Document:

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                                                                   EXHIBIT 10.40

                                                                    May 20, 2001

Derrick Oien
c/o MP3.com, Inc.
4790 Eastgate Mall
San Diego, CA  92121

Dear Derrick::

                Reference is made to the Agreement and Plan of Merger, dated as
of May 20, 2001, (the "Merger Agreement"), by and among Vivendi Universal, S.A.
("Parent"), Metronome Acquisition Sub Inc. and MP3.com, Inc. (the "Company").
Capitalized terms not defined herein have the meanings given to such terms in
the Merger Agreement. Subject to the consummation of the transactions
contemplated by the Merger Agreement, Parent and the Company each hereby agree
to continue your employment with the Company following the Merger pursuant to
the terms and conditions of this letter agreement ("Agreement") set forth below:

        1. The term of your employment under this Agreement will commence on the
date on which the Effective Time occurs ("Effective Date") and end on the second
anniversary of the Effective Date (the "Scheduled Term"), unless terminated
earlier in accordance with this Agreement. For purposes of this Agreement, the
"Term" refers to such two-year period or, in the event of your earlier
termination of employment, such shorter period during which you are actually
employed hereunder. During the Term, you will be employed as Chief Operating
Officer and shall have the duties, responsibilities and authority as are
customary and appropriate for such position. You will devote all of your working
time to the business of the Company and shall not accept employment with, or
provide services as a consultant or in any other capacity for, any person or
entity other than the Company or Parent or their subsidiaries and affiliates.

        2. During the Term, you will receive an annual base salary ("Base
Salary") of $231,000 for the first year of the Scheduled Term and $254,100 for
the second year of the Scheduled Term, payable in accordance with the Company's
regular payroll practices. During the Term, you will be eligible to receive an
annual bonus as determined by the Company, based on performance criteria
mutually agreed by you and the Company, in an amount that may range from 0% -
200% of your Target Bonus (as defined below), except as provided below. Your
target annual bonus ("Target Bonus") shall be $100,000 for the first year of the
Scheduled Term ("First Target Bonus") and $100,000 for the second year of the
Scheduled Term (the "Second Target Bonus"). The actual amount of the bonus
payable to you shall be determined by the Company in its sole discretion;
provided, that in no event shall your actual bonus for the first year of the
Scheduled Term be less than an amount equal to 50% of the First Target Bonus.
During the Term, your bonus in respect of any 12-month period shall be
determined as soon as practicable following the expiration of such period and
shall be paid in cash promptly thereafter. During the Term, you shall be
entitled to participate in the pension and welfare plans and programs,
including, without limitation, 401(k) and health insurance plans, generally made
available by the Company from time to time for its employees.

        3. Subject to the approval of the Compensation Committee of Parent, you
will be granted at the Effective Time options to purchase 15,000 ordinary
shares, nominal value E5.50 per share, of Parent (the "Parent Shares"), which
shares shall be issued in the form of American depositary shares representing
Parent Shares. The options shall be granted with an exercise price equal to the
fair market value of the Parent Shares subject to the options on the date of
grant and shall otherwise be subject to the terms and conditions of the Parent's
stock option plan pursuant to which the options are granted.

        4. You shall be entitled to receive a retention bonus of $300,000
("Retention Bonus"), payable in cash as set forth herein. 50% of the Retention
Bonus shall be payable at the
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Effective Time. The remaining 50% of the Retention Bonus shall be payable in two
equal installments, on each of the first and second anniversaries of the
Effective Date, subject to your continued employment with the Company and your
compliance with the terms of this Agreement.

        5. If, prior to the end of the Scheduled Term, the Company terminates
your employment without Cause or you terminate your employment for Good Reason,
(a) you shall be entitled to receive a lump sum cash severance payment in an
amount equal to the sum of (i) the portion of your Base Salary that would have
been paid to you during the remainder of the Scheduled Term or, if greater, an
amount equal to 25% of your Base Salary, plus (ii) if your termination of
employment occurs during the first year of the Scheduled Term, an amount equal
to the sum of your First Target Bonus and Second Target Bonus or, if your
termination of employment occurs during the second year of the Scheduled Term,
an amount equal to your Second Target Bonus plus (iii) an amount equal to any
unpaid Retention Bonus as of the date of termination, (b) all of your options to
purchase Parent Shares that you received pursuant to the Merger Agreement upon
the rollover of your prior options to purchase shares of Company common stock
shall be fully vested and immediately exercisable upon your date of termination
and (c) the Company shall reimburse you for any required COBRA premiums in
respect of continued health plan coverage during the first 12 months following
your date of termination or until you obtain comparable employer-provided health
plan coverage, if earlier. Except as provided herein, none of Parent, the
Company or their subsidiaries and affiliates shall have any further obligations
hereunder following any termination of your employment with the Company and its
subsidiaries and affiliates.

