Exhibit 10.39

NITCHES, INC.

2006 EQUITY INCENTIVE PLAN

ADOPTED FEBRUARY 2, 2006
APPROVED BY SHAREHOLDERS MARCH 15, 2006
TERMINATION DATE: FEBRUARY 1, 2015

          1.          PURPOSES.

                       (a)          ELIGIBLE STOCK AWARD RECIPIENTS. The persons
eligible to receive Stock Awards are the Employees, Directors and Consultants of
the Company and its Affiliates.

                       (b)          AVAILABLE STOCK AWARDS. The purpose of the
Plan is to provide a means by which eligible recipients of Stock Awards may be
given an opportunity to benefit from increases in value of the Common Stock
through the granting of the following Stock Awards: (i) Incentive Stock Options,
(ii) Nonstatutory Stock Options, (iii) stock bonuses and (iv) rights to acquire
restricted stock.

                       (c)          GENERAL PURPOSE. The Company, by means of
the Plan, seeks to retain the services of the group of persons eligible to
receive Stock Awards, to secure and retain the services of new members of this
group and to provide incentives for such persons to exert maximum efforts for
the success of the Company and its Affiliates.

          2.          DEFINITIONS.

                       (a)          “AFFILIATE” means any parent corporation or
subsidiary corporation of the Company, whether now or hereafter existing, as
those terms are defined in Sections 424(e) and (f), respectively, of the Code.

                       (b)          “BOARD” means the Board of Directors of the
Company.

                       (c)          “CODE” means the Internal Revenue Code of
1986, as amended.

                       (d)          “COMMITTEE” means a Committee appointed by
the Board in accordance with subsection 3(c).

                       (e)          “COMMON STOCK” means the common stock of the
Company.

                       (f)           “COMPANY” means Nitches, Inc., a California
corporation.

                       (g)          “CONSULTANT” means any person, including an
advisor, (i) engaged by the Company or an Affiliate to render consulting or
advisory services and who is compensated for such services or (ii) who is a
member of the Board of Directors of an Affiliate.  However, the term
“Consultant” shall not include either Directors of the Company who are not
compensated by the Company for their services as Directors or Directors of the
Company who are merely paid a director’s fee by the Company for their services
as Directors.

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                       (h)          “CONTINUOUS SERVICE” means that the
Participant’s service with the Company or an Affiliate, whether as an Employee,
Director or Consultant, is not interrupted or terminated. The Participant’s
Continuous Service shall not be deemed to have terminated merely because of a
change in the capacity in which the Participant renders service to the Company
or an Affiliate as an Employee, Consultant or Director or a change in the entity
for which the Participant renders such service, provided that there is no
interruption or termination of the Participant’s Continuous Service. For
example, a change in status from an Employee of the Company to a Consultant of
an Affiliate or a Director of the Company will not constitute an interruption of
Continuous Service. The Board or the chief executive officer of the Company, in
that party’s sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.

                       (i)          “COVERED EMPLOYEE” means the chief executive
officer and the four (4) other highest compensated officers of the Company for
whom total compensation is required to be reported to shareholders under the
Exchange Act, as determined for purposes of Section 162(m) of the Code.

                       (j)          “DIRECTOR” means a member of the Board of
Directors of the Company.

                       (k)          “DISABILITY” means the permanent and total
disability of a person within the meaning of Section 22(e)(3) of the Code.

                       (l)           “EMPLOYEE” means any person employed by the
Company or an Affiliate.  Mere service as a Director or payment of a director’s
fee by the Company or an Affiliate shall not be sufficient to constitute
“employment” by the Company or an Affiliate.

                       (m)          “EXCHANGE ACT” means the Securities Exchange
Act of 1934, as amended.

                       (n)           “FAIR MARKET VALUE” means, as of any date,
the value of the Common Stock determined as follows:

                                       (i)          If the Common Stock is
listed on any established stock exchange or traded on the Nasdaq National Market
or the Nasdaq Small Cap Market, the Fair Market Value of a share of Common Stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such exchange or market (or the exchange or market
with the greatest volume of trading in the Common Stock) on the last market
trading day prior to the day of determination, as reported in THE WALL STREET
JOURNAL or such other source as the Board deems reliable.

                                        (ii)          In the absence of such
markets for the Common Stock, the Fair Market Value shall be determined in good
faith by the Board.

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                                       (iii)          Prior to the Listing Date,
the value of the Common Stock shall be determined in a manner consistent with
Section 260.140.50 of Title 10 of the California Code of Regulations.

                       (o)          “INCENTIVE STOCK OPTION” means an Option
intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code and the regulations promulgated thereunder.

                       (p)          “LISTING DATE” means the first date upon
which any security of the Company is listed (or approved for listing) upon
notice of issuance on any securities exchange or designated (or approved for
designation) upon notice of issuance as a national market security on an
inter-dealer quotation system if such securities exchange or inter-dealer
quotation system has been certified in accordance with the provisions of
Section 25100(o) of the California Corporate Securities Law of 1968.

                       (q)          “NON-EMPLOYEE DIRECTOR” means a Director of
the Company who either

                                      (i)          is not a current Employee or
Officer of the Company or its parent or a subsidiary, does not receive
compensation (directly or indirectly) from the Company or its parent or a
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
(“Regulation S-K”)), does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of Regulation S-K and is
not engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or

                                      (ii)          is otherwise considered a
“non-employee director” for purposes of Rule 16b-3.

                       (r)          “NONSTATUTORY STOCK OPTION” means an Option
not intended to qualify as an Incentive Stock Option.

                       (s)          “OFFICER” means (i) before the Listing Date,
any person designated by the Company as an officer and (ii) on and after the
Listing Date, a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.

                       (t)          “OPTION” means an Incentive Stock Option or
a Nonstatutory Stock Option granted pursuant to the Plan.

                       (u)          “OPTION AGREEMENT” means a written agreement
between the Company and an Option holder evidencing the terms and conditions of
an individual Option grant. Each Option Agreement shall be subject to the terms
and conditions of the Plan.

                       (v)          “OPTIONHOLDER” means a person to whom an
Option is granted pursuant to the Plan or, if applicable, such other person who
holds an outstanding Option.

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                       (w)          “OUTSIDE DIRECTOR” means a Director of the
Company who either

                                       (i)          is not a current employee of
the Company or an “affiliated corporation” (within the meaning of Treasury
Regulations promulgated under Section 162(m) of the Code), is not a former
employee of the Company or an “affiliated corporation” receiving compensation
for prior services (other than benefits under a tax qualified pension plan), was
not an officer of the Company or an “affiliated corporation” at any time and is
not currently receiving direct or indirect remuneration from the Company or an
“affiliated corporation” for services in any capacity other than as a Director
or

                                       (ii)          is otherwise considered an
“outside director” for purposes of Section 162(m) of the Code.

