Document:

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                                                                     Exhibit 4.1
               AMENDMENT TO AMENDED AND RESTATED RIGHTS AGREEMENT
                BETWEEN ACUSON CORPORATION AND BANKBOSTON, N.A.

     This Amendment To Amended and Restated Rights Agreement (the "Amendment")
is made this 26th day of September, 2000, by and between Acuson Corporation, a
Delaware corporation (the "Company"), and BankBoston, N.A., a national banking
association (the "Rights Agent").

     WHEREAS, the Company is entering into an Agreement and Plan of Merger (as
the same may be amended from time to time, the "Merger Agreement"), among the
Company, Siemens Corporation, a Delaware corporation ("Parent"), and Sigma
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Subsidiary"), pursuant to which (i) Subsidiary will commence a tender
offer within the meaning of the Securities Exchange Act of 1934, as amended, for
all of the outstanding common stock, $0.001 par value per share, of the Company
and (ii) if the tender offer is consummated, Subsidiary will merge with and into
the Company, and the Company will survive as a wholly owned subsidiary of
Parent;

     WHEREAS, the Company and the Rights Agent are parties to that certain
Rights Agreement, dated as of June 8, 1998 as amended and restated by that
certain Amended and Restated Rights Agreement, dated as of November 5, 1998 (the
"Rights Agreement");

     WHEREAS, the Company desires to amend the Rights Agreement in connection
with the execution and delivery of the Merger Agreement; and

     WHEREAS, the Board of Directors of the Company has approved this Amendment
and authorized its appropriate officers to execute and deliver the same to the
Rights Agent.

     NOW, THEREFORE, in accordance with the procedures for amendment of the
Rights Agreement set forth in Section 26 thereof, and in consideration of the
foregoing and the mutual agreements herein set forth, the parties hereby agree
as follows:

1.  Capitalized terms that are not otherwise defined herein shall have the
    meanings ascribed to them in the rights agreement.

2.  The definition of "Acquiring Person" set forth in Section 1(a) of the Rights
    Agreement is amended by adding the following sentence to the end of that
    section:

          Notwithstanding the foregoing, no Person shall be or become an
     Acquiring Person by reason of (i) the execution and delivery of the
     Agreement and Plan of Merger, dated as of September 26, 2000, among Siemens
     Corporation, a Delaware corporation ("Parent"), Sigma Acquisition Corp., a
     Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub")
     and the Company (the "Merger Agreement") or the execution of any amendment
     thereto, (ii) the commencement by Merger Sub of a tender offer within the
     meaning of the Exchange Act for all of the outstanding Company Common Stock
     pursuant to the Merger Agreement (the "Tender Offer"), (iii) the merger of
     Merger Sub with and into the Company, or (iv) the consummation of any other
     transaction contemplated by the Merger Agreement, as it may be amended from
     time to time.
<PAGE>

3.  The definition of "Stock Acquisition Date" in Section l(u) of the Rights
    Agreement is hereby amended by adding the following sentence to the end of
    that section:

          Notwithstanding anything else set forth in this Agreement, a Stock
     Acquisition Date shall not be deemed to have occurred by reason of (i) the
     execution and delivery or amendment of the Merger Agreement, (ii) the
     commencement or consummation of the Tender Offer, (iii) the merger of
     Merger Sub with and into the Company, or (iv) the consummation of any other
     transaction contemplated by the Merger Agreement.

4.  Section 3(a) of the Rights Agreement is hereby amended by adding the
    following sentence to the end of that section:

          Notwithstanding anything else set forth in this Agreement, no
     Distribution Date shall be deemed to have occurred by reason of (i) the
     execution and delivery or amendment of the Merger Agreement, (ii) the
     commencement or consummation of the Tender Offer, (iii) the merger of
     Merger Sub with and into the Company, or (iv) the consummation of any other
     transaction contemplated by the Merger Agreement.

5.  Section 11(a)(ii) is hereby amended by adding the following sentence to the
    end of that section:

          Notwithstanding anything else set forth in this Agreement, no event
     requiring an adjustment under this Section 11(a)(ii) shall be deemed to
     have occurred by reason of (i) the execution and delivery or amendment of
     the Merger Agreement, (ii) the commencement or consummation of the Tender
     Offer, (iii) the merger of Merger Sub with and into the Company, or (iv)
     the consummation of any other transaction contemplated by the Merger
     Agreement.

