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                                                                    EXHIBIT 10.3

                           PHASE FORWARD INCORPORATED

                      2004 STOCK OPTION AND INCENTIVE PLAN

1.       Purpose and Eligibility

         The purpose of this 2004 Stock Option and Incentive Plan (the "Plan")
of Phase Forward Incorporated (the "Company") is to provide stock options and
other equity interests in the Company (each an "Award") to employees, officers,
directors, consultants and advisors of the Company and its Subsidiaries, all of
whom are eligible to receive Awards under the Plan. Any person to whom an Award
has been granted under the Plan is called a "Participant." Additional
definitions are contained in Section 8.

2.       Administration

         The Plan will be administered by the Board of Directors of the Company
(the "Board"). In the event the Board fails to appoint or refrains from
appointing a Committee, the Board shall have all power and authority to
administer this Plan. In such event, the word "Committee" wherever used herein
shall be deemed to mean the Board. The Committee shall, subject to the
provisions of the Plan, have the power to construe this Plan, to determine all
questions hereunder, and to adopt and amend such rules and regulations for the
administration of this Plan as it may deem desirable. No member of the Board or
the Committee shall be liable for any action or determination made in good faith
with respect to this Plan or any option granted under it.

3.       Stock Available for Awards

         a.       Number of Shares. Subject to adjustment under Section 3(c),
the aggregate number of shares of Common Stock of the Company (the "Common
Stock") that may be issued pursuant to the Plan is 1,500,000 shares. If any
Award expires, or is terminated, surrendered or forfeited, in whole or in part,
the unissued Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan. If shares of Common Stock issued pursuant to the
Plan are repurchased by, or are surrendered or forfeited to, the Company at no
more than cost, such shares of Common Stock shall again be available for the
grant of Awards under the Plan; provided, however, that the cumulative number of
such shares that may be so reissued under the Plan will not exceed 750,000
shares. Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.

         b.       Per-Participant Limit. Subject to adjustment under Section
3(c), no Participant may be granted Awards during any one fiscal year to
purchase more than 750,000 shares of Common Stock.

         c.       Adjustment to Common Stock. In the event of any stock split,
stock dividend, extraordinary cash dividend, recapitalization, reorganization,
merger, consolidation, combination, exchange of shares, liquidation, spin-off,
split-up, or other similar change in capitalization or

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event, (i) the number and class of securities available for Awards under the
Plan and the per-Participant share limit, (ii) the number and class of
securities, vesting schedule and exercise price per share subject to each
outstanding Option, (iii) the repurchase price per security subject to
repurchase, and (iv) the terms of each other outstanding stock-based Award shall
be adjusted by the Company (or substituted Awards may be made) to the extent the
Board shall determine, in good faith, that such an adjustment (or substitution)
is appropriate. If Section 7(e)(i) applies for any event, this Section 3(c)
shall not be applicable.

4.       Stock Options

         a.       General. The Board may grant options to purchase Common Stock
(each, an "Option") and determine the number of shares of Common Stock to be
covered by each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option and the Common Stock
issued upon the exercise of each Option, including vesting provisions,
repurchase provisions and restrictions relating to applicable federal or state
securities laws, as it considers advisable.

         b.       Incentive Stock Options. An Option that the Board intends to
be an "incentive stock option" as defined in Section 422 of the Code (an
"Incentive Stock Option") shall be granted only to employees of the Company and
shall be subject to and shall be construed consistently with the requirements of
Section 422 of the Code. The Board and the Company shall have no liability if an
Option or any part thereof that is intended to be an Incentive Stock Option does
not qualify as such. An Option or any part thereof that does not qualify as an
Incentive Stock Option is referred to herein as a "Nonstatutory Stock Option."

         c.       Exercise Price. The Board shall establish the exercise price
(or determine the method by which the exercise price shall be determined) at the
time each Option is granted and specify it in the applicable option agreement.

         d.       Duration of Options. Each Option shall be exercisable at such
times and subject to such terms and conditions as the Board may specify in the
applicable option agreement.

         e.       Exercise of Option. Options may be exercised only by delivery
to the Company of a written notice of exercise signed by the proper person
together with payment in full as specified in Section 4(f) for the number of
shares for which the Option is exercised.

         f.       Payment Upon Exercise. Common Stock purchased upon the
exercise of an Option shall be paid for by one or any combination of the
following forms of payment:

                  (i)      by check payable to the order of the Company;

                  (ii)     except as otherwise explicitly provided in the
applicable option agreement, and only if the Common Stock is then publicly
traded, delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds to pay
the exercise price, or delivery by the Participant to the Company of a copy

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of irrevocable and unconditional instructions to a creditworthy broker to
deliver promptly to the Company cash or a check sufficient to pay the exercise
price; or

                  (iii)    to the extent explicitly provided in the applicable
option agreement, by (x) delivery of shares of Common Stock owned by the
Participant valued at fair market value (as determined by the Board or as
determined pursuant to the applicable option agreement), (y) delivery of a
promissory note of the Participant to the Company (and delivery to the Company
by the Participant of a check in an amount equal to the par value of the shares
purchased), or (z) payment of such other lawful consideration as the Board may
determine.