                       (x)          “PARTICIPANT” means a person to whom a Stock
Award is granted pursuant to the Plan or, if applicable, such other person who
holds an outstanding Stock Award.

                       (y)          “PLAN” means this Nitches, Inc. 2006 Equity
Incentive Plan.

                       (z)          “RULE 16B-3” means Rule 16b-3 promulgated
under the Exchange Act or any successor to Rule 16b-3, as in effect from time to
time.

                       (aa)         “SECURITIES ACT” means the Securities Act of
1933, as amended.

                       (bb)         “STOCK AWARD” means any right granted under
the Plan, including an Option, a stock bonus and a right to acquire restricted
stock.

                       (cc)         “STOCK AWARD AGREEMENT” means a written
agreement between the Company and a holder of a Stock Award evidencing the terms
and conditions of an individual Stock Award grant. Each Stock Award Agreement
shall be subject to the terms and conditions of the Plan.

                       (dd)         “TEN PERCENT SHAREHOLDER” means a person who
owns (or is deemed to own pursuant to Section 424(d) of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or of any of its Affiliates.

          3.          ADMINISTRATION.

                       (a)          ADMINISTRATION BY BOARD. The Board shall
administer the Plan unless and until the Board delegates administration to a
Committee, as provided in subsection 3(c).

                       (b)          POWERS OF BOARD. The Board shall have the
power, subject to, and within the limitations of, the express provisions of the
Plan:

                                      (i)          To determine from time to
time which of the persons eligible under the Plan shall be granted Stock Awards;
when and how each Stock Award shall be granted; what type or combination of
types of Stock Award shall be granted; the provisions of each Stock Award
granted (which need not be identical), including the time or times when a person
shall be permitted to receive stock pursuant to a Stock Award; and the number of
shares with respect to which a Stock Award shall be granted to each such person.

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                                      (ii)          To construe and interpret
the Plan and Stock Awards granted under it, and to establish, amend and revoke
rules and regulations for its administration. The Board, in the exercise of this
power, may correct any defect, omission or inconsistency in the Plan or in any
Stock Award Agreement, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.

                                      (iii)          To amend the Plan or a
Stock Award as provided in Section 12.

                                      (iv)          Generally, to exercise such
powers and to perform such acts as the Board deems necessary or expedient to
promote the best interests of the Company which are not in conflict with the
provisions of the Plan.

                       (c)           DELEGATION TO COMMITTEE.

                                      (i)          GENERAL. The Board may
delegate administration of the Plan to a Committee or Committees of one or more
members of the Board, and the term “Committee” shall apply to any person or
persons to whom such authority has been delegated. If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to
the Board shall thereafter be to the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. The Board may abolish the
Committee at any time and revest in the Board the administration of the Plan.

                                      (ii)          COMMITTEE COMPOSITION WHEN
COMMON STOCK IS PUBLICLY TRADED.  At such time as the Common Stock is publicly
traded, in the discretion of the Board, a Committee may consist solely of two or
more Outside Directors, in accordance with Section 162(m) of the Code, and/or
solely of two or more Non-Employee Directors, in accordance with Rule 16b-3.
Within the scope of such authority, the Board or the Committee may (i) delegate
to a committee of one or more members of the Board who are not Outside Directors
the authority to grant Stock Awards to eligible persons who are either (1) not
then Covered Employees and are not expected to be Covered Employees at the time
of recognition of income resulting from such Stock Award or (2) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code
and/or) (ii) delegate to a committee of one or more members of the Board who are
not Non-Employee Directors the authority to grant Stock Awards to eligible
persons who are not then subject to Section 16 of the Exchange Act.

          4.          SHARES SUBJECT TO THE PLAN.

                       (a)          SHARE RESERVE. Subject to the provisions of
Section 11 relating to adjustments upon changes in stock, the stock that may be
issued pursuant to Stock Awards shall not exceed in the aggregate 600,000 shares
of Common Stock.

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                       (b)          REVERSION OF SHARES TO THE SHARE RESERVE. If
any Stock Award shall for any reason expire or otherwise terminate, in whole or
in part, without having been exercised in full (or vested in the case of
Restricted Stock), the stock not acquired under such Stock Award shall revert to
and again become available for issuance under the Plan. If any Common Stock
acquired pursuant to the exercise of an Option shall for any reason be
repurchased by the Company under an unvested share repurchase option provided
under the Plan, the stock repurchased by the Company under such repurchase
option shall not revert to and again become available for issuance under the
Plan.

                       (c)          SOURCE OF SHARES. The stock subject to the
Plan may be unissued shares or reacquired shares, bought on the market or
otherwise.

          5.          ELIGIBILITY.

                       (a)          ELIGIBILITY FOR SPECIFIC STOCK AWARDS.
Incentive Stock Options may be granted only to Employees. Stock Awards other
than Incentive Stock Options may be granted to Employees, Directors and
Consultants.

                       (b)          TEN PERCENT SHAREHOLDERS. No Ten Percent
Shareholder shall be eligible for the grant of an Incentive Stock Option unless
the exercise price of such Option is at least one hundred ten percent (110%) of
the Fair Market Value of the Common Stock at the date of grant and the Option is
not exercisable after the expiration of five (5) years from the date of grant.

          Prior to the Listing Date, no Ten Percent Shareholder shall be
eligible for the grant of a Nonstatutory Stock Option unless the exercise price
of such Option is at least one hundred ten percent (110%) of the Fair Market
Value of the Common Stock at the date of grant.

          Prior to the Listing Date, no Ten Percent Shareholder shall be
eligible for a restricted stock award unless the purchase price of the
restricted stock is at least one hundred percent (100%) of the Fair Market Value
of the Common Stock at the date of grant.

                       (c)          SECTION 162(m) LIMITATION. Subject to the
provisions of Section 11 relating to adjustments upon changes in stock, no
employee shall be eligible to be granted Options covering more than 100,000
shares of the Common Stock during any calendar year. This subsection 5(c) shall
not apply prior to the Listing Date and, following the Listing Date, this
subsection 5(c) shall not apply until

                                      (i)          the earliest of: (1) the
first material modification of the Plan (including any increase in the number of
shares reserved for issuance under the Plan in accordance with Section 4);
(2) the issuance of all of the shares of Common Stock reserved for issuance
under the Plan; (3) the expiration of the Plan; or (4) the first meeting of
shareholders at which Directors of the Company are to be elected that occurs
after the close of the third calendar year following the calendar year in which
occurred the first registration of an equity security under Section 12 of the
Exchange Act; or

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                                      (ii)          such other date required by
Section 162(m) of the Code and the rules and regulations promulgated thereunder.

