Document:

Exhibit
10.2

STARENT NETWORKS, CORP.

Form of Non-Employee Director

Nonstatutory Stock Option Agreement

Granted Under 2007 Stock Incentive Plan

1.                                       Grant
of Option.

This agreement evidences the grant by Starent
Networks, Corp., a Delaware corporation (the “Company”), on
           , 200[ ]  (the “Grant Date”) to  [                  ],
a director of the Company (the “Participant”), of an option to purchase, in
whole or in part, on the terms provided herein and in the Company’s 2007 Stock
Incentive Plan (the “Plan”), a total of
[                
 ] shares (the “Shares”) of common stock, $0.001  par
value per share, of the Company (“Common Stock”) at
$[          ] per Share.  Unless earlier terminated, this option shall
expire at 5:00 p.m., Eastern time, on [              ]  (the “Final Exercise Date”).

It is intended that the option evidenced by this
agreement shall not be an incentive stock option as defined in Section 422 of
the Internal Revenue Code of 1986, as amended, and any regulations promulgated
thereunder (the “Code”).  Except as
otherwise indicated by the context, the term “Participant”, as used in this
option, shall be deemed to include any person who acquires the right to
exercise this option validly under its terms.

2.                                       Vesting
Schedule.

(a)                                  This
option will become exercisable (“vest”) as to 25% of the original number of
Shares (the “Initial Vesting Amount”) on the first anniversary of the Grant
Date and as to an additional 6.25% of the original number of Shares at the end
of each successive  three-month  period following the first anniversary of
the Grant Date until the fourth anniversary of the Grant Date (the “End Date”).

(b)                                 The
right of exercise shall be cumulative so that to the extent the option is not
exercised in any period to the maximum extent permissible it shall continue to
be exercisable, in whole or in part, with respect to all Shares for which it is
vested until the earlier of the Final Exercise Date or the termination of this
option under Section 3 hereof or the Plan.

(c)                                  Notwithstanding
Section 2(a) above, in case of (i) the consolidation or merger of the Company
with or into any other corporation or other entity (other than a merger or
consolidation in which all or substantially all of the individuals and entities
who were beneficial owners of the outstanding securities entitled to vote
generally in the election of directors of the Company immediately prior to such
transaction beneficially own, directly or indirectly, more than 50% of the
outstanding securities entitled to vote generally in the election of directors
of the resulting, surviving or acquiring corporation in such transaction), or
(ii) the sale of all or substantially all of the properties and assets of the
Company as an entirety to any other person (either event being hereinafter referred
to as a “Change of Control Event”), then 100% of the Shares shall become fully
vested upon the consummation of such Change of Control Event.

3.                                       Exercise
of Option.

(a)                                  Form
of Exercise.  Each election to
exercise this option shall be in writing, signed by the Participant, and
received by the Company at its principal office, accompanied by this agreement,
and payment in full in the manner provided in the Plan.  The Participant may purchase less than the
number of shares covered hereby, provided that no partial exercise of this
option may be for any fractional share.

(b)                                 Continuous
Relationship with the Company Required. 
Except as otherwise provided in this Section 3, this option may not
be exercised unless the Participant, at the time he or she exercises this
option, is, and has been at all times since the Grant Date, an employee or
officer of, or consultant or advisor to, the Company or any other entity the
employees, officers, directors, consultants, or advisors of which are eligible
to receive option grants under the Plan (an “Eligible Participant”)

(c)                                  Termination
of Relationship with the Company.  If
the Participant ceases to be an Eligible Participant for any reason, then,
except as provided in paragraphs (d) and (e) below, the right to exercise
this option shall terminate  three
months after such cessation (but in no event after the Final Exercise Date), provided
that this option shall be exercisable only to the extent that the
Participant was entitled to exercise this option on the date of such cessation.  Notwithstanding the foregoing, if the
Participant, prior to the Final Exercise Date, violates the non-competition or
confidentiality provisions of any employment contract, confidentiality and
nondisclosure agreement or other agreement between the Participant and the
Company, the right to exercise this option shall terminate immediately upon
written notice to the Participant from the Company describing such violation.

(d)                                 Exercise
Period Upon Death or Disability.  If
the Participant dies or becomes disabled (within the meaning of
Section 22(e)(3) of the Code) prior to the Final Exercise Date while he or
she is an Eligible Participant and the Company has not terminated such
relationship for “cause” as specified in paragraph (e) below, this option shall
be exercisable, within the period of one year following the date of death or
disability of the Participant, by the Participant (or in the case of death by
an authorized transferee), provided  that this option shall be
exercisable only to the extent that this option was exercisable by the
Participant on the date of his or her death or disability, and further provided
that this option shall not be exercisable after the Final Exercise Date.

(e)                                  Termination
for Cause.  If, prior to the Final
Exercise Date, the Participant’s employment or other relationship with the
Company is terminated by the Company for Cause (as defined below), the right to
exercise this option shall terminate immediately upon the effective date of
such termination of employment or other relationship.  If the Participant is party to an employment,
consulting or severance agreement with the Company that contains a definition
of “cause” for termination of employment or other relationship, “Cause” shall
have the meaning ascribed to such term in such agreement.  Otherwise, “Cause” shall mean willful
misconduct by the Participant or willful failure by the Participant to perform
his or her responsibilities to the Company (including, without limitation,
breach by the Participant of any provision of any employment, consulting,
advisory, nondisclosure, non-competition or other similar agreement between the
Participant and the Company), as determined by the Company, which determination

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shall be conclusive.  The
Participant shall be considered to have been discharged for “Cause” if the
Company determines, within 30 days after the Participant’s resignation, that
discharge for cause was warranted.

4.                                       Withholding.

No Shares will be issued pursuant to the exercise of
this option unless and until the Participant pays to the Company, or makes
provision satisfactory to the Company for payment of, any federal, state or
local withholding taxes required by law to be withheld in respect of this
option.

5.                                       Nontransferability
of Option.

This option may not be sold, assigned, transferred,
pledged or otherwise encumbered by the Participant, either voluntarily or by
operation of law, except by will or the laws of descent and distribution, and,
during the lifetime of the Participant, this option shall be exercisable only
by the Participant.

6.                                       Provisions
of the Plan.

This option is subject to the provisions of the Plan,
a copy of which is furnished to the Participant with this option.

IN WITNESS WHEREOF, the
Company has caused this option to be executed under its corporate seal by its
duly authorized officer.  This option
shall take effect as a sealed instrument.

	
   

  	
   

  	
   

  	
  STARENT NETWORKS, CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

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PARTICIPANT’S ACCEPTANCE

The undersigned hereby accepts the foregoing option
and agrees to the terms and conditions thereof. 
The undersigned hereby acknowledges receipt of a copy of the Company’s
2007 Stock Incentive Plan.

	
   

  	
   

  	
  PARTICIPANT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

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EXHIBIT
A

NOTICE OF STOCK OPTION EXERCISE

	
  Date: 

  	
   

  

 

Starent Networks, Corp.

30 International Place

Tewksbury, MA 01876

Attention:  Treasurer

Dear Sir or Madam:

I am the holder of an Nonstatutory Stock Option
granted to me under the Starent Networks, Corp. (the “Company”) 2007 Stock
Incentive Plan on                       for
the purchase of                       shares
of Common Stock of the Company at a purchase price of $                       per
share.

I hereby exercise my option to purchase                        
shares of Common Stock (the “Shares”), for which I have enclosed                       in
the amount of $                       .  Please register my stock certificate as
follows:

	
  

  	
   

  	
   

  	
   

  	
  (check applicable box)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name(s):

  	
   

  	
   

  	
   

  	
  o

  	
  TEN COM

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  o

  	
  TEN ENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
  o

  	
  JT TEN

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tax I.D. #:

  	
   

  	
   

  	
   

  	
  o

  	
  UNIF GIFT MIN ACT

  

 

	
  Very truly yours,

  
	
   

  
	
   

  
	
   

  	
   

  
	
  (Signature)Exhibit 10.2

 

UNITED ONLINE, INC.

2001 STOCK INCENTIVE PLAN

 

ARTICLE
ONE

GENERAL
PROVISIONS

I.              PURPOSE
OF  THE  PLAN

This Plan is intended to promote the interests of the
Corporation by providing eligible persons in the Corporation’s service with the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in
such service.

Capitalized terms shall have the meanings assigned to
such terms in the attached Appendix.

