JAMMIN JAVA CORP.
 
EQUITY COMPENSATION PLAN
 
1.           Purposes.  The purposes of the Jammin Java, Corp. Equity
Compensation Plan are to attract and retain the best available Employees,
Directors, and Contractors, and to promote the success of the Company and
Related Entities.
 
2.           Definitions.  The following terms have the following definitions:
 
(a)           “Administrator” means the Board and each Committee.
 
(b)           “Applicable Laws” means the requirements for equity compensation
plans and awards under federal securities laws, the Code, applicable state
corporate and securities laws, the rules of any applicable stock exchange or
national market system, and the rules of any foreign jurisdiction applicable to
Awards.
 
(c)           “Award” means the determination to make one or more grants under
the Plan of Options, SARs, or Restricted Stock.
 
(d)           “Award Agreement” means the written agreement for the grant of an
Award executed by the Company, any Parent or Related Entity to which the Grantee
primarily provides services on the date of grant, and the Grantee, and any
amendments thereto.
 
(e)           “Board” means the Company’s board of directors.
 
(f)           “Cause” means a Separation From Service by the Company and all
Parents and Related Entities for cause as defined in a then-effective written
agreement between the Company, a Parent or Related Entity, and the Grantee, or a
then-effective written policy of the Company, a Parent, or a Related Entity
binding on the Grantee, and in the absence of such agreement or policy and
definition, results from any one or more of the following as the Administrator
determines in its exclusive discretion:
 
(i)           the entry of a final judgment of conviction of the Grantee by a
trial court for a felony regardless of whether the Grantee appeals the judgment,
or entry of a plea of nolo contendere by the Grantee to a felony;
 
(ii)          the issuance of a final award, judgment, or order by an
administrative agency, a single arbitrator or panel of arbitrators, governmental
body, governmentally-owned corporation, self-regulatory organization, or trial
court that prohibits or prevents the Grantee from performing any material
obligation to the Company, a Parent, or a Related Entity for more than six (6)
months regardless of whether the Grantee appeals the award, judgment, or order;
 
(iii)         the Grantee’s intentional violation of any law that causes or
threatens to cause a material loss to any business of the Company, a Parent, or
a Related Entity; provided, however, that the foregoing provision does not apply
to a violation subject only to a monetary fine of five thousand ($5,000) dollars
or less;

 
 

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(iv)         the Grantee’s violation of any law governing any business of the
Company, a Parent, or a Related Entity; provided, however, that the foregoing
provision does not apply if the Grantee acted (A) in accordance with the written
direction or policy of the Board, or the board of directors or other governing
body of the Parent or Related Entity to which the Grantee primarily provides
services; or (B) in reliance on the written advice of counsel to the Company, a
Parent, or a Related Entity requested by the Board, or the board of directors or
other governing body of the Parent or Related Entity to which the Grantee
primarily provides services;
 
(v)         the Grantee’s arrest or indictment for a felony, which arrest or
indictment results in substantial adverse publicity to the Company, a Parent, or
a Related Entity;
 
(vi)         the Grantee’s failure to obtain and maintain the professional
qualifications necessary for the Grantee’s position, including without
limitation the licenses and registration required by administrative agencies,
governmental bodies, and self-regulatory organizations, which failure the
Grantee does not cure within thirty (30) days after the Grantee’s receipt of
written notice from the Board or the board of directors or other governing body
of the Parent or Related Entity to which the Grantee primarily provides
services.  The written notice shall specify the failure and request the Grantee
to cure it;
 
(vii)        the Grantee’s failure, other than by reason of Disability, to
perform satisfactorily on a regular basis any material duty as an Employee,
Director, or Contractor;
 
(viii)       the Grantee’s failure, other than by reason of Disability, to carry
out the reasonable and achievable business directions of the Board or the board
of directors or other governing body of the Parent or Related Entity to which
the Grantee primarily provides services, or any Officer who customarily gives
business directions to the Grantee, which failure the Grantee does not cure
within thirty (30) days after the Grantee’s receipt of written notice from the
person or entity that gave the directions.  The written notice is to specify the
failure and request the Grantee to cure it;
 
(ix)          (A) any act or failure to act by the Grantee that the Grantee
intends to cause or threaten to cause a material loss to any business of the
Company, a Parent, or a Related Entity; (B) any act or failure to act by the
Grantee that constitutes gross negligence and causes or threatens to cause a
material loss to any business of the Company, a Parent, or a Related Entity; or
(C) multiple acts or failures to act by the Grantee that constitute negligence
and cause or threaten to cause a material loss to any business of the Company, a
Parent, or a Related Entity;
 
(x)           the Grantee’s appropriation of any business opportunity of the
Company, a Parent, or a Related Entity for the Grantee’s personal benefit, the
personal benefit of a member of the Grantee’s Immediate Family, or the benefit
of any entity in which the Grantee or a member of the Grantee’s Immediate Family
owns an equity interest possessing at least five (5%) percent of total combined
voting power of all equity interests entitled to vote, or at least five (5%)
percent of the total value of all classes of equity (a “Family Entity”).  In
determining ownership, the rules of Treasury Regulation Sections 1.414(c)-3 and
1.414(c)-4 shall apply;

 
 

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(xi)         the Grantee’s intentional interference with any business of the
Company, a Parent, or a Related Entity that causes or threatens to cause a
material loss to that business;
 
(xii)         the Grantee’s falsification of any information given to a Director
or Officer or a director or officer of a Parent;
 
(xiii)       any act by the Grantee directed against the Company, a Parent, or a
Related Entity of bribery, embezzlement, fraud, misappropriation of assets, or
receipt of kickbacks; or
 
(xiv)       the Grantee’s disparagement of the Company, a Parent, Related
Entity, Director, Officer, or a director or officer of a Parent.
 
During the thirty (30) day cure periods of subparagraphs (v) and (viii), the
Grantee shall not vest in or exercise Options or SARs, vest in Restricted Stock
Awards, or purchase Shares.
 
(g)          “Change in Control” means a change in ownership or control effected
through any one or more of the following:
 
(i)           any one person or entity, or more than one person or entity acting
as a group, acquires ownership of stock of a corporation that, together with
stock previously held by the acquiror, constitutes more than fifty (50%) percent
of the total fair market value or total voting power of the corporation’s
stock.  If any one person or entity, or more than one person or entity acting as
a group, is considered to own more than fifty (50%) percent of the total fair
market value or total voting power of the corporation’s stock, the acquisition
of additional stock by the same person or entity or persons or entities acting
as a group does not cause a change in ownership.  An increase in the percentage
of stock owned by any one person or entity, or persons or entities acting as a
group, as a result of a transaction in which the corporation acquires its own
stock in exchange for property, is treated as an acquisition of stock;
 
(ii)          any one person or entity, or more than one person or entity acting
as a group, acquires (or has acquired during the twelve (12) month period ending
on the date of the most recent acquisition by that person or entity or persons
or entities acting as a group) ownership of a corporation’s stock possessing at
least thirty (30%) percent of the total voting power of the stock;
 
(iii)         a majority of the members of the corporation’s board of directors
is replaced during a twelve (12) month period by directors whose appointment or
election is not endorsed by a majority of the members of the board of directors
prior to the date of appointment or election; or
 
(iv)         any one person or entity, or more than one person or entity acting
as a group, acquires (or has acquired during the twelve (12) month period ending
on the date of the most recent acquisition by that person or entity or persons
or entities acting as a group) assets from a corporation that have a total gross
fair market value equal to at least forty (40%) percent of the total gross fair
market value of all the corporation’s assets immediately prior to the
acquisition or acquisitions.  Gross fair market value means the value of the
corporation’s assets, or the value of the assets being disposed of, without
regard to any liabilities associated with these assets.

 
 

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In determining whether a Change in Control has occurred, the attribution rules
of Code Section 318 apply to determine stock ownership.  The stock underlying a
vested option is treated as owned by the individual who holds the vested option,
and the stock underlying an unvested option is not treated as owned by the
individual who holds the unvested option.  In addition, similar rules apply for
determining whether a Change in Control of a noncorporate entity has occurred.
 