5.       Restricted Stock

         a.       Grants. The Board may grant Awards entitling recipients to
acquire shares of Common Stock, subject to (i) delivery to the Company by the
Participant of cash or other lawful consideration in an amount at least equal to
the par value of the shares purchased, and (ii) the right of the Company to
repurchase all or part of such shares at their issue price or other stated or
formula price from the Participant in the event that conditions specified by the
Board in the applicable Award are not satisfied prior to the end of the
applicable restriction period or periods established by the Board for such Award
(each, a "Restricted Stock Award").

         b.       Terms and Conditions. The Board shall determine the terms and
conditions of any such Restricted Stock Award. Any stock certificates issued in
respect of a Restricted Stock Award shall be registered in the name of the
Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). After the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or, if the Participant has died, to the
beneficiary designated by a Participant, in a manner determined by the Board, to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.

6.       Other Stock-Based Awards

         The Board shall have the right to grant other Awards based upon the
Common Stock having such terms and conditions as the Board may determine,
including, without limitation, the grant of shares based upon certain
conditions, the grant of securities convertible into Common Stock and the grant
of stock appreciation rights, phantom stock awards or stock units.

7.       General Provisions Applicable to Awards

         a.       Transferability of Awards. Except as the Board may otherwise
determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall

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be exercisable only by the Participant. References to a Participant, to the
extent relevant in the context, shall include references to authorized
transferees.

         b.       Documentation. Each Award under the Plan shall be evidenced by
a written instrument in such form as the Board shall determine or as executed by
an officer of the Company pursuant to authority delegated by the Board. Each
Award may contain terms and conditions in addition to those set forth in the
Plan; provided, that such terms and conditions do not contravene the provisions
of the Plan.

         c.       Board Discretion. The terms of each type of Award need not be
identical, and the Board need not treat Participants uniformly.

         d.       Termination of Status. In the event a participant dies prior
to the vesting of the first tranche of shares subject to an Award, such Award
will automatically accelerate to provide that the first tranche of shares shall
be exercisable for the remainder of the term of the Award. The Board shall
otherwise determine the effect on an Award of the disability, death, retirement,
authorized leave of absence or other change in the employment or other status of
a Participant and the extent to which, and the period during which, the
Participant, or the Participant's legal representative, conservator, guardian or
Designated Beneficiary, may exercise rights under the Award.

         e.       Acquisition of the Company

                  (i)      Consequences of an Acquisition. Upon the consummation
of an Acquisition, the Board or the board of directors of the surviving or
acquiring entity (as used in this Section 7(e)(i), also the "Board"), shall, as
to outstanding Awards (on the same basis or on different bases as the Board
shall specify), make appropriate provision for the continuation of such Awards
by the Company or the assumption of such Awards by the surviving or acquiring
entity and by substituting on an equitable basis for the shares then subject to
such Awards either (a) the consideration payable with respect to the outstanding
shares of Common Stock in connection with the Acquisition, (b) shares of stock
of the surviving or acquiring corporation or (c) such other securities or other
consideration as the Board deems appropriate, the fair market value of which (as
determined by the Board in its sole discretion) shall not materially differ from
the fair market value of the shares of Common Stock subject to such Awards
immediately preceding the Acquisition; provided, however, that, notwithstanding
the foregoing, the form of instruments evidencing Options granted pursuant to
this Plan shall provide that in the event of an Acquisition, then twenty-five
percent (25%) of the shares underlying the Options issued pursuant to such
instruments shall immediately vest and become exercisable (in addition to any
portion of the Options already vested and exercisable). In addition to or in
lieu of the foregoing, with respect to outstanding Options, the Board may, on
the same basis or on different bases as the Board shall specify, upon written
notice to the affected optionees, provide that one or more Options then
outstanding must be exercised, in whole or in part, within a specified number of
days of the date of such notice, but in no event less than five (5) business
days, at the end of which period such Options shall terminate, or provide that
one or more Options then outstanding, in whole or in part, shall be terminated
in exchange for a cash payment equal to the excess of the

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fair market value (as determined by the Board in its sole discretion) for the
shares subject to such Options over the exercise price thereof; provided,
however, that before terminating any portion of an Option that is not vested or
exercisable (other than in exchange for a cash payment), the Board must first
accelerate in full the exercisability of the portion that is to be terminated.
Unless otherwise determined by the Board (on the same basis or on different
bases as the Board shall specify), any repurchase rights or other rights of the
Company that relate to an Option or other Award shall continue to apply to
consideration, including cash, that has been substituted, assumed or amended for
an Option or other Award pursuant to this paragraph. The Company may hold in
escrow all or any portion of any such consideration in order to effectuate any
continuing restrictions.

