Document:

Exhibit 10.1 2000 Option Plan - Ramp Networks

Exhibit No. 10.1

RAMP NETWORKS, INC.

2000 NON-STATUTORY STOCK OPTION PLAN

 

1.Purposes of the Plan. The purposes of this 2000 Non-Statutory
Stock Option Plan are to attract and retain the best available personnel for positions
of substantial responsibility, to provide additional incentive to the Employees and
Consultants of the Company and its Subsidiaries to promote the success of the Company's
business. Options granted hereunder shall be Nonstatutory Stock Options.

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

(a)"Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.

(b)"Affiliate" means an entity other than a Subsidiary in which the
Company owns a significant interest directly or indirectly, as determined in the
discretion of the Administrator, or which, together with the Company, is under common
control of a third person or entity.

(c)"Applicable Laws" means the legal requirements relating to the
administration of stock option plans under applicable U.S. state corporate laws, U.S.
federal and applicable state securities laws, the Code, any Stock Exchange rules and
regulations and the applicable laws of any other country or jurisdiction where Options
are granted under the Plan, as such laws, rules, regulations and requirements shall be
in place from time to time; provided, however, that to the extent permitted under such
laws, rules, regulations and requirements, the rights of any participant under the Plan
shall be determined in accordance with the law of the State of California, without
giving effect to principles of conflict of law.

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

(e)"Change of Control" means a sale of all or substantially all of
the Company's assets, or any merger or consolidation of the Company with or into another
corporation other than a merger or consolidation in which the holders of more than 50%
of the shares of capital stock of the Company outstanding immediately prior to such
transaction continue to hold (either by the voting securities remaining outstanding or
by their being converted into voting securities of the surviving entity) more than 50%
of the total voting power represented by the voting securities of the Company, or such
surviving entity, outstanding immediately after such transaction.

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

(g)"Committee" means the Committee appointed by the Board in
accordance with paragraph (a) of Section 4 of the Plan, if one is
appointed.

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

(i)"Company" means Ramp Networks, Inc., a Delaware corporation.

(j)"Consultant" means any person who is engaged by the Company or
any Parent, Subsidiary or Affiliate to render consulting services and is compensated for
such consulting services, excluding Officers, Named Executives and Directors.

(k)"Continuous Service Status" means the absence of any
interruption or termination of service as an Employee or Consultant to the Company or a
Parent, Subsidiary or Affiliate. Continuous Service Status shall not be considered
interrupted in the case of: (i) sick leave; (ii) military leave;
(iii) any other leave of absence approved by the Administrator, provided that such
leave is for a period of not more than 90 days, unless reemployment upon the expiration
of such leave is guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or (iv) transfers between
locations of the Company or between the Company, its Parent(s), Subsidiaries or
Affiliates or their respective successors. Unless otherwise determined by the
Administrator, a change in status from an Employee to a Consultant or from a Consultant
to an Employee will not constitute termination or interruption of Continuous Service
Status. 

(l)"Corporate Transaction" means a sale of all or substantially all
of the Company's assets, or a merger, consolidation or other capital reorganization of
the Company with or into another corporation.

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

(n)"Employee" means any person who is employed by the Company or
any Parent, Subsidiary or Affiliate of the Company, excluding Officers, Named Executives
and Directors. Notwithstanding the foregoing, an Officer who was not previously employed
by the Company and for whom an Option grant is an inducement essential to the Officer's
entering into an employment relationship or contract with the Company shall be treated
as an Employee for purposes of the Option grant made to the Officer in connection with
commencement of the Officer's employment with the Company.

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

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

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

(ii)If the Common Stock is quoted on the Nasdaq System (but not on the National
Market thereof) or regularly quoted by a recognized securities dealer but selling prices
are not reported, its Fair Market Value shall be the mean between the high bid and low
asked prices for the Common Stock on the date of determination (or if no bids occurred
on the date of determination, on the last trading day prior to the date of
determination) as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; or

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

(q)"Named Executive" means any individual who, on the last day of
the Company's fiscal year, is the chief executive officer of the Company (or is acting
in such capacity) or among the four highest compensated officers of the Company (other
than the chief executive officer). Such officer status shall be determined pursuant to
the executive compensation disclosure rules under the Exchange Act.

(r)"Nonstatutory Stock Option" means an Option not intended to
qualify as an incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable Option Agreement. 

(s)"Officer" means a person who is appointed or elected by the
Board of Directors as an officer of the Company, including but not limited to a person
who is an officer within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

(t)"Option" means a Non-Statutory Stock Option granted pursuant to
the Plan.

(u)"Option Agreement" means a written document, the form(s) of
which shall be approved from time to time by the Administrator, reflecting the terms of
an Option granted under the Plan and includes any documents attached to or incorporated
into such Option Agreement, including, but not limited to, a notice of stock option
grant and a form of exercise notice.

