Document:

Exhibit 10.25

	

     Exhibit
10.25 

Approved by Compensation Committee

3/7/02

Scientific
Learning Corporation
2002 Management Incentive Plan

Goal Setting Process

Only through management
teamwork toward clearly defined common goals can we achieve our aggressive
company financial goals for 2002. Scientific Learning Corporation is committed
to a formal goal setting and regular communication process that helps us achieve
these goals. We will: 

			1. 		Hold
an annual goal setting meeting at the beginning of the year with all Management Incentive
Plan participants to discuss company goals and how each participant in the Management
Incentive Plan can help achieve those goals. 

			2. 		Formalize
company goals and individual goals.

			3. 		Management
meets quarterly to discuss company’s performance against shared goals and to agree
upon modifications to tasks and priorities to help the company achieve its goals. 

			4. 		After
each quarterly meeting, plan participants with individual goals meet with their managers
to discuss performance against goals. At end of Q4, plan participants with individual
goals receive “scores”on how well goals were achieved. 

	

Purpose of Plan / Participation in Plan

Purpose

To provide significant cash
awards to participants for the achievement and over-achievement of Scientific
Learning Corporation’s aggressive company financial goals for 2002. 

Participants

Directors, Vice Presidents and Executives (Grades 9 and above)

Target Incentive Awards

Target incentive awards in
the Management Incentive Plan will be set to deliver market 50th
percentile total cash compensation at 100% achievement of aggressive company
revenue and profit goals for 2002. As goals are exceeded, awards will increase. 

Target
Incentive Award Opportunities for Plan Participants

	

	Title	Grade	Target Incentive Opportunity for 50th Percentile Total Cash Comp.
	

	Chairman, CEO	12	50%
	

	President & COO	12	45%
	

	CFO	12	30%
	

	SVP	11	30%
	

	VP, Sales	10	100%
	

	Other VPs	10	30%
	

	Directors	9	20%
	

	

SCIENTIFIC LEARNING
CORPORATION - 2002 MANAGEMENT INCENTIVE PLAN  

Page 1 of 3  

	

Approved by Compensation Committee

3/7/02

Trigger

A condition to the payment
of any bonuses under the plan is that, during the year 2002, the Company
achieves net operating cash use of not more than $4,000,000 (before bonuses)
(except as provided below for the VP Sales). For example, even if an individual
achieves his/her individual goals and/or the Company achieves the revenue goal,
no bonuses would be paid under the plan if the company used $5,000,000 in
operating cash during 2002. 

Goals and Profitability Condition

All participants in the
Management Incentive Plan will have shared company goals (achieved
collectively). Some positions will have individual goals (directly under the
control of the participant and focused specifically on optimizing the
achievement of the shared goals). Weighting of these goals in the plan varies by
position. 

Shared Goals

Shared goals for the 2002
plan are: 

	 	
1.   2002 net revenue of $25.7 million

2.   Operating loss of not more than $4.5 million (before bonuses)

•   2002 revenue goal represents         2/3   of shared target awards

•   Operating loss goal represents      1/3   of shared target awards

	

Individual Goals

Individual goals will vary
by participant and will be designed to help the company achieve its shared
goals. Individual goals will be developed during the goal-setting meeting and
shared with all participants. Where applicable, participants may develop up to
four individual goals. 

Weighting of Shared and Individual Goals

The weighting of shared and
individual goals will vary by position. 

Weighting of
Shared and Individual Goals

	

	 	 	Shared Goals	Individual Goals
	Title	Grade	Revenue	Operating Loss	(Up to 4)
	

	Chairman, CEO	12	67%	33%	0%
	

	President & COO	12	67%	33%	0%
	

	CFO	12	67%	33%	0%
	

	SVP	11	47%	23%	30%
	

	VP, Sales*	10	100%	0%	0%
	

	Other VPs	10	47%	23%	30%
	

	Directors	9	33.5%	16.5%	50%
	

	

*The VP Sales is not
subject to the operating cash use trigger. The VP Sales revenue goal is school
sales revenue of $20 million rather than the total company revenue goal. 