6.  Section 11(n)(i) of the Rights Agreement is hereby amended to read as
    follows:

          (i) consolidate with any other Person (other than (y) a wholly owned
     Subsidiary of the Company in a transaction which complies with Section
     11(o) hereof or (z) Merger Sub pursuant to the Merger Agreement),

7.  Section 11(n)(ii) of the Rights Agreement is hereby amended to read as
    follows:

          merge with or into any other Person (other than (y) a wholly owned
     Subsidiary of the Company in a transaction which complies with Section
     11(o) hereof or (z) Merger Sub pursuant to the Merger Agreement), or

8.  Clause "(y)" of Section 13(a) is hereby amended to read as follows:

     (y) any Person (other than (i) a wholly owned Subsidiary of the Company in
     a transaction which complies with Section 11(o) hereof or (ii) Merger Sub
     pursuant to the Merger Agreement) shall consolidate with, or merge with or
     into, the Company, and the Company shall be the surviving corporation of
     such consolidation or merger and, in connection with such consolidation or
     merger, all or part of the outstanding shares of Company Common Stock shall
     be changed into or exchanged for stock or other securities of the Company
     or any other Person or cash or any other property, or

9.  The first phrase of Section 13(c) of the Rights Agreement is hereby amended
    to read as follows:
<PAGE>

          The Company shall not consummate any such consolidation, merger (other
     than the merger of Merger Sub with and into the Company), sale or transfer
     unless the Principal Party shall have a sufficient number of authorized
     shares of its Common Stock that have not been issued or reserved for
     issuance to permit the exercise in full of the Rights in accordance with
     this Section 13, and unless prior thereto the Company and such Principal
     Party and each other Person who may become a Principal Party as a result of
     such consolidation, merger, sale or transfer shall have executed and
     delivered to the Rights Agent a supplemental agreement providing for the
     terms set forth in paragraphs (a) and (b) of this Section 13 and further
     providing that, as soon as practicable after the date of any consolidation,
     merger, sale or transfer of assets mentioned in this paragraph (a) of this
     Section 13, the Principal Party at its own expense will:  ...

The remaining portion of Section 13(c) shall be unchanged and shall remain in
full force and effect.

10.  Section 13(f) of the Rights Agreement is hereby amended to read as follows:

          (f) Notwithstanding anything contained herein to the contrary, in the
     event of the closing of any merger or other acquisition transaction
     involving the Company (including the consummation of the Tender Offer
     pursuant to the Merger Agreement) pursuant to a merger or other acquisition
     agreement between the Company and any Person (or one or more of such
     Person's Affiliates or Associates) which agreement has been approved by the
     Board of Directors prior to any Person becoming an Acquiring Person, this
     Agreement and the rights of holders of Rights hereunder shall be terminated
     in accordance with Section 7(a) hereof.

11.  The Rights Agreement, as amended by this Amendment, shall remain in full
     force and effect in accordance with its terms.

12.  All the covenants and provisions of this Amendment by or for the benefit of
     the Company or the Rights Agent shall bind and inure to the benefit of
     their respective successors and assigns hereunder.

13.  Nothing in this Amendment shall be construed to give to any person or
     corporation other than the Company, the Rights Agent and the registered
     holders of the Right Certificates (and, prior to the Distribution Date, the
     Company Common Stock) any legal or equitable right, remedy or claim under
     this Amendment; but this Amendment shall be for the sole and exclusive
     benefit of the Company, the Rights Agent and the registered holders of the
     Right Certificates (and, prior to the Distribution Date, the Company Common
     Stock).

14.  If any term, provision, covenant or restriction of this Amendment is held
     by a court of competent jurisdiction or other authority to be invalid, void
     or unenforceable, the remainder of the terms, provisions, covenants and
     restrictions of this Amendment shall remain in full force and effect and
     shall in no way be affected, impaired or invalidated.

15.  This Amendment shall be deemed to be a contract made under the laws of the
     State of Delaware and for all purposes shall be governed by and construed
     in accordance with the laws of such State applicable to contracts to be
     made and performed entirely within such State.

16.  This Amendment may be executed in any number of counterparts and each of
     such counterparts shall for all purposes be deemed to be an original, and
     all such counterparts shall together constitute but one and the same
     instrument.
<PAGE>

17.  The Company hereby certifies to the Rights Agent that this Amendment is in
     compliance with Section 26 of the Rights Agreement. In Witness Whereof, the
     parties herein have caused this Amendment to be duly executed and attested,
     all as of the date and year first above written.

