ex41.htm


     

    Exhibit
      4.1

    
 

    PLATINUM
      STUDIOS, INC.

     

    2007
      INCENTIVE PLAN

     

    SECTION
      1.  Purpose
      of the Plan

     

    The
      Platinum Studios, Inc. 2007 Incentive Plan (the “Plan”) is intended to promote
      the interests of Platinum Studios, Inc., a California corporation (the
“Company”), and its shareholders by encouraging officers, employees,
      non-employee directors and consultants of the Company and its Affiliates to
      acquire or increase their equity interests in the Company and to provide a
      means
      whereby they may develop a sense of proprietorship and personal involvement
      in
      the development and financial success of the Company, and to encourage them
      to
      remain with and devote their best efforts to the business of the Company thereby
      advancing the interests of the Company and its stockholders. The Board of
      Directors of the Company also contemplates that through the Plan, the Company
      and its Affiliates will be better able to attract and retain the services of
      individuals who are essential for the growth and profitability of the Company.
      The Plan provides for payment of various forms of incentive compensation and
      accordingly is not intended to be a plan that is subject to the Employee
      Retirement Income Security Act of 1974, as amended, and shall be administered
      accordingly.

     

    SECTION
      2.  Definitions.

     

    As
      used
      in the Plan, the following terms shall have the meanings set forth
      below:

     

    “Affiliate”
      shall mean (i) any “parent corporation” of the Company (as defined in Section
      424(e) of the Code), (ii) any “subsidiary corporation” of any such parent
      corporation (as defined in Section 424(f) of the Code) of the Company and (iii)
      any trades or businesses, whether or not incorporated, which are members of
      a
      controlled group or are under common control (as defined in Sections 414(b)
      or
      (c) of the Code) with the Company, substituting (for the purpose of determining
      whether Options or Other Stock-Based Awards that may be subject to Section
      409A
      of the Code are derived in respect of “stock of the service recipient” within
      the meaning of that term under regulatory guidance issued by the appropriate
      governmental authority under Section 409A of the Code) “50 percent” in place of
“80 percent” in determining a controlled group under Section 414(b) of the Code
      and in determining trades or businesses that are under common control for
      purposes of Section 414(c) of the Code.

     

    “Award”
      shall mean any Option, Restricted Stock, Performance Award, Bonus Shares or
      Other Stock-Based Award.

     

    “Award
      Agreement” shall mean any written agreement, contract, or other instrument or
      document evidencing any Award, which may, but need not, be executed or
      acknowledged by a Participant.

     

    “Board”
      shall mean the Board of Directors of the Company.

     

    “Bonus
      Shares” shall mean an award of Shares granted pursuant to Section 6(d) of the
      Plan.

     

    “Change
      in Control” shall mean the occurrence of any one (1) of the following
      events:

     

    (a)  any
      “person” (as defined in Section 3(a)(9) of the Exchange Act, and as modified in
      Section 13(d) and 14(d) of the Exchange Act) other than (i) the Company or
      any
      of its subsidiaries; (ii) any employee benefit plan of the Company or any of
      its
      subsidiaries; (iii) or any Affiliate; (iv) a company owned, directly or
      indirectly, by stockholders of the Company in substantially the same proportions
      as their ownership of the Company; or (v) an underwriter temporarily holding
      securities pursuant to an offering of such securities (a “Person”), becomes the
“beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
      indirectly, of securities of the Company representing more than fifty percent
      (50%) of the shares of voting stock of the Company then
      outstanding;

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (b)  the
      consummation of any merger, organization, business combination or consolidation
      of the Company or one (1) of its subsidiaries with or into any other company,
      other than a merger, reorganization, business combination or consolidation
      which
      would result in the holders of the voting securities of the Company outstanding
      immediately prior thereto holding securities which represent immediately after
      such merger, reorganization, business combination or consolidation more than
      fifty percent (50%) of the combined voting power of the voting securities of
      the
      Company or the surviving company or the parent of such surviving
      company;

     

    (c)  the
      consummation of a sale, lease, transfer, conveyance or other disposition
      (including by merger or consolidation) by the Company in one (1) or a series
      of
      related transactions, of all or substantially all of the Company’s assets, other
      than any such transaction if the holders of the voting securities of the Company
      outstanding immediately prior thereto hold securities immediately thereafter
      which represent more than fifty percent (50%) of the combined voting power
      of
      the voting securities of the acquiror, or parent of the acquiror, of such
      assets;

     

    (d)  the
      stockholders of the Company approve a plan of complete liquidation or
      dissolution of the Company; or

     

    (e)  individuals
      who, as of the Effective Date, constitute the Board (the “Incumbent Board”)
      cease for any reason to constitute at least a majority of the Board; provided,
      however, that any individual becoming a director subsequent to the Effective
      Date whose election by the Board was approved by a vote of at least a majority
      of the directors then comprising the Incumbent Board shall be considered as
      though such individual were a member of the Incumbent Board, but excluding,
      for
      this purpose, any such individual whose initial assumption of office occurs
      as a
      result of either (i) an actual or threatened election contest (as such terms
      are
      used in Rule 14A-11 of Regulation 14A promulgated under the Exchange Act) with
      respect to the election or removal of directors or an actual or threatened
      solicitation of proxies or consents by or on behalf of a Person other than
      the
      Board or (ii) a plan or agreement to replace a majority of the members of the
      Board then comprising the Incumbent Board.

