EXHIBIT
10.1





QUALSTAR
CORPORATION


2008
STOCK INCENTIVE PLAN








This 2008
STOCK INCENTIVE PLAN (the “Plan”) is hereby established by Qualstar Corporation,
a California corporation (the “Company”), and adopted by its Board of Directors
as of November 5, 2008 (the “Effective Date”).





ARTICLE
1.





PURPOSES
OF THE PLAN





1.1           Purposes.  The
purposes of the Plan are (a) to enhance the Company’s ability to attract and
retain the services of qualified employees, officers, directors, consultants and
other service providers upon whose judgment, initiative and efforts the
successful conduct and development of the Company’s business largely depends,
and (b) to provide additional incentives to such persons or entities to devote
their utmost effort and skill to the advancement and betterment of the Company,
by providing them an opportunity to participate in the ownership of the Company
and thereby have an interest in the success and increased value of the
Company.





ARTICLE
2.





DEFINITIONS





For
purposes of this Plan, the following terms shall have the meanings
indicated:





2.1           Administrator.“Administrator”
means the Board or, if the Board delegates responsibility for any matter to the
Committee, the term Administrator shall mean the Committee.





2.2           Affiliated
Company.  “Affiliated Company” means:





(a)           with
respect to Incentive Options, any “parent corporation” or “subsidiary
corporation” of the Company, whether now existing or hereafter created or
acquired, as those terms are defined in Sections 424(e) and 424(f) of the Code,
respectively; and





(b)           with
respect to Nonqualified Options, any entity described in paragraph (a) of this
Section 2.2 above, plus any other corporation, limited liability company
(“LLC”), partnership or joint venture, whether now existing or hereafter created
or acquired, with respect to which the Company beneficially owns more than fifty
percent (50%) of:  (1) the total combined voting power of all
outstanding voting securities or (2) the capital or profits interests of an LLC,
partnership or joint venture.




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





2.4           Change in
Control.“Change in Control” shallmean:





(a)           The
acquisition, directly or indirectly, in one transaction or a series of related
transactions, by any person or group (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of the
beneficial ownership of securities of the Company possessing more than fifty
percent (50%) of the total combined voting power of all outstanding securities
of the Company;











(b)           A
merger or consolidation in which the Company is not the surviving entity, except
for a transaction in which the holders of the outstanding voting securities of
the Company immediately prior to such merger or consolidation hold as a result
of holding Company securities prior to such transaction, in the aggregate,
securities possessing more than fifty percent (50%) of the total combined voting
power of all outstanding voting securities of the surviving entity (or the
parent of the surviving entity) immediately after such merger or
consolidation;





(c)           A
reverse merger in which the Company is the surviving entity but in which the
holders of the outstanding voting securities of the Company immediately prior to
such merger hold, in the aggregate, securities possessing less than fifty
percent (50%) of the total combined voting power of all outstanding voting
securities of the Company or of the acquiring entity immediately after such
merger;





(d)           The
sale, transfer or other disposition (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company, except
for a transaction in which the holders of the outstanding voting securities of
the Company immediately prior to such transaction(s) receive as a distribution
with respect to securities of the Company, in the aggregate, securities
possessing more than fifty percent (50%) of the total combined voting power of
all outstanding voting securities of the acquiring entity immediately after such
transaction(s); or





(e)           The
approval by the stockholders of a plan or proposal for the liquidation or
dissolution of the Company.





2.5           Code.“Code”means the Internal
Revenue Code of 1986, as amended from time to time.





2.6           Committee.“Committee”
means a committee of two or more members of the Board appointed to administer
the Plan, as set forth in Section 6.1 hereof.





2.7           Common
Stock.“Common Stock”means the Common Stock
of the Company, subject to adjustment pursuant to Section 4.2
hereof.





2.8           Company.  “Company”
means Qualstar Corporation, a California corporation, or any entity that is a
successor to the Company.





2.9           Disability.“Disability”
means permanent and total disability as defined in Section 22(e)(3) of the
Code.  The Administrator’s determination of a Disability or the
absence thereof shall be conclusive and binding on all interested
parties.





