Document:

ex4-1

 

Exhibit 4.1

CONSULTING CONTRACT

This Agreement, dated as of December 14, 2001, is between Cray Inc., a
Washington corporation located at 411 First Avenue South, Suite 600, Seattle,
WA, U.S.A. 98104-2860 (“Cray”), and Alan Kay, a consultant located at 1209
Grand Central Avenue, Glendale, CA 91291 (“Alan Kay”).

WHEREAS, Cray has requested Alan Kay to provide certain computer software
services regarding the development of high level programming environments for
high performance computers and Alan Kay is willing to provide such services.

NOW THEREFORE, in consideration of the mutual promises contained in this
Agreement, the parties agree as follows:

1. Services.

1.1 Scope of Work. Alan Kay shall furnish the necessary facilities, equipment
and services for performance of Alan Kay’s performance as described in Exhibit
A, Statement of Work (the “Phase I”). Cray shall provide such assistance as
Alan Kay and Cray agree. As this Agreement contemplates that it shall cover a
number of separate and/or related projects, the parties may modify, supplement
or otherwise add additional services by agreeing to additional Scopes of Work.

1.2 Timing. Alan Kay use its best efforts to complete the Phase I as mutually
agreed and set forth on Exhibit A, and to complete future projects as may be
set forth in the applicable Statement of Work.

1.3 Completion. Phase I will be deemed completed upon mutual agreement of the
parties. Upon completion, Alan Kay shall deliver such deliverables as set out
in the Phase I Statement of Work. Future Statements of Work shall define the
applicable deliverables, if any.

2. Fee. For Phase I, Cray shall deliver to Alan Kay 75,000 shares
of its Common Stock, such delivery to be pursuant to Cray’s Registration
Statement on Form S-3 No. 333-46092, and completed as soon as practicable
following execution of this Agreement. Cray shall make such filings and take
such actions so that such shares are freely tradeable on the public securities
markets

3. Project Management. To facilitate communications and effective management
of the Phase I, the parties have appointed the following individuals as Project
Managers:

		
	
	
	
	
	Cray:	 Burton Smith
	
	
	
	

	Consultant:	Alan Kay

These individuals shall have authority to agree to changes in the Scope of Work
and schedule and matters pertaining to the Phase I and to add additional Scopes
of Work as may be appropriate.

4. Proprietary Information.

4.1 Confidentiality. Both parties agree to maintain all Proprietary
Information in strict confidence, not to make use thereof other than for the
performance of this Agreement, to release it only to employees who have a
reasonable need to know the same, and not to release or disclose it to any
third parties, without the prior written

 

 

consent of the disclosing party, provided that any third parties to whom Proprietary Information is released
shall first have entered into a written confidentiality agreement, obligating
the third party to both Cray and Alan Kay and which contains substantially
equivalent confidentiality obligations of non-use and nondisclosure as the
provisions of this Section 4.

4.2 Ownership. All Proprietary Information and any copies thereof shall remain
the property of the disclosing party, and no license or other rights are
granted or implied hereby. The receiving party shall, according to the
disclosing party’s request, return to the disclosing party or destroy the
original and all copies of tangible Proprietary information.

4.3 Obligations. The obligation under this Section 4 shall survive the
termination or expiration of this Agreement for five (5) years from the date of
termination or expiration.

4.4 Equitable Remedies. The parties acknowledge and agree that due to the
unique nature of the Proprietary Information, there can be no adequate remedy
at law for any breach of the obligations hereunder, that any such breach may
result in irreparable harm to the non-breaching party, and therefore, upon any
such breach or any threat thereof, the non-breaching party shall be entitled to
appropriate equitable relief in addition to whatever remedies it might have at
law.

