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                                                                    EXHIBIT 10.3











                                 FIREPOND, INC.
                              AMENDED AND RESTATED
                                 1997 STOCK PLAN





















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                                 FIREPOND, INC.
                      AMENDED AND RESTATED 1997 STOCK PLAN



SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS

     The name of this plan is the Firepond, Inc. 1997 Stock Plan (the "Plan").
The purpose of the Plan is to enable Firepond, Inc. (the "Company") to retain
and attract executives and other key employees, directors and consultants who
contribute to the Company's success by their ability, ingenuity and industry,
and to enable such individuals to participate in the long-term success and
growth of the Company by giving them a proprietary interest in the Company.

     For purposes of the Plan, the following terms shall be defined as set forth
below:

     a.   "BOARD" means the Board of Directors of the Company as it may be
          comprised from time to time.

     b.   "CAUSE" means means (i) any material breach by the optionee of any
          agreement to which the optionee and the Company or its Subsidiaries
          are parties, including breach of covenants not to compete and
          covenants relating to the protection of confidential information and
          proprietary rights of the Company or its Subsidiaries which breach is
          not cured pursuant to the terms of such agreement, (ii) any act (other
          than retirement) or omission to act by the optionee which would
          reasonably be likely to have a material adverse effect on the business
          of the Company or its Subsidiaries or on the optionee's ability to
          perform services for the Company or its Subsidiaries, including,
          without limitation, the conviction or plea of guilty or nolo contendre
          to any crime (other than ordinary traffic violations) which impairs
          the optionee's ability to perform his or her duties, (iii) any
          material misconduct or willful and deliberate non-performance of
          duties by the optionee in connection with the business or affairs of
          the Company or its Subsidiaries, (iv) the optionee's theft,
          dishonesty, or falsification of the Company's or its Subsidiaries'
          documents or records, or (v) the optionee's improper use or disclosure
          of the Company's or its Subsidiaries' confidential or proprietary
          information. All references herein to the Company or its Subsidiaries
          shall include any successor entity thereof.

     c.   "CODE" means the Internal Revenue Code of 1986, as amended from time
          to time, or any successor statute.

     d.   "COMMITTEE" means the Committee referred to in Section 2 of the Plan.
          If at any time no Committee shall be in office, then the functions of
          the Committee specified in the Plan shall be exercised by the Board,
          unless the Plan specifically states otherwise.

     e.   "CONSULTANT" means any person, including an advisor, engaged by the
          Company or a Parent Corporation or a Subsidiary of the Company to
          render services and who is compensated for such services and who is
          not an employee of the Company or any Parent Corporation or Subsidiary
          of the Company. A director who is not an employee may serve as a
          Consultant.

     f.   "COMPANY" means Firepond, Inc., a corporation organized under the laws
          of the State of Delaware (or any successor corporation).

     g.   "DEFERRED STOCK" means an award made pursuant to Section 8 below of
          the right to receive stock at the end of a specified deferral period.


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     h.   "DISABILITY" means permanent and total disability as determined by the
          Committee.

     i.   "EARLY RETIREMENT" means retirement, with consent of the Committee at
          the time of retirement, from active employment with the Company and
          any Subsidiary or Parent Corporation of the Company.

     j.   "FAIR MARKET VALUE" of Stock on any given date shall be determined by
          the Committee as follows:

          (a)  if the Stock is listed for trading on one or more national
               securities exchanges, or is traded on The Nasdaq Stock Market,
               the last reported sales price on the principal such exchange or
               The Nasdaq Stock Market on the date in question, or if such Stock
               shall not have been traded on such principal exchange on such
               date, the last reported sales price on such principal exchange or
               The Nasdaq Stock Market on the first day prior thereto on which
               such Stock was so traded, or

          (b)  if the Stock is not listed for trading on a national securities
               exchange or The Nasdaq Stock Market, but is traded in the
               over-the-counter market, including The Nasdaq Small Cap Market,
               the closing bid price for such Stock on the date in question, or
               if there is no such bid price for such Stock on such date the
               closing bid price on the first day prior thereto on which such
               price existed; or

          (c)  if neither (a) or (b) is applicable, by any means fair and
               reasonable by the Committee, which determination shall be final
               and binding on all parties.

     k.   "INCENTIVE STOCK OPTION" means any Stock Option intended to be and
          designated as an "Incentive Stock Option" within the meaning of
          Section 422 of the Code.

     l.   "NON-EMPLOYEE DIRECTOR" shall have the meaning set forth in Rule
          16b-3(b)(3) as promulgated by the Securities and Exchange Commission
          under the Securities Exchange Act of 1934, as amended, or any
          successor definition adopted by the Commission.

     m.   "NON-QUALIFIED STOCK OPTION" means any Stock Option that is not an
          Incentive Stock Option, and is intended to be and is designated as a
          "Non-Qualified Stock Option."

