Common use of Stock Options Clause in Contracts

Stock Options. (i) At the Effective Time, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e).

Stock Options. (ia) At the Effective Time, each outstanding option entitling granted by the holder thereof Company to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, each a “Company Stock Option” ”) which was granted pursuant to any stock option plan, program or collectively arrangement of the Company as set forth on Section 3.2 the Company Disclosure Letter (collectively, the “Company Stock OptionsOption Plans”), to the extent not already fully vested that is outstanding and exercisable, shall become fully vested and exercisable unexercised immediately prior to consummation the Effective Time shall cease to represent a right to acquire share of Company Common Stock, and Parent shall assume each such Company Option (hereafter, “Assumed Option”) subject to the terms of the Mergerapplicable Company Option Plan and the agreement evidencing the grant thereunder of such Assumed Option; provided, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent however, that the (i) the number of shares of Parent or Merger Sub, and Common Stock purchaseable upon such exercise of such Assumed Option shall be converted into and shall become the right equal to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are were purchasable on exercise of under such Company Stock Option immediately prior to the Effective Time but subsequent multiplied by the Exchange Ratio, and rounded to the nearest whole share, and (ii) the per share exercise price under such Assumed Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio, and rounding to the nearest whole cent, and (iii) such Assumed Option shall not terminate if the holder ceases to be a director, officer or employee or consultant of the Surviving Corporation or any acceleration of vesting provided for its affiliates (including Parent and its Subsidiaries). In the case of any Assumed Option that is an “incentive stock option” (as defined in this Section 2.1(e)(i422 of the Code), less any mandatory tax withholdings (the “exercise price, the number of shares of Parent Common Stock purchasable pursuant to such Assumed Option Payment”). At and the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment terms and conditions of exercise of such option shall be due hereunder) shall be canceled and be of no further force or effect except for the right determined in order to receive the cash Option Payment comply, to the fullest extent provided in this possible, with Section 2.1(e)424(a) of the Code. Prior to the Effective Time, the Company and Parent shall take prepare and file with the SEC a registration statement on Form S-8 (or other appropriate form) registering all actions the shares of Parent Common Stock subject to the Assumed Options, and such registration statement shall be kept effective (including, if appropriate, amending and the terms current status of the Company Stock Plans and related option agreementsprospectus or prospectuses required thereby shall be maintained) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)as long as any Assumed Option remains outstanding.

Stock Options. (ia) At Prior to the Effective Time, the Board shall take all necessary actions so that each outstanding option entitling the holder thereof to purchase shares of Company Common Stock granted by the Company, whether granted pursuant to the Company Stock Plans, other than the 2004 Employee Option Plan (eachindividually, a “Company Stock Plan Option” ”) or collectively otherwise (collectively, including all Company Plan Options, the “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable ) that is outstanding immediately prior to consummation of the MergerEffective Time, but excluding any Company Stock Options held whether vested or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Subunvested, and shall be converted into and become rights with respect to Parent Common Stock, and Parent shall become the right to receiveassume each Company Option, in full accordance with the terms of the Company Option Plan and/or stock option agreement by which it is evidenced, except that from and complete satisfaction after the Effective Time, (i) Parent and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that its compensation committee shall be determined by multiplying substituted for the Company and the compensation committee of the Board (A) the excessincluding, if anyapplicable, the Board) administering such Company Option Plan, (ii) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock (or cash, if so provided under the Merger Consideration over the applicable per share exercise price terms of such Company Option), (iii) the number of shares of Parent Common Stock Option, by (B) subject to such Company Options shall be equal to the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Stock Option Options immediately prior to the Effective Time but subsequent multiplied by the Exchange Ratio, rounded down to any acceleration the nearest whole share, and (iv) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price under each such Company Option by the Exchange Ratio and rounding up to the nearest cent. In addition, notwithstanding the provisions of vesting provided for in clauses (iii) and (iv) of the first sentence of this Section 2.1(e)(i‎1.8(a), less any mandatory tax withholdings (the each Company Option that is an “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment incentive stock option” or a nonqualified stock option held by a U.S. taxpayer shall be due hereunderadjusted as required by Section 424 of the Code and Section 409A of the Code and the Treasury Regulations thereunder, so as not to constitute a modification, extension or renewal of the option, within the meaning of Section 424(h) shall be canceled of the Code and be the Treasury Regulations under Section 409A of no further force the Code, or effect except for otherwise result in negative Tax treatment or penalties under Section 424 of the right to receive Code or Section 409A of the cash Option Payment to the extent provided in this Section 2.1(e)Code. Prior to the Effective Time, Each of the Company and Parent shall adopt any and all resolutions and take all actions (including, if appropriate, amending necessary steps to effectuate the terms foregoing provisions of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e‎1.8(a).

Stock Options. (ia) At the Effective Time, each outstanding option entitling the holder thereof all rights with respect to purchase shares of Company Common Stock pursuant to the under each Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall become assume each such Company Option in accordance with the right terms (as in effect as of the date of this Agreement) of the stock option plan under which it was issued and the stock option agreement by which it is evidenced. From and after the Effective Time, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per each such Company Stock Option, without interest, in an amount that Option shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) equal to the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Stock Option immediately prior to the Effective Time but subsequent multiplied by the Exchange Ratio, rounded down to the nearest whole share, (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share 39. exercise price under such Company Option by the Exchange Ratio and rounded up to the nearest cent and (iv) any acceleration restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting provided for schedule and other provisions of such Company Option shall otherwise remain unchanged; provided, however, that each Company Option assumed by Parent in accordance with this Section 2.1(e)(i)5.4(a) shall, less in accordance with its terms, be subject to further adjustment as appropriate to reflect any mandatory tax withholdings (the “Option Payment”). At the Effective Timestock split, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be division or subdivision of no further force shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior other similar transaction subsequent to the Effective Time. Parent shall file with the SEC, promptly after the date on which the Merger becomes effective, a registration statement on Form S-8 relating to the shares of Parent Common Stock issuable with respect to the Company and Options assumed by Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by in accordance with this Section 2.1(e5.4(a).

Stock Options. If, but only if, Mr. Sowar does not exercise his right of revocation under paragraph 00(x), xxlow, then the stock options granted to Mr. Sowar by PlanetCAD on our about October 17, 1996 (itwo grants covxxxxx x xotal of 130,833 shares), October 22, 1998 (two grants covering a total of 50,000 shares), and April 26, 2001 (one grant covering 50,000 shares) At the Effective Time, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock an "Option” or collectively “Company Stock ," and collectively, the "Options”), to the extent not already ") shall be hereby amended such that each Option shall be deemed fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation as of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger SubEffective Date, and shall be converted into remain fully exercisable until October 1, 2006, notwithstanding any language to the contrary in the stock option agreements and/or equity incentive plans pursuant to which the Options were granted (collectively the "Option Agreements and shall become Plans"). Mr. Sowar understands that this amendment and/or his exercise of cerxxxx xx xhe Options more than 90 days after the right termination of his employment may affect their characterization as "Incentive Stock Options" and the application of certain preferential tax treatment afforded to receiveholders of such Incentive Stock Options, in and assumes all risks, costs, expenses and tax liabilities relating to or arising from the amendment and/or the deferred exercise of any Option. Mr. Sowar understands and agrees that he should seek independent proxxxxxxxxx advice concerning tax and legal matters relating to the Options and the amendment thereto effected by this Agreement, acknowledges that he has had a full and complete satisfaction fair opportunity to do so, and cancellation thereoffurther acknowledges and agrees that he has not relied on any information or advice provided by PlanetCAD or any representative, a cash payment per Company Stock Optionagent or attorney thereof relating to any matterpertaining to this Agreement, including particularly but without interest, in an amount that shall be determined by multiplying (A) limitation the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior legal and tax issues relating to the Effective Time but subsequent to any acceleration of vesting provided for Options and the amendment thereof. Except as specifically stated in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Timeparagraph, the Company Options shall remain in force and Parent shall take all actions (includingeffect in accordance with, if appropriateand subject to, amending the terms of and conditions stated in the Company Stock Plans Option Agreements and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e).Plans

Stock Options. (i) At the Effective Time, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Merger 1 Effective Time, the Company and Parent shall take all actions (includingoffer to cancel, if appropriateeffective immediately prior to the Merger 1 Effective Time, amending any of the terms of Company Options granted under the Company Stock Plans (a “Cancellation Offer”) in exchange for the payment of an amount to be determined by the Company up to $0.20 per share of Company Common Stock subject to such Company Options (each such payment, an “Option Cancellation Payment”); provided, however, that in no event shall the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and related other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation Agreement”) shall be distributed to each holder of a Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide that, upon execution by the holder of such Company Option and delivery of such Option Cancellation Agreement to the Company in accordance with the provisions set forth herein, such Company Option shall be cancelled in accordance with its terms, effective immediately prior to the Merger 1 Effective Time, and the holder of such Company Option, in cancellation and settlement therefor, shall be entitled to an Option Cancellation Payment reduced by any applicable withholding Taxes. The Option Cancellation Agreement will include a release of claims against the Company with respect to such Company Options. The Board of Directors of the Company shall adopt all appropriate resolutions and take all other actions necessary with respect to the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements) that are agreements and cancel the relevant Company Options as necessary to give effect to effectuate the transactions contemplated by provisions of this Section 2.1(e1.6(d)(i). Any Cancellation Offer by the Company shall be on such terms and conditions as are reasonably acceptable to Parent and shall comply in all material respects with applicable federal and state securities laws, including, if necessary, the rules applicable to tender offers.

Stock Options. (ia) At Subject to Section 5.4(b), at the Effective Time, each outstanding option entitling the holder thereof all rights with respect to purchase shares of Company Common Stock pursuant to the under each Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall become assume each such Company Option in accordance with the right terms (as in effect as of the date of this Agreement) of the stock option plan under which it was issued and the terms of the stock option agreement by which it is evidenced. From and after the Effective Time, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per each such Company Stock Option, without interest, in an amount that Option shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) equal to the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Stock Option immediately prior to the Effective Time but subsequent multiplied by the Exchange Ratio, rounding down to the nearest whole share, (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio and rounding up to the nearest cent, and (iv) any acceleration restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting provided for schedule and other provisions of such Company Option shall otherwise remain unchanged; provided, however, that each Company Option assumed by Parent in accordance with this Section 2.1(e)(i)5.4(a) shall, less in accordance with its terms, be subject to further adjustment as appropriate to reflect any mandatory tax withholdings (the “Option Payment”). At the Effective Timestock split, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force stock dividend, reverse stock split, reclassification, recapitalization or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior other similar transaction effected subsequent to the Effective Time. Parent shall file with the SEC, no later than 10 business days after the date on which the Merger becomes effective, a registration statement on Form S-8 relating to the shares of Parent Common Stock issuable with respect to the Company Options and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated ESPP Options assumed by Parent in accordance with this Section 2.1(e5.4(a).

Stock Options. (ia) At Each of the Company's stock option plans (the "Option Plans"), each of which is set forth in Section 3.6 of the disclosure schedule delivered by the Company to Parent in connection with this Agreement (the "Company Disclosure Schedule"), and each option to acquire shares of Company Stock outstanding immediately prior to the Effective Time thereunder, whether vested or unvested (each, an "Option" and collectively, the "Options"), shall be assumed by Parent at the Effective Time, and each outstanding such Option shall become an option, to purchase, on the same terms and condition as were applicable under the Option Plan and the underlying option entitling the holder thereof to purchase agreements, a number of shares of Company Parent Common Stock pursuant (a "Substitute Option") equal to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock subject to such Option multiplied by the Exchange Ratio (rounded up to the nearest whole share). The per share exercise price for each Substitute Option shall be the current exercise price per share of Company Stock divided by the Exchange Ratio (rounded up to the nearest full cent), and each Substitute Option otherwise shall be subject to all of the other terms and conditions of the original option to which it relates, provided, however, that are in the case of any option to which Section 421 of the Internal Revenue Code of 1986, as amended (the "Code") applies by reason of its qualification under Section 422 of the Code, the option price, the number of shares purchasable on pursuant to such option and the terms and conditions of exercise of such Company Stock option shall be determined in order to comply with Section 424 (a) of the Code. Parent acknowledges that the consummation of the Merger will constitute a "Terminating Event" (as defined in the Option prior Plans) or similar event with respect to the Effective Time but subsequent to any acceleration options listed on Section 3.6 of the Company Disclosure Schedule, and that the vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (of such options shall therefore become accelerated as a result of the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e)Merger. Prior to the Effective Time, the Company and Parent shall take all such additional actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that as are necessary under applicable law and the applicable agreements and Option Plans to give effect ensure that each outstanding Option shall, from and after the Effective Time, represent only the right to the transactions contemplated by this Section 2.1(e)purchase, upon exercise, shares of Parent Common Stock.

Stock Options. As of August 22, 2005 (ithe "Grant Date"), you shall be granted a non-qualified stock option (the "Extension Options") At the Effective Time, each outstanding option entitling the holder thereof to purchase 532,717 shares of Company Common Stock Stock, pursuant to the terms and conditions of the Stock Incentive Plan and a written Stock Option Agreement to be entered into by and between you and the Company (the "Extension Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”Option Agreement"), to the extent not already fully vested and exercisablewhich, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent as otherwise provided in this Section 2.1(e). Prior 4, shall be substantially identical to the Effective TimeRetention Stock Option Agreement. For purposes of the Employment Agreement (including without limitation Sections 7 and 11 thereof), the Company Extension Options shall be treated identically to the Retention Options. The Extension Options shall have an exercise price equal to the fair market value per share of Common Stock as of the Grant Date and Parent shall take all actions have a term of 10 years. The Extension Options shall become exercisable in three cumulative installments as follows: (includinga) the first installment shall consist of 25% of the shares of Common Stock covered by the Extension Options and shall become vested and exercisable on the fourth anniversary of the Grant Date; (b) the second installment shall consist of 25% of the shares of Common Stock covered by the Extension Options and shall become vested and exercisable on the fifth anniversary of the Grant Date; and (c) the third installment shall consist of 50% of the shares of Common Stock covered by the Extension Options and shall become exercisable on the sixth anniversary of the Grant Date; provided, that, except as otherwise provided in Section 7 of the Employment Agreement or the Extension Stock Option Agreement, no portion of the Extension Options not then exercisable shall become exercisable following your termination of employment for any reason. (For the avoidance of doubt, if appropriateyour employment shall terminate by reason of your Disability or death, amending the terms then Section 7(d) of the Company Stock Plans and related option agreements) that are necessary to give effect Employment Agreement shall apply to the transactions contemplated by this Section 2.1(e)Extension Options.) You and the Company acknowledge and agree that the Extension Options shall not provide for the grant of any "Restoration Options" as defined in the Stock Incentive Plan.

Stock Options. The Company shall take all actions necessary to provide that all outstanding options to acquire shares of Company Common Stock ("Options") granted under any stock option plan, program or similar arrangement of the Company, each as amended (the "Stock Option Plans"), shall become fully exercisable and vested immediately prior to the Effective Time whether or not otherwise exercisable and vested. The Company shall comply with the terms of the Stock Option Plans, as applicable, and, to the extent required thereunder, provide written notice to the holders of Options that such Options shall be treated as set forth herein. All Options which are outstanding immediately prior to the Effective Time shall be canceled and each holder thereof shall be entitled to receive, subject to reduction for any applicable withholding taxes, from Parent or the Surviving Corporation, at the same time and in the same manner as the holders of Company Shares pursuant to Section 2.02, for each Option to acquire one share of Company Common Stock, (i) At an amount in cash equal to (A) the Effective Time, each outstanding option entitling Cash Consideration payable to the holder thereof to purchase shares of one share of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable Section 2.01(c)(i) assuming such Option had been exercised immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration minus (B) the exercise price of vesting provided for in this Section 2.1(e)(isuch Option (the "Exercise Difference"), less any mandatory tax withholdings plus (ii) certificates representing that number of Parent Shares that the “Option Payment”). At the Effective Time, all outstanding holder of one share of Company Common Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for would have the right to receive the cash pursuant to Section 2.01(c)(ii) assuming such Option Payment had been exercised prior to the extent Effective Time; provided, however, if the Exercise Difference is a negative number, at the election of the holder of any Option, such holder can elect to pay for the Exercise Difference in cash or the number of Parent Shares to be provided to the Option holder under clause (ii) shall be reduced by an amount that is equal in this Section 2.1(e)value to the Exercise Difference based on the higher of the average closing price for a Parent Share on the Nasdaq National Market for the five trading days ending two business days prior to the Effective Time and a value of $9.75 per share. Prior to the Effective Time, the Company and shall use its reasonable best efforts to obtain such consents, if any, from the holders as are required to cancel the Options. All applicable withholding taxes attributable to the payments made hereunder or to distributions contemplated hereby shall, at the election of the holders of any Option, first be deducted from the amount, if any, payable under clause (i) of the preceding sentence and, if such amount is insufficient to satisfy the Option holder's tax withholding liability, thereafter, at the election of Parent, the Parent shall take all actions (x) use its reasonable best efforts (including, if appropriatewithout limitation, amending by preparing and filing any registration statement and by causing such registration statement to become effective), and the terms Company shall cooperate in seeking, as of the Company Effective Time, standby purchasers for Parent Shares for the holders of Options or (y) reduce the Stock Plans and related option agreements) that are necessary to give effect Consideration payable in respect of such Options by an amount equal in value to the transactions contemplated amount of the remaining withholding based on the higher of the average closing price for a Parent Share on the Nasdaq National Market for the five trading days ending two business days prior to the Effective Time and a value of $9.75 per share, in each case to enable such holder to pay applicable withholding taxes. Except as provided herein or as otherwise agreed to by this Section 2.1(e)the parties and to the extent permitted by the Stock Option Plans, the Company shall cause the Stock Option Plans to terminate as of the Effective Time.

Stock Options. (i) At the Effective Time, each holder of a then-outstanding option entitling the holder thereof to purchase shares Company Common Stock under the Company's 1995 Key Employee Stock Option Plan, the Company's 1995 Non-Employee Director Stock Option Plan, the Non-Qualified Stock Option Agreement dated as of January 17, 1995 between the Company and Green Equity Investors, L.P. and all other agreements with the Company and its employees and Directors (collectively, the "Stock Option Plans") (true and correct copies of which have been delivered by the Company to Parent), whether or not then exercisable (the "Compensation Options"), shall, in settlement thereof, receive for each share of Company Common Stock pursuant subject to such Compensation Option an amount (subject to any applicable withholding tax) in cash equal to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of difference between the Merger Consideration over Price and the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Compensation Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided such difference is a positive number (such amount being hereinafter referred to as, the "Option Consideration"). Upon receipt of the Option Consideration, the Compensation Option shall be canceled. The surrender of a Compensation Option to the Company in this Section 2.1(e)exchange for the Option Consideration shall be deemed a release of any and all rights the holder had or may have had in respect of such Compensation Option. Prior to the Effective Time, the Company shall obtain all necessary consents or releases from holders of Compensation Options under the Stock Option Plans and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are such other lawful action as may be necessary to give effect to the transactions contemplated by this Section 2.1(e3.01(e) (except for any such action that may require the approval of the Company's stockholders). Except as otherwise agreed to by the parties: (i) the Stock Option Plans shall terminate as of the Effective Time and the provisions in any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or, any Subsidiary thereof, shall be canceled as of the Effective Time; and (ii) the Company shall assure that following the Effective Time no participant in the Stock Option Plans or other plans, programs or arrangements, including but not limited to, the Company's Employee Stock Purchase Plan, shall have any right thereunder to acquire equity securities of the Company, the Surviving Corporation or any Subsidiary thereof and to terminate all such plans.

Stock Options. The Company shall establish an incentive stock option plan for the executives, employees and directors of the Company (i) At the Effective Time"Plan"). The participants in the Plan shall be entitled to purchase, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than options to be granted thereunder (which may be "incentive stock options" within the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation meaning of Section 422(b) of the MergerInternal Revenue Code, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in non-incentive stock options) an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the aggregate number of shares of Company the Company's common stock, one-third cent par value (the "Common Stock"), as shall be equal to approximately 20% of the total number of shares of Common Stock that are purchasable which shall be issued and outstanding upon consummation of the stock purchase agreement dated of as May 3, 1999 between the Company and the Executive (the "post-agreement issued and outstanding shares"). As soon as practically possible after the Plan has been authorized by the Company's shareholders, the Company shall register the Common Stock to be issued upon exercise of the options to be granted thereunder for sale by the Company, and for resale by holders thereof, pursuant to the Securities Act of 1933, as amended. The Executive, together with the Company's new Vice President - Sales and Marketing, Xx. Xxxxxx Xxxxxxxx, and such other executives as shall be hired by the Company during the term of this Agreement upon the advice of the Executive, shall be entitled to purchase, pursuant to the options to be granted under the Plan an aggregate number of shares of Common Stock as shall be equal to 10% of the total number of post-agreement issued and outstanding shares. The exercise price for each of such options shall be $1.00 per share. The vesting of such options shall occur at the rate of 25% per annum at the end of each Review Period during the Employment Period, and the exercise of all vested options shall be conditioned upon the achievement of a set of pre-determined earnings, revenue and other performance targets to be formulated mutually by the Executive and the Board or the committee administering the Plan (the "Performance Targets"). The term of such options shall be the 51 month period commencing on the date of commencement of the Employment Period. The Plan and such options shall provide that, upon the death, disability or termination of employment of the Executive other than "for cause," all options which shall then have vested, or which would have vested if such event had occurred on the last day of the then current Review Period, shall be exercisable by the Executive, or by the person or persons to whom such options shall pass by will or by the laws of descent and distribution, as the case may be, during the six month period following the date of occurrence of such event, provided, that, all applicable conditions to the exercise of such Company Stock Option prior options shall have been satisfied on or before the date of exercise thereof. Each option granted pursuant to the Effective Time but subsequent Plan shall also contain such other terms, limitations and conditions as the Board or the committee administering the Plan shall deem appropriate pursuant to any acceleration the provisions of vesting provided for in this Section 2.1(e)(i)the Plan. In the event that the Company's shareholders fail to authorize the Plan, less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment options to be granted hereunder shall be due hereunder) shall be canceled issued as non-Plan options in accordance with, and be of no further force or effect except for the right subject to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans foregoing terms and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)conditions.

Stock Options. (ia) At the Effective Time, each outstanding option entitling the holder thereof all rights with respect to purchase shares of Company Common Stock pursuant to the under each Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall become assume each such Company Option in accordance with the right terms (as in effect as of the date of this Agreement) of the stock option plan under which it was issued and the terms of the stock option agreement by which it is evidenced as set forth herein. From and after the Effective Time, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per each such Company Stock Option, without interest, in an amount that Option shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) equal to the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Stock Option immediately prior to the Effective Time but subsequent multiplied by the Exchange Ratio, rounding down to any acceleration of vesting provided for in this Section 2.1(e)(i)the nearest whole share, less any mandatory tax withholdings (iii) the “per share exercise price under each such Company Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunderadjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio and rounding up to the nearest cent and (iv) any restriction on the exercise of any such Company Option shall be canceled continue in full force and be effect and the term, exercisability, vesting schedule and other provisions of no further force or effect such Company Option shall otherwise remain unchanged, except for the right to receive the cash Option Payment to the extent provided that any restriction on exercise, term, exercisability, vesting schedule and other provisions of such Company Option are automatically waived in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to connection with the transactions contemplated by this Agreement; provided, however, that each Company Option assumed by Parent in accordance with this Section 2.1(e5.4(a) shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other similar transaction subsequent to the Effective Time. Parent shall file with the SEC, no later than 30 days after the date on which the Merger becomes effective, a registration statement on Form S-8 relating to the shares of Parent Common Stock issuable with respect to the Company Options assumed by Parent in accordance with this Section 5.4(a). Notwithstanding any of the foregoing to the contrary, in lieu of assuming outstanding Company Options, Parent may, at its election, cause such outstanding Company Options to be replaced by issuing replacement stock options in substitution therefor (each, a "Substitute Option"). Each Substitute Option shall (i) be exercisable solely for shares of Parent Common Stock, (ii) cover a number of shares of Parent Common Stock equal to the number of shares of Company Common Stock covered by the Company Option for which it is substituted, multiplied by the Exchange Ratio, rounded down to the nearest whole share, (iii) have a per share exercise price equal to the per share exercise price of the Company Option for which it is substituted, divided by the Exchange Ratio, rounded up to the nearest whole cent and (iv) have substantially identical terms as the Company Option for which it is substituted including, without limitation, any restriction on the exercise of any such Company Option, the term, exercisability, vesting schedule and other provisions of such Company Option, except to the extent that any restriction on exercise, term, exercisability, vesting schedule and other provisions of such Company Option are automatically waived in connection with the transactions contemplated by this Agreement; provided, however, that each Substituted Option shall be subject to further adjustment as appropriate to reflect any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other similar transaction subsequent to the Effective Time.

Stock Options. (ia) At the Effective TimeTime of Merger I, by virtue of Merger I and in accordance with the Company’s 2000 Stock Plan, 2001 Officer Stock Plan, 2001 Non-U.S. Plan and 2001 California Plan (such plans collectively referred to as the “Company Stock Plans”), and without any action on the part of the parties hereto, each stock option that is then outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to under the Company Stock Plans, other than the 2004 Employee Plan whether vested or unvested (each, a “Company Stock Option” or collectively “Company Stock Options”), to shall be assumed by Parent in accordance with the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation terms (as in effect as of the Merger, but excluding any date of this Agreement) of the Company Stock Plans, the stock option agreement by which such Company Option is evidenced (including any amendments thereto) and this Agreement (the “Assumed Company Option”). All rights with respect to Company Common Stock under outstanding Company Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall thereupon be converted into and shall become the a right to receivereceive cash and Parent Common Stock. Accordingly, in full from and complete satisfaction after the Effective Time of Merger I, (i) each Assumed Company Option may be exercised solely for cash and cancellation thereof, a cash payment per shares of Parent Common Stock with respect to the Assumed Company Stock Option, without interest, in an (ii) the amount that of cash subject to each Assumed Company Option shall be determined by multiplying equal the difference between (A) the excess, if any, product of the Merger Consideration over Company Common Cash Conversion Ratio multiplied by the applicable per share exercise price of such Company Stock Option, by Option Shares minus (B) the product of the Company Option Shares multiplied by the Exercise Price Per Share multiplied by the Cash Ratio, (iii) the number of shares of Parent Common Stock subject to each such Assumed Company Option shall equal the product of the Company Common Stock that are purchasable Conversion Ratio multiplied by the Company Option Shares, (iv) the per share exercise price applicable to each such Assumed Company Option shall equal the product (rounded up to the nearest whole cent) of (A) the quotient of the Exercise Price Per Share divided by the Company Common Stock Conversion Ratio multiplied by (B) the Stock Ratio and (v) all rights and restrictions on the exercise of each Company Option including the term, exercisability, vesting schedule and all other provisions of such Company Option shall continue in full force and effect and apply to the Assumed Company Option. It is the intention of the parties that the portion of the Assumed Company Option that will become an option for Parent Common Stock Option qualify, to the maximum extent permissible, following the Effective Time of the Mergers as incentive stock options (as defined in Section 422 of the Code) to the extent such Assumed Options qualified as incentive stock options prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Merger I. The Company and Parent shall take all actions commercially reasonable action that may be necessary (including, if appropriate, amending the terms of under the Company Stock Plans and related option agreementsotherwise) that are necessary to give effect to effectuate the transactions contemplated by provisions of this Section 2.1(e1.6(a).. Following the Closing, Parent will send to each holder of an Assumed Company Option a written notice setting forth (1) the amount of cash subject to such Assumed Company Option, (2) the number of shares of Parent Common Stock subject to such Assumed Company Option and (3) the exercise price per share of Parent Common Stock issuable upon exercise of such Assumed Company Option. Parent shall file with the SEC, promptly after the Closing Date, and in any event within five (5) business days after the Closing Date, a registration statement on Form S-8 registering the Parent Common Stock to be issued upon the exercise of the 8. Table of Contents

Stock Options. (ia) At On the Effective TimeEmployment Date, each outstanding the Company will enter into an incentive stock option entitling agreement with Employee providing for the holder thereof grant of incentive options effective on the Employment Date, under the Company's stock option plan (which plan, to purchase be adopted or before the Employment Date by the Company's Board of Directors, and subject to subsequent shareholder approval, will, upon receipt of such shareholder approval, satisfy all conditions of Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act"), to acquire 1,200,000 shares of Company Common Stock common stock at an exercise price equal to the fair market value of the Company's common stock on the Employment Date (anticipated to be $0.375 per share, the fair market value on the date hereof). Such options shall become exercisable, in whole or in part, in five equal cumulative annual installments commencing on April 30, 1996. Once exercisable, such options shall remain exercisable until expiration. In the event of termination of employment, all options 6 exercisable on the date of termination shall remain exercisable for a period of three months following termination. The options shall expire ten years from the date of grant. The Company agrees to promptly register on Form S-8 under the Act, all shares issuable pursuant to the Company Stock Plansoptions granted to Employee under this Section 13(a), other than but not prior to achieving the 2004 Financing Goal. On each May 1 (provided Employee Plan (eachis then employed by the Company), the exercise date for the 240,000 shares included in the next annual installment, to become exercisable on the next May 1, shall be accelerated to the extent necessary for Employee to maintain, on a fully diluted basis, a “Company Stock Option” or collectively “Company Stock Options”)10% interest in the Company's common stock. No acceleration will be effected until Employee has obtained a 10% interest in the Company's common stock, on a fully diluted basis, the determination of which, as well as any determination regarding the maintenance of Employee's 10% interest in the Company's common stock, shall be made as if all of Employee's outstanding options, to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation had been exercised. For purposes of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excesspreceding sentence, if any, of Employee has not obtained a 10% interest in the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option Company's common stock prior to the Effective Time but subsequent expiration of three years from the Employment Date then Employee will be deemed to any acceleration have obtained such 10% interest in the Company's common stock at the expiration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (three years from the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)Employment Date.

