Exhibit 10.3
 

STANDARD DRILLING, INC.
 
2006 STOCK INCENTIVE PLAN
 
PURPOSE
 
The purpose of the STANDARD DRILLING, INC. 2006 STOCK INCENTIVE PLAN (the
“Plan”) is to provide a means through which STANDARD DRILLING, INC., a Nevada
corporation (the “Company”), and its Affiliates may attract able persons to
serve as Directors or Consultants or to enter the employ of the Company and its
Affiliates and to provide a means whereby those individuals upon whom the
responsibilities of the successful administration and management of the Company
and its Affiliates rest, and whose present and potential contributions to the
Company and its Affiliates are of importance, can acquire and maintain stock
ownership, thereby strengthening their concern for the welfare of the Company
and its Affiliates. A further purpose of the Plan is to provide such individuals
with additional incentive and reward opportunities designed to enhance the
profitable growth of the Company and its Affiliates. Accordingly, the Plan
provides for granting Incentive Stock Options, options that do not constitute
Incentive Stock Options, Restricted Stock Awards, or any combination of the
foregoing, as is best suited to the circumstances of the particular employee,
Consultant or Director as provided herein.
 
DEFINITIONS
 
The following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:
 
  “Affiliate” means any corporation, partnership, limited liability company or
partnership, association, trust or other organization which, directly or
indirectly, controls, is controlled by, or is under common control with, the
Company. For purposes of the preceding sentence, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control
with”), as used with respect to any entity or organization, shall mean the
possession, directly or indirectly, of the power (i) to vote more than 50% of
the securities having ordinary voting power for the election of directors of the
controlled entity or organization, or (ii) to direct or cause the direction of
the management and policies of the controlled entity or organization, whether
through the ownership of voting securities or by contract or otherwise.
 
  “Award” means, individually or collectively, any Option or Restricted Stock
Award.
 
  “Board” means the Board of Directors of the Company.
 
  “Code” means the Internal Revenue Code of 1986, as amended. Reference in the
Plan to any section of the Code shall be deemed to include any amendments or
successor provisions to such section and any regulations under such section.
 
  “Committee” means a committee of the Board that is selected by the Board as
provided in Paragraph IV(a).
 
 
 

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  “Common Stock” means the common stock, par value $0.001 per share, of the
Company, or any security into which such common stock may be changed by reason
of any transaction or event of the type described in Paragraph IX.
 
  “Company” means Standard Drilling, Inc., a Nevada corporation, and any
successor thereto that adopts the Plan.
 
  “Consultant” means any person who is not an employee or a Director and who is
providing advisory or consulting services to the Company or any Affiliate.
 
  “Corporate Change” shall have the meaning assigned to such term in Paragraph
IX(c) of the Plan.
 
  “Director” means an individual who is a member of the Board.
 
  An “employee” means any person (including a Director) in an employment
relationship with the Company or any Affiliate.
 
  “Fair Market Value” means, as of any specified date, the mean of the high and
low sales prices of the Common Stock (i) reported by the National Market System
of NASDAQ on that date or (ii) if the Common Stock is listed on a national stock
exchange, reported on the stock exchange composite tape on that date (or such
other reporting service approved by the Committee); or, in either case, if no
prices are reported on that date, on the last preceding date on which such
prices of the Common Stock are so reported. If the Common Stock is traded over
the counter at the time a determination of its fair market value is required to
be made hereunder, its fair market value shall be deemed to be equal to the
average between the reported high and low or closing bid and asked prices of
Common Stock on the most recent date on which Common Stock was publicly traded.
In the event Common Stock is not publicly traded at the time a determination of
its value is required to be made hereunder, the determination of its fair market
value shall be made by the Committee in such manner as it deems appropriate.
Notwithstanding the foregoing, the Fair Market Value of a share of Common Stock
on the date of an initial public offering of Common Stock shall be the offering
price under such initial public offering.
 
  “Incentive Stock Option” means an incentive stock option within the meaning of
section 422 of the Code.
 
  “Option” means an Award granted under Paragraph VII of the Plan and includes
both Incentive Stock Options to purchase Common Stock and Options that do not
constitute Incentive Stock Options to purchase Common Stock.
 
  “Option Agreement” means a written agreement between the Company and a
Participant with respect to an Option.
 
  “Participant” means an employee, Consultant, or Director who has been granted
an Award.
 
  “Plan” means the Standard Drilling, Inc. 2006 Stock Incentive Plan, as amended
from time to time.
 