          6.          OPTION PROVISIONS.

          Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and a separate certificate or certificates will be issued for shares
purchased on exercise of each type of Option. The provisions of separate Options
need not be identical, but each Option shall include (through incorporation of
provisions hereof by reference in the Option or otherwise) the substance of each
of the following provisions:

                       (a)          TERM. Subject to the provisions of
subsection 5(b) regarding Ten Percent Shareholders, no Option shall be
exercisable after the expiration of ten (10) years from the date it was granted.

                       (b)          EXERCISE PRICE OF AN INCENTIVE STOCK OPTION.
Subject to the provisions of subsection 5(b) regarding Ten Percent Shareholders,
the exercise price of each Incentive Stock Option shall be not less than one
hundred percent (100%) of the Fair Market Value of the stock subject to the
Option on the date the Option is granted. Notwithstanding the foregoing, an
Incentive Stock Option may be granted with an exercise price lower than that set
forth in the preceding sentence if such Option is granted pursuant to an
assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.

                       (c)          EXERCISE PRICE OF A NONSTATUTORY STOCK
OPTION.  Subject to the provisions of subsection 5(b) regarding Ten Percent
Shareholders, the exercise price of each Nonstatutory Stock Option granted prior
to the Listing Date shall be not less than one hundred percent (100%) of the
Fair Market Value of the stock subject to the Option on the date the Option is
granted.  The exercise price of each Nonstatutory Stock Option granted on or
after the Listing Date shall be not less than one hundred percent (100%) of the
Fair Market Value of the stock subject to the Option on the date the Option is
granted. Notwithstanding the foregoing, a Nonstatutory Stock Option may be
granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.

                       (d)          CONSIDERATION. The purchase price of stock
acquired pursuant to an Option shall be paid, to the extent permitted by
applicable statutes and regulations, either (i) in cash at the time the Option
is exercised or (ii) at the discretion of the Board at the time of the grant of
the Option (or subsequently in the case of a Nonstatutory Stock Option) by
(1) delivery to the Company of other Common Stock, (2) according to a deferred
payment or other arrangement (which may include, without limiting the generality
of the foregoing, the use of other Common Stock) with the Participant or (3) in
any other form of legal consideration that may be acceptable to the Board;
provided, however, that at any time that the Company is incorporated in
Delaware, payment of the Common Stock’s “par value,” as defined in the Delaware
General Corporation Law, shall not be made by deferred payment.

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          In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.

                       (e)          TRANSFERABILITY OF AN INCENTIVE STOCK
OPTION. An Incentive Stock Option shall not be transferable except by will or by
the laws of descent and distribution and shall be exercisable during the
lifetime of the Optionholder only by the Optionholder.  Notwithstanding the
foregoing provisions of this subsection 6(e), the Optionholder may, by
delivering written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the Optionholder,
shall thereafter be entitled to exercise the Option.

                       (f)          TRANSFERABILITY OF A NONSTATUTORY STOCK
OPTION.  A Nonstatutory Stock Option granted prior to the Listing Date shall not
be transferable except by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Optionholder only by the
Optionholder.  A Nonstatutory Stock Option granted on or after the Listing Date
shall be transferable to the extent provided in the Option Agreement.  If the
Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime of
the Optionholder only by the Optionholder. Notwithstanding the foregoing
provisions of this subsection 6(f), the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.

                       (g)          VESTING GENERALLY. The total number of
shares of Common Stock subject to an Option may, but need not, vest and
therefore become exercisable in periodic installments which may, but need not,
be equal. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The vesting provisions of
individual Options may vary. The provisions of this subsection 6(g) are subject
to any Option provisions governing the minimum number of shares as to which an
Option may be exercised.

                       (h)          MINIMUM VESTING PRIOR TO THE LISTING DATE.
Notwithstanding the foregoing subsection 6(g), Options granted prior to the
Listing Date shall provide for vesting of the total number of shares at a rate
of at least twenty percent (20%) per year over five (5) years from the date the
Option was granted, subject to reasonable conditions such as continued
employment. However, in the case of such Options granted to Officers, Directors
or Consultants, the Option may become fully exercisable, subject to reasonable
conditions such as continued employment, at any time or during any period
established by the Company; for example, the vesting provision of the Option may
provide for vesting of less than twenty percent (20%) per year of the total
number of shares subject to the Option.

                       (i)          TERMINATION OF CONTINUOUS SERVICE. In the
event an Optionholder’s Continuous Service terminates (other than upon the
Optionholder’s death or Disability), the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise it as of
the date of termination) but only within such period of time ending on the
earlier of (i) the date three (3) months following the termination of the
Optionholder’s Continuous Service (or such longer or shorter period specified in
the Option Agreement, which, for Options granted prior to the Listing Date,
shall not be less than thirty (30) days, unless such termination is for cause),
or (ii) the expiration of the term of the Option as set forth in the Option
Agreement. If, after termination, the Optionholder does not exercise his or her
Option within the time specified in the Option Agreement, the Option shall
terminate.

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                       (j)          EXTENSION OF TERMINATION DATE. An
Optionholder’s Option Agreement may also provide that if the exercise of the
Option following the termination of the Optionholder’s Continuous Service (other
than upon the Optionholder’s death or Disability) would be prohibited at any
time solely because the issuance of shares would violate the registration
requirements under the Securities Act, then the Option shall terminate on the
earlier of (i) the expiration of the term of the Option set forth in
subsection 6(a) or (ii) the expiration of a period of three (3) months after the
termination of the Optionholder’s Continuous Service during which the exercise
of the Option would not be in violation of such registration requirements.

                       (k)          DISABILITY OF OPTIONHOLDER. In the event an
Optionholder’s Continuous Service terminates as a result of the Optionholder’s
Disability, the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise it as of the date of termination), but
only within such period of time ending on the earlier of

                                      (i)          the date twelve (12) months
following such termination (or such longer or shorter period specified in the
Option Agreement, which, for Options granted prior to the Listing Date, shall
not be less than six (6) months) or

                                      (ii)          the expiration of the term
of the Option as set forth in the Option Agreement.  If, after termination, the
Optionholder does not exercise his or her Option within the time specified
herein, the Option shall terminate.

                       (l)          DEATH OF OPTIONHOLDER.  In the event (i) an
Optionholder’s Continuous Service terminates as a result of the Optionholder’s
death or (ii) the Optionholder dies within the period (if any) specified in the
Option Agreement after the termination of the Optionholder’s Continuous Service
for a reason other than death, then the Option may be exercised (to the extent
the Optionholder was entitled to exercise the Option as of the date of death) by
the Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder’s death pursuant to subsection 6(e) or 6(f), but
only within the period ending on the earlier of (1) the date eighteen (18)
months following the date of death (or such longer or shorter period specified
in the Option Agreement, which, for Options granted prior to the Listing Date,
shall not be less than six (6) months) or (2) the expiration of the term of such
Option as set forth in the Option Agreement.  If, after death, the Option is not
exercised within the time specified herein, the Option shall terminate.

