2006-I Employee Stock Incentive Plan


    EXHIBIT
      4.1

    


    U.S.
      Microbics,
      Inc.

    


    2006-I
      EMPLOYEE
      STOCK INCENTIVE PLAN

    


    As
      Adopted March
      27, 2006

    


    


    
      	1.	
              PURPOSE.

            


    

    


    The
      purpose of this Plan is to provide incentives to attract, retain and motivate
      eligible persons whose present and potential contributions are important to
      the
      success of the Company, its Parent and Subsidiaries, by offering them an
      opportunity to participate in the Company’s future performance through awards of
      Options, Restricted Stock and Stock Bonuses. Capitalized terms not defined
      in
      the text are defined in Section 2.

    


    
      	2.	
              DEFINITIONS.

            


    

    


    As
      used in this Plan, the following terms will have the following
      meanings:

    


    “AWARD”
means
      any award under
      this Plan, including any Option, Restricted Stock or Stock Bonus.

    


    “AWARD
      AGREEMENT”
means,
      with respect to
      each Award, the signed written agreement between the Company and the Participant
      setting forth the terms and conditions of the Award.

    


    “BOARD”
means
      the Board of
      Directors of the Company.

    


    “CAUSE”
means
      any cause, as
      defined by applicable law, for the termination of a Participant’s employment
      with the Company or a Parent or Subsidiary of the Company.

    


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

    


    “COMPANY”
means
      U.S. Microbics,
      Inc., a Colorado corporation, or any successor corporation.

    


    “DISABILITY”
means
      a disability,
      whether temporary or permanent, partial or total, as determined by the
      Board.

    


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

    


    “EXERCISE
      PRICE”
      means the price at which a holder of an Option may purchase the Shares issuable
      upon exercise of the Option.

    


    “FAIR
      MARKET
      VALUE”
      means, as of any date, the value of a share of the Company’s Common Stock
      determined as follows:

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	 	
              (a)

            	
              if
                such Common Stock
                is publicly traded and is then listed on a national securities exchange,
                its closing price on the date of determination on the principal national
                securities exchange on which the Common Stock is listed or admitted
                to
                trading as reported in The Wall Street
                Journal;

            


    

    


    
      	 	
              (b)

            	
              if
                such Common Stock
                is quoted on the NASDAQ National Market, its closing price on the
                NASDAQ
                National Market on the date of determination as reported in The Wall
                Street Journal;

            


    

    


    
      	 	
              (c)

            	
              if
                such Common Stock
                is publicly traded but is not listed or admitted to trading on a
                national
                securities exchange, the average of the closing bid and asked prices
                on
                the date of determination as reported by Bloomberg,
                L.P.;

            


    

    


    
      	 	
              (d)

            	
              in
                the case of an
                Award made on the Effective Date, the price per share at which shares
                of
                the Company’s Common Stock are initially offered for sale to the public by
                the Company’s underwriters in the initial public offering of the Company’s
                Common Stock pursuant to a registration statement filed with the
                SEC under
                the Securities Act; or

            


    

    


    
      	 	
              (e)

            	
              if
                none of the
                foregoing is applicable, by the Board in good
                faith.

            


    

    


    “INSIDER”
means
      an officer or
      director of the Company or any other person whose transactions in the Company’s
      Common Stock are subject to Section 16 of the Exchange Act.

    


    “OPTION”
means
      an award of an
      option to purchase Shares pursuant to Section 6.

    


    “PARENT”
means
      any corporation
      (other than the Company) in an unbroken chain of corporations ending with the
      Company if each of such corporations other than the Company owns stock
      possessing 50% or more of the total combined voting power of all classes of
      stock in one of the other corporations in such chain.

    


    “PARTICIPANT”
means
      a person who
      receives an Award under this Plan.

    


    “PERFORMANCE
      FACTORS”
      means the factors selected by the Board, in its sole and absolute discretion,
      from among the following measures to determine whether the performance goals
      applicable to Awards have been satisfied:

    


    
      	 	 	
              (a)

            	
              Net
                revenue and/or
                net revenue growth;

            


    

    


    
      	 	 	
              (b)

            	
              Earnings
                before
                income taxes and amortization and/or earnings before income taxes
                and
                amortization growth;

            


    

    


    
      	 	 	
              (c)

            	
              Operating
                income
                and/or operating income growth;

            


    

    


    
      	 	 	
              (d)

            	
              Net
                income and/or
                net income growth;

            


    

    


    
      	 	 	
              (e)

            	
              Earnings
                per share
                and/or earnings per share growth;

            


    

    


    
      	 	 	
              (f)

            	
              Total
                stockholder
                return and/or total stockholder return
                growth;

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	 	
              (g)

            	
              Return
                on
                equity;

            


    

    


    
      	 	 	
              (h)

            	
              Operating
                cash flow
                return on income;

            


    

    


    
      	 	 	
              (i)

            	
              Adjusted
                operating
                cash flow return on income;

            


    

    


    
      	 	 	
              (j)

            	
              Economic
                value
                added; and

            


    

    


    
      	 	 	
              (k)

            	
              Individual
                confidential business objectives.