II.            STRUCTURE
OF  THE  PLAN

A.    The
Plan shall be divided into four separate equity incentive programs:

·              the Discretionary Option Grant
Program under which eligible persons may, at the discretion of the Plan
Administrator, be granted options to purchase shares of Common Stock,

·              the Salary Investment Option Grant
Program under which eligible employees may elect to have         a portion of their base salary invested each year in special
option grants,

·              the Stock Issuance Program under
which eligible persons may, at the discretion of the Plan Administrator, be
issued shares of Common Stock directly, either through the immediate purchase
of such shares or as a bonus for services rendered the Corporation (or any
Parent or Subsidiary), and

·              the Director Fee Option Grant Program
under which non-employee Board members may elect to have all or any portion of
their annual retainer fee otherwise payable in cash applied to a special stock
option grant.

B.            The
provisions of Articles One and Six shall apply to all equity programs under the
Plan and shall govern the interests of all persons under the Plan.

III.           ADMINISTRATION  OF
THE  PLAN

A.            The
Primary Committee and the Board shall have concurrent authority to administer
the Discretionary Option Grant and Stock Issuance Programs with respect to
Section 16 Insiders.  Administration of
the Discretionary Option Grant and Stock Issuance Programs with respect to all
other persons eligible to participate in those programs may, at the Board’s 

discretion, be vested in the Primary Committee or a
Secondary Committee, or the Board may retain the power to administer those
programs with respect to all such persons. 
However, any discretionary option grants or stock issuances for members
of the Primary Committee must be authorized by a disinterested majority of the
Board.

B.    Members
of the Primary Committee or any Secondary Committee shall serve for such period
of time as the Board may determine and may be removed by the Board at any
time.  The Board may also at any time
terminate the functions of any Secondary Committee and reassume all powers and
authority previously delegated to such committee.

C.    Each
Plan Administrator shall, within the scope of its administrative functions
under the Plan, have full power and authority (subject to the provisions of the
Plan) to establish such rules and regulations as it may deem appropriate for
proper administration of the Discretionary Option Grant and Stock Issuance
Programs and to make such determinations under, and issue such interpretations
of, the provisions of those programs and any outstanding options or stock
issuances thereunder as it may deem necessary or advisable.  Decisions of the Plan Administrator within
the scope of its administrative functions under the Plan shall be final and
binding on all parties who have an interest in the Discretionary Option Grant
and Stock Issuance Programs under its jurisdiction or any option or stock
issuance thereunder.

D.    The
Primary Committee shall have the sole and exclusive authority to determine
which Section 16 Insiders and other highly compensated Employees shall be
eligible for participation in the Salary Investment Option Grant Program for
one or more calendar years.  However, all
option grants under the Salary Investment Option Grant Program shall be made in
accordance with the express terms of that program, and the Primary Committee
shall not exercise any discretionary functions with respect to the option
grants made under that program.

E.     Service
on the Primary Committee or the Secondary Committee shall constitute service as
a Board member, and members of each such committee shall accordingly be
entitled to full indemnification and reimbursement as Board members for their
service on such committee.  No member of
the Primary Committee or the Secondary Committee shall be liable for any act or
omission made in good faith with respect to the Plan or any option grants or
stock issuances under the Plan.

F.     Administration
of the Director Fee Option Grant Program shall be self-executing in accordance
with the terms of that program, and no Plan Administrator shall exercise any
discretionary functions with respect to any option grants or stock issuances
made under such program.

IV.           ELIGIBILITY

A.    The
persons eligible to participate in the Discretionary Option Grant and Stock
Issuance Programs are as follows:

1.     Employees,

2.     non-employee
members of the Board or the board of directors of any Parent or Subsidiary, and

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3.     independent
contractors who provide services to the Corporation (or any Parent or
Subsidiary).

B.    Only
Employees who are Section 16 Insiders or other highly compensated individuals
shall be eligible to participate in the Salary Investment Option Grant Program.

C.    Each
Plan Administrator shall, within the scope of its administrative jurisdiction
under the Plan, have full authority to determine, (1) with respect to the
option grants under the Discretionary Option Grant Program, which eligible
persons are to receive such grants, the time or times when those grants are to
be made, the number of shares to be covered by each such grant, the status of
the granted option as either an Incentive Option or a Non-Statutory Option, the
time or times when each option is to become exercisable, the vesting schedule
(if any) applicable to the option shares and the maximum term for which the
option is to remain outstanding and (2) with respect to stock issuances under
the Stock Issuance Program, which eligible persons are to receive such
issuances, the time or times when the issuances are to be made, the number of
shares to be issued to each Participant, the vesting schedule (if any)
applicable to the issued shares and the consideration for such shares.

D.    The
Plan Administrator shall have the absolute discretion either to grant options
in accordance with the Discretionary Option Grant Program or to effect stock
issuances in accordance with the Stock Issuance Program.

E.     Non-employee
Board members shall be eligible to participate in the Director Fee Option Grant
Program.  In no event, however, shall a
non-employee Board member be eligible for such participation if that individual
would be required, whether contractually or otherwise, to transfer the
ownership of the option grant received under that program, or any economic
interest in such grant, to any venture fund or other entity with which he or
she is at the time affiliated.

V.            STOCK
SUBJECT  TO  THE  PLAN

A.    The
stock issuable under the Plan shall be shares of authorized but unissued or
reacquired Common Stock, including shares repurchased by the Corporation on the
open market.  The number of shares of
Common Stock reserved for issuance over the term of the Plan shall not exceed
9,477,779 shares.  Such reserve shall
consist of the shares that remain available for issuance immediately prior to the
Plan Effective Date under the Predecessor Plans, including the shares subject
to outstanding options under those Predecessor Plans, as well as 1,300,000
shares due to the automatic share reserve increase that occurred on January 2,
2002.

B.    The
number of shares of Common Stock available for issuance under the Plan shall
automatically increase on the first trading day of January each calendar year
during the term of the Plan, beginning with calendar year 2002, by an amount
equal to four percent (4%) of the total number of shares of Common Stock
outstanding on the last trading day in December of the immediately preceding
calendar year, but in no event shall any such annual increase exceed 1,300,000
shares.

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C.    No
one person participating in the Plan may receive options, separately
exercisable stock appreciation rights and direct stock issuances for more than
2,000,000 shares of Common Stock in the aggregate per calendar year.

D.    Shares
of Common Stock subject to outstanding options (including options transferred
to this Plan from the Predecessor Plans) shall be available for subsequent
issuance under the Plan to the extent (1) those options expire or terminate for
any reason prior to exercise in full or (2) the options are cancelled in
accordance with the cancellation-regrant provisions of Article Two.  Unvested shares issued under the Plan and
subsequently cancelled or repurchased by the Corporation at the original issue
price paid per share, pursuant to the Corporation’s repurchase rights under the
Plan shall be added back to the number of shares of Common Stock reserved for
issuance under the Plan and shall accordingly be available for reissuance
through one or more subsequent option grants or direct stock issuances under
the Plan.  However, should the exercise
price of an option under the Plan be paid with shares of Common Stock or should
shares of Common Stock otherwise issuable under the Plan be withheld by the
Corporation in satisfaction of the withholding taxes incurred in connection
with the exercise of an option or the vesting of a stock issuance under the
Plan, then the number of shares of Common Stock available for issuance under
the Plan shall be reduced by the gross number of shares for which the option is
exercised or which vest under the stock issuance, and not by the net number of
shares of Common Stock issued to the holder of such option or stock
issuance.  Shares of Common Stock
underlying one or more stock appreciation rights granted pursuant to the Plan
shall not be available for subsequent issuance
under the Plan if the stock appreciation right is exercised.

E.     If
any change is made to the Common Stock by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without the
Corporation’s receipt of consideration, appropriate adjustments shall be made
by the Plan Administrator to (1) the maximum number and/or class of securities
issuable under the Plan, (2) the maximum number and/or class of securities for
which any one person may be granted stock options, separately exercisable stock
appreciation rights and direct stock issuances under the Plan per calendar
year, (3) the number and/or class of securities and the exercise price per
share in effect under each outstanding option under the Plan, (4) the number
and/or class of securities and price per share in effect under each outstanding
option transferred to this Plan from the Predecessor Plans and (5) the maximum
number and/or class of securities by which the share reserve is to increase
automatically each calendar year pursuant to the provisions of Section V.B of
this Article One.  Such adjustments to
the outstanding options are to be effected in a manner which shall preclude the
enlargement or dilution of rights and benefits under such options.  The adjustments determined by the Plan
Administrator shall be final, binding and conclusive.

