Document:

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Exhibit 10.37

                               SPEEDFAM-IPEC, INC.

June 14, 2001

Mr. Peter Simone
61 Lehigh Road
Wellesley, MA 02482

Dear Pete:

After discussions with the SpeedFam-IPEC board of directors I am very pleased to
offer you the position of Chairman of the board of directors. The board is very
excited about your potential to help the company achieve greater success in the
market, and dramatic enhancement of shareholder value, by adding your skills and
experience to the existing team.

ROLE AND TIME EXPECTATIONS

As Chairman you would both serve as an employee and director of the company and
participate actively as an officer managing the company. In your capacity as an
officer, the CEO would report to you and you would have the same authority as
the CEO to manage operations and bind the company.

The board expects that over the longer term you would spend approximately 25% of
your time working with SpeedFam-IPEC, with two or three days every other week at
the SpeedFam-IPEC facility in Chandler, Arizona. In the near term, you may
determine that you need to spend more time each week in Chandler or other
locations to develop a deeper understanding of the company's goals, resources
and action plans.

We currently expect that you would concentrate on developing company strategies,
coaching and reviewing the management team's progress, and with the full board's
assistance, recruiting additional management and board personnel. You would keep
the board informed and obtain approval as necessary for changes in your duties
as you learn more about the company and your thinking evolves about your optimal
role in enhancing company performance.

The board may ask you to serve on board committees to the extent permitted by
rules requiring corporate governance by independent directors.

COMPENSATION
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Your compensation package is designed primarily to provide equity incentives
focused on significantly increasing overall shareholder value.

-        You will receive cash compensation, subject to withholding, of $10,000
         per month. If you wind up regularly spending more than 25% of your time
         working with SpeedFam-IPEC, the board will make an appropriate
         adjustment in your cash compensation.

-        The company will reimburse your out of pocket expenses incurred in
         performing your duties.

-        The board will grant you a nonqualified stock option to purchase
         360,000 shares of SpeedFam-IPEC common stock with an exercise price
         equal to the closing price of the common stock on the date you begin
         employment with the company (which we anticipate will be the day you
         accept this offer). The company will file a registration statement to
         cover those shares.

         -        The option will vest monthly over 18 months (20,000 shares per
                  month) as long as you remain an employee or director of the
                  company.

         -        The option will terminate 36 months after the date of grant to
                  the extent not exercised before that time. The option will
                  also terminate 30 days after you cease to be an employee or
                  director of the company to the extent not exercised before
                  that time and provided no change of control has occurred.

         -        If SpeedFam-IPEC is acquired before your options have fully
                  vested:

                  -        Your options will continue to vest monthly
                           post-acquisition if you continue to provide services
                           to SpeedFam-IPEC or the acquiror.

                  -        Your options will vest 100% when the acquisition
                           closes if the acquiror does not assume options.

                  -        Your options will vest 100% when the acquisition
                           closes if the acquiror assumes options, but the
                           acquiror terminates your services, or "constructively
                           terminates" you by offering you a continuing service
                           relationship which requires you to perform services
                           below the senior executive level, or requires a
                           greater than 25% time commitment, or creates other
                           obligations on your part (such as post-employment
                           noncompetition obligations).

                  -        If at the time of or after an acquisition you decide
                           to terminate your services voluntarily, or you refuse
                           to accept an offer to provide senior executive
                           services (and which does not require a greater time
                           commitment or other obligations on your part), your
                           unvested options will terminate and you will have 30
                           days to exercise your vested options.

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INDEMNIFICATION AND INSURANCE. The company will sign the same indemnification
agreement with you as it has signed with other directors. You will be covered by
SpeedFam-IPEC's director and officer insurance policy.

TERM. Your employment as an officer on these terms will remain in effect for six
months, when the board will review your performance and has the option to
continue your employment for an additional six months. If the board decides not
to renew your employment, your salary and option vesting would cease. Your
option would continue to be exercisable until 30 days after your board service
ends.

Pete, the entire SpeedFam-IPEC board would enthusiastically welcome you as
Chairman of the company. Please indicate your acceptance of these arrangements
by signing this letter below and sending me a copy. Your employment will start,
and your option will be granted, the day you accept this offer.

Sincerely yours,

Neil Bonke, Director

I accept SpeedFam-IPEC's offer described above.

-----------------------------------
Peter Simone

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Date signed

                                      -3-ex10-38

Exhibit 10.38

SPEEDFAM-IPEC, INC.

