Document:

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                                                                    Exhibit 10.4

                              CONNECTED CORPORATION

                           1996 EQUITY INCENTIVE PLAN
                       (Amended and Restated May 27, 1999)

Section 1.  Purpose

        The purpose of the Connected Corporation 1996 Equity Incentive Plan (the
"Plan") is to attract and retain key employees, directors and consultants to
provide an incentive for them to assist Connected Corporation (the "Company") to
achieve long-range performance goals, and to enable them to participate in the
long-term growth of the Company.

Section 2.  Definitions

(a)  "Affiliate" means any business entity in which the Company owns directly or
     indirectly 50% or more of the total combined voting power or has a
     significant financial interest as determined by the Committee.

(b)  "Award" means any Option, Stock Appreciation Right, Performance or Award
     Share, or Restricted Stock awarded under the Plan.

(c)  "Award Share" means a share of Common Stock awarded to an employee without
     payment therefor.

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

(e)  "Code" means the Internal Revenue Code of 1986, as amended from time to
     time.

(f)  "Committee" means a committee of not less than three members of the Board
     appointed by the Board to administer the Plan. Alternatively, if the Board
     so designates, the President of the Company shall serve as the sole member
     of the Committee.

(g)  "Common Stock" or "Stock" means the Common Stock, par value $.001 per
     share, of the Company.

(h)  "Company" means Connected Corporation.

(i)  "Designated Beneficiary" means the beneficiary designated by a Participant,
     in a manner determined by the Board, to receive amounts due or exercise
     rights of the Participant in the event of the Participant's death. In the
     absence of an effective designation by a Participant, Designated
     Beneficiary shall mean the Participant's estate.

(j)  "Fair Market Value" means, with respect to Common Stock or any other
     property, the fair market value of such property as determined by the Board
     in good faith or in the manner established by the Board from time to time.

(k)  "Incentive Stock Option" means an option to purchase shares of Common Stock
     awarded to a Participant under Section 6 which is intended to meet the
     requirements of Section 422 of the Code or any successor provision.

(l)  "Nonstatutory Stock Option" means an option to purchase shares of Common
     Stock awarded to a Participant under Section 6 which is not intended to be
     an Incentive Stock Option.
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(m)  "Option" means an Incentive Stock Option or a Nonstatutory Stock Option.

(n)  "Participant" means a person selected by the Board to receive an Award
     under the Plan.

(o)  "Performance Cycle" or "Cycle" means the period of time selected by the
     Board during which performance is measured for the purpose of determining
     the extent to which an award of Performance Shares has been earned.

(p)  "Performance Shares" mean shares of Common Stock which may be earned by the
     achievement of performance goals awarded to a Participant under Section 8.

(q)  "Restricted Period" means the period of time selected by the Board during
     which an award of Restricted Stock may be forfeited to the Company.

(r)  "Restricted Stock" means shares of Common Stock subject to forfeiture
     awarded to a Participant under Section 9.

(s)  "Stock Appreciation Right" or "SAR" means a right to receive any excess in
     value of shares of Common Stock over the exercise price awarded to a
     Participant under Section 7.

(t)  "Stock Unit" means an award of Common Stock or units that are valued in
     whole or in part by reference to, or otherwise based on, the value of
     Common Stock, awarded to a Participant under Section 10.

Section 3.  Administration

        The Plan shall be administered by the Board. The Board shall have
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the operation of the Plan as it shall from time to time
consider advisable, and to interpret the provisions of the Plan. The Board's
decisions shall be final and binding. To the extent permitted by applicable law,
the Board may delegate to the Committee the power to make Awards to Participants
and all determinations under the Plan with respect thereto.

Section 4.  Eligibility

        All employees and, in the case of Awards other than Incentive Stock
Options, directors and consultants of the Company or any Affiliate capable of
contributing significantly to the successful performance of the Company, other
than a person who has irrevocably elected not to be eligible, are eligible to be
Participants in the Plan.

Section 5.  Stock Available for Awards

(a)      Subject to adjustment under subsection (b), Awards may be made under
         the Plan of Options to acquire not in excess of 1,750,000 shares of
         Company Common Stock. Other Awards may be made as the Board may
         determine, provided that a maximum of 1,750,000 shares of Common Stock
         may be issued under this Plan. If any Award in respect of shares of
         Common Stock expires or is terminated unexercised or is forfeited for
         any reason or settled in a manner that results in fewer shares
         outstanding than were initially awarded, including without limitation
         the surrender of shares in payment for the Award or any tax obligation
         thereon, the shares subject to such Award or so surrendered, as the
         case may be, to the extent of such expiration, termination, forfeiture
         or decrease, shall again be available for award under the Plan,
         subject, however, in the case of Incentive Stock Options, to any
         limitation required

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         under the Code. Common Stock issued through the assumption or
         substitution of outstanding grants from an acquired company shall not
         reduce the shares available for Awards under the Plan. Shares issued
         under the Plan may consist in whole or in part of authorized but
         unissued shares or treasury shares.