F.     Outstanding
awards granted pursuant to the Plan shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital
or business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.

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ARTICLE
TWO

DISCRETIONARY
OPTION GRANT PROGRAM

I.              OPTION
TERMS

Each option shall be evidenced by one or more
documents in the form approved by the Plan Administrator; provided,
however, that each such document shall comply with the terms
specified below.  Each document
evidencing an Incentive Option shall, in addition, be subject to the provisions
of the Plan applicable to such options.

A.    Exercise Price.

1.     The
exercise price per share shall be fixed by the Plan Administrator.

2.     The
exercise price shall become immediately due upon exercise of the option and
shall, subject to the provisions of Section I of Article Seven and the
documents evidencing the option, be payable in one or more of the forms
specified below:

(i)            cash or check made
payable to the Corporation,

(ii)           shares of Common
Stock held for the requisite period necessary to avoid a charge to the
Corporation’s earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date, or

(iii)          to the extent the
option is exercised for vested shares, through a special sale and remittance
procedure pursuant to which the Optionee shall concurrently provide irrevocable
instructions to (a) a Corporation-designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Corporation, out of the
sale proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to be withheld by
the Corporation by reason of such exercise and (b) the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale.

Except to the extent such sale and remittance
procedure is utilized, payment of the exercise price for the purchased shares
must be made on the Exercise Date.

B.    Exercise and Term of Options.
Each option shall be exercisable at such time or times, during such period and
for such number of shares as shall be determined by the Plan Administrator and
set forth in the documents evidencing the option.  However, no option shall have a term in
excess of ten (10) years measured from the option grant date.

C.    Effect of Termination of
Service.

1.     The
following provisions shall govern the exercise of any options granted pursuant
to the Discretionary Option Grant Program that are outstanding at the time of
the Optionee’s cessation of Service:

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(i)            Any option
outstanding at the time of the Optionee’s cessation of Service shall remain
exercisable for such period of time thereafter as shall be determined by the
Plan Administrator and set forth in the documents evidencing the option, but no
such option shall be exercisable after the expiration of the option term.

(ii)           Any option
outstanding at the time of the Optionee’s death and exercisable in whole or in
part at that time may be subsequently exercised by the personal representative
of the Optionee’s estate or by the person or persons to whom the option is
transferred pursuant to the Optionee’s will or the laws of inheritance or by
the Optionee’s designated beneficiary or beneficiaries of that option.

(iii)          Should the Optionee’s
Service be terminated for Misconduct or should the Optionee otherwise engage in
Misconduct while options granted pursuant to this Article Two are outstanding,
then all of those options shall terminate immediately and cease to be
outstanding.

(iv)          During the
applicable post-Service exercise period, the option may not be exercised in the
aggregate for more than the number of vested shares for which the option is
exercisable on the date of the Optionee’s cessation of Service.  Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding for any vested shares for which
the option has not been exercised.  However,
the option shall, immediately upon the Optionee’s cessation of Service,
terminate and cease to be outstanding to the extent the option is not otherwise
at that time exercisable for vested shares.

2.     The
Plan Administrator shall have complete discretion, exercisable either at the
time an option is granted or at any time while the option remains outstanding,
to:

(i)            extend the period
of time for which the option is to remain exercisable following the Optionee’s
cessation of Service from the limited exercise period otherwise in effect for
that option to such greater period of time as the Plan Administrator shall deem
appropriate, but in no event beyond the expiration of the option term, and/or

(ii)           permit the option
to be exercised, during the applicable post-Service exercise period, not only
with respect to the number of vested shares of Common Stock for which such
option is exercisable at the time of the Optionee’s cessation of Service but
also with respect to one or more additional installments in which the Optionee
would have vested had the Optionee continued in Service.

D.    Stockholder Rights. The holder of an
option shall have no stockholder rights with respect to the shares subject to
the option until such person shall have exercised the option, paid the exercise
price and become a holder of record of the purchased shares.

E.     Repurchase Rights. The Plan
Administrator shall have the discretion to grant options which are exercisable
for unvested shares of Common Stock. 
Should the Optionee cease Service while such shares are unvested, the
Corporation shall have the right to repurchase, at the 

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exercise price paid per share, any or all of those unvested
shares.  The terms upon which such
repurchase right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares) shall
be established by the Plan Administrator and set forth in the document
evidencing such repurchase right.

F.     Limited Transferability of Options.
During the lifetime of the Optionee, options shall be exercisable only by the
Optionee and shall not be assignable or transferable other than by will or by
the laws of inheritance following the Optionee’s death.  However, the Plan Administrator may permit an
assignment, in whole or in part, during the Optionee’s lifetime, of a
Non-Statutory Option, if such assignment is in connection with the Optionee’s
estate plan and is to one or more members of the Optionee’s immediate family or
to a trust established exclusively for one or more such family members.  The assigned portion may only be exercised by
the person or persons who acquire a proprietary interest in the option pursuant
to the assignment.  The terms applicable
to the assigned portion shall be the same as those in effect for the option
immediately prior to such assignment and shall be set forth in such documents
issued to the assignee as the Plan Administrator may deem appropriate.  Notwithstanding the foregoing, the Optionee
may also designate one or more persons as the beneficiary or beneficiaries of
his or her outstanding options under this Article Two, and any outstanding
options shall, in accordance with such designation, automatically be
transferred to such beneficiary or beneficiaries upon the Optionee’s
death.  Such beneficiary or beneficiaries
shall take the transferred options subject to all the terms and conditions of
the applicable agreement evidencing each such transferred option, including
(without limitation) the limited time period during which the option may be
exercised following the Optionee’s death.

II.            INCENTIVE
OPTIONS

The terms specified below shall be applicable to all
Incentive Options.  Except as modified by
the provisions of this Section II, all the provisions of Articles One, Two and
Six shall be applicable to Incentive Options. 
Options which are specifically designated as Non-Statutory Options when
issued under the Plan shall not be subject to the terms of this Section II.

A.    Eligibility. Incentive Options may only
be granted to Employees.

B.    Dollar Limitation.  The aggregate Fair Market Value of the shares
of Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee under the Plan (or any other
option plan of the Corporation or any Parent or Subsidiary) may for the first
time become exercisable as Incentive Options during any one calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($100,000).

To the extent the Employee holds two (2) or more such
options which become exercisable for the first time in the same calendar year,
the foregoing limitation on the exercisability of such options as Incentive
Options shall be applied on the basis of the order in which such options are
granted.

C.    10% Stockholder.  If any Employee to whom an Incentive Option
is granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten 

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percent (110%) of the Fair Market Value per share of Common Stock on
the option grant date, and the option term shall not exceed five (5) years
measured from the option grant date.

III.           CORPORATE
TRANSACTION/CHANGE  IN
CONTROL

A.    In
the event of any Corporate Transaction, the shares of Common Stock at the time
subject to each outstanding option granted under this Discretionary Option
Grant Program shall automatically vest in full so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
exercisable for all the shares of Common Stock at the time subject to such
option and may be exercised for any or all of those shares as fully vested
shares of Common Stock.  However, an
outstanding option shall not become
vested on such an accelerated basis if and to the extent: (1) such option is,
in connection with the Corporate Transaction, to be assumed by the successor
corporation (or parent thereof) or (2) such option is to be replaced with a
cash incentive program of the successor corporation which preserves the spread
existing at the time of the Corporate Transaction on any shares for which the
option is not otherwise at that time exercisable and provides for subsequent
payout in accordance with the same exercise/vesting schedule applicable to
those option shares or (3) the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of the option grant.

B.    All
outstanding repurchase rights under the Discretionary Option Grant Program
shall automatically terminate, and the shares of Common Stock subject to those
terminated rights shall immediately vest in full, in the event of any Corporate
Transaction, except to the extent: (1) those repurchase rights are to be
assigned to the successor corporation (or parent thereof) in connection with
such Corporate Transaction or (2) such accelerated vesting is precluded by
other limitations imposed by the Plan Administrator at the time the repurchase
right is issued.

C.    Immediately
following the consummation of the Corporate Transaction, all outstanding
options granted pursuant to the Discretionary Option Grant Program shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof).