Stock Options. (ia) At Subject to Section 5.4(b), at the Effective Time, each outstanding option entitling the holder thereof all rights with respect to purchase shares of Company Common Stock pursuant to the under each Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall become assume each such Company Option in accordance with the right terms (as in effect as of the date of this Agreement) of the stock option plan under which it was issued and the stock option agreement by which it is evidenced. From and after the Effective Time, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per each such Company Stock Option, without interest, in an amount that Option shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) equal to the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Stock Option immediately prior to the Effective Time but subsequent multiplied by the Exchange Ratio, rounded down to the nearest whole share (with cash, less the applicable exercise price, being payable for any acceleration fraction of vesting provided for in this Section 2.1(e)(ia share), less (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio and rounding up to the nearest cent and (iv) any mandatory tax withholdings restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Company Option shall otherwise remain unchanged; PROVIDED, HOWEVER, that (A) in accordance with the “Option Payment”). At terms of the Employment Agreement between Xxxx X. Xxxxxxx and the Company dated December 1, 1994, all unvested Company Options granted to Xxxx X. Xxxxxxx pursuant to said Employment Agreement shall become immediately exercisable as of the Effective Time, all outstanding (B) in accordance with the terms of that certain Employment Agreement between Xxxxxx X. Xxxxx and the Company Stock dated April 24, 1995, and that certain Employment Agreement between Xxxxxxx Xxxxxxxx and the Company dated March 3, 1995, certain unvested Company Options granted to Messrs. Selvi and Xxxxxxxx pursuant to said Employment Agreements shall become immediately exercisable as of the Effective Time, (including any Company C) in accordance with the terms of the Company's 1995 Directors Stock Option for which no payment Plan, unvested Company Options granted to outside directors of the Company pursuant to such plan shall be due hereunderbecome immediately exercisable as of the Effective Time, and (D) shall be canceled and be of no further force or effect except for the right to receive the cash each Company Option Payment to the extent provided assumed by Parent in accordance with this Section 2.1(e). Prior 5.4(a) shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other similar transaction subsequent to the Effective Time. Parent shall file with the SEC, no later than five business days after the date on which the Merger becomes effective, a Registration Statement on Form S-8 relating to the shares of Parent Common Stock issuable with respect to the Company and Options assumed by Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by in accordance with this Section 2.1(e5.4(a).

Stock Options. (i) At the Effective Time, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take such action as may be necessary to cause each unexpired and unexercised option to purchase shares of Company Common Stock (each, a "Company Option") under (1) the Company's Amended and Restated 1997 Long-Term Incentive Plan (the "1997 Plan"), a true and complete copy of which has heretofore been provided to Parent by the Company, and (2) the Company's 1999 Long-Term Incentive Plan (the "1999 Plan," and together with the 1997 Plan, the "Company Stock Option Plans"), a true and complete copy of which has heretofore been provided to Parent by the Company, to be exercisable solely for such number of shares of Parent Common Stock as is equal to the number of shares of Company Common Stock that could have been purchased under such Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio (rounded to the nearest whole number of shares of Parent Common Stock), at a price per share of Parent Common Stock equal to the per-share option exercise price specified in the Company Option divided by the Exchange Ratio (rounded down to the nearest whole cent). Such Company Option shall otherwise be subject to the same terms and conditions (including provisions regarding vesting and the acceleration thereof) as in effect at the Effective Time, including the date of grant. At the Effective Time, (1) all actions references in the Company Stock Option Plans and in the related stock option agreements to the Company shall be deemed to refer to Parent and (including2) Parent shall assume all of the Company's obligations with respect to Company Options as so amended. Promptly after the Effective Time, if appropriateto the extent necessary to provide for registration of shares of Parent Common Stock subject to such Company Options, amending Parent shall file a registration statement on Form S-8 (or any successor form) with respect to such shares of Parent Common Stock and shall use its best efforts to maintain such registration statement (or any successor form), including the terms current status of any related prospectus or prospectuses, for so long as the Company Options remain outstanding. None of the Company Stock Plans and related option agreements) that Options are necessary to give effect to "incentive stock options" within the transactions contemplated by this meaning of Section 2.1(e)422 of the Code.

Stock Options. (i) At Contemporaneous with the Effective Timecommencement of the Offer, the Company shall request each outstanding option entitling the holder thereof to purchase shares of Company Common Employee Stock pursuant Options (whether or not such Company Employee Stock Options are vested as of the date of this Agreement) to execute and deliver to the Company Stock PlansCompany, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), prior to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation expiration of the MergerOffer, but excluding any Company Stock Options held or beneficially owned an agreement in the form specified by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub(an "Option Election") under which such holder would agree, and shall be converted into and shall become contingent upon the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number purchase of shares of Company Common Stock by Sub in the Offer, to cause, with effect as of immediately prior to the expiration of the Offer, such Option to be exercised and the shares of Company Common Stock issued as a result of that are purchasable on exercise to be tendered in the Offer. To the extent permitted by law, the Company shall advance to each holder of Company Employee Stock Options who executes and delivers a valid Option Election the funds necessary for the exercise of such Company Employee Stock Option prior Options and the funds so advanced shall be deducted from the amount payable to such holder pursuant to the Effective Time but subsequent Offer. The Company, Parent and Sub shall take such further actions as may be necessary to any acceleration accommodate such advancement of vesting provided for in this Section 2.1(e)(i)funds, less any mandatory tax withholdings (the “exercise, issuance, tender and payment with respect to each such valid Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e)Election. Prior to the Effective Timecommencement of the Offer, the Company and Parent Board shall adopt such resolutions or take all such other actions (including, if appropriate, amending as are required to elect the terms treatment of Company Employee Stock Options described in Section 16(a)(y) of the Company's 1985 Stock Option Plan and Section 12(a)(y) of the Company's Equity Incentive Plan, and pursuant to such Company Board action, shall cause the Company to deliver, contemporaneously with the delivery to each holder of Company Employee Stock Plans Options of the request to execute and related option agreementsdeliver an Option Election as described above, a notice specifying that the Company Employee Stock Options must be exercised no later than the later to occur of the twentieth (20th) Business Day following the commencement of the Offer, or the date of the final expiration of the Offer; and further specifying that if such Company Employee Stock Options are necessary not exercised by such date, they shall be terminated as of the Effective Time. All amounts payable pursuant to give effect to the transactions contemplated by this Section 2.1(e)7.04 shall be subject to any required withholding of Taxes and shall be paid without interest.

Stock Options. All options and warrants to acquire Company Common Stock (iindividually, a "Company Option" and collectively, the "Company Options") outstanding at the Effective Time under the Company's 1992 Stock Option Plan, the Company's 1995 Stock Option Plan or otherwise (the "Company Stock Option Plans") shall remain outstanding following the Effective Time. At the Effective Time, each outstanding option entitling such Company Options, by virtue of the Merger and without any further action on the part of the Company or the holder thereof of such Company Options, shall be assumed by Watsxx xx such manner that Watsxx (x) is a corporation (or a parent or a subsidiary corporation of such corporation) "assuming a stock option in a transaction to purchase shares which Section 424(a) applied" within the meaning of Company Common Stock pursuant to Section 424 of the Company Stock Plans, other than the 2004 Employee Plan Code; or (each, a “Company Stock Option” or collectively “Company Stock Options”), b) to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation that Section 424 of the MergerCode does not apply to any such Company Options, but excluding any would be such a corporation (or a parent or a subsidiary corporation of such corporation) were Section 424 applicable to such option. Each Company Option assumed by Watsxx xxxll be exercisable upon 4 the same terms and conditions as under the applicable Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent Option Plan and the applicable option agreement issued thereunder, except that (x) the unexercised portion of Parent or Merger Sub, and each such Company Option shall be converted into and shall become exercisable for that whole number of shares of Watsxx Xxxmon Stock (rounded to the right nearest whole share, with 0.5 rounded upward) equal to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise subject to the unexercised portion of such Company Option multiplied by the Exchange Ratio; and (y) the option exercise price per share of Watsxx Xxxmon Stock shall be an amount equal to the option exercise price per share of Company Common Stock subject to such Company Option prior to in effect at the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings divided by the Exchange Ratio (the “Option Payment”option price per share, as so determined, being rounded to the nearest full cent, with $0.005 rounded upward). At No payment shall be made for fractional interests. The term, exercisability, vesting schedule, status as an "incentive stock option" under Section 422 of the Code, if applicable, and all of the other terms of the Company Options shall otherwise remain unchanged unless modified by or as a result of the transaction contemplated by this Agreement. As soon as practicable after the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment Watsxx xxxll deliver to the extent provided in holders of Company Options appropriate notices setting forth such holders' rights pursuant to such Company Options, as amended by this Section 2.1(e1.5 as well as notice of Watsxx'x xxxumption of the Company's obligations with respect thereto (which occurs by virtue of this Agreement). Prior Watsxx xxxll take all corporate actions necessary to reserve for issuance such number of shares of Watsxx Xxxmon Stock as will be necessary to satisfy exercises in full of all Company Options after the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e).

Stock Options. (ia) At the Effective Time, each outstanding option entitling or warrant to purchase Shares (a "Company Stock Option" or collectively "Company Stock Options") issued pursuant to the holder thereof Company's 1988 Stock Option Plan, 1990 Stock Option Plan, 1992 Key Executive Stock Option Plan, 1993 Employee Qualified Stock Purchase Plan, 1996 Supplemental Stock Plan, as amended, 1997 Stock Option Plan, as amended, 1994 Outside Director Stock Option Plan, Key Executive Stock Option Plan, SpeedSim, Inc. 1995 Incentive and Nonqualified Stock Option Plan, or other agreement or arrangement, whether vested or unvested, shall be converted as of the Effective Time into options or warrants, as applicable, to purchase shares of Company Parent Common Stock in accordance with the terms of this Section 1.11. All plans or agreements described above pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding which any Company Stock Options held Option has been issued or beneficially owned by Parent or Merger Sub or any may be issued other Subsidiary or parent of Parent or Merger Sub, and than outstanding warrants are referred to collectively as the "Company Plans." Each Company Stock Option shall be converted into deemed to constitute an option to acquire, on the same terms and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the conditions as were applicable per share exercise price of under such Company Stock Option, by (B) a number of shares of Parent Common Stock equal to the number of shares of Company Parent Common Stock that are purchasable on exercise the holder of such Company Stock Option would have been entitled to receive pursuant to the Merger had such holder exercised such option or warrant in full immediately prior to the Effective Time but subsequent at a price per share equal to any acceleration of vesting provided (x) the aggregate exercise price for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Shares otherwise purchasable pursuant to such Company Stock Option for divided by (y) the product of (i) the number of Shares otherwise purchasable pursuant to such Company Stock Option, multiplied by (ii) the Exchange Ratio; PROVIDED, HOWEVER, that in the case of any option to which no payment Section 421 of the Code applies by reason of its qualification under Section 422 of the Code ("incentive stock options" or "ISOs") the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be due hereunderdetermined in order to comply with Section 424(a) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)Code.

Stock Options. (ia) At the Effective Time, each outstanding option entitling the holder thereof all rights with respect to purchase shares of Company Common Stock pursuant to that were issuable upon the Company Stock Plans, exercise of options granted under the stock option plans and other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation options set forth on SECTION 3.02(b) of the MergerDisclosure Schedule (collectively, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent the "COMPANY OPTIONS") and warrants set forth on SECTION 3.02(b) of Parent or Merger Subthe Disclosure Schedule (collectively, and the "COMPANY WARRANTS") then outstanding, shall be converted into and become rights with respect to Veeco Shares, and Veeco shall become assume each such Company Option and Company Warrant in accordance with the right terms (as in effect as of the date of this Merger Agreement) of the stock option plan, warrant instrument or other arrangement under which it was issued and the terms of the stock option agreement or other document by which it is evidenced. From and after the Effective Time, (i) each Company Option and Company Warrant assumed by Veeco may be exercised by the holder thereof solely for Veeco Shares, (ii) the number of Veeco Shares subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per each such Company Stock Option, without interest, in an amount that Option or Company Warrant shall be determined by multiplying equal to the product of (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (Ba) the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Stock Option or Company Warrant immediately prior to the Effective Time but subsequent multiplied by (b) 0.184, rounding to the nearest whole share, (iii) the per share exercise price under each such Company Option or Company Warrant shall be adjusted by dividing (x) the per share exercise price under such Company Option or Company Warrant by (y) 0.184 and rounding to the nearest cent and (iv) any acceleration restriction on the exercise or transfer of any such Company Option or Company Warrant shall continue in full force and effect in accordance with its terms and the term, exercisability, vesting provided for schedule and other provisions of or relating to such Company Option or Company Warrant shall otherwise remain unchanged; PROVIDED, HOWEVER, that each Company Option and Company Warrant assumed by Veeco in accordance with this Section 2.1(e)(i)5.15(a) shall, less in accordance with its terms, be subject to further adjustment as appropriate to reflect any mandatory tax withholdings (the “Option Payment”). At the Effective Timestock split, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force stock dividend, reverse stock split, reclassification, recapitalization or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior other similar transaction subsequent to the Effective Time. Veeco shall file with the SEC, no later than the date on which the Merger becomes effective, a registration statement on Form S-8 relating to the Veeco Shares issuable with respect to the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated Options assumed by Veeco in accordance with this Section 2.1(e5.15(a).

Stock Options. All options and warrants to acquire Company Common Stock (iindividually, a "Company Option" and collectively, the "Company Options") outstanding at the Effective Time under the Company's Restated 1992 Employee Stock Option Plan, the Company's 1992 Directors' Stock Option Plan or otherwise (collectively, the "Company Stock Option Plans") shall remain outstanding following the Effective Time. At the Effective Time, each outstanding option entitling such Company Options, by virtue of the Merger and without any further action on the part of the Company or the holder thereof of such Company Options, shall be assumed by Watsxx xx such manner that Watsxx (x) is a corporation (or a parent or a subsidiary corporation of such corporation) "assuming a stock option in a transaction to purchase shares which Section 424(a) applied" within the meaning of Company Common Stock pursuant to Section 424 of the Company Stock Plans, other than the 2004 Employee Plan Code; or (each, a “Company Stock Option” or collectively “Company Stock Options”), b) to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation that Section 424 of the MergerCode does not apply to any such Company Options, but excluding any would be such a corporation (or a parent or a subsidiary corporation of such corporation) were Section 424 applicable to such option. Each Company Option assumed by Watsxx xxxll be exercisable upon the same terms and conditions as under the applicable Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent Option Plan and the applicable option agreement issued thereunder, except that (x) the unexercised portion of Parent or Merger Sub, and each such Company Option shall be converted into and shall become exercisable for that whole number of shares of Watsxx Xxxmon Stock (rounded to the right nearest whole share, with 0.5 rounded upward) equal to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise subject to the unexercised portion of such Company Option multiplied by the Exchange Ratio; and (y) the option exercise price per share of Watsxx Xxxmon Stock shall be an amount equal to the option exercise price per share of Company Common Stock subject to such Company Option prior to in effect at the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings divided by the Exchange Ratio (the “Option Payment”option price per share, as so determined, being rounded to the nearest full cent, with $0.005 rounded upward). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no No payment shall be due hereunder) shall be canceled and be made for fractional interests. The term, exercisability, vesting schedule, status as an "incentive stock option" under Section 422 of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (includingCode, if appropriateapplicable, amending and all of the other terms of the Company Stock Plans and related option agreements) that are necessary to give effect to Options shall otherwise remain unchanged. As soon as practicable after the transactions contemplated by this Section 2.1(e).Effective

Stock Options. (ia) At the Effective Time, each outstanding option entitling granted by the holder thereof Company to purchase shares of Company Common Stock pursuant to the (each a "Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested ") which is outstanding and exercisable, shall become fully vested and exercisable unexercised immediately prior thereto shall cease to consummation represent a right to acquire shares of the Merger, but excluding any Company Common Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted automatically into and shall become the right an option to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company purchase shares of Parent Common Stock Option, without interest, in an amount that and at an exercise price determined as provided below (and otherwise subject to the terms of the Company's 1993 Incentive Stock Option Plan and the Company's 1993 Stock Option Plan for Outside Directors (collectively, the "Company Option Plans"), the agreements evidencing grants thereunder and any other agreements between the Company and an optionee regarding Company Options): (1) the number of shares of Parent Common Stock to be subject to the new option shall be determined by multiplying (A) equal to the excess, if any, product of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior subject to the Effective Time but subsequent original option and the Exchange Ratio, provided that any fractional shares of Parent Common Stock resulting from such multiplication shall be rounded down to the nearest whole share; and (2) the exercise price per share of Parent Common Stock under the new option shall be equal to the exercise price per share of Company Common Stock under the original option divided by the Exchange Ratio, provided that such exercise price shall be rounded up to the nearest cent. The adjustment provided herein with respect to any acceleration options which are "incentive stock options" (as defined in Section 422 of vesting provided for in this Section 2.1(e)(i)the Internal Revenue Code of 1986, less any mandatory tax withholdings as amended (the “Option Payment”"Code"). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and is intended to be effected in a manner which is consistent with Section 424(a) of no further force or effect except for the right to receive the cash Option Payment Code and, to the extent provided in this it is not so consistent, such Section 2.1(e)424(a) shall override anything to the contrary contained herein. The duration and other terms of the new option shall be the same as the original option except that all references to the Company shall be deemed to be references to Parent. (b) Prior to the Effective Time, the Company and Parent shall take all actions reserve for issuance the number of shares of Parent Common Stock necessary to satisfy Parent's obligations under this Section 1.5. Promptly after the Effective Time (includingbut in no event later than five business days thereafter), if appropriateParent shall file with the Securities and Exchange Commission (the "SEC") a registration statement on an appropriate form under the Securities Act of 1933, amending as amended (the terms "Securities Act"), with respect to the shares of Parent Common Stock subject to options to acquire Parent Common Stock issued pursuant to Section 1.5(a) hereof, and shall use its best efforts to maintain the current status of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e).prospectus contained therein, as well as comply with applicable state securities or "blue sky" laws, for so long as such options remain outstanding. 1.6

Stock Options. (i) At Effective as of the Effective Time, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective TimeDate, the Company shall grant Employee a stock option (the "Option") consisting of 250,000 shares of the Company's Common Stock at an exercise price equal to the fair market value thereof on the date of grant. The Option shall vest immediately as to 50,000 Option Shares and Parent the remainder thereof (consisting of an option to purchase 200,000 Option Shares) shall take all actions vest ratably on a monthly basis as of the last day of each of the first 36 months following the date of grant, such that 1/36th of the Option will vest on the one-month anniversary of the Effective Date and the Option shall be fully vested on the third anniversary of the Effective Date, subject to Employee continuing to render services to the Company. In addition, the Option shall be subject to acceleration upon the occurrence of certain events, including if Employee is terminated by the Company without cause (includingwhich shall result in acceleration of 50% of Employee's then unvested options), if appropriateEmployee is subject to an Involuntary Termination (which shall result in acceleration of 50% of Employee's then unvested options), amending or due to a Change of Control, as defined above (which shall result in acceleration of 100% of Employee's then unvested options), all as set forth in greater detail in the terms stock option agreement by and between Employee and the Company (the "Stock Option Agreement"), which agreement shall be substantially in the form of Exhibit A hereto and is incorporated by this reference as if fully set forth herein. In the event that Employee elects to terminate his employment with Company without cause, or if Company terminates Employee "for cause" pursuant to and as defined in Section 2(a) above, the Option shall immediately terminate, and Employee shall be entitled to exercise the portion of the Company Option that was vested on the date of termination only for such period of time as is provided in the Company's Stock Plans Option Plan and related option agreements) that are necessary to give effect reflected in the Stock Option Agreement. In all other respects, the Option shall be subject to the transactions contemplated by this Section 2.1(e)terms, definitions and provisions of the Company's Stock Option Plan and the Stock Option Agreement.

Stock Options. (i) At the Effective Time, each outstanding option entitling purchase right under the holder thereof 2007 Unit Option Plan of Envision Solar, LLC, (the “2007 Plan”), as amended to purchase shares of Company Common date and with any addendums thereto, and under the Envision Solar International, Inc. 2008 Stock pursuant Option Plan (the “2008 Plan”), as amended to the Company Stock Plans, other than the 2004 Employee Plan date and any addendums thereto (each, a “Company Stock Option”) shall be assumed by Parent in such manner that Parent is a corporation “issuing or assuming a stock option in a transaction to which Section 424(a) applies” or collectively “Company Stock Options”), to within the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation meaning of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger SubCode, and shall be converted into a right to purchase Parent Common Stock in accordance with this Section 1.09. Each Company Option so converted shall continue to have, and be subject to, the same terms and conditions (including vesting schedule) as set forth in the 2007 Plan or 2008 Plan, as applicable, and any agreements thereunder immediately prior to the Effective Time, except that, as of the Effective Time, (i) each Company Option shall be exercisable (or shall become exercisable in accordance with its terms) for that number of whole shares of Parent Common Stock equal to the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, product of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on were issuable upon exercise of such Company Stock Option immediately prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings multiplied by 9.398 (the “Option PaymentExchange Ratio”). At , rounded down to the Effective Time, all outstanding nearest whole number of shares of Parent Common Stock and (ii) the per share exercise price for the shares of Parent Common Stock issuable upon exercise of such Company Stock Options (including any Company Stock Option for which no payment so converted shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment equal to the extent provided in this Section 2.1(e). Prior quotient determined by dividing the exercise price per share of Company Common Stock at which such Company Option was exercisable immediately prior to the Effective TimeTime by the Option Exchange Ratio, rounded up to the Company nearest whole cent, subject to any adjustments that may be required in order to comply with Sections 409A and Parent shall take all actions (including, if appropriate, amending the terms 422 of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)Code.

Stock Options. (ia) At Within 30 days after the Effective TimeAcceptance Time (or, if there is a subsequent offering period with respect to the Offer, within 30 days after the expiration date of the subsequent offering period, as it may be extended), Parent shall make an offer to each holder of then outstanding Company Options that were granted prior to January 1, 2009, whether or not vested, to grant to such holder, in exchange for such holder’s agreement in writing to the cancellation of such holder’s Company Option, a newly-issued option entitling the holder thereof (a “Pre-2009 Replacement Option”) to purchase shares of common stock, par value $0.001, of Parent (“Parent Common Stock”) having the terms set forth in this Section 5.2. With respect to each Pre-2009 Replacement Option granted by Parent to a holder of a Company Option pursuant to such offer: (i) the number of shares of Parent Common Stock pursuant subject to such Pre-2009 Replacement Option shall be determined by multiplying the number of Company Stock Plans, other than the 2004 Employee Plan (each, a “Shares that were subject to such holder’s Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable Option immediately prior to consummation the cancellation thereof by the Pre-2009 Option Conversion Ratio (as defined below), and rounding the resulting number down to the nearest whole number of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent shares of Parent or Merger Sub, and shall be converted into and shall become Common Stock; (ii) the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company share exercise price for the Parent Common Stock Option, without interest, in an amount that issuable upon exercise of such Pre-2009 Replacement Option shall be determined by multiplying (A) the excess, if any, quotient of the Merger Consideration over the applicable per share exercise price in Korean Won of Company Shares subject to such Company Stock Option, as in effect immediately prior to the cancellation thereof, divided by the Pre-2009 Option Conversion Ratio; by (B) the number average of shares the US Dollar/Korean Won exchange rate quoted in the Western Edition of Company Common Stock that are purchasable on the Wall Street Journal for each of the 20 consecutive business days immediately preceding the date of this Agreement, and rounding the resulting exercise price up to the nearest whole cent; (iii) the vesting schedule of such Company Stock Pre-2009 Replacement Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunderas set forth on Schedule 5.2 and (iv) such Pre-2009 Replacement Option shall be canceled have the same term and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the exercisability as such Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)Option.

Stock Options. (i) At the Effective Acceptance Time, each outstanding option entitling to purchase Shares (“Company Option”) under any employee stock option or compensation plan or arrangement of the Company or otherwise (other than the ESPPs), but including, without limitation, the 1997 Incentive and Non-Qualified Stock Option Plan, the 1999 Incentive and Non-Qualified Stock Option Plan, the Amended and Restated Stock Incentive Plan, the Non- Qualified Stock Option Plan for Former Employees of Gilead Sciences, Inc. and the Stock Incentive Plan for Pre-Merger Employees of Eyetech Pharmaceuticals, Inc. (collectively, the “Equity Compensation Plans”), shall by virtue of the occurrence of the Acceptance Time and without any action on the part of any holder of any Company Option be cancelled and the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, will receive a cash payment per Company Stock Option, without interest, in an amount that shall be determined with respect thereto equal to the product obtained by multiplying (Aa) the excess, if any, of the Merger Consideration Offer Price over the applicable exercise price per share exercise price of such Company Stock Option, by (Bb) the number of shares of Company Common Stock that are purchasable on Shares issuable upon exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Cash Payment”). At Parent and the Effective Surviving Corporation or the Company, as applicable, shall use their respective commercially reasonable best efforts to cause the cash payments required pursuant to this Section 6.10(a) to be paid as soon as practicable after the Acceptance Time in accordance with the currently existing payroll practices of the Company. All amounts payable pursuant to this Section 6.10(a) shall be subject to and reduced by the amount of any withholding and/or deduction that is required under applicable Tax Law in accordance with Section 3.2(i) of this Agreement. As of the Acceptance Time, all Company Options shall no longer be outstanding and shall automatically cease to exist, and each holder of a Company Stock Options (including Option shall cease to have any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect rights with respect thereto, except for the right to receive the cash Option Payment Cash Payment. In order to effect the extent provided in provisions of this Section 2.1(e6.10(a). Prior to the Effective Time, the Company and Parent shall take be permitted to fully accelerate the vesting of all actions (including, if appropriate, amending Company Options at such time prior to the terms of Acceptance Time as shall be determined by the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)in its sole discretion.

Stock Options. (i) At the Effective Time, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all such actions with respect to each stock option (each, an "Existing Company Options") set forth in Schedule 3.03 of the volume of disclosure schedules delivered by the Company to Parent on October 10, 1995 (the "Company Disclosure Volume") as may be necessary to cause such Existing Company Option to be assumed by Parent (such options after such assumption, the "Assumed Options"), subject to the amendments described in this Section 2.04. Each Assumed Option shall continue to have, and be subject to, the same terms and conditions (including, if appropriatewithout limitation, amending the terms applicable vesting schedule, as modified to reflect the change in the number of shares covered by such option as described herein) as set forth in the stock option plan and agreement (as in effect immediately prior to the Effective Time) pursuant to which such Existing Company Option was issued, except that (i) all references to the Company shall be deemed to be references to Parent (or, with respect to employment, Parent or its subsidiaries), (ii) each option shall be exercisable for that number of whole shares of Parent Common Stock equal to the product of the number of shares of Company Common Stock covered by such option immediately prior to the Effective Time multiplied by the Exchange Ratio and rounded down to the nearest whole number of shares of Parent Common Stock and (iii) the exercise price per share of Parent Common Stock under such option shall be equal to the exercise price per share of Company Common Stock under the Existing Company Option divided by the Exchange Ratio and rounded down to the nearest cent. The adjustment provided herein with respect to any Existing Company Options that are "incentive stock options" (as defined in Section 422 of the Code) shall be and is intended to be effected in a manner that is consistent with Section 424(a) of the Code. Parent shall (i) reserve for issuance the number of shares of Parent Common Stock that will become issuable upon the exercise of such Assumed Options pursuant to this Section 2.04 and (ii) promptly after the Effective Time issue to each holder of an outstanding Existing Company Option a document evidencing the assumption by Parent of the Company's obligations with respect thereto under this Section 2.04. Nothing in this Section 2.04 shall affect the schedule of vesting with respect to Company Stock Plans and related option agreements) that are necessary Options to give effect to the transactions contemplated be assumed by Parent as provided in this Section 2.1(e)2.04. Promptly after the Effective Time, Parent shall file a registration statement on Form S-8 with the Securities and Exchange Commission (the "SEC") covering the shares of Parent Common Stock to be issued upon exercise of the Assumed Options, shall use reasonable best efforts to cause such registration statement to become and remain effective so long as any Assumed Options are outstanding, and shall reserve a sufficient number of shares of Parent Common Stock for issuance upon exercise thereof.

