Common use of Stock Options Clause in Contracts

Stock Options. (i) Prior to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any of the 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 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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. As of August 22, 2005 (ithe "Grant Date"), you shall be granted a non-qualified stock option (the "Extension Options") Prior to purchase 532,717 shares of Common Stock, pursuant to the Merger 1 Effective Timeterms 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 Option Agreement"), which, except as otherwise provided in this Section 4, shall be substantially identical to the Retention Stock Option Agreement. For purposes of the Employment Agreement (including without limitation Sections 7 and 11 thereof), the Company Extension Options shall offer to cancel, effective immediately prior be treated identically to the Merger 1 Effective Time, any of Retention Options. The Extension Options shall have an exercise price equal to the 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 fair market value per share of Company Common Stock subject to such Company as of the Grant Date and shall have a term of 10 years. The Extension Options shall become exercisable in three cumulative installments as follows: (each such payment, an “Option Cancellation Payment”)a) 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, howeverthat, that except as otherwise provided in Section 7 of the Employment Agreement or the Extension Stock Option Agreement, no event portion of the Extension Options not then exercisable shall become exercisable following your termination of employment for any reason. (For the Option Cancellation Payments exceed $1,000,000 in avoidance of doubt, if your employment shall terminate by reason of your Disability or death, then Section 7(d) of the aggregate. To facilitate Employment Agreement shall apply to the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materialsExtension Options.) in such form as Parent You and the Company acknowledge and agree that the Extension Options shall mutually agree (an “Option Cancellation Agreement”) shall be distributed to each holder not provide for the grant of a Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide that, upon execution by any "Restoration Options" as defined in 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersStock Incentive Plan.

Stock Options. (i) Prior to Contemporaneous with the Merger 1 Effective Timecommencement of the Offer, the Company shall offer request each holder of Company Employee Stock Options (whether or not such Company Employee Stock Options are vested as of the date of this Agreement) to cancelexecute and deliver to the Company, effective prior to the expiration of the Offer, an agreement in the form specified by Parent (an "Option Election") under which such holder would agree, contingent upon the purchase of shares of Company Common Stock by Sub in the Offer, to cause, with effect as of immediately prior to the Merger 1 Effective Time, any expiration of the Company Options granted under the Company Stock Plans (a “Cancellation Offer”) in exchange for the payment of an amount , such Option to be determined by exercised and the Company up to $0.20 per share shares of Company Common Stock subject issued as a result of that exercise 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 be tendered in the aggregateOffer. To facilitate the foregoingextent permitted by law, an option cancellation agreement (and 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 advance to each holder of Company Employee Stock Options who executes and delivers a Company valid Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide that, upon execution by Election the holder funds necessary for the exercise of such Company Option Employee Stock Options and delivery of the funds so advanced shall be deducted from the amount payable to such Option Cancellation Agreement holder pursuant 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 TaxesOffer. The Option Cancellation Agreement will include a release Company, Parent and Sub shall take such further actions as may be necessary to accommodate such advancement of claims against the Company funds, exercise, issuance, tender and payment with respect to each such valid Option Election. Prior to the commencement of the Offer, the Company Board shall adopt such resolutions or take such other actions as are required to elect the 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 Options. The Board action, shall cause the Company to deliver, contemporaneously with the delivery to each holder of Directors Company Employee Stock Options of the Company shall adopt all appropriate resolutions request to execute and take all other actions necessary with respect to deliver 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 not exercised by such date, they shall be terminated as of the Effective Time. All amounts payable pursuant to this Section 7.04 shall be subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements any required withholding of Taxes and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offerspaid without interest.

Stock Options. (i) Prior to At the Merger 1 Effective Time, each holder of a then-outstanding option to purchase 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 shall offer to canceland Green Equity Investors, effective immediately prior to the Merger 1 Effective Time, any of L.P. and all other agreements with the Company Options granted under and its employees and Directors (collectively, the Company "Stock Plans Option Plans") (a “Cancellation Offer”) in exchange for the payment true and correct copies of an amount to be determined which have been delivered by the Company up to $0.20 per Parent), whether or not then exercisable (the "Compensation Options"), shall, in settlement thereof, receive for each share of Company Common Stock subject to such Company Options Compensation Option an amount (each subject to any applicable withholding tax) in cash equal to the difference between the Merger Price and the per share exercise price of such paymentCompensation Option to the extent such difference is a positive number (such amount being hereinafter referred to as, an “the "Option Cancellation Payment”Consideration"); provided, however, that in no event shall . Upon receipt of the Option Cancellation Payments exceed $1,000,000 in Consideration, the aggregate. To facilitate the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Compensation Option Cancellation Agreement”) shall be distributed to each holder canceled. The surrender of a Company Compensation 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 exchange for the provisions set forth herein, such Company Option Consideration shall be cancelled deemed a release of any and all rights the holder had or may have had in accordance with its terms, effective immediately prior respect of such Compensation Option. Prior to the Merger 1 Effective Time, the Company shall obtain all necessary consents or releases from holders of Compensation Options under the Stock Option Plans and take all such other lawful action as may be necessary to give effect to the transactions contemplated by this Section 3.01(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 holder provisions in any other plan, program or arrangement providing for the issuance or grant of such any other interest in respect of the capital stock of the Company Optionor, in cancellation and settlement thereforany Subsidiary thereof, shall be entitled to an Option Cancellation Payment reduced by any applicable withholding Taxes. The Option Cancellation Agreement will include a release canceled as of claims against the Company with respect to such Company Options. The Board of Directors of Effective Time; and (ii) the Company shall adopt all appropriate resolutions 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 take all other actions necessary with respect to the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer by the Company shall be on all 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 offersplans.

Stock Options. (i) Prior to the Merger 1 Effective Time, the Company and Parent shall offer take such action as may be necessary to cancelcause each unexpired and unexercised option to purchase shares of Company Common Stock (each, effective 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 Merger 1 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, any including the date of grant. At the Company Options granted under Effective Time, (1) all references in the Company Stock Option Plans (a “Cancellation Offer”) and in exchange for the payment of an amount related stock option agreements to be determined by the Company up shall be deemed to $0.20 per share refer to Parent and (2) Parent shall assume all of the Company's obligations with respect to Company Options as so amended. Promptly after the Effective Time, to the extent necessary to provide for registration of shares of Parent Common Stock subject to such Company Options Options, Parent shall file a registration statement on Form S-8 (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 other appropriate and customary information and transmittal materialsor any successor form) 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 shares of Parent Common Stock and shall use its best efforts to maintain such registration statement (or any successor form), including the current status of any related prospectus or prospectuses, for so long as the Company OptionsOptions remain outstanding. The Board of Directors None of the Company shall adopt all appropriate resolutions and take all other actions necessary with respect to Options are "incentive stock options" within the Company Options subject to an Option Cancellation Agreement, to terminate meaning of Section 422 of the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersCode.

Stock Options. The Company shall establish an incentive stock option plan for the executives, employees and directors of the Company (i) Prior the "Plan"). The participants in the Plan shall be entitled to purchase, pursuant to the Merger 1 Effective Timeoptions to be granted thereunder (which may be "incentive stock options" within the meaning of Section 422(b) of the Internal Revenue Code, or non-incentive stock options) an aggregate number of shares of 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 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 offer register the Common Stock to cancelbe issued upon exercise of the options to be granted thereunder for sale by the Company, effective immediately prior and for resale by holders thereof, pursuant to the Merger 1 Effective TimeSecurities Act of 1933, any 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 Company Options Executive, shall be entitled to purchase, pursuant to the options to be granted under the Company Plan an aggregate number of shares of Common Stock Plans (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 “Cancellation Offer”) in exchange for the payment set of an amount pre-determined earnings, revenue and other performance targets to be determined formulated mutually 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 other appropriate and customary information and transmittal materials) in such form as Parent Executive and the Company shall mutually agree Board or the committee administering the Plan (an “Option Cancellation Agreement”) the "Performance Targets"). The term of such options shall be distributed to each holder the 51 month period commencing on the date of a Company Option to whom a Cancellation Offer is madecommencement of the Employment Period. The Option Cancellation Agreements Plan and such options shall provide that, upon execution by the holder 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 Company Option and delivery event had occurred on the last day 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 thereforthen current Review Period, shall be entitled exercisable by the Executive, or by the person or persons to an Option Cancellation Payment reduced whom such options shall pass by any 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 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 conditions to the Company Options subject exercise of such options shall have been satisfied on or before the date of exercise thereof. Each option granted pursuant to an Option Cancellation Agreementthe Plan shall also contain such other terms, limitations and conditions as the Board or the committee administering the Plan shall deem appropriate pursuant to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i)the Plan. Any Cancellation Offer by In the Company event that the Company's shareholders fail to authorize the Plan, the options to be granted hereunder shall be on such issued as non-Plan options in accordance with, and subject to all of the foregoing 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 offersconditions.

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) Prior to the Merger 1 Effective Time(each, an "Option," and collectively, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any of the 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 other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation Agreement”"Options") shall be distributed to hereby amended such that 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 deemed fully vested as of the Effective Date, and shall 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 Plans"). Mr. Sowar understands that this amendment and/or his exercise of cerxxxx xx xhe Options more than 90 days after the termination of his employment may affect their characterization as "Incentive Stock Options" and the application of certain preferential tax treatment afforded to holders of such Incentive Stock Options, 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 fair opportunity to do so, and further acknowledges and agrees that he has not relied on any information or advice provided by PlanetCAD or any representative, agent or attorney thereof relating to any matterpertaining to this Agreement, including particularly but without limitation the legal and tax issues relating to the Options and the amendment thereof. Except as specifically stated in this paragraph, the Options shall remain in force and effect in accordance with its terms, effective immediately prior to the Merger 1 Effective Timewith, and subject to, 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer by the Company shall be on such terms and conditions as are reasonably acceptable to Parent stated in the Option Agreements and shall comply in all material respects with applicable federal and state securities laws, including, if necessary, the rules applicable to tender offers.Plans

Stock Options. (a) Subject to Section 5.4(b), at the Effective Time, all rights with respect to Company Common Stock under each Company Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each such Company Option in accordance with the 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) Prior 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 each such Company Option shall be equal to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any number of the 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 shares of Company Common Stock subject to such Company Options Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounding down to the nearest whole share, (iii) the per share exercise price under each such paymentCompany 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, an “and (iv) any restriction on the exercise of any such Company Option Cancellation Payment”)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 in no event shall the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and 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 assumed by the holder of such Company Option and delivery of such Option Cancellation Agreement to the Company Parent in accordance with the provisions set forth hereinthis Section 5.4(a) shall, such Company Option shall be cancelled in accordance with its terms, effective immediately prior 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 the Merger 1 Effective Time. Parent shall file with the SEC, and no later than 10 business days after the holder date on which the Merger becomes effective, a registration statement on Form S-8 relating to the shares 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 Parent Common Stock issuable with respect to the Company Options subject to an Option Cancellation Agreement, to terminate and the relevant individual option agreements and cancel the relevant Company ESPP Options as necessary to effectuate the provisions of assumed by Parent in accordance with this Section 1.6(d)(i5.4(a). 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. 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) an amount in cash equal to (A) the Cash Consideration payable to the holder of one share of Company Common Stock pursuant to Section 2.01(c)(i) assuming such Option had been exercised immediately prior to the Effective Time minus (B) the exercise price of such Option (the "Exercise Difference"), plus (ii) certificates representing that number of Parent Shares that the holder of one share of Company Common Stock would have the right to receive pursuant to Section 2.01(c)(ii) assuming such Option had been exercised prior to the 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 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 Merger 1 Effective Time, the Company shall offer use its reasonable best efforts to cancelobtain such consents, effective immediately prior if any, from the holders as are required to cancel the Options. All applicable withholding taxes attributable to the Merger 1 Effective Timepayments made hereunder or to distributions contemplated hereby shall, any at the election of the Company Options granted holders of any Option, first be deducted from the amount, if any, payable under clause (i) of the Company Stock Plans (a “Cancellation Offer”) in exchange for the payment of an preceding sentence and, if such amount is insufficient 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 satisfy the Option Cancellation Payments exceed $1,000,000 in holder's tax withholding liability, thereafter, at the aggregate. To facilitate election of Parent, the foregoingParent shall (x) use its reasonable best efforts (including, an option cancellation agreement (without limitation, by preparing and other appropriate filing any registration statement and customary information and transmittal materials) in by causing such form as Parent registration statement to become effective), and the Company shall mutually agree cooperate in seeking, as of the Effective Time, standby purchasers for Parent Shares for the holders of Options or (an “Option Cancellation Agreement”y) 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 reduce the holder Stock Consideration payable in respect of such Company Option and delivery of such Option Cancellation Agreement Options by an amount equal in value to the Company in accordance with amount of the provisions set forth herein, such Company Option shall be cancelled in accordance with its terms, effective immediately 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 Merger 1 Effective Time, Time and the holder a value of such Company Option$9.75 per share, in cancellation and settlement therefor, shall be entitled each case to an Option Cancellation Payment reduced by any enable such holder to pay applicable withholding Taxestaxes. The Except as provided herein or as otherwise agreed to by the parties and to the extent permitted by the Stock Option Cancellation Agreement will include a release of claims against the Company with respect to such Company Options. The Board of Directors of Plans, the Company shall adopt all appropriate resolutions and take all other actions necessary with respect to cause the Company Options subject to an Stock Option Cancellation Agreement, Plans to terminate as of the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersEffective Time.

Stock Options. (ia) Prior to On the Merger 1 Effective TimeEmployment Date, the Company will enter into an incentive stock option agreement with Employee providing for the grant of incentive options effective on the Employment Date, under the Company's stock option plan (which plan, to 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 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 offer 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 cancelpromptly register on Form S-8 under the Act, effective immediately all shares issuable pursuant to the options granted to Employee under this Section 13(a), but not prior to achieving the Financing Goal. On each May 1 (provided Employee is 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 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 exercisable, had been exercised. For purposes of the preceding sentence, if Employee has not obtained a 10% interest in the Company's common stock prior to the Merger 1 Effective Time, any expiration of three years from the Company Options granted under the Company Stock Plans (a “Cancellation Offer”) in exchange for the payment of an amount Employment Date then Employee will be deemed to be determined by the Company up to $0.20 per share of Company Common Stock subject to have obtained 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 10% interest in the aggregate. To facilitate Company's common stock at the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and expiration of three years from 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersEmployment Date.

Stock Options. (a) At the Effective Time, all rights with respect to Company Common Stock under each Company Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each such Company Option in accordance with the 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) Prior 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 each such Company Option shall be equal to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any number of the 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 shares of Company Common Stock subject to such Company Options Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounding down to the nearest whole share, (iii) the per share exercise price under each such paymentCompany 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, an “exercisability, vesting schedule and other provisions of such Company Option Cancellation Payment”)shall otherwise remain unchanged, 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 in no event shall the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and 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 assumed by the holder of such Company Option and delivery of such Option Cancellation Agreement to the Company Parent in accordance with the provisions set forth hereinthis Section 5.4(a) shall, such Company Option shall be cancelled in accordance with its terms, effective immediately prior 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 Merger 1 Effective Time. Parent shall file with the SEC, and no later than 30 days after the holder date on which the Merger becomes effective, a registration statement on Form S-8 relating to the shares 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 Parent Common Stock issuable with respect to the Company Options subject assumed by Parent in accordance with this Section 5.4(a). Notwithstanding any of the foregoing to an Option Cancellation Agreementthe contrary, to terminate the relevant individual option agreements and cancel the relevant in lieu of assuming outstanding Company Options, Parent may, at its election, cause such outstanding Company Options as necessary to effectuate the provisions of this Section 1.6(d)(ibe replaced by issuing replacement stock options in substitution therefor (each, a "Substitute Option"). Any Cancellation Offer 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 on such terms and conditions subject to further adjustment as are reasonably acceptable appropriate to Parent and shall comply in all material respects with applicable federal and state securities lawsreflect any stock split, includingstock dividend, if necessaryreverse stock split, reclassification, recapitalization or other similar transaction subsequent to the rules applicable to tender offersEffective Time.

Stock Options. (a) At the Effective Time 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 under the Company Stock Plans, whether vested or unvested (a “Company Option”), shall be assumed by Parent in accordance with the terms (as in effect as of the 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 shall thereupon be converted into a right to receive cash and Parent Common Stock. Accordingly, from and after the Effective Time of Merger I, (i) Prior each Assumed Company Option may be exercised solely for cash and shares of Parent Common Stock with respect to the Merger 1 Effective TimeAssumed Company Option, (ii) the amount of cash subject to each Assumed Company Option shall equal the difference between (A) the product of the Company Common Cash Conversion Ratio multiplied by the Company 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 offer equal the product of the Company Common Stock Conversion Ratio multiplied by the Company Option Shares, (iv) the per share exercise price applicable to canceleach 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, effective immediately 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 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 of Merger 1 Effective Time, any of the I. The Company Options granted and Parent shall take all commercially reasonable action that may be necessary (under the Company Stock Plans (a “Cancellation Offer”and otherwise) 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 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i1.6(a). Any Cancellation Offer by 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 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, issued upon the rules applicable to tender offers.exercise of the 8. Table of Contents

Stock Options. (ia) Prior to At the Merger 1 Effective Time, each option granted by the Company shall offer to cancelpurchase shares of Company Common Stock (each a “Company Option”) which was granted pursuant to any stock option plan, effective program or arrangement of the Company as set forth on Section 3.2 the Company Disclosure Letter (collectively, the “Company Option Plans”), that is outstanding and unexercised immediately prior to the Merger 1 Effective Time, any of the Company Options granted under the Company Stock Plans (Time shall cease to represent a “Cancellation Offer”) in exchange for the payment of an amount right to be determined by the Company up to $0.20 per acquire share of Company Common Stock Stock, and Parent shall assume each such Company Option (hereafter, “Assumed Option”) subject to the terms of the applicable Company Option Plan and the agreement evidencing the grant thereunder of such Company Options (each such payment, an “Option Cancellation Payment”)Assumed Option; provided, however, that in no event shall the (i) the number of shares of Parent Common Stock purchaseable upon such exercise of such Assumed Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and 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 equal to each holder the number of a shares of Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide that, upon execution by the holder of Common Stock that were purchasable under 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 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 of its affiliates (including Parent and its Subsidiaries). In the case of any Assumed Option that is an “incentive stock option” (as defined in Section 422 of the Code), the exercise price, the number of shares of Parent Common Stock purchasable pursuant to such Assumed Option and the terms and conditions of exercise of such option shall be determined in order to comply, to the fullest extent possible, with Section 424(a) of the Code. Prior to the Effective Time, Parent shall prepare and file with the SEC a registration statement on Form S-8 (or other appropriate form) registering all the shares of Parent Common Stock subject to the Assumed Options, and such registration statement shall be kept effective (and the holder current status of such Company Option, in cancellation and settlement therefor, the prospectus or prospectuses required thereby shall be entitled to an maintained) as long as any Assumed 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersremains outstanding.

Stock Options. (ia) 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 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 agreements, a number of shares of Parent Common Stock (a "Substitute Option") equal to the number of shares of Company 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 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 pursuant to such option and the terms and conditions of exercise of such 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 Plans) or similar event with respect to the options listed on Section 3.6 of the Company Disclosure Schedule, and that the vesting of such options shall therefore become accelerated as a result of the Merger. Prior to the Merger 1 Effective Time, the Company shall offer take such additional actions as are necessary under applicable law and the applicable agreements and Option Plans to cancelensure that each outstanding Option shall, effective immediately prior to from and after the Merger 1 Effective Time, any of represent only the Company Options granted under the Company Stock Plans (a “Cancellation Offer”) in exchange for the payment of an amount right 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 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 thatpurchase, upon execution by the holder exercise, shares 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersCommon Stock.