            


    

    


    “PERFORMANCE
      PERIOD”
      means the period of service determined by the Board, not to exceed five years,
      during which years of service or performance is to be measured for Restricted
      Stock Awards or Stock Bonuses.

    


    “PLAN”
means
      this U.S.
      Microbics, Inc. 2006-I Employee Stock Incentive Plan, as amended from time
      to
      time.

    


    “RESTRICTED
      STOCK
      AWARD”
      means an award of Shares pursuant to Section 7.

    


    “SEC”
means
      the Securities and
      Exchange Commission.

    


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

    


    “SHARES”
means
      shares of the
      Company’s Common Stock reserved for issuance under this Plan, as adjusted
      pursuant to Sections 3 and 19, and any successor security.

    


    “STOCK
      BONUS”
      means an award of Shares, or cash in lieu of Shares, pursuant to Section
      8.

    


    “SUBSIDIARY”
means
      any corporation
      (other than the Company) in an unbroken chain of corporations beginning with
      the
      Company if each of the corporations other than the last corporation in the
      unbroken chain owns stock possessing 50% or more of the total combined voting
      power of all classes of stock in one of the other corporations in such
      chain.

    


    “TERMINATION”
or
“TERMINATED”
means,
      for purposes of
      this Plan with respect to a Participant, that the Participant has for any reason
      ceased to provide services as an employee, officer, director, consultant,
      independent contractor, or advisor to the Company or a Parent or Subsidiary
      of
      the Company. An employee will not be deemed to have ceased to provide services
      in the case of (i) sick leave, (ii) military leave, or (iii) any other leave
      of
      absence approved by the Company, provided that such leave is for a period of
      not
      more than 90 days, unless reemployment upon the expiration of such leave is
      guaranteed by contract or statute or unless provided otherwise pursuant to
      a
      formal policy adopted from time to time by the Company and issued and
      promulgated to employees in writing. In the case of any employee on an approved
      leave of absence, the Board may make such provisions respecting suspension
      of
      vesting of the Award while on leave from the employ of the Company or a
      Subsidiary as it may deem appropriate, except that in no event may an Option
      be
      exercised after the expiration of the term set forth in the Option agreement.
      The Board will have sole discretion to determine whether a Participant has
      ceased to provide services and the effective date on which the Participant
      ceased to provide services (the “TERMINATION DATE”). 

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “UNVESTED
      SHARES”
      means “Unvested Shares” as defined in the Award Agreement.

    


    “VESTED
      SHARES”
      means “Vested Shares” as defined in the Award Agreement.

    


    
      	3.	
              SHARES
                SUBJECT TO THE PLAN.

            


    

    


    3.1 Number
      of Shares
      Available. Subject
      to Sections 3.2
      and 19, the total aggregate number of Shares reserved and available for grant
      and issuance pursuant to this Plan will be 50,000,000 plus Shares that are
      subject to: (a) issuance upon exercise of an Option but cease to be subject
      to
      such Option for any reason other than exercise of such Option; (b) an Award
      granted hereunder but forfeited or repurchased by the Company at the original
      issue price; and (c) an Award that otherwise terminates without Shares being
      issued. At all times the Company shall reserve and keep available a sufficient
      number of Shares as shall be required to satisfy the requirements of all
      outstanding Options granted under this Plan and all other outstanding but
      unvested Awards granted under this Plan.

    


    3.2 Adjustment
      of
      Shares.
      In the event that the number of outstanding shares is changed by a stock
      dividend, recapitalization, stock split, reverse stock split, subdivision,
      combination, reclassification or similar change in the capital structure of
      the
      Company without consideration, then (a) the number of Shares reserved for
      issuance under this Plan, (b) the Exercise Prices of and number of Shares
      subject to outstanding Options, and (c) the number of Shares subject to other
      outstanding Awards will be proportionately adjusted, subject to any required
      action by the Board or the stockholders of the Company and compliance with
      applicable securities laws; provided, however, that fractions of a Share will
      not be issued but will either be replaced by a cash payment equal to the Fair
      Market Value of such fraction of a Share or will be rounded up to the nearest
      whole Share, as determined by the Board.

    


    
      	4.	
              ELIGIBILITY.

            


    

    


    ISOs
      (as defined in Section 6 below) may be granted only to employees (including
      officers and directors who are also employees) of the Company or of a Parent
      or
      Subsidiary of the Company. All other Awards may be granted to employees,
      officers, directors, consultants, independent contractors and advisors of the
      Company or any Parent or Subsidiary of the Company; provided such consultants,
      contractors and advisors render bona fide services not in connection with the
      offer and sale of securities in a capital-raising transaction. 