     

    Solely
      with respect to any Award that is subject to Section 409A of the Code, this
      definition is intended to comply with the definition of change in control under
      Section 409A of the Code as in effect commencing January 1, 2005 and, to the
      extent that the above definition does not so comply, such definition shall
      be
      void and of no effect and, to the extent required to ensure that this definition
      complies with the requirements of Section 409A of the Code, the definition
      of
      such term set forth in regulations or other regulatory guidance issued under
      Section 409A of the Code by the appropriate governmental authority is hereby
      incorporated by reference into and shall form part of this Plan as fully as
      if
      set forth herein verbatim and the Plan shall be operated in accordance with
      the
      above definition of Change in Control as modified to the extent necessary to
      ensure that the above definition complies with the definition prescribed in
      such
      regulations or other regulatory guidance insofar as the definition relates
      to
      any Award that is subject to Section 409A of the Code.

     

    “Code”
      shall mean the Internal Revenue Code of 1986, as amended from time to time,
      and
      the rules and regulations thereunder.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Committee”
      shall mean the compensation committee of the Board which, for any period in
      which the Company is subject to the reporting requirements of the Exchange
      Act,
      shall consist of not less than two (2) members of the Board, each of whom shall
      qualify as a “non-employee director” (as that term is defined in Rule 16b-3 of
      the General Rules and Regulations under the Exchange Act) appointed by and
      serving at the pleasure of the Board to administer the Plan or, if none, the
      Board; provided however, that with respect to any Award granted to a Covered
      Employee which is intended to be “performance-based compensation” as described
      in Section 162(m)(4)(C) of the Code, the Committee shall consist solely of
      two
      (2) or more “outside directors” as described in Section 162(m)(4)(C)(i) of the
      Code.

    


    “Company”
      shall mean the corporation described in Section 1 of the Plan or any successor
      thereto that assumes and continues the Plan.

     

    “Consultant”
      shall mean any individual, other than a Director or an Employee, who renders
      consulting services to the Company or an Affiliate for a fee.

     

    “Covered
      Employee” shall mean any of the Chief Executive Officer of the Company and the
      four (4) highest paid officers of the Company other than the Chief Executive
      Officer as described in Section 162(m)(3) of the Code or any individual
      Consultant, Director or other Employee, or class of Consultants, Directors
      or
      Employees, who the Committee specifies in an Award shall be treated as a Covered
      Employee.

     

    “Director”
      shall mean a member of the Board who is not an Employee of the
      Company.

     

    “Effective
      Date” means the date that the Plan is (i) adopted by the Board; and (ii)
      approved by shareholders of the Company, provided that such shareholder approval
      occurs not more than one (1) year prior to or after the date of such adoption.
      The provisions of the Plan are applicable to all Awards granted on or after
      the
      Effective Date.

     

    “Employee”
      shall mean any employee of the Company or an Affiliate.

     

    “Exchange
      Act” shall mean the Securities Exchange Act of 1934, as amended.

     

    “Fair
      Market Value” shall mean, with respect to Shares, the closing sales price of a
      Share on the applicable date (or if there is no trading in the Shares on such
      date, on the next preceding date on which there was trading) as reported in
      The
      Wall Street Journal (or other reporting service approved by the Committee).
      In
      the event the Shares are not publicly traded at the time a determination of
      its
      fair market value is required to be made hereunder, the determination of fair
      market value shall be made in good faith by the Committee.

     

    “Option”
      shall mean an option granted under Section 6(a) of the Plan. Options granted
      under the Plan may constitute “incentive stock options” for purposes of Section
      422 of the Code or nonqualified stock options.

     

    “Other
      Stock-Based Award” shall mean an award granted pursuant to Section 6(e) of the
      Plan that is not otherwise specifically provided for, the value of which is
      based in whole or in part upon the value of a Share.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “Participant”
      shall mean any Director, Employee or Consultant granted an Award under the
      Plan.

     

    “Performance
      Award” shall mean any right granted under Section 6(c) of the Plan.

     

    “Performance
      Objectives” means the objectives, if any, established by the Committee that are
      to be achieved with respect to an Award granted under this Plan, which may
      be
      described in terms of Company-wide objectives, in terms of objectives that
      are
      related to performance of a business, division, subsidiary, department, unit
      or
      function within the Company or an Affiliate in which the Participant receiving
      the Award is employed or in individual or other terms, and which will relate
      to
      the period of time determined by the Committee. Which objectives to use with
      respect to an Award, the weighting of the objectives if more than one (1) is
      used, and whether the objective is to be measured against a Company-established
      budget or target, an index or a peer group of companies, shall be determined
      by
      the Committee in its discretion at the time of grant of the Award. One or more
      of the following business criteria for the Company shall be used by the
      Committee in establishing Performance Objectives for Performance Awards granted
      to a Participant: (i) earnings per share; (ii) increase in price per share,
      (iii) increase in revenues; (iv) increase in cash flow; (v) return on net
      assets; (vi) return on assets; (vii) return on investment; (viii) return on
      equity; (ix) economic value added; (x) gross margin; (xi) net income; (xii)
      pretax earnings; (xiii) pretax earnings before interest, depreciation, depletion
      and amortization; (xiv) pretax operating earnings after interest expense and
      before incentives, service fees, and extraordinary or special items; (xv)
      operating income; (xvi) total stockholder return; (xvii) debt reduction; and
      (xviii) any of the above goals determined on the absolute or relative basis
      or
      as compared to the performance of a published or special index deemed applicable
      by the Committee including, but not limited to, the Standard & Poor’s 500
      Stock Index or components thereof or a group of comparable companies. A
      Performance Objective need not be based on an increase or a positive result
      and
      may include, for example, maintaining the status quo or limiting economic
      losses.

     

    “Person”
      shall mean an individual or a corporation, limited liability company,
      partnership, association, joint-stock company, trust, unincorporated
      organization, government or political subdivision thereof or other
      entity.