     n.   "NORMAL RETIREMENT" means retirement from active employment with the
          Company and any Subsidiary or Parent Corporation of the Company on or
          after age 65.

     o.   "OUTSIDE DIRECTOR" means a director who

          (a)  is not a current employee of the Company or any member of an
               affiliated group which includes the Company,

          (b)  is not a former employee of the Company who receives compensation
               for prior services (other than benefits under a tax-qualified
               retirement plan) during the taxable year,

          (c)  has not been an officer of the Company;

          (d)  does not receive remuneration from the Company, either directly
               or indirectly, in any capacity other than as a director, except
               as otherwise permitted under Code Section 162(m) and regulations
               thereunder. For this purpose, remuneration includes any

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               payment in exchange for goods or services. This definition shall
               be further governed by the provisions of Code Sections 162(m) and
               regulations promulgated thereunder.

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

     q.   "RESTRICTED STOCK" means an award of shares of Stock that are subject
          to restrictions under Section 7 below.

     r.   "RETIREMENT" means Normal Retirement or Early Retirement.

     s.   "STOCK" means the Common Stock of the Company.

     t.   "STOCK APPRECIATION RIGHT" means the right pursuant to an award
          granted under Section 6 below to surrender to the Company all or a
          portion of a Stock Option in exchange for an amount equal to the
          difference between

          (i)  Fair Market Value, as of the date such Stock Option or such
               portion thereof is surrendered, of the shares of Stock covered by
               such Stock Option or such portion thereof and

          (ii) the aggregate exercise price of such Stock Option or such portion
               thereof.

     u.   "STOCK OPTION" means any option to purchase shares of Stock granted
          pursuant to Section 5 below.

     v.   "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 the
          chain.

     w.   "TRANSACTION" means the dissolution or liquidation of the Company,
          (ii) the sale of all or substantially all of the assets of the Company
          on a consolidated basis to an unrelated person or entity, (iii) a
          merger, reorganization or consolidation between the Company and
          another person or entity (other than a holding company or Subsidiary
          of the Company) as a result of which, the holders of the Company's
          outstanding voting power immediately prior to such transaction do not
          own a majority of the outstanding voting power of the surviving or
          resulting entity immediately upon completion of such transaction, (iv)
          the sale of all of the Stock of the Company to an unrelated person or
          entity or (v) any other transaction in which the owners of the
          Company's outstanding voting power prior to such transaction do not
          own at least a majority of the outstanding voting power of the
          relevant entity after the transaction, in each case, regardless of the
          form thereof

SECTION 2. ADMINISTRATION.

     The Plan shall be administered by the Board of Directors or by a Committee
of not less than two directors, all of whom shall be Non-Employee Directors upon
the Company becoming subject to the insider reporting requirements of Section 16
of the Securities Exchange Act of 1934, as amended, and also Outside Directors
upon the Company becoming subject to the requirements of Rule 162(m) of the
Code. Committee members shall be appointed by the Board of Directors of the
Company and shall serve

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at the pleasure of the Board. Any and all functions of the Committee specified
in the Plan may be exercised by the Board, unless the Plan specifically states
otherwise.

     The Committee shall have the power and authority to grant to eligible
employees, directors or Consultants, pursuant to the terms of the Plan: (i)Stock
Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock, or (iv)Deferred
Stock awards. In particular, the Committee shall have the authority:

              (i)    to select the officers, directors and other key employees
                     of the Company and its Subsidiaries and other eligible
                     persons to whom Stock Options, Stock Appreciation Rights,
                     Restricted Stock and Deferred Stock awards may from time to
                     time be granted hereunder;

              (ii)   to determine whether and to what extent Incentive Stock
                     Options, Non-Qualified Stock Options, Stock Appreciation
                     Rights, Restricted Stock and Deferred Stock awards, or a
                     combination of the foregoing, are to be granted hereunder,

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

              (iv)   to determine the terms and conditions, not inconsistent
                     with the terms of the Plan, of any award granted hereunder
                     (including but not limited to, any restriction on any Stock
                     Option or other award and/or the shares of Stock relating
                     thereto), which authority shall be exclusively vested in
                     the Committee (and not the Board) for purposes of
                     establishing performance criteria used with Restricted
                     Stock and Deferred Stock awards provided, however, in the
                     event of a merger or asset sale, the applicable provisions
                     of Sections 5(c) and 7(c) of the Plan shall govern. the
                     acceleration of the vesting of any Stock option or awards;

              (v)    to determine whether, to what extent and under what
                     circumstances Stock and other amounts payable with respect
                     to an award under this Plan shall be deferred either
                     automatically or at the election of the participant.