    


    
      	5.	
              ADMINISTRATION.

            


    

    


    5.1 Board
      Authority. This
      Plan will be
      administered by the Board. Subject to the general purposes, terms and conditions
      of this Plan, the Board will have full power to implement and carry out this
      Plan. Without limitation, the Board will have the authority to:

    


    
      	 	
              (a)

            	 	
              construe
                and
                interpret this Plan, any Award Agreement and any other agreement
                or
                document executed pursuant to this
                Plan;

            


    

    


    
      	 	
              (b)

            	
              prescribe,
                amend and
                rescind rules and regulations relating to this Plan or any
                Award;

            


    

    


    
      	 	
              (c)

            	
              select
                persons to
                receive Awards;

            


    

    


    
      	 	
              (d)

            	
              determine
                the form
                and terms of Awards;

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              (e)

            	
              determine
                the number
                of Shares or other consideration subject to
                Awards;

            


    

    


    
      	 	
              (f)

            	
              determine
                whether
                Awards will be granted singly, in combination with, in tandem with,
                in
                replacement of, or as alternatives to, other Awards under this Plan
                or any
                other incentive or compensation plan of the Company or any Parent
                or
                Subsidiary of the Company;

            


    

    


    
      	 	
              (g)

            	
              grant
                waivers of
                Plan or Award conditions;

            


    

    


    
      	 	
              (h)

            	
              determine
                the
                vesting, ability to exercise and payment of
                Awards;

            


    

    


    
      	 	
              (i)

            	
              correct
                any defect,
                supply any omission or reconcile any inconsistency in this Plan,
                any Award
                or any Award Agreement;

            


    

    


    
      	 	
              (j)

            	
              determine
                whether an
                Award has been earned; and

            


    

    


    
      	 	
              (k)

            	
              make
                all other
                determinations necessary or advisable for the administration of this
                Plan.

            


    

    


    5.2 Board
      Discretion. Any
      determination made
      by the Board with respect to any Award will be made at the time of grant of
      the
      Award or, unless in contravention of any express term of this Plan or Award,
      at
      any later time, and such determination will be final and binding on the Company
      and on all persons having an interest in any Award under this Plan. The Board
      may delegate to one or more officers of the Company the authority to grant
      an
      Award under this Plan to Participants who are not Insiders of the
      Company.

    


    
      	6.	
              OPTIONS.

            


    

    


     The
      Board may grant
      Options to eligible persons and will determine whether such Options will be
      Incentive Stock Options within the meaning of the Code (“ISO”) or Nonqualified
      Stock Options (“NQSO”), the number of Shares subject to the Option, the Exercise
      Price of the Option, the period during which the Option may be exercised, and
      all other terms and conditions of the Option, subject to the
      following:

    


    6.1 Form
      of Option
      Grant.
      Each Option granted under this Plan will be evidenced by an Award Agreement
      that
      will expressly identify the Option as an ISO or an NQSO (hereinafter referred
      to
      as the “STOCK OPTION AGREEMENT”), and will be in such form and contain such
      provisions (which need not be the same for each Participant) as the Board may
      from time to time approve, and which will comply with and be subject to the
      terms and conditions of this Plan.

    


    6.2 Date
      of
      Grant.
      The date of grant of an Option will be the date on which the Board makes the
      determination to grant such Option, unless otherwise specified by the Board.
      The
      Stock Option Agreement and a copy of this Plan will be delivered to the
      Participant within a reasonable time after the granting of the
      Option.

    


    6.3 Exercise
      Period.
      Options may be exercisable within the times or upon the events determined by
      the
      Board as set forth in the Stock Option Agreement governing such Option;
      provided, however, that no Option will be exercisable after the expiration
      of
      ten (10) years from the date the Option is granted; and provided further that
      no
      ISO granted to a person who directly or by attribution owns more than ten
      percent (10%) of the total combined voting power of all classes of stock of
      the
      Company or of any Parent or Subsidiary of the Company (“TEN PERCENT
      STOCKHOLDER”) will be exercisable after the expiration of five (5) years from
      the date the ISO is granted. The Board also may provide for Options to become
      exercisable at one time or from time to time, periodically or otherwise, in
      such
      number of Shares or percentage of Shares as the Board determines.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.4 Exercise
      Price.
      The Exercise Price of an Option will be determined by the Board when the Option
      is granted and may be not less than 85% of the Fair Market Value of the Shares
      on the date of grant; provided that: (a) the Exercise Price of an ISO will
      be
      not less than 100% of the Fair Market Value of the Shares on the date of grant;
      and (b) the Exercise Price of any ISO granted to a Ten Percent Stockholder
      will
      not be less than 110% of the Fair Market Value of the Shares on the date of
      grant. Payment for the Shares purchased may be made in accordance with Section
      9
      of this Plan.

    


    6.5 Method
      of
      Exercise.
      Options may be exercised only by delivery to the Company of a written stock
      option exercise agreement (the “EXERCISE AGREEMENT”) in a form approved by the
      Board, (which need not be the same for each Participant), stating the number
      of
      Shares being purchased, the restrictions imposed on the Shares purchased under
      such Exercise Agreement, if any, and such representations and agreements
      regarding Participant’s investment intent and access to information and other
      matters, if any, as may be required or desirable by the Company to comply with
      applicable securities laws, together with payment in full of the Exercise Price
      for the number of Shares being purchased.