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

(w)"Optionee" means an Employee or Consultant who receives an
Option.

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

(y)"Plan" means this 2000 Non-Statutory Stock Option Plan.

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

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

3.Stock Subject to the Plan. Subject to the provisions of
Section 12 of the Plan, the maximum aggregate number of Shares that may be optioned
and sold under the Plan is 2,500,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.

If an Option should expire or become unexercisable for any reason without having been
exercised in full, the unpurchased Shares that were subject thereto shall, unless the
Plan shall have been terminated, become available for future grant under the Plan. In
addition, any Shares of Common Stock that are retained by the Company upon exercise of
an Option in order to satisfy the exercise or purchase price for such Option or any
withholding taxes due with respect to such exercise shall be treated as not issued and
shall continue to be available under the Plan. Notwithstanding any other provision of
the Plan, shares issued under the Plan and later repurchased by the Company shall not
become available for future grant or sale under the Plan.

4.Administration of the Plan.

(a)Composition of Administrator. 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. If a Committee has been
appointed pursuant to this Section 4(a), such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to time the Board
may increase the size of any Committee and appoint additional members thereof, remove
members (with or without cause) and appoint new members in substitution therefor, fill
vacancies (however caused) and remove all members of a Committee and thereafter directly
administer the Plan, all to the extent permitted by the Applicable Laws.

(b)Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, the specific duties delegated by, or limitations
of authority imposed by, the Board to or on such Committee, the Administrator shall have
the authority, in its discretion: 
(i) to grant Options under the Plan; 

(ii) to determine, upon review of relevant information and in accordance with
Section 2(o) of the Plan, the Fair Market Value of the Common Stock; 

(iii) to determine the exercise price per share of Options to be granted, which
exercise price shall be determined in accordance with Section 10(a) of the Plan;

(iv) to determine the Employees or Consultants to whom, and the time or times at
which, Options shall be granted and the number of shares to be represented by each
Option; 

(v) to interpret the Plan; 

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

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

(vii) to determine whether and under what circumstances an Option may be settled
in cash under Section 9(f) instead of Common Stock;

(viii) to reduce the exercise price of any Option to the then current Fair
Market Value if the Fair Market Value of the Common Stock covered by such Option shall
have declined since the date the Option was granted and to make any other amendments or
adjustments to any Option that the Administrator determines, in its discretion and under
the authority granted to it under the Plan, to be necessary or advisable, provided
however that no amendment or adjustment to an Option that would materially and adversely
affect the rights of any Optionee shall be made without the prior written consent of the
Optionee;

(x) to initiate an Option Exchange Program;

(xi) to construe and interpret the terms of the Plan and awards granted
under the Plan; and

(xii) in order to fulfill the purposes of the Plan and without amending the
Plan, to modify grants of Options to Participants who are foreign nationals or employed
outside of the United States in order to recognize differences in local law, tax
policies or customs.

(e)Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and binding on
all Participants.

5.Eligibility.

(a)Recipients of Grants. Options may be granted only to Employees
and Consultants. An Employee or Consultant who has been granted an Option may, if he is
otherwise eligible, be granted an additional Option or Options.

(b)Type of Option. Each Option shall be designated in the Option
Agreement as a Nonstatutory Stock Option.

(c)At-Will Relationship. The Plan shall not confer upon any
Optionee any right with respect to continuation of employment or consulting relationship
with the Company, nor shall it interfere in any way with such holder's right or the
Company's right to terminate his or her employment or consulting relationship at any
time, with or without cause.

6.Term of Plan. The Plan shall become effective upon its adoption
by the Board of Directors. It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 15 of the Plan.

7.Term of Option. The term of each Option shall be ten (10) years
from the date of grant thereof or such shorter term as may be provided in the Option
Agreement.

8.Exercise Price and Consideration.

(a)The per Share exercise price for the Shares to be issued pursuant to exercise
of an Option shall be such price as is determined by the Administrator.

(b)The consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, shall be determined by the Administrator and
may consist entirely of (1) cash, (2) check, (3) delivery or optionee's promissory note
with such recourse, interest, security and redemption provisions as the Administrator
determines to be appropriate (subject to provisions of Applicable Law, (4) cancellation
of indebtedness, (5) surrender of other Shares which (i) either have been owned by
the Optionee for more than six (6) months on the date of surrender or were not acquired,
directly or indirectly, from the Company, and (ii) have a fair market value on the
date of surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, (6) delivery of a properly executed exercise notice together
with irrevocable instructions to a broker to deliver promptly to the Company the amount
of sale or loan proceeds required to pay the exercise price, (7) any combination of such
methods of payment, (8) any combination of the foregoing methods of payment; or (9) such
other consideration and method of payment for the issuance of Shares to the extent
permitted under the Applicable Laws. In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company, and the Administrator
may refuse to accept a particular form of consideration at the time of any Option
exercise if, in its sole discretion, acceptance of such form of consideration is not in
the best interests of the Company at such time.