2.10         Effective
Date.“Effective Date”means the date on which
the Plan was originally adopted by the Board, as set forth on the first page
hereof.





2.11         Exchange
Act.“Exchange Act” means the Securities and Exchange Act of
1934, as amended.





2.12         Exercise
Price.“Exercise Price” means the purchase price per share of
Common Stock payable by the Optionee to the Company upon exercise of an
Option.





2.13         Fair Market
Value.“Fair Market Value”on any given date means
the value of one share of Common Stock, determined as follows:





(a)           If
the Common Stock is then listed or admitted to trading on The NASDAQ Stock
Market or another stock exchange which reports closing sale prices, the Fair
Market Value shall be the closing sale price on the date of valuation on The
NASDAQ Stock Market or principal stock exchange on which the Common Stock is
then listed or admitted to trading, or, if no closing sale price is quoted on
such day, then the Fair Market Value shall be the closing sale price of the
Common Stock on The NASDAQ Stock Market or such exchange on the next preceding
day on which a closing sale price is reported.





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(b)           If
the Common Stock is not then listed or admitted to trading on The NASDAQ Stock
Market or a stock exchange which reports closing sale prices, the Fair Market
Value shall be the average of the closing bid and asked prices of the Common
Stock in the over-the-counter market on the date of valuation.





(c)           If
neither (a) nor (b) is applicable as of the date of valuation, then the Fair
Market Value shall be determined by the Administrator in good faith using any
reasonable method of evaluation, which determination shall be conclusive and
binding on all interested parties.





2.14         FINRA
Dealer.“FINRA Dealer” means a broker-dealer that is a member
of the Financial Industry Regulatory Authority.





2.15         Incentive
Option.“Incentive Option” means any Option designated and
qualified as an “incentive stock option” as defined in Section 422 of the
Code.





2.16         Incentive Option
Agreement.“Incentive Option Agreement” means an Option
Agreement with respect to an Incentive Option.





2.17         Nonqualified
Option.“Nonqualified Option”means any Option that is
not an Incentive Option.  To the extent that any Option designated as
an Incentive Option fails in whole or in part to qualify as an Incentive Option,
including, without limitation, for failure to meet the limitations applicable to
a 10% Stockholder or because it exceeds the annual limit provided for in
Section 5.7 below, it shall to that extent constitute a Nonqualified
Option.





2.18         Nonqualified Option Agreement.“Nonqualified Option Agreement” means an Option Agreement with respect to
a Nonqualified Option.





2.19         Option.“Option”means any option to
purchase Common Stock granted pursuant to this Plan.





2.20         Option
Agreement.“Option Agreement”means the written
agreement entered into between the Company and the Optionee with respect to an
Option granted under this Plan.





2.21         Optionee.“Optionee”
means any Participant who holds an Option.





2.22         Participant.“Participant”
means an individual or entity that holds an Option under this Plan.





2.23         Performance
Criteria.“Performance Criteria” means one or more of the
following as established by the Administrator, which may be stated as a target
percentage or dollar amount, a percentage increase over a base period percentage
or dollar amount or the occurrence of a specific event or events:





(a)           Revenue;





(b)           Gross
profit;





(c)           Operating
income;





(d)           Pre-tax
income;





(e)           Earnings
before interest, taxes, depreciation and amortization (“EBITDA”);





(f)           Earnings
per common share on a fully diluted basis (“EPS”);





(g)           Consolidated
net income of the Company divided by the average consolidated common
stockholders equity (“ROE”);





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(h)           Cash
and cash equivalents derived from either (i) net cash flow from operations, or
(ii) net cash flow from operations, financings and investingactivities (“Cash
Flow”);





(i)           Adjusted
operating cash flow return on income;





(j)           Cost
containment or reduction;





(k)           The
percentage increase in the market price of the Company’s common stock over a
stated period; and





(l) 
          Individual business
objectives.





2.24         Service
Provider.“Service Provider”means a consultant or
other person or entity the Administrator authorizes to become
a  Participant in the Plan and who provides services to (i) the
Company, (ii) an Affiliated Company, or (iii) any other business venture
designated by the Administrator in which the Company or an Affiliated Company
has a significant ownership interest.