Stock Options. As of August 22, 2005 (ithe "Grant Date"), you shall be granted a non-qualified stock option (the "Extension Options") At the Effective Time, each outstanding option entitling the holder thereof to purchase 1,686,581 shares of Company Common Stock Stock, pursuant to the terms and conditions of the Stock Incentive Plan and a written Stock Option Agreement to be entered into by and between you and the Company (the "Extension Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”Option Agreement"), to the extent not already fully vested and exercisablewhich, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent as otherwise provided in this Section 2.1(e). Prior 5, shall be substantially identical to the Effective TimeRetention Stock Option Agreement. For purposes of the Employment Agreement (including without limitation Sections 7 and 11 thereof), the Company Extension Options shall be treated identically to the Retention Options. The Extension Options shall have an exercise price equal to the fair market value per share of Common Stock as of the Grant Date and Parent shall take all actions have a term of 10 years. The Extension Options shall become exercisable in three cumulative installments as follows: (includinga) the first installment shall consist of 25% of the shares of Common Stock covered by the Extension Options and shall become vested and exercisable on the fourth anniversary of the Grant Date; (b) the second installment shall consist of 25% of the shares of Common Stock covered by the Extension Options and shall become vested and exercisable on the fifth anniversary of the Grant Date; and (c) the third installment shall consist of 50% of the shares of Common Stock covered by the Extension Options and shall become exercisable on the sixth anniversary of the Grant Date; provided, that, except as otherwise provided in Section 7 of the Employment Agreement or the Extension Stock Option Agreement, no portion of the Extension Options not then exercisable shall become exercisable following your termination of employment for any reason. (For the avoidance of doubt, if appropriateyour employment shall terminate by reason of your Disability or death, amending the terms then Section 7(d) of the Company Stock Plans and related option agreements) that are necessary to give effect Employment Agreement shall apply to the transactions contemplated by this Section 2.1(e)Extension Options.) You and the Company acknowledge and agree that the Extension Options shall not provide for the grant of any "Restoration Options" as defined in the Stock Incentive Plan.

Stock Options. The Employee shall be granted the option to purchase ------------- 370,000 (iThree Hundred and Seventy Thousand) At shares of the Company's Common stock (the "Stock Options"), at an exercise price per share equal to the fair market value of the Company's Common Stock on the date of grant as determined by the Board in its sole discretion. Such grant and determination shall be made no later than thirty (30) days after the Effective Time, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to Date. To the extent not already fully vested and exercisablepossible, such Option will be an incentive stock option. The Stock Options shall become fully vested and exercisable immediately prior to consummation vest monthly at the rate of 1/48 per month; however there shall be a twelve (12) month cliff vesting period, upon which the first 1/4th of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent shall vest. Upon the termination of Parent or Merger Subthe Employee's employment in accordance with the provision of Paragraph 6 below, the Stock Options shall vest as described in such provisions. Except as provided herein and in Paragraph 6 below, the Stock Options shall be converted into and shall become the right subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Company's Stock Plans Option Plan and related option agreements) that are necessary to give effect the Company's standard incentive and non-statutory Stock Option Purchase Agreements (the "Standard Agreements" described in Attachment D), provided pursuant to the transactions contemplated Company's Stock Option Plan. The Employee will be permitted to exercise the option in full prior to vesting in the underlying shares, subject to the Company's right to repurchase any unvested shares (subject to Paragraph 6 below) at the Employee's original cost upon his termination of employment, as provided in the Standard Agreements. In addition, the Company shall permit the Employee to pay the option exercise price with a full recourse loan (secured by this Section 2.1(e)the shares acquired with the loan) at the lowest interest rate available to avoid the imposition of imputed income under the tax laws to assist the Employee to exercise the Stock Options. Such loan shall be repayable upon the earlier of: (i) the fifth year anniversary of the Effective Date; (ii) the date six (6) months after termination of the Employee's employment for any reason; or (iii) the date twelve (12) months after the Employee is first eligible to sell shares of the Company's stock that he holds following an initial public offering of the Company's shares; provided however that in the event of termination of the Employee Without Cause or the employee's Resignation for Good Reason, such loan shall be repayable upon the earlier of the events stated in clauses (i) or (iii) immediately preceding. Going forward, the Employee will be eligible to receive additional Stock Options at amounts and exercise prices then prevailing, but consistent with the proportional amounts of the original grant vis-a-vis other senior manager's original grant allotments.

Stock Options. (i) At The 1997 Stock Option Plan pursuant to which Xxxx’s options were granted provides that his options “shall terminate immediately upon the Effective Time, each outstanding option entitling termination for any reason of the holder’s employment or services,” with the holder thereof having 90 days following such termination in which to purchase shares exercise his options. While the language could be construed otherwise, the Company, through its Compensation Committee on the advice of counsel, has taken the position that the options will remain exercisable until the earlier of their expiration dates and 90 days following his termination of service as a board member, in accordance with applicable Company Common Stock pursuant policies. The terms of the January 27, 2006 Transfer Restriction Agreement between Xxxx and the Company remain in effect. In summary, to address all of Xxxx’s benefits remaining payable by the Company, in addition to the $173,077 it has already paid to Xxxx, the Company Stock Plansproposes two options by which Xxxx’s benefits will be delivered. Please have Xxxx execute his name following the option he selects, other than in the 2004 Employee Plan signature block provided for this purpose. By executing his name under either option, Xxxx agrees he is voluntarily and knowingly releasing the Company (each, a “Company Stock Option” or collectively “Company Stock Options”including its affiliated companies), and the officers, directors and agents thereof (collectively, the “Releasees”) from any and all claims pertaining to benefits under the extent not already fully vested May 12, 2006 employment agreement between him and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Suball applicable employment laws identified in Annex 1, and shall be converted into and shall become the Company’s reporting of such benefits to applicable taxing authorities. Xxxx has the right to receiveconsider this release for 21 days and, for seven (7) calendar days following his execution of this letter agreement, to revoke it. To be effective, his revocation must be in writing and delivered by hand or overnight mail and received by the Company within the seven day period. This letter agreement will not be effective or enforceable until the seven day revocation period has expired. This release does not waive rights or claims that may arise when this release is executed. In addition, in the case of the second option, Xxxx agrees to indemnify the Releasees for, and hold the Releasees harmless from and against, any and all claims, liabilities and exposures arising out of any determination that the payment to Xxxx of benefits prior to June 2, 2008 does not comply with Section 409A (it being understood and agreed that each of Xxxx and the Company will be responsible for the fees and expenses of its own counsel). Xxxxxx Xxxxx, Esq. April 8, 2008 Option 1 and Option 2 follow on page 5 and 6 respectively. Any deliveries to Xxxx will be made by (a) certified mail, return receipt requested, (b) recognized overnight courier or (c) personal delivery service, in each case addressed to Xxxx Xxxxx at 00 Xxxxxxxx Xxxx, Xxxxx Xxxx, Xxx Xxxx 00000 and will be deemed delivered, in the case of (a), on the fifth business day following the date postmarked, in the case of (b), the next business day, and, in the case of (c), the date of delivery to the delivery service as documented by the Company’s records. Please let me know immediately in writing if Xxxx would prefer deliveries to be made to an alternate address. Please feel free to call me with any questions or comments. Very truly yours, The Children’s Place Retail Stores, Inc. By /s/ Xxxxxxxx X. Xxxx Xxxxxxxx X. Xxxx Senior Vice President, General Counsel and Secretary Direct: (000) 000-0000 Facsimile: (000) 000-0000 Xxxxxx Xxxxx, Esq. April 8, 2008 Option 1: The Company will make the following payments and deliveries to Xxxx Xxxxx, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e).its obligations under Xxxx’s employment agreement:

Stock Options. The Employee shall be granted the option to purchase 370,000 (iThree Hundred and Seventy Thousand) At shares of the Company's Common stock (the "Stock Options"), at an exercise price per share equal to the fair market value of the Company's Common Stock on the date of grant as determined by the Board in its sole discretion. Such grant and determination shall be made no later than thirty (30) days after the Effective Time, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to Date. To the extent not already fully vested and exercisablepossible, such Option will be an incentive stock option. The Stock Options shall become fully vested and exercisable immediately prior to consummation vest monthly at the rate of 1/48 per month; however there shall be a twelve (12) month cliff vesting period, upon which the first 1/4th of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent shall vest. Upon the termination of Parent or Merger Subthe Employee's employment in accordance with the provision of Paragraph 6 below, the Stock Options shall vest as described in such provisions. Except as provided herein and in Paragraph 6 below, the Stock Options shall be converted into and shall become the right subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Company's Stock Plans Option Plan and related the Company's standard incentive and non-statutory Stock Option Purchase Agreements (the "Standard Agreements" described in Attachment D), provided pursuant tot he Company's Stock Option Plan. The Employee will be permitted to exercise the option agreements) that are necessary in full prior to give effect vesting in the underlying shares, subject to the transactions contemplated Company's right to repurchase any unvested shares (subject to Paragraph 6 below) at the Employee's original cost upon his termination of employment, as provided in the Standard Agreements. In addition, the Company shall permit the Employee to pay the option exercise price with a full recourse loan (secured by this Section 2.1(e)the shares acquired with the loan) at the lowest interest rate available to avoid the imposition of imputed income under the tax laws to assist the Employee to exercise the Stock Options. Such loan shall be repayable upon the earlier of: (i) the fifth year anniversary of the Effective Date; (ii) the date six (6) months after termination of the Employee's employment for any reason; or (iii) the date twelve (12) months after the Employee is first eligible to sell shares of the Company's stock that he holds following an initial public offering of the Company's shares; provided however that in the event of termination of the Employee Without Cause or the employee's Resignation for Good Reason, such loan shall be repayable upon the earlier of the events stated in clauses (i) or (iii) immediately preceding. Going forward, the Employee will be eligible to receive additional Stock Options at amounts and exercise prices then prevailing, but consistent with the proportional amounts of the original grant vis-a-vis other senior manager's original grant allotments.

Stock Options. (i) At Prior to the Effective Time, each outstanding option entitling the holder thereof to purchase shares Board of Company Common Stock pursuant to Directors of the Company Stock Plans(or, if appropriate, any committee thereof) shall adopt appropriate resolutions and take all other than actions necessary to provide that each employee, consultant or director of the 2004 Employee Plan Company (each, a “an "Option Holder") who has been granted an option to acquire shares of Common Stock ("Options") under the Huckleberry 1993 Stock Option Plan (the "1993 Plan") or the Huckleberry Director Option Plan (the "Director Plan," and together with the 1993 Plan, the "Company Stock Option” or collectively “Company Stock Options”Option Plans") which is outstanding at such time shall receive notice (the "Notice"), to in accordance with the extent provisions of the Company Option Plans, that such Option, whether or not already fully vested and then exercisable, vested or unvested, is exercisable for a period beginning on the date of Notice and ending on a date specified in the Notice, which shall become fully vested and exercisable immediately prior to consummation be no later than the Effective Time (the "Exercise Period"). The duration of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that Exercise Period shall be determined by multiplying (A) in accordance with the excessprovisions of the Company Option Plan under which the Option was granted, if any, the exercisability of any such Option shall be contingent upon the occurrence of the Merger Consideration over (except in the applicable per share exercise price case of such Company Stock Option, an Option which is already exercisable without regard to the accelerated exercisability provided by (Bthe Notice) and the number of shares of Company Common Stock that are purchasable on actual exercise of each such Company Stock Option shall not occur until immediately prior to the Effective Time but subsequent Time. The Board of Directors of the Company (or committee) shall also adopt procedures pursuant to which each Option Holder may give notice to the Company during the Exercise Period of his or her intent to exercise any acceleration such Option, including allowing for cashless exercise by the Option Holders whereby Options would be converted to Common Stock without payment of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”)cash. At the Effective Time, all outstanding Company Stock Exercise Periods shall expire and all Options (including any Company Stock Option for which no payment shall be due hereunderterminated. Notwithstanding anything herein to the contrary, (i) the Company shall submit the form of all Notices to be sent to each Option Holder to Parent and Merger Sub at least three (3) business days prior to being sent to any such Option Holder for the prior written approval of Parent and Merger Sub of such Notice (such approval not to be unreasonably withheld), and (ii) all Notices shall be canceled delivered to each Option Holder in such a manner as to confirm and be provide evidence of no further force or effect except for the right to receive the cash receipt of such Notice by each Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)Holder.

Stock Options. (i) At the Effective Time, each outstanding option entitling the holder thereof all rights with respect to purchase shares of Company Common Stock pursuant to under each option issued by the Company Stock Plans, other than the 2004 Employee Plan then outstanding (each, a “"Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and ") shall be converted into and become rights with respect to Parent Common Stock, and Parent shall become assume each such Company Option in accordance with the right terms and conditions (as in effect as of the date of this Agreement) of the stock option plan under which it was issued and the terms and conditions of the stock option agreement by which it is evidenced. From and after the Effective Time, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) except that the number of shares of Parent Common Stock subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per each such Company Stock Option, without interest, in an amount that Option shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) equal to the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Stock Option immediately prior to the Effective Time but multiplied by the Common Stock Exchange Ratio, rounding down to the nearest whole share, (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price under such Company Option by the Common Stock Exchange Ratio and rounding up to the nearest cent, (iv) each Company Option shall be fully vested and immediately exercisable and (v) any restriction on the exercise of any such Company Option, other than any vesting provisions as provided in clause (iv), shall continue in full force and effect and the term and other provisions of such Company Option shall otherwise remain unchanged; provided, however, that each Company Option assumed by Parent in accordance with this Section 1.5(f) shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other similar transaction effected subsequent to any acceleration the Effective Time. Each Company Option which is an incentive stock option within the meaning of vesting provided for Code Section 422(b) shall be adjusted as required by Section 424 of the Code, and the Treasury Regulations promulgated thereunder (including Proposed Treasury Regulations published in this Section 2.1(e)(iJune of 2003), less so as to continue as an incentive stock option under Section 424(a) of the Code, and so as not to constitute a modification, extension, or renewal of the option within the meaning of Section 424(h) of the Code. Parent has reserved and shall continue to reserve adequate shares of Parent Common Stock for delivery upon exercise of any mandatory tax withholdings (assumed Company Options. As provided in Section 5.15, Parent shall file a registration statement on Form S-8 with respect to the “Option Payment”)shares of Parent Common Stock subject to assumed Company Options and shall use commercially reasonable efforts to maintain the effectiveness of such registration statement for so long as such assumed Company Options remain outstanding. At As soon as practicable after the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment Parent shall be due hereunder) shall be canceled and be of no further force or effect except for the right issue to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior each Person who immediately prior to the Effective Time, the Time was a holder of an outstanding Company and Parent shall take all actions (including, if appropriate, amending the terms Option a document evidencing Parent's assumption of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by Option. For purposes of this Section 2.1(e)Agreement, "in-the-money Company Options" shall mean all Company Options with an exercise price less than $1.00 per share of Company Common Stock.

Stock Options. (i) At In connection with the Effective Timeexecution of the Employment Agreement, each outstanding option entitling the holder thereof Ross was granted stock options to purchase 300,000 shares of the common stock of the Company Common (the "Option Shares") at an exercise price of $11.00 per share (the "Stock Options") under the Company's 1995 Stock Option Plan (the "Plan") and pursuant to a Stock Option Agreement between Ross and the Company, dated May 23, 1997 (the "Stock Option Agreement"). The Company hereby agrees that irrespective of any term or condition of the Plan or the Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), Option Agreement to the extent contrary, effective as of the date hereof, the Stock Options that are not already fully vested and exercisable, shall become fully vested and exercisable immediately prior as of such date shall be vested and exercisable and Ross shall be entitled to consummation exercise all of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent until the close of Parent or Merger Subbusiness on January 10, and 2000 (the "Sale Period") without regard to the vesting criteria otherwise contained therein; provided, however, that Ross shall be converted into and shall become not sell the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Option Shares purchased upon exercise of the Stock Option, without interest, Options in an amount exceeding 25,000 shares per week (the "Weekly Limit") and 50,000 shares per month (the "Monthly Limit," and together with the Weekly Limit, the "Limits"); provided further, however, that shall be determined by multiplying (Ax) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment Monthly Limit shall be due hereunder) shall be canceled terminate and be of no further force or effect except for upon the right earlier to receive occur of October 1, 1999 and the cash occurrence of a Change of Control and (y) the Limits shall terminate and be of no further force or effect upon the occurrence of a Change of Control. The Company agrees that at all times during the Sale Period, the acquisition by Ross of the Option Payment Shares shall be registered under a registration statement on Form S-8 or other appropriate form (a "Registration Statement") filed with and declared effective by the Securities and Exchange Commission (the "SEC") and the Company shall take all action that may be necessary to (i) cause the extent provided Registration Statement to comply with all applicable laws and regulations and (ii) permit the sale by Ross, without any limitation as to volume (other than as set forth in this Section 2.1(e2.3 or which may be applicable to "affiliates" pursuant to Rule 144 promulgated under the Securities Act of 1933), of the Option Shares. Prior To the extent that a Registration Statement is not effective or does not contain all information required to be disclosed therein at any time during the Effective TimeSale Period, the Company and Parent Sale Period shall take be extended by the number of days during such period that such Registration Statement was not effective or did not contain all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary information required to give effect to the transactions contemplated by this Section 2.1(e)be disclosed therein.

Stock Options. On the day of the Corporation's 2001 Annual Shareholders Meeting, scheduled to be held on April 17, 2001, the Corporation shall grant you, subject to the Corporation's shareholders approving a new Corporation stock option plan at the 2001 Annual Shareholders Meeting, non-qualified stock options to purchase fifteen thousand (15,000) shares of the Corporation's common stock at a price equal to the fair market value of the stock on that date. Provided this Agreement has not been terminated for Cause, due to your death, or disability as defined hereunder, or by you for other than Good Reason, on the day of the Corporation's Annual Shareholders Meetings in the year 2002 and in the year 2003, the Corporation shall each such year, grant you options to purchase an additional ten thousand (10,000) shares of the Corporation's common stock at a price equal to the fair market value of the shares of the Corporation's stock on those respective dates." Otherwise the Agreement remains unaltered. Intending to be legally bound, for good and sufficient consideration, the receipt of which is hereby acknowledged and as an inducement for making this Amendment, the parties hereto hereby represent and warrant, as applicable, that (i) At all representations and warranties set forth in the Effective TimeAgreement are true and correct as of the date hereof; and (ii) no condition or event exists or has occurred which would constitute a default under the Agreement, each outstanding option entitling or upon the holder thereof to purchase shares giving of Company Common Stock pursuant to notice or the Company Stock Planspassage of time, other than or both would constitute a default. The undersigned hereby acknowledges and confirms that the 2004 Employee Plan (eachAgreement, a “Company Stock Option” as hereby amended, is valid, binding and in full force and effect as of the date hereof and fully enforceable against the parties hereto. All capitalized terms used herein, which are not defined herein or collectively “Company Stock Options”), to the extent not already fully vested and exercisableotherwise conventionally capitalized, shall become fully vested have the meanings ascribed to them in the Agreement. By signing below, you confirm and exercisable immediately prior to consummation approve the terms and conditions of the MergerAgreement, but excluding as amended and acknowledge receipt of a copy of this Amendment. If you have any Company Stock Options held questions or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Subdesire additional information, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”)kindly advise me. At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e).Sincerely yours,

Stock Options. (i) At Xx. Xxxxxxxxx shall be granted the Effective Time, each outstanding option entitling the holder thereof to purchase ------------- 400,000 shares of Company the Company's Common Stock pursuant (the "Stock Options"), at an exercise price per share equal to the fair market value of the Company's Common Stock on the date of grant as determined by the Board in its sole discretion. Such grant and determination shall be made no later than five (5) days after the date on which Xx. Xxxxxxxxx'x employment with the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to commences. To the extent not already fully vested and exercisablepossible, such option will be an incentive stock option. The Stock Options shall become fully vested and exercisable immediately prior to consummation vest monthly at the rate of 1/48 per month; however, there shall be a twelve (12) month cliff, upon which the first 1/4 of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent shall vest. Upon the termination of Parent or Merger SubXx. Xxxxxxxxx'x employment in accordance with the provisions of Section 10, and below, the Stock Options shall vest as described in such provisions. Except as provided in Section 10, below, the Stock Options shall be converted into and shall become the right subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Company's Stock Plans Option Plan and related the Company's standard incentive and non-statutory stock option agreements) that are necessary to give effect agreements (the "Standard Agreements"), provided pursuant to the transactions contemplated Company's Stock Option Plan. Xx. Xxxxxxxxx will be permitted to exercise the Stock Options in full prior to vesting in the underlying shares, subject to the Company's right to repurchase any unvested shares at Xx. Xxxxxxxxx'x original cost upon his termination of employment, as provided in the Standard Agreements. In addition, the Company shall permit Xx. Xxxxxxxxx to pay the option exercise price with a full recourse loan (secured by this Section 2.1(ethe shares acquired with the loan) at the lowest interest rate available to avoid the imposition of imputed income under the tax laws to assist Xx. Xxxxxxxxx to exercise the Stock Options. Such loan shall be repayable upon the earliest of: (i) the fifth year anniversary of the Effective Date; (ii) the termination of Xx. Xxxxxxxxx'x employment for any reason; or (iii) the date twelve (12) months after Xx. Xxxxxxxxx is first eligible to sell shares of the Company's stock that he holds following an initial public offering of the Company's shares; provided, however, that in the event of Xx. Xxxxxxxxx'x termination without Cause or resignation for Good Reason or termination by reason of death or Disability (as defined below), such loan shall be repayable upon the earlier of the events stated in clauses (i) or (iii) immediately preceding.

Stock Options. (ia) At the Effective Time, each All outstanding option entitling the holder thereof options to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan capital stock (each, a “Company Stock Option” or collectively “Company Stock Options”)) outstanding at the Effective Time under the Appilog, to Inc. 2003 Stock Option Plan (the “Company Stock Plan”) shall, at the Effective Time and by virtue of the Merger and without any action on the part of the holder thereof, be assumed by Parent. To the extent not already fully vested and exercisablenecessary, the applicable option agreements shall be amended to provide that the Company Stock Options (other than the Additional Options) shall become fully vested as of the Effective Time. Subject to the immediately preceding sentence, each Company Stock Option so assumed by Parent under this Agreement shall continue to have, and exercisable be subject to, substantially similar terms and conditions to those set forth in the Company Stock Plan or as provided in the respective option agreement immediately prior to consummation of the MergerEffective Time, but excluding any except that (i) each Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent Option will be exercisable for that number of whole shares of Parent or Merger Sub, and shall be converted into and shall become Common Stock equal to the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, product of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on were issuable upon exercise of such Company Stock Option immediately prior to the Effective Time but subsequent multiplied by the Option Exchange Ratio, rounded down to any acceleration the nearest whole number of vesting provided shares of Parent Common Stock; and (ii) the per share exercise price for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “shares of Parent Common Stock issuable upon exercise of such assumed Company Stock Option Payment”). At will be equal to the quotient determined by dividing the exercise price per share of Company capital stock at which such Company Option was exercisable immediately prior to the Effective TimeTime by the Option Exchange Ratio, all outstanding rounded up to the nearest whole cent. It is the intention of the parties hereto that the Company Stock Options (including any Company Stock Option for other than those Additional Options which no payment shall be due hereunderissued to employees located in the United States) shall be canceled and be of no further force or effect except for assumed by Parent following the right Effective Time pursuant to receive the cash Option Payment this Section will, to the extent provided permitted by applicable law, qualify as incentive stock options as defined in this Section 2.1(e). Prior 422 of the Code, to the extent any such Company Stock Options qualified as incentive stock options immediately prior to the Effective Time, Time or as options granted pursuant to the Company and Parent shall take all actions (including, if appropriate, amending the terms provisions of section 102 of the Company Israeli Income Tax Ordinance (new version) 1961 (the “Ordinance”) and any regulations, rules, orders or procedures promulgated thereunder, including the Income Tax Rules (Tax benefits in Stock Plans and related option agreementsIssuance to Employees) that are necessary to give effect to 5763-2003 (the transactions contemplated by this Section 2.1(e“Rules”), as appropriate.

Stock Options. (ia) At Each of the Company's stock option plans, each of which is set forth in Section 3.5(a) of the Company Disclosure Schedule (as defined in Section 5.1) (the "Option Plans"), and each option to acquire shares of Common Stock outstanding immediately prior to the Effective TimeDate thereunder, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan whether vested or unvested (each, a “Company Stock an "Option” or collectively “Company Stock " and collectively, the "Options”"), shall be assumed by the Parent at the Effective Date, and each such Option shall become an option to purchase a number of shares of Parent Common Stock (a "Substitute Option") (rounded to the extent not already fully vested and exercisablenearest whole share, shall become fully vested and exercisable immediately prior with 0.5 shares being rounded up) equal to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on subject to such Option multiplied by the Option Exchange Ratio (as defined below). The per share exercise price for each Substitute Option shall be the current exercise price per share of such Company Common Stock divided by the Option prior Exchange Ratio (rounded up to the nearest full cent), and each Substitute Option otherwise shall after the Effective Time but subsequent Date be subject to any all of the other terms and conditions of the original Option to which it relates (including, without limitation, all provisions relating to acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(evesting). Prior to the Effective TimeDate, the Company and Parent shall take such additional actions as are necessary under applicable law and the applicable agreements and Option Plans to ensure that each outstanding Option shall, from and after the Effective Date, represent only the right to purchase, upon exercise, shares of Parent Common Stock. Except as set forth in Section 3.5(a) of the Company Disclosure Schedule, the vesting of no Option shall be accelerated by reason of the Merger unless the agreement or arrangement under which it was granted or by which it is otherwise governed specifically provides for such acceleration. For avoidance of doubt, it is the intention of Parent and the Company that the Substitute Options be identical in all actions respects to the Options (includingexcept for the number and type of shares for which they shall be exercisable and the exercise price thereof) and that, if appropriatewithout limitation, amending the (i) all terms of the plans under which such Options were issued and (ii) all policies set forth in Sections 3.5 and 5.8 of the Company Stock Plans Disclosure Schedule, shall apply thereto from and related option agreements) that are necessary to give effect to after the transactions contemplated by this Section 2.1(e)Effective Date.

Stock Options. (ia) At or immediately prior to the Effective Time, each outstanding employee stock option entitling the holder thereof or director stock option to purchase shares of Shares outstanding under any Company Common Stock pursuant to the Company Stock Plansstock option plans, other than the 2004 Employee Plan whether or not vested or exercisable (each, a “"Company Stock Option” or collectively “Company Stock Options”)") shall, to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, virtue of the Merger Consideration over and without any further action on the part of any holder thereof, be assumed by Parent and deemed to constitute an option (each, a "Parent Option") to acquire, on the same terms and conditions as were applicable per share exercise price of under such Company Stock OptionOption (subject to Section 3.04(b)), by (B) the same number of shares of Company Parent Common Stock that are purchasable on exercise as the holder of such Company Stock Option would have been entitled to receive pursuant to Section 3.02(c) of this Agreement had such holder exercised such Company Option in full immediately prior to the Effective Time but subsequent (rounded to any acceleration of vesting provided for in this Section 2.1(e)(ithe nearest whole number), less any mandatory tax withholdings at a price per share (rounded down to the “Option Payment”). At nearest whole cent) equal to (x) the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except aggregate exercise price for the right share of Company Common Stock otherwise purchasable pursuant to receive such Company Option divided by (y) the cash Option Payment number of whole shares of Parent Common Stock purchasable pursuant to the extent provided Parent Option in this Section 2.1(e)accordance with the foregoing. Prior The other terms of each such Company Option, and the plans under which they were issued, shall continue to apply in accordance with their terms. Notwithstanding the Effective Timeforegoing, the Company and Parent shall take all actions (including, not assume any particular Company Option if appropriate, amending the terms of that Company Option contain a cash-out right in favor of the Company Stock Plans and related option agreements) optionee that are necessary to give effect to is triggered by the transactions contemplated by this Section 2.1(e)Agreement and the optionee refuses to waive such cash-out right in a manner reasonably satisfactory to Parent. Instead, each such optionee shall be paid a cash amount in accordance with the terms of the governing plan document in exchange for the cancellation of said Company Option.