     The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
form time to time, deem advisable; to interpret the terms and provisions of the
Plan as it shall, from time to time, deem advisable; to interpret the terms and
provisions of the Plan and any award issued under the Plan (and any agreements
relating thereto); and to otherwise supervise the administration of the Plan.
The Committee may delegate to executive officers of the Company the authority to
exercise the powers specified in (i), (ii), (iii), (iv) and (v) above with
respect to persons who are not executive officers of the Company.

     All decisions made by the Committee pursuant to the provisions of the Plan
shall be final and binding on all persons, including the Company and Plan
participants.

SECTION 3. STOCK SUBJECT TO PLAN.

     The total number of shares of Stock reserved and available for distribution
under the Plan shall be 14,095,222. Such shares may consist, in whole or in
part, of authorized and unissued shares.

     Subject to paragraph (b)(iv) of Section 6 below, if any shares that have
been optioned cease to be subject to Stock Options or if any shares subject to
any Restricted Stock or Deferred Stock award granted hereunder are forfeited or
such award otherwise terminates without a payment being made to the participant,
such shares shall again be available for distribution in connection with future
awards under the Plan.

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     In the event of any merger; reorganization, consolidation,
recapitalization, stock dividend, other change in corporate structure affecting
the Stock, or spin-off or other distribution of assets to shareholders, such
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding options granted under the Plan, and in the number of
shares subject to Restricted Stock or Deferred Stock awards granted under the
Plan as may be determined by the Committee, in its sole discretion, provided
that the number of shares subject to any award shall always be a whole number.
Such adjusted option price shall also be used to determine the amount payable by
the Company upon the exercise of any Stock Appreciation Right associated with
any Option.

SECTION 4. ELIGIBILITY

     Officers, directors, other key employees of the Company and Subsidiaries,
and Consultants who are responsible for or contribute to the management, growth
and profitability of the business of the Company and its Subsidiaries are
eligible to be granted Stock Options, Stock Appreciation Rights, Restricted
Stock or Deferred Stock awards under the Plan. The optionees and participants
under the Plan shall be selected from time to time by the Committee, in its sole
discretion, from among those eligible, and the Committee shall determine, in its
sole discretion, the number of shares covered by each award.

     Notwithstanding the foregoing, upon the Company becoming subject to the
requirements of Section 162(m) of the Code, no person shall receive grants or
awards under this Plan which exceed 1,500,000 shares during any fiscal year of
the Company.

SECTION 5. STOCK OPTIONS.

     Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.

     The Stock Options granted under the Plan may be of two types: (i)Incentive
Stock Options and (ii) Non-Qualified Stock Options. No Incentive Stock Options
shall be granted under the Plan after May 7, 2007.

     The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non-Qualified Stock Options, or both types of options (in each
case with or without Stock Appreciation Rights). To the extent that any option
does not qualify its an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option.

     Anything in the Plan to the contrary notwithstanding, no term of this Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised, so
as to disqualify either the Plan or any Incentive Stock Option under Section 422
of the Code. The preceding sentence shall not preclude any modification or
amendment to an outstanding Incentive Stock Option, whether or not such
modification or amendment results in disqualification of such Stock Option as an
Incentive Stock Option provided the optionee consents in writing to the
modification or amendment.

     Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.

          (a)  OPTION PRICE. The option price per share of Stock purchasable
               under a Stock Option shall be determined by the Committee at the
               time of grant. In no event shall


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               the option price per share of Stock purchasable under an
               Incentive Stock Option be less than 100% of Fair Market Value on
               the date the option is granted. If an employee owns or is deemed
               to own (by reason of the attribution rules applicable under
               Section 424(d) of the Code) more than 10% of the combined voting
               power of all classes of stock of the Company or any Parent
               Corporation or Subsidiary and an Incentive Stock Option is
               granted to such employee, the option price shall be no less than
               110% of the Fair Market Value of the Stock on the date the option
               is granted.

          (b)  OPTION TERM. The term of each Stock Option shall be fixed by the
               Committee, but no Incentive Stock Option shall be exercisable
               more than ten years after the date the option is granted. If an
               employee owns or is deemed to own (by reason of the attribution
               rules of Section 424(d) of the Code) more than10% of the combined
               voting power of all classes of stock of the Company or any Parent
               Corporation or Subsidiary and an Incentive Stock Option is
               granted to such employee, the term of such option shall be no
               more than five years from the date of grant.