                  (ii)     Acquisition Defined. An "Acquisition" shall mean:

                           (a)      a merger or consolidation of the Company
         with or into any other corporation or other business entity in which
         the Company is the surviving corporation (except one in which the
         holders of capital stock of the Company immediately prior to such
         merger or consolidation continue to hold at least a majority of the
         outstanding securities having the right to vote in an election of the
         Board ("Voting Stock") of the Company); or any such merger or
         consolidation in which the Company is not the surviving corporation;

                           (b)      a sale, lease, exchange or other transfer
         (in one transaction or a related series of transactions) of all or
         substantially all of the Company's assets;

                           (c)      the acquisition by any person or any group
         of persons (other than the Company, any of its direct or indirect
         subsidiaries, or any trustee, fiduciary or other person or entity
         holding securities under any employee benefit plan or trust of the
         Company or any of its direct or indirect subsidiaries) acting together
         in any transaction or related series of transactions, of such number of
         shares of the Company's Voting Stock as causes such person, or group of
         persons, to own beneficially, directly or indirectly, as of the time
         immediately after such transaction or series of transactions, 50% or
         more of the combined voting power of the Voting Stock of the Company
         other than as a result of an acquisition of securities directly from
         the Company, or solely as a result of an acquisition of securities by
         the Company which by reducing the number of shares of the Voting Stock
         outstanding increases the proportionate voting power represented by the
         Voting Stock owned by any such person to 50% or more of the combined
         voting power of such Voting Stock; and

                           (d)      a change in the composition of the Board
         following a tender offer or proxy contest, as a result of which persons
         who, immediately prior to a tender offer or proxy contest, constituted
         the Company's Board shall cease to constitute at least a majority of
         the members of the Board.

                  (iii)    Assumption of Options Upon Certain Events. In
connection with a merger or consolidation of an entity with the Company or the
acquisition by the Company of property or stock of an entity, the Board may
grant Awards under the Plan in substitution for stock and stock-

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based awards issued by such entity or an affiliate thereof. The substitute
Awards shall be granted on such terms and conditions as the Board considers
appropriate in the circumstances.

                  (iv)     Parachute Awards. If, in connection with an
Acquisition described therein, a tax under Section 4999 of the Code would be
imposed on the Participant (after taking into account the exceptions set forth
in Sections 280G(b)(4) and 280G(b)(5) of the Code), then the number of Awards
which shall become exercisable, realizable or vested shall be reduced (or
delayed), to the minimum extent necessary, so that no such tax would be imposed
on the Participant (the Awards not becoming so accelerated, realizable or
vested, the "Parachute Awards"); provided, however, that if the "aggregate
present value" of the Parachute Awards would exceed the tax that, but for this
sentence, would be imposed on the Participant under Section 4999 of the Code in
connection with the Acquisition, then the Awards shall become immediately
exercisable, realizable and vested without regard to the provisions of this
sentence. For purposes of the preceding sentence, the "aggregate present value"
of an Award shall be calculated on an after-tax basis (other than taxes imposed
by Section 4999 of the Code) and shall be based on economic principles rather
than the principles set forth under Section 280G of the Code and the regulations
promulgated thereunder. All determinations required to be made under this
Section 7(e)(iv) shall be made by the Company.

         f.       Withholding. Each Participant shall pay to the Company, or
make provisions satisfactory to the Company for payment of, any taxes required
by law to be withheld in connection with Awards to such Participant no later
than the date of the event creating the tax liability. The Board may allow
Participants to satisfy such tax obligations in whole or in part by transferring
shares of Common Stock, including shares retained from the Award creating the
tax obligation, valued at their fair market value (as determined by the Board or
as determined pursuant to the applicable option agreement). The Company may, to
the extent permitted by law, deduct any such tax obligations from any payment of
any kind otherwise due to a Participant.

         g.       Amendment of Awards. The Board may amend, modify or terminate
any outstanding Award including, but not limited to, substituting therefor
another Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.

         h.       Conditions on Delivery of Stock. The Company will not be
obligated to deliver any shares of Common Stock pursuant to the Plan or to
remove restrictions from shares previously delivered under the Plan until (i)
all conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations including any applicable withholding tax.

