Document:

Exhibit 4.4

May , 2003 (Revised May 24, 2007 by direction of the Board)

Mr. Scott Milligan
2972 Peak Place,
Oakville, Ontario
L6H 5T1

Dear Scott:

I am pleased to offer you employment as Senior Vice President, Finance and Chief
Financial Officer of Zarlink  Semiconductor Inc.  ("Zarlink") , on the following
terms and conditions.

Your place of work will be the  Zarlink  offices  located  in  Ottawa,  Ontario,
Canada.  You will be  expected  to locate with your family to the Ottawa area by
calendar year end.

This offer,  once  accepted,  will  constitute an employment  agreement  between
Zarlink and you. Please note that all figures are in Canadian  dollars,  and all
compensation will be subject to the usual statutory deductions.

1. Work Responsibilities

You will be employed full-time in the position of Senior Vice President, Finance
and Chief  Financial  Officer,  reporting to myself as President  and CEO.  Your
starting  date  will be no  later  than  June 9,  2003 and  will be  earlier  if
possible.

In this position,  you will devote your best efforts,  and your full time, skill
and  attention to carrying out your duties and to promoting the interests of the
company.   You  will  well  and  faithfully  perform  all  services  and  duties
customarily associated with your position,  together with such additional duties
and responsibilities as may be assigned by myself from time to time.

You agree not to be employed or engaged in any other  capacity  (including  as a
director) in promoting, undertaking or carrying on any other business apart from
that of Zarlink, without my prior written authorization.  This does not preclude
you from any passive or personal  investments that you may wish to hold,  unless
with a competitor of the company,  in which case you will advise the Board prior
to  making  such  investments,  unless  the  investments  are  made  through  an
independently  managed fund or your  ownership  represents  less than 0.1 % of a
corporation's publicly traded shares.

2. Salary and Bonus

Your annual base salary will be $300,000. ($335,000. at May 24, 2007)

In  addition,  you  will  be  eligible  to  earn an  annual  incentive  payment,
conditional  upon successful  achievement of the annual  objectives of Zarlink's
Pay for  Performance  ("PFP") Plan. If all  objectives of the Plan are met, your
target  incentive  payment  will be equal  to 50% of your  base  salary.  If the
Financial  Component  of the Plan is  exceeded,  you can earn up to 150% on that

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                                      -2-

portion  of  your   individual   incentive  plan  attributed  to  the  financial
performance of the Company (currently 60% of your target incentive).

Incentive  objectives  for each fiscal year will be reviewed and finalized  with
the Board and  communicated  to you no later than early May each year (within 45
days after the commencement of Zarlink's fiscal year).

By the  middle of May each  year  (the  "Incentive  Assessment  Date"),  Zarlink
assesses the achievement of the previous year's  objectives,  and calculates any
earned incentive amounts. Any incentive earned will be paid to you by the end of
May.  Please  note  that  you  must be  employed  by  Zarlink  on the  Incentive
Assessment  Date, in order to be eligible to receive any incentive for the prior
fiscal year.

3. Stock Options

The Board has approved a grant of fifty thousand (50,000)  options,  pursuant to
Zarlink"s  1991 Employee  Stock Option Plan (a copy of which is  enclosed).  The
option  grant will  provide for equal  annual  vesting  over a period of 4 years
commencing one year from the date of grant.

The options will be priced at the current market price in effect on the date you
accept this offer of  employment,  pursuant to the formula set out in the Plan .
Your specific  rights and  entitlements  relating to the options,  including any
rights arising upon the cessation of  employment,  will be governed by the terms
and conditions of the Plan.

You will be included among those  executives whose stock options will be subject
to accelerated vesting in the event of a Change in Control, as defined by and in
accordance with the enclosed Board Resolution dated January 11, 2000.

4. Benefits

Zarlink  maintains a comprehensive  group employee benefits plan, made available
to our employees through Canada Life. Enclosed you will find a benefits brochure
which describes the available  benefits.  Your  eligibility for coverage and for
benefits will be determined in accordance with the specific terms and conditions
of the benefits plan.

5. Car Lease

Zarlink  will  provide you an annual car  allowance  of  $18,000.  which will be
taxable  as income.  In  addition  Zarlink  will  provide  fuel,  insurance  and
maintenance  for one  company  vehicle if you choose to lease a company  vehicle
under the GE Capital  lease plan.  Currently the plan requires that the employee
pay 20% of the capital  cost of the company car to GE Capital as a down  payment
and the monthly  payments will be based on the 80% balance.  You may select your
choice of vehicle and monthly lease costs for that vehicle will be deducted from
your biweekly pay. If you wish to have use of additional vehicles as part of the
fleet,   Zarlink  will  provide  insurance  coverage  but  you  will  be  wholly
responsible for any related lease, fuel and maintenance costs.

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                                      -3-

6. Pension

You will be entitled to participate in the Canadian Executive Pension Plan which
provides a combination of annual payments by Zarlink into an RRSP and a SERP for
your  benefit.  The  annual  funding  cost paid by  Zarlink  is 15% of your base
salary. Enclosed is a copy of the pension plan description.