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          7.          PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

                       (a)          STOCK BONUS AWARDS. Each stock bonus
agreement shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate.  The terms and conditions of stock bonus
agreements may change from time to time, and the terms and conditions of
separate stock bonus agreements need not be identical, but each stock bonus
agreement shall include (through incorporation of provisions hereof by reference
in the agreement or otherwise) the substance of each of the following
provisions:

                                      (i)          CONSIDERATION. A stock bonus
shall be awarded in consideration for past services actually rendered to the
Company for its benefit.

                                      (ii)          VESTING.  Shares of Common
Stock awarded under the stock bonus agreement may, but need not, be subject to a
share repurchase option in favor of the Company in accordance with a vesting
schedule to be determined by the Board.

                                      (iii)          TERMINATION OF
PARTICIPANT’S CONTINUOUS SERVICE.  Subject to the “Repurchase Limitation” in
subsection 10(h), in the event a Participant’s Continuous Service terminates,
the Company may reacquire any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the stock bonus agreement.

                                      (iv)          TRANSFERABILITY. For a stock
bonus award made before the Listing Date, rights to acquire shares under the
stock bonus agreement shall not be transferable except by will or by the laws of
descent and distribution and shall be exercisable during the lifetime of the
Participant only by the Participant.  For a stock bonus award made on or after
the Listing Date, rights to acquire shares under the stock bonus agreement shall
be transferable by the Participant only upon such terms and conditions as are
set forth in the stock bonus agreement, as the Board shall determine in its
discretion, so long as stock awarded under the stock bonus agreement remains
subject to the terms of the stock bonus agreement.

                       (b)          RESTRICTED STOCK AWARDS.  Each restricted
stock purchase agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate.  The terms and conditions of the
restricted stock purchase agreements may change from time to time, and the terms
and conditions of separate restricted stock purchase agreements need not be
identical, but each restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:

                                      (i)          PURCHASE PRICE. Subject to
the provisions of subsection 5(b) regarding Ten Percent Shareholders, the
purchase price under each restricted stock purchase agreement shall be such
amount as the Board shall determine and designate in such restricted stock
purchase agreement.  For restricted stock awards made prior to the Listing Date,
the purchase price shall not be less than one hundred percent (100%) of the
stock’s Fair Market Value on the date such award is made or at the time the
purchase is consummated. For restricted stock awards made on or after the
Listing Date, the purchase price shall not be less than one hundred
percent (100%) of the stock’s Fair Market Value on the date such award is made
or at the time the purchase is consummated.

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                                      (ii)          CONSIDERATION. The purchase
price of stock acquired pursuant to the restricted stock purchase agreement
shall be paid either: (i) in cash at the time of purchase; (ii) at the
discretion of the Board, according to a deferred payment or other arrangement
with the Participant; or (iii) in any other form of legal consideration that may
be acceptable to the Board in its discretion; provided, however, that at any
time that the Company is incorporated in Delaware, then payment of the Common
Stock’s “par value,” as defined in the Delaware General Corporation Law, shall
not be made by deferred payment.

                                      (iii)          VESTING. Subject to the
“Repurchase Limitation” in subsection 10(h), shares of Common Stock acquired
under the restricted stock purchase agreement may, but need not, be subject to a
share repurchase option in favor of the Company in accordance with a vesting
schedule to be determined by the Board.

                                      (iv)          TERMINATION OF PARTICIPANT’S
CONTINUOUS SERVICE. Subject to the “Repurchase Limitation” in subsection 10(h),
in the event a Participant’s Continuous Service terminates, the Company may
repurchase or otherwise reacquire any or all of the shares of Common Stock held
by the Participant which have not vested as of the date of termination under the
terms of the restricted stock purchase agreement.

                                      (v)          TRANSFERABILITY. For a
restricted stock award made before the Listing Date, rights to acquire shares
under the restricted stock purchase agreement shall not be transferable except
by will or by the laws of descent and distribution and shall be exercisable
during the lifetime of the Participant only by the Participant.  For a
restricted stock award made on or after the Listing Date, rights to acquire
shares under the restricted stock purchase agreement shall be transferable by
the Participant only upon such terms and conditions as are set forth in the
restricted stock purchase agreement, as the Board shall determine in its
discretion, so long as stock awarded under the restricted stock purchase
agreement remains subject to the terms of the restricted stock purchase
agreement.

          8.          COVENANTS OF THE COMPANY.

                       (a)          AVAILABILITY OF SHARES.  During the terms of
the Stock Awards, the Company shall keep available at all times the number of
shares of Common Stock required to satisfy such Stock Awards.

                       (b)          SECURITIES LAW COMPLIANCE. The Company shall
seek to obtain from each regulatory commission or agency having jurisdiction
over the Plan such authority as may be required to grant Stock Awards and to
issue and sell shares of Common Stock upon exercise of the Stock Awards;
provided, however, that this undertaking shall not require the Company to
register under the Securities Act the Plan, any Stock Award or any stock issued
or issuable pursuant to any such Stock Award.  If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such Stock Awards
unless and until such authority is obtained.

11

          9.          USE OF PROCEEDS FROM STOCK.  Proceeds from the sale of
stock pursuant to Stock Awards shall constitute general funds of the Company.

          10.         MISCELLANEOUS.

                       (a)          ACCELERATION OF EXERCISABILITY AND VESTING. 
The Board shall have the power to accelerate the time at which a Stock Award may
first be exercised or the time during which a Stock Award or any part thereof
will vest in accordance with the Plan, notwithstanding the provisions in the
Stock Award stating the time at which it may first be exercised or the time
during which it will vest.

                       (b)          SHAREHOLDER RIGHTS.  No Participant shall be
deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares subject to such Stock Award unless and until such
Participant has satisfied all requirements for exercise of the Stock Award
pursuant to its terms.

                       (c)          NO EMPLOYMENT OR OTHER SERVICE RIGHTS.
Nothing in the Plan or any instrument executed or Stock Award granted pursuant
thereto shall confer upon any Participant or other holder of Stock Awards any
right to continue to serve the Company or an Affiliate in the capacity in effect
at the time the Stock Award was granted or shall affect the right of the Company
or an Affiliate to terminate (i) the employment of an Employee with or without
notice and with or without cause, (ii) the service of a Consultant pursuant to
the terms of such Consultant’s agreement with the Company or an Affiliate or
(iii) the service of a Director pursuant to the Bylaws of the Company or an
Affiliate, and any applicable provisions of the corporate law of the state in
which the Company or the Affiliate is incorporated, as the case may be.

                       (d)          INCENTIVE STOCK OPTION $100,000 LIMITATION. 
To the extent that the aggregate Fair Market Value (determined at the time of
grant) of stock with respect to which Incentive Stock Options are exercisable
for the first time by any Optionholder during any calendar year (under all plans
of the Company and its Affiliates) exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.