     

    “Plan”
      means the plan described in Section 1 of the Plan and set forth in this
      document, as amended from time to time.

     

    “Restricted
      Period” shall mean the period established by the Committee with respect to an
      Award during which the Award remains subject to forfeiture and/or is not
      exercisable by the Participant.

     

    “Restricted
      Stock” shall mean any Share, prior to the lapse of restrictions thereon, granted
      under Sections 6(b) of the Plan.

     

    “Rule
      16b-3” shall mean Rule 16b-3 promulgated by the SEC under the Exchange Act, or
      any successor rule or regulation thereto as in effect from time to
      time.

     

    “SEC”
      shall mean the Securities and Exchange Commission, or any successor
      thereto.

     

     “Shares”
      or “Common Shares” or “Common Stock” shall mean the common stock of the Company,
      $.0001 par value, and such other securities or property as may become the
      subject of Awards under the Plan.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    SECTION
      3.  Administration

     

    The
      Plan
      shall be administered by the Committee. A majority of the Committee shall
      constitute a quorum, and the acts of the members of the Committee who are
      present at any meeting thereof at which a quorum is present, or acts unanimously
      approved by the members of the Committee in writing, shall be the acts of the
      Committee. No member of the Committee shall vote or act upon any matter relating
      solely to himself. Grants of Awards to members of the Committee must be ratified
      by the Board. Subject to the terms of the Plan and applicable law, and in
      addition to other express powers and authorizations conferred on the Committee
      by the Plan, the Committee shall have full power and authority to: (i) designate
      Participants; (ii) determine the type or types of Awards to be granted to a
      Participant; (iii) determine the number of Shares to be covered by, or with
      respect to which payments, rights, or other matters are to be calculated in
      connection with, Awards; (iv) determine the terms and conditions of any Award;
      (v) determine whether, to what extent, and under what circumstances Awards
      may
      be settled or exercised in cash, Shares, other securities, other Awards or
      other
      property, or canceled, forfeited, or suspended and the method or methods by
      which Awards may be settled, exercised, canceled, forfeited, or suspended;
      (vi)
      determine whether, to what extent, and under what circumstances cash, Shares,
      other securities, other Awards, other property, and other amounts payable with
      respect to an Award shall be deferred either automatically or at the election
      of
      the holder thereof or of the Committee; (vii) interpret and administer the
      Plan
      and any instrument or agreement relating to an Award made under the Plan; (viii)
      establish, amend, suspend, or waive such rules and regulations and appoint
      such
      agents as it shall deem appropriate for the proper administration of the Plan;
      and (ix) make any other determination and take any other action that the
      Committee deems necessary or desirable for the administration of the Plan.
      Unless otherwise expressly provided in the Plan, all designations,
      determinations, interpretations, and other decisions under or with respect
      to
      the Plan or any Award shall be within the sole discretion of the Committee,
      may
      be made at any time and shall be final, conclusive, and binding upon all
      Persons, including the Company, any Affiliate, any Participant, any holder
      or
      beneficiary of any Award, any stockholder and any Employee, Consultant or
      Director. No member of the Board or the Committee shall be liable for any action
      or determination made in good faith with respect to the Plan or any Award
      granted hereunder and the members of the Board and the Committee shall be
      entitled to indemnification and reimbursement by the Company and its Affiliates
      in respect of any claim, loss, damage or expense (including legal fees) arising
      therefrom to the full extent permitted by law.

     

    SECTION
      4.  Shares
      Available for Awards

     

    (a)  Shares
      Available. Subject to adjustment as provided in Section 4(c), the number of
      Shares with respect to which Awards may be granted under the Plan shall be
      Thirty Million (30,000,000) Shares. In addition, during any calendar year in
      which Section 162(m) of the Code shall apply to the Company, the number of
      Shares reserved for issuance under the Plan which are subject to Options that
      may be granted to any one (1) Participant shall not exceed 30,000,000
      Shares.  If any Award is exercised, paid, forfeited, terminated or
      canceled without the delivery of Shares, then the Shares covered by such Award,
      to the extent of such exercise, payment, forfeiture, termination or
      cancellation, shall again be Shares with respect to which Awards may be granted;
      provided, however, that Shares not delivered due to withholding or payment
      of
      taxes or payment of exercise price shall not again be Shares with respect to
      which Awards may be granted.

     

    (b)  Sources
      of Shares Deliverable Under Awards. Any Shares delivered pursuant to an
      Award shall consist of authorized and unissued Shares.  No fractional
      Shares shall be issued under the Plan; payment for any fractional Shares shall
      be made in cash.

     

    (c)  Adjustments.
      In the event that any dividend or other distribution (whether in the form of
      cash, Shares, other securities, or other property), recapitalization, stock
      split, reverse stock split, reorganization, merger, consolidation, split-up,
      spin-off, combination, repurchase, or exchange of Shares or other securities
      of
      the Company, issuance of warrants or other rights to purchase Shares or other
      securities of the Company, or other similar corporate transaction or event
      affects the Shares such that an adjustment is determined by the Committee to
      be
      appropriate in order to prevent dilution or enlargement of the benefits or
      potential benefits intended to be made available under the Plan, then the
      Committee shall, in such manner as it may deem equitable, adjust any or all
      of
      (i) the number and type of Shares (or other securities or property) with respect
      to which Awards may be granted; (ii) the number and type of Shares (or other
      securities or property) subject to outstanding Awards; and (iii) the grant
      or
      exercise price with respect to any Award or, if deemed appropriate, make
      provision for a cash payment to the holder of an outstanding Award.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    SECTION
      5.  Eligibility

     

    Any
      Employee, Director or Consultant shall be eligible to be designated a
      Participant and receive an Award under the Plan.

