Document:

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                                                                    EXHIBIT 10.1

                            INDEMNIFICATION AGREEMENT

      This INDEMNIFICATION AGREEMENT (this "Agreement") is made and entered into
this ____ day of April, 2004 (the "Effective Date") by and between Lindows,
Inc., a Delaware corporation (the "Company"), and [______________] (the
"Indemnitee").

      WHEREAS, the Company believes it is essential to retain and attract
qualified directors and officers;

      WHEREAS, the Indemnitee is or intends to become a director and/or officer
of the Company;

      WHEREAS, both the Company and the Indemnitee recognize the increased risk
of litigation and other claims being asserted against directors and officers of
public companies;

      WHEREAS, the Company's Amended and Restated Certificate of Incorporation
(the "Certificate of Incorporation") and Bylaws (the "Bylaws") require the
Company to indemnify and advance expenses to its directors and officers to the
extent permitted by the DGCL (as hereinafter defined);

      WHEREAS, in recognition of the Indemnitee's need for (i) substantial
protection against personal liability based on the Indemnitee's reliance on the
Certificate of Incorporation and Bylaws, and (ii) an inducement to provide
effective services to the Company as a director and/or officer thereof, the
Company wishes to provide for the indemnification of the Indemnitee and to
advance expenses to the Indemnitee to the fullest extent permitted by law and as
set forth in this Agreement, and, to the extent insurance is maintained by the
Company, to provide for the continued coverage of the Indemnitee under the
Company's directors' and officers' liability insurance policies; and

      WHEREAS, the Indemnitee (i) has been serving and intends to continue
serving as a director and/or officer of the Company in part in reliance on the
Certificate of Incorporation and Bylaws; or (ii) is relying upon the rights
afforded under this Agreement in accepting Indemnitee's position as a director,
officer or employee of the Company.

      NOW, THEREFORE, in consideration of the premises contained herein and of
the Indemnitee continuing to serve the Company directly or, at its request, with
another enterprise, and intending to be legally bound hereby, the parties hereto
agree as follows:

      1.    CERTAIN DEFINITIONS.

            (a)   A "Change in Control" shall be deemed to have occurred if:

                  (i) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act"), other than (a) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company; (b) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company; or (c) any current beneficial stockholder or
group, as defined by
<PAGE>
                                                                    EXHIBIT 10.1

Rule 13d-5 of the Exchange Act, including the heirs, assigns and successors
thereof, of beneficial ownership, within the meaning of Rule 13d-3 of the
Exchange Act, of securities possessing more than 50% of the total combined
voting power of the Company's outstanding securities; hereafter becomes the
"beneficial owner," as defined in Rule 13d-3 of the Exchange Act, directly or
indirectly, of securities of the Company representing 20% or more of the total
combined voting power represented by the Company's then outstanding Voting
Securities;

                  (ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board of Directors of the
Company (the "Board") and any new director whose election by the Board or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then in office who either were directors at
the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof;
or

                  (iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company, in one transaction or a series of
transactions, of all or substantially all of the Company's assets.

            (b) "DGCL" shall mean the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended or interpreted;
provided, however, that in the case of any such amendment or interpretation,
only to the extent that such amendment or interpretation permits the Company to
provide broader indemnification rights than were permitted prior thereto.

            (c) "Expense" shall mean attorneys' fees and all other costs,
expenses and obligations paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing for any of the foregoing, any Proceeding relating to any Indemnifiable
Event.

            (d) "Indemnifiable Event" shall mean any event or occurrence that
takes place either prior to or after the execution of this Agreement, related to
the fact that the Indemnitee is or was a director or officer of the Company, or
is or was serving at the request of the Company as a director, officer,
employee, or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, or by reason of anything done or not done by the Indemnitee in any such
capacity.

            (e) "Proceeding" shall mean any threatened, pending or completed
action, suit, investigation or proceeding, and any appeal thereof, whether
civil, criminal, administrative or investigative and/or any inquiry or
investigation, whether conducted by the Company or any other party, that the
Indemnitee in good faith believes might lead to the institution of any such
action.
<PAGE>
                                                                    EXHIBIT 10.1

            (f) "Reviewing Party" shall mean any appropriate person or body
consisting of a member or members of the Company's Board or any other person or
body appointed by the Board (including the special independent counsel referred
to in Section 6) who is not a party to the particular Proceeding with respect to
which the Indemnitee is seeking indemnification.

            (g) "Voting Securities" shall mean any securities of the Company
which vote generally in the election of directors.

      2. INDEMNIFICATION. In the event the Indemnitee was, or is a party to or
is involved (as a party, witness, or otherwise) in any Proceeding by reason of
(or arising in part out of) an Indemnifiable Event, whether the basis of the
Proceeding is the Indemnitee's alleged action in an official capacity as a
director or officer or in any other capacity while serving as a director or
officer, the Company shall indemnify the Indemnitee to the fullest extent
permitted by the DGCL against any and all Expenses, liability, and loss
(including judgments, fines, ERISA excise taxes or penalties, and amounts paid
or to be paid in settlement, and any interest, assessments, or other charges
imposed thereon, and any federal, state, local, or foreign taxes imposed on any
director or officer as a result of the actual or deemed receipt of any payments
under this Agreement) (collectively, "Liabilities") reasonably incurred or
suffered by such person in connection with such Proceeding. The Company shall
provide indemnification pursuant to this Section 2 as soon as practicable, but
in no event later than 30 days after it receives written demand from the
Indemnitee. Notwithstanding anything in this Agreement to the contrary and
except as provided in Section 5 below, the Indemnitee shall not be entitled to
indemnification pursuant to this Agreement (i) in connection with any Proceeding
initiated by the Indemnitee against the Company or any director or officer of
the Company unless (A) such indemnification is required by applicable law or (B)
the Company has joined in or consented to the initiation of such Proceeding or
(ii) on account of any suit in which judgment is rendered against the Indemnitee
pursuant to Section 16(b) of the Exchange Act for an accounting of profits made
from the purchase or sale by the Indemnitee of securities of the Company.

      3. ADVANCEMENT OF EXPENSES. The Company shall advance Expenses to the
Indemnitee within 20 days of such request (an "Expense Advance"); provided,
however, that if required by applicable corporate laws such Expenses shall be
advanced only upon delivery to the Company of an undertaking by or on behalf of
the Indemnitee to repay such amount if it is ultimately determined that the
Indemnitee is not entitled to be indemnified by the Company; and provided
further, that the Company shall make such advances only to the extent permitted
by law.