9.Exercise of Option.

(a)Vesting. Any Option granted hereunder shall be exercisable at
such times and under such conditions as determined by the Administrator, consistent with
the terms of the Plan and reflected in the Option Agreement, including vesting
requirements and/or performance criteria with respect to the Company and/or the
Optionee.

(b)Procedure for Exercise. An Option may not be exercised for a
fraction of a Share. An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the Option
by the person entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the Company. Full payment
may, as authorized by the Administrator, consist of any consideration and method of
payment allowable under Section 8(b) of the Plan. Exercise of an Option in any
manner shall result in a decrease in the number of Shares that thereafter may be
available, both for purposes of the Plan and for sale under the Option, by the number of
Shares as to which the Option is exercised. 

(c)Rights as a Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer agent of
the Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such stock certificate promptly upon exercise of the Option. 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 Section 12 of
the Plan.

(d)Termination of Continuous Service Status. In the event of
termination of an Optionee's Continuous Service Status, such Optionee's right to
exercise the Option shall cease and the Option shall forthwith become void and cease to
have effect, except as set forth specifically in the Option Agreement.

If required by the Applicable Laws, an Option shall be exercisable by the
Optionee for a period of time following the termination of the Optionee's Continuous
Service as follows:
(i)In the event of termination of Continuous Service Status for reasons other
than the Optionee's disability or death, the Option shall be exercisable by the Optionee
following such termination for a period of not less than thirty (30) days, as is
determined by the Administrator after the date of such termination of Continuous Service
(but in no event later than the date of expiration of the term of such Option as set
forth in the Option Agreement), to the extent that the Optionee was entitled to exercise
it at the date of such termination. To the extent that the Optionee was not entitled to
exercise the Option at the date of such termination, or if the Optionee does not
exercise the Option to the extent so entitled within the time specified above, the
Option shall terminate and the Optioned Stock underlying the unexercised portion of the
Option shall revert to the Plan. 

(ii)In the event of termination of Continuous Service Status as a result of
Optionee's disability, such Optionee may, but only within six (6) months (or such longer
period of time as is determined by the Administrator), from the date of such termination
(but in no event later than the date of expiration of the term of such Option as set
forth in the Option Agreement), exercise the Option to the extent he or she was entitled
to exercise it at the date of such termination. To the extent that the Optionee was not
entitled to exercise the Option at the date of termination, or if the Optionee does not
exercise the Option to the extent so entitled within the time specified herein, the
Option shall terminate and the Optioned Stock underlying the unexercised portion of the
Option shall revert to the Plan.

(iii)In the event of the death of an Optionee prior to termination of his or her
Continuous Service Status, the Option may be exercised at any time within six (6) months
(or such longer period of time as is determined by the Administrator), following the
date of death (but in no event later than the expiration date of the term of such Option
as set forth in the Option Agreement) by such Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to the
extent of the right to exercise that had accrued at the date of death or, if earlier,
the date of termination of the Optionee's Continuous Service. To the extent that the
Optionee was not entitled to exercise the Option at the date of death or termination, as
the case may be, or if the Optionee does not exercise such Option to the extent so
entitled within the time specified above, the Option shall terminate and the Optioned
Stock underlying the unexercised portion of the Option shall revert to the
Plan.

(e)Extension of Exercise Period. The Administrator shall have full
power and authority to extend the period of time for which an Option is to remain
exercisable following termination of an Optionee's Continuous Service Status from the
periods set forth in Sections 9(d)(i), (ii) or (iii) above or in the Option
Agreement to such greater time as the Board shall deem appropriate, provided, that in no
event shall such Option be exercisable later than the date of expiration of the term of
such Option as set forth in the Option Agreement.

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

10.Taxes.

(a)As a condition of the exercise of an Option granted under the Plan, the
Optionee (or in the case of the Optionee's death, the person exercising the Option)
shall make such arrangements as the Administrator may require for the satisfaction of
any applicable federal, state, local or foreign withholding tax obligations that may
arise in connection with the exercise of an Option and the issuance of Shares. The
Company shall not be required to issue any Shares under the Plan until such obligations
are satisfied.

(b)In the case of an Employee and in the absence of any other arrangement, the
Employee shall be deemed to have directed the Company to withhold or collect from his or
her compensation an amount sufficient to satisfy such tax obligations from the next
payroll payment otherwise payable after the date of an exercise of the Option.

(c)In the case of a Optionee other than an Employee (or in the case of an
Employee where the next payroll payment is not sufficient to satisfy such tax
obligations, with respect to any remaining tax obligations), in the absence of any other
arrangement and to the extent permitted under the Applicable Laws, the Optionee shall be
deemed to have elected to have the Company withhold from the Shares to be issued upon
exercise of the Option that number of Shares having a Fair Market Value determined as of
the applicable Tax Date (as defined below) equal to the minimum statutory amount
required to be withheld. For purposes of this Section 10, the Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to be
withheld is to be determined under the Applicable Laws (the "Tax Date"). 

