Document:

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                                January 23, 1998

PRIVATE AND CONFIDENTIAL

Mr. James N. Poor
66 Amble Road
Chelmsford, MA 01824

Dear Jim:

      I am pleased to offer you a position with Manufacturers' Services Limited
(the "Company"), on the following terms and conditions:

      1. Your title will be Vice President, Human Resources, and you will report
to me. You will be based at the Company's headquarters office in Concord,
Massachusetts, but your responsibilities will require some travel.

      2. Your compensation will consist of the following:

            (a)   Base Salary at the bi-weekly rate of $5,000.00 payable in
                  accordance with the Company's payroll practices and
                  procedures.

            (b)   The opportunity to earn a Target Incentive bonus in an amount
                  up to 40% of your Base Salary and a Super Achievement
                  Incentive bonus with no cap in accordance with the Company's
                  1998 Cash Incentive Compensation Plan. The amount of Target
                  Incentive and Super Achievement Incentive you earn will be
                  based on the Company achieving or exceeding a specified
                  profitability target and on your accomplishing Personal
                  Performance Goals, which will be established. All cash
                  incentive compensation is paid annually.

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      3. You will be granted options to purchase 65,000 shares of the Company's
stock pursuant to the Company's Non-Qualified Stock Option Plan, a copy of which
will be provided to you with your Award Agreement for such options.

      4. In addition to your compensation set forth above, you will be eligible
to receive health and life insurance and other employee benefits in accordance
with the terms and conditions of the respective Company benefit plans and other
plans and policies in force and effect, which may be changed, expanded or
diminished from time to time, during the course of your employment by the
Company. You will be entitled to twenty days of vacation each year consistent
with the Company's vacation policy. A summary of the Company's 1998 benefits is
enclosed.

      5. As a condition of your employment by the Company, you agree to sign the
Company's Agreement with Respect to Confidential Information and Inventions
(Confidentiality Agreement), which is also enclosed.

      6. Under the Immigration Reform and Control Act of 1986, employers are
required to verify employment eligibility of all new employees. Upon joining the
Company, you will be asked to complete INS form I-9 (employment eligibility
verification) and to provide for our review either (1) United States passport,
certificate of Naturalization or Citizenship, or Alien Registration card with
employment authorization and photograph, or, (2) a driver's license or other
official photograph identification card, and original Social Security card or
birth certificate.

      7. By signing this offer letter, you represent that you are not subject to
any restrictions (including, without limitation, any restrictions in connection
with any previous employment) that prevent you from accepting this offer of
employment or that materially and adversely affect (or may in the future, so far
as you can reasonably foresee, materially and adversely affect) your ability to
fulfill your responsibilities as an employee of the Company.

      8. Your employment will be on an at-will basis, and either you or the
Company may terminate your employment, at any time, with or without "Cause" (as
defined herein). If your employment is terminated by the Company (and for this
purpose the Company includes any successor in interest) other than for Cause,
death or Disability (as defined herein), you will be entitled to salary
continuation payments during the 12-month period following termination. The
total of all such payments, which shall be payable in 26 equal installments in
accordance with the Company's payroll practices and procedures, shall be an
amount equal to the sum of (i) your Base Salary for the fiscal year of
termination, plus (ii) your incentive compensation earned during the prior
fiscal year, provided that (x) the total amount payable to you hereunder shall
not exceed two times your Base Salary for the year of termination, (y) salary
continuation payments shall terminate upon your breach of the Confidentiality

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Agreement, and (z) in further consideration for the salary continuation
payments, you will sign and deliver to the Company a general release. For this
purpose:

            (a) "Cause" means (i) your willful and continued failure
substantially to perform your duties (other than (x) as a result of total or
partial incapacity due to physical or mental illness, or (y) for Good Reason),
(ii) your dishonesty in the performance of your duties, (iii) your breach of the
Confidentiality Agreement or (iv) your conviction of, or the entry of a plea of
guilty by you to, a felony involving your personal conduct under the laws of the
United States or any state thereof or conviction of, or the entry of a plea of
guilty to, a crime involving your personal conduct in any other jurisdiction
which crime would constitute a felony under the laws of the United States or any
state thereof if such crime had been committed within the jurisdiction of the
United States or any state thereof.