      4. REVIEW PROCEDURE FOR INDEMNIFICATION. Notwithstanding the foregoing,
(i) the obligations of the Company under Sections 2 and 3 above shall be subject
to the condition that the Reviewing Party shall not have determined (in a
written opinion, in any case in which the special independent counsel referred
to in Section 6 hereof is involved) that the Indemnitee would not be permitted
to be indemnified under applicable law, and (ii) the obligation of the Company
to make an Expense Advance pursuant to Section 3 above shall be subject to the
condition that, if, when and to the extent that the Reviewing Party determines
that the Indemnitee would not be permitted to be so indemnified under applicable
law, the Company shall be entitled to be reimbursed by the Indemnitee (who
hereby agrees to reimburse the Company) for all such amounts theretofore paid;
provided, however, that if the Indemnitee has commenced legal
<PAGE>
                                                                    EXHIBIT 10.1

proceedings in a court of competent jurisdiction pursuant to Section 5 below to
secure a determination that the Indemnitee should be indemnified under
applicable law, any determination made by the Reviewing Party that the
Indemnitee would not be permitted to be indemnified under applicable law shall
not be binding and the Indemnitee shall not be required to reimburse the Company
for any Expense Advance until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have been exhausted
or have lapsed). The Indemnitee's obligation to reimburse the Company for
Expense Advances pursuant to this Section 4 shall be unsecured and no interest
shall be charged thereon. If there has not been a Change in Control, the
Reviewing Party shall be selected by the Board, and if there has been such a
Change in Control, other than a Change in Control which has been approved by a
majority of the Company's Board who were directors immediately prior to such
Change in Control, the Reviewing Party shall be the special independent counsel
referred to in Section 6 hereof.

      5. ENFORCEMENT OF INDEMNIFICATION RIGHTS. If the Reviewing Party
determines that the Indemnitee substantively would not be permitted to be
indemnified in whole or in part under applicable law, or if the Indemnitee has
not otherwise been paid in full pursuant to Sections 2 and 3 above within 30
days after a written demand has been received by the Company, the Indemnitee
shall have the right to commence litigation in any court in the State of
Delaware having subject matter jurisdiction thereof and in which venue is proper
to recover the unpaid amount of the demand (an "Enforcement Proceeding") and, if
successful in whole or in part, the Indemnitee shall be entitled to be paid any
and all Expenses in connection with such Enforcement Proceeding. The Company
hereby consents to service of process for such Enforcement Proceeding and to
appear in any such Enforcement Proceeding. Any determination by the Reviewing
Party otherwise shall be conclusive and binding on the Company and the
Indemnitee. In the event of an action instituted by or in the name of the
Company under this Agreement or to enforce or interpret any of the terms of this
Agreement, the Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee in defense of such action (including with respect to Indemnitee's
counterclaims and cross-claims made in such action) if the Indemnitee is
successful in whole or in part in such action.

      6. CHANGE IN CONTROL. The Company agrees that if there is a Change in
Control of the Company, other than a Change in Control which has been approved
by a majority of the Company's Board who were directors immediately prior to
such Change in Control, then with respect to all matters thereafter arising
concerning the rights of the Indemnitee to indemnity payments and Expense
Advances under this Agreement or any other agreement or under applicable law or
the Company's Certificate of Incorporation or Bylaws now or hereafter in effect
relating to indemnification for Indemnifiable Events, the Company shall seek
legal advice only from special independent counsel selected by the Indemnitee
and approved by the Company, which approval shall not be unreasonably withheld.
Such special independent counsel shall not have otherwise performed services for
the Company or the Indemnitee, other than in connection with such matters,
within the last five years. Such independent counsel shall not include any
person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or the Indemnitee in an action to determine the Indemnitee's rights under this
Agreement. Such counsel, among other things, shall render its written opinion to
the Company and the Indemnitee as to whether and to what extent the Indemnitee
would be permitted to be indemnified under applicable law. The
<PAGE>
                                                                    EXHIBIT 10.1

Company agrees to pay the reasonable fees of the special independent counsel
referred to above and to indemnify fully such counsel against any and all
expenses (including attorneys' fees), claims, liabilities and damages arising
out of or relating to this Agreement or the engagement of special independent
counsel pursuant to this Agreement.

      7. PARTIAL INDEMNITY. If the Indemnitee is entitled under any provision of
this Agreement to indemnification by the Company for some or a portion of the
Expenses and Liabilities, but not, however, for all of the total amount thereof,
the Company shall nevertheless indemnify the Indemnitee for the portion thereof
to which the Indemnitee is entitled. Moreover, notwithstanding any other
provision of this Agreement, to the extent that the Indemnitee has been
successful on the merits or otherwise in defense of any or all Proceedings
relating in whole or in part to an Indemnifiable Event or in defense of any
issue or matter therein, including dismissal without prejudice, the Indemnitee
shall be indemnified against all Expenses incurred in connection therewith. In
connection with any determination by the Reviewing Party or otherwise as to
whether the Indemnitee is entitled to be indemnified hereunder, the burden of
proof shall be on the Company to establish that the Indemnitee is not so
entitled.

      8. NON-EXCLUSIVITY. The rights of the Indemnitee hereunder shall be in
addition to any other rights the Indemnitee may have under any statute,
provision of the Company's Certificate of Incorporation or Bylaws, vote of
stockholders or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office. To the extent that a change in the DGCL permits greater indemnification
by agreement than would be afforded currently under the Company's Certificate of
Incorporation and Bylaws and this Agreement, it is the intent of the parties
hereto that the Indemnitee shall enjoy by this Agreement the greater benefits so
afforded by such change.

      9. LIABILITY INSURANCE. The Company hereby covenants and agrees that, so
long as the Indemnitee shall continue to serve as a director or officer of the
Company and thereafter so long as the Indemnitee shall be subject to any
possible proceeding by reason of the fact that Indemnitee was an agent of the
Company, the Company shall promptly obtain and maintain in full force and effect
directors' and officers' liability insurance in reasonable amounts from
established and reputable insurers ("D&O Insurance"). In all policies of D&O
Insurance, the Indemnitee shall be named as an insured in such a manner as to
provide the Indemnitee the same rights and benefits as are accorded to the most
favorably insured of the Company's directors, if the Indemnitee is a director;
or of the Company's officers, if the Indemnitee is not a director of the Company
but is an officer. Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company determines in good
faith that such insurance is not reasonably available, the premium, retentions
or other costs for such insurance are disproportionate to the amount of coverage
provided, the coverage provided by such insurance is limited by exclusions or
otherwise so as to provide an insufficient benefit, the Indemnitee is covered by
similar insurance maintained by a subsidiary of the Company, or the Company is
prohibited from complying with this Section 9 by applicable law.

      10. SETTLEMENT OF CLAIMS. The Company shall not be liable to indemnify the
Indemnitee under this Agreement (a) for any amounts paid in settlement of any
action or claim effected without the Company's written consent, which consent
shall not be unreasonably
<PAGE>
                                                                    EXHIBIT 10.1

withheld; or (b) for any judicial award if the Company was not given a
reasonable and timely opportunity, at its expense, to participate in the defense
of such action.

      11. NO PRESUMPTION. For purposes of this Agreement, to the fullest extent
permitted by law, the termination of any Proceeding, action, suit or claim, by
judgment, order, settlement (whether with or without court approval) or
conviction, or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that the Indemnitee did not meet any particular standard of
conduct or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law. In addition, neither the
failure of the Reviewing Party to have made a determination as to whether the
Indemnitee has met any particular standard of conduct or had any particular
belief, nor an actual determination by the Reviewing Party that the Indemnitee
has not met such standard of conduct or did not have such belief, prior to the
commencement of an Enforcement Proceeding under this Agreement, shall be a
defense to the Indemnitee's claim or create a presumption that the Indemnitee
has not met any particular standard of conduct or did not have any particular
belief.