    


    6.6 Termination.
      Notwithstanding the
      exercise periods set forth in the Stock Option Agreement, exercise of an Option
      will always be subject to the following:

    


    (a) If
      the Participant’s
      service is Terminated for any reason except death or Disability, then the
      Participant may exercise such Participant’s Options only to the extent that such
      Options would have been exercisable upon the Termination Date no later than
      three (3) months after the Termination Date (or such shorter or longer time
      period not exceeding five (5) years as may be determined by the Board, with
      any
      exercise beyond three (3) months after the Termination Date deemed to be an
      NQSO), but in any event, no later than the expiration date of the
      Options.

    


    (b) If
      the Participant’s
      service is Terminated because of Participant’s death or Disability (or the
      Participant dies within three (3) months after a Termination other than for
      Cause or because of Participant’s Disability), then Participant’s Options may be
      exercised only to the extent that such Options would have been exercisable
      by
      Participant on the Termination Date and must be exercised by Participant (or
      Participant’s legal representative or authorized assignee) no later than twelve
      (12) months after the Termination Date (or such shorter or longer time period
      not exceeding five (5) years as may be determined by the Board, with any such
      exercise beyond (i) three (3) months after the Termination Date when the
      Termination is for any reason other than the Participant’s death or Disability,
      or (ii) twelve (12) months after the Termination Date when the Termination
      is
      for Participant’s death or Disability, deemed to be an NQSO), but in any event
      no later than the expiration date of the Options.

    


    (c) Notwithstanding
      the
      provisions in paragraph 6.6(a) above, if a Participant’s service is Terminated
      for Cause, neither the Participant, the Participant’s estate nor such other
      person who may then hold the Option shall be entitled to exercise any Option
      with respect to any Shares whatsoever, after Termination, whether or not after
      Termination the Participant may receive payment from the Company or Subsidiary
      for vacation pay, for services rendered prior to Termination, for services
      rendered for the day on which Termination occurs, for salary in lieu of notice,
      or for any other benefits. For the purpose of this paragraph, Termination shall
      be deemed to occur on the date when the Company dispatches notice or advice
      to
      the Participant that his service is Terminated.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.7 Limitations
      on
      Exercise.
      The Board may specify a reasonable minimum number of Shares that may be
      purchased on any exercise of an Option, provided that such minimum number will
      not prevent Participant from exercising the Option for the full number of Shares
      for which it is then exercisable.

    


    6.8 Limitations
      on
      ISO. The
      aggregate Fair Market Value (determined as of the date of grant) of Shares
      with
      respect to which ISO are exercisable for the first time by a Participant during
      any calendar year (under this Plan or under any other incentive stock option
      plan of the Company, Parent or Subsidiary of the Company) will not exceed
      $100,000. If the Fair Market Value of Shares on the date of grant with respect
      to which ISO are exercisable for the first time by a Participant during any
      calendar year exceeds $100,000, then the Options for the first $100,000 worth
      of
      Shares to become exercisable in such calendar year will be ISO and the Options
      for the amount in excess of $100,000 that become exercisable in that calendar
      year will be NQSOs. In the event that the Code or the regulations promulgated
      thereunder are amended after the Effective Date of this Plan to provide for
      a
      different limit on the Fair Market Value of Shares permitted to be subject
      to
      ISO, such different limit will be automatically incorporated herein and will
      apply to any Options granted after the effective date of such
      amendment.

    


    6.9 Modification,
      Extension
      or Renewal. The
      Board may modify,
      extend or renew outstanding Options and authorize the grant of new Options
      in
      substitution therefor, provided that any such action may not, without the
      written consent of a Participant, impair any of such Participant’s rights under
      any Option previously granted. Any outstanding ISO that is modified, extended,
      renewed or otherwise altered will be treated in accordance with Section 424(h)
      of the Code. The Board may reduce the Exercise Price of outstanding Options
      without the consent of Participants affected by a written notice to them;
      provided, however, that the Exercise Price may not be reduced below the minimum
      Exercise Price that would be permitted under Section 6.4 of this Plan for
      Options granted on the date the action is taken to reduce the Exercise
      Price.

    


    6.10 No
      Disqualification. Notwithstanding
      any
      other provision in this Plan, no term of this Plan relating to ISO will be
      interpreted, amended or altered, nor will any discretion or authority granted
      under this Plan be exercised, so as to disqualify this Plan under Section 422
      of
      the Code or, without the consent of the Participant affected, to disqualify
      any
      ISO under Section 422 of the Code.

    


    
      	7.	
              RESTRICTED
                STOCK.

            


    

    


    A
      Restricted Stock Award is an offer by the Company to sell to an eligible person
      Shares that are subject to restrictions. The Board will determine to whom an
      offer will be made, the number of Shares the person may purchase, the price
      to
      be paid (the “PURCHASE PRICE”), the restrictions to which the Shares will be
      subject, and all other terms and conditions of the Restricted Stock Award,
      subject to the following:

    