          (c)  EXERCISABILITY. Stock Options shall be exercisable at such time
               or times as determined by the Committee at or after grant. If the
               Committee provides, in its discretion, that any option is
               exercisable only in installments, the Committee may waive such
               installment exercise provisions at any time, provided, however,
               that upon the Company becoming subject to the requirements of
               Section 16 of the Securities Exchange Act of 1934, as amended, a
               Stock Option granted to an officer, director or 10% shareholder
               of the Company shall not be exercisable for a period of six (6)
               months after the date of grant UNLESS the Stock Option has been
               approved by the Board, the ------ Committee or shareholders of
               the Company. Notwithstanding anything contained in the Plan to
               the contrary, the Committee may, in its discretion, accelerate,
               extend or vary the term of any Stock Option or any installment
               thereof, whether or not the optionee is then employed by the
               Company, if such action is deemed to be in the best interests of
               the Company

               The grant of an option pursuant to the Plan shall not limit in
          any way the right or power of the Company to make adjustments,
          reclassifications, reorganizations or changes of its capital or
          business structure or to merge, exchange or consolidate or to
          dissolve, liquidate, sell or transfer all or any part of its business
          or assets.

          (d)  METHOD OF EXERCISE. Stock Options may be exercised in whole or in
               part at any time during the option period by giving written
               notice of exercise to the Company specifying the number of shares
               to be purchased. Such notice shall be accompanied by payment in
               full of the purchase price, either by check, or by any other form
               of legal consideration deemed sufficient by the Committee and
               consistent with the Plan's purpose and applicable law, including
               promissory notes or a properly executed exercise notice together
               with irrevocable instructions to a broker acceptable to the
               Company to promptly deliver to the Company the amount of sale or
               loan proceeds to pay the exercise price. As determined by the
               Committee at the time of grant or exercise, in its sole
               discretion, payment in full or in part may also be made in the
               form of Stock already owned by the optionee (which in the case of
               Stock acquired upon exercise of an option have been owned for
               more than six months on the date of surrender)or, in the case of
               the exercise of a Non-Qualified Stock Option, Restricted Stock or
               Deferred Stock subject to an award hereunder (based, in each
               case, on the Fair Market Value of the Stock on the date the
               option is exercised, as determined by the Committee), provided,
               however, that, in the case of an Incentive Stock Option, the
               right to make a payment in the form of already owned shares may
               be authorized only at the time the option is granted, and
               provided further that in the event payment is made in the form of
               shares of Restricted Stock or a Deferred Stock award, the

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               optionee will receive a portion of the option shares in the form
               of and in an amount equal to, the Restricted Stock or Deferred
               Stock award tendered as payment by the optionee. If the terms of
               an option so permit, an optionee may elect to pay all or part of
               the option exercise price by having the Company withhold from the
               shares of Stock that would otherwise be issued upon exercise that
               number of shares of Stock having a Fair Market Value equal to the
               aggregate option exercise price for the shares with respect to
               which such election is made. No shares of Stock shall be issued
               until full payment therefor has been made. An optionee shall
               generally have the rights to dividends and other rights of a
               shareholder with respect to shares subject to the option when the
               optionee has given written notice of exercise, has paid in full
               for such shares, and, if requested, has given the representation
               described in paragraph (a) of Section 12.

          (e)  NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be
               transferable by the optionee otherwise than by will or by the
               laws of descent and distribution, and all Stock Options shall be
               exercisable, during the optionee's lifetime, only by the optionee
               or by the optionee's legal representative or guardian in the
               event of the optionee's incapacity. Notwithstanding the
               foregoing, the Board in its sole discretion may provide in any
               Stock Option agreement that the optionee may transfer, without
               consideration for the transfer, his or her Non-Qualified Stock
               Options to members of his or her immediate family, to trusts for
               the benefit of such family members, or to partnerships in which
               such family members are the only partners or to limited liability
               companies in which such family members are the only members,
               provided that the transferee agrees in writing with the Company
               to be bound by all of the terms and conditions of this Plan and
               the applicable Option.

          (f)  TERMINATION BY DEATH. Unless otherwise provided by the Committee,
               if an optionee's employment by the Company and any Subsidiary or
               Parent Corporation terminates by reason of death, the Stock
               Option may thereafter be immediately exercised, to the extent
               then exercisable, by the legal representative of the estate or by
               the legatee of the optionee under the will, of the optionee, for
               a Period of three months from the date of such death or until the
               expiration of the stated term of the option, whichever period is
               shorter.

          (g)  TERMINATION BY REASON OF DISABILITY. Unless otherwise provided by
               the Committee, if an optionee's employment by the Company and any
               Subsidiary or Parent Corporation terminates by reason of
               Disability, any Stock Option held by such optionee may thereafter
               be exercised, to the extent it was exercisable at the time of
               termination due to Disability, but may not be exercised after
               twelve months from the date of such termination of employment or
               the expiration of the stated term of the option, whichever period
               is the shorter. In the event of termination of employment by
               reason of Disability, if an Incentive Stock Option is exercised
               after the expiration of the exercise periods that apply for
               purposes of Section 422 of the Code, the option will thereafter
               be treated as a Non-Qualified Stock Option.