      12. PERIOD OF LIMITATIONS. No legal action shall be brought and no cause
of action shall be asserted by or on behalf of the Company or any affiliate of
the Company against the Indemnitee, the Indemnitee's spouse, heirs, executors or
personal or legal representatives after the expiration of two years from the
date of accrual of such cause of action, or such longer period as may be
required by state law under the circumstances, and any claim or cause of action
of the Company or its affiliate shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such period; provided,
however, that if any shorter period of limitations is otherwise applicable to
any such cause of action, such shorter period shall govern.

      13. AMENDMENT OF THIS AGREEMENT. No supplement, modification or amendment
of this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
effective against the Indemnitee or the Company unless in writing and signed by
the Indemnitee, and no waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a waiver of any other provisions hereof (whether
or not similar), nor shall such waiver constitute a continuing waiver. Except as
specifically provided herein, no failure to exercise or any delay in exercising
any right or remedy hereunder shall constitute a waiver thereof.

      14. SUBROGATION. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of the Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.

      15. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under this
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent the Indemnitee has otherwise actually received payment
(under any insurance policy, Bylaw, vote, agreement or otherwise) of the amounts
otherwise indemnifiable hereunder.

      16. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any
<PAGE>
                                                                    EXHIBIT 10.1

direct or indirect successor by purchase, merger, consolidation or otherwise to
all or substantially all of the business and/or assets of the Company, spouses,
heirs, and personal and legal representatives. The Company shall require and
cause any successor (whether direct or indirect by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business and/or assets of the Company, by written agreement in form and
substance satisfactory to the Indemnitee, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place. This
Agreement shall continue in effect regardless of whether the Indemnitee
continues to serve as a director or officer of the Company or of any other
enterprise at the Company's request.

      17. SEVERABILITY. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) is held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.

      18. GOVERNING LAW; INTERPRETATION. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such State without giving
effect to the principles of conflicts of laws. It is understood that the parties
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification to the Indemnitee to the fullest extent permitted by law,
including those circumstances in which indemnification would otherwise be
discretionary.

      19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

      20. NOTICES. All notices, demands, and other communications required or
permitted hereunder shall be made in writing and shall be deemed to have been
duly given if delivered by hand, against receipt, or mailed, postage prepaid,
certified or registered mail, return receipt requested, and addressed to the
Company at:

                        Lindows, Inc.
                        9333 Genesee Ave., 3rd Floor
                        San Diego, CA  92121

      and to the Indemnitee at:

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

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

                        --------------------------
<PAGE>
                                                                    EXHIBIT 10.1

      Notice of change of address shall be effective only when done in
accordance with this Section. All notices complying with this Section shall be
deemed to have been received on the date of delivery or on the third business
day after mailing.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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                                                                    EXHIBIT 10.1

      IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day first set forth above.

                                    THE COMPANY:

                                    LINDOWS, INC.

                                    By:
                                       --------------------------------------

                                    Name:
                                         ------------------------------------

                                    Title:
                                          -----------------------------------

                                    INDEMNITEE:

                                    -----------------------------------------
                                                     Signature

                                    Print Name:
                                               ------------------------------

                  [SIGNATURE PAGE TO INDEMNIFICATION AGREEMENT]<PAGE>

                                                                    Exhibit 10.2

                                LINDOWS.COM, INC.

                            2001 STOCK INCENTIVE PLAN

                    (AS AMENDED AND RESTATED APRIL 19, 2004)

         1.       Purposes of the Plan. The purposes of this Stock Incentive
Plan are to attract and retain the best available personnel, to provide
additional incentive to Employees, Directors and Consultants and to promote the
success of the Company's business.

         2.       Definitions. As used herein, the following definitions shall
apply:

                  (a)      "Administrator" means the Board or any of the
Committees appointed to administer the Plan.

                  (b)      "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange
Act.

                  (c)      "Applicable Laws" means the legal requirements
relating to the administration of stock incentive plans, if any, under
applicable provisions of federal and state securities laws, the corporate laws
of California and, to the extent other than California, the corporate law of the
state of the Company's incorporation, the Code, the rules of any applicable
stock exchange or national market system, and the rules of any foreign
jurisdiction applicable to Awards granted to residents therein.

                  (d)      "Assumed" means that (i) pursuant to a Corporate
Transaction defined in Section 2(q)(i), 2(q)(ii) or 2(q)(iii) or a Related
Entity Disposition, the contractual obligations represented by the Award are
assumed by the successor entity or its Parent in connection with the Corporate
Transaction or Related Entity Disposition or (ii) pursuant to a Corporate
Transaction defined in Section 2(q)(iv) or 2(q)(v), the Award is affirmed by the
Company. The Award shall not be deemed "Assumed" for purposes of terminating the
Award (in the case of a Corporate Transaction) and the termination of the
Continuous Service of the Grantee (in the case of a Related Entity Disposition)
if pursuant to a Corporate Transaction or a Related Entity Disposition the Award
is replaced with a comparable award with respect to shares of capital stock of
the successor entity of its Parent. However, for purposes of determining whether
the vesting of the Award accelerates, the Award shall be deemed "Assumed" if the
Award is replaced with such a comparable stock award or the Award is replaced
with a cash incentive program of the successor entity or Parent thereof which
preserves the compensation element of such Award existing at the time of the
Corporate Transaction or Related Entity Disposition and provides for subsequent
payout in accordance with the same vesting schedule applicable to such Award.
The determination of Award comparability shall be made by the Administrator and
its determination shall be final, binding and conclusive.

                  (e)      "Award" means the grant of an Option, Restricted
Stock, or other right or benefit under the Plan.

                  (f)      "Award Agreement" means the written agreement
evidencing the grant of an Award executed by the Company and the Grantee,
including any amendments thereto.

Lindows.com 2001 Stock Incentive Plan   1

<PAGE>

                  (g)      "Board" means the Board of Directors of the Company.

                  (h)      "Cause" means, with respect to the termination by the
Company or a Related Entity of the Grantee's Continuous Service, that such
termination is for "Cause" as such term is expressly defined in the
then-effective written policies of the Company or such Related Entity or the
then-effective written agreement between the Grantee and the Company or such
Related Entity, or in the absence of such then-effective policy or written
agreement and definition, is based on, in the determination of the
Administrator, the Grantee's: (i) performance of any act or failure to perform
any act in bad faith and to the detriment of the Company or a Related Entity;
(ii) dishonesty, intentional misconduct or material breach of any agreement with
the Company or a Related Entity; or (iii) commission of a crime involving
dishonesty, breach of trust, or physical or emotional harm to any person.

                  (i)      "Change in Control" means a change in ownership or
control of the Company after the Registration Date effected through either of
the following transactions:

                           (i)      the direct or indirect acquisition by any
person or related group of persons (other than an acquisition from or by the
Company or by a Company-sponsored employee benefit plan or by a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of
the Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities pursuant to
a tender or exchange offer made directly to the Company's stockholders which a
majority of the Continuing Directors who are not Affiliates or Associates of the
offer or do not recommend such stockholders accept, or

                           (ii)     a change in the composition of the Board
over a period of thirty-six (36) months or less such that a majority of the
Board members (rounded up to the next whole number) ceases, by reason of one or
more contested elections for Board membership, to be comprised of individuals
who are Continuing Directors.

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

                  (k)      "Committee" means any committee appointed by the
Board to administer the Plan.

                  (l)      "Common Stock" means the voting common stock of the
Company.

                  (m)      "Company" means Lindows.com, Inc. a Delaware
corporation.