7. Relocation

Zarlink  will  provide a home sale  guarantee  for your  current  home under its
Guaranteed Home Sale Program and relocation assistance to Ottawa as described in
Zarlink's Domestic Relocation Agreement (copies of both enclosed).

8. Vacation

Zarlink  will provide you with paid  vacation  leave of 4 weeks per fiscal year,
accrued in equal  bi-weekly  instalments.  If you have not used all of your paid
vacation  leave for a given fiscal year,  you may carry forward a maximum of 150
hours into the next fiscal year. In accordance with Zarlink's policy, any unused
remainder will be forfeited absent prior special  arrangement.  In addition,  of
course, Zarlink will provide you with paid statutory holidays and with any other
leave you are entitled to receive,  all in accordance with employment  standards
legislation.

9. Confidentiality of Information and Ownership of Proprietary Property

As a condition  of your  acceptance  of this offer,  you are required to provide
Zarlink  with an executed  original of the enclosed  Confidentiality  Agreement.
Please note the ongoing nature of the obligations set out in the Agreement.  The
terms of the Confidentiality  Agreement form part of the terms and conditions of
this employment agreement.

10. Cessation of Employment

      (a)   Definitions

      For the purposes of this employment  agreement,  the following definitions
      apply:

      "Incapacity"   means  any  permanent  physical  or  mental  incapacity  or
      disability which prevents you from performing the essential duties of your
      position,  with no  reasonable  prospect of  recovery,  as  determined  by
      Zarlink on the basis of medical evidence satisfactory to the Board.

      "Good Just Cause" means any grounds at common law for which an employer is
      entitled to dismiss an employee  without notice or compensation in lieu of
      notice.

      "Termination Date" means:

      (i) if Zarlink  terminates  your  employment,  the date  designated by the
      company  as the  last day of your  employment  (without  reference  to any
      applicable

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                                      -4-

      notice period to which you may be entitled,  whether under statute, common
      law, contract, or otherwise);

      (ii) if you resign your employment with Zarlink, the date which is the end
      of the three months  notice  period or such shorter  notice  period as the
      parties agree;

      (iii) if you die, the date of death;

      (iv) if this employment agreement is frustrated, which includes but is not
      limited to Incapacity,  the date  designated by Zarlink as the last day of
      your employment.

      (b)   Notice of Resignation

      You may resign at any time,  for any reason,  upon giving a minimum of one
      month advance  written  notice to Zarlink.  Zarlink  reserves the right to
      require you to immediately return all company property at any point during
      the  resignation  notice  period,  and  to  require  you to  refrain  from
      attending at the workplace  during any portion of the  resignation  notice
      period.

      (c)   Entitlements upon Resignation, Termination for Good Just Cause

      If you resign or your  employment is terminated for Good Just Cause,  then
      you will be entitled to receive any compensation, benefits and perquisites
      which  have  accrued  up to the  Termination  Date,  but you  will  not be
      entitled  to receive  other  compensation  of any  nature,  whether  under
      contract,  statute,  common law or otherwise.  Your rights  respecting any
      options,  which have been granted to you, will be determined in accordance
      with the terms of the Zarlink 1991 Stock Option Plan.

      (d)   Entitlements upon Death, Frustration of Contract

      If you die, or  frustration  of this  employment  agreement  occurs (which
      includes but is not limited to Incapacity),  then you (or your estate,  in
      the event of your death)  will be  entitled  to receive any  compensation,
      benefits and perquisites  which have accrued up to the  Termination  Date,
      but you will not be  entitled  to receive  other  compensation  (except as
      provided  in  insurance  plans) of any  nature,  whether  under  contract,
      statute,  common law or  otherwise.  Your rights  respecting  any options,
      which have been granted to you, will be determined in accordance  with the
      terms of the Zarlink 1991 Stock Option Plan.

      (e)   Entitlements upon Termination without Good Just Cause

      If Zarlink terminates your employment without Good Just Cause, you will be
      provided with the following termination package (which is inclusive of any
      statutory  entitlements you may have under applicable employment standards
      legislation, and will be provided net of required deductions):

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                                      -5-

            (i)   You will  receive  payment in a lump sum of an amount equal to
                  two times your then current  annual base salary.  This payment
                  will be made within 30 business days following the Termination
                  Date.

            (ii)  You will receive payment in a lump sum of an amount in lieu of
                  bonus  equal to two  times  your  target  annual  bonus.  This
                  payment  will be made within 30 business  days  following  the
                  Termination Date.

            (iii) If you are then participating in the Zarlink Executive Pension
                  Plan,  you will receive  payment of two year's  regular annual
                  contribution to the Executive  Pension Plan. This payment will
                  be made  within 30 business  days  following  the  Termination
                  Date.