 
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  “Restricted Stock Agreement” means a written agreement between the Company and
a Participant with respect to a Restricted Stock Award.
 
  “Restricted Stock Award” means an Award granted under Paragraph VIII of the
Plan.
 
  “Stock Appreciation Right” shall have the meaning assigned to such term in
Paragraph VII(d) of the Plan.
 
EFFECTIVE DATE AND DURATION OF THE PLAN
 
The Plan shall become effective upon the date of its adoption by the Board,
provided the Plan is approved by the stockholders of the Company within 12
months thereafter. Notwithstanding any provision in the Plan, in any Option
Agreement or in any Restricted Stock Agreement, no Option shall be exercisable
and no Restricted Stock Award shall vest prior to such stockholder approval. No
further Awards may be granted under the Plan after 10 years from the date the
Plan is adopted by the Board. The Plan shall remain in effect until all Options
granted under the Plan have been satisfied or expired, and all Restricted Stock
Awards granted under the Plan have vested or been forfeited.
 
ADMINISTRATION
 
  Composition of Committee. The Plan shall be administered by a committee of,
and appointed by, the Board. In the absence of the Board’s appointment of a
committee to administer the Plan, the Board shall serve as the Committee.
 
  Powers. Subject to the express provisions of the Plan, the Committee shall
have authority, in its discretion, to determine which employees, Consultants, or
Directors shall receive an Award, the time or times when such Award shall be
made, whether an Incentive Stock Option or nonqualified Option shall be granted,
and the number of shares to be subject to each Option or Restricted Stock Award.
In making such determinations, the Committee shall take into account the nature
of the services rendered by the respective employees, Consultants, or Directors,
their present and potential contribution to the Company’s success and such other
factors as the Committee in its discretion shall deem relevant.
 
  Additional Powers. The Committee shall have such additional powers as are
delegated to it by the other provisions of the Plan. Subject to the express
provisions of the Plan, this shall include the power to construe the Plan and
the respective agreements executed hereunder, to prescribe rules and regulations
relating to the Plan, and to determine the terms, restrictions and provisions of
the agreement relating to each Award, including such terms, restrictions and
provisions as shall be requisite in the judgment of the Committee to cause
designated Options to qualify as Incentive Stock Options, and to make all other
determinations necessary or advisable for administering the Plan. The Committee
may correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any agreement relating to an Award in the manner and to the
extent it shall deem expedient to carry it into effect. The determinations of
the Committee on the matters referred to in this Paragraph IV shall be
conclusive.
 
 
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SHARES SUBJECT TO THE PLAN; GRANT OF AWARDS
 
  Shares Subject to the Plan. Subject to adjustment in the same manner as
provided in Paragraph IX with respect to shares of Common Stock subject to
Options then outstanding, the aggregate number of shares of Common Stock that
may be issued under the Plan shall not exceed 9,000,000 shares. Shares shall be
deemed to have been issued under the Plan only (i) to the extent actually issued
and delivered pursuant to an Award or (ii) to the extent an Award is settled in
cash. To the extent that an Award lapses or the rights of its holder terminate,
any shares of Common Stock subject to such Award shall again be available for
the grant of an Award under the Plan.
 
  Grant of Awards. The Committee may from time to time grant Awards to one or
more employees, Consultants, or Directors determined by it to be eligible for
participation in the Plan in accordance with the terms of the Plan.
 
  Stock Offered. Subject to the limitations set forth in Paragraph V(a), the
stock to be offered pursuant to the grant of an Award may be authorized but
unissued Common Stock or Common Stock previously issued and outstanding and
reacquired by the Company. Any of such shares which remain unissued and which
are not subject to outstanding Awards at the termination of the Plan shall cease
to be subject to the Plan but, until termination of the Plan, the Company shall
at all times make available a sufficient number of shares to meet the
requirements of the Plan.
 
ELIGIBILITY
 
Awards may be granted only to persons who, at the time of grant, are employees,
Consultants, or Directors. An Award may be granted on more than one occasion to
the same person, and, subject to the limitations set forth in the Plan, such
Award may include an Incentive Stock Option, an Option that is not an Incentive
Stock Option, a Restricted Stock Award, or any combination thereof.
 
STOCK OPTIONS
 
  Option Period. The term of each Option shall be as specified by the Committee
at the date of grant; provided, however, that each such Option by its terms
shall not be exercisable after the expiration of ten years from the date of
grant.
 
  Limitations on Exercise of Option. An Option shall be exercisable in whole or
in such installments and at such times as determined by the Committee.
 