Stock Options. The Company agrees to grant to Employee as of the date of the execution of this Agreement, an option (ithe "Option") At the Effective Time, each outstanding option entitling the holder thereof to purchase 100,000 shares of the Company's Common Stock, par value $.10 per share. The Company acknowledges that such grant is a material inducement for Employee to enter into this Agreement and essential to Employee for him to continue his employment with the Company. The Option will be granted pursuant to a separate option agreement entered into on the execution date of this Agreement, shall have an option exercise price per share equal to the closing price for the Company's Common Stock pursuant to as reported by NASDAQ on the Company Stock Plans, other than last trading day on which such stock was traded next preceding the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation date of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Subsuch execution, and shall be converted into and have a term of 10 years. The Option will consist entirely of "Incentive Stock Options" ("ISO") as defined in the Internal Revenue Code. The Option shall become exercisable in such number of approximately equal annual installments as is the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount smallest number of installments so that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of the shares of Company Common Stock that are purchasable as to which the Option first becomes exercisable in each installment does not exceed the $100,000 limitation for ISO's, with the first such installment becoming exercisable by Employee on exercise the date of such grant, and each succeeding installment becoming exercisable by Employee on succeeding anniversaries of such grant; PROVIDED, HOWEVER, that in the event that Employee's employment with the Company Stock Option shall terminate for any reason prior to the Option's becoming exercisable in its entirety, the Option shall automatically become exercisable (and shall remain exercisable for at least a ninety-day period following such termination of employment), without regard for the treatment of the entirety of the Option as an ISO, as to 25,000 shares for each Fiscal Year or fraction thereof that have elapsed between the Effective Time but subsequent Date of this Agreement and the date of such termination. The Option shall be subject to any acceleration requirement of vesting provided for in this Section 2.1(e)(i)shareholder approval imposed by the National Association of Securities Dealers, less any mandatory tax withholdings Inc. as a condition to the continued quotation of the Company's Common Stock on NASDAQ (including the “Option Payment”National Market System thereof). At The Company will have used its best efforts to obtain such shareholder approval, if required, at the next annual meeting of the Company's shareholders following the Effective TimeDate hereof. Notwithstanding the foregoing, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be in the event of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms Employee's termination as an employee of the Company Stock Plans and related option agreements) that are necessary to give effect to Company, except as a result of the transactions contemplated breach of any material term or condition hereof by this Section 2.1(e)the Company, any portion of the Option not then exercisable shall automatically expire.

Stock Options. (ia) At Subject to Section 5.1(b), at the Effective Time, each Company Option which is outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable unexercised immediately prior to consummation of the MergerEffective Time, but excluding any Company Stock Options held whether or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Subnot vested, and shall be converted into and become an option to purchase Parent Common Stock, and Parent shall become assume each such Company Option in accordance with the right terms (as in effect as of the date of this Agreement) of the stock option plan under which it was issued and the terms of the stock option agreement by which it is evidenced in a manner consistent with the requirements of Section 422 of the Code. Accordingly, from and after the Effective Time, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock to receive, in full and complete satisfaction and cancellation thereof, a cash payment per be subject to each assumed Company Stock Option, without interest, in an amount that Option shall be determined by multiplying equal to the product of (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable subject to the original Company Option and (B) the Exchange Ratio (rounded down to the nearest whole share); (iii) the exercise price per share of Parent Common Stock under the assumed Company Option shall be equal to the quotient of (A) the exercise price per share of Company Common Stock under the original Company Option divided by the Exchange Ratio (rounded up to the nearest whole cent); and (iv) any restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for shall otherwise remain unchanged; PROVIDED, HOWEVER, that each Company Option assumed by Parent in accordance with this Section 2.1(e)(i)5.1(a) shall, less in accordance with its terms, be subject to further adjustment as appropriate to reflect any mandatory tax withholdings (the “Option Payment”). At the Effective Timestock split, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be division or subdivision of no further force shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior other similar transaction subsequent to the Effective Time. The adjustments provided herein with respect to any Company Options which are "incentive stock options" (as defined in Section 422 of the Code) shall be effected in a manner consistent with the requirements of Section 424(a) of the Code. Parent shall file with the SEC, no later than 60 days after the date on which the Merger becomes effective, a registration statement on Form S-8 relating to the shares of Parent Common Stock issuable with respect to the Company and Options assumed by Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by in accordance with this Section 2.1(e5.1(a).

Stock Options. On or as soon as practicable following the date on which this Agreement is actually executed, the Company will grant Xx. Xxxxx an option (i) At the Effective Time“2006 Option”), each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to the Company’s 1997 Stock Plan, to purchase an aggregate of 80,000 shares of the Company’s Common Stock, $.01 par value per share, at an exercise price equal to the fair market value of such shares as of the date of such grant and otherwise on substantially the same terms and conditions as the option evidenced by the Non-Qualified Stock Option Agreement dated February 16, 2005 between the Company Stock Plansand Xx. Xxxxx, other than except that (1) the 2004 Employee Plan (each, a “Company Stock terms of the 2006 Option shall specify that the 2006 Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisablethat it shall have become exercisable during the Employment Period, shall remain exercisable throughout the Consulting Period; and (2) all such options shall vest upon a change of control. The 2006 Option and all other options to purchase Company stock previously granted to Xx. Xxxxx (collectively, the “Options”) shall continue to be and become fully vested and exercisable immediately prior to consummation in accordance with the terms of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings agreements (the “Option PaymentAgreements”)) evidencing such Options and Xx. At the Effective Time, all outstanding Company Stock Options (including any Company Stock Xxxxx will continue to be able to exercise each such Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending accordance with the terms of the Company Stock Plans and related option agreementsapplicable Option Agreement until the earlier of (1) that are necessary to give effect the expiration of the general term of the Option as set forth in the applicable Option Agreement (prior to the transactions contemplated by amendment thereto to comply with this Section 2.1(e3(c)) or (2) the later of the 15th day of the third month following the date at which, or December 31 of the calendar year in which, such Option would otherwise have ceased to be exercisable in accordance with the terms of the Option Agreement. Although the period during which vested Options may be exercised may be extended pursuant to this Paragraph 3(c), nothing in this Paragraph 3(c) shall be construed to mean that the vesting or exercisability of any Options will be accelerated. The provision of any option with respect to vesting or the first date upon which the option is exercisable shall be appropriately amended from time to time as necessary so that such provision is at least as favorable as those contained in any future change of control agreement made available to others or in the employment agreement of any member of senior management.

Stock Options. (i) At the Effective Time, each outstanding Each option entitling the holder thereof to purchase shares of Company Fourth Shift Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock "Fourth Shift Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable ") outstanding immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (shall remain outstanding following the “Option Payment”)Effective Time. At the Effective Time, all outstanding Company Stock Options AremisSoft shall assume each Fourth Shift Option by virtue of the Merger and without any further action on the part of Fourth Shift or the holders thereof. AremisSoft shall assume each such option in such manner that AremisSoft (including any Company Stock Option for i) is a corporation "assuming a stock option in a transaction to which no payment shall be due hereunderSection 424(a) shall be canceled and be applies" within the meaning of no further force Section 424 of the Code or effect except for the right to receive the cash Option Payment (ii) to the extent provided that Section 424 of the Code does not apply to any such Fourth Shift Option, would be such a corporation were Section 424 of the Code applicable to such Fourth Shift Option. From and after the Effective Time, all references to "Fourth Shift" in this Section 2.1(e). Prior the Fourth Shift Options and the related stock option agreements shall be deemed to refer to "AremisSoft." After the Effective Time, each Fourth Shift Option assumed by AremisSoft shall be exercisable upon the same terms and conditions as were in effect under the Fourth Shift Options and the related option agreements immediately prior to the Effective Time, except that (i) each Fourth Shift Option shall be exercisable for that whole number of shares of AremisSoft Common Stock (rounded down to the Company nearest whole share) equal to the number of shares of Fourth Shift Common Stock subject to such Fourth Shift Option immediately prior to the Effective Time divided by 6.14159, and Parent (ii) the option price per share of AremisSoft Common Stock shall take be an amount equal to the option price per share of Fourth Shift Common stock subject to such Fourth Shift Option in effect immediately prior to the Effective Time multiplied by 6.14159 (the option price per share, as so determined, being rounded upward to the nearest full cent), and (iii) any and all actions (includingoutstanding and unvested Fourth Shift Options, if appropriateor any portion thereof, amending the terms shall be accelerated and deemed fully vested as of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)Effective Time.

Stock Options. (i) At the Effective Time, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant Subject to the Company Stock Plansprovisions of this paragraph, other than the 2004 Employee Plan Compensation and Organization Committee of the Board (eachthe "Compensation Committee") by its approval and adoption of this Agreement, a “Company Stock Option” or collectively “Company Stock Options”)as noted below, does hereby accelerate vesting (to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation vested) of the Mergerfollowing nonqualified stock options heretofore granted to Stauth under the Xxxxxxg Companies, but excluding any Company Xxx. 1990 Stock Options held Option Plan (the "1990 SOP") and permit Stauth (or beneficially owned by Parent his exxxxxxx or Merger Sub personal representative, as applicable) to exercise and purchase during the two-year period from July 18, 1998 through July 17, 2000 (the "Exercise Period") all or any other Subsidiary part of the shares subject to such stock options: Number of Options Exercise Price 30,000 $24.9375 Provided, however, if, upon advice of counsel the Compensation Committee determines it cannot or parent if it elects not to amend the 1990 SOP to provide for extension of Parent or Merger Subthe exercise of the referenced options through July 17, 2000, the Company shall notify Stauth of such dexxxxxxation and shall be converted into nonetheless pay Stauth the differxxxx xetween the exercise price and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, fair market value of the Merger Consideration over Company common stock on the applicable per share exercise price of such Company Stock Option, by Exercise Date (B) herein referred to as the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”"Spread"). At any time during the Effective TimeExercise Period, all outstanding Company Stock Options Stauth may select xxx xay (including any Company Stock Option for the "Exercise Date") as of which no payment he shall be due hereunder) entitled to be paid the Spread by the Company; provided, however, that prior to 9:00 a.m., central time, on the day following the Exercise Date, Stauth shall notixx xxx Company of his election to exercise the stock options by receiving payment of the Spread. In the event of Stauth's death, sxxx xxxxt shall vest in Stauth's executor xx xxxxonal representative. The payment of the Spread shall be canceled and be made within five (5) days after the notice of no further force or effect except for the right election to receive the cash Option Payment Spread. Likewise, the Compensation Committee, by its approval and adoption set out below, does hereby accelerate vesting (to the extent provided not already vested) of the following nonqualified stock options heretofore granted to Stauth under the Xxxxxxg Companies, Xxx. 1996 Stock Incentive Plan (the "1996 SIP") and permit Stauth (or his exxxxxxx or personal representative, as applicable) to exercise and purchase during the two-year period from July 18, 1998 through July 17, 2000 all or any part of the shares subject to such stock options: Number of Options Exercise Price 30,000 $19.7500 30,000 $16.3750 30,000 $17.5000 Notwithstanding anything to the contrary in each of the nonqualified stock option agreements that Stauth and the Coxxxxx have executed representing the stock options described in this Section 2.1(e)paragraph 3 granted under the 1996 SIP, such agreements are hereby amended to provide that such nonqualified stock options are exercisable in whole or in part by Stauth (or his exxxxxxx or personal representative) during the two-year period from July 18, 1998 through July 17, 2000. Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related Such option agreements) that are necessary to give , as herein modified, shall continue in full force and effect to the transactions contemplated by this Section 2.1(e)in accordance with their terms.

Stock Options. (i) At the Effective Time, each unexercised and unexpired Company Option then outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding under any Company Stock Options held Option Plan or beneficially owned by Parent otherwise, whether or Merger Sub or any other Subsidiary or parent of Parent or Merger Subnot then exercisable, and shall be converted into an option to purchase Parent Common Stock in accordance with this Section 2.4; provided, however, that with respect to any such Company Options granted under the Company’s Rules of Approved Executive Share Option Sub-Scheme and the Company’s Rules of Unapproved Share Option Sub-Scheme For Employees (the “UK Stock Option Plans”), (i) Parent shall become use commercially reasonable efforts to obtain the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, consent of the Merger Consideration over the applicable per share exercise price holders of such Company Options to such conversion and (ii) each such Company Option so converted shall satisfy the requirements set forth in the UK Stock OptionOption Plans applicable to such conversion; provided, by (B) further that to the number extent any Company Options have been issued pursuant to agreements that have not been documented in writing, or that have been documented but not provided to Parent, the Company shall use commercially reasonable efforts to obtain the consents of shares of Company Common Stock that are purchasable on exercise the holders of such Company Options to such conversion; provided, further that the Company and Parent agree to cooperate to restructure such conversion of Company Options held by holders who are not United States residents to the extent necessary or desirable in order to accommodate local legal or tax considerations. Each Company Option so converted shall have, and be subject to, the same terms and conditions (including vesting schedule) as set forth in the applicable Company Stock Option Plan and any agreements thereunder (or if issued other than pursuant to a Company Stock Option Plan, pursuant to the agreement that governs its issuance) immediately prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i)and, less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company allowable under applicable Law and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans Option Plan (or such other agreement), the terms and related option agreementsconditions of (i) the Employment Agreements, (ii) the executive transition assistance plan (substantially in the form provided to the Company by Parent on the date hereof), (iii) the employee transition assistance plan (substantially consistent with the terms and conditions set forth in the term sheet delivered to the Company by Parent on the date hereof) that are necessary to give effect Parent will adopt prior to the transactions contemplated Effective Time (together, the “Transition Assistance Plans”) and (iv) Schedule C, except that (x) each Company Option shall be exercisable (or shall become exercisable in accordance with its terms) for that number of whole shares of Parent Common Stock equal to the product of the Table of Contents number of shares that were issuable upon exercise of such Company Option immediately prior to the Effective Time multiplied by this the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock and (y) the per share exercise price for the shares of Parent Common Stock issuable upon exercise of such Company Option so converted shall be equal to the quotient determined by dividing the exercise price per share of Company Common Stock at which such Company Option was exercisable immediately prior to the Effective Time by the Exchange Ratio, rounded up to the nearest whole cent. The conversion of any Company Options which are “incentive stock options,” within the meaning of Section 2.1(e)422 of the Code, into options to purchase Parent Common Stock shall be made so as not to constitute a “modification” of such Company Options within the meaning of Section 424 of the Code. Continuous employment with the Company or any Company Subsidiary shall be credited to the optionee for purposes of determining the vesting of all converted Company Options after the Effective Time. In addition to the foregoing, Parent shall assume each Company Stock Option Plan and the number and kind of shares available for issuance under each such Company Stock Option Plan shall be converted into shares of Parent Common Stock in accordance with the provisions of the applicable Company Stock Option Plan.

Stock Options. (i) At the Effective Time, each outstanding option entitling the holder thereof all rights with respect to purchase shares of Company Common Stock pursuant to the under each Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall become assume each such Company Option in accordance with the right terms (as in effect as of the date of this Agreement) of the stock option plan under which it was issued and the stock option agreement by which it is evidenced. From and after the Effective Time, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per each such Company Stock Option, without interest, in an amount that Option shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) equal to the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Stock Option immediately prior to the Effective Time but multiplied by the Exchange Ratio, rounding down to the nearest whole share (with cash, less the applicable exercise price (as adjusted as set forth in clause "(iii)" of this sentence), being payable for any fraction of a share), (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio and rounding up to the nearest hundredth of a cent and (iv) any restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Company Option shall otherwise remain unchanged; provided, however, that each Company Option assumed pursuant to this Section 5.4(a) shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other similar transaction subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”)Effective Time. At After the Effective Time, all Parent will deliver to each holder of an outstanding Company Stock Options (including any Option a notice describing the assumption of such Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for Option. Parent agrees to file with the right to receive the cash Option Payment SEC a Registration Statement on Form S-8 relating to the extent provided in this Section 2.1(e). Prior shares of Parent Common Stock issuable with respect to the Effective Time, assumed Company Options no later than the Company and Parent shall take all actions (including, if appropriate, amending business day immediately following the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)Closing Date.

Stock Options. (ia) At the Effective Time, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock (a "Company Stock Option" or collectively, "Company Stock Options") issued pursuant to the (i) 1987 Stock Option Plan of the Company and the 1995 Stock Option and Award Plan (the "1995 Plan") of the Company and the Papyrus Design Group, Inc. 1992 Stock Option Plan (collectively, the "Company Plans") and (ii) the Sierra On-Line, Inc. 1993 Stock Option Grant Agreement with Kennxxx X. Xxxxxxxx xxx the Sierra On-Line, Inc., 1994 Stock Option Grant Agreement with Waltxx X. Xxxxxx (xxllectively, the "Non-Plan Option Agreements"), whether vested or unvested, shall be cancelled and, in lieu thereof, Parent shall issue to each holder of a Company Stock Plans, other than the 2004 Employee Plan Option an option (each, a “Company Stock "Parent Option” or collectively “Company Stock Options”"), to acquire, on substantially the extent not already fully vested same terms and exercisable, shall become fully vested and exercisable immediately prior subject to consummation of substantially the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the same conditions as were applicable per share exercise price of under such Company Stock Option, including, without limitation term, exercisability, vesting schedule, status as an "incentive stock option" under section 422 of the Code (except as hereinafter provided), acceleration and termination provisions, the same number of shares of Parent Common Stock as the holder of such Company Stock Option would have been entitled to receive pursuant to the Merger had such holder exercised such option in full immediately prior to the Effective Time, at a price per share equal to (y) the aggregate exercise price for the shares of Company Common Stock otherwise purchasable pursuant to such Company Stock Option divided by (Bz) the number of full shares of Parent Common Stock deemed purchasable pursuant to such Company Stock Option; provided, however, that the number of shares of Company Parent Common Stock that are purchasable on may be purchased upon exercise of any such Company Stock Parent Option prior to shall not include any fractional share and, upon exercise of the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i)Parent Option, less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no a cash payment shall be due hereundermade for any fractional share based upon the Closing Price (as hereinafter defined) shall be canceled and be of no further force or effect except for a share of Parent Common Stock on the right to receive trading day immediately preceding the cash Option Payment to the extent provided in this Section 2.1(e)date of exercise. Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)."

Stock Options. (i) At Subject to compliance with all applicable laws and the Effective Timerules of any quotation system or stock exchange, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to then applicable, the Company Stock Planswill grant to RAI or its designates, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation 20% of the Merger, but excluding any Company stock options available under the Company’s Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become Option Plan from time to time. If this Agreement is terminated then all the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excessvested share option rights, if any, may be exercised for 180 days from termination. The Options shall be subject in all respects to the terms of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company a Stock Option prior Agreement to be entered into between RAI and the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings Company (the “Stock Option PaymentAgreement”). At In the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled event of a conflict between the terms of this Agreement and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Stock Option Agreement, the terms of the Stock Option Agreement shall govern. The Stock Option Agreement shall be in the form generally used by the Company for the grant of stock options. All of the Options will expire on the fourth anniversary of the date that they are granted or on such earlier date as may be provided in the Stock Plans Option Agreement. Unless and related option agreementsuntil the common shares represented by the Option (the “Shares”) that are registered under the United Stated Securities Act of 1933, all certificates representing the Shares and any certificates subsequently issues in substitution therefore and any certificate for any securities issued pursuant to any stock split, share reclassification, stock dividend or other similar capital event shall bear legends in substantially the following form: THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATIONS UNDER THE UNITED STATES SECURITIES ACT O 1933, AS AMENDED (THE “1933 ACT”). NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATIONS UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FORM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATIONS UNDER THE 1933 ACT. and UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THE SECURITIES SHALL NOT TRADE THE SECURITIES IN CANADA BEFORE THE LATER OF THE DATE THAT IS FOUR MONTHS AND ONE DAY AFTER THE DISTRIBUTION DATE AND THE DATE THE COMPANY BECOMES A REPORTING ISSUER IN A PROVINCE OF CANADA. and/or such legend or legends as the Company and its counsel deem necessary to give effect or appropriate. Appropriate stop transfer instructions with respect to the transactions contemplated by this Section 2.1(e)Shares may be placed with the Company’s transfer agent.

Stock Options. (i) At The Company hereby grants Executive stock options to purchase approximately 2,675,000 shares of Common Stock (representing 3% of the fully diluted in-force option, warrant and equity shares of the Company), for a purchase price of $1.20 per share, which options shall expire on the tenth anniversary of the Effective Time, each outstanding option entitling the holder thereof Date hereof (subject to purchase shares earlier termination of Company Common Stock pursuant such options as provided in this Section 4.c. This grant of options is subject to ----------- any requisite shareholder approval which shall be obtained by the Company Stock Planson or prior to September 1, other than 1999. The stock options to be received by Executive shall vest and become exercisable in four increments as follows: 25% of such option shares on the 2004 Employee Plan Effective Date, 25% of such option shares each on the first, second and third anniversary of the Effective Date hereof (eacheach annual period ending on an anniversary of the Effective Date hereof being referred to herein as an "Option Year") of this Agreement. Except as specifically provided in this Section 4.c, a “once options become exercisable, such options shall remain ----------- exercisable through the expiration date and may be exercised whether or not the Executive's employment with the Company Stock Option” or collectively “Company Stock Options”), has terminated. Such options shall be incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986 to the extent of the maximum number of such options which may so qualify. In the event of a public offering of the Company' securities, Executive agrees that he will execute the same form of agreement not already fully vested and exercisableto sell securities ("Lock-Up Agreement") executed by the other executives of the Company as required by the Company's underwriters. In the event of a stock split, reverse split, stock dividend, recapitalization or other reclassification in the Company's common stock, the exercise price of any options granted pursuant to this Agreement shall become fully vested and exercisable be adjusted appropriately to an amount that bears the same relationship to the exercise price in effect immediately prior to consummation such action as the total number of the Mergershares of common stock (or shares of any security into which such common shares have been reclassified, but excluding any Company Stock Options held subdivided, split or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Subotherwise changed) outstanding immediately after such action; in such event, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares for which an option is exercisable shall be adjusted to a number obtained by dividing the exercise price in effect prior to adjustment thereof by the new exercise price after such adjustment. Such adjustments shall be made successively when any event described above occurs. As used in this agreement, "Company" includes any parent entity which at any time owns HOB Entertainment, Inc. or operates the business theretofore operated by HOB Entertainment, Inc. and its Affiliates. On the tenth (10th) day following the termination of the Executive's employment pursuant to Section 5.c (By the Company Common Stock for Cause), all options ----------- granted hereunder (including options which are then exercisable) shall terminate. In the event of the termination of the Executive's employment by the Executive, all options not exercisable upon such termination shall lapse and terminate. In the event that the Executive's employment terminates pursuant to Section 5.a (Death), Section 5.b (Disability) or Section 5.d (By the Company ----------- ----------- ----------- Other than for Cause), then in such event, the Options granted under Section 4.c ----------- which would become exercisable at the end of the Option Year in which such termination occurs shall immediately vest and become exercisable and all other options shall lapse and terminate. Upon a Change of Control as herein defined, all options granted under this Agreement, including, without limitation, options which are purchasable on exercise not then exercisable at the time of such Company Stock Option prior to Change of Control shall immediately become exercisable. For the Effective Time but subsequent to purposes hereof Change of Control is defined as follows: (i) any acceleration sale, merger, consolidation, issuance of vesting provided for in this Section 2.1(e)(ishares (excluding a public offering of shares), less any mandatory tax withholdings or other transaction (each a "Transaction") as a result of which at least 51 % the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms voting power of the Company Stock Plans (or any parent entity of the Company) is not held, directly or indirectly, by persons or entities who held at least 51% of the voting power before such Transaction; (ii) a sale or other disposition of all or a substantial part of the Company's assets, whether in one transaction or a series of related transactions; (iii) any person or entity or group of persons or entities (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended, and related option agreementsthe rules and regulations thereunder) that are necessary acquires the power, through ownership of securities or otherwise, to give elect a majority of the Company's or any parent entity's board of directors (or similar governing body) (such power being called "voting power"); other than groups formed by existing Stockholders of the Company on the date hereof, or (iv) individuals who on the date hereof constitute the Company's board of directors and any new director (other than a director designated by a person or entity who has entered into an agreement to effect a transaction described in clause (i) or (ii) above) whose nomination and/or election to the transactions contemplated board was approved by this Section 2.1(e)a vote of at least a majority of the directors then still in office who either were directors on the date hereof or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Company's or such parent's board of directors. Notwithstanding the foregoing, any changes in ownership, voting or otherwise resulting from the proposed UCI transaction shall not constitute a Change of Control.

Stock Options. (iA) At Subject to Section 5.4(b), at the Effective Time, each outstanding option entitling the holder thereof all rights with respect to purchase shares of Company Common Stock pursuant to the under each Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall become assume each such Company Option in accordance with the right terms (as in effect as of the date of this Agreement) of the stock option plan under which it was issued, the stock option agreement by which it is evidenced and any applicable Change of Control Agreement. From and after the Effective Time, (i) each Company Option assumed by Parent may be exercised solely for shares 45. of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per each such Company Stock Option, without interest, in an amount that Option shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) equal to the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Stock Option immediately prior to the Effective Time but subsequent multiplied by the Exchange Ratio, rounding down to the nearest whole share, (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio and rounding up to the nearest cent and (iv) any acceleration restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting provided for schedule and other provisions of such Company Option shall otherwise remain unchanged; PROVIDED, HOWEVER, that each Company Option assumed by Parent in accordance with this Section 2.1(e)(i)5.4(a) shall, less in accordance with its terms, be subject to further adjustment as appropriate to reflect any mandatory tax withholdings (the “Option Payment”). At the Effective Timestock split, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be division or subdivision of no further force shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior other similar transaction subsequent to the Effective Time. Parent shall file with the SEC, within 7 days after the date on which the Merger becomes effective, a registration statement on Form S-8 relating to the shares of Parent Common Stock issuable with respect to the Company and Options assumed by Parent in accordance with this Section 5.4(a). As soon as practicable after the Effective Time (but in no event later than 30 days thereafter), Parent shall take all actions (including, if appropriate, amending deliver to each holder of a Company Option an appropriate notice setting forth such holder's rights with respect to such Company Option and indicating that such Company Option shall continue in effect on the same terms of the Company Stock Plans and related option agreements) that are necessary to give conditions as were in effect immediately prior to the transactions contemplated by this Effective Time (subject to the adjustments required pursuant to Section 2.1(e5.4(a)).