            (ii)  You will  receive  continued  group life and  health  benefits
                  coverage  until  the  earlier  of  two  years   following  the
                  Termination  Date or 30 days  after you  secure  substantially
                  similar  replacement  coverage through  re-employment.  Please
                  note that long-term  disability coverage will not be continued
                  after the  Termination  Date.  You will be  required to notify
                  Zarlink  in  writing  forthwith  if you  secure  substantially
                  similar replacement coverage, during the continuation period.

            (iv)  You will have six months  following the  Termination  Date (or
                  until the natural expiry date of your stock options, whichever
                  is  earlier),  to exercise any stock  options  which have been
                  granted to you under the Zarlnk  1991  Stock  Option  Plan and
                  which have  vested as of the last day of that 6 month  period.
                  In all other  respects,  your rights  respecting  any options,
                  which  have  been  granted  to  you,  will  be  determined  in
                  accordance  with the terms of the  Zarlink  1991 Stock  Option
                  Plan.

            (iii) All  perquisites  such as company cars and the like will cease
                  30 days following the Termination Date.

      (f)   Resignation of Office

            If your  employment  ends for any  reason,  you  agree to  resign in
            writing  effective  upon the  Termination  Date  from any  office or
            directorship  held  with  the  Zarlink  or with  any  subsidiary  or
            affiliated company.

11. Non-Competition and Non-Solicitation Obligations

You agree that it could seriously harm Zarlink's  legitimate  business interests
if you took  unfair  advantage  of the special  knowledge  you will gain in your
executive  position,  to compete with Zarlink.  Accordingly,  you agree that the
restrictions  set out below are reasonably  required to protect  Zarlink and its
goodwill from unfair  competition.  You also  acknowledge that your agreement to
such restrictions is of essence to this employment  agreement,  and that Zarlink
would not enter into this  employment  agreement  without your  agreement to the
restrictions set out in this paragraph.

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                                      -6-

If your employment with ZARLINK ceases for reasons other than "without Good Just
Cause", you agree that for a period of one (1) year from the Termination Date
and in the case of termination "without Good Just Cause" for a period of two (2)
years from the Termination Date:

      (a) you will not  participate  (as an employee or  consultant,  executive,
      director  or  significant  investor  (greater  than  20%) in any  business
      operating  anywhere in the world that competes directly with the principal
      businesses of Zarlink (or its successor);

      (b) you will not directly or indirectly solicit any of Zarlink's customers
      for business in competition with Zarlink (or its successors); and,

      (c) you will not  solicit,  entice,  approach  or induce any of  Zarlink's
      employees  or  consultants  to  leave  their  employment  or to end  their
      consultancy  arrangements  with  Zarlink  (or  its  successor)  or to join
      another business or organization.

12. Choice of Law and Jurisdiction

This  employment  agreement will be governed by and construed in accordance with
the laws of the Province of Ontario, Canada, without regard to the principles of
conflicts of law, and will in all respects be treated as an Ontario contract. In
the event of a dispute,  you agree that any legal  proceedings  must be taken in
the City of Ottawa, in the Province of Ontario,  Canada,  and you hereby consent
to attorn to the jurisdiction of the Ontario courts.

13. Whole Agreement

By  accepting  this offer of  employment,  you are  agreeing  that the terms and
conditions  set out in this offer  (including  the terms and  conditions  of any
documents  enclosed)  represent the entire agreement relating to your employment
with the  company;  that any and all  previous  agreements  or  representations,
written  or oral,  are  hereby  terminated  and  cancelled;  and that you hereby
release  Zarlink from any and all claims  whatsoever  under or in respect of any
such previous agreements or representations.

We trust that you will find this offer of  employment  responsive to your needs.
To signify your  acceptance,  please sign below,  and return one complete signed
original of this offer and of the  enclosed  Agreement  to the  attention of Don
McIntyre, no later than close of business, May 19th, 2003.

The executive  management  team and I are looking forward to working with you to
meet the challenges and opportunities facing our dynamic company.

Zarlink Semiconductor Inc.        Revised May 24, 2007 by direction of the Board

                                  /s/ Don McIntyre
                                  ---------------------------------------
Per: signed: Pat Brockett         D. McIntyre, Corporate Secretary
President and CEO

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                                      -7-

Acknowledgement and Acceptance

I, Scott  Milligan,  have read and reviewed,  in their  entirety,  this offer of
employment  dated  May,  2003,  and  the  documents  enclosed.  I  have  had  an
opportunity  to ensure that I clearly  understand the terms and conditions of my
employment  with  Zarlink,  and I have had the  opportunity  to  confer  with an
independent  legal advisor if I so wished, in advance of accepting this offer of
employment.  I hereby  represent  and confirm to Zarlink that I am not under any
contractual  or other legal  obligation,  which  prevents me from accepting this
offer of employment or from abiding by the terms and conditions of my employment
with  Zarlink.  I accept  this offer of  employment,  and agree to the terms and
conditions as set out.

Dated at  ___________________ this   ___day of  May 2003.