            (b) "Disability" means physical or mental incapacity resulting in
your being unable to perform your essential functions for an aggregate of more
than six months during any period of twenty-four consecutive months. Any
question as to the existence of your Disability as to which you and the Company
cannot agree will be determined by a qualified independent physician mutually
acceptable to you and the Company. If you and the Company cannot agree as to a
qualified independent physician, each will appoint such a physician and those
two physicians will select a third, who will make such determination in writing.
Such determination of Disability made in writing to the Company and to you will
be final and conclusive for all purposes of your employment.

            (c) "Good Reason" means:

            (i) you are assigned duties and responsibilities that are
inconsistent, in a material respect, with the scope of duties and
responsibilities associated with your position;

            (ii) breach by the Company of any of its material employment
obligations to you; or

            (iii) your Base Salary or the percentage of your Base Salary used to
calculate your incentive compensation is reduced other than for reasons of your
performance after written notice and a reasonable opportunity to cure.

      9. Your employment will be subject to, and the terms of this letter will
be interpreted in accordance with, the laws of the Commonwealth of Massachusetts
without regard to its conflict of laws rules.

      10. The foregoing terms and conditions supersede any prior discussions
related to your employment by the Company. Please acknowledge your acceptance of
these terms and conditions by signing and dating the enclosed copy of this offer
letter.

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Please return the enclosed copy and the signed Confidentiality Agreement
to Mr. Dale Johnson at this address.

      Jim, I want to take this opportunity to say that we look forward to your
joining the Company's team, and we believe that you will make a significant
contribution to the Company's growth.

                              Very truly yours,

                              MANUFACTURERS' SERVICES LIMITED

                              By:___________________________________
                                 Robert Donahue
                                 Chief Financial Officer

Accepted and Agreed:

_______________________________
James N. Poor
Dated: ____________, 1998<PAGE>

                                                                   Exhibit 10.7

                         MANUFACTURERS' SERVICES LIMITED

                           SECOND AMENDED AND RESTATED

                         NON-QUALIFIED STOCK OPTION PLAN

     This Second Amended and Restated Non-Qualified Stock Option Plan dated as
of January 1, 1999 amends and restates the Non-Qualified Stock Option Plan dated
as of December 4, 1996, as previously amended and restated on February 26, 1998.

         SECTION 1. PURPOSE. The purposes of the Second Amended and Restated
Manufacturers' Services Limited Non-Qualified Stock Option Plan (the "Plan") are
to (a) encourage the retention of the services of executive personnel, key
employees and directors of the Company, and other non-employee consultants and
contractors and (b) provide incentive to all such personnel and employees to
devote their utmost effort and skill to the advancement and betterment of the
Company by permitting them to participate in ownership of the Company and
thereby in any success or increased value of the Company. The Plan shall become
effective as of the Effective Date.

         SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall
have the meanings set forth below:

     "Affiliate" shall mean (i) any entity that is directly or indirectly
controlling, controlled by, or under common control with the Company and (ii)
any entity in which the Company has a significant equity interest, in each case
as determined by the Committee.

     "Board" or "Board of Directors" shall mean the Board of Directors of the
Company.

     "Cause" shall mean "Cause" as defined in any Employment Agreement or, if
there is no such Employment Agreement, or if such Employment Agreement does not
contain any such defined term, then "Cause" shall mean (a) a willful breach or
habitual neglect of the duties to be performed by the Participant, after
reasonably specific written warning and opportunity to cure; PROVIDED THAT, in
the event of such breach or habitual neglect the Participant shall have no
opportunity to cure any subsequent breach or neglect of duties, (b) an act of
fraud by the Participant on the Company or (c) the breach by the Participant of
any Non-Compete Agreement or Non-Disclosure Agreement or the non-compete
provisions of such Employment Agreement, whether or not such Non-Compete
Agreement or Non-Disclosure Agreement or the non-compete provisions of such
Employment Agreement are enforceable by specific performance or other equitable
or legal remedies. A finding of Cause shall be determined in good faith in the
sole discretion of the Board.