(h)           “Code” means the Internal Revenue Code of 1986, as amended, the
final and temporary regulations promulgated thereunder, and all authorities that
constitute substantial authority under Code Section 6662.
 
(i)           “Committee” means each Committee appointed by the Board under
Section 4(a).
 
(j)           “Common Stock” means the Company’s common stock.
 
(k)           “Company” means Jammin Java, Corp., a corporation formed under the
laws of the State of Nevada.
 
(l)           “Contractor” means any person or entity, other than an Employee or
Director, who is engaged by the Company or a Related Entity to perform services
as an independent contractor.
 
(m)           “Director” means a member of the Board or the board of directors
or other governing body of a Related Entity.
 
(n)           “Disability” means that a Grantee is (i) unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or last for a
continuous period of at least twelve (12) months; or (ii) by reason of any
medically determinable physical or mental impairment that can be expected to
result in death or last for a continuous period of at least twelve (12) months,
receiving income replacement benefits for at least three (3) months under an
accident and health plan covering the Company’s, a Parent’s, or a Related
Entity’s Employees.
 
(o)           “Employee” means any person, including a Director or Officer, who
is a common law employee of the Company or a Related Entity.  For Incentive
Stock Options, Employee means any person, including a Director or Officer, who
is a common law employee of the Company, a Parent, or a Subsidiary.  The payment
of a director’s fee does not result in employment.
 
(p)           “Exchange Act” means the Securities Exchange Act of 1934, as
amended.
 
(q)           “Fair Market Value” means, as of any date, the fair market value
of a Share determined as follows:

 
 

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(i)           When there is a public market for the Shares, the Fair Market
Value shall be determined by (A) the closing price for a Share on the market
trading day on the date of determination (and if a closing price was not
reported on that date, then the arithmetic mean of the closing bid and asked
prices at the close of the market on that date, and if these prices were not
reported on that date, then the closing price on the last trading date on which
a closing price was reported) on the stock exchange or national market system
that is the primary market for the Shares; and (B) if the Shares are not traded
on such stock exchange or national market system, the arithmetic mean of the
closing bid and asked prices for a Share on the Nasdaq Small Cap Market for the
day prior to the date of the determination (and if these prices were not
reported on that date, then on the last date on which these prices were
reported), in each case as reported in The Wall Street Journal or such other
source that the Administrator considers reliable in its exclusive discretion; or
 
(ii)           If the Administrator, in its exclusive discretion, determines
that the foregoing methods do not apply or produce a reasonable valuation, then
Fair Market Value shall be determined by an independent appraisal that satisfies
the requirements of Code Section 401(a)(28)(C) as of a date within twelve (12)
months before the date of the transaction for which the appraisal is used, e.g.,
the date of grant of an Award (the “Appraisal”).  If the Administrator, in its
exclusive discretion, determines that the Appraisal does not reflect information
available after the date of the Appraisal that may materially affect the value
of Shares, then Fair Market Value shall be determined by a new Appraisal.
 
(r)           “Fees for Fees” means the amounts under Section 21(a).
 
(s)           “Good Reason” means a Grantee’s voluntary Separation From Service
when the following requirements are satisfied:
 
(i)           The Separation From Service occurs no later than two (2) years
after initial existence of one or more of the following events that occur
without the Grantee’s consent:
 
(A)           a material diminution in the Grantee’s base compensation;
 
(B)           a material diminution in the Grantee’s authority, duties, or
responsibilities;
 
(C)           a material diminution in the authority, duties, or
responsibilities of the supervisor to whom the Grantee reports, including
without limitation a requirement that the Grantee report to an officer or
employee instead of directly to the board of directors or other governing body;
 
(D)           a material diminution in the budget over which the Grantee has
authority;
 
(E)           a material change in the geographical location at which the
Grantee performs services; or

 
 

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(F)           any other act or failure to act that constitutes a material breach
by the Company, a Parent, or a Related Entity of the employment agreement or
other agreement under which the Grantee provides services; and
 
(ii)           The Grantee gives written notice to the board of directors or
other governing body of the entity to which the Grantee primarily provides
services of the event described in subparagraph (i) within ninety (90) days of
its initial occurrence, and upon receipt of the written notice, the Company,
Parent, or Related Entity has thirty (30) days to cure it.
 
(t)           “Grantee” means an Employee, Director, or Contractor who receives
an Award under an Award Agreement.
 
(u)           “Immediate Family” means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, both by birth and adoption, any person sharing the Grantee’s
household, other than a tenant or employee, a trust in which any one or more of
the foregoing persons own more than fifty (50%) percent of the beneficial
interests, a foundation in which any one or more of the foregoing persons or the
Grantee controls the management of assets, and any other entity in which any one
or more of the foregoing persons and the Grantee owns more than fifty (50%)
percent of the total voting power.
 
(v)           “Incentive Stock Option” means an Option intended to qualify and
that the Administrator designates on the date of grant as an incentive stock
option under Code Section 422.
 
(w)           “Nonqualified Stock Option” means an Option not intended to
qualify on the date of grant as an Incentive Stock Option, or an Incentive Stock
Option that does not satisfy the requirements of Code Section 422 after the date
of grant.
 
(x)           “Officer” means a person who is an officer of the Company or a
Related Entity under Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
 
(y)           “Option” means an Incentive Stock Option or Nonqualified Stock
Option to purchase a specified number of Shares under an Award Agreement.
 
(z)           “Parent” means any corporation, other than the Company, in an
unbroken chain of corporations ending with the Company, if on the date of grant
of an Award each corporation, other than the Company, owns stock possessing at
least fifty (50%) percent of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
 
(aa)         “Plan” means the Jammin Java Corp. Equity Compensation Plan as it
may be amended.

 
 

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(bb)         “Related Entity” means the corporation or other entity, other than
the Company, to which the Grantee primarily provides services on the date of
grant of an Award, and any corporation or other entity, other than the Company,
in an unbroken chain of corporations or other entities beginning with the
Company in which each corporation or other entity has a controlling interest in
another corporation or other entity in the chain, and ending with the
corporation or other entity that has a controlling interest in the corporation
or other entity to which the Grantee primarily provides services on the date of
grant of an Award.  For a corporation, a controlling interest means ownership of
stock possessing at least fifty (50%) percent of total combined voting power of
all classes of stock, or at least fifty (50%) percent of the total value of all
classes of stock.  For a partnership or limited liability company, a controlling
interest means ownership of at least fifty (50%) percent of the profits interest
or capital interest of the entity.  In determining ownership, the rules of
Treasury Regulation Sections 1.414(c)-3 and 1.414(c)-4 shall apply.
 
(cc)          “Related Parent” means any corporation or other entity in an
unbroken chain of corporations or other entities in which the Company is a
member and in which each corporation or other entity owns more than fifty (50%)
percent of the total fair market value and total voting power in one of the
other corporations or entities in the chain.
 
(dd)         “Restricted Stock” means a specified number of Shares issued to a
Grantee for a specified purchase price, if any, and subject to the transfer
restrictions, repurchase obligations, rights of first refusal, vesting
schedules, performance goals for vesting, and other provisions as the
Administrator determines in its exclusive discretion.
 
(ee)         “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act.
 
(ff)           “SAR” means a stock appreciation right entitling the Grantee to
Shares or cash, as provided in the Award Agreement, measured by the increase in
the Fair Market Value of a specified number of Shares from the date of grant
until the date of exercise.
 