                For purposes of this Agreement, "Cause" means: (i) your
continued failure, following written notice from the Company, substantially to
perform your duties (other than as a result of incapacity due to physical or
mental illness), (ii) your gross negligence or willful misconduct in the course
of your employment with the Company, (iii) your conviction of, or plea of nolo
contendere to, a felony (or the equivalent thereof in a jurisdiction other than
the United States), (iv) your material breach of any of the provisions of this
Agreement, (v) your material breach of an employment policy of Parent or the
Company, (vi) your misuse, misappropriation or embezzlement of funds or property
belonging to Parent or the Company or any of their subsidiaries and affiliates
or (vii) your use of alcohol or drugs that either interferes with the
performance of your duties hereunder or compromises the integrity and reputation
of the Company, Parent, their subsidiaries or affiliates, their employees or
their products; provided, that following written notice from the Company under
clause (i) above, you have five (5) days during which to cure such failure;
provided, further, that you will be permitted only one such cure period during
the Scheduled Term.

                For purposes of this Agreement, "Good Reason" means: (i) the
Company has reduced your Base Salary or Target Bonus from the levels set forth
in paragraph 2 or (ii) the Company has required you to relocate your principal
place of employment to a location that is more than 30 miles from your principal
place of employment as of the Effective Date or (iii) the Company has
significantly reduced your title, duties or responsibilities from those
contemplated by paragraph 1.

        6. Any reports, data, presentations, inventions, documents, computer
models and ideas made or conceived by you in connection with or during the
performance of services for the Company or Parent or their subsidiaries and
affiliates and any proprietary rights relating thereto (including patents and
trademarks and applications therefor) (collectively, "Inventions") shall be the
property of the Company and Parent. You agree to assign, and do hereby assign,
to the Company and Parent all right, title and interest of whatsoever kind and
nature in and to all such Inventions, and you will execute, acknowledge, and
deliver to the Company and Parent all such further papers as may be necessary to
enable the Company and Parent to own, register, publish or protect such
Inventions in any and all countries and to vest title to such Inventions in the
Company, Parent or their nominees, and their successors or assigns. You shall
render all such

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assistance as the Company and Parent may require in any proceeding or litigation
involving such Inventions. You agree that the copyright and all other rights in
and to all copyrightable work created by you under this Agreement shall belong
completely and in all respects to Company and Parent and that you shall retain
no rights in or to same. You further expressly agree that the aforementioned
work will be considered and deemed as work made for hire for the benefit and
exclusive ownership of Company and Parent to the fullest extent permitted by
law. Notwithstanding the foregoing, any provision of this Agreement requiring
you to assign your rights in any Invention does not apply to an Invention which
fully qualifies under the provisions of Section 2870 of the California Labor
Code. That Section provides that the requirement to assign "shall not apply to
an invention that the employee developed entirely on his or her own time without
using the employer's equipment, supplies, facilities, or trade secret
information except for those inventions that either (1) relate at the time of
conception or reduction to practice of the invention to the employer's business,
or actual or demonstrably anticipated research or development of the employer;
or (2) result from any work performed by the employee for the employer." You
agree to advise Parent and the Company promptly in writing of any Inventions
that you believe fully qualify under Section 2870 of the California Labor Code.

        7. You acknowledge and agree that the information, observations and data
obtained by you (whether in written form or orally) concerning the business or
affairs of the Company, Parent or any of their subsidiaries and affiliates,
including, without limitation, trade "know-how" secrets, customer lists, pricing
policies, operational methods, technical processes, formulae, inventions and
research projects, financial information, organizational and personnel matters,
policies, procedures and other non-public matters (and those of third parties)
in the course of your employment prior to or after the date of this Agreement
("Confidential Information") are the property of the Company, Parent or such
subsidiaries and affiliates. In consideration of, and as a condition to
continued access to, Confidential Information, and without prejudice to or
limitation on any other confidentiality obligations imposed by agreement or by
law, you hereby undertake to use and protect Confidential Information in
accordance with any restrictions placed on its use or disclosure. Without
limiting the foregoing, except as authorized by the Company or Parent or as
required by law, you may not disclose or allow disclosure of any Confidential
Information, or of any information derived therefrom, in whatever form, to any
person unless such person is a director, officer, employee, attorney or agent of
the Company or Parent and, in your reasonable good faith judgment, has a need to
know the Confidential Information or information derived therefrom in
furtherance of the business of the Company or Parent.