4.5 Definition. “Proprietary Information” shall mean any information that is
controlled by a party and identified as proprietary and confidential and that
is disclosed by a party to the other under this Agreement. Written Proprietary
Information shall be clearly marked or labeled “PROPRIETARY” or “CONFIDENTIAL.”
All oral disclosures of Proprietary information shall be identified as such
upon disclosure and confirmed, in writing, by the disclosing party within
thirty (30) days of the disclosure. In case of disagreement to confidentiality
or the contents, the receiving party must make an objection thereto, in
writing, within ten (10) days of receipt of written disclosure or confirmation.
The term “Proprietary Information” shall not include any information that: (i)
is now or hereafter in the public domain or otherwise becomes available to the
public other than by breach of this Agreement by the receiving party; (ii) has
been rightfully in the receiving party’s possession prior to receipt from the
disclosing party; (iii) is rightfully received by the receiving party from a
third party; (iv) is independently developed by the receiving party, (v) is
authorized in writing by the disclosing party to be released or disclosed; (vi)
is furnished by the disclosing party to a third party without a duty of
confidentiality; or (vii) is disclosed under operation of law after the
receiving party notifies the disclosing party so that the disclosing party may
contest the disclosure or obtain a protective order for such disclosure.

Notwithstanding the foregoing, all Cray source codes to which Alan Kay has
access, compilers and other programs and tools, are “Proprietary Information”
of Cray within the meaning of this Section 4.

5. Ownership of Intellectual Property. During the performance of this
Agreement, Alan Kay directly or indirectly will generate the deliverables
pursuant to Exhibit A and may generate other ideas, inventions, improvements,
copyrightable materials, patentable concepts and other information of value
which is derived directly from Kay’s efforts under this Agreement (together,
the “Intellectual Property”). Alan Kay hereby grants to Cray a perpetual,
non-exclusive, fully paid, royalty free license to copy, use, install,
modify,distribute and sublicense the Intellectual Property, including

 

 

without limitation the inclusion of all or any part of the Intellectual Property in
products, software and services sold, licensed or provided by Cray to third
parties for compensation. To the extent that the Intellectual Property is open
source software that may be used without limitation on its inclusion in Cray
products, such as pursuant to a Squeak license, then to that extent that
license would satisfy the requirements of this section.

6. Termination. Either party may terminate this Agreement upon one month’s
prior written notice, provided that unless mutually agreed, Phase I may not be
terminated for the first three months following execution of this Agreement.
Either party may terminate this Agreement immediately upon the material default
of the other party of its obligations under this Agreement.

7. Miscellaneous.

7.1 Assignment and Delegations. The parties agree that this Agreement is not
assignable in whole or in part by either of them, nor may Alan Kay delegate any
of its responsibilities hereunder without the prior written consent of Cray.
This Agreement shall inure to the benefit of, and be enforceable by and be
binding upon, each party’s successors.

7.2 Legal Relationship. This Agreement shall not be interpreted or construed
as establishing anything other than an independent contractor relationship, and
no employee, partnership, joint venture or other arrangement shall be inferred
from this Agreement.

7.3 Notices. Any notices, consents or requests given hereunder shall be
sufficient if in writing or if personally delivered or if sent by registered or
certified mail, postage prepaid, return receipt requested, to the addresses
first set forth above. The parties may designate a different place for notice
in the manner described in this Section. Notices shall be effective as of the
date of personal delivery or, if mailed, five business days after the deposit
of the same in the mail.

7.4 Controlling Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Washington.

7.5 Entire Agreement; Separability. This Agreement reflects the entire
agreement and understanding of the parties, and its provisions may not be
amended or changed except by a writing signed by the party against whom enforcement of the
amendment or change is sought. No waiver of any breach shall constitute a
subsequent waiver of any subsequent breach, and if any provision of this
Agreement shall be deemed invalid, the remaining provisions shall remain
enforceable.

IN WITNESS WHEREOF, the parties hereby sign and deliver this Agreement as of
the date first above written.

	 	 	 	 	 
	CRAY INC.	 	
Consultant
	
	
	
	

	By	/s/	 	
By	/s/
	
         	
	 	 	

	 	Authorized Officer	 	 	Alan Kay
	Tel: 206-701-2000	 	
Tel: 818-332-3003
	Fax: 206-701-2500	 	
Fax: 818-244-9761

 

 

Exhibit A

STATEMENT OF WORK

Description of services that may be performed by Consultant:

Consultant will perform original research of object-oriented systems on various
supercomputer architectures with the intention to capture the software mind
share of super computer users worldwide.

Consultant will provide strategic overview and direction of major object
oriented environments.

Consultant will provide tactical insight into object oriented technology in use
today and contribute to the formulation of an object oriented technology
strategy for Cray Inc.