(b)      In the event that the Board in its discretion determines that any stock
         dividend, extraordinary cash dividend, creation of a class of equity
         securities, recapitalization, reorganization, merger, consolidation,
         split-up, spin-off, combination or reclassification of shares exchange
         of shares, warrants or rights offering to purchase Common Stock at a
         price substantially below fair market value, or other similar capital
         change affects the Common Stock such that an adjustment is required in
         order to preserve the benefits or potential benefits intended to be
         made available under the Plan, then the Board, subject, in the case of
         Incentive Stock Options, to any limitation required under the Code,
         shall equitably adjust any or all of (i) the number and kind of shares
         in respect of which Awards may be made under the Plan, (ii) the number
         and kind of shares subject to outstanding Awards, and (iii) the award,
         exercise or conversion price with respect to any of the foregoing, and
         if considered appropriate, the Board may make provision for a cash
         payment with respect to an outstanding Award, provided that the number
         of shares subject to any Award shall always be a whole number.

(c)      In the event of a consolidation or merger of the Company with another
         corporation, or the sale or exchange of all or substantially all of the
         assets of the Company, or a reorganization or liquidation of the
         Company, the Participant shall be entitled to receive upon exercise and
         payment in accordance with the terms of this Plan the same shares,
         securities or property as he would have been entitled to receive upon
         the occurrence of such event if he had been, immediately prior to such
         event, the holder of the number of shares of Common Stock purchasable
         under this Plan, or if another corporation shall be the survivor, such
         corporation shall substitute therefor substantially equivalent shares,
         securities or property of such other corporation; provided, however,
         that in lieu of the foregoing the Board may upon written notice to the
         Participant provide that this Plan shall terminate on a date not less
         than twenty (20) days after the date of such notice unless theretofore
         exercised. In connection with such notice, the Board may in its
         discretion accelerate or waive any deferred exercise period.

Section 6.  Stock Options

(a)      Subject to the provisions of the Plan, the Board may award Incentive
         Stock Options and Nonstatutory Stock Options and determine the number
         of shares to be covered by each Option, the option price therefor and
         the conditions and limitations applicable to the exercise of the
         Option. The terms and conditions of Incentive Stock Options shall be
         subject to and comply with Section 422 of the Code, or any successor
         provision, and any regulations thereunder.

(b)      The Board shall establish the option price at the time each Option is
         awarded, which price shall not be less than 100% of the Fair Market
         Value of the Common Stock on the date of award with respect to
         Incentive Stock Options.

(c)      Each Option shall be exercisable at such times and subject to such
         terms and conditions as the Board may specify in the applicable Award
         or thereafter. The Board may impose such conditions with respect to the
         exercise of Options, including conditions relating to applicable
         federal or state securities laws, as it considers necessary or
         advisable.

(d)      No shares shall be delivered pursuant to any exercise of an Option
         until payment in full of the option price therefor is received by the
         Company. Such payment may be made in whole or in

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         part in cash or, to the extent permitted by the Board at or after the
         award of the Option, by delivery of a note or shares of Common Stock
         owned by the optionholder, including Restricted Stock, valued at their
         Fair Market Value on the date of delivery, or such other lawful
         consideration as the Board may determine.

(e)      The Board may provide for the automatic award of an Option upon the
         delivery of shares to the Company in payment of an Option for up to the
         number of shares so delivered.

(f)      In the case of Incentive Stock Options the following additional
         conditions shall apply:

         (i)      Such options shall be granted only to employees of the
                  Company, and shall not be granted to any person who owns stock
                  that possesses more than ten percent of the total combined
                  voting power of all classes of stock of the Company or of its
                  parent or subsidiary corporation (as those terms are defined
                  in section 422(b) of the Internal Revenue Code of 1986, as
                  amended, and the regulations promulgated thereunder), unless,
                  at the time of such grant, the exercise price of such option
                  is at least 110% of the fair market value of the stock that is
                  subject to such option and the option shall not be exercisable
                  more than five years after the date of grant;

         (ii)     Such options shall not be exercisable more than ten years from
                  the date hereof and shall not be exercisable more than ten
                  years from the date of grant;

         (iii)    Such options shall, by their terms, be transferable by the
                  optionee only by will or the laws of descent and distribution,
                  and shall be exercisable only by such employee during his
                  lifetime.

Section 7.  Stock Appreciation Rights

        Subject to the provisions of the Plan, the Board may award SARs in
tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are exercised.