Stock Options. (i) At Throughout the Effective TimeEmployment Period and to the extent determined .by the Board of Directors in its discretion to be commensurate with Vinixx'x xxxel of responsibility within the Company, each outstanding Vinixx xxxll be entitled to participate in any stock option entitling plan that may be adopted by the holder thereof Company in its discretion and in which any of the Company's executive employees participate; provided, however, the Company agrees to purchase shares promptly implement a stock option plan to reward Vinixx xxx other key officers of the Company Common Stock pursuant for achieving annual targets with respect to the Company Stock Plans, other than the 2004 Employee Plan Business and with respect to its Common Stock- (each, a “Company Stock Option” or collectively “Company Stock Options”as defined below), as such targets are reasonably adopted by the Board of' Directors from time to time. In addition to the extent not already fully vested and exercisableforegoing, shall become fully vested and exercisable immediately prior Vinixx xxxll be entitled, upon the execution of this Agreement, to consummation receive options (the "Vinixx Xxxions") to acquire 1,000,000 shares of the MergerCompany's common stock, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable par value $0.001 per share (the "Common Stock"). The Vinixx Xxxions shall provide for an exercise price per share of Common Stock equal to the closing price of such Common Stock, as reported on NASDAQ on September 26, 2003, Subject to applicable law, at Vinixx'x xxxuest, (be Company shall use best efforts to qualify the Vinixx Xxxions as Incentive Stock Option, by (B) Options under applicable 'sections of the number of shares of Company Common Stock Internal Revenue Code and regulations promulgated thereunder. The Vinixx Xxxions shall be issued pursuant to that are purchasable on exercise of such Company certain Stock Option prior to Agreement, substantially in the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings form attached hereto as Exhibit C (the “Option Payment”"Vinixx Xxxion Agreement"). At As set forth in the Effective TimeVinixx Xxxion Agreement, all outstanding Company Stock Options (including any Company Stock Option for which no payment the Vinixx Xxxions shall be due hereunder) shall be canceled vest and be of no further force or effect except for exercisable into Common Stock, assuming the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective TimeEmployment Period has not otherwise been earlier terminated, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e).as follows:

Stock Options. (iA) At Subject to Section 5.5(b), at the Effective Time, each outstanding option entitling the holder thereof all rights with respect to purchase shares of Company Common Stock pursuant to the under each Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall become assume each such Company Option in accordance with the right requirements of Section 424(a) of the Code (as in effect as of the date of this Agreement) and the terms of the stock option plan under which it was issued and the stock option agreement by which it is evidenced. From and after the Effective Time, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per each such Company Stock Option, without interest, in an amount that Option shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) equal to the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Stock Option immediately prior to the Effective Time but multiplied by the Exchange Ratio, rounding down to the nearest whole share (with cash, less the applicable exercise price, being payable for any fraction of a share), (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio and rounding up to the nearest cent and (iv) any restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Company Option shall otherwise remain unchanged; PROVIDED, HOWEVER, that each Company Option assumed by Parent in accordance with this Section 5.5(a) shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other similar transaction subsequent to any acceleration of vesting provided for the Effective Time. (B) Notwithstanding anything to the contrary contained in this Section 2.1(e)(i5.5, in lieu of assuming outstanding Company Options in accordance with Section 5.5(a), less any mandatory tax withholdings Parent may, at its election, cause such outstanding Company Options to be replaced by issuing equivalent replacement stock options in substitution therefor that are substantially the same. (C) The Company shall take all action that may be necessary (under the “Option Payment”). At plans pursuant to which Company Options are outstanding and otherwise) to effectuate the provisions of this Section 5.5 and to ensure that, from and after the Effective Time, all outstanding holders of Company Stock Options (including any Company Stock Option for which have no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent rights with respect thereto other than those specifically provided in this Section 2.1(e)5.5. Prior 5.6 FORM S-8. Parent agrees to file a registration statement on Form S-8 for the shares of Parent Common Stock issuable with respect to assumed Company Options as soon as reasonably practical (and in any event within sixty (60) days) after the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e).. 5.7

Stock Options. The Executive shall be granted (i) At on the Effective TimeDate an option to purchase 100,000 shares of Revlon common stock, (ii) subject to the Executive's continued employment not later than February 15, 2001, an option to purchase 50,000 shares of Revlon common stock, and (iii) subject to the Executive's continued employment not later than February 15, 2002, an option to purchase 50,000 shares of Revlon common stock, each outstanding with a term of 10 years from the date of grant and an option entitling exercise price equal to the holder thereof market price of Revlon common stock on the date of grant and otherwise on terms (other than number of shares covered) substantially the same as other senior executives of the Company generally. Subject to purchase the Executive's continued employment with the Company, the options so recommended shall vest and become and remain exercisable as to 25% of the shares subject thereto on each of the first through fourth anniversaries of the date of grant or, if more advantageous to the Executive, on terms no less favorable than options granted to RCPC's senior most executives generally. If prior to the end of the Term, the Company Common Stock shall terminate the Executive other than for Cause pursuant to Section 4.3, or the Company Executive shall terminate his employment on account of Good Reason pursuant to Section 4.4, the options so recommended shall vest and be exercisable in accordance with the terms of the Revlon Inc. Amended and Restated 1996 Stock PlansPlan or any plan that may replace it, other than as if the 2004 Employee Plan (eachExecutive had "retired" with the Company's consent within the meaning of such plan. For purposes of clarification and for the avoidance of doubt, a “Company Stock Option” or collectively “Company Stock Options”), treating options as if Executive had "retired" shall mean that each option held by the Executive as of the date of such termination shall continue to vest in accordance with its terms and provisions of this Agreement and shall remain exercisable for one year following the extent not already date that such option becomes fully vested and exercisable. In addition, the Executive shall become fully vested and exercisable immediately prior be recommended to consummation the Compensation Committee or other committee of the Merger, but excluding any Company Board administering the Revlon Inc. Amended and Restated 1996 Stock Options held or beneficially owned by Parent or Merger Sub Plan or any other Subsidiary or parent of Parent or Merger Subplan that may replace it, and shall be converted into and shall become the right as from time to time in effect, to receive, under that Plan or otherwise, additional annual grants in full years after 2002 under terms and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior conditions no less favorable than those granted to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)RCPC's senior most executives generally.

Stock Options. (i) At Upon Xxxxxx'x execution of the Effective TimeSupplemental Release ------------- attached hereto as Exhibit C, each outstanding option entitling the holder thereof all unvested stock options previously granted to purchase shares of Company Common Stock pursuant to --------- Xxxxxx by TV Guide, Inc., TV Guide International, Inc. and/or the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested shall immediately vest in full and exercisable, shall become fully exercisable for their full term, and all previously vested stock options shall remain fully exercisable for their full term as forth in the Schedule attached hereto as Exhibit X. Xxxxxx agrees --------- that from the Effective Date through July 1, 2002, unless and exercisable immediately prior to consummation until a Releasing Event (as defined below) occurs, Xxxxxx shall not sell more than 10% of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the total number of shares of Company Common Stock that are purchasable on exercise stock or options beneficially owned by Xxxxxx as of the date hereof unless and until the market price for the Company's stock reaches $25.00 per share. "Releasing Event" means the occurrence of one of the following: (i) Xxxxx Xxxx ceases to be Chairman and Chief Executive Officer of the Company or (ii) Xxxxx Xxxx publicly announces his intention to resign as Chairman and Chief Executive Officer of the Company. Upon the occurrence of a Releasing Event, Xxxxxx shall not be precluded by this agreement from selling any and all shares of the Company's stock without restriction. To the extent Xxxxxx'x stock option agreements permit the transfer of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided options for in this Section 2.1(e)(i), less any mandatory tax withholdings estate planning purposes (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e7.2(e) of the TVG Equity Incentive Plan). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending represents it will recommend that the terms CONFIDENTIAL ------------ Compensation Committee of the Company Stock Plans approve a resolution in the form attached hereto as Exhibit F. The Company shall use best efforts to obtain unanimous --------- consent to such resolution within five (5) business days of Xxxxxx'x execution of this Separation and related option agreementsConsulting Agreement. If such unanimous consent cannot be obtained within five (5) that are necessary business days of Xxxxxx'x execution of this Separation and Consulting Agreement, the Company shall notice a meeting of the Compensation Committee to give effect occur within fifteen (15) business days after Xxxxxx'x execution of this Separation and Consulting Agreement to consider such resolution, and the transactions contemplated by this Section 2.1(e)Company shall use best efforts to obtain approval from the Compensation Committee at such meeting.

Stock Options. (ia) At Prior to the Effective Time, the Board of Directors of the Company (or, if appropriate, any committee thereof) shall adopt appropriate resolutions and take all other actions necessary or appropriate, if any, to (i) cause each Company Stock Option that is outstanding option entitling as of the date hereof to vest and to be exercisable immediately prior to the consummation of the Merger, (ii) cause all restrictions applicable to any restricted stock award heretofore granted under the Company Restricted Stock Plan or any other similar plan outstanding upon the consummation of the Merger to lapse immediately prior to the Effective Time and (iii) cause each Company Stock Option that is outstanding upon the consummation of the Merger to be exercisable solely for the Merger Consideration for each Share issuable upon exercise thereof immediately prior to the Effective Time. The Company shall offer each holder thereof of a Company Stock Option (an "Option Holder"), in exchange for the cancellation thereof, the right to purchase receive from the Company an amount equal to (A) the product of (1) the number of shares of Company Common Stock pursuant subject to the such Company Stock Plans, other than the 2004 Employee Plan Option and (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A2) the excess, if any, of the Merger Consideration over the applicable exercise price per share exercise price for the purchase of the Company Common Stock subject to such Company Stock Option, by minus (B) the number of shares of Company Common Stock that are purchasable on exercise all applicable federal, state and local Taxes required to be withheld in respect of such Company Stock Option prior payment. The amounts payable pursuant to the Effective Time but subsequent to any acceleration immediately preceding sentence of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At 5.4 shall be paid as soon as reasonably practicable following the Effective Time. The surrender of an Option in exchange for the consideration contemplated by the second sentence of this Section 5.4 shall be deemed a release of any and all rights the Option Holder had or may have had in respect thereof. The Company shall take all such steps as may be required to cause the transactions contemplated by this Section 5.4 and any other dispositions of Company equity securities (including derivative securities) in connection with this Agreement by each individual who is a director or officer of the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act, such steps to be taken in accordance with the No-Action Letter dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP. (b) The Company shall take all outstanding actions necessary to ensure that (i) the Offering Period (as defined in the Company Stock Options (including any Purchase Plan) applicable to the options outstanding under the Company Stock Purchase Plan (each, a "Purchase Plan Option") is shortened in accordance with Section 16 of the Company Stock Purchase Plan so as to have an Exercise Date (as defined in the Company Stock Purchase Plan) that occurs before the Effective Time; (ii) no new Offering Period, other than the Offering Period scheduled to commence on April 1, 1999, shall commence on or after the date hereof, and (iii) no holder of a Purchase Plan Option for which no payment is permitted to increase his or her rate of payroll deduction under the Company Stock Purchase Plan from and after the date hereof. (c) The Company shall be due hereunder) shall be canceled and be of no further force or effect except for the right take all actions necessary to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior provide that, prior to the Effective Time, (i) the Company Stock Option Plan, the Company Stock Purchase Plan and Parent any similar plan or agreement of the Company shall take all actions be terminated, (includingii) any rights under any other plan, program, agreement or arrangement to the issuance or grant of any other interest in respect of the capital stock of the Company or any of its Subsidiaries shall be terminated, and (iii) no Option Holder will have any right to receive any shares of capital stock of the Company or, if appropriateapplicable, amending the Surviving Corporation, upon exercise of any Company Stock Option. (d) The Company represents and warrants that it has the power and authority under the terms of the Company Stock Plans Purchase Plan and related option agreementseach of the Company Stock Option Plan and the Company Restricted Stock Plan to comply with subsections (a), (b) that are necessary to give effect to and (c) hereof without the transactions contemplated by this consent of any Option Holder or any other person. Section 2.1(e).5.5

Stock Options. (i) At Mr. Xxxxxxxxx xxxll be granted the Effective Time, each outstanding option entitling the holder thereof to purchase 400,000 shares of Company the Company's Common Stock pursuant (the "Stock Options"), at an exercise price per share equal to the fair market value of the Company's Common Stock on the date of grant as determined by the Board in its sole discretion. Such grant and determination shall be made no later than five (5) days after the date on which Mr. Xxxxxxxxx'x xxxloyment with the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to commences. To the extent not already fully vested and exercisablepossible, such option will be an incentive stock option. The Stock Options shall become fully vested and exercisable immediately prior to consummation vest monthly at the rate of 1/48 per month; however, there shall be a twelve (12) month cliff, upon which the first 1/4 of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent shall vest. Upon the termination of Parent or Merger SubMr. Xxxxxxxxx'x xxxloyment in accordance with the provisions of Section 10, and below, the Stock Options shall vest as described in such provisions. Except as provided in Section 10, below, the Stock Options shall be converted into and shall become the right subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Company's Stock Plans Option Plan and related the Company's standard incentive and non-statutory stock option agreements) that are necessary to give effect agreements (the "Standard Agreements"), provided pursuant to the transactions contemplated Company's Stock Option Plan. Mr. Xxxxxxxxx xxxl be permitted to exercise the Stock Options in full prior to vesting in the underlying shares, subject to the Company's right to repurchase any unvested shares at Mr. Xxxxxxxxx'x xxxginal cost upon his termination of employment, as provided in the Standard Agreements. In addition, the Company shall permit Mr. Xxxxxxxxx xx pay the option exercise price with a full recourse loan (secured by this Section 2.1(ethe shares acquired with the loan) at the lowest interest rate available to avoid the imposition of imputed income under the tax laws to assist Mr. Xxxxxxxxx xx exercise the Stock Options. Such loan shall be repayable upon the earliest of: (i) the fifth year anniversary of the Effective Date; (ii) the termination of Mr. Xxxxxxxxx'x xxxloyment for any reason; or (iii) the date twelve (12) months after Mr. Xxxxxxxxx xx first eligible to sell shares of the Company's stock that he holds following an initial public offering of the Company's shares; provided, however, that in the event of Mr. Xxxxxxxxx'x xxxmination without Cause or resignation for Good Reason or termination by reason of death or Disability (as defined below), such loan shall be repayable upon the earlier of the events stated in clauses (i) or (iii) immediately preceding.

Stock Options. (i) At As provided below, the Effective Time, each outstanding option entitling the holder thereof Company shall grant Employee two ------------- stock options to purchase a total of 350,000 shares of Company Common Stock common stock pursuant to, or equivalent in all material respects to options that would be available for grant pursuant to, the USA Floral 1997 Long-Term Incentive Plan ("LTIP"), except as provided herein, including Section 7(g)(i) of the LTIP. The options will vest at the rate of 25% as of the Employment Commencement Date and an additional 6.25% on the last day of each succeeding calendar quarter beginning as of March 31, 2000. The options will have an exercise price equal to the closing sale price of Company common stock on their respective dates of grant. The option for 200,000 shares shall be a nonqualified stock option and shall have a date of grant as of the date hereof, and the option for 150,000 shares shall be an incentive stock option under Section 422 of the Internal Revenue Code (the "Code") if and to the extent the tax rules permit such treatment and shall have a date of grant as of the employment Commencement Date. Absent the Company's consent, if Employee does not begin work for the Company on or before January 10, 2000, any options described in this Agreement shall be void and have no effect on either party. Employee may be eligible to receive additional grants or awards under the Company's stock option plans and programs to the extent that grants or awards thereunder are made to Employee by the Compensation Committee of the Board in its discretion. In addition, Employee shall be granted stock options or other awards during the Employment Period pursuant to the LTIP as determined in the discretion of the Compensation Committee. Upon a termination of Employee's employment by the Company Stock Plans, other than "without cause" pursuant to paragraph 7(b)(iv) or by the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”for "good reason" pursuant to paragraph 7(b)(v), to the extent not already fully vested and exercisable, . all outstanding unvested options held by Employee shall become fully vested on the date of termination and all options will remain exercisable immediately prior to consummation for the term provided under paragraph 6(b)(iv) of the MergerLTIP. Upon Employee's termination of employment pursuant to paragraph 7(b)(v) without "good reasons," the Employee's termination as a result of the conditions described in paragraph 7(b)(vi), but excluding any or, notwithstanding paragraph 6(b)(iv) of the LTIP, if Employee's employment is terminated by the Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, for "cause" under circumstances described in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying clause (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by or (B) of paragraph 7(b)(iii), all unvested options shall immediately terminate and all vested options will remain exercisable for the number term provided under paragraph 6(b)(iv) of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior the LTIP (without regard to the Effective Time but subsequent immediate termination for cause otherwise provided in that subparagraph). If Employee's termination is by reason of death or disability pursuant to any acceleration of vesting provided for in this Section 2.1(e)(iparagraph 7(b)(i) or (ii), less any mandatory tax withholdings all unvested options shall become fully vested on the date of termination and notwithstanding paragraph 6(b)(iv) of the LTIP, all options will remain exercisable for the one year period following such termination. Upon termination of Employee's employment for "cause" under circumstances described in clause (the “Option Payment”C). At the Effective Time, (D) or (E) of paragraph 7(b)(iii), all outstanding Company Stock Options (including any Company Stock Option for which options, whether or not vested, shall immediately terminate. All exercisable options may be exercised through a broker-assisted "cashless" exercise arrangement. Notwithstanding the foregoing, no payment shall option may be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms exercisable beyond expiration of the Company Stock Plans and related option agreementsterm of such option. Upon a Change in Control (as defined below), all outstanding unvested options held by Employee shall become fully vested unless Section 7(g)(i) that are necessary to give effect to of the transactions contemplated by this Section 2.1(e)LTIP applies.

Stock Options. (i) At The Executive shall be recommended to the Effective TimeCompensation Committee or other committee of the Board administering the Revlon, Inc. Second Amended and Restated 1996 Stock Plan or any plan that may replace it, as from time to time in effect, to receive an option not later than February 28 of each year of the Term, commencing in 1999, each outstanding such option entitling the holder thereof to purchase cover a minimum of 40,000 shares of Company Revlon Common Stock, to have a term of 10 years, to have an option exercise price equal to the market price of Revlon Common Stock on the date of grant, and otherwise to be on terms substantially the same as other senior executives of the Executive's level, provided that if the Term is to end pursuant to Section 2.2 otherwise than at a calendar year end, RCPC shall not be required to recommend that the stock option to be granted to the Executive with respect to such final year of the Term cover more than that number of shares that is the product of multiplying the annual grant provided for above by a fraction of which the numerator is the number of days of the Term during such final year and the denominator is 365, and provided further that if the Term is to end pursuant to Section 4.4 on or before June 30, 2000, RCPC shall not be required to recommend that the stock option to be granted to the Executive with respect to the year 2000 cover more than 20,000 shares and if the Term so ends subsequent to the grant of options with respect to the year 2000, the Executive agrees to forfeit and surrender to the Company Stock Planssuch portion of the stock option granted with respect to such year as covers more than 20,000 shares, other than and provided finally that this Section 3.3 shall not apply following a Triggering Event. In connection with any termination of the 2004 Employee Plan (eachExecutive's employment pursuant to Section 4.4, a “Company Stock Option” or collectively “Company Stock Options”), RCPC shall recommend to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation Compensation Committee (or other committee of the MergerBoard of Directors at the time administering the Stock Plan) that all stock options then held by the Executive become immediately exercisable and remain so exercisable for a period of two years from the date of termination, but excluding whereupon any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent stock options still remaining outstanding and unexercised shall automatically terminate, provided that if the Executive violates Section 5.2 of Parent or Merger Sub, and shall be converted into and shall become the right to receivethis Agreement, in full addition to all other rights and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, remedies of the Merger Consideration over Company the applicable per share exercise price of such Executive agrees to forfeit and surrender to the Company Stock Option, by (B) all then outstanding stock options granted to the number of Executive in May 1999 covering 25,000 shares of Company Revlon Common Stock that are purchasable on and to pay over to the Company all after tax gain realized by the Executive upon any exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)May 1999 stock options.

Stock Options. The Employee has been granted and may in the future be granted options (ithe “Company Options”) At the Effective Time, each outstanding option entitling the holder thereof to purchase shares Company shares. The Employee shall be permitted to transfer Company Options only with the approval of IAC, so long as IAC beneficially owns at least 15% of the voting power of the Company Common Stock pursuant shares. Notwithstanding the foregoing, any Company Options which were granted to the Employee prior to July 1, 2004 and approved for transfer by the Company’s Board of Directors prior to the date hereof may be so transferred by the Employee without IAC’s approval. Other than terms mentioned herein, the Company Options shall be subject to the terms and conditions of the applicable Company share option plan and any related stock option agreement in effect at the time of grant of the Company Option; provided that (1) with respect to any Company Options granted on or after July 1, 2004, in the event of a Change in Control, and a Termination by the Employee with Good Reason or a Termination by the Company without Cause following such Change in Control, the Executive shall be entitled to immediate vesting for an additional 12 months for the remaining Company Options that are unvested as of the date of the Termination by the Employee with Good Reason or Termination by the Company without Cause following the Change in Control and (2) the Employee’s grant of 240,000 Company Options on December 1, 2003 shall vest 1/3rd on the first anniversary of the date of grant and 1/12th on each three month anniversary thereafter, subject to the Employee’s continued employment with the Company through each applicable vesting date, except as otherwise provided in the immediately following sentence. In addition, for Company Options granted prior to July 1, 2004, in the event of a Change in Control, a Termination by the Employee with Good Reason or a Termination by the Company without Cause, the Employee shall be entitled to immediate vesting for an additional 12 months for the remaining Company Options that are unvested as of the date of the Termination by the Employee with Good Reason, Termination by the Company without Cause or the Change in Control. With respect to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately Options granted prior to consummation July 1, 2004, the definition of Change in Control shall not include, for purposes of construing the effect of a change in control on those options under the share option plan and any related stock option agreement in effect at the time of grant, as well as for purposes of the Mergerforegoing sentence, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Subreferences to IAC, Xxxxx Xxxxxx, Liberty Media Corporation and their respective Affiliates and shall be converted into and shall become not include the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, final paragraph of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)definition.

Stock Options. Other than (i) nonvested options held by Nichxxxx Xxxxxxx, Xxanxxx Xxxxx, Xx Fxxxxxxx, Xx Fxxxxxx, Xxn Xxxx, Xxe Xxxxx, Xxncx Xxxxxx xxx Rich Xxxx, xxe acceleration of exercisability of which is contingent upon delivery by each such person of an Amendment to Executive Employment Agreement, and (ii) certain options held by A. Laurxxxx Xxxxx xx the extent that such acceleration would result in an "excess parachute payment" within the meaning of Section 280G of the Code, prior to the Closing, the Company shall cause each outstanding Performance Option (as hereinafter defined), Harbxxxx Xxxion (as hereinafter defined) and each outstanding option under the 1990 Plan (as hereinafter defined) and the 1994 Plan (as hereinafter defined, and together with the 1990 Plan, the "Stock Option Plans") to become exercisable for a period beginning on such date after the date hereof as the Company shall reasonably determine and ending immediately prior to the Effective Time. At the Effective Time, each then outstanding Performance Option, Harbxxxx Xxxion or option entitling under the Stock Option Plans (collectively, the "Options") which was not exercised prior to the Effective Time shall terminate and the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become will have the right to receivereceive for the shares of Common Stock, in full and complete satisfaction and cancellation thereof, a cash payment per Company Series 2 Preferred or Nonvoting Common Stock Option, without interest, in subject to such Option an amount that shall be determined by multiplying (Asubject to any applicable withholding tax) in cash equal to the excess, if any, of difference between the aggregate Merger Consideration over applicable to such shares and the applicable aggregate per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment option to the extent provided in this Section 2.1(esuch difference is a positive number (such amount being hereinafter referred to as, the "Option Consideration"). Prior The surrender of an Option to the Effective Time, Company in exchange for the Company Option Consideration shall be deemed a release of any and Parent shall take all actions (including, if appropriate, amending rights the terms holder had or may have had in respect of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)such option.

Stock Options. (ia) At the Effective Time, each outstanding option entitling in accordance with Section 5(c)(ii) of the holder thereof Company 1999 Stock Option Plan and Section V.C.2. of the Company 1995 Non-Employee Director Stock Option Plan, respectively, all rights to purchase shares of acquire Company Common Stock pursuant to under each Option then outstanding under the Company 1999 Stock Plans, other than Option Plan and the 2004 Company 1995 Non-Employee Director Stock Option Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and become rights to receive in lieu of each share of Company Common Stock then subject to the Option, the number and class of shares and/or other securities or property (including cash) comprising the Merger Consideration. With respect to each such Option (an "ASSUMED OPTION"), Parent shall become assume the right obligation to receivedeliver to each holder of such Option (an "OPTIONHOLDER") the amount of Merger Consideration payable upon the exercise of the Assumed Option. From and after the Effective Time (i) each Assumed Option may be exercised solely for Merger Consideration as provided herein and (ii) in 1999 Stock Option Plan and the Company 1995 accordance with the terms of the Company Non-Employee Director Stock Option Plan, any restriction on the exercise of any such Assumed Option shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Assumed Option shall otherwise remain unchanged; provided, however that each Assumed Option shall, in full accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other similar transaction subsequent to the Effective Time in accordance with and complete satisfaction subject to the 1999 Stock Option Plan and cancellation thereofthe Company 1995 Non-Employee Director Stock Option Plan. Within a reasonable time after the Effective Time, Parent shall issue to each Optionholder a document describing the terms applicable to Assumed Options. In addition, the Company Board (or a committee thereof consisting of two or more non-employee directors, each of whom shall be to the extent required by Rule 16b-3, a cash payment per Company Stock Option, without interest, "non-employee director" as defined in an amount that Rule 16b-3 of the Exchange Act ) shall be determined by multiplying (A) the excessadopt such resolutions and take other actions, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock as may be required to provide that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At upon the Effective Time, all outstanding unexercised options (whether vested or unvested and without regard to limitations on exercise otherwise contained in the agreement evidencing the option) granted pursuant to the Company Stock Options (including any Company 1993 Stock Option for which no payment shall be due hereunderPlan and the Company 1997 Stock Option Plan ("TERMINATING OPTIONS") shall be canceled terminated effective as of the Effective Time in accordance with the terms of each such plan, respectively, and be the Company shall deliver a notice of no further force or effect except for the right termination to receive the cash each holder of a Terminating Option Payment at least 20 days prior to the extent Effective Time; provided in this Section 2.1(e). Prior that, during the period from the date on which such notice of termination is delivered to the Effective Time, each holder of a Terminating Option shall have the Company right to exercise in full all of his or her Terminating Options that are then outstanding (whether vested or unvested and without regard to limitations on exercise otherwise contained in the agreement evidencing the Terminating Option), but contingent on occurrence of the Merger, and provided that, if the Merger does not take place within 180 days after giving such notice for any reason whatsoever, the notice and exercise shall be null and void. Parent shall take all actions (including, if appropriate, amending register the terms number and class of shares as comprise the Merger Consideration issuable upon the exercise of the Company Stock Plans Assumed Options with the Securities and related option agreements) that are necessary to give effect to Exchange Commission on a Form S-8 not later than 15 days following the transactions contemplated by this Section 2.1(e)Effective Time.

Stock Options. (ia) At the Effective Time, each outstanding option entitling option, warrant or other right to purchase Shares (a "Company Stock Option" and collectively, "Company Stock Options") issued pursuant to the holder thereof 1991 Amended and Restated Stock Option Plan, the 1995 Outside Directors Stock Option Plan and the 1997 Non-Statutory Stock Option Plan, and all other agreements or arrangements other than the 1995 Employee Stock Purchase Plan, whether vested or unvested, shall be converted as of the Effective Time into an option, warrant or right, as applicable, to purchase shares of Company Parent Common Stock in accordance with the terms of this Section 1.11. All plans or agreements described above pursuant to which any Company Stock Option has been issued or may be issued other than outstanding warrants or rights are referred to collectively as the "Company Plans." Each Company Stock Option so converted shall be deemed to constitute an option to acquire, on the same terms and conditions as were applicable under such Company Stock Option, a number of shares of Parent Common Stock equal to the number of shares of Parent Common Stock that the holder of such Company Stock Option would have been entitled to receive pursuant to the Merger had such holder exercised such Company Stock Option, whether or not vested, in full immediately prior to the Effective Time rounded to the nearest whole share at a price per share, rounded to the nearest whole cent, equal to the exercise price per Share pursuant to such Company Stock Option immediately prior to the Effective Time divided by the Exchange Ratio; provided, however, that in the case of any option to which Section 421 of the Code applies by reason of its qualification under Sections 422 through 424 of the Code, the option price, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be adjusted as necessary in order to comply with Section 424(a) of the Code. (b) As soon as practicable after the Effective Time, Parent shall deliver to the holders of Company Stock Options appropriate notices setting forth such holders' rights pursuant to the Company Stock Plans, other than Plans and that the 2004 Employee Plan (each, a “agreements evidencing the grants of such Company Stock Option” or collectively “Options shall continue in effect on the same terms and conditions (subject to the adjustments required by this Section 1.11 after giving effect to the Merger). Parent shall comply with the terms of the Company Stock Options”)Plans and ensure, to the extent not already fully vested required by and exercisablesubject to the provisions of such Plans, shall become fully vested and exercisable immediately that Company Stock Options that qualified as incentive stock options prior to consummation the Effective Time continue to qualify as incentive stock options of Parent after the MergerEffective Time . (c) At or before the Effective Time, but excluding Parent shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of Company Stock Options assumed in accordance with this Section 1.11. Promptly following the Effective Time, Parent shall, if no registration statement is in effect covering such Parent shares, file a registration statement on Form S-8 (or any successor or other appropriate forms) with respect to the shares of Parent Common Stock subject to any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, all persons with respect to whom registration on Form S-8 is available and shall be converted into use all commercially reasonable efforts to maintain the effectiveness of such registration statement or registration statements (and shall become maintain the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, current status of the Merger Consideration over the applicable per share exercise price of prospectus or prospectuses contained therein) for so long as such Company Stock Option, by options remain outstanding. (Bd) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to before the Effective Time, the Company and Parent shall take all actions (includingcause to be effected, in a manner reasonably satisfactory to Parent, such amendments, if appropriateany, amending the terms of to the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by foregoing provisions of this Section 2.1(e)1.11.