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         i.       Acceleration. The Board may at any time provide that any
Options shall become immediately exercisable in full or in part, that any
Restricted Stock Awards shall be free of some or all restrictions, or that any
other stock-based Awards may become exercisable in full or in part or free of
some or all restrictions or conditions, or otherwise realizable in full or in
part, as the case may be, despite the fact that the foregoing actions may (i)
cause the application of Sections 280G and 4999 of the Code if a change in
control of the Company occurs, or (ii) disqualify all or part of the Option as
an Incentive Stock Option.

8.       Miscellaneous

         a. Definitions.

                  (i)      "Company," for purposes of eligibility under the
Plan, shall include any present or future subsidiary corporations of Phase
Forward Incorporated, as defined in Section 424(f) of the Code (a "Subsidiary"),
and any present or future parent corporation of Phase Forward Incorporation, as
defined in Section 424(e) of the Code. For purposes of Awards other than
Incentive Stock Options, the term "Company" shall include any other business
venture in which the Company has a direct or indirect significant interest, as
determined by the Board in its sole discretion.

                  (ii)     "Code" means the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder.

                  (iii)    "employee" for purposes of eligibility under the Plan
(but not for purposes of Section 4(b)) shall include a person to whom an offer
of employment has been extended by the Company.

         b.       No Right To Employment or Other Status. No person shall have
any claim or right to be granted an Award, and the grant of an Award shall not
be construed as giving a Participant the right to continued employment or any
other relationship with the Company. The Company expressly reserves the right at
any time to dismiss or otherwise terminate its relationship with a Participant
free from any liability or claim under the Plan.

         c.       No Rights As Stockholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall have any rights
as a stockholder with respect to any shares of Common Stock to be distributed
with respect to an Award until becoming the record holder thereof.

         d.       Effective Date and Term of Plan. The Plan shall become
effective on the date on which it is adopted by the Board. No Awards shall be
granted under the Plan after the completion of ten years from the date on which
the Plan was adopted by the Board, but Awards previously granted may extend
beyond that date.

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         e.       Amendment of Plan. The Board may amend, suspend or terminate
the Plan or any portion thereof at any time.

         f.       Governing Law. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law.

                                           Adopted by the Board of Directors on
                                           March __, 2004

                                           Approved by the stockholders on
                                           March __, 2004

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                                                                    EXHIBIT 10.4

                           PHASE FORWARD INCORPORATED

                        2004 EMPLOYEE STOCK PURCHASE PLAN

ARTICLE 1 - PURPOSE.

         This 2004 Employee Stock Purchase Plan (the "Plan") is intended to
encourage stock ownership by all eligible employees of Phase Forward
Incorporated (the "Company"), a Delaware corporation, and its participating
subsidiaries (as defined in Article 17) so that they may share in the growth of
the Company by acquiring or increasing their proprietary interest in the
Company. The Plan is designed to encourage eligible employees to remain in the
employ of the Company and its participating subsidiaries. The Plan is intended
to constitute an "employee stock purchase plan" within the meaning of Section
423(b) of the Internal Revenue Code of 1986, as amended (the "Code"). Purchase
options are to be granted under the Plan only to employees of the Company or its
subsidiaries as provided in Article 3.

ARTICLE 2 - ADMINISTRATION OF THE PLAN.

         This Plan shall be administered by the Board or by a committee
appointed by the Board (the "Committee"). In the event the Board fails to
appoint or refrains from appointing a Committee, the Board shall have all power
and authority to administer this Plan. In such event, the word "Committee"
wherever used herein shall be deemed to mean the Board. The Committee shall,
subject to the provisions of the Plan, have the power to construe this Plan, to
determine all questions hereunder, and to adopt and amend such rules and
regulations for the administration of this Plan as it may deem desirable. No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to this Plan or any option granted
under it.

ARTICLE 3 - ELIGIBLE EMPLOYEES.

         All employees of the Company or any of its participating subsidiaries
whose customary employment is more than 20 hours per week and for more than five
months in any calendar year shall be eligible to receive purchase options under
the Plan to purchase common stock of the Company, and all eligible employees
shall have the same rights and privileges hereunder. Persons who are eligible
employees on the first business day of any Payment Period (as defined in Article
5) shall receive their purchase options as of such day. Persons who become
eligible employees after any date on which purchase options are granted under
the Plan shall be granted purchase options on the first day of the next
succeeding Payment Period on which purchase options are granted to eligible
employees under the Plan. In no event, however, may an employee be granted a
purchase option if such employee, immediately after the purchase option was
granted, would be treated as owning stock possessing five percent or more of the
total combined voting power or value of all classes of stock of the Company or
of any parent corporation or subsidiary corporation, as the terms "parent
corporation" and "subsidiary corporation" are defined in Section 424(e) and (f)
of the Code. For purposes of determining stock ownership under this paragraph,
the rules of Section 424(d) of the Code shall apply, and

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stock which the employee may purchase under outstanding purchase options shall
be treated as stock owned by the employee.