Stock Options. (a) Subject to Section 5.4(b), at the Effective Time, all rights with respect to Company Common Stock under each Company Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each such Company Option in accordance with the 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) Prior 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 each such Company Option shall be equal to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any number of the 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 shares of Company Common Stock subject to such Company Options Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole share (each such paymentwith cash, an “Option Cancellation Payment”); providedless the applicable exercise price, 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 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 being payable for any fraction of a Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide thatshare), upon execution by (iii) the holder of such Company Option and delivery of such Option Cancellation Agreement to the Company in accordance with the provisions set forth herein, per share exercise price under each such Company Option shall be cancelled 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 (A) in accordance with the 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, (B) in accordance with the terms of that certain Employment Agreement between Xxxxxx X. Xxxxx and the Company 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, (C) in accordance with the terms of the Company's 1995 Directors Stock Option Plan, unvested Company Options granted to outside directors of the Company pursuant to such plan shall become immediately exercisable as of the Effective Time, and (D) each Company Option assumed by Parent in accordance with this Section 5.4(a) shall, in accordance with its terms, effective immediately prior 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 Merger 1 Effective Time. Parent shall file with the SEC, and no later than five business days after the holder date on which the Merger becomes effective, a Registration Statement on Form S-8 relating to the shares 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 Parent Common Stock issuable with respect to the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of assumed by Parent in accordance with this Section 1.6(d)(i5.4(a). 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. (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 offer to canceltake all actions (including, effective immediately prior to if appropriate, amending the Merger 1 Effective Time, any terms of the Company Options granted under the Company Stock Plans (a “Cancellation Offer”and related option agreements) in exchange for the payment of an amount that are necessary 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 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 give effect 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 transactions contemplated 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i2.1(e). 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) Prior to the Merger 1 Effective Time, the Board shall take all necessary actions so that each option to purchase shares of Company shall offer Common Stock granted by the Company, whether granted pursuant to cancelthe Company Option Plan (individually, effective a “Company Plan Option”) or otherwise (collectively, including all Company Plan Options, the “Company Options”) that is outstanding immediately prior to the Merger 1 Effective Time, any whether vested or unvested, shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each Company Option, in accordance with the terms of the Company Options granted Option Plan and/or stock option agreement by which it is evidenced, except that from and after the Effective Time, (i) Parent and its compensation committee shall be substituted for the Company and the compensation committee of the Board (including, if applicable, 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 terms of such Company Option), (iii) the number of shares of Parent Common Stock Plans (a “Cancellation Offer”) in exchange for subject to such Company Options shall be equal to the payment number of an amount to be determined by the Company up to $0.20 per share shares of Company Common Stock subject to such Company Options (each such payment, an “Option Cancellation Payment”); provided, however, that in no event shall immediately prior to the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and 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 Effective Time multiplied by the holder of such Company Option and delivery of such Option Cancellation Agreement Exchange Ratio, rounded down to the Company in accordance with nearest whole share, and (iv) the provisions set forth herein, per share exercise price under each such Company Option shall be cancelled in accordance with its terms, effective immediately prior adjusted by dividing the per share exercise price under each such Company Option by the Exchange Ratio and rounding up to the Merger 1 Effective Timenearest cent. In addition, notwithstanding the provisions of clauses (iii) and (iv) of the first sentence of this Section ‎1.8(a), each Company Option that is an “incentive stock option” or a nonqualified stock option held by a U.S. taxpayer shall be adjusted as required by Section 424 of the Code and Section 409A of the Code and the holder Treasury Regulations thereunder, so as not to constitute a modification, extension or renewal of such Company Optionthe option, within the meaning of Section 424(h) of the Code and the Treasury Regulations under Section 409A of the Code, or otherwise result in cancellation and settlement therefor, shall be entitled to an Option Cancellation Payment reduced by any applicable withholding Taxesnegative Tax treatment or penalties under Section 424 of the Code or Section 409A of the Code. The Option Cancellation Agreement will include a release of claims against the Company with respect to such Company Options. The Board of Directors Each of the Company and Parent shall adopt any and 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 and cancel the relevant Company Options as necessary steps to effectuate the foregoing provisions of this Section 1.6(d)(i‎1.8(a). 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. (a) At the Effective Time, all rights with respect to Company Common Stock under each Company Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each such Company Option in accordance with the 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) Prior 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 each such Company Option shall be equal to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any number of the 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 shares of Company Common Stock subject to such Company Options Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounded down to the nearest whole share, (iii) the per share exercise price under each such paymentCompany 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 restriction on the exercise of any such Company Option shall continue in full force and effect and the term, an “exercisability, vesting schedule and other provisions of such Company Option Cancellation Payment”)shall otherwise remain unchanged; 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 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 assumed by the holder of such Company Option and delivery of such Option Cancellation Agreement to the Company Parent in accordance with the provisions set forth hereinthis Section 5.4(a) shall, such Company Option shall be cancelled in accordance with its terms, effective immediately prior 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 Merger 1 Effective Time. Parent shall file with the SEC, and promptly after the holder date on which the Merger becomes effective, a registration statement on Form S-8 relating to the shares 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 Parent Common Stock issuable with respect to the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of assumed by Parent in accordance with this Section 1.6(d)(i5.4(a). 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. (a) Subject to Section 5.5(b), at the Effective Time, all rights with respect to Company Common Stock under each Company Option then outstanding, except for Company Options outstanding under the Company's Non-Employee Directors' Stock Option Plan, shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each such Company Option in accordance with the terms (as in effect as of the date of this Agreement or, for Company Options granted after the date hereof, as in effect on the date of such grants) of the Stock Plan under which it was issued and or the terms of the stock option agreement by which it is evidenced. From and after the Effective Time, (i) Prior 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 each such Company Option shall be equal to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any number of the 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 shares of Company Common Stock subject to such Company Options (each such payment, an “Option Cancellation Payment”); provided, however, that in no event shall immediately prior to the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and 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 Effective Time multiplied by the holder of such Company Option and delivery of such Option Cancellation Agreement Exchange Ratio, rounding down to the Company in accordance with nearest whole share, (iii) the provisions set forth herein, per share exercise price under each such Company Option shall be cancelled 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 accordance with its termsfull force and effect and the term, effective exercisability, vesting schedule and other provisions of such Company Option shall otherwise remain unchanged. All Company Options granted and outstanding under the Company's Non-Employee Directors' Stock Option Plan shall terminate 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 rights of claims against participants in the Company ESPP with respect to the offering period beginning June 1, 2001 under the Company ESPP shall continue in effect until such offering period terminates on March 31, 2002 pursuant to the Company Options. The Board of Directors ESPP provided, however, if the stockholders of the Company do not approve an increase of 500,000 shares of Company Common Stock under the Company ESPP at the Company's Annual Meeting of Stockholders on May 22, 2001, the Company shall adopt all appropriate resolutions terminate the Company ESPP and take all other actions necessary any outstanding offering periods prior to the Effective Time. Parent shall file with the SEC, no later than 20 days after the date on which the Effective Time occurs, a registration statement on Form S-8 relating to the shares of Parent Common Stock issuable with respect to the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of assumed by Parent in accordance with this Section 1.6(d)(i5.5(a). 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. (i) Prior to At the Merger 1 Effective Time, the Company's obligations with respect to each outstanding Company Stock Option (as defined in Section 3.3) to purchase shares of Company Common Stock, as amended in the manner described in the following sentence, shall offer be assumed by Red Cannxx. Xxe Company Stock Options so assumed by Red Cannxx xxxll continue to cancelhave, effective and be subject to, the same terms and conditions as set forth in the stock option plans and agreements pursuant to which such Company Stock Options were issued and any other agreements evidencing such options, as in effect immediately prior to the Merger 1 Effective Time, except that from and after the Effective Time each such Company Stock Option shall be exercisable for that number of whole shares of Red Cannxx Xxxmon 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 up to the nearest whole number of shares of Red Cannxx Xxxmon Stock, with an exercise price per share equal to the exercise price per share of such 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 any of the Company Options granted under requirements of Section 421 of the Code, the option price, the number of shares purchasable pursuant thereto and the terms and conditions of exercise thereof shall be determined in order to comply with Section 424(a) of the Code. Red Cannxx xxxll (i) reserve for issuance the number of shares of Red Cannxx Xxxmon Stock that will become issuable upon the exercise of such Company Stock Plans Options pursuant to this Section 2.4, (a “Cancellation Offer”ii) in exchange for promptly after the payment Effective Time issue to each holder of an amount outstanding Company Stock Option a document evidencing the assumption by Red Cannxx xx the Company's obligations with respect thereto under this Section 2.4, and (iii) promptly after the Effective Time, prepare and file a registration statement on Form S-8 (or any successor or other appropriate forms) with respect to be determined by the Company up to $0.20 per share shares of Company Common Red Cannxx Xxxmon Stock subject to such Company Stock Options (each and maintain the effectiveness of 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 registration statement (and other appropriate and customary information and transmittal materials) in such form as Parent and maintain 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 current status of the Company prospectus contained therein) for so long as such options remain outstanding and cause such shares to be approved for quotation on Nasdaq. Nothing in this Agreement shall adopt all appropriate resolutions and take all other actions necessary accelerate the exercisability or affect the schedule of vesting with respect to the Company Stock Options subject to an Option Cancellation Agreementor, to terminate the relevant individual option agreements and cancel the relevant Company Options except as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer by the Company shall be set forth 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 necessarySCHEDULE 4.2, the rules applicable to tender offersRed Cannxx Xxxck Options (as defined in Section 4.2).

Stock Options. (ia) Prior At the Effective Time, each outstanding option, warrant or other right to purchase Shares (a "Company Stock Option" and collectively, "Company Stock Options") issued pursuant to the 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 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 1 Effective Timehad such holder exercised such Company Stock Option, the Company shall offer to cancelwhether or not vested, effective in full immediately prior to the Merger 1 Effective TimeTime rounded to the nearest whole share at a price per share, any of rounded to the Company Options granted under nearest whole cent, equal to 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 exercise price per share of Company Common Stock subject Share pursuant to such Company Options (each such payment, an “Stock Option Cancellation Payment”)immediately prior to the Effective Time divided by the Exchange Ratio; provided, however, that in no event shall the Option Cancellation Payments exceed $1,000,000 in case of any option to which Section 421 of the aggregate. To facilitate Code applies by reason of its qualification under Sections 422 through 424 of the foregoingCode, an the option cancellation agreement (and other appropriate and customary information and transmittal materials) in price, the number of shares purchasable pursuant to such form as Parent option and the Company shall mutually agree (an “Option Cancellation Agreement”) terms and conditions of exercise of such option shall be distributed adjusted as necessary in order to each holder comply with Section 424(a) of a the Code. (b) As soon as practicable after the Effective Time, Parent shall deliver to the holders of Company Option Stock Options appropriate notices setting forth such holders' rights pursuant to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide that, upon execution by the holder Company Plans and that the agreements evidencing the grants of such Company Option Stock Options shall continue in effect on the same terms and delivery 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 Plans and ensure, to the extent required by and subject to the provisions of such Option Cancellation Agreement Plans, that Company Stock Options that qualified as incentive stock options prior to the Effective Time continue to qualify as incentive stock options of Parent after the Effective Time . (c) At or before the Effective Time, 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 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 Parent shall, if no registration statement is in effect covering such Company OptionParent shares, in cancellation and settlement therefor, shall be entitled to an Option Cancellation Payment reduced by file a registration statement on Form S-8 (or 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 successor or other appropriate resolutions and take all other actions necessary forms) with respect to the Company Options shares of Parent Common Stock subject to an Option Cancellation Agreementany Company Stock Options held by all persons with respect to whom registration on Form S-8 is available and shall use all commercially reasonable 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 options remain outstanding. (d) At or before the Effective Time, the Company shall cause to be effected, in a manner reasonably satisfactory to Parent, such amendments, if any, to terminate the relevant individual option agreements and cancel the relevant Company Options as Plans that are necessary to effectuate give effect to the foregoing provisions of this Section 1.6(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 offers1.11.

Stock Options. (i) Prior to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any Board of Directors of the Company Options (or, if appropriate, any committee thereof) shall adopt appropriate resolutions and take all other actions necessary to provide that each employee, consultant or director of the Company (each, an "Option Holder") who has been granted an option to acquire shares of Common Stock ("Options") under the Company Huckleberry 1993 Stock Plans Option Plan (a “Cancellation Offer”the "1993 Plan") in exchange for or the payment of an amount to be determined by Huckleberry Director Option Plan (the Company up to $0.20 per share of Company Common Stock subject to such Company Options (each such payment"Director Plan," and together with the 1993 Plan, 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 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 Plans") which is made. The Option Cancellation Agreements outstanding at such time shall provide thatreceive notice (the "Notice"), 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 hereinof the Company Option Plans, that such Option, whether or not 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 be no later than the Effective Time (the "Exercise Period"). The duration of the Exercise Period shall be determined in accordance with the provisions of the Company Option Plan under which the Option was granted, the exercisability of any such Option shall be cancelled contingent upon the occurrence of the Merger (except in accordance with its terms, effective the case of an Option which is already exercisable without regard to the accelerated exercisability provided by the Notice) and the actual exercise of each such Option shall not occur until 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 (or committee) shall also adopt all appropriate resolutions and take all other actions necessary with respect 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 such Option, including allowing for cashless exercise by the Option Holders whereby Options subject would be converted to an Option Cancellation AgreementCommon Stock without payment of cash. At the Effective Time, all Exercise Periods shall expire and all Options shall be terminated. Notwithstanding anything herein to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer by contrary, (i) the Company shall submit the form of all Notices to be on such terms and conditions as are reasonably acceptable 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 comply be delivered to each Option Holder in all material respects with applicable federal such a manner as to confirm and state securities laws, including, if necessary, the rules applicable to tender offersprovide evidence of receipt of such Notice by each Option Holder.

Stock Options. Each option to purchase shares of Fourth Shift Common Stock (ia "Fourth Shift Option") Prior to the Merger 1 Effective Time, the Company shall offer to cancel, effective outstanding immediately prior to the Merger 1 Effective Time shall remain outstanding following the Effective Time. At the Effective Time, any AremisSoft shall assume each Fourth Shift Option by virtue of the Company 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 (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 or (ii) to the extent 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 the Fourth Shift Options granted 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 Company 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 Plans (a “Cancellation Offer”rounded down to the nearest whole share) in exchange for equal to the payment number of an amount to be determined by the Company up to $0.20 per share shares of Company Fourth Shift Common Stock subject to such Company Options (each such payment, an “Fourth Shift 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 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 TimeTime divided by 6.14159, and (ii) the holder option price per share of AremisSoft Common Stock shall be an amount equal to the option price per share of Fourth Shift Common stock subject to such Company OptionFourth Shift Option in effect immediately prior to the Effective Time multiplied by 6.14159 (the option price per share, in cancellation as so determined, being rounded upward to the nearest full cent), and settlement therefor(iii) any and all outstanding and unvested Fourth Shift Options, or any portion thereof, 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 accelerated and deemed fully vested as 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersEffective Time.

Stock Options. (ia) Prior At the Effective Time, each outstanding option to purchase Shares (each “Company Stock Option” and, collectively, “Company Stock Options”) issued pursuant to the Company’s 1994 Long-Term Incentive Plan, Non-Employee Directors’ Stock Plans, or other agreement or arrangement, whether vested or unvested, shall be converted as of the 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 Option has been issued or may be issued are referred to collectively as the “Company Plans.” At the Effective Time, each Company Stock Option shall be deemed to constitute an option to acquire, on the same terms and conditions (but taking into account any changes thereto, including any acceleration in the vesting or exercisability of such option by reason of this Agreement or the Merger or the transactions or matters contemplated by this Agreement provided for in such option or the applicable 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 1 Effective Time, the Company shall offer to cancel, effective had such holder exercised such option in full immediately prior to the Merger 1 Effective Time, any of rounded down to the Company Options granted under nearest whole share, at a price per share equal to (i) the Company Stock Plans (a “Cancellation Offer”) in exchange aggregate exercise price for the payment of an amount to be determined by the Company up to $0.20 per share of Company Common Stock subject Shares otherwise purchasable pursuant to such Company Options Stock Option divided by (each ii) the product of (A) the number of Shares otherwise purchasable pursuant to such paymentCompany Stock Option multiplied by (B) the Exchange Ratio, an “Option Cancellation Payment”)rounded up to the nearest cent; provided, however, that in no event shall the Option Cancellation Payments exceed $1,000,000 in case of any option to which Section 421 of the aggregate. To facilitate Code applies by reason of its qualification under Section 422 of the foregoingCode (“incentive stock options” or “ISOs”) Parent may cause the option price, an the number of shares purchasable pursuant to such option cancellation agreement (and 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer by the Company shall be on such terms and conditions of exercise of such option to be determined so as are reasonably acceptable to Parent and shall comply in all material respects with applicable federal and state securities laws, including, if necessary, Section 424(a) of the rules applicable to tender offersCode.

Stock Options. You are hereby granted options to purchase 250,000 shares of the Company's common stock at an exercise price equal to $2.85 (ithe closing price on November 7, 2005). One-third of such options (83,333) Prior 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 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 Merger 1 Effective TimeCompany after the effective date hereof. Subject to approval by the Company's shareholders, the Company shall offer will grant you options to cancel, effective immediately prior purchase an additional 250,000 shares of the Company's common stock at a price equal to the Merger 1 Effective Time, any fair market value of the Company Options granted under 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 Stock Plans 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 “Cancellation Offer”) in exchange for writing signed by the payment of an amount party against whom the same is sought 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 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 thereforenforced, shall be entitled 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 an Option Cancellation Payment reduced by any applicable withholding Taxes. The Option Cancellation Agreement will include a release the jurisdiction and venue of claims against the Company such courts with respect to such Company Optionsall matters relating hereto. 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 AgreementPlease confirm our agreements below. Very truly yours, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i)GLOBAL PAYMENT TECHNOLOGIES, INC. 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.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") Prior or any successor plan thereto to purchase 360,000 shares of the Company's common stock ("Common Stock") on the Effective Date (the "First Tranche") and, subject to the Merger 1 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 TimeDate (the "Second Tranche" and, collectively with the First Tranche, the Company "Option Awards"). Each Option Award shall offer to cancelbe 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, effective immediately prior to the Merger 1 Effective Time, any each Option Award shall vest in accordance with Section 8(a) of the 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”)SOP or any successor plan thereto; provided, however, that in no event the fourth and fifth sentences of Section 8(a) of the SOP shall not apply to the Option Cancellation Payments exceed $1,000,000 Awards. The Option Awards shall be set forth in award agreements consistent with the aggregateterms and conditions of the SOP or any successor plan thereto, subject, however, to the terms of Section 8.5 of this Agreement. To facilitate For purposes of Section 6 of the foregoingSOP or any successor plan thereto, the First Tranche shall consist of an option cancellation agreement (issuance of options for 360,000 shares of Common Stock issued in connection with Executive's recruitment and other appropriate the Second Tranche shall consist of issuances of options for 140,000 shares of Common Stock issued in connection with Executive's recruitment and customary information of options for 220,000 shares of Common Stock issued for the fiscal year following the fiscal year in which the Effective Date has occurred. In the event that the shareholders of the Company do not approve the amendments to and transmittal materials) in such form as Parent restatement of the SOP at the Company's 2010 Annual Meeting, then the Executive and the Company shall will consult one another in good faith and will use their reasonable best efforts to arrive at a 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 agreeable substitution for the holder of such Company Option and delivery of such Option Cancellation Agreement to Second Tranche which would put 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, Executive in cancellation substantially the same positions they would have been in had the shareholders approved the amendments to 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 restatement 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersSOP.

Stock Options. (ia) Prior to At the Merger 1 Effective Time, all employee stock options (the Company shall offer "Employee Options") to cancel, effective immediately prior to the Merger 1 Effective Time, any of the 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 purchase shares of Company Common Stock under the Company's 1997 Stock Option Plan (the "Employee Option Plan"), which are then outstanding and unexercised, shall cease to represent a right to acquire shares of Company Common Stock and shall be converted automatically into options to purchase shares of Parent Common Stock, and Parent shall assume each such Employee Option subject to the terms thereof, including but not limited to the accelerated vesting of such Company Options (each options which shall occur in connection with or by virtue of the Merger as and to the extent required by the Employee Option Plan and agreements governing such payment, an “Option Cancellation Payment”)Employee Options; provided, however, that in no event shall from and after the Option Cancellation Payments exceed $1,000,000 in Effective Time, (i) the aggregate. To facilitate the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as number of shares of 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, Common Stock purchasable upon execution by the holder exercise of such Company Option and delivery of such Option Cancellation Agreement to the Company in accordance with the provisions set forth herein, such Company Employee Option shall be cancelled equal to the number of shares of Company Common Stock that were purchasable under such Employee Option immediately prior to the Effective Time multiplied by the Exchange Ratio, and rounding to the nearest whole share, and (ii) the per share exercise price under each such Employee Option shall be adjusted by dividing the per share exercise price of each such Employee Option by the Exchange Ratio, and rounding down to the nearest cent. The terms of each Employee Option shall, in accordance with its terms, effective immediately prior be subject to the Merger 1 Effective Timefurther adjustment as appropriate to reflect any stock split, and the holder of such Company Optionstock dividend, 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 recapitalization or other similar transaction with respect to such Company OptionsParent Common Stock on or subsequent to the Effective Time. The Board of Directors Notwithstanding the foregoing, each Employee Option which is intended to be an "incentive stock option" (as defined in Section 422 of the Company Internal Revenue Code, as amended (the "Code")) shall adopt all appropriate resolutions and take all other actions necessary be adjusted in accordance with the requirements of Section 424 of the Code. Accordingly, with respect to the Company Options subject to an Option Cancellation Agreementany incentive stock options, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer by the Company fractional shares shall be on such terms rounded down to the nearest whole number of shares and conditions as are reasonably acceptable where necessary the per share exercise price shall be rounded down to Parent and shall comply in all material respects with applicable federal and state securities laws, including, if necessary, the rules applicable to tender offersnearest cent.