     

    SECTION
      6.  Awards

     

    (a)  Options.
      Subject to the provisions of the Plan, the Committee shall have the authority
      to
      determine the Participants to whom Options shall be granted, the number of
      Shares to be covered by each Option, the purchase price therefor and the
      conditions and limitations applicable to the exercise of the Option, including
      the following terms and conditions and such additional terms and conditions,
      as
      the Committee shall determine, that are not inconsistent with the provisions
      of
      the Plan.

     

    (i)  Exercise
      Price. The purchase price per Share purchasable under an Option shall be
      determined by the Committee at the time the Option is granted, but shall not
      be
      less than one hundred percent (100%) of the Fair Market Value per Share on
      such
      grant date. If any Employee to whom an Option that is an incentive stock option
      is granted owns stock possessing more than ten percent (10%) of the total
      combined voting power of all classes of stock of the Company or any parent
      corporation, within the meaning of Section 424(e) of the Code, or any subsidiary
      corporation of the Company, within the meaning of Section 424(f) of the Code,
      then the exercise price per share shall not be less than one hundred ten percent
      (110%) of the Fair Market Value per Share on the date of grant and the option
      term shall not exceed five (5) years measured from the date of
      grant.  For purposes of the immediately preceding sentence, the
      attribution rules under Section 424(d) of the Code shall apply for purposes
      of
      determining an Employee’s ownership.

     

    (ii)  Time
      and Method of Exercise. The Committee shall determine the time or times at
      which an Option may be exercised in whole or in part (which may include the
      achievement of one (1) or more Performance Objectives), and the method or
      methods by which, and the form or forms in which payment of the exercise price
      with respect thereto may be made. In that connection, in order to exercise
      an
      Option, the person or persons entitled to exercise it shall deliver to the
      Company payment in full for (A) the shares being purchased and (B) unless other
      arrangements have been made with the Committee, any required withholding taxes.
      The payment of the exercise price for each Option shall either be (x) in cash
      or
      by check payable and acceptable to the Company (y) with the consent of the
      Committee, by tendering to the Company shares of Common Stock owned by the
      person for more than six (6) months having an aggregate Fair Market Value as
      of
      the date of exercise that is not greater than the full exercise price for the
      shares with respect to which the Option is being exercised and by paying any
      remaining amount of the exercise price as provided in (A) above, or (z) with
      the
      consent of the Committee and compliance with such instructions as the Committee
      may specify, by delivering to the Company and to a broker a properly executed
      exercise notice and irrevocable instructions to such broker to deliver to the
      Company cash or a check payable and acceptable to the Company to pay the
      exercise price and any applicable withholding taxes. Upon receipt of the cash
      or
      check from the broker, the Company will deliver to the broker the shares for
      which the Option is exercised. In the event that the person elects to make
      payment as allowed under clause (z) above, the Committee may, upon confirming
      that the optionee owns the number of additional shares being tendered, authorize
      the issuance of a new certificate for the number of shares being acquired
      pursuant to the exercise of the Option less the number of shares being tendered
      upon the exercise and return to the person (or not require surrender of) the
      certificate for the shares being tendered upon the exercise. The date of sale
      of
      the shares by the broker pursuant to a cashless exercise under (z) above shall
      be the date of exercise of the Option.

     

    (iii)  Option
      Repricing. With shareholder approval, the Committee, in its absolute
      discretion, may grant to holders of outstanding Options that are not incentive
      stock options, in exchange for the surrender and cancellation of such Options
      that are not incentive stock options, new Options that are not incentive stock
      options having exercise prices lower (or higher with any required consent)
      than
      the exercise price provided in the Options so surrendered and canceled and
      containing such other terms and conditions as the Committee may deem
      appropriate.

     

    (iv)  Incentive
      Stock Options. The terms of any Option granted under the Plan intended to be
      an incentive stock option shall comply in all respects with the provisions
      of
      Section 422 of the Code, or any successor provision, and any regulations
      promulgated thereunder. Incentive stock options may be granted only to employees
      of the Company, while it is a “corporation” described in Section 7701(a)(3) of
      the Code and Treas. Reg. Section 1.421-1(i)(l), and its parent corporation
      and
      subsidiary corporations, within the meaning of Section 424 of the Code. To
      the
      extent the aggregate Fair Market Value of the Shares (determined as of the
      date
      of grant) of an Option to the extent exercisable for the first time during
      any
      calendar year (under all plans of the Company and its parent and subsidiary
      corporations) exceeds $100,000, such Option Shares in excess of $100,000 shall
      not be incentive stock options. No Option that is an incentive stock option
      shall be exercisable more than three (3) months after the Participant ceases
      to
      be an Employee for any reason other than death or disability, or more than
      one
      (1) year after the Participant ceases to be an Employee due to death or
      disability.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (b)  Restricted
      Stock. Subject to the provisions of the Plan, the Committee shall have the
      authority to determine the Participants to whom Restricted Stock shall be
      granted, the number of Shares of Restricted Stock to be granted to each such
      Participant, the duration of the Restricted Period during which, and the
      conditions, including Performance Objectives, if any, under which if not
      achieved, the Restricted Stock may be forfeited to the Company, and the other
      terms and conditions of such Awards.

     

    (i)  Dividends.
      Dividends paid on Restricted Stock may be paid directly to the Participant
      or
      may be subject to risk of forfeiture and/or transfer restrictions during any
      period established by the Committee in its discretion.