Section 8.  Performance Shares

(a)      Subject to the provisions of the Plan, the Board may award Performance
         Shares and determine the number of such shares for each Performance
         Cycle and the duration of each Performance Cycle. There may be more
         than one Performance Cycle in existence at any one time, and the
         duration of Performance Cycles may differ from each other. The payment
         value of Performance Shares shall be equal to the Fair Market Value of
         the Common Stock on the date the Performance Shares are earned or, in
         the discretion of the Board, on the date the Board determines that the
         Performance Shares have been earned.

(b)      The Board shall establish performance goals for each Cycle, for the
         purpose of determining the extent to which Performance Shares awarded
         for such Cycle are earned, on the basis of such criteria and to
         accomplish such objectives as the Board may from time to time select.
         During any Cycle, the Board may adjust the performance goals for such
         Cycle as it deems equitable in recognition of unusual or non-recurring
         events affecting the Company, changes in applicable tax laws or
         accounting principles, or such other factors as the Board may
         determine.

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(c)      As soon as practicable after the end of a Performance Cycle, the Board
         shall determine the number of Performance Shares which have been earned
         on the basis of performance in relation to the established performance
         goals. The payment values of earned Performance Shares shall be
         distributed to the Participant or, if the Participant has died, to the
         Participant's Designated Beneficiary, as soon as practicable
         thereafter. The Board shall determine, at or after the time of award,
         whether payment values will be settled in whole or in part in cash or
         other property, including Common Stock or Awards.

Section 9.  Restricted Stock

(a)      Subject to the provisions of the Plan, the Board may award shares of
         Restricted Stock and determine the duration of the Restricted Period
         during which, and the conditions under which, the shares may be
         forfeited to the Company and the other terms and conditions of such
         Awards. Shares of Restricted Stock may be issued for no cash
         consideration or such minimum consideration as may be required by
         applicable law.

(b)      Shares of Restricted Stock may not be sold, assigned, transferred,
         pledged or otherwise encumbered, except as permitted by the Board,
         during the Restricted Period. Shares of Restricted Stock shall be
         evidenced in such manner as the Board may determine. Any certificates
         issued in respect of shares of Restricted Stock shall be registered in
         the name of the Participant and unless otherwise determined by the
         Board, deposited by the Participant, together with a stock power
         endorsed in blank, with the Company. At the expiration of the
         Restricted Period, the Company shall deliver such certificates to the
         Participant or if the Participant has died, to the Participant's
         Designated Beneficiary.

Section 10.  Stock Units

(a)      Subject to the provisions of the Plan, the Board may award Stock Units
         subject to such terms, restrictions, conditions, performance criteria,
         vesting requirements and payment rules as the Board shall determine.

(b)      Shares of Common Stock awarded in connection with a Stock Unit Award
         shall be issued for no cash consideration or such minimum consideration
         as may be required by applicable law. Such shares of Common Stock may
         be designated as Award Shares by the Board.

Section 11.  General Provisions Applicable to Awards

(a)      Documentation. Each Award under the Plan shall be evidenced by a
         writing delivered to the Participant specifying the terms and
         conditions thereof and containing such other terms and conditions not
         inconsistent with the provisions of the Plan as the Board considers
         necessary or advisable to achieve the purposes of the Plan or comply
         with applicable tax and regulatory laws and accounting principles.

(b)      Board Discretion. Each type of Award may be made alone, in addition to
         or in relation to any other type of Award. The terms of each type of
         Award need not be identical, and the Board need not treat Participants
         uniformly. Except as otherwise provided by the Plan or a particular
         Award, any determination with respect to an Award may be made by the
         Board at the time of award or at any time thereafter.

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(c)      Settlement. The Board shall determine whether Awards are settled in
         whole or in part in cash, Common Stock, other securities of the
         Company, Awards or other property. The Board may permit a Participant
         to defer all or any portion of a payment under the Plan, including the
         crediting of interest on deferred amounts denominated in cash and
         dividend equivalents on amounts denominated in Common Stock.

(d)      Dividends and Cash Awards. In the discretion of the Board, any Award
         under the Plan may provide the Participant with (i) dividends or
         dividend equivalents payable currently or deferred with or without
         interest, and (ii) cash payments in lieu of or in addition to an Award.

(e)      Termination of Employment. The Board shall determine the effect on an
         Award of the disability, death, retirement or other termination of
         employment of a Participant and the extent to which, and the period
         during which, the Participant's legal representative, guardian or
         Designated Beneficiary may receive payment of an Award or exercise
         rights thereunder.