2.25         10%
Stockholder.“10% Stockholder” means a person who, as of a
relevant date, owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or of an
Affiliated Company.





ARTICLE
3.





ELIGIBILITY





3.1           Incentive
Options.  Only employees of the Company or of an Affiliated
Company (including members of the Board if they are employees of the Company or
of an Affiliated Company) are eligible to receive Incentive Options under the
Plan.





3.2           Nonqualified
Options.  Employees of the Company or of an Affiliated Company,
members of the Board (whether or not employed by the Company or an Affiliated
Company), and Service Providers are eligible to receive Nonqualified Options
under the Plan.





3.3           Section 162(m)
Limitation.  In no event shall any Participant be granted
Options in any one calendar year pursuant to which the aggregate number of
shares of Common Stock that may be acquired thereunder exceeds one hundred
thousand (100,000) shares, subject to adjustment as to the number and kind of
shares pursuant to Section 4.2 hereof.





ARTICLE
4.





PLAN
SHARES





4.1           Shares Subject to the
Plan.





(a)           The
number of shares of Common Stock that may be issued under this Plan shall be
five hundred thousand (500,000) shares, subject to adjustment as to the number
and kind of shares pursuant to Section 4.2 hereof.  For purposes
of this limitation, in the event that (a) all or any portion of any Option
granted under the Plan can no longer under any circumstances be exercised, or
(b) any shares of Common Stock are reacquired by the Company pursuant to an
Option Agreement, the shares of Common Stock allocable to the unexercised
portion of such Option or the shares so reacquired shall again be available for
grant or issuance under the Plan.





(b)           The
maximum number of shares of Common Stock that may be issued under the Plan as
Incentive Options shall be five hundred thousand (500,000) shares, subject to
adjustment as to the number and kind of shares pursuant to Section 4.2
hereof.





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4.2           Changes in Capital
Structure.  In the event that the outstanding shares of Common
Stock are hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of a recapitalization, stock split, reverse stock split, reclassification, stock
dividend, or other change in the capital structure of the Company, then
appropriate adjustments shall be made by the Administrator to the aggregate
number and kind of shares subject to this Plan, the number and kind of shares
and the price per share subject to outstanding Option Agreements, and the limit
on the number of shares under Section 3.3, all in order to preserve, as nearly
as practical, but not to increase, the benefits to Participants.





ARTICLE
5.





OPTIONS





5.1           Grant of Stock
Options.The Administrator shall have the right to grant
pursuant to this Plan, Options subject to such terms, restrictions and
conditions as the Administrator may determine at the time of
grant.  Such conditions may include, but are not limited to, continued
employment or the achievement of specified performance goals or objectives
established by the Administrator with respect to one or more Performance
Criteria.





5.2           Option
Agreements.  Each Option granted pursuant to this Plan shall be
evidenced by an Option Agreement which shall specify the number of shares
subject thereto, vesting provisions relating to such Option, the Exercise Price
per share, and whether the Option is an Incentive Option or Nonqualified
Option.  As soon as is practical following the grant of an Option, an
Option Agreement shall be duly executed and delivered by or on behalf of the
Company to the Optionee to whom such Option was granted.  Each Option
Agreement shall be in such form and contain such additional terms and
conditions, not inconsistent with the provisions of this Plan, as the
Administrator shall, from time to time, deem desirable.





5.3           Exercise Price.  The
Exercise Price per share of Common Stock covered by each Option shall be
determined by the Administrator, subject to the following:  (a) the
Exercise Price of an Incentive Option shall not be less than 100% of Fair Market
Value on the date the Incentive Option is granted, (b) the Exercise Price of a
Nonqualified Option shall not be less than 100% of Fair Market Value on the date
the Nonqualified Option is granted, and (c) if the person to whom an Incentive
Option is granted is a 10% Stockholder on the date of grant, the Exercise Price
shall not be less than 110% of Fair Market Value on the date the Incentive
Option is granted.  However, an Option may be granted with an exercise
price lower than that set forth in the preceding sentence if such Option is
granted pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424 of the Code.





