EXHIBIT 10.1

THIS INDEMNIFICATION AGREEMENT ("Agreement") is made as of this _____ day of ___________, 19__, by and between Echelon Corporation, a Delaware corporation (the "Company"), and _______________ ("Indemnitee").

WHEREAS, the Company and Indemnitee recognize the increasing difficulty in obtaining directors' and officers' liability insurance, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance;

WHEREAS, the Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting officers and directors to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited;

WHEREAS, Indemnitee does not regard the current protection available as adequate given the present circumstances, and Indemnitee and other officers and directors of the Company may not be willing to serve as officers and directors without additional protection; and

WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve as officers and directors of the Company and to indemnify its officers and directors so as to provide them with the maximum protection permitted by law.

NOW, THEREFORE, in consideration for the Indemnitee's agreement to continue to serve the corporation, the Company and Indemnitee hereby agree as follows:

best interests of the Company, or (ii) with respect to any criminal action or proceeding, Indemnitee had reasonable cause to believe that Indemnitee's conduct was unlawful.

the Company shall designate in writing to Indemnitee. Notice shall be deemed received on the third business day after the date postmarked if sent by domestic certified or registered mail, properly addressed; otherwise notice shall be deemed received when such notice shall actually be received by the Company. In addition, Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within Indemnitee's power.

employ his or her counsel in any such proceeding at Indemnitee's expense; and
(ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (C) the Company shall not, in fact, have employed counsel to assume the defense of such proceeding, then the reason able fees and expenses of Indemnitee's counsel shall be at the expense of the Company.

and amounts paid in settlement) which have been paid directly to Indemnitee by an insurance carrier under a policy of directors' and officers' liability insurance maintained by the Company or any parent or subsidiary of the Company; or

(a) For purposes of this Agreement, references to the "Company" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.

(b) For purposes of this Agreement, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to "serving at the request of the Company"

shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants, or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the best interests of the Company" as referred to in this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

ECHELON CORPORATION

By:____________________________

Its:___________________________

Address: 4015 Miranda Avenue
Palo Alto, CA 94304

AGREED TO AND ACCEPTED:

INDEMNITEE:

Address: ________________________

EXHIBIT 10.3

ECHELON CORPORATION

1988 STOCK OPTION PLAN
(as amended through February 1, 1995)

Options granted hereunder may be either Incentive Stock Options or Nonstatutory Stock Options, at the discretion of the Board and as reflected in the terms of the written option agreement. The Board also has the discretion to grant Stock Purchase Rights.

If an Option or Stock Purchase Right should expire or become unexercisable for any reason without having been exercised in full, then the unpurchased Shares which were subject thereto shall, unless the Plan shall have been terminated, become available for future grant or sale under the Plan.

(i) Subject to subparagraph (ii), the Board of Directors may appoint a Committee consisting of not less than two members of the Board of Directors to administer the Plan on behalf of the Board of Directors, subject to such terms and conditions as the Board of Directors may prescribe. Once appointed, the Commit tee shall continue to serve until otherwise directed by the Board of Directors. Members of the Board who are either eligible for Options and/or Stock Purchase Rights or have been granted Options and/or Stock Purchase Rights may vote on any matters affecting the administration of the Plan or the grant of any Options and/or Stock Purchase Rights pursuant to the Plan, except that no such member shall act upon the granting of an Option and/or Stock Purchase Right to such member, but any such member may be counted in determining the existence of a quorum at any meeting of the Board during which action is taken with respect to the granting of Options and/or Stock Purchase Rights to the member.

(ii) Notwithstanding the foregoing subparagraph (i), if and in any event the Company registers any class of any equity security pursuant to
Section 12 of the Exchange Act, from the effective date of such registration until six months after the termination of such registration, any grants of Options and/or Stock Purchase Rights to officers or directors shall only be made by the Board of Directors; provided, however, that if a majority of the Board of Directors is eligible to participate in this Plan or any other stock option or other stock plan of the Company or any of its affiliates, or has been eligible at any time during the prior one-year period (or, if shorter, the period following the initial registration of the Company's equity securities under
Section 12 of the Exchange Act) any grants of Options and/or Stock Purchase Rights to directors must be made by, or only in accordance with the recommendation of, a Committee consisting of three or more persons, who may but need not be directors or employees of the Company, appointed by the Board of Directors and having full authority to act in the matter, none of whom is eligible to participate in this Plan or any other stock option or other stock plan of the Company or any of its affiliates, or has been eligible at any time during the prior one-year period (or, if shorter, the period following the initial registration of the Company's equity securities under Section 12 of the Exchange Act). Any Committee administering the Plan with respect to grants to officers who are not also directors shall conform to the requirements of the preceding sentence. Once appointed, the Committee shall continue to serve until otherwise directed by the Board of Directors.

(iii) Subject to the foregoing subparagraphs (i) and (ii), from time to time the Board of Directors may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies however caused, or remove all members of the Committee and thereafter directly administer the Plan.

(a) Options and Stock Purchase Rights may be granted to Employees and Consultants provided that Incentive Stock Options may only be granted to Employees. An Employee or Consultant who has been granted an Option or Stock Purchase Right may, if such Employee or Consultant is otherwise eligible, be granted additional Option(s) or Stock Purchase Right(s).

(b) Each Option shall be designated in the written option agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designations, to the extent that the aggregate fair market value of the Shares with respect to which Options designated as Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year (under all plans of the Company) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options.

(c) For purposes of Section 5(b), Options shall be taken into account in the order in which they were granted, and the fair market value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

(d) The Plan shall not confer upon any Optionee or holder of a Stock Purchase Right any right with respect to continuation of employment by or the rendition of services to the

Company, nor shall it interfere in any way with his or her right or the Company's right to terminate his or her employment or services at any time, with or without cause.

(a) The per Share exercise price for the Shares to be issued pursuant to exercise of an Option or Stock Purchase Right shall be such price as is determined by the Board, but shall be subject to the following:

(i) In the case of an Incentive Stock Option

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

(B) granted to any Employee, the per Share exercise price shall be no less than 100% of the fair market value per Share on the date of grant.

(ii) In the case of a Nonstatutory Stock Option

(A) granted to a person who, at the time of the grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the fair market value per Share on the date of the grant.

(B) granted to any person, the per Share exercise price shall be no less than 85% of the fair market value per Share on the date of grant.

(iii) In the case of a Stock Purchase Right granted to any person, the per Share exercise price shall be no less than 85% of the fair market value per Share on the date of grant.

For purposes of this Section 7(a), in the event that an Option or Stock Purchase Right is amended to reduce the exercise price, the date of grant of such Option or Stock Purchase Right shall thereafter be considered to be the date of such amendment.

(b) The fair market value shall be determined by the Board in its discretion; provided, however, that where there is a public market for the Common Stock, the fair market value

per Share shall be the mean of the bid and asked prices (or the closing price per share if the Common Stock is listed on the National Association of Securities Dealers Automated Quotation ("NASDAQ") National Market System of the Common Stock for the date of grant, as reported in the Wall Street Journal (or, if not so reported, as otherwise reported by the NASDAQ System) or, in the event the Common Stock is listed on a stock exchange, the fair market value per Share shall be the closing price on such exchange on the date of grant of the Option or Stock Purchase Right, as reported in the Wall Street Journal.

(c) The consideration to be paid for the Shares to be issued upon exercise of an Option or Stock Purchase Right, including the method of payment, shall be determined by the Board (and, in the case of an Incentive Stock Option, shall be determined at the time of grant), and may consist entirely of (i) cash,
(ii) check, (iii) promissory note, (iv) other Shares of Common Stock which (x) either have been owned by the Optionee for more than six (6) months on the date of surrender or were not acquired directly or indirectly, from the Company, and
(y) have a fair market value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised, (v) authorization from the Company to retain from the total number of Shares as to which the Option is exercised that number of Shares having a fair market value on the date of exercise equal to the exercise price for the total number of Shares as to which the Option is exercised; (vi) delivery of a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company the amount of sale or loan proceeds required to pay the exercise price; (vii) any combination of such methods of payment; or (viii) such other consideration and method of payment for the issuance of Shares to the extent permitted under applicable laws. Notwithstanding the foregoing, Incentive Stock Options outstanding as of April 17, 1989 may only be exercised by cash or with Shares of Common Stock (as described in (iv) above).

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company. Full payment may, as authorized by the Board, consist of any consideration and method of payment allowable under Section 7 of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Option. In the event that the exercise of an Option is treated in part as the exercise of an Incentive Stock Option and in part as the exercise of a Nonstatutory Stock Option pursuant to Section 5(b), the Company shall issue a separate stock certificate evidencing the Shares treated as acquired upon exercise of an Incentive Stock Option and a separate stock certificate evidencing the Shares treated as acquired upon exercise of a Nonstatutory Stock Option and shall identify each such certificate accordingly in its stock transfer records. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.

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

such Employee or Consultant does not exercise such Option (which such Employee or Consultant was entitled to exercise) within the time specified herein, the Option shall terminate.

outstanding Option and Stock Purchase Right, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options or Stock Purchase Rights have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase Right, or repurchase of Shares from a Purchaser upon termination of his or her employment or consulting relationship, as well as the price per share of Common Stock covered by each such outstanding Option or Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock of the Company or the payment of a stock dividend with respect to the Common Stock or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option or Stock Purchase Right.

In the event of the proposed dissolution or liquidation of the Company, the Board shall notify the Optionee at least fifteen (15) days prior to such proposed action. To the extent it has not been previously exercised, the Option will terminate immediately prior to the consummation of such proposed action. In the event of a merger of the Company with or into another corporation, the Option shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation. With respect to any Option granted prior to the issuance of the amending order by the California Department of Corporations (the "Department") increasing the number of shares qualified for issuance under the Plan to 5,800,000, in the event that such successor corporation does not agree to assume such Option or to substitute an equivalent option, the Board shall, in lieu of such assumption or substitution, provide for the Optionee to have the right to exercise such Option as to all of the Optioned Stock, including Shares as to which such Option would not otherwise be exercisable. If the Board makes an Option fully exercisable in lieu of assumption or substitution in the event of a merger, the Board shall notify the Optionee that the Option shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option will terminate upon the expiration of such period. With respect to any Option granted after the issuance of the amending order by the Department increasing the number of shares qualified for issuance under the Plan to 5,800,000, in the event that such successor corporation does not agree to assume such Option or to substitute an equivalent option, the Option shall terminate as of the date of the closing of the merger. For the purposes of this paragraph, the Option shall be deemed to be assumed if, following the merger, the option confers the right to purchase, for each Share of Optioned Stock subject to the Option immediately prior to the merger, the consideration (whether stock, cash, or other securities or property) received in the merger by holders of Common Stock for each Share held on the effective date of the transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger was not solely common

stock of the successor corporation or its Parent, the Board of Directors may, with the consent of the successor corporation and the Optionee, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger.

As a condition to the exercise of an Option or Stock Purchase Rights, the Company may require the person exercising such Option or Stock Purchase Rights to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned relevant provisions of law.

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

ECHELON CORPORATION
INCENTIVE STOCK OPTION AGREEMENT

Echelon Corporation, a Delaware corporation (the "Company"), has granted to ________ (the "Optionee"), an option (the "Option") to purchase a total of ________ shares of Common Stock (the "Shares"), at the price determined as provided herein, and in all respects subject to the terms, definitions and provisions of the 1988 Stock Option Plan (the "Plan") adopted by the Company, which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings herein.

     On or After                                 Number of Shares
---------------------                         ---------------------
___________                                      ________Shares
___________                  an additional       ________Shares
___________                  an additional       ________Shares
___________                  an additional       ________Shares

This Option may be exercised in whole or in part at any time, as to Shares which have not yet vested under the above vesting schedule; provided, however, that the Optionee shall execute as a condition to such exercise of this Option, the Restricted Stock Purchase Agreement attached hereto as Exhibit A.

(b) This Option may not be exercised for a fraction of a share.

(c) In the event of Optionee's death, disability or other termination of employment, the exercisability of the Option is governed by Sections 7 and 8, and 9 subject to the limitations contained in subsections 3(i)(d) and (e).

(d) In no event may this Option be exercised after the date of expiration of the term of this Option as set forth in Section 11 below.

(e) In no event may this Option become exercisable at a time or times which, when this Option is aggregated with all other incentive stock options granted to Optionee by the Company or any Parent or Subsidiary, would result in Shares having an aggregate fair market value (determined for each Share as of the date of grant of the option covering such share) in excess of $100,000 becoming first available for purchase upon exercise of one or more incentive stock options during any calendar year.

No Shares will be issued pursuant to the exercise of an Option unless such issuance and such exercise shall comply with all relevant provisions of law and the requirements of any stock exchange upon which the Shares may then be listed. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares.

(i) cash;

(ii) check; or

(iii) surrender of other shares of Common Stock of the Company which (A) either have been owned by the Optionee for more than six (6) months on the date of surrender or were not acquired, directly or indirectly, from the Company and (B) have a fair market value on the date of surrender equal to the exercise price of the Shares as to which the Option is being exercised.

DATE OF GRANT: _________

ECHELON CORPORATION,
a Delaware corporation

By: _________________________

Title: Vice President of Finance

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
SECTION 3 HEREOF IS EARNED ONLY BY CONTINUING EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH HIS RIGHT OR THE COMPANY'S RIGHT TO TERMINATE HIS EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE.

Optionee acknowledges receipt of a copy of the Plan and certain information related thereto and represents that he is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under the Plan. Optionee further agrees to notify the Company upon any change in the residence address indicated below.

Residence Address:

ECHELON CORPORATION

RESTRICTED STOCK PURCHASE AGREEMENT

THIS AGREEMENT is made between _______________ (the "Purchaser") and Echelon Corporation, a Delaware corporation (the "Company"), as of __________19__.

(1) Pursuant to the exercise of a stock option granted to the Purchaser under the Company's 1988 Stock Option Plan, and pursuant to the Incentive Stock Option Agreement (the "Option Agreement") dated _____________, 19__ by and between the Company and the Purchaser, the Purchaser has elected to purchase ________ of those shares which have become vested under the vesting schedule set forth in Section 3(i) of the Option Agreement ("Vested Shares") and _________ shares which have not yet vested under such schedule ("Unvested Shares"). (The Vested Shares and the Unvested Shares are sometimes collectively referred to herein as the "Shares").

(2) As required by the Option Agreement in the event of the Purchaser's election to exercise the option as to Unvested Shares, this Agreement gives the Company the right to repurchase at cost certain of the Unvested Shares in the event of a termination of the Purchaser's employment with the Company prior to the date upon which they would have vested under the Option Agreement.

(a) Upon the occurrence of a Termination, the Company may exercise the Company Option by delivering personally or by first class mail, to Purchaser (or his or her transferee or legal representative, as the case may be), within 60 days of the Termination, a notice in writing indicating the Company's intention to exercise the Company Option and setting forth a date for closing (the "Closing") not later than thirty (30) days from the mailing of such notice. The Closing shall take place at the Company's principal executive offices. At the Closing, the holder of the certificates for the Unvested Shares being transferred shall deliver the stock certificate or certificates evidencing the Unvested Shares, and the Company shall deliver the purchase price therefor.

(b) Whenever the Company shall have the right to purchase the Unvested Shares pursuant to this Agreement, the Company may, upon written notice to the Purchaser, assign to one or more persons the right to exercise all or part of the Company's purchase rights. Each such assignee shall have the right to exercise such right in its own name and for its own account. If the Company Option is assigned by the Company and the fair market value of the shares, as determined by the Board of Directors of the Company, exceeds the repurchase price, and such assignee exercises the Company Option, then the assignee shall pay to the Company the difference between the fair market value of the shares repurchased and the aggregate repurchase price.

(c) If the Company does not elect to exercise the Company Option conferred above by giving the requisite notice within sixty (60) days following the Termination, the Company Option shall terminate.

(a) The Company Option provided for in Section 1 of this Agreement shall terminate upon the first date on which there are no longer any Unvested Shares which are the subject of the Company Option;

(b) Notwithstanding the foregoing, the sixty (60) day period in which the Company may exercise the Company Option will not be affected or shortened by a termination of this Agreement pursuant to this Section.