(f)      Change in Control. In order to preserve a Participant's rights under an
         Award in the event of a change in control of the Company, the Board in
         its discretion may, at the time an Award is made or at any time
         thereafter, take one or more of the following actions: (i) provide for
         the acceleration of any time period relating to the exercise or
         realization of the Award, (ii) provide for the purchase of the Award
         upon the Participant's request for an amount of cash or other property
         that could have been received upon the exercise or realization of the
         Award had the Award been currently exercisable or payable, (iii) adjust
         the terms of the Award in a manner determined by the Board to reflect
         the change in control, (iv) cause the Award to be assumed, or new
         rights substituted therefor, by another entity, or (v) make such other
         provision as the Board may consider equitable and in the best interests
         of the Company.

(g)      Withholding. The Participant shall pay to the Company, or make
         provision satisfactory to the Board for payment of, any taxes required
         by law to be withheld in respect of Awards under the Plan no later than
         the date of the event creating the tax liability. In the Board's
         discretion, such tax obligations may be paid in whole or in part in
         shares of Common Stock, including shares retained from the Award
         creating the tax obligation, valued at their Fair Market Value on the
         date of delivery. The Company and its Affiliates may, to the extent
         permitted by law, deduct any such tax obligations from any payment of
         any kind otherwise due to the Participant.

(h)      Foreign Nationals. Awards may be made to Participants who are foreign
         nationals or employed outside the United States on such terms and
         conditions different from those specified in the Plan as the Board
         considers necessary or advisable to achieve the purposes of the Plan or
         comply with applicable laws.

(i)      Amendment of Award. The Board may amend, modify or terminate any
         outstanding Award, including substituting therefor another Award of the
         same or a different type, changing the date of exercise or realization
         and convening an Incentive Stock Option to a Nonstatutory Stock Option,
         provided that the Participant's consent to such action shall be
         required unless the Board determines that the action, taking into
         account any related action, would not materially and adversely affect
         the Participant.

Section 12.  Miscellaneous

(a)      No Right To Employment. No person shall have any claim or right to be
         granted an Award, and the grant of an Award shall not be construed as
         giving a Participant the right to continued employment. The Company
         expressly reserves the right at any time to dismiss a Participant

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         free from any liability or claim under the Plan, except as expressly
         provided in the applicable Award.

(b)      No Rights As Shareholder. Subject to the provisions of the applicable
         Award, no Participant or Designated Beneficiary shall have any rights
         as a shareholder with respect to any shares of Common Stock to be
         distributed under the Plan until he or she becomes the holder thereof.
         A Participant to whom Common Stock is awarded shall be considered the
         holder of the Stock at the time of the Award except as otherwise
         provided in the applicable Award.

(c)      Effective Date. This amended and restated Plan became effective on May
         27, 1999. The original Plan first became effective, subject to
         shareholder approval, on February 21, 1996.

(d)      Amendment of Plan. The Board may amend, suspend or terminate the Plan
         or any portion thereof at any time, provided that no amendment shall be
         made without shareholder approval if such approval is necessary to
         comply with any applicable tax requirement.

(e)      Governing Law. The provisions of the Plan shall be governed by and
         interpreted in accordance with the laws of the Commonwealth of
         Massachusetts.

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                                                                    Exhibit 10.5

                              CONNECTED CORPORATION

                       2000 COMBINATION STOCK OPTION PLAN

SECTION 1. PURPOSE

         The purpose of this Connected Corporation 2000 Combination Stock Option
Plan (the "Plan") is to attract and retain employees and consultants and to
provide an incentive for them to assist Connected Corporation (the "Company") to
achieve long-range performance goals, and to enable them to participate in the
long-term growth of the Company.

SECTION 2.  DEFINITIONS

         As used herein, the following terms have the indicated meanings:

"Affiliate" means any business entity in which the Company owns directly or
indirectly 50% or more of the total combined voting power or has a significant
financial interest as determined by the Committee.

"Award" means any Option awarded under the Plan.

"Board" means the Board of Directors of the Company.

"Code" means the Internal Revenue Code of 1986, as amended from time to time.

"Committee" means a committee of not less than two nonemployee directors
appointed by the Board to administer the Plan or, alternatively, if the Board so
determines, the whole Board.

"Common Stock" or "Stock" means the Common Stock, $.001 par value, of the
Company.

"Company" means Connected Corporation, a Delaware corporation.

"Exchange Act" means the Securities Exchange Act of 1934, as amended from time
to time, or any successor statute.

"Fair Market Value" means the fair market value of Common Stock as determined in
accordance with Section 10 of this Plan.

"Incentive Stock Option" means an option to purchase shares of Common Stock
awarded to a Participant under Section 5 which is intended to meet the
requirements of Section 422 of the Code or any successor provision.