                  (n)      "Consultant" means any person (other than an Employee
or a Director, solely with respect to rendering services in such person's
capacity as a Director) who is engaged by the Company or any Related Entity to
render consulting or advisory services to the Company or such Related Entity.

                  (o)      "Continuing Directors" means members of the Board who
either (i) have been Board members continuously for a period of at least
thirty-six (36) months or (ii) have been Board members for less than thirty-six
(36) months and were elected or nominated for election as

Lindows.com 2001 Stock Incentive Plan   2

<PAGE>

Board members by at least a majority of the Board members described in clause
(i) who were still in office at the time such election or nomination was
approved by the Board.

                  (p)      "Continuous Service" means that the provision of
services to the Company or a Related Entity in any capacity of Employee,
Director or Consultant, is not interrupted or terminated. Continuous Service
shall not be considered interrupted in the case of (i) any approved leave of
absence, (ii) transfers among the Company, any Related Entity, or any successor,
in any capacity of Employee, Director or Consultant, or (iii) any change in
status as long as the individual remains in the service of the Company or a
Related Entity in any capacity of Employee, Director or Consultant (except as
otherwise provided in the Award Agreement). An approved leave of absence shall
include sick leave, military leave, or any other authorized personal leave. For
purposes of each Incentive Stock Option granted under the Plan, if such leave
exceeds ninety (90) days, and reemployment upon expiration of such leave is not
guaranteed by statute or contract, then the Incentive Stock Option shall be
treated as a Non-Qualified Stock Option on the day three (3) months and one (1)
day following the expiration of such ninety (90) day period.

                  (q)      "Corporate Transaction" means any of the following
transactions:

                           (i)      a merger or consolidation in which the
Company is not the surviving entity, except for a transaction the principal
purpose of which is to change the state in which the Company is incorporated;

                           (ii)     the sale, transfer or other disposition of
all or substantially all of the assets of the Company (including the capital
stock of the Company's subsidiary corporations);

                           (iii)    the complete liquidation or dissolution of
the Company;

                           (iv)     any reverse merger in which the Company is
the surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding securities
are transferred to a person or persons different from those who held such
securities immediately prior to such merger; or

                           (v)      acquisition by any person or related group
of persons (other than the Company or by a Company-sponsored employee benefit
plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange
Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities (whether or not in
a transaction also constituting a Change in Control), but excluding any such
transaction that the Administrator determines shall not be a Corporate
Transaction.

                  (r)      "Covered Employee" means an Employee who is a
"covered employee" under Section 162(m)(3) of the Code.

                  (s)      "Director" means a member of the Board or the board
of directors of any Related Entity.

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                  (t)      "Disability" means as defined under the long-term
disability policy of the Company or the Related Entity to which the Grantee
provides services regardless of whether the Grantee is covered by such policy.
If the Company or the Related Entity to which the Grantee provides service does
not have a long-term disability plan in place, "Disability" means that a Grantee
is unable to carry out the responsibilities and functions of the position held
by the Grantee by reason of any medically determinable physical or mental
impairment. A Grantee will not be considered to have incurred a Disability
unless he or she furnishes proof of such impairment sufficient to satisfy the
Administrator in its discretion.

                  (u)      "Employee" means any person, including an Officer or
Director, who is in the employ of the Company or any Related Entity, subject to
the control and direction of the Company or any Related Entity as to both the
work to be performed and the manner and method of performance. The payment of a
director's fee by the Company or a Related Entity shall not be sufficient to
constitute "employment" by the Company.

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

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

                           (i)      Where there exists a public market for the
Common Stock, the Fair Market Value shall be (A) the closing price for a Share
on the date of the determination (or, if no closing price was reported on that
date, on the last trading date on which a closing price was reported) on the
stock exchange determined by the Administrator to be the primary market for the
Common Stock or the Nasdaq National Market, whichever is applicable or (B) if
the Common Stock is not traded on any such exchange or national market system,
the average of the closing bid and asked prices of a Share on the Nasdaq Small
Cap Market on the date of the determination (or, if no such prices were reported
on that date, on the last date on which such prices were reported), in each
case, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; or

                           (ii)     In the absence of an established market for
the Common Stock of the type described in (i), above, the Fair Market Value
thereof shall be determined by the Administrator in good faith and in a manner
consistent with Section 260.140.50 of Title 10 of the California Code of
Regulations which requires that consideration be given to (A) the price at which
securities of reasonably comparable corporations (if any) in the same industry
are being traded, or (B) if there are no securities of reasonably comparable
corporations in the same industry being traded, the earnings history, book value
and prospects of the issuer in light of market conditions generally.

                  (x)      "Grantee" means an Employee, Director or Consultant
who receives an Award under the Plan.

                  (y)      "Immediate Family" means any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the Grantee's household (other than a tenant or employee), a

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trust in which these persons (or the Grantee) have more than fifty percent (50%)
of the beneficial interest, a foundation in which these persons (or the Grantee)
control the management of assets, and any other entity in which these persons
(or the Grantee) own more than fifty percent (50%) of the voting interests.

                  (z)      "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.

                  (aa)     "Non-Qualified Stock Option" means an Option not
intended to qualify as an Incentive Stock Option.

                  (bb)     "Officer" means a person who is an officer of the
Company or a Related Entity within the meaning of Section 16 of the Exchange Act
and the rules and regulations promulgated thereunder.

                  (cc)     "Option" means an option to purchase Shares pursuant
to an Award Agreement granted under the Plan.

                  (dd)     "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

                  (ee)     "Performance-Based Compensation" means compensation
qualifying as "performance-based compensation" under Section 162(m) of the Code.

                  (ff)     "Plan" means this 2001 Stock Incentive Plan.

                  (gg)     "Post-Termination Exercise Period" means the period
specified in the Award Agreement of not less than sixty (60) days commencing on
the date of termination (other than termination by the Company or any Related
Entity for Cause) of the Grantee's Continuous Service, or such longer period as
may be applicable upon death or Disability.

                  (hh)     "Registration Date" means the first to occur of (i)
the closing of the first sale to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, of (A) the Common Stock
or (B) the same class of securities of a successor corporation (or its Parent)
issued pursuant to a Corporate Transaction in exchange for or in substitution of
the Common Stock; and (ii) in the event of a Corporate Transaction, the date of
the consummation of the Corporate Transaction if the same class of securities of
the successor corporation (or its Parent) issuable in such Corporate Transaction
shall have been sold to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, on or prior to the date of
consummation of such Corporate Transaction.

                  (ii)     "Related Entity" means any Parent or Subsidiary of
the Company and any business, corporation, partnership, limited liability
company or other entity in which the Company or a Parent or a Subsidiary of the
Company holds a substantial ownership interest, directly or indirectly.

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                  (jj)     "Related Entity Disposition" means the sale,
distribution or other disposition by the Company or a Parent or a Subsidiary of
the Company of all or substantially all of the interests of the Company or a
Parent or a Subsidiary of the Company in any Related Entity effected by a sale,
merger or consolidation or other transaction involving that Related Entity or
the sale of all or substantially all of the assets of that Related Entity, other
than any Related Entity Disposition to the Company or a Parent or a Subsidiary
of the Company.