D.    Each
option granted pursuant to the Discretionary Option Grant Program which is
assumed in connection with a Corporate Transaction shall be appropriately
adjusted, immediately after such Corporate Transaction, to apply to the number
and class of securities which would have been issuable to the Optionee in
consummation of such Corporate Transaction had the option been exercised
immediately prior to such Corporate Transaction.  Appropriate adjustments to reflect such
Corporate Transaction shall also be made to (1) the exercise price payable per
share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the same, (2)
the maximum number and/or class of securities available for issuance over the
remaining term of the Plan and (3) the maximum number and/or class of
securities for which any one person may be granted stock options, separately
exercisable stock appreciation rights and direct stock issuances under the Plan
per calendar year and (4) the maximum number and/or class of securities by
which the share reserve is to increase automatically each calendar year.  To the extent the holders of Common Stock
receive cash consideration for their Common Stock in consummation of the
Corporate Transaction, with the 

 8
 

Plan Administrator’s consent prior to the consummation of the Corporate
Transaction, the successor corporation may, in connection with the assumption
of the outstanding options under the Discretionary Option Grant Program,
substitute one or more shares of its own common stock with a fair market value
equivalent to the cash consideration paid per share of Common Stock in such
Corporate Transaction.

E.     Among
its discretionary powers, the Plan Administrator shall have the ability to
structure an option (either at the time the option is granted or at any time
while the option remains outstanding) so that the option shall become
immediately exercisable and some or all of the shares subject to that option
shall automatically become vested (and some or all of the repurchase rights of
the Corporation with respect to the unvested shares subject to that option
shall immediately terminate) upon the occurrence of a Corporate Transaction, a
Change in Control, any other event or the Optionee’s Involuntary Termination
within a designated period of time following any of these events.

F.     The
portion of any Incentive Option accelerated in connection with a Corporate
Transaction or Change in Control shall remain exercisable as an Incentive
Option only to the extent the applicable One Hundred Thousand Dollar ($100,000)
limitation is not exceeded.  To the
extent such dollar limitation is exceeded, the accelerated portion of such
option shall be exercisable as a Non-Statutory Option under the Federal tax
laws.

IV.           CANCELLATION
AND  REGRANT  OF  OPTIONS

The Plan Administrator shall have the authority to
effect, at any time and from time to time, with the consent of the affected
option holders, the cancellation of any or all outstanding options under the
Discretionary Option Grant Program (including outstanding options incorporated
from the Predecessor Plans) and to grant in substitution new options covering
the same or different number of shares of Common Stock.

V.            STOCK
APPRECIATION  RIGHTS

A.    The
Plan Administrator shall have full power and authority to grant to selected
Optionees tandem stock appreciation rights and/or limited stock appreciation rights.

B.    The
following terms shall govern the grant and exercise of tandem stock
appreciation rights:

1.     One
or more Optionees may be granted the right, exercisable upon such terms as the
Plan Administrator may establish, to elect between the exercise of the
underlying option for shares of Common Stock and the surrender of that option
in exchange for a distribution from the Corporation in an amount equal to the
excess of (a) the Fair Market Value (on the option surrender date) of the
number of shares in which the Optionee is at the time vested under the
surrendered option (or surrendered portion thereof) over (b) the aggregate
exercise price payable for such shares.

2.     No
such option surrender shall be effective unless it is approved by the Plan
Administrator, either at the time of the actual option surrender or at any
earlier time.  If the surrender is so
approved, then the distribution to which the Optionee shall be entitled may be 

 9
 

made in shares of Common Stock valued at Fair Market Value on the
option surrender date, in cash, or partly in shares and partly in cash, as the
Plan Administrator shall in its sole discretion deem appropriate.

3.     If
the surrender of an option is not approved by the Plan Administrator, then the
Optionee shall retain whatever rights the Optionee had under the surrendered
option (or surrendered portion thereof) on the option surrender date and may
exercise such rights at any time prior to the later
of (a) five (5) business days after the receipt of the rejection notice or (b)
the last day on which the option is otherwise exercisable in accordance with
the terms of the documents evidencing such option, but in no event may such
rights be exercised more than ten (10) years after the option grant date.

C.    The
following terms shall govern the grant and exercise of limited stock
appreciation rights:

1.     One
or more Section 16 Insiders may be granted limited stock appreciation rights
with respect to their outstanding options.

2.     Upon
the occurrence of a Hostile Take-Over, each individual holding one or more
options with such a limited stock appreciation right shall have the
unconditional right (exercisable for a thirty (30)-day period following such
Hostile Take-Over) to surrender each such option to the Corporation.  In return for the surrendered option, the
Optionee shall receive a cash distribution from the Corporation in an amount
equal to the excess of (A) the Take-Over Price of the shares of Common Stock at
the time subject to such option (whether or not the Optionee is otherwise vested
in those shares) over (B) the aggregate exercise price payable for those
shares.  Such cash distribution shall be
paid within five (5) days following the option surrender date.

3.     At
the time such limited stock appreciation right is granted, the Plan Administrator
shall pre-approve any subsequent exercise of that right in accordance with the
terms of this Paragraph C. Accordingly, no further approval of the Plan
Administrator or the Board shall be required at the time of the actual option
surrender and cash distribution.

 

 10

ARTICLE
THREE

SALARY
INVESTMENT OPTION GRANT PROGRAM

I.              OPTION
GRANTS

The Primary Committee shall have the sole and
exclusive authority to determine the calendar year or years (if any) for which
the Salary Investment Option Grant Program is to be in effect and to select the
Section 16 Insiders and other highly compensated Employees eligible to
participate in the Salary Investment Option Grant Program for such calendar
year or years.  Each selected individual
who elects to participate in the Salary Investment Option Grant Program must,
prior to the start of each calendar year of participation, file with the Plan
Administrator (or its designate) an irrevocable authorization directing the
Corporation to reduce his or her base salary for that calendar year by an
amount not less than Ten Thousand Dollars ($10,000.00) nor more than Fifty
Thousand Dollars ($50,000.00). Each individual who files such a timely
authorization shall automatically be granted an option under the Salary
Investment Option Grant Program on the first trading day in January of the
calendar year for which the salary reduction is to be in effect.

II.            OPTION
TERMS

Each option shall be a Non-Statutory Option evidenced
by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document shall comply with
the terms specified below.

A.    Exercise Price.

1.     The
exercise price per share shall be thirty-three and one-third percent (33-1/3%)
of the Fair Market Value per share of Common Stock on the option grant date.

2.     The
exercise price shall become immediately due upon exercise of the option and
shall be payable in one or more of the alternative forms authorized under the
Discretionary Option Grant Program. 
Except to the extent the sale and remittance procedure specified
thereunder is utilized, payment of the exercise price for the purchased shares
must be made on the Exercise Date.

B.    Number of Option Shares. The number of
shares of Common Stock subject to the option shall be determined pursuant to
the following formula (rounded down to the nearest whole number):

X = A  ̧
(B x 66-2/3%), where

X is the number of
option shares,

A is the dollar
amount of the reduction in the Optionee’s base salary for the calendar year to
be in effect pursuant to this program, and

 11
 

 B is the Fair Market Value per share of Common
Stock on the option grant date.

C.    Exercise and Term of Options. The
option shall become exercisable in a series of twelve (12) successive equal
monthly installments upon the Optionee’s completion of each calendar month of
Service in the calendar year for which the salary reduction is in effect.  Each option shall have a maximum term of ten
(10) years measured from the option grant date.

D.    Effect of Termination of Service.
Should the Optionee cease Service for any reason while one or more options
granted under this Article Three are outstanding, then each such option shall
remain exercisable, for any or all of the shares for which the option is
exercisable at the time of such cessation of Service, until the earlier of (i) the expiration of the ten (10)-year option
term or (ii) the expiration of the three (3)-year period measured from the date
of such cessation of Service.  Should the
Optionee die while one or more options granted under this Article Three are outstanding,
then each such option may be exercised, for any or all of the shares for which
the option is exercisable at the time of the Optionee’s cessation of Service
(less any shares subsequently purchased by Optionee prior to death), by the
personal representative of the Optionee’s estate or by the person or persons to
whom the option is transferred pursuant to the Optionee’s will or the laws of
inheritance or by the designated beneficiary or beneficiaries of such
option.  Such right of exercise shall lapse,
and the option shall terminate, upon the earlier of (i)
the expiration of the ten (10)-year option term or (ii) the three (3)-year
period measured from the date of the Optionee’s cessation of Service.  However, the option shall, immediately upon
the Optionee’s cessation of Service for any reason, terminate and cease to
remain outstanding with respect to any and all shares of Common Stock for which
the option is not otherwise at that time exercisable.