        8. You acknowledge that during your employment with the Company and its
subsidiaries you have become familiar with the Company's trade secrets and with
other Confidential Information concerning the Company and its predecessors and
its subsidiaries and affiliates, and that during the Term you shall become
familiar with trade secrets and other Confidential Information of Parent and its
subsidiaries and affiliates, including the Company, and that your services have
been and shall be of special, unique and extraordinary value to Parent, the
Company and their subsidiaries and affiliates. You understand that the Company
and Parent shall be entitled to protect and preserve the going concern value of
the Company to the extent permitted by law and that the Company and Parent would
not have entered into the Merger Agreement without your agreement to the
covenants contained in this paragraph 8 and in paragraph 9 of this Agreement.
Therefore, you agree that during the period beginning on the Effective Date and
ending on the expiration of the Scheduled Term, you shall not, directly or
indirectly, own any interest in, manage, control, actively participate in,
consult with, render services for, or in any manner engage, anywhere in the
world, (i) in any business that competes with the Company or its subsidiaries
and affiliates, provided that for this purpose the term "affiliate" shall not
include (a) Parent, (b) any subsidiary of Parent (other than the Company and its
subsidiaries) or (c) any entity not described in the preceding clause (b) that
would be treated as an affiliate of the Company solely because it is an
affiliate of Parent or any entity described in the preceding clause (b), or (ii)
with respect to activities or businesses in which Parent and its subsidiaries
are engaged and in which you engage, participate or otherwise perform services
in

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connection with the course of your employment following the Effective Date, in
any business that competes with Parent and its subsidiaries and affiliates in
respect of such activities or businesses. Nothing herein shall prohibit you from
holding less than a 1% equity or voting interest in any publicly traded company,
so long as you have no active participation in the business of such corporation.
For purposes of this paragraph 8, "active participation" includes, without
limitation, acting directly or indirectly as an officer, director, proprietor,
employee, partner, investor, lender, consultant, advisor, agent or
representative.

        9. You agree that during the period beginning on the Effective Date and
ending on the one-year anniversary of the date of termination of your
employment, you shall not, directly or indirectly (i) induce any employee of the
Company or its subsidiaries and affiliates to leave the employ of the Company,
or (ii) recommend to any other person that such other person employ or solicit
for employment any such employee or (iii) hire any such employee.

        10. You acknowledge that a violation on your part of any of the
covenants contained in paragraphs 8 or 9 of this Agreement would cause
immeasurable and irreparable damage to the Company and Parent in an amount that
would be material but not readily ascertainable, and that any remedy at law
would be inadequate. Accordingly, you agree that the Company and Parent shall be
entitled (without the necessity of showing economic loss or other actual damage)
to injunctive relief in any court of competent jurisdiction for any actual or
threatened violation of any such covenant in addition to any other remedies it
may have. You agree that in the event that any arbitrator or court of competent
jurisdiction shall finally hold that any provision of paragraphs 8 or 9 of this
Agreement is void or constitutes an unreasonable restriction against you, the
provisions of such paragraph 8 or 9 shall not be rendered void but shall be
deemed to be modified to the minimum extent necessary to remain in force and
effect for the greatest period and to such extent as such arbitrator or court
may determine constitutes a reasonable restriction under the circumstances.

        11. You shall provide reasonable cooperation in connection with any
suit, action or proceeding (or any appeal from any suit, action or proceeding)
which relates to events occurring during your employment with the Company,
Parent, their subsidiaries and affiliates, and their predecessors. This
provision shall survive any termination of this Agreement.

        12. The Company may withhold from any amounts payable under this
Agreement such Federal, state and local taxes as may be required to be withheld
pursuant to any applicable law or regulation.

        13. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflicts of laws
principles thereof. Any dispute, controversy or claim arising out of, in
connection with or relating to the severance benefits to be provided under
paragraph 5, shall be referred to and finally resolved by arbitration in San
Diego, California pursuant to the Federal Arbitration Act, 9 U.S.C. Sections 1
et seq. Unless otherwise mutually agreed, the arbitration shall be conducted
before the American Arbitration Association according to its Employment Dispute
Resolution Rules. Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof and any party to the
arbitration may, if elected by such party, institute proceedings in any court
having jurisdiction for the specific performance of any such award. The
arbitrators shall apply New York law in accordance with the first sentence of
this paragraph 13.