          (h)  TERMINATION BY REASON OF RETIREMENT. Unless otherwise provided by
               the Committee, if an optionee's employment by the Company and any
               Subsidiary or Parent Corporation terminates by reason of
               Retirement and the terms of the Stock Option so provide, any
               Stock Option held by such optionee may thereafter be exercised to
               the extent it was exercisable at the time of such Retirement, but
               may not be exercised after three months from the date of such
               termination of employment or the expiration of the stated term of
               the option, whichever period is the shorter. In the event of
               termination of employment by reason of Retirement, if an
               Incentive Stock Option is exercised after the expiation of the
               exercise periods that apply for purposes


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               of Section 422 of the Code, the option will thereafter be treated
               as a Non-Qualified Stock Option.

          (i)  OTHER TERMINATION. In the event an optionee's continuous status
               as an employee or Consultant terminates (other than upon the
               optionee's death, Retirement or Disability), the optionee may
               exercise his or her Option, but only within such period of time
               as is determined by the Committee, and only to the extent that
               the optionee was entitled to exercise it at the date of
               termination(but in no event later than the expiration of the term
               of such Option as set forth in the Notice of Grant). In the case
               of an Incentive Stock Option, the Committee shall determine such
               period of time when the Option is granted. If such period of time
               with respect to an Incentive Stock Option exceeds 90 days and the
               Option is exercised after 90 days from the date of termination,
               such Option shall thereafter be treated as a Non-Qualified Stock
               Option. In the event an optionee's employment with the Company is
               terminated for Cause, or under such other circumstances as the
               Committee shall define in the option grant, all Stock Options
               granted to such optionee shall immediately terminate.

          (j)  ANNUAL LIMIT ON INCENTIVE STOCK OPTION. The aggregate Fair Market
               Value (determined as of the time the Stock Option is granted) of
               the Common Stock with respect to which an Incentive Stock Option
               under this Plan or any other plan of the Company and any
               Subsidiary or Parent Corporation is exercisable for the first
               time by an optionee during any calendar year shall not exceed
               $100,000.

          (k)  DIRECTORS. The Board of Directors may amend this Plan to provide
               for annual automatic grants to directors who are not employees of
               the Company upon such terms and conditions as the Board deems
               advisable. In the event discretionary Stock Options are granted
               to members of the Committee, such Stock Options shall be granted
               by the Board.

SECTION 6. STOCK APPRECIATION RIGHTS.

     (a)  GRANT AND EXERCISE. Stock Appreciation Rights may be granted in
          conjunction with all or part of any Stock Option granted under the
          Plan. In the case of a Non-Qualified Stock Option, such rights may be
          granted either at or after the time of the grant of such Option. In
          the case of an Incentive Stock Option, such rights may be granted only
          at the time of the grant of the Stock Option.

     In the event Stock Appreciation Rights are granted to members of the
Committee, such rights shall be granted by the Board.

     A Stock Appreciation Right or applicable portion thereof granted with
respect to a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, except that a
Stock Appreciation Right granted with respect to less than the full number of
shares covered by a related stock Option shall not be reduced until the exercise
or termination of the related Stock Option exceeds the number of shares not
covered by the Stock Appreciation Right.

     A Stock Appreciation Right may be exercised by an optionee, in accordance
with paragraph (b) of this Section 6, by surrendering the applicable portion of
the related Stock Option. Upon such exercise and surrender, the optionee shall
be entitled to receive an amount determined in the manner prescribed in
paragraph (b) of this Section 6. Stock Options which have been so surrendered,
in whole or in part, shall no longer be exercisable to the extent the related
Stock Appreciation Rights have been exercised.

<PAGE>

     (b)  TERMS AND CONDITIONS. Stock Appreciation Rights shall be subject to
          such terms and conditions, not inconsistent with the provisions of the
          Plan, as shall be determined from time to time by the Committee,
          including the following: Stock Appreciation Rights shall be
          exercisable only at such time or times and to the extent that the
          Stock Options to which they relate shall be exercisable in accordance
          with the provisions of Section 5 and this Section 6 of the Plan.

              (i)    Upon the exercise of a Stock Appreciation Right, an
                     optionee shall be entitled to receive up to, but not more
                     than, an amount in cash or shares of Stock equal in value
                     to the excess of the Fair Market Value of one share of
                     Stock over the option price per share specified in the
                     related option multiplied by the number of shares in
                     respect of which the Stock Appreciation Right shall have
                     been exercised, with the Committee having the right to
                     determine the form of payment.

              (ii)   Stock Appreciation Rights shall be transferable only when
                     and to the extent that the underlying Stock Option would be
                     transferable under Section 5 of the Plan.

              (iii)  Upon the exercise of a Stock Appreciation Right, the Stock
                     Option or part thereof to which such Stock Appreciation
                     Right is related shall be deemed to have been exercised for
                     the purpose of the limitation set forth in Section 3 of the
                     Plan on the number of shares of Stock to be issued under
                     the Plan, but only to the extent of the number of shares
                     issued or issuable under the Stock Appreciation Right at
                     the time of exercise based on the value of the Stock
                     Appreciation Right at such time.