                  (kk)     "Restricted Stock" means Shares issued under the Plan
to the Grantee for such consideration, if any, and subject to such restrictions
on transfer, rights of first refusal, repurchase provisions, forfeiture
provisions, and other terms and conditions as established by the Administrator.

                  (ll)     "Rule 16b-3" means Rule 16b-3 promulgated under the
Exchange Act or any successor thereto.

                  (mm)     "Share" means a share of the Common Stock.

                  (nn)     "Subsidiary" means a "subsidiary corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the Code.

         3.       Stock Subject to the Plan.

                  (a)      Subject to the provisions of Section 10 below, the
maximum aggregate number of Shares which may be issued pursuant to all Awards
(including Incentive Stock Options) is Ten Million Six Hundred Twenty-Five
Thousand (10,625,000) Shares. The Shares may be authorized, but unissued, or
reacquired Common Stock.

                  (b)      Any Shares covered by an Award (or portion of an
Award) which is forfeited or canceled, expires or is settled in cash, shall be
deemed not to have been issued for purposes of determining the maximum aggregate
number of Shares which may be issued under the Plan. Shares that actually have
been issued under the Plan pursuant to an Award shall not be returned to the
Plan and shall not become available for future issuance under the Plan, except
that if unvested Shares are forfeited, or repurchased by the Company at their
original purchase price, such Shares shall become available for future grant
under the Plan.

         4.       Administration of the Plan.

                  (a)      Plan Administrator.

                           (i)      Administration with Respect to Directors and
Officers. Prior to the Registration Date, with respect to grants of Awards to
Directors or Employees who are also Officers or Directors of the Company, the
Plan shall be administered by (A) the Board or (B) a Committee designated by the
Board, which Committee shall be constituted in such a manner as to satisfy the
Applicable Laws. On or after the Registration Date, with respect to grants of
Awards to Directors or Employees who are also Officers or Directors of the
Company, the Plan shall be administered by (A) the Board or (B) a Committee
designated by the Board, which Committee shall be constituted in such a manner
as to satisfy the Applicable Laws and to permit such grants and related
transactions under the Plan to be exempt from Section 16(b) of the

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Exchange Act in accordance with Rule 16b-3. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board.

                           (ii)     Administration With Respect to Consultants
and Other Employees. With respect to grants of Awards to Employees or
Consultants who are neither Directors nor Officers of the Company, the Plan
shall be administered by (A) the Board or (B) a Committee designated by the
Board, which Committee shall be constituted in such a manner as to satisfy the
Applicable Laws. Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board.

                           (iii)    Administration With Respect to Covered
Employees. Notwithstanding the foregoing, as of and after the date that the
exemption for the Plan under Section 162(m) of the Code expires, as set forth in
Section 20 herein, grants of Awards to any Covered Employee intended to qualify
as Performance-Based Compensation shall be made only by a Committee (or
subcommittee of a Committee) which is comprised solely of two or more Directors
eligible to serve on a committee making Awards qualifying as Performance-Based
Compensation. In the case of such Awards granted to Covered Employees,
references to the "Administrator" or to a "Committee" shall be deemed to be
references to such Committee or subcommittee.

                  (b)      Multiple Administrative Bodies. The Plan may be
administered by different bodies with respect to Directors, Officers,
Consultants, and Employees who are neither Directors nor Officers.

                  (c)      Powers of the Administrator. Subject to Applicable
Laws and the provisions of the Plan (including any other powers given to the
Administrator hereunder), and except as otherwise provided by the Board, the
Administrator shall have the authority, in its discretion:

                           (i)      to select the Employees, Directors and
Consultants to whom Awards may be granted from time to time hereunder;

                           (ii)     to determine whether and to what extent
Awards are granted hereunder;

                           (iii)    to determine the number of Shares or the
amount of other consideration to be covered by each Award granted hereunder;

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

                           (v)      to determine the terms and conditions of any
Award granted hereunder;

                           (vi)     to establish additional terms, conditions,
rules or procedures to accommodate the rules or laws of applicable foreign
jurisdictions and to afford Grantees favorable treatment under such rules or
laws; provided, however, that no Award shall be granted under any such
additional terms, conditions, rules or procedures with terms or conditions which
are inconsistent with the provisions of the Plan;

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                           (vii)    to amend the terms of any outstanding Award
granted under the Plan, provided that any amendment that would adversely affect
the Grantee's rights under an outstanding Award shall not be made without the
Grantee's written consent;

                           (viii)   to construe and interpret the terms of the
Plan and Awards, including without limitation, any notice of award or Award
Agreement, granted pursuant to the Plan; and

                           (ix)     to take such other action, not inconsistent
with the terms of the Plan, as the Administrator deems appropriate.

         5.       Eligibility. Awards other than Incentive Stock Options may be
granted to Employees, Directors and Consultants. Incentive Stock Options may be
granted only to Employees of the Company, a Parent or a Subsidiary. An Employee,
Director or Consultant who has been granted an Award may, if otherwise eligible,
be granted additional Awards. Awards may be granted to such Employees, Directors
or Consultants who are residing in foreign jurisdictions as the Administrator
may determine from time to time.

         6.       Terms and Conditions of Awards.

                  (a)      Type of Awards. The Administrator is authorized under
the Plan to award any type of arrangement to an Employee, Director or Consultant
that is not inconsistent with the provisions of the Plan and that by its terms
involves or might involve the issuance of (i) Shares, (ii) an Option, or similar
right with a fixed or variable price related to the Fair Market Value of the
Shares and with an exercise or conversion privilege related to the passage of
time, the occurrence of one or more events, or the satisfaction of performance
criteria or other conditions, or (iii) any other security with the value derived
from the value of the Shares. Such awards include, without limitation, Options,
or sales or bonuses of Restricted Stock, and an Award may consist of one such
security or benefit, or two (2) or more of them in any combination or
alternative.

                  (b)      Designation of Award. Each Award shall be designated
in the Award Agreement. In the case of an Option, the Option shall be designated
as either an Incentive Stock Option or a Non-Qualified Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of Shares subject to Options designated as Incentive Stock Options which
become exercisable for the first time by a Grantee during any calendar year
(under all plans of the Company or any Parent or Subsidiary) exceeds $100,000,
such excess Options, to the extent of the Shares covered thereby in excess of
the foregoing limitation, shall be treated as Non-Qualified Stock Options. For
this purpose, Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of the Shares shall be
determined as of the grant date of the relevant Option.

                  (c)      Conditions of Award. Subject to the terms of the
Plan, the Administrator shall determine the provisions, terms, and conditions of
each Award including, but not limited to, the Award vesting schedule, repurchase
provisions, rights of first refusal, forfeiture provisions, form of payment
(cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance
criteria established

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by the Administrator may be based on any one of, or combination of, increase in
share price, earnings per share, total stockholder return, return on equity,
return on assets, return on investment, net operating income, cash flow,
revenue, economic value added, personal management objectives, or other measure
of performance selected by the Administrator. Partial achievement of the
specified criteria may result in a payment or vesting corresponding to the
degree of achievement as specified in the Award Agreement.

                  (d)      Acquisitions and Other Transactions. The
Administrator may issue Awards under the Plan in settlement, assumption or
substitution for, outstanding awards or obligations to grant future awards in
connection with the Company or a Related Entity acquiring another entity, an
interest in another entity or an additional interest in a Related Entity whether
by merger, stock purchase, asset purchase or other form of transaction.