Stock Options. (i) Prior The Corporation acknowledges that (x) the Board on December 21, 1995 awarded the Executive, subject to the Merger 1 Effective Timeshareholder approval, the Company shall offer to cancelstock options covering an aggregate of 300,000 shares of Common Stock $.01 par value, effective immediately prior to the Merger 1 Effective Time, any 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 Option ("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 Company 1995 Stock Plans (a “Cancellation Offer”) in exchange for Option Plan of the payment of an amount to Corporation and shall be determined governed by the Company up 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 $0.20 per share the extent such terms and provisions do not adversely affect the status of Company Common such options as Incentive 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 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 madeOption. 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 options granted hereunder not qualifying as Incentive Stock Option shall be cancelled 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 accordance with its terms, effective immediately prior Paragraph 6 (v) and will be non-transferable inter vivos except to or for the Merger 1 Effective Time, benefit of members of the Executive's immediate family and will be transferable upon the holder of such Company Option, in cancellation and settlement therefor, shall be entitled to an Option Cancellation Payment reduced Executive's death by will or other testamentary disposition or by any applicable withholding Taxesstatute in the event of intestacy. The Option Cancellation Agreement 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 include become fully vested at such times as average Per Share Closing Price of the Common Stock for ten trading days during a release period of claims twenty consecutive trading days equals or exceed $10.25 (the "First Accelerated Vesting Date"), (y) 100,000 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 $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 each of the foregoing options shall be $8.87, the fair market value of the Common Stock on the date of grant, to wit, December 21, 1995. At the option of the Executive, all or any portion of the exercise price of any option may be paid by surrendering options for cancellation in which event the Executive will receive credit against the Company with respect exercise price of options to such Company Options. The Board of Directors be exercised in the amount of the Company shall adopt all appropriate resolutions difference between the exercise price of the option so surrendered and take all other actions necessary with respect the then Per Share Closing Price of the shares subject to the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offerssurrendered options.

Stock Options. (a) At the Effective Time, each outstanding option to purchase shares of Company Common Stock (a "Company Stock Option" or collectively, "Company Stock Options") issued pursuant to the (i) Prior 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 Option an option (each, a "Parent Option"), to acquire, on substantially the same terms and subject to substantially the same conditions as were applicable 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 1 Effective Time, the Company shall offer to cancel, effective had such holder exercised such option in full immediately prior to the Merger 1 Effective Time, any of at a price per share equal to (y) the Company Options granted under the Company Stock Plans (a “Cancellation Offer”) in exchange aggregate exercise price for the payment of an amount to be determined by the Company up to $0.20 per share shares of Company Common Stock subject otherwise purchasable pursuant to such Company Options Stock Option divided by (each z) the number of full shares of Parent Common Stock deemed purchasable pursuant to such payment, an “Option Cancellation Payment”)Company Stock Option; provided, however, that in no event the number of shares of Parent Common Stock that may be purchased upon exercise of any such Parent Option shall not include any fractional share and, upon exercise of the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoingParent Option, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation Agreement”) a cash payment shall be distributed to each holder made for any fractional share based upon the Closing Price (as hereinafter defined) of a Company Option to whom a Cancellation Offer is madeshare of Parent Common Stock on the trading day immediately preceding the date of exercise. 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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. (i) Prior Subject to the Merger approval by the shareholders of the Company, 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 Effective Timemillion." 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 Company shall offer to cancel, effective immediately prior to Employment Agreement (including the Merger 1 Effective Time, any 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 Options granted and the Executive. This Amendment shall be governed by and construed and interpreted under the Company laws of the State of New York without reference to the 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 Incentive Plan (a “Cancellation Offer”) in exchange the "Plan"), you are hereby granted an option for the payment purchase of ________ shares of the Company's common stock, $.01 par value, at an amount to be determined by the Company up to $0.20 exercise price of ________ per share (the "exercise price"). A copy 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 other appropriate and customary information and transmittal materials) in such form as Parent Plan is attached 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 lawsthereof, including, if necessarywithout limitation, those relating to withholding taxes, are incorporated into this Agreement by reference. The terms of the rules applicable to tender offers.option are as set forth in the Plan and in this Agreement. The most important of the terms set forth in the Plan are summarized as follows:

Stock Options. (ia) Prior to the Merger 1 Effective Time, the Company shall offer to cancel, effective At or immediately prior to the Merger 1 Effective Time, each employee stock option or director stock option to purchase Shares outstanding under any Company stock option plans, whether or not vested or exercisable (each, a "Company Option") shall, by virtue of the Merger 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 under such Company Options granted under Option (subject to Section 3.04(b)), the Company Stock Plans (a “Cancellation Offer”) in exchange for the payment same number of an amount to be determined by the Company up to $0.20 per share shares of Company Parent 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 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 would have been entitled to receive pursuant to Section 3.02(c) of this Agreement had such holder exercised such Company Option Cancellation Agreement in full immediately prior to the Effective Time (rounded to the nearest whole number), at a price per share (rounded down to the nearest whole cent) equal to (x) the aggregate exercise price for the share of Company Common Stock otherwise purchasable pursuant to such Company Option divided by (y) the number of whole shares of Parent Common Stock purchasable pursuant to the Parent Option 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 foregoing. The other terms of each such Company Option, in cancellation and settlement thereforthe plans under which they were issued, shall be entitled continue to an apply in accordance with their terms. Notwithstanding the foregoing, Parent shall not assume any particular Company Option Cancellation Payment reduced by any applicable withholding Taxes. The if the terms of that Company Option Cancellation Agreement will include contain a release of claims against the Company with respect to such Company Options. The Board of Directors cash-out right in favor 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer optionee that is triggered by the Company transactions contemplated by this Agreement and the optionee refuses to waive such cash-out right in a manner reasonably satisfactory to Parent. Instead, each such optionee shall be on such paid a cash amount in accordance with the terms and conditions as are reasonably acceptable to Parent and shall comply of the governing plan document in all material respects with applicable federal and state securities laws, including, if necessary, exchange for the rules applicable to tender offerscancellation of said Company Option.

Stock Options. (i) Prior to At the Merger 1 Effective Time, each outstanding option (a “Company Option”) to purchase shares of Company Common Stock issued pursuant to the Company Company’s 2006 Stock Incentive Plan (the “Stock Plan”) shall offer to cancelbe assumed by Parent, effective on the same terms and conditions as were applicable under the Stock Plan immediately prior to the Merger 1 Effective Time, any except that: (i) the number of the shares of Parent Common Stock subject to each Company Options granted under the Company Stock Plans (a “Cancellation Offer”) in exchange for the payment of an amount to Option shall be determined by multiplying the number of shares of Company up Common Stock that were subject to $0.20 such Company Option immediately prior to the Effective Time by the Option Conversion Ratio (as defined below), 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 shall be determined by dividing the per share exercise price of Company Common Stock subject to such Company Options (each such paymentOption, an “as in effect immediately prior to the Effective Time, by the Option Cancellation Payment”)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 no event shall a manner consistent with the Option Cancellation Payments exceed $1,000,000 requirements of Section 409A of the Code to the extent applicable; and provided, further, that in the aggregate. To facilitate the foregoing, an option cancellation agreement (and 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 case of a any Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide thatwhich Section 422 of the Code applies, upon execution by the holder option price, the number of shares subject to such Company Option and delivery the terms and conditions of such Option Cancellation Agreement to the Company in accordance with the provisions set forth herein, exercise of such Company Option shall be cancelled determined in accordance with its termsthe foregoing, effective immediately prior subject to such adjustments as are necessary in order to satisfy the Merger 1 Effective Time, 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 holder 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 cancellation and settlement thereforSchedule 2.3(a), shall be entitled to an Option Cancellation Payment reduced by any applicable withholding Taxesimmediately exercisable after the Effective Time. The “Option Cancellation Agreement 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 a release the conversion of claims against all shares of Company Capital Stock and the Company with respect to such Company Options. The Board reservation of Directors all shares of Parent Common Stock required for assumption of the Company Options that have vested as of the Effective Time. Parent shall adopt all appropriate resolutions and take all other actions necessary with respect to reserve for issuance a sufficient number of shares of Parent Common Stock for delivery upon exercise of the Company Options subject assumed by Parent, which, as of the date hereof, are as set forth on Schedule 1.5(a) (such Schedule to an Option Cancellation Agreementbe amended at or prior to Closing to reflect the issuance of any shares of Company Common Stock, to terminate the relevant individual option agreements and cancel the relevant whether by exercise of Company Options as necessary or otherwise, after the date hereof and prior to effectuate the provisions of this Section 1.6(d)(iClosing). 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. (i) Prior to At the Merger 1 Effective Time, each outstanding option (a “Company Option”) to purchase shares of Company Common Stock issued pursuant to the Company Company’s 2006 Stock Incentive Plan (the “Stock Plan”), which is vested at the Effective Time, shall offer to cancelbe assumed by Parent, effective on the same terms and conditions as were applicable under the Stock Plan immediately prior to the Merger 1 Effective Time, any except that: (i) the number of the shares of Parent Common Stock subject to each Company Options granted under the Company Stock Plans (a “Cancellation Offer”) in exchange for the payment of an amount to Option shall be determined by multiplying the number of shares of Company up Common Stock that were subject to $0.20 such Company Option immediately prior to the Effective Time by the Option Conversion Ratio (as defined below), 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 shall be determined by dividing the per share exercise price of Company Common Stock subject to such Company Options (each such paymentOption, an “as in effect immediately prior to the Effective Time, by the Option Cancellation Payment”)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 no event shall a manner consistent with the Option Cancellation Payments exceed $1,000,000 requirements of Section 409A of the Code to the extent applicable; and provided, further, that in the aggregate. To facilitate the foregoing, an option cancellation agreement (and 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 case of a any Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide thatwhich Section 422 of the Code applies, upon execution by the holder option price, the number of shares subject to such Company Option and delivery the terms and conditions of such Option Cancellation Agreement to the Company in accordance with the provisions set forth herein, exercise of such Company Option shall be cancelled determined in accordance with its termsthe foregoing, effective immediately prior subject to such adjustments as are necessary in order to satisfy the Merger 1 Effective Time, 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 holder 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 cancellation and settlement thereforSchedule 2.3(a), shall be entitled 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 an Option Cancellation Payment reduced by any applicable withholding Taxesthe Effective Time. The “Option Cancellation Agreement 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 Common Stock which will include a release the conversion of claims against all shares of Company Capital Stock and the Company with respect to such Company Options. The Board reservation of Directors all shares of Parent Common Stock required for assumption of the Company Options that have vested at the Effective Time. Parent shall adopt all appropriate resolutions reserve for issuance a sufficient number of shares of Parent Common Stock 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 take all other actions necessary prior to Closing). Within sixty days following the Effective Time, Parent shall file a registration statement on Form S-8 (or any successor form) with respect to the shares of Parent Common Stock subject to such Company Option held by 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 subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersremain outstanding.

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) Prior hold the Remaining Options, in which event the Remaining Options shall be exercisable until the five-year anniversary of this Agreement in accordance with the Plan, or (ii) deliver written notice ("Election Notice") to the Merger 1 Effective TimeCompany of his election to cancel all, but not part of, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any of the Company Remaining Options granted under the Company Stock Plans (a “Cancellation Offer”) in exchange consideration for the payment of an amount to be determined by the Company up to of $0.20 per share 500,000; upon delivery of Company Common Stock subject to such Company Options (each such payment, an “Option Cancellation Payment”)the options shall lapse without further action. The Election Notice must be received by the Company during regular business hours on or before the first anniversary of the date of this Agreement or shall not be effective; provided, however, that in no event shall if such date falls on a Saturday, Sunday or legal holiday, then the Option Cancellation Payments exceed $1,000,000 in date on which the aggregateElection Notice must be received is on the first business day thereafter. To facilitate the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and the The Company shall mutually agree pay $500,000 (less applicable taxes) within ten (10) days of its receipt of an “Option Cancellation Agreement”) shall be distributed to each holder of a Company Option to whom a Cancellation Offer is madeeffective Election Notice. The Option Cancellation Agreements shall provide that, upon execution Except as otherwise amended 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 necessaryPARAGRAPH 3, the rules applicable to tender offersStock Option Agreement shall remain in full force and effect.

Stock Options. Xx. Xxxxxxxxx shall be granted the option to purchase ------------- 400,000 shares of the Company's Common Stock (i) Prior the "Stock Options"), at an exercise price per share equal to the Merger 1 Effective Timefair 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 commences. To the extent possible, such option will be an incentive stock option. The Stock Options shall 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 Stock Options shall vest. Upon the termination of Xx. Xxxxxxxxx'x employment in accordance with the provisions of Section 10, below, the Stock Options shall vest as described in such provisions. Except as provided in Section 10, below, the Stock Options shall be subject to the terms of the Company's Stock Option Plan and the Company's standard incentive and non-statutory stock option agreements (the "Standard Agreements"), provided pursuant to the 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 offer permit Xx. Xxxxxxxxx to cancel, effective immediately prior pay the option exercise price with a full recourse loan (secured by the shares acquired with the loan) at the lowest interest rate available to avoid the Merger 1 Effective Time, any 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 Company Options granted under Effective Date; (ii) the Company Stock Plans termination of Xx. Xxxxxxxxx'x employment for any reason; or (a “Cancellation Offer”iii) in exchange for the payment date twelve (12) months after Xx. Xxxxxxxxx is first eligible to sell shares of the Company's stock that he holds following an amount to be determined by initial public offering of the Company up to $0.20 per share of Company Common Stock subject to such Company Options (each such payment, an “Option Cancellation Payment”)Company's shares; provided, however, that in no the event shall the Option Cancellation Payments exceed $1,000,000 in the aggregateof Xx. To facilitate the foregoingXxxxxxxxx'x termination without Cause or resignation for Good Reason or termination by reason of death or Disability (as defined below), an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation Agreement”) loan shall be distributed to each holder of a Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide that, repayable 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 earlier 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer by the Company shall be on such terms and conditions as are reasonably acceptable to Parent and shall comply events stated in all material respects with applicable federal and state securities laws, including, if necessary, the rules applicable to tender offersclauses (i) or (iii) immediately preceding.

Stock Options. All options and warrants to acquire Company Common Stock (iindividually, a "Company Option" and collectively, the "Company Options") Prior to outstanding at the Merger 1 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, the such Company shall offer to cancelOptions, effective immediately prior to by virtue of the Merger 1 Effective Time, and without any further action on the part of the Company Options granted or the holder 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 which Section 424(a) applied" within the meaning of Section 424 of the Code; or (b) to the extent that Section 424 of the Code does not apply to any such Company Options, 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 Plans Option Plan and the applicable option agreement issued thereunder, except that (a “Cancellation Offer”x) in exchange the unexercised portion of each such Company Option shall be exercisable for that whole number of shares of Watsxx Xxxmon Stock (rounded to the payment nearest whole share, with 0.5 rounded upward) equal to the number of shares of Company Common Stock 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 be determined by the Company up to $0.20 option exercise price per share of Company Common Stock subject to such Company Options Option in effect at the Effective Time divided by the Exchange Ratio (each such paymentthe option price per share, as so determined, being rounded to the nearest full cent, with $0.005 rounded upward). No payment shall be made for fractional interests. The term, exercisability, vesting schedule, status as an “Option Cancellation Payment”); provided"incentive stock option" under Section 422 of the Code, howeverif applicable, that in no event shall and all of the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and terms of the Company Options shall mutually agree (an “Option Cancellation otherwise remain unchanged unless modified by or as a result of the transaction contemplated by this 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 As soon as practicable after 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 Watsxx xxxll deliver to the holder holders of Company Options appropriate notices setting forth 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 holders' rights pursuant to such Company Options. The Board , as amended by this Section 1.5 as well as notice of Directors Watsxx'x xxxumption of the Company shall adopt all appropriate resolutions and Company's obligations with respect thereto (which occurs by virtue of this Agreement). Watsxx xxxll take all other corporate actions necessary with respect to the reserve for issuance such number of shares of Watsxx Xxxmon Stock as will be necessary to satisfy exercises in full of all Company Options subject to an Option Cancellation Agreement, to terminate after the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersEffective Time.

Stock Options. (a) 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 at the Effective Time, whether or not then exercisable, shall be assumed by Xxxxxxxxx and shall be deemed to constitute an option to acquire Xxxxxxxxx Common Stock on the terms and conditions as were applicable under the respective Option, except that (i) Prior each Option shall be exercisable for the greatest number of whole shares of Xxxxxxxxx Common Stock equal to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any product of the Company Options granted under the Company Stock Plans (a “Cancellation Offer”) in exchange for the payment number of an amount to be determined by the Company up to $0.20 per share shares of Company Banner Common Stock subject to such Company Options Option immediately prior to the Effective Time multiplied by the Exchange Ratio; (each such payment, an “Option Cancellation Payment”); provided, however, that in no event shall ii) the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation Agreement”) exercise price per share of Xxxxxxxxx Common Stock shall be distributed an amount equal to the exercise price per share of Banner Common Stock specified under such Option in 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, shall become exercisable in full at the Effective Time. As soon as practicable after the Effective Time, Xxxxxxxxx shall deliver to each holder of a Company an Option an appropriate notice setting forth the holder's right to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide that, upon execution by the holder acquire shares 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 TimeXxxxxxxxx Common Stock, and the Option Agreements of each holder of such Company Option, in cancellation and settlement therefor, shall be entitled deemed to an Option Cancellation Payment reduced by any applicable withholding Taxes. The Option Cancellation Agreement will include a release of claims against be appropriately amended so that the Company with respect to such Company Options. The Board of Directors of Options shall represent 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersrights set forth above.

Stock Options. (A) Subject to Section 5.4(b), at the Effective Time, all rights with respect to Company Common Stock under each Company Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each such Company Option in accordance with the 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) Prior 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 each such Company Option shall be equal to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any number of the 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 shares of Company Common Stock subject to such Company Options Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounding down to the nearest whole share, (iii) the per share exercise price under each such paymentCompany 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, an “exercisability, vesting schedule and other provisions of such Company Option Cancellation Payment”)shall otherwise remain unchanged; providedPROVIDED, howeverHOWEVER, that each Company Option assumed by Parent in accordance with this Section 5.4(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 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 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 the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and 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 deliver 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 an appropriate notice setting forth 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 holder's rights with respect to such Company Options. The Board of Directors of Option and indicating that such Company Option shall continue in effect on 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer by the Company shall be on such same terms and conditions as are reasonably acceptable were in effect immediately prior to Parent and shall comply in all material respects with applicable federal and state securities laws, including, if necessary, the rules applicable Effective Time (subject to tender offersthe adjustments required pursuant to Section 5.4(a)).

Stock Options. (i) Prior to the Merger 1 Effective Time, the Company and Parent shall offer take such actions with respect to canceleach stock option (each, effective 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, without limitation, the 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 Merger 1 Effective Time) pursuant to which such Existing Company Option was issued, any 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 Options granted under Common Stock covered by such option immediately prior to the Company Stock Plans (a “Cancellation Offer”) in exchange for the payment of an amount to be determined Effective Time multiplied by the Company up Exchange Ratio and rounded down to $0.20 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 subject under the Existing Company Option divided by the Exchange Ratio and rounded down to such the nearest cent. The adjustment provided herein with respect to any Existing Company Options that are "incentive stock options" (each such payment, an “Option Cancellation Payment”); provided, however, that as defined in no event shall Section 422 of the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation Agreement”Code) shall be distributed 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 a 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 whom a Cancellation Offer is madeCompany Stock Options to be assumed by Parent as provided in this Section 2.04. The Option Cancellation Agreements shall provide that, upon execution by Promptly after 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, Parent shall file a registration statement on Form S-8 with the Securities and Exchange Commission (the holder "SEC") covering the shares of such Company Option, in cancellation and settlement thereforParent Common Stock to be issued upon exercise of the Assumed Options, shall be entitled use reasonable best efforts to an Option Cancellation Payment reduced by cause such registration statement to become and remain effective so long as 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 Assumed Options subject to an Option Cancellation Agreementare outstanding, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersreserve a sufficient number of shares of Parent Common Stock for issuance upon exercise thereof.