    7.1 Form
      of Restricted
      Stock Award. All
      purchases under a
      Restricted Stock Award made pursuant to this Plan will be evidenced by an Award
      Agreement (the “RESTRICTED STOCK PURCHASE AGREEMENT”) that will be in such form
      (which need not be the same for each Participant) as the Board will from time
      to
      time approve, and will comply with and be subject to the terms and conditions
      of
      this Plan. The offer of Restricted Stock will be accepted by the Participant’s
      execution and delivery of the Restricted Stock Purchase Agreement and full
      payment for the Shares to the Company within thirty (30) days from the date
      the
      Restricted Stock Purchase Agreement is delivered to the person. If such person
      does not execute and deliver the Restricted Stock Purchase Agreement along
      with
      full payment for the Shares to the Company within thirty (30) days, then the
      offer will terminate, unless otherwise extended by the Board.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.2 Purchase
      Price.
      The Purchase Price of Shares sold pursuant to a Restricted Stock Award will
      be
      determined by the Board on the date the Restricted Stock Award is granted,
      except in the case of a sale to a Ten Percent Stockholder, in which case the
      Purchase Price will be 100% of the Fair Market Value. Payment of the Purchase
      Price must be made in accordance with Section 9 of this Plan.

    


    7.3 Terms
      of Restricted
      Stock Awards. Restricted
      Stock Awards
      shall be subject to such restrictions as the Board may impose. These
      restrictions may be based upon completion of a specified number of years of
      service with the Company or upon completion of the performance goals as set
      out
      in advance in the Participant’s individual Restricted Stock Purchase Agreement.
      Restricted Stock Awards may vary from Participant to Participant and between
      groups of Participants. Prior to the grant of a Restricted Stock Award, the
      Board shall: (a) determine the nature, length and starting date of any
      Performance Period for the Restricted Stock Award; (b) select from among the
      Performance Factors to be used to measure performance goals, if any; and (c)
      determine the number of Shares that may be awarded to the Participant. Prior
      to
      the payment of any Restricted Stock Award, the Board shall determine the extent
      to which such Restricted Stock Award has been earned. Performance Periods may
      overlap and Participants may participate simultaneously with respect to
      Restricted Stock Awards that are subject to different Performance Periods and
      have different performance goals and other criteria.

    


    7.4 Termination
      During
      Performance Period. If
      a Participant is
      Terminated during a Performance Period for any reason, then such Participant
      will be entitled to payment (whether in Shares, cash or otherwise) with respect
      to the Restricted Stock Award only to the extent earned as of the date of
      Termination in accordance with the Restricted Stock Purchase Agreement, unless
      the Board determines otherwise.

    


    
      	8.	
              STOCK
                BONUSES.

            


    

    


    8.1 Awards
      of Stock
      Bonuses.
      A Stock Bonus is an award of Shares (which may consist of Restricted Stock)
      for
      extraordinary services rendered to the Company or any Parent or Subsidiary
      of
      the Company. A Stock Bonus will be awarded pursuant to an Award Agreement (the
      “STOCK BONUS AGREEMENT”) that will be in such form (which need not be the same
      for each Participant) as the Board will from time to time approve, and will
      comply with and be subject to the terms and conditions of this Plan. A Stock
      Bonus may be awarded upon satisfaction of such performance goals as are set
      out
      in advance in the Participant’s individual Award Agreement (the “PERFORMANCE
      STOCK BONUS AGREEMENT”) that will be in such form (which need not be the same
      for each Participant) as the Board will from time to time approve, and will
      comply with and be subject to the terms and conditions of this Plan. Stock
      Bonuses may vary from Participant to Participant and between groups of
      Participants, and may be based upon the achievement of the Company, Parent
      or
      Subsidiary and/or individual performance factors or upon such other criteria
      as
      the Board may determine.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    8.2 Terms
      of Stock
      Bonuses.
      The Board will determine the number of Shares to be awarded to the Participant.
      If the Stock Bonus is being earned upon the satisfaction of performance goals
      pursuant to a Performance Stock Bonus Agreement, then the Board will: (a)
      determine the nature, length and starting date of any Performance Period for
      each Stock Bonus; (b) select from among the Performance Factors to be used
      to
      measure the performance, if any; and (c) determine the number of Shares that
      may
      be awarded to the Participant. Prior to the payment of any Stock Bonus, the
      Board shall determine the extent to which such Stock Bonuses have been earned.
      Performance Periods may overlap and Participants may participate simultaneously
      with respect to Stock Bonuses that are subject to different Performance Periods
      and different performance goals and other criteria. The number of Shares may
      be
      fixed or may vary in accordance with such performance goals and criteria as may
      be determined by the Board. The Board may adjust the performance goals
      applicable to the Stock Bonuses to take into account changes in law and
      accounting or tax rules and to make such adjustments as the Board deems
      necessary or appropriate to reflect the impact of extraordinary or unusual
      items, events or circumstances to avoid windfalls or hardships.

    


    8.3 Form
      of
      Payment.
      The earned portion of a Stock Bonus may be paid to the Participant by the
      Company either currently or on a deferred basis, with such interest or dividend
      equivalent, if any, as the Board may determine. Payment may be made in the
      form
      of cash or whole Shares or a combination thereof, either in a lump sum payment
      or in installments, all as the Board will determine.