Hurdles. Scaling and Over Achievement

Hurdles

Each goal must meet a minimum
achievement before the portion of the incentive award tied to the goal can be paid.
(Note: except as provided above for the VP Sales, no awards will be paid unless the cash
use trigger is met.) 

SCIENTIFIC LEARNING
CORPORATION - 2002 MANAGEMENT INCENTIVE PLAN  

Page 2 of 3 

	

Hurdles for goals are:

		•		70%
of revenue goal must be achieved before portion of the award tied to revenue is paid 

		•		70%
of operating loss goal must be achieved before portion of the award tied to operating
profit is paid 

		•		50%
of individual goals must be achieved before the portion of the award tied to that
individual goals is paid 

	

Scaling

Once the operating cash use
trigger has been satisfied, and the hurdle for the goal has been achieved: 

		•		At
70% achievement of the goal, 20% of that goal’s portion of the target award is
earned.  

		•		At
100% of the goal, 100% of that goal’s portion of the target award is earned.  

		•		Between
70% and 100% achievement of the goal, the amount of that goal’s portion of the
target award earned is scaled ratably. (For example, at 85% of goal, 60% that goal’s
portion is earned.)  

	

Over Achievement

The Compensation Committee
of the Board of Directors will determine what levels of bonus will be paid if
more than the 100% of goals are achieved. 

Timing of Awards

Awards are made in February
following each plan year, upon the completion of the annual audit. Plan
participants must be employed at Scientific Learning Corporation at the time
that the plan awards are made to receive an award. Participants hired during the
plan year will be eligible for a pro-rated award (unless otherwise agreed to, in
writing, when the participant is hired). 

Summary of Plan Schedule

	April 2002 -		Goal setting meeting

	May 2002 -		Management meeting:  communication of company performance.

Participants with individual goals meet with managers to discuss performance against goals

	July 2002 -		
Management meeting:  communication of company performance - reset priorities if appropriate

Participants with individual goals meet with managers to discuss performance against goals

	Oct. 2002 -		Management meeting:  communication of company performance - reset priorities if appropriate

	Dec. 2002-		
Management meeting:  communication of company performance against goals

Participants with individual goals receive ratings on performance against those goals

	Feb. 2003-		After audit, incentive awards paid

	

Estimated Cost of Plan

At 100% of revenue target
and 100% of operating cash use target the estimated cost of the plan will be
approximately $822,500, or 3.5% of $23.4 million in revenues. 

SCIENTIFIC LEARNING
CORPORATION - 2002 MANAGEMENT INCENTIVE PLAN  

Page 3 of 3Exhibit 10.1

	

EXHIBIT 10.1 

CASTELLE

1995 NON-EMPLOYEE
DIRECTORS' STOCK OPTION PLAN

ADOPTED ON NOVEMBER
15, 1995

APPROVED BY
SHAREHOLDERS
ON DECEMBER 6, 1995

AMENDED BY THE BOARD
ON JULY 16, 1996, FEBRUARY 23, 1999, FEBRUARY 24, 2000
and FEBRUARY 21, 2002

	I. 		PURPOSE.  

	

     (a) 
The purpose of the 1995 Non-Employee Directors’ Stock Option Plan (the
“Plan”) is to provide a means by which each director of Castelle (the
“Company”) who is not otherwise at the time of grant an employee of or
consultant to the Company or of any Affiliate of the Company (each such person
being hereafter referred to as a “Non-Employee Director”) will be
given an opportunity to purchase stock of the Company. 

     (b) 
The word “Affiliate” as used in the Plan means any parent corporation
or subsidiary corporation of the Company as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
from time to time (the “Code”). 

     (c) 
The Company, by means of the Plan, seeks to retain the services of persons now
serving as Non-Employee Directors of the Company, to secure and retain the
services of persons capable of serving in such capacity, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company. 