(d)If permitted by the Administrator, in its discretion, a Optionee may satisfy
his or her tax withholding obligations upon exercise of an Option by surrendering to the
Company Shares that (i) in the case of Shares previously acquired from the Company,
have been owned by the Optionee for more than six months on the date of surrender, and
(ii) have a Fair Market Value determined as of the applicable Tax Date equal to the
minimum statutory amount required to be withheld.

(e)Any election or deemed election by a Optionee to have Shares withheld to
satisfy tax withholding obligations under Section 10(c) or (d) above shall be
irrevocable as to the particular Shares as to which the election is made and shall be
subject to the consent or disapproval of the Administrator. Any election by an Optionee
under Section 11(d) above must be made on or prior to the applicable Tax Date.

(f)In the event an election to have Shares withheld is made by a Optionee and the
Tax Date is deferred under Section 83 of the Code because no election is filed under
Section 83(b) of the Code, the Optionee shall receive the full number of Shares with
respect to which the Option is exercised but such Optionee shall be unconditionally
obligated to tender back to the Company the proper number of Shares on the Tax Date.

11.Non-Transferability of Options. The Options 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; provided, that the Administrator
may in its discretion grant transferable Options pursuant to option agreements
specifying (i) the manner in which such Options are transferable and (ii) that any such
transfer shall be subject to the Applicable Laws. The designation of a beneficiary by an
Optionee will not constitute a transfer. An Option may be exercised, during the lifetime
of the Optionee, only by the Optionee or a transferee permitted by this
Section 11.

12.Adjustments Upon Changes in Capitalization, Corporate Transaction and
Other Transaction. 

(a)Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by each
outstanding Option, and the number of shares of Common Stock that have been authorized
for issuance under the Plan but as to which no Options have yet been granted or which
have been returned to the Plan upon cancellation or expiration of an Option and the
price per share of Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued shares of
Common Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock (including any change in the number
of Shares of Common Stock effected in connection with a change of domicile of the
Company), or any other increase or decrease in the number of issued shares of Common
Stock effected without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to an Option.

(b)Dissolution or Liquidation. In the event of the dissolution or
liquidation of the Company that is not a Corporate Transaction, each outstanding Option
will terminate immediately upon the consummation of such dissolution or liquidation,
unless otherwise provided by the Administrator.

(c)Corporate Transactions; Change of Control. In the event of a
Corporate Transaction, including a Change of Control, the Administrator shall, as to
outstanding Options, either (i) provide that such Options shall be assumed by the
successor corporation or a Parent or Subsidiary of such successor corporation (such
entity, the "Successor Corporation") or that the Successor Corporation shall
substitute with respect to such Options equivalent options; (ii) provide upon notice to
Optionees that all Options, to the extent then exercisable or to be exercisable as a
result of the Change of Control, must be exercised on or before a specified date (which
date shall be at least five (5) days from the date of the notice), after which the
Options shall terminate; or (iii) terminate each Option in its entirety in exchange for
a payment of cash, securities and/or other property equal to the excess of the Fair
Market Value of the Shares with respect to which the Option is vested and exercisable
immediately prior to the consummation of the transaction over the aggregate exercise
price thereof. In the event of a Change of Control, all conditions and restrictions with
respect to Restricted Shares shall lapse, except to the extent such conditions and
restrictions are assigned to the successor corporation (or its Parent) in connection
with the Change of Control.

For purposes of this Section 12(c), an Option shall be considered assumed, without
limitation, if, at the time of issuance of the stock or other consideration upon a
Corporate Transaction, each Optionee would be entitled to receive upon exercise of an
Option the same number and kind of shares of stock or the same amount of property, cash
or securities as the Optionee would have been entitled to receive upon the occurrence of
such transaction if the Optionee had been, immediately prior to the transaction, the
holder of the number of Shares of Common Stock covered by the Option at such time (after
giving effect to any adjustments in the number of Shares covered by the Option as
provided for in this Section 12); provided however that if such consideration received
in the transaction is not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon exercise of the Option to be solely common
stock of the successor corporation or its Parent equal to the Fair Market Value of the
per Share consideration received by holders of Common Stock in the transaction.

(d)Certain Distributions. In the event of any distribution to the
Company's shareholders of securities of any other entity or other assets (other than
dividends payable in cash or stock of the Company) without receipt of consideration by
the Company, the Administrator may, in its discretion, appropriately adjust the price
per Share of Common Stock covered by each outstanding Option to reflect the effect of
such distribution.

13.Time of Granting Options. The date of grant of an Option shall,
for all purposes, be the date on which the Administrator makes the determination
granting such Option. Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the date of
such grant.

14.Amendment and Termination of the Plan.