Signed Scott Milligan

Revised May 24, 2007

/s/ Scott Milligan
-----------------------
Scott MilliganEXHIBIT 4.1

                      MODERN MEDICAL MODALITIES CORPORATION
                             2003 STOCK OPTION PLAN

                           As adopted October 30, 2003

1. PURPOSE OF PLAN; ADMINISTRATION

   1.1 Purpose.

      The Modern Medical Modalities Corporation 2003 Stock Option Plan
(hereinafter, the "Plan") is hereby established to grant to officers and other
employees of Modern Medical Modalities Corporation (the "Company") or of its
parents or subsidiaries (as defined in Sections 424(e) and (f), respectively, of
the Internal Revenue Code of 1986, as amended (the "Code")), if any
(individually and collectively, the Company"), and to non-employee directors,
consultants and advisors and other persons who may perform significant services
for or on behalf of the Company, a favorable opportunity to acquire common
stock, $.0002 par value ("Common Stock"), of the Company and, thereby, to create
an incentive for such persons to remain in the employ of or provide services to
the Company and to contribute to its success.

      The Company may grant under the Plan both incentive stock options within
the meaning of Section 422 of the Code ("Incentive Stock Options") and stock
options that do not qualify for treatment as Incentive Stock Options
("Nonstatutory Options"). Unless expressly provided to the contrary herein, all
references herein to "options," shall include both incentive Stock Options and
Nonstatutory Options.

   1.2  Administration.

      The Plan shall be administered by the Board of Directors of the Company
(the "Board"), if each member is a "Non-Employee Director" within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934, as amended ("Rule 16b-3"),
or a committee (the "Committee") of two or more directors, each of whom is a
Non-Employee Director. Appointment of Committee members shall be effective upon
acceptance of appointment. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in the Committee may be filled
by the Board. Until such time that the Committee is properly appointed, the
Board shall administer the Plan in accordance with the terms of this Section
1.2.

      A majority of the members of the Committee shall constitute a quorum for
the purposes of the Plan. Provided a quorum is present, the Committee may take
action by affirmative vote or consent of a majority of its members present at a
meeting. Meetings may be held telephonically as long as all members are able to
hear one another, and a member of the Committee shall be deemed to be present
for this purpose if he or she is in simultaneous communication by telephone with
the other members who are able to hear one another. In lieu of action at a
meeting, the Committee may act by written consent of a majority of its members.

      Subject to the express provisions of the Plan, the Committee shall have
the authority to construe and interpret the Plan and all Stock Option Agreements
(as defined in Section 3.4)

<PAGE>

entered into pursuant hereto and to define the terms used therein, to prescribe,
adopt, amend and rescind rules and regulations relating to the administration of
the Plan and to make all other determinations necessary or advisable for the
administration of the Plan; provided, however, that the Committee may delegate
nondiscretionary administrative duties to such employees of the Company as it
deems proper; and, provided, further, in its absolute discretion, the Board may
at any time and from time to time exercise any and all rights and duties of the
Committee under the Plan. Subject to the express limitations of the Plan, the
Committee shall designate the individuals from among the class of persons
eligible to participate as provided in Section 1.3 who shall receive options,
whether an optionee will receive Incentive Stock Options or Nonstatutory
Options, or both, and the amount, price, restrictions and all other terms and
provisions of such options (which need not be identical).

      Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of this Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and the
Company's officers and directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. No members of the Committee or Board
shall be personally liable for any action, determination or interpretation made
in good faith with respect to the Plan, and all members of the Committee shall
be fully protected by the Company in respect of any such action, determination
or interpretation.

   1.3  Participation.

      Officers and other employees of the Company, non-employee directors,
consultants and advisors and other persons who may perform significant services
on behalf of the Company shall be eligible for selection to participate in the
Plan upon approval by the Committee; provided, however, that only "employees"
(within the meaning of Section 3401(c) of the Code) of the Company shall be
eligible for the grant of Incentive Stock Options. An individual who has been
granted an option may, if otherwise eligible, be granted additional options if
the Committee shall so determine. No person is eligible to participate in the
Plan by matter of right; only those eligible persons who are selected by the
Committee in its discretion shall participate in the Plan.

   1.4  Stock Subject to the Plan.

      Subject to adjustment as provided in Section 3.5, the stock to be offered
under the Plan shall be shares of authorized but unissued Common Stock,
including any shares repurchased under the terms of the Plan or any Stock Option
Agreement entered into pursuant hereto. The cumulative aggregate number of
shares of Common Stock to be issued under the Plan shall not exceed 2,000,000,
subject to adjustment as set forth in Section 3.5.

      If any option granted hereunder shall expire or terminate for any reason
without having been fully exercised, the unpurchased shares subject thereto
shall again be available for the purposes of the Plan. For purposes of this
Section 1.4, where the exercise price of options is paid by means of the
grantee's surrender of previously owned shares of Common Stock, only the net
number of additional shares issued and which remain outstanding in connection
with such exercise shall be deemed "issued" for purposes of the Plan.

2. STOCK OPTIONS

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   2.1  Exercise Price; Payment.