                       (e)          INVESTMENT ASSURANCES. The Company may
require a Participant, as a condition of exercising or acquiring stock under any
Stock Award, (i) to give written assurances satisfactory to the Company as to
the Participant’s knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business matters
and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Stock Award;
and (ii) to give written assurances satisfactory to the Company stating that the
Participant is acquiring the stock subject to the Stock Award for the
Participant’s own account and not with any present intention of selling or
otherwise distributing the stock.  The foregoing requirements, and any
assurances

12

given pursuant to such requirements, shall be inoperative if (iii) the issuance
of the shares upon the exercise or acquisition of stock under the Stock Award
has been registered under a then currently effective registration statement
under the Securities Act or (iv) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.

                       (f)          WITHHOLDING OBLIGATIONS. To the extent
provided by the terms of a Stock Award Agreement, the Participant may satisfy
any federal, state or local tax withholding obligation relating to the exercise
or acquisition of stock under a Stock Award by any of the following means (in
addition to the Company’s right to withhold from any compensation paid to the
Participant by the Company) or by a combination of such means: (i) tendering a
cash payment; (ii) authorizing the Company to withhold shares from the shares of
the Common Stock otherwise issuable to the participant as a result of the
exercise or acquisition of stock under the Stock Award; or (iii) delivering to
the Company owned and unencumbered shares of the Common Stock.

                       (g)          INFORMATION OBLIGATION. Prior to the Listing
Date, to the extent required by Section 260.140.46 of Title 10 of the California
Code of Regulations, the Company shall deliver financial statements to
Participants at least annually. This subsection 10(g) shall not apply to key
Employees whose duties in connection with the Company assure them access to
equivalent information.

                       (h)          REPURCHASE LIMITATION. The terms of any
repurchase option shall be specified in the Stock Award and may be either at
Fair Market Value at the time of repurchase or at not less than the original
purchase price. To the extent required by Section 260.140.41 and
Section 260.140.42 of Title 10 of the California Code of Regulations, any
repurchase option contained in a Stock Award granted prior to the Listing Date
to a person who is not an Officer, Director or Consultant shall be upon the
terms described below:

                                      (i)          FAIR MARKET VALUE. If the
repurchase option gives the Company the right to repurchase the shares upon
termination of employment at not less than the Fair Market Value of the shares
to be purchased on the date of termination of Continuous Service, then (i) the
right to repurchase shall be exercised for cash or cancellation of purchase
money indebtedness for the shares within ninety (90) days of termination of
Continuous Service (or in the case of shares issued upon exercise of Stock
Awards after such date of termination, within ninety (90) days after the date of
the exercise) or such longer period as may be agreed to by the Company and the
Participant (for example, for purposes of satisfying the requirements of
Section 1202(c)(3) of the Code regarding “qualified small business stock”) and
(ii) the right terminates when the shares become publicly traded.

                                      (ii)          ORIGINAL PURCHASE PRICE. If
the repurchase option gives the Company the right to repurchase the shares upon
termination of Continuous Service at the original purchase price, then (i) the
right to repurchase at the original purchase price shall lapse at the rate of at
least twenty percent (20%) of the shares per year over five (5) years from the
date

13

the Stock Award is granted (without respect to the date the Stock Award was
exercised or became exercisable) and (ii) the right to repurchase shall be
exercised for cash or cancellation of purchase money indebtedness for the shares
within ninety (90) days of termination of Continuous Service (or in the case of
shares issued upon exercise of Options after such date of termination, within
ninety (90) days after the date of the exercise) or such longer period as may be
agreed to by the Company and the Participant (for example, for purposes of
satisfying the requirements of Section 1202(c)(3) of the Code regarding
“qualified small business stock”).

          11.         ADJUSTMENTS UPON CHANGES IN STOCK.

                       (a)          CAPITALIZATION ADJUSTMENTS.  If any change
is made in the stock subject to the Plan, or subject to any Stock Award, without
the receipt of consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or other transaction
not involving the receipt of consideration by the Company), the Plan will be
appropriately adjusted in the class(es) and maximum number of securities subject
to the Plan pursuant to subsection 4(a) and the maximum number of securities
subject to award to any person pursuant to subsection 5(c), and the outstanding
Stock Awards will be appropriately adjusted in the class(es) and number of
securities and price per share of stock subject to such outstanding Stock
Awards. The Board, the determination of which shall be final, binding and
conclusive, shall make such adjustments.  (The conversion of any convertible
securities of the Company shall not be treated as a transaction “without receipt
of consideration” by the Company.)

                       (b)          DISSOLUTION OR LIQUIDATION. In the event of
a dissolution or liquidation of the Company other than in an Acquisition (as
defined below), then such Stock Awards shall be terminated if not exercised (if
applicable) prior to such event, unless such outstanding Stock Awards are
assumed by a subsequent purchaser.

                       (c)          CHANGE IN CONTROL.

                                     (i)          For the purposes of this
Section 11, “Acquisition” shall mean (1) any consolidation or merger of the
Company with or into any other corporation or other entity or person in which
the shareholders of the Company prior to such consolidation or merger own less
than fifty percent (50%) of the Company’s voting power immediately after such
consolidation or merger, excluding any consolidation or merger effected
exclusively to change the domicile of the Company; or (2) a sale of all or
substantially all of the assets of the Company.

                                     (ii)          In the event the Company
undergoes an Acquisition then any surviving corporation or acquiring corporation
shall assume any Stock Awards outstanding under the Plan or shall substitute
similar stock awards (including an award to acquire the same consideration paid
to the shareholders in the transaction described in this subsection 11(c)) for
those outstanding under the Plan.

                                     (iii)          In the event any surviving
corporation or acquiring corporation in an Acquisition refuses to assume such
Stock Awards or to substitute similar stock awards for those outstanding under
the Plan, then with respect to (1) Stock Awards which (i) are held by

14

Participants whose Continuous Service has not terminated prior to such event,
and (ii) would otherwise vest and become exercisable within one (1) year of the
closing of the Acquisition, the vesting of such Stock Awards (and, if
applicable, the time during which such Stock Awards may be exercised) shall be
accelerated and made fully exercisable at least thirty (30) days prior to the
closing of the Acquisition (and the Stock Awards terminated if not exercised
prior to the closing of such  Acquisition), and (2) any other Stock Awards
outstanding under the Plan, such Stock Awards shall be terminated if not
exercised prior to the closing of the Acquisition..