(a)Amendment and Termination. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable

(b)Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not adversely affect Options already granted (except to
the extent contemplated by such Options) and such Options shall remain in full force and
effect, unless mutually agreed otherwise between the Optionee and the Board (or other
body then administering the Plan), which agreement must be in writing and signed by the
Optionee and the Company.

15.Conditions Upon Issuance of Shares. Notwithstanding any other
provision of the Plan or any agreement entered into by the Company pursuant to the Plan,
the Company shall not be obligated, and shall have no liability for failure, to issue or
deliver any Shares under the Plan unless such issuance or delivery would comply with the
Applicable Laws, with such compliance determined by the Company in consultation with its
legal counsel.

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

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

17.Option Agreements. Options shall be evidenced by Option
Agreements in such forms as the Administrator shall from time to time approve.California Software Corporation
                   2901 S. Pullman Street
                 Santa Ana, California 92705

                    Employment Agreement

      This  Employment Agreement (the "Agreement"),  entered
into  this  13th  day  of December,  1999,  by  and  between
California Software Corporation (the "Company"),  having  an
office  at  2901  S. Pullman Street, Santa  Ana,  California
92705  and  Bruce  Acacio, (the "Employee"),  whose  mailing
address is 25 Glen Echo, Dove Canyon, CA  92679.

                          RECITALS

      WHEREAS, The Employee is one of the key executives  of
the  Company  and has experience in the area of business  of
which the Company is involved; and

      WHEREAS, The Company wishes to employ the Employee  as
President, Chief Executive Officer and Chairman of the Board
and the Employee wishes to provide these officer services to
the Company.

      NOW, THEREFORE, in consideration of the recitals,  the
following  representations and covenants and the payment  of
one  dollar made by each party to the other, the receipt and
sufficiency  of  which is acknowledged by  each  party,  the
parties agree on the following terms:

1.   ENGAGEMENT AND DURATION

1.1  The Company hereby engages the services of the Employee
for  the position of President, Chief Executive Officer  and
Chairman  of the Board and the Employee hereby accepts  such
engagement and agrees to perform the services to the best of
his  ability and in accordance with terms and conditions  of
this Agreement.

1.2   The  Company shall employ the Employee for a  term  of
three  (3) years commencing on the date as set above.   This
initial  term  can  be extended at the sole  option  of  the
Company.

2.   DUTIES

2.1  The Employee shall, pursuant to this Agreement, perform
all  duties customarily performed by an Employee  with  like
title and position of a publicly-held corporation engaged in
a business similar to the Company's business.

2.2   The  Employee  shall use his or her  best  efforts  to
promote  the  interests of the Company and,  to  the  extent
necessary to discharge the responsibilities assigned to  the
Employee,   perform   faithfully   and   efficiently    such
responsibilities.

2.3  The Employee shall perform his duties at the offices of
the  Company which are currently located at 2901 S. Pullman,
Santa  Ana,  California 92705, or at such other location  as
shall be approved by the board of directors.

2.4   The  Employee  will, subject  to  the  terms  of  this
agreement, comply promptly and faithfully with the Company's
reasonable  instructions, directions,  requests,  rules  and
regulations as may be expected of a part-time Employee.  The
Company  shall  not be deemed to have waived  the  right  to
require  the  Employee to perform any  duties  hereunder  by
assigning the Employee to any other duties or services or by
assigning  another individual to perform the duties  of  the
Employee.

2.5   The  Employee's  performance of  personal,  civil,  or
charitable  activities  or  the Employee's  service  on  any
boards or committees as of the date of this Agreement or  at
any  future time during the term of this Agreement shall not
be   deemed  to  interfere  with  the  performance  of   the
Employee's  services  and responsibilities  to  the  Company
pursuant to this Agreement.

2.6  In the event of a change of control of the Company, the
Employee  shall continue to serve the Company  in  the  same
capacity  and have the same authority, responsibilities  and
status  as  he had as of the date immediately prior  to  the
change  of  control.   Following a change  of  control,  the
Employee's  services shall be performed at such location  as
may  be  mutually  agreed upon between the Company  and  the
Employee.  For the purposes of this Agreement, a "change  of
control" shall be deemed to have occurred when:

     (a)  a person other than the current control person(s) of
       the Company becomes a control person; or
     (b)  a majority of the directors elected at any annual or
       special meeting of the Shareholders of the Company are not
       individuals nominated by the Company's then-incumbent Board
       of Directors.

3.   REMUNERATION AND BENEFITS

3.1  Base Salary.  The Employee shall be paid an annual base
salary   of   TWO   HUNDRED  TWENTY-FIVE  THOUSAND   DOLLARS
($225,000.00)  (U.S.D.)  for the first  year  of  employment
under  this  Agreement,  beginning  January  1,  2000.   The
Employee  shall  be  paid an annual  base  salary  of  THREE
HUNDRED  THOUSAND  DOLLARS ($300,000.00)  (U.S.D.)  for  the
second  year  of employment under this Agreement,  beginning
January  1, 2001. The Employee shall be paid an annual  base
salary of THREE HUNDRED FIFTY THOUSAND DOLLARS ($350,000.00)
(U.S.D.)  for  the  third  year  of  employment  under  this
Agreement, beginning January 1, 2002.