  Special Limitations on Incentive Stock Options. An Incentive Stock Option may
be granted only to an individual who is employed by the Company or any parent or
subsidiary corporation (as defined in section 424 of the Code) of the Company at
the time the Option is granted. To the extent that the aggregate fair market
value (determined at the time the respective Incentive Stock Option is granted)
of stock with respect to which Incentive Stock Options are exercisable for the
first time by an individual during any calendar year under all incentive stock
option plans of the Company and its parent and subsidiary corporations exceeds
$100,000, such Incentive Stock Options shall be treated as Options which do not
constitute Incentive Stock Options. The Committee shall determine, in accordance
with applicable provisions of the Code, Treasury Regulations and other
administrative pronouncements, which of a Participant’s Incentive Stock Options
will not constitute Incentive Stock Options because of such limitation and shall
notify the Participant of such determination as soon as practicable after such
determination. No Incentive Stock Option shall be granted to an individual if,
at the time the Option is granted, such individual owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or of its parent or subsidiary corporation, within the meaning of
section 422(b)(6) of the Code, unless (i) at the time such Option is granted the
option price is at least 110% of the Fair Market Value of the Common Stock
subject to the Option and (ii) such Option by its terms is not exercisable after
the expiration of five years from the date of grant. An Incentive Stock Option
shall not be transferable otherwise than by will or the laws of descent and
distribution, and shall be exercisable during the Participant’s lifetime only by
such Participant or the Participant’s guardian or legal representative.
 
 
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  Option Agreement. Each Option shall be evidenced by an Option Agreement in
such form and containing such provisions not inconsistent with the provisions of
the Plan as the Committee from time to time shall approve, including, without
limitation, provisions to qualify an Incentive Stock Option under section 422 of
the Code. Each Option Agreement shall specify the effect of termination of (i)
employment, (ii) the consulting or advisory relationship, or (iii) membership on
the Board, as applicable, on the exercisability of the Option. An Option
Agreement may provide for the payment of the option price, in whole or in part,
by the delivery of a number of shares of Common Stock (plus cash if necessary)
having a Fair Market Value equal to such option price. Moreover, an Option
Agreement may provide for a “cashless exercise” of the Option by establishing
procedures satisfactory to the Committee with respect thereto. Further, an
Option Agreement may provide for the surrender of the right to purchase shares
under the Option in return for a payment in cash or shares of Common Stock or a
combination of cash and shares of Common Stock equal in value to the excess of
the Fair Market Value of the shares with respect to which the right to purchase
is surrendered over the option price therefor (“Stock Appreciation Rights”), on
such terms and conditions as the Committee in its sole discretion may prescribe.
In the case of any such Stock Appreciation Right that is granted in connection
with an Incentive Stock Option, such right shall be exercisable only when the
Fair Market Value of the Common Stock exceeds the price specified therefor in
the Option or the portion thereof to be surrendered. The terms and conditions of
the respective Option Agreements need not be identical. Subject to the consent
of the Participant, the Committee may, in its sole discretion, amend an
outstanding Option Agreement from time to time in any manner that is not
inconsistent with the provisions of the Plan (including, without limitation, an
amendment that accelerates the time at which the Option, or a portion thereof,
may be exercisable.)
 
  Option Price and Payment. The price at which a share of Common Stock may be
purchased upon exercise of an Option shall be determined by the Committee but,
subject to adjustment as provided in Paragraph IX, The exercise price for an
option granted under the plan is determined by the committee but will be no less
than the fair market value of the option, which will be based on the fair market
value our common stock on the date the option is granted. Non-statutory option
exercise price may be less than the fair market value of the common stock on the
date of grant. The Option or portion thereof may be exercised by delivery of an
irrevocable notice of exercise to the Company, as specified by the Committee.
The purchase price of the Option or portion thereof shall be paid in full in the
manner prescribed by the Committee. If permitted by applicable law, the Company
may assist a Participant who has received an Option in the payment of such
Option’s purchase price by lending the amount of some or all of such purchase
price to such Participant on such terms and such rates of interest and upon such
security (or unsecured) as shall have been authorized by or under authority of
the Board. Separate stock certificates shall be issued by the Company for those
shares acquired pursuant to the exercise of an Incentive Stock Option and for
those shares acquired pursuant to the exercise of any Option that does not
constitute an Incentive Stock Option.
 
 
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  Stockholder Rights and Privileges. The Participant shall be entitled to all
the privileges and rights of a stockholder only with respect to such shares of
Common Stock as have been purchased under the Option and for which certificates
of stock have been registered in the Participant’s name.
 
