1996 STOCK OPTION AND RESTRICTED STOCK PLAN

Exhibit 10.5



E-STAMP CORPORATION



1996 STOCK OPTION AND RESTRICTED STOCK PLAN









SECTION 1

-------



This Plan is established (i) to offer selected Employees and Consultants of the Company or its Subsidiaries or any predecessor entity an equity ownership interest in the financial success of the Company, (ii) to provide the Company an opportunity to attract and retain the best available personnel for positions of substantial responsibility, and (iii) to encourage equity participation in the Company by eligible Participants. This Plan provides for the grant by the Company of (i) Options to purchase Shares, and (ii) shares of Restricted Stock. Options granted under this Plan may include nonstatutory options as well as incentive stock options intended to qualify under section 422 of the Code.



SECTION 2

-----------



"Board of Directors" shall mean the board of directors of the Company, as

------------------ duly elected from time to time.



"Code" shall mean the Internal Revenue Code of 1986, as amended, and as

---- interpreted by the regulations thereunder.



"Committee" shall mean the Compensation Committee of the Company, or such

--------- other Committee as may be appointed by the Board of Directors from time to time.



"Company" shall mean E-Stamp Corporation, a Delaware corporation.

-------



"Consultant" shall mean any individual that is expressly designated and

---------- compensated as a consultant of the Company or its Subsidiaries by the Committee in its sole discretion; provided, however, that the term "Consultant" shall not include directors who are paid only a director's fee by the Company.



"Date of Grant" shall mean the date on which the Committee resolves to

------------- grant an Option to an Optionee or grant Restricted Stock to a Participant, as the case may be.



"Employee" shall include every individual performing Services to the

-------- Company or its Subsidiaries if the relationship between such individual and the Company or its Subsidiaries is the legal relationship of employer and employee. This definition of "Employee" is qualified in its entirety and is subject to the definition set forth in section 3401(c) of the Code and the regulations thereunder. Neither service as a member of the Board of Directors nor payment of a director's fee shall in itself constitute "Services" for purposes of this definition.



"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,

------------ and as interpreted by the rules and regulations promulgated thereunder.



"Exercise Price" shall mean the amount for which one Share may be purchased

-------------- upon exercise of an Option, as specified by the Committee in the applicable Stock Option Agreement, but in no event less than the par value per Share.



"Fair Market Value" shall mean such amount as the Committee, in its sole

----------------- discretion, shall determine; provided, however, that if there is a public market

-------- ------- for the securities, the Fair Market Value shall be the mean of the bid and asked prices of the securities per share or unit, as the case may be, as reported in the Wall Street Journal (or, if not so reported, as otherwise reported by the National Association of Securities Dealers Automated Quotation System) as of the date in question or, in the event the securities are listed on a stock exchange, the Fair Market Value shall be the closing sales price of the securities per share or unit, as the case may be, on such exchange, as reported in the Wall Street Journal, as of the date in question.

"ISO" shall mean a stock option which is granted to an individual and which

--- meets the requirements of section 422(b) of the Code, pursuant to which the Optionee has no tax consequences resulting from the grant or, subject to certain holding period requirements, exercise of the option and the employer is not entitled to a business expense deduction with respect thereto.



"Non-employee Director" shall mean any person who at the time of grant is a

--------------------- member of the Board of Directors but is not an Employee of or Consultant to the Company or any Affiliate of the Company and has not been an Employee of or Consultant to the Company or any Affiliate of the Company at any time during the preceding 12 months. Neither the payment of a director's fee nor service as a director shall in itself constitute employment for purposes of this definition.



"Nonstatutory Option" shall mean any Option granted by the Committee that

------------------- does not meet the requirements of sections 421 through 424 of the Code, as amended.



"Option" shall mean either an ISO or Nonstatutory Option, as the context

------ requires.



"Optionee" shall mean a Participant who holds an Option.

--------



"Participants" shall mean those individuals described in Section 1 of this

------------ Plan selected by the Committee who are eligible under Section 4 of this Plan for grants of either Options or Restricted Stock under this Plan.



"Permanent and Total Disability" shall mean that an individual is unable to

------------------------------ engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months. An individual shall not be considered to suffer from Permanent and Total Disability unless such individual furnishes proof of the existence thereof in such form and manner, and at such times, as the Committee may reasonably require. The scope of this definition shall automatically be reduced or expanded to the extent that section 22(e)(3) of the Code is amended to reduce or expand the scope of the definition of Permanent and Total Disability thereunder.



"Plan" shall mean this 1996 Stock Option and Restricted Stock Plan, as

---- amended from time to time.



"Plan Award" shall mean the grant of either an Option or Restricted Stock,

---------- as the context requires.



"Restricted Stock" shall have that meaning set forth in Section 7(a) of

---------------- this Plan.



"Restricted Stock Account" shall have that meaning set forth in Section

------------------------ 7(a)(ii) of this Plan.



"Restricted Stock Criteria" shall have that meaning set forth in Section

------------------------- 7(a)(iv) of this Plan.



"Restriction Period" shall have that meaning set forth in Section 7(a)(iii)

------------------ of this Plan.



"Services" shall mean services rendered to the Company or any predecessor

-------- entity or any of its Subsidiaries as an Employee or Consultant, as the context requires.



"Share" shall mean one share of Stock, as adjusted in accordance with

----- Section 9 of this Plan (if applicable).



"Stock" shall mean the common stock of the Company, par value $.001 per

----- share.



"Stock Option Agreement" shall mean the agreement executed between the

---------------------- Company and an Optionee that contains the terms, conditions, and restrictions pertaining to the granting of an Option. Any inconsistencies between this Plan and any Stock Option Agreement shall be controlled by this Plan.