(gg)         “Section 424 Corporate Transaction” means the occurrence, in a
single transaction or a series of related transactions, of any one or more of
the following: (i) a sale or other disposition of all or substantially all of
the assets of the Company and its Subsidiaries; (ii) a sale or other disposition
of more than fifty (50%) percent of the outstanding stock of the Company; (iii)
the consummation of a merger, consolidation, or similar transaction after which
the Company is not the surviving corporation; (iv) the consummation of a merger,
consolidation, or similar transaction after which the Company is the surviving
corporation but the shares outstanding immediately preceding the merger,
consolidation, or similar transaction are converted or exchanged by reason of
the transaction into other stock, property, or cash; or (v) a distribution by
the Company (excluding an ordinary dividend or a stock split or stock dividend
described in Treasury Regulation Section 1.424-1(e)(4)(v)).
 
(hh)         “Securities Act” means the Securities Act of 1933, as amended.
 
(ii)           “Separation From Service” means a Grantee separates from service
as an Employee, Director, and Contractor to the Company and all Parents and
Related Entities when the Grantee dies, retires, or has a termination of service
in accordance with the following provisions:

 
 

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(i)           The employment relationship is treated as continuing intact while
the Grantee is on military leave, sick leave, or other bona fide leave of
absence, as long as the period of leave does not exceed six (6) months or, if
longer, as long as the Grantee’s right to reemployment with the Company, a
Parent, or a Related Entity is provided by statute or contract.  A leave of
absence is bona fide only if there is a reasonable expectation that the Grantee
will return to perform services for the Company, Parent, or Related Entity.  If
the period of leave exceeds six (6) months and the Grantee’s right to
reemployment is not provided by statute or contract, the employment relationship
is deemed to terminate on the first day immediately following the six (6) month
period;
 
(ii)          A Director or Contractor has a Separation From Service upon the
expiration of the contract, and if there is more than one contract, all
contracts, under which the Director or Contractor performs services as long as
the expiration is a good faith and complete termination of the contractual
relationship; and
 
(iii)         If a Grantee performs services in more than one capacity, the
Grantee must Separate From Service in all capacities as an Employee, Director,
and Contractor.  Notwithstanding the foregoing, if a Grantee provides services
both as an Employee and a Director, the services provided as a Director are not
taken into account in determining whether the Grantee has a Separation From
Service as an Employee under a nonqualified deferred compensation plan in which
the Grantee participates as an Employee and that is not aggregated under Code
Section 409A with any plan in which the Grantee participates as a Director.  In
addition, if a Grantee provides services both as an Employee and a Director, the
services provided as an Employee are not taken into account in determining
whether the Grantee has a Separation From Service as a Director under a
nonqualified deferred compensation plan in which the Grantee participates as a
Director and that is not aggregated under Code Section 409A with any plan in
which the Grantee participates as an Employee.
 
(jj)           “Share” means a share of Common Stock.
 
(kk)          “Subsidiary” means any corporation, other than the Company, in an
unbroken chain of corporations beginning with the Company, if on the date of
grant of an Award each of the corporations, other than the last corporation in
the chain, owns stock possessing at least fifty (50%) percent of the total
combined voting power of all classes of stock in one of the other corporations
in the chain.
 
(ll)           “Taxes” means all federal, state, local, and foreign employment,
excise, income, and payroll taxes.
 
3.           Stock Subject to the Plan.
 
(a)           Subject to Section 10, (i) the maximum aggregate number of Shares
that may be issued under all Awards is 20,000,000 Shares; and (ii) the maximum
aggregate number of Shares that may be issued under Incentive Stock Options is
20,000,000 Shares.  The Shares may be authorized but unissued, or reacquired
Shares.  The Company shall reserve and keep available the number of Shares
necessary to satisfy the Plan’s requirements.
 
(b)           Shares subject to an Award or a portion thereof that expires or is
forfeited, cancelled, or settled in cash (including without limitation Shares
repurchased by the Company at the original issuance price under a contractual
repurchase right) reduce the maximum aggregate number of Shares that the Company
may issue under the Plan.  Shares that are issued under an Award are unavailable
for future issuance, except that if unvested Shares are forfeited, these Shares
are so available.

 
 

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4.           Plan Administration.
 
(a)           Administrator.
 
(i)           Administration for Directors and Officers.  For Awards to
Employees who are also Directors or Officers, and for Awards to Directors, the
Plan shall be administered by (A) the Board; or (B) a committee appointed by the
Board consisting of two or more members of the Board, each of whom shall be a
nonemployee director under Rule 16b-3 and an outside director under Code Section
162(m)(4) (the “Committee”).  Once appointed, the Committee and any member
thereof shall continue to serve until the Board, in its exclusive discretion,
determines otherwise.
 
(ii)          Administration for Contractors and Other Employees.  For Awards to
Contractors or Employees who are neither Directors nor Officers, the Plan is to
be administered by (A) the Board; or (B) a committee appointed by the Board (the
“Committee”).  Once appointed, the Committee and any member thereof shall
continue to serve until the Board, in its exclusive discretion, determines
otherwise.  The Board may delegate to one or more Officers the authority to
grant Awards to Contractors or Employees who are neither Directors nor Officers,
and may limit this authority as the Board, in its exclusive discretion,
determines appropriate; provided, however, that the Board resolutions for this
delegation shall specify the number of Shares subject to the Awards that the
Officer may grant, and shall prohibit the Officer from granting Awards to
himself or herself, a member of his or her Immediate Family, and a Family
Entity.
 
(iii)         Committee Decisions.  A majority of the Committee’s members in
attendance at a meeting at which a quorum is present shall make the Committee’s
decisions.  Any decision reduced to writing and signed by all Committee members
is as effective as if it had been made at a duly held meeting.
 
(b)           Administrator’s Authority and Discretion.  Subject to Applicable
Laws and the Plan’s provisions, and except as otherwise determined by the Board,
the Administrator shall have the exclusive authority and discretion:
 
(i)           to select the Employees, Directors, and Contractors to whom Awards
may be granted;
 
(ii)          to determine whether and the extent to which Awards are granted;
 
(iii)         to determine the number of Shares covered by each Award;
 
(iv)         to approve forms of Award Agreements;
 
(v)           to determine the provisions of any Award and Award Agreement;

 
 

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(vi)         to amend the provisions of any outstanding Award or Award
Agreement; provided, however, that any amendment that would adversely affect a
Grantee’s rights under an outstanding Award Agreement may be made only with the
Grantee’s written consent.  Notwithstanding the foregoing provisions, the Board
may, without a Grantee’s written consent, amend the provisions of an outstanding
Award Agreement to maintain the qualified status of an Incentive Stock Option,
and to bring an Award Agreement into compliance with, or obtain an exemption
from, the requirements of Code Section 409A;
 
(vii)        to construe and interpret the provisions of the Plan, Awards, and
Award Agreements;
 
(viii)       to make all factual and legal determinations under the Plan,
Awards, and Award Agreements;
 
(ix)          to add provisions to an Award or Award Agreement to accommodate
the laws of foreign jurisdictions and provide Grantees with favorable treatment
under these laws; provided, however, that the Administrator shall not add
provisions inconsistent with the Plan; and
 
(x)           to take all other actions consistent with Applicable Laws and the
Plan’s provisions as the Administrator determines appropriate.
 
5.           Eligibility.  The Administrator may grant Awards to Employees,
Directors, and Contractors; provided, however, that the Administrator may grant
Incentive Stock Options only to Employees of the Company, a Parent, or a
Subsidiary.  In addition, the board of directors or other governing body of a
Parent or Related Entity to which the Employee, Director, or Contractor
primarily provides services on the date of grant must have adopted the Plan and
approved the Award on or prior to the date of grant.  An Employee, Director, or
Contractor who has been granted an Award or an award under another plan may be
granted additional Awards.
 
6.           Characteristics of Awards.
 
(a)           Designation.  The Administrator shall set forth the provisions of
each Award in an Award Agreement.  The Administrator shall designate each Option
as an Incentive Stock Option or a Nonqualified Stock Option.  To the extent that
the aggregate Fair Market Value of Shares subject to Incentive Stock Options
that become exercisable by a Grantee for the first time during any calendar year
under all plans of the Company, any Parent, and any Subsidiary exceeds $100,000,
these Options, to the extent of the Shares in excess of this amount, shall be
Nonqualified Stock Options.  The Administrator shall take Incentive Stock
Options into account in the order granted, and shall determine the Fair Market
Value of the Shares as of each Option’s date of grant.