1995 STOCK PLAN

as amended and restated as of July      , 2001

         1.     
Purposes
of the Plan. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Company’s business. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant. Stock
Purchase Rights may also be granted under the Plan.

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

                  (a) “Administrator” means the Compensation Committee or any successor
thereto of the Board of Directors of the Corporation or by such other committee
as shall be determined by the Board of Directors which shall administer the
Plan, in accordance with Section 4 of the Plan. The Committee shall consist of
not less than two members of the Board of Directors, each of whom shall qualify
as a “disinterested person” to administer the Plan as contemplated by Rule
16b-3, as amended, or other applicable rules under Section 16(b) of the
Securities Exchange Act of 1934, as amended.

                  (b) “Applicable Laws” means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.

                  (c) “Board” means the Board of Directors of the Company.

                  (d) “Change in Control” means the occurrence of any of the following
events:

                           (i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting power represented
by the Company’s then outstanding voting securities; or

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

                           (iii) A change in the composition of the Board occurring within a two-year
period, as a result of which fewer than a majority of the directors are
Incumbent Directors.

 

“Incumbent Directors” means directors who either (A) are Directors as of
the date hereof, or (B) are elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the Incumbent Directors at
the time of such election or nomination (but will not include an individual
whose election or nomination is in connection with an actual or threatened
proxy contest relating to the election of directors to the Company); or

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

                  (e) “Code” means the Internal Revenue Code of 1986, as amended.

                  (f) “Committee” means a committee of Directors appointed by the Board in
accordance with Section 4 of the Plan.

                  (g) “Common Stock” means the common stock of the Company.

                  (h) “Company” means Speedfam-IPEC, Inc., an Illinois corporation.

                  (i) “Consultant” means any natural person, including an advisor, engaged
by the Company or a Parent or Subsidiary to render services to such entity.

                  (j) “Director” means a member of the Board.

                  (k) “Disability” means total and permanent disability as defined in
Section 22(e)(3) of the Code.

                  (l) “Employee” means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by
the Company is not so guaranteed, then three (3) months following the 91st day
of such leave any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option. Neither service as a Director nor payment of a
director’s fee by the Company shall be sufficient to constitute “employment” by
the Company.

                  (m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

                  (n) “Fair Market Value” means, as of any date, the value of Common Stock
determined as follows:

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                           (i) If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National Market
or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value
shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or system on the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;

                           (ii) If the Common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of a Share of
Common Stock shall be the mean between the high bid and low asked prices for
the Common Stock on the day 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 shall be determined in good faith by the Administrator.

                  (o) “Incentive Stock Option” means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

                  (p) “Inside Director” means a Director who is an Employee.

                  (q) “Nonstatutory Stock Option” means an Option not intended to qualify as
an Incentive Stock Option.

                  (r)
“Notice of Grant” means a written or electronic notice evidencing
certain terms and conditions of an individual Option or Stock Purchase Right
grant. The Notice of Grant is part of the Option Agreement.

                  (s) “Officer” means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

                  (t) “Option” means a stock option granted pursuant to the Plan.

                  (u) “Option Agreement” means an agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.

                  (v) “Option Exchange Program” means a program whereby outstanding Options
are surrendered in exchange for Options with a lower exercise price.

                  (w) “Optioned Stock” means the Common Stock subject to an Option or Stock
Purchase Right.

                  (x) “Optionee” means the holder of an outstanding Option or Stock Purchase
Right granted under the Plan.

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                  (y) “Outside Director” means a Director who is not an Employee.

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

                  (aa) “Plan” means this 1995 Stock Plan.

                  (bb) “Restricted Stock” means shares of Common Stock acquired pursuant to
a grant of Stock Purchase Rights under Section 11 of the Plan.

                  (cc) “Restricted Stock Purchase Agreement” means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.

                  (dd) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.

                  (ee) “Section 16(b)” means Section 16(b) of the Exchange Act.

                  (ff) “Service Provider” means an Employee, Director or Consultant.

                  (gg) “Share” means a share of the Common Stock, as adjusted in accordance
with Section 14 of the Plan.

                  (hh) “Stock Purchase Right” means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.

                  (ii) “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 14 of
the Plan, the maximum aggregate number of Shares that may be optioned and sold
under the Plan is 5,300,000 Shares. The Shares may be authorized, but
unissued, or reacquired Common Stock.

                  If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued
under the Plan, whether upon exercise of an Option or Right, shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by
the Company at their original purchase price, such Shares shall become
available for future grant under the Plan.

         4.     Administration of the Plan.

                  (a) Procedure.