(a) Purchaser hereby authorizes and directs the Secretary of the Company, or such other person designated by the Company, to transfer the Unvested Shares as to which the Company Option to purchase has been exercised from Purchaser to the Company. Purchaser further authorizes the Company to refuse, or to cause its transfer agent to refuse, to transfer any stock attempted to be transferred in violation of this Agreement.

(b) Except as required to effectuate the exercise of the Company Option, none of the Unvested Shares which are subject to the Company Option under Section 1 may be sold, transferred, pledged, hypothecated or otherwise disposed of by Purchaser. The certificate or certificates evidencing any of the shares purchased hereunder shall be endorsed with a legend substantially as follows (together with any other legend(s) restricting the transfer of the Unvested Shares necessary or appropriate under applicable federal or state securities laws):

"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN OPTION AGREEMENT AND A RESTRICTED STOCK PURCHASE AGREEMENT PURSUANT TO WHICH SUCH SHARES WERE PURCHASED, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE CORPORATION."

(c) To ensure the availability for delivery of the Purchaser's Unvested Shares upon repurchase by the Company pursuant to the Company Option under Section 1, the Purchaser shall, upon execution of this Agreement, deliver and deposit with the Secretary of the Company, or such other person designated by the Company, the share certificates representing the Unvested Shares, together with the stock power, duly endorsed in blank, attached hereto as Exhibit A-1. The Unvested Shares and stock power shall be held by the Secretary in escrow, until such time as the Company's rights of repurchase pursuant to the Company Option no longer are in effect. As a further condition to the Company's obligations under this Agreement, the spouse of Purchaser, if any, shall execute and deliver to the Company the Consent of Spouse attached hereto as Exhibit A-2.

(d) The Company, or its designee, shall not be liable for any act it may do or omit to do with respect to holding the Unvested Shares in escrow and while acting in good faith and in the exercise of its judgment.

(e) Transfer or sale of said Unvested Shares is subject to restrictions on transfer imposed by any applicable state and federal securities laws. Any transferee shall hold such Unvested Shares subject to all the provisions hereof and shall acknowledge the same by signing a copy of this Agreement.

ment Date is the date the Company's right to repurchase Unvested shares at cost in the event of termination of employment lapse as to such shares.

Purchaser represents that he or she has read this Agreement and is familiar with its terms and provisions. Purchaser hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under this Agreement.

IN WITNESS WHEREOF, this Agreement is deemed made as of the date first set forth above.

ECHELON CORPORATION,
a Delaware corporation

By:_________________________________

Title:______________________________

PURCHASER

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED I, hereby sell, assign and transfer unto __________________ _____________________________ (__________) shares of the Common Stock of Echelon Corporation standing in my name of the books of said corporation represented by Certificate No. _________ herewith and do hereby irrevocably constitute and appoint _______________________________ to transfer said stock on the books of the within-named corporation with full power of substitution in the premises.

Dated: _____________, 19___.

Signature:

This Assignment Separate from Certificate was executed in conjunction with the terms of a Restricted Stock Purchase Agreement between the above assignor and ___________________________________ dated _________________, 19__.

CONSENT OF SPOUSE

I, ___________________, spouse of ________________________, have read and approved the foregoing Agreement. In consideration of granting of the right to my spouse to purchase shares of Echelon Corporation as set forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights under such Agreement or in any shares issued pursuant thereto under the community property laws of the State of California or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement.

Dated:_______, 19____

The undersigned taxpayer has acquired property pursuant to the exercise of a stock option intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Code. The undersigned taxpayer hereby elects, pursuant to the above-referenced Federal Tax Code, to include in the computation of his or her alternative minimum taxable income for the current taxable year the amount of any income includable pursuant to Section 56(b)(3) of the Code in connection with his or her receipt of the property below:

1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

Name                :        Taxpayer:
                             Spouse  :

Address             :
Identification No.  :        Taxpayer:

Spouse :

Taxable Year :

2. The property with respect to which the election is made is described as follows:

___________ shares (the "Shares") of Common Stock of Echelon Corporation, a Delaware corporation (the "Company").

3. The date on which the property was transferred is: _______________, 19___.

4. The property is subject to the following restrictions: Periodic lapsing repurchase option at cost in favor of the Company upon termination of taxpayer's employment.

5. The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is:

6. The amount (if any) paid for such property:

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned's receipt of the above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

Dated: _________________, 19__ _______________________________ Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated: _________________, 19__ _______________________________ Spouse

SELLER    :         ECHELON CORPORATION

COMPANY   :         ECHELON CORPORATION

SECURITY  :         COMMON STOCK

AMOUNT    :

DATE :

In connection with the purchase of the above-listed Securities, I, the Purchaser, represent to the Seller and to the Company the following:

(a) I am aware of the Company's business affairs and financial condition, and have acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. I am purchasing these Securities for my own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933, as amended (the "Securities Act")

(b) I understand that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of my investment intent as expressed herein. In this connection, I understand that, in the view of the Securities and Exchange Commission (the "SEC"), the statutory basis for such exemption may be unavailable if my representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future.

(c) I further understand that the Securities must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. Moreover, I understand that the Company is under no obligation to register the Securities. In addition, I understand that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.

(d) I am familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of "restricted securities" acquired, directly or indirectly, from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the option pursuant to which the Securities are issued, such issuance will be exempt from registration under the Securities Act. In the event the Company later becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter the securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including among other things: (1) the sale being made through a broker in an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, and the amount of securities being sold during any three month period not exceeding the limitations specified in Rule 144(e), if applicable. Notwithstanding this paragraph (d), I acknowledge and agree to the restrictions set forth in paragraph (e) hereof.

In the event that the Company does not qualify under Rule 701 at the time of the grant of the option pursuant to which the Securities are issued, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires among other things: (1) the resale occurring not less than two years after the later of the date the securities were sold by the Company or the date they were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of an affiliate, or of a non-affiliate who has held the securities less than three years, (2) the availability of certain public information about the Company, (3) the sale being made through a broker in an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934), and (4) the amount of securities being sold during any three month period not exceeding the specified limitations stated therein, if applicable.

(f) I further understand that in the event all of the applicable requirements of Rule 144 or Rule 701 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 and Rule 701 are not exclusive, the Staff of the SEC has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rule 144 or Rule 701 will have a substantial burden of proof in establishing that an

exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.

(g) I understand that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities without the consent of the Commissioner of Corporations of California. I have read the applicable Commissioner's Rules with respect to such restriction, a copy of which is attached.

Signature of Purchaser:

Date: ____________________, 19___

(b) It is unlawful for the holder of any such security to consummate a sale or transfer of such security, or any interest therein, without the prior written consent of the Commissioner (until this condition is removed pursuant to
Section 260.141.12 of these rules), except:

(1) to the issuer;

(2) pursuant to the order or process of any court;

(3) to any person described in Subdivision (i) of Section 25102 of the Code or Section 260.105.14 of these rules;

(4) to the transferor's ancestors, descendants or spouse, or any custodian or trustee for the account of the transferor or the transferor's ancestors, descendants, or spouse; or to a transferee by a trustee or custodian for the account of the transferee or the transferee's ancestors, descendants or spouse;

(5) to holders of securities of the same class of the same issuer;

(6) by way of gift or donation inter vivos or on death;

(7) by or through a broker-dealer licensed under the Code (either acting as such or as a finder) to a resident of a foreign state, territory or country who is neither domiciled in this state to the knowledge of the broker-dealer, nor actually present in this state if the sale of such securities is not in violation of any securities law of the foreign state, territory or country concerned;

(8) to a broker-dealer licensed under the Code in a principal transaction, or as an underwriter or member of an underwriting syndicate or selling group;

(9) if the interest sold or transferred is a pledge or other lien given by the purchaser to the seller upon a sale of the security for which the Commissioner's written consent is obtained or under this rule not required;

(10) by way of a sale qualified under Sections 25111, 25112, 25113 or 25121 of the Code, of the securities to be transferred, provided that no order under Section 25140 or Subdivision (a) of Section 25143 is in effect with respect to such qualification;

(11) by a corporation to a wholly owned subsidiary of such corporation, or by a wholly owned subsidiary of a corporation to such corporation;

(12) by way of an exchange qualified under Section 25111, 25112 or 25113 of the Code, provided that no order under Section 25140 or Subdivision (a) of Section 25143 is in effect with respect to such qualification;

(13) between residents of foreign states, territories or countries who are neither domiciled nor actually present in this state;

(14) to the State Controller pursuant to the Unclaimed Property Law or to the administrator of the unclaimed property law of another state;

(15) by the State Controller pursuant to the Unclaimed Property Law or by the administrator of the unclaimed property law of another state if, in either such case, such person (i) discloses to potential purchasers at the sale that transfer of the securities is restricted under this rule, (ii) delivers to each purchaser a copy of this rule, and (iii) advises the Commissioner of the name of each purchaser;

(16) by a trustee to a successor trustee when such transfer does not involve a change in the beneficial ownership of the securities; or

(17) by way of an offer and sale of outstanding securities in an issuer transaction that is subject to the qualification requirement of
Section 25110 of the Code but exempt from that qualification requirement by subdivision (f) of Section 25102;

provided that any such transfer is on the condition that any certificate evidencing the security issued to such transferee shall contain the legend required by this section.

(c) The certificates representing all such securities subject to such a restriction on transfer, whether upon initial issuance or upon any transfer thereof, shall bear on their face a legend, prominently stamped or printed thereon in capital letters of not less than 10-point size, reading as follows:

"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OR CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."

ECHELON CORPORATION

NONSTATUTORY STOCK OPTION AGREEMENT

Echelon Corporation, a Delaware corporation (the "Company"), has granted to ________ (the "Optionee"), an option (the "Option") to purchase a total of __________ shares of Common Stock (the "Shares"), at the price determined as provided herein, and in all respects subject to the terms, definitions and provisions of the 1988 Stock Option Plan (the "Plan") adopted by the Company, which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings .

 On or After                                   Number of Shares
-------------                                  ----------------
________                                       ________ Shares
________               an additional           ________ Shares
________               an additional           ________ Shares
________               an additional           ________ Shares

This Option may be exercised in whole or in part at any time, as to Shares which have not yet vested under the above vesting schedule; provided, however, that the Optionee shall execute as a condition to such exercise of this Option, the Restricted Stock Purchase Agreement attached hereto as Exhibit A.

(b) This Option may not be exercised for a fraction of a share.

(c) In the event of Optionee's death, disability or other termination of employment or consulting relationship, the exercisability of the Option is governed by Sections 7, 8 and 9 below.

(d) In no event may this Option be exercised after the date of expiration of the term of this Option as set forth in Section 11 below.

by payment of the exercise price. This Option shall be deemed exercised upon receipt by the Company of such written notice accompanied by the exercise price.

No Shares will be issued pursuant to the exercise of an Option unless such issuance and such exercise shall comply with all relevant provisions of law and the requirements of any stock exchange upon which the Shares may then be listed. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares.

(i) cash;

(ii) check; or

(iii) surrender of other shares of Common Stock of the Company which (A) either have been owned by the Optionee for more than six (6) months on the date of surrender or were not acquired, directly or indirectly, from the Company and (B) have a fair market value on the date of surrender equal to the exercise price of the Shares as to which the Option is being exercised.

exercise the Option at the date of termination, or if he does not exercise such Option (which he was entitled to exercise) within the time specified herein, the Option shall terminate.

DATE OF GRANT: _______________

ECHELON CORPORATION,
a Delaware corporation

By:________________________________

Title: Vice President of Finance

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
SECTION 3 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE OR CONSULTANT AS THE CASE MAY BE, AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY SERVICES WITH THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH HIS RIGHT OR THE COMPANY'S RIGHT TO TERMINATE HIS EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE.

Optionee acknowledges receipt of a copy of the Plan and certain information related thereto and represents that he is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under the Plan. Optionee further agrees to notify the Company upon any change in the residence address indicated below.

Dated: _________________

Residence Address:

ECHELON CORPORATION

RESTRICTED STOCK PURCHASE AGREEMENT

THIS AGREEMENT is made between ____________________ (the "Purchaser") and Echelon Corporation, a Delaware corporation (the "Company"), as of _______________, 19__.

(1) Pursuant to the exercise of a stock option granted to the Purchaser under the Company's 1988 Stock Option Plan, and pursuant to the Nonstatutory Stock Option Agreement (the "Option Agreement") dated ________, 19__ by and between the Company and the Purchaser, the Purchaser has elected to purchase _______ of those shares which have become vested under the vesting schedule set forth in Section 3(i) of the Option Agreement ("Vested Shares") and _______ shares which have not yet vested under such schedule ("Unvested Shares"). (The Vested Shares and the Unvested Shares are sometimes collectively referred to herein as the "Shares").

(2) As required by the Option Agreement in the event of the Purchaser's election to exercise the option as to Unvested Shares, this Agreement gives the Company the right to repurchase at cost the Unvested Shares in the event of a termination of the Purchaser's employment with the Company prior to the date upon which they would have vested under the Option Agreement.

(a) Upon the occurrence of a Termination, the Company may exercise the Company Option by delivering personally or by first class mail, to Purchaser (or his or her transferee or legal representative, as the case may be), within 60 days of the Termination, a notice in writing indicating the Company's intention to exercise the Company Option and setting forth a date for closing (the "Closing") not later than thirty (30) days from the mailing of such notice. The Closing shall take place at the Company's principal executive offices. At the Closing, the holder of the certificates for the Unvested Shares being transferred shall deliver the stock certificate or certificates evidencing the Unvested Shares, and the Company shall deliver the purchase price therefor.

(b) Whenever the Company shall have the right to purchase the Unvested Shares pursuant to this Agreement, the Company may, upon written notice to the Purchaser, assign to one or more persons the right to exercise all or part of the Company's purchase rights. Each such assignee shall have the right to exercise such right in its own name and for its own account. If the Company Option is assigned by the Company and the fair market value of the shares, as determined by the Board of Directors of the Company, exceeds the repurchase price, and such assignee exercises the Company Option, then the assignee shall pay to the Company the difference between the fair market value of the shares repurchased and the aggregate repurchase price.

(c) If the Company does not elect to exercise the Company Option conferred above by giving the requisite notice within sixty (60) days following the Termination, the Company Option shall terminate.

(a) The Company Option provided for in Section 1 of this Agreement shall terminate upon the first date on which there are no longer any Unvested Shares which are the subject of the Company Option;

(b) Notwithstanding the foregoing, the sixty (60) day period in which the Company may exercise the Company Option will not be affected or shortened by a termination of this Agreement pursuant to this Section.

(a) Purchaser hereby authorizes and directs the Secretary of the Company, or such other person designated by the Company, to transfer the Unvested Shares as to which the Company Option to purchase has been exercised from Purchaser to the Company. Purchaser further authorizes the Company to refuse, or to cause its transfer agent to refuse, to transfer any stock attempted to be transferred in violation of this Agreement.

(b) Except as required to effectuate the exercise of the Company Option, none of the Unvested Shares which are subject to the Company Option under Section 1 may be sold, transferred, pledged, hypothecated or otherwise disposed of by Purchaser. The certificate or certificates evidencing any of the shares purchased hereunder shall be endorsed with a legend substantially as follows (together with any other legend(s) restricting the transfer of the Unvested Shares necessary or appropriate under applicable federal or state securities laws):

"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN OPTION AGREEMENT AND A RESTRICTED STOCK PURCHASE AGREEMENT PURSUANT TO WHICH SUCH SHARES WERE PURCHASED, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE CORPORATION."

(c) To ensure the availability for delivery of the Purchaser's Unvested Shares upon repurchase by the Company pursuant to the Company Option under Section 1, the Purchaser shall, upon execution of this Agreement, deliver and deposit with the Secretary of the Company, or such other person designated by the Company, the share certificates representing the Unvested Shares, together with the stock power, duly endorsed in blank, attached hereto as Exhibit A-1. The Unvested Shares and stock power shall be held by the Secretary in escrow until such time as the Company's rights of repurchase pursuant to the Company Option no longer are in effect. As a further condition to the Company's obligations under this Agreement, the spouse of Purchaser, if any, shall execute and deliver to the Company the Consent of Spouse attached hereto as Exhibit A-2.

(d) The Company, or its designee, shall not be liable for any act it may do or omit to do with respect to holding the Unvested Shares in escrow and while acting in good faith and in the exercise of its judgment.