ARTICLE 4 - STOCK SUBJECT TO THE PLAN.

         The stock subject to the purchase options under the Plan shall be
shares of the Company's authorized but unissued common stock, par value $0.01
per share (the "Common Stock"), or shares of Common Stock reacquired by the
Company, including shares purchased in the open market. The aggregate number of
shares which may be issued pursuant to the Plan is three hundred twenty thousand
(320,000), subject to adjustment as provided in Article 12. If any purchase
option granted under the Plan shall expire or terminate for any reason without
having been exercised in full or shall cease for any reason to be exercisable in
whole or in part, the unpurchased shares subject thereto shall again be
available under the Plan.

ARTICLE 5 - PAYMENT PERIOD AND PURCHASE OPTIONS.

         The first Payment Period during which payroll deductions will be
accumulated under the Plan shall commence on the effective date of the
registration statement on Form S-1 registering the shares to be offered in the
initial public offering of the Common Stock (the "Offering") and shall end on
November 30, 2004 (the "First Payment Period"). For the remainder of the
duration of the Plan, Payment Periods shall consist of the six-month periods
commencing on December 1 and June 1 and ending on the last days of November and
May of each calendar year.

         Twice each year, on the first business day of each Payment Period, the
Company will grant to each eligible employee who is then a participant in the
Plan a purchase option to purchase on the last day of such Payment Period, at
the Option Price hereinafter provided for, a maximum of 5,000 shares, on
condition that such employee remains eligible to participate in the Plan
throughout the remainder of such Payment Period. The participant shall be
entitled to exercise the purchase option so granted only to the extent of the
participant's accumulated payroll deductions on the last day of such Payment
Period. If the participant's accumulated payroll deductions on the last day of
the Payment Period would enable the participant to purchase more than 5,000
shares except for the 5,000-share limitation, the excess of the amount of the
accumulated payroll deductions over the aggregate purchase price of the 5,000
shares shall be promptly refunded to the participant by the Company, without
interest. The Option Price per share for each Payment Period shall be the lesser
of (i) 85% of the average market price of the Common Stock on the first business
day of the Payment Period and (ii) 85% of the average market price of the Common
Stock on the last business day of the Payment Period, in either event rounded up
to the nearest cent. The foregoing limitation on the number of shares subject to
purchase option and the Option Price shall be subject to adjustment as provided
in Article 12.

         For purposes of the Plan, the term "average market price" on any date
means (i) the average (on that date) of the high and low prices of the Common
Stock on the principal national securities exchange on which the Common Stock is
traded, if the Common Stock is then traded on a national securities exchange; or
(ii) the last reported sale price (on that date) of the Common Stock on the
NASDAQ National Market, if the Common Stock is not then traded on a national

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securities exchange; or (iii) the average of the closing bid and asked prices
last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the NASDAQ
National Market; or (iv) if the Common Stock is not publicly traded, the fair
market value of the Common Stock as determined by the Committee after taking
into consideration all factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length. Notwithstanding the foregoing, the
"average market price" of Common Stock on the first business day of the First
Payment Period shall equal the price per share at which the Common Stock is sold
to the underwriters in the Offering, without regard to any applicable discounts
or commissions provided to such underwriters.

         For purposes of the Plan, the term "business day" means a day on which
there is trading on the NASDAQ National Market or the aforementioned national
securities exchange, whichever is applicable pursuant to the preceding
paragraph; and if neither is applicable, a day that is not a Saturday, Sunday or
legal holiday in the Commonwealth of Massachusetts.

         No employee shall be granted a purchase option which permits the
employee's right to purchase stock under the Plan, and under all other Section
423(b) employee stock purchase plans of the Company and any parent or subsidiary
corporations, to accrue at a rate which exceeds $25,000 of fair market value of
such stock (determined on the date or dates that purchase options on such stock
were granted) for each calendar year in which such purchase option is
outstanding at any time. The purpose of the limitation in the preceding sentence
is to comply with Section 423(b)(8) of the Code. If the participant's
accumulated payroll deductions on the last day of the Payment Period would
otherwise enable the participant to purchase Common Stock in excess of the
Section 423(b)(8) limitation described in this paragraph, the excess of the
amount of the accumulated payroll deductions over the aggregate purchase price
of the shares actually purchased shall be promptly refunded to the participant
by the Company, without interest.

ARTICLE 6 - EXERCISE OF PURCHASE OPTION.