Consultant will mentor the culture in the industry and contribute to the
formulation of a sales strategy, identify opportunities for new business,
provide contacts and make introductions if appropriate.

The Spirit of the Initiative:

Computering is difficult... Supercomputering is super difficult.

Therefore, Cray is looking for visionary ideas about making complex systems
more approachable for software engineering.

Cray is taking the necessary steps to fully embrace, further its progress, and
take the lead by investigating state of the art object oriented systems and
their applicability to supercomputers.

More specifically, Cray is actively seeking to collaborate with object oriented
researchers worldwide and is currently involved in the teaming of some of the
most preeminent object oriented researchers to address the many issues that
make supercomputers difficult to use.

Cray intends to attract, employ, fund, support and in other various and
meaningful ways, forward the vision of making complex systems easier to use
through the use of object oriented methodology.

Original research will include, but is not limited to, the development of
systems, parallel programming languages and compilers, operating systems,
schedulers, runtime, middleware, libraries, integrated programming
environments, user application tools, and tools for parallel and distributed
computing systems.Exhibit 4.2

                         TCSI 2001 STOCK INCENTIVE PLAN

                                TCSI CORPORATION

                            2001 STOCK INCENTIVE PLAN

                    (Amended and Restated as of May 10, 2001)

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

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

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

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

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

          (d) "Award" means the grant of an Option, SAR, Dividend Equivalent
     Right, Restricted Stock, Performance Unit, Performance Share, or other
     right or benefit under the Plan.

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

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

          (g) "Change in Control" means the determination by the Board of
     Directors (as it is comprised immediately prior to either of the following
     transactions) in its absolute discretion that one of the following
     transactions has occurred and should be deemed to constitute a Change in
     Control:

               (i) the direct or indirect acquisition by any person or related
          group of persons (other than an acquisition from or by the Company or
          by a Company-sponsored employee benefit plan or by a person that
          directly or indirectly controls, is controlled by, or is under common
          control with, the Company) of beneficial ownership (within the meaning
          of Rule 13d-3 of the Exchange Act) of securities possessing more than
          fifty percent (50%) of the total combined voting power of the
          Company's outstanding securities pursuant to a tender or exchange
          offer made directly to the Company's

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<PAGE>

          stockholders which a majority of the Continuing Directors who are not
          Affiliates or Associates of the offeror do not recommend such
          stockholders accept, or

               (ii) a change in the composition of the Board over a period of
          twenty-four (24) months or less such that a majority of the Board
          members (rounded up to the next whole number) ceases, by reason of one
          or more contested elections for Board membership, to be comprised of
          individuals who are Continuing Directors.

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

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

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

          (k) "Company" means TCSI Corporation, a Nevada corporation.

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

          (m) "Continuing Directors" means members of the Board who either (i)
     have been Board members continuously for a period of at least twenty-four
     (24) months or (ii) have been Board members for less than twenty-four (24)
     months and were elected or nominated for election as Board members by at
     least a majority of the Board members described in clause (i) who were
     still in office at the time such election or nomination was approved by the
     Board.

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

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

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

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<PAGE>

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

               (iii) approval by the Company's shareholders of any plan or
          proposal for the complete liquidation or dissolution of the Company;

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

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

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

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

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

          (s) "Dividend Equivalent Right" means a right entitling the Grantee to
     compensation measured by dividends paid with respect to Common Stock.

          (t) "Employee" means any person, including an Officer or Director, who
     is an employee of the Company or any Related Entity. The payment of a
     director's fee by the Company or a Related Entity shall not be sufficient
     to constitute "employment" by the Company.

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

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

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<PAGE>

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

               (ii) In the absence of an established market for the Common Stock
          of the type described in (i), above, the Fair Market Value thereof
          shall be determined by the Administrator in good faith.

          (w) "Grantee" means an Employee, Director or Consultant who receives
     an Award pursuant to an Award Agreement under the Plan.

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

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

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

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

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

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

          (dd) "Performance Shares" means Shares or an Award denominated in
     Shares which may be earned in whole or in part upon attainment of
     performance criteria established by the Administrator.

          (ee) "Performance Units" means an Award which may be earned in whole
     or in part upon attainment of performance criteria established by the
     Administrator and which may be settled for cash, Shares or other securities
     or a combination of cash, Shares or other securities as established by the
     Administrator.