  Options and Rights in Substitution for Options Granted by Other Employers.
Options and Stock Appreciation Rights may be granted under the Plan from time to
time in substitution for options held by individuals providing services to
corporations or other entities who become employees, Consultants, or Directors
as a result of a merger or consolidation or other business transaction with the
Company or any Affiliate.
 
RESTRICTED STOCK AWARDS
 
  Forfeiture Restrictions To Be Established by the Committee. Shares of Common
Stock that are the subject of a Restricted Stock Award shall be subject to
restrictions on disposition by the Participant and an obligation of the
Participant to forfeit and surrender the shares to the Company under certain
circumstances (the “Forfeiture Restrictions”). The Forfeiture Restrictions shall
be determined by the Committee in its sole discretion, and the Committee may
provide that the Forfeiture Restrictions shall lapse upon (i) the attainment of
one or more performance targets established by the Committee, (ii) the
Participant’s continued employment with the Company or an Affiliate or continued
service as a Consultant or Director for a specified period of time, (iii) the
occurrence of any event or the satisfaction of any other condition specified by
the Committee in its sole discretion, or (iv) a combination of any of the
foregoing. Each Restricted Stock Award may have different Forfeiture
Restrictions, in the discretion of the Committee.
 
  Other Terms and Conditions. Common Stock awarded pursuant to a Restricted
Stock Award shall be represented by a stock certificate registered in the name
of the Participant. Unless provided otherwise in a Restricted Stock Agreement,
the Participant shall have the right to receive dividends with respect to Common
Stock subject to a Restricted Stock Award, to vote Common Stock subject thereto
and to enjoy all other stockholder rights, except that (i) the Participant shall
not be entitled to delivery of the stock certificate until the Forfeiture
Restrictions have expired, (ii) the Company shall retain custody of the stock
until the Forfeiture Restrictions have expired, (iii) the Participant may not
sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the stock
until the Forfeiture Restrictions have expired, and (iv) a breach of the terms
and conditions established by the Committee pursuant to the Restricted Stock
Agreement shall cause a forfeiture of the Restricted Stock Award. At the time of
such Award, the Committee may, in its sole discretion, prescribe additional
terms, conditions or restrictions relating to Restricted Stock Awards,
including, but not limited to, rules pertaining to the termination of employment
or service as a Consultant or Director (by retirement, disability, death or
otherwise) of a Participant prior to expiration of the Forfeitures Restrictions.
Such additional terms, conditions or restrictions shall be set forth in a
Restricted Stock Agreement made in conjunction with the Award.
 
 
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  Payment for Restricted Stock. The Committee shall determine the amount and
form of any payment for Common Stock received pursuant to a Restricted Stock
Award, provided that in the absence of such a determination, a Participant shall
not be required to make any payment for Common Stock received pursuant to a
Restricted Stock Award, except to the extent otherwise required by law.
 
  Committee’s Discretion to Accelerate Vesting of Restricted Stock Awards. The
Committee may, in its discretion and as of a date determined by the Committee,
fully vest any or all Common Stock awarded to a Participant pursuant to a
Restricted Stock Award and, upon such vesting, all restrictions applicable to
such Restricted Stock Award shall terminate as of such date. Any action by the
Committee pursuant to this Subparagraph may vary among individual Participants
and may vary among the Restricted Stock Awards held by any individual
Participant.
 
  Restricted Stock Agreements. At the time any Award is made under this
Paragraph VIII, the Company and the Participant shall enter into a Restricted
Stock Agreement setting forth each of the matters contemplated hereby and such
other matters as the Committee may determine to be appropriate. The terms and
provisions of the respective Restricted Stock Agreements need not be identical.
Subject to the consent of the Participant, the Committee may, in its sole
discretion, amend an outstanding Restricted Stock Agreement from time to time in
any manner that is not inconsistent with the provisions of the Plan.
 
RECAPITALIZATION OR REORGANIZATION
 
  No Effect on Right or Power. The existence of the Plan and the Awards granted
hereunder shall not affect in any way the right or power of the Board or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s or any
Affiliate’s capital structure or its business, any merger or consolidation of
the Company or any Affiliate, any issue of debt or equity securities ahead of or
affecting Common Stock or the rights thereof, the dissolution or liquidation of
the Company or any Affiliate or any sale, lease, exchange or other disposition
of all or any part of its assets or business or any other corporate act or
proceeding.
 