     "Change of Control" shall mean (i) a merger or consolidation in which the
Company is a constituent corporation and immediately following which transaction
securities of the surviving
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or resulting corporation possessing less than 50% of the combined voting power
of such corporation's outstanding voting securities (computed on either an
actual or fully diluted basis) with respect to matters submitted to a vote of
the stockholders generally shall then be owned in the aggregate by persons who
immediately prior to such transaction were the stockholders of the Company; (ii)
a sale or transfer by the Company or any of its Subsidiaries of substantially
all of the consolidated assets of (x) the Company or (y) all of the Subsidiaries
to an entity (other than the Company) which is not a Subsidiary of the Company;
(iii) any "person" (as such term is used in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act) (other than DLJMBP, DLJIP, DLJOP, DLJMBF or any affiliate of any
of them or any "group", within the meaning of such Section 13(d)(3), of which
any of them is a part) is or becomes the beneficial owner, (other than as a
result of an initial public offering of Shares of the Company) directly or
indirectly, of securities of the Company representing more than 50% of the
combined voting power of the Company's then outstanding voting securities with
respect to matters submitted to a vote of the stockholders generally; or (iv)
the Company adopts a plan of dissolution or liquidation or liquidates or
dissolves.

     "Cliff Vesting Options" shall mean those Options, including Share Value
Options, the vesting of which is contingent upon the passage of a period of up
to eight years from the Grant Date but which vesting may be accelerated upon the
occurrence of certain events.

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

     "Committee" shall mean (a) a committee of the Board of Directors designated
by the Board to administer the Plan which, to the extent the Board determines it
is desirable to comply with or qualify under Rule 16b-3 of the Exchange Act and
Section 162(m) of the Code, shall be composed of not less than the number of
persons required by such Rule or such Section, each of whom is a "Non-Employee
Director" within the meaning of Rule 16b-3 and an "outside director" for
purposes of Section 162(m) or (b) if the Board has not so designated a
committee, the Board.

     "Company" shall mean Manufacturers' Services Limited, a Delaware
corporation, together with any successor thereto.

     "Designated Beneficiary" shall mean the beneficiary designated by the
Participant, in a manner determined by the Committee, to receive amounts due to
the Participant in the event of the Participant's death. In the absence of an
effective designation by the Participant, Designated Beneficiary shall mean the
Participant's estate.

     "Disability" shall mean "Disability" as defined in any Employment Agreement
or, if there is no such Employment Agreement, or if such Employment Agreement
does not contain any such defined term, then "Disability" shall mean the
physical or mental incapacity of the Participant and consequent inability of the
Participant, for a period of six (6) consecutive months or for an aggregate of
twelve (12) months in any twenty-four (24) consecutive month period, to perform
his duties with the Company. Any question as to the existence of the Disability
of such Participant as to which the Participant and the Company cannot agree
shall be determined in

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writing by a qualified independent physician mutually acceptable to the
Participant and the Company. If the Participant and the Company cannot agree as
to a qualified independent physician, each shall appoint such a physician and
those two physicians shall select a third who shall make such determination in
writing. The determination of Disability made in writing to the Company and the
Participant shall be final and conclusive for all purposes of the Plan.

     "Effective Date" shall mean December 4, 1996, the date the Plan becomes
effective.

     "Employee" shall mean (i) an officer or employee of the Company or of any
Affiliate, (ii) a director of the Company or of any Affiliate or (iii) a
non-employee consultant or contractor to the Company or to any Affiliate.

     "Employment Agreement" shall mean, with respect to a Participant, any
employment agreement by and between the Company and such Participant.

     "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

     "Expiration Date" shall mean, subject to cancellation of any Option as set
forth in the applicable Option Agreement, the tenth anniversary of the Grant
Date of the Option.

     "Fair Market Value" shall mean, with respect to any Share, unless otherwise
defined in an applicable Option Agreement, the fair market value of such Share
as determined by the Board.

     "Founding Stockholder" shall have the meaning set forth in the Securities
Purchase Agreement.

     "Grant Date" shall have the meaning set forth in the applicable Option
Agreement.

     "Non-Compete Agreement" shall mean, with respect to a Participant, any
non-compete agreement by and between the Company and such Participant requiring
such Participant to refrain from providing services in any capacity to the
Company's competitors.