      (a) The exercise price of each Incentive Stock Option granted under the
Plan shall be determined by the Committee, but shall not be less than 100% of
the "Fair Market Value" (as defined below) of Common Stock on the date of grant.
If an Incentive Stock Option is granted to an employee who at the time such
option is granted owns (within the meaning of section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of capital stock of
the Company, the option exercise price shall be at least 110% of the Fair Market
Value of Common Stock on the date of grant. The exercise price of each
Nonstatutory Option also shall be determined by the Committee, but shall not be
less than 85% of the Fair Market Value of Common Stock on the date of grant. The
status of each option granted under the Plan as either an Incentive Stock Option
or a Nonstatutory Option shall be determined by the Committee at the time the
Committee acts to grant the option, and shall be clearly identified as such in
the Stock Option Agreement relating thereto.

      "Fair Market Value" for purposes of the Plan shall mean: (i) the closing
price of a share of Common Stock on the principal exchange on which shares of
Common Stock are then trading, if any, on the day immediately preceding the date
of grant, or, if shares were not traded on the day preceding such date of grant,
then on the next preceding trading day during which a sale occurred; or (ii) if
Common Stock is not traded on an exchange but is quoted on Nasdaq or a successor
quotation system, (1) the last sales price (if Common Stock is then listed on
the Nasdaq Stock Market) or (2) the mean between the closing representative bid
and asked price (in all other cases) for Common Stock on the day prior to the
date of grant as reported by Nasdaq or such successor quotation system; or (iii)
if there is no listing or trading of Common Stock either on a national exchange
or over-the-counter, that price determined in good faith by the Committee to be
the fair value per share of Common Stock, based upon such evidence as it deems
necessary or advisable.

      (b) In the discretion of the Committee at the time the option is
exercised, the exercise price of any option granted under the Plan shall be paid
in full in cash, by check or by the optionee's interest-bearing promissory note
(subject to any limitations of applicable state corporations law) delivered at
the time of exercise; provided, however, that subject to the timing requirements
of Section 2.7, in the discretion of the Committee and upon receipt of all
regulatory approvals, the person exercising the option may deliver as payment in
whole or in part of such exercise price certificates for Common Stock of the
Company (duly endorsed or with duly executed stock powers attached), which shall
be valued at its Fair Market Value on the day of exercise of the option, or
other property deemed appropriate by the Committee; and, provided further, that,
subject to Section 422 of the Code, so-called cashless exercises as permitted
under applicable rules and regulations of the Securities and Exchange Commission
and the Federal Reserve Board shall be permitted in the discretion of the
Committee. Without limiting the Committee's discretion in this regard,
consecutive book entry stock-for-stock exercises of options (or "pyramiding")
also are permitted in the Committee's discretion.

      Irrespective of the form of payment, the delivery of shares issuable upon
the exercise of an option shall be conditioned upon payment by the optionee to
the Company of amounts sufficient to enable the Company to pay all federal,
state, and local withholding taxes resulting, in the Company's judgment, from
the exercise. In the discretion of the Committee, such payment to the Company
may be effected through (i) the Company's withholding from the number of shares
of Common Stock that would otherwise be delivered to the optionee by the Company
on exercise of the option a number of shares of Common Stock equal in value (as
determined by the Fair Market Value of Common Stock on the date of exercise) to
the aggregate withholding taxes, (ii) payment

<PAGE>

by the optionee to the Company of the aggregate withholding taxes in cash, (iii)
withholding by the Company from other amounts contemporaneously owed by the
Company to the optionee, or (iv) any combination of these three methods, as
determined by the Committee in its discretion.

   2.2  Option Period.

      (a) The Committee shall provide, in the terms of each Stock Option
Agreement, when the option subject to such agreement expires and becomes
unexercisable, but in no event will an Incentive Stock Option granted under the
Plan be exercisable after the expiration of ten years from the date it is
granted. Without limiting the generality of the foregoing, the Committee may
provide in the Stock Option Agreement that the option subject thereto expires 30
days following a Termination of Employment (as defined in Section 3.2 hereof)
for any reason other than death or disability, or six months following a
Termination of Employment for disability or following an optionee's death.

      (b) Outside Date for Exercise. Notwithstanding any provision of this
Section 2.2, in no event shall any option granted under the Plan be exercised
after the expiration date of such option set forth in the applicable Stock
Option Agreement.

   2.3  Exercise of Options.

      Each option granted under the Plan shall become exercisable and the total
number of shares subject thereto shall be purchasable, in a lump sum or in such
installments, which need not be equal, as the Committee shall determine;
provided, however, that each option shall become exercisable in full no later
than ten years after such option is granted, and each option shall become
exercisable as to at least 10% of the shares of Common Stock covered thereby on
each anniversary of the date such option is granted; and provided, further, that
if the holder of an option shall not in any given installment period purchase
all of the shares which such holder is entitled to purchase in such installment
period, such holder's right to purchase any shares not purchased in such
installment period shall continue until the expiration or sooner termination of
such holder's option. The Committee may, at any time after grant of the option
and from time to time, increase the number of shares purchasable in any
installment, subject to the total number of shares subject to the option and the
limitations set forth in Section 2.5. At any time and from time to time prior to
the time when any exercisable option or exercisable portion thereof becomes
unexercisable under the Plan or the applicable Stock Option Agreement, such
option or portion thereof may be exercised in whole or in part; provided,
however, that the Committee may, by the terms of the option, require any partial
exercise to be with respect to a specified minimum number of shares. No option
or installment thereof shall be exercisable except with respect to whole shares.
Fractional share interests shall be disregarded, except that they may be
accumulated as provided above and except that if such a fractional share
interest constitutes the total shares of Common Stock remaining available for
purchase under an option at the time of exercise, the optionee shall be entitled
to receive on exercise a certified or bank cashier's check in an amount equal to
the Fair Market Value of such fractional share of stock.