"Nonqualified Stock Option" means an option to purchase shares of Common Stock
awarded to a Participant under Section 5 which is not intended to be an
Incentive Stock Option.

"Option" means an Incentive Stock Option or a Nonqualified Stock Option.

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"Parent Corporation" has the meaning specified in Section 424(e) of the Code.

"Participant" means a person selected by the Committee to receive an Award under
the Plan.

"Permanent Disability" has the meaning in Section 22(e)(3) of the Code.

"Plan" means this Connected Corporation 2000 Combination Stock Option Plan.

"Subsidiary Corporation" has the meaning specified in Section 424(f) of the
Code.

"Ten Percent Stockholder" means an individual who owns (within the meaning of
Section 425(d) of the Code) capital stock possessing more than 10% of the total
combined voting power of all classes of capital stock of the Company or any
Parent Corporation or Subsidiary Corporation at the time an Incentive Stock
Option is granted under this Plan.

SECTION 3.  ELIGIBILITY

         All employees, including directors who are also employees, and
consultants of the Company or any Affiliate, capable of contributing
significantly to the successful performance of the Company, other than a person
who has irrevocably elected not to be eligible, are eligible to be Participants
in the Plan. Consultants are not eligible to receive Incentive Stock Options
under the Plan.

SECTION 4.  STOCK SUBJECT TO PLAN

         (a) Subject to adjustment under Section 9, the maximum aggregate number
of shares of the Company's Common Stock that may be issued under this Plan shall
be 6,000,000 shares., plus an annual increase to be made on the first day of
each fiscal year equal to the lesser of (a) 1.5% of the Issued Shares (as
defined below) on the last day of the immediately preceding fiscal year, (b)
450,000 shares, or (c) an amount determined by the Board. "Issued Shares" shall
mean the number of shares of Common Stock of the Company outstanding on the last
day of the immediately preceding fiscal year, plus any shares reacquired by the
Company during the fiscal year that ends on such date.

         (b) The shares to be issued under this Plan may be made available, at
the discretion of the Board, from: (i) authorized but unissued shares; (ii)
shares previously reserved for issuance upon exercise of Options which have
expired or been terminated; or (iii) treasury shares and shares reacquired by
the Company for the purpose, including shares purchased in the open market.

         (c) If any Option expires or is terminated unexercised or is forfeited
for any reason or settled in a manner that results in fewer shares issued and
outstanding than were initially subject to the Option, including without
limitation the surrender of shares in payment for the Award or any tax
obligation thereon, the shares subject to such Award or so surrendered, as the
case may be, to the extent of such expiration, termination, forfeiture or
decrease, shall again be available

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for Awards under the Plan, subject, in the case of Incentive Stock Options, to
any limitation required under the Code.

         (d) Shares of Common Stock issued or received for issuance through the
assumption or substitution of outstanding grants from an acquired company shall
not reduce the shares available for Awards under the Plan.

SECTION 5.      ADMINISTRATION OF THE PLAN

         (a) The Plan shall be administered by the Committee. Except where the
full Board serves as the Committee, the Committee shall serve at the pleasure of
the Board, which may from time to time appoint additional members of the
Committee, remove members and appoint new members in substitution for those
previously appointed, and fill vacancies however caused. A majority of the
Committee shall constitute a quorum and the acts of a majority of the members
present at any meeting at which a quorum is present shall be deemed the action
of the Committee. The Committee may act by unanimous written consent in lieu of
a meeting.

         (b) Subject to the express provisions of this Plan and provided that
all actions taken shall be consistent with the purposes of the Plan, the
Committee shall have full and complete authority and the sole discretion to: (i)
determine those persons eligible under Section 3; (ii) select those persons to
whom Awards shall be granted under the Plan; (iii) determine the number of
shares covered by and the form of the Awards to be granted; (iv) determine the
time or times when Awards shall be granted; (v) establish the terms and
conditions upon which Options may be exercised; (vi) alter any restrictions or
conditions upon any Awards; and (vii) adopt rules and regulations, establish,
define and/or interpret any other terms and conditions, and make all other
determinations (which may be on a case-by-case basis) deemed necessary or
desirable for the administration of the Plan.

         (c) The terms of each type of Award need not be identical, and the
Committee need not treat Participants uniformly. Except as otherwise provided by
the Plan or a particular Award, any determination with respect to an Award may
be made by the Committee at the time of award or at any time thereafter.

         (d) In making its determinations hereunder, the Committee shall take
into account the nature of the services rendered or to be rendered by the
recipient, his or her present and potential contributions to the success of the
Company, and such other factors as the Committee, in its discretion, shall deem
relevant in order to accomplish the purposes of the Plan.