    


    
      	9.	
              PAYMENT
                FOR
                SHARE PURCHASES.

            


    

    


    9.1 Payment.
      Payment for Shares
      purchased pursuant to this Plan may be made in cash (by check) or, where
      expressly approved for the Participant by the Board and where permitted by
      law:

    


    
      
        
          	
                	(a)	
                  by
                    cancellation of
                    indebtedness of the Company to the
                    Participant;

                


        

      

    

    


    
      	 	
              (b)

            	
              by
                surrender of
                shares that either: (1) have been owned by Participant for more than
                one
                year and have been paid for within the meaning of Rule 144 of the
                Securities Act of 1933 (and, if such shares were purchased from the
                Company by use of a promissory note, such note has been fully paid
                with
                respect to such shares); or (2) were obtained by Participant in the
                public
                market;

            


    

    


    
      	 	
               

            	
              (c)

            	
              by
                waiver of compensation due or accrued to the Participant for services
                rendered;

            


    

    


    
      	
            	(d)	
              with
                respect only to
                purchases upon exercise of an Option, and provided that a public
                market
                for the Company’s stock exists:

            


    

    


    
      	
               

            	
              (1)

            	
              through
                a “same day
                sale” commitment from the Participant and a broker-dealer that is a member
                of the National Association of Securities Dealers (an “NASD DEALER”)
                whereby the Participant irrevocably elects to exercise the Option
                and to
                sell a portion of the Shares so purchased to pay for the Exercise
                Price,
                and whereby the NASD Dealer irrevocably commits upon receipt of such
                Shares to forward the Exercise Price directly to the Company;
                or

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (2)

            	
              through
                a “margin”
                commitment from the Participant and a NASD Dealer whereby the Participant
                irrevocably elects to exercise the Option and to pledge the Shares
                so
                purchased to the NASD Dealer in a margin account as security for
                a loan
                from the NASD Dealer in the amount of the Exercise Price, and whereby
                the
                NASD Dealer irrevocably commits upon receipt of such Shares to forward
                the
                Exercise Price directly to the Company;
                or

            


    

    


    (e) by
      any combination of the
      foregoing.

    


    
      	10.	
              WITHHOLDING
                TAXES.

            


    

    


    10.1 Withholding
      Generally. Whenever
      Shares are to
      be issued in satisfaction of Awards granted under this Plan, the Company may
      require the Participant to remit to the Company an amount sufficient to satisfy
      federal, state and local withholding tax requirements prior to the delivery
      of
      any certificate or certificates for such Shares. Whenever, under this Plan,
      payments in satisfaction of Awards are to be made in cash, such payment will
      be
      net of an amount sufficient to satisfy federal, state, and local withholding
      tax
      requirements.

    


    10.2 Stock
      Withholding. When,
      under applicable
      tax laws, a participant incurs tax liability in connection with the exercise
      or
      vesting of any Award that is subject to tax withholding and the Participant
      is
      obligated to pay the Company the amount required to be withheld, the Board
      may
      allow the Participant to satisfy the minimum withholding tax obligation by
      electing to have the Company withhold from the Shares to be issued that number
      of Shares having a Fair Market Value equal to the minimum amount required to
      be
      withheld, determined on the date that the amount of tax to be withheld is to
      be
      determined. All elections by a Participant to have Shares withheld for this
      purpose will be made in accordance with the requirements established by the
      Board and be in writing in a form acceptable to the Board.

    


    
      	11.	
              PRIVILEGES
                OF STOCK OWNERSHIP.

            


    

    


    11.1 Voting
      and
      Dividends. No
      Participant will have
      any of the rights of a stockholder with respect to any Shares until the Shares
      are issued to the Participant. After Shares are issued to the Participant,
      the
      Participant will be a stockholder and will have all the rights of a stockholder
      with respect to such Shares, including the right to vote and receive all
      dividends or other distributions made or paid with respect to such Shares;
      provided, that if such Shares are Restricted Stock, then any new, additional
      or
      different securities the Participant may become entitled to receive with respect
      to such Shares by virtue of a stock dividend, stock split or any other change
      in
      the corporate or capital structure of the Company will be subject to the same
      restrictions as the Restricted Stock; provided, further, that the Participant
      will have no right to retain such stock dividends or stock distributions with
      respect to Shares that are repurchased at the Participant’s Purchase Price or
      Exercise Price pursuant to Section 12.

    


    11.2 Financial
      Statements. Pursuant
      to regulation
      260.140.46 of the Rules of the California Corporations Commissioner, the Company
      will provide financial statements to each Participant prior to such
      Participant’s purchase of Shares under this Plan, and to each Participant
      annually during the period such Participant has Awards outstanding; provided,
      however, the Company will not be required to provide such financial statements
      to Participants whose services in connection with the Company assure them access
      to equivalent information.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              12.

            	
              TRANSFERABILITY.

            


    

    


    Awards
      granted under this Plan, and any interest therein, will not be transferable
      or
      assignable by Participant, and may not be made subject to execution, attachment
      or similar process, other than by will or by the laws of descent and
      distribution. During the lifetime of the Participant an Award will be
      exercisable only by the Participant. During the lifetime of the Participant,
      any
      elections with respect to an Award may be made only by the Participant unless
      otherwise determined by the Board and set forth in the Award Agreement with
      respect to Awards that are not ISOs.