   2.4  Transferability of Options.

      Except as the Committee may determine as aforesaid, an option granted
under the Plan shall, by its terms, be nontransferable by the optionee other
than by will or the laws of descent and distribution, or pursuant to a qualified
domestic relations order (as defined by the Code), and shall be exercisable
during the optionee's lifetime only by the optionee or by his or her guardian or
legal representative. More particularly, but without limiting the generality of
the immediately

<PAGE>

preceding sentence, an option may not be assigned, transferred (except as
provided in the preceding sentence), pledged or hypothecated (whether by
operation of law or otherwise), and shall not be subject to execution,
attachment or similar process. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of any option contrary to the provisions of
the Plan and the applicable Stock Option Agreement, and any levy of any
attachment or similar process upon an option, shall be null and void, and
otherwise without effect, and the Committee may, in its sole discretion, upon
the happening of any such event, terminate such option forthwith.

   2.5  Limitation on Exercise of Incentive Stock Options.

      To the extent that the aggregate Fair Market Value (determined on the date
of grant as provided in Section 2.1 above) of the Common Stock with respect to
which Incentive Stock Options granted hereunder (together with all other
Incentive Stock Option plans of the Company) are exercisable for the first time
by an optionee in any calendar year under the Plan exceeds $100,000, such
options granted hereunder shall be treated as Nonstatutory Options to the extent
required by Section 422 of the Code. The rule set forth in the preceding
sentence shall be applied by taking options into account in the order in which
they were granted.

   2.6  Disqualifying Dispositions of Incentive Stock Options.

      If Common Stock acquired upon exercise of any Incentive Stock Option is
disposed of in a disposition that, under Section 422 of the Code, disqualifies
the option holder from the application of Section 421(a) of the Code, the holder
of the Common Stock immediately before the disposition shall comply with any
requirements imposed by the Company in order to enable the Company to secure the
related income tax deduction to which it is entitled in such event.

   2.7  Certain Timing Requirements.

      At the discretion of the Committee, shares of Common Stock issuable to the
optionee upon exercise of an option may be used to satisfy the option exercise
price or the tax withholding consequences of such exercise, in the case of
persons subject to Section 16 of the Securities Exchange Act of 1934, as
amended, only (i) during the period beginning on the third business day
following the date of release of the quarterly or annual summary statement of
sales and earnings of the Company and ending on the twelfth business day
following such date or (ii) pursuant to an irrevocable written election by the
optionee to use shares of Common Stock issuable to the optionee upon exercise of
the option to pay all or part of the option price or the withholding taxes made
at least six months prior to the payment of such option price or withholding
taxes.

   2.8  No Effect on Employment.

      Nothing in the Plan or in any Stock Option Agreement hereunder shall
confer upon any optionee any right to continue in the employ of the Company, any
Parent Corporation or any Subsidiary or shall interfere with or restrict in any
way the rights of the Company, its Parent Corporation and its Subsidiaries,
which are hereby expressly reserved, to discharge any optionee at any time for
any reason whatsoever, with or without cause.

      For purposes of the Plan, "Parent Corporation" shall mean any corporation
in an unbroken chain of corporations ending with the Company if each of the
corporations other than the Company then 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. For purposes of the Plan,

<PAGE>

"Subsidiary" shall mean any corporation in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain then 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.

3. OTHER PROVISIONS

   3.1  Sick Leave and Leaves of Absence.

      Unless otherwise provided in the Stock Option Agreement, and to the extent
permitted by Section 422 of the Code, an optionee's employment shall not be
deemed to terminate by reason of sick leave, military leave or other leave of
absence approved by the Company if the period of any such leave does not exceed
a period approved by the Company, or, if longer, if the optionee's right to
reemployment by the Company is guaranteed either contractually or by statute. A
Stock Option Agreement may contain such additional or different provisions with
respect to leave of absence as the Committee may approve, either at the time of
grant of an option or at a later time.