III.           CORPORATE
TRANSACTION/ CHANGE  IN
CONTROL/ HOSTILE  TAKE-OVER

A.    In
the event of any Corporate Transaction while the Optionee remains in Service,
the shares of Common Stock at the time subject to each outstanding option
granted under this Salary Investment Option Grant Program shall automatically
vest in full so that each such option shall, immediately prior to the effective
date of the Corporate Transaction, become exercisable for all the shares of
Common Stock at the time subject to such option and may be exercised for any or
all of those shares as fully-vested shares of Common Stock.  Each such outstanding option shall terminate
immediately following the Corporate Transaction, except to the extent assumed
by the successor corporation (or parent thereof) in such Corporate
Transaction.  Any option so assumed and
shall remain exercisable for the fully-vested shares until the earlier of (i) the expiration of the ten (10)-year option
term or (ii) the expiration of the three (3)-year period measured from the date
of the Optionee’s cessation of Service.

B.    In
the event of a Change in Control while the Optionee remains in Service, the
shares of Common Stock at the time subject to each outstanding option granted
under this Salary Investment Option Grant Program shall automatically vest in
full so that each such option shall, immediately prior to the effective date of
the Change in Control, become exercisable for all the shares of Common Stock at
the time subject to such option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. 
Such option shall remain exercisable until 

 12
 

the earliest to occur of (i) the expiration
of the ten (10)-year option term, (ii) the expiration of the three (3)-year
period measured from the date of the Optionee’s cessation of Service, (iii) the
termination of the option in connection with a Corporate Transaction or (iv)
the surrender of the option in connection with a Hostile Take-Over.

C.    Upon
the occurrence of a Hostile Take-Over, the Optionee shall have a thirty
(30)-day period in which to surrender to the Corporation each outstanding
option granted him or her under the Salary Investment Option Grant
Program.  The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to the surrendered option (whether or not the option is otherwise at
the time exercisable for those shares) over (ii) the aggregate exercise price
payable for such shares.  Such cash
distribution shall be paid within five (5) days following the surrender of the
option to the Corporation.  The Primary
Committee shall, at the time the option with such limited stock appreciation
right is granted under the Salary Investment Option Grant Program, pre-approve
any subsequent exercise of that right in accordance with the terms of this
Paragraph C. Accordingly, no further approval of the Primary Committee or the
Board shall be required at the time of the actual option surrender and cash
distribution.

D.    Each
option granted pursuant to the Salary Investment Option Grant Program which is
assumed in connection with a Corporate Transaction shall be appropriately
adjusted, immediately after such Corporate Transaction, to apply to the number
and class of securities which would have been issuable to the Optionee in
consummation of such Corporate Transaction had the option been exercised
immediately prior to such Corporate Transaction.  Appropriate adjustments shall also be made to
the exercise price payable per share under each outstanding option, provided
the aggregate exercise price payable for such securities shall remain the
same.  To the extent the holders of
Common Stock receive cash consideration for their Common Stock in consummation
of the Corporate Transaction, with the Plan Administrator’s consent prior to
the consummation of the Corporate Transaction, the successor corporation may,
in connection with the assumption of the outstanding options under the Salary
Investment Option Grant Program, substitute one or more shares of its own
common stock with a fair market value equivalent to the cash consideration paid
per share of Common Stock in such Corporate Transaction.

IV.           REMAINING
TERMS

The remaining terms of each option granted under the
Salary Investment Option Grant Program shall be the same as the terms in effect
for option grants made under the Discretionary Option Grant Program.

 13
 

ARTICLE FOUR

STOCK
ISSUANCE PROGRAM

I.              STOCK
ISSUANCE  TERMS

Shares of Common Stock may be issued under the Stock
Issuance Program through direct and immediate issuances without any intervening
option grants.  Each such stock issuance
shall be evidenced by a Stock Issuance Agreement which complies with the terms
specified below.  Shares of Common Stock
may also be issued under the Stock Issuance Program pursuant to share right
awards which entitle the recipients to receive those shares upon the attainment
of designated performance goals or the satisfaction of specified Service
requirements.

A.    Purchase Price.

1.     The
purchase price per share shall be fixed by the Plan Administrator.

2.     Subject
to the provisions of Section I of Article Seven, shares of Common Stock may be
issued under the Stock Issuance Program for any of the following items of
consideration which the Plan Administrator may deem appropriate in each
individual instance:

(i)            cash or check made
payable to the Corporation, or

(ii)           past services
rendered to the Corporation (or any Parent or Subsidiary).

B.    Vesting Provisions.

1.     Shares
of Common Stock issued under the Stock Issuance Program may, in the discretion
of the Plan Administrator, be fully and immediately vested upon issuance or may
vest in one or more installments over the Participant’s period of Service or
upon attainment of specified performance objectives.  The elements of the vesting schedule
applicable to any unvested shares of Common Stock issued under the Stock
Issuance Program shall be determined by the Plan Administrator and incorporated
into the Stock Issuance Agreement.  Shares
of Common Stock may also be issued under the Stock Issuance Program pursuant to
share right awards which entitle the recipients to receive those shares upon
the attainment of designated performance goals or the satisfaction of specified
Service requirements.

2.     Any
new, substituted or additional securities or other property (including money
paid other than as a regular cash dividend) which the Participant may have the
right to receive with respect to the Participant’s unvested shares of Common
Stock by reason of any stock dividend, stock split, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation’s receipt of
consideration shall be issued subject to (i) the same vesting requirements
applicable to the Participant’s unvested shares of Common Stock and (ii) such
escrow arrangements as the Plan Administrator shall deem appropriate.

 14
 

3.     The
Participant shall have full stockholder rights with respect to any shares of
Common Stock issued to the Participant under the Stock Issuance Program,
whether or not the Participant’s interest in those shares is vested.  Accordingly, the Participant shall have the
right to vote such shares and to receive any regular cash dividends paid on
such shares.

4.     Should
the Participant cease to remain in Service while one or more shares of Common
Stock issued under the Stock Issuance Program are unvested or should the
performance objectives not be attained with respect to one or more such
unvested shares of Common Stock, then those shares shall be immediately
surrendered to the Corporation for cancellation, and the Participant shall have
no further stockholder rights with respect to those shares.  To the extent the surrendered shares were previously
issued to the Participant for consideration paid in cash or cash equivalent
(including the Participant’s purchase-money indebtedness), the Corporation
shall repay to the Participant the cash consideration paid for the surrendered
shares and shall cancel the unpaid principal balance of any outstanding
purchase money note of the Participant attributable to the surrendered shares.

5.     The
Plan Administrator may in its discretion waive the surrender and cancellation
of one or more unvested shares of Common Stock which would otherwise occur upon
the cessation of the Participant’s Service or the non-attainment of the
performance objectives applicable to those shares.  Such waiver shall result in the immediate
vesting of the Participant’s interest in the shares of Common Stock as to which
the waiver applies.  Such waiver may be
effected at any time, whether before or after the Participant’s cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.

6.     Outstanding
share right awards under the Stock Issuance Program shall automatically
terminate, and no shares of Common Stock shall actually be issued in
satisfaction of those awards, if the performance goals or Service requirements
established for such awards are not attained or satisfied.  The Plan Administrator, however, shall have
the discretionary authority to issue shares of Common Stock under one or more
outstanding share right awards as to which the designated performance goals or
Service requirements have not been attained or satisfied.

II.            CORPORATE
TRANSACTION/CHANGE  IN
CONTROL

A.    All
of the Corporation’s outstanding repurchase rights under the Stock Issuance
Program shall terminate automatically, and all the shares of Common Stock
subject to those terminated rights shall immediately vest in full, in the event
of any Corporate Transaction, except to the extent (1) those repurchase rights
are to be assigned to the successor corporation (or parent thereof) in
connection with such Corporate Transaction or (2) such accelerated vesting is
precluded by other limitations imposed in the Stock Issuance Agreement.