5.4           Payment of Exercise
Price.  Payment of the Exercise Price shall be made upon
exercise of an Option and may be made, in the discretion of the Administrator,
subject to any legal restrictions, by:  (a) cash; (b) check;
(c) the surrender of shares of Common Stock owned by the Optionee (provided
that shares acquired pursuant to the exercise of options granted by the Company
must have been held by the Optionee for the requisite period necessary to avoid
a charge to the Company’s earnings for financial reporting purposes), which
surrendered shares shall be valued at Fair Market Value as of the date of such
exercise; (d)  the cancellation of indebtedness of the Company to the
Optionee; (e) the waiver of compensation due or accrued to the Optionee for
services rendered; (f) provided that a public market for the Common Stock
exists, a “same day sale” commitment from the Optionee and a FINRA Dealer
whereby the Optionee 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
FINRA Dealer irrevocably commits upon receipt of such shares to forward the
Exercise Price directly to the Company; (g) provided that a public market for
the Common Stock exists, a “margin” commitment from the Optionee and a FINRA
Dealer whereby the Optionee irrevocably elects to exercise the Option and to
pledge the shares so purchased to the FINRA Dealer in a margin account as
security for a loan from the FINRA Dealer in the amount of the Exercise Price,
and whereby the FINRA Dealer irrevocably commits upon receipt of such shares to
forward the Exercise Price directly to the Company; or (h) any combination
of the foregoing methods of payment or any other consideration or method of
payment as shall be permitted by applicable law.





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5.5           Term and Termination of
Options.  The term and provisions for termination of each
Option shall be as fixed by the Administrator, but no Option may be exercisable
more than ten (10) years after the date it is granted.  An Incentive
Option granted to a person who is a 10% Stockholder on the date of grant shall
not be exercisable more than five (5) years after the date it is
granted.





5.6           Vesting and Exercise of
Options.  Each Option shall vest and become exercisable in one
or more installments at such time or times and subject to such conditions,
including without limitation the achievement of specified performance goals or
objectives established with respect to one or more Performance Criteria, as
shall be determined by the Administrator.





5.7           Annual Limit on Incentive
Options.  To the extent required for “incentive stock option”
treatment under Section 422 of the Code, the aggregate Fair Market Value
(determined as of the time of grant) of the Common Stock with respect to which
Incentive Options granted under this Plan and any other plan of the Company or
any Affiliated Company become exercisable for the first time by an Optionee
during any calendar year shall not exceed $100,000.





5.8           Nontransferability of
Options.Except as otherwise provided in this Section 5.8,
Options shall not be assignable or transferable except by will, the laws of
descent and distribution or pursuant to a domestic relations order entered by a
court in settlement of marital property rights, and during the life of the
Optionee, Options shall be exercisable only by the Optionee.  At the
discretion of the Administrator and in accordance with rules it establishes from
time to time, Optionees may be permitted to transfer some or all of their
Nonqualified Options to one or more “family members,” which is not a “prohibited
transfer for value,” provided that (i) the Optionee (or such Optionee’s estate
or representative) shall remain obligated to satisfy all income or other tax
withholding obligations associated with the exercise of such Nonqualified
Option; (ii) the Optionee shall notify the Company in writing that such transfer
has occurred and disclose to the Company the name and address of the “family
member” or “family members” and their relationship to the Optionee, and (iii)
such transfer shall be effected pursuant to transfer documents in a form
approved by the Administrator.  For purposes of the foregoing, the
terms “family members” and “prohibited transfer for value” have the meaning
ascribed to them in the General Instructions to Form S-8 (or any successor form)
promulgated under the Securities Act of 1933, as amended.





5.9           Rights as a
Stockholder.  An Optionee or permitted transferee of an Option
shall have no rights or privileges as a stockholder with respect to any shares
covered by an Option until such Option has been duly exercised and certificates
representing shares purchased upon such exercise have been issued to such
person.