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                           (i) Multiple Administrative Bodies. Different Committees with respect to
different groups of Service Providers may administer the Plan.

                           (ii) Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
shall be structured to satisfy the requirements for exemption under Rule 16b-3.

                           (iii) Other Administration. Other than as provided above, the Plan shall
be administered by (A) the Board or (B) a Committee, which committee shall be
constituted to satisfy Applicable Laws.

                  (b) Powers of the Administrator. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:

                           (i) to determine the Fair Market Value;

                           (ii) to select the Service Providers to whom Options and Stock Purchase
Rights may be granted hereunder;

                           (iii) to determine the number of shares of Common Stock to be covered by
each Option and Stock Purchase Right granted hereunder;

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

                           (v) to determine the terms and conditions, not inconsistent with the terms
of the Plan, of any Option or Stock Purchase Right granted hereunder. Such
terms and conditions include, but are not limited to, the exercise price, the
time or times when Options or Stock Purchase Rights 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
or Stock Purchase Right or the shares of Common Stock relating thereto, based
in each case on such factors as the Administrator, in its sole discretion,
shall determine;

                           (vi) to reduce the exercise price of any Option or Stock Purchase Right to
the then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option or Stock Purchase Right shall have declined since the
date the Option or Stock Purchase Right was granted;

                           (vii) to institute an Option Exchange Program;

                           (viii) to construe and interpret the terms of the Plan and awards granted
pursuant to the Plan;

                           (ix) to prescribe, amend and rescind rules and regulations relating to the
Plan, including rules and regulations relating to sub-plans established for the
purpose of satisfying applicable foreign laws;

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                           (x) to modify or amend each Option or Stock Purchase Right (subject to
Section 16(c) of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Options longer than is otherwise
provided for in the Plan;

                           (xi) to allow Optionees to satisfy withholding tax obligations by electing
to have the Company withhold from the Shares to be issued upon exercise of an
Option or Stock Purchase Right that number of Shares having a Fair Market Value
equal to the minimum amount required to be withheld. 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. All elections by an Optionee to have
Shares withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable;

                           (xii) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option or Stock Purchase Right
previously granted by the Administrator;

                           (xiii) to make all other determinations deemed necessary or advisable for
administering the Plan.

                  (c) Effect of Administrator’s Decision. The Administrator’s decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options or Stock Purchase Rights.

         5.     Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Service Providers. Incentive Stock Options may be granted only
to Employees.

         6.     Limitations.

                  (a) Each Option shall be designated in the Option Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

                  (b) Neither the Plan nor any Option or Stock Purchase Right shall confer
upon an Optionee any right with respect to continuing the Optionee’s
relationship as a Service Provider with the Company, nor shall they interfere
in any way with the Optionee’s right or the Company’s right to terminate such
relationship at any time, with or without cause.

         7.     Term of Plan. Subject to Section 20 of the Plan, the Plan shall become
effective upon its adoption by the Board. It shall continue in effect for a
term of ten (10) years unless terminated earlier under Section 16 of the Plan.

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         8.     Term of Option. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten
(10) years from the date of grant or such shorter term as may be provided in
the Option Agreement. Moreover, in the case of an Incentive Stock Option
granted to an Optionee who, at the time the Incentive Stock Option is granted,
owns stock representing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Incentive Stock Option shall be five (5) years from
the date of grant or such shorter term as may be provided in the Option
Agreement.

         9.     Option Exercise Price and Consideration.

                  (a) Exercise Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

                           (i) In the case of an Incentive Stock Option

                                 (A) granted to an Employee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than 110% of the Fair Market Value
per Share on the date of grant.

                                 (B) granted to any Employee other than an Employee described in paragraph
(A) immediately above, the per Share exercise price shall be no less than 100%
of the Fair Market Value per Share on the date of grant.

                           (ii) Notwithstanding the foregoing, Options may be granted with a per
Share exercise price of less than 100% of the Fair Market Value per Share on
the date of grant pursuant to a merger or other corporate transaction.

                  (b) Waiting Period and Exercise Dates. At the time an Option is granted,
the Administrator shall fix the period within which the Option may be exercised
and shall determine any conditions that must be satisfied before the Option may
be exercised.

                  (c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:

                           (i) cash;

                           (ii) check;

                           (iii) promissory note;

                           (iv) other Shares which, in the case of Shares acquired directly or
indirectly from the Company, (A) have been owned by the Optionee for more than
six (6) months on

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the date of surrender, and (B) 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;

                           (v) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan;

                           (vi) a reduction in the amount of any Company liability to the Optionee,
including any liability attributable to the Optionee’s participation in any
Company-sponsored deferred compensation program or arrangement;

                           (vii) any combination of the foregoing methods of payment; or

                           (viii) such other consideration and method of payment for the issuance of
Shares to the extent permitted by Applicable Laws.