	II. 		ADMINISTRATION. 

	

     (d) 
The Plan shall be administered by the Board of Directors of the Company (the
“Board”) unless and until the Board delegates administration to a
committee, as provided in subparagraph 2(b). 

Page 1 of 15  

	

EXHIBIT 10.1

     (e) 
The Board may delegate administration of the Plan to a committee composed of not
fewer than two (2) members of the Board (the “Committee”). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. 

	III. 		SHARES
SUBJECT TO THE PLAN. 

	

     (f) 
Subject to the provisions of paragraph 10 relating to adjustments upon changes
in stock, the stock that may be sold pursuant to options granted under the Plan
shall not exceed in the aggregate one hundred and twenty thousand (120,000)
shares of the Company’s common stock. If any option granted under the Plan
shall for any reason expire or otherwise terminate without having been exercised
in full, the stock not purchased under such option shall again become available
for the Plan. 

     (g) 
The stock subject to the Plan may be unissued shares or reacquired shares,
bought on the market or otherwise. 

	IV. 		ELIGIBILITY. 

	

     Options
shall be granted only to Non-Employee Directors of the Company. 

	V. 		NON-DISCRETIONARY
GRANTS. 

	

     (h) 
Each person who is, after the effective date of the initial public offering of
the Company’s common stock (the “IPO Date”), elected for the
first time to be a Non-Employee Director automatically shall, upon the date of
his or her initial election to be a Non-Employee Director by the Board or
shareholders of the Company, be granted an option to purchase ten
thousand (10,000) shares of common stock of the Company on the terms and conditions set
forth herein (the “Initial Option Grant”).
 

2 of 15 

	

EXHIBIT 10.1

     (i) 
On April 1 of each year, commencing with April 1, 2002, each person who on that
date is then a Non-Employee Director (whether elected before or after the IPO
Date) automatically shall be granted an option to purchase five thousand (5,000)
shares of common stock of the Company on the terms and conditions set forth
herein (the “Annual Option Grant”). 

	VI. 		OPTION
PROVISIONS. 

	

     Each
option shall be subject to the following terms and conditions: 

     (j) 
The term of each option commences on the date it is granted and, unless sooner
terminated as set forth herein, expires on the date (the “Expiration
Date”) ten (10) years from the date of grant. If the optionee’s
service as a Non-Employee Director of the Company terminates for any reason or
for no reason, the option shall terminate on the earlier of the Expiration Date
or the date twelve (12) months following the date of termination of service;
provided, however, that if such termination of service is due to the
optionee’s death, the option shall terminate on the earlier of the
Expiration Date or eighteen (18) months following the date of the
optionee’s death. In any and all circumstances, an option may be exercised
following termination of the optionee’s service as a Non-Employee Director
of the Company only as to that number of shares as to which it was exercisable
as of the date of termination of such service under the provisions of
subparagraph 6(e). 

     (k) 
The exercise price of each option shall be one hundred percent (100%) of the
fair market value of the stock subject to such option on the date such option is
granted. 

     (l) 
The optionee may elect to make payment of the exercise price under one of the
following alternatives: 

			(i) 		Payment
of the exercise price per share in cash at the time of exercise; or

	

3 of 15 

	

EXHIBIT 10.1

			(ii)  		Provided
that at the time of the exercise the Company's common stock is publicly traded and quoted
regularly in the Wall Street Journal, payment by delivery of shares of common stock of
the Company already owned by the optionee, held for the period required to avoid a charge
to the Company's reported earnings, and owned free and clear of any liens, claims,
encumbrances or security interest, which common stock shall be valued at its fair market
value on the date preceding the date of exercise; or

			(iii)  		Payment
by a combination of the methods of payment specified in subparagraph 6(c)(i) and 6(c)(ii)
above.

	

     Notwithstanding
the foregoing, this option may be exercised pursuant to a program developed
under Regulation T as promulgated by the Federal Reserve Board which results in
the receipt of cash (or check) by the Company either prior to the issuance of
shares of the Company’s common stock or pursuant to the terms of
irrevocable instructions issued by the optionee prior to the issuance of shares
of the Company’s common stock. 