              (iv)   A Stock Appreciation Right granted in connection with an
                     Incentive Stock Option may be exercised only if and when
                     the market price of the Stock subject to the Incentive
                     Stock Option exceeds the exercise price of such Option.

SECTION 7. RESTRICTED STOCK.

     (a)  ADMINISTRATION. Shares of Restricted Stock may be issued either alone
          or in addition to other awards granted under the Plan. The Committee
          shall determine the officers, directors, key employees and Consultants
          of the Company and Subsidiaries to whom, and the time or times at
          which, grants of Restricted Stock will be made, the number of shares
          to be awarded, the time or times within which such awards may be
          subject to forfeiture, and all other conditions of the awards. The
          Committee may also condition the grant of Restricted Stock upon the
          attainment of specified performance goals. The provisions of
          Restricted Stock awards need not be the same with respect to each
          recipient.

     In the event Restricted Stock awards are granted to members of the
Committee, such awards shall be granted by the Board.

     (b)  AWARDS AND CERTIFICATES. The prospective recipient of an award of
          shares of Restricted Stock shall not have any rights with respect to
          such award, unless and until such recipient has executed an agreement
          evidencing the award and has delivered a fully executed copy thereof
          to the Company, and has otherwise complied with the then applicable
          terms and conditions.

              (i)    Each participant shall be issued a stock certificate in
                     respect of shares of Restricted Stock awarded under the
                     Plan. Such certificate shall be registered in the name of
                     the participant and shall bear an appropriate legend
                     referring to the


<PAGE>

                     terms, conditions, and restrictions applicable to such
                     award, substantially in the following form:

                            "The transferability of this certificate and the
                     shares of stock represented hereby are subject to the terms
                     and conditions (including forfeiture) of the Firepond, Inc.
                     1997 Stock Plan and an Agreement entered into between the
                     registered owner and Firepond, Inc. Copies of such Plan and
                     Agreement are on file in the offices of Firepond, Inc.,
                     Waltham Woods Corporate Center, 890 Winter Street, Waltham,
                     MA 02451."

              (ii)   The Committee shall require that the stock certificates
                     evidencing such shares be held in custody by the Company
                     until the restrictions thereon shall have lapsed, and that,
                     as a condition of any Restricted Stock award, the
                     participant shall have delivered a stock power, endorsed in
                     blank, relating to the Stock covered by such award.

     (c)  RESTRICTIONS AND CONDITIONS. The shares of Restricted Stock awarded
          pursuant to the Plan shall be subject to the following restrictions
          and conditions:

              (i)    Subject to the provisions of this Plan and the award
                     agreement, during a period set by the Committee commencing
                     with the date of such award (the "Restriction Period"), the
                     participant shall not be permitted to sell, transfer,
                     pledge or assign shares of Restricted Stock awarded under
                     the Plan. Within these limits, the Committee may provide
                     for the lapse of such restrictions in installments where
                     deemed appropriate.

              (ii)   Except as provided in paragraph (c)(i) of this Section
                     7,the participant shall have, with respect to the shares of
                     Restricted Stock all of the rights of a shareholder of the
                     Company, including the right to vote the shares and the
                     right to receive any cash dividends. The Committee, in its
                     sole discretion, may permit or require the payment of cash
                     dividends to be deferred and, if the Committee so
                     determines, reinvested in additional shares of Restricted
                     Stock (to the extent shares are available under Section 3
                     and subject to paragraph (f) of Section 12). Certificates
                     for shares of unrestricted Stock shall be delivered to the
                     grantee promptly after, and only after, the period of
                     forfeiture shall have expired without forfeiture in respect
                     of such shares of Restricted Stock.

              (iii)  Subject to the provisions of the award agreement and
                     paragraph (c)(iv) of this Section 7, upon termination of
                     employment directorship (if the award was based on services
                     as a director) or consulting relationship for any reason
                     during the Restriction Period, all shares still subject to
                     restriction shall be forfeited by the participant.

              (iv)   In the event of special hardship circumstances of a
                     participant whose employment is unforeseeable emergency of
                     a participant still in service, the Committee may, in its
                     sole terminated (other than for Cause),including death,
                     Disability or Retirement or in the event of an discretion,
                     when it finds that a waiver would be in the best interest
                     of the Company, waive in whole or in part any or all
                     remaining restrictions with respect to such participant's
                     shares of Restricted Stock.

              (v)    Notwithstanding anything contained in the Plan to the
                     contrary, the Committee may, in its discretion, accelerate,
                     extend or vary the terms or the lapsing of the

<PAGE>

                     restrictions placed on any Restricted Stock award granted
                     pursuant to this Plan if such action is deemed to be in the
                     best interests of the Company.