Stock Options. (i) Prior Executive hereby acknowledges and agrees that Schedule A contains a complete and accurate list of all his outstanding options or rights to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, purchase common stock or any other equity security or interest of the Company Options granted under or its subsidiaries as well as the Company Stock Plans portion thereof that is vested as of the Separation Date (a the “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 PaymentOptions”). Notwithstanding anything to the 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, however, that in no event shall the Option Cancellation Payments exceed $1,000,000 in time-based options designated on Schedule A to purchase up to a maximum of an additional 75,963 shares of common stock (the aggregate. To facilitate the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation AgreementTime-Based Options”) shall be distributed continue 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 vest in accordance with and subject to their existing terms and conditions until May 17, 2004, provided that Executive remains on the provisions set forth hereinBoard of Directors until such date, such Company Option and all remaining Time-Based Options to purchase the then remaining unvested shares shall be cancelled as of May 17, 2004. Options vested as of the Separation Date or by May 17, 2004, as the case may be, shall remain exercisable in accordance with its termsand subject to their existing terms and conditions and, effective immediately 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 May 17, 2004, the Merger 1 Effective Timevesting of all of the Time Based Options, and if any, that remain unvested as of the holder date of such Company Optionevent shall immediately be accelerated without further action by the Company, 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 provided that Executive remains on the Company with respect to such Company Options. The Board of Directors until such date. In the event Options intended to qualify as “incentive stock options” within the meaning of Section 422 of the Company shall adopt all appropriate resolutions and take all other actions necessary with respect to Internal Revenue Code of 1986, as amended (the Company “Code”), are exercised more than three (3) months following the Separation Date, such Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer by the Company shall be on such terms and conditions treated 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 offersnon-qualified stock options.

Stock Options. At the Effective Time, all rights with respect to Company Common Stock under each option issued by the Company then outstanding (each, a "Company Option") shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each such Company Option in accordance with the 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) Prior 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 each such Company Option shall be equal to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any number of the 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 shares of Company Common Stock subject to such Company Options Option immediately prior to the Effective Time multiplied by the Common Stock Exchange Ratio, rounding down to the nearest whole share, (iii) the per share exercise price under each such paymentCompany 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, an “(iv) each Company Option Cancellation Payment”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 in no event shall the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and 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 assumed by the holder of such Company Option and delivery of such Option Cancellation Agreement to the Company Parent in accordance with the provisions set forth hereinthis Section 1.5(f) shall, such Company Option shall be cancelled in accordance with its terms, effective 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 the Effective Time. Each Company Option which is an incentive stock option within the meaning of 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 June of 2003), 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 assumed Company Options. As provided in Section 5.15, Parent shall file a registration statement on Form S-8 with respect to the 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. As soon as practicable after the Effective Time, Parent shall issue to each Person who immediately prior to the Merger 1 Effective Time, and the Time was a holder of such an outstanding 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 document evidencing Parent's assumption of the Company Option. For purposes of this Agreement, "in-the-money Company Options" shall adopt mean all appropriate resolutions and take all other actions necessary with respect to the Company Options subject to with an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant exercise price less than $1.00 per share of Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersCommon Stock.

Stock Options. (a) Except as provided in (c) below with respect to the Company's 1997 Employee Stock Purchase Plan, as amended (the "Company ESPP"), each option to purchase shares of Company Common Stock 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) Prior 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 Merger 1 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 shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any of in the Company Options granted 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 (a “Cancellation Offer”rounded down to the nearest whole number of such shares) in exchange for that equals the payment product of an amount to be determined the Conversion Ratio multiplied by the Company up to $0.20 per share number of shares 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 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, (ii) the option exercise price per share of Parent Common Stock 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 divided by the Conversion Ratio, and (iii) the holder Company Options shall vest to the extent required pursuant to the current terms of such Company Option, Options or other agreements as described 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 Section 1.7 of the Company shall adopt all appropriate resolutions and take all Disclosure Schedule (as defined below); provided that if such vesting of Company Options or other actions necessary 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 an Option Cancellation AgreementParent's written consent not to be unreasonably withheld, use reasonable best efforts to terminate prevent such vesting or effect of other provisions. Except to the relevant individual option agreements and cancel extent required pursuant to the relevant current terms of such Company Options or other agreements as necessary to effectuate described in Section 1.7 of the provisions of this Section 1.6(d)(iCompany Disclosure Schedule (as defined below). Any Cancellation Offer by , the Company shall be on such terms and conditions as are reasonably acceptable not take any action to Parent and shall comply in all material respects with applicable federal and state securities laws, including, if necessaryaccelerate the vesting of any Company Options. Prior to the Effective Time, the 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 applicable and regulations thereunder (the "1934 Act"), specifically approve (i) the assumption by Parent of the Company Options and (ii) the issuance of Parent Common Stock in the Merger to tender offersdirectors, officers and stockholders of the Company subject to Section 16 of the 1934 Act.

Stock Options. (i) Prior Subject to the Merger 1 Effective Timeprovisions of this paragraph, the Compensation and Organization Committee of the Board (the "Compensation Committee") by its approval and adoption of this Agreement, as noted below, does hereby accelerate vesting (to the extent not already vested) of the following nonqualified stock options heretofore granted to Stauth under the Xxxxxxg Companies, Xxx. 1990 Stock Option Plan (the "1990 SOP") 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 (the "Exercise Period") all or any 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 if it elects not to amend the 1990 SOP to provide for extension of the exercise of the referenced options through July 17, 2000, the Company shall offer to cancel, effective immediately prior to notify Stauth of such dexxxxxxation and shall nonetheless pay Stauth the Merger 1 Effective Time, any differxxxx xetween the exercise price and the fair market value of the Company Options granted under common stock on the Company Stock Plans Exercise Date (a “Cancellation Offer”herein referred to as the "Spread"). At any time during the Exercise Period, Stauth may select xxx xay (the "Exercise Date") in exchange for the payment as of an amount which he shall be entitled to be determined paid the Spread 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”)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 no event Stauth's executor xx xxxxonal representative. The payment of the Spread shall be made within five (5) days after the Option Cancellation Payments exceed notice of election to receive the Spread. Likewise, the Compensation Committee, by its approval and adoption set out below, does hereby accelerate vesting (to the extent 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 $1,000,000 19.7500 30,000 $16.3750 30,000 $17.5000 Notwithstanding anything to the contrary in each of the aggregate. To facilitate the foregoing, an nonqualified stock option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent agreements that Stauth and the Company Coxxxxx have executed representing the stock options described in this 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. Such option agreements, as herein modified, 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 continue in full force and delivery of such Option Cancellation Agreement to the Company effect in accordance with the provisions set forth herein, such Company Option shall be cancelled in accordance with its their 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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. The Employee has been granted and may in the future be granted options (ithe “Company Options”) Prior to purchase 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 shares. Notwithstanding the foregoing, any Company Options which were granted to the Merger 1 Effective TimeEmployee 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 offer to cancel, effective immediately prior be subject to the Merger 1 Effective Time, 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 under on or after July 1, 2004, in the Company Stock Plans (event of a “Cancellation Offer”) Change in exchange for Control, and a Termination by the payment of an amount to be determined Employee with Good Reason or a Termination by the Company up to $0.20 per share of Company Common Stock subject to without Cause following such Company Options (each such paymentChange in Control, 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 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, Executive shall be entitled to immediate vesting for an Option Cancellation Payment reduced additional 12 months for the remaining Company Options that are unvested as of the date of the Termination by any applicable withholding Taxes. The Option Cancellation Agreement will include a release of claims against the Employee with Good Reason or Termination by the Company with respect to such without Cause following the Change in Control and (2) the Employee’s grant of 240,000 Company Options. The Board of Directors 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 adopt all appropriate resolutions and take all other actions necessary 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 Options subject granted prior to an Option Cancellation AgreementJuly 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 foregoing sentence, references to terminate the relevant individual option agreements IAC, Xxxxx Xxxxxx, Liberty Media Corporation and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer by the Company shall be on such terms and conditions as are reasonably acceptable to Parent their respective Affiliates and shall comply in all material respects with applicable federal and state securities laws, including, if necessary, not include the rules applicable to tender offersfinal paragraph of the definition.

Stock Options. (i) Prior In connection with the execution of the Employment Agreement, Ross was granted stock options to purchase 300,000 shares of the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any common stock of the Company Options granted (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 Option Agreement to the contrary, effective as of the date hereof, the Stock Options that are not vested and exercisable as of such date shall be vested and exercisable and Ross shall be entitled to exercise all of the Stock Options until the close of business on January 10, 2000 (a “Cancellation Offer”the "Sale Period") in exchange for without regard to 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”)vesting criteria otherwise contained therein; provided, however, that in no event Ross shall not sell the Option Cancellation Payments exceed $1,000,000 Shares purchased upon exercise of the Stock Options in an amount exceeding 25,000 shares per week (the aggregate"Weekly Limit") and 50,000 shares per month (the "Monthly Limit," and together with the Weekly Limit, the "Limits"); provided further, however, that (x) the Monthly Limit shall terminate and be of no further force or effect upon the earlier to occur of October 1, 1999 and the 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. To facilitate The Company agrees that at all times during the foregoingSale Period, an option cancellation agreement (and the acquisition by Ross of the Option Shares shall be registered under a registration statement on Form S-8 or other appropriate form (a "Registration Statement") filed with and customary information declared effective by the Securities and transmittal materialsExchange Commission (the "SEC") in such form as Parent and the Company shall mutually agree take all action that may be necessary to (an “i) cause the 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 2.3 or which may be applicable to "affiliates" pursuant to Rule 144 promulgated under the Securities Act of 1933), of the Option Cancellation Agreement”) Shares. 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 Sale Period, the Sale Period 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 extended by the holder number of days during such Company Option and delivery of period that such Option Cancellation Agreement Registration Statement was not effective or did not contain all information required 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersdisclosed therein.

Stock Options. (i) Prior to At the Merger 1 Effective Time, the each unexercised and unexpired Company Option then outstanding under any Company Stock Option Plan or otherwise, whether or not then exercisable, shall offer be converted into an option to cancelpurchase Parent Common Stock in accordance with this Section 2.4; provided, effective immediately prior however, that with respect to the Merger 1 Effective Time, any of the 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 use commercially reasonable efforts to obtain the consent of the 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 Option Plans applicable to such conversion; provided, further that to the 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 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 Plans 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 and, to the extent allowable under applicable Law and the terms of the Company Stock Option Plan (or such other agreement), the terms and conditions 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 Parent will adopt prior to the Effective Time (together, the “Cancellation OfferTransition Assistance Plans”) and (iv) Schedule C, except that (x) each Company Option shall be exercisable (or shall become exercisable in exchange 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 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 payment shares of an amount Parent Common Stock issuable upon exercise of such Company Option so converted shall be equal to be the quotient determined by dividing the Company up to $0.20 exercise price per share of Company Common Stock subject 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 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 (each such payment, an “Option Cancellation Payment”); provided, however, that in no event within the meaning of Section 424 of the Code. Continuous employment with the Company or any Company Subsidiary shall be credited to the Option Cancellation Payments exceed $1,000,000 in optionee for purposes of determining the aggregatevesting of all converted Company Options after the Effective Time. To facilitate In addition to the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent shall assume each Company Stock Option Plan and the number and kind of shares available for issuance under each such Company shall mutually agree (an “Stock Option Cancellation Agreement”) Plan shall be distributed to each holder converted into shares 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 Parent Common Stock 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 applicable Company shall adopt all appropriate resolutions and take all other actions necessary with respect to the Company Options subject to an Stock Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersPlan.

Stock Options. (i) Prior 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 Date hereof (subject to earlier termination of 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 on or prior to September 1, 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 Effective Date, 25% of such option shares each on the first, second and third anniversary of the Effective Date hereof (each 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, 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 has terminated. Such options shall be incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986 to the Merger 1 Effective Timeextent 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 to 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 Company exercise price of any options granted pursuant to this Agreement shall offer be adjusted appropriately to cancel, effective an amount that bears the same relationship to the exercise price in effect immediately prior to such action as the Merger 1 Effective Timetotal number of shares of common stock (or shares of any security into which such common shares have been reclassified, subdivided, split or otherwise changed) outstanding immediately after such action; in such event, 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 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 not then exercisable at the time of such Change of Control shall immediately become exercisable. For the purposes hereof Change of Control is defined as follows: (i) any sale, merger, consolidation, issuance of shares (excluding a public offering of shares), or other transaction (each a "Transaction") as a result of which at least 51 % the voting power of the Company Options granted under (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 the rules and regulations thereunder) acquires the power, through ownership of securities or otherwise, to 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 Stock Plans 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 “Cancellation Offer”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 board was approved by a vote of at least a majority of the directors then still in exchange 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 payment Company's or such parent's board 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 aggregatedirectors. To facilitate Notwithstanding the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) any changes in such form as Parent and ownership, voting or otherwise resulting from the Company proposed UCI transaction shall mutually agree (an “Option Cancellation Agreement”) shall be distributed to each holder not constitute a Change 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersControl.

Stock Options. (ia) Prior to Each of the Merger 1 Effective TimeCompany's stock option plans, each of which is set forth in Section 3.5(a) of the Company shall offer Disclosure Schedule (as defined in Section 5.1) (the "Option Plans"), and each option to cancel, effective acquire shares of Common Stock outstanding immediately prior to the Merger 1 Effective TimeDate thereunder, any whether vested or unvested (each, an "Option" 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 the Company Options granted under the Company shares of Parent Common Stock Plans (a “Cancellation Offer”"Substitute Option") in exchange for (rounded to the payment nearest whole share, with 0.5 shares being rounded up) equal to the number of an amount to be determined by the Company up to $0.20 per share shares of Company Common Stock subject to such Company Options (each such payment, an “Option Cancellation Payment”); provided, however, that in no event shall multiplied by the Option Cancellation Payments exceed $1,000,000 Exchange Ratio (as defined below). The per share exercise price for each Substitute Option shall be the current exercise price per share of Company Common Stock divided by the Option Exchange Ratio (rounded up to the nearest full cent), and each Substitute Option otherwise shall after the Effective Date be subject to 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). Prior to the Effective Date, the Company 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 aggregateCompany 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. To facilitate For avoidance of doubt, it is the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as intention of Parent and the Company shall mutually agree that the Substitute Options be identical in all respects to the Options (an “Option Cancellation Agreement”) except for the number and type of shares for which they shall be distributed to each holder of a Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide exercisable and the exercise price thereof) and that, upon execution by without limitation, (i) all terms of the holder of plans under which such Company Option Options were issued and delivery of such Option Cancellation Agreement to the Company in accordance with the provisions (ii) all policies set forth herein, such Company Option shall be cancelled in accordance with its terms, effective immediately prior to the Merger 1 Effective Time, Sections 3.5 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 5.8 of the Company Disclosure Schedule, shall adopt all appropriate resolutions apply thereto from and take all other actions necessary with respect to after the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersEffective Date.

Stock Options. (a) Within 30 days after the Acceptance 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 (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) Prior to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any number of the Company Options granted under the Company Stock Plans (a “Cancellation Offer”) in exchange for the payment shares of an amount to be determined by the Company up to $0.20 per share of Company Parent 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 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 Pre-2009 Replacement Option shall be cancelled in accordance with its terms, effective determined by multiplying the number of Company Shares that were subject to such holder’s Company Option immediately prior to the Merger 1 Effective Timecancellation thereof by the Pre-2009 Option Conversion Ratio (as defined below), and rounding the holder resulting number down to the nearest whole number of shares of Parent Common Stock; (ii) the per share exercise price for the Parent Common Stock issuable upon exercise of such Pre-2009 Replacement Option shall be determined by multiplying (A) the quotient of the per share exercise price in Korean Won of Company Shares subject to such Company Option, as in effect immediately prior to the cancellation thereof, divided by the Pre-2009 Option Conversion Ratio; by (B) the average of the US Dollar/Korean Won exchange rate quoted in the Western Edition of the Wall Street Journal for each of the 20 consecutive business days immediately preceding the date of this Agreement, and settlement therefor, rounding the resulting exercise price up to the nearest whole cent; (iii) the vesting schedule of such Pre-2009 Replacement Option shall be entitled to an as set forth on Schedule 5.2 and (iv) such Pre-2009 Replacement Option Cancellation Payment reduced by any applicable withholding Taxes. The Option Cancellation Agreement will include a release of claims against shall have the Company with respect to same term and exercisability as 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersOption.

Stock Options. (a) At the Effective Time, each option, whether vested or unvested (a "Company Option"), that is then outstanding under any of the Company's Stock Option Plans (collectively, the "Stock Plan") shall automatically and without further action by the holder 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 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) Prior 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 Merger 1 Effective Timenumber 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 shall offer Common Stock subject to cancel, effective such Assumed Option if such Assumed Option had been exercised immediately prior to the Merger 1 Effective Time, any of (iii) the Company Options granted under the Company Stock Plans (a “Cancellation Offer”) in exchange per share exercise price for the payment Parent Class A Common Stock issuable upon exercise of an amount to each such Assumed Option shall be determined by dividing the Company up to $0.20 exercise price per share of Company Common Stock subject to such Assumed Option, as in effect immediately prior to the Effective Time, by 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 Options Common Stock subject to such Assumed Option immediately 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 paymentAssumed Option shall continue in full force and effect and the term, exercisability, status as an “Option Cancellation Payment”)incentive or nonqualified option, and other provisions of such Company Option, except the vesting schedule, shall otherwise remain unchanged; provided, however, that in no event shall the each such Assumed Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoingshall, an option cancellation agreement (and 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 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 Merger 1 Effective TimeShare 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 holder provisions hereof are subject to shareholder approval of any such Company Option, in cancellation and settlement therefor, shall be entitled to an Option Cancellation Payment reduced by any applicable withholding Taxesamendment. 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 and Parent shall adopt all appropriate resolutions and take all other actions action that may be necessary with respect to (under the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements Stock Plan and cancel the relevant Company Options as necessary otherwise) to effectuate the provisions of this Section 1.6(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 offers1.11.

Stock Options. (ia) Prior to At the Merger 1 Effective Time, the each outstanding option or warrant to purchase Shares (a "Company shall offer to cancel, effective immediately prior Stock Option" or collectively "Company Stock Options") issued pursuant to the Merger 1 Effective TimeCompany's 1988 Stock Option Plan, any 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 Company Options granted under Effective Time into options or warrants, as applicable, to purchase shares of 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 Plans (Option has been issued or may be issued other than outstanding warrants are referred to collectively as the "Company Plans." Each Company Stock Option shall be deemed to constitute an option to acquire, on the same terms and conditions as were applicable under such Company Stock Option, a “Cancellation Offer”) in exchange for the payment number of an amount to be determined by the Company up to $0.20 per share shares of Company Parent Common Stock subject equal to such Company Options (each such payment, an “Option Cancellation Payment”); provided, however, the number of shares of Parent Common Stock 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 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 Stock Option and delivery of such Option Cancellation Agreement would have been entitled to receive pursuant to the Company Merger had such holder exercised such option or warrant in accordance with the provisions set forth herein, such Company Option shall be cancelled in accordance with its terms, effective full immediately prior to the Merger 1 Effective Time, and Time at a price per share equal to (x) 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 aggregate exercise price for the Company with respect Shares otherwise purchasable pursuant to such Company Options. The Board Stock Option divided by (y) the product of Directors (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 Section 421 of the Company shall adopt all appropriate resolutions 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 take all other actions necessary with respect to the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer by the Company shall be on such terms and conditions as are reasonably acceptable of exercise of such option shall be determined in order to Parent and shall comply in all material respects with applicable federal and state securities laws, including, if necessary, Section 424(a) of the rules applicable to tender offersCode.

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) Prior 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 ELC’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, the Stock Options granted pursuant to this Section 5 shall be automatically and immediately vested and become exercisable by Executive, subject to the Merger 1 Effective Timeterms of Section 8 of this Agreement. Unless otherwise provided herein, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any terms of the Company Stock Options granted under the Company Stock Plans (a “Cancellation Offer”) in exchange for the payment of an amount pursuant 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 other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation Agreement”) this Section 5 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 governed in accordance with the provisions set forth herein, such Company Option of ELC’s 2001 Employee Stock Incentive Plan (the “Plan”). The Stock Options issued pursuant to this agreement shall be cancelled in accordance with its terms, effective immediately prior incentive stock options to the Merger 1 Effective Timeextent permitted by law and the terms of the Plan, and the holder of such Company Option, in cancellation and settlement therefor, balance shall be entitled to an Option Cancellation Payment reduced by any applicable withholding Taxesnon-qualified options. The Option Cancellation Agreement will include a release of claims against If Executive’ employment with the Company with respect to is terminated, as provided in Section 8, such Company Options. The Board of Directors of the Company Stock Options (whether or not vested) shall adopt all appropriate resolutions and take all other actions necessary with respect to the Company Options subject to an Option Cancellation Agreement, to survive or terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this provided under Section 1.6(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 offers8.