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

                                       4
<PAGE>

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

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

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

          (jj) "Retirement" means retirement from Continuous Service with the
     Company or a Related Entity on or after the age of sixty-five (65) years,
     unless the Administrator provides for a different retirement age in the
     Grantee's Award Agreement.

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

          (ll) "SAR" means a stock appreciation right entitling the Grantee to
     Shares or cash compensation, as established by the Administrator, measured
     by appreciation in the value of Common Stock.

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

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

     3. Stock Subject to the Plan.

          (a) Subject to the provisions of Section 10, below, the maximum
     aggregate number of Shares which may be issued pursuant to all Awards
     (including Incentive Stock Options) is 1,300,000 Shares. Notwithstanding
     the foregoing, subject to the provisions of Section 10, below, the maximum
     aggregate number of Shares which may be issued for all Awards of Restricted
     Stock is 500,000 Shares. The Shares to be issued pursuant to Awards may be
     authorized, but unissued, or reacquired Common Stock.

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

                                       5
<PAGE>

     4. Administration of the Plan.

          (a) Plan Administrator.

               (i) Administration with Respect to Directors and Officers. With
          respect to grants of Awards to Directors or Employees who are also
          Officers or Directors of the Company, the Plan shall be administered
          by (A) the Board or (B) a Committee designated by the Board, which
          Committee shall be constituted in such a manner as to satisfy the
          Applicable Laws and to permit such grants and related transactions
          under the Plan to be exempt from Section 16(b) of the Exchange Act in
          accordance with Rule 16b-3. Once appointed, such Committee shall
          continue to serve in its designated capacity until otherwise directed
          by the Board.

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

               (iii) Administration With Respect to Covered Employees.
          Notwithstanding the foregoing, grants of Awards to any Covered
          Employee intended to qualify as Performance-Based Compensation shall
          be made only by a Committee (or subcommittee of a Committee) which is
          comprised solely of two or more Directors eligible to serve on a
          committee making Awards qualifying as Performance-Based Compensation.
          In the case of such Awards granted to Covered Employees, references to
          the "Administrator" or to a "Committee" shall be deemed to be
          references to such Committee or subcommittee.

               (iv) Administration Errors. In the event an Award is granted in a
          manner inconsistent with the provisions of this subsection (a), such
          Award shall be presumptively valid as of its grant date to the extent
          permitted by the Applicable Laws.

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

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

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

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

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<PAGE>

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

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

               (vi) to amend the terms of any outstanding Award granted under
          the Plan, provided that any (A) amendment that would adversely affect
          the Grantee's rights under an outstanding Award shall not be made
          without the Grantee's written consent, (B) and the reduction of the
          exercise price of any option awarded under the plan shall be subject
          to stockholder approval;

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

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

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

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

     6. Terms and Conditions of Awards.

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

          (b) Designation of Award. Each Award shall be designated in the Award
     Agreement. In the case of an Option, the Option shall be designated as
     either an Incentive Stock Option or a Non-Qualified Stock Option. However,
     notwithstanding such designation, to the extent that the aggregate Fair
     Market Value of Shares subject to Options designated as Incentive Stock
     Options which become exercisable for the first time by a

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     Grantee during any calendar year (under all plans of the Company or any
     Parent or Subsidiary) exceeds $100,000, such excess Options, to the extent
     of the Shares covered thereby in excess of the foregoing limitation, shall
     be treated as Non-Qualified Stock Options. For this purpose, Incentive
     Stock Options shall be taken into account in the order in which they were
     granted, and the Fair Market Value of the Shares shall be determined as of
     the date the Option with respect to such Shares is granted.

          (c) Conditions of Award. Subject to the terms of the Plan, the
     Administrator shall determine the provisions, terms, and conditions of each
     Award including, but not limited to, the Award vesting schedule, repurchase
     provisions, rights of first refusal, forfeiture provisions, form of payment
     (cash, Shares, or other consideration) upon settlement of the Award,
     payment contingencies, and satisfaction of any performance criteria. The
     performance criteria established by the Administrator may be based on any
     one of, or combination of, increase in share price, earnings per share,
     total stockholder return, return on equity, return on assets, return on
     investment, net operating income, cash flow, revenue, economic value added,
     personal management objectives, or other measure of performance selected by
     the Administrator. Partial achievement of the specified criteria may result
     in a payment or vesting corresponding to the degree of achievement as
     specified in the Award Agreement.