     (m) 
An option shall not be transferable except by will or by the laws of descent and
distribution, and shall be exercisable during the lifetime of the person to whom
the option is granted only by such person or by his guardian or legal
representative. The person to whom the Option is granted may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the Optionee, shall thereafter
be entitled to exercise the Option. 

     (n) 
The Initial Option Grant shall become exercisable in installments over a period of two
years from the date of grant at the rate of one twenty fourth of the total number of
shares subject to the option a month, in twenty-four (24) equal monthly installments
commencing on the date one month after the date of grant of the Initial Option Grant,
provided that the optionee has, during the entire period prior to such vesting date,
continuously served as a Non-Employee Director, employee or consultant of the Company or
Affiliate of the Company, whereupon such option shall become fully exercisable in
accordance with its terms with respect to that portion of the shares represented by that
installment. The Annual Option Grant shall become exercisable in installments over a
period of one year from the date of grant at the rate of one twelfth of the total number
of shares subject to the option a month, in twelve (12) equal monthly installments
commencing on the date one month after the date of grant of the Annual Option Grant,
provided that the optionee has, during the entire period prior to such vesting date,
continuously served as a Non-Employee Director, employee or consultant of the Company or
Affiliate of the Company, whereupon such option shall become fully exercisable in
accordance with its terms with respect to that portion of the shares represented by that
installment  

4 of 15 

	

EXHIBIT 10.1

     (o) 
The Company may require any optionee, or any person to whom an option is
transferred under subparagraph 6(d), as a condition of exercising any such
option: (i) to give written assurances satisfactory to the Company as to the
optionee’s knowledge and experience in financial and business matters; and
(ii) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the option for such person’s own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise of the option has been registered under a then-currently-effective
registration statement under the Securities Act of 1933, as amended (the
“Securities Act”), or (ii), as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may require any optionee to provide such other representations, written
assurances or information which the Company shall determine is
necessary, desirable or appropriate to comply with applicable securities laws as a
condition of granting an option to the optionee or permitting the optionee to exercise
the option. The Company may, upon advice of counsel to the Company, place legends on
stock certificates issued under the Plan as such counsel deems necessary or appropriate
in order to comply with applicable securities laws, including, but not limited to,
legends restricting the transfer of the stock. 

5 of 15 

	

EXHIBIT 10.1

     (p) 
Notwithstanding anything to the contrary contained herein, an option may not be
exercised unless the shares issuable upon exercise of such option are then
registered under the Securities Act or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Securities Act. 

	VII. 		COVENANTS
OF THE COMPANY. 

	

     (q) 
During the terms of the options granted under the Plan, the Company shall keep
available at all times the number of shares of stock required to satisfy such
options. 

     (r) 
The Company shall seek to obtain from each regulatory commission or agency
having jurisdiction over the Plan such authority as may be required to issue and
sell shares of stock upon exercise of the options granted under the Plan;
provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan, or any stock issued or issuable pursuant to any such option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell stock upon exercise of
such options. 

6 of 15 

	

EXHIBIT 10.1

	VIII. 		USE
OF PROCEEDS FROM STOCK. 

	

     Proceeds
from the sale of stock pursuant to options granted under the Plan shall constitute
general funds of the Company. 

	IX. 		MISCELLANEOUS. 

	

     (s) 
Neither an optionee nor any person to whom an option is transferred under
subparagraph 6(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such option unless and
until such person has satisfied all requirements for exercise of the option
pursuant to its terms. 

     (t) 
Throughout the term of any option granted pursuant to the Plan, the Company
shall make available to the holder of such option, not later than one hundred
twenty (120) days after the close of each of the Company’s fiscal years
during the option term, upon request, such financial and other information
regarding the Company as comprises the annual report to the shareholders of the
Company provided for in the Bylaws of the Company and such other information
regarding the Company as the holder of such option may reasonably request. 