3.2   Quarterly Bonuses.  During the term of the  Agreement,
quarterly  bonuses  shall be paid to  the  Employee  by  the
Company,  in  the  amount of  TWENTY-FIVE  THOUSAND  DOLLARS
($25,000)  (U.S.D) per quarter based upon  a  percentage  of
achievement of the revenue goals as set forth by  the  board
of   directors  of  the  Company  in  the  Company's  annual
projections.

3.3   Stock  Options.  At the end of the first year  of  the
term  of  this  Agreement (December 31, 2000),  the  Company
shall  grant  to  Employee options to purchase  THREE HUNDRED
THOUSAND  (300,000) shares of  common  stock  of  the
Company, exercisable at the end of the initial term  of  the
Agreement.   At the end of the second year of  the  term  of
this  Agreement (December 31, 2001), the Company shall grant
to  Employee options to purchase THREE HUNDRED THOUSAND
(300,000) shares of common stock of the Company, exercisable
at the end of the initial term of the Agreement.  At the end
of  the  third year of the term of this Agreement  (December
31,  2002),  the Company shall grant to Employee options  to
purchase  THREE  HUNDRED THOUSAND  (300,000)  shares  of
common  stock of the Company, exercisable at the end of  the
initial term of the Agreement.

3.4  Reimbursement of Expenses.  The Company shall reimburse
the  Employee  for all reasonable expenses incurred  by  the
Employee in the performance of his duties pursuant  to  this
agreement  upon  the  Employee providing  the  Company  with
receipts  for  such  expenses.  Such  reimbursable  expenses
shall  not  include  customary day-to-day  office  expenses,
including  but  not  limited to copies,  faxes,  and  office
supplies.

4.   RESTRICTIVE COVENANTS

4.1  Non-Competition

4.1.1      During  the term of this Agreement, the  Employee
shall not:

      (a) own or have any interest directly in;

       (b)  act as an officer, director, agent, Employee  or
consultant of; or

       (c) assist in any way or in any capacity, any person,
     firm,  association, partnership, corporation  or  other
     entity which is,

a  business that is substantially similar to and/or competes
with  the  business  then engaged in  by  the  Company  (the
"Competitive Entity").

4.1.2      The restriction set out in subparagraph  4.1.1(a)
above  shall not apply to the Employee's ownership  of  less
than ten (10%) of the securities of any Competitive Entity.

4.1.3      The  Employee acknowledges that the  restrictions
contained  in this section 4.1 are reasonable;  however,  in
the  event that any court should determine that any  of  the
restrictive  covenants  contained in subparagraph  4.1.1  or
4.1.2   of   this  agreement,  or  any  part  thereof,   are
unenforceable because of the duration of such  provision  or
the area covered thereby, such court shall have the power to
reduce  the duration or area of such provision and,  in  its
reduced  form, such provision shall then be enforceable  and
shall be enforced.

4.2  Delivery of Records

4.2.1      Upon the termination of the Employee's employment
with  the Company, the Employee will deliver to the  Company
all  books,  records, lists, brochures  and  other  property
belonging to the Company or developed in connection with the
business of the Company.

4.3         Confidentiality

4.3.1     The term "Confidential Information" means any  and
all information concerning the business of the Company which
the  Employee may receive or develop as a result of  his/her
employment.  All documents, procedures, policies,  programs,
reports,  plans, proposals, technical information, know-how,
systems  and  other information unique to the  Company,  its
customers  or  principals,  received  or  developed  by  the
Employee  are  the  property  of  the  Company  and/or  such
parties.   The  Employee  shall not  make  any  unauthorized
disclosure  or use of and shall use his/her best efforts  to
prevent   publication  or  disclosure   or   use   of   such
confidential information.

4.3.2      The  Employee acknowledges that any  unauthorized
disclosure,   reproduction  or  use  of  such   Confidential
Information  by the Employee may result in material  damages
to the Company and consents to the issuance of an injunction
or  other  equitable remedy to prohibit, prevent  or  enjoin
unauthorized  disclosure or use of Confidential  Information
by the Employee.

4.3.3      Except as authorized by the Company, the Employee
will not:

       (a)     duplicate, transfer or disclose nor allow any
     other person to duplicate, transfer or disclose any  of
     the Company's Confidential Information;

  (b)  use the Company's Confidential Information without the
     prior written consent of the Company; or

        (c)     incorporate, in whole or in part, within any
     domestic  or foreign patent application any proprietary
     or Confidential Information disclosed by the Company.