                  (e)      Deferral of Award Payment. The Administrator may
establish one or more programs under the Plan to permit selected Grantees the
opportunity to elect to defer receipt of consideration upon exercise of an
Award, satisfaction of performance criteria, or other event that absent the
election would entitle the Grantee to payment or receipt of Shares or other
consideration under an Award (but only to the extent that such deferral programs
would not result in an accounting compensation charge unless otherwise
determined by the Administrator). The Administrator may establish the election
procedures, the timing of such elections, the mechanisms for payments of, and
accrual of interest or other earnings, if any, on amounts, Shares or other
consideration so deferred, and such other terms, conditions, rules and
procedures that the Administrator deems advisable for the administration of any
such deferral program.

                  (f)      Separate Programs. The Administrator may establish
one or more separate programs under the Plan for the purpose of issuing
particular forms of Awards to one or more classes of Grantees on such terms and
conditions as determined by the Administrator from time to time.

                  (g)      Individual Option Limit. Following the date that the
exemption from application of Section 162(m) of the Code described in Section 20
(or any exemption having similar effect) ceases to apply to Awards, the maximum
number of Shares with respect to which Options may be granted to any Grantee in
any fiscal year of the Company shall be two million (2,000,000) Shares. In
connection with a Grantee's commencement of Continuous Service, a Grantee may be
granted Options for up to an additional one million (1,000,000) Shares which
shall not count against the limit set forth in the previous sentence. The
foregoing limitations shall be adjusted proportionately in connection with any
change in the Company's capitalization pursuant to Section 10, below. To the
extent required by Section 162(m) of the Code or the regulations thereunder, in
applying the foregoing limitations with respect to a Grantee, if any Option is
canceled, the canceled Option shall continue to count against the maximum number
of Shares with respect to which Options may be granted to the Grantee. For this
purpose, the repricing of an Option shall be treated as the cancellation of the
existing Option and the grant of a new Option.

                  (h)      Early Exercise. The Award Agreement may, but need
not, include a provision whereby the Grantee may elect at any time while an
Employee, Director or Consultant to exercise any part or all of the Award prior
to full vesting of the Award. Any unvested Shares

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<PAGE>

received pursuant to such exercise may be subject to a repurchase right in favor
of the Company or a Related Entity or to any other restriction the Administrator
determines to be appropriate.

                  (i)      Term of Award. The term of each Award shall be the
term stated in the Award Agreement, provided, however, that the term shall be no
more than ten (10) years from the date of grant thereof. However, in the case of
an Incentive Stock Option granted to a Grantee who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant
thereof or such shorter term as may be provided in the Award Agreement.

                  (j)      Transferability of Awards. Non-Qualified Stock
Options shall be transferable (i) by will, by the laws of descent and
distribution, by instrument to an inter vivos or testamentary trust in which the
Non-Qualified Stock Options are to be passed to beneficiaries upon the death of
the Grantee or (ii) to the extent and in the manner authorized by the
Administrator by gift to members of the Grantee's Immediate Family. Incentive
Stock Options and other Awards may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Grantee, only by the Grantee.

                  (k)      Time of Granting Awards. The date of grant of an
Award shall for all purposes be the date on which the Administrator makes the
determination to grant such Award, or such other date as is determined by the
Administrator. Notice of the grant determination shall be given to each
Employee, Director or Consultant to whom an Award is so granted within a
reasonable time after the date of such grant.

         7.       Award Exercise or Purchase Price, Consideration and Taxes.

                  (a)      Exercise or Purchase Price. The exercise or purchase
price, if any, for an Award shall be as follows:

                           (i)      In the case of an Incentive Stock Option:

                                    (A)      granted to an Employee who, at the
time of the grant of such Incentive Stock Option owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be not
less than one hundred ten percent (110%) of the Fair Market Value per Share on
the date of grant; or

                                    (B)      granted to any Employee other than
an Employee described in the preceding paragraph, the per Share exercise price
shall be not less than one hundred percent (100%) of the Fair Market Value per
Share on the date of grant.

                           (ii)     In the case of a Non-Qualified Stock Option:

                                    (A)      granted to a person who, at the
time of the grant of such Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be not

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<PAGE>

less than one hundred ten percent (110%) of the Fair Market Value per Share on
the date of grant; or

                                    (B)      granted to any person other than a
person described in the preceding paragraph, the per Share exercise price shall
be not less than eighty-five percent (85%) of the Fair Market Value per Share on
the date of grant.

                           (iii)    In the case of Awards intended to qualify as
Performance-Based Compensation, the exercise or purchase price, if any, shall be
not less than one hundred percent (100%) of the Fair Market Value per Share on
the date of grant.

                           (iv)     In the case of the sale of Shares:

                                    (A)      granted to a person who, at the
time of the grant of such Award, or at the time the purchase is consummated,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
purchase price shall be not less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant; or

                                    (B)      granted to any person other than a
person described in the preceding paragraph, the per Share purchase price shall
be not less than eighty-five percent (85%) of the Fair Market Value per Share on
the date of grant.

                           (v)      In the case of other Awards, such price as
is determined by the Administrator.

                           (vi)     Notwithstanding the foregoing provisions of
this Section 7(a), in the case of an Award issued pursuant to Section 6(d),
above, the exercise or purchase price for the Award shall be determined in
accordance with the principles of Section 424(a) of the Code.

                  (b)      Consideration. Subject to Applicable Laws, the
consideration to be paid for the Shares to be issued upon exercise or purchase
of an Award including the method of payment, shall be determined by the
Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). In addition to any other types of
consideration the Administrator may determine, the Administrator is authorized
to accept as consideration for Shares issued under the Plan the following
provided that the portion of the consideration equal to the par value of the
Shares must be paid in cash or other legal consideration permitted by the
Delaware General Corporation Law.

                           (i)      cash;

                           (ii)     check;

                           (iii)    delivery of Grantee's promissory note with
such recourse, interest, security, and redemption provisions as the
Administrator determines as appropriate (but only to the extent that the terms
of the promissory note would not result in an accounting compensation charge
with respect to the use of such promissory note to pay the exercise price unless
otherwise determined by the Administrator);

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                           (iv)     if the exercise or purchase occurs on or
after the Registration Date, surrender of Shares or delivery of a properly
executed form of attestation of ownership of Shares as the Administrator may
require which have a Fair Market Value on the date of surrender or attestation
equal to the aggregate exercise price of the Shares as to which said Award shall
be exercised (but only to the extent that such exercise of the Award would not
result in an accounting compensation charge with respect to the Shares used to
pay the exercise price unless otherwise determined by the Administrator;
generally an accounting charge will result if the Shares used to pay the
exercise price were acquired less than six months before the exercise);

                           (v)      with respect to Options, if the exercise
occurs on or after the Registration Date, payment through a broker-dealer sale
and remittance procedure pursuant to which the Grantee (A) shall provide written
instructions to a Company designated brokerage firm to effect the immediate sale
of some or all of the purchased Shares and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased Shares and (B) shall provide
written directives to the Company to deliver the certificates for the purchased
Shares directly to such brokerage firm in order to complete the sale
transaction; or

                           (vi)     any combination of the foregoing methods of
payment.