(e) Transfer or sale of said Unvested Shares is subject to restrictions on transfer imposed by any applicable State and federal securities laws. Any transferee shall hold such Unvested

Shares subject to all the provisions hereof and shall acknowledge the same by signing a copy of this Agreement.

THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S TO TIMELY FILE THE ELECTION UNDER SECTION 83(B), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON THE PURCHASER'S BEHALF.

Purchaser represents that he or she has read this Agreement and is familiar with its terms and provisions. Purchaser hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under this Agreement.

IN WITNESS WHEREOF, this Agreement is deemed made as of the date first set forth above.

ECHELON CORPORATION,
a Delaware corporation

By:________________________________

Title:_____________________________

PURCHASER

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED I, hereby sell, assign and transfer unto ______________ _____________________ (____________) shares of the Common Stock of Echelon Corporation standing in my name of the books of said corporation represented by Certificate No. _________ herewith and do hereby irrevocably constitute and appoint _______________________________ to transfer said stock on the books of the within-named corporation with full power of substitution in the premises.

Dated:______________________, 19____.

Signature:

This Assignment Separate from Certificate was executed in conjunction with the terms of a Restricted Stock Purchase Agreement between the above assignor and _____________________________ dated ________________________, 19____.

CONSENT OF SPOUSE

I, _______________________________, spouse of ____________________________ have read and approved the foregoing Agreement. In consideration of granting of the right to my spouse to purchase shares of Echelon Corporation as set forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and agree to be bound by the provisions of the Agreement insofar as I may have any rights under such Agreement or in any shares issued pursuant thereto under the community property laws of the State of California or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement.

Dated:___________________, 19____

ELECTION UNDER SECTION 83(B)
OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to the above-referenced Federal Tax Code, to include in his gross income for the current taxable year, the amount of any compensation taxable to him in connection with his receipt of the property described below:

1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

NAME:                TAXPAYER:_______________      SPOUSE:________________

ADDRESS:             ________________________
                     ________________________


IDENTIFICATION NO.:  TAXPAYER:_______________      SPOUSE:________________

TAXABLE YEAR: Calendar Year 19____

2. The property with respect to which the election is made is described as follows:

___________________ shares (the "Shares") of Common Stock of Echelon Corporation, a Delaware corporation (the "Company").

3. The date on which the property was transferred is:______________, 19____.

4. The property is subject to the following restrictions:

Periodic lapsing repurchase option at cost in favor of the Company upon termination of taxpayer's employment or services.

5. The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is: $____________

6. The amount (if any) paid for such property: $____________

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned's receipt of the above described property. The transferee of such property is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

Dated:_____________________ ________________________________________ Taxpayer

The undersigned spouse of taxpayer joins in this election.

Dated:_____________________ ________________________________________ Spouse of Taxpayer

INVESTMENT REPRESENTATION STATEMENT

PURCHASER:

SELLER : ECHELON CORPORATION

COMPANY : ECHELON CORPORATION

SECURITY : COMMON STOCK

AMOUNT :

DATE :

In connection with the purchase of the above-listed Securities, I, the Purchaser, represent to the Seller and to the Company the following:

(a) I am aware of the Company's business affairs and financial condition, and have acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. I am purchasing these Securities for my own account for investment purposes only and not with a view to, or for the resale in connection with, any "distribution" thereof for purposes of the Securities Act of 1933, as amended (the "Securities Act").

(b) I understand that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of my investment intent as expressed herein. In this connection, I understand that, in the view of the Securities and Exchange Commission (the "SEC"), the statutory basis for such exemption may be unavailable if my representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future.

(c) I further understand that the Securities must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. Moreover, I understand that the Company is under no obligation to register the Securities. In addition, I understand that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Company.

(d) I am familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of "restricted securities" acquired, directly or indirectly, from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the option pursuant to which the Securities are issued, such issuance will be exempt from registration under the Securities Act. In the event the Company later becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter the securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including among other things: (1) the sale being made through a broker in an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an

affiliate, (2) the availability of certain public information about the Company, and the amount of securities being sold during any three month period not exceeding the limitations specified in Rule 144(e), if applicable.
Notwithstanding this paragraph (d), I acknowledge and agree to the restrictions set forth in paragraph (e) hereof.

In the event that the Company does not qualify under Rule 701 at the time of the grant of the option pursuant to which the Securities are issued, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires among other things: (1) the resale occurring not less than two years after the later of the date the securities were sold by the Company or the date they were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of an affiliate, or of a non-affiliate who has held the securities less than three years, (2) the availability of certain public information about the Company, (3) the sale being made through a broker in an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934), and (4) the amount of securities being sold during any three month period not exceeding the specified limitations stated therein, if applicable.

(f) I further understand that in the event all of the applicable requirements of Rule 144 or Rule 701 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 and Rule 701 are not exclusive, the Staff of the SEC has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rule 144 or Rule 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.

(g) I understand that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities without the consent of the Commissioner of Corporations of California. I have read the applicable Commissioner's Rules with respect to such restriction, a copy of which is attached.

Signature of Purchaser:

Date:____________________, 19____

(b) It is unlawful for the holder of any such security to consummate a sale or transfer of such security, or any interest therein, without the prior written consent of the Commissioner (until this condition is removed pursuant to Section 260.141.12 of these rules), except:

(1) to the issuer;

(2) pursuant to the order or process of any court;

(3) to any person described in Subdivision (i) of Section 25102 of the Code or Section 260.105.14 of these rules;

(4) to the transferor's ancestors, descendants or spouse, or any custodian or trustee for the account of the transferor or the transferor's ancestors, descendants, or spouse; or to a transferee by a trustee or custodian for the account of the transferee or the transferee's ancestors, descendants or spouse;

(5) to holders of securities of the same class of the same issuer;

(6) by way of gift or donation inter vivos or on death;

(7) by or through a broker-dealer licensed under the Code (either acting as such or as a finder) to a resident of a foreign state, territory or country who is neither domiciled in this state to the knowledge of the broker-dealer, nor actually present in this state if the sale of such securities is not in violation of any securities law of the foreign state, territory or country concerned;

(8) to a broker-dealer licensed under the Code in a principal transaction, or as an underwriter or member of an underwriting syndicate or selling group;

(9) if the interest sold or transferred is a pledge or other lien given by the purchaser to the seller upon a sale of the security for which the Commissioner's written consent is obtained or under this rule not required;

(10) by way of a sale qualified under Sections 25111, 25112, 25113 or 25121 of the Code, of the securities to be transferred, provided that no order under Section 25140 or Subdivision (a) of Section 25143 is in effect with respect to such qualification;

(11) by a corporation to a wholly owned subsidiary of such corporation, or by a wholly owned subsidiary of a corporation to such corporation;

(12) by way of an exchange qualified under Section 25111, 25112 or 25113 of the Code, provided that no order under Section 25140 or Subdivision (a) of Section 25143 is in effect with respect to such qualification;

(13) between residents of foreign states, territories or countries who are neither domiciled nor actually present in this state;

(14) to the State Controller pursuant to the Unclaimed Property Law or to the administrator of the unclaimed property law of another state;

(15) by the State Controller pursuant to the Unclaimed Property Law or by the administrator of the unclaimed property law of another state if, in either such case, such person (i) discloses to potential purchasers at the sale that transfer of the securities is restricted under this rule, (ii) delivers to each purchaser a copy of this rule, and (iii) advises the Commissioner of the name of each purchaser;

(16) by a trustee to a successor trustee when such transfer does not involve a change in the beneficial ownership of the securities; or

(17) by way of an offer and sale of outstanding securities in an issuer transaction that is subject to the qualification requirement of
Section 25110 of the Code but exempt from that qualification requirement by subdivision (f) of Section 25102;

provided that any such transfer is on the condition that any certificate evidencing the security issued to such transferee shall contain the legend required by this section.

(c) The certificates representing all such securities subject to such a restriction on transfer, whether upon initial issuance or upon any transfer thereof, shall bear on their face a legend, prominently stamped or printed thereon in capital letters of not less than 10-point size, reading as follows:

"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OR CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."

INTERNATIONAL DISTRIBUTOR AGREEMENT

THIS AGREEMENT (the "Agreement") is entered into effective as of ___________, 199__, between Echelon Corporation ("Echelon"), a Delaware corporation with principal offices at 4015 Miranda Avenue, Palo Alto, California 94304, and __________________________________ ("Distributor"), a corporation organized under the laws of _____________________, with principal offices at _______________________________________________________.

WHEREAS, Echelon has developed and distributes products for intelligent distributed control systems.

WHEREAS, Echelon wishes to appoint Distributor to distribute Echelon's products on a non-exclusive basis in the Territory (as hereinafter defined).

WHEREAS, Distributor is willing to accept such appointment.

NOW, THEREFORE, the parties hereto agree as follows:

(a) "Products" shall mean those hardware and/or software products for which Distributor will serve as a non-exclusive distributor hereunder, as identified in Exhibit A hereto, as it may be amended from time to time pursuant to Section 9 below.

(b) "Development Products" shall mean those Products identified in Exhibit A as such.

(c) "OEM Products" shall mean those Products identified in Exhibit A as such.

(d) "Software Products" shall mean those Products identified in Exhibit A as such.

(e) "Territory" shall mean the territory set forth in Exhibit B.

(f) "Software" shall mean any Software Product that is listed in Exhibit A and any software that is included in or with a Product that is listed in Exhibit A. All references to the Products herein include reference to the Software.

(g) "Software Copy" shall mean an object code copy of any of the Software, together with a copy of any user manual or other documentation customarily supplied with the Software Copy to end users by Echelon.

(i) "Registered Customer" shall mean a customer of Distributor that has been registered by Distributor with Echelon pursuant to Echelon's standard customer registration policies and procedures. Such registration policies and procedures are set forth in Exhibit A. Echelon may amend the registration policies and procedures set forth in Exhibit A from time to time in its sole discretion, including eliminating the registration program. Any such change shall be effective upon notice to Distributor.

Distributor's sole remuneration with respect to the distribution of Products hereunder shall be (i) the difference between Distributor's price from Echelon and Distributor's price to its customers and (ii) any commissions or sales credits payable pursuant to Sections 8(g) or 8(h) below.

Distributor acknowledges and agrees that certain Products may only be distributed pursuant to license agreements, as indicated by the Licensing Requirements set forth in Exhibit A. Distributor shall only distribute such Products to customers who have entered into all required license agreements with Echelon.

One time with respect to each order, Distributor may cancel, delay or reduce the quantity of Product(s) on that portion of an order that has a scheduled delivery date in the period beyond sixty (60) days of the then current date subject to the following provisions: (i) the combined effect of such cancellation or reduction shall not reduce the total quantity of each Product to be delivered on all scheduled delivery dates in such period by more than forty percent (40%); (ii) no scheduled delivery date may be delayed by more than three
(3) months; and (iii) the remaining orders shall continue to be subject to the minimum aggregate invoice value set forth on Exhibit A.

If under this Section 5(d) Distributor is permitted a delay in delivery, and if Echelon has, prior to Distributor's request therefor, notified Distributor of Distributor Price changes that are effective at the time of the new delivery date, then Echelon's price to Distributor on Products for which delivery was delayed and any penalties due to Echelon hereunder shall be based upon Echelon's new Distributor Price.

to perfect and protect such security interest. In the event Distributor fails promptly to execute such documents, Distributor hereby appoints Echelon its attorney-in-fact for the sole purpose of executing such documents, which appointment shall be a power coupled with an interest and shall be irrevocable.

(i) With respect to Products shipped to Distributor (as opposed to Products shipped directly to Distributor's customers), Distributor shall inspect all such Products upon receipt thereof, and Distributor may reject any item that fails substantially to conform to the then current Product specifications. To reject a Product, Distributor shall within five (5) working days of receipt of such Product notify Echelon in writing or by facsimile of its rejection and request a Return Material Authorization ("RMA") number. Within ten
(10) working days of receipt of the RMA number, Distributor shall return the rejected Product, freight prepaid and properly insured, in its original shipping carton with the RMA number displayed on the outside of the carton.

(ii) If Echelon confirms the defect, Echelon shall, at Echelon's option and expense, either repair or replace the Product. Echelon shall reimburse Distributor for the shipping charges to return properly rejected Products and shall pay the shipping charges for the delivery of such repaired or replacement Products to Distributor; otherwise, Distributor shall be responsible for all shipping charges.

(a) Notwithstanding anything to the contrary contained herein, title to all Software shall remain with Echelon. Distributor shall have a nonexclusive license to distribute Software Copies; provided, that such Software Copies are delivered to customers in unopened packages in good condition and at the same time as associated hardware Products, if any.

(b) Distributor shall have no right to copy the Software or to reverse engineer, disassemble, decompile or otherwise attempt to derive the source code from the Software. With respect to any Software Copies to be used for demonstration purposes, in addition to the requirements set forth in Sections 8(b) and 17(c) below, Distributor agrees to the terms of the (i) Software License Agreement accompanying the Software Copies, for Software identified with a Note 2, 3 or 4 Licensing Requirement in Exhibit A, and (ii) the Software License Agreement set

forth in Exhibit G hereto, for Software identified with a Note 5 Licensing Requirement in Exhibit A. Distributor shall not remove, alter, cover or obfuscate any copyright notices or other proprietary rights notices placed or embedded by Echelon on or in the Software.

Sales Credit Request Form shall set forth at a minimum: the name of the end user customer; the Echelon part number; the projected quantity of Products to be sold; and the per unit special sales credit. Receipt of the foregoing special sales credit is conditioned upon (i) verification by Distributor's POS Report
(as described in Section 13(d) below) of the type of Product(s) sold; (ii)
verification that the customer is a Registered Customer of Distributor; and
(iii) receipt of the Sales Credit Form set forth in Exhibit A. Distributor will not be entitled to any special sales credit unless such procedures have been fully complied with, and no credits will be provided to Distributor for shipments made by Distributor prior to the date that Echelon executes the applicable Special Sales Credit Form.

1. Echelon part number
2. Quantity sold
3. Unit sales price
4. Date product shipped (or scheduled to be shipped) to customer
5. Customer name
6. "Ship to" location

The accuracy of each POS report shall be certified by Distributor. Echelon shall have the right to audit Distributor's books and records to verify the accuracy of any POS report without notice at any time during Distributor's normal business hours; provided, that any such audit shall not materially interfere with Distributor's normal business operations.

provisions is deemed to be "technical data-commercial items" pursuant to DFAR
Section 227.7015(a).

expiration of each fixed term. In the event the parties continue to transact business under this Agreement following any expiration or termination of this Agreement, this Agreement shall be deemed to have been renewed on a day to day basis, and following such renewal, either party may terminate this Agreement upon one (1) day's written notice to the other party.

because of such termination, for compensation, reimbursement or damages on account of the loss of prospective profits or anticipated sales or on account of expenditures, inventory, investments, leases or commitments in connection with the business or goodwill of Echelon or Distributor. Termination shall not, however, relieve either party of obligations incurred prior to the termination.

ECHELON'S LIABILITY ARISING OUT OF THIS AGREEMENT AND/OR THE SALE OF ANY PRODUCT SHALL NOT EXCEED THE PRICE PAID BY DISTRIBUTOR FOR THE PRODUCT. IN NO EVENT SHALL ECHELON BE LIABLE FOR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS BY ANYONE. IN NO EVENT SHALL ECHELON BE LIABLE TO DISTRIBUTOR OR ANY OTHER ENTITY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES OR LOST PROFITS, HOWEVER CAUSED, WHETHER FOR BREACH OF CONTRACT, NEGLIGENCE OR OTHERWISE, AND WHETHER OR NOT ECHELON HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. THE ESSENTIAL PURPOSE OF THIS PROVISION IS TO LIMIT THE POTENTIAL LIABILITY OF ECHELON ARISING OUT OF THIS AGREEMENT AND DISTRIBUTION OF THE PRODUCTS.

only for the purposes herein set forth, and upon termination of this Agreement for any reason such authorization shall cease.

(i) Distributor agrees not to provide or otherwise make available any Software Copies, in any form, to any person other than employees of Distributor or Echelon or Distributor's customers in connection with the distribution of the Software or its demonstration (in accordance with Subsection 17(c) below).