Stock Options. At the Effective Time, all rights with respect to Company Common Stock under each Company Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each such Company Option in accordance with the 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) Prior 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 each such Company Option shall be equal to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any number of the 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 shares of Company Common Stock subject to such Company Options Option immediately prior to the Effective Time 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 paymentCompany 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, an “exercisability, vesting schedule and other provisions of such Company Option Cancellation Payment”)shall otherwise remain unchanged; 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 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 assumed pursuant to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide thatthis Section 5.4(a) shall, 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 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 Merger 1 Effective Time. After the Effective Time, and Parent will deliver to each holder of an outstanding Company Option a notice describing the holder assumption of such Company Option, in cancellation and settlement therefor, shall be entitled . Parent agrees to an Option Cancellation Payment reduced by any applicable withholding Taxes. The Option Cancellation Agreement will include file with the SEC a release Registration Statement on Form S-8 relating to the shares 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 Parent Common Stock issuable with respect to the assumed Company Options subject to an Option Cancellation Agreement, to terminate no later than the relevant individual option agreements and cancel business day immediately following the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersClosing Date.

Stock Options. (a) At the Effective Time, all rights with respect to Company Common Stock under each Company Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each such Company Option in accordance with the 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) Prior 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 each such Company Option shall be equal to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any number of the 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 shares of Company Common Stock subject to such Company Options Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounding down to the nearest whole share (each such paymentwith cash, an “Option Cancellation Payment”); providedless the applicable exercise price, 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 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 being payable for any fraction of a Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide thatshare), upon execution by (iii) the holder of such Company Option and delivery of such Option Cancellation Agreement to the Company in accordance with the provisions set forth herein, per share exercise price under each such Company Option shall be cancelled 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 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 6.5(a) shall, 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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.further adjustment as

Stock Options. For purposes of this Section 13, the non-qualified stock option agreements between Employee and the Company (ithe "Stock Option Agreements") Prior to and the Merger 1 Effective TimeCompany's Long Term Incentive Plan, (as amended), (the "Plan") only, Employee's separation from the Company shall offer be deemed to cancel, effective immediately prior to be a Voluntary Resignation with Good Reason under the Merger 1 Effective Time, any Stock Option Agreements. Employee expressly acknowledges that he has vested and exercisable stock options for 350,000 shares of stock of the Company Options granted under 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 Stock Plans (with a “Cancellation Offer”) in exchange for the payment strike price of an amount to be determined by the Company up to $0.20 4.54 cents per share of Company Common (the "October Grant") pursuant to the Stock subject to such Company Options (each such payment, an “Option Cancellation Payment”); provided, however, that in no event shall Agreements and the Option Cancellation Payments exceed $1,000,000 in the aggregatePlan. To facilitate the foregoingextent not already vested, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and these options shall vest immediately upon 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 madeEffective Date. The Option Cancellation Agreements June Grant shall provide thatexpire, if not previously exercised, upon execution by the holder of such Company Option and delivery of such Option Cancellation Agreement to last dxx xx xxx thirtieth (30th) month following 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 TimeDate, and the holder October Grant shall expire, if not previously exercised, on the last day of such Company Option, in cancellation and settlement therefor, the twenty-fourth (24th) month following the Effective Date. The provisions of this Section 13 shall be entitled to an Option Cancellation Payment reduced by applicable notwithstanding 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 provisions of the Company shall adopt all appropriate resolutions and take all other actions necessary with respect to Stock Option Agreements or the Company Options subject to an Option Cancellation AgreementPlan which may be contrary to, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate or inconsistent with, the provisions of this Section 1.6(d)(i)13. Any Cancellation Offer 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 not limited to, the provisions of this Section 13, and the Stock Option Agreements have been duly authorized by all necessary corporate action on the part of 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 necessarybut not limited to, all necessary action on the rules applicable to tender offerspart of the Committee (as defined in the Plan), and this Agreement, including the provisions of this Section 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) Prior to At the Merger 1 Effective Time, the each outstanding and unexercised option to purchase shares of Company shall offer to cancel, effective immediately prior Common Stock (a “Company Option”) issued pursuant to the Merger 1 Effective TimePrab Robots, any Inc. 1988 Stock Option Plan, the Prab, Inc. 1999 Stock Option Plan, the Prab, Inc. 2000 Stock Option Plan of the Company Options granted under or otherwise (collectively, the “Company Stock Plans Option Plans”), the per share exercise price of which Company Option is less than the Merger Consideration (a “Cancellation OfferCashed-Out Company Option”), shall be converted into the right of the holder thereof to receive, in full satisfaction of each Cashed-Out Company Option, the “Cash Amount” with respect to such Cashed-Out Company Option, less any required withholding taxes. The “Cash Amount” for any Cashed-Out Company Option shall equal the product of: (1) in exchange for the payment excess of an amount to be determined by the Company up to $0.20 Merger Consideration over the exercise price 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 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 Cashed-Out Company Option and delivery (2) the number of shares of Company Common Stock issuable upon the exercise of such Option Cancellation Agreement Cashed-Out Company Option. The Company shall take all reasonable actions necessary to cause the holders of Company Options to consent, to the Company in accordance with extent required, to the provisions set forth herein, such Company Option shall be cancelled in accordance with its terms, effective transactions contemplated by this Section 1.7 no later than immediately prior to the Merger 1 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, 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 (A) the Company with 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 to such Company Options. The Board of Directors the capital stock of the Company shall adopt all appropriate resolutions be deleted and take all (C) no holder of Company Options or any participant in the Company Option Plans or any other actions necessary 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 subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersOptions.

Stock Options. (ia) Prior 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 Merger 1 following provisions of this Section 2.2. As of the Effective Time, each option to purchase shares of Company Common Stock, including all options granted pursuant to the Company Option Plan, the Company's 1983 Stock Option Plan, 1986 Non-Employee Director Option Plan and 1992 Employee Stock Option Plan (each, a "COMPANY STOCK OPTION") which is then outstanding shall offer be assumed by Parent and converted into an option (or a new substitute option shall be granted) (an "ASSUMED STOCK OPTION") to cancel, effective immediately prior purchase the number of shares of Parent Common Stock (rounded up to the Merger 1 Effective Timenearest whole share) equal to (x) the number of shares subject to such option multiplied by (y) the Exchange Ratio, any at an exercise price per share of Parent Common Stock (rounded down to the Company Options granted under nearest pennx) xxual to (A) 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 former exercise price per share of Company Common Stock subject under such option immediately prior to such Company Options the Effective Time divided by (each such payment, an “Option Cancellation Payment”)B) the Exchange Ratio; provided, however, that in no event shall the case of any Company Stock Option Cancellation Payments exceed $1,000,000 in to which Section 421 of the aggregate. To facilitate Code applies by reason of its qualification under Section 422 of the foregoingCode, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation Agreement”) conversion formula shall be distributed adjusted, if necessary, to comply with Section 424(a) of the Code. Except as provided above, 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 Assumed Stock Option shall be cancelled in accordance with its terms, effective 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 Merger 1 Effective Time, . Parent shall use its reasonable best efforts to promptly prepare and file with the holder of such Company Option, in cancellation Securities and settlement therefor, shall be entitled to an Option Cancellation Payment reduced by any applicable withholding Taxes. The Option Cancellation Agreement will include Exchange Commission (the "SEC") a release of claims against the Company registration statement on Form S-8 or other appropriate form with respect to shares of Parent Common Stock subject to the Assumed Stock Options and to maintain the effectiveness of such Company Options. The Board of Directors registration statement or registration statements covering such Assumed Stock Options (and maintain the current status of the Company shall adopt all appropriate resolutions and take all other actions necessary with respect to the Company prospectus or prospectuses contained therein) for so long as such Assumed Stock Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersremain outstanding.

Stock Options. (ia) Prior to Each of the Merger 1 Effective TimeCompany's stock option plans, each of which is set forth in Section 3.5(a) of the Company shall offer Disclosure Schedule (as defined in Section 5.1) (the "Option Plans"), and each option to cancel, effective acquire shares of Common Stock outstanding immediately prior to the Merger 1 Effective TimeDate thereunder, any whether vested or unvested (each, an "Option" 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 the Company Options granted under the Company shares of Parent Common Stock Plans (a “Cancellation Offer”"Substitute Option") in exchange for (rounded to the payment nearest whole share, with 0.5 shares being rounded up) equal to the number of an amount to be determined by the Company up to $0.20 per share shares of Company Common Stock subject to such Company Options (each such payment, an “Option Cancellation Payment”); provided, however, that in no event shall multiplied by the Option Cancellation Payments exceed $1,000,000 Exchange Ratio (as defined below). The per share exercise price for each Substitute Option shall be the current exercise price per share of Company Common Stock divided by the Option Exchange Ratio (rounded up to the nearest full cent), and each Substitute Option otherwise shall after the Effective Date be subject to 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). Prior to the Effective Date, the Company 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 aggregateCompany 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. To facilitate For avoidance of doubt, it is the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as intention of Parent and the Company shall mutually agree that the Substitute Options be identical in all respects to the Options (an “Option Cancellation Agreement”) except for the number and type of shares for which they shall be distributed to each holder of a Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide exercisable and the exercise price thereof) and that, upon execution by without limitation, (i) all terms of the holder of plans under which such Company Option Options were issued and delivery of such Option Cancellation Agreement to the Company in accordance with the provisions (ii) all policies set forth herein, such Company Option shall be cancelled in accordance with its terms, effective immediately prior to the Merger 1 Effective Time, Sections 3.5 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 5.8 of the Company Disclosure Schedule, shall adopt apply thereto from and after the Effective Date. (b) For purposes of this Amended and Restated Agreement, the term "Option Exchange Ratio" shall mean the ratio of (x) $20.50 to (y) the average of the closing prices per share of the Parent Common Stock on the New York Stock Exchange, as reported in the Wall Street Journal, for each of the ten trading days immediately preceding the Effective Date. (c) As soon as practicable after the Effective Date, Parent shall cause to be included under a registration statement on Form S-8 of Parent all appropriate resolutions and take all other actions necessary with respect to the Company Options shares of Parent Common Stock which are subject to an Option Cancellation AgreementSubstitute Options, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 maintain the effectiveness of such registration statement until all material respects with applicable federal and state securities lawsSubstitute Options have been exercised, including, if necessary, the rules applicable to tender offersexpired or forfeited. Section 3.6.

Stock Options. On the Effective Date, Executive will be granted options to purchase Two Million Five Hundred Thousand (i2,500,000) Prior to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any shares of common stock of the Company Options granted under the Company Stock Plans (a “Cancellation Offer”) in exchange for the payment of at an amount to be determined by the Company up exercise price equal to $0.20 1.01 per share of Company Common pursuant to the Non-Qualified Stock subject to such Company Options Option Agreement (each such payment, an the “Stock 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 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 which 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 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 in accordance with the provisions set forth herein1000 Xxxxxxxxxx Xxxxxx Xxxxxxx, such Company Xxxxxxxx 00000 Re: Grant of Stock 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. Dear Sxx: The Board of Directors of Swift Foods Company (the “Company”) has adopted the Company’s 2002 Stock Option Plan (the “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 adopt all appropriate resolutions be deemed a part of this Option Agreement as if fully set forth herein. The terms 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(ithat certain employment agreement between you and the Company, dated as of May 26, 2005 (together with any successor or replacement agreement, the “Employment Agreement”), that relate to or affect the Option are incorporated herein by reference. Any Cancellation Offer by Terms not defined herein that are defined in the Company Employment Agreement shall be on such 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 conditions as are reasonably acceptable to Parent of this Option Agreement and shall comply in all material respects with applicable federal the terms and state securities laws, including, if necessaryconditions of the Employment Agreement, the rules applicable to tender offersterms and conditions of the Employment Agreement shall be controlling.

Stock Options. All options and warrants to acquire Company Common Stock (iindividually, a "Company Option" and collectively, the "Company Options") Prior to outstanding at the Merger 1 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, the such Company shall offer to cancelOptions, effective immediately prior to by virtue of the Merger 1 Effective Time, and without any further action on the part of the Company Options granted or the holder 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 which Section 424(a) applied" within the meaning of Section 424 of the Code; or (b) to the extent that Section 424 of the Code does not apply to any such Company Options, 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 Plans Option Plan and the applicable option agreement issued thereunder, except that (a “Cancellation Offer”x) in exchange the unexercised portion of each such Company Option shall be exercisable for that whole number of shares of Watsxx Xxxmon Stock (rounded to the payment nearest whole share, with 0.5 rounded upward) equal to the number of shares of Company Common Stock 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 be determined by the Company up to $0.20 option exercise price per share of Company Common Stock subject to such Company Options Option in effect at the Effective Time divided by the Exchange Ratio (each such paymentthe option price per share, an “Option Cancellation Payment”as so determined, being rounded to the nearest full cent, with $0.005 rounded upward); 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 other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation Agreement”) No payment shall be distributed to each holder of a Company Option to whom a Cancellation Offer is mademade for fractional interests. The Option Cancellation Agreements shall provide thatterm, upon execution by exercisability, vesting schedule, status as an "incentive stock option" under Section 422 of the holder of such Company Option and delivery of such Option Cancellation Agreement to the Company in accordance with the provisions set forth hereinCode, such Company Option shall be cancelled in accordance with its terms, effective immediately prior to the Merger 1 Effective Timeif applicable, and all of 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 other terms of the Company Options shall adopt all appropriate resolutions and take all other actions necessary with respect to otherwise remain unchanged. As soon as practicable after the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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.Effective

Stock Options. (i) Prior Subject to Executive commencing his employment hereunder as the Company's Chief Scientific Officer on the Commencement Date, Executive shall be granted options to purchase an aggregate of 150,000 shares of Common Stock of the Company, subject to the Merger 1 Effective Timeterms of the Enzon, Inc. Non-Qualified Stock Option Plan, as amended (the Company "Option Plan"), and the Notice of Option Grant attached hereto as Exhibit A. Except as otherwise provided herein the Option Plan shall offer govern the terms of the options granted herein. Executive acknowledges that he has received and reviewed a copy of the Option Plan. The exercise price of such options shall be the last reported sale price of a share of Common Stock as reported by the Nasdaq Stock Market on the Commencement Date. Such options shall vest and become exercisable (a) as to cancel100,000 of such options, effective 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 prior vest and become exercisable (subject to the Merger 1 Effective Timerequirement in the Option Plan that such options not be exercisable for the 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, any and (b) as to 50,000 of such options, on the fifth anniversary of the Commencement Date, provided such 50,000 options shall immediately vest and become exercisable (subject to the requirement in the Option Plan that such options not be exercisable for the six months after the grant date thereof) on the date on which the audited financial statements of the Company Options granted under for a fiscal year are issued, which report net annual revenues of not less than Fifty Million Dollars ($50,000,000) from the Company Stock Plans commercial sale of product(s) used for organ rejection or autoimmune diseases (a “Cancellation Offer”"Organ Rejection and Autoimmune Products"), provided in the case of each of clause (a) and (b) of this paragraph that, except as otherwise provided in exchange for the payment of an amount to be determined Section 10 hereof, Executive is then employed by the Company up to $0.20 per share on a full-time basis as its Chief Scientific Officer. For purposes of Company Common Stock subject to such Company Options (each such payment, an “Option Cancellation Payment”); provided, however, that in no event this Section "net annual revenues" shall mean the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and 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 Company's revenues for 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 fiscal year 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 and cancel the relevant Company Options as necessary to effectuate the provisions derived from "net sales" of this Section 1.6(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.Organ Rejection and

Stock Options. The Company agrees to grant to Employee as of the date of the execution of this Agreement, an option (ithe "Option") Prior 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 Merger 1 Effective Timeclosing price for the Company's Common Stock as reported by NASDAQ on the last trading day on which such stock was traded next preceding the date of such execution, and shall 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 smallest number of installments so that the number of the shares 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 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 shall offer to cancel, effective immediately terminate for any reason prior to the Merger 1 Effective TimeOption's becoming exercisable in its entirety, any 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 Company Options granted under entirety of the Company Stock Plans (a “Cancellation Offer”) in exchange Option as an ISO, as to 25,000 shares for each Fiscal Year or fraction thereof that have elapsed between the payment Effective Date of an amount this Agreement and the date of such termination. The Option shall be subject to be determined any requirement of shareholder approval imposed by the Company up National Association of Securities Dealers, Inc. as a condition to $0.20 per share the continued quotation of Company the Company's Common Stock subject on NASDAQ (including the National Market System thereof). The Company will have used its best efforts to obtain such Company Options (each such paymentshareholder approval, an “Option Cancellation Payment”); providedif required, however, that in no event shall at the Option Cancellation Payments exceed $1,000,000 in next annual meeting of the aggregateCompany's shareholders following the Effective Date hereof. To facilitate Notwithstanding the foregoing, in the event of Employee's termination as an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form employee of the Company, except as Parent and a result of the Company shall mutually agree (an “Option Cancellation Agreement”) shall be distributed to each holder breach of a Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide that, upon execution any material term or condition hereof by the holder of such Company Option and delivery of such Option Cancellation Agreement to the Company in accordance with the provisions set forth hereinCompany, 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 portion of the Company Option not then exercisable 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersautomatically expire.

Stock Options. (i) Prior to the Merger 1 Effective TimeAs provided below, the Company shall offer grant Employee two ------------- stock options to cancel, effective immediately prior to the Merger 1 Effective Time, any purchase a total of the 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 350,000 shares of Company Common Stock subject to such Company Options (each such paymentcommon stock pursuant to, 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 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer by the Company shall be on such terms and conditions as are reasonably acceptable to Parent and shall comply or equivalent in all material respects with applicable federal 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 state securities lawsan additional 6.25% on the last day of each succeeding calendar quarter beginning as of March 31, including2000. 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 necessaryEmployee 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 rules applicable Company's stock option plans and programs to tender offersthe 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 "without cause" pursuant to paragraph 7(b)(iv) or by the Employee for "good reason" pursuant to paragraph 7(b)(v). all outstanding unvested options held by Employee shall become fully vested on the date of termination and all options will remain exercisable for the term provided under paragraph 6(b)(iv) of the LTIP. 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), or, notwithstanding paragraph 6(b)(iv) of the LTIP, if Employee's employment is terminated by the Company for "cause" under circumstances described in clause (A) or (B) of paragraph 7(b)(iii), all unvested options shall immediately terminate and all vested options will remain exercisable for the term provided under paragraph 6(b)(iv) of the LTIP (without regard to the immediate termination for cause otherwise provided in that subparagraph). If Employee's termination is by reason of death or disability pursuant to paragraph 7(b)(i) or (ii), 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 (C), (D) or (E) of paragraph 7(b)(iii), all outstanding 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 option may be exercisable beyond expiration of the term 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) of the LTIP applies.