   3.2  Termination of Employment.

      For purposes of the Plan "Termination of Employment," shall mean the time
when the employee-employer relationship between the optionee and the Company,
any Subsidiary or any Parent Corporation is terminated for any reason,
including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding (i) terminations where
there is a simultaneous reemployment or continuing employment of an optionee by
the Company, any Subsidiary or any Parent Corporation, (ii) at the discretion of
the Committee, terminations which result in a temporary severance of the
employee-employer relationship, and (iii) at the discretion of the Committee,
terminations which are followed by the simultaneous establishment of a
consulting relationship by the Company, a Subsidiary or any Parent Corporation
with the former employee. Subject to Section 3.1, the Committee, in its absolute
discretion, shall determine the affect of all matters and questions relating to
Termination of Employment; provided, however, that, with respect to Incentive
Stock Options, a leave of absence or other change in the employee-employer
relationship shall constitute a Termination of Employment if, and to the extent
that such leave of absence or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then-applicable regulations
and revenue rulings under said Section.

   3.3  Issuance of Stock Certificates.

      Upon exercise of an option, the Company shall deliver to the person
exercising such option a stock certificate evidencing the shares of Common Stock
acquired upon exercise. Notwithstanding the foregoing, the Committee in its
discretion may require the Company to retain possession of any certificate
evidencing stock acquired upon exercise of an option which remains subject to
repurchase under the provisions of the Stock Option Agreement or any other
agreement signed by the optionee in order to facilitate such repurchase
provisions.

   3.4  Terms and Conditions of Options.

      Each option granted under the Plan shall be evidenced by a written Stock
Option Agreement ("Stock Option Agreement") between the option holder and the
Company providing that the option is subject to the terms and conditions of the
Plan and to such other terms and conditions

<PAGE>

not inconsistent therewith as the Committee may deem appropriate in each case.

   3.5  Adjustments Upon Changes in Capitalization; Merger and Consolidation.

      If the outstanding shares of Common Stock are changed into, or exchanged
for cash or a different number or kind of shares or securities of the Company or
of another corporation through reorganization, merger, recapitalization,
reclassification, stock split-up, reverse stock split, stock dividend, stock
consolidation, stock combination, stock reclassification or similar transaction,
an appropriate adjustment shall be made by the Committee in the number and kind
of shares as to which options may be granted. In the event of such a change or
exchange, other than for shares or securities of another corporation or by
reason of reorganization, the Committee shall also make a corresponding
adjustment changing the number or kind of shares and the exercise price per
share allocated to unexercised options or portions thereof, which shall have
been granted prior to any such change, shall likewise be made. Any such
adjustment, however, shall be made without change in the total price applicable
to the unexercised portion of the option (except for any change in the aggregate
price resulting from rounding-off of share quantities or prices).

      In the event of a "spin-off" or other substantial distribution of assets
of the Company which has a material diminutive effect upon the Fair Market Value
of the Common Stock, the Committee in its discretion shall make an appropriate
and equitable adjustment to the exercise prices of options then outstanding
under the Plan.

      Where an adjustment under this Section 3.5 of the type described above is
made to an Incentive Stock Option, the adjustment will be made in a manner which
will not be considered a "modification" under the provisions of subsection
424(b)(3) of the Code.

      In connection with the dissolution or liquidation of the Company or a
partial liquidation involving 50% or more of the assets of the Company, a
reorganization of the Company in which another entity is the survivor, a merger
or reorganization of the Company under which more than 50% of the Common Stock
outstanding prior to the merger or reorganization is converted into cash or into
a security of another entity, a sale of more than 50% of the Company's assets,
or a similar event that the Committee determines, in its discretion, would
materially alter the structure of the Company or its ownership, the Committee,
upon 30 days prior written notice to the option holders, may, in its discretion,
do one or more of the following: (i) shorten the period during which options are
exercisable (provided they remain exercisable for at least 30 days after the
date the notice is given); (ii) accelerate any vesting schedule to which an
option is subject; (iii) arrange to have the surviving or successor entity grant
replacement options with appropriate adjustments in the number and kind of
securities and option prices, or (iv) cancel options upon payment to the option
holders in cash, with respect to each option to the extent then exercisable
(including any options as to which the exercise has been accelerated as
contemplated in clause (ii) above), of any amount that is the equivalent of the
Fair Market Value of the Common Stock (at the effective time of the dissolution,
liquidation, merger, reorganization, sale or other event) or the fair market
value of the option. In the case of a change in corporate control, the Committee
may, in considering the advisability or the terms and conditions of any
acceleration of the exercisability of any option pursuant to this Section 3.5,
take into account the penalties that may result directly or indirectly from such
acceleration to either the Company or the option holder, or both, under Section
280G of the Code, and may decide to limit such acceleration to the extent
necessary to avoid or mitigate such penalties or their effects.

      No fractional share of Common Stock shall be issued under the Plan on
account of any adjustment under this Section 3.5.

<PAGE>

   3.6  Rights of Participants and Beneficiaries.

      The Company shall pay all amounts payable hereunder only to the option
holder or beneficiaries entitled thereto pursuant to the Plan. The Company shall
not be liable for the debts, contracts or engagements of any optionee or his or
her beneficiaries, and rights to cash payments under the Plan may not be taken
in execution by attachment or garnishment, or by any other legal or equitable
proceeding while in the hands of the Company.