     (u) 
Nothing in the Plan or in any instrument executed pursuant thereto shall confer
upon any Non-Employee Director any right to continue in the service of the
Company or any Affiliate in any capacity or shall affect any right of the
Company, its Board or shareholders or any Affiliate to remove any Non-Employee
Director pursuant to the Company’s By-Laws and the provisions of the
California General Corporation Law (or the laws of the Company’s state of
incorporation should that change in the future). 

     (v) 
No Non-Employee Director, individually or as a member of a group, and no
beneficiary or other person claiming under or through him, shall have any right,
title or interest in or to any option reserved for the purposes of the Plan
except as to such shares of common stock, if any, as shall have been reserved
for him pursuant to an option granted to him. 

7 of 15 

	

EXHIBIT 10.1

     (w) 
In connection with each option made pursuant to the Plan, it shall be a
condition precedent to the Company’s obligation to issue or transfer shares
to a Non-Employee Director, or to evidence the removal of any restrictions on
transfer, that such Non-Employee Director make arrangements satisfactory to the
Company to insure that the amount of any federal or other withholding tax
required to be withheld with respect to such sale or transfer, or such removal
or lapse, is made available to the Company for timely payment of such tax. 

     (x) 
As used in this Plan, fair market value means, as of any date, the value of the
common stock of the Company determined as follows: 

			(i)  		If
the common stock is listed on any established stock exchange or a national market system,
including without limitation the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") System, the Fair Market Value of
a share of common stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the exchange
with the greatest volume of trading in common stock) on the last market trading day prior
to the day of determination, as reporting in the Wall Street Journal or such other source
as the Board deems reliable;

			(ii)  		If
the common stock is quoted on the NASDAQ System (but not on the National Market System
thereof) or is regularly quoted by a recognized securities dealer but selling prices are
not reported, the Fair Market Value of a share of common stock shall be the mean between
the bid and asked prices for the common stock on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such other source as the
Board deems reliable;

	

8 of 15  

	

EXHIBIT 10.1

			(iii)  		In
the absence of an established market for the common stock, the Fair Market Value shall be
determined in good faith by the Board.

	X. 		ADJUSTMENTS
UPON CHANGES IN STOCK. 

	

     (y) 
If any change is made in the stock subject to the Plan, or subject to any option
granted under the Plan (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan and outstanding options will be
appropriately adjusted in the class(es) and maximum number of shares subject to
the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding options. Such adjustments shall be made by the Board, the
determination of which shall be final, binding, and conclusive. (The conversion
of any convertible securities of the Company shall not be treated as a
“transaction not involving the receipt of consideration by the
Company.”) 

     (z) 
In the event of: (1) a dissolution, liquidation, or sale of all or substantially
all of the assets of the Company; (2) a merger or consolidation in which the
Company is not the surviving corporation; (3) a reverse merger in which the
Company is the surviving corporation but the shares of the Company’s common
stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise; or (4) the acquisition by any person, entity or groups within the
meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), or any comparable successor provisions
(excluding any employee benefit plan, or related trust, approved or maintained
by the Company or any Affiliate of the Company) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or
comparable successor rule) of securities of the Company representing at least fifty
percent (50%) of the combined voting power entitled to vote in the election of directors,
then to the extent not prohibited by applicable law: the time during which options
outstanding under the Plan may be exercised shall be accelerated prior to such event and
the options terminated if not exercised after such acceleration and at or prior to such
event.  

9 of 15 

	

EXHIBIT 10.1

	XI. 		AMENDMENT
OF THE PLAN. 

	

     (aa) 
The Board at any time, and from time to time, may amend the Plan and/or some or
all outstanding options granted under the Plan, provided, however, that the
Board shall not amend the plan more than once every six (6) months, with respect
to the provisions of the Plan which relate to the amount, price and timing of
grants, other than to comport with changes in the Code, the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), or the rules
thereunder. Except as provided in paragraph 10 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
shareholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will: 

			(i)  		Increase
the number of shares which may be issued under the Plan;

			(ii)  		Modify
the requirements as to eligibility for participation in the Plan (to the extent such
modification requires shareholder approval in order for the Plan to comply with the
requirements of Rule 16b-3); or

			(iii)  		Modify
the Plan in any other way if such modification requires shareholder approval in order for
the Plan to comply with the requirements of Rule 16b-3.