Stock Options. (ia) Prior to the Merger 1 Effective Time, the Board of Directors of the Company (or, if appropriate, any committee thereof) shall offer adopt appropriate resolutions and take all other actions necessary or appropriate, if any, to cancel, effective (i) cause each Company Stock Option that is outstanding as of the date hereof to vest and to be exercisable immediately prior to the Merger 1 Effective Time, any consummation of the Company Options Merger, (ii) cause all restrictions applicable to any restricted stock award heretofore granted under the Company Restricted Stock Plans 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 of a “Cancellation Offer”) Company Stock Option (an "Option Holder"), in exchange for the payment of cancellation thereof, the right to receive from the Company an amount equal to be determined by (A) the Company up to $0.20 per share product of (1) the number of shares of Company Common Stock subject to such Company Options Stock Option and (each 2) the excess, if any, of the Merger Consideration over the exercise price per share for the purchase of the Company Common Stock subject to such Company Stock Option, minus (B) all applicable federal, state and local Taxes required to be withheld in respect of such payment, . The amounts payable pursuant to the immediately preceding sentence of this 5.4 shall be paid as soon as reasonably practicable following the Effective Time. The surrender of an “Option Cancellation Payment”); provided, however, that in no event 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 Cancellation Payments exceed $1,000,000 Holder had or may have had in respect thereof. The Company shall take all such steps as may be required to cause the aggregate. To facilitate the foregoing, an option cancellation agreement transactions contemplated by this Section 5.4 and any other dispositions of Company equity securities (and other appropriate and customary information and transmittal materialsincluding derivative securities) in such form as Parent and connection with this Agreement by each individual who is a director or officer of the Company shall mutually agree (an “Option Cancellation Agreement”) shall to be distributed exempt under Rule 16b-3 promulgated under the Exchange Act, such steps 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 be taken in accordance with the provisions set forth hereinNo-Action Letter dated January 12, such 1999, issued by the SEC to Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP. (b) The Company Option shall be cancelled take all actions necessary to ensure that (i) the Offering Period (as defined in the Company Stock Purchase Plan) applicable to the options outstanding under the Company Stock Purchase Plan (each, a "Purchase Plan Option") is shortened in accordance with its termsSection 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, effective immediately 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 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 take all actions necessary to provide that, 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 (i) the Company with respect to such Stock Option Plan, the Company Options. The Board of Directors Stock Purchase Plan and any similar plan or agreement of the Company shall adopt all appropriate resolutions and take all be terminated, (ii) any rights under any other actions necessary with respect plan, program, agreement or arrangement to the Company Options subject to an Option Cancellation Agreement, to terminate issuance or grant of any other interest in respect of the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions capital stock of this Section 1.6(d)(i). Any Cancellation Offer by the Company or any of its Subsidiaries shall be on such terms terminated, and conditions as are reasonably acceptable (iii) no Option Holder will have any right to Parent and shall comply in all material respects with applicable federal and state securities laws, includingreceive any shares of capital stock of the Company or, if necessaryapplicable, the rules applicable 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 Purchase Plan and each of the Company Stock Option Plan and the Company Restricted Stock Plan to tender offers.comply with subsections (a), (b) and (c) hereof without the consent of any Option Holder or any other person. Section 5.5

Stock Options. (i) Prior to Commencing on the Merger 1 Effective Timecomplete execution of this Agreement, the Company shall offer grant Executive an option to cancelpurchase Twenty Thousand (20,000) shares of the Company's stock at the market rate as set froth in the Company's Stock Option Plan on the effective date, effective immediately prior commencing on the complete execution of this Agreement. Said options shall vest at a rate of twenty-five percent (25%) per year (i.e. five thousand (5,000) options shall vest at the end of each full year of the Executive's employment during the five-year Term of this Agreement) and shall remain exercisable for a period of (10) years from the issue date. The option shall be subject to the Merger 1 Effective Time, any of the Company Options terms and conditions contained in and granted under the Company pursuant to that certain Incentive Stock Plans (a “Cancellation Offer”) in exchange for the payment of an amount to be determined Option Agreement adopted by the Company up (the "Incentive Stock Option Agreement"), a copy which is attached to $0.20 per share of Company Common Stock subject this Agreement as Exhibit B. In addition to such Company Options (each such paymentthe aforementioned options, 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 other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation Agreement”) Executive shall be distributed granted additional options for Seven Thousand Five Hundred (7,500) shares of the Company's stock per grant during each year that this Agreement remains in effect. All subsequent grants of options pursuant to each holder of this paragraph shall be at a Company Option price to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide that, upon execution be set 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 and ahsll be the same price at which options are offered to most other employees of the Company during the year in which the options are granted. Said options shall adopt all appropriate resolutions vest at a rate of twenty-five percent (25%) per year (i.e. one thousand eight hundred seventy five (1,875) options shall vest at the end of each full year of the Executive's employment) and take all other actions necessary with respect shall remain exercisable for a period of (10) years from the issue date. The option shall be subject to the Company Options subject terms and conditions contained in and granted pursuant to an that certain Incentive Stock Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer Agreement adopted by the Company (the "Incentive Stock Option Agreement"), a copy which is attached to this Agreement as Exhibit B. Should Executive's employment be terminated by the Company other than for Cause (pursuant to Section 2.03) prior to the Term of this Agreement, all options granted though the date of termination will fully vest immediately and all annual options granted for each year or employment through the end of the severance period shall fully vest immediately upon the date of termination as if the termination had not occurred. Should Executive be terminated for Cause, he shall be on such terms and conditions as are reasonably acceptable entitled only to Parent and shall comply in all material respects with applicable federal and state securities lawsthose options, including, if necessary, which vested through the rules applicable to tender offersdate of termination.

Stock Options. Each option to purchase shares of Fourth Shift Common Stock (ia "Fourth Shift Option") Prior to the Merger 1 Effective Time, the Company shall offer to cancel, effective outstanding immediately prior to the Merger 1 Effective Time shall remain outstanding following the Effective Time. At the Effective Time, any AremisSoft shall assume each Fourth Shift Option by virtue of the Company 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 (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 or (ii) to the extent 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 the Fourth Shift Options granted 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 Company 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 Plans (a “Cancellation Offer”rounded down to the nearest whole share) in exchange for equal to the payment number of an amount to be determined by the Company up to $0.20 per share shares of Company Fourth Shift Common Stock subject to such Company Options (each such payment, an “Fourth Shift 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 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 TimeTime divided by 6.14159, and (ii) the holder option price per share of such Company Option, in cancellation and settlement therefor, AremisSoft Common Stock shall be entitled an amount equal to an Option Cancellation Payment reduced by any applicable withholding Taxes. The Option Cancellation Agreement will include a release the option price per share of claims against the Company with respect Fourth Shift Common stock subject to such Company Options. The Board of Directors of the Company shall adopt all appropriate resolutions and take all other actions necessary with respect Fourth Shift Option in effect immediately prior to the Company Options subject Effective Time multiplied by 6.14159 (the option price per share, as so determined, being rounded upward to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(inearest full cent). 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. As of August 22, 2005 (ithe "Grant Date"), you shall be granted a non-qualified stock option (the "Extension Options") Prior to purchase 1,686,581 shares of Common Stock, pursuant to the Merger 1 Effective Timeterms 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 Option Agreement"), which, except as otherwise provided in this Section 5, shall be substantially identical to the Retention Stock Option Agreement. For purposes of the Employment Agreement (including without limitation Sections 7 and 11 thereof), the Company Extension Options shall offer to cancel, effective immediately prior be treated identically to the Merger 1 Effective Time, any of Retention Options. The Extension Options shall have an exercise price equal to the 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 fair market value per share of Company Common Stock subject to such Company as of the Grant Date and shall have a term of 10 years. The Extension Options shall become exercisable in three cumulative installments as follows: (each such payment, an “Option Cancellation Payment”)a) 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, howeverthat, that except as otherwise provided in Section 7 of the Employment Agreement or the Extension Stock Option Agreement, no event portion of the Extension Options not then exercisable shall become exercisable following your termination of employment for any reason. (For the Option Cancellation Payments exceed $1,000,000 in avoidance of doubt, if your employment shall terminate by reason of your Disability or death, then Section 7(d) of the aggregate. To facilitate Employment Agreement shall apply to the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materialsExtension Options.) in such form as Parent You and the Company acknowledge and agree that the Extension Options shall mutually agree (an “Option Cancellation Agreement”) shall be distributed to each holder not provide for the grant of a Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide that, upon execution by any "Restoration Options" as defined in 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersStock Incentive Plan.

Stock Options. (a) At the Effective Time, all rights with respect to shares of Company Common Stock that were issuable upon the exercise of options granted under the stock option plans and other options set forth on SECTION 3.02(b) of the Disclosure Schedule (collectively, the "COMPANY OPTIONS") and warrants set forth on SECTION 3.02(b) of the Disclosure Schedule (collectively, the "COMPANY WARRANTS") then outstanding, shall be converted into and become rights with respect to Veeco Shares, and Veeco shall assume each such Company Option and Company Warrant in accordance with the 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) Prior 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 each such Company Option or Company Warrant shall be equal to the Merger 1 Effective Time, product of (a) the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any number of the 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 shares of Company Common Stock subject to such Company Options Option or Company Warrant immediately prior to the Effective Time multiplied by (b) 0.184, rounding to the nearest whole share, (iii) the per share exercise price under 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 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 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 delivery of such Option Cancellation Agreement rounding to the nearest cent and (iv) any 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 schedule and other provisions set forth herein, of or relating to such Company Option or Company Warrant shall be cancelled otherwise remain unchanged; PROVIDED, HOWEVER, that each Company Option and Company Warrant assumed by Veeco in accordance with this Section 5.15(a) shall, in accordance with its terms, effective immediately prior 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 Merger 1 Effective Time. Veeco shall file with the SEC, and no later than the holder of such Company Optiondate on which the Merger becomes effective, in cancellation and settlement therefor, shall be entitled a registration statement on Form S-8 relating 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 Veeco Shares issuable with respect to the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of assumed by Veeco in accordance with this Section 1.6(d)(i5.15(a). 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. (i) Prior Concurrently herewith the Company has granted to Employee options to acquire 500 shares of the Merger 1 Effective TimeCompany'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 shall offer agrees to cancel, effective immediately prior 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 Merger 1 Effective Time, any five year period commencing on the date of issuance (the Company Options granted under the Company Stock Plans (a “Cancellation Offer”"Additional Options") in exchange for the payment of an amount such amounts (up to 100 shares per year) as shall be determined by the Company up 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) all Additional Options granted to $0.20 per share Employee as of Company Common Stock subject to such Company Options date shall be become fully vested and (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 other appropriate and customary information and transmittal materialsii) in such form as Parent and the Company shall mutually agree (an “Option Cancellation Agreement”) shall be distributed grant to each holder Employee fully vested additional options to purchase common stock 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 an amount equal to 500 minus the provisions set forth hereinsum of (A) the number of shares covered by the Additional Options issued as of such date, such Company Option shall be cancelled in accordance with its terms, effective immediately plus (B) for each year prior to such date an amount equal to 100 minus the Merger 1 Effective Time, and the holder number of such Company Option, in cancellation and settlement therefor, shall be entitled Additional Options granted to an Option Cancellation Payment reduced by any applicable withholding Taxes. The Option Cancellation Agreement will include a release of claims against the Company Employee with respect to such year. (For example, if the Company Optionscompletes 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 this Agreement, 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. The Board In this scenario, the Employee would have been granted a total of Directors 980 options (500 signing + 180 granted during term + 300 granted at IPO.) All stock options granted pursuant hereto shall be granted under the terms 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 Company's incentive stock option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersplan.

Stock Options. The Executive's compensation shall include options (ithe "Options") Prior to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any purchase equity of the Company Options granted under in the Company Stock Plans (a “Cancellation Offer”) in exchange for the payment form of an amount to be determined by the Company up to shares of common stock, $0.20 .001 par value per share (the "Company Common Stock"), equivalent to an amount, when exercised, of 2,000,000 shares of Company Common Stock subject (as such number of shares may be adjusted pursuant to clause (v) below). The material terms of the Options will include the following: (i) The date of grant of the Options will be the Effective Date; (ii) On the one (1) year anniversary of the Effective Date (the "Initial Vesting Date"), provided that the 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 (each as such paymentnumber 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, an “Option Cancellation Payment”)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, however, that in no event shall if the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and Executive's employment with the Company is terminated for any other reason than Due Cause, the Executive shall mutually agree 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 (an “Option Cancellation Agreement”as such number of shares may be adjusted pursuant to clause (v) below); (v) The Executive 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 receive customary anti-dilution protection for any mechanical adjustments 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 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 adopt all appropriate resolutions 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 other actions steps necessary with respect 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 Options subject Common Stock pursuant to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 Federal and state securities laws, including, if necessary, the rules applicable to tender offers.

Stock Options. (i) Prior The Executive shall be recommended to the Merger 1 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 Company shall offer Term, commencing in 1999, each such option to cancelcover a minimum of 40,000 shares of Revlon Common Stock, effective immediately prior to have a term of 10 years, to have an option exercise price equal to the Merger 1 Effective Timemarket price of Revlon Common Stock on the date of grant, any and otherwise to be on terms substantially the same as other senior executives of the Company Options granted under Executive's level, provided that if the Company Stock Plans (Term is to end pursuant to Section 2.2 otherwise than at a “Cancellation Offer”) in exchange for calendar year end, RCPC shall not be required to recommend that the payment of an amount stock option 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 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 granted 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 Executive with respect to such Company Options. The Board of Directors final year of the Company 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 adopt all appropriate resolutions and take all other actions necessary 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 Options subject such portion of the stock option granted with respect to an Option Cancellation such year as covers more than 20,000 shares, and provided finally that this Section 3.3 shall not apply following a Triggering Event. In connection with any termination of the Executive's employment pursuant to Section 4.4, RCPC shall recommend to the Compensation Committee (or other committee of the Board 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, whereupon any stock options still remaining outstanding and unexercised shall automatically terminate, provided that if the Executive violates Section 5.2 of this Agreement, in addition to terminate all other rights and remedies of the relevant individual option agreements Company the Executive agrees to forfeit and cancel surrender to the relevant Company Options as necessary all then outstanding stock options granted to effectuate the provisions Executive in May 1999 covering 25,000 shares of this Section 1.6(d)(i). Any Cancellation Offer Revlon Common Stock and to pay over to the Company all after tax gain realized by the Company shall be on Executive upon any exercise of 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 offersMay 1999 stock options.

Stock Options. (i) Prior to At the Merger 1 Effective Time, each outstanding purchase right under the 2007 Unit Option Plan of Envision Solar, LLC, (the “2007 Plan”), as amended to date and with any addendums thereto, and under the Envision Solar International, Inc. 2008 Stock Option Plan (the “2008 Plan”), as amended to date and any addendums thereto (each, a “Company Option”) shall offer be assumed by Parent in such manner that Parent is a corporation “issuing or assuming a stock option in a transaction to cancelwhich Section 424(a) applies” within the meaning of the Code, effective 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 Merger 1 Effective Time, any except that, as of the Effective Time, (i) each Company Options granted under 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 9.398 (the “Option Exchange Ratio”), rounded down to the nearest whole number of shares of Parent Common Stock Plans and (a “Cancellation Offer”ii) in exchange the per share exercise price for the payment shares of an amount Parent Common Stock issuable upon exercise of such Company Option so converted shall be equal to be the quotient determined by dividing the Company up to $0.20 exercise price 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 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 at which 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 was exercisable immediately prior to the Merger 1 Effective TimeTime by the Option Exchange Ratio, rounded up to the nearest whole cent, subject to any adjustments that may be required in order to comply with Sections 409A 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 422 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersCode.

Stock Options. The Employee shall be granted the option to purchase 370,000 (iThree Hundred and Seventy Thousand) Prior shares of the Company's Common stock (the "Stock Options"), at an exercise price per share equal to the Merger 1 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 TimeDate. To the extent possible, such Option will be an incentive stock option. The Stock Options shall 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 Stock Options shall vest. Upon the termination of the 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 subject to the terms of the Company's Stock Option Plan and 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 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 offer permit the Employee to cancel, effective immediately prior pay the option exercise price with a full recourse loan (secured by the shares acquired with the loan) at the lowest interest rate available to avoid the Merger 1 Effective Time, any 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 Company Options granted under Effective Date; (ii) the Company Stock Plans date six (a “Cancellation Offer”6) in exchange months after termination of the Employee's employment for any reason; or (iii) the payment date twelve (12) months after the Employee is first eligible to sell shares of the Company's stock that he holds following an amount to be determined by initial public offering of the Company up to $0.20 per share of Company Common Stock subject to such Company Options (each such payment, an “Option Cancellation Payment”)Company's shares; provided, however, provided however that in no the event shall of termination of the Option Cancellation Payments exceed $1,000,000 in Employee Without Cause or the aggregate. To facilitate the foregoingemployee's Resignation for Good Reason, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation Agreement”) loan shall be distributed repayable upon the earlier of the events stated in clauses (i) or (iii) immediately preceding. Going forward, the Employee will be eligible to each holder of a Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide thatreceive additional Stock Options at amounts and exercise prices then prevailing, upon execution by the holder of such Company Option and delivery of such Option Cancellation Agreement to the Company in accordance but consistent 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 proportional amounts of the Company shall adopt all appropriate resolutions and take all original grant vis-a-vis other actions necessary with respect to the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offerssenior manager's original grant allotments.

Stock Options. (i) Prior to At the Merger 1 Effective Time, the each unexercised and unexpired Company Option then outstanding under any Company Stock Option Plan or otherwise, whether or not then exercisable, shall offer be converted into an option to cancelpurchase Parent Common Stock in accordance with this Section 2.4; provided, effective immediately prior however, that with respect to the Merger 1 Effective Time, any of the 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 use commercially reasonable efforts to obtain the consent of the 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 Option Plans applicable to such conversion; provided, further that to the 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 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 Plans 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 and, to the extent allowable under applicable Law and the terms of the Company Stock Option Plan (or such other agreement), the terms and conditions 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 Parent will adopt prior to the Effective Time (together, the “Cancellation OfferTransition Assistance Plans”) and (iv) Schedule C, except that (x) each Company Option shall be exercisable (or shall become exercisable in exchange 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 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 payment shares of an amount Parent Common Stock issuable upon exercise of such Company Option so converted shall be equal to be the quotient determined by dividing the Company up to $0.20 exercise price per share of Company Common Stock subject 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 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 (each such payment, an “Option Cancellation Payment”); provided, however, that in no event within the meaning of Section 424 of the Code. Continuous employment with the Company or any Company Subsidiary shall be credited to the Option Cancellation Payments exceed $1,000,000 in optionee for purposes of determining the aggregatevesting of all converted Company Options after the Effective Time. To facilitate In addition to the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent shall assume each Company Stock Option Plan and the number and kind of shares available for issuance under each such Company shall mutually agree (an “Stock Option Cancellation Agreement”) Plan shall be distributed to each holder converted into shares 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 Parent Common Stock 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 applicable Company shall adopt all appropriate resolutions and take all other actions necessary with respect to the Company Options subject to an Stock Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersPlan.

Stock Options. All options and warrants to acquire Company Common Stock (iindividually, a "Company Option" and collectively, the "Company Options") Prior to outstanding at the Merger 1 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, the such Company shall offer to cancelOptions, effective immediately prior to by virtue of the Merger 1 Effective Time, and without any further action on the part of the Company Options granted or the holder 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 which Section 424(a) applied" within the meaning of Section 424 of the Code; or (b) to the extent that Section 424 of the Code does not apply to any such Company Options, 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 Plans Option Plan and the applicable option agreement issued thereunder, except that (a “Cancellation Offer”x) in exchange the unexercised portion of each such Company Option shall be exercisable for that whole number of shares of Watsxx Xxxmon Stock (rounded to the payment nearest whole share, with 0.5 rounded upward) equal to the number of shares of Company Common Stock 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 be determined by the Company up to $0.20 option exercise price per share of Company Common Stock subject to such Company Options Option in effect at the Effective Time divided by the Exchange Ratio (each such paymentthe option price per share, as so determined, being rounded to the nearest full cent, with $0.005 rounded upward). No payment shall be made for fractional interests. The term, exercisability, vesting schedule, status as an “Option Cancellation Payment”); provided"incentive stock option" under Section 422 of the Code, howeverif applicable, that in no event shall and all of the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and terms of the Company Options shall mutually agree (an “Option Cancellation otherwise remain unchanged unless modified by or as a result of the transaction contemplated by this 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 As soon as practicable after 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 Watsxx xxxll deliver to the holder holders of Company Options appropriate notices setting forth 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 holders' rights pursuant to such Company Options. The Board , as amended by this Section 1.5 as well as notice of Directors Watsxx'x xxxumption of the Company shall adopt all appropriate resolutions and Company's obligations with respect thereto (which occurs by virtue of this Agreement). Watsxx xxxll take all other corporate actions necessary with respect to the reserve for issuance such number of shares of Watsxx Xxxmon Stock as will be necessary to satisfy exercises in full of all Company Options subject to an Option Cancellation Agreement, to terminate after the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i)Effective Time. 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 offers1.6.

Stock Options. (i) Prior to On or as soon as practicable following the Merger 1 Effective Timedate on which this Agreement is actually executed, the Company shall offer to cancelwill grant Xx. Xxxxx an option (the “2006 Option”), effective immediately prior pursuant to the Merger 1 Effective TimeCompany’s 1997 Stock Plan, any to purchase an aggregate of 80,000 shares of the Company Options granted under 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 Plans and Xx. Xxxxx, except that (1) the terms of the 2006 Option shall specify that the 2006 Option, to the extent that 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 “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 other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation AgreementOptions”) shall continue to 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 become exercisable in accordance with the provisions set forth herein, terms of the agreements (the “Option Agreements”) evidencing such Company Options and Xx. Xxxxx will continue to be able to exercise each such Option shall be cancelled in accordance with its terms, effective immediately the terms of the applicable Option Agreement until the earlier of (1) the expiration of the general term of the Option as set forth in the applicable Option Agreement (prior to the Merger 1 Effective Timeamendment thereto to comply with this Section 3(c)) or (2) the later of the 15th day of the third month following the date at which, and or December 31 of the holder calendar year in which, such Option would otherwise have ceased to be exercisable in accordance with the terms of such Company Optionthe Option Agreement. Although the period during which vested Options may be exercised may be extended pursuant to this Paragraph 3(c), nothing in cancellation and settlement therefor, this Paragraph 3(c) shall be entitled construed to an Option Cancellation Payment reduced by mean that the vesting or exercisability of any applicable withholding TaxesOptions will be accelerated. The Option Cancellation Agreement will include a release provision of claims against the Company any option with respect to such Company Options. The Board of Directors of vesting or the Company first date upon which the option is exercisable shall adopt all appropriate resolutions and take all other actions necessary with respect be appropriately amended from time to the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options 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 effectuate others or in the provisions employment agreement of this Section 1.6(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 offersany member of senior management.