SECTION 8. DEFERRED STOCK AWARDS.

     (a)  ADMINISTRATION. Deferred Stock may be awarded either alone or in
          addition to other awards granted under the Plan. The Committee shall
          determine the officers, directors, key employees and Consultants of
          the Company and Subsidiaries to whom and the time or times at which
          Deferred Stock shall be awarded, the number of Shares of Deferred
          Stock to be awarded to any participant or group of participants, the
          duration of the period (the "Deferral Period") during which and the
          conditions under which, receipt of the Stock will be deferred, and the
          terms and conditions of the award in addition to those contained in
          paragraph (b) of this Section 8. The Committee may also condition the
          grant of Deferred Stock upon the attainment of specified performance
          goals. The provisions of Deferred Stock awards need not be the same
          with respect to each recipient.

     In the event Deferred Stock awards are granted to members of the Committee,
such awards shall be granted by the Board.

     (b)  TERMS AND CONDITIONS

              (i)    Subject to the provisions of this Plan and the award
                     agreement, Deferred Stock awards may not be sold, assigned,
                     transferred, pledged or otherwise encumbered during the
                     Deferral Period. At the expiration of the Deferral Period
                     (or Elective Deferral Period, where applicable), share
                     certificates shall be delivered to the participant, or his
                     legal representative, in a number equal to the shares
                     covered by the Deferred Stock award.

              (ii)   Amounts equal to any dividends declared during the Deferral
                     Period with respect to the number of shares covered by a
                     Deferred Stock award will be paid to the participant
                     currently or deferred and deemed to be reinvested in
                     additional Deferred Stock or otherwise reinvested, all as
                     determined at the time of the award by the Committee, in
                     its sole discretion.

              (iii)  Subject to the provisions of the award agreement and
                     paragraph (b)(iv) of this Section 8, upon termination of
                     employment, directorship (if the award was based on
                     services as a director) or consulting relationship for any
                     reason during the Deferral Period for a given award, the
                     Deferred Stock in question shall be forfeited by the
                     participant.

              (iv)   In the event of special hardship circumstances of a
                     participant whose employment is terminated (other than for
                     Cause) including death, Disability or Retirement, or in the
                     event of an unforeseeable emergency of a participant still
                     in service, the Committee may, in its sole discretion, when
                     it finds that a waiver would be in the best interest of the
                     Company, waive in whole or in part any or all of the
                     remaining deferral limitations imposed hereunder with
                     respect to any or all of the participant's Deferred Stock.

              (v)    A participant may elect to further defer receipt of the
                     award for a specified period or until a specified event
                     (the "Elective Deferral Period"), subject in each case to
                     the Committee's approval and to such terms as are
                     determined by the Committee, all in its sole discretion.
                     Subject to any exceptions adopted by the Committee, such
                     election must generally be made prior to completion of one
                     half

<PAGE>

                     of the Deferral Period for a Deferred Stock award (or for
                     an installment of such an award).

              (vi)   Each award shall be confirmed by, and subject to the terms
                     of, a Deferred Stock agreement executed by the Company and
                     the participant.

SECTION 9. TRANSFER LEAVE OF ABSENCE, ETC.

       For purposes of the Plan, the following events shall not be deemed a
termination of employment:

               (a)  a transfer of an employee from the Company to a Parent
                    Corporation or Subsidiary, or from a Parent Corporation or
                    Subsidiary to the Company, or from one Subsidiary to
                    another;

               (b)  a leave of absence, approved in writing by the Committee,
                    for military service or sickness, or for any other purpose
                    approved by the Company if the period of such leave does not
                    exceed ninety (90) days (or such longer period as the
                    Committee may approve, in its sole discretion); and

               (c)  a leave of absence in excess of ninety (90) days, approved
                    in writing by the Committee, but only if the employee's
                    right to reemployment is guaranteed either by a statute or
                    by contract, and provided that, in the case of any leave of
                    absence, the employee returns to work within 30 days after
                    the end of such leave.

SECTION 10. AMENDMENTS AND TERMINATION.

     The Board may amend, after, or discontinue the Plan, but no amendment
alteration, or discontinuation shall be made (i) which would adversely impair
the rights of an optionee or participant under a Stock Option, Restricted Stock
or other Stock-based award theretofore granted, without the optionee's or
participant's consent, or (ii) which without the approval of the shareholders of
the Company would cause the Plan to no longer comply with Rule 16b-3 under the
Securities Exchange Act of 1934, Section 422 of the Code or any other regulatory
requirements.

     The Committee may amend the terms of any award or option theretofore
granted, prospectively or retroactively to the extent such amendment is
consistent with the terms of this Plan, but no such amendment shall impair the
rights of any holder without his or her consent except to the extent authorized
under the Plan. The Committee may also substitute new Stock Options for
previously granted Stock Options, including previously granted Stock Options
having higher Stock Option prices.