    


    
      	13.	
              RESTRICTIONS
                ON SHARES.

            


    

    


    At
      the
      discretion of the Board, the Company may reserve to itself and/or its
      assignee(s) in the Award Agreement a right to repurchase a portion of or all
      Unvested Shares held by a Participant following such Participant’s Termination
      at any time within ninety (90) days after the later of (a) Participant’s
      Termination Date, or (b) the date Participant purchases Shares under this Plan.
      Such repurchase by the Company shall be for cash and/or cancellation of purchase
      money indebtedness, and the price per share shall be the Participant’s Exercise
      Price or the Purchase Price, as applicable.

    


    
      	14.	
              CERTIFICATES.

            


    

    


    All
      certificates for Shares or other securities delivered under this Plan will
      be
      subject to such stock transfer orders, legends and other restrictions as the
      Board may deem necessary or advisable, including restrictions under any
      applicable federal, state or foreign securities law, or any rules, regulations
      and other requirements of the SEC or any stock exchange or automated quotation
      system upon which the Shares may be listed or quoted.

    


    
      	15.	
              ESCROW;
                PLEDGE OF SHARES.

            


    

    


    To
      enforce any restrictions on a Participant’s Shares, the Board may require the
      Participant to deposit all certificates representing Shares, together with
      stock
      powers or other instruments of transfer approved by the Board appropriately
      endorsed in blank, with the Company or an agent designated by the Company to
      hold in escrow until such restrictions have lapsed or terminated, and the Board
      may cause a legend or legends referencing such restrictions to be placed on
      the
      certificates. Any Participant who is permitted to execute a promissory note
      as
      partial or full consideration for the purchase of Shares under this Plan will
      be
      required to pledge and deposit with the Company all or part of the Shares so
      purchased as collateral to secure the payment of Participant’s obligation to the
      Company under the promissory note; provided, however, that the Board may require
      or accept other or additional forms of collateral to secure the payment of
      such
      obligation and, in any event, the Company will have full recourse against the
      Participant under the promissory note notwithstanding any pledge of the
      Participant’s Shares or other collateral. In connection with any pledge of the
      Shares, Participant will be required to execute and deliver a written pledge
      agreement in such form as the Board will from time to time approve. The Shares
      purchased with the promissory note may be released from the pledge on a pro
      rata
      basis as the promissory note is paid.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	16.	
              EXCHANGE
                AND
                BUYOUT OF AWARDS.

            


    

    


    The
      Board may, at any time or from time to time, authorize the Company, with the
      consent of the respective Participants, to issue new Awards in exchange for
      the
      surrender and cancellation of any or all outstanding Awards. The Board may
      at
      any time buy from a Participant an Award previously granted with payment in
      cash, Shares (including Restricted Stock) or other consideration, based on
      such
      terms and conditions as the Board and the Participant may agree.

    


    
      	17.	
              SECURITIES
                LAW AND OTHER REGULATORY
                COMPLIANCE.

            


    

    


    An
      Award will not be effective unless such Award is in compliance with all
      applicable federal and state securities laws, rules and regulations of any
      governmental body, and the requirements of any stock exchange or automated
      quotation system upon which the Shares may then be listed or quoted, as they
      are
      in effect on the date of grant of the Award and also on the date of exercise
      or
      other issuance. Notwithstanding any other provision in this Plan, the Company
      will have no obligation to issue or deliver certificates for Shares under this
      Plan prior to: (a) obtaining any approvals from governmental agencies that
      the
      Company determines are necessary or advisable; and/or (b) completion of any
      registration or other qualification of such Shares under any state or federal
      law or ruling of any governmental body that the Company determines to be
      necessary or advisable. The Company will be under no obligation to register
      the
      Shares with the SEC or to effect compliance with the registration, qualification
      or listing requirements of any state securities laws, stock exchange or
      automated quotation system, and the Company will have no liability for any
      inability or failure to do so.

    


    
      	18.	
              NO
                OBLIGATION TO EMPLOY.

            


    

    


    Nothing
      in this Plan or
      any Award granted under this Plan will confer or be deemed to confer on any
      Participant any right to continue in the employ of, or to continue any other
      relationship with, the Company or any Parent or Subsidiary of the Company or
      limit in any way the right of the Company or any Parent or Subsidiary of the
      Company to terminate Participant’s employment or other relationship at any time,
      with or without cause.

    


    
      	19.	
              CORPORATE
                TRANSACTIONS.

            


    

    