Stock Options. (i) Prior to the Merger 1 Effective TimeExcept as provided in this paragraph 4, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any of the Company Options granted under the Company your interest in and rights in your Vested 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 as defined and set forth in no event shall the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation Agreement”Exhibit A) shall be distributed governed by and be subject to each holder of a Company all conditions, terms and restrictions contained in the Company's 1993 Stock Option Plan, as amended from time to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide that, upon execution by time ("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 TimePlan"), and the holder option 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 "Employment Agreement")), the option letter agreement dated August 28, 1998 (a copy of such Company Optionwhich is attached hereto as Exhibit C) and the option letter agreement dated March 1, in cancellation 2000 (a copy of which is attached hereto as Exhibit D). Your rights with respect to your Stock Options shall be fixed as of your Termination Date and settlement thereforpursuant to this Agreement. With respect to the 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 you shall be entitled to an Option Cancellation Payment reduced by any applicable withholding Taxesexercise those options on or before February 15, 2003. The Option Cancellation Agreement will include a release of claims against the Company with With respect to such Company Optionsthe 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 you shall be entitled to exercise those 90,000 options on or before February 15, 2005. The Board With respect to the option letter agreement dated August 28, 1998, you shall be entitled to exercise, at your election, some or all of Directors the 105,000 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, the term "Cashless Basis" shall mean that in lieu of exercising some or all of your 105,000 vested stock options for cash, you shall be entitled to receive up to a total number of shares of common stock of the Company shall adopt all appropriate resolutions computed using the following formulas: X = 35,000 (A - $1.2375) ; and take all other actions -------------------- 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 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 with 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 vested as of your Termination Date on or before February 15, 2005. You acknowledge and agree that you shall forfeit any right to those 30,000 unvested stock options under the 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 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. The Company Options subject agrees to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as take any action necessary to effectuate the provisions terms of this Section 1.6(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 offersparagraph 4.

Stock Options. (i) Prior to At the Merger 1 Effective Acceptance Time, the each outstanding option to purchase Shares (“Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, Option”) under any employee stock option or compensation plan or arrangement of the Company Options granted under 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 Stock Plans Option be cancelled and the holder thereof will receive a cash payment with respect thereto equal to the product obtained by multiplying (a “Cancellation Offer”a) in exchange for the payment excess, if any, of an amount to be determined by the Company up to $0.20 Offer Price over the exercise price per share of Company Common Stock subject to such Company Options Option, by (each b) the number of Shares issuable upon exercise of such payment, an Company Option (the “Option Cancellation Cash 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 other appropriate and customary information and transmittal materials) in such form as Parent and the Company Surviving Corporation or the Company, as applicable, shall mutually agree (an “Option Cancellation Agreement”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 distributed 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 Option shall cease 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 have any applicable withholding Taxes. The Option Cancellation Agreement will include a release of claims against the Company rights with respect thereto, except the right to such Company Optionsreceive the Option Cash Payment. The Board of Directors of the Company shall adopt all appropriate resolutions and take all other actions necessary with respect In order to the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate effect the provisions of this Section 1.6(d)(i6.10(a). Any Cancellation Offer by , the Company shall be on permitted to fully accelerate the vesting of all Company Options at such terms and conditions time prior to the Acceptance Time as are reasonably acceptable to Parent and shall comply be determined by the Company in all material respects with applicable federal and state securities laws, including, if necessary, the rules applicable to tender offersits sole discretion.

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 (the “May 2009 Vesting Options”). Xxxxxx shall also be eligible to receive shares of the Company’s authorized stock and additional options to purchase shares of 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) Prior to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any “Change in Control” of the Company Options granted under or its business, (ii) if the Company Stock Plans (a “Cancellation Offer”) in exchange for the payment employment of an amount to be determined Xxxxxx is terminated by the Company up to $0.20 per share without “Cause” (as defined below) or by Xxxxxx with “Good Reason” (as defined below), or (iii) if the employment of Company Common Stock subject to such Company Options (each such paymentXxxxxx is terminated upon the death or Total Disability of Xxxxxx. For purposes hereof, an “Option Cancellation Payment”); provided, however, that in no event Change of Control” and “Total Disability” shall have the Option Cancellation Payments exceed $1,000,000 meanings set forth in the aggregate. To facilitate the foregoing, an stock option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and between 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 and Xxxxxx representing 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 May 2009 Vesting Options. The Board of Directors of the Company shall adopt all appropriate resolutions hereby agrees to register its existing Stock Option and take all other actions necessary with respect to the Company Options Restricted Stock Plan on a Form S-8 registration statement as soon reasonably practicable so Xxxxxx may, subject to an Option Cancellation AgreementRule 144 under the Securities Act of 1933, to terminate as amended, exercise the relevant individual option agreements above options and cancel freely sell the relevant Company Options as necessary to effectuate shares of common stock obtained thereby in the provisions of this Section 1.6(d)(ipublic market. (c). 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) Prior to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any of the 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 other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree take such commercially reasonable actions as are necessary to provide that (an “i) at the Effective Time each outstanding Company Stock Option Cancellation Agreement”(as defined in Section 3.2(a)) 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 adjusted in accordance with the provisions terms thereof and this Agreement to be exercisable to purchase shares of Parent Common Stock as provided below and (ii) except as otherwise provided for in this Agreement or in option grants to non-employee directors of the Company, or as agreed to in writing by Parent, the vesting of exercisability of any Company Stock Option shall not be accelerated due to the Merger or this Agreement. Following the Effective Time, each Company Stock Option shall continue to have, and shall be subject to, the same terms and conditions (including vesting and transfer restrictions) set forth herein, in the Company Option Plans (as defined in Section 3.2(a)) or any other agreement pursuant to which such Company Stock Option shall be cancelled in accordance with its terms, effective was subject immediately prior to the Merger 1 Effective Time, and the holder of such except that (i) each Company Option, in cancellation and settlement therefor, Stock Option shall be entitled exercisable for that number of shares of Parent Common Stock equal to an Option Cancellation Payment reduced by any applicable withholding Taxes. The Option Cancellation Agreement will include a release the product of claims against (x) the Company with respect to such Company Options. The Board aggregate number of Directors shares of the Company shall adopt all appropriate resolutions Common Stock for which such Company Stock Option was exercisable and take all other actions necessary with respect (y) the Exchange Ratio, rounded down to the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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, includingnearest whole share, if necessary, (ii) the rules applicable per share exercise price of such Company Stock Option shall be the exercise price immediately prior to tender offersthe Effective Time divided by the Exchange Ratio (rounded up to the nearest whole cent) and (iii) in the event an optionee's (other than David Saperstein's) employment is terminated by the Surviving Corporxxxxx xx xxx xx xxs affiliates without "cause" (as defined in the optionee's option agreement) within three years following the Effective Time, Parent shall cause any unvested options held by the optionee which were granted pursuant to the Company Option Plans prior to the Effective Time to immediately vest. The adjustments provided herein to any options which are incentive stock options (as defined in Section 422 of the Code) shall be effected in a manner consistent with Section 424(a) of the Code.

Stock Options. Other than (i) Prior 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 Merger 1 Effective TimeClosing, the Company shall offer 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 cancel, effective 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 Merger 1 Effective Time. At the Effective Time, any of the Company Options granted each then outstanding Performance Option, Harbxxxx Xxxion or option under the Company Stock Option Plans (a “Cancellation Offer”collectively, the "Options") in exchange which was not exercised prior to the Effective Time shall terminate and the holder thereof will have the right to receive for the payment shares of an amount to be determined by the Company up to $0.20 per share of Company Common Stock, Series 2 Preferred or Nonvoting Common Stock subject to such Company Options Option an amount (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 other appropriate and customary information and transmittal materialssubject to any applicable withholding tax) in cash equal to the difference between the aggregate Merger Consideration applicable to such form as Parent shares and the Company shall mutually agree aggregate per share exercise price of such option to the extent such difference is a positive number (an “such amount being hereinafter referred to as, the "Option Cancellation Agreement”) shall be distributed to each holder of a Company Option to whom a Cancellation Offer is madeConsideration"). The surrender of an 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 exchange for the provisions set forth herein, such Company Option Consideration 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 deemed a release of claims against any and all rights the Company with holder had or may have had in respect to of 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersoption.

Stock Options. The Employee shall be granted the option to purchase ------------- 370,000 (iThree Hundred and Seventy Thousand) Prior shares of the Company's Common stock (the "Stock Options"), at an exercise price per share equal to the Merger 1 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 TimeDate. To the extent possible, such Option will be an incentive stock option. The Stock Options shall 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 Stock Options shall vest. Upon the termination of the 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 subject to the terms of the Company's Stock Option Plan and the Company's standard incentive and non-statutory Stock Option Purchase Agreements (the "Standard Agreements" described in Attachment D), provided pursuant to the 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 offer permit the Employee to cancel, effective immediately prior pay the option exercise price with a full recourse loan (secured by the shares acquired with the loan) at the lowest interest rate available to avoid the Merger 1 Effective Time, any 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 Company Options granted under Effective Date; (ii) the Company Stock Plans date six (a “Cancellation Offer”6) in exchange months after termination of the Employee's employment for any reason; or (iii) the payment date twelve (12) months after the Employee is first eligible to sell shares of the Company's stock that he holds following an amount to be determined by initial public offering of the Company up to $0.20 per share of Company Common Stock subject to such Company Options (each such payment, an “Option Cancellation Payment”)Company's shares; provided, however, provided however that in no the event shall of termination of the Option Cancellation Payments exceed $1,000,000 in Employee Without Cause or the aggregate. To facilitate the foregoingemployee's Resignation for Good Reason, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation Agreement”) loan shall be distributed repayable upon the earlier of the events stated in clauses (i) or (iii) immediately preceding. Going forward, the Employee will be eligible to each holder of a Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide thatreceive additional Stock Options at amounts and exercise prices then prevailing, upon execution by the holder of such Company Option and delivery of such Option Cancellation Agreement to the Company in accordance but consistent 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 proportional amounts of the Company shall adopt all appropriate resolutions and take all original grant vis-a-vis other actions necessary with respect to the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offerssenior manager's original grant allotments.

Stock Options. (i) Prior The 1997 Stock Option Plan pursuant to which Xxxx’s options were granted provides that his options “shall terminate immediately upon the termination for any reason of the holder’s employment or services,” with the holder having 90 days following such termination in which to 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 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 Merger 1 Effective Time$173,077 it has already paid to Xxxx, the Company shall offer to cancelproposes two options by which Xxxx’s benefits will be delivered. Please have Xxxx execute his name following the option he selects, effective immediately prior to in the Merger 1 Effective Timesignature block provided for this purpose. By executing his name under either option, any of Xxxx agrees he is voluntarily and knowingly releasing the Company Options granted (including its affiliated companies), and the officers, directors and agents thereof (collectively, the “Releasees”) from any and all claims pertaining to benefits under the Company Stock Plans May 12, 2006 employment agreement between him and all applicable employment laws identified in Annex 1, and the Company’s reporting of such benefits to applicable taxing authorities. Xxxx has the right to consider this release for 21 days and, for seven (a “Cancellation Offer”7) calendar days following his execution of this letter agreement, to revoke it. To be effective, his revocation must be in exchange for the payment of an amount to be determined writing and delivered by hand or overnight mail and received by the Company up to $0.20 per share of Company Common Stock subject to such Company Options (each such paymentwithin 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, an “Option Cancellation Payment”); provided, however, that in no event shall the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate case of the foregoingsecond option, an option cancellation agreement 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 other appropriate and customary information and transmittal materials) in such form as Parent agreed that each of Xxxx and the Company shall mutually agree 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 (an “Option Cancellation Agreement”a) shall 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 distributed 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 each holder of a Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide that, upon execution the delivery service as documented by the holder of such 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 Option will make the following payments and delivery of such Option Cancellation Agreement deliveries 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 OptionXxxx Xxxxx, 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 full satisfaction 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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.its obligations under Xxxx’s employment agreement:

Stock Options. (i) Prior Notwithstanding anything to the Merger 1 Effective Timecontrary contained within this Consulting Agreement, the Company shall offer to cancel, effective immediately prior Employment Agreement or the Option Agreement described on Exhibit "A" to the Merger 1 Effective TimeEmployment Agreement, (hereinafter "Option Agreement"), or the Stock Option Agreement, dated as of January 21, 1999 (hereinafter the "Additional Option Agreement") the Company and the Executive hereby agree (a) that Section 3.1(a) and Sections 3.3(b) and (c) of the Option Agreement are hereby clarified and, to the extent necessary, modified, to state that those options that have been granted and which 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 exercisable at any time, (b) that Section 3.1(a) and Sections 3.3(b) and (c) of the Additional Option Agreement are hereby clarified and, to the extent 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 any subsequent option agreement that may be entered into between the Company and 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 for other persons. To the extent that registered shares are available for issuance upon exercise of the option, Company will issue registered shares to Executive. Executive further agrees that to the extent he anticipates entering into the market to sell any of the 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, howevershares received upon exercise, that in no event shall the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (he will consult with and 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 cooperate 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 reasonable requests of the Company shall adopt all appropriate resolutions and take all other actions necessary or the Company's designated investment banker with respect to the Company Options subject timing and amount of such sales in order to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer by the Company shall be on avoid any adverse market affect from 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 offersdispositions.

Stock Options. (i) Prior to At the Merger 1 Effective Acceptance Time, the each outstanding option to purchase Shares (“Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, Option”) under any employee stock option or compensation plan or arrangement of the Company Options granted under 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 Stock Plans Option be cancelled and the holder thereof will receive a cash payment with respect thereto equal to the product obtained by multiplying (a “Cancellation Offer”a) in exchange for the payment excess, if any, of an amount to be determined by the Company up to $0.20 Offer Price over the exercise price per share of Company Common Stock subject to such Company Options Option, by (each b) the number of Shares issuable upon exercise of such payment, an Company Option (the “Option Cancellation Cash 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 other appropriate and customary information and transmittal materials) in such form as Parent and the Company Surviving Corporation or the Company, as applicable, shall mutually agree (an “Option Cancellation Agreement”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 distributed 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 Option shall cease 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 have any applicable withholding Taxes. The Option Cancellation Agreement will include a release of claims against the Company rights with respect thereto, except the right to such Company Optionsreceive the Option Cash Payment. The Board of Directors of the Company shall adopt all appropriate resolutions and take all other actions necessary with respect In order to the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate effect the provisions of this Section 1.6(d)(i6.10(a). Any Cancellation Offer by , the Company shall be on permitted to fully accelerate the vesting of all Company Options at such terms and conditions time prior to the Acceptance Time as are reasonably acceptable to Parent and shall comply be determined by the Company in all material respects with applicable federal and state securities laws, including, if necessary, the rules applicable to tender offersits sole discretion.

Stock Options. (ia) Prior All outstanding options to purchase Company capital stock (“Company Stock Options”) outstanding at the Effective Time under the Appilog, 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 necessary, 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 Merger 1 Effective Timeimmediately preceding sentence, each Company Stock Option so assumed by Parent under this Agreement shall continue to have, and be subject to, substantially similar terms and conditions to those set forth in the Company shall offer to cancel, effective Stock Plan or as provided in the respective option agreement immediately prior to the Merger 1 Effective Time, any except that (i) each Company Stock Option will be exercisable for that number of whole shares of Parent Common Stock equal to the product of the number of shares of Company Options granted under the Common Stock that were issuable upon exercise of such Company Stock Plans Option immediately prior to the Effective Time multiplied by the Option Exchange Ratio, rounded down to the nearest whole number of shares of Parent Common Stock; and (a “Cancellation Offer”ii) in exchange the per share exercise price for the payment shares of an amount Parent Common Stock issuable upon exercise of such assumed Company Stock Option will be equal to be the quotient determined by dividing the Company up to $0.20 exercise price 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 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 capital stock at which 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 was exercisable immediately prior to the Merger 1 Effective TimeTime by the Option Exchange Ratio, and rounded up to the holder nearest whole cent. It is the intention of the parties hereto that the Company Stock Options (other than those Additional Options which shall be issued to employees located in the United States) assumed by Parent following the Effective Time pursuant to this Section will, to the extent permitted by applicable law, qualify as incentive stock options as defined in Section 422 of the Code, to the extent any 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 Stock Options qualified as incentive stock options immediately prior to the Company Options subject Effective Time or as options granted pursuant to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(isection 102 of the 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 Issuance to Employees) 5763-2003 (the “Rules”). 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 offersappropriate.

Stock Options. (i) Prior to The Company shall take all requisite action so that at the Merger 1 Effective Time, each outstanding option issued by the Company shall offer pursuant to cancelany of the Company Stock Incentive Plans (a “Company Stock Option”) whether or not exercisable at the Effective Time, effective will be assumed by Parent by virtue of the Merger and without any action on the part of the holder thereof. Subject to, and in accordance with, the terms of the applicable Company Stock Incentive Plan including any applicable award agreement evidencing such Company Stock Option, from and after the 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 Merger 1 Effective Time as set forth in the applicable Company Stock Incentive Plan (including any applicable award agreement, evidencing such Company Stock Option) immediately prior to the Effective Time, any 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 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 number of Company Common Stock Shares that were subject to such Company Options 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 Common 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 paymentassumed Company Stock Option by the Equity Exchange Factor, an “Option Cancellation Payment”); provided, however, that in no event shall rounded up to the Option Cancellation Payments exceed $1,000,000 in the aggregatenearest whole cent. To facilitate Notwithstanding the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and the conversion of the Company shall mutually agree (an “Option Cancellation Agreement”) Stock Options into options to purchase Parent Common Shares is intended to conform with and 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 made 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 requirements 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Treasury Regulation Section 1.6(d)(i1.409A-1(b)(5)(v)(D). 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. The Executive shall be granted (i) Prior on the Effective Date an option to purchase 100,000 shares of Revlon common stock, (ii) subject to the Merger 1 Effective TimeExecutive'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 with a term of 10 years from the date of grant and an option exercise price equal to the 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 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 shall offer terminate the Executive other than for Cause pursuant to cancelSection 4.3, effective immediately prior or the Executive shall terminate his employment on account of Good Reason pursuant to Section 4.4, the Merger 1 Effective Time, any of the Company Options granted under the Company Stock Plans (a “Cancellation Offer”) in exchange for the payment of an amount to options so recommended shall vest and 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 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 exercisable in accordance with the provisions set forth hereinterms of the Revlon Inc. Amended and Restated 1996 Stock Plan or any plan that may replace it, as if the Executive had "retired" with the Company's consent within the meaning of such Company Option plan. For purposes of clarification and for the avoidance of doubt, treating options as if Executive had "retired" shall be cancelled mean that each option held by the Executive as of the date of such termination shall continue to vest in accordance with its terms, effective immediately prior to the Merger 1 Effective Time, terms 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i)Agreement and shall remain exercisable for one year following the date that such option becomes fully vested and exercisable. Any Cancellation Offer by In addition, the Company Executive shall be on such recommended to the Compensation Committee or other committee of the Board administering the Revlon Inc. Amended and Restated 1996 Stock Plan or any plan that may replace it, as from time to time in effect, to receive, under that Plan or otherwise, additional annual grants in years after 2002 under terms and conditions as are reasonably acceptable no less favorable than those granted to Parent and shall comply in all material respects with applicable federal and state securities laws, including, if necessary, the rules applicable to tender offersRCPC's senior most executives generally.

