such Shares are subject to all the
provisions of the Agreement. I will take no action at any time to hinder
operation of the Agreement on these Shares or any interest I may have in or to
them.

                                        Date:
-------------------------------------         ----------------------------------
Signature of Optionee's Spouse

-------------------------------------
Spouse's Name - Typed or Printed

-------------------------------------
Optionee's Name - Typed or Printed

<PAGE>
                                                                          No. __

                          NETSCREEN TECHNOLOGIES, INC.

                           2001 EQUITY INCENTIVE PLAN

                             STOCK OPTION AGREEMENT
                             ----------------------
                          (For Non-Employee Directors)

     This Stock Option Agreement (this "Agreement") is made and entered into as
of the Date of Grant set forth below (the "Date of Grant") by and between
Netscreen Technologies, Inc., a Delaware corporation (the "Company"), and the
Optionee named below ("Optionee"). Capitalized terms not defined herein shall
have the meanings ascribed to them in the Company's 2001 Equity Incentive Plan
(the "Plan").

Optionee:
                              --------------------------------------------------
Social Security Number:
                              --------------------------------------------------
Optionee's Address:
                              --------------------------------------------------

Total Option Shares:
                              --------------------------------------------------
Exercise Price Per Share:
                              --------------------------------------------------
Date of Grant:
                              --------------------------------------------------

Expiration Date:
                              --------------------------------------------------
                              (unless earlier terminated under Section 3 hereof)

Type of Stock Option:         Nonqualified Stock Option
                              ----------------------------------------

     1.   Grant of Option. The Company hereby grants to Optionee an option (this
          ---------------
"Option") to purchase up to the total number of shares of Common Stock of the
Company set forth above as Total Option Shares (collectively, the "Shares") at
the Exercise Price Per Share set forth above (the "Exercise Price"), subject to
all of the terms and conditions of this Agreement and the Plan.

     2.   Vesting; Exercise Period.
          ------------------------

          2.1       Vesting of Shares. Subject to the terms and conditions of
                    -----------------
the Plan and this Agreement, this Option shall be exercisable as it vests.
Subject to the terms and conditions of the Plan and this Agreement, this Option
shall vest as to 2.78% of the Shares at the end of each full succeeding month
from the Date of Grant, so long as the Optionee continuously remains a director
or consultant of the Company.

                                       2

<PAGE>

          2.2       Expiration. This Option shall expire on the Expiration Date
                    ----------
set forth above and must be exercised, if at all, on or before the earlier of
the Expiration Date or the date on which this Option is earlier terminated in
accordance with the provisions of Section 3 hereof.

     3.   Termination. Except as provided below in this Section, this Option
          -----------
shall terminate and may not be exercised if Optionee ceases to be a member of
the Board of Directors of the Company ("Board Member") or if Optionee ceases to
be a consultant of the Company. The date on which Optionee ceases to be a Board
Member shall be referred to as the "Termination Date."

          3.1       Termination for Any Reason Except Death, Disability or
                    ------------------------------------------------------
Cause. If Optionee ceases to be a Board Member or a consultant for any reason
-----
except death, Disability or Cause, then this Option may be exercised by Optionee
no later than three (3) months after the Termination Date, but in any event no
later than the Expiration Date.

          3.2       Termination Because of Death or Disability. If Optionee
                    ------------------------------------------
ceases to be a Board Member or a consultant due to Optionee's death or
Disability (or dies within 3 months after Termination other than for Cause or
because of Disability), then this Option may be exercised by Optionee (or
Optionee's legal representative or authorized assignee) no later than twelve
(12) months after the Termination Date, but in any event no later than the
Expiration Date.

          3.3       Termination for Cause. If Optionee is Terminated for Cause,
                    ---------------------
this Option will expire on the Optionee's date of Termination.

     4.   Manner of Exercise.
          ------------------

          4.1       Stock Option Exercise Agreement. To exercise this Option,
                    -------------------------------
Optionee (or in the case of exercise after Optionee's death, Optionee's
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in the form attached
hereto as Exhibit A, or in such other form as may be approved by the Company
          ---------
from time to time (the "Exercise Agreement"), which shall set forth, inter alia,
                                                                     ----- ----
Optionee's election to exercise this Option, the number of shares being
purchased, any restrictions imposed on the Shares and any representations,
warranties and agreements regarding Optionee's investment intent and access to
information as may be required by the Company to comply with applicable
securities laws. If someone other than Optionee exercises this Option, then such
person must submit documentation reasonably acceptable to the Company that such
person has the right to exercise this Option.

          4.2       Limitations on Exercise. This Option may not be exercised
                    -----------------------
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. This Option may
not be exercised as to fewer than 100 Shares unless it is exercised as to all
Shares as to which this Option is then exercisable.