  Subdivision or Consolidation of Shares; Stock Dividends. The shares with
respect to which Options may be granted are shares of Common Stock as presently
constituted, but if, and whenever, prior to the expiration of an Option
theretofore granted, the Company shall effect a subdivision or consolidation of
shares of Common Stock or the payment of a stock dividend on Common Stock
without receipt of consideration by the Company, the number of shares of Common
Stock with respect to which such Option may thereafter be exercised (i) in the
event of an increase in the number of outstanding shares shall be
proportionately increased, and the purchase price per share shall be
proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares shall be proportionately reduced, and the purchase price per
share shall be proportionately increased. Any fractional share resulting from
such adjustment shall be rounded up to the next whole share.
 
 
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  Recapitalizations and Corporate Changes. If the Company recapitalizes,
reclassifies its capital stock, or otherwise changes its capital structure (a
“recapitalization”), the number and class of shares of Common Stock covered by
an Option theretofore granted shall be adjusted so that such Option shall
thereafter cover the number and class of shares of stock and securities to which
the Participant would have been entitled pursuant to the terms of the
recapitalization if, immediately prior to the recapitalization, the Participant
had been the holder of record of the number of shares of Common Stock then
covered by such Option. If (i) the Company shall not be the surviving entity in
any merger or consolidation (or survives only as a subsidiary of an entity),
(ii) the Company sells, leases or exchanges or agrees to sell, lease or exchange
all or substantially all of its assets to any other person or entity, (iii) the
Company is to be dissolved and liquidated, (iv) any person or entity, including
a “group” as contemplated by Section 13(d)(3) of the Securities Exchange Act of
1934, as amended, acquires or gains ownership or control (including, without
limitation, power to vote) of more than 50% of the outstanding shares of the
Company’s voting stock (based upon voting power), or (v) as a result of or in
connection with a contested election of Directors, the persons who were
Directors of the Company before such election shall cease to constitute a
majority of the Board (each such event is referred to herein as a “Corporate
Change”), no later than (x) 10 days after the approval by the stockholders of
the Company of such merger, consolidation, reorganization, sale, lease or
exchange of assets or dissolution or such election of Directors or (y) 30 days
after a Corporate Change of the type described in clause (iv), the Committee,
acting in its sole discretion without the consent or approval of any
Participant, shall effect one or more of the following alternatives, which
alternatives may vary among individual Participants and which may vary among
Options held by any individual Participant: (1) accelerate the time at which
Options then outstanding may be exercised so that such Options may be exercised
in full for a limited period of time on or before a specified date (before or
after such Corporate Change) fixed by the Committee, after which specified date
all unexercised Options and all rights of Participants thereunder shall
terminate, (2) require the mandatory surrender to the Company by selected
Participants of some or all of the outstanding Options held by such Participants
(irrespective of whether such Options are then exercisable under the provisions
of the Plan) as of a date, before or after such Corporate Change, specified by
the Committee, in which event the Committee shall thereupon cancel such Options
and cause the Company to pay to each Participant an amount of cash per share
equal to the excess, if any, of the amount calculated in Subparagraph (d) below
(the “Change of Control Value”) of the shares subject to such Option over the
exercise price(s) under such Options for such shares, or (3) make such
adjustments to Options then outstanding as the Committee deems appropriate to
reflect such Corporate Change (provided, however, that the Committee may
determine in its sole discretion that no adjustment is necessary to Options then
outstanding), including, without limitation, adjusting an Option to provide that
the number and class of shares of Common Stock covered by such Option shall be
adjusted so that such Option shall thereafter cover securities of the surviving
or acquiring corporation or other property (including, without limitation, cash)
as determined by the Committee in its sole discretion.
 
 
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  Change of Control Value. For the purposes of clause (2) in Subparagraph (c)
above, the “Change of Control Value” shall equal the amount determined in clause
(i), (ii) or (iii), whichever is applicable, as follows: (i) the per share price
offered to stockholders of the Company in any such merger, consolidation, sale
of assets or dissolution transaction, (ii) the per share price offered to
stockholders of the Company in any tender offer or exchange offer whereby a
Corporate Change takes place, or (iii) if such Corporate Change occurs other
than pursuant to a tender or exchange offer, the fair market value per share of
the shares into which such Options being surrendered are exercisable, as
determined by the Committee as of the date determined by the Committee to be the
date of cancellation and surrender of such Options. In the event that the
consideration offered to stockholders of the Company in any transaction
described in this Subparagraph (d) or Subparagraph (c) above consists of
anything other than cash, the Committee shall determine the fair cash equivalent
of the portion of the consideration offered which is other than cash.
 