Stock Options. For purposes of this Section 13, the non-qualified stock option agreements between Employee and the Company (ithe "Stock Option Agreements") At and the Effective TimeCompany's Long Term Incentive Plan, each outstanding option entitling (as amended), (the holder thereof "Plan") only, Employee's separation from the Company shall be deemed to purchase be a Voluntary Resignation with Good Reason under the Stock Option Agreements. Employee expressly acknowledges that he has vested and exercisable stock options for 350,000 shares of stock of the Company Common Stock with a strike price of $6.72 per share (the "June Grant") and vested and exercisable stock options for 23,572 sharxx xx xxxxk of the Company with a strike price of $4.54 cents per share (the "October Grant") pursuant to the Company Stock Plans, other than Option Agreements and the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to Plan. To the extent not already fully vested vested, these options shall vest immediately upon the Effective Date. The June Grant shall expire, if not previously exercised, upon the last dxx xx xxx thirtieth (30th) month following the Effective Date, and exercisablethe October Grant shall expire, shall become fully vested and exercisable immediately prior to consummation if not previously exercised, on the last day of the Mergertwenty-fourth (24th) month following the Effective Date. The provisions of this Section 13 shall be applicable notwithstanding any provisions of the Stock Option Agreements or the Plan which may be contrary to, or inconsistent with, the provisions of this Section 13. The provisions of this Section 13 supersede any such contrary or inconsistent provisions in the Stock Option Agreements or the Plan. All other provisions of the Stock Option Agreements shall remain unchanged and the Stock Option Agreements, as amended hereby, will remain in full force and effect. Other than those set forth in the Stock Option Agreements and this Section 13, Employee has no rights or entitlements whatsoever to any stock options or stock option grants from the Company. The Company represents and warrants that this Agreement including, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent not limited to, the provisions of Parent or Merger Subthis Section 13, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to Agreements have been duly authorized by all necessary corporate action on the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms part of the Company Stock Plans including, but not limited to, all necessary action on the part of the Committee (as defined in the Plan), and related option agreements) that are necessary to give effect to this Agreement, including the transactions contemplated by provisions of this Section 2.1(e)13, and the Stock Option Agreements constitute the legal, valid and binding obligations of the Company enforceable against the Company in according with their respective terms. The Company further represents and warrants that this Agreement, including the provisions of this Section 13, does not conflict with, or result in a violation of, any term or condition of the Plan.

Stock Options. (ia) At the Effective Time, each option, whether vested or unvested (a "Company Option"), that is then outstanding option entitling under any of the Company's Stock Option Plans (collectively, the "Stock Plan") shall automatically and without further action by the holder thereof of a Company Option become fully vested and shall be assumed by Parent in accordance with the terms (as in effect on the date hereof) of the Stock Plan and the stock option agreement, if any, by which such Company Option is evidenced. All rights with respect to purchase Company Common Stock under outstanding Company Options shall thereupon be converted, subject to the provisions hereof, into rights with respect to Parent Class A Common Stock. From and after the Effective Time, (i) each Company Option assumed by Parent (collectively, the "Assumed Options") may be exercised solely for shares of Parent Class A Common Stock, (ii) the number of shares of Parent Class A Common Stock subject to each such Assumed Option shall be equal to the number of shares of Parent Class A Common Stock which the holder of such Assumed Option would have received pursuant to Section 1.5, without giving effect to any adjustment to the Share Consideration pursuant to Section 1.5(f), in exchange for the shares of Company Common Stock pursuant subject to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable such Assumed Option if such Assumed Option had been exercised immediately prior to consummation the Effective Time, (iii) the per share exercise price for the Parent Class A Common Stock issuable upon exercise of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that each such Assumed Option shall be determined by multiplying (A) dividing the excess, if any, of the Merger Consideration over the applicable exercise price per share exercise price of Company Common Stock subject to such Company Stock Assumed Option, as in effect immediately prior to the Effective Time, by (B) a fraction the numerator of which is the number of shares of Parent Class A Common Stock subject to such Assumed Option immediately after the Effective Time, and the denominator of which is the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Stock Assumed Option immediately prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, and rounding the resulting exercise price up to the nearest whole cent, and (iv) all restrictions on the exercise of each such Assumed Option shall continue in full force and effect and the term, exercisability, status as an incentive or nonqualified option, and other provisions of such Company Option, except the vesting schedule, shall otherwise remain unchanged; provided, however, that each such Assumed Option shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, reverse stock split, stock dividend, recapitalization or other similar transaction effected by Parent after the Effective Time but without giving effect to any adjustment to the Share Consideration pursuant to Section 1.5(f). Notwithstanding the foregoing, the parties acknowledge that it may be necessary to amend the Parent's stock option plan to increase the number of shares available for grant thereunder in order to permit the issuance of stock options as contemplated by this Section 1.11, and the provisions hereof are subject to shareholder approval of any such amendment. The Company and Parent shall take all actions action that may be necessary (including, if appropriate, amending under the terms Stock Plan and otherwise) to effectuate the provisions of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)1.11.

Stock Options. Xxxxxx acknowledges that on May 11, 2009 the Company granted Xxxxxx options to purchase 3,750,000 shares of the Company’s common stock with an exercise price of $0.13 per share which stock options vested fully on the grant date, and cancelled, with the consent of Xxxxxx, options held by Xxxxxx to purchase 4,400,000 shares of the Company’s common stock, exercisable at $0.85 per share. In addition, Xxxxxx acknowledges that on May 11, 2009 the Company granted Xxxxxx options to purchase 20,000,000 shares of the Company’s common stock with an exercise price of $0.13 per share, which stock options shall vest annually over a period of four years from the date of grant (i) At the Effective Time, each outstanding option entitling “May 2009 Vesting Options”). Xxxxxx shall also be eligible to receive shares of the holder thereof Company’s authorized stock and additional options to purchase shares of Company Common Stock pursuant the Company’s authorized stock from time to time as determined by the Board of Directors. Notwithstanding the vesting provisions applicable to any of said options, all of the options shall immediately vest on an accelerated basis, and remain exercisable (including options which are then already fully vested) for a period of ten (10) years from the date of grant on the first to occur of any of the following: (i) any “Change in Control” of the Company Stock Plansor its business, other than (ii) if the 2004 Employee Plan employment of Xxxxxx is terminated by the Company without “Cause” (each, a as defined below) or by Xxxxxx with “Company Stock OptionGood Reason” or collectively “Company Stock Options”(as defined below), to or (iii) if the extent not already fully vested employment of Xxxxxx is terminated upon the death or Total Disability of Xxxxxx. For purposes hereof, “Change of Control” and exercisable, “Total Disability” shall become fully vested and exercisable immediately prior to consummation of have the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become meanings set forth in the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, stock option agreement between the Company and Parent shall take all actions Xxxxxx representing the May 2009 Vesting Options. The Company hereby agrees to register its existing Stock Option and Restricted Stock Plan on a Form S-8 registration statement as soon reasonably practicable so Xxxxxx may, subject to Rule 144 under the Securities Act of 1933, as amended, exercise the above options and freely sell the shares of common stock obtained thereby in the public market. (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(ec).

Stock Options. The parties acknowledge that options (the "Original Options") to purchase 215,054 shares of the Company's common stock, par value $.001 ("Common Stock"), were granted to Employee under the 1996 CS Wireless Systems, Inc. Incentive Stock Plan, as amended from time to time (the "Plan"). The parties further acknowledge that of the Original Options, options to purchase 172,044 shares of Common Stock, at an exercise price of $6.50 per share, are fully vested (the "Remaining Options") and the balance of the Original Options, which represent options to purchase 43,010 shares of Common Stock, are hereby surrendered by Employee to the Company. The Remaining Options shall continue to be governed by the Plan. The Plan is the same as that which covers all senior executives of the Company, and any amendments to the Plan will be applicable to Employee. On the first anniversary of the date of this Agreement, Employee shall have the option, provided the Company's common stock is not then publicly traded and the price per share quoted on any applicable exchange or over-the-counter is greater than $9.50, to (i) At hold the Effective TimeRemaining Options, each outstanding option entitling in which event the holder thereof to purchase shares Remaining Options shall be exercisable until the five-year anniversary of Company Common Stock pursuant this Agreement in accordance with the Plan, or (ii) deliver written notice ("Election Notice") to the Company Stock Plansof his election to cancel all, other than but not part of, the 2004 Employee Plan (eachRemaining Options in consideration for payment by the Company of $500,000; upon delivery of such payment, a “the options shall lapse without further action. The Election Notice must be received by the Company Stock Option” during regular business hours on or collectively “Company Stock Options”), to before the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation first anniversary of the Mergerdate of this Agreement or shall not be effective; provided, but excluding any however, that if such date falls on a Saturday, Sunday or legal holiday, then the date on which the Election Notice must be received is on the first business day thereafter. The Company shall pay $500,000 (less applicable taxes) within ten (10) days of its receipt of an effective Election Notice. Except as otherwise amended by this PARAGRAPH 3, the Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and Option Agreement shall be converted into and shall become the right to receive, remain in full force and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)effect.

Stock Options. (ia) At Except as provided in (c) below with respect to the Effective TimeCompany's 1997 Employee Stock Purchase Plan, as amended (the "Company ESPP"), each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant that is outstanding at the Effective Time, whether or not exercisable and whether or not vested (a "Company Option") shall, without any action on the part of the Company or the holder thereof, be assumed by Parent in such manner that Parent (i) is a corporation "assuming a stock option in a transaction to which Section 424(a) applies" within the meaning of Section 424 of the Code and the regulations thereunder or (ii) to the extent that Section 424 of the Code does not apply to any such Company Option, would be such a corporation were Section 424 of the Code applicable to such Company Option. From and after the Effective Time, all references to the Company in the Company Options shall be deemed to refer to Parent. The Company Options assumed by Parent shall be exercisable upon the same terms and conditions as under the Company Options (including provisions regarding vesting and the acceleration thereof) except that (i) such Company Options shall entitle the holder to 5. purchase from Parent the number of shares of Parent Common Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), rounded down to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation nearest whole number of such shares) that equals the product of the Merger, but excluding any Company Stock Options held or beneficially owned Conversion Ratio multiplied by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Option immediately prior to the Effective Time, (ii) the option exercise price per share of Parent Common Stock Option shall be an amount (rounded up to the nearest full cent) equal to the option exercise price per share of Company Common Stock in effect immediately prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i)divided by the Conversion Ratio, less any mandatory tax withholdings and (iii) the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment vest to the extent required pursuant to the current terms of such Company Options or other agreements as described in Section 1.7 of the Company Disclosure Schedule (as defined below); provided that if such vesting of Company Options or other provisions with respect to the Company Options would jeopardize the Merger being accounted for as a "pooling of interests", then the Company shall, subject to Parent's written consent not to be unreasonably withheld, use reasonable best efforts to prevent such vesting or effect of other provisions. Except to the extent required pursuant to the current terms of such Company Options or other agreements as described in this Section 2.1(e1.7 of the Company Disclosure Schedule (as defined below), the Company shall not take any action to accelerate the vesting of any Company Options. Prior to the Effective Time, the Company Board of Directors of Parent shall, for purposes of Rule 16b-3(d)(1) promulgated under Section 16 of the Securities Exchange Act of 1934, and the rules and regulations thereunder (the "1934 Act"), specifically approve (i) the assumption by Parent shall take all actions (including, if appropriate, amending the terms of the Company Options and (ii) the issuance of Parent Common Stock Plans in the Merger to directors, officers and related option agreements) that are necessary stockholders of the Company subject to give effect to Section 16 of the transactions contemplated by this Section 2.1(e)1934 Act.

Stock Options. (i) At the Effective Time, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant Notwithstanding anything to the contrary contained within this Consulting Agreement, the Employment Agreement or the Option Agreement described on Exhibit "A" to the Employment Agreement, (hereinafter "Option Agreement"), or the Stock Option Agreement, dated as of January 21, 1999 (hereinafter the "Additional Option Agreement") the Company Stock Plans, other than and the 2004 Employee Plan Executive hereby agree (each, a “Company Stock Option” or collectively “Company Stock Options”)a) that Section 3.1(a) and Sections 3.3(b) and (c) of the Option Agreement are hereby clarified and, to the extent not already fully vested necessary, modified, to state that those options that have been granted and exercisablewhich are exercisable as of January 19, 2000 (namely 276,750 shares) shall continue to be exercisable until 90 days after the termination of this Consulting Agreement, but that no additional options will become fully vested exercisable at any time, (b) that Section 3.1(a) and exercisable immediately prior to consummation Sections 3.3(b) and (c) of the MergerAdditional Option Agreement are hereby clarified and, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided necessary, modified to state that those options that have been granted and which are exercisable as of January 19, 2000 (namely 19,110 shares) shall continue to be exercisable until 90 days after the termination of this Consulting Agreement, but that no additional options will become exercisable at any time, and (c) that notwithstanding any provisions of the Option Agreement or the Additional Option Agreement, options that have been granted but are not exercisable as of January 19, 2000 under Section 3.1(a) of both the Option Agreement or the Additional Option Agreement shall terminate as of the first day of this Consulting Agreement. Nothing contained herein, however, shall require that such provision be included in this Section 2.1(e). Prior to the Effective Time, any subsequent option agreement that may be entered into between the Company and Parent shall take all the Executive. This Section 3(d) is intended to supercede the provisions of Section 3.3(a) of the Option Agreement and the Additional Option Agreement, respectively. Company agrees (a) that the relationship established by this Agreement constitutes the "simultaneous establishment of a consulting relationship" between the Company and the Executive as described in the Option Agreement and the Additional Option Agreement, and (b) to process Executive's exercise of options in the same fashion and as expeditiously as it normally processes similar actions (includingfor other persons. To the extent that registered shares are available for issuance upon exercise of the option, if appropriateCompany will issue registered shares to Executive. Executive further agrees that to the extent he anticipates entering into the market to sell any of the shares received upon exercise, amending the terms that he will consult with and cooperate with reasonable requests of the Company Stock Plans and related option agreements) that are necessary to give effect or the Company's designated investment banker with respect to the transactions contemplated by this Section 2.1(e)timing and amount of such sales in order to avoid any adverse market affect from such dispositions.

Stock Options. (ia) At the Effective Time, each outstanding and unexercised option entitling the holder thereof to purchase shares of Company Common Stock (a “Company Option”) issued pursuant to the Prab Robots, Inc. 1988 Stock Option Plan, the Prab, Inc. 1999 Stock Option Plan, the Prab, Inc. 2000 Stock Option Plan of the Company Stock Plansor otherwise (collectively, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock OptionsOption Plans”), to the extent not already fully vested and exercisableper share exercise price of which Company Option is less than the Merger Consideration (a “Cashed-Out Company Option”), shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right of the holder thereof to receive, in full and complete satisfaction and cancellation thereof, a cash payment per of each Cashed-Out Company Stock Option, without interestthe “Cash Amount” with respect to such Cashed-Out Company Option, in an amount that less any required withholding taxes. The “Cash Amount” for any Cashed-Out Company Option shall be determined by multiplying equal the product of: (A1) the excess, if any, excess of the Merger Consideration over the applicable exercise price per share exercise price of Company Common Stock of such Cashed-Out Company Stock Option, by Option and (B2) the number of shares of Company Common Stock that are purchasable on issuable upon the exercise of such Cashed-Out Company Stock Option prior Option. The Company shall take all reasonable actions necessary to cause the Effective Time but subsequent holders of Company Options to any acceleration of vesting provided for in this Section 2.1(e)(i)consent, less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Timerequired, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)1.7 no later than immediately prior to the Effective Time and shall facilitate the net exercise of Cashed-Out Company Options so as to enable the holders thereof to receive the Cash Amount in respect thereof without first paying the exercise price thereof. Except as may be otherwise agreed to by Parent and the Company, as of the Effective Time, (A) the Company Option Plans shall terminate, (B) the provisions in any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company shall be deleted and (C) no holder of Company Options or any participant in the Company Option Plans or any other plans, programs or arrangements shall have any rights thereunder to acquire any shares of capital stock of the Company or the Surviving Corporation. The Company and Parent agree that the Cash Amounts are the sole payments that will be made with respect to or in relation to the Company Options.

Stock Options. Except as provided in this paragraph 4, your interest in and rights in your Vested Stock Options (ias defined and set forth in Exhibit A) At shall be governed by and be subject to all conditions, terms and restrictions contained in the Effective TimeCompany's 1993 Stock Option Plan, each outstanding as amended from time to time ("the Plan"), and the option entitling letter agreements dated April 25, 1997 (denoted as Exhibits A-1, A-2 and B to your Employment Agreement dated April 25, 1997, a xxxx xx which is attached hereto as Exhibit B (the holder thereof "Employment Agreement")), the option letter agreement dated August 28, 1998 (a copy of which is attached hereto as Exhibit C) and the option letter agreement dated March 1, 2000 (a copy of which is attached hereto as Exhibit D). Your rights with respect to purchase shares your Stock Options shall be fixed as of Company Common Stock your Termination Date and pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), this Agreement. With respect to the extent not already fully option letter agreements dated April 25, 1997 and denoted as Exhibits A-1 and A-2 to your Employment Agreement, all 250,000 options shall be deemed vested as of your Termination Date and exercisableyou shall be entitled to exercise those options on or before February 15, 2003. With respect to the option letter agreement dated April 25, 1997 and denoted as Exhibit B to your Employment Agreement, 60,000 options shall be deemed vested as of your Termination Date and you shall be entitled to exercise those 60,000 options on or before February 15, 2003, and the 90,000 options that would have been unvested as of your Termination Date shall be accelerated and deemed to have become fully vested as of your Termination Date and exercisable immediately prior you shall be entitled to consummation exercise those 90,000 options on or before February 15, 2005. With respect to the option letter agreement dated August 28, 1998, you shall be entitled to exercise, at your election, some or all of the Merger105,000 options that are vested as of your Termination Date on a cashless basis (defined below) on the later of either: (a) your Termination Date; or (b) within five (5) business days following the expiration of the Revocation Period defined in paragraph 11. For purposes of this Agreement, but excluding any Company Stock Options held the term "Cashless Basis" shall mean that in lieu of exercising some or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent all of Parent or Merger Subyour 105,000 vested stock options for cash, and you shall be converted into and shall become the right entitled to receive, in full and complete satisfaction and cancellation thereof, receive up to a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, total number of shares of common stock of the Merger Consideration over Company computed using the applicable per share exercise price of such Company Stock Option, by following formulas: X = 35,000 (BA - $1.2375) ; and -------------------- A X = 35,000 (A - $2.125) ; and ------------------- A X = 35,000 (A - $3.125) ------------------- A where X equals the number of shares of common stock to be issued to you and A equals the fair market value of one share of common stock on the date of exercise. In addition, you may elect to have the Company Common Stock withhold from the total number of shares due under the above formulas a number of shares having a fair market value equal to the minimum amount necessary to satisfy the Company's aggregate federal, state, local and foreign tax withholding and FICA and FUTA obligations due as a result of a Cashless Basis exercise. With respect to the option letter agreement dated March 1, 2000, you shall be entitled to exercise the 60,000 options that are purchasable vested as of your Termination Date on exercise of such Company Stock Option prior to the Effective Time but subsequent to or before February 15, 2005. You acknowledge and agree that you shall forfeit any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive those 30,000 unvested stock options under the cash Option Payment option letter agreement dated March 1, 2000, as shown in Exhibit A hereto. You acknowledge and agree that there has been no change of control at any time up to the extent provided in this Section 2.1(e)and including your Termination Date and that you shall have no rights to accelerated vesting or otherwise upon any change of control occurring after your Termination Date. Prior The Company agrees to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending any action necessary to effectuate the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)paragraph 4.

Stock Options. (ia) At the Effective Time, each outstanding option entitling the holder thereof all rights with respect to purchase shares of Company Common Stock pursuant to the under each Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall become assume each such Company Option in accordance with the right terms (as in effect as of the date of this Agreement) of the stock option plan under which it was issued and the stock option agreement by which it is evidenced as same may be amended or modified by the Company's employment agreements and severance agreements, plans and arrangements. From and after the Effective Time, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per each such Company Stock Option, without interest, in an amount that Option shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) equal to the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Stock Option immediately prior to the Effective Time but subsequent multiplied by the Exchange Ratio, rounding down to the nearest whole share (with cash, less the applicable exercise price, being payable for any acceleration fraction of a share), (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio and rounding up to the nearest cent and (iv) any restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting provided for schedule and other provisions of such Company Option as may have been amended or modified by the Company's employment agreements and severance agreements, plans and arrangements shall otherwise remain unchanged; PROVIDED, HOWEVER, that each Company Option assumed by Parent in accordance with this Section 2.1(e)(i)6.5(a) shall, less any mandatory tax withholdings (the “Option Payment”). At the Effective Timein accordance with its terms, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no subject to further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e).adjustment as

Stock Options. (i) At Subject to the Effective Timeapproval by the shareholders of the Company, each outstanding option entitling the holder thereof Executive shall be granted options to purchase 500,000 shares of Common Stock, if the Company's pre-tax operating income for the fiscal year ending September 30, 1997 or the fiscal year ending September 30, 1998 is at least $1 million." The parties hereby agree that the Stock Option Agreement will be in the form of Exhibit A attached hereto. Except as expressly provided herein, this Amendment neither amends nor alters any other provision of the Employment Agreement (including the balance of Section 3(d)) and all other provisions contained therein remain in full force and effect and constitute binding and enforceable obligations of the Company Common Stock pursuant and the Executive. This Amendment shall be governed by and construed and interpreted under the laws of the State of New York without reference to the Company principles of conflicts of law. The undersigned have executed this Amendment on the date first written above. FORWARD INDUSTRIES, INC. By: /s/ XXXXXXXX X. XXXXXXXXX ------------------------------ Name: Xxxxxxxx X. Xxxxxxxxx Title: Chief Executive Officer /s/ XXXXXXX XXXXX --------------------------------- Xxxxxxx Xxxxx EXHIBIT A FORWARD INDUSTRIES, INC. STOCK OPTION LETTER AGREEMENT TO: XXXXXXX XXXXX Pursuant to the terms of that certain Employment Agreement dated as of October 14, 1996 (the "Employment Agreement")between yourself and Forward Industries, Inc. (the "Company") and the Company's 1996 Stock Plans, other than the 2004 Employee Incentive Plan (each, a “Company Stock Option” or collectively “Company Stock Options”the "Plan"), to you are hereby granted an option for the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation purchase of ________ shares of the MergerCompany's common stock, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub$.01 par value, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in at an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings ________ per share (the “Option Payment”"exercise price"). At A copy of the Effective TimePlan is attached and the provisions thereof, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriatewithout limitation, amending the those relating to withholding taxes, are incorporated into this Agreement by reference. The terms of the Company Stock Plans option are as set forth in the Plan and related option agreements) that in this Agreement. The most important of the terms set forth in the Plan are necessary to give effect to the transactions contemplated by this Section 2.1(e).summarized as follows:

Stock Options. (i) At the Effective Time, each unexercised and unexpired Company Option then outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding under any Company Stock Options held Option Plan or beneficially owned by Parent otherwise, whether or Merger Sub or any other Subsidiary or parent of Parent or Merger Subnot then exercisable, and shall be converted into an option to purchase Parent Common Stock in accordance with this Section 2.4; provided, however, that with respect to any such Company Options granted under the Company’s Rules of Approved Executive Share Option Sub-Scheme and the Company’s Rules of Unapproved Share Option Sub-Scheme For Employees (the “UK Stock Option Plans”), (i) Parent shall become use commercially reasonable efforts to obtain the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, consent of the Merger Consideration over the applicable per share exercise price holders of such Company Options to such conversion and (ii) each such Company Option so converted shall satisfy the requirements set forth in the UK Stock OptionOption Plans applicable to such conversion; provided, by (B) further that to the number extent any Company Options have been issued pursuant to agreements that have not been documented in writing, or that have been documented but not provided to Parent, the Company shall use commercially reasonable efforts to obtain the consents of shares of Company Common Stock that are purchasable on exercise the holders of such Company Options to such conversion; provided, further that the Company and Parent agree to cooperate to restructure such conversion of Company Options held by holders who are not United States residents to the extent necessary or desirable in order to accommodate local legal or tax considerations. Each Company Option so converted shall have, and be subject to, the same terms and conditions (including vesting schedule) as set forth in the applicable Company Stock Option Plan and any agreements thereunder (or if issued other than pursuant to a Company Stock Option Plan, pursuant to the agreement that governs its issuance) immediately prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i)and, less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company allowable under applicable Law and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans Option Plan (or such other agreement), the terms and related option agreementsconditions of (i) the Employment Agreements, (ii) the executive transition assistance plan (substantially in the form provided to the Company by Parent on the date hereof), (iii) the employee transition assistance plan (substantially consistent with the terms and conditions set forth in the term sheet delivered to the Company by Parent on the date hereof) that are necessary to give effect Parent will adopt prior to the transactions contemplated Effective Time (together, the “Transition Assistance Plans”) and (iv) Schedule C, except that (x) each Company Option shall be exercisable (or shall become exercisable in accordance with its terms) for that number of whole shares of Parent Common Stock equal to the product of the number of shares that were issuable upon exercise of such Company Option immediately prior to the Effective Time multiplied by this the Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock and (y) the per share exercise price for the shares of Parent Common Stock issuable upon exercise of such Company Option so converted shall be equal to the quotient determined by dividing the exercise price per share of Company Common Stock at which such Company Option was exercisable immediately prior to the Effective Time by the Exchange Ratio, rounded up to the nearest whole cent. The conversion of any Company Options which are “incentive stock options,” within the meaning of Section 2.1(e)422 of the Code, into options to purchase Parent Common Stock shall be made so as not to constitute a “modification” of such Company Options within the meaning of Section 424 of the Code. Continuous employment with the Company or any Company Subsidiary shall be credited to the optionee for purposes of determining the vesting of all converted Company Options after the Effective Time. In addition to the foregoing, Parent shall assume each Company Stock Option Plan and the number and kind of shares available for issuance under each such Company Stock Option Plan shall be converted into shares of Parent Common Stock in accordance with the provisions of the applicable Company Stock Option Plan.

Stock Options. All options and warrants to acquire Company Common Stock (iindividually, a "Company Option" and collectively, the "Company Options") outstanding at the Effective Time under the Company's 1992 Stock Option Plan, the Company's 1995 Stock Option Plan or otherwise (the "Company Stock Option Plans") shall remain outstanding following the Effective Time. At the Effective Time, each outstanding option entitling such Company Options, by virtue of the Merger and without any further action on the part of the Company or the holder thereof of such Company Options, shall be assumed by Watsxx xx such manner that Watsxx (x) is a corporation (or a parent or a subsidiary corporation of such corporation) "assuming a stock option in a transaction to purchase shares which Section 424(a) applied" within the meaning of Company Common Stock pursuant to Section 424 of the Company Stock Plans, other than the 2004 Employee Plan Code; or (each, a “Company Stock Option” or collectively “Company Stock Options”), b) to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation that Section 424 of the MergerCode does not apply to any such Company Options, but excluding any would be such a A-2 3 corporation (or a parent or a subsidiary corporation of such corporation) were Section 424 applicable to such option. Each Company Option assumed by Watsxx xxxll be exercisable upon the same terms and conditions as under the applicable Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent Option Plan and the applicable option agreement issued thereunder, except that (x) the unexercised portion of Parent or Merger Sub, and each such Company Option shall be converted into and shall become exercisable for that whole number of shares of Watsxx Xxxmon Stock (rounded to the right nearest whole share, with 0.5 rounded upward) equal to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise subject to the unexercised portion of such Company Option multiplied by the Exchange Ratio; and (y) the option exercise price per share of Watsxx Xxxmon Stock shall be an amount equal to the option exercise price per share of Company Common Stock subject to such Company Option prior to in effect at the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings divided by the Exchange Ratio (the “Option Payment”option price per share, as so determined, being rounded to the nearest full cent, with $0.005 rounded upward). At No payment shall be made for fractional interests. The term, exercisability, vesting schedule, status as an "incentive stock option" under Section 422 of the Code, if applicable, and all of the other terms of the Company Options shall otherwise remain unchanged unless modified by or as a result of the transaction contemplated by this Agreement. As soon as practicable after the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment Watsxx xxxll deliver to the extent provided in holders of Company Options appropriate notices setting forth such holders' rights pursuant to such Company Options, as amended by this Section 2.1(e1.5 as well as notice of Watsxx'x xxxumption of the Company's obligations with respect thereto (which occurs by virtue of this Agreement). Prior Watsxx xxxll take all corporate actions necessary to reserve for issuance such number of shares of Watsxx Xxxmon Stock as will be necessary to satisfy exercises in full of all Company Options after the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e). 1.6.