	

10 of 15 

	

EXHIBIT 10.1

     (bb) 
Rights and obligations under any option granted before any amendment of the Plan
shall not be or impaired by such amendment unless (i) the Company requests the
consent of the person to whom the option was granted and (ii) such person
consents in writing. 

	XII. 		TERMINATION
OR SUSPENSION OF THE PLAN. 

	

     (cc) 
The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on November 14, 2005. No options may be
granted under the Plan while the Plan is suspended or after it is terminated. 

     (dd) 
Rights and obligations under any option granted while the Plan is in effect
shall not be altered or impaired by suspension or termination of the Plan,
except with the consent of the person to whom the option was granted. 

     (ee) 
The Plan shall terminate upon the occurrence of any of the events described in
Section 10(b) above. 

	XIII. 		EFFECTIVE
DATE OF PLAN; CONDITIONS OF EXERCISE. 

	

     (ff) 
Upon adoption of the Plan by the Board of Directors and subject to the condition
subsequent that the Plan is approved by the shareholders of the Company, the
Plan shall become effective on the IPO Date. (gg) No option granted under the
Plan shall be exercised or exercisable unless and until the conditions of
subparagraph 13(a) above has been met. 

     (gg) 
No option granted under tha Plan shall be exercised or exercisable unless and until the
conditions of subparagraph 13(a) above has been met. 

11 of 15 

	

EXHIBIT 10.1

CASTELLE
1995
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

NONSTATUTORY
STOCK OPTION

_______________, Optionee: 

     On ______________,
20 , (the “Grant Date”) an option was automatically granted to you
pursuant to the Castelle (the “Company”) 1995 Non-Employee
Directors’ Stock Option Plan (the “Plan”) to purchase shares of
the common stock of the Company (“Common Stock”). This option is not
intended to qualify and will not be treated as an “incentive stock
option” within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the “Code”). 

     The
grant hereunder is in connection with and in furtherance of the Company’s
compensatory benefit plan for the Company’s Non-Employee Directors (as
defined in the Plan). 

     The
details of your option are as follows: 

     1. 
The total number of shares of Common Stock subject to this option ___________________
(____________________). Subject to the limitations contained herein, this option shall
vest and become exercisable in [twenty-four (24)/twelve (12)] equal monthly installments
measured from the Grant Date. 

     2. 
The exercise price of this option is _______________ ($________) per share,
being the Fair Market Value (as defined in the Plan) of the Common Stock on the
Grant Date. 

     3. 
     (a) This option may be exercised, to the extent specified
above, by delivering a notice of exercise (in a form designated by the Company) together
with the exercise price, in one or a combination of the forms of payment permitted under
the Plan, to the Secretary of the Company, or to such other person as the Company may
designate, during regular business hours, together with such additional documents as the
Company may then require pursuant to paragraph 6 of the Plan. This option may only be
exercised for whole shares. 

     
         (b)  The exercise price may be
paid under one of the following alternatives: 

     
               (i) 
Payment of the exercise price per share in cash or check; 

     
               (ii) 
Provided that at the time of the exercise the Common Stock is publicly traded and quoted
regularly in the Wall Street Journal, payment by delivery of shares of Common Stock
already owned by you, held for the period required to avoid a charge to the Company's
reported earnings, and owned free and clear of any liens, claims, encumbrances or
security interest, which Common Stock shall be valued at its Fair Market Value on the
date preceding the date of exercise; 

     
               (iii) 
Payment pursuant to a program developed under Regulation T as promulgated by the
Federal Reserve Board which results in the receipt of cash (or check) by the Company
either prior to the issuance of shares of Common Stock or pursuant to the terms of
irrevocable instructions issued by you prior to the issuance of shares of Common Stock;
or 

12 of 15 

	

EXHIBIT 10.1

     
               (iv) 
Payment by a combination of the methods of payment specified in subparagraphs (i) through
(iii) above. 