 
 

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(b)           Provisions.
 
(i)           Subject to Applicable Laws and the Plan’s provisions, the
Administrator shall determine in its exclusive discretion the provisions of each
Award, including without limitation any transfer restrictions, repurchase
obligations, rights of first refusal, the method of payment of the exercise or
purchase price, vesting schedules, and performance goals for vesting. 
Performance goals may be based on one or more of an increase in the Fair Market
Value of Shares, earnings per Share, total shareholder return, return on equity,
return on assets, return on investment, net operating income, cash flow,
revenue, personal management objectives, and other performance measures as
determined by the Administrator in its exclusive discretion.  As provided in an
Award Agreement, partial achievement of performance goals results in payment or
vesting corresponding to the degree of achievement.
 
(ii)          The Administrator shall not grant any Options that contain any
provision entitling the Grantee to the automatic grant of additional Options on
exercise of the original Option.
 
(c)           Repurchase of Shares.  For any Award that contains a repurchase
obligation for Shares, other than a right of first refusal, or a put or call
right that is not a lapse restriction under Treasury Regulation Section
1.83-3(i), the purchase price is the Fair Market Value of the Shares on the date
of repurchase (disregarding lapse restrictions under Treasury Regulation Section
1.83-3(i)).
 
(d)           Acceleration of Exercise and Vesting Dates.  The Board may
accelerate in its exclusive discretion the exercise date of a portion of or an
entire Option or SAR, and the vesting date of a portion of or an entire
Restricted Stock Award.
 
(e)           Term.  The term of each Award is the term provided in the Award
Agreement; provided, however, that the term of an Incentive Stock Option is not
to exceed ten (10) years from the date of grant.  For an Incentive Stock Option
granted to a Grantee who on the date of the grant owns stock possessing more
than ten (10%) percent of the voting power of all classes of stock of the
Company, a Parent, or a Subsidiary, the term is five (5) years from the date of
grant or any shorter term as provided in the Award Agreement.
 
(f)           Transferability.  Incentive Stock Options are not to be assigned,
encumbered, pledged, sold, transferred, or otherwise disposed of other than by
will or the laws of descent and distribution; provided, however, that a Grantee
may designate a beneficiary on the Grantee’s death on a form provided by the
Administrator.  Incentive Stock Options are to be exercised during the Grantee’s
lifetime only by the Grantee.  Awards other than Incentive Stock Options are not
to be assigned, encumbered, pledged, sold, transferred, or otherwise disposed
of; provided, however, that an Award Agreement may provide that the Grantee may
transfer these Awards by gift or domestic relations order to members of the
Grantee’s Immediate Family.
 
(g)           Restricted Stock.  Upon an Award of Restricted Stock, the Company
shall issue in the Grantee’s name and deliver to the Grantee a certificate for
the Restricted Stock.  The Shares represented by the certificate are subject to
the restrictions in the Award Agreement.  Once the Restricted Stock Award vests,
the Company shall issue a new certificate for the Shares without these
restrictions, and the Grantee shall tender to the Company for cancellation the
certificate for the Shares subject to these restrictions.

 
 

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(h)           Code Section 162(m).  To protect against the Company’s or a
Related Entity’s loss of deductibility under Code Section 162(m), the
Administrator may make Restricted Stock Awards subject to the achievement of one
or more preestablished performance goals for corporate, division, group,
subsidiary, or unit performance, including without limitation increases in gross
revenue, earnings per Share, and ratios of earnings to equity or assets.  The
Administrator in its exclusive discretion may change these goals to reduce or
eliminate, but not to increase, a Restricted Stock Award.
 
7.           Exercise or Purchase Price, Payment, and Withholding.
 
(a)          Exercise or Purchase Price. The exercise or purchase price for an
Award shall be as follows:
 
(i)           For an Incentive Stock Option:
 
(A)           granted to an Employee who on the date of grant owns stock
possessing more than ten (10%) percent of the voting power of all classes of
stock of the Company, any Parent, or any Subsidiary, the per Share exercise
price shall not be less than one hundred and ten (110%) percent of the Fair
Market Value per Share on the date of grant; and
 
(B)           granted to an Employee other than an Employee described in
subparagraph (A), the per Share exercise price shall not be less than one
hundred (100%) percent of the Fair Market Value per Share on the date of grant.
 
(ii)          For a Nonqualified Stock Option, the per Share exercise price
shall not be less than one hundred (100%) percent of the Fair Market Value per
Share on the date of grant.
 
(iii)         For Restricted Stock, the per Share purchase price, if any, shall
be the price set forth in the Award Agreement.
 
(b)          Payment.  Subject to Applicable Laws and the Plan’s provisions, the
Administrator shall, in its exclusive discretion, determine the method of
payment for the Shares to be issued on the exercise of an Option, and the grant
or vesting of a Restricted Stock Award.  For Incentive Stock Options, the
Administrator shall make this determination on the date of grant.  The
Administrator may, in its exclusive discretion, accept as payment any one or
more of the following:
 
(i)           wire transfer;
 
(ii)          bank cashier’s check, certified check, or postal money order;
 
(iii)         when the Shares are registered under the Exchange Act, the
Grantee’s surrender of previously held Shares, or the Company’s retention of
Shares otherwise to be delivered on exercise of an Option or the grant or
vesting of a Restricted Stock Award.  If the Grantee acquired the previously
held Shares directly from the Company, the Grantee must have held the Shares for
at least six (6) months prior to delivery.  The Shares must have a Fair Market
Value on the date of surrender or retention equal to the aggregate exercise or
purchase price of the Shares for which the Option is exercised or the Restricted
Stock is purchased; or

 
 

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(iv)         for Options, payment through a broker-dealer sale and remittance
procedure by which the Grantee (A) provides written instructions to a
Company-designated brokerage firm for the immediate sale of a portion of or all
the purchased Shares and to remit to the Administrator, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price for the purchased Shares and any required Tax withholding; (B)
provides written instructions to the Administrator to deliver the certificate
for the purchased Shares directly to the brokerage firm; and (C) bears the
brokerage and other costs of this procedure.
 
(c)           Withholding.  The Company shall not issue and deliver Shares or
cash until the Grantee makes arrangements acceptable to the Administrator, in
its exclusive discretion, for satisfaction of all Tax withholding obligations,
including without limitation on the exercise of an Option or SAR, the grant or
vesting of a Restricted Stock Award, the making of a Code Section 83(b)
election, and the sale or other disposition of Shares received under an Award. 
In its exclusive discretion the Administrator may allow a Grantee to satisfy Tax
withholding obligations in cash, or in Shares by the Grantee’s surrender of
previously acquired Shares or the Company’s retention of Shares otherwise to be
delivered.  Shares surrendered or retained must not be subject to any
forfeiture, repurchase, unfulfilled vesting, or similar requirements.
 
8.           Exercise of Awards.
 
(a)          Procedure; Rights as a Shareholder.
 
(i)           Upon vesting in an Option or SAR, a Grantee may exercise an Option
or SAR by giving written notice of exercise to the Company, and making full
payment for the exercise price of the Option.  The Company shall issue the
certificate for the Shares promptly on exercise, but until issuance of the
certificate the Grantee shall not have any right to vote or receive dividends,
or any other rights as a shareholder.  In addition, on exercise of an Option or
SAR, the Grantee shall not be entitled to any dividends declared and paid on the
Shares underlying the Option or SAR between the date of grant and the date of
exercise.
 
(ii)           Upon vesting in a Restricted Stock Award, the Company shall
promptly issue the certificate for the vested Shares.  Until issuance of the
certificate a Grantee shall not have any right to vote or receive dividends, or
any other rights as a shareholder.  In addition, on vesting the Grantee shall
not be entitled to any dividends declared and paid on the Shares between the
date of grant and the date of vesting.
 