5.10         Repricing
Prohibited.  Subject to Section 4.2 hereof, without the prior
approval of the Company’s stockholders, evidenced by a majority of votes cast,
neither the Committee nor the Board shall cause the cancellation, substitution
or amendment of an Option Agreement that would have the effect of reducing the
exercise price of an Option previously granted under this Plan, or otherwise
approve any modification to an Option that would be treated as a “repricing”
under the then applicable rules, regulations or listing requirements adopted by
The NASDAQ Stock Market or the principal exchange on which the Company’s shares
of Common Stock are then listed or admitted to trading.





5.11         Compliance with Code Section
409A.  Notwithstanding anything in this Article 5 to the
contrary, all Option Agreements must be structured to satisfy the requirements
of Code Section 409A or an applicable exemption therefrom, as determined by the
Administrator in its sole discretion.





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ARTICLE
6.





ADMINISTRATION
OF THE PLAN





6.1           Administrator.  Authority
to control and manage the operation and administration of the Plan shall be
vested in the Board, which may delegate such responsibilities in whole or in
part to a committee consisting of two (2) or more members of the Board (the
“Committee”).  Members of the Committee may be appointed from time to
time by, and shall serve at the pleasure of, the Board.  The Board may
limit the composition of the Committee to those persons necessary to comply with
the requirements of Section 162(m) of the Code and Section 16 of the Exchange
Act.  As used herein, the term “Administrator” means the Board or,
with respect to any matter as to which responsibility has been delegated to the
Committee, the term Administrator shall mean the Committee.





6.2           Powers of the
Administrator.  In addition to any other powers or authority
conferred upon the Administrator elsewhere in this Plan or by law, the
Administrator shall have full power and authority:  (a) to
determine the persons to whom, and the time or times at which, Incentive Options
or Nonqualified Options shall be granted, the number of shares to be represented
by each Option, and the consideration to be received by the Company upon the
exercise of such Options; (b) to interpret the Plan; (c) to create,
amend or rescind rules and regulations relating to the Plan; (d) to
determine the terms, conditions and restrictions contained in, and the form of,
Option Agreements; (e) to determine the identity or capacity of any persons
who may be entitled to exercise a Participant’s rights under any Option
Agreement under the Plan; (f) to correct any defect or supply any omission
or reconcile any inconsistency in the Plan or in any Option Agreement;
(g) to accelerate the vesting of any Option; (h) to extend the
expiration date of any Option; (i)  to amend outstanding Option Agreements
to provide for, among other things, any change or modification which the
Administrator could have included in the original Agreement or in furtherance of
the powers provided for herein; and (j) to make all other determinations
necessary or advisable for the administration of this Plan, but only to the
extent not contrary to the express provisions of this Plan.  Any
action, decision, interpretation or determination made in good faith by the
Administrator in the exercise of its authority conferred upon it under this Plan
shall be final and binding on the Company and all Participants.





6.3           Limitation on
Liability.  No employee of the Company or member of the Board
or Committee shall be subject to any liability with respect to duties under the
Plan unless the person acts fraudulently or in bad faith.  To the
extent permitted by law, the Company shall indemnify each member of the Board or
Committee, and any employee of the Company with duties under the Plan, who was
or is a party, or is threatened to be made a party, to any threatened, pending
or completed proceeding, whether civil, criminal, administrative or
investigative, by reason of such person’s conduct in the performance of duties
under the Plan.





ARTICLE
7.





CHANGE
IN CONTROL





7.1           Options.  In order
to preserve a Participant’s rights with respect to any outstanding Options in
the event of a Change in Control of the Company:





(a)           Vesting
of all outstanding Options shall accelerate automatically effective as of
immediately prior to the consummation of the Change in Control unless the Options
are to be assumed by the acquiring or successor entity (or parent thereof) or
new options or New Incentives are to be issued in exchange therefor, as provided
in subsection (b) below.