                  (c)      Taxes. No Shares shall be delivered under the Plan to
any Grantee or other person until such Grantee or other person has made
arrangements acceptable to the Administrator for the satisfaction of any
foreign, federal, state, or local income and employment tax withholding
obligations, including, without limitation, obligations incident to the receipt
of Shares or the disqualifying disposition of Shares received on exercise of an
Incentive Stock Option. Upon exercise of an Award the Company shall withhold or
collect from Grantee an amount sufficient to satisfy such tax obligations.

         8.       Exercise of Award.

                  (a)      Procedure for Exercise; Rights as a Stockholder.

                           (i)      Any Award granted hereunder shall be
exercisable at such times and under such conditions as determined by the
Administrator under the terms of the Plan and specified in the Award Agreement
but in the case of an Option, in no case at a rate of less than twenty percent
(20%) per year over five (5) years from the date the Option is granted, subject
to reasonable conditions such as continued employment. Notwithstanding the
foregoing, in the case of an Option granted to an Officer, Director or
Consultant, the Award Agreement may provide that the Option may become
exercisable, subject to reasonable conditions such as such Officer's, Director's
or Consultant's Continuous Service, at any time or during any period established
in the Award Agreement.

                           (ii)     An Award shall be deemed to be exercised
when written notice of such exercise has been given to the Company in accordance
with the terms of the Award by the person entitled to exercise the Award and
full payment for the Shares with respect to which the Award is exercised,
including, to the extent selected, use of the broker-dealer sale and remittance
procedure to pay the purchase price as provided in Section 7(b)(v). Until the
issuance (as

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evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to Shares subject to an Award,
notwithstanding the exercise of an Option or other Award. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in the Award Agreement
or Section 10 below.

                  (b)      Exercise of Award Following Termination of Continuous
Service. In the event of termination of a Grantee's Continuous Service for any
reason other than Disability or death (but not in the event of a Grantee's
change of status from Employee to Consultant or from Consultant to Employee),
such Grantee may, but only during the Post-Termination Exercise Period (but in
no event later than the expiration date of the term of such Award as set forth
in the Award Agreement), exercise the portion of the Grantee's Award that was
vested at the date of such termination or such other portion of the Grantee's
Award as may be determined by the Administrator. The Grantee's Award Agreement
may provide that upon the termination of the Grantee's Continuous Service for
Cause, the Grantee's right to exercise the Award shall terminate concurrently
with the termination of Grantee's Continuous Service. In the event of a
Grantee's change of status from Employee to Consultant, an Employee's Incentive
Stock Option shall convert automatically to a Non-Qualified Stock Option on the
day three (3) months and one day following such change of status. To the extent
that the Grantee's Award was unvested at the date of termination, or if the
Grantee does not exercise the vested portion of the Grantee's Award within the
Post-Termination Exercise Period, the Award shall terminate.

                  (c)      Disability of Grantee. In the event of termination of
a Grantee's Continuous Service as a result of his or her Disability, Grantee
may, but only within six (6) months from the date of such termination (and in no
event later than the expiration date of the term of such Award as set forth in
the Award Agreement), exercise the portion of the Grantee's Award that was
vested at the date of such termination; provided, however, that if such
Disability is not a "disability" as such term is defined in Section 22(e)(3) of
the Code, in the case of an Incentive Stock Option such Incentive Stock Option
shall automatically convert to a Non-Qualified Stock Option on the day three (3)
months and one day following such termination. To the extent that the Grantee's
Award was unvested at the date of termination, or if Grantee does not exercise
the vested portion of the Grantee's Award within the time specified herein, the
Award shall terminate.

                  (d)      Death of Grantee. In the event of a termination of
the Grantee's Continuous Service as a result of his or her death, or in the
event of the death of the Grantee during the Post-Termination Exercise Period or
during the twelve (12) month period following the Grantee's termination of
Continuous Service as a result of his or her Disability, the Grantee's estate or
a person who acquired the right to exercise the Award by bequest or inheritance
may exercise the portion of the Grantee's Award that was vested as of the date
of termination, within twelve (12) months from the date of death (but in no
event later than the expiration of the term of such Award as set forth in the
Award Agreement). To the extent that, at the time of death, the Grantee's Award
was unvested, or if the Grantee's estate or a person who acquired the right to
exercise the Award by bequest or inheritance does not exercise the vested
portion of the Grantee's Award within the time specified herein, the Award shall
terminate.

Lindows.com 2001 Stock Incentive Plan   13

<PAGE>

         9.       Conditions Upon Issuance of Shares.

                  (a)      Shares shall not be issued pursuant to the exercise
of an Award unless the exercise of such Award and the issuance and delivery of
such Shares pursuant thereto shall comply with all Applicable Laws, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

                  (b)      As a condition to the exercise of an Award, the
Company may require the person exercising such Award to represent and warrant at
the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required
by any Applicable Laws.

10.      Adjustments Upon Changes in Capitalization.

         Subject to any required action by the stockholders of the Company, the
number of Shares covered by each outstanding Award, and the number of Shares
which have been authorized for issuance under the Plan but as to which no Awards
have yet been granted or which have been returned to the Plan, the exercise or
purchase price of each such outstanding Award, the maximum number of Shares with
respect to which Options may be granted to any Grantee in any fiscal year of the
Company, as well as any other terms that the Administrator determines require
adjustment shall be proportionately adjusted for (i) any increase or decrease in
the number of issued Shares resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Shares, or similar
transaction affecting the Shares, (ii) any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the
Company, or (iii) as the Administrator may determine in its discretion, any
other transaction with respect to Common Stock to which Section 424(a) of the
Code applies or a similar transaction; provided, however that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator and its determination shall be final, binding and conclusive.
Except as the Administrator determines, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason hereof shall be made with respect to,
the number or price of Shares subject to an Award.

         11.      Corporate Transactions/Changes in Control/Related Entity
Dispositions.

                  (a)      Termination of Award to Extent Not Assumed.

                           (i)      Corporate Transaction. Effective upon the
consummation of a Corporate Transaction, all outstanding Awards under the Plan
shall terminate. However, all such Awards shall not terminate to the extent they
are Assumed in connection with the Corporate Transaction.

                           (ii)     Related Entity Disposition. Effective upon
the consummation of a Related Entity Disposition, for purposes of the Plan and
all Awards, there shall be a deemed termination of Continuous Service of each
Grantee who is at the time engaged primarily in service to the Related Entity
involved in such Related Entity Disposition and each Award of such Grantee which
is at the time outstanding under the Plan shall be exercisable in accordance
with

Lindows.com 2001 Stock Incentive Plan   14

<PAGE>

the terms of the Award Agreement evidencing such Award. However, such Continuous
Service shall not be deemed to terminate as to the portion of any such award
that is Assumed.

                  (b)      Acceleration of Award Upon Corporate
Transaction/Change in Control/Related Entity Disposition. The Administrator
shall have the authority, exercisable either in advance of any actual or
anticipated Corporate Transaction, Change in Control or Related Entity
Disposition or at the time of an actual Corporate Transaction, Change in Control
or Related Entity Disposition and exercisable at the time of the grant of an
Award under the Plan or any time while an Award remains outstanding, to provide
for the full or partial automatic vesting and exercisability of one or more
outstanding unvested Awards under the Plan and the release from restrictions on
transfer and repurchase or forfeiture rights of such Awards in connection with a
Corporate Transaction, Change in Control or Related Entity Disposition, on such
terms and conditions as the Administrator may specify. The Administrator also
shall have the authority to condition any such Award vesting and exercisability
or release from such limitations upon the subsequent termination of the
Continuous Service of the Grantee within a specified period following the
effective date of the Corporate Transaction, Change in Control or Related Entity
Disposition. The Administrator may provide that any Awards so vested or released
from such limitations in connection with a Change in Control or Related Entity
Disposition, shall remain fully exercisable until the expiration or sooner
termination of the Award.