         Each eligible employee who continues to be a participant in the Plan on
the last day of a Payment Period shall be deemed to have exercised his or her
purchase option on such date and shall be deemed to have purchased from the
Company such number of full shares of Common Stock reserved for the purpose of
the Plan as the participant's accumulated payroll deductions on such date will
pay for at the Option Price, subject to the 5,000-share limit of the purchase
option and the Section 423(b)(8) limitation described in Article 5. If the
individual is not a participant on the last day of a Payment Period, he or she
shall not be entitled to exercise his or her purchase option and the amount of
his or her aggregate payroll deductions for that period will be refunded without
interest. Only full shares of Common Stock may be purchased under the Plan.
Unused payroll deductions remaining in a participant's account at the end of a
Payment Period by reason of the inability to purchase a fractional share shall
be carried forward to the next Payment Period.

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ARTICLE 7 - AUTHORIZATION FOR ENTERING THE PLAN.

         An employee may elect to enter the Plan by filling out, signing and
delivering to the Company an authorization in a form specified by the Company:

                  A.       Stating the percentage to be deducted regularly from
         the employee's pay;

                  B.       Authorizing the purchase of stock for the employee in
         each Payment Period in accordance with the terms of the Plan; and

                  C.       Specifying the exact name or names in which stock
         purchased for the employee is to be issued as provided under Article 11
         hereof.

Such authorization must be received by the Company before the first day of the
next succeeding Payment Period and shall take effect only if the employee is an
eligible employee on the first business day of such Payment Period, provided,
however, that with respect to the First Payment Period, a purchase option shall
be granted to each eligible employee and such authorization to participate in
the plan must be received no more than three weeks following the first day of
the First Payment Period.

         Unless a participant files a new authorization or withdraws from the
Plan, the deductions and purchases under the authorization the participant has
on file under the Plan will continue from one Payment Period to succeeding
Payment Periods as long as the Plan remains in effect.

         The Company will accumulate and hold for each participant's account the
amounts deducted from his or her pay. No interest will be paid on these amounts.

ARTICLE 8 - MAXIMUM AMOUNT OF PAYROLL DEDUCTIONS.

         An employee may authorize payroll deductions in an amount (expressed as
a whole percentage or fixed amount) not more than ten percent (10%) of the
employee's total compensation, including base pay or salary and any overtime,
bonuses or commissions.

ARTICLE 9 - CHANGE IN PAYROLL DEDUCTIONS.

         Deductions may not be increased or decreased during a Payment Period.
However, a participant may withdraw in full from the Plan in which event the
Company will refund the amount of the participant aggregate payroll deductions
for that period will be refunded without interest.

ARTICLE 10 - WITHDRAWAL FROM THE PLAN.

         A participant may withdraw from the Plan (in whole but not in part) at
any time prior to the last day of a Payment Period by delivering a withdrawal
notice to the Company in the form specified by the Company.

<PAGE>

         To re-enter the Plan, an employee who has previously withdrawn must
file a new authorization before the first day of the next Payment Period in
which he or she wishes to participate. The employee's re-entry into the Plan
becomes effective at the beginning of such Payment Period, provided that he or
she is an eligible employee on the first business day of the Payment Period.

ARTICLE 11 - ISSUANCE OF STOCK.

         Certificates for stock issued to participants shall be delivered as
soon as practicable after each Payment Period by the Company's transfer agent.
Certificates may be issued in paper or electronic form at the discretion of the
Company.

         Stock purchased under the Plan shall be issued only in the name of the
participant, or if the participant's authorization so specifies, in the name of
the participant.

ARTICLE 12 - ADJUSTMENTS.

         Upon the happening of any of the following described events subsequent
to the close of the Offering, a participant's rights under purchase options
granted under the Plan shall be adjusted as hereinafter provided:

                  A.       In the event that the shares of Common Stock shall be
         subdivided or combined into a greater or smaller number of shares or
         if, upon a reorganization, split-up, liquidation, recapitalization or
         the like of the Company, the shares of Common Stock shall be exchanged
         for other securities of the Company, each participant shall be
         entitled, subject to the conditions herein stated, to purchase such
         number of shares of Common Stock or amount of other securities of the
         Company as were exchangeable for the number of shares of Common Stock
         that such participant would have been entitled to purchase except for
         such action, and appropriate adjustments shall be made in the purchase
         price per share to reflect such subdivision, combination or exchange;
         and

                  B.       In the event the Company shall issue any of its
         shares as a stock dividend upon or with respect to the shares of stock
         of the class which shall at the time be subject to a purchase option
         hereunder, each participant upon exercising such a purchase option
         shall be entitled to receive (for the purchase price paid upon such
         exercise) the shares as to which the participant is exercising his or
         her purchase option and, in addition thereto (at no additional cost),
         such number of shares of the class or classes in which such stock
         dividend or dividends were declared or paid, and such amount of cash in
         lieu of fractional shares, as is equal to the number of shares thereof
         and the amount of cash in lieu of fractional shares, respectively,
         which the participant would have received if the participant had been
         the holder of the shares as to which the participant is exercising his
         or her purchase option at all times between the date of the granting of
         such purchase option and the date of its exercise.