         (e) Neither the Board nor the Committee, nor any member of either or
any delegatee thereof, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with this Plan,
and the members of the Board and the Committee (and any delegatee thereof) shall
be entitled in all cases to indemnification and reimbursement by the Company in
respect of any claim, loss, damage or expense (including, without limitation,
reasonable attorneys' fees) arising or resulting therefrom to the fullest extent
permitted by law,

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the Company's Certificate of Incorporation and By-Laws, and/or under any
directors' and officers' liability insurance coverage which may be in effect
from time to time.

SECTION 6.  STOCK OPTIONS

         (a) General. Subject to the provisions of the Plan, the Committee may
award Incentive Stock Options and Non-Qualified Stock Options and determine the
number of shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. Any Option
granted under this Plan shall be upon such terms and conditions not inconsistent
with this Plan as the Committee may determine. At the time of grant of any
Option, the Committee shall specify whether the Option is intended to be an
Incentive Stock Option or a Non-Qualified Stock Option. If the Option is not
intended to be an Incentive Stock Option but otherwise qualifies to be such, the
agreement evidencing such Option will include a specific statement that it is
not intended to qualify as an Incentive Stock Option.

         (b) Price. The price at which any shares of Stock may be purchased
pursuant to the exercise of an Option shall be determined by the Committee but
may not be less than the greater of (i) the minimum legal consideration required
under the laws of the jurisdiction in which the Company is then organized or
(ii) in the case of Incentive Stock Options, the Fair Market Value of the Stock
on the date of grant of the Option (or, in the case of Incentive Stock Options
granted to Ten Percent Stockholders, 110% of the Fair Market Value on such
date).

         (c) Period of Option. Each Option granted under this Plan shall
continue in effect for such period not exceeding ten years as the Committee
shall determine; provided, that any Incentive Stock Option must be granted
within ten years from the date of establishment of this Plan or the date the
Plan is approved by stockholders, whichever is earlier, and must have a term of
not more than five years from the date of grant in the case of Incentive Stock
Options granted to Ten Percent Stockholders.

         (d) Incentive Stock Options; Transferability Generally.

                  (i)      Incentive Stock Options shall be granted only to
                           employees of the Company;

                  (ii)     No Incentive Stock Option shall be exercisable beyond
                           three months after the date upon which the Option
                           holder ceases to be an employee of the Company or a
                           Parent Corporation or Subsidiary Corporation, except
                           that the Committee may provide in the Incentive Stock
                           Option that in the event of termination of employment
                           by reason of death or Permanent Disability of the
                           holder, the Option may be exercised by the holder or
                           his estate for a period of up to one year after
                           termination of employment;

                  (iii)    No Option shall be transferable by the optionee
                           otherwise than by will or by the laws of descent and
                           distribution and all Options shall be exercisable,
                           during the optionee's lifetime, only by the optionee,
                           or by the

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                  optionee's legal representative or guardian in the event of
                  the optionee's incapacity. Notwithstanding the foregoing, the
                  Committee, in its sole discretion, may provide in the Award
                  agreement regarding a given Option that the optionee may
                  transfer his or her Non-Qualified Stock Options to members of
                  his immediate family, to trusts for the benefit of such family
                  members, or to partnerships in which such family members are
                  the only partners, provided that the transferee agrees in
                  writing with the Company to be bound by all of the terms and
                  conditions of this Plan and the applicable Option.

         (iv)     The terms and conditions of Incentive Stock Options shall be
                  subject to and comply with Section 422 of the Code, or any
                  successor provision, and any regulations thereunder.

SECTION 7.      EXERCISE OF OPTIONS; PAYMENT

                  (e) Options may be exercised in whole or in part at such time
         and in such manner as the Committee may determine and as shall be
         prescribed in the written agreement with each holder.

                  (f) The purchase price of shares of Stock upon exercise of an
         Option shall be paid by the Option holder in full upon exercise and may
         be paid as the Committee may determine in its sole discretion in any
         combination of: (i) cash or check payable to the order of the Company;
         (ii) delivery of a promissory note; (iii) delivery of shares of Common
         Stock (valued at Fair Market Value at the date of purchase of the
         Common Stock subject to the Option), including by way of so-called
         "cashless exercise" and the netting of the number of shares of Common
         Stock subject to the Option having an aggregate Fair Market Value equal
         to the purchase price of the shares of Stock upon exercise of the
         Option; or (iv) such other means as the Committee may permit; provided,
         however, that payment of the exercise price by delivery of shares of
         Common Stock of the Company owned by the Option holder or "cashless
         exercise" may be made only if such payment does not result in a charge
         to earnings for financial accounting purposes, as determined by the
         Committee.