(b)          Exercise and Termination of Awards After Separation From Service.
 
(i)           Upon a Grantee’s Separation From Service for Cause, all
unexercised Options and SARs, whether unvested or vested, and all unvested
Restricted Stock Awards, shall terminate on the date of Separation From Service.
 
(ii)          Upon a Grantee’s Separation From Service for Good Reason, or
without Cause by the Company and all Parents and Related Entities, or upon
nonrenewal by the Company and all Parents and Related Entities of all the
agreements under which the Grantee provides services, the Grantee shall fully
vest in all Awards, and may exercise an Option or SAR for one (1) year after the
date of Separation From Service.

 
 

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(iii)         Upon a Grantee’s Separation From Service for death or Disability,
the Grantee shall fully vest in all Awards, and may exercise an Option or SAR
for one (1) year after the date of Separation From Service.
 
(iv)         Except as otherwise provided in Section 8(b)(i)-(iii) or in an
Award Agreement, a Grantee may exercise a vested Option or SAR for three (3)
months after the date of Separation From Service.  If exercise is prohibited
during this period solely because the issuance of Shares would violate the
Securities Act’s registration requirements, then a Grantee may exercise the
Option or SAR until the expiration of three (3) months after the date of
Separation From Service during which the issuance of Shares would not violate
the registration requirements.
 
(v)          Except as otherwise provided in Section 8(b)(i)-(iii) or in an
Award Agreement, all unvested Awards shall terminate on the date of Separation
From Service.
 
(vi)         When the Plan, an Award, or an Award Agreement permits a Grantee to
exercise an Award for a specified period after the Grantee’s Separation From
Service, the Award shall terminate on the earlier of the last day of the
specified period, and the last day of the Award’s original term.
 
(vii)        To the extent Incentive Stock Options are not exercised within the
time required by the Code after the Grantee’s termination of employment with the
Company, a Parent, and a Subsidiary, the Incentive Stock Options automatically
convert to Nonqualified Stock Options and thereafter may be exercised for the
period provided in the Plan, Award, and Award Agreement.
 
(c)           Awards of Nonexempt Employees.  A nonexempt Employee under the
Fair Labor Standards Act shall not exercise any Option or SAR or vest in a
Restricted Stock Award until at least six (6) months after the date of grant, or
such shorter or longer period as the Administrator, in its exclusive discretion,
determines, so that the income and gain realized or recognized under an Award is
excluded from the nonexempt Employee’s regular rate of pay.
 
9.           Conditions on Issuance of Shares.
 
(a)           The Company shall not issue Shares on the exercise of an Option or
SAR, or the grant or vesting of a Restricted Stock Award, unless the exercise
and issuance complies with Applicable Laws.  This obligation does not require
the Company, a Parent, or a Related Entity to register under the Securities Act
any Award, Shares, or any stock of the Company, a Related Entity, a Parent, or a
Related Parent.
 
(b)           The Company shall use reasonable efforts to obtain the approval
from any regulatory body that the Company’s counsel delivers a written opinion
addressed to the Board that it is more likely than not to be necessary for the
issuance or sale of Shares.  If, after reasonable efforts the Company does not
obtain this approval, the Company shall not have any liability for failure to
issue or sell Shares.  This obligation does not require the Company, a Parent,
or a Related Entity to register under the Securities Act any Award, Shares, or
any stock of the Company, a Related Entity, a Parent, or a Related Parent.

 
 

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(c)           If the exercise period of an Option or SAR would expire when the
Grantee’s exercise would violate an applicable federal, state, local, or foreign
law, the Company shall extend the exercise period for thirty (30) days after the
first date that the Grantee’s exercise would no longer violate an applicable
federal, state, local, or foreign law.  A provision of foreign law is applicable
only to foreign earned income from sources within the foreign country that
promulgated the law.  Foreign earned income means income as defined under Code
Section 911(b)(1) without regard to Code Section 911(b)(1)(B)(iv) and the
requirement that the income attributable to services performed during the period
described in Code Section 911(d)(1)(A) or (B).
 
(d)           As a condition to the exercise of an Option or SAR, or the grant
or vesting of a Restricted Stock Award, the Board in its exclusive discretion
may require a Grantee to (i) represent and warrant that the Shares are being
acquired only for investment for the Grantee’s account and without any present
intention to sell or distribute the Shares; (ii) represent and warrant that the
Grantee shall not make any short sale of, grant any option for the purchase,
loan, pledge, or otherwise encumber or dispose of Shares; and (iii) indemnify
the Company, all Parents and Related Entities, the Board, the board of directors
or other governing body of each Parent and Related Entity, each Committee, and
each Director, Officer, and Employee acting on behalf of the Board or a
Committee (an “Indemnitee”) for all assessments, claims, costs, damages,
expenses, fines, judgments, liabilities, losses, penalties, and reasonable
accountant’s, actuary’s, and attorney’s and paralegal’s fees and disbursements
arising from or related to the representations and warranties in (i) and (ii). 
The foregoing provisions do not apply if the issuance of Shares has already been
registered under a then-effective registration statement under the Securities
Act.
 
10.         Adjustments on Changes in Capitalization.
 
(a)           For Nonqualified Stock Options and SARs, on a stock split
(including a reverse stock split) or stock dividend in which the only effect is
to increase or decrease on a pro-rata basis the number of Shares subject to the
Nonqualified Stock Option or SAR, the Administrator may, in its exclusive
discretion, proportionally adjust the exercise price and numbers of Shares
subject to the Nonqualified Stock Option or SAR.
 
(b)           For Incentive Stock Options and Restricted Stock Awards, if any
combination, consolidation, forward or reverse split, merger, reorganization,
repurchase, spin-off, or exchange of stock, stock dividend or other special and
nonrecurring dividend or distribution (whether in cash, securities, or other
property), liquidation, dissolution, or other transaction, affects the Common
Stock such that an adjustment is appropriate to prevent dilution or enlargement
of Grantees’ rights, then the Administrator may, in its exclusive discretion,
adjust all or any portion of (i) the number of shares and classes of stock
available thereafter for Incentive Stock Options and Restricted Stock Awards in
the aggregate to all Grantees, and individually to any one Grantee; (ii) the
number of shares and classes of stock that may be delivered for outstanding
Incentive Stock Options and Restricted Stock Awards; and (iii) the exercise or
purchase price for any Incentive Stock Option or Restricted Stock Award.

 
 

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11.         Change in Control.
 
(a)           On a Change in Control of the Company or a Related Parent of the
Company, each Award of a Grantee who on the date of the Change of Control
provides services primarily to the Company shall fully vest and be released from
all transfer restrictions (other than transfer restrictions on Incentive Stock
Options) and repurchase rights.  Notwithstanding the foregoing provisions, the
Administrator in its exclusive discretion may provide in any Award, Award
Agreement, or as part of a Section 424 Corporate Transaction that any one or
more of the foregoing provisions shall not apply.
 
(b)           On a Change in Control of a Related Entity or a Related Parent of
the Related Entity, each Award to a Grantee who, on the date of the Change in
Control, provides services primarily to the Related Entity shall fully vest and
be released from all transfer restrictions (other than transfer restrictions on
Incentive Stock Options) and repurchase rights.  Notwithstanding the foregoing
provisions, the Administrator in its exclusive discretion may provide in any
Award, Award Agreement, or as part of a Section 424 Corporate Transaction that
any one or more of the foregoing provisions shall not apply.
 
(c)           On a Change in Control of a Parent, each Incentive Stock Option of
a Grantee who on the date of the Change in Control provides services primarily
to the Parent shall fully vest and be released from all repurchase rights. 
Notwithstanding the foregoing provisions, the Administrator in its exclusive
discretion may provide in any Award, Award Agreement, or as part of a Section
424 Corporate Transaction that any one or more of the foregoing provisions shall
not apply.
 
