Document:

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                              NEOWARE SYSTEMS, INC.

                        INCENTIVE STOCK OPTION AGREEMENT

         NEOWARE SYSTEMS, INC. (the "Company"), hereby grants to ________ (the
"Optionee") this option to purchase shares of the Company's Common Stock at a
price and on the terms set forth herein and subject to the terms and conditions
contained in the Company's 1995 Stock Option Plan, as amended (the "1995 Plan"),
which terms and conditions are hereby incorporated herein.

         1. GRANT. Effective as of _________ (the "Date of Grant"), the
Company's Compensation and Stock Option Committee (the "Committee") granted to
you an option (the "Option") to purchase up to _____ shares of the Common Stock
of the Company (the "Option Shares") at a price of $______ per share (the
"Option Price").

         2. TYPE OF OPTION. This Option is intended to be an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").

         3. TERM. The Option granted hereunder shall expire at 5:00 p.m. (local
time at the principal executive offices of the Company) on ___________ (the
"Expiration Date"), unless sooner terminated as provided herein.

         4. EXERCISE OF OPTION. Subject to Paragraph 2 and in accordance with
the terms and conditions contained in the 1995 Plan, the Option shall be
exercisable, on a cumulative basis, in accordance with the following schedule:

                  BEGINNING ON                 NUMBER OF SHARES
                  ------------                 ----------------
                   ________                         _____
                   ________                         _____

         5. METHOD OF EXERCISE AND PAYMENT.

                  5.1 This Option shall be exercisable by written notice to the
Company, pursuant to Paragraph 13 hereof, specifying the number of Option Shares
to be purchased. The notice shall also be accompanied by payment of the
aggregate Option Price of the Option Shares being purchased.

                  If the listing, registration or qualification of the Option
Shares upon any securities exchange or under any federal or state law, or the
consent or approval of any governmental regulatory body is necessary as a
condition of or in connection with the purchase of such Option Shares, the
Company shall not be obligated to issue or deliver the certificates representing
the Option Shares as to which the Option has been exercised unless and until
such listing, registration, qualification, consent or approval shall have been
effected or obtained.

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                  5.2 To the extent permitted by the Committee, payment of the
Option Price may be made: (i) by cash, check or such other instrument as the
Committee may accept; (ii) by exchange of shares of Common Stock valued at its
fair market value on the date of exercise; or (iii) by means of a brokers'
cashless exercise procedure. Where payment of the Option Price is to be made
with shares of Common Stock acquired under any compensation plan of the Company,
such shares will not be accepted as payment unless the Optionee has held such
shares for a minimum period of time specified in the 1995 Plan.

         6. RIGHTS OF STOCKHOLDERS. Neither an Optionee nor his or her legal
representatives or beneficiaries shall have any of the rights of a stockholder
with respect to any shares subject to any Option until such shares shall have
been issued upon the proper exercise of such Option.

         7. NONTRANSFERABILITY OF OPTIONS. Except as set forth herein, no Option
may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated otherwise than by will or by the laws of descent and distribution
or pursuant to a qualified domestic relations order as defined by the Code, or
Title I of the Employee Retirement Income Security Act, or the rules thereunder.

         8. TERMINATION OF EMPLOYMENT OR SERVICE. Subject to the condition that
no option shall be exercisable after the expiration of the period fixed by the
Committee in accordance with Paragraph 2 hereof and unless otherwise determined
by the Committee after the Date of Grant:

                  8.1 In the event that the Optionee ceases to be an employee of
the Company or its subsidiaries by reason of a discharge for cause, the Option
shall terminate immediately.

                  8.2 In the event that the Optionee ceases to be an employee of
the Company or its subsidiaries by reason of a voluntary or involuntary
termination for any reason other than death, disability, retirement or
termination for cause, the Option may be exercised, to the extent that it was
exercisable at the time of such termination or on such accelerated basis as the
Committee may determine, for a period of three months after termination.

                  8.3 In the event that the Optionee shall die while employed by
the Company or within the periods referred to in Paragraphs 8.2 or 8.4, the
Option shall be exercisable during its remaining term, to the extent then
exercisable or on such accelerated basis as the Committee may determine, by the
Optionee's legal representative, within one year after death.

                 8.4 In the event that the Optionee's employment terminates due
to disability (within the meaning of Code Section 22(e)(3)) or retirement, the
Option granted shall be exercisable during its remaining term, to the extent
then exercisable or on such accelerated basis as the Committee may specify,
within a period of one year after such termination. For purposes of Section 8.4,
"Retirement" shall mean any employee retirement under the Company's retirement
policy.