     

    (ii)  Registration.
      Any Restricted Stock may be evidenced in such manner as the Committee shall
      deem
      appropriate, including, without limitation, book-entry registration or issuance
      of a stock certificate or certificates. In the event any stock certificate
      is
      issued in respect of Restricted Stock granted under the Plan, such certificate
      shall be registered in the name of the Participant and shall bear an appropriate
      legend referring to the terms, conditions, and restrictions applicable to such
      Restricted Stock.

     

    (iii)  Forfeiture
      and Restrictions Lapse. Except as otherwise determined by the Committee or
      the terms of the Award that granted the Restricted Stock, upon termination
      of a
      Participant’s employment (as determined under criteria established by the
      Committee) for any reason during the applicable Restricted Period, all
      Restricted Stock shall be forfeited by the Participant and reacquired by the
      Company. Unrestricted Shares, evidenced in such manner as the Committee shall
      deem appropriate, shall be issued to the holder of Restricted Stock promptly
      after the applicable restrictions have lapsed or otherwise been
      satisfied.

     

    (iv)  Transfer
      Restrictions. During the Restricted Period, Restricted Stock will be subject
      to the limitations on transfer as provided in Section 6(f)(b)(iii).

     

    (c)  Performance
      Awards. The Committee shall have the authority to determine the Participants
      who shall receive a Performance Award, which shall confer on the Participant
      the
      right to receive payment of such Award, in whole or in part, upon the
      achievement of such Performance Objectives during such performance periods
      as
      the Committee shall establish with respect to the Award.

     

    (i)  Terms
      and Conditions. Subject to the terms of the Plan and any applicable Award
      Agreement, the Committee shall determine the Performance Objectives to be
      achieved during any performance period, the length of any performance period,
      the amount of any Performance Award and the amount of any payment or transfer
      to
      be made pursuant to any Performance Award.

     

    (ii)  General.
      In the case of any Award granted to a Covered Employee, Performance Objectives
      shall be designed to be objective and shall otherwise meet the requirements
      of
      Section 162(m) of the Code and regulations thereunder (including Treasury
      Regulations sec. 1.162-27 and successor regulations thereto), including the
      requirement that the level or levels of performance targeted by the Committee
      are such that the achievement of performance goals is “substantially uncertain”
at the time of grant. The Committee may determine that such Performance Awards
      shall be granted and/or settled upon achievement of any one (1) performance
      goal
      or that two (2) or more of the performance goals must be achieved as a condition
      to the grant and/or settlement of such Performance Awards. Performance
      Objectives may differ among Performance Awards granted to any one (1)
      Participant or for Performance Awards granted to different
      Participants.

     

    (iii)  Performance
      Period; Timing for Establishing Performance Goals. Achievement of
      Performance Objectives in respect of Performance Awards that are granted to
      a
      Covered Employee and intended to meet the requirements of Section 162(m) of
      the
      Code shall be measured over a performance period of not less than six (6) months
      and not more than ten (10) years, as specified by the Committee. Performance
      Objectives in the case of any Award granted to a Participant shall be
      established not later than ninety (90) days after the beginning of any
      performance period applicable to such Performance Awards, or at such other
      date
      as may be required or permitted for “performance-based compensation” under
      Section 162(m) of the Code.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (iv)  Settlement
      of Performance Awards; Other Terms. After the end of each performance
      period, the Committee shall determine the amount, if any, of Performance Awards
      payable to each Participant based upon achievement of business criteria over
      a
      performance period. Except as may otherwise be required under Section 409A
      of
      the Code, payment described in the immediately preceding sentence shall be
      made
      by the later of (i) the date that is 2 1⁄2 months after the end of the
      Participant’s first taxable year in which the Performance Award is earned and
      payable under the Plan and (ii) the date that is 2 1⁄2 months after the end of the
      Company’s first taxable year in which the Performance Award is earned and
      payable under the Plan, and such payment shall not be subject to any election
      by
      the Participant to defer the payment to a later period. The Committee may not
      exercise discretion to increase any such amount payable in respect of a
      Performance Award which is intended to comply with Section 162(m) of the Code.
      The Committee shall specify the circumstances in which such Performance Awards
      shall be paid or forfeited in the event of termination of employment by the
      Participant prior to the end of a performance period or settlement of
      Performance Awards.

     

    (v)  Written
      Determinations. All determinations by the Committee as to the establishment
      of Performance Objectives, the amount of any Performance Award, and the
      achievement of Performance Objectives relating to Performance Awards shall
      be
      made in a written agreement or other document covering the Performance Award.
      The Committee may not delegate any responsibility relating to such Performance
      Awards that are granted to a Covered Employee and intended to meet the
      requirements of Section 162(m) of the Code.

     

    (vi)  Status
      of Performance Awards under Section 162(m) of the Code. It is the intent of
      the Company that Performance Awards granted to persons who are designated by
      the
      Committee as likely to be Covered Employees within the meaning of Section 162(m)
      of the Code and regulations thereunder (including Treasury Regulations sec.
      1.162-27 and successor regulations thereto) shall constitute “performance-based
      compensation” within the meaning of Section 162(m) of the Code and regulations
      thereunder. Accordingly, the terms of this Section shall be interpreted in
      a
      manner consistent with Section 162(m) of the Code and regulations thereunder.
      Notwithstanding the foregoing, because the Committee cannot determine with
      certainty whether a given Participant will be a Covered Employee with respect
      to
      a fiscal year that has not yet been completed, the term Covered Employee as
      used
      herein shall mean any person designated by the Committee, at the time of grant
      of a Performance Award, as likely to be a Covered Employee with respect to
      that
      fiscal year. If any provision of the Plan as in effect on the date of adoption
      or any agreements relating to Performance Awards that are intended to comply
      with Section 162(m) of the Code does not comply or is inconsistent with the
      requirements of Section 162(m) of the Code or regulations thereunder, such
      provision shall be construed or deemed amended to the extent necessary to
      conform to such requirements.