4.3.4      The  Employee  will  safeguard  all  Confidential
Information  at all times so that it is not  exposed  to  or
used by unauthorized persons, and will exercise at least the
same   degree   of  care  to  protect  the  Employee's   own
Confidential Information.

4.3.5      The restrictive obligations set forth above shall
not apply to the disclosure or use of information which:

        (a)      is  or  later becomes publicly known  under
     circumstances involving no breach of this agreement  by
     the Employee;

  (b)  is already known to the Employee at the time of receipt
     of the Confidential Information;

  (c)  is lawfully made available to the Employee by a third
     party; or

       (d)     is independently developed by and Employee of
     the Employee who has not been privy to the Confidential
     Information provided by the Company.

4.3.6     If the Employee contends that any such information
disclosed  to him by the Company is in the public domain  or
was  in  the  possession  of  the  Employee  prior  to  such
disclosure  and  not under an obligation of confidence,  the
Employee will, within ten days of receipt by the Employee of
such  disclosure give written notice of such  contention  to
the  Company, which written notice shall include a  complete
identification  of  the  information  in  question  and  the
derivation thereof, including particulars of any contract in
which the Employee or any other person has made use of  such
concept or information.  If the Employee has not within  ten
days  of  receipt  by the Employee of such disclosure  given
such  written  notice  to  the Company,  then  it  shall  be
conclusively  presumed that all information communicated  by
the  Company  to  the  Employee concerning  the  development
originated  with  the  Company and  constitutes  secret  and
confidential information and know-how.

4.3.7      The  Employee hereby certifies that  he  has  not
brought  and will not bring with the Employee to the Company
or  use while performing his Employee duties for the Company
any  materials  or  documents of a former  employer  of  the
Employee  which are not generally available  to  the  public
except  the  know-how to which the right  to  use  has  duly
licensed  to  the  Company  by such  former  employer.   The
Employee understands that while employed by the Company, the
employer  is  not to breach any obligation of confidence  or
duty  and the Employee agrees that he will fulfill all  such
obligations during his employment with the Company.

4.3.8     No patent right or licenses are guaranteed by this
agreement  and  patent rights or licenses now  or  developed
during  the term of this agreement are the property of  this
Company.   The disclosure of Confidential Information  under
this  agreement  shall  not result in  any   obligation  for
either  party  to grant any rights in its patent  rights  or
confidential  information, and no other obligations  of  any
kind  are assumed by or implied against either party, except
for those stated in this agreement.

4.3.9      The  provision of section 4.3 shall  survive  the
termination of this agreement.

5.   TERMINATION

5.1   The  Company  may terminate the Employee's  employment
under this Agreement at any time upon the occurrence of  any
of the following events:

        (a)     the Employee acting unlawfully, dishonestly,
negligently, incompetently or in bad faith;

  (b)  the conviction of the Employee of a felony;

  (c)  the breach or default of any term of this agreement by
     the Employee if such breach or default has not been remedied
     to the satisfaction of the Company, acting responsibly,
     within 14 days after written notice of the breach of default
     has been delivered by the Company to the Employee.

5.2   In  the  event  of the termination of  the  Employee's
employment  under this agreement the Company shall  pay  the
following  amounts to the Employee within ten  days  of  the
date of termination:

       (a)     in the event of the termination of employment
     pursuant to subsection 5.1(a), (b), (d) and (e) of this
     agreement,  the Company shall pay to the  Employee  the
     full amount of compensation accrued pursuant to section
     3.0 of this agreement as of the date of termination;

       (b)     in the event of the termination of employment
     due to the death of the Employee, the Company shall pay
     to  the  Employee's estate or legal representative  the
     amount of compensation accrued pursuant to section 3 of
     this agreement as of the date of termination.

5.3  The Employee may terminate his obligations under this agreement:

  (a)   upon  the  default or breach of  any  term  of  this
    Agreement by the Company if such breach or default has not
    been remedied or is not being remedied to the satisfaction
    of the Employee, acting reasonably, within 14 days after
    written notice of the breach or default has been delivered
    by the Employee to the Company.

5.4   In  the  event  of the termination of  the  Employee's
employment  under this agreement pursuant to section  5.3(a)
of  this Agreement, the Company shall pay within ten days of
termination to the Employee      all compensation to be paid
to  the  Employee under this agreement for the remainder  of
the term of this agreement.

5.5   The rights of the Company and the Employee under  this
section  5 are in addition to and not in derogation  of  any
other remedies which may be available to the Company or  the
Employee at law or in equity.

6.   PERSONAL NATURE

6.1   This  agreement is personal and is entered into  based
upon  the  singular skill, qualifications and experience  of
the Employee.