B.    The
Plan Administrator shall have the discretionary authority to structure one or
more of the Corporation’s repurchase rights under the Stock Issuance Program so
that those rights shall automatically terminate in whole or in part, and the
shares of Common Stock subject to those terminated rights shall immediately
vest, upon the occurrence of a Corporate Transaction, a Change in Control, any
other event or the Participant’s Involuntary Termination within a designated
period of time following any of these events.

 15
 

ARTICLE
FIVE

DIRECTOR
FEE OPTION GRANT PROGRAM

I.              OPTION
GRANTS

The Primary Committee shall have the sole and
exclusive authority to determine the calendar year or years for which the
Director Fee Option Grant Program is to be in effect.  For each such calendar year the program is in
effect, each non-employee Board member may irrevocably elect to apply all or
any portion of the annual retainer fee otherwise payable in cash for his or her
service on the Board for that year to the acquisition of a special option grant
under this Director Fee Option Grant Program. 
Such election must be filed with the Corporation’s Chief Financial
Officer prior to the first day of the calendar year for which the annual
retainer fee which is the subject of that election is otherwise payable.  Each non-employee Board member who files such
a timely election shall automatically be granted an option under this Director
Fee Option Grant Program on the first trading day in January in the calendar
year for which the annual retainer fee which is the subject of that election
would otherwise be payable in cash.

In no event, however, shall a non-employee Board
member be eligible to receive an option grant under the Director Fee Option
Grant Program if that individual would be required, whether contractually or
otherwise, to transfer the ownership of the grant, or any economic interest in
such grant, to any venture fund or other entity with which he or she is at the
time affiliated.

II.            OPTION
TERMS

Each option shall be a Non-Statutory Option governed
by the terms and conditions specified below.

A.    Exercise Price.

1.     The
exercise price per share shall be thirty-three and one-third percent (33-1/3%)
of the Fair Market Value per share of Common Stock on the option grant date.

2.     The
exercise price shall become immediately due upon exercise of the option and
shall be payable in one or more of the alternative forms authorized under the
Discretionary Option Grant Program. 
Except to the extent the sale and remittance procedure specified
thereunder is utilized, payment of the exercise price for the purchased shares
must be made on the Exercise Date.

B.    Number of Option Shares.  The number of shares of Common Stock subject
to the option shall be determined pursuant to the following formula (rounded
down to the nearest whole number):

X = A  ̧
(B x 66-2/3%), where

X is the number of
option shares,

 16
 

A is the portion
of the annual retainer fee subject to the non-employee Board member’s election,
and

B is the Fair
Market Value per share of Common Stock on the option grant date.

C.    Exercise and Term of Options. The
option shall become exercisable in a series of twelve (12) successive equal
monthly installments upon the Optionee’s completion of each calendar month of
Board service during the calendar year in which the option is granted. Each
option shall have a maximum term of ten (10) years measured from the option
grant date.

D.    Limited Transferability of Options.
Each option under this Article Five may, in connection with the Optionee’s
estate plan, be assigned in whole or in part during the Optionee’s lifetime to
one or more members of the Optionee’s immediate family or to a trust
established exclusively for one or more such family members.  The assigned portion may only be exercised by
the person or persons who acquire a proprietary interest in the option pursuant
to the assignment.  The terms applicable
to the assigned portion shall be the same as those in effect for the option
immediately prior to such assignment and shall be set forth in such documents
issued to the assignee as the Plan Administrator may deem appropriate.  The Optionee may also designate one or more
persons as the beneficiary or beneficiaries of his or her outstanding options
under this Article Five, and any outstanding options shall, in accordance with
such designation, automatically be transferred to such beneficiary or
beneficiaries upon the Optionee’s death. 
Such beneficiary or beneficiaries shall take the transferred options subject
to all the terms and conditions of the applicable agreement evidencing each
such transferred option, including (without limitation) the limited time period
during which the option may be exercised following the Optionee’s death.

E.     Termination of Board Service.  Should the Optionee cease Board service for
any reason (other than death or Permanent Disability) while one or more options
granted under this Director Fee Option Grant Program are outstanding, then each
such option shall remain exercisable, for any or all of the shares for which
the option is exercisable at the time of such cessation of Board service, until
the earlier of (i) the expiration of the ten
(10)-year option term or (ii) the expiration of the three (3)-year period
measured from the date of such cessation of Board service.  However, each option granted pursuant to this
Director Fee Option Grant Program that is outstanding at the time of the
Optionee’s cessation of Board service shall immediately terminate and cease to
remain outstanding with respect to any and all shares of Common Stock for which
the option is not otherwise at that time exercisable.

F.     Death or Permanent Disability.  Should the Optionee’s service as a Board
member cease by reason of death or Permanent Disability, then each outstanding
option granted pursuant to this Director Fee Option Grant Program shall
immediately become exercisable for all the shares of Common Stock at the time
subject to that option, and the option may be exercised for any or all of those
shares as fully-vested shares until the earlier of (1)
the expiration of the ten (10)-year option term or (2) the expiration of the
three (3)-year period measured from the date of such cessation of Board
service.  To the extent such option is
exercisable at the time of the Optionee’s death, that option may be exercised
by the personal representative of the Optionee’s estate or by the person or
persons to whom the option is transferred pursuant to the 

 17
 

Optionee’s will or the laws of inheritance or by the designated beneficiary
or beneficiaries of such option.

Should the Optionee die after cessation of Board
service but while one or more options granted under this Director Fee Option
Grant Program are outstanding, then each such option may be exercised, for any
or all of the shares for which the option is exercisable at the time of the
Optionee’s cessation of Board service (less any shares subsequently purchased
by Optionee prior to death), by the personal representative of the Optionee’s
estate or by the person or persons to whom the option is transferred pursuant
to the Optionee’s will or the laws of inheritance or by the designated
beneficiary or beneficiaries of such option. 
Such right of exercise shall lapse, and the option shall terminate, upon
the earlier of (1) the expiration of the ten
(10)-year option term or (2) the three (3)-year period measured from the date
of the Optionee’s cessation of Board service.

III.           CORPORATE
TRANSACTION/CHANGE  IN
CONTROL/HOSTILE  TAKE-OVER

A.    In
the event of any Corporate Transaction while the Optionee remains a Board
member, each outstanding option granted pursuant to this Director Fee Option
Grant Program shall automatically vest in full so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
exercisable for all the shares of Common Stock at the time subject to such
option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock.  Each such
outstanding option shall terminate immediately following the Corporate
Transaction, except to the extent assumed by the successor corporation (or
parent thereof) in such Corporate Transaction. 
Any option so assumed and shall remain exercisable for the fully-vested
shares until the earlier of (1) the expiration of
the ten (10)-year option term or (2) the expiration of the three (3)-year
period measured from the date of the Optionee’s cessation of Board service.

B.    In
the event of a Change in Control while the Optionee remains in Service, each
outstanding option granted pursuant to this Director Fee Option Grant Program
shall automatically vest in full so that each such option shall immediately
become exercisable for all of the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock.  Such option
shall remain exercisable until the earliest to
occur of (1) the expiration of the ten (10)-year option term, (2) the
expiration of the three (3)-year period measured from the date of the Optionee’s
cessation of Board service, (3) the termination of the option in connection
with a Corporate Transaction or (4) the surrender of the option in connection
with a Hostile Take-Over.

C.    Upon
the occurrence of a Hostile Take-Over, the Optionee shall have a thirty
(30)-day period in which to surrender to the Corporation each outstanding
option granted him or her under the Director Fee Option Grant Program.  The Optionee shall in return be entitled to a
cash distribution from the Corporation in an amount equal to the excess of (1)
the Take-Over Price of the shares of Common Stock at the time subject to each
surrendered option (whether or not the option is otherwise at the time
exercisable for those shares) over (2) the aggregate exercise price payable for
such shares.  Such cash distribution
shall be paid within five (5) days following the surrender of the option to the
Corporation.  No approval or consent of
the Board or 

 18
 

any Plan Administrator shall be required at the time of the actual
option surrender and cash distribution.