    19.1 Assumption
      or
      Replacement of Awards by Successor. In
      the event of (a) a
      dissolution or liquidation of the Company, (b) a merger or consolidation in
      which the Company is not the surviving corporation (other than a merger or
      consolidation with a wholly-owned subsidiary, a reincorporation of the Company
      in a different jurisdiction, or other transaction in which there is no
      substantial change in the stockholders of the Company or their relative stock
      holdings and the Awards granted under this Plan are assumed, converted or
      replaced by the successor corporation, which assumption will be binding on
      all
      Participants), (c) a merger in which the Company is the surviving corporation
      but after which the stockholders of the Company immediately prior to such merger
      (other than any stockholder that merges, or which owns or controls another
      corporation that merges, with the Company in such merger) cease to own their
      shares or other equity interest in the Company, (d) the sale of substantially
      all of the assets of the Company, or (e) the acquisition, sale, or transfer
      of
      more than 50% of the outstanding shares of the Company by tender offer or
      similar transaction, any or all outstanding Awards may be assumed, converted
      or
      replaced by the successor corporation (if any), which assumption, conversion
      or
      replacement will be binding on all Participants. In the alternative, the
      successor corporation may substitute equivalent Awards or provide substantially
      similar consideration to Participants as was provided to stockholders (after
      taking into account the existing provisions of the Awards). The successor
      corporation may also issue, in place of outstanding Shares of the Company held
      by the Participant, substantially similar shares or other property subject
      to
      repurchase restrictions no less favorable to the Participant. In the event
      such
      successor corporation (if any) refuses to assume or substitute Awards, as
      provided above, pursuant to a transaction described in this Subsection 19.1,
      such Awards will expire on such transaction at such time and on such conditions
      as the Board will determine. Notwithstanding anything in this Plan to the
      contrary, the Board may provide that the vesting of any or all Awards granted
      pursuant to this Plan will accelerate upon a transaction described in this
      Section 19. If the Board exercises such discretion with respect to Options,
      such
      Options will become exercisable in full prior to the consummation of such event
      at such time and on such conditions as the Board determines, and if such Options
      are not exercised prior to the consummation of the corporate transaction, they
      shall terminate at such time as determined by the Board.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    19.2 Other
      Treatment of
      Awards.
      Subject to any greater rights granted to Participants under the foregoing
      provisions of this Section 19, in the event of the occurrence of any transaction
      described in Section 19.1, any outstanding Awards will be treated as provided
      in
      the applicable agreement or plan of merger, consolidation, dissolution,
      liquidation, or sale of assets.

    


    19.3 Assumption
      of Awards by
      the Company. The
      Company, from time
      to time, also may substitute or assume outstanding awards granted by another
      company, whether in connection with an acquisition of such other company or
      otherwise, by either: (a) granting an Award under this Plan in substitution
      of
      such other company’s award; or (b) assuming such award as if it had been granted
      under this Plan if the terms of such assumed award could be applied to an Award
      granted under this Plan. Such substitution or assumption will be permissible
      if
      the holder of the substituted or assumed award would have been eligible to
      be
      granted an Award under this Plan if the other company had applied the rules
      of
      this Plan to such grant. In the event the Company assumes an award granted
      by
      another company, the terms and conditions of such award will remain unchanged
      (except that the exercise price and the number and nature of Shares issuable
      upon exercise of any such option will be adjusted appropriately pursuant to
      Section 424(a) of the Code). In the event the Company elects to grant a new
      Option rather than assuming an existing option, such new Option may be granted
      with a similarly adjusted Exercise Price.

    


    
      	20.	
              ADOPTION
                AND
                STOCKHOLDER APPROVAL.

            


    

    


    This
      Plan will become effective on the date on which it is adopted by the Board
      (the
“EFFECTIVE DATE”). This Plan shall be approved by the stockholders of the
      Company within twelve (12) months before or after the date this Plan is adopted
      by the Board. Upon the Effective Date, the Board may grant Awards pursuant
      to
      this Plan. In the event that stockholder approval of this Plan is not obtained
      within the time period provided herein, all Awards granted hereunder shall
      be
      cancelled, any Shares issued pursuant to any Awards shall be cancelled and
      any
      purchase of Shares issued hereunder shall be rescinded.

    


    
      	21.	
              TERM
                OF
                PLAN/GOVERNING LAW.

            


    

    


    Unless
      earlier terminated as provided herein, this Plan will terminate ten (10) years
      from the date this Plan is adopted by the Board or, if earlier, the date of
      stockholder approval. This Plan and all agreements there under shall be governed
      by and construed in accordance with the laws of the State of
      California.

    


    
      	22.	
              AMENDMENT
                OR
                TERMINATION OF PLAN.

            


    

    


    The
      Board may at any time terminate or amend this Plan in any respect, including
      without limitation amendment of any form of Award Agreement or instrument to
      be
      executed pursuant to this Plan; provided, however, that the Board will not,
      without the approval of the stockholders of the Company, amend this Plan in
      any
      manner that requires such stockholder approval.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	23.	
              NONEXCLUSIVITY
                OF THE PLAN.

            


    

    


    Neither
      the adoption of
      this Plan by the Board, the submission of this Plan to the stockholders of
      the
      Company for approval, nor any provision of this Plan will be construed as
      creating any limitations on the power of the Board to adopt such additional
      compensation arrangements as it may deem desirable, including, without
      limitation, the granting of stock options and bonuses otherwise than under
      this
      Plan, and such arrangements may be either generally applicable or applicable
      only in specific cases.

    


    
      	24.	
              ACTION
                BY
                BOARD.

            


    

     

    Any
      action permitted or required to be taken by the Board or any decision or
      determination permitted or required to be made by the Board pursuant to this
      Plan shall be taken or made in the Board’s sole and absolute
      discretion.