                  (g) With the consent of the Committee, payment of the exercise
         price may also be made by delivery of a properly executed exercise
         notice to the Company, together with a copy of irrevocable instructions
         to a broker to deliver promptly to the Company the amount of sale or
         loan proceeds to pay the exercise price. To facilitate such
         arrangements, the Company may enter into agreements for coordinating
         procedures with one or more securities brokerage firms. The date of
         delivery of such exercise notices shall be deemed the date of exercise.

                  (h) The Committee may impose such conditions with respect to
         the exercise of Options, including conditions relating to applicable
         federal or state securities laws, as it considers necessary or
         advisable, including making the Common Stock issued upon exercise
         subject to restrictions on vesting or transferability, or to risk of
         forfeiture, upon the happening of such

                                      -5-
<PAGE>   6
events as the Committee may determine, any of which may be accelerated or waived
in the Committee's sole discretion.

                  (i) No shares of Common Stock shall be issued upon exercise of
         any Option under this Plan until full payment in the form approved by
         the Committee has been made and all other legal requirements applicable
         to the issuance or transfer of such shares and such other requirements
         as are consistent with the Plan have been complied with to the
         satisfaction of the Committee.

SECTION 8.  GENERAL PROVISIONS APPLICABLE TO AWARDS

                  (a) Documentation. Each Award under the Plan shall be
         evidenced by a writing delivered to the Participant specifying the
         terms and conditions thereof and containing such other terms and
         conditions not inconsistent with the provisions of the Plan as the
         Committee considers necessary or advisable to achieve the purposes of
         the Plan or comply with applicable laws and accounting principles.

                  (b) Date of Award. The date of any Award hereunder shall be
         the date upon which such Award is voted by the Committee (or approved
         by the full Board if such approval is legally required), unless the
         vote expressly provides otherwise.

                  (c) Termination of Employment. The Board shall determine the
         effect on an Award of the disability, death, retirement or other
         termination of employment of a Participant and the extent to which, and
         the period during which, the Participant's legal representative,
         guardian or designated beneficiary may exercise rights under an Award.

                  (d) Withholding. The Participant shall pay to the Company, or
         make provision satisfactory to the Committee for payment of, any taxes
         required by law to be withheld in respect of Awards under the Plan no
         later than the date of the event creating the tax liability. In the
         Committee's discretion, such tax obligations may be paid in whole or in
         part in shares of Common Stock, including shares retained from the
         Award creating the tax obligation, valued at their Fair Market Value on
         the date of delivery. The Company and its Affiliates may, to the extent
         permitted by law, deduct any such tax obligations from any payment of
         any kind otherwise due to the Participant.

                  (e) Foreign Nationals. Awards may be made to Participants who
         are foreign nationals or employed outside the United States on such
         terms and conditions different from those specified in the Plan as the
         Board considers necessary or advisable to achieve the purposes of the
         Plan or comply with applicable laws.

                  (f) Amendment of Award. The Committee may amend, modify or
         terminate any outstanding Award, including substituting therefor
         another Award of the same or a different type, changing the date of
         exercise, or conversion of an Incentive Stock Option to a Non-Qualified
         Stock Option; provided, that the Participant's consent to such action
         shall be required unless the

                                      -6-
<PAGE>   7
Board determines that the action, taking into account any related action, would
not materially and adversely affect the Participant.

         (g) Loans. The Company may make loans to Participants to permit them to
exercise Options. If any such loans are made, the requirements of applicable
Federal and State law regarding such loans shall be met.

SECTION 9.  ADJUSTMENTS

         Upon the occurrence of any of the following events, a Participant's
rights with respect to Awards granted to him or her hereunder shall be adjusted
as hereinafter provided, unless otherwise specifically provided in the written
agreement between the Participant and the Company.

         (a) Stock Dividends and Stock Splits. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of Options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.

         (b) Consolidation or Mergers. If the Company is to be consolidated with
or acquired by another entity in a merger, sale of all or substantially all of
the Company's assets or otherwise (an "Acquisition"), the Committee or the board
of directors of any entity assuming the obligations of the Company hereunder
shall, as to outstanding Awards, make appropriate provision for the continuation
of such Awards by substituting on an equitable basis for the shares then subject
to such Awards the consideration payable with respect to the outstanding shares
of Common Stock in connection with the Acquisition and by adjusting on an
equitable basis the exercise price of such Awards to reflect such Acquisition.

         (c) Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company (other than an Acquisition)
pursuant to which securities of the Company or of another corporation are issued
with respect to the outstanding shares of Common Stock, a Participant upon
exercising rights under an Award shall be entitled to receive what he would have
received if he or she had exercised prior to such recapitalization or
reorganization.