     "Non-Disclosure Agreement" shall mean, with respect to a Participant, any
non-disclosure agreement by and between the Company and such Participant
requiring such Participant to refrain from disclosing "Confidential Information"
to anyone not authorized to receive such information.

     "Non-Qualified Stock Option" shall mean a right to purchase Shares from the
Company that is granted under Section 6 of the Plan.

     "Option" shall mean a Non-Qualified Stock Option.

     "Option Agreement" shall mean any written agreement evidencing the grant of
an Option, which may, but need not, be executed or acknowledged by a
Participant.

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     "Ordinary Option" shall mean an Option that is not a Share Value Option.

     "Participant" shall mean any Employee or Founding Stockholder selected by
the Committee to receive an Option under the Plan.

     "Person" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, government or political
subdivision thereof or other entity.

     "Plan" shall mean the Manufacturers' Services Limited Second Amended and
Restated Non-Qualified Stock Option Plan.

     "Rule 16b-3" shall mean Rule 16b-3 as promulgated and interpreted by the
SEC under the Exchange Act, or any successor rule or regulation thereto as in
effect from time to time.

     "SEC" shall mean the Securities and Exchange Commission or any successor
thereto and shall include the staff thereof.

     "Securities Purchase Agreement" shall mean the Securities Purchase
Agreement dated as of January 20, 1995 by and among the Company, the DLJ
Entities (as defined therein) and the Founding Stockholders (as defined
therein).

     "Share Value Option" shall mean an Option, the vesting of which is
contingent upon the Company achieving a certain share value on specified dates,
in each case in the manner set forth in the applicable Option Agreement.

     "Shares" shall mean shares of the Company's common stock, par value $.001
per share, or such other securities of the Company as may be designated by the
Committee from time to time.

     "Subsidiary" shall mean any entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions (including, in the case
of a partnership, a general partner) are at the time directly or indirectly
owned by the Company.

     "Time Vesting Options" shall mean those Ordinary Options the vesting of
which is contingent only upon the passage of time and continued employment.

     "Vested Options" shall mean Options which have become exercisable pursuant
to the terms of the Plan and any applicable Option Agreement.

         SECTION 3. ADMINISTRATION. (a) The Plan shall be administered by the
Committee. Subject to the terms of the Plan, the Securities Purchase Agreement
and applicable law, and in addition to other express powers and authorizations
conferred on the Committee by

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the Plan, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the number of Shares to be covered by, or with
respect to which payments, rights, or other matters are to be calculated in
connection with, Options; (iii) determine the terms and conditions of any
Options; (iv) determine whether, to what extent, and under what circumstances
Options may be settled or exercised in cash, Shares, other securities, or other
property, or canceled, forfeited, or suspended and the method or methods by
which Options may be settled, exercised, canceled, forfeited, or suspended; (v)
determine whether, to what extent, and under what circumstances cash, Shares,
other securities, other property, and other amounts payable with respect to an
Option shall be deferred either automatically or at the election of the holder
thereof or of the Committee; (vi) interpret and administer the Plan and any
instrument or agreement relating to, or Option made under, the Plan; (vii)
establish, amend, suspend, or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
(viii) accelerate the exercise date of any Option; and (ix) make any other
determination and take any other action that the Committee deems necessary or
desirable for the administration of the Plan.

     (b) Unless otherwise expressly provided in the Plan or any Option
Agreement, all designations, determinations, interpretations, and other
decisions under or with respect to the Plan or any Option shall be within the
sole discretion of the Committee, may be made at any time and shall be final,
conclusive, and binding upon all Persons, including the Company, any Affiliate,
any Participant, any Designated Beneficiary, any holder or beneficiary of any
Option, any shareholder and any Employee.

         SECTION 4. SHARES AVAILABLE FOR OPTIONS. (a) SHARES AVAILABLE. Subject
to the provisions of subsections 4(b) and 4(c) hereof, the number of Shares with
respect to which Ordinary Options may be granted under the Plan shall be ten
million seven hundred and fifty thousand (10,750,000). Subject to the provisions
of sub-sections 4(b) hereof, the number of Shares with respect to which Share
Value Options may be granted under the Plan shall be one million two hundred
fifty thousand (1,250,000). If, after the Effective Date of the Plan, any Shares
covered by an Option granted under the Plan are forfeited, or if an Option is
settled for cash or otherwise terminates or is canceled without the delivery of
Shares, then the Shares covered by such Option, or to which such Option relates,
or the number of Shares otherwise counted against the aggregate number of Shares
with respect to which such Options may be granted, to the extent of any such
settlement, forfeiture, termination or cancellation, shall again be, or shall
become, Shares with respect to which such Options may be granted.