(ii) Distributor acknowledges that the Software constitutes confidential and proprietary information of Echelon developed at substantial expense to Echelon. Distributor agrees to use the Software only as authorized herein, and to treat the Software with at least the degree of care and protection as its treats its own most confidential information, and Distributor represents and warrants that it takes reasonable measures to protect its own confidential information. Distributor agrees that Distributor will take appropriate action by instruction, agreement, or otherwise with Distributor's employees to satisfy Distributor's obligations under this Agreement with respect to use, copying, modification and protection and security of the Software. Distributor shall remain obligated, both during the term of this Agreement and thereafter, to hold in confidence its knowledge of the Software as a trade secret for the benefit of Echelon.

(iii) Distributor acknowledges that by reason of its relationship with Echelon hereunder it will have access to certain other information and materials concerning the Products and Echelon's business, plans, customers and technology that are confidential and of substantial value to Echelon, which value would be impaired if such information were disclosed to third parties. Distributor agrees that it shall not use in any way for its own account or the account of any third party, nor disclose to any third party, any such confidential information revealed to it by Echelon. Distributor shall take every reasonable precaution to protect the confidentiality of such information, including, at the request of Echelon, the entry by Distributor's agents and employees into confidentiality agreements in a form approved by Echelon, prohibiting any disclosure to third parties of confidential information provided by Echelon. Distributor shall not publish any technical description of any Software or Product or other confidential information of Echelon beyond the description published by Echelon. In the event of termination or expiration of this Agreement, there shall be no use or disclosure by Distributor, its agents, or employees of any confidential information of Echelon, and Distributor shall not manufacture or have manufactured any products utilizing any of Echelon's confidential information. Distributor shall deliver to Echelon all copies within its possession or within its control of customer lists, catalogues, specifications, proposals, quotations, price lists, contracts and all other documents and data relating to the Products or the conduct of Echelon's business.

(i) Distributor understands and acknowledges that Echelon is subject to regulation by agencies of the U.S. Government, including the U.S. Department of Commerce, which prohibit export or diversion of certain products and technology to certain countries. Any and all obligations of Echelon to provide products, software, documentation or any media in which any of the foregoing is contained, as well as any technical assistance, shall be subject in all respects to Echelon's compliance with such United States laws and regulations as shall from time to time govern the license and delivery of technology and products abroad by persons subject to the jurisdiction of the United States, including the Export Administration Act of 1979, as amended, any successor legislation, and the Export Administration Regulations issued by the Department of Commerce, Bureau of Export Administration.

(ii) Without in any way limiting the provisions of this Agreement, Distributor agrees that unless prior written authorization is obtained from the Bureau of Export Administration or the Export Administration Regulations, it will not export, reexport, or transship, directly or indirectly, any of the technical data or Software (i) into (or to a national resident of) Cuba, Iraq, Libya, Yugoslavia, North Korea, Iran, Sudan, Syria or any other country to which the U.S. has embargoed goods; or (ii) to anyone on the U.S. Treasury Department's list of Specially Designated Nationals or the U.S. Commerce Department's Table of Deny Orders.

this Agreement is being performed, the remainder of this Agreement shall be valid and enforceable and the parties shall negotiate, in good faith, a substitute, valid and enforceable provision which most nearly effects the parties' intent in entering into this Agreement.

LIABILITY AND EXCLUSIONS OF DAMAGES SET FORTH HEREIN SHALL REMAIN IN EFFECT.

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written.

ECHELON CORPORATION                     ________________________________
(Echelon)                               (Distributor)

By: ___________________________         By: ____________________________

_______________________________         ________________________________
         (Print Name)                   (Print Name)

Title: ________________________         Title: _________________________

========================================================================

   DEVELOPMENT      DISTRIBUTOR        SALES CREDIT        LICENSING
    PRODUCTS           PRICE          OR COMMISSION       REQUIREMENT
     ------            -----             ------             ------
------------------------------------------------------------------------
------------------------------------------------------------------------

------------------------------------------------------------------------

------------------------------------------------------------------------

========================================================================

========================================================================

      OEM           DISTRIBUTOR        SALES CREDIT        LICENSING
    PRODUCTS           PRICE          OR COMMISSION       REQUIREMENT
     ------            -----             -------            -------
------------------------------------------------------------------------
------------------------------------------------------------------------

------------------------------------------------------------------------

------------------------------------------------------------------------

========================================================================

========================================================================

    SOFTWARE        DISTRIBUTOR        SALES CREDIT        LICENSING
    PRODUCTS           PRICE          OR COMMISSION       REQUIREMENT
     ------            -----            --------            -------
------------------------------------------------------------------------
------------------------------------------------------------------------

------------------------------------------------------------------------

------------------------------------------------------------------------

========================================================================

EXHIBIT B

TERRITORY

EXHIBIT C

PAYMENT TERMS

EXHIBIT D

SOFTWARE MARKETING OBLIGATIONS

1. Pre-Sales Support. Distributor shall use its best efforts to solicit sales for the Software Products. Distributor shall provide limited pre-sales support, including distributing Echelon's promotional materials, answering technical questions and expediting customer's completion of the applicable Software License Agreement.

2. Delivery. Promptly upon receipt of the Software Products from Echelon, Distributor shall deliver the same to the customer unopened in the original packaging and will obtain from the customer a signed copy of Echelon's Acknowledgment of Receipt. Distributor shall immediately forward such Acknowledgment to Echelon via facsimile transmission to the attention of Order Processing.

3. Post-Sales Support. Distributor shall provide limited post-sales support. Customers requiring greater support will be directed by Distributor to contact Echelon for in-depth support during the initial warranty period and to contact Echelon with respect to entering into a support contract thereafter.

EXHIBIT E

ADDITIONAL MARKETING OBLIGATIONS

[Insert terms of minimum purchases]

EXHIBIT F

EVALUATION AGREEMENT

EXHIBIT G

SOFTWARE LICENSE AGREEMENT

EXHIBIT 10.6

Agreement # H_______________

To be assigned by Echelon

LONWORKS(R)
OEM LICENSE AGREEMENT

This Agreement is entered into between ECHELON CORPORATION ("Echelon") and _________________________________ ("Licensee") on the following terms and conditions:

1. DEFINITIONS

(a) "LonTalk(R) Protocol" means Echelon's protocol for control networks known as the LonTalk Protocol, as such protocol may be modified or improved by Echelon from time to time.

(b) "Neuron(R) Chips" means semiconductor devices that are (i) generally sold under the name Neuron Chips, (ii) designed by Echelon or a supplier licensed by Echelon to design such devices, (iii) implement, or are designed to be used to implement, all or part of the LonTalk Protocol, and (iv) manufactured by Echelon or by a supplier licensed by Echelon to manufacture such devices.

(c) "LONWORKS Applications" means equipment that incorporates Neuron Chips and the LonTalk Protocol. LONWORKS Applications shall exclude development systems for developing applications that use the LONTALK Protocol.

(d) "Echelon Intellectual Property" means (i) U.S. Patent No. 4,918,690, U.S. Patent No. 4,941,143, U.S. Patent No. 4,955,018, U.S. Patent No. 4,969,147, U.S. Patent No. 5,297,143, U.S. Patent No. 5,319,641, U.S. Patent No. 5,420,572, U.S. Patent No. 5,500,852, U.S. Patent No. 5,513,324, U.S. Patent No. 5,519,878, and foreign patents based upon such U.S. patents and claiming the same inventions, and (ii) Echelon copyrights governing the LonTalk Protocol.

(e) "Neuron Chip Firmware" means only the Echelon software which, among other things, implements the LonTalk Protocol, and which is identified as "Neuron Chip Firmware" in the documentation and/or start up screen for Echelon's development systems for developing applications that use the LonTalk Protocol.

2. LICENSE

(a) Echelon grants Licensee a nonexclusive, royalty-free, fully paid license, under Echelon Intellectual Property, to make, use and sell LonWorks Applications. Licensee agrees that whenever a Neuron Chip is executing instructions, the Neuron Chip Firmware shall be loaded into it starting at address location 0 (zero). Licensee's rights to use the LonTalk Protocol and Neuron Chips shall not extend to use of the LonTalk Protocol in devices that duplicate the functions of all or part of the Neuron Chips, or to use the Neuron Chips with any communications protocol other than the LonTalk Protocol. The foregoing limitations shall apply to all Neuron Chips incorporated by Licensee into its LonWorks Applications, including Neuron Chips contained in products or equipment purchased by Licensee. If Licensee desires to implement the LonTalk Protocol for use with semiconductor devices other than the Neuron Chip, then Licensee should request a copy of Echelon's LonTalk Protocol License Agreement.

(b) Echelon grants Licensee a nonexclusive, royalty-free, fully paid license to reproduce and distribute the Neuron Chip Firmware without modification for use only with Neuron Chips; provided that Neuron Chip Firmware is programmed into either: (i) the memory of a Neuron Chip, or (ii) a memory device attached to the memory bus of a Neuron Chip. Notwithstanding the foregoing, Licensee may provide a master copy of the Neuron Chip Firmware linked with an application program on removable media to (A) an OEM Licensee who is a contract manufacturer for Licensee's LONWORKS Applications and (B) an OEM Licensee for whom Licensee is designing LonWorks Applications, for use and distribution by such OEM Licensee pursuant to the terms of such OEM Licensee's agreement with Echelon. As used herein "OEM License" means a LonWorks Development License Agreement or LONWORKS OEM License Agreement with Echelon or its subsidiaries that has an agreement number preceded by the letter "E" or a subsequent letter of the alphabet. Licensee agrees not to modify, translate, reverse engineer, decompile, disassemble or otherwise attempt to derive source code for the Neuron Chip Firmware (except to the extent that such acts may not be prohibited under applicable law).

(c) At the request of Licensee, and upon receipt of a fee of Fifty United States Dollars (U.S. $50.00), Echelon will deliver to Licensee one (1) copy of the Neuron Chip Firmware if Licensee has not already received such a copy from Echelon.

(d) No license is granted, express or implied, under any patents, trade secrets, know-how or other intellectual property of Echelon covering specific applications or implementations of the LonTalk Protocol, LonWorks Applications or Neuron Chips. Licensee shall have no right under Echelon Intellectual Property to modify the LonTalk Protocol.

(e) Licensee may make appropriate and truthful reference to Echelon and Echelon products and technology in Licensee's company and product literature; provided that Licensee properly attributes Echelon's trademarks; and provided, further, that Licensee does not use the name of Echelon or any Echelon trademark in its name or in its product name. No license is granted, express or implied, under any Echelon trademarks, trade names or service marks.

3. USE OF NEURON CHIPS

LICENSEE ASSUMES RESPONSIBILITY FOR, AND HEREBY AGREES TO USE ITS BEST EFFORTS IN, DESIGNING AND MANUFACTURING EQUIPMENT LICENSED HEREUNDER TO PROVIDE FOR SAFE OPERATION THEREOF, INCLUDING, BUT NOT LIMITED TO, COMPLIANCE OR QUALIFICATION WITH RESPECT TO ALL SAFETY LAWS, REGULATIONS AND AGENCY APPROVALS, AS APPLICABLE. THE NEURON CHIP, LONTALK PROTOCOL AND NEURON CHIP FIRMWARE ARE NOT DESIGNED OR INTENDED FOR USE AS COMPONENTS IN EQUIPMENT INTENDED FOR SURGICAL IMPLANT INTO THE BODY, OR OTHER APPLICATIONS INTENDED TO SUPPORT OR SUSTAIN LIFE, FOR USE IN FLIGHT CONTROL OR ENGINE CONTROL EQUIPMENT WITHIN AN AIRCRAFT, OR FOR ANY OTHER APPLICATION IN WHICH THE FAILURE OF THE NEURON CHIP, LONTALK PROTOCOL OR NEURON CHIP FIRMWARE COULD CREATE A SITUATION IN WHICH PERSONAL INJURY OR DEATH MAY OCCUR, AND LICENSEE SHALL HAVE NO RIGHTS HEREUNDER FOR ANY SUCH APPLICATIONS.

4. INDEMNITY

Echelon shall indemnify Licensee for any liabilities, damages and costs payable by Licensee to a third party in an action for infringement of any third party United States patent by the LonTalk Protocol and for reasonable attorney's fees relating thereto. The foregoing shall be subject to the Licensee notifying Echelon promptly in writing of and giving Echelon the exclusive authority to defend or settle any such claim or proceeding. If the use of the LonTalk Protocol is enjoined or is the subject of any actual or potential patent infringement action, Echelon may, at its option, procure for Licensee the right to continue to use the LonTalk Protocol or replace or modify the LonTalk Protocol so that it becomes noninfringing. Notwithstanding the foregoing, Echelon assumes no liability for any claims attributable to Licensee's specific applications for the LonTalk Protocol or attributable to the use of the LonTalk Protocol in combination with equipment or technology not provided by Echelon if the claim would not have occurred but for such specific application or combination. In addition, in no event shall Echelon's liability to Licensee under this paragraph exceed the amount of Two Thousand Five Hundred United States Dollars (U.S.
$2,500.00). THE FOREGOING STATES THE ENTIRE LIABILITY OF ECHELON WITH RESPECT TO INFRINGEMENT OF ANY PATENTS OR OTHER INTELLECTUAL PROPERTY RIGHT BY THE LONTALK PROTOCOL, LONWORKS APPLICATIONS, NEURON CHIP, ECHELON INTELLECTUAL PROPERTY OR NEURON CHIP FIRMWARE.

5. WARRANTY AND DISCLAIMER

Echelon represents and warrants that it has the right to grant the licenses granted herein. ECHELON DISCLAIMS ALL OTHER WARRANTIES AND CONDITIONS, EXPRESS, IMPLIED OR STATUTORY, RESPECTING THE LONTALK PROTOCOL, LonWorks APPLICATIONS, NEURON CHIPS, ECHELON INTELLECTUAL PROPERTY OR NEURON CHIP FIRMWARE, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND ANY IMPLIED WARRANTIES ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE.

LonWorks OEM License Agreement Page 1 of 2

6. TERM AND TERMINATION

(a) The term of this Agreement shall be ten (10) years from the date of execution unless terminated earlier as provided below. Licensee may renew this Agreement for an additional ten (10) year period upon written notice delivered to Echelon within the last six (6) months of the initial term. Echelon agrees to give Licensee six (6) months notice prior to expiration of the initial term of this Agreement. If Echelon fails to give such notice, then this Agreement shall remain in force until six (6) months after notice of expiration is given by Echelon (but in no event longer than six (6) months after ten (10) years from the date of execution) unless renewed prior to such date.

(b) In addition, the non-breaching party may terminate this Agreement upon a breach by the other party if such breach remains uncured thirty (30) days after delivery by the non-breaching party of written notice of the breach. The provisions of paragraphs 5, 7 and 8 shall survive any termination of this Agreement. All other provisions shall terminate.

7. LIMITATION OF LIABILITY

NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY LOST PROFITS OR OTHER SPECIAL CONSEQUENTIAL, INDIRECT, PUNITIVE OR INCIDENTAL DAMAGES, HOWEVER CAUSED ON ANY THEORY OF LIABILITY, ARISING IN ANY WAY OUT OF THIS AGREEMENT OR THE DEVELOPMENT OR DISTRIBUTION BY LICENSEE OF APPLICATIONS OR SYSTEMS USING THE LONTALK PROTOCOL, NEURON CHIPS OR NEURON CHIP FIRMWARE. THE FOREGOING SHALL NOT APPLY TO ANY BREACHES BY LICENSEE OF SECTIONS 2 OR 3.

8. MISCELLANEOUS

(a) Licensee shall comply with any United States export controls governing export of any technical data or technology provided by Echelon. If Licensee is other than a U.S. entity or is located outside the U.S., Licensee, as a prior condition to exercising its rights hereunder, shall execute any letter of written assurances required for the export of technical data or technology by Echelon and shall comply with such other requirements of the U.S. Department of Commerce or other applicable agency for the export of technical data or technology by Echelon and shall comply with such other requirements of the U.S. Department of Commerce or other applicable agency for the export of technical data or technology by Echelon to Licensee.

(b) If Licensee is other than a U.S. entity or is located outside of the U.S., Licensee represents that no consent or approval of any governmental authority is required in connection with the valid execution and performance of this Agreement.