Stock Options. The Executive is hereby granted stock options (the “Stock Options”) to purchase 300,000 shares of ELC’s common stock at a price (the “Exercise Price”) equal to i) the closing price of the common stock on the first day of the Employment Period, or ii) $1.00, which ever is greater. Such Stock Options shall vest in accordance with the following schedule: • Upon execution of this Agreement and the start of the Employment Period, Executive shall become immediately vested in Stock Options to purchase 100,000 shares of the Company’s common stock at the Exercise Price; and • On the first anniversary of the first day of the Employment Period, so long as Executive is employed by the Company as its President on such date, Executive shall become immediately vested in Stock Options to purchase 100,000 shares of the Company’s common stock at the Exercise Price; and • On the second anniversary of the first day of the Employment Period, so long as Executive is employed by the Company as its President on such date, Executive shall become immediately vested in Stock Options to purchase 100,000 shares of the Company’s common stock at the Exercise Price. For all purposes of this Section 5, a “Change in Control” shall be deemed to have occurred when (i) At ELC is merged or consolidated with another entity which is not then controlled by ELC and, as a result, such merger or consolidation results in at least fifty-one percent (51%) or greater of ELC’s common stock being controlled or owned by another entity, or (ii) a majority of the Effective TimeELC’s assets are sold or otherwise transferred to another entity that is not then controlled by or affiliated with ELC. Upon the occurrence of a Change in Control, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock Options granted pursuant to the Company Stock Plansthis Section 5 shall be automatically and immediately vested and become exercisable by Executive, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), subject to the extent not already fully vested and exercisableterms of Section 8 of this Agreement. Unless otherwise provided herein, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary Options granted pursuant to give effect this Section 5 shall be governed in accordance with the provisions of ELC’s 2001 Employee Stock Incentive Plan (the “Plan”). The Stock Options issued pursuant to this agreement shall be incentive stock options to the transactions contemplated extent permitted by this law and the terms of the Plan, and the balance shall be non-qualified options. If Executive’ employment with the Company is terminated, as provided in Section 2.1(e)8, such Stock Options (whether or not vested) shall survive or terminate as provided under Section 8.

Stock Options. (ia) At Subject to Section 5.3(b), at the Effective Time, each outstanding option entitling the holder thereof all rights with respect to purchase shares of Company Common Stock pursuant to the under each Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall become assume each such Company Option in accordance with the right terms (as in effect as of the closing date) of the stock option plan under which it was issued and the stock option agreement by which it is evidenced. From and after the Effective Time, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per each such Company Stock Option, without interest, in an amount that Option shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) equal to the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Stock Option immediately prior to the Effective Time but multiplied by the Exchange Ratio, rounding down to the nearest whole share, (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio and rounding up to the nearest cent and (iv) any restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Company Option shall otherwise remain unchanged; provided, however, that each Company Option assumed by Parent in accordance with this Section 5.3(a) shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or other similar transaction subsequent to the Effective Time. Parent shall file with the SEC within as soon as practicable after the date on which the Merger becomes effective, and in any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings event within thirty (the “Option Payment”). At 30) calendar days after the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment a registration statement on Form S-8 relating to the extent provided shares of Parent Common Stock issuable with respect to the Company Options assumed by Parent in accordance with this Section 2.1(e5.3(a). Prior , which may be legally registered on a Form S-8 and shall use its reasonable efforts to maintain the Effective Time, effectiveness of such registration statement (and maintain the current status of the prospectus or prospectuses contained therein) for so long as the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)options remain outstanding.

Stock Options. (ia) At As soon as practicable following the date of this Agreement, Parent and the Company (or, if appropriate, any committee of the Board of Directors of the Company administering the Company's 1999 Equity Incentive Plan (the "COMPANY OPTION PLAN") or any committee of the Board of Directors administering Parent's option plans) or any other Company stock option plans shall take such action as may be required to effect the following provisions of this Section 2.2. As of the Effective Time, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock Stock, including all options granted pursuant to the Company Option Plan, the Company's 1983 Stock PlansOption Plan, other than the 2004 1986 Non-Employee Director Option Plan and 1992 Employee Stock Option Plan (each, a “Company "COMPANY STOCK Option") which is then outstanding shall be assumed by Parent and converted into an option (or a new substitute option shall be granted) (an "ASSUMED STOCK OPTION") to purchase the number of shares of Parent Common Stock Option” or collectively “Company Stock Options”), (rounded up to the extent not already fully vested and exercisablenearest whole share) equal to (x) the number of shares subject to such option multiplied by (y) the Exchange Ratio, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent at an exercise price per share of Parent or Merger Sub, and shall be converted into and shall become Common Stock (rounded down to the right nearest xxxxx) equal to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable former exercise price per share exercise price of Company Common Stock under such Company Stock Option, option immediately prior to the Effective Time divided by (B) the number Exchange Ratio; provided, however, that in the case of shares of Company Common Stock that are purchasable on exercise of such any Company Stock Option to which Section 421 of the Code applies by reason of its qualification under Section 422 of the Code, the conversion formula shall be adjusted, if necessary, to comply with Section 424(a) of the Code. Except as provided above, each Assumed Stock Option shall be subject to the same terms and conditions (including expiration date and vesting) as were applicable to such converted Company Stock Option immediately prior to the Effective Time but subsequent Time. Parent shall use its reasonable best efforts to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings promptly prepare and file with the Securities and Exchange Commission (the “Option Payment”). At "SEC") a registration statement on Form S-8 or other appropriate form with respect to shares of Parent Common Stock subject to the Effective Time, all outstanding Company Assumed Stock Options and to maintain the effectiveness of such registration statement or registration statements covering such Assumed Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for maintain the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms current status of the Company prospectus or prospectuses contained therein) for so long as such Assumed Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)Options remain outstanding.

Stock Options. (i) At the Effective Time, each Executive hereby acknowledges and agrees that Schedule A contains a complete and accurate list of all his outstanding option entitling the holder thereof options or rights to purchase shares common stock or any other equity security or interest of Company Common Stock pursuant to the Company Stock Plans, other than or its subsidiaries as well as the 2004 Employee Plan portion thereof that is vested as of the Separation Date (each, a the “Company Stock Option” or collectively “Company Stock Options”), . Notwithstanding anything to the extent not already fully contrary contained in Executive’s stock option agreements, the related option plans, applicable board resolutions, written or oral agreements or understandings or otherwise, all unvested Options as of the Separation Date shall be cancelled; provided, that the time-based options designated on Schedule A to purchase up to a maximum of an additional 75,963 shares of common stock (the “Time-Based Options”) shall continue to vest in accordance with and subject to their existing terms and conditions until May 17, 2004, provided that Executive remains on the Board of Directors until such date, and all remaining Time-Based Options to purchase the then remaining unvested shares shall be cancelled as of May 17, 2004. Options vested and exercisableas of the Separation Date or by May 17, 2004, as the case may be, shall become fully vested remain exercisable in accordance with and exercisable immediately subject to their existing terms and conditions and, if unexercised, shall expire within enumerated periods set forth in the respective option agreements or plan following termination of Executive’s service on the Board. In addition, in the event of a Change of Control or the consummation of a Corporate Transaction (as defined in the Company’s 2002 Stock Option Plan) prior to consummation May 17, 2004, the vesting of all of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excessTime Based Options, if any, that remain unvested as of the Merger Consideration over the applicable per share exercise price date of such Company Stock Optionevent shall immediately be accelerated without further action by the Company, by (B) provided that Executive remains on the number Board of shares Directors until such date. In the event Options intended to qualify as “incentive stock options” within the meaning of Company Common Stock that are purchasable on exercise Section 422 of such Company Stock Option prior to the Effective Time but subsequent to any acceleration Internal Revenue Code of vesting provided for in this Section 2.1(e)(i)1986, less any mandatory tax withholdings as amended (the “Option PaymentCode”). At , are exercised more than three (3) months following the Effective TimeSeparation Date, all outstanding Company Stock such Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)treated as non-qualified stock options.

Stock Options. The Executive's compensation shall include options (the "Options") to purchase equity of the Company in the form of shares of common stock, $.001 par value per share (the "Company Common Stock"), equivalent to an amount, when exercised, of 2,000,000 shares of Company Common Stock (as such number of shares may be adjusted pursuant to clause (v) below). The material terms of the Options will include the following: (i) At The date of grant of the Options will be the Effective TimeDate; (ii) On the one (1) year anniversary of the Effective Date (the "Initial Vesting Date"), each outstanding option entitling provided that the holder thereof Executive has not been terminated for Due Cause (as defined below) by the Company, the Executive will acquire a vested interest with respect to twenty-five percent (25%) of the Options, or Options to purchase 500,000 shares of Company Common Stock (as such number of shares may be adjusted pursuant to clause (v) below); (iii) Every subsequent monthly period following the Initial Vesting Date, provided that the Executive has not been terminated for Due Cause by the Company, the Executive will acquire a vested interest with respect to Options to purchase an additional 41,667 shares of Company Common Stock (as such number of shares may be adjusted pursuant to clause (v) below), until the 48th month following the Effective Date or until such time as the Executive has received Options to purchase 2,000,000 shares of Company Common Stock (as such number of shares may be adjusted pursuant to clause (v) below); (iv) If the Executive is no longer employed by the Company due to termination of his employment for Due Cause, the Executive is only entitled to those options in which the Executive has acquired a vested interest as of the date of termination for Due Cause; provided, that if the Executive's employment with the Company is terminated for any other reason than Due Cause, the Executive shall acquire a vested interest in all remaining Options to be vested so that the Executive has received Options to purchase 2,000,000 shares of Company Common Stock (as such number of shares may be adjusted pursuant to clause (v) below); (v) The Executive shall receive customary anti-dilution protection for any mechanical adjustments to the equity securities of the Company including stock splits, stock dividends or similar adjustments. In addition, if the Company issues any equity securities or any securities convertible into equity securities, except in any case pursuant to outstanding options, a restricted stock plan, stock option plan, executive benefit plan or any other similar plan for executives and consultants duly adopted by the Company, for less than the exercise price per share paid by the Executive, then the Executive shall receive full ratchet anti-dilution protection; (vi) The exercise price for the Options will be the closing market price on the Closing Date (as such term is defined in the Stock Purchase Agreement, dated as of December 31, 2001, among the Company, PPSI and the PPSI Stockholders (as such terms are defined therein)) as such prices are reported in the Wall Street Journal or by any market maker; (vii) The Options shall be Incentive Stock Options, as such term is defined in the Internal Revenue Code of 1986, as amended (the "Code"); and (ix) Each Option shall have an exercise period of ten (10) years. U covenants and agrees that it shall take all steps necessary or desirable to ensure that shares of Company Common Stock received by Executive upon the exercise of Options are freely tradeable, including by registering such shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested applicable Federal and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)state securities laws.

Stock Options. (ia) At the Effective Time, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan Shares (each, a each “Company Stock Option” or collectively and, collectively, “Company Stock Options”), ) issued pursuant to the extent not already fully Company’s 1994 Long-Term Incentive Plan, Non-Employee Directors’ Stock Plans, or other agreement or arrangement, whether vested and exercisableor unvested, shall become fully vested and exercisable immediately prior to consummation be converted as of the Merger, but excluding Effective Time into options to purchase shares of Parent Common Stock in accordance with this Section 1.11. All plans or agreements described above pursuant to which any Company Stock Options held Option has been issued or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Submay be issued are referred to collectively as the “Company Plans.” At the Effective Time, and each Company Stock Option shall be converted deemed to constitute an option to acquire, on the same terms and conditions (but taking into and shall become account any changes thereto, including any acceleration in the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined vesting or exercisability of such option by multiplying (A) the excess, if any, reason of this Agreement or the Merger Consideration over or the transactions or matters contemplated by this Agreement provided for in such option or the applicable per share exercise price of plan with respect thereto) as were applicable to such Company Stock Option, a number of shares of Parent Common Stock equal to the number of shares of Parent Common Stock that the holder of such Company Stock Option would have been entitled to receive pursuant to the Merger had such holder exercised such option in full immediately prior to the Effective Time, rounded down to the nearest whole share, at a price per share equal to (i) the aggregate exercise price for the Shares otherwise purchasable pursuant to such Company Stock Option divided by (ii) the product of (A) the number of Shares otherwise purchasable pursuant to such Company Stock Option multiplied by (B) the Exchange Ratio, rounded up to the nearest cent; provided, however, that in the case of any option to which Section 421 of the Code applies by reason of its qualification under Section 422 of the Code (“incentive stock options” or “ISOs”) Parent may cause the option price, the number of shares purchasable pursuant to such option and the terms and conditions of Company Common Stock that are purchasable on exercise of such Company Stock Option prior option to the Effective Time but subsequent be determined so as to any acceleration of vesting provided for in this comply with Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder424(a) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)Code.

Stock Options. (ia) Parent shall not assume or otherwise replace any Company Options, whether vested or unvested, in connection with the transactions contemplated hereby. At the Effective Time, each outstanding option entitling the holder thereof to purchase shares Company Option that is outstanding, unexercised and unexpired as of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the MergerEffective Time, but excluding any Company Stock Options held whether vested or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Subunvested, and shall be accelerated in full, cancelled and converted into and shall become represent (A) the right to receive, in full and complete satisfaction and cancellation thereofaccordance with the Company Option Termination Agreement (as defined below), a cash payment per Company Stock Optionan amount in cash, without interest, in an amount that shall be determined by multiplying equal to (Ax) the excessPer Share Amount, if any, of minus the Merger Consideration over the applicable exercise price per share exercise price of attributable to such Company Stock Option, minus the Working Capital Escrow Contribution Amount, multiplied by (By) the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Option, plus (B) the right to receive, in accordance with this Agreement and in connection with any cash disbursements required to be made from the Working Capital Escrowed Funds, an amount in cash equal to (i) the Per Share Working Capital Disbursement Amount for such disbursements, multiplied by (ii) the number of shares of Company Common Stock Option prior subject to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i)such Company Option, less any mandatory tax withholdings plus (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunderC) shall be canceled and be of no further force or effect except for the right to receive in accordance with the Tax Sharing Provisions, in respect of each cash Option disbursement of any Tax Benefit Payment satisfied prior to the extent provided fifth (5th) anniversary of the Closing Date, an amount in this Section 2.1(ecash equal to (1) the Per Share Tax Benefit Amount for such disbursement of a Tax Benefit Payment, multiplied by (2) the number of shares of Company Common Stock subject to such Company Option (it being acknowledged and agreed that no Tax Benefit Payment will be made with respect to any Company Option on or after the fifth (5th) anniversary of the Closing). Prior Subject to the terms and conditions hereof, (X) the amount payable pursuant to clause (A) of the preceding sentence shall be paid by Parent to each Holder of Company Options promptly following the Effective TimeTime by distributing such amount to such Holder through the Company’s normal payroll procedures, (Y) any amount payable pursuant to clause (B) of the preceding sentence shall be paid by Parent to each Holder of Company Options in accordance with Section 1.11 by distributing such amount to such Holder through the Company’s normal payroll procedures, and (Z) any amounts payable pursuant to clause (C) of the preceding sentence shall be paid by Parent to each Holder of Company Options in accordance with Section 1.12 by distributing such amount to such Holder through the Company’s normal payroll procedures; provided that, in each case, such Holder has executed and delivered the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary Option Termination Agreement pursuant to give effect to the transactions contemplated by this Section 2.1(e1.7(b).

Stock Options. (i) At The Corporation acknowledges that (x) the Effective TimeBoard on December 21, each outstanding option entitling 1995 awarded the holder thereof Executive, subject to purchase shareholder approval, stock options covering an aggregate of 300,000 shares of Company Common Stock pursuant to $.01 par value, of the Company Corporation ("Common Stock") and (y) such award was approved by all requisite action at a special meeting of shareholders of the Corporation held on February 16, 1996. In each calendar year during the term of this Agreement these options shall vest and become exercisable in the maximum amount that can vest and become exercisable and also qualify as an Incentive Stock Plans, other than the 2004 Employee Plan Option (each, a “Company Stock Option” or collectively “Company "Incentive Stock Options”") as defined in Section 422(b) of the Internal Revenue Code of l986, as amended (the "Code"), . These options are intended to qualify as Incentive Stock Options and shall be deemed to have been granted under the 1995 Stock Option Plan of the Corporation and shall be governed by the terms and provisions of such plan except as inconsistent with the terms and provision of this Agreement in which event the terms and provisions of this Agreement shall govern and control to the extent such terms and provisions do not already fully adversely affect the status of such options as Incentive Stock Option. The options granted hereunder not qualifying as Incentive Stock Option shall be nonqualified options not granted under any plan of the Corporation. The options once vested shall remain exercisable until the tenth (10th) anniversary of the date of grant except as provided in Paragraph 6 (v) and exercisablewill be non-transferable inter vivos except to or for the benefit of members of the Executive's immediate family and will be transferable upon the Executive's death by will or other testamentary disposition or by any applicable statute in the event of intestacy. The Executive's immediate family shall mean and include the Executive and his spouse, their issue, their parents, their siblings, the descendants of their siblings and the spouse of each of the foregoing. The nonqualified options shall vest on December 21, 2000 (the "Normal Vesting Date"); PROVIDED, HOWEVER, that the vesting of such option may be accelerated as follows: (x) 75,000 of the nonqualified options will become fully vested and exercisable immediately prior to consummation at such times as average Per Share Closing Price of the MergerCommon Stock for ten trading days during a period of twenty consecutive trading days equals or exceed $10.25 (the "First Accelerated Vesting Date"), but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (Ay) the excess, if any, 100,000 of the Merger Consideration over nonqualified options will become fully vested at such times as average Per Share Closing Price of the applicable Common Stock for ten trading days during a period of twenty consecutive trading days equals or exceed $12.25 (the "Second Accelerated Vesting Date") and (z) 125,000 of the nonqualified options will become fully vested at such times as average Per Share Closing Price of the Common Stock for ten trading days during a period of twenty consecutive trading days equals or exceed $14.25 (the "Third Accelerated Vesting Date"). The per share exercise price of such Company Stock Optioneach of the foregoing options shall be $8.87, by (B) the number fair market value of shares of Company the Common Stock that are purchasable on exercise the date of such Company Stock Option prior grant, to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i)wit, less any mandatory tax withholdings (the “Option Payment”)December 21, 1995. At the Effective Timeoption of the Executive, all outstanding Company Stock Options (including or any Company Stock Option portion of the exercise price of any option may be paid by surrendering options for cancellation in which no payment shall event the Executive will receive credit against the exercise price of options to be due hereunder) shall be canceled exercised in the amount of the difference between the exercise price of the option so surrendered and be the then Per Share Closing Price of no further force or effect except for the right to receive the cash Option Payment shares subject to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)surrendered options.

Stock Options. (ia) At Subject to Section 5.5(b), at the Effective Time, each outstanding option entitling the holder thereof all rights with respect to purchase shares of Company Common Stock pursuant to the under each Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall become assume each such Company Option in accordance with the right terms (as in effect as of the date of this Agreement) of the stock option plan under which it was issued and the terms of the stock option agreement by which it is evidenced. From and after the Effective Time, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per each such Company Stock Option, without interest, in an amount that Option shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) equal to the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Stock Option immediately prior to the Effective Time but subsequent multiplied by the Exchange Ratio, rounding down to the nearest whole share, (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio and rounding up to the nearest cent and (iv) any acceleration restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting provided for schedule and other provisions of such Company Option shall otherwise remain unchanged; PROVIDED, HOWEVER, that (A) in this Section 2.1(e)(i)accordance with the terms of those certain agreements between the Company and each of the individuals identified on Part 2.17(k) of the Company Disclosure Schedule, less any mandatory tax withholdings (the “Option Payment”). At certain unvested Company Options referred to therein shall become immediately exercisable as of the Effective Time, all outstanding and (B) each Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided assumed by Parent in accordance with this Section 2.1(e). Prior 5.5(a) shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, stock dividend, reverse stock split, reclassification, recapitalization or other similar transaction subsequent to the Effective Time. Parent shall file with the SEC, no later than 10 days after the date on which the Merger becomes effective, a registration statement on Form S-8 relating to the shares of Parent Common Stock issuable with respect to the Company and Options assumed by Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by in accordance with this Section 2.1(e5.5(a).

Stock Options. (i) At On the Effective TimeDate, each outstanding option entitling the holder thereof Executive will be granted options to purchase Two Million Five Hundred Thousand (2,500,000) shares of common stock of the Company Common Stock at an exercise price equal to $1.01 per share pursuant to the Non-Qualified Stock Option Agreement (the “Stock Option Agreement”) which is attached hereto as Exhibit B to the Agreement. THE SHARES ISSUABLE PURSUANT TO THIS AGREEMENT ARE SUBJECT TO AN OPTION TO REPURCHASE AND A RIGHT OF FIRST REFUSAL PROVIDED UNDER THE PROVISIONS OF THE COMPANY’S 2002 STOCK OPTION PLAN AND THIS AGREEMENT IS ENTERED INTO PURSUANT THERETO. COPIES OF THE PLAN ARE AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES. SWIFT FOODS COMPANY 2002 STOCK OPTION PLAN NON-QUALIFIED STOCK OPTION AGREEMENT July 1, 2005 Sxx Xxxxx c/o Swift Foods Company 1000 Xxxxxxxxxx Xxxxxx Xxxxxxx, Xxxxxxxx 00000 Re: Grant of Stock Plans, other than Option Dear Sxx: The Board of Directors of Swift Foods Company (the 2004 Employee “Company”) has adopted the Company’s 2002 Stock Option Plan (eachthe “Plan”) for certain individuals, directors and key employees of the Company and its Related Entities. A copy of the Plan is being furnished to you concurrently with the execution of this Option Agreement and shall be deemed a part of this Option Agreement as if fully set forth herein. The terms and provisions of that certain employment agreement between you and the Company, dated as of May 26, 2005 (together with any successor or replacement agreement, the “Company Stock Option” or collectively “Company Stock OptionsEmployment Agreement”), that relate to or affect the extent Option are incorporated herein by reference. Terms not already fully vested defined herein that are defined in the Employment Agreement shall have the respective meanings set forth in the Employment Agreement. Terms not defined herein that are not defined in the Employment Agreement shall have the respective meanings set forth in the Plan. In the event of any conflict or inconsistency between the terms and exercisable, shall become fully vested conditions of this Option Agreement and exercisable immediately prior to consummation the terms and conditions of the MergerEmployment Agreement, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent the terms and conditions of Parent or Merger Sub, and the Employment Agreement shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)controlling.

Stock Options. At the Effective Date, each of the options to purchase Company Common Stock granted under (i) At the Company's 1992 Stock Incentive Plan, as amended (the "STOCK OPTION PLAN") that is outstanding as of the Effective TimeDate and (ii) the Stock Option Agreement dated as of December 11, each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant to 1996 between the Company and Michael G. Puls (the "PULS AGREEMENT," and collectively with the optxxxx xxxxxxxxxxg under xxx Stock PlansOption Plan, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”"OUTSTANDING OPTIONS"), to whether or not then vested, exercisable or effective, shall, by action of the extent not already fully vested Board of Directors of the Company or a duly authorized Committee thereof, under the terms of the Stock Option Plan and exercisablethe agreements evidencing the options granted thereunder or the Puls Agreement, shall as applicable, and without any action on the part of xxx holder thereof, vest and become fully vested effective and exercisable immediately prior to consummation of solely for the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Per Share Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, Consideration (without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective TimeDate, each holder of Outstanding Options shall be offered the Company right to execute an agreement, substantially in the form attached hereto as Exhibit B, to cancel such Outstanding Options. Immediately after the Effective Date and in no event later than the first payment to a Holder pursuant to SECTION 3.2, Parent shall cause the Surviving Corporation to pay to each holder of an Outstanding Option who executes such an agreement, in consideration for such cancellation, an amount in cash (less applicable withholding taxes, if any) equal to the amount and in the manner set forth in the agreement attached hereto as Exhibit B; provided that if such amount is equal to or less than zero, such Outstanding Option shall be deemed canceled and terminated. For purposes of this SECTION 3.6, each of the Company, Sub and Parent shall take all actions (including, if appropriate, amending the terms agree that each option listed on SECTION 5.2 of the Company Company's Disclosure Schedule (as hereinafter defined), unless such option is exercised or expires in accordance with the provisions of Stock Plans and related option agreements) that are necessary to give effect Option Plan or Puls Agreement prior to the transactions contemplated by this Section 2.1(e)Effective Date, is an Outstanding Option.

Stock Options. (ia) At Each option to purchase Company Common Stock (a “Company Option”) that was granted under any employee or director stock option or compensatory plan or other arrangement with the Company prior to the Effective Time, each whether or not exercisable at the Effective Time, and which remains outstanding option entitling immediately prior to the holder thereof Effective Time, shall be assumed by Buyer, shall cease to purchase represent a right to acquire shares of Company Common Stock pursuant and shall be appropriately adjusted and converted, at the Effective Time, into an option to acquire Buyer Common Stock (the “Buyer Option”) under the applicable stock option plan of the Company Stock Plans(all of which plans shall be assumed by Buyer at the Effective Time) in accordance with this Section 1.08(a). The Buyer Option shall entitle the holder to purchase from Buyer that number of whole shares of common stock of Buyer, other than par value $.01 per share (the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock OptionsBuyer Common Stock”), equal to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation product of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of were subject to such Company Stock Option immediately prior to the Effective Time but subsequent multiplied by 0.0836, rounded down to the nearest whole number of shares of Buyer Common Stock, and the per share exercise price for the shares of Buyer Common Stock issuable upon exercises of such substituted Buyer Option will be equal to the quotient determined by dividing the exercise price per share of the Company Common Stock at which such Company Option was exercisable immediately prior to the Effective Time by 0.0836, rounded up to the nearest whole cent; provided, however, that in the case of any acceleration Option to which Section 421 of vesting provided for in this Section 2.1(e)(i)the Internal Revenue Code of 1986, less any mandatory tax withholdings as amended, and the rules and regulations adopted pursuant thereto (the “Option PaymentCode”). At ) applies by reason of its qualification under Section 422 of the Effective TimeCode, all outstanding Company Stock Options (including any Company Stock Option for which no payment the option exercise price, the number of shares subject to such option and the terms and conditions of exercise of such option shall be due hereunderdetermined in a manner consistent with the requirements of Section 424(a) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary Code so as not to give effect to the transactions contemplated by this Section 2.1(e)constitute a “modification” of such option.

Stock Options. (i) At the Effective Acceptance Time, each outstanding option entitling to purchase Shares (“Company Option”) under any employee stock option or compensation plan or arrangement of the Company or otherwise (other than the ESPPs), but including, without limitation, the 1997 Incentive and Non-Qualified Stock Option Plan, the 1999 Incentive and Non-Qualified Stock Option Plan, the Amended and Restated Stock Incentive Plan, the Non-Qualified Stock Option Plan for Former Employees of Gilead Sciences, Inc. and the Stock Incentive Plan for Pre-Merger Employees of Eyetech Pharmaceuticals, Inc. (collectively, the “Equity Compensation Plans”), shall by virtue of the occurrence of the Acceptance Time and without any action on the part of any holder of any Company Option be cancelled and the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, will receive a cash payment per Company Stock Option, without interest, in an amount that shall be determined with respect thereto equal to the product obtained by multiplying (Aa) the excess, if any, of the Merger Consideration Offer Price over the applicable exercise price per share exercise price of such Company Stock Option, by (Bb) the number of shares of Company Common Stock that are purchasable on Shares issuable upon exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Cash Payment”). At Parent and the Effective Surviving Corporation or the Company, as applicable, shall use their respective commercially reasonable best efforts to cause the cash payments required pursuant to this Section 6.10(a) to be paid as soon as practicable after the Acceptance Time in accordance with the currently existing payroll practices of the Company. All amounts payable pursuant to this Section 6.10(a) shall be subject to and reduced by the amount of any withholding and/or deduction that is required under applicable Tax Law in accordance with Section 3.2(i) of this Agreement. As of the Acceptance Time, all Company Options shall no longer be outstanding and shall automatically cease to exist, and each holder of a Company Stock Options (including Option shall cease to have any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect rights with respect thereto, except for the right to receive the cash Option Payment Cash Payment. In order to effect the extent provided in provisions of this Section 2.1(e6.10(a). Prior to the Effective Time, the Company and Parent shall take be permitted to fully accelerate the vesting of all actions (including, if appropriate, amending Company Options at such time prior to the terms of Acceptance Time as shall be determined by the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)in its sole discretion.