        14. Except as provided below, this Agreement contains the entire
understanding of you, the Company and Parent with respect to your continued
employment by the Company. There are no restrictions, agreements, promises,
warranties, covenants or undertakings between you or the Company or Parent with
respect to the subject matter herein other than those expressly set forth
herein. This Agreement shall not supersede any other agreement, written or oral,
pertaining to the matters covered herein, except to the extent of any
inconsistency between this

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Agreement and any prior agreement, in which case this Agreement shall prevail.
This Agreement may not be altered, modified, or amended except by written
instrument signed by you and the Company. The failure of a party to insist upon
strict adherence to term of this Agreement on any occasion shall not be
considered a waiver of such party's rights or deprive such party of the right
thereafter to insist upon strict adherence to that term or any other term of
this Agreement. In the event that any one or more of the provisions of this
Agreement is or becomes invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not be affected thereby.

        15. This Agreement is personal to you and without the prior written
consent of the Company and Parent shall not be assignable by you otherwise than
by will or the laws of descent and distribution, and any assignment in violation
of this Agreement shall be void. This Agreement shall inure to the benefit of
and be enforceable by your legal representatives. This Agreement may be assigned
by the Company or Parent to any of their subsidiaries or affiliates and shall
inure to the benefit of and be binding upon the Company, its successors and
assigns.

        16. This Agreement is conditioned upon the consummation of the and
Merger and shall be void ab initio if the Merger does not occur, and of no force
and effect upon the occurrence of the termination of the Merger Agreement prior
to the consummation of the Merger.

        17. Any notice provided for in this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally with receipt
acknowledged or sent by registered or certified mail or equivalent, if
available, postage prepaid, or by fax (which shall be confirmed by a writing
sent by registered or certified mail or equivalent on the same day that such fax
was sent), to the Company or Parent at their principal executive offices or to
you at your last known address in the records of the Company, or to such other
address as you or the Company or Parent shall hereafter specify by notice to the
others.

        18. This Agreement may be signed in counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument.

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                If you are in agreement with the foregoing, please acknowledge
your acceptance by signing below.

                                         MP3.COM, INC.

                                         /s/ PAUL L. H. OUYANG
                                         ---------------------------------------
                                   Name: Paul L. H. Ouyang
                                   Title: Chief Financial Officer

                                         VIVENDI UNIVERSAL, S.A.

                                         /s/ JEAN-MARIE MESSIER
                                         ---------------------------------------
                                   Name: Jean-Marie Messier
                                   Title: Chairman and CEO

Agreed and Accepted:

/s/ DERRICK OLEN
-----------------------------
Name: Derrick Olen<PAGE>   1

                                                                     EXHIBIT 4.1
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                                     WARNING
     Granting options to directors and officers under this plan may violate
     NASD or stock exchange rules if the plan does not meet the broad based
        plan exemption from shareholder approval. Grants to directors and
         officers may be permitted if the grant is made upon the initial
            employment of the director or officer and the grant is an
                       essential inducement to employment.
--------------------------------------------------------------------------------

                            NETWORKS ASSOCIATES, INC.
                 2000 NONSTATUTORY STOCK OPTION PLAN, AS AMENDED

                                January 24, 2001

        1.     Purposes of the Plan. The purposes of this Nonstatutory Stock
               Option Plan are:

               -      to attract and retain the best available personnel for
                      positions of substantial responsibility,

               -      to provide additional incentive to Employees, Directors
                      and Consultants, and

               -      to promote the success of the Company's business.

               Options granted under the Plan will be Nonstatutory Stock
               Options.

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

            (a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.

            (b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.

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

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

            (e) "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.

            (f) "Common Stock" means the Common Stock of the Company.

            (g) "Company" means Networks Associates, Inc., a Delaware
corporation.

            (h) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity.

            (i) "Director" means a member of the Board.

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

            (k) "Employee" means any person, including Officers, employed by the
Company or any Parent or Subsidiary of the Company. A Service Provider shall not
cease to be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.

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

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

                (i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;

                (ii) If the Common Stock 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 high bid and low 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 Administrator deems reliable;

                (iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.

            (n) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option grant. The
Notice of Grant is part of the Option Agreement.

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

            (p) "Option" means a nonstatutory stock option granted pursuant to
the Plan, that is not intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code and the regulations promulgated
thereunder.

            (q) "Option Agreement" means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.

            (r) "Option Exchange Program" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.

            (s) "Optioned Stock" means the Common Stock subject to an Option.

            (t) "Optionee" means the holder of an outstanding Option granted
under the Plan.

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

            (v) "Plan" means this 2000 Nonstatutory Stock Option Plan.

            (w) "Service Provider" means an Employee including an Officer,
Consultant or Director.

            (x) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.

            (y) "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. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is eleven million five hundred thousand (11,500,000) Shares. The
Shares may be authorized, but unissued, or reacquired Common Stock.

            If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated).