     
         (c)  By exercising this option
you agree that the Company may require you to enter an arrangement providing for the cash
payment by you to the Company of any tax withholding obligation of the Company arising by
reason of the exercise of this option or the lapse of any substantial risk of forfeiture
to which the shares are subject at the time of exercise. 

     4. 
The term of this option is ten (10) years, commencing on the Grant Date, unless
sooner terminated as set forth in the Plan. In no event may this option be
exercised on or after the date on which it terminates. 

     5. 
This option is not transferable, except by will or by the laws of descent and
distribution, and is exercisable during your life only by you. 

     6. 
Any notices provided for in this option or the Plan shall be given in writing
and shall be deemed effectively given upon receipt or, in the case of notices
delivered by the Company to you, five (5) days after deposit in the United
States mail, postage prepaid, addressed to you at the address specified below or
at such other address as you hereafter designate by written notice to the
Company. 

     7. 
This option is subject to all the provisions of the Plan, a copy of which is
attached hereto and its provisions are hereby made a part of this option,
including without limitation the provisions of paragraph 6 of the Plan relating
to option provisions, and is further subject to all interpretations, amendments,
rules and regulations which may from time to time be promulgated and adopted
pursuant to the Plan. In the event of any conflict between the provisions of
this option and those of the Plan, the provisions of the Plan shall control. 

     Dated
the ________ day of __________________, 20_________. 

			Very truly yours,

CASTELLE

By: _______________________________

       Duly authorized on behalf of the Board

       of Directors

	

ATTACHMENT: Castelle 1995
Non-Employee Directors' Stock Option Plan 

13 of 15 

	

EXHIBIT 10.1

The undersigned: 

     
         (a) 
Acknowledges receipt of the foregoing option and the Plan and understands that
all rights and liabilities with respect to this option are set forth in the
option and the Plan; 

     
         (b) 
Acknowledges that as of the date of grant of this option, it sets forth the
entire understanding between the undersigned optionee and the Company and its
affiliates regarding the acquisition of stock in the Company and supersedes all
prior oral and written agreements on that subject with the exception of (i) only
options previously granted and delivered to the undersigned under stock option
plans of the Company, and (ii) the following agreements only: 

				NONE  		_______________

    (Initial) 

				OTHER  		
_________________________________

_________________________________

_________________________________ 

		
__________________________________________

Optionee 

		
__________________________________________

Address

__________________________________________ 

	

14 of 15 

	

EXHIBIT 10.1

NOTICE OF
EXERCISE

	
Castelle

855 Jarvis Drive, Suite 100

Morgan Hill, CA 95037
	

Date of Exercise:_______________

	

Ladies and Gentlemen: 

     This
constitutes notice under my stock option that I elect to purchase the number of shares
for the price set forth below. 

		Type of option:	Nonstatutory

		Stock option dated:	____________________

		Number of shares as to
which option is exercised:	
____________________

		Certificates to be issued in name of:	____________________

		Total exercise price:	$___________________

		Cash payment delivered:	$___________________

		Value of _______ shares of
common stock delivered1:	
$___________________

	

     By
this exercise, I agree (i) to provide such additional documents as you may require
pursuant to the terms of the Company's 1995 Non-Employee Directors' Stock Option Plan and
(ii) to provide for the payment by me to you (in the manner designated by you) of your
withholding obligation, if any, relating to the exercise of this option. 

		Very truly yours,

_____________________________________

	

1      Shares must meet the
public trading requirements set forth in the option. Shares must be valued in
accordance with the terms of the option being exercised, must have been owned
for the minimum period required in the option, and must be owned free and clear
of any liens, claims, encumbrances or security interests. Certificates must be
endorsed or accompanied by an executed assignment separate from certificate. 

15 of 15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00036-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00036-of-00352.parquet"}]]