         10.     Exercise of Option.

                  (a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be suspended during any unpaid leave
of absence. An Option may not be exercised for a fraction of a Share.

                           An Option shall be deemed exercised when the Company receives: (i) written
or electronic notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the
Shares with respect to which the Option is exercised. Full payment may consist
of any consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company), 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 Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided
in Section 14 of the Plan.

                           Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.

                  (b) Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, other than upon the Optionee’s death or
Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence
of a specified time in the Option Agreement, the Option shall remain
exercisable for three (3) months following the

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Optionee’s termination. If, on the date of termination, the Optionee is
not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.

                  (c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee’s Disability, the Optionee may exercise
his or her Option within such period of time as is specified in the Option
Agreement to the extent the Option is vested on the date of termination (but in
no event later than the expiration of the term of such Option as set forth in
the Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Optionee’s termination. If, on the date of termination, the Optionee is
not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.

                  (d) Death of Optionee. If an Optionee dies while a Service Provider, the
Option may be exercised following the Optionee’s death within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of death (but in no event may the option be exercised later
than the expiration of the term of such Option as set forth in the Option
Agreement), by the Optionee’s designated beneficiary, provided such beneficiary
has been designated prior to Optionee’s death in a form acceptable to the
Administrator. If no such beneficiary has been designated by the Optionee,
then such Option may be exercised by the personal representative of the
Optionee’s estate or by the person(s) to whom the Option is transferred
pursuant to the Optionee’s will or in accordance with the laws of descent and
distribution. In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following Optionee’s
death. If, at the time of death, Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. If the Option is not so exercised within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

         11.     Stock Purchase Rights.

                  (a) Rights to Purchase. Stock Purchase Rights may be issued either alone,
in addition to, or in tandem with other awards granted under the Plan and/or
cash awards made outside of the Plan. After the Administrator determines that
it will offer Stock Purchase Rights under the Plan, it shall advise the offeree
in writing or electronically, by means of a Notice of Grant, of the terms,
conditions and restrictions related to the offer, including the number of
Shares that the offeree shall be entitled to purchase, the price to be paid,
and the time within which the offeree must accept such offer. The offer shall
be accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.

                  (b) Repurchase Option. Unless the Administrator determines otherwise, the
Restricted Stock Purchase Agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser’s
service with the Company for any reason

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(including death or Disability). The purchase price for Shares
repurchased pursuant to the Restricted Stock Purchase Agreement shall be the
original price paid by the purchaser and may be paid by cancellation of any
indebtedness of the purchaser to the Company. The repurchase option shall
lapse at a rate determined by the Administrator.

                  (c) Other Provisions. The Restricted Stock Purchase Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.

                  (d) Rights as a Shareholder. Once the Stock Purchase Right is exercised,
the purchaser shall have the rights equivalent to those of a shareholder, and
shall be a shareholder when his or her purchase is entered upon the records of
the duly authorized transfer agent of the Company. No adjustment will be made
for a dividend or other right for which the record date is prior to the date
the Stock Purchase Right is exercised, except as provided in Section 14 of the
Plan.

         12.     Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right
may not be sold, pledged, assigned, hypothecated, transferred, or disposed of
in any manner other than by will or by the laws of descent or distribution and
may be exercised, during the lifetime of the Optionee, only by the Optionee.
If the Administrator makes an Option or Stock Purchase Right transferable, such
Option or Stock Purchase Right shall contain such additional terms and
conditions as the Administrator deems appropriate.

         13.     Formula Option Grants to Outside Directors. Discretionary awards can
be made to Outside Directors pursuant to Section 4(b) hereof. All grants of
Options to Outside Directors pursuant to this Section 13, however, shall be
automatic and shall be made in accordance with the following provisions:

                  (a) All Options granted pursuant to this Section shall be Nonstatutory
Stock Options and, except as otherwise provided herein, shall be subject to the
other terms and conditions of the Plan.

                  (b) Each person who first becomes an Outside Director following the
effective date of this Plan, as determined in accordance with Section 7 hereof,
shall be automatically granted an Option to purchase 15,000 Shares (the “First
Option”) or the date on which such person first becomes an Outside Director,
whether through election by the stockholders of the Company or appointment by
the Board to fill a vacancy; provided, however, that an Inside Director who
ceases to be an Inside Director but who remains a Director shall not receive a
First Option.