     (b) ADJUSTMENTS. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then the Committee

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shall, in such manner as it may deem equitable, adjust any or all of (i) the
number of Shares or other securities of the Company (or number and kind of other
securities or property) with respect to which Options may be granted under
Section 4(a) or 4(c), as applicable, both in the aggregate and with respect to
permissible Options to any Participant, (ii) the number of Shares or other
securities of the Company (or number and kind of other securities or property)
subject to outstanding Options, and (iii) the grant or exercise price with
respect to any Option, which adjustments may include, if deemed appropriate,
provision for a cash payment to the holder of an outstanding Option.

     (c) SOURCES OF SHARES DELIVERABLE PURSUANT TO EXERCISES OF OPTIONS. Any
Shares delivered pursuant to the exercise of an Option may consist, in whole or
in part, of authorized and unissued Shares or of treasury Shares.

         SECTION 5. ELIGIBILITY. Any Employee, including any officer or director
of the Company, or any Affiliate, who, to the extent the Committee determines it
is desirable to qualify for exemption under Rule 16b-3 or Section 162(m) of the
Code, is not a member of the Committee, and any Founding Stockholder shall be
eligible to be designated a Participant.

         SECTION 6. STOCK OPTIONS. (i) GRANT. Subject to the provisions of this
Plan, any applicable Option Agreement and the Securities Purchase Agreement, the
Committee shall have sole and complete authority to determine the Employees to
whom Options shall be granted, the number of Shares to be covered by each
Option, the Option price therefor and the conditions and limitations applicable
to the exercise of the Option.

     (ii) EXERCISE PRICE. Each Option shall represent the right to purchase one
     Share. Subject to the provisions of this Plan, any applicable Option
     Agreement and the Securities Purchase Agreement, the Committee shall
     establish the exercise price per Share at the time each Option is granted.

     (c) EXERCISE. Subject to the provisions of this Plan, any applicable Option
Agreement and the Securities Purchase Agreement, Options shall be exercisable at
such times, throughout a period commencing on the date such Options become
exercisable in accordance with their terms ending upon the expiration or
termination of such Options, as determined in the sole discretion of the
Committee. Subject to the provisions of this Plan the Committee may impose in
any Option Agreement such conditions with respect to the exercise of each Option
as it may deem necessary or advisable.

     (d) PAYMENT. No Shares shall be delivered pursuant to any exercise of an
Option until payment in full of the Option exercise price, or provision
therefor, is received by the Company. Such payment may be made in cash, or its
equivalent, or, if and to the extent permitted by the Committee, by tendering
Shares owned by the Participant (which have been held by the Participant for a
minimum period of at least six months prior to such exercise and which are not
the subject of any pledge or other security interest), or by a combination of
the foregoing, PROVIDED THAT the combined value of all cash and cash equivalents
and the Fair Market Value of

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any such Shares so tendered to the Company as of the date of such tender is at
least equal to such Option exercise price.

     (e) TERM OF OPTION. Subject to such earlier cancellation as is set forth in
the applicable Option Agreement, each Option granted under the Plan shall be
deemed forfeited and canceled on the Expiration Date. The Committee shall
provide to the Participant written notice of such Expiration Date 60 days prior
to such Expiration Date; PROVIDED THAT failure of the Committee to provide such
written notice shall have no effect on the terms of the Options set forth in the
Plan and any applicable Option Agreement.

         SECTION 7. TERMINATION OF EMPLOYMENT. Except as may be set forth in any
Option Agreement or Employment Agreement, the following provisions of this
Section 7 shall govern the treatment of Options upon the termination of the
Participant's employment by the Company and each of the Subsidiaries:

    (i) If the Participant's employment is terminated by the Company (or
    applicable Subsidiary) for Cause, all Options, whether vested or unvested,
    will automatically be forfeited and unexercisable and the Company shall have
    the right to purchase from the Participant any Shares previously acquired
    upon the exercise of Options held by the Participant at a price equal to the
    lesser of the Fair Market Value or the initial purchase price of such
    Shares; PROVIDED HOWEVER that in the event the Shares become publicly
    traded, the Company shall no longer have such repurchase right.