                                    Acuson Corporation

                                    By: /s/ Samuel H. Maslak
                                        --------------------
                                         Name:  Samuel H. Maslak
                                         Title: Chairman of the Board and
                                                Chief Executive Officer

Attest:/s/ Charles H. Dearborn
       -----------------------
       Name:  Charles H. Dearborn
       Title: Secretary

                                    Fleet National Bank

                                    By: /s/ M. Prentice
                                        ---------------
                                         Name:  M. Prentice
                                         Title: Managing Director
Attest:/s/ Neil Nolan
       --------------
       Name:  Neil Nolan
       Title: Account Manager<PAGE>

                                                                    Exhibit 10.5

                                  PALM, INC.

                             AMENDED AND RESTATED
                           1999 DIRECTOR OPTION PLAN

                       (September 13, 2000 Restatement)

     1.   Purposes of the Plan.  The purposes of this Amended and Restated 1999
          --------------------
Director Option Plan are to attract and retain the best available personnel for
service as Outside Directors (as defined herein) of the Company, to provide
additional incentive to the Outside Directors of the Company to serve as
Directors, and to encourage their continued service on the Board.  The Plan
became effective upon the IPO.  This amended and restated Plan is effective as
of September 13, 2000.

          All options granted hereunder shall be nonstatutory stock options.

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

          (a)  "Board" means the Board of Directors of the Company.
                -----

          (b)  "Change of Control" means the occurrence of any of the following
                -----------------
events:

                (i)   Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the total voting power
represented by the Company's then outstanding voting securities who is not
already such as of the Effective Date; or

                (ii)  The consummation of the sale or disposition by the Company
     of all or substantially all the Company's assets; or

                (iii) The consummation of a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining out-standing or by
being converted into voting securities of the surviving entity or its parent) at
least fifty percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation; or

                (iv)  A change in the composition of the Board occurring within
a two-year period, as a result of which fewer than a majority of the directors
are Incumbent Directors. "Incumbent Directors" shall mean directors who either
(A) are directors of the Company as of the Effective Date, or (B) are elected,
or nominated for election, to the Board with the affirmative votes of at least a
majority of those directors whose election or nomination was not in connection
with any
<PAGE>

transaction described in subsections (i), (ii), or (iii) above, or in connection
with an actual or threatened proxy contest relating to the election of directors
to the Company.

     Notwithstanding the foregoing, in no event shall either or both of the
following events constitute a Change of Control: (i) the initial public offering
of the Company's securities pursuant to a registration statement filed under
Section 12 of the Exchange Act or (ii) the spin-off of the Company from 3Com
pursuant to one or more transactions in which 3Com distributes eighty percent
(80%) or more of its securities ownership of the Company to the shareholders of
3Com.

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

          (d)  "Common Stock" means the common stock of the Company.
                ------------

          (e)  "Company" means Palm, Inc., a Delaware corporation.
                -------

          (f)  "Director" means a member of the Board.
                --------

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

          (h)  "Effective Date" means the effective date of this Plan as
                --------------
determined in accordance with Section 6.

          (i)  "Employee" means any person, including officers and Directors,
                --------
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.

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

          (k)  "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 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 Board deems reliable;

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

                                      -2-
<PAGE>

               (iv)  For purposes of Option grants made on the effective date of
the Company's initial public offering of Common Stock (the "IPO"), the Fair
Market Value shall be the initial price to the public as set forth in the final
prospectus included with the registration on Form S-1 filed with the Securities
and Exchange Commission for such offering.

          (l)  "Option" means a stock option granted pursuant to the Plan.
                ------

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

          (n)  "Optionee" means a Director who holds an Option.
                --------

          (o)  "Outside Director" means a Director who is not an Employee.
                ----------------

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

          (q)  "Plan" means this Amended and Restated 1999 Director Option Plan.
                ----

          (r)  "Share" means a share of the Common Stock, as adjusted in
                -----
accordance with Section 10 of the Plan.

          (s)  "Subsidiary" means a "subsidiary corporation," whether now or
                ----------
hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of
1986.

          (t)  "3Com" means 3Com Corporation, a Delaware corporation.
                ----

     3.   Stock Subject to the Plan. Subject to the provisions of Section 10 of
          -------------------------
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 500,000 Shares, plus an annual increase to be added on the
first day of the Company's fiscal year, beginning in 2001, equal to 500,000
Shares or a lesser amount determined by the Board (the "Pool"). The Shares may
be authorized, but unissued, or reacquired Common Stock.

          If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated).  Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.

     4.   Administration and Grants of Options under the Plan.
          ---------------------------------------------------

          (a)  Procedure for Grants. All grants of Options to Outside Directors
               --------------------
under this Plan shall be automatic and nondiscretionary and shall be made
strictly in accordance with the following provisions:

               (i)   No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options.