(c) This Agreement will be governed by and construed in accordance with the laws of the State of California, U.S.A., except that body of California law concerning conflicts of law.

(d) Licensee shall not assign this Agreement or any of its rights or duties hereunder except to a successor-in-interest without the prior written consent of Echelon which shall not be unreasonably withheld.

(e) The Neuron Chip Firmware is deemed to be "commercial computer software" pursuant to DFAR Section 227.7202. Any use, modification, reproduction, distribution or disclosure of the Neuron Chip Firmware by the U.S. Government shall be governed solely by the terms of this Agreement and shall be prohibited except to the extent expressly permitted by the terms of this Agreement.

(f) Licensee agrees that Echelon may disclose its name, address and Agreement number to vendors of Neuron Chips or LONWORKS Applications for the purpose of verifying Licensee's status as an Echelon licensee.

(g) This Agreement constitutes the entire agreement between the parties,

and supersedes any prior agreements, with respect to the subject

matter hereof. No amendment to any term of the Agreement shall be

valid unless mutually agreed to in writing by the parties. The failure

of either party to enforce any provision of this Agreement shall not

constitute a waiver of such provision.

ECHELON CORPORATION:                     LICENSEE:____________________________

Signature:_______________________        Signature:___________________________

Print Name:______________________        Print Name:__________________________

Title:___________________________        Title:_______________________________

Effective Date:__________________        Date Signed:_________________________

Address: 4015 Miranda Avenue             Address:_____________________________

Palo Alto, CA  94304                     _____________________________________

(800) 258 - 4LON                         Phone:_______________________________

Lon, Neuron, LONWORKS and LonTalk  are U.S.                   v.12.16.96
registered trademarks of Echelon Corporation.          P/N 120-0005-01L

                  LonWorks OEM License Agreement                   Page 2 of 2

EXHIBIT 10.7

AGREEMENT NUMBER C______________

SOFTWARE LICENSE AGREEMENT

BETWEEN

ECHELON CORPORATION
4015 MIRANDA AVENUE
PALO ALTO, CALIFORNIA 94304

AND

DEVELOPER

Echelon Corporation ("Echelon") enters into this Agreement to license to Developer ("Developer") certain computer programs described in Exhibit A attached hereto in accordance with the terms and conditions of this Agreement.

This Agreement consists of this cover page, the attached Terms and Conditions, and Exhibits A (Executable Files, Development Purpose and Developer's Product), B (License Fees), C (Royalties), and D (End User License Restrictions). There are separate sequentially numbered Exhibits A, B and C for each computer program available from Echelon (e.g., Exhibit A-1, Exhibit A-2, etc.). Additional Exhibits A, B and C may be added to this Agreement by execution thereof by both parties. All references in the Terms and Conditions to Exhibit A, Exhibit B, or Exhibit C include all Exhibit A's, all Exhibit B's, or all Exhibit C's in effect, as applicable.

Developer has read, understands and agrees to the terms of this Agreement and the undersigned is duly authorized to sign this Agreement.

ECHELON CORPORATION                            DEVELOPER


By: _________________________                  By:_____________________________

_____________________________                  ________________________________
(Print Name)                                   (Print Name)

Title: ______________________                  Title: _________________________

Date:  ______________________                  Date:  _________________________

                          SOFTWARE LICENSE AGREEMENT
                             TERMS AND CONDITIONS

1         DEFINITIONS.
          -----------

     1.1  "Object Code " means the computer program(s) set forth on Exhibit A in
object code form.

     1.2  "Documentation" means the documentation accompanying the Object Code.

     1.3  "Executable Files" means the executable files set forth on Exhibit A

and the Support Files.

1.4. "Support Files" means the support files set forth on Exhibit A.

1.5 "Utilities" means all other files supplied on the distribution disk(s) not defined as Object Code or Support Files.

1.6 "Licensed Software" means the Object Code, Support Files, Utilities and Documentation.

     1.7  "Developer's Product" shall have the meaning set forth on Exhibit A.

     1.8  "LonTalk(TM) Protocol" means Echelon's protocol for control networks.

     1.9  "Development Purpose" shall have the meaning set forth on Exhibit A.

2         LICENSE.
          -------

     2.1  Object Code.  Echelon hereby grants Developer a nonexclusive,
          -----------

nontransferable license to use the Object Code solely for the Development Purpose, and to use the Documentation, Support Files and Utilities to support such efforts. Developer may make one (1) copy of the Licensed Software for backup purposes.

conspicuously identified as Confidential Information as provided in Section 9 of this Agreement; and (ii) with respect to the Licensed Software such contractor is subject to a confidentiality obligation at least as stringent as that set forth in Section 9 this Agreement. Developer shall have no right to reproduce, distribute or otherwise provide to third parties the Documentation, except as provided in the previous sentence.

3         END USER LICENSE RESTRICTIONS.
          -----------------------------

          The following provisions of this Section 3 apply only if Developer's
Product as defined on Exhibit A is a computer program and not a hardware
product:

     (i)  Each copy of Developer's Product containing any Executable Files that

is distributed hereunder shall be distributed pursuant to a software license agreement between Developer and the end user that incorporates the terms and conditions set forth on Exhibit D. In jurisdictions in which an enforceable copyright covering the Licensed Software exists, the agreement may be a written agreement in the package containing such Developer's Product that is fully visible to the end user and that the end user accepts by opening the package. In all other jurisdictions, such agreement must be a written agreement signed by the end user. Developer agrees to use its best efforts to enforce the obligations of its end user software license agreements and to inform Echelon immediately of any known breach of such obligations. Echelon may modify the terms of Exhibit D upon sixty (60) days written notice to Developer. After the end of such period, such Developer's Product may be distributed only pursuant to the modified terms.

(ii) Notwithstanding the foregoing paragraph, Developer shall not be obligated to distribute such Developer's Product pursuant to a software license agreement as described in the foregoing paragraph for copies of such Developer's Product that are distributed internally for Developer's internal business purposes. For each such copy of Developer's Product, Developer agrees to be bound by the restriction in Sections 1, 2, 4, 5, 6, 10, and 11 of Exhibit D with respect to the Executable Files included in the Developer's Product.

4         CONSIDERATION.
          -------------

     4.1  License Fees.  In consideration for the license granted pursuant to
          ------------

Section 2.1, Developer agrees to pay to Echelon the one-time nonrefundable license fee(s) set forth on Exhibit B. Upon receipt of Developer's executed Exhibit B and a purchase order for the Licensed Software, Echelon will invoice Developer for such fee. Payment of the invoiced amount will be due within thirty (30) days of the invoice date. Any invoiced amount not paid when due may bear interest at the rate of one and one-half percent (1 1/2%) per month or, if less, the maximum amount permitted by applicable law.

(a) In consideration for the license granted pursuant to Section 2.2, Developer agrees to pay to Echelon the royalties set forth on Exhibit C for each copy of the Executable Files that is distributed by or for Developer according to the terms of Exhibit C. If Developer's Product incorporating such Executable Files, as defined on Exhibit A, is a computer program, the royalty shall be due for each copy distributed and each copy shall be distributed for use only on a single computer and not for use in a network. If Developer's Product incorporating such Executable Files, as defined on Exhibit A, is a hardware product, the royalty shall be due for each copy of such Executable Files distributed in each hardware product. As used in this Section 4, "distribute" includes, but is not limited to, distributed internally for business purposes other than solely for development.

(b) Developer shall pay, within thirty (30) days after the end of each calendar quarter or part thereof during the term of this Agreement, the aggregate royalties for all such Developer's Products distributed by Developer during such quarter. Developer will also submit to Echelon within thirty (30) days after the end of each calendar quarter or part thereof during the term of this Agreement, a reasonably detailed report for the quarter for which such royalties are due, which describes (i) the number of such Developer's Products distributed by Developer, and (ii) the calculation of the royalties due.

(c) Notwithstanding paragraph (a) above, no royalty will be payable for limited numbers of such Developer's Product distributed by Developer internally and to Distributors solely for marketing and sales demonstrations. In addition, if such Developer's Product as defined on Exhibit A is a computer program and not a hardware product, no royalties will be payable for limited copies of Developer's Product distributed solely for the following purposes; (i) limited copies internally and to Distributors for product maintenance and support; (ii) as back up copies; (iii) as error corrections that are distributed generally to third party customers for no fee (or for media and handling charges only); or (iv) as error corrections that are distributed to internal users, provided, that such error corrections do not incorporate new features or functions.

(a) The fees and royalties payable hereunder do not include any sales, use, excise, value-added, or similar taxes that may be applicable. When Echelon has the legal obligation to collect such taxes, the appropriate amount shall be added to Developer's invoice and paid by Developer unless Developer provides Echelon with a valid tax exemption certificate authorized by the appropriate taxing authority. Echelon agrees to take such steps as may be practical to minimize such taxes.

(b) All payments by Developer shall be made free and clear of, and without reduction for, any withholding taxes. Any such taxes which are otherwise imposed on payments to Echelon shall be the sole responsibility of Developer. Developer shall provide Echelon with official receipts issued by the appropriate taxing authority or such other evidence as is reasonably requested by Echelon to establish that such taxes have been paid. Developer will cooperate with Echelon and take all actions reasonably necessary in order to secure a reduction or elimination of withholding taxes pursuant to any income tax treaty between the United States and the jurisdiction of the appropriate taxing authority, as applicable.

Support, updates and training will be provided pursuant to Echelon's standard programs, policies and prices. Developer agrees that any Licensed Software update or upgrade (the "Replacement Software") provided by Echelon is subject to this Agreement. In the event that Echelon provides Developer with Replacement Software, then Developer agrees to destroy all copies of the prior release of the applicable Licensed Software within thirty (30) days after receipt of Replacement Software; provided, however, that Developer may retain one copy of the prior release for backup, archival and support purposes.

Echelon warrants that the media on which the Licensed Software is delivered will be free from defects in materials and workmanship for a period of ninety (90) days after delivery. Except as expressly provided above, Echelon licenses the Licensed Software to Developer on an "AS IS" basis. ECHELON AND ITS SUPPLIERS MAKE AND DEVELOPER RECEIVES NO WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, REGARDING THE LICENSED SOFTWARE OR ITS USE OR OPERATION, ALONE OR IN COMBINATION WITH DEVELOPER'S PRODUCT.

8         LABELLING.
          ---------

     8.1  Notices.  Developer shall not remove any copyright notices or
          -------

proprietary legends contained within the Licensed Software. Developer shall include a copyright notice in Developer's Product that contains Executable Files if such Developer's Product as defined on Exhibit A is a computer program, and on Developer's Product if such Developer's Product as defined on Exhibit A is a hardware product, reflecting the copyright ownership of Echelon and, if appropriate, of Developer. Developer agrees to indicate in Developer's documentation for such Developer's Product that such product contains copyrighted material of Echelon.

9         CONFIDENTIALITY.
          ---------------

     9.1  Confidential Information.  Developer acknowledges that information
          ------------------------

which Echelon discloses to Developer in a tangible form and which is marked "Confidential" or "Proprietary" (or with a similar legend), or that is disclosed orally and confirmed in writing as confidential within a reasonable time, constitutes the proprietary and confidential information of Echelon ("Confidential Information"). Even if not so marked, the parties agree that the Licensed Software and Documentation shall be "Confidential Information" hereunder.

11        INDEMNIFICATION.
          ---------------

     11.1 By Echelon.  Echelon shall indemnify and hold harmless Developer from
          ----------

and against all liabilities payable to third parties and reasonable expenses of Developer (including reasonable fees of attorneys and other professionals) resulting from any infringement by the Licensed Software of any copyright or trade secret of any third party. Developer shall promptly notify Echelon of any such claim and, at Echelon's option, permit Echelon to control the defense and settlement thereof. Developer shall not enter into any settlements that affect Echelon without the prior written consent of Echelon, which shall not be unreasonably withheld. In the event of such infringement, Echelon shall use every reasonable effort to obtain a license under the intellectual property rights that are infringed; provided that if in Echelon's judgment such a license is not available on reasonable terms, Echelon may terminate the licenses granted to Developer hereunder with respect to the infringing Licensed Software upon written notice to Developer. Echelon shall have no liability for infringement based on (i) use of other than the current release of the Licensed Software,
(ii) modification of the Licensed Software, or (iii) the combination or use of the Licensed Software with software or any item or process not furnished by Echelon if such infringement would have been avoided by the use of the Licensed Software alone. IN NO EVENT SHALL ECHELON'S LIABILITY UNDER THIS SECTION 11.1 EXCEED THE TOTAL AMOUNT PAID BY DEVELOPER TO ECHELON FOR THE LICENSED SOFTWARE GIVING RISE TO SUCH LIABILITY. THIS SECTION 11.1 STATES ECHELON'S ENTIRE OBLIGATION WITH RESPECT TO INFRINGEMENT BY SUCH MATERIALS OF INTELLECTUAL PROPERTY RIGHTS.

12        TERM AND TERMINATION.
          --------------------

     12.1 Term.  This Agreement shall continue in full force and effect unless
          ----

and until terminated as provided in Section 12.2 below or in Section 2.4, 9.3, 11.1 or 13.2.

(a) If either party defaults in the performance of any provision of this Agreement, then the non-defaulting party may give written notice to the defaulting party that if the default is not cured within thirty (30) days the Agreement will be terminated. If the non-defaulting party gives such notice and the default is not cured during the thirty (30) day period, then the Agreement will terminate immediately upon notice by the non-defaulting party.

(b) This Agreement will terminate automatically without notice, (i) upon the institution by or against Developer of insolvency, receivership or bankruptcy proceedings or any other proceedings for the settlement of Developer's debts, (ii) upon Developer's making an assignment for the benefit of creditors, or (iii) in the event of Developer's dissolution or insolvency.

(c) Developer may terminate this Agreement either in its entirety or with respect to particular Licensed Software for any reason or for no reason upon thirty (30) days written notice to Echelon.

13        MISCELLANEOUS.
          -------------

     13.1 Assignment.  This Agreement may not be assigned by Developer without
          ----------

(a) Developer understands and acknowledges that Echelon is subject to regulation by agencies of the U.S. Government, including the U.S. Department of Commerce, which prohibit export or diversion of certain products and technology to certain countries. Any and all obligations of Echelon to provide products as well as any technical assistance shall be subject in all respects to such United States laws and regulations as shall from time to time govern the license and delivery of technology and products abroad by persons subject to the jurisdiction of the United States, including the Export Administration Act of 1979, as amended any successor legislation, and the Export Administration Regulations issued by the Department of Commerce, International Trade Administration, Bureau of Export Administration. Developer agrees to cooperate with Echelon, including, without limitation, providing required documentation, in order to obtain export licenses or exemptions therefrom. Developer warrants that it will comply with the Export Administration Regulations or other United States laws and regulations in effect from time to time.

(b) Without in any way limiting the provisions of this Agreement, Developer agrees that unless prior written authorization is obtained from the Bureau of Export Administration or the Export Administration Regulations explicitly permitting the reexport, it will not export, reexport, or transship, directly or indirectly, to country groups S or Z (as defined in the Export Administration Regulations and which currently consist of Cambodia, Cuba, Libya, North Korea, and Vietnam), any of the technical data or software (if the described on the Control List with a letter "A" following its Export Control Number).

AGREEMENT NUMBER C13-___________

A. The Object Code is the LonBuilder Microprocessor Interface Program Libraries.

B. "Executable Files" means custom ROM images in Motorola S-record or Intel Hex format created from the Object Code using the export facility of the LonBuilder Developer's Workbench.

C. "Support files" means no files contained herein.

D. "Developer's Product" means a hardware product that includes a memory device attached to the memory bus of a Neuron(R) 3150(R) Chip into which the Executable Files are programmed, or that includes a Neuron Chip in which the Executable Files have been programmed into EEPROM memory, and in both cases, that is included in equipment which enables communication from an attached computer onto a network otherwise comprised of LonWorks(R) Applications (as defined in Echelon's OEM License Agreement with Developer). Developer's Product also includes computer programs, solely in executable form, that execute on the attached computer and which may incorporate one or more Support Files. Notwithstanding that a portion of Developer's Product is a computer program, Developer's Product is deemed to be a hardware product.