D.    Each
option granted pursuant to the Director Fee Option Grant Program which is
assumed in connection with a Corporate Transaction shall be appropriately
adjusted, immediately after such Corporate Transaction, to apply to the number
and class of securities which would have been issuable to the Optionee in
consummation of such Corporate Transaction had the option been exercised
immediately prior to such Corporate Transaction.  Appropriate adjustments shall also be made to
the exercise price payable per share under each outstanding option, provided
the aggregate exercise price payable for such securities shall remain the
same.  To the extent the holders of
Common Stock receive cash consideration for their Common Stock in consummation
of the Corporate Transaction, with the Plan Administrator’s consent prior to
the consummation of the Corporate Transaction, the successor corporation may,
in connection with the assumption of the outstanding options under the Director
Fee Option Grant Program, substitute one or more shares of its own common stock
with a fair market value equivalent to the cash consideration paid per share of
Common Stock in such Corporate Transaction.

IV.           REMAINING
TERM1S

The remaining terms of each option granted under this
Director Fee Option Grant Program shall be the same as the terms in effect for
option grants made under the Discretionary Option Grant Program.

 19

ARTICLE
SIX

MISCELLANEOUS

I.              FINANCING

The Plan Administrator may permit any Optionee or
Participant to pay the option exercise price under the Discretionary Option
Grant Program or the purchase price of shares issued under the Stock Issuance
Program by delivering a full-recourse, interest bearing promissory note payable
in one or more installments.  The terms
of any such promissory note (including the interest rate and the terms of
repayment) shall be established by the Plan Administrator in its sole discretion.  In no event may the maximum credit available
to the Optionee or Participant exceed the sum of (A) the aggregate option
exercise price or purchase price payable for the purchased shares (less the par
value of those shares) plus (B) any Federal, state and local income and
employment tax liability incurred by the Optionee or the Participant in
connection with the option exercise or share purchase.

II.            TAX
WITHHOLDING

A.    The
Corporation’s obligation to deliver shares of Common Stock upon the exercise of
options or the issuance or vesting of such shares under the Plan shall be
subject to the satisfaction of all applicable Federal, state and local income
and employment tax withholding requirements.

B.    The
Plan Administrator may, in its discretion, provide any or all holders of
Non-Statutory Options or unvested shares of Common Stock under the Plan (other
than the options granted to non-employee Board members or independent
contractors) with the right to use shares of Common Stock in satisfaction of
all or part of the Withholding Taxes to which such holders may become subject
in connection with the exercise of their options or the vesting of their
shares.  Such right may be provided to
any such holder in either or both of the following formats:

1.     Stock
Withholding:  The election to have
the Corporation withhold, from the shares of Common Stock otherwise issuable
upon the exercise of such Non-Statutory Option or the vesting of such shares, a
portion of those shares with an aggregate Fair Market Value equal to the
percentage of the Withholding Taxes (not to exceed one hundred percent (100%))
designated by the holder.

2.     Stock
Delivery:  The election to deliver to
the Corporation, at the time the Non-Statutory Option is exercised or the
shares vest, one or more shares of Common Stock previously acquired by such
holder (other than in connection with the option exercise or share vesting
triggering the Withholding Taxes) with an aggregate Fair Market Value equal to
the percentage of the Withholding Taxes (not to exceed one hundred percent
(100%)) designated by the holder.

 20
 

III.           SHARE
ESCROW/LEGENDS

Unvested shares may, in the Plan Administrator’s
discretion, be held in escrow by the Corporation until the Participant’s or the
Optionee’s interest in such shares vests or may be issued directly to the
Participant or the Optionee with restrictive legends on the certificates
evidencing those unvested shares.

IV.           EFFECTIVE
DATE  AND  TERM  OF  THE
PLAN

A.    The
Plan shall become effective immediately on the Plan Effective Date.  However, the Salary Investment Option Grant
Program and the Director Fee Option Grant Program shall not be implemented
until such time as the Primary Committee may deem appropriate.  Options may be granted under the Discretionary
Option Grant at any time on or after the Plan Effective Date.

B.    The
Plan shall serve as the successor to the Predecessor Plans, and no further
option grants or direct stock issuances shall be made under those Predecessor
Plans after the Plan Effective Date.  All
options outstanding under the Predecessor Plans on the Plan Effective Date
shall be transferred to the Plan at that time and shall be treated as
outstanding options under the Plan. 
However, each outstanding option so incorporated shall continue to be
governed solely by the terms of the documents evidencing such option, and no
provision of the Plan shall be deemed to affect or otherwise modify the rights
or obligations of the holders of such incorporated options with respect to
their acquisition of shares of Common Stock.

C.    One
or more provisions of the Plan, including (without limitation) the
option/vesting acceleration provisions of Article Two relating to Corporate
Transactions and Changes in Control, may, in the Plan Administrator’s
discretion, be extended to one or more options incorporated from the
Predecessor Plans which do not otherwise contain such provisions.

D.    Unless
terminated by the Board prior to such time, the Plan shall terminate upon the
tenth anniversary of the Plan’s adoption by the Board.  Should the Plan terminate when options and/or
unvested shares are outstanding, such awards shall continue in effect in
accordance with the provisions of the documents evidencing such grants or
issuances.

V.            AMENDMENT
OF  THE  PLAN

A.    The
Board shall have complete and exclusive power and authority to amend or modify
the Plan in any or all respects. 
However, no such amendment or modification shall adversely affect the
rights and obligations with respect to stock options or unvested stock
issuances at the time outstanding under the Plan unless the Optionee or the
Participant consents to such amendment or modification.  In addition, certain amendments may require
stockholder approval pursuant to applicable laws or regulations.

B.    Options
to purchase shares of Common Stock may be granted under the Discretionary
Option Grant and Salary Investment Option Grant Programs and shares of Common
Stock may be issued under the Stock Issuance Program that are in each instance
in excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued under those programs shall be held
in escrow until the number of shares of 

 21
 

Common Stock available for issuance under the Plan is sufficiently
increased either by (1) the automatic annual share reserve increase set forth
in Section V.B. of Article One or (2) the stockholder approval of an amendment
of the Plan sufficiently increasing the share reserve.  Grants made against an automatic annual share
reserve increase will not qualify as Incentive Options if the Fair Market Value
of the Common Stock is higher on the date such increase is effected than it was
on the date of grant.  If stockholder
approval is required and is not obtained within twelve (12) months after the
date the first excess issuances are made against the contingent increase, then
(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees and the Participants the exercise or purchase price
paid for any excess shares issued under the Plan and held in escrow, together
with interest (at the applicable Short Term Federal Rate) for the period the
shares were held in escrow, and such shares shall thereupon be automatically
cancelled and cease to be outstanding.

VI.           USE
OF  PROCEEDS

Any cash proceeds received by the Corporation from the
sale of shares of Common Stock under the Plan shall be used for any corporate
purpose.

VII.         REGULATORY
APPROVALS

A.    The
implementation of the Plan, the granting of any stock option under the Plan and
the issuance of any shares of Common Stock (i) upon the exercise of any granted
option or (ii) under the Stock Issuance Program shall be subject to the
Corporation’s procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the stock options granted under
it and the shares of Common Stock issued pursuant to it.

B.    No
shares of Common Stock or other assets shall be issued or delivered under the
Plan unless and until there shall have been compliance with all applicable
requirements of Federal and state securities laws, including the filing and
effectiveness of the Form S-8 registration statement for the shares of Common
Stock issuable under the Plan, and all applicable listing requirements of any
Stock Exchange (or the Nasdaq Stock Market, if applicable) on which Common
Stock is then listed for trading.

VIII.        NO
EMPLOYMENT/SERVICE  RIGHTS

Nothing in the Plan shall confer upon the Optionee or
the Participant any right to continue in Service for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the
Corporation (or any Parent or Subsidiary employing or retaining such person) or
of the Optionee or the Participant, which rights are hereby expressly reserved
by each, to terminate such person’s Service at any time for any reason, with or
without cause.

 

 22

APPENDIX

The following definitions shall be in effect under the
Plan:

A.            Board shall mean the Corporation’s
Board of Directors.

B.            Change in Control shall mean a change
in ownership or control of the Corporation effected through either of the
following transactions:

1.     the
acquisition, directly or indirectly by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls,
is controlled by, or is under common control with, the Corporation), of
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of
securities possessing more than fifty percent (50%) of the total combined
voting power of the Corporation’s outstanding securities pursuant to a tender
or exchange offer made directly to the Corporation’s stockholders, or

2.     a
change in the composition of the Board over a period of thirty-six (36)
consecutive months or less such that a majority of the Board members ceases, by
reason of one or more contested elections for Board membership, to be comprised
of individuals who either (A) have been Board members continuously since the
beginning of such period or (B) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time the Board approved
such election or nomination.