                  (c) Each Outside Director shall be automatically granted an Option to
purchase 5,000 Shares (a “Subsequent Option”) on the date of the annual meeting
of the stockholders of the Company, if as of such date, he or she shall have
served on the Board for at least the preceding six (6) months.

                  (d) Notwithstanding the provisions of subsections (c) and (d) hereof, any
exercise of an Option granted before the Company has obtained shareholder
approval of the Plan in

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accordance with Section 20 hereof shall be conditioned upon obtaining such
shareholder approval of the Plan in accordance with Section 20 hereof.

                  (e) The terms of each Option granted pursuant to this Section shall be as
follows:

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

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

                           (iii) subject to Section 14 hereof, the First Option and the Subsequent
Option shall be immediately exercisable and fully vested.

         14.     Adjustments Upon Changes in Capitalization, Merger or Change in
Control.

                  (a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock that have
been authorized for issuance under the Plan but as to which no Options or Stock
Purchase Rights have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option or Stock Purchase Right, the
number of Shares that may be added annually to the Plan pursuant to Section
3(i), the number of shares which may be granted pursuant to the automatic grant
provisions of Section 13 and the number of shares of Common Stock as well as
the price per share of Common Stock covered by each such outstanding Option or
Stock Purchase Right, 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, 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 Board, 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 or Stock
Purchase Right.

                  (b) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, the Administrator shall notify each Optionee as
soon as practicable prior to the effective date of such proposed transaction.
The Administrator in its discretion may provide for an Optionee to have the
right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares
as to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse
as to all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not
been previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.

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                  (c) Merger or Change in Control. In the event of a merger of the Company
with or into another corporation, or a Change in Control, each outstanding
Option and Stock Purchase Right shall be assumed or an equivalent option or
right substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. With respect to Options granted to an Outside Director
pursuant to Section 13 that are assumed or substituted for, if following such
assumption or substitution the Optionee’s status as a Director or a director of
the successor corporation, as applicable, is terminated other than upon a
voluntary resignation by the Optionee, then the Optionee shall fully vest in
and have the right to exercise the Option as to all of the Optioned Stock,
including Shares as to which it would not otherwise be vested or exercisable.

                           In the event that the successor corporation refuses to assume or
substitute for the Option or Stock Purchase Right, the Optionee shall fully
vest in and have the right to exercise the Option or Stock Purchase Right as to
all of the Optioned Stock, including Shares as to which it would not otherwise
be vested or exercisable. If an Option or Stock Purchase Right becomes fully
vested and exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Administrator shall notify the Optionee in
writing or electronically that the Option or Stock Purchase Right shall be
fully vested and exercisable for a period of fifteen (15) days from the date of
such notice, and the Option or Stock Purchase Right shall terminate upon the
expiration of such period.

                           For the purposes of this subsection (c), the Option or Stock Purchase
Right shall be considered assumed if, following the merger or Change in
Control, the option or right confers the right to purchase or receive, for each
Share of Optioned Stock subject to the Option or Stock Purchase Right
immediately prior to the merger or Change in Control, the consideration
(whether stock, cash, or other securities or property) received in the merger
or Change in Control by holders of Common Stock for each Share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or Change in Control is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option or Stock Purchase Right, for each Share of Optioned
Stock subject to the Option or Stock Purchase Right, to be solely common stock
of the successor corporation or its Parent equal in fair market value to the
per share consideration received by holders of Common Stock in the merger or
Change in Control.

         15.     Date of Grant. The date of grant of an Option or Stock Purchase Right
shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall
be provided to each Optionee within a reasonable time after the date of such
grant.

         16.     Amendment and Termination of the Plan.

                  (a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.

-12-

                  (b) Shareholder Approval. The Company shall obtain shareholder approval
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.

                  (c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to Options granted
under the Plan prior to the date of such termination.

         17.     Conditions Upon Issuance of Shares.

                  (a) Legal Compliance. Shares shall not be issued pursuant to the exercise
of an Option or Stock Purchase Right unless the exercise of such Option or
Stock Purchase Right and the issuance and delivery of such Shares shall comply
with Applicable Laws and shall be further subject to the approval of counsel
for the Company with respect to such compliance.

                  (b) Investment Representations. As a condition to the exercise of an
Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right 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.

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

         19.     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.

         20.     Shareholder Approval. The Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan
is adopted. Such shareholder approval shall be obtained in the manner and to
the degree required under Applicable Laws.

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