(d)           For Nonqualified Stock Options and SARs, the Administrator in its
exclusive discretion may provide in any Award, Award Agreement, or as part of a
Section 424 Corporate Transaction, that if the requirements of Treasury
Regulation Section 1.424-1 (without regard to the requirement of Treasury
Regulation Section 1.424-1(a)(2) that an eligible corporation be the optionee’s
employer) would be met in a Section 424 Corporate Transaction if the
Nonqualified Stock Option or SAR were an Incentive Stock Option, the
substitution of a Nonqualified Stock Option or SAR for a portion of or an entire
outstanding Nonqualified Stock Option or SAR, and the assumption of a portion of
or an entire outstanding Nonqualified Stock Option or SAR, shall not be treated
as the grant of a new Nonqualified Stock Option or SAR, or a change in the form
of payment.  The requirement of Treasury Regulation Section 1.424-1(a)(5)(iii)
is deemed satisfied if the ratio of the exercise price to the Fair Market Value
of the underlying shares immediately after the substitution or assumption is not
greater than the ratio of the exercise price to the Fair Market Value of the
underlying Shares immediately before the substitution or assumption.  For a
transaction described in Code Section 355 in which the stock of the distributing
corporation and the stock distributed in the transaction are both readily
tradable on an established securities market immediately after the transaction,
the requirements of Treasury Regulation Section 1.424-1(a)(5) may be satisfied
by:

 
 

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(i)           using the last sale before or the first sale after the specified
date as of which the valuation is being made, the closing price on the last
trading day before or the trading day of a specified date, the arithmetic mean
of the high and low prices on the last trading day before or the trading day of
the specified date, or any other reasonable method using actual transactions in
the stock as reported by the market on a specified date, for the stock of the
distributing corporation and the stock distributed in the transaction, provided
that the specified date is designated before its occurrence, and the specified
date is within sixty (60) days after the transaction;
 
(ii)          using the arithmetic mean of the market prices in subparagraph (i)
on trading days during a specified period designated before the beginning of the
specified period, when the specified period is not longer than thirty (30) days
and ends within sixty (60) days after the transaction; or
 
(iii)         using an average of the foregoing prices during the prespecified
period weighted based on the volume of trading of the stock on each trading day
during the prespecified period.
 
(e)           For Incentive Stock Options, the Administrator in its exclusive
discretion may provide in any Award, Award Agreement, or as part of a Section
424 Corporate Transaction, that in a Section 424 Corporate Transaction a portion
of or an entire Incentive Stock Option may be assumed or an equivalent Incentive
Stock Option substituted by the successor corporation, or a parent or subsidiary
of the successor corporation, in accordance with the requirements of Code
Section 424.
 
(f)           For Restricted Stock Awards, the Administrator in its exclusive
discretion may provide in any Award, Award Agreement, or as part of a Section
424 Corporate Transaction, that in a Section 424 Corporate Transaction a portion
of or an entire Restricted Stock Award may be assumed or an equivalent
Restricted Stock Award substituted by the successor corporation, or a parent or
subsidiary of the successor corporation.
 
12.         Effective Date and Term.  The Plan will be effective on the earlier
of its adoption by the Board, and by the affirmative vote of the holders of a
majority of the votes of the outstanding shares of capital stock of the Company
present in person or represented by proxy at a meeting of stockholders and
entitled to vote thereon (or in the case of action by written consent in lieu of
a meeting of stockholders, the number of votes required by applicable law to act
in lieu of a meeting) (“Stockholder Approval”).   In the event such Stockholder
Approval is withheld or otherwise not received on or before the latter date, the
Plan and, unless otherwise provided in the Award Agreement, all Options, SARs,
Restricted Stock and rights to Bonus Shares that may have been granted hereunder
shall become null and void.  The Plan will continue in effect for ten (10) years
unless terminated sooner.  Subject to Applicable Laws and Section 16, the
Administrator may grant Awards upon the Plan becoming effective.
 
13.         Amendment, Suspension, and Termination.
 
(a)           The Board in its exclusive discretion may amend or suspend the
Plan at any time and from time to time, and terminate the Plan at any time.  The
Company shall, to the extent required by Applicable Laws, obtain shareholder
approval of any amendment.
 
(b)           The Administrator shall not grant Awards during any suspension of
the Plan and after its termination.

 
 

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(c)           Any amendment, suspension, or termination of the Plan (a “Change”)
does not adversely affect or terminate (i) outstanding Award Agreements executed
prior to the Change; (ii) the indemnification obligations under the Plan for
representations, warranties, acts, and failures to act that were made or
occurred prior to the Change; (iii) the indemnification obligations under
Section 20 for the provision for Fees for Fees contained in Section 21 prior to
the Change, and for the payment of Fees for Fees under Section 21 for claims
that accrued prior to the Change; and (iv) the indemnification obligations under
Section 21 for the payment of Fees for Fees for claims that accrued prior to the
Change; provided, however, that the Board may amend the Plan to change the
provisions of an outstanding Award Agreement to maintain the qualified status of
an Incentive Stock Option, and to bring an outstanding Award Agreement into
compliance with, or obtain an exemption from, the requirements of Code Section
409A.
 
14.         No Effect on Service Relationship.  The Plan, any Award, and any
Award Agreement do not confer on a Grantee any right regarding the Grantee’s
service, nor shall they restrict the Grantee’s right or the Company’s, a
Parent’s, or a Related Entity’s right to terminate the Grantee’s service with or
without Cause.
 
15.          No Effect on Other Plans.  Except as otherwise provided in a
governing document of another plan, arrangement, or agreement of the Company, a
Parent, or a Related Entity (the “Other Plan”), the income and gain realized or
recognized under an Award is not compensation for determining contributions and
benefits under any Other Plan.  Other Plans include without limitation any
tax-qualified or nonqualified welfare benefit plan, tax-qualified or
nonqualified deferred compensation plan, bonus plan, equity compensation plan,
and severance plan.
 
16.         Shareholder Approval.  The grant of Incentive Stock Options is
subject to approval by the Company’s shareholders either twelve (12) months
before or after the date that the Board adopts the Plan.  Shareholder approval
is to be obtained in accordance with the Company’s certificate of incorporation
and bylaws, and Applicable Laws.  The Administrator may grant Incentive Stock
Options prior to shareholder approval, but until the Company obtains this
approval, a Grantee shall not exercise them.  If the Company does not timely
obtain shareholder approval, a Grantee may exercise previously granted Incentive
Stock Options as Nonqualified Stock Options.
 
17.         Date of Grant.  The term date of grant of an Award is the date on
which the Company, a Parent, and a Related Entity completes all action by the
entity necessary to create the legally binding right to the Award.  An entity’s
action is not complete until the date on which the maximum number of Shares that
can be purchased or received under the Award, or for which an SAR is exercised,
is fixed and determinable, the minimum exercise or purchase price is fixed and
determinable, and the class of underlying stock and the Grantee’s identity is
designated.
 
18.         Governing Law.  The Plan is governed by the laws of the State of
Nevada regardless of the laws that might otherwise apply under applicable
principles of conflict of laws.
 
19.         Payment of Expenses.  The Company shall pay all reasonable expenses
of the Plan’s administration incurred by the Board, each Committee, and each
Director, Officer, and Employee acting on behalf of the Board or a Committee.

 
 

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20.         Indemnification.
 
(a)           The Company shall indemnify the Board, each Committee, and each
Director, Officer, and Employee acting on behalf of the Board or a Committee (an
“Indemnitee”) for all assessments, claims, costs, damages, expenses, fines,
judgments, liabilities, losses, penalties, and reasonable accountant’s,
actuary’s, and attorney’s and paralegal’s fees and disbursements arising from or
related to (i) any act or failure to act in the Plan’s administration, except
when due to that person’s or entity’s gross negligence or intentional
misconduct; and (ii) all claims by the Internal Revenue Service or other tax
authority that the provision for, or payment of, Fees for Fees does not satisfy
the requirements of Code Section 409A or an exemption thereto.  Except as
otherwise provided in this Section 20, the Company shall make the
indemnification payments within sixty (60) days after the indemnified amount is
incurred.
 