Stock Options. (ia) Prior to Parent shall not assume or otherwise replace any Company Options, whether vested or unvested, in connection with the Merger 1 transactions contemplated hereby. At the Effective Time, the each Company shall offer to cancelOption that is outstanding, effective unexercised and unexpired as of immediately prior to the Merger 1 Effective Time, any of whether vested or unvested, shall be accelerated in full, cancelled and converted into and represent (A) the right to receive, in accordance with the Company Options granted under the Company Stock Plans Option Termination Agreement (a “Cancellation Offer”) in exchange for the payment of as defined below), an amount in cash, without interest, equal to be determined by (x) the Company up to $0.20 Per Share Amount, minus the exercise price per share attributable to such Company Option, minus the Working Capital Escrow Contribution Amount, multiplied by (y) the number of shares of Company Common Stock subject to such Company Options Option, plus (each such paymentB) 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 “Option Cancellation Payment”); providedamount in cash equal to (i) the Per Share Working Capital Disbursement Amount for such disbursements, however, that in no event shall multiplied by (ii) the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and the number of shares of Company shall mutually agree (an “Option Cancellation Agreement”) shall be distributed Common Stock subject 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 Option, plus (C) the right to the Company receive in accordance with the provisions set forth hereinTax Sharing Provisions, in respect of each cash disbursement of any Tax Benefit Payment satisfied prior to the fifth (5th) anniversary of the Closing Date, an amount in cash 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). Subject to the terms and conditions hereof, (X) the amount payable pursuant to clause (A) of the preceding sentence shall be cancelled paid by Parent to each Holder of Company Options promptly following the Effective Time 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 its terms, effective immediately prior Section 1.11 by distributing such amount to such Holder through the Merger 1 Effective TimeCompany’s normal payroll procedures, and (Z) any amounts payable pursuant to clause (C) of the holder preceding sentence shall be paid by Parent to each Holder of Company Options in accordance with Section 1.12 by distributing such Company Optionamount to such Holder through the Company’s normal payroll procedures; provided that, in cancellation each case, such Holder has executed 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 delivered the Company with respect Option Termination Agreement pursuant 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i1.7(b). 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) Prior Subject to Section 5.1(b), at the Merger 1 Effective Time, the each Company shall offer to cancel, effective Option which is outstanding and unexercised immediately prior to the Merger 1 Effective Time, any whether or not vested, shall be converted into and become an option to purchase Parent Common Stock, and Parent shall assume each such Company Option in accordance with the 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 Options granted Option assumed by Parent may be exercised solely for shares of Parent Common Stock, (ii) the number of shares of Parent Common Stock to be subject to each assumed Company Option shall be equal to the product of (A) the number of shares of Company Common Stock 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 Stock Plans Option shall be equal to the quotient of (a “Cancellation Offer”A) in exchange for the payment of an amount to be determined by the Company up to $0.20 exercise price per share of Company Common Stock subject 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 Options (each such paymentOption shall continue in full force and effect and the term, an “Option Cancellation Payment”); providedexercisability, 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 (vesting schedule and 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 provisions of such Company Option and delivery of such shall otherwise remain unchanged; PROVIDED, HOWEVER, that each Company Option Cancellation Agreement to the Company assumed by Parent in accordance with the provisions set forth hereinthis Section 5.1(a) shall, such Company Option shall be cancelled in accordance with its terms, effective immediately prior 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 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 adjustments provided herein with respect to such any Company Options. The Board of Directors Options which are "incentive stock options" (as defined in Section 422 of the Company Code) shall adopt all appropriate resolutions and take all other actions necessary 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 Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of assumed by Parent in accordance with this Section 1.6(d)(i5.1(a). 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) Prior 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 Merger 1 Effective Time, whether or not exercisable at the Company shall offer to cancelEffective Time, effective and which remains outstanding immediately prior to the Merger 1 Effective Time, any of the Company Options granted under the Company Stock Plans (shall be assumed by Buyer, shall cease to represent a “Cancellation Offer”) in exchange for the payment of an amount right to be determined by the Company up to $0.20 per share acquire shares of Company Common Stock 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 (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, par value $.01 per share (the “Buyer Common Stock”), equal to the product of the number of shares of Company Common Stock that were subject to such Company Options (each Option immediately prior to the Effective Time 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 paymentsubstituted 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, an “Option Cancellation Payment”)rounded up to the nearest whole cent; 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 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 case of a Company any Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide thatwhich Section 421 of the Internal Revenue Code of 1986, 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 Timeas amended, and the holder rules and regulations adopted pursuant thereto (the “Code”) applies by reason of such Company Optionits qualification under Section 422 of the Code, in cancellation and settlement thereforthe option exercise price, shall be entitled to an Option Cancellation Payment reduced by any applicable withholding Taxes. The Option Cancellation Agreement will include a release the number of claims against the Company with respect shares subject to such Company Options. The Board of Directors of option and 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer by the Company shall be on such terms and conditions of exercise of such option shall be determined in a manner consistent with the requirements of Section 424(a) of the Code so as are reasonably acceptable not to Parent and shall comply in all material respects with applicable federal and state securities laws, including, if necessary, the rules applicable to tender offersconstitute a “modification” of such option.

Stock Options. At the Effective Date, each of the options to purchase Company Common Stock granted under (i) Prior to the Merger 1 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, 1996 between the Company and Michael G. Puls (the "PULS AGREEMENT," and collectively with the optxxxx xxxxxxxxxxg under xxx Stock Option Plan, the Company shall offer to cancel"OUTSTANDING OPTIONS"), effective immediately prior to the Merger 1 Effective Timewhether or not then vested, any exercisable or effective, shall, by action of the 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 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 or a duly authorized Committee thereof, under the terms of the Stock Option Plan and take all other actions necessary with respect the agreements evidencing the options granted thereunder or the Puls Agreement, as applicable, and without any action on the part of xxx holder thereof, vest and become effective and exercisable solely for the Per Share Merger Consideration (without interest). Prior to the Company Effective Date, each holder of Outstanding Options subject shall be offered the right to execute an Option Cancellation Agreementagreement, substantially in the form attached hereto as Exhibit B, to terminate cancel such Outstanding Options. Immediately after the relevant individual 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 agree that each option agreements and cancel listed on SECTION 5.2 of the relevant Company Options Company's Disclosure Schedule (as necessary to effectuate hereinafter defined), unless such option is exercised or expires in accordance with the provisions of this Section 1.6(d)(i). Any Cancellation Offer by Stock Option Plan or Puls Agreement prior to 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 lawsEffective Date, including, if necessary, the rules applicable to tender offersis an Outstanding Option.

Stock Options. (a) Except as provided in (c) below with respect to the Company's 1997 Employee Stock Purchase Plan, as amended (the "Company ESPP"), each option to purchase shares of Company Common Stock 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) Prior 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 Merger 1 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 shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any of in the Company Options granted 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 (a “Cancellation Offer”rounded down to the nearest whole number of such shares) in exchange for that equals the payment product of an amount to be determined the Conversion Ratio multiplied by the Company up to $0.20 per share number of shares 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 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, (ii) the option exercise price per share of Parent Common Stock 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 divided by the Conversion Ratio, and (iii) the holder Company Options shall vest to the extent required pursuant to the current terms of such Company Option, Options or other agreements as described 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 Section 1.7 of the Company shall adopt all appropriate resolutions and take all Disclosure Schedule (as defined below); provided that if such vesting of Company Options or other actions necessary 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 an Option Cancellation AgreementParent's written consent not to be unreasonably withheld, use reasonable best efforts to terminate prevent such vesting or effect of other provisions. Except to the relevant individual option agreements and cancel extent required pursuant to the relevant current terms of such Company Options or other agreements as necessary to effectuate described in Section 1.7 of the provisions of this Section 1.6(d)(iCompany Disclosure Schedule (as defined below). Any Cancellation Offer by , the Company shall be on such terms and conditions as are reasonably acceptable not take any action to Parent and shall comply in all material respects with applicable federal and state securities laws, including, if necessaryaccelerate the vesting of any Company Options. Prior to the Effective Time, the 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 applicable and regulations thereunder (the "1934 Act"), specifically approve (i) the assumption by Parent of the Company Options and (ii) the issuance of Parent Common Stock in the Merger to tender offersdirectors, officers and stockholders of the Company subject to Section 16 of the 1934 Act.

Stock Options. (ia) Prior to the Merger 1 Effective Time, the The Company shall offer use its reasonable best efforts to cancelobtain, effective immediately prior not later than 45 days after the date hereof, from each holder of outstanding options (whether or not then exercisable or vested) to the Merger 1 Effective Time, any of the acquire Company Options Common Stock granted under the Company Stock Plans (each, a “Cancellation Offer”"Company Stock Option" and collectively, the "Company Stock Options"), an executed agreement substantially in the form of Section 2.6 of the Company Disclosure Schedule, in each case providing that automatically at the Effective Time (i) each Company Stock Option held by such holder shall become fully vested and immediately exercisable, (ii) each then outstanding Company Stock Option shall be cancelled and void, (iii) in exchange consideration of such vesting and cancellation, each Company Stock Option shall thereupon represent for all purposes under the payment relevant Company Stock Plan and all grant and award instruments and agreements governing and evidencing such holder's Company Stock Option(s) only the right to receive (subject to Section 2.3(g) and the last paragraph of an Section 2.1(c)) such amount to of Parent Common Stock and cash ratably in the same proportion in which the Parent Stock Consideration and Cash Consideration shall be determined by delivered and paid in accordance with Section 2.1(c)) equal to, for each Company Stock Option, the Company up to $0.20 per share product of (x) the number of shares of Company Common Stock subject to the then outstanding Company Stock Options held by such holder and (y) the excess (to the extent a positive number) of $9.3691 over the then applicable per share exercise price of each such Company Options Stock Option (such amount of Parent Common Stock and cash being so paid in full settlement of and in consideration for cancellation of each such paymentCompany Stock Option being hereinafter referred to as the "Option Consideration"), an “Option Cancellation Payment”payable as provided in Section 2.6(b); provided, however, that in no event shall and (iv) from and after the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and 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, except as provided in this Section 2.6, such holder shall not have any rights or benefits under any Company Stock Plan or Company Stock Option (or any grant or award letter or agreement issued in respect thereof) to acquire any securities of the Company, Parent, the Surviving Corporation or any subsidiary of Parent and the holder shall, by virtue of having effected such Company Optionsurrender, in cancellation and settlement thereforreceipt of Option Consideration, have unconditionally and irrevocably discharged and released Parent, the Company, the Surviving Corporation and each of their respective subsidiaries, officers, directors and affiliates from and against, and thereupon shall be entitled to an Option Cancellation Payment reduced by any applicable withholding Taxes. The Option Cancellation Agreement will include a release of have permanently waived, all rights and claims against the Company (fixed, contingent or otherwise) such holder may now or hereafter have thereunder with respect to such all Company Options. The Board of Directors of Stock Plans and Company Stock Options (and all grant and award instruments and agreements governing and evidencing 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(isame). 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) Prior to At the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any of the Company Options each option 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 purchase shares of Company Common Stock (each a "Company Option") which is outstanding and unexercised immediately prior thereto shall cease to represent a right to acquire shares of Company Common Stock and shall be converted automatically into an option to purchase shares of Parent Common Stock in an amount 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 equal to the product of the number of shares of Company Common Stock subject to the 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 subject 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 options which are "incentive stock options" (as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")) shall be and is intended to be effected in a manner which is consistent with Section 424(a) of the Code and, to the extent it is not so consistent, such Section 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 Options shall be deemed to be references to Parent. (each such paymentb) Prior to the Effective Time, an “Option Cancellation Payment”); provided, however, that Parent shall 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 (but in no event later than five business days thereafter), Parent shall the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoing, an option cancellation agreement (and 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 file with the provisions set forth hereinSecurities and Exchange Commission (the "SEC") a registration statement on an appropriate form under the Securities Act of 1933, such Company Option shall be cancelled in accordance with its termsas amended (the "Securities Act"), 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 shares of Parent Common Stock subject to an Option Cancellation Agreementoptions to acquire Parent Common Stock issued pursuant to Section 1.5(a) hereof, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer by the Company shall be on such terms and conditions as are reasonably acceptable to Parent and shall use its best efforts to maintain the current status of the prospectus contained therein, as well as comply in all material respects with applicable federal and state securities or "blue sky" laws, including, if necessary, the rules applicable to tender offers.for so long as such options remain outstanding. 1.6

Stock Options. Mr. Xxxxxxxxx xxxll be granted the option to purchase 400,000 shares of the Company's Common Stock (i) Prior the "Stock Options"), at an exercise price per share equal to the Merger 1 Effective Timefair 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 commences. To the extent possible, such option will be an incentive stock option. The Stock Options shall 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 Stock Options shall vest. Upon the termination of Mr. Xxxxxxxxx'x xxxloyment in accordance with the provisions of Section 10, below, the Stock Options shall vest as described in such provisions. Except as provided in Section 10, below, the Stock Options shall be subject to the terms of the Company's Stock Option Plan and the Company's standard incentive and non-statutory stock option agreements (the "Standard Agreements"), provided pursuant to the 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 offer permit Mr. Xxxxxxxxx xx pay the option exercise price with a full recourse loan (secured by the shares acquired with the loan) at the lowest interest rate available to cancel, effective immediately prior avoid the imposition of imputed income under the tax laws to assist Mr. Xxxxxxxxx xx exercise the Merger 1 Effective Time, any Stock Options. Such loan shall be repayable upon the earliest of: (i) the fifth year anniversary of the Company Options granted under Effective Date; (ii) the Company Stock Plans termination of Mr. Xxxxxxxxx'x xxxloyment for any reason; or (a “Cancellation Offer”iii) in exchange for the payment date twelve (12) months after Mr. Xxxxxxxxx xx first eligible to sell shares of the Company's stock that he holds following an amount to be determined by initial public offering of the Company up to $0.20 per share of Company Common Stock subject to such Company Options (each such payment, an “Option Cancellation Payment”)Company's shares; provided, however, that in no the event shall the Option Cancellation Payments exceed $1,000,000 in the aggregate. To facilitate the foregoingof Mr. Xxxxxxxxx'x xxxmination without Cause or resignation for Good Reason or termination by reason of death or Disability (as defined below), an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation Agreement”) loan shall be distributed to each holder of a Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide that, repayable 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 earlier 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(d)(i). Any Cancellation Offer by the Company shall be on such terms and conditions as are reasonably acceptable to Parent and shall comply events stated in all material respects with applicable federal and state securities laws, including, if necessary, the rules applicable to tender offersclauses (i) or (iii) immediately preceding.

Stock Options. (a) Subject to Section 5.3(b), at the Effective Time, all rights with respect to Company Common Stock under each Company Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each such Company Option in accordance with the 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) Prior 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 each such Company Option shall be equal to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any number of the 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 shares of Company Common Stock subject to such Company Options Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounding down to the nearest whole share, (iii) the per share exercise price under each such paymentCompany 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, an “exercisability, vesting schedule and other provisions of such Company Option Cancellation Payment”)shall otherwise remain unchanged; 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 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 assumed by the holder of such Company Option and delivery of such Option Cancellation Agreement to the Company Parent in accordance with the provisions set forth hereinthis Section 5.3(a) shall, such Company Option shall be cancelled in accordance with its terms, effective immediately prior 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 1 becomes effective, and in any event within thirty (30) calendar days after the Effective Time, and a registration statement on Form S-8 relating to the holder shares 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 Parent Common Stock issuable with respect to the Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of assumed by Parent in accordance with this Section 1.6(d)(i5.3(a). Any Cancellation Offer by , which may be legally registered on a Form S-8 and shall use its reasonable efforts to maintain the effectiveness of such registration statement (and maintain the current status of the prospectus or prospectuses contained therein) for so long as 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 offersoptions remain outstanding.

Stock Options. (ia) Prior 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 Merger 1 following provisions of this Section 2.2. As of the Effective Time, each option to purchase shares of Company Common Stock, including all options granted pursuant to the Company Option Plan, the Company's 1983 Stock Option Plan, 1986 Non-Employee Director Option Plan and 1992 Employee Stock Option Plan (each, a "COMPANY STOCK Option") which is then outstanding shall offer be assumed by Parent and converted into an option (or a new substitute option shall be granted) (an "ASSUMED STOCK OPTION") to cancel, effective immediately prior purchase the number of shares of Parent Common Stock (rounded up to the Merger 1 Effective Timenearest whole share) equal to (x) the number of shares subject to such option multiplied by (y) the Exchange Ratio, any at an exercise price per share of Parent Common Stock (rounded down to the Company Options granted under nearest xxxxx) equal to (A) 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 former exercise price per share of Company Common Stock subject under such option immediately prior to such Company Options the Effective Time divided by (each such payment, an “Option Cancellation Payment”)B) the Exchange Ratio; provided, however, that in no event shall the case of any Company Stock Option Cancellation Payments exceed $1,000,000 in to which Section 421 of the aggregate. To facilitate Code applies by reason of its qualification under Section 422 of the foregoingCode, an option cancellation agreement (and other appropriate and customary information and transmittal materials) in such form as Parent and the Company shall mutually agree (an “Option Cancellation Agreement”) conversion formula shall be distributed adjusted, if necessary, to comply with Section 424(a) of the Code. Except as provided above, 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 Assumed Stock Option shall be cancelled in accordance with its terms, effective 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 Merger 1 Effective Time, . Parent shall use its reasonable best efforts to promptly prepare and file with the holder of such Company Option, in cancellation Securities and settlement therefor, shall be entitled to an Option Cancellation Payment reduced by any applicable withholding Taxes. The Option Cancellation Agreement will include Exchange Commission (the "SEC") a release of claims against the Company registration statement on Form S-8 or other appropriate form with respect to shares of Parent Common Stock subject to the Assumed Stock Options and to maintain the effectiveness of such Company Options. The Board of Directors registration statement or registration statements covering such Assumed Stock Options (and maintain the current status of the Company shall adopt all appropriate resolutions and take all other actions necessary with respect to the Company prospectus or prospectuses contained therein) for so long as such Assumed Stock Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersremain outstanding.

Stock Options. (A) Subject to Section 5.5(b), at the Effective Time, all rights with respect to Company Common Stock under each Company Option then outstanding shall be converted into and become rights with respect to Parent Common Stock, and Parent shall assume each such Company Option in accordance with the 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) Prior 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 each such Company Option shall be equal to the Merger 1 Effective Time, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any number of the 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 shares of Company Common Stock subject to such Company Options Option immediately prior to the Effective Time multiplied by the Exchange Ratio, rounding down to the nearest whole share (each such paymentwith cash, an “Option Cancellation Payment”); providedless the applicable exercise price, 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 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 being payable for any fraction of a Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide thatshare), upon execution by (iii) the holder of such Company Option and delivery of such Option Cancellation Agreement to the Company in accordance with the provisions set forth herein, per share exercise price under each such Company Option shall be cancelled 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, effective immediately prior 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 Merger 1 Effective Time, and . (B) Notwithstanding anything to the holder of such Company Optioncontrary contained in this Section 5.5, in cancellation and settlement thereforlieu of assuming outstanding Company Options in accordance with Section 5.5(a), shall Parent may, at its election, cause such outstanding Company Options to be entitled to an Option Cancellation Payment reduced replaced by any applicable withholding Taxesissuing equivalent replacement stock options in substitution therefor that are substantially the same. (C) 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 action that may be necessary with respect (under the plans pursuant to the which Company Options subject to an Option Cancellation Agreement, to terminate the relevant individual option agreements are outstanding and cancel the relevant Company Options as necessary otherwise) to effectuate the provisions of this Section 1.6(d)(i)5.5 and to ensure that, from and after the Effective Time, holders of Company Options have no rights with respect thereto other than those specifically provided in this Section 5.5. Any Cancellation Offer by 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 shall be on such terms Options as soon as reasonably practical (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, any event within sixty (60) days) after the rules applicable to tender offers.Effective Time. 5.7

Stock Options. Upon Xxxxxx'x execution of the Supplemental Release ------------- attached hereto as Exhibit C, all unvested stock options previously granted to --------- Xxxxxx by TV Guide, Inc., TV Guide International, Inc. and/or the Company shall immediately vest in full and 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 until a Releasing Event (as defined below) occurs, Xxxxxx shall not sell more than 10% of the total number of shares of Company 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) Prior 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 options for estate planning purposes (to the Merger 1 Effective Timeextent provided in Section 7.2(e) of the TVG Equity Incentive Plan), the Company represents it will recommend that the CONFIDENTIAL ------------ Compensation Committee of the Company 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 Consulting Agreement. If such unanimous consent cannot be obtained within five (5) business days of Xxxxxx'x execution of this Separation and Consulting Agreement, the Company shall offer to cancel, effective immediately prior to the Merger 1 Effective Time, any notice a meeting of the Company Options granted under the Company Stock Plans Compensation Committee to occur within fifteen (a “Cancellation Offer”15) in exchange for the payment business days after Xxxxxx'x execution of an amount this Separation and Consulting Agreement to be determined by the Company up to $0.20 per share of Company Common Stock subject to consider such Company Options (each such paymentresolution, 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 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 use best efforts to each holder of a Company Option to whom a Cancellation Offer is made. The Option Cancellation Agreements shall provide that, upon execution by obtain approval from the holder of Compensation Committee at 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 and cancel the relevant Company Options as necessary to effectuate the provisions of this Section 1.6(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 offersmeeting.