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

          (e) Deferral of Award Payment. The Administrator may establish one or
     more programs under the Plan to permit selected Grantees the opportunity to
     elect to defer receipt of consideration upon exercise of an Award,
     satisfaction of performance criteria, or other event that absent the
     election would entitle the Grantee to payment or receipt of Shares or other
     consideration under an Award. The Administrator may establish the election
     procedures, the timing of such elections, the mechanisms for payments of,
     and accrual of interest or other earnings, if any, on amounts, Shares or
     other consideration so deferred, and such other terms, conditions, rules
     and procedures that the Administrator deems advisable for the
     administration of any such deferral program.

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

          (g) Individual Option and SAR Limit. The maximum number of Shares with
     respect to which Options and SARs may be granted to any Grantee in any
     fiscal year of the Company shall be 750,000 Shares. The foregoing
     limitation shall be adjusted proportionately in connection with any change
     in the Company's capitalization pursuant to Section 10, below. To the
     extent required by Section 162(m) of the Code or the regulations
     thereunder, in applying the foregoing limitation with respect to a Grantee,
     if any Option or SAR is canceled, the canceled Option or SAR shall continue
     to count against the maximum number of Shares with respect to which Options
     and SARs may be granted to the Grantee.

                                       8
<PAGE>

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

          (i) Transferability of Awards. Awards may not be sold, pledged,
     assigned, hypothecated, transferred, or disposed of in any manner other
     than by will or by the laws of descent or distribution and may be
     exercised, during the lifetime of the Grantee, only by the Grantee;
     provided, however, that the Grantee may designate a beneficiary of the
     Grantee's Award in the event of the Grantee's death on a beneficiary
     designation form provided by the Administrator.

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

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

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

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

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

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

               (ii) In the case of a Non-Qualified Stock Option, the per Share
          exercise price shall be not less than one hundred percent (100%) of
          the Fair Market Value per Share on the date of grant.

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

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

                                       9
<PAGE>

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

          (b) Consideration. Subject to Applicable Laws, the consideration to be
     paid for the Shares to be issued upon exercise or purchase of an Award
     including the method of payment, shall be determined by the Administrator
     (and, in the case of an Incentive Stock Option, shall be determined at the
     time of grant). In addition to any other types of consideration the
     Administrator may determine, the Administrator is authorized to accept as
     consideration for Shares issued under the Plan the following:

               (i)   cash;

               (ii)  check;

               (iii) delivery of Grantee's promissory note with such recourse,
          interest, security, and redemption provisions as the Administrator
          determines as appropriate, provided that the following terms and
          conditions shall apply:

                    (A) No promissory note shall exceed the sum of (I) the
               aggregate purchase price payable pursuant to the Award with
               respect to which the promissory note is made, plus (II) the
               amount of the reasonably estimated income taxes payable by the
               Grantee with respect to the Award. In no event may any such
               promissory note exceed the Fair Market Value, at the date of
               exercise or acquisition (determined without regard to the
               restrictions set forth in any Restricted Stock Award), of any
               such shares of Common Stock acquired upon such exercise or
               acquisition.

                    (B) No promissory note shall have an initial term exceeding
               five years; provided, however, that such promissory notes shall
               be renewable at the discretion of the Committee. Notwithstanding
               the foregoing, any such loan shall become immediately due and
               payable in full, at the option of the Company, upon termination
               of Continuous Service of the Grantee for any reason.

                    (C) Promissory notes may be satisfied by a Grantee in cash
               or, with the consent of the Committee, in whole or in part by the
               transfer of shares of Common Stock, the Fair Market Value of
               which on the date of such transfer is equal to the amount payable
               on the promissory note.