         (d) Modification of ISOs. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs (a), (b) or (c) of this Section with
respect to Incentive Stock Options shall be made only after the Committee, after
consulting with counsel for the Company, determines whether such adjustments
would constitute a "modification" of such Incentive Stock Options (as that term
is defined in Section 424 of the Code) or would cause any adverse tax
consequences for the holders of such Incentive Stock Options. If the Committee
determines that such adjustments made with respect to Incentive Stock Options
would constitute a modification of such Incentive Stock Options, it may refrain
from making such adjustments.

                                      -7-
<PAGE>   8
         (e) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action or at such other
time and subject to such other conditions as shall be determined by the
Committee.

         (f) Issuances of Securities. 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
subject to Options. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company.

         (g) Fractional Shares. No fractional shares shall be issued under the
Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.

         (h) Adjustments. Upon the happening of any of the events described in
subparagraphs (a), (b) or (c) of this Section, the class and aggregate number of
shares set forth in Section 4 hereof that are subject to Awards which previously
have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Committee shall determine the specific adjustments to be made under this
Section 9 and subject to Section 5, its determination shall be conclusive.

SECTION 10.  FAIR MARKET VALUE

         (a) If the Common Stock is then traded on any national securities
exchange or automated quotation system which has sale price reporting, the Fair
Market Value of the Common Stock shall be the closing sales price, if any, on
such exchange or system on the date as of which Fair Market Value is being
determined or, if none, shall be determined by taking the closing sales price on
the nearest date before that date in accordance with applicable regulations
under the Code.

         (b) If the Common Stock is then traded on an exchange or system which
does not have sale price reporting, the Fair Market Value of the Common Stock
shall be the mean between the average of the "Bid" and the average of the "Ask"
prices, if any, as reported for the date as of which Fair Market Value is being
determined, or, if none, shall be determined by taking the average of the means
between the highest and lowest sales prices on the nearest date before and the
nearest date after such date in accordance with applicable regulations under the
Code.

         (c) With respect to Common Stock if it is not publicly traded and with
respect to any other property, the Fair Market Value of such property shall be
determined in good faith by the Committee or in the manner otherwise provided by
the Committee from time to time.

SECTION 11.  MISCELLANEOUS

                                      -8-
<PAGE>   9
         (a) No Right To Employment. No person shall have any claim or right to
be granted an Award, and the grant of an Award shall not be construed as giving
a Participant the right to continued employment or affiliation with the Company.
The Company expressly reserves the right at any time to dismiss a Participant
free from any liability or claim under the Plan, except as expressly provided in
the applicable Award.

         (b) No Rights Other Than Those Expressly Created. No person eligible to
receive Awards under this Plan shall have any claim or right to be granted an
Award hereunder. Neither this Plan nor any action taken hereunder shall be
construed as (i) giving any Award holder any right to continue to be affiliated
with the Company, (ii) giving any Award holder any equity or interest of any
kind in any assets of the Company, or (iii) creating a trust of any kind or a
fiduciary relationship of any kind between the Company and any such person. As
to any claim for any unpaid amounts under this Plan, any person having a claim
for payments shall be an unsecured creditor. No Award holder shall have any of
the rights of a stockholder with respect to shares of Stock covered by an Award
until such time as the Stock has been issued.

         (c) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the State of Delaware.

         (d) Effective Date of Plan. The effective date of this Plan shall be
the date of its adoption by the Board. If the Plan is subject to the approval of
the stockholders under paragraph (e) below, upon such approval it shall be
effective as of the date of its adoption by the Board. The Committee may grant
Awards under the Plan prior to any such required stockholder approval, and any
such Awards which are of a type that require stockholder approval shall become
effective as of the date of grant upon receipt of such approval.

         (e) Stockholder Approval. The adoption of this Plan, or any amendment
hereto, shall be subject to approval by stockholders only to the extent required
by (i) the Code, (ii) the rules under Section 16 of the Exchange Act, (iii)
rules of any stock exchange or over-the-counter stock market, or (iv) as
otherwise required by law. Any such approval shall be obtained within the time
required by such law or rule. Any stockholder approval of this Plan or any
amendment so required shall mean the affirmative vote of at least a majority of
the shares of capital stock present and entitled to vote at a duly held meeting
of stockholders, unless a greater vote is required by state corporation law or
the law or rule requiring stockholder approval, in which case such greater
requirement shall apply.

         (f) Amendment of Plan. The Board may at any time, and from time to
time, amend, suspend or terminate this Plan in whole or in part; provided,
however, that the Board may not modify the Plan in a manner requiring the
approval of stockholders under paragraph (e) above unless such approval is
obtained to the extent required.

         (g) Term of Plan. This Plan shall terminate ten years from the date of
adoption by the Board, and no Award shall be granted under this Plan thereafter,
but such termination shall not affect the validity of Awards granted prior to
the date of termination.

                                      -9-

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