    (ii) (A) With respect to Options granted prior to January 1, 1997, if the
    Participant's employment is terminated by the Company other than for Cause,
    (x) unvested Time Vesting Options shall continue to vest and become
    exercisable in accordance with the vesting schedule set forth in the
    Participant's Option Agreement and, in addition to each other Option which
    is already vested and exercisable on such date, shall remain exercisable by
    the Participant or his or her representative, devisees or heirs, as
    applicable, until the date six months following the later of (1) the date of
    such termination of employment and (2) the date on which such Option becomes
    vested; PROVIDED THAT in the case of any breach by the Participant of any
    Non-Compete Agreement or Non-Disclosure Agreement or any non-solicitation or
    confidentiality provision contained in any Employment Agreement to which the
    Participant is a party, all Options shall be deemed immediately forfeited
    and canceled and (y) all unvested Cliff Vesting Options and Share Value
    Options shall be deemed immediately forfeited and canceled.

         (B) With respect to Options granted on or after January 1, 1997, if the
    Participant's employment is terminated by the Company other than for Cause,
    all unvested Options shall be deemed immediately forfeited and canceled and
    all vested Options shall remain exercisable by the Participant or his or her
    representative, devisees or heirs as applicable for a period of six months
    following such termination of employment; PROVIDED THAT in the case of any
    breach by the Participant of any Non-Compete Agreement or Non-Disclosure
    Agreement or any non-solicitation or

                                       7
<PAGE>

    confidentiality provision contained in any Employment Agreement to which the
    Participant is a party, all Options shall be deemed immediately forfeited
    and canceled.

    (iii) (A) Upon the occurrence of a Change of Control, in which the net
    purchase price for the Company or the stock or assets of the Company, as
    applicable, is at least $3.00 per share, or the equivalent thereof as
    determined by an independent financial advisor selected in the discretion of
    the Committee, all outstanding Options as of the date of the Change of
    Control shall be vested and immediately exercisable, and remain exercisable
    for a period of six (6) months following such Change of Control.

          (B) Upon the occurrence of a Change of Control, under any other
    circumstances than those set forth in the preceding paragraph, (x) unvested
    Time Vesting Options shall continue to vest and become exercisable in
    accordance with the vesting schedule set forth in the Participant's Option
    Agreement and, in addition to each other Option which is already vested and
    exercisable on such date, shall remain exercisable by the Participant or his
    or her representative, devisees or heirs, as applicable, until the
    expiration of the exercise period of such Option and (y) all unvested Cliff
    Vesting Options and Share Value Options shall be deemed immediately
    forfeited and canceled.

    (iv) If the Participant's employment is terminated voluntarily by the
    Participant (other than by reason of the Participant's death or Disability),
    (x) all unvested Options shall be deemed immediately forfeited and canceled
    and (y) the Company shall have the right to purchase from the Participant
    (A) all vested Options held by such Participant at a price equal to the Fair
    Market Value of the Shares at such time less the aggregate exercise price
    for such Options and (B) any Shares held by the Participant previously
    acquired upon the exercise of Options held by the Participant at a price
    equal to the Fair Market Value of such Shares; PROVIDED HOWEVER, that in the
    event the Shares become publicly traded, the Company shall no longer have
    the right to purchase such Shares.

    (v) (A) With respect to Options granted prior to January 1, 1997, if the
    Participant's employment is terminated by reason of the Participant's death
    or Disability (x) unvested Time Vesting Options shall continue to vest and
    become exercisable in accordance with the vesting schedule set forth in the
    Participant's Option Agreement and, in addition to each other Option which
    is already vested and exercisable on such date, shall remain exercisable by
    the Participant or his or her representative, devisees or heirs, as
    applicable, until the date one year following the later of (1) the date of
    such termination or employment and (2) the date on which such Option becomes
    vested; PROVIDED THAT in the case of any breach by the Participant of any
    Non-Compete Agreement or Non-Disclosure Agreement or any non-solicitation or
    confidentiality provision contained in any Employment Agreement to which the
    Participant is a party, all Options shall be deemed immediately forfeited
    and canceled and (y) all unvested Cliff Vesting Options and Share Value
    Options shall be deemed immediately forfeited and canceled.