  Other Changes in the Common Stock. In the event of changes in the outstanding
Common Stock by reason of recapitalizations, reorganizations, mergers,
consolidations, combinations, split-ups, split-offs, spin-offs, exchanges or
other relevant changes in capitalization or distributions to the holders of
Common Stock occurring after the date of the grant of any Award and not
otherwise provided for by this Paragraph IX, such Award and any agreement
evidencing such Award shall be subject to adjustment by the Committee at its
discretion as to the number and price of shares of Common Stock or other
consideration subject to such Award. In the event of any such change in the
outstanding Common Stock or distribution to the holders of Common Stock, or upon
the occurrence of any other event described in this Paragraph IX, the aggregate
number of shares available under the Plan shall be appropriately adjusted to the
extent, if any, determined by the Committee, whose determination shall be
conclusive.
 
  Stockholder Action. Any adjustment provided for in the above Subparagraphs
shall be subject to any required stockholder action.
 
  No Adjustments unless Otherwise Provided. Except as hereinbefore expressly
provided, the issuance by the Company of shares of stock of any class or
securities convertible into shares of stock of any class, for cash, property,
labor or services, upon direct sale, upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, and in any case whether or not
for fair value, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number of shares of Common Stock subject to Awards
theretofore granted or the purchase price per share, if applicable.
 
AMENDMENT AND TERMINATION OF THE PLAN
 
The Board in its discretion may terminate the Plan at any time with respect to
any shares of Common Stock for which Awards have not theretofore been granted.
The Board shall have the right to alter or amend the Plan or any part thereof
from time to time; provided that no change in the Plan may be made that would
impair the rights of a Participant with respect to an Award theretofore granted
without the consent of the Participant, and provided, further, that the Board
may not, without approval of the stockholders of the Company, amend the Plan to
(a) increase the maximum aggregate number of shares that may be issued under the
Plan or (b) change the class of individuals eligible to receive Awards under the
Plan.
 
 
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MISCELLANEOUS
 
  No Right To An Award. Neither the adoption of the Plan nor any action of the
Board or of the Committee shall be deemed to give an employee, Consultant, or
Director any right to be granted an Option, a right to a Restricted Stock Award,
or any other rights hereunder except as may be evidenced by an Option Agreement
or a Restricted Stock Agreement duly executed on behalf of the Company, and then
only to the extent and on the terms and conditions expressly set forth therein.
The Plan shall be unfunded. The Company shall not be required to establish any
special or separate fund or to make any other segregation of funds or assets to
assure the performance of its obligations under any Award.
 
  No Employment/Membership Rights Conferred. Nothing contained in the Plan shall
(i) confer upon any employee or Consultant any right with respect to
continuation of employment or of a consulting or advisory relationship with the
Company or any Affiliate or (ii) interfere in any way with the right of the
Company or any Affiliate to terminate his or her employment or consulting or
advisory relationship at any time. Nothing contained in the Plan shall confer
upon any Director any right with respect to continuation of membership on the
Board.
 
  Other Laws; Withholding. The Company shall not be obligated to issue any
Common Stock pursuant to any Award granted under the Plan at any time when the
shares covered by such Award have not been registered under the Securities Act
of 1933, as amended, and such other state and federal laws, rules and
regulations as the Company or the Committee deems applicable and, in the opinion
of legal counsel for the Company, there is no exemption from the registration
requirements of such laws, rules and regulations available for the issuance and
sale of such shares. No fractional shares of Common Stock shall be delivered,
nor shall any cash in lieu of fractional shares be paid. The Company shall have
the right to deduct in connection with all Awards any taxes required by law to
be withheld and to require any payments required to enable it to satisfy its
withholding obligations.
 
  No Restriction on Corporate Action. Nothing contained in the Plan shall be
construed to prevent the Company or any Affiliate from taking any action which
is deemed by the Company or such Affiliate to be appropriate or in its best
interest, whether or not such action would have an adverse effect on the Plan or
any Award made under the Plan. No Participant, beneficiary or other person shall
have any claim against the Company or any Affiliate as a result of any such
action.
 
  Restrictions on Transfer. An Award (other than an Incentive Stock Option,
which shall be subject to the transfer restrictions set forth in Paragraph
VII(c) shall be transferable freely transferable on the date of issuance.
 
  Governing Law. The Plan shall be governed by, and construed in accordance
with, the laws of the State of Nevada, without regard to conflicts of law
principles thereof.
 
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