(b)           The Company shall pay an Indemnitee an additional amount (the
“Gross-Up Payment”) if (i) the Company’s counsel delivers a written opinion
addressed to the Board and the Indemnitee that it is more likely than not that
the provision for, or payment of, Fees for Fees does not satisfy the
requirements of Code Section 409A or an exemption thereto; (ii) the Internal
Revenue Service or other tax authority issues a final and nonappealable or
nonreviewable assessment, or a court enters a final and nonappealable judgment,
that the provision for, or payment of, Fees for Fees does not satisfy the
requirements of Code Section 409A or an exemption thereto; or (iii) the Board
otherwise determines in writing to have the Company pay the Gross-Up Payment. 
The Company shall pay the Gross-Up Payment within sixty (60) days after the date
provided in the written opinion, issuance of the assessment, entry of the
judgment, or issuance of the written determination.
 
(c)           The Gross-Up Payment shall equal an amount such that after the
Indemnitee’s payment of all Taxes, interest, and penalties imposed on the
Gross-Up Payment, the Indemnitee retains an amount of the Gross-Up Payment equal
to the sum of (i) the interest under Code Section 409A(a)(1)(B)(i)(I) and (ii);
(ii) the additional Tax under Code Section 409A(a)(1)(B)(i)(II); (iii) any
penalties resulting from a violation of Code Section 409A; and (iv) if the
Indemnitee recognizes income from the provision for, or payment of, Fees for
Fees prior to the taxable year that the Fees for Fees would have been included
in the Indemnitee’s gross income in the absence of Code Section 409A, the amount
of the Taxes on the income recognized other than the additional Tax under (ii).
 
(d)           The Gross-Up Payment is the exclusive indemnification payment to
which an Indemnitee is entitled under Section 20(a)(ii) other than the costs,
expenses, and reasonable accountant’s, actuary’s, and attorney’s and paralegal’s
fees and disbursements incurred in audits and administrative and judicial
proceedings, and the payments under Section 20(g).
 
(e)           Only the Indemnitee to whom the Company’s counsel written opinion
under subparagraph (b) is addressed may rely on the opinion and receive a
Gross-Up Payment based on it, and no other Indemnitee may rely on it and receive
a Gross-Up Payment based on it.

 
 

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(f)           The Indemnitee shall give the Board written notice of any claim by
the Internal Revenue Service or other tax authority that the provision for, or
payment of, Fees for Fees does not satisfy the requirements of Code Section 409A
or an exemption thereto.  The Indemnitee shall give this notice as soon as
practicable but no later than ten (10) days after the Indemnitee receives
written notice of the claim.  The Indemnitee’s notice to the Board shall contain
a copy of the entire written claim.  The Indemnitee shall not pay the claim
prior to the expiration of thirty (30) days following the date on which the
Indemnitee gives notice to the Board (or such shorter period ending on the date
that any payment of Taxes pursuant to the claim is due).  If the Board gives the
Indemnitee written notice prior to the expiration of this period that the
Company wishes to contest the claim, the Indemnitee shall (i) give the Company
all information reasonably requested by the Board relating to the claim; (ii)
take such action or refrain from taking such action in contesting the claim as
the Board reasonably requests in writing, including without limitation accepting
legal representation by a law firm selected by the Board; (iii) cooperate with
the Company in contesting the claim; and (iv) permit the Company to participate
in all audits and administrative and judicial proceedings.
 
(g)           If the Board directs the Indemnitee to pay the claim under
subparagraph (f) and sue for a refund, the Company shall advance the amount of
the payment to the Indemnitee on an interest-free basis, and shall indemnify the
Indemnitee on an after-Tax basis for all Taxes, interest, and penalties imposed
on the advance and any imputed income on the advance.  The Company shall make
the foregoing indemnification payments within sixty (60) days after the
Indemnitee remits the Taxes, interest, and penalties to the tax authorities.  If
the Indemnitee receives a refund, the Indemnitee shall promptly pay the Company
the amount of the refund together with any interest paid or credited after Taxes
thereon.  If a court enters a final and nonappealable judgment that the
Indemnitee is not entitled to a refund, the Company shall forgive the advance,
and the amount of the advance shall offset the amount of the Gross-Up Payment.
 
(h)           If the Board decides to enter into a final and nonappealable
settlement agreement with respect to a claim under Section 20(f) or a suit for
refund under Section 20(g) with the Internal Revenue Service or other tax
authority, the Indemnitee shall consent to the settlement agreement.
 
(i)           If the Indemnitee takes a deduction with respect to the
Indemnitee’s payment of Fees for Fees in determining taxable income in one or
more taxable years subsequent to the taxable year in which the Indemnitee
recognized income from the provision for, or payment of, Fees for Fees due to a
violation of Code Section 409A (the “Deduction”), the Indemnitee shall pay the
Company the reduction in Taxes resulting from the Deduction within sixty (60)
days after the initial due date of the applicable returns for the subsequent
taxable year or years.
 
(j)           If the Company’s counsel delivers a written opinion addressed to
the Board and the Indemnitee that it is more likely than not that the Indemnitee
is entitled to a Deduction for one or more taxable years, the Indemnitee shall,
in accordance with the instructions set forth in the opinion, take the Deduction
on all applicable returns to be filed, and file all applicable amended returns
with the Deduction.  For the returns to be filed, the Indemnitee shall make the
payment under subparagraph (i).  For the amended returns, if the claim for
refund is granted and the Indemnitee receives a refund, the Indemnitee shall
promptly pay the Company the amount of the refund together with any interest
paid or credited after Taxes thereon.  If the claim for refund is denied, the
provisions of Section 20(l) apply.

 
 

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(k)           The Indemnitee shall give the Board written notice of any claim by
the Internal Revenue Service or other tax authority to disallow the Deduction. 
The Indemnitee shall give this notice as soon as practicable but no later than
ten (10) days after the Indemnitee receives written notice of the claim.  The
Indemnitee’s notice to the Board shall contain a copy of the entire written
claim.  The Indemnitee shall not pay the claim prior to the expiration of thirty
(30) days following the date on which the Indemnitee gives notice to the Board
(or such shorter period ending on the date that any payment of Taxes pursuant to
the claim is due).  If the Board gives the Indemnitee written notice prior to
the expiration of this period that the Company wishes to contest the claim, the
Indemnitee shall (i) give the Company all information reasonably requested by
the Board relating to the claim; (ii) take such action or refrain from taking
such action in contesting the claim as the Board reasonably requests in writing,
including without limitation accepting legal representation by a law firm
selected by the Board; (iii) cooperate with the Company in contesting the claim;
and (iv) permit the Company to participate in all audits and administrative and
judicial proceedings.
 
(l)            If the Board directs the Indemnitee to pay the claim under
Section 20(k) and sue for a refund, or if the Board directs the Indemnitee to
sue for a refund in response to the denial of the claim for refund under Section
20(j), the provisions of Section 20(g) shall apply, other than the requirement
to offset the amount of the Gross-Up Payment.
 
(m)           If the Board decides to enter into a final and nonappealable
settlement agreement with respect to a claim under Section 20(k) or a suit for
refund under Section 20(l) with the Internal Revenue Service or other tax
authority, the Indemnitee shall consent to the settlement agreement.
 
(n)           The Company shall indemnify the Indemnitee for all reasonable
accountant’s, actuary’s, and attorney’s and paralegal’s fees and disbursements
incurred by the Indemnitee in taking the Deduction, filing amended returns,
suing for a refund, and contesting a claim to disallow the Deduction.  The
Company shall make the foregoing indemnification payments within sixty (60) days
after the indemnified amount is incurred.  If the Internal Revenue Service or
other tax authority makes a claim under Section 20(k), the Company shall
indemnify the Indemnitee on an after-Tax basis for all Taxes, interest, and
penalties arising from or related to the claim.  The Company shall make the
foregoing indemnification payments within sixty (60) days after the Indemnitee
remits the Taxes, interest, and penalties to the tax authorities.
 