C.            Code shall mean the Internal Revenue
Code of 1986, as amended.

D.            Common Stock shall mean the Corporation’s
common stock.

E.             Corporate Transaction shall mean either
of the following stockholder approved transactions to which the Corporation is
a party:

1.     a
merger, consolidation or reorganization approved by the Corporation’s
stockholders, unless securities representing more than fifty percent
(50%) of the total combined voting power of the voting securities of the
successor corporation are immediately thereafter beneficially owned, directly
or indirectly and in substantially the same proportion, by the persons who
beneficially owned the Corporation’s outstanding voting securities immediately
prior to such transaction, or

2.     any
stockholder-approved transfer or other disposition of all or substantially all
of the Corporation’s assets.

F.             Corporation shall mean United Online,
Inc., a Delaware corporation, and any corporate successor to all or
substantially all of the assets or voting stock of United Online, Inc. which
has by appropriate action assumed the Plan.

G.            Director Fee Option Grant Program shall
mean the special stock option grant in effect for non-employee Board members
under Article Five of the Plan.

 A-1
 

H.            Discretionary Option Grant Program
shall mean the discretionary option grant program in effect under Article Two
of the Plan.

I.              Eligible Director mean a non-employee
Board member eligible to participate in the Director Fee Option Grant Program
in accordance with the eligibility provisions of Articles One and Five of the
Plan.

J.             Employee shall mean an individual who
is in the employ of the Corporation (or any Parent or Subsidiary), subject to
the control and direction of the employer entity as to both the work to be
performed and the manner and method of performance.

K.            Exercise Date shall mean the date on
which the Corporation shall have received written notice of the option
exercise.

L.             Fair Market Value per share of Common
Stock on any relevant date shall be determined in accordance with the following
provisions:

1.     If
the Common Stock is at the time traded on the Nasdaq Stock Market, then the
Fair Market Value shall be the closing selling price per share of Common Stock
on the date in question, as such price is reported by the National Association
of Securities Dealers on the Nasdaq Stock Market.  If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation
exists.

2.     If
the Common Stock is at the time listed on any Stock Exchange, then the Fair
Market Value shall be the closing selling price per share of Common Stock on
the date in question on the Stock Exchange determined by the Plan Administrator
to be the primary market for the Common Stock, as such price is officially
quoted in the composite tape of transactions on such exchange.  If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation
exists.

M.           Hostile Take-Over shall mean the
acquisition, directly or indirectly, by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls,
is controlled by, or is under common control with, the Corporation) of
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Corporation’s outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation’s stockholders which the Board does not
recommend such stockholders to accept.

N.            Incentive Option shall mean an option
which satisfies the requirements of Code Section 422.

O.            Involuntary Termination shall mean,
except as otherwise determined by the Plan Administrator, the termination of
the Service of any individual which occurs by reason of:

 A-2
 

1.     such
individual’s involuntary dismissal or discharge by the Corporation (or any
Parent or Subsidiary) for reasons other than Misconduct, or

2.     such
individual’s voluntary resignation following (A) a material reduction in the
scope of his or her day to day responsibilities at the Corporation (or any
Parent or Subsidiary), it being understood that a change in such individual’s
title shall not, in and of itself, be deemed a material reduction, (B) a
reduction in his or her base salary or (C) a relocation of such individual’s
place of employment by more than fifty (50) miles, provided and only if such
change, reduction or relocation is effected by the Corporation (or any Parent
or Subsidiary) without the individual’s consent.

P.             Misconduct shall mean the commission of
any act of fraud, embezzlement or dishonesty by the Optionee or Participant,
any unauthorized use or disclosure by such person of confidential information
or trade secrets of the Corporation (or any Parent or Subsidiary), or any other
intentional misconduct by such person adversely affecting the business or
affairs of the Corporation (or any Parent or Subsidiary) in a material
manner.  The foregoing definition shall
not be deemed to be inclusive of all the acts or omissions which the
Corporation (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).

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

R.            Non-Statutory Option shall mean an
option not intended to satisfy the requirements of Code Section 422.

S.             Optionee shall mean any person to whom
an option is granted under the Discretionary Option Grant, Salary Investment
Option Grant or Director Fee Option Grant Program.

T.            Parent shall mean any corporation
(other than the Corporation) in an unbroken chain of corporations ending with
the Corporation, provided each corporation in the unbroken chain (other than
the Corporation) owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

U.            Participant shall mean any person who
is issued shares of Common Stock under the Stock Issuance Program.

V.            Permanent Disability or Permanently Disabled
shall mean the inability of the Optionee or the Participant to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or has lasted or
can be expected to last for a continuous period of twelve (12) months or
more.  However, solely for purposes of
the Director Fee Option Grant Program, Permanent Disability or Permanently
Disabled shall mean the inability of the non-employee Board member to perform
his or her usual duties as a Board member by reason of any medically
determinable physical or mental impairment expected to result in death or to be
of continuous duration of twelve (12) months or more.

 A-3
 

W.           Plan shall mean the United Online, Inc.
2001 Stock Incentive Plan, as set forth in this document.

X.            Plan Administrator shall mean the
particular entity, whether the Primary Committee, the Board or the Secondary
Committee, which is authorized to administer the Discretionary Option Grant and
Stock Issuance Programs with respect to one or more classes of eligible
persons, to the extent such entity is carrying out its administrative functions
under those programs with respect to the persons under its jurisdiction.

Y.            Plan Effective Date shall mean the date
the merger of NetZero, Inc. and NZ Acquisition Corp. and the merger of Juno
Online Services, Inc. and JO Acquisition Corp. become effective as contemplated
by the Agreement and Plan of Merger, by and among NetZero, Inc., Juno Online
Services, Inc., United Online, Inc. and the other parties thereto, dated as of
June 7, 2001.

Z.            Predecessor Plans shall mean the Juno
Online Services, Inc. 1999 Stock Incentive Plan, the NetZero, Inc. 1999 Stock
Incentive Plan, the AimTV, Inc. 1999 Employee Stock Option Plan and the 1999
RocketCash Corporation Stock Option Plan, as each such plan is in effect
immediately prior to the Plan Effective Date.

AA.        Primary Committee shall mean the
committee of two (2) or more non-employee Board members appointed by the Board
to administer the Discretionary Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders and to administer the Salary Investment Option
Grant Program solely with respect to the selection of the eligible individuals
who may participate in such program.

BB.          Salary Investment Option Grant Program
shall mean the salary investment option grant program in effect under Article
Three of the Plan.

CC.          Secondary Committee shall mean a
committee of one or more Board members appointed by the Board to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to eligible
persons other than Section 16 Insiders.

DD.         Section 16 Insider shall mean an
officer or director of the Corporation subject to the short-swing profit
liabilities of Section 16 of the 1934 Act.

EE.          Service
shall mean the performance of services for the Corporation (or any Parent or
Subsidiary) by a person in the capacity of an Employee, a non-employee member
of the board of directors or an independent contractor, except to the extent
otherwise specifically provided in the documents evidencing the option grant or
stock issuance.

FF.          Stock
Exchange shall mean either the American Stock Exchange or the
New York Stock Exchange.

GG.          Stock Issuance Agreement shall mean the
agreement entered into by the Corporation and the Participant at the time of
issuance of shares of Common Stock under the Stock Issuance Program.

 A-4
 

HH.         Stock Issuance Program shall mean the
stock issuance program in effect under Article Four of the Plan.

II.            Subsidiary shall mean any corporation
(other than the Corporation) in an unbroken chain of corporations beginning
with the Corporation, provided each corporation (other than the last
corporation) in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.

JJ.            Take-Over Price shall mean the greater of (i) the Fair Market Value per share of Common
Stock on the date the option is surrendered to the Corporation in connection
with a Hostile Take-Over or (ii) the highest reported price per share of Common
Stock paid by the tender offeror in effecting such Hostile Take-Over.  However, if the surrendered option is an
Incentive Option, the Take-Over Price shall not exceed the clause (i) price per
share.

KK.         10% Stockholder shall mean the owner of
stock (as determined under Code Section 424(d)) possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Corporation (or any Parent or Subsidiary).

LL.          Withholding Taxes shall mean the
Federal, state and local income and employment withholding taxes to which the
holder of Non-Statutory Options or unvested shares of Common Stock may become
subject in connection with the exercise of those options or the vesting of
those shares.

 

 A-5

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