     

    (d)  Bonus
      Shares. The Committee shall have the authority, in its discretion, to grant
      Bonus Shares to Participants. Each Bonus Share shall constitute a transfer
      of an
      unrestricted Share to the Participant, without other payment therefor, as
      additional compensation for the Participant’s services to the
      Company.

     

    (e)  Other
      Stock-Based Awards. The Committee may also grant to Participants an Other
      Stock-Based Award, which shall consist of a right which is an Award denominated
      or payable in, valued in whole or in part by reference to, or otherwise based
      on
      or related to, Shares as is deemed by the Committee to be consistent with the
      purposes of the Plan. Subject to the terms of the Plan, including the
      Performance Objectives, if any, applicable to such Award, the Committee shall
      determine the terms and conditions of any such Other Stock-Based Award.
      Notwithstanding any other provision of the Plan to the contrary, any Other
      Stock-Based Award shall contain terms that (i) are designed to avoid application
      of Section 409A of the Code or (ii) are designed to avoid adverse tax
      consequences under Section 409A should that Code section apply to such
      Award.

     

    (f)  General
      Provisions Applicable to all Awards.

     

    (i)  Awards
      May Be Granted Separately or Together. Awards may, in the discretion of the
      Committee, be granted either alone or in addition to, in tandem with, or in
      substitution for any other Award granted under the Plan or any award granted
      under any other plan of the Company or any Affiliate. No Award shall be issued
      in tandem with another Award if the tandem Awards would result in adverse tax
      consequences under Section 409A of the Code. Awards granted in addition to
      or in
      tandem with other Awards or awards granted under any other plan of the Company
      or any Affiliate may be granted either at the same time as or at a different
      time from the grant of such other Awards or awards.

     

    (ii)  Forms
      of Payment by Company Under Awards. Subject to the terms of the Plan and of
      any applicable Award Agreement, payments or transfers to be made by the Company
      or an Affiliate upon the grant, exercise or payment of an Award may be made
      in
      such form or forms as the Committee shall determine, including, without
      limitation, cash, Shares, other securities, other Awards or other property,
      or
      any combination thereof, and may be made in a single payment or transfer, in
      installments, or on a deferred basis, in each case in accordance with rules
      and
      procedures established by the Committee. Such rules and procedures may include,
      without limitation, provisions for the payment or crediting of reasonable
      interest on installment or deferred payments.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (iii)  Limits
      on Transfer of Awards.

     

    A.  Except
      as
      provided in (C) below, each Award, and each right under any Award, shall be
      exercisable only by the Participant during the Participant’s lifetime, or by the
      person to whom the Participant’s rights shall pass by will or the laws of
      descent and distribution. Notwithstanding anything in the Plan to the contrary,
      a nonqualified stock option shall be transferable pursuant to a domestic
      relations order.

     

    B.  Except
      as
      provided in (C) below, no Award and no right under any such Award may be
      assigned, alienated, pledged, attached, sold or otherwise transferred or
      encumbered by a Participant and any such purported assignment, alienation,
      pledge, attachment, sale, transfer or encumbrance shall be void and
      unenforceable against the Company or any Affiliate.

     

    C.  Notwithstanding
      anything in the Plan to the contrary, to the extent specifically provided by
      the
      Committee with respect to a grant, a nonqualified stock option may be
      transferred to immediate family members or related family trusts, or similar
      entities on such terms and conditions as the Committee may establish. In
      addition, Awards may be transferred by will or the laws of descent and
      distribution.

     

    (iv)  Term
      of Awards. The term of each Award shall be for such period as may be
      determined by the Committee; provided, that in no event shall the term of any
      Award exceed a period of ten (10) years from the date of its grant (or such
      shorter term as may be required in respect of an Option that is an incentive
      stock option under Section 422 of the Code).

     

    (v)  Share
      Certificates. All certificates for Shares or other securities of the Company
      or any Affiliate delivered under the Plan pursuant to any Award or the exercise
      thereof shall be subject to such stop transfer orders and other restrictions
      as
      the Committee may deem advisable under the Plan or the rules, regulations,
      and
      other requirements of the SEC, any stock exchange upon which such Shares or
      other securities are then listed, and any applicable federal or state laws,
      and
      the Committee may cause a legend or legends to be put on any such certificates
      to make appropriate reference to such restrictions.

     

    (vi)  Delivery
      of Shares or other Securities and Payment by Participant of Consideration.
      No Shares or other securities shall be delivered pursuant to any Award until
      payment in full of any amount required to be paid pursuant to the Plan or the
      applicable Award Agreement (including, without limitation, any exercise price,
      tax payment or tax withholding) is received by the Company. Such payment may
      be
      made by such method or methods and in such form or forms as the Committee shall
      determine, including, without limitation, cash, Shares, other securities, other
      Awards or other property, withholding of Shares, cashless exercise with
      simultaneous sale, or any combination thereof; provided that the combined value,
      as determined by the Committee, of all cash and cash equivalents and the Fair
      Market Value of any such Shares or other property so tendered to the Company,
      as
      of the date of such tender, is at least equal to the full amount required to
      be
      paid pursuant to the Plan or the applicable Award Agreement to the
      Company.

     

    (vii)  Code
      Section 409A.  Notwithstanding any other provision of the Plan to
      the contrary, any Award shall contain terms that (i) are designed to avoid
      application of Section 409A of the Code to the Award or (ii) are designed to
      avoid adverse tax consequences under Section 409A of the Code should that Code
      Section apply to the Award.