                                      -3-
<PAGE>

               (ii)  Each Outside Director shall be automatically granted an
Option to purchase 40,000 Shares (the "First Option") on the later of (A)
September 13, 2000 or (B) the date on which such person first becomes an Outside
Director, whether through election by the shareholders of the Company or
appointment by the Board to fill a vacancy; provided, however, that any Director
who received a First Option on or after the Effective Date and before
September 13, 2000 shall not be eligible to receive another First Option.

               (iii) Each Outside Director shall be automatically granted an
Option to purchase 15,000 Shares (a "Subsequent Option") on the date of each
annual stockholder meeting, subject to the following. An Outside Director shall
receive a Subsequent Option only if he or she (A) is an Outside Director on the
date of the annual stockholder meeting, (B) is expected to continue in service
as an Outside Director after the meeting date, and (C) has served as an Outside
Director for at least six (6) months preceding the meeting date.

               (iv)  The terms of a First Option granted hereunder shall be as
follows:

                     (A)  the term of the First Option shall be ten (10) years.

                     (B)  the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.

                     (C)  the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the First Option.

                     (D)  subject to Section 10 hereof, the First Option shall
vest and become exercisable in three (3) successive equal annual installments on
each of the first three (3) anniversaries of its date of grant. On any such
date, shares actually will vest and become exercisable only if the Optionee
continues to serve as a Director on such date. Notwithstanding the foregoing, a
First Option granted before September 13, 2000 shall vest and become exercisable
in three (3) successive equal annual installments on each of the first three (3)
anniversaries of such Director's date of commencement of service with the
Company. On any such date, shares actually will vest and become exercisable only
if the Optionee continues to serve as a Director on such date.

               (v)   The terms of a Subsequent Option granted hereunder shall be
as follows:

                     (A)  the term of the Subsequent Option shall be ten (10)
years.

                     (B)  the Subsequent Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.

                     (C)  the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Subsequent Option.

                     (D)  subject to Section 10 hereof, the Subsequent Option
shall vest and become exercisable in three (3) successive equal annual
installments on each of the first three (3)

                                      -4-
<PAGE>

anniversaries of its date of grant. On any such date, shares actually will vest
and become exercisable only if the Optionee continues to serve as a Director on
such date. Notwithstanding the foregoing, a Subsequent Option granted before
September 13, 2000 shall fully vest and become fully exercisable on the first
anniversary of its date of grant, but only if the Optionee remains a Director
through such date.

               (vi)  In the event that any Option granted under the Plan would
cause the number of Shares subject to outstanding Options plus the number of
Shares previously purchased under Options to exceed the Pool, then the remaining
Shares available for Option grant shall be granted under Options to the Outside
Directors on a pro rata basis. No further grants shall be made until such time,
if any, as additional Shares become available for grant under the Plan through
action of the Board or the shareholders to increase the number of Shares which
may be issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.

     5.   Eligibility. Options may be granted only to Outside Directors. All
          -----------
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.

          The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate the Director's relationship with the Company at any time.

     6.   Term of Plan. The Plan became effective upon the IPO. It shall
          ------------
continue in effect for a term of ten (10) years from the IPO unless sooner
terminated under Section 11 of the Plan. This amended and restated Plan is
effective as of September 13, 2000.

     7.  Form of Consideration. The consideration to be paid for the Shares to
         ---------------------
be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of
Shares acquired upon exercise of an option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (y) 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, (iv) consideration received
by the Company under a cashless exercise program implemented by the Company in
connection with the Plan, or (v) any combination of the foregoing methods of
payment.

     8.   Exercise of Option.
          ------------------

          (a)  Procedure for Exercise; Rights as a Shareholder. Any Option
               -----------------------------------------------
granted hereunder shall be exercisable at such times as are set forth in Section
4 hereof; provided, however, that no Options shall be exercisable until
shareholder approval of the Plan in accordance with Section 16 hereof has been
obtained.

               An Option may not be exercised for a fraction of a Share.

               An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person

                                      -5-
<PAGE>

entitled to exercise the Option and full payment for the Shares with respect to
which the Option is exercised has been received by the Company. Full payment may
consist of any consideration and method of payment allowable under Section 7 of
the Plan. Until the issuance (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to vote or receive dividends
or any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. A share certificate for the
number of Shares so acquired shall be issued to the Optionee as soon as
practicable after exercise of the Option. No adjustment shall be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 10 of the Plan.

               Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be 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 Continuous Status as a Director. Subject to
               ----------------------------------------------
Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or Disability), the Optionee may exercise
his or her Option, but only within three (3) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of such termination, and to the extent that the
Optionee does not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate.