                                       3

<PAGE>

          4.3       Payment. The Exercise Agreement shall be accompanied by full
                    -------
payment of the Exercise Price for the Shares being purchased in cash (by check),
or where permitted by law:

          (a)  by cancellation of indebtedness of the Company to the Optionee;

          (b)  by surrender of shares of the Company's Common Stock that either:
               (1) have been owned by Optionee for more than six (6) months and
               have been paid for within the meaning of SEC Rule 144 (and, if
               such shares were purchased from the Company by use of a
               promissory note, such note has been fully paid with respect to
               such shares); or (2) were obtained by Optionee in the open public
               market; and (3) are clear of all liens, claims, encumbrances or
                       ---
               security interests;

          (c)  by waiver of compensation due or accrued to Optionee for services
               rendered;

          (d)  provided that a public market for the Company's stock exists: (1)
               through a "same day sale" commitment from Optionee and a
               broker-dealer that is a member of the National Association of
               Securities Dealers (an "NASD Dealer") whereby Optionee
               irrevocably elects to exercise this Option and to sell a portion
               of the Shares so purchased to pay for the Exercise Price and
               whereby the NASD Dealer irrevocably commits upon receipt of such
               Shares to forward the exercise price directly to the Company; or
                                                                             --
               (2) through a "margin" commitment from Optionee and an NASD
               Dealer whereby Optionee -- irrevocably elects to exercise this
               Option and to pledge the Shares so purchased to the NASD Dealer
               in a margin account as security for a loan from the NASD Dealer
               in the amount of the Exercise Price, and whereby the NASD Dealer
               irrevocably commits upon receipt of such Shares to forward the
               Exercise Price directly to the Company; or

          (e)  by any combination of the foregoing.

          4.4       Tax Withholding. Prior to the issuance of the Shares upon
                    ---------------
exercise of this Option, Optionee must pay or provide for any applicable federal
or state withholding obligations of the Company. If the Committee permits,
Optionee may provide for payment of withholding taxes upon exercise of this
Option by requesting that the Company retain Shares with a Fair Market Value
equal to the minimum amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Optionee by deducting the
Shares retained from the Shares issuable upon exercise.

          4.5       Issuance of Shares. Provided that the Exercise Agreement and
                    ------------------
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Optionee, Optionee's
authorized assignee, or Optionee's legal representative, and shall deliver
certificates representing the Shares with the appropriate legends affixed
thereto.

                                       4

<PAGE>

     5.   Compliance with Laws and Regulations. The exercise of this Option and
          ------------------------------------
the issuance and transfer of Shares shall be subject to compliance by the
Company and Optionee with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Optionee understands that the Company is under no obligation to
register or qualify the Shares with the SEC, any state securities commission or
any stock exchange to effect such compliance.

     6.   Nontransferability of Option. This Option may not be transferred in
          ----------------------------
any manner other than under the terms and conditions of the Plan or by will or
by the laws of descent and distribution and may be exercised during the lifetime
of Optionee only by Optionee. The terms of this Option shall be binding upon the
executors, administrators, successors and assigns of Optionee.

     7.   Tax Consequences. Set forth below is a brief summary as of the date
          ----------------
the Board adopted the Plan of some of the federal tax consequences of exercise
of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.

          7.1       Exercise of Nonqualified Stock Option. There may be a
                    -------------------------------------
regular federal income tax liability upon the exercise of this Option. Optionee
will be treated as having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the fair market value of the
Shares on the date of exercise over the Exercise Price. The Company may be
required to withhold from Optionee's compensation or collect from Optionee and
pay to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.

          7.2       Disposition of Shares. If the Shares are held for more than
                    ---------------------
twelve (12) months after the date of the transfer of the Shares pursuant to the
exercise of an NQSO, any gain realized on disposition of the Shares will be
treated as long-term capital gain.

     8.   Privileges of Stock Ownership. Optionee shall not have any of the
          -----------------------------
rights of a stockholder with respect to any Shares until the Shares are issued
to Optionee.

     9.   Interpretation. Any dispute regarding the interpretation of this
          --------------
Agreement shall be submitted by Optionee or the Company to the Committee for
review. The resolution of such a dispute by the Committee shall be final and
binding on the Company and Optionee.

     10.  Entire Agreement. The Plan is incorporated herein by reference. This
          ----------------
Agreement and the Plan and the Exercise Agreement constitute the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior understandings and agreements with respect
to such subject matter.

                                       5

<PAGE>

     11.  Notices. Any notice required to be given or delivered to the Company
          -------
under the terms of this Agreement shall be in writing and addressed to the
Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated above or to such other address as
such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: personal delivery;
three (3) days after deposit in the United States mail by certified or
registered mail (return receipt requested); one (1) business day after deposit
with any return receipt express courier (prepaid); or one (1) business day after
transmission by facsimile.

     12.  Successors and Assigns. The Company may assign any of its rights under
          ----------------------
this Agreement. This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of the Company. Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon Optionee and
Optionee's heirs, executors, administrators, legal representatives, successors
and assigns.

     13.  Governing Law. This Agreement shall be governed by and construed in
          -------------
accordance with the internal laws of the State of California, without regard to
that body of law pertaining to choice of law or conflict of law.