SECTION 11. UNFUNDED STATUS OF PLAN.

     The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder, provided, however, that the existence of such trusts or other
arrangements is consistent with the unfunded status of the Plan.

<PAGE>

SECTION 12. GENERAL PROVISIONS.

     (a)  The Committee may require each person purchasing shares pursuant to a
          Stock Option under the Plan to represent to and agree with the Company
          in writing that the optionee is acquiring the shares without a view to
          distribution thereof. The certificates for such shares may include any
          legend which the Committee deems appropriate to reflect any
          restrictions on transfer.

     All certificates for shares of Stock delivered under the Plan pursuant to
any Restricted Stock, Deferred Stock or other Stock-based awards shall be
subject to such stock-transfer orders and other restrictions as the Committee
may deem, advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, and any applicable Federal or state securities laws, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.

     (b)  Subject to paragraph (d) below, recipients of Restricted Stock,
          Deferred Stock and other Stock-based awards under the Plan (other than
          Stock Options) are not required to make any payment or provide
          consideration other than the rendering of services.

     (c)  Nothing contained in this Plan shall prevent the Board of Directors
          from adopting other or additional compensation arrangements, subject
          to stockholder approval if such approval is required; and such
          arrangements may be either generally applicable or applicable only in
          specific cases. The adoption of the Plan shall not confer upon any
          employee of the Company or any Subsidiary any right to continued
          employment with the Company or a Subsidiary, as the case may be, nor
          shall it interfere in any way with the right of the Company or a
          Subsidiary to terminate the employment of any of its employees at any
          time.

     (d)  Each participant shall, no later than the date as of which any part of
          the value of an award first becomes includible as compensation in the
          gross income of the participant for Federal income tax purposes, pay
          to the Company, or make arrangements satisfactory to the Committee
          regarding payment of, any Federal, state, or local taxes of any kind
          required by law to be withheld with respect to the award. The
          obligations of the Company under the Plan shall be conditional on such
          payment or arrangements and the Company and Subsidiaries shall, to the
          extent permitted by law, have the right to deduct any such taxes from
          any payment of any kind otherwise due to the participant. With respect
          to any award under the Plan, if the terms of such award so permit, a
          participant may elect by written notice to the Company to satisfy part
          or all of the withholding tax requirements associated with the award
          by (1) authorizing the Company to retain from the number of shares of
          Stock that would otherwise be deliverable to the participant, or (ii)
          delivering to the Company from shares of Stock already owned by the
          participant, that number of shares having an aggregate Fair Market
          Value equal to part or all of the tax payable by the participant under
          this Section 12(d). Any such election shall be in accordance with, and
          subject to, applicable tax and securities laws, regulations and
          rulings.

     (e)  At the time grant, the Committee may provide in connection with any
          grant made under this Plan that the shares of Stock received as a
          result of such grant shall be subject to a repurchase right in favor
          of the Company, pursuant to which the participant shall be required to
          offer to the Company upon termination of employment for any reason any
          shares that the participant acquired under the Plan, with the price
          being the then Fair Market Value of the Stock or, in the case of a
          termination for Cause, an amount equal to the cash consideration paid
          for the Stock, subject to such other terms and conditions as the
          Committee may specify at the time of grant. The Committee may, at the
          time of the grant of an award under the Plan, provide the Company with
          the right to repurchase, or require the forfeiture of shares of Stock


<PAGE>

          acquired pursuant to the Plan by any participant who at any time
          within two years after termination of employment with the Company,
          directly or indirectly competes with, or is employed by a competitor
          of the Company.

     (f)  The reinvestment of dividends in additional Restricted Stock (or in
          Deferred Stock or other types of Plan awards) at the time of any
          dividend payment shall only be permissible in the Committee (or the
          company's chief financial officer) certifies in writing that under
          Section 3 sufficient shares are available for such reinvestment
          (taking into account then outstanding Stock Options and other Plan
          awards).

     (g)  The Plan is expressly made subject to the approval by shareholders of
          the Company. If the Plan is not so approved by the shareholders on or
          before one year after this Plan's adoption by the Board of Directors,
          this Plan shall not come into effect. The offering of the shares
          hereunder shall be also subject to the effecting by the Company of any
          registration or qualification of the shares under any federal or state
          law or the obtaining of the consent or approval of any governmental
          regulatory body which the Company shall determine, in its sole
          discretion, is necessary or desirable as a condition to or in
          connection with, the offering or the issue or purchase of the shares
          covered thereby.

     (h)  This Plan and all Options and actions taken thereunder shall be
          governed by the laws of the Commonwealth of Massachusetts, applied
          without regard to conflict of law principles thereof.


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Approved by the shareholders on May 7, 1997