     

    SECTION
      7.  Amendment
      and Termination

     

    Except
      to
      the extent prohibited by applicable law and unless otherwise expressly provided
      in an Award Agreement or in the Plan:

     

    (a)  Amendments
      to the Plan. The Board or the Committee may amend, alter, suspend,
      discontinue, or terminate the Plan without the consent of any shareholder,
      Participant, other holder or beneficiary of an Award, or other Person; provided,
      however, no such amendment may be made without stockholder approval to the
      extent that such approval is required by (i) applicable legal requirements
      or
      (ii) the requirements of any securities exchange or market on which the Shares
      are listed. Notwithstanding the foregoing, the Board or the Committee may amend
      the Plan in such manner as it deems necessary in order to permit Awards to
      meet
      the requirements of the Code or other applicable laws, or to prevent adverse
      tax
      consequences.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (b)  Amendments
      to Awards. The Committee may waive any conditions or rights under, amend any
      terms of, or alter any Award theretofore granted, provided no change, other
      than
      pursuant to Section 7(c), in any Award shall materially reduce the benefit
      to
      Participant without the consent of such Participant.

     

    (c)  Adjustment
      of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The
      Committee is hereby authorized to make adjustments in the terms and conditions
      of, and the criteria included in, Awards in recognition of unusual or
      nonrecurring events affecting the Company, any Affiliate, or the financial
      statements of the Company or any Affiliate, or of changes in applicable laws,
      regulations, or accounting principles, whenever the Committee determines that
      such adjustments are appropriate in order to prevent dilution or enlargement
      of
      the benefits or potential benefits intended to be made available under the
      Plan.

     

    SECTION
      8.  Adjustments
      Upon Changes in Stock/Change in Control

     

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

     

    (b)  Change
      in Control. Unless otherwise provided in the Award, in the event of a Change
      in Control described in clauses (b), (c) or (d) of the definition of Change
      in
      Control under Section 2 of the Plan, (i) if the Company does not survive as
      an
      independent corporation (excluding as a subsidiary), the surviving corporation
      or an affiliate of such surviving corporation shall assume the Awards
      outstanding under the Plan or substitute similar awards (including an award
      to
      acquire the same consideration paid to the stockholders of the Company in the
      transaction effecting the Change in Control) for those outstanding under the
      Plan, or (ii) if the Company continues as an independent corporation (excluding
      as a subsidiary), such Awards shall continue in full force and effect. In the
      event of a Change in Control in which the Company does not survive as an
      independent corporation (excluding as a subsidiary), if any surviving
      corporation and its affiliates refuse to assume or continue the Awards, or
      to
      substitute similar awards for those outstanding under the Plan, then unless
      otherwise provided in the Award:

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (i)  All
      Options then outstanding shall become immediately vested and fully exercisable
      immediately prior to the Change in Control, notwithstanding any provision
      therein for exercise in installments;

     

    (ii)  All
      restrictions and conditions of all Restricted Stock then outstanding shall
      be
      deemed satisfied, and the Restricted Period or other limitations on payment
      in
      full with respect thereto shall be deemed to have expired immediately prior
      to
      the date of the Change in Control; and

     

    (iii)  All
      outstanding Performance Awards and any Other Stock or Performance-Based Awards
      shall become fully vested, deemed earned in full immediately prior to the date
      of the Change in Control and promptly paid to the Participants as of the date
      of
      the Change of Control, without regard to payment schedules and notwithstanding
      that the applicable performance cycle, retention cycle or other restrictions
      and
      conditions shall not have been completed or satisfied.

     

    (c)  Right
      of Cash-Out. If approved by the Board prior to or within thirty (30) days
      after such time as a Change in Control shall be deemed to have occurred, the
      Board shall have the right for a forty-five (45) day period immediately
      following the date that the Change in Control is deemed to have occurred to
      require all, but not less than all, Participants to transfer and deliver to
      the
      Company all Awards previously granted to the Participants in exchange for an
      amount equal to the “cash value” (defined below) of the Awards. Such right shall
      be exercised by written notice to all Participants. For purposes of this
      Section, the cash value of an Award shall equal the sum of (i) all cash to
      which
      the Participant would be entitled upon settlement or exercise of any Award
      which
      is not an Option and (ii) in the case of any Award that is an Option, the excess
      of the “market value” (defined below) per share over the option price, if any,
      multiplied by the number of shares subject to such Award. For purposes of the
      preceding sentence, “market value” per share shall mean the higher of (i) the
      average of the Fair Market Value per share of Common Stock on each of the five
      (5) trading days immediately following the date a Change in Control is deemed
      to
      have occurred or (ii) the highest price, if any, offered in connection with
      the
      Change in Control. The amount payable to each Participant by the Company
      pursuant to this Section shall be in cash or by certified check and shall be
      reduced by any taxes required to be withheld.

     

    SECTION
      9.  General
      Provisions

     

    (a)  No
      Rights to Awards. No Director, Employee, Consultant or other Person shall
      have any claim to be granted any Award, and there is no obligation for
      uniformity of treatment of Employees, Consultants, or holders or beneficiaries
      of Awards. The terms and conditions of Awards need not be the same with respect
      to each recipient.