                    (D) Promissory notes made under the Plan shall be with full
               recourse against the Grantee to whom the loan is made and shall
               be secured by a pledge of shares with a Fair Market Value of not
               less than the principal amount of the promissory note at the time
               the loan is made. The Company shall retain physical possession of
               the stock certificates evidencing the shares so pledged together
               with a duly executed stock power for such shares. After partial
               repayment of the promissory note, pledged shares of Common Stock
               no longer required as security may be released pursuant to the
               terms of the Award to the Grantee;

               (iv) surrender of Shares or delivery of a properly executed form
          of attestation of ownership of Shares as the Administrator may require
          (including withholding

                                       10
<PAGE>

          of Shares otherwise deliverable upon exercise of the Award) which have
          a Fair Market Value on the date of surrender or attestation equal to
          the aggregate exercise price of the Shares as to which said Award
          shall be exercised (but only to the extent that such exercise of the
          Award would not result in an accounting compensation charge with
          respect to the Shares used to pay the exercise price unless otherwise
          determined by the Administrator);

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

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

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

     8. Exercise of Award.

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

               (i) Any Award granted hereunder shall be exercisable at such
          times and under such conditions as determined by the Administrator
          under the terms of the Plan and specified in the Award Agreement.

               (ii) An Award shall be deemed to be exercised when written notice
          of such exercise has been given to the Company in accordance with the
          terms of the Award by the person entitled to exercise the Award and
          full payment for the Shares with respect to which the Award is
          exercised, including, to the extent selected, use of the broker-dealer
          sale and remittance procedure to pay the purchase price as provided in
          Section 7(b)(v). Until the issuance (as evidenced by the appropriate
          entry on the books of the Company or of a duly authorized transfer
          agent of the Company) of the stock certificate evidencing such Shares,
          no right to vote or receive dividends or any other rights as a
          stockholder shall exist with respect to Shares subject to an Award,
          notwithstanding the exercise of an Option or other Award. The Company
          shall issue (or cause to be issued) such stock certificate promptly
          upon exercise of the Award. No adjustment will be made for a dividend
          or other right for which the record date is prior to the date the
          stock certificate is issued, except as provided in the Award Agreement
          or Section 10, below.

          (b) Exercise of Award Following Termination of Continuous Service.

                                       11
<PAGE>

               (i) An Award may not be exercised after the termination date of
          such Award set forth in the Award Agreement and may be exercised
          following the termination of a Grantee's Continuous Service only to
          the extent provided in the Award Agreement.

               (ii) Where the Award Agreement permits a Grantee to exercise an
          Award following the termination of the Grantee's Continuous Service
          for a specified period, the Award shall terminate to the extent not
          exercised on the last day of the specified period or the last day of
          the original term of the Award, whichever occurs first.

               (iii) Any Award designated as an Incentive Stock Option to the
          extent not exercised within the time permitted by law for the exercise
          of Incentive Stock Options following the termination of a Grantee's
          Continuous Service shall convert automatically to a Non-Qualified
          Stock Option and thereafter shall be exercisable as such to the extent
          exercisable by its terms for the period specified in the Award
          Agreement.

     9. Conditions Upon Issuance of Shares.

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

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

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

                                       12
<PAGE>

     11. Corporate Transactions/Changes in Control/Related Entity Dispositions.
Except as may be provided in an Award Agreement:

          (a) Except as provided otherwise in an individual Award Agreement, in
     the event of a Corporate Transaction each Award which is at the time
     outstanding under the Plan shall automatically become fully vested and
     exercisable and be released from any restrictions on transfer (other than
     transfer restrictions applicable to Options) and repurchase or forfeiture
     rights, immediately prior to the specified effective date of such Corporate
     Transaction, for all of the Shares at the time represented by such Award if
     the Award is not assumed by the successor corporation or the Parent thereof
     in connection with the Corporate Transaction. For the purposes of
     accelerating the vesting and the release of restrictions applicable to
     Awards pursuant to this subsection (but not for purposes of termination of
     such Awards), the Award shall be considered assumed if, in connection with
     the Corporate Transaction, the Award is replaced with a comparable Award
     with respect to shares of capital stock of the successor corporation or
     Parent thereof or is replaced with a cash incentive program of the
     successor corporation or Parent thereof which preserves the compensation
     element of such Award existing at the time of the Corporate Transaction and
     provides for subsequent payout in accordance with the same vesting schedule
     applicable to such Award. The determination of Award comparability above
     shall be made by the Administrator and its determination shall be final,
     binding and conclusive. Effective upon the consummation of the Corporate
     Transaction, all outstanding Awards under the Plan shall terminate.
     However, all such Awards shall not terminate if the Awards are, in
     connection with the Corporate Transaction, assumed by the successor
     corporation or Parent thereof.