                                     (iv)          In the event the Company
undergoes an Acquisition and the surviving corporation or acquiring corporation
does assume such Stock Awards (or substitutes similar stock awards for those
outstanding under the Plan), then, with respect to each Stock Award held by
persons then performing services as Employees or Directors, the vesting of each
such Stock Award (and, if applicable, the time during which such Stock Award may
be exercised) shall be accelerated and such Stock Award shall become fully
vested and exercisable, if any of the following events occurs within one
(1) month before or eighteen (18) months after the effective date of the
Acquisition: (1) the service to the Company or an Affiliate of the Employee or
Director holding such Stock Award is terminated without Cause (as defined
below); (2) the Employee holding such Stock Award terminates his or her service
to the Company or an Affiliate due to the fact that the principal place of the
performance of the responsibilities and duties of the Employee is changed to a
location more than fifty (50) miles from such Employee’s existing work location
without the Employee’s express consent (not applicable to Directors); or (3) the
Employee holding such Stock Award terminates his or her service to the Company
or Affiliate due to the fact that there is a material reduction in such
Employee’s responsibilities and duties without the Employee’s express consent
(not applicable to Directors).

                                     (v)          For the purposes of this
Section 11(c), “Cause” means an individual’s misconduct, including but not
limited to: (1) conviction of any felony or any crime involving moral turpitude
or dishonesty, (2) participation in a fraud or act of dishonesty against the
Company, (3) conduct that, based upon a good faith and reasonable factual
investigation and determination by the Board, demonstrates your gross unfitness
to serve, or (4) intentional, material violation of any contract with the
Company or any statutory duty to the Company that is not corrected within
thirty (30) days after written notice thereof. Physical or mental disability
shall not constitute “Cause.”

                                     (vi)          The acceleration of vesting
provided for under this Section 11(c) may be limited in certain circumstances as
follows:  If any such acceleration (the “Benefit”) would (i) constitute a
“parachute payment” within the meaning of Section 280G of the Code and (ii) but
for such acceleration, be subject to the excise tax imposed by Section 4999 of
the Code, then such Benefit shall be reduced to the extent necessary so that no
portion of the Benefit would be subject to such excise tax, as determined in
good faith by the Company; provided, however, that if, in the absence of any
such reduction (or after such reduction), such Employee believes that the
Benefit or any portion thereof (as reduced, if applicable) would be subject to
such excise tax, the Benefit shall be reduced (or further reduced) to the extent
determined by such Employee in his or her discretion so that the excise tax
would not apply.  If, notwithstanding any such reduction (or in the absence of
such reduction), the Internal Revenue Service (“IRS”) determines that such
Employee is liable for the excise tax as a result of the Benefit, then such
Employee

15

shall be obligated to return to the Company, within thirty (30) days of such
determination by the IRS, a portion of the Benefit sufficient such that none of
the Benefit retained by such Employee constitutes a “parachute payment” within
the meaning of Section 280G of the Code that is subject to the excise tax.

          12.         AMENDMENT OF THE PLAN AND STOCK AWARDS.

                       (a)          AMENDMENT OF PLAN. The Board at any time,
and from time to time, may amend the Plan. However, except as provided in
Section 11 relating to adjustments upon changes in stock, no amendment shall be
effective unless approved by the shareholders of the Company to the extent
shareholder approval is necessary to satisfy the requirements of Section 422 of
the Code, Rule 16b-3 or any NASDAQ or securities exchange listing requirements.

                       (b)          SHAREHOLDER APPROVAL. The Board may, in its
sole discretion, submit any other amendment to the Plan for shareholder
approval, including, but not limited to, amendments to the Plan intended to
satisfy the requirements of Section 162(m) of the Code and the regulations
thereunder regarding the exclusion of performance-based compensation from the
limit on corporate deductibility of compensation paid to certain executive
officers.

                       (c)          CONTEMPLATED AMENDMENTS.  It is expressly
contemplated that the Board may amend the Plan in any respect the Board deems
necessary or advisable to provide eligible Employees with the maximum benefits
provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to bring the
Plan and/or Incentive Stock Options granted under it into compliance therewith.

                       (d)          NO IMPAIRMENT OF RIGHTS. Rights under any
Stock Award granted before amendment of the Plan shall not be impaired by any
amendment of the Plan unless (i) the Company requests the consent of the
Participant and (ii) the Participant consents in writing.

                       (e)          AMENDMENT OF STOCK AWARDS. The Board at any
time, and from time to time, may amend the terms of any one or more Stock
Awards; provided, however, that the rights under any Stock Award shall not be
impaired by any such amendment unless (i) the Company requests the consent of
the Participant and (ii) the Participant consents in writing.

          13.         TERMINATION OR SUSPENSION OF THE PLAN.

                       (a)          PLAN TERM. The Board may suspend or
terminate the Plan at any time. Unless sooner terminated, the Plan shall
terminate on the day before the tenth (10th) anniversary of the date the Plan is
adopted by the Board or approved by the shareholders of the Company, whichever
is earlier.  No Stock Awards may be granted under the Plan while the Plan is
suspended or after it is terminated.

                       (b)          NO IMPAIRMENT OF RIGHTS. Suspension or
termination of the Plan shall not impair rights and obligations under any Stock
Award granted while the Plan is in effect except with the written consent of the
Participant.

16

          14.         EFFECTIVE DATE OF PLAN.

          The Plan shall become effective as determined by the Board, but no
Stock Award shall be exercised (or, in the case of a stock bonus, shall be
granted) unless and until the Plan has been approved by the shareholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.

17

NITCHES, INC.
STOCK OPTION GRANT NOTICE
(2006 INCENTIVE PLAN)

          Nitches, Inc. (the “Company”), pursuant to its 2006 Equity Incentive
Plan (the “Plan”), hereby grants to Option holder an option to purchase the
number of shares of the Company’s Common Stock set forth below. This option is
subject to all of the terms and conditions as set forth herein and in the Stock
Option Agreement, the Plan and the Notice of Exercise, all of which are attached
hereto and incorporated herein in their entirety.

Option holder:
___________________________________________________________________________________

 

Date of Grant:
___________________________________________________________________________________

 

Vesting Commencement Date:
______________________________________________________________________

 

Number of Shares Subject to Option:
_________________________________________________________________

 

Exercise Price Per Share:
__________________________________________________________________________

 

Expiration Date:
_________________________________________________________________________________

TYPE OF GRANT:

o

Incentive Stock Option

o

Nonstatutory Stock Option

 

 

 

 

 

EXERCISE SCHEDULE:

o

Same as Vesting Schedule

 

 

VESTING SCHEDULE:   [AMT. INITIAL VESTING] of the shares vest one year after the
Vesting Commencement Date. [PERCENT OF VESTING] of the shares vest monthly
thereafter over the next [LENGTH OF VESTING] years.