     

    (b)  Withholding.
      The Company or any Affiliate is authorized to withhold at the minimum statutory
      rate from any Award, from any payment due or transfer made under any Award
      or
      under the Plan or from any compensation or other amount owing to a Participant
      the amount (in cash, Shares, other securities, Shares that would otherwise
      be
      issued pursuant to such Award, other Awards or other property) of any applicable
      taxes payable in respect of an Award, its exercise, the lapse of restrictions
      thereon, or any payment or transfer under an Award or under the Plan and to
      take
      such other action as may be necessary in the opinion of the Company to satisfy
      all obligations for the payment of such taxes. In addition, the Committee may
      provide, in an Award Agreement, that the Participant may direct the Company
      to
      satisfy such Participant’s tax obligation through the “constructive” tender of
      already-owned Shares or the withholding of Shares otherwise to be acquired
      upon
      the exercise or payment of such Award.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (c)  No
      Right to Employment. The grant of an Award shall not be construed as giving
      a Participant the right to be retained in the employ of the Company or any
      Affiliate. Further, the Company or an Affiliate may at any time dismiss a
      Participant from employment, free from any liability or any claim under the
      Plan, unless otherwise expressly provided in the Plan or in any Award
      Agreement.

     

    (d)  Governing
      Law. The validity, construction, and effect of the Plan and any rules and
      regulations relating to the Plan shall be determined in accordance with the
      laws
      of the State of California and applicable federal law.

     

    (e)  Severability.
      If any provision of the Plan or any Award is or becomes or is deemed to be
      invalid, illegal, or unenforceable in any jurisdiction or as to any Person
      or
      Award, or would disqualify the Plan or any Award under any law deemed applicable
      by the Committee, such provision shall be construed or deemed amended to conform
      to the applicable laws, or if it cannot be construed or deemed amended without,
      in the determination of the Committee, materially altering the intent of the
      Plan or the Award, such provision shall be stricken as to such jurisdiction,
      Person or Award and the remainder of the Plan and any such Award shall remain
      in
      full force and effect.

     

    (f)  Other
      Laws. The Committee may refuse to issue or transfer any Shares or other
      consideration under an Award if, acting in its sole discretion, it determines
      that the issuance of transfer or such Shares or such other consideration might
      violate any applicable law or regulation or entitle the Company to recover
      the
      same under Section 16(b) of the Exchange Act, and any payment tendered to the
      Company by a Participant, other holder or beneficiary in connection with the
      exercise of such Award shall be promptly refunded to the relevant Participant,
      holder or beneficiary.

     

    (g)  No
      Trust or Fund Created. Neither the Plan nor the Award shall create or be
      construed to create a trust or separate fund of any kind or a fiduciary
      relationship between the Company or any Affiliate and a Participant or any
      other
      Person. To the extent that any Person acquires a right to receive payments
      from
      the Company or any Affiliate pursuant to an Award, such right shall be no
      greater than the right of any general unsecured creditor of the Company or
      any
      Affiliate.

     

    (h)  No
      Fractional Shares. No fractional Shares shall be issued or delivered
      pursuant to the Plan or any Award, and the Committee shall determine whether
      cash, other securities, or other property shall be paid or transferred in lieu
      of any fractional Shares or whether such fractional Shares or any rights thereto
      shall be canceled, terminated, or otherwise eliminated.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (i)  Securities
      Laws Compliance. Unless the Shares have been registered under the Securities
      Act of 1933 (and, in the case of any Participant who may be deemed an affiliate
      of the Company for securities law purposes, such Shares have been registered
      under such Act for resale by such Participant), or the Company has determined
      that an exemption from registration is available, the Company may require prior
      to and as a condition of the exercise or payment of any Award that (i) the
      Participant desiring to exercise or receive payment such Award give the Company
      written notice thereof and that such notice may not be given by the Participant
      until forty-five (45) days thereafter (which time period may be waived by the
      Committee in its sole discretion) in order to allow the Company the opportunity
      to provide to such Participant any disclosure materials, or to make such
      filings, as may be required under federal and state securities laws and (ii)
      the
      Participant desiring to exercise or be paid such Award furnish the Company
      with
      a written representation in a form prescribed by the Committee to the effect
      that such person is acquiring said Shares solely with a view to investment
      for
      his or her own account and not with a view to the resale or distribution of
      all
      or any part thereof, and that such person will not dispose of any of such Shares
      otherwise than in accordance with the provisions of Rule 144 under the Act
      unless and until either the Shares are registered under the Act or the Company
      is satisfied that an exemption from such registration is available.

     

    (j)  Headings.
      Headings are given to the Sections and subsections of the Plan solely as a
      convenience to facilitate reference. Such headings shall not be deemed in any
      way material or relevant to the construction or interpretation of the Plan
      or
      any provision thereof.

     

    (k)  Code
      Section 409A. Notwithstanding anything in this Plan to the contrary, if any
      Plan provision or Award under the Plan would result in the imposition of an
      applicable tax under Code Section 409A and related regulations and Treasury
      pronouncements (“Section 409A”), that Plan provision or Award may be reformed to
      avoid imposition of the applicable tax and no action taken to comply with
      Section 409A shall be deemed to adversely affect the Participant’s rights to an
      Award.

     

    (l)  No
      Guarantee of Tax Consequences. None of the Board, the Company nor the
      Committee makes any commitment or guarantee that any federal, state or local
      tax
      treatment will apply or be available to any person participating or eligible
      to
      participate hereunder.

     

    SECTION
      10.  Term
      of the Plan

     

    No
      Award
      shall be granted under the Plan after the tenth (10th) anniversary
      of
      the date the Plan is adopted by the Board as the Plan shall expire on that
      date
      unless earlier terminated pursuant to Section 7. However, unless otherwise
      expressly provided in the Plan or in an applicable Award Agreement, any Award
      granted prior to such expiration or termination, and the authority of the Board
      or the Committee to amend, alter, adjust, suspend, discontinue, or terminate
      any
      such Award or to waive any conditions or rights under such Award, shall extend
      beyond such expiration or termination date.

     


    
      
        
        

      

      
        13