E. "Development Purpose" means the purpose of configuring custom parameters, such as transceiver parameters, to create Executable Files, and using such Executable Files solely for developing Developer's Product.

F. Additional software that is not considered Object Code, Support Files or Utilities will be provided in the Examples directory. Developer shall have the right to use, modify, reproduce and distribute such software for any purpose. Except as specifically modified by the previous sentence, such software shall be considered to be the Licensed Software for all purposes under this Agreement except that the indemnity set forth in Section 11 shall not apply to such software, AND ECHELON DISCLAIMS ANY WARRANTY OF NONINFRINGEMENT WITH RESPECT TO SUCH SOFTWARE.

G. For the purposes of the LonBuilder Microprocessor Interface Developer's Kit, Section 5 is replaced in its entirety with the following:

AGREEMENT NUMBER C13-________

ECHELON CORPORATION                      DEVELOPER:_________________________
                                                   (Company Name)

Signature:____________________           Signature:_________________________

______________________________           ___________________________________
(Print Name)                             (Print Name)

Title:________________________           Title:_____________________________

Date:_________________________           Date:_____________________________

Licensed
Software
Echelon                                                                                License
Model No.                    Description                            Quantity           Fee
--------------------       --------------------------------       ------------       ------------
23201                        LonBuilder(R) Microprocessor
                             Interface Developer's Kit

A. As of the date of this Agreement, Developer designates the following individual to fulfill Developer's royalty reporting requirements under this Agreement:

Name:___________________            Title:________________________

Address:________________            Phone #:______________________

________________________            Fax #:________________________

________________________

Developer agrees to notify Echelon of any change in the above information.

ECHELON CORPORATION                      DEVELOPER:________________________
                                                   (Company Name)

Signature:____________________           Signature:________________________

______________________________           __________________________________
(Print Name)                             (Print Name)

Title:________________________           Title:____________________________

Date:_________________________           Date:_____________________________

                                       3

                                                AGREEMENT NUMBER  C13-_________

A.    Royalties.
      ----------

       Royalty               Annual Unit Volume
       Level                  Commitment Level              Royalty
       -------            --------------------------        -------
       Level 1                 Less than 2,500                $5.00
       Level 2             2,500 to 4,999 inclusive           $4.00
       Level 3             5,000 to 9,999 inclusive           $3.00
       Level 4            10,000 to 24,999 inclusive          $2.50
       Level 5            25,000 to 49,999 inclusive          $2.00
       Level 6                 50,000 and more                $1.50

B. For the first year of this Agreement, Developer's royalty will be based on Developer's expected volume for such year. For each subsequent year of this Agreement, Developer's royalty will be based on the volume actually achieved in the previous year.

C. Developer's expected volume for the first year of this Agreement as mutually agreed with Echelon is ______________. If no volume level is set forth in the previous sentence, then Developer shall be deemed to have specified level 1.

D. Royalties for the first 100 copies are included with the license fee set forth on Exhibit B-2.

ECHELON CORPORATION                      DEVELOPER:_______________________
                                                   (Company Name)

Signature:______________________         Signature:_______________________

________________________________         _________________________________
(Print Name)                             (Print Name)

Title:__________________________         Title:___________________________

Date:___________________________         Date:____________________________

                                       4

                                            AGREEMENT NUMBER  C13-_____________

All end user licenses of Developer's Product shall include provisions that:

(1) only a non-exclusive, non-transferable license to use the copy of the software on either (a) a single computer, or (b) a network server for access by one user, by way of a terminal or computer attached to the network server, is granted. Should the user choose to install the software on additional computers, or increase user access via a network server, the user must first acquire a license for each additional such computer or user who will use the software, as applicable, with the understanding that at any one time (and regardless of the number of media sets included with the software), the number of computers on which the software is installed or users who are permitted to use the software, as applicable, may not exceed the number of single-user licenses that the user has;

(2) Intentionally left blank.

(3) Developer or its suppliers retains all title and copyrights to the software, and all copies thereof, and the license is not a sale;

(4) the end user may not copy the software, except for one (1) copy of the software solely for backup purposes and provided that the end user reproduces proprietary notices on the copy;

(5) the end user may not modify, translate, reverse assemble, decompile, or disassemble the software;

(6) The software and accompanying documentation are deemed to be "commercial computer software" and "commercial computer software documentation", respectively, pursuant to DFAR Section 227.7202 and FAR Section 12.212(b), as applicable. Any use, modification, reproduction, release, performing, displaying or disclosing of the software and accompanying documentation by the U.S. Government shall be governed solely by the terms of this agreement and shall be prohibited except to the extent expressly permitted by the terms of this agreement;

(7) Echelon is a direct and intended beneficiary of the license agreement and may enforce it directly against the end user;

(8) Echelon shall not be liable to the end user for any loss of data, lost profits, cost of cover or other special, incidental, punitive, consequential, or indirect damages arising out of the use of the software;

(9) Echelon makes no warranties, express, implied or statutory, regarding the software, including without limitation the implied warranties of merchantability and fitness for a particular purpose;

(10) the end user's rights with respect to the software may be terminated, either immediately or after a notice period not exceeding thirty (30) days, upon unauthorized copying of the software or failure to comply with the restrictions contained in the license agreement; and

(11) upon termination of the license, the end user shall return all copies of the software to the party from which the software was acquired.

Echelon may be referred to as Developer's supplier.

AGREEMENT NUMBER C13-____________

A. "Object Code" means those files set forth in the file OBJECT.TXT in the product LICENSE directories.

B. "Executable Files" means those files set forth in the EXECUTE.TXT file in the product LICENSE directories.

C. "Support Files" means those files listed in the file SUPPORT.TXT in the product LICENSE directories.

D. "Developer's Product" means Developer's computer program(s), solely in executable form, that make calls to the LNS Developer's Kit for Windows Executable File. Developer's Product is a computer program.

E. "Development Purpose" means the purpose of incorporating calls to the LNS Developer's Kit for Windows Executable Files.

F. Additional software that is not designated as Object Code, Executable Files, Support Files, or Source Files will be provided in the EXA or EXAMPLES directories and their subdirectories, and in the files contained within the LONWORKS\DRIVERS directory that are also listed in the SOURCE.TXT file in the product LICENSE directories. Developer shall have the right to use, modify, reproduce and distribute such software, in binary form only, solely for use with Developer's Product. Except as specifically modified by the previous sentence, such software shall be considered to be the Licensed Software for all purposes under this Agreement except that the indemnity set forth in Section 11 shall not apply to such software, AND ECHELON DISCLAIMS ANY WARRANTY OF NONINFRINGEMENT WITH RESPECT TO SUCH SOFTWARE.

G. For the purposes of the LNS Developer's Kit for Windows, add the following sentences to the end of Section 4.2(a): "Echelon may provide Developer with successor versions of Exhibit C-14. If Developer does not execute Exhibit C-14 as of the date Developer executes this Exhibit A-14, then Echelon will only accept the then current version of Exhibit C-14 at such time as Developer executes an Exhibit C-14. The terms and conditions with respect to royalties set forth in an executed copy of Exhibit C-14 shall be fixed for the period set forth in Exhibit C-14 (the "Exhibit Term"). After expiration of the Exhibit Term, if Echelon has provided Developer with successor versions of Exhibit C-14, Developer must execute the then current successor version of Exhibit C-14 within thirty (30) days after the end of the Exhibit Term. After expiration of the Exhibit Term, if Echelon has not provided Developer with successor versions of Exhibit C-14, the last version of Exhibit C-14 executed by Developer shall remain in effect until thirty (30) days after Echelon has provided a successor version of Exhibit C-14 to Developer, during which thirty (30) day period Developer must execute such successor version. If Developer does not execute any successor version of Exhibit C-14 during the applicable thirty (30) day period as required above, Developer's right to distribute Executable Files shall terminate until such time as Developer executes the then current successor version of Exhibit C-14."

H. For the purposes of the LNS Developer's Kit for Windows, Section 5 is replaced in its entirety with the following:

5         SUPPORT.
          -------

     5.1  Definition   "Support" means:
          ----------
     (i)   Responses to  technical questions regarding the use of the Licensed

Software when such inquiries are submitted via either telephone, electronic mail, or facsimile.
(ii) Updates to the Licensed Software that Echelon provides generally to its customers under support agreements for no additional fee other than the support contract fee.
(iii) Support for LNS for Windows only covers the LCA Object Server ActiveX Control, the LCA Data Server API, the Network Services API, and the Field Compiler API. It does not include support for the Network Interface API or lower level API's. Echelon reserves the right to decline to respond to technical questions involving:

a) Product developments that duplicate the functions of Echelon's products.
b) Third-party products.
c) Debugging of Developer's software code

AGREEMENT NUMBER C13-____________

Echelon's support hours are Monday through Friday, 8:00 A.M. to 4 :30 P.M., Pacific time in the US, 0900 to 1700 Greenwich Mean Time in Europe, and 0900 to 1700 in Japan. Service is not available on Echelon's local regularly scheduled holidays at each of these locations. When Echelon does not respond immediately to a Support inquiry, Echelon will use reasonable efforts to respond within eight (8) business hours. Developer may designate up to three individuals who may place support calls with Echelon.

ECHELON CORPORATION                      DEVELOPER:__________________
                                                   (Company Name)

Signature:_________________              Signature:__________________

___________________________              ____________________________
(Print Name)                             (Print Name)

Title:______________________             Title:______________________
Date: ______________________             Date:_______________________

Windows is a registered trademark of Microsoft Corporation.

Licensed Software
Echelon Model No.              Description                                         Quantity           License Fee
-------------------------      --------------------------------------------      -------------       --------------
34303                            LNS Developer's Kit for Windows                       1

A. As of the date of this Agreement, Developer designates the following individual to fulfill Developer's royalty reporting requirements under this Agreement:

Name:_____________________________           Title:____________________________

Address:__________________________           Phone #:__________________________

                                             Fax #:____________________________
__________________________________

__________________________________

Developer agrees to notify Echelon of any change in the above information.

ECHELON CORPORATION                      DEVELOPER:________________________
                                                   (Company Name)

Signature:_______________________        Signature:________________________

_________________________________        __________________________________
(Print Name)                             (Print Name)

Title:___________________________        Title:____________________________

Date:____________________________        Date:_____________________________

                                       3

                                               AGREEMENT NUMBER  C13-___________

D. For the purposes of the LNS Developer's Kit for Windows, add the following to the end of Section 4.2(c):

"If such Developer's Product is distributed generally to third party customers or to internal users who are existing licensees as an error correction but also incorporates new features and functions, then the royalty due for such distributions shall be 15% of the royalty due by Developer according to the applicable rate set forth in Exhibit C-14. The foregoing provisions of this subsections (c) only apply if such Developer's Product does not increase the total capacity of the Commissioned Nodes. Notwithstanding the foregoing, the standard royalty shall be due for such Developer's Product distributed internally or to third party customers that are not existing licensees of the Executable Files."

AGREEMENT NUMBER C13-__________

E. For the purposes of the LNS Developer's Kit for Windows, add the following new Section 4.2(d):

"(d) As used herein, "Node" means a device that implements layers 1 through 6 of the LonTalk Protocol and "Demonstration Copy" means a version of Developer's Product that includes any Executable Files that is (i) distributed for pre-sales, marketing purposes only to Developer's potential customers, (ii) distributed for no fee (or for media and handling charges only), and (iii) can install and manage only four Nodes. Notwithstanding paragraph (a) above, no royalty will be payable for a reasonable number of Demonstration Copies distributed by or for Developer. Developer shall submit to Echelon within thirty (30) days after the end of each calendar quarter or part thereof during the term of this Agreement a reasonably detailed report for the quarter of the number of Demonstration Copies distributed by or for Developer. All other terms of this Agreement remain in effect with respect to Demonstration Copies, including but not limited to Section 3, END USER LICENSE RESTRICTIONS."

F. For the purposes of the LNS Developer's Kit for Windows, add the following new Section 4.2(e):

"(e) If Echelon provides Replacement Software (as defined in Section 5) to Developer for no fee (or for media and handling charges only), and if Developer distributes such Replacement Software to its existing licensees of the Executable Files for no fee (or for media and handling charges only), then no royalty shall be due for such Replacement Software. If Echelon charges a fee (other than media and handling charges only) for such Replacement Software, and/or if Developer charges its customers a fee (other than media and handling charges only) for such Replacement Software, and such Replacement Software is distributed to Developer's existing licensees of the Executable Files, then the royalty due for such Replacement Software shall be 15% of the royalty due by Developer according to the applicable rate set forth in Exhibit C-14. The foregoing provisions of this subsection (e) only apply if the Replacement Software does not increase the total capacity of the Commissioned Nodes. Notwithstanding the foregoing, the standard royalty shall be due for copies of Replacement Software that are distributed to customers that are not existing licensees of the Executable Files."

ECHELON CORPORATION                      DEVELOPER:_______________________
                                                   (Company Name)

Signature:_____________________          Signature:_______________________

_______________________________          _________________________________
(Print Name)                             (Print Name)
Title:_________________________          Title:___________________________

Date:___________________________         Date:____________________________

Agreement Number C13-__________

(1) only a non-exclusive, non-transferable license to use the copy of the software on either (a) a single computer, or (b) a network server for access by one user, by way of a terminal or computer attached to the network server, is granted. Should the user choose to install the software on additional computers, or increase user access via a network server, the user must first acquire a license for each additional such computer or user who will use the software, as applicable, with the understanding that at any one time (and regardless of the number of media sets included with the software), the number of computers on which the software is installed or users who are permitted to use the software, as applicable, may not exceed the number of single-user licenses that the user has;

(2) Intentionally left blank.

(3) Developer or its suppliers retains all title and copyrights to the software, and all copies thereof, and the license is not a sale;

(4) the end user may not copy the software, except for one (1) copy of the software solely for backup purposes and provided that the end user reproduces proprietary notices on the copy;

(5) the end user may not modify, translate, reverse assemble, decompile, or disassemble the software;

(6) The software and accompanying documentation are deemed to be "commercial computer software" and "commercial computer software documentation", respectively, pursuant to DFAR Section 227.7202 and FAR Section 12.212(b), as applicable. Any use, modification, reproduction, release, performing, displaying or disclosing of the software and accompanying documentation by the U.S. Government shall be governed solely by the terms of this agreement and shall be prohibited except to the extent expressly permitted by the terms of this agreement;

(7) Echelon is a direct and intended beneficiary of the license agreement and may enforce it directly against the end user;

(8) Echelon shall not be liable to the end user for any loss of data, lost profits, cost of cover or other special, incidental, punitive, consequential, or indirect damages arising out of the use of the software;

(9) Echelon makes no warranties, express, implied or statutory, regarding the software, including without limitation the implied warranties of merchantability and fitness for a particular purpose;

(10) the end user's rights with respect to the software may be terminated, either immediately or after a notice period not exceeding thirty
(30) days, upon unauthorized copying of the software or failure to comply with the restrictions contained in the license agreement; and

(11) upon termination of the license, the end user shall return all copies of the software to the party from which the software was acquired.

Echelon may be referred to as Developer's supplier.

EXHIBIT 10.8

INTERNATIONAL DISTRIBUTOR AGREEMENT

between

ECHELON CORPORATION

and

EBV ELEKTRONIK GMBH

AS OF DECEMBER 1, 1997

THIS AGREEMENT (the "Agreement") is entered into effective as of December 1, 1997 (the "Effective Date"), between Echelon Corporation ("Echelon"), a Delaware corporation with principal offices at 4015 Miranda Avenue, Palo Alto, California 94304, and EBV Elektronik GmbH ("Distributor"), a corporation organized under the laws of Germany, with principal offices at Ammerthalstr. 28, D-85551 Kirchheim, Germany.

WHEREAS, Echelon has developed and distributes products for intelligent distributed control systems;

WHEREAS, Echelon wishes to appoint Distributor to distribute Echelon's products on a non-exclusive basis in the Territory (as hereinafter defined); and

WHEREAS, Distributor is willing to accept such appointment.

NOW, THEREFORE, the parties hereto agree as follows:

(a) "Products" shall mean those hardware and/or software products and services for which Distributor will serve as a non-exclusive distributor or sales representative, as applicable, hereunder, which are identified in Exhibit A hereto, as it may be amended from time to time pursuant to Section 9 below.