                  (c)      Effect of Acceleration on Incentive Stock Options.
The portion of any Incentive Stock Option accelerated under this Section 11 in
connection with a Corporate Transaction, Change in Control or Related Entity
Disposition shall remain exercisable as an Incentive Stock Option under the Code
only to the extent the $100,000 dollar limitation of Section 422(d) of the Code
is not exceeded. To the extent such dollar limitation is exceeded, the
accelerated excess portion of such Option shall be exercisable as a
Non-Qualified Stock Option.

         12.      Repurchase Rights. If the provisions of an Award Agreement
grant to the Company the right to repurchase Shares upon termination of the
Grantee's Continuous Service, the Award Agreement shall (or may, with respect to
Awards granted or issued to Officers, Directors or Consultants) provide that:

                  (a)      the right to repurchase must be exercised, if at all,
within ninety (90) days of the termination of the Grantee's Continuous Service
(or in the case of Shares issued upon exercise of Awards after the date of
termination of the Grantee's Continuous Service, within ninety (90) days after
the date of the Award exercise);

                  (b)      the consideration payable for the Shares upon
exercise of such repurchase right shall be made in cash or by cancellation of
purchase money indebtedness within the ninety (90) day periods specified in
Section 12(a);

                  (c)      the amount of such consideration shall (i) be equal
to the original purchase price paid by Grantee for each such Share; provided,
that the right to repurchase such Shares at the original purchase price shall
lapse at the rate of at least twenty percent (20%) of the Shares subject to the
Award per year over five (5) years from the date the Award is granted (without
respect to the date the Award was exercised or became exercisable), and (ii)
with respect to

Lindows.com 2001 Stock Incentive Plan   15

<PAGE>

Shares, other than Shares subject to repurchase at the original purchase price
pursuant to clause (i) above, not less than the Fair Market Value of the Shares
to be repurchased on the date of termination of Grantee's Continuous Service;
and

                  (d)      the right to repurchase Shares, other than the right
to repurchase Shares at the original purchase price pursuant to clause (i) of
Section 12(c), shall terminate on the Registration Date.

         13.      Effective Date and Term of Plan. The Plan shall become
effective upon the earlier to occur of its adoption by the Board or its approval
by the stockholders of the Company. It shall continue in effect for a term of
ten (10) years unless sooner terminated. Subject to Section 18 below, and
Applicable Laws, Awards may be granted under the Plan upon its becoming
effective.

         14.      Amendment, Suspension or Termination of the Plan.

                  (a)      The Board may at any time amend, suspend or terminate
the Plan. To the extent necessary to comply with Applicable Laws, the Company
shall obtain stockholder approval of any Plan amendment in such a manner and to
such a degree as required.

                  (b)      No Award may be granted during any suspension of the
Plan or after termination of the Plan.

                  (c)      Any amendment, suspension or termination of the Plan
(including termination of the Plan under Section 13 above) shall not affect
Awards already granted, and such Awards shall remain in full force and effect as
if the Plan had not been amended, suspended or terminated, unless mutually
agreed otherwise between the Grantee and the Administrator, which agreement must
be in writing and signed by the Grantee and the Company.

         15.      Reservation of Shares.

                  (a)      The Company, during the term of the Plan, will at all
times reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.

                  (b)      The inability of the Company to obtain authority from
any regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not have
been obtained.

         16.      No Effect on Terms of Employment/Consulting Relationship. The
Plan shall not confer upon any Grantee any right with respect to the Grantee's
Continuous Service, nor shall it interfere in any way with his or her right or
the Company's right to terminate the Grantee's Continuous Service at any time,
with or without cause, and with or without notice. The Company's ability to
characterize the termination of Continuous Service of a Grantee as a termination
for "Cause" as defined in the Plan does not affect the Grantee's at will status.

Lindows.com 2001 Stock Incentive Plan   16

<PAGE>

         17.      No Effect on Retirement and Other Benefit Plans. Except as
specifically provided in a retirement or other benefit plan of the Company or a
Related Entity, Awards shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of the Company or
a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the
availability or amount of benefits is related to level of compensation. The Plan
is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement
Income Security Act of 1974, as amended.

         18.      Plan Approval. The Plan was originally adopted by the Board
and by the Company's stockholders during 2001. On April 14, 2003, the Board
adopted and approved an amendment of the Plan to increase the number of Shares
reserved for issuance under the Plan by 2,000,000 Shares for a total reserve of
6,625,000 Shares, which amendment was subsequently approved by the stockholders
of the Company. On April 19, 2004, the Board adopted and approved an amendment
and restatement of the Plan to increase the number of Shares reserved for
issuance under the Plan by 4,000,000 Shares for a total reserve of 10,625,000
Shares, which amendment and restatement was subsequently approved by the
stockholders of the Company.

         19.      Information to Grantees. The Company shall provide to each
Grantee, during the period for which such Grantee has one or more Awards
outstanding, copies of financial statements at least annually.

         20.      Effect of Section 162(m) of the Code. Section 162(m) of the
Code does not apply to the Plan prior to the Registration Date. Following the
Registration Date, the Plan, and all Awards (except Awards of Restricted Stock
that vest over time) issued thereunder, are intended to be exempt from the
application of Section 162(m) of the Code, which restricts under certain
circumstances the Federal income tax deduction for compensation paid by a public
company to named executives in excess of $1 million per year. The exemption is
based on Treasury Regulation Section 1.162-27(f), in the form existing on the
effective date of the Plan, with the understanding that such regulation
generally exempts from the application of Section 162(m) of the Code
compensation paid pursuant to a plan that existed before a company becomes
publicly held. Under such Treasury Regulation, this exemption is available to
the Plan for the duration of the period that lasts until the earlier of (i) the
expiration of the Plan, (ii) the material modification of the Plan, (iii) the
exhaustion of the maximum number of shares of Common Stock available for Awards
under the Plan, as set forth in Section 3(a), (iv) the first meeting of
stockholders at which directors are to be elected that occurs after the close of
the third calendar year following the calendar year in which the Company first
becomes subject to the reporting obligations of Section 12 of the Exchange Act,
or (v) such other date required by Section 162(m) of the Code and the rules and
regulations promulgated thereunder. The Committee may, without stockholder
approval, amend the Plan retroactively and/or prospectively to the extent it
determines necessary in order to comply with any subsequent clarification of
Section 162(m) of the Code required to preserve the Company's Federal income tax
deduction for compensation paid pursuant to the Plan. To the extent that the
Administrator determines as of the date of grant of an Award that (i) the Award
is intended to qualify as Performance-Based Compensation and (ii) the exemption
described above is no longer available with respect to such Award, such Award
shall not be effective until any stockholder approval required under Section
162(m) of the Code has been obtained.

Lindows.com 2001 Stock Incentive Plan   17

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