          (b) In the event of a Change in Control (other than a Change in
     Control which also is a Corporate Transaction), each Award which is at the
     time outstanding under the Plan automatically shall become fully vested and
     exercisable and be released from any restrictions on transfer (other than
     transfer restrictions applicable to Options) and repurchase or forfeiture
     rights, immediately prior to the specified effective date of such Change in
     Control, for all of the Shares at the time represented by such Award.

          (c) Effective upon the consummation of a Related Entity Disposition,
     for purposes of the Plan and all Awards, the Continuous Service of each
     Grantee who is at the time engaged primarily in service to the Related
     Entity involved in such Related Entity Disposition shall be deemed to
     terminate and each Award of such Grantee which is at the time outstanding
     under the Plan automatically shall become fully vested and exercisable and
     be released from any restrictions on transfer (other than transfer
     restrictions applicable to Options) and repurchase or forfeiture rights for
     all of the Shares at the time represented by such Award and be exercisable
     in accordance with the terms of the Award Agreement evidencing such Award.
     However, such Continuous Service shall not be deemed to terminate if such
     Award is, in connection with the Related Entity Disposition, assumed by the
     successor entity or its Parent. In addition, such Continuous Service shall
     not be deemed to terminate and an outstanding Award under the Plan shall
     not so fully vest and be exercisable and released from such limitations if
     and to the extent: (i) such Award is, in connection with the Related Entity
     Disposition, either to be assumed by the successor entity or its parent or
     to be replaced with a comparable Award with respect to interests in the
     successor entity or its parent or (ii) such Award is to be replaced with a
     cash incentive program of the successor entity which preserves the
     compensation element of such Award

                                       13
<PAGE>

     existing at the time of the Related Entity Disposition and provides for
     subsequent payout in accordance with the same vesting schedule applicable
     to such Award. The determination of Award comparability above shall be made
     by the Administrator.

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

     12. Effective Date and Term of Plan. The Plan shall become effective upon
the earlier to occur of its adoption by the Board or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated. Subject to Section 17, below, and Applicable
Laws, Awards may be granted under the Plan upon its becoming effective.

     13. Amendment, Suspension or Termination of the Plan.

          (a) The Board may at any time amend, suspend or terminate the Plan
     provided that any amendment to section 4(b)vi shall be subject to
     stockholder approval. To the extent necessary to comply with Applicable
     Laws, the Company shall obtain stockholder approval of any Plan amendment
     in such a manner and to such a degree as required.

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

          (c) Any amendment, suspension or termination of the Plan (including
     termination of the Plan under Section 12, above) shall not affect Awards
     already granted, and such Awards shall remain in full force and effect as
     if the Plan had not been amended, suspended or terminated, unless mutually
     agreed otherwise between the Grantee and the Administrator, which agreement
     must be in writing and signed by the Grantee and the Company.

     14. Reservation of Shares.

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

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

     15. No Effect on Terms of Employment/Consulting Relationship. The Plan
shall not confer upon any Grantee any right with respect to the Grantee's
Continuous Service,

                                       14
<PAGE>

nor shall it interfere in any way with his or her right or the Company's right
to terminate the Grantee's Continuous Service at any time, with or without
cause.

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

     17. Stockholder Approval. The grant of Incentive Stock Options under the
Plan shall be subject to approval by the stockholders of the Company within
twelve (12) months before or after the date the Plan is adopted excluding
Incentive Stock Options issued in substitution for outstanding Incentive Stock
Options pursuant to Section 424(a) of the Code. Such stockholder approval shall
be obtained in the degree and manner required under Applicable Laws. The
Administrator may grant Incentive Stock Options under the Plan prior to approval
by the stockholders, but until such approval is obtained, no such Incentive
Stock Option shall be exercisable. In the event that stockholder approval is not
obtained within the twelve (12) month period provided above, all Incentive Stock
Options previously granted under the Plan shall be exercisable as Non-Qualified
Stock Options.

                                       15

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