                                       8
<PAGE>

        (B) With respect to Options granted on or after January 1, 1997, if the
    Participant's employment is terminated by the reason of the Participant's
    death or Disability, all unvested Options shall be deemed immediately
    forfeited and canceled and vested Options shall remain exercisable by the
    Participant or his or her representative, devisees or heirs, as applicable,
    for a period of one year following such termination of employment; PROVIDED
    THAT in the case of any breach by the Participant of any Non-Compete
    Agreement or Non-Disclosure Agreement or any non-solicitation or
    confidentiality provision contained in any Employment Agreement to which the
    Participant is a party, all Options shall be deemed immediately forfeited
    and canceled.

         SECTION 8. AMENDMENT AND TERMINATION. (a) AMENDMENTS TO THE PLAN. The
Board may amend, alter, suspend, discontinue, or terminate the Plan or any
portion thereof at any time; PROVIDED THAT no such amendment, alteration,
suspension, discontinuation or termination shall be made without shareholder
approval if the Board determines such approval is necessary to qualify for or
comply with any tax or regulatory requirement.

     (b) AMENDMENTS TO OPTIONS. Unless otherwise set forth in an applicable
Option Agreement, the Committee may waive any conditions or rights under, amend
any terms of, or alter, suspend, discontinue, cancel or terminate, any Option
theretofore granted, prospectively or retroactively; PROVIDED THAT, any such
waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination that would impair the rights of any Participant or any holder or
beneficiary of any Option theretofore granted shall not to the extent be
effective without the consent of the affected Participant, holder or
beneficiary.

     (c) ADJUSTMENT OF OPTIONS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. The Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Options in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4(b) hereof) affecting the Company, any
Affiliate, or the financial statements of the Company or any Affiliate, or of
changes in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan.

         SECTION 9. GENERAL PROVISIONS. (a) NONTRANSFERABILITY. (i) Each Option,
and each right under any Option, shall be exercisable only by the Participant
(or, to the extent permitted in an Option Agreement, by such Participant's
Transferee (as defined in the Option Agreement)) during the Participant's
lifetime, or, if permissible under applicable law, by the Participant's
Designated Beneficiary or by a transferee receiving such Option pursuant to a
qualified domestic relations order ("QDRO"), as determined by the Committee.

     (ii) Unless otherwise set forth in an Option Agreement, no Option may be
     assigned, alienated, pledged, attached, sold or otherwise transferred or
     encumbered by a Participant other than by will or by the laws of descent
     and distribution or pursuant to a QDRO, and any such purported assignment,
     alienation, pledge, attachment, sale, transfer or

                                       9
<PAGE>

     encumbrance shall be void and unenforceable against the Company or any
     Affiliate unless otherwise set forth in an Option Agreement; PROVIDED THAT
     the designation of a beneficiary shall not constitute an assignment,
     alienation, pledge, attachment, sale, transfer or encumbrance.

     (b) NO RIGHTS TO OPTIONS. No Employee, Participant or other Person shall
have any claim to be granted any Option, and there is no obligation for
uniformity of treatment of Employees, Participants, or holders or beneficiaries
of Options. The terms and conditions of Options need not be the same with
respect to each recipient.

     (c) SHARE CERTIFICATES. All certificates for Shares or other securities of
the Company or any Affiliate delivered under the Plan pursuant to Option or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations, and other requirements of the SEC, any stock exchange upon which
such Shares or other securities are then listed, and any applicable federal or
state laws, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.

     (d) CONSEQUENCES OF CASH OUT. Notwithstanding any other provision of the
Agreement, the payment to the Optionee at any time of an amount equal to the
excess, if any, of the Fair Market Value at such time of the underlying Shares
subject to such Option over the aggregate exercise price of such Option, in
consideration of the cancellation thereof, shall extinguish any rights of the
Optionee in connection therewith.