(b) "Development Products" shall mean those Products identified in Exhibit A as such.

(c) "OEM Products" shall mean those Products identified in Exhibit A as such.

(d) "Software Products" shall mean those Products identified in Exhibit A as such.

(e) "Territory" shall mean the territory set forth in Exhibit B.

(f) "Development License Agreement" shall mean Echelon's standard LonWorks(R) Development License Agreement and "OEM License Agreement" shall mean Echelon's standard LonWorks OEM License Agreement.

(g) "Software" shall mean any Software Product that is listed in Exhibit A and any software that is included in or with a Product that is listed in Exhibit A. All references to the Products herein include reference to the Software.

(h) "Software Copy" shall mean an object code copy of any of the Software, together with a copy of any user manual or other documentation customarily supplied with the Software Copy to end users by Echelon.

(i) Registered Customer" shall mean a customer of Distributor that has been registered by Distributor with Echelon pursuant to Echelon's standard customer registration policies and procedures. Such registration policies and procedures (and a list of customers not currently eligible for registration) are set forth in Exhibit A. Echelon may amend the registration policies and procedures set forth in Exhibit A from time to time in its sole discretion, including eliminating the registration program. Any such change shall be effective upon notice to Distributor.

(j) "Regular Product(s)" shall mean those products identified as such in Exhibit H, as such list of products is amended by Echelon from time to time in its sole discretion.

(k) "Target Inventory Level" shall mean the quantity set forth in Exhibit H for each Regular Product, as such exhibit is amended by the parties from time to time.

(l) "Volume Product(s)" shall mean those products identified as such in Exhibit H, as such list of products is amended by Echelon from time to time in its sole discretion.

power to direct and control the day-to-day activities of the other,
(ii) constitute the parties as partners, joint venturers, principal and agent, employer and employee, co-owners, franchisor and franchisee or otherwise as participants in a joint undertaking, or (iii) allow Distributor to create or assume any obligation on behalf of Echelon for any purpose whatsoever. All financial and other obligations associated with Distributor's business are the sole responsibility of Distributor. Distributor shall be solely responsible for, and shall indemnify and hold Echelon free and harmless from, any and all claims, damages or lawsuits (including Echelon's attorneys' fees) arising out of the acts of Distributor, its employees or its agents.

Distributor's sole remuneration with respect to the distribution of Products hereunder shall be (i) the difference between Distributor's price from Echelon and Distributor's price to its customers and (ii) any commissions, sales credits, or bonus payable pursuant to Sections 8 (g), 8
(h), or 8(i), below.

Distributor acknowledges and agrees that certain Products may only be distributed pursuant to signed license agreements, as indicated by the Licensing Requirements set forth in Exhibit A. Distributor shall only distribute such Products to customers who have entered into all required license agreements with Echelon.

i) Distributor shall initiate purchases under this Agreement by submitting written or facsimile purchase orders to Echelon. All purchase orders shall contain the following: (a) model numbers of Products, (b) quantity of Products to be purchased, (c) shipping point (Echelon's manufacturing facility or Echelon's European shipping point) and special shipping instructions, if any, (d) requested delivery schedule, which shall be within the next succeeding six (6) months, and which

shall conform to the minimum lead times for such Products as set forth in Exhibit A", (e) destination, (f) billing address if different from address listed above and (g) the net price for the Products, which shall conform to the minimum aggregate invoice value set forth on Exhibit A. No purchase order shall be binding upon Echelon until accepted by Echelon in writing. Echelon shall use reasonable commercial efforts to notify Distributor of the acceptance or rejection of a purchase order within fifteen (15) days of receipt of the purchase order.

ii) As a material inducement for Echelon to enter into this Agreement, Distributor has agreed to provide Echelon with the initial order attached to this Agreement as Exhibit I (the "Initial Order"). Echelon's acknowledgment thereof is attached to this Agreement as Exhibit J. Echelon agrees that, notwithstanding the requirements of Section 5 (b) (i), above, such Initial Order sets forth delivery dates within the next succeeding twelve (12) months. For each Regular Product the requested scheduled delivery dates are December 15, 1997; March 15, 1998; June 15, 1998; September 15, 1998 and November 15, 1998. Such dates will be adjusted as set forth in Section 5 (b) (iii), below. For each Volume Product there is one (1) requested scheduled delivery date per month.

iii) With respect to each Regular Product, Distributor shall place one order per calendar month by the tenth (10th) working day thereof with a requested delivery date within such month. The quantity of each Regular Product set forth on such order shall be determined by subtracting Distributor's ending inventory for such Regular Product as of the last day of the preceding month (including any Products in transit from Echelon to Distributor) from the then current Target Inventory Level for such Regular Product. During the first twelve (12) months of this Agreement, or, if earlier, until delivery of all units of such Regular Product scheduled for delivery under the Initial Order, Distributor shall effect such order by requesting a delivery date in the current month for a portion of the Regular Product ordered on the Initial Order and scheduled for delivery in a subsequent month. Thereafter, Distributor shall place a new order each month for the quantity of Regular Product determined hereunder. The parties will meet once each calendar quarter to negotiate the following provisions of Exhibit H, establishing the Target Inventory Levels for Regular Products added to Exhibit A pursuant to Section 9 (a), adjusting Target Inventory Levels for Regular Products deleted from Exhibit A pursuant to Section 9 (b), or increasing or decreasing the Target Inventory Level for any Regular Product based upon current sales levels for such Regular Product.

iv) With respect to the Initial Order for each Volume Product, Distributor may follow the procedure set forth in Section 5 (c) to request modification of any scheduled delivery date.

Commencing in June

1998, Distributor shall place one order per month for that quantity of each Volume Product requested for delivery six (6) months thereafter, thereby maintaining an order backlog of six
(6) months for each Volume Product.

i) Distributor may not cancel, delay or reduce the quantity of Product(s) on that portion of an order with a scheduled delivery date in the period within and including sixty (60) days of the then current date without Echelon's prior written approval granted in each instance in Echelon's sole discretion, and subject to a fifteen percent (15%) cancellation charge. Distributor will have no rights in partially completed goods from canceled orders.

ii) One time with respect to each order, Distributor may cancel, delay or reduce the quantity of Product(s) on that portion of an order that has a scheduled delivery date in the period beyond sixty (60) days of the then current date subject to the following provisions: (i) the combined effect of such cancellation or reduction shall not reduce the total quantity of each Product to be delivered on all scheduled delivery dates in such period by more than forty percent (40%); (ii) no scheduled delivery date may be delayed by more than three (3) months; (iii) no scheduled delivery date with respect to the Initial Order maybe delayed beyond November 30, 1998; (iv) with respect to cancellation under the Initial Order, Distributor must order other Products for delivery prior to November 30, 1998 to ensure that the total dollar value of all shipments thereunder is no less than the amount set forth on Schedule I; and (v) the remaining orders shall continue to be subject to the minimum aggregate invoice value set forth on Exhibit A. For purposes of this Section 5 (c), each scheduled delivery under the Initial Order shall be deemed to be an individual order. Notwithstanding the provisions of this Section 5 (c), Distributor may not cancel, delay or reduce the quantity of any order if the effect would be for Distributor's inventory level to fall below the Target Inventory Level for any Regular Product.

iii) If under this Section 5 (c) Distributor is permitted a delay in delivery, and if Echelon has, prior to Distributor's request therefor, notified Distributor of Distributor Price changes that are effective at the time of the new delivery date, then Echelon's price to Distributor on Products for which delivery was delayed and any penalties due to Echelon hereunder shall be based upon Echelon's new Distributor Price.

i) With respect to Products shipped to Distributor (as opposed to Products shipped directly to Distributor's customers), Distributor shall inspect all such Products for visable defects upon receipt thereof, and Distributor may reject any item that fails substantially to conform to the then current Product specifications. To reject a Product, Distributor shall within five (5) working days of receipt of such Product notify Echelon in writing or by facsimile of its rejection and request a Return Material Authorization ("RMA") number. Within ten (10) working days of receipt of the RMA number, Distributor shall return the rejected Product, freight prepaid and properly insured, in its original shipping carton with the RMA number displayed on the outside of the carton.

ii) If Echelon confirms the defect, Echelon shall, at Echelon's option and expense, either repair or replace the Product. Echelon shall reimburse Distributor for the shipping charges to return properly rejected Products and shall pay the shipping charges for the delivery of such repaired or replacement Products to Distributor; otherwise, Distributor shall be responsible for all shipping charges.

(a) Notwithstanding anything to the contrary contained herein, title to all Software shall remain with Echelon. Distributor shall have a nonexclusive license to distribute Software Copies; provided, that such Software Copies are delivered to customers in unopened packages in good condition and at the same time as associated hardware Products, if any.

(b) Distributor shall have no right to copy the Software or to reverse engineer, disassemble, decompile or otherwise attempt to derive the source code from the Software, except to the extent that such activities may not be prohibited under local law. With respect to any Software Copies to be used for demonstration purposes, in addition to the requirements set forth in Sections 8 (b) and 17 (b) below, Distributor agrees to the terms of the (i) Software License Agreement accompanying the Software Copies, for Software identified with a Note 2, 3 or 4 Licensing Requirement in Exhibit A, and (ii) the Software License Agreement set forth in Exhibit G hereto, for Software identified with a Note 5 Licensing Requirement in Exhibit A. Distributor shall not remove, alter, cover or obfuscate any copyright notices or other proprietary rights notices placed or embedded by Echelon on or in the Software.

Exhibit A off the Distributor Price set forth in Exhibit A. Upon request, Echelon may, in it sole determination of Distributor's demonstration capabilities, provide Distributor at no charge with one
(1) copy of any Software Product (other than those Software Products identified in Exhibit A as "not available for demonstration"), to be used solely for demonstration purposes. Distributor certifies that Products purchased or provided on this basis ("Demonstration Products") shall be used exclusively for demonstration and/or troubleshooting purposes and shall in no event be resold by Distributor. Distributor shall have the right to use and lend Demonstration Products pursuant to Section 17 (b) below.

SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES FOR BREACH OF WARRANTY.

and market the Products, including, without limitation, selling and distributing the Products through its own sales force and marketing the Products in Distributor's catalogues, if any, as soon as possible. Without limiting the foregoing, Distributor shall fulfill the additional marketing obligations set forth in Exhibit E hereto.

action within a reasonable period, Distributor hereby appoints Echelon its attorney-in-fact for the purpose of executing such documents, which appointment shall be deemed a power coupled with an interest and shall be irrevocable.

Echelon shall have the right to terminate this Agreement for cause immediately upon written notice to Distributor, without opportunity to cure.

i) in the event that any current legislation or exchange controls under applicable law preclude Distributor from making payments to Echelon in United States currency for a period of sixty (60) days; provided, however, that termination under this Section shall not relieve Distributor of its payment obligations under this Agreement; or

ii) upon the enactment of any law, decree, or regulation by the government of the Territory which would impair or restrict (A) the right of Echelon to terminate or elect not to renew this Agreement as herein provided, (B) Echelon's right, title or interest in the Products or the intellectual property rights therein, or (C) Echelon's rights to receive the payments under this Agreement.

(f) Distributor agrees to give Echelon prompt written notice of any law, decree or regulation covered by this Section 15 (e).

i) Upon termination of this Agreement, and subject to Echelon's right to require prepayment, Echelon may, but shall not be obligated to, fulfill all orders accepted by Echelon prior to the date of termination.

ii) If Echelon appoints an additional distributor for Volume Products in the Territory, and provided that Distributor then terminates the Agreement pursuant to Section 15 (b), Distributor shall have the right to cancel any scheduled deliveries of Products under the Initial Order that have scheduled delivery dates that are later than the date of Distributor's notice of termination.

Distributor. Termination shall not, however, relieve either party of obligations incurred prior to the termination.

ECHELON'S LIABILITY ARISING OUT OF THIS AGREEMENT AND/OR THE SALE OF ANY PRODUCT SHALL NOT EXCEED THE PRICE PAID BY DISTRIBUTOR FOR THE PRODUCT. IN NO EVENT SHALL ECHELON BE LIABLE FOR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS BY ANYONE. IN NO EVENT SHALL ECHELON BE LIABLE TO DISTRIBUTOR OR ANY OTHER ENTITY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES OR LOST PROFITS, HOWEVER CAUSED, WHETHER FOR BREACH OF CONTRACT, NEGLIGENCE OR OTHERWISE, AND WHETHER OR NOT ECHELON HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. THE ESSENTIAL PURPOSE OF THIS PROVISION IS TO LIMIT THE POTENTIAL LIABILITY OF ECHELON ARISING OUT OF THIS AGREEMENT AND DISTRIBUTION OF THE PRODUCTS.

i) Distributor agrees not to provide or otherwise make available any Software Copies, in any form, to any person other than employees of Distributor or Echelon or Distributor's customers in connection with the distribution of the Software or its demonstration (in accordance with Subsection 17 (b) below).

ii) Distributor acknowledges that the Software constitutes confidential and proprietary information of Echelon developed at substantial expense to Echelon. Distributor agrees to use the Software only as authorized herein, and to treat the Software with at least the degree of care and protection as its treats its own most confidential information, and Distributor represents and warrants that it takes reasonable measures to protect its own confidential information. Distributor agrees that Distributor will take appropriate action by instruction, agreement, or otherwise with Distributor's employees to satisfy Distributor's obligations under this Agreement with respect to use, copying, modification and protection and security of the Software. Distributor shall remain obligated, both during the term of this Agreement and thereafter, to hold in confidence its knowledge of the Software as a trade secret for the benefit of Echelon.

iii) Distributor acknowledges that by reason of its relationship with Echelon hereunder it will have access to certain other information and materials concerning the Products and Echelon's business, plans, customers and technology that are confidential and of substantial value to Echelon, which value would be impaired if such information were disclosed to third parties. Distributor agrees that it shall not use in any way for its own account or the account of any third party, nor disclose to any third party, any such confidential information revealed to it by Echelon. Distributor shall take every reasonable precaution to protect the confidentiality of such information, including, at the request of Echelon, the entry by Distributor's agents and employees into confidentiality agreements in a form approved by Echelon, prohibiting any disclosure to third parties of confidential information provided by Echelon. Distributor shall not publish any technical description of any Software or Product or other confidential information of Echelon beyond the description published by Echelon. In the event of termination or expiration of this Agreement, there shall be no use or disclosure by Distributor, its agents, or employees of any confidential information of Echelon, and Distributor shall not manufacture or have manufactured any products utilizing any of Echelon's confidential information. Distributor shall deliver to Echelon all copies within its possession or within its control of customer lists, catalogues, specifications, proposals, quotations, price lists, contracts and all other documents and data relating to the Products or the conduct of Echelon's business.

evaluation purposes; provided, that Distributor furnishes Echelon with an original copy of Echelon's Evaluation Agreement signed by the prospective customer. The Evaluation Agreement shall be either (i) in substantially the form attached hereto as Exhibit F (with a ten (10) business day evaluation period) or (ii) in substantially the form as furnished by Echelon (if Echelon in its sole discretion elects to approve any request for a different evaluation period). Distributor shall (i) use best efforts to ensure that the prospective customer performs its obligation at the end of the evaluation period to return the Product, any accompanying documentation and any materials developed by such customer relating to the Product, (ii) notify Echelon of any known breach of such Evaluation Agreement and (iii) provide Echelon with reasonable assistance in connection with the enforcement of such Evaluation Agreement, including, without limitation, granting Echelon full authority to proceed on Distributor's behalf. Echelon shall reimburse Distributor for its documented, pre-approved, out-of-pocket expenses incurred in connection with such assistance. Subject to the prior approval of Echelon, Distributor shall have the right to translate the Evaluation Agreement. Any such approval granted by Echelon shall be subject to the terms of Section 13 (e) above.

register any trademarks, service marks or trade names confusingly similar to those of Echelon.

in or with which any of the Products may be used but not covering the Products standing alone; (ii) any trademark infringements involving any marking or branding not applied by Echelon or involving any marking or branding applied at the request of Distributor; or (iii) the modification of the Products, or any part thereof, unless such modification was made by Echelon.

i) This Agreement shall be made in the English language, which language shall be controlling in all respects, and all versions hereof in any other language shall not be binding on the parties hereto. All communications and notices to be made or given pursuant to this Agreement shall be in the English language.

ii) The parties hereto confirm that it is their wish that this Agreement, as well as other documents relating hereto, including Notices, have been and shall be written in the English language only.

describing the dispute in sufficient detail to apprise the other party of the facts and legal theory upon which the demanding party bases its claim and stating the relief requested.

hereto with respect to the subject matter hereof, including, without limitation, any distribution and related agreements in effect as of the date hereof.