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         9. RIGHTS OF EMPLOYEES. Nothing in the Option shall interfere with or
limit in any way the right of the Company or any subsidiary to terminate the
Optionee's employment at any time, nor confer upon the Optionee any right to
continue in the employ of the Company or any subsidiary. The Optionee shall not
have the right to be selected as an Optionee, or having been so selected, to be
selected again as an Optionee. The grant of the Option shall not constitute a
part of the base salary or any other compensation of the Optionee under any
other benefit plan of the Company or any subsidiary unless expressly so provided
in such other benefit plan.

         10. TAX WITHHOLDING. The Company shall have the authority, with respect
to the Option, to withhold, or to require the Optionee to remit to the Company,
prior to the issuance or delivery of any Option Shares, an amount sufficient to
satisfy federal, state and local withholding requirements on any exercise of the
Option. The Committee may, in its sole discretion, permit the Optionee to elect
to satisfy withholding taxes, if any, arising in connection with the exercise of
the Option either by electing to have the Company retain (or by delivering to
the Company) shares of Common Stock then held by the Optionee valued at the fair
market value on the date the tax is to be withheld. Any such election shall be
subject to tax and securities law requirements.

         11. CHANGES IN CAPITALIZATION. In the event of any change in the Common
Stock of the Company, such as merger, consolidation, reorganization, stock
split, stock dividend, combination of shares or exchange of shares, the Board or
the Committee shall adjust appropriately the maximum number and class of shares
subject to the Option and/or the Option Price, except that any fractional shares
resulting from such adjustments shall be eliminated by rounding any portion of a
share equal to .500 or greater up, and any portion of a share equal to less than
..500 down, in each case to the nearest whole number.

         12. MERGER OR ASSET SALE; CHANGE IN CONTROL. In the event of merger or
asset sale, or a "Change in Control," as that term is defined in Section 14 of
the 1995 Plan, outstanding Options shall be adjusted as set forth in Section 14
of the 1995 plan and as determined by the Committee in its sole discretion.

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         13. NOTICES. Any notice to be given to the Company shall be addressed
to the Company at 400 Feheley Drive, King of Prussia, Pennsylvania, 19406, and
any notice given to the Optionee shall be addressed to the Optionee at the
address then appearing on the personnel records of the Company or the subsidiary
of the Company by which the Optionee is employed, or at such other address as
either party hereafter may designate in writing to the other. Any such notice
shall be deemed to have been duly given when deposited in the United States
mail, addressed as aforesaid, registered or certified mail, and with proper
postage and registration and certification fees prepaid, or transmitted by hand
delivery or overnight express.

         IN WITNESS WHEREOF, the Company has granted this Option as of the _____
day of ________, _____.

                                       NEOWARE SYSTEMS, INC.

                                       By: ____________________________________

ACKNOWLEDGMENT AND AGREEMENT:

         Optionee acknowledges receipt of this Agreement and the 1995 Plan and
agrees to all of the terms and conditions contained herein and therein.

OPTIONEE:  __________________________________
                      (Signature)

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                              NEOWARE SYSTEMS, INC.

                  NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT

         NEOWARE SYSTEMS, INC. (the "Company") hereby grants to _______ (the
"Optionee") this option to purchase shares of the Company's Common Stock at a
price and on the terms set forth herein and subject to the terms and conditions
contained in the Company's 1995 Stock Option Plan, as amended (the "1995 Plan"),
which terms and conditions are hereby incorporated herein.

                  1. Grant. Effective as of __________ (the "Date of Grant"),
the Company granted to the Optionee an option (the "Option") to purchase up to
_________ shares of the Common Stock of the Company (the "Option Shares") at a
price of $______ per share (the "Option Price").

         2. Type of Option. This Option is intended to be a non-qualified stock
option, granted under Part III of the 1995 Plan, and is not intended to be an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").

         3. Term. The Option granted hereunder shall expire at 5:00 p.m. (local
time at the principal executive offices of the Company) on ___________ (the
"Expiration Date"), unless sooner terminated as provided herein.

         4. Exercise of Option. Subject to Paragraph 3 and in accordance with
the terms and conditions contained in the 1995 Plan, the Option shall vest and
be exercisable, on a cumulative basis, in accordance with the following
schedule:

                        Beginning On              Number of Shares
                        ------------              ----------------
                         __________                     _______
                         __________                     _______

         5. Method of Exercise and Payment.

                  5.1 This Option shall be exercisable by written notice to the
Company, pursuant to Paragraph 11, specifying the number of Option Shares to be
purchased. The notice shall also be accompanied by payment of the aggregate
Option Price of the Option Shares being purchased.