     (e) DELEGATION. Subject to the terms of the Plan and applicable law, the
Committee may delegate to one or more officers or managers of the Company or any
Affiliate, or to a committee of such officers or managers, the authority,
subject to such terms and limitations as the Committee shall determine, to grant
Options to, or to cancel, modify or waive rights with respect to, or to alter or
discontinue Options held by, Employees who are not officers or directors of the
Company for purposes of Section 16 of the Exchange Act, or any successor section
thereto, or who are otherwise not subject to such Section.

     (f) WITHHOLDING. A Participant may be required to pay to the Company or
any Affiliate and the Company or any Affiliate shall have the right and is
hereby authorized to withhold from any Option, from any payment due or
transfer made under any Option or under the Plan or from any compensation or
other amount owing to a Participant the amount (in cash, Shares, other
securities, other Options or other property) of any applicable withholding
taxes in respect of an Option, its exercise, or any payment or transfer under
an Option or under the Plan and to take such other action as may be necessary
in the opinion of the Company to satisfy all obligations for the payment of
such taxes. The Committee may provide for additional cash payments to holders
of Options to defray or offset any tax arising from the grant, vesting,
exercise or payments of any Option.

                                       10
<PAGE>

     (g) OPTION AGREEMENTS. Each Option hereunder shall be evidenced by an
Option Agreement which shall be delivered to the Participant and shall specify
the terms and conditions of the Option and any rules applicable thereto.

     (h) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other compensation arrangements, which may, but need not, provide for the
grant of options, restricted stock, Shares and other types of Options provided
for hereunder (subject to shareholder approval if such approval is required),
and such arrangements may be either generally applicable or applicable only in
specific cases.

     (i) NO RIGHT TO EMPLOYMENT. The grant of an Option shall not be construed
as giving a Participant the right to be employed by or retained in the employ of
the Company or any Affiliate. Further, the Company or an Affiliate may at any
time dismiss a Participant from employment, free from any liability or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any Option
Agreement.

     (j) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Option, no Participant or holder or beneficiary of any Option shall have any
rights as a shareholder with respect to any Shares to be distributed under the
Plan until he or she has become the holder of such Shares.

     (k) GOVERNING LAW. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan and any Option Agreement shall be
determined in accordance with the laws of Delaware.

     (l) SEVERABILITY. If any provision of the Plan or any Option is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as
to any Person or Option, or would disqualify the Plan or any Option under any
law deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to the applicable laws, or if it cannot be construed
or deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Option, such provision shall be stricken
as to such jurisdiction, Person or Option and the remainder of the Plan and any
such Option shall remain in full force and effect.

     (m) OTHER LAWS. The Committee may refuse to issue or transfer any Shares or
other consideration under an Option if, acting in its reasonable discretion, it
determines that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation or entitle the
Company to recovery under Section 16(b) of the Exchange Act, and any payment
tendered to the Company by a Participant, other holder or beneficiary in
connection with the exercise of such Option shall be promptly refunded to the
relevant Participant, holder or beneficiary. Without limiting the generality of
the foregoing, no Option granted hereunder shall be construed as an offer to
sell securities of the Company, and no such offer shall be outstanding, unless
and until the Committee in its reasonable discretion has determined that any
such offer, if

                                       11
<PAGE>

made, would be in compliance with all applicable requirements of the U.S.
federal securities laws.

     (n) NO TRUST OR FUND CREATED. Neither the Plan nor any Option shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Option, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.

     (o) NO FRACTIONAL SHARES. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Option, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Shares or whether such fractional Shares or any rights thereto
shall be canceled, terminated or otherwise eliminated.

     (p) HEADINGS. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.

          SECTION 10. TERM OF THE PLAN. (a) EFFECTIVE DATE. The Plan shall be
effective as of the Effective Date.

     (b) EXPIRATION. No Option shall be granted under the Plan after December 4,
2006. Unless otherwise expressly provided in the Plan or in an applicable Option
Agreement, any Option granted hereunder may, and the authority of the Board or
the Committee to amend, alter, adjust, suspend, discontinue, or terminate any
such Option or to waive any conditions or rights under any such Option shall,
continue after December 4, 2006.

                                       12

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