          (c)  Disability of Optionee. In the event Optionee's status as a
               ----------------------
Director terminates as a result of Disability, the Optionee may exercise his or
her Option, but only within twelve (12) months following the date of such
termination, and only to the extent that the Optionee was entitled to exercise
it on the date of such termination (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to
exercise an Option on the date of termination, or if he or she does not exercise
such Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.

          (d)  Death of Optionee. In the event of an Optionee's death, each of
               -----------------
the Optionee's outstanding Options shall accelerate and become immediately
vested and exercisable with respect to one hundred percent (100%) of the Shares
then subject to each such Option. Each such Option may be exercised by the
Optionee's designated beneficiary, provided such beneficiary has been designated
prior to Optionee's death in a form acceptable by the Board. If no such
beneficiary has been designated by the Optionee, then each such Option may be
exercised by the personal representative of the Optionee's estate or by the
person or persons to whom the Option is transferred pursuant to the Optionee's
will or in accordance with the laws of descent and distribution. The Option may
be exercised in whole or in part by the Optionee's designated beneficiary,
estate or the person or persons who acquire the right to exercise the Option,
but only within twelve (12) months following the date of death (but in no event
later than the expiration of its ten (10) year term). To the extent the Option
is not exercised within the time specified herein, the Option shall terminate.

                                      -6-
<PAGE>

     9.   Non-Transferability of Options.  The 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, only by the Optionee.

     10.  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 which have been authorized for
issuance under the Plan, including Shares as to which no Options have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option, the number of Shares that may be added annually to the Shares
reserved under the Plan (pursuant to Section 3(i)), the number of Shares covered
by each outstanding Option, as well as the price per Share covered by each such
outstanding Option, and the number of Shares issuable pursuant to the automatic
grant provisions of Section 4 hereof shall be proportionately adjusted for any
increase or decrease in the number of issued Shares resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
Shares 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." 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 an Option.

          (b)  Dissolution or Liquidation. In the event of the proposed
               --------------------------
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall 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, outstanding Options may be assumed or equivalent options may be
substituted by the successor corporation or a Parent or Subsidiary thereof (the
"Successor Corporation"). If an Option is assumed or substituted for, the Option
or equivalent option shall continue to be exercisable as provided in Section 4
hereof for so long as the Optionee serves as a Director or a director of the
Successor Corporation. Thereafter, the Option or option shall remain exercisable
in accordance with Sections 8(b) through (d) above. If the Successor Corporation
does not assume an outstanding Option or substitute for it an equivalent option,
the Option shall become fully vested and exercisable, including as to Shares for
which it would not otherwise be exercisable. In such event the Board shall
notify the Optionee that the Option shall be fully exercisable for a period of
thirty (30) days from the date of such notice, and upon the expiration of such
period the Option shall terminate.

               For the purposes of this Section 10(c), an Option shall be
considered assumed if, following the merger or sale of assets, the Option
confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option 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

                                      -7-
<PAGE>

majority of the outstanding Shares). 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 subject to the Option, 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.

               Notwithstanding the foregoing, in the event of a Change of
Control, each outstanding Option shall accelerate and become vested and
exercisable immediately prior to such Change of Control with respect to one
hundred percent (100%) of the Shares then subject to each such Option. Each such
outstanding Option shall terminate immediately following the Change of Control.

     11.  Amendment and Termination of the Plan.
          -------------------------------------

          (a)  Amendment and Termination. The Board may at any time amend,
               -------------------------
alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with any applicable
law, regulation or stock exchange rule, the Company shall obtain shareholder
approval of any Plan amendment in such a manner and to such a degree as
required.

          (b)  Effect of Amendment or Termination. Any such amendment or
               ----------------------------------
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.

     12.  Time of Granting Options.  The date of grant of an Option shall, for
          ------------------------
all purposes, be the date determined in accordance with Section 4 hereof.

     13.  Conditions Upon Issuance of Shares.  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 pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

          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 by any of
the aforementioned relevant provisions of law.

          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

                                      -8-
<PAGE>

the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

     14.  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.

     15.  Option Agreement. Options shall be evidenced by written option
          ----------------
agreements in such form as the Board shall approve.

     16.  Shareholder Approval.  The Plan shall be subject to approval by the
          --------------------
shareholders of the Company within twelve (12) months after the date the Plan is
adopted.  Such shareholder approval shall be obtained in the degree and manner
required under applicable state and federal law and any stock exchange rules.

                                      -9-

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