     14.  Acceptance. Optionee hereby acknowledges receipt of a copy of the Plan
          ----------
and this Agreement. Optionee has read and understands the terms and provisions
thereof, and accepts this Option subject to all the terms and conditions of the
Plan and this Agreement. Optionee acknowledges that there may be adverse tax
consequences upon exercise of this Option or disposition of the Shares and that
the Company has advised Optionee to consult a tax advisor prior to such exercise
or disposition.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate by its duly authorized representative and Optionee has executed this
Agreement in duplicate as of the Date of Grant.

NETSCREEN TECHNOLOGIES, INC.             OPTIONEE

By:
   ---------------------------------     ---------------------------------------
                                         (Signature)

------------------------------------     ---------------------------------------
(Please print name)                      (Please print name)


------------------------------------
(Please print title)

                                       6

<PAGE>

                                    EXHIBIT A
                                    ---------

                         STOCK OPTION EXERCISE AGREEMENT

<PAGE>
                                    Exhibit A
                                    ---------

                          NETSCREEN TECHNOLOGIES, INC.
                     2001 EQUITY INCENTIVE PLAN (the "Plan")
                         STOCK OPTION EXERCISE AGREEMENT
                         -------------------------------
                          (For Non-Employee Directors)

I hereby elect to purchase the number of shares of Common Stock of Netscreen
Technologies, Inc. (the "Company") as set forth below:
<TABLE>
<S>                                                             <C>
Optionee:                                                       Number of Shares Purchased:
         -------------------------------------------------                                  ----------------------------------------
Social Security Number:                                         Purchase Price per Share:
                       -----------------------------------                                ------------------------------------------
Address:                                                        Aggregate Purchase Price:
        --------------------------------------------------                                ------------------------------------------
                                                                Date of Option Agreement:
        --------------------------------------------------                                ------------------------------------------

Type of Option:     Nonqualified Stock Option                   Exact Name of Title to Shares:
                                                                                               -------------------------------------

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

</TABLE>

1.   Delivery of Purchase Price. Optionee hereby delivers to the Company the
Aggregate Purchase Price, to the extent permitted in the Option Agreement (the
"Option Agreement") as follows (check as applicable and complete):

[ ]  in cash (by check) in the amount of $_____________________, receipt of
     which is acknowledged by the Company;

[ ]  by cancellation of indebtedness of the Company to Optionee in the amount of
     $___________________________________;

[ ]  by delivery of ______________________________ fully-paid, nonassessable and
     vested shares of the Common Stock of the Company owned by Optionee for at
     least six (6) months prior to the date hereof (and which have been paid for
     within the meaning of SEC Rule 144), or obtained by Optionee in the open
     public market, and owned free and clear of all liens, claims, encumbrances
     or security interests, valued at the current Fair Market Value of
     $____________________ per share;

[ ]  by the waiver hereby of compensation due or accrued to Optionee for
     services rendered in the amount of $____________________________________;

[ ]  through a "same-day-sale" commitment, delivered herewith, from Optionee and
     the NASD Dealer named therein, in the amount of
     $_______________________________; or

[ ]  through a "margin" commitment, delivered herewith from Optionee and the
     NASD Dealer named therein, in the amount of
     $_________________________________________.

2.   Market Standoff Agreement. Optionee, if requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, agrees not to
sell or otherwise transfer or dispose of any Common Stock (or other securities)
of the Company held by Optionee during the period requested by the managing
underwriter following the effective date of a registration statement of the
Company filed under the Securities Act, provided that all officers and directors
of the Company are required to enter into similar agreements. Such agreement
shall be in writing in a form satisfactory to the Company and such underwriter.
The Company may impose stop-transfer instructions with respect to the shares (or
other securities) subject to the foregoing restriction until the end of such
period.

3.   Tax Consequences. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE TAX
CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF THE SHARES.
OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX CONSULTANT(S)
OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE
SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.

4.   Entire Agreement. The Plan and Option Agreement are incorporated herein by
reference. This Exercise Agreement, the Plan and the Option Agreement constitute
the entire agreement and understanding of the parties and supersede in their
entirety all prior understandings and agreements of the Company and Optionee
with respect to the subject matter hereof, and are governed by California law
except for that body of law pertaining to choice of law or conflict of law.

Date:
     ---------------------         ---------------------------------------------
                                   Signature of Optionee

<PAGE>
                                 Spousal Consent

     I acknowledge that I have read the foregoing Stock Option Exercise
Agreement (the "Agreement") and that I know its contents. I hereby consent to
and approve all of the provisions of the Agreement, and agree that the shares of
the Common Stock of Netscreen Technologies, Inc. purchased thereunder (the
"Shares") and any interest I may have in such Shares are subject to all the
provisions of the Agreement. I will take no action at any time to hinder
operation of the Agreement on these Shares or any interest I may have in or to
them.

                                        Date:
-------------------------------------         ----------------------------------
Signature of Optionee's Spouse

-------------------------------------
Spouse's Name - Typed or Printed

-------------------------------------
Optionee's Name - Typed or Printed


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