7.   WAIVER

7.1   No consent or waiver, express or implied, by any party
to  this  agreement of any breach or default  by  the  other
party  in  the  performance of its  obligations  under  this
agreement or of any of the terms, covenants or conditions of
this  agreement shall be deemed or construed to be a consent
or  waiver of any subsequent or continuing breach or default
in  such party's performance or in the terms, covenants  and
conditions of this agreement.  The failure of any  party  to
this  agreement to assert any claim in a timely fashion  for
any of its rights or remedies under this agreement shall not
be  construed  as a waiver of any such claim and  shall  not
serve to modify, alter or restrict any such party's right to
assert such claim at any time thereafter.

8.   NOTICES

8.1   Any  notice relating to this agreement or required  or
permitted  to  be  given in accordance with  this  agreement
shall  be  in  writing and shall be personally delivered  or
mailed by registered mail, postage prepaid to the address of
the  parties  set  out on the first page of this  agreement.
Any  notice  shall  be  deemed  to  have  been  received  if
delivered, when delivered, and if mailed, on the  fifth  day
(excluding  Saturdays,  Sundays  and  holidays)  after   the
mailing  thereof.  If normal mail service is interrupted  by
strike,   slowdown,  or  other  cause,  a  notice  sent   by
registered  mail  will not be deemed to  be  received  until
actually  received and the party sending  the  notice  shall
utilize   any  other  services  which  have  not   been   so
interrupted or shall deliver such notice in order to  ensure
prompt receipt thereof.

8,2  Each party to this agreement may change its address for
the purpose of this section 9.0 by giving written notice  of
such change in the manner provided for in section 9.1.

9.   APPLICABLE LAW

9.1   This  agreement shall be governed by and construed  in
accordance  with  the laws of the State of  Nevada  and  the
federal  laws of the United applicable therein, which  shall
be  deemed to be the proper law hereof.  The parties  hereto
hereby  submit  to the jurisdiction of the courts  of  Clark
County, Las Vegas, Nevada.

10.      SEVERABILITY

10.1  If  any provision of this agreement for any reason  be
declared  invalid,  such declaration shall  not  effect  the
validity  of  any remaining portion of the agreement,  which
remaining  portion shall remain in full force and effect  as
if this agreement had been executed with the invalid portion
thereof  eliminated and is hereby declared the intention  of
the  parties  that  they would have executed  the  remaining
portions  of  this agreement without including  therein  any
such  part,  parts or portion which may, for any reason,  be
hereafter declared invalid.

11.  ENTIRE AGREEMENT

11.1 This agreement constitutes the entire agreement between
the  parties  hereto  and there are  no  representations  or
warranties, express or implied, statutory or otherwise other
than set forth in this agreement and there are no agreements
collateral hereto other than as are expressly set  forth  or
referred  to  herein. This agreement cannot  be  amended  or
supplement  except by a written agreement executed  by  both
parties hereto, provided that if the Company becomes  listed
on  any U.S. stock market or quotation system, the terms  of
this agreement may upon mutual agreement be renegotiated.

12.  ARBITRATION

12.1   In   the  event  of  any  dispute  arising   in   the
determination  of  the compensation to be paid  pursuant  to
section  5  or of the Employee's salary as set out  in  this
agreement,  the matter in dispute shall be referred  to  the
auditors  of the Company for determination.  If the auditors
cannot  agree  on a determination of the matter  in  dispute
within  ten days following the referral to them, the  matter
in  dispute shall be referred to a single arbitrator  under,
the Arbitration Act then in effect federally.

13.  NON-ASSIGNABILITY

13.1 This agreement shall not be assigned by either party to
this  agreement  without the prior written  consent  of  the
other party to this agreement.

14.  BURDEN AND BENEFIT

14.1  This  agreement shall enure to the benefit of  and  be
binding upon the parties hereto and their respective  heirs,
executors, administrators, successors and permitted assigns.

15.  TIME

15.1 Time is of the essence of this agreement.

16.  COUNTERPART

16.1  This Agreement may be executed in counterpart and such
counterparts  together shall constitute  one  and  the  same
instrument  and notwithstanding the date of execution  shall
be  deemed to bear the date as set out on the first page  of
this agreement.

IN  WITNESS  WHEREOF the Subscriber has duly  executed  this
subscription  as of the date set out on the  first  page  of
this agreement.

CALIFORNIA SOFTWARE CORPORATION

/s/Carol  Conway, Vice President

EMPLOYEE

/s/Bruce  Acacio, Employee

                       ACKNOWLEDGEMENT

STATE OF CALIFORNIA )
                    ) ss:
COUNTY OF ORANGE         )

      IN  WITNESS BEFORE ME, a Notary Public, within and for
said County and State, personally appeared Bruce Acacio  and
Carol  Conway,  proved  to me on the basis  of  satisfactory
evidence to be the persons described in and whose names  are
subscribed to the foregoing instrument, and acknowledged  to
me that they executed the same.

        WITNESS,   my   signature   this   ____    day    of
__________________, 1999.

___________________________________
                                   NOTARY PUBLIC

(SEAL)

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