PAYMENT:  By one or a combination of the following items (described in the Stock
Option Agreement):

                    [By cash or check]
                    [Pursuant to a Regulation T Program if the Shares are
publicly traded]
                    [By delivery of already-owned shares if the Shares are
publicly traded]

ADDITIONAL TERMS/ACKNOWLEDGMENTS:  The undersigned Optionholder acknowledges
receipt of, and understands and agrees to, this Grant Notice, the Stock Option
Agreement, the Plan and the Shareholders’ Agreement. Optionholder further
acknowledges that as of the Date of Grant, this Grant Notice, the Stock Option
Agreement, the Plan and the Stockholders’ Agreement set forth the entire
understanding between Optionholder and the Company regarding the acquisition of
stock in the Company and supersede all prior oral and written agreements on that
subject with the exception of options previously granted and delivered to
Optionholder under the Plan.

1

NITCHES, INC.

By:

 

 

 

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

 

 

[signature above/name typed below line]

 

 

 

 

Date:

 ________________________________

 

 

 

 

 

 

 

OPTIONHOLDER:

 

 

 

 

By:

 

 

 

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

 

 

[signature above/name typed below line]

 

 

 

 

Date:

 ________________________________

 

ATTACHMENTS:

Stock Option Agreement

 

2006 Equity Incentive Plan

 

Notice of Exercise

2

ATTACHMENT I

STOCK OPTION AGREEMENT

NITCHES, INC. 2006 EQUITY INCENTIVE PLAN

(INCENTIVE AND NONSTATUTORY STOCK OPTIONS)

          Pursuant to the Stock Option Grant Notice (“Grant Notice”) and this
Stock Option Agreement, Nitches, Inc.. (the “Company”) has granted you an option
under its 2006 Equity Incentive Plan (the “Plan”) to purchase the number of
shares of the Company’s Common Stock indicated in the Grant Notice at the
exercise price indicated in the Grant Notice. Defined terms not explicitly
defined in this Stock Option Agreement but defined in the Plan shall have the
same definitions as in the Plan.

          The details of your option are as follows:

          1.          VESTING. Subject to the limitations contained herein, your
option will vest as provided in the Grant Notice, provided that vesting will
cease upon the termination of your Continuous Service.

          2.          NUMBER OF SHARES AND EXERCISE PRICE. The number of shares
subject to your option and your exercise price per share referenced in the Grant
Notice may be adjusted from time to time for Capitalization Adjustments, as
provided in the Plan.

          3.          METHOD OF PAYMENT. Payment of the exercise price is due in
full upon exercise of all or any part of your option. You may elect to make
payment of the exercise price in cash or by check or in any other manner
PERMITTED BY THE GRANT NOTICE, which may include one or more of the following:

                       (a)          In the Company’s sole discretion at the time
your option is exercised and provided that at the time of exercise the Common
Stock is publicly traded and quoted regularly in The Wall Street Journal,
pursuant to a program developed under Regulation T as promulgated by the Federal
Reserve Board which, prior to the issuance of Common Stock, results in either
the receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from the sales
proceeds.

                       (b)          Provided that at the time of exercise the
Common Stock is publicly traded and quoted regularly in The Wall Street Journal,
by delivery of already-owned shares of Common Stock that either have been held
for the period required to avoid a charge to the Company’s reported earnings
(generally six months) or were not acquired, directly or indirectly from the
Company, that are owned free and clear of any liens, claims, encumbrances or
security interests, and that are valued at Fair Market Value on the date of
exercise. “Delivery” for these purposes, in the sole discretion of the Company
at the time your option is exercised, shall include delivery to the Company of
your attestation of ownership of such shares of Common Stock in a form approved
by the Company. Notwithstanding the foregoing, your option may not be exercised
by tender to the Company of Common Stock to the extent such tender would
constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company’s stock.

1

          4.          WHOLE SHARES.  Your option may only be exercised for whole
shares.

          5.          SECURITIES LAW COMPLIANCE.  Notwithstanding anything to
the contrary contained herein, your option may not be exercised unless the
shares issuable upon exercise of your option are then registered under the
Securities Act or, if such shares are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act.  The exercise of your option must also
comply with other applicable laws and regulations governing the option, and the
option may not be exercised if the Company determines that the exercise would
not be in material compliance with such laws and regulations.

          6.          TERM. The term of your option commences on the Date of
Grant and expires upon the EARLIEST of the following:

                       (a)          three (3) months after the termination of
your Continuous Service for any reason other than Disability or death, provided
that if during any part of such three (3) month period the option is not
exercisable solely because of the condition set forth in paragraph 6, the option
shall not expire until the earlier of the Expiration Date or until it shall have
been exercisable for an aggregate period of three (3) months after the
termination of your Continuous Service;

                       (b)          twelve (12) months after the termination of
your Continuous Service due to Disability;

                       (c)          eighteen (18) months after your death if you
die either during your Continuous Service or within three (3) months after your
Continuous Service terminates;

                       (d)          the Expiration Date indicated in the Grant
Notice; or

                       (e)          the tenth (10th) anniversary of the Date of
Grant.

          If your option is an incentive stock option, note that, to obtain the
federal income tax advantages associated with an “incentive stock option,” the
Code requires that at all times beginning on the date of grant of the option and
ending on the day three (3) months before the date of the option’s exercise, you
must be an employee of the Company or an Affiliate, except in the event of your
death or your Disability.  The Company has provided for extended exercisability
of your option under certain circumstances for your benefit, but cannot
guarantee that your option will necessarily be treated as an “incentive stock
option” if you provide services to the Company or an Affiliate as a Consultant
or Director or if you exercise your option more than three (3) months after the
date your employment with the Company or an Affiliate terminates.

2

          7.          EXERCISE.

                       (a)          You may exercise the vested portion of your
option (and the unvested portion of your option if the Grant Notice so permits)
during its term by delivering a Notice of Exercise (in a form designated by the
Company) together with the exercise price to the Secretary of the Company, or to
such other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.

                       (b)          By exercising your option you agree that, as
a condition to any exercise of your option, the Company may require you to enter
an arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the
shares are subject at the time of exercise, or (3) the disposition of shares
acquired upon such exercise.

                       (c)          If your option is an incentive stock option,
by exercising your option you agree that you will notify the Company in writing
within fifteen (15) days after the date of any disposition of any of the shares
of the Common Stock issued upon exercise of your option that occurs within
two (2) years after the date of your option grant or within one (1)year after
such shares of Common Stock are transferred upon exercise of your option.

                       (d)          By exercising your option you agree that the
Company (or a representative of the underwriters) may, in connection with the
first underwritten registration of the offering of any securities of the Company
under the Securities Act, require that you not sell, dispose of, transfer, make
any short sale of, grant any option for the purchase of, or enter into any
hedging or similar transaction with the same economic effect as a sale, any
shares of Common Stock or other securities of the Company held by you, for a
period of time specified by the underwriter(s) (not to exceed one hundred
eighty (180) days) following the effective date of the registration statement of
the Company filed under the Securities Act. You further agree to execute and
deliver such other agreements as may be reasonably requested by the Company
and/or the underwriter(s) which are consistent with the foregoing or which are
necessary to give further effect thereto. In order to enforce the foregoing
covenant, the Company may impose stop-transfer instructions with respect to your
Common Stock until the end of such period.