                  If the listing, registration, or qualification of the Option
Shares upon any securities exchange or under any federal or state law, or the
consent or approval of any governmental regulatory body is necessary as a
condition of or in connection with the purchase of such Option Shares, the
Company shall not be obligated to issue or deliver the certificates representing
the Option Shares as to which the Option has been exercised unless and until
such listing, registration, qualification, consent, or approval shall have been
effected or obtained.

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                  5.2 Payment of the Option Price may be made: (i) in cash or
check; (ii) by exchange of shares of Common Stock valued at its fair market
value on the date of exercise; (iii) by means of a brokers' cashless exercise
procedure by the delivery to the Company of an exercise notice together with
irrevocable instructions to a broker to sell a sufficient number of shares of
Common Stock to pay the purchase price of Common Stock as to which such exercise
relates; and to deliver promptly such amount to the Company; or (iv) by any
combination of the foregoing. Where payment of the Option Price is to be made
with shares of Common Stock acquired under any compensation plan of the Company,
such shares will not be accepted as payment unless the Optionee has held such
shares for the period of time specified in the 1995 Plan.

         6. Rights of Shareholders. Neither an Optionee nor his or her legal
representatives or beneficiaries shall have any of the rights of a shareholder
with respect to any shares subject to any Option until such shares shall have
been issued upon the proper exercise of such Option.

         7. Nontransferability of Options. No Option may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated otherwise than by will
or by the laws of descent and distribution or, with respect to nonqualified
stock options, pursuant to a qualified domestic relations order as defined by
the Code, or Title I of the Employee Retirement Income Security Act, or the
rules thereunder. Except as otherwise specifically provided herein, all Options
granted to an Optionee under the 1995 Plan shall be exercised during the
lifetime of such Optionee only by such Optionee.

         8. Termination of Service. Subject to the condition that no Option
shall be exercisable after the Expiration date:

                  8.1 Upon the Optionee's cessation of service as a non-employee
director (for reasons other than retirement or death), including cessation of
service due to physical or mental disability that prevents the Optionee from
rendering further services as a non-employee director, only those options
exercisable at the date of cessation of service shall be exercisable by the
Optionee. This Option shall be exercisable until the first to occur of: (i) the
expiration of the remaining term of the Option; or (ii) three months after the
Optionee's cessation of service.

         Upon the Optionee's retirement or death, this Option shall be
exercisable as follows:

                  (a) Retirement. Upon the Optionee's retirement as a
non-employee director after the Optionee has served for at least six consecutive
years as a director, this Option shall continue to be exercisable during its
term as if the Optionee had remained a non-employee director.

                  (b) Death. In the event of the Optionee's death while a member
of the Board of Directors or within the period after termination of service
during which the Option is exercisable by the Optionee in accordance with this
Paragraph 8, the Option shall be exercisable, to the extent then exercisable,
until the first to occur of (i) the expiration of the remaining term of the
Option or (ii) one year after the date of the Optionee's death.

         9. No Guaranteed Term of Office. Nothing in this Option shall be deemed
an agreement or condition guaranteeing to the Optionee any particular term of
office or limiting the right of the Company, the Board of Directors or the
shareholders to terminate the Optionee's term of office under the circumstances
set forth in the Company's Certificate of Incorporation or Bylaws, or as
otherwise provided by law.

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         10. Adjustments. In the event of any change in the outstanding Common
Stock of the Company, such as merger, consolidation, reorganization, stock
split, stock dividend, combination of shares or exchange of shares, the Board or
the Committee shall adjust appropriately the maximum number and class of shares
subject to the Option and/or the Option Price, except that any fractional shares
resulting from such adjustments shall be eliminated by rounding any portion of a
share equal to .500 or greater up, and any portion of a share equal to less than
..500 down, in each case to the nearest whole number.

         11. Notices. Any notice to be given to the Company shall be addressed
to the Company at 400 Feheley Drive, King of Prussia, Pennsylvania 19406, and
any notice given to the Optionee shall be addressed to the Optionee at the
address then appearing on the records of the Company, or at such other address
as either party hereafter may designate in writing to the other. Any such notice
shall be deemed to have been duly given when deposited in the United States
mail, addressed as aforesaid, registered, or certified mail, and with proper
postage, registration, and certification fees prepaid, or transmitted by hand
delivery or overnight express.

         IN WITNESS WHEREOF, the Company has granted this Option as of the _____
day of ________, ____.

                                NEOWARE  SYSTEMS, INC.

                                By: ______________________________________
                                         _________, CHIEF FINANCIAL OFFICER

ACKNOWLEDGMENT AND AGREEMENT:

         Optionee acknowledges receipt of this Agreement and the 1995 Plan and
agrees to all of the terms and conditions contained herein and therein.

OPTIONEE:  __________________________________
                      (Signature)
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