Stock Options. (ia) At Except as provided in (c) below with respect to the Effective TimeCompany's 1997 Employee Stock Purchase Plan, as amended (the "Company ESPP"), each outstanding option entitling the holder thereof to purchase shares of Company Common Stock pursuant that is outstanding at the Effective Time, whether or not exercisable and whether or not vested (a "Company Option") shall, without any action on the part of the Company or the holder thereof, be assumed by Parent in such manner that Parent (i) is a corporation "assuming a stock option in a transaction to which Section 424(a) applies" within the meaning of Section 424 of the Code and the regulations thereunder or (ii) to the extent that Section 424 of the Code does not apply to any such Company Option, would be such a corporation were Section 424 of the Code applicable to such Company Option. From and after the Effective Time, all references to the Company in the Company Options shall be deemed to refer to Parent. The Company Options assumed by Parent shall be exercisable upon the same terms and conditions as under the Company Options (including provisions regarding vesting and the acceleration thereof) except that (i) such Company Options shall entitle the holder to purchase from Parent the number of shares of Parent Common Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), rounded down to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation nearest whole number of such shares) that equals the product of the Merger, but excluding any Company Stock Options held or beneficially owned Conversion Ratio multiplied by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Option immediately prior to the Effective Time, (ii) the option exercise price per share of Parent Common Stock Option shall be an amount (rounded up to the nearest full cent) equal to the option exercise price per share of Company Common Stock in effect immediately prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i)divided by the Conversion Ratio, less any mandatory tax withholdings and (iii) the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment vest to the extent required pursuant to the current terms of such Company Options or other agreements as described in Section 1.7 of the Company Disclosure Schedule (as defined below); provided that if such vesting of Company Options or other provisions with respect to the Company Options would jeopardize the Merger being accounted for as a "pooling of interests", then the Company shall, subject to Parent's written consent not to be unreasonably withheld, use reasonable best efforts to prevent such vesting or effect of other provisions. Except to the extent required pursuant to the current terms of such Company Options or other agreements as described in this Section 2.1(e1.7 of the Company Disclosure Schedule (as defined below), the Company shall not take any action to accelerate the vesting of any Company Options. Prior to the Effective Time, the Company Board of Directors of Parent shall, for purposes of Rule 16b-3(d)(1) promulgated under Section 16 of the Securities Exchange Act of 1934, and the rules and regulations thereunder (the "1934 Act"), specifically approve (i) the assumption by Parent shall take all actions (including, if appropriate, amending the terms of the Company Options and (ii) the issuance of Parent Common Stock Plans in the Merger to directors, officers and related option agreements) that are necessary stockholders of the Company subject to give effect to Section 16 of the transactions contemplated by this Section 2.1(e)1934 Act.

Stock Options. (i) At the Effective Time, each outstanding option entitling the holder thereof (a “Company Option”) to purchase shares of Company Common Stock issued pursuant to the Company Company’s 2006 Stock Plans, other than the 2004 Employee Incentive Plan (each, a the “Company Stock Option” or collectively “Company Stock OptionsPlan”), to which is vested at the extent not already fully vested and exercisableEffective Time, shall become fully vested be assumed by Parent, on the same terms and exercisable conditions as were applicable under the Stock Plan immediately prior to consummation the Effective Time, except that: (i) the number of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent shares of Parent or Merger Sub, and shall be converted into and shall become the right Common Stock subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per each Company Stock Option, without interest, in an amount that Option shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of were subject to such Company Stock Option immediately prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(iby the Option Conversion Ratio (as defined below), less any mandatory tax withholdings and rounding the resulting number down to the nearest whole number of shares of Parent Common Stock; and (ii) the “per share exercise price for the shares of Parent Common Stock issuable upon exercise of each Company Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be determined by dividing the per share exercise price of no further force or Company Common Stock subject to such Company Option, as in effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior immediately prior to the Effective Time, by the Option Conversion Ratio; provided, however, that the exercise price and the number of shares of Parent Common Stock subject to each Company Option shall be determined in a manner consistent with the requirements of Section 409A of the Code to the extent applicable; and provided, further, that in the case of any Company Option to which Section 422 of the Code applies, the option price, the number of shares subject to such Company Option and the terms and conditions of exercise of such Company Option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. Any restriction on the exercise of any Company Option assumed by Parent shall continue in full force and effect and the term, exercisability and other provisions of such Company Option shall otherwise remain unchanged as a result of the assumption of such Company Option; provided, however, the Company Options that are accelerated at the Effective Time as a result of the Merger, as set forth in Schedule 2.3(a), shall be immediately exercisable after the Effective Time. Any Company Option that has not fully vested at the Effective Time will not be assumed by Parent and shall be terminated prior to the Effective Time. The “Option Conversion Ratio” shall be equal to .74599 (subject to adjustment at or prior to Closing to reflect vesting of additional Company Options and the issuance of any shares of Company Common Stock, whether by exercise of Company Options or otherwise, after the date hereof and prior to Closing). Notwithstanding anything to the contrary set forth herein or on Schedule 1.5(a), the Merger Consideration shall consist of an aggregate of 12,500,000 shares of Parent shall take Common Stock which will include the conversion of all actions (including, if appropriate, amending shares of Company Capital Stock and the terms reservation of all shares of Parent Common Stock required for assumption of the Company Options that have vested at the Effective Time. Parent shall reserve for issuance a sufficient number of shares of Parent Common Stock Plans for delivery upon exercise of the Company Options assumed by Parent, which, as of the date hereof, are as set forth on Schedule 1.5(a) (such Schedule to be amended at or prior to Closing to reflect the issuance of any shares of Company Common Stock, whether by exercise of Company Options or otherwise, after the date hereof and related option agreementsprior to Closing). Within sixty days following the Effective Time, Parent shall file a registration statement on Form S-8 (or any successor form) that are necessary to give effect with respect to the transactions contemplated shares of Parent Common Stock subject to such Company Option held by this Section 2.1(e)persons who become employees or consultants of the Surviving Company and shall use its reasonable best efforts to maintain the effectiveness of such registration statement or registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such Company Options remain outstanding.

Stock Options. (ia) At As soon as practicable following the date of this Agreement, Parent and the Company (or, if appropriate, any committee of the Board of Directors of the Company administering Company's 1988 Stock Option Plan, 1993 Long-Term Incentive Plan, Amended 1993 Long-Term Incentive Plan, 1996 Incentive Plan and 1997-1999 Long-Term Incentive Program (the "INCENTIVE PROGRAM") (collectively, the "COMPANY OPTION PLANS" )) shall take such action as may be required to effect the following provisions of this Section 2.2(a). Subject to the provisions of Section 16 of the Exchange Act (as defined in Section 3.4), as of the Effective Time, Time each outstanding option entitling the holder thereof to purchase Shares pursuant to the Company Option Plans (a "COMPANY STOCK OPTION") which is then outstanding shall be converted into an option (or a new substitute option shall be granted) (an "ASSUMED STOCK OPTION") to purchase the number of shares of Parent Common Stock (rounded up to the nearest whole share) equal to (x) the number of Shares subject to such option multiplied by (y) the Exchange Ratio, at an exercise price per share of Parent Common Stock (rounded down to the nearest xxxxx) equal to (A) the former exercise price per share of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable under such option immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, Effective Time divided by (B) the number Exchange Ratio; provided, however, that in the case of shares of Company Common Stock that are purchasable on exercise of such any Company Stock Option to which Section 421 of the Code applies by reason of its qualification under Section 422 of the Code, the conversion formula shall be adjusted, if necessary, to comply with Section 424(a) of the Code. Except as provided above, the Assumed Stock Options shall be subject to the same terms and conditions (including expiration date and exercise provisions) as were applicable to the converted Company Stock Option immediately prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”)Time. At the Effective Time, all outstanding The Company Stock Options (including any committee of the Board of Directors administering the Company Option Plans) shall take such action as may be necessary to provide that the vesting of the exercisability of any Company Stock Option for which no payment shall will not be due hereunder) shall be canceled and be of no further force accelerated through the Merger or effect this Agreement, except for the right to receive the cash Option Payment to the extent as otherwise provided in this Section 2.1(e). Prior to the Effective Time, Company Option Plans or in any agreement in effect on the date hereof between the Company and Parent shall take all actions (including, if appropriate, amending the terms any holder of the a Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)Option.

Stock Options. (i) At Subject to Executive commencing his employment hereunder as the Effective TimeCompany's Chief Scientific Officer on the Commencement Date, each outstanding option entitling the holder thereof Executive shall be granted options to purchase an aggregate of 150,000 shares of Company Common Stock pursuant of the Company, subject to the Company terms of the Enzon, Inc. Non-Qualified Stock PlansOption Plan, other than as amended (the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”"Option Plan"), to and the extent not already fully vested and exercisable, Notice of Option Grant attached hereto as Exhibit A. Except as otherwise provided herein the Option Plan shall become fully vested and exercisable immediately prior to consummation govern the terms of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, options granted herein. Executive acknowledges that he has received and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, reviewed a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, copy of the Merger Consideration over the applicable per share Option Plan. The exercise price of such Company Stock Option, by (B) options shall be the number last reported sale price of shares a share of Company Common Stock that are purchasable as reported by the Nasdaq Stock Market on exercise the Commencement Date. Such options shall vest and become exercisable (a) as to 100,000 of such Company Stock Option prior options, at the rate of 20,000 shares per year, commencing on the first anniversary of the Commencement Date, provided that any unvested portion of such 100,000 options shall immediately vest and become exercisable (subject to the Effective Time but subsequent to any acceleration of vesting provided for requirement in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall Plan that such options not be due hereunder) shall be canceled and be of no further force or effect except exercisable for the right six months after the grant date thereof) when the last reported sale price of a share of the Common Stock is at least one hundred dollars ($100.00) as reported on the Nasdaq Stock Market for at least twenty (20) consecutive trading days, and (b) as to receive 50,000 of such options, on the cash Option Payment fifth anniversary of the Commencement Date, provided such 50,000 options shall immediately vest and become exercisable (subject to the extent provided requirement in this Section 2.1(e). Prior to the Effective Time, Option Plan that such options not be exercisable for the Company and Parent shall take all actions (including, if appropriate, amending six months after the terms grant date thereof) on the date on which the audited financial statements of the Company Stock Plans for a fiscal year are issued, which report net annual revenues of not less than Fifty Million Dollars ($50,000,000) from the commercial sale of product(s) used for organ rejection or autoimmune diseases ("Organ Rejection and related option agreementsAutoimmune Products"), provided in the case of each of clause (a) that are necessary to give effect to and (b) of this paragraph that, except as otherwise provided in Section 10 hereof, Executive is then employed by the transactions contemplated by Company on a full-time basis as its Chief Scientific Officer. For purposes of this Section 2.1(e)."net annual revenues" shall mean the Company's revenues for a fiscal year of the Company derived from "net sales" of Organ Rejection and

Stock Options. (i) At The Company shall take all requisite action so that at the Effective Time, each outstanding option entitling issued by the holder thereof to purchase shares of Company Common Stock pursuant to any of the Company Stock Plans, other than the 2004 Employee Plan Incentive Plans (each, a “Company Stock Option” ”) whether or collectively “Company Stock Options”)not exercisable at the Effective Time, to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned will be assumed by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, virtue of the Merger Consideration over and without any action on the part of the holder thereof. Subject to, and in accordance with, the terms of the applicable per share exercise price of Company Stock Incentive Plan including any applicable award agreement evidencing such Company Stock Option, by (B) from and after the number of shares of Company Common Stock that are purchasable on exercise of such Effective Time, each Company Stock Option so assumed by Parent under this Agreement will otherwise continue to have, and be subject to, the same terms and conditions (including vesting schedule) as were applicable to the corresponding Company Stock Option immediately prior to the Effective Time but subsequent to any acceleration of vesting provided for as set forth in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding applicable Company Stock Options Incentive Plan (including any applicable award agreement, evidencing such Company Stock Option for which no payment shall be due hereunderOption) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior immediately prior to the Effective Time, except that, from and after the Effective Time, (A) each Company Stock Option, when exercisable, will be exercisable for that number of whole Parent Common Shares equal to the product of the number of Company Common Shares that were subject to such Company Stock Option immediately prior to the Effective Time multiplied by the Equity Exchange Factor, rounded down to the nearest whole number of Parent Common Shares and (B) the per share exercise price for the Parent shall take all actions (includingCommon Shares issuable upon exercise of such assumed Company Stock Option will be equal to the quotient determined by dividing the exercise price of each Company Common Share subject to such assumed Company Stock Option by the Equity Exchange Factor, if appropriaterounded up to the nearest whole cent. Notwithstanding the foregoing, amending the terms conversion of the Company Stock Plans Options into options to purchase Parent Common Shares is intended to conform with and related option agreements) that are necessary to give effect to shall be made in accordance with the transactions contemplated by this requirements of Treasury Regulation Section 2.1(e1.409A-1(b)(5)(v)(D).

Stock Options. (ia) At the Effective Time, each Company stock option (“Company Option”) granted and outstanding option entitling under the holder thereof to purchase shares of Company Common Company’s Second Amended and Restated 1994 Stock pursuant to the Company Stock Plans, other than the 2004 Employee Option Plan (each, a the “Company Stock Option” or collectively “Company Stock OptionsOption Plan”), to the extent not already fully vested ) which is outstanding and exercisable, shall become fully vested and exercisable unexercised immediately prior to consummation of the MergerEffective Time, but excluding any Company Stock Options held whether or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Subnot vested, and shall be converted into and become an option to purchase Parent Common Stock, and Parent shall become assume each such Company Option in accordance with the right terms (as in effect as of the date of this Agreement) of the stock option plan under which it was issued and the terms of the stock option agreement by which it is evidenced. Accordingly, from and after the Effective Time, (i) each Company Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per each such Company Stock Option, without interest, in an amount that Option shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) equal to the number of shares of Company Common Stock that are purchasable on exercise of subject to such Company Stock Option immediately prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings multiplied by a fraction (the “Option PaymentExchange Ratio”). At , the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for numerator of which no payment shall be due hereunder) the fair market value per share of common stock of Parent as of the Closing (as determined by Parent), and the denominator shall be canceled and $3.22, which product shall then be of no further force or effect except for the right to receive the cash Option Payment rounded down to the extent provided nearest whole share, (iii) the per share exercise price under each such Company Option shall be adjusted by dividing the per share exercise price under such Company Option by the Exchange Ratio and rounding up to the nearest cent and (iv) any restriction on the exercise of any such Company Option shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions of such Company Option shall otherwise remain unchanged; provided, however, that each Company Option assumed by Parent in accordance with this Section 2.1(e). Prior 1.6 shall, in accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or other similar transaction subsequent to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e).

Stock Options. (ia) At As of the Effective Time, by virtue of the Merger and without any action on the part of holders thereof, each option (an "Option") which has been granted under the 1990 Non-Qualified and Incentive Stock Option Plan, as amended, of Banner or the 1996 Non-Employee Director Stock Option Plan of Banner or the Stock Award Agreement for Phillipe Hercot dated September 13, 1996 (collectively, the "Option Plans") and is outstanding option entitling at the holder thereof to purchase shares of Company Common Stock pursuant to the Company Stock PlansEffective Time, other than the 2004 Employee Plan (each, a “Company Stock Option” whether or collectively “Company Stock Options”), to the extent not already fully vested and then exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned be assumed by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, Xxxxxxxxx and shall be converted into deemed to constitute an option to acquire Xxxxxxxxx Common Stock on the terms and shall become conditions as were applicable under the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock respective Option, without interest, in an amount except that (i) each Option shall be determined by multiplying (A) exercisable for the excess, if any, greatest number of whole shares of Xxxxxxxxx Common Stock equal to the Merger Consideration over the applicable per share exercise price product of such Company Stock Option, by (B) the number of shares of Company Banner Common Stock that are purchasable on exercise of subject to such Company Stock Option immediately prior to the Effective Time but subsequent multiplied by the Exchange Ratio; (ii) the exercise price per share of Xxxxxxxxx Common Stock shall be an amount equal to any acceleration the exercise price per share of vesting provided for Banner Common Stock specified under such Option in this Section 2.1(e)(i)effect immediately prior to the Effective Time divided by the Exchange Ratio (rounded up to the nearest whole cent) and (iii) each Option to the extent not then exercisable, less any mandatory tax withholdings (shall become exercisable in full at the “Option Payment”)Effective Time. At As soon as practicable after the Effective Time, all outstanding Company Stock Options (including any Company Stock Xxxxxxxxx shall deliver to each holder of an Option for which no payment an appropriate notice setting forth the holder's right to acquire shares of Xxxxxxxxx Common Stock, and the Option Agreements of each holder shall be due hereunder) deemed to be appropriately amended so that the Options shall be canceled and be of no further force or effect except for represent the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending the terms of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)rights set forth above.

Stock Options. (i) At the Effective Time, each outstanding option entitling the holder thereof (a “Company Option”) to purchase shares of Company Common Stock issued pursuant to the Company Company’s 2006 Stock Plans, other than the 2004 Employee Incentive Plan (eachthe “Stock Plan”) shall be assumed by Parent, a “Company on the same terms and conditions as were applicable under the Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, shall become fully vested and exercisable Plan immediately prior to consummation the Effective Time, except that: (i) the number of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent shares of Parent or Merger Sub, and shall be converted into and shall become the right Common Stock subject to receive, in full and complete satisfaction and cancellation thereof, a cash payment per each Company Stock Option, without interest, in an amount that Option shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of were subject to such Company Stock Option immediately prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(iby the Option Conversion Ratio (as defined below), less any mandatory tax withholdings and rounding the resulting number down to the nearest whole number of shares of Parent Common Stock; and (ii) the “per share exercise price for the shares of Parent Common Stock issuable upon exercise of each Company Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be determined by dividing the per share exercise price of no further force or Company Common Stock subject to such Company Option, as in effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior immediately prior to the Effective Time, by the Option Conversion Ratio; provided, however, that the exercise price and the number of shares of Parent Common Stock subject to each Company Option shall be determined in a manner consistent with the requirements of Section 409A of the Code to the extent applicable; and provided, further, that in the case of any Company Option to which Section 422 of the Code applies, the option price, the number of shares subject to such Company Option and the terms and conditions of exercise of such Company Option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. Any restriction on the exercise of any Company Option assumed by Parent shall continue in full force and effect and the term, exercisability and other provisions of such Company Option shall otherwise remain unchanged as a result of the assumption of such Company Option; provided, however, the Company Options that are accelerated at the Effective Time as a result of the Merger, as set forth in Schedule 2.3(a), shall be immediately exercisable after the Effective Time. The “Option Conversion Ratio” shall be equal to 0.72967. Notwithstanding anything to the contrary set forth herein or on Schedule 1.5(a), the Merger Consideration shall consist of an aggregate of 12,325,000 shares of Parent Common Stock which will include the conversion of all shares of Company Capital Stock and the reservation of all shares of Parent shall take all actions (including, if appropriate, amending the terms Common Stock required for assumption of the Company Options that have vested as of the Effective Time. Parent shall reserve for issuance a sufficient number of shares of Parent Common Stock Plans for delivery upon exercise of the Company Options assumed by Parent, which, as of the date hereof, are as set forth on Schedule 1.5(a) (such Schedule to be amended at or prior to Closing to reflect the issuance of any shares of Company Common Stock, whether by exercise of Company Options or otherwise, after the date hereof and related option agreements) that are necessary prior to give effect to the transactions contemplated by this Section 2.1(eClosing).”

Stock Options. Concurrently herewith the Company has granted to Employee options to acquire 500 shares of the Company's common stock which vest at a rate of 20% per year over the five year period commencing on Employee's first date of employment by the Company. In addition, the Company agrees to grant options to purchase up to an additional 500 shares of its common stock which will vest at a rate of 20% per year over the five year period commencing on the date of issuance (the "Additional Options") in such amounts (up to 100 shares per year) as shall be determined by the Company in its sole discretion based on Employee's annual review job performance review with the Chief Executive Officer of the Company. In the event the Company is acquired, goes public, or both of Xxxxxxxx Xxxxxxxx and Xxxxx Xxxxxxxxxx cease being executive officers of the Company, then (i) At the Effective Time, each outstanding option entitling the holder thereof all Additional Options granted to purchase shares Employee as of Company Common Stock pursuant to the Company Stock Plans, other than the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), to the extent not already fully vested and exercisable, such date shall be become fully vested and exercisable immediately prior (ii) the Company shall grant to consummation Employee fully vested additional options to purchase common stock of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying equal to 500 minus the sum of (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise covered by the Additional Options issued as of such Company Stock Option date, plus (B) for each year prior to such date an amount equal to 100 minus the Effective Time but subsequent number of Additional Options granted to any acceleration Employee with respect to such year. (For example, if the Company completes an Initial Public Offering in three years, and prior to such event the Company granted 100 Additional Options to Employee during the first year of vesting provided for in this Section 2.1(e)(i)Agreement, less any mandatory tax withholdings and 80 Additional Options during the second year, then all 180 Additional Options would immediately vest, and the Company would issue Employee 300 fully vested Additional Options at such time. In this scenario, the Employee would have been granted a total of 980 options (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment 500 signing + 180 granted during term + 300 granted at IPO.) All stock options granted pursuant hereto shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, the Company and Parent shall take all actions (including, if appropriate, amending granted under the terms of the Company Stock Plans and related Company's incentive stock option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)plan.

Stock Options. (i) At the Effective Time, each outstanding option entitling the holder thereof You are hereby granted options to purchase 250,000 shares of the Company's common stock at an exercise price equal to $2.85 (the closing price on November 7, 2005). One-third of such options (83,333) will vest on the first anniversary of the date of your employment, one-third of such options (83,333) will vest on the second such anniversary and the final one-third (83,334) will vest on the third anniversary. The exercise period for such option will be seven years and have such other terms as are set forth herein and in the Option Contract being executed this date and annexed as Exhibit A. All of your stock options will vest and become fully exercisable upon a sale of substantially all of the assets of the Company Common Stock pursuant or any sale or merger or other event that results in a change of control of the Company if such transaction occurs with an entity first introduced to the Company Stock Plans, other than after the 2004 Employee Plan (each, a “Company Stock Option” or collectively “Company Stock Options”), effective date hereof. Subject to approval by the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount that shall be determined by multiplying (A) the excess, if any, of the Merger Consideration over the applicable per share exercise price of such Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective TimeCompany's shareholders, the Company and Parent shall take all actions (including, if appropriate, amending the terms will grant you options to purchase an additional 250,000 shares of the Company Stock Plans and related option agreements) that are necessary to give effect Company's common stock at a price equal to the transactions contemplated fair market value of the Company's common stock on the date that the shareholders approve such additional options. If approved, these options will also vest over a three year period and will have the same provisions as the options described above. This will also confirm our agreement that in the event we both mutually agree, instead of the additional 250,000 options described above, the Company may provide you with additional compensation in an alternative form (e.g., "restricted stock"), subject to our mutual agreement with respect thereto. The foregoing is our entire agreement and may not be amended or changed except in a writing signed by this Section 2.1(e).the party against whom the same is sought to be enforced, shall be governed by the laws of New York, and any dispute hereunder shall be resolved solely in the Supreme Court of the State of New York, New York County or the United States District Court for the Southern District of New York. Each of the parties hereby agrees to the jurisdiction and venue of such courts with respect to all matters relating hereto. Please confirm our agreements below. Very truly yours, GLOBAL PAYMENT TECHNOLOGIES, INC. By: ---------------------------------- Name: -------------------------------- Title: ------------------------------- AGREED TO AND ACCEPTED AS OF THE EFFECTIVE DATE HEREOF: ------------------------------- Stephen Nevitt

Stock Options. The Company shall grant to Executive nonqualified stock options under the Technitrol, Inc. 2001 Stock Option Plan established under the Company's Incentive Compensation Plan (i"SOP") At or any successor plan thereto to purchase 360,000 shares of the Company's common stock ("Common Stock") on the Effective TimeDate (the "First Tranche") and, subject to the approval by the Company's shareholders of the amendments to and restatement of the SOP in a manner consistent with the terms set forth on Exhibit B, an additional 360,000 shares of Common Stock on the first anniversary of the Effective Date (the "Second Tranche" and, collectively with the First Tranche, the "Option Awards"). Each Option Award shall be granted at an exercise price as set forth in the SOP or any successor plan thereto. Except as provided in Section 8.2(b) of this Agreement, each outstanding option entitling Option Award shall vest in accordance with Section 8(a) of the holder thereof to purchase shares SOP or any successor plan thereto; provided, however, that the fourth and fifth sentences of Company Common Stock pursuant Section 8(a) of the SOP shall not apply to the Company Stock PlansOption Awards. The Option Awards shall be set forth in award agreements consistent with the terms and conditions of the SOP or any successor plan thereto, other than the 2004 Employee Plan (eachsubject, a “Company Stock Option” or collectively “Company Stock Options”)however, to the extent not already fully vested and exercisable, shall become fully vested and exercisable immediately prior to consummation terms of Section 8.5 of this Agreement. For purposes of Section 6 of the Merger, but excluding any Company Stock Options held or beneficially owned by Parent or Merger Sub SOP or any other Subsidiary or parent successor plan thereto, the First Tranche shall consist of Parent or Merger Sub, an issuance of options for 360,000 shares of Common Stock issued in connection with Executive's recruitment and the Second Tranche shall be converted into consist of issuances of options for 140,000 shares of Common Stock issued in connection with Executive's recruitment and shall become of options for 220,000 shares of Common Stock issued for the right to receive, fiscal year following the fiscal year in full and complete satisfaction and cancellation thereof, a cash payment per Company Stock Option, without interest, in an amount which the Effective Date has occurred. In the event that shall be determined by multiplying (A) the excess, if any, shareholders of the Merger Consideration over Company do not approve the applicable per share exercise price amendments to and restatement of such the SOP at the Company's 2010 Annual Meeting, then the Executive and the Company Stock Option, by (B) the number of shares of Company Common Stock that are purchasable on exercise of such Company Stock Option prior will consult one another in good faith and will use their reasonable best efforts to the Effective Time but subsequent to any acceleration of vesting provided for in this Section 2.1(e)(i), less any mandatory tax withholdings (the “Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled and be of no further force or effect except arrive at a mutually agreeable substitution for the right to receive the cash Option Payment to the extent provided in this Section 2.1(e). Prior to the Effective Time, Second Tranche which would put the Company and Parent shall take all actions (including, if appropriate, amending the terms Executive in substantially the same positions they would have been in had the shareholders approved the amendments to and restatement of the Company Stock Plans and related option agreements) that are necessary to give effect to the transactions contemplated by this Section 2.1(e)SOP.

Stock Options. (ia) At the Effective Time, each outstanding option entitling all employee stock options (the holder thereof "Employee Options") to purchase shares of Company Common Stock pursuant to under the Company Company's 1997 Stock Plans, other than the 2004 Employee Option Plan (each, a “Company Stock Option” or collectively “Company Stock Options”the "Employee Option Plan"), to the extent not already fully vested which are then outstanding and exercisableunexercised, shall become fully vested and exercisable immediately prior cease to consummation represent a right to acquire shares of the Merger, but excluding any Company Common Stock Options held or beneficially owned by Parent or Merger Sub or any other Subsidiary or parent of Parent or Merger Sub, and shall be converted automatically into options to purchase shares of Parent Common Stock, and Parent shall become assume each such Employee Option subject to the right to receive, in full and complete satisfaction and cancellation terms thereof, a cash payment per Company Stock Option, without interest, including but not limited to the accelerated vesting of such options which shall occur in an amount that shall be determined connection with or by multiplying (A) the excess, if any, virtue of the Merger Consideration over as and to the applicable per share extent required by the Employee Option Plan and agreements governing such Employee Options; provided, however, that from and after the Effective Time, (i) the number of shares of Parent Common Stock purchasable upon exercise price of such Company Stock Option, by (B) Employee Option shall be equal to the number of shares of Company Common Stock that are were purchasable on exercise of under such Company Stock Employee Option immediately prior to the Effective Time but subsequent multiplied by the Exchange Ratio, and rounding to any acceleration of vesting provided for in this Section 2.1(e)(i)the nearest whole share, less any mandatory tax withholdings and (ii) the “per share exercise price under each such Employee Option Payment”). At the Effective Time, all outstanding Company Stock Options (including any Company Stock Option for which no payment shall be due hereunder) shall be canceled adjusted by dividing the per share exercise price of each such Employee Option by the Exchange Ratio, and be of no further force or effect except for the right to receive the cash Option Payment rounding down to the extent provided nearest cent. The terms of each Employee Option shall, in this Section 2.1(e). Prior accordance with its terms, be subject to further adjustment as appropriate to reflect any stock split, stock dividend, recapitalization or other similar transaction with respect to Parent Common Stock on or subsequent to the Effective Time. Notwithstanding the foregoing, the Company and Parent shall take all actions each Employee Option which is intended to be an "incentive stock option" (including, if appropriate, amending the terms as defined in Section 422 of the Company Stock Plans and related option agreementsInternal Revenue Code, as amended (the "Code")) that are necessary shall be adjusted in accordance with the requirements of Section 424 of the Code. Accordingly, with respect to give effect any incentive stock options, fractional shares shall be rounded down to the transactions contemplated by this Section 2.1(e)nearest whole number of shares and where necessary the per share exercise price shall be rounded down to the nearest cent.