         Upon the happening of any of the foregoing events, the class and
aggregate number of shares set forth in Article 4 hereof which are subject to
purchase options which have been or may

                                       -5-

<PAGE>

be granted under the Plan and the limitations set forth in the second paragraph
of Article 5 shall also be appropriately adjusted to reflect the events
specified in paragraphs A and B above. Notwithstanding the foregoing, any
adjustments made pursuant to paragraphs A or B shall be made only after the
Committee, based on advice of counsel for the Company, determines whether such
adjustments would constitute a "modification" (as that term is defined in
Section 424 of the Code). If the Committee determines that such adjustments
would constitute a modification, it may refrain from making such adjustments.

         If the Company is to be consolidated with or acquired by another entity
in a merger, a sale of all or substantially all of the Company's assets or
otherwise (an "Acquisition"), the Committee or the board of directors of any
entity assuming the obligations of the Company hereunder (the "Successor Board")
shall, with respect to purchase options then outstanding under the Plan, either
(i) make appropriate provision for the continuation of such purchase options by
arranging for the substitution on an equitable basis for the shares then subject
to such purchase options either (a) the consideration payable with respect to
the outstanding shares of the Common Stock in connection with the Acquisition,
(b) shares of stock of the successor corporation, or a parent or subsidiary of
such corporation, or (c) such other securities as the Successor Board deems
appropriate, the fair market value of which shall not materially exceed the fair
market value of the shares of Common Stock subject to such purchase options
immediately preceding the Acquisition; or (ii) terminate each participant's
purchase options in exchange for a cash payment equal to the excess of (a) the
fair market value on the date of the Acquisition, of the number of shares of
Common Stock that the participant's accumulated payroll deductions as of the
date of the Acquisition could purchase, at a purchase option price determined
with reference only to the first business day of the applicable Payment Period
and subject to the 2,500-share, Code Section 423(b)(8) and fractional-share
limitations on the amount of stock a participant would be entitled to purchase,
over (b) the result of multiplying such number of shares by such purchase option
price.

         The Committee or Successor Board shall determine the adjustments to be
made under this Article 12, and its determination shall be conclusive.

ARTICLE 13 - NO TRANSFER OR ASSIGNMENT OF EMPLOYEE'S RIGHTS.

         A purchase option granted under the Plan may not be transferred or
assigned, except by will or the laws of decent and distribution, and may be
exercised, during the participant's lifetime, only by the participant.

ARTICLE 14 - TERMINATION OF EMPLOYEE'S RIGHTS.

         Whenever a participant ceases to be an eligible employee because of
retirement, voluntary or involuntary termination, resignation, layoff,
discharge, death or for any other reason, his or her rights under the Plan shall
immediately terminate, and the Company shall promptly refund, without interest,
the entire balance of his or her payroll deduction account under the Plan.
Notwithstanding the foregoing, eligible employment shall be treated as
continuing intact while a participant is on military leave, sick leave or other
bona fide leave of

                                       -6-

<PAGE>

absence, for up to 90 days, or for so long as the participant's right to
re-employment is guaranteed either by statute or by contract, if longer than 90
days.

ARTICLE 15 - TERMINATION AND AMENDMENTS TO PLAN.

         Unless terminated sooner as provided below, the Plan shall terminate on
May 31, 2014. The Plan may be terminated at any time by the Company's Board of
Directors but such termination shall not affect purchase options then
outstanding under the Plan. It will terminate in any case when all or
substantially all of the unissued shares of stock reserved for the purposes of
the Plan have been purchased. If at any time shares of stock reserved for the
purpose of the Plan remain available for purchase but not in sufficient number
to satisfy all then unfilled purchase requirements, the available shares shall
be apportioned among participants in proportion to the amount of payroll
deductions accumulated on behalf of each participant that would otherwise be
used to purchase stock, and the Plan shall terminate. Upon such termination or
any other termination of the Plan, all payroll deductions not used to purchase
stock will be refunded, without interest.

         The Committee or the Board of Directors may from time to time adopt
amendments to the Plan provided that, without the approval of the stockholders
of the Company, no amendment may (i) increase the number of shares that may be
issued under the Plan; (ii) change the class of employees eligible to receive
purchase options under the Plan, if such action would be treated as the adoption
of a new plan for purposes of Section 423(b) of the Code; or (iii) cause Rule
16b-3 under the Securities Exchange Act of 1934 to become inapplicable to the
Plan.

ARTICLE 16 - LIMITS ON SALE OF STOCK PURCHASED UNDER THE PLAN.