(o)           The provisions of Sections 20(i) through (n) apply only to the
extent that the amount of the Deduction does not exceed the amount of income
previously recognized by the Indemnitee from the provision for, or payment of,
Fees for Fees due to a violation of Code Section 409A.  The Company shall not
have any obligations under Sections 20(i) through (n) for a taxable year if the
Board (i) decides and notifies the Indemnitee that the Company waives the
payment under Section 20(i) for the taxable year; (ii) the Company returns to
the Indemnitee the payment under Section 20(i) for the taxable year; or (iii)
the Company’s counsel does not deliver the opinion under Section 20(j) for the
taxable year.

 
 

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21.         Enforcement of Indemnification Obligations.
 
(a)           If an Indemnitee brings an action to recover on claims for any
indemnification obligation under the Plan, the indemnifying person or entity
shall also indemnify the Indemnitee for all costs, expenses, and reasonable
accountant’s, actuary’s, and attorney’s and paralegal’s fees and disbursements
incurred by the Indemnitee in bringing those indemnification claims on which the
Indemnitee substantially prevails (“Fees for Fees”).
 
(b)           For purposes of this Section 21, reasonable accountant’s,
actuary’s, and attorney’s and paralegal’s fees indemnified by the Company means
the product of the average hourly rate for each group of personnel based in the
United States (“Personnel”) multiplied by the number of hours worked by that
group.  The average hourly rates are the average hourly rate for each group of
Personnel of the ten (10) largest accounting, actuarial (including without
limitation the actuarial departments of accounting and consulting firms), and
law firms with one or more offices in the United States by annual worldwide
gross revenue (the “Firms”).  Each group of Personnel shall be classified by at
least:  one (1), five (5), ten (10), fifteen (15), twenty (20), twenty-five
(25), and thirty (30) years of experience in the applicable area of expertise. 
Reasonable disbursements means those reasonable expenses customarily billed by
the Firms to their clients in addition to the hourly rates of Personnel,
including without limitation charges for electronic research services, expert
witnesses, faxes, investigators, lodging, meals, messengers, overnight delivery,
overtime for support staff, photocopying, postage, preparation of exhibits,
telephone calls, transcripts, and transportation.
 
(c)           The indemnifying person or entity shall pay Fees for Fees within
sixty (60) days after (i) entry of a final and nonappealable judgment for an
award of Fees for Fees; or (ii) execution of a final and nonappealable
settlement agreement for Fees for Fees.
 
(d)           The Company’s payment of Fees for Fees during an Indemnitee’s
taxable year does not affect any other expenses eligible for reimbursement or
in-kind benefits to be provided in another taxable year.
 
(e)           An Indemnitee’s right to indemnification for Fees for Fees by the
Company is not subject to liquidation or exchange for another benefit.
 
(f)           The Company’s indemnification obligations under this Section 21
apply from the date that an Indemnitee first has the right to act in the Plan’s
administration until expiration of the applicable statute of limitations as it
may be tolled or extended for each claim to which the Indemnitee is entitled to
indemnification (the “Claim Period”).  If a claim is made during the Claim
Period, the indemnification obligation continues beyond the Claim Period until
final resolution of the claim.

 
 

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22.         Compliance With Other Laws.
 
(a)           For Grantees subject to Section 16 of the Exchange Act:
 
(i)           the Plan is intended to satisfy the provisions of Rule 16b-3;
 
(ii)          all transactions involving Grantees who are subject to Section
16(b) of the Exchange Act are subject to the provisions of Rule 16b-3 regardless
of whether they are set forth in the Plan; and
 
(iii)         any provision of the Plan that conflicts with Rule 16b-3 does not
apply to the extent of the conflict.
 
(b)           If any provision of the Plan, any Award, or Award Agreement
conflicts with the requirements of Code Section 162(m) or 422 for Awards subject
to these requirements, then that provision does not apply to the extent of the
conflict.
 
(c)           Notwithstanding any other provision of the Plan, the Board and
each applicable Committee shall administer the Plan and exercise all authority
and discretion under the Plan to satisfy the requirements of Code Section 409A
or any exemption thereto.
 
(d)           Notwithstanding any other provision of the Plan, if, for an
Employee of a Parent, the conversion of an Incentive Stock Option to a
Nonqualified Stock Option or the treatment of an Incentive Stock Option as a
Nonqualified Stock Option would not satisfy the requirements of Code Section
409A or an exemption thereto, as determined by the Administrator in its
exclusive discretion, then the Incentive Stock Option shall terminate on the
date that it would no longer qualify as an Incentive Stock Option as determined
by the Administrator in its exclusive discretion.
 
23.         Successors.  The Plan is binding upon and inures to the benefit of
the Company, each Parent, Related Entity, Related Parent, and Subsidiary, the
Board, each Committee, and each Director, Officer, and Grantee, and their
permitted assigns, beneficiaries, and successors.
 
24.         Electronic Delivery.  Any reference in the Plan to a written
document includes any document delivered electronically or posted on the
Company’s, a Parent’s, or a Related Entity’s intranet.
 
25.         Headings and Captions.  The headings and captions in the Plan are
inserted as a matter of convenience for organizational purposes, and do not
construe, define, extend, interpret, or limit any provision of the Plan.
 
26.         Gender and Number.  Whenever the context may require, any pronoun
includes the corresponding masculine, feminine, or neuter form, and the singular
includes the plural and vice versa.
 
27.         References.  Any reference in the Plan to a statutory or regulatory
provision includes corresponding successor provisions.

 
 

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28.         Use of Proceeds.  The proceeds from the sale of shares pursuant to
Awards granted under the Plan shall constitute general funds of the Company.
 
29.          Not a Contract of Employment.  Nothing contained in the Plan or in
any Award agreement executed pursuant hereto shall be deemed to confer upon any
individual or entity to whom an Award is or may be granted hereunder any right
to remain in the employ or service of the Company or a parent or subsidiary of
the Company or any entitlement to any remuneration or other benefit pursuant to
any consulting or advisory arrangement.
 
30.         Termination, Modification and Amendment.
 
(a)           The Plan (but not Options previously granted under the Plan) shall
terminate ten years from the date of adoption, or sooner as provided above, and
no Award shall be granted after termination of the Plan.  The foregoing shall
not be deemed to limit the vesting period for Options, SARs, Restricted Stock or
Stock Bonuses granted pursuant to the Plan.
 
(b)           The Plan may from time to time be terminated, modified, or amended
if Stockholder Approval of the termination, modification or amendment is
obtained.
 
(c)           Notwithstanding paragraph (b) hereof, the Board may at any time,
on or before the Termination Date, without Stockholder Approval, terminate the
Plan, or from time to time make such modifications or amendments to the Plan as
it may deem advisable; provided, however, that the Board of Directors shall not,
without Stockholder Approval, (i) increase (except as otherwise provided herein)
the maximum number of shares as to which Incentive Stock Options may be granted
hereunder, change the designation of the employees or class of employees
eligible to receive Incentive Stock Options, or make any other change which
would prevent any Incentive Stock Option granted hereunder which is intended to
be an “incentive stock option” from qualifying as such under the then existing
provisions of the Code or any law amendatory thereof or supplemental thereto or
(ii) make any other modifications or amendments that require Stockholder
Approval pursuant to applicable law, regulation or exchange requirements,
including, without limitation, Section 162(m) of the Code.  In the event
Stockholder Approval is not received within one year of adoption by the Board of
Directors of the change provided for in (i) or (ii) above, then, unless
otherwise provided in the Award Agreement (but subject to applicable law), the
change and all Stock Awards that may have been granted pursuant thereto shall be
null and void.
 
(d )          No termination, modification, or amendment of the Plan may,
without the consent of the Grantee to whom any Award shall have been granted,
adversely affect the rights conferred by such Award.

 
 

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