          8.          TRANSFERABILITY. Your option is not transferable, except
by will or by the laws of descent and distribution, and is exercisable during
your life only by you. Notwithstanding the foregoing, by delivering written
notice to the Company, in a form satisfactory to the Company, you may designate
a third party who, in the event of your death, shall thereafter be entitled to
exercise your option.

          9.          OPTION NOT A SERVICE CONTRACT.  Your option is not an
employment or service contract, and nothing in your option shall be deemed to
create in any way whatsoever any obligation on your part to continue in the
employ of the Company or an Affiliate, or of the Company or an Affiliate to
continue your employment. In addition, nothing in your option shall obligate the
Company or an Affiliate, their respective shareholders, Boards of Directors,
Officers or Employees to continue any relationship that you might have as a
Director or Consultant for the Company or an Affiliate.

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          10.         WITHHOLDING OBLIGATIONS.

                       (a)          At the time your option is exercised, in
whole or in part, or at any time thereafter as requested by the Company, you
hereby authorize withholding from payroll and any other amounts payable to you,
and otherwise agree to make adequate provision for (including by means of a
“cashless exercise” pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board to the extent permitted by the
Company), any sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Company or an Affiliate, if any, which arise in
connection with your option.

                       (b)          Upon your request and subject to approval by
the Company, in its sole discretion, and compliance with any applicable
conditions or restrictions of law, the Company may withhold from fully vested
shares of Common Stock otherwise issuable to you upon the exercise of your
option a number of whole shares having a Fair Market Value, determined by the
Company as of the date of exercise, not in excess of the minimum amount of tax
required to be withheld by law.  If the date of determination of any tax
withholding obligation is deferred to a date later than the date of exercise of
your option, share withholding pursuant to the preceding sentence shall not be
permitted unless you make a proper and timely election under Section 83(b) of
the Code, covering the aggregate number of shares of Common Stock acquired upon
such exercise with respect to which such determination is otherwise deferred, to
accelerate the determination of such tax withholding obligation to the date of
exercise of your option. Notwithstanding the filing of such election, shares
shall be withheld solely from fully vested shares of Common Stock determined as
of the date of exercise of your option that are otherwise issuable to you upon
such exercise. Any adverse consequences to you arising in connection with such
share withholding procedure shall be your sole responsibility.

                       (c)          Your option is not exercisable unless the
tax withholding obligations of the Company and/or any Affiliate are satisfied.
Accordingly, you may not be able to exercise your option when desired even
though your option is vested, and the Company shall have no obligation to issue
a certificate for such shares or release such shares from any escrow provided
for herein.

          11.         NOTICES. Any notices provided for in your option or the
Plan shall be given in writing and shall be deemed effectively given upon
receipt or, in the case of notices delivered by the Company to you, five (5)
days after deposit in the United States mail, postage prepaid, addressed to you
at the last address you provided to the Company.

          12.         GOVERNING PLAN DOCUMENT.  Your option is subject to all
the provisions of the Plan, the provisions of which are hereby made a part of
your option, and is further subject to all interpretations, amendments, rules
and regulations which may from time to time be promulgated and adopted pursuant
to the Plan. In the event of any conflict between the provisions of your option
and those of the Plan, the provisions of the Plan shall control.

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ATTACHMENT II

2006 EQUITY INCENTIVE PLAN

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ATTACHMENT III

NOTICE OF EXERCISE

Nitches, Inc.
10280 Camino Santa Fe
San Diego, California 92121

Date of Exercise: _______________

Ladies and Gentlemen:

          This constitutes notice under my stock option that I elect to purchase
the number of shares for the price set forth below.

 

Type of option (check one):

 

Incentive o

 

Nonstatutory o

 

 

 

 

 

 

 

 

 

Stock option dated:

 

_____________

 

 

 

 

 

 

 

 

 

 

 

Number of shares as to which option is exercised:

 

_____________

 

 

 

 

 

 

 

 

 

 

 

Certificates to be issued in name of:

 

_____________

 

 

 

 

 

 

 

 

 

 

 

Total exercise price:

 

$____________

 

 

 

 

 

 

 

 

 

 

 

Cash payment delivered herewith:

 

$____________

 

 

 

 

 

 

 

 

 

 

 

Value of ________ shares of Nitches, Inc. common stock delivered herewith(1):

 

$____________

 

 

 

          By this exercise, I agree (i) to provide such additional documents as
you may require pursuant to the terms of the 2006 Equity Incentive Plan, (ii) to
provide for the payment by me to you (in the manner designated by you) of your
withholding obligation, if any, relating to the exercise of this option, and
(iii) if this exercise relates to an incentive stock option, to notify you in
writing within fifteen (15) days after the date of any disposition of any of the
shares of Common Stock issued upon exercise of this option that occurs within
two (2) years after the date of grant of this option or within one (1) year
after such shares of Common Stock are issued upon exercise of this option.

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          (1)          Shares must meet the public trading requirements set
forth in the option. Shares must be valued in accordance with the terms of the
option being exercised, must have been owned for the minimum period required in
the option, and must be owned free and clear of any liens, claims, encumbrances
or security interests. Certificates must be endorsed or accompanied by an
executed assignment separate from certificate.

          I hereby make the following certifications and representations with
respect to the number of shares of Common Stock of the Company listed above (the
“Shares”), which are being acquired by me for my own account upon exercise of
the Option as set forth above:

          I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”), and are deemed to
constitute “restricted securities” under Rule 701 and “control securities” under
Rule 144 promulgated under the Securities Act.  I warrant and represent to the
Company that I have no present intention of distributing or selling said Shares,
except as permitted under the Securities Act and any applicable state securities
laws.

          I further acknowledge that I will not be able to resell the Shares for
at least ninety days (90) after the stock of the Company becomes publicly traded
(i.e., subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934) under Rule 701 and that more restrictive
conditions apply to affiliates of the Company under Rule 144.

           I further acknowledge that all certificates representing any of the
Shares subject to the provisions of the Option shall have endorsed thereon
appropriate legends reflecting the foregoing limitations, as well as any legends
reflecting restrictions pursuant to the Company’s Articles of Incorporation,
Bylaws and/or applicable securities laws.

          I further agree that, if required by the Company (or a representative
of the underwriters) in connection with the first underwritten registration of
the offering of any securities of the Company under the Securities Act, I will
not sell or otherwise transfer or dispose of any shares of Common Stock or other
securities of the Company during such period (not to exceed one hundred
eighty (180) days) following the effective date of the registration statement of
the Company filed under the Securities Act as may be requested by the Company or
the representative of the underwriters. I further agree that the Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such period.

 

Very truly yours,

 

 

 

 

 

 

 

By:

 

 

 

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

 

Name:

 

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