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written.

ECHELON CORPORATION
(Echelon) (Distributor)

By: /s/ Oliver R Stanfield                  By: /s/ Franz Wiedehann

    Oliver R Stanfield                           Franz Wiedehann
       (Print Name)                               (Print Name)

Title: VP & CFO                             Title: SALES MNGR.

Exhibit B

TERRITORY

European Economic Community, Switzerland, Norway, Poland, Czech Republic, Slovak Republic, Hungary, Romania, Bulgaria, the countries comprising the geographic area that was formerly the country of Yugoslavia, Russia, Belarus, Ukraine, Lithuania, Estonia, Latvia and Turkey.

Exhibit C

PAYMENT TERMS

Net thirty (30) days from date of the invoice

Exhibit D

SALES REPRESENTATIVE OBLIGATIONS

1. Pre-Sales Support. Distributor shall provide limited pre-sales support, including distributing Echelon's promotional materials, answering technical questions and expediting customer's completion of the applicable Software License Agreement.

2. Post-Sales Support. Distributor shall provide limited post-sales support. Customers requiring greater support will be directed by Distributor to contact Echelon for in-depth support during the initial warranty period and to contact Echelon with respect to entering into a support contract thereafter.

3. Transmittal Sheet. In order to receive a commission pursuant to Section
8 (g), the end user customer's order for the applicable Product(s) must be received by Echelon with the Transmittal Sheet attached hereto.

Transmittal Sheet

Customer's Name and Address

Distributor's Name and Address

Exhibit E

ADDITIONAL MARKETING OBLIGATIONS

Distributor shall employ a minimum of eight (8) full time employees fully trained to sell the products in the Territory and exclusively employed therefor, including one (1) person each in Switzerland, the United Kingdom, a Nordic country, Denmark, France, and Benelux, and two (2) persons in Germany.

Exhibit F

EVALUATION AGREEMENT

Upon receipt by Distributor as identified below (the "Distributor") of this Agreement, signed and completed by the party identified below (the "Recipient"), Distributor shall provide Recipient with a copy of the Echelon product(s) listed below (the "Product(s)"). The Product(s) shall be furnished to Recipient solely for Recipient's internal use and evaluation for a period of ten (10) business days (the "Evaluation Period").

PRODUCT(S) NAME: __________________________________________________

The Recipient agrees that it is receiving a copy of the Product(s) for use only on a single computer. The Recipient may make up to one (1) additional copy only for back-up purposes. The Recipient agrees that all copies of the Product(s) and all intellectual property rights in and to the Product(s) are owned by Echelon Corporation ("Echelon") or its suppliers, that all copies will display Echelon's copyright notice, and that all copies will be strictly safeguarded against disclosure or use by persons not authorized by Echelon to use the Product(s). The Recipient agrees that unauthorized copying will cause great damage to Echelon or to any third party holding any right, title, or interest in the Product(s). The Recipient agrees that it will not distribute to any third party the Product(s), any portion thereof, or any program derived from the Product(s) without the prior written consent of Echelon. Recipient agrees that it will not modify, translate, reverse engineer, decompile, or disassemble the Product(s). THE PRODUCT(S) IS PROVIDED "AS IS" WITHOUT WARRANTY OR CONDITION OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. THE RECIPIENT AGREES THAT NEITHER ECHELON, ITS SUBSIDIARIES, NOR ANYONE ELSE INVOLVED IN CREATING, PRODUCING, OR DELIVERING THE PRODUCT(S) SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, OR INCIDENTAL DAMAGES RELATING TO THE PRODUCT(S), HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY. By the end of the Evaluation Period, Recipient shall either sign and return to Distributor the appropriate Product license agreement or deliver to Distributor all full or partial copies of the Product(s), accompanying documentation, and all other materials provided by Distributor or developed by Recipient relating to the Product(s). The parties acknowledge that Echelon and its subsidiaries are third party beneficiaries of this Agreement. This Agreement will be governed by California law (without reference to rules of conflicts of law). All disputes arising out of or in connection with this Agreement will be settled by binding arbitration in San Francisco, California under the rules of arbitration of the American Arbitration Association. Judgment on the arbitrator's award may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing arbitration provision, Echelon may apply to any court of competent jurisdiction for injunctive relief. This Agreement may not be assigned without Echelon's or its subsidiary's consent. This Agreement is the entire agreement with respect to the subject matter hereof and may only be modified in writing. The Recipient agrees not to export or re-export , or cause to be exported or re-exported, the Product(s), or the direct product of such Product(s), to any country which, under the laws of the United States, Recipient is or might be prohibited from exporting its technology or the direct product thereof.

Distributor                              Recipient

----------------------------------       ----------------------------------
Signature                                Signature

----------------------------------       ----------------------------------
Name (Please Print)                      Name (Please Print)

----------------------------------       ----------------------------------
Company                                  Company

----------------------------------       ----------------------------------
Address                                  Address

----------------------------------       ----------------------------------
City, State, Zip                         City, State, Zip

----------------------------------       ----------------------------------
Phone Number                             Phone Number

----------------------------------       ----------------------------------
Date                                     Date
Revised 07/15/96

Exhibit G

SOFTWARE LICENSE AGREEMENT

This Agreement is entered into between Echelon Corporation ("Echelon") and Distributor ("Licensee") on the following terms and conditions.

Echelon Corporation ("Echelon") grants to Licensee a non-exclusive, non- transferable license to use the copy of the applicable software delivered pursuant to the Agreement and any updates or upgrades thereto provided by Echelon according to the terms set forth below. If Echelon provides any software to Licensee as an update or upgrade to software which Licensee has previously licensed, then Licensee agrees to destroy all copies of the prior release of this software within thirty (30) days after opening the software package; provided, however, that Licensee may retain one copy of the prior release for backup, archival, and support purposes.

LICENSE
LICENSEE MAY:

a. install and use the software on only one computer or network node,

b. use the software only for demonstrating applications using Echelon's LonWorks(R) tools and components,

c. make one (1) copy of the software in machine readable form solely for backup purposes, provided that Licensee reproduces all proprietary notices on the copy, and

d. physically transfer the software from one computer or network node to another, provided that the software is removed from the computer or network node on which it was installed and is used on only one computer or network node at a time.

LICENSEE MAY NOT:

a. use the software on more than one computer or network node at a time or in a multi-user system,

b. modify, translate, reverse engineer, decompile, or disassemble the software (except to the extent that such acts may not be prohibited under applicable law),

c. copy the software (except for the backup copy ) or copy the accompanying documentation, or

d. rent, transfer, or grant any rights in the software or accompanying documentation in any form to any person without the prior written consent of Echelon, except as set forth in Section 17 of the Agreement.

This license is not a sale. Title and copyrights to the software, accompanying documentation, and any copy made by Licensee remain with Echelon. Unauthorized copying of the software or the accompanying documentation, or failure to comply with the above restrictions, will result in automatic termination of this license and will make available to Echelon other legal remedies.

LIMITED WARRANTY AND DISCLAIMER

ECHELON DISCLAIMS ALL WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY, OR IN ANY COMMUNICATION WITH YOU, AND ECHELON SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NONINFRINGEMENT AND THEIR EQUIVALENTS. does not warrant that the operation of the software will be uninterrupted or error free or that the software will meet Licensee's specific requirements.

LIMITATION OF LIABILITY

IN NO EVENT WILL ECHELON BE LIABLE FOR LOSS OF DATA, LOST PROFITS, COST OF COVER, OR OTHER SPECIAL, INCIDENTAL, PUNITIVE, CONSEQUENTIAL, OR INDIRECT DAMAGES ARISING FROM THE USE OF THE SOFTWARE OR ACCOMPANYING DOCUMENTATION, HOWEVER CAUSED

AND ON ANY THEORY OF LIABILITY. THIS LIMITATION WILL APPLY EVEN IF ECHELON HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. LICENSEE ACKNOWLEDGES THAT THE AMOUNTS PAID BY LICENSEE FOR THE SOFTWARE REFLECT THIS ALLOCATION OF RISK.

GENERAL

This Agreement shall be governed by the laws of the State of California, U.S.A. This Agreement is the entire agreement between us and supersedes any other communications or advertising with respect to the subject matter hereof. This Agreement may only be amended in writing signed by an officer of each party. The failure of Echelon to enforce any provision of this Agreement does not constitute a waiver of such provision. If any provision of this Agreement is held invalid, the remainder of this Agreement shall continue in full force and effect. Use, duplication , or disclosure by the U. S. Government is subject to restrictions set forth in subdivision (c)(1) (ii) of the rights in Technical Data and Computer Software clause at DFARS 252.227-7013. [Suzanne, please

check]

Echelon and LonWorks  are U.S. registered trademarks of Echelon Corporation.
v. 071596

                                        Regular             Target
                                       or Volume          Inventory
Model          Product                  Product             Level
---------      -------                  -------             -----
                                                         -----------
50051          FTT-10A                   Volume              N/A
50040-01       LPT-10                    Volume              N/A
50090-02       PLT-21                    Volume              N/A
50100-01       PLT-30                    Volume              N/A
61000-100      RTR-10                    Volume              N/A
--------------------------------------------------------------------
50010-10       TPT/XP-78                 Regular            1,800
50020-10       TPT/XF-1250               Regular            1,800
50080-02       PLT-10A                   Regular               20
53001-01       PLA-21 Amplifier          Regular               20
55010-00       TP/XF-78 Module           Regular              400
--------------------------------------------------------------------
55010-10       TP/XF-78F Module          Regular               20
55020-01       TP/FT-10 Module           Regular              350
55020-10       TP/FT-10F Module          Regular            1,000
55030-10       TP/XP-1250 Module         Regular               40
56210-01       LPI-10 Module             Regular               60
--------------------------------------------------------------------
58020-01       LPI-10 Dev Kit            Regular                -
57010          PLCA-10 Comm Anal.        Regular                -
58021-2        PLCA-21 Comm Anal.        Regular                1
57010-032      PLCA-30 Comm Anal.        Regular                1
65100-100      LTM-10 Module             Regular              500
--------------------------------------------------------------------
65120          LTM-10 Mother Board       Regular                5
65150-LxP      LTM-10 Node T. Pair       Regular                5
77010          TPM/XF-78                 Regular              150
77030          TPM/XF-1250               Regular               60
77040          FTM-10                    Regular              300
--------------------------------------------------------------------
77050          TPM-RS485                 Regular              100
77090          PLM-10                    Regular                5
77161          PLM-21                    Regular               30
77180          PLM-30                    Regular               10
78200-110      PL-10 L/E, 120VAC         Regular                -
--------------------------------------------------------------------
78200-120      PL-10 L/E, 240VAC         Regular                -
78200-121      PL-10 L/N, 240VAC         Regular                -
78200-211      PL-20 L/E, 120VAC         Regular                -
78200-220      PL-20 L/E, 240VAC         Regular                5
78200-221      PL-20 L/N, 240VAC         Regular               30
--------------------------------------------------------------------
78200-321      PL-30 L/N, 240VAC         Regular                5
58030-01       Connectivity Starter Kit  Regular               50
71000-11       Loa Works Roster (any)    Regular              150
65200-100      LTS-10 SLTA Module        Regular              125
65200-200      PSG-10                    Regular               25
--------------------------------------------------------------------
73000-3        PSG/2                     Regular                -
73000-1        SLTA/2                    Regular                -
73551          SLTA-10/FT-10             Regular              300
73353          SLTA-10/TP-1250           Regular               20
73100-11       PCLTA Single Channel      Regular               10
--------------------------------------------------------------------
73100-12       PCLTA Dual Channel        Regular                5
73401          PCLTA-10/FT-10            Regular              200
73403          PCLTA-10/TP-1250          Regular               20
73200          PCC-10 PC Card            Regular               75
78300          2-Conductor/XL Cable      Regular               15
--------------------------------------------------------------------
78301          15-Conductor Cable        Regular                20
78302          2-Conductor Cable         Regular                75
33100-00       15A Conductor Analyser    Regular                 3
33100-10       PCC-10 Conductor Analyser Regular                10
34000-100      NSS-10 Module             Regular                 5
--------------------------------------------------------------------
35000-100      NSI-10 Module             Regular                 5
34100          PCNSS PC Interface Card   Regular                20
35100          PCNSI PC Interface Card   Regular                60
                                                         -----------

EXHIBIT 10.9

ECHELON CORPORATION

1998 DIRECTOR OPTION PLAN

All options granted hereunder shall be nonstatutory stock options.

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

(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; or

(iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Board. Notwithstanding the foregoing, with respect to any Options granted upon the effective date of the IPO, as set forth in Section 4 below, the Fair Market Value shall be the price as it appears in the final prospectus relating to the IPO.

If an Option expires or becomes unexercisable without having been exercised in full, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). Shares that have actually been issued under the Plan shall not be returned to the Plan and shall not become available for future distribution under the Plan.

(i) Each Outside Director shall be automatically granted an Option to purchase 25,000 Shares (the "First Option") on the date on which such person first becomes an Outside Director (provided such date is after May 29, 1998), whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy; provided, however, that an Inside Director who ceases to be an Inside Director but who remains a Director shall not receive a First Option.

(iii) Notwithstanding the provisions of subsections (i) and (ii) hereof, any exercise of an Option granted before the Company has obtained stockholder approval of the Plan in accordance with Section 16 hereof shall be conditioned upon obtaining such stockholder approval of the Plan in accordance with Section 16 hereof.

(iv) The terms of a First Option granted hereunder shall be as follows:

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

(B) the First Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth in Sections 8 and 10 hereof.

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

(D) subject to Sections 8 and 10 hereof, the First Option shall become exercisable as to 25% percent of the Shares subject to the First Option on each anniversary of its date of grant, provided that the Optionee continues to serve as a Director on such dates.

(v) The terms of a Subsequent Option granted hereunder shall be as follows:

(A) the term of the Subsequent Option shall be ten (10)

years.

(B) the Subsequent Option shall be exercisable only while the Outside Director remains a Director of the Company, except as set forth in Sections 8 and 10 hereof.

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

(D) subject to Sections 8 and 10 hereof, the Subsequent Option shall become exercisable as to 25% percent of the Shares subject to the Subsequent Option on each anniversary of its date of grant, provided that the Optionee continues to serve as a Director on such dates.

(vi) In the event that any Option granted under the Plan would cause the number of Shares subject to outstanding Options plus the number of Shares previously purchased under Options to exceed the Pool, then the remaining Shares available for Option grant shall be granted under Options to the Outside Directors on a pro rata basis. No further grants shall be made until such time, if any, as additional Shares become available for grant under the Plan through action of the Board or the stockholders to increase the number of Shares which may be issued under the Plan or through cancellation or expiration of Options previously granted hereunder.

6. Term of Plan. The Plan shall become effective upon the effective date of the IPO. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 11 of the Plan.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company. Full payment may consist of any consideration and method of payment allowable under Section 7 of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. A share certificate for the number of Shares so acquired shall be issued to the Optionee as soon as practicable after exercise of the Option. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 10 of the Plan.

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

estate or a person who acquired the right to exercise such Option does not exercise such Option (to the extent otherwise so entitled) within the time specified herein, the Option shall terminate.

Option or option shall become fully exercisable, including as to Shares for which it would not otherwise be exercisable. Thereafter, the Option or option shall remain exercisable in accordance with Sections 8(b) through (e) above.

If the Successor Corporation does not assume an outstanding Option or substitute for it an equivalent option, the Option shall become fully vested and exercisable, including as to Shares for which it would not otherwise be exercisable. In such event the Board shall notify the Optionee that the Option shall be fully exercisable for a period of thirty (30) days from the date of such notice, and upon the expiration of such period the Option shall terminate.

For the purposes of this Section 10(c), an Option shall be considered assumed if, following the merger or sale of assets, the Option confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares). If such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets.

which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares, if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned relevant provisions of law.

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