"Subsidiary" shall mean any corporation as to which more than fifty (50%)

---------- percent of the outstanding voting stock or shares shall now or hereafter be owned or controlled directly by a person, any Subsidiary of such person, or any Subsidiary of such Subsidiary.



"Ten-Percent Stockholder" shall mean a person that owns more than ten

----------------------- percent (10%) of the total combined voting power of all classes of outstanding stock of the Company or any Subsidiary, taking into account the attribution rules set forth in section 424 of the Code, as amended. For purposes of this definition of "Ten Percent Stockholder" the term "outstanding stock" shall include all stock actually issued and outstanding immediately after the grant of an Option to an Optionee. "Outstanding stock" shall not include reacquired shares or shares authorized for issuance under outstanding Options held by the Optionee or by any other person.



"Vest Date" shall have that meaning set forth in Section 7(a)(v) of this

--------- Plan.



SECTION 3

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



(a) General Administration. This Plan shall be administered by the

---------------------- Committee, which shall consist of at least two (2) persons who shall be Non- employee Directors. The members of the Committee shall be appointed by the Board of Directors for such terms as the Board of Directors may determine. The Board of Directors may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, however caused, shall be filled by the Board of Directors.



(b) Committee Procedures. The Board of Directors shall designate one of

-------------------- the members of the Committee as chairman. The Committee may hold meetings at such times, places, and in such manner as it shall determine. The acts of a majority of the Committee members present at meetings at which a quorum exists, or acts reduced to or approved in writing by a majority of all Committee members, shall be valid acts of the Committee. A majority of the Committee shall constitute a quorum.



(c) Authority of Committee. This Plan shall be administered by, or under

---------------------- the direction of, the Committee constituted in such a manner as to comply at all times with Rule 16b-3 (or any successor rule) under the Exchange Act. The Committee shall administer this Plan so as to comply at all times with the Exchange Act and, subject to the Code, shall otherwise have absolute and final authority to interpret this Plan and to make all determinations specified in or permitted by this Plan or deemed necessary or desirable for its administration or for the conduct of the Committee's business including without limitation the authority to take the following actions:



(i) To interpret this Plan and to apply its provisions;



(ii) To adopt, amend or rescind rules, procedures and forms relating

to this Plan;



(iii) To authorize any person to execute, on behalf of the Company,

any instrument required to carry out the purposes of this Plan;



(iv) To determine when Plan Awards are to be granted under this Plan;



(v) To select the Optionees and Participants;



(vi) To determine the number of Shares to be made subject to each Plan Award;



(vii) To prescribe the terms, conditions and restrictions of each Plan Award, including without limitation the Exercise Price and the determination whether an Option is to be classified as an ISO or a Nonstatutory Option;



(viii) To amend any outstanding Stock Option Agreement or the terms, conditions and restrictions of a grant of Restricted Stock, subject to applicable legal restrictions and the consent of the Optionee or Participant, as the case may be, who entered into such agreement;

(ix) To establish procedures so that an Optionee may obtain a loan through a registered broker-dealer under the rules and regulations of the Federal Reserve Board, for the purpose of exercising an Option;



(x) To establish procedures for an Optionee (1) to have withheld from the total number of Shares to be acquired upon the exercise of an Option that number of Shares having a Fair Market Value, which, together with such cash as shall be paid in respect of fractional shares, shall equal the Exercise Price, and (2) to exercise a portion of an Option by delivering that number of Shares already owned by an Optionee having a Fair Market Value which shall equal the partial Exercise Price and to deliver the Shares thus acquired by such Optionee in payment of Shares to be received pursuant to the exercise of additional portions of the Option, the effect of which shall be that an Optionee can in sequence utilize such newly acquired shares in payment of the Exercise Price of the entire Option, together with such cash as shall be paid in respect of fractional shares;



(xi) To establish procedures whereby a number of Shares may be withheld from the total number of Shares to be issued upon exercise of an Option, to meet the obligation of withholding for federal and state income and other taxes, if any, incurred by the Optionee upon such exercise; and



(xii) To take any other actions deemed necessary or advisable for the administration of this Plan.



All interpretations and determinations of the Committee made with respect to the granting of Plan Awards shall be final, conclusive, and binding on all interested parties. The Committee may make grants of Plan Awards on an individual or group basis. No member of the Committee shall be liable for any action that is taken or is omitted to be taken if such action or omission is taken in good faith with respect to this Plan or grant of any Plan Award.



(d) Holding Period. The Committee may in its sole discretion require as a

-------------- condition to the granting of any Plan Award, that a Participant agree not to sell or otherwise dispose of a Plan Award, any Shares acquired pursuant to a Plan Award, or any other "derivative security" (as defined by Rule 16a-1(c) under the Exchange Act) for a period of time determined by the Committee including, without limitation, a period of six (6) months following the later of (i) the date of the grant of such Plan Award, or (ii) the date when the Exercise Price of an Option is fixed if such Exercise Price is not fixed on the Date of Grant.



SECTION 4

-----------



(a) General Rule. Subject to the limitations set forth in subsection b

------------ below, Participants shall be eligible to participate in this Plan; provided,

-------- however, that no Non-employee Directors shall be eligible for any Plan Awards - ------- under this Plan.



(b) Non-Employee Ineligible for ISOs. In no event shall an ISO be granted

-------------------------------- to any individual who is not an Employee on the Date of Grant.



(c) Former Employees. Employees and former employees of any predecessor

---------------- entity of the Company may be eligible to participate in this Plan if selected by the Committee.





SECTION 5

SHARES SUBJECT TO PLAN

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



...