        4. Administration of the Plan.

            (a) Administration. The Plan shall be administered by (i) the Board
or (ii) a Committee, which committee shall be constituted to satisfy Applicable
Laws.

            (b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:

                (i) to determine the Fair Market Value of the Common Stock;

               (ii) to select the Service Providers to whom Options may be
granted hereunder;

              (iii) to determine whether and to what extent Options are
granted hereunder;

               (iv) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;

                (v) to approve forms of agreement for use under the Plan;

               (vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;

                                      II-3
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              (vii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;

             (viii) to institute an Option Exchange Program;

               (ix) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;

                (x) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;

               (xi) to modify or amend each Option (subject to Section 14(b) of
the Plan), including the discretionary authority to extend the post-termination
exercisability period of Options longer than is otherwise provided for in the
Plan;

              (xii) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option previously granted by
the Administrator;

             (xiii) to determine the terms and restrictions applicable to
Options;

              (xiv) to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option that number of Shares having a Fair Market Value equal to
the amount required to be withheld. The Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be withheld
is to be determined. All elections by an Optionee to have Shares withheld for
this purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable; and

               (xv) to make all other determinations deemed necessary or
advisable for administering the Plan.

            (c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.

        5. Eligibility. Options may be granted to Service Providers; provided,
however, that notwithstanding anything to the contrary contained in the Plan,
Options may not be granted to Officers and Directors, except for grants to
Officers and Directors not previously employed by the Company, which are an
essential inducement to such Officers' or Directors' entering into an employment
contract with the Company.

        6. Limitation. Neither the Plan nor any Option shall confer upon an
Optionee any right with respect to continuing the Optionee's relationship as a
Service Provider with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such relationship at any
time, with or without cause.

        7. Term of Plan. The Plan shall become effective upon its adoption by
the Board. It shall continue in effect for ten (10) years, unless sooner
terminated under Section 14 of the Plan.

        8. Term of Option. The term of each Option shall be stated in the Option
Agreement.

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        9. Option Exercise Price and Consideration.

            (a) Exercise Price. The per share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the
Administrator.

            (b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised.

            (c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. Such consideration may consist entirely of:

                (i) cash;

               (ii) check;

              (iii) promissory note;

               (iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six months
on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;

                (v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;

               (vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;

              (vii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws; or

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

        10. Exercise of Option.

            (a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. An Option may not be exercised for a fraction of
a Share.

                An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized

                                      II-5
<PAGE>   6

transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such Shares promptly after the Option is exercised. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Shares are issued, except as provided in Section 12 of the Plan.

                Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.

            (b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option, but only within such
period of time as is specified in the Option Agreement, and only to the extent
that the Option is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for three (3) months following the Optionee's termination.
If, on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

            (c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option
Agreement, to the extent the Option is vested on the date of termination (but in
no event later than the expiration of the term of such Option as set forth in
the Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.

            (d) Death of Optionee. If an Optionee dies while a Service Provider,
the Option may be exercised within such period of time as is specified in the
Option Agreement (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance,
but only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. The Option may be exercised by the executor or administrator
of the Optionee's estate or, if none, by the person(s) entitled to exercise the
Option under the Optionee's will or the laws of descent or distribution. If the
Option is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

            (e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

        11. Non-Transferability of Options. Unless determined otherwise by the
Administrator, an Option 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
Optionee,

                                      II-6
<PAGE>   7

only by the Optionee. If the Administrator makes an Option transferable, such
Option shall contain such additional terms and conditions as the Administrator
deems appropriate.

        12. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.

            (a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; 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 Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, 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 thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.

            (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed
action.

            (c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option shall be assumed or an equivalent option
or right substituted by the successor corporation or a Parent or Subsidiary of
the successor corporation. In the event that the successor corporation refuses
to assume or substitute for the Option, the Optionee shall fully vest in and
have the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an Option
becomes fully vested and exercisable in lieu of assumption or substitution in
the event of a merger or sale of assets, the Administrator shall notify the
Optionee in writing or electronically that the Option shall be fully vested and
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option shall terminate upon the expiration of such period. For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the option or right confers the right to purchase or
receive, for each Share of Optioned Stock, immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock to be
solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common Stock
in the merger or sale of assets.

                                      II-7
<PAGE>   8

        13. Date of Grant. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.

        14. Amendment and Termination of the Plan.

            (a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.

            (b) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to options granted under the
Plan prior to the date of such termination.

        15. Conditions Upon Issuance of Shares.

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

            (b) Investment Representations. As a condition to the exercise of an
Option the Company may require the person exercising such Option 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.

        16. Inability to Obtain Authority. 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.

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

                                      II-8

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