   3.7  Government Regulations.

      The Plan, and the grant and exercise of options and the issuance and
delivery of shares of Common Stock under options granted hereunder, shall be
subject to compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law) and
federal margin requirements and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
the Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and options granted hereunder shall be
deemed amended to the extent necessary to conform to such laws, rules and
regulations.

   3.8  Amendment and Termination.

      The Board or the Committee may at any time suspend, amend or terminate the
Plan and may, with the consent of the option holder, make such modifications of
the terms and conditions of such option holder's option as it shall deem
advisable, provided, however, that, without approval of the Company's
stockholders given within twelve months before or after the action by the Board
or the Committee, no action of the Board or the Committee may, (A) materially
increase the benefits accruing to participants under the Plan; (B) materially
increase the number of securities which may be issued under the Plan; or (C)
materially modify the requirements as to eligibility for participation in the
Plan. No option may be granted during any suspension of the Plan or after such
termination. The amendment, suspension or termination of the Plan shall not,
without the consent of the option holder affected thereby, alter or impair any
rights or obligations under any option theretofore granted under the Plan. No
option way be granted during any period of suspension nor after termination of
the Plan, and in no event may any option be granted under the Plan after the
expiration of ten years from the date the Plan is adopted by the Board.

   3.9  Time of Grant And Exercise of Option.

      An option shall be deemed to be exercised when the Secretary of the
Company receives written notice from an option holder of such exercise, payment
of the exercise price determined pursuant to Section 2.1 of the Plan and set
forth in the Stock Option Agreement, and all representations, indemnifications
and documents reasonably requested by the Committee.

   3.10 Privileges of Stock Ownership; Non-Distributive Intent; Reports to
   Option Holders.

      A participant in the Plan shall not be entitled to the privilege of stock
ownership as to any shares of Common Stock not actually issued to the optionee.
Upon exercise of an option at a time when there is not in effect under the
Securities Act of 1933, as amended, a Registration Statement

<PAGE>

relating to the Common Stock issuable upon exercise or payment therefor and
available for delivery a Prospectus meeting the requirements of Section 10(a)(3)
of said Act, the optionee shall represent and warrant in writing to the Company
that the shares purchased are being acquired for investment and not with a view
to the distribution thereof.

      The Company shall furnish to each optionee under the Plan the Company's
annual report and such other periodic reports, if any, as are disseminated by
the Company in the ordinary course to its stockholders.

   3.11 Legending Share Certificates.

      In order to enforce any restrictions imposed upon Common Stock issued upon
exercise of an option granted under the Plan or to which such Common Stock may
be subject, the Committee may cause a legend or legends to be placed on any
share certificates representing such Common Stock, which legend or legends shall
make appropriate reference to such restrictions, including, but not limited to,
a restriction against sale of such Common Stock for any period of time as may be
required by applicable laws or regulations. If any restriction with respect to
which a legend was placed on any certificate ceases to apply to Common Stock
represented by such certificate, the owner of the Common Stock represented by
such certificate may require the Company to cause the issuance of a new
certificate not bearing the legend.

      Additionally, and not by way of limitation, the Committee may impose such
restrictions on any Common Stock issued pursuant to the Plan as it may deem
advisable, including, without limitation, restrictions under the requirements of
any stock exchange upon which Common Stock is then traded.

   3.12 Use of Proceeds.

      Proceeds realized pursuant to the exercise of options under the Plan shall
constitute general funds of the Company.

   3.13 Changes in Capital Structure; No Impediment to Corporate Transactions.

      The existence of outstanding options under the Plan shall not affect the
Company's right to effect adjustments, recapitalizations, reorganizations or
other changes in its or any other corporation's capital structure or business,
any merger or consolidation, any issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting Common Stock, the dissolution or
liquidation of the Company's or any other corporation's assets or business, or
any other corporate act, whether similar to the events described above or
otherwise.

   3.14 Effective Date of the Plan.

      The Plan shall be effective as of the date of its approval by the
stockholders of the Company within twelve months after the date of the Board's
initial adoption of the Plan. Options may be granted but not exercised prior to
stockholder approval of the Plan. If any options are so granted and stockholder
approval shall not have been obtained within twelve months of the date of
adoption of this Plan by the Board of Directors, such options shall terminate
retroactively as of the date they were granted.

   3.15 Termination.

<PAGE>

      The Plan shall terminate automatically as of the close of business on the
day preceding the tenth anniversary date of its adoption by the Board or earlier
as provided in Section 3.8. Unless otherwise provided herein, the termination of
the Plan shall not affect the validity of any option agreement outstanding at
the date of such termination.

   3.16 No Effect on Other Plans.

      The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Subsidiary or any Parent
Corporation. Nothing in the Plan shall be construed to limit the right of the
Company (i) to establish any other forms of incentives or compensation for
employees of the Company, any Subsidiary or any Parent Corporation or (ii) to
grant or assume options or other rights otherwise than under the Plan in
connection with any proper corporate purpose including but not by way of
limitation, the grant or assumption of options in connection with the
acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, partnership, firm or association.

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