         The Plan is intended to provide shares of Common Stock for investment
and not for resale. The Company does not, however, intend to restrict or
influence any employee in the conduct of his or her own affairs. An employee
may, therefore, sell stock purchased under the Plan at any time the employee
chooses, subject to compliance with the Company's insider trading policy, as
amended and in effect from time to time, any applicable federal or state
securities laws and subject to any restrictions imposed under Article 22 to
ensure that tax withholding obligations are satisfied. THE EMPLOYEE ASSUMES THE
RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE STOCK.

ARTICLE 17 - PARTICIPATING SUBSIDIARIES.

         The term "participating subsidiary" shall mean any present or future
subsidiary of the Company, as that term is defined in Section 424(f) of the
Code, which is designated from time to time by the Board of Directors to
participate in the Plan. The Board of Directors shall have the power to make
such designation before or after the Plan is approved by the stockholders.

                                       -7-

<PAGE>

ARTICLE 18 - OPTIONEES NOT STOCKHOLDERS.

         Neither the granting of a purchase option to an employee nor the
deductions from his or her pay shall constitute such employee a stockholder of
the shares covered by a purchase option until such shares have been actually
purchased by the employee.

ARTICLE 19 - NO RIGHT TO EMPLOYMENT OR OTHER STATUS.

         Participation in the Plan shall not be construed as giving a
participant the right to continued employment or any other relationship with the
Company.

ARTICLE 20 - APPLICATION OF FUNDS.

         The proceeds received by the Company from the sale of Common Stock
pursuant to purchase options granted under the Plan will be used for general
corporate purposes.

ARTICLE 21 - NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

         By electing to participate in the Plan, each participant agrees to
notify the Company in writing immediately after the participant transfers Common
Stock acquired under the Plan, if such transfer occurs within two years after
the first business day of the Payment Period in which such Common Stock was
acquired. Each participant further agrees to provide any information about such
a transfer as may be requested by the Company or any subsidiary corporation in
order to assist it in complying with the tax laws. Such dispositions generally
are treated as "disqualifying dispositions" under Sections 421 and 424 of the
Code, which have certain tax consequences to participants and to the Company and
its participating subsidiaries.

ARTICLE 22 - WITHHOLDING OF ADDITIONAL INCOME TAXES.

         By electing to participate in the Plan, each participant acknowledges
that the Company and its participating subsidiaries are required to withhold
taxes with respect to the amounts deducted from the participant's compensation
and accumulated for the benefit of the participant under the Plan, and each
participant agrees that the Company and its participating subsidiaries may
deduct additional amounts from the participant's compensation, when amounts are
added to the participant's account, used to purchase Common Stock or refunded,
in order to satisfy such withholding obligations. Each participant further
acknowledges that when Common Stock is purchased under the Plan the Company and
its participating subsidiaries may be required to withhold taxes with respect to
all or a portion of the difference between the fair market value of the Common
Stock purchased and its purchase price, and each participant agrees that such
taxes may be withheld from compensation otherwise payable to such participant.
It is intended that tax withholding will be accomplished in such a manner that
the full amount of payroll deductions elected by the participant under Article 7
will be used to purchase Common Stock. However, if amounts sufficient to satisfy
applicable tax withholding obligations have not been withheld from compensation
otherwise payable to any participant, then, notwithstanding any other provision
of the Plan, the Company may withhold such taxes from the participant's
accumulated payroll

<PAGE>

deductions and apply the net amount to the purchase of Common Stock, unless the
participant pays to the Company, prior to the exercise date, an amount
sufficient to satisfy such withholding obligations. Each participant further
acknowledges that the Company and its participating subsidiaries may be required
to withhold taxes in connection with the disposition of stock acquired under the
Plan and agrees that the Company or any participating subsidiary may take
whatever action it considers appropriate to satisfy such withholding
requirements, including deducting from compensation otherwise payable to such
participant an amount sufficient to satisfy such withholding requirements or
conditioning any disposition of Common Stock by the participant upon the payment
to the Company or such subsidiary of an amount sufficient to satisfy such
withholding requirements.

ARTICLE 23 - GOVERNMENTAL REGULATIONS.

         The Company's obligation to sell and deliver shares of Common Stock
under the Plan is subject to the approval of any governmental authority required
in connection with the authorization, issuance or sale of such shares.

         Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
identify shares of Common Stock issued under the Plan on its stock ownership
records and send tax information statements to employees and former employees
who transfer title to such shares.

ARTICLE 24 - GOVERNING LAW.

         The validity and construction of the Plan shall be governed by the laws
of Delaware, without giving effect to the principles of conflicts of law
thereof.

ARTICLE 25 - APPROVAL OF BOARD OF DIRECTORS AND STOCKHOLDERS OF THE COMPANY.

         The Plan was adopted by the Board of Directors on March ___, 2004 and
was approved by the stockholders of the Company on ____________, 2004.

                                       -9-

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