(b)           Vesting
of outstanding Options shall not accelerate if and
to the extent that:  (i) the Options (including the unvested
portion thereof) are to be assumed by the acquiring or successor entity (or
parent thereof) or new options of comparable value are to be issued in exchange
therefor pursuant to the terms of the Change in Control transaction, or
(ii) the Options (including the unvested portion thereof) are to be
replaced by the acquiring or successor entity (or parent thereof) with other
incentives of comparable value under a new incentive program (“New Incentives”)
containing such terms and provisions as the Administrator in its discretion may
consider equitable.  If outstanding Options are assumed, or if new
options of comparable value are issued in exchange therefor, then each such
Option or new option shall be appropriately adjusted, concurrently with the
Change in Control, to apply to the number and class of securities or other
property that the Optionee would have received pursuant to the Change in Control
transaction in exchange for the shares issuable upon exercise of the Option had
the Option been exercised immediately prior to the Change in Control, and
appropriate adjustment also shall be made to the Exercise Price such that the
aggregate Exercise Price of each such Option or new option shall remain the same
as nearly as practicable.





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(c)           If
any Option is assumed by an acquiring or successor entity (or parent thereof) or
a new option of comparable value or New Incentive is issued in exchange therefor
pursuant to the terms of a Change in Control transaction, then, if so provided
in an Option Agreement, the vesting of the Option, the new option or the New
Incentive shall accelerate if and at such time as the Optionee’s service as an
employee, director, officer, consultant or other service provider to the
acquiring or successor entity (or a parent or subsidiary thereof) is terminated
involuntarily or voluntarily under certain circumstances within a specified
period following consummation of the Change in Control, pursuant to such terms
and conditions as shall be set forth in the Option Agreement.





(d)           If
vesting of outstanding Options will accelerate pursuant to subsection (a)
above, the Administrator in its discretion may provide, in connection with the
Change in Control transaction, for the purchase or exchange of each Option for
an amount of cash or other property having a value equal to the amount (or
“spread”) by which (x) the value of the cash or other property that the
Optionee would have received pursuant to the Change in Control transaction in
exchange for the shares issuable upon exercise of the Option had the Option been
exercised immediately prior to the Change in Control, exceeds (y) the
Exercise Price of the Option.





(e)           The
Administrator shall have the discretion to provide in each Option Agreement
other terms and conditions that relate to (i) vesting of such Option in the
event of a Change in Control, and (ii) assumption of such Options or
issuance of comparable securities or New Incentives in the event of a Change in
Control.  The aforementioned terms and conditions may vary in each
Option Agreement, and may be different from and have precedence over the
provisions set forth in Sections 7.1(a) - 7.1(d) above.





(f)           Outstanding
Options shall terminate and cease to be exercisable upon consummation of a
Change in Control except to the extent that the Options are assumed by the
successor entity (or parent thereof) pursuant to the terms of the Change in
Control transaction.





(g)           If
outstanding Options will not be assumed by the acquiring or successor entity (or
parent thereof), the Administrator shall cause written notice of a proposed
Change in Control transaction to be given to Optionees not less than fifteen
(15) days prior to the anticipated effective date of the proposed
transaction.





ARTICLE
8.





AMENDMENT
AND TERMINATION OF THE PLAN





8.1           Amendments.  The
Board may from time to time alter, amend, suspend or terminate this Plan in such
respects as the Board may deem advisable.  No such alteration,
amendment, suspension or termination shall be made which shall substantially
affect or impair the rights of any Participant under an outstanding Option
Agreement without such Participant’s consent.  The Board may alter or
amend the Plan to comply with requirements under the Code relating to Incentive
Options or other types of options which give Optionees more favorable tax
treatment than that applicable to Options granted under this Plan as of the date
of its adoption.  Upon any such alteration or amendment, any
outstanding Option granted hereunder may, if the Administrator so determines and
if permitted by applicable law, be subject to the more favorable tax treatment
afforded to an Optionee pursuant to such terms and conditions.





8.2           Plan
Termination.  Unless this Plan shall theretofore have been
terminated, the Plan shall terminate on the tenth (10th) anniversary of the
Effective Date and no Options may be granted under the Plan thereafter, but
Option Agreements then outstanding shall continue in effect in accordance with
their respective terms.





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ARTICLE
9.





TAX
WITHHOLDING





9.1           Withholding.  The
Company shall have the power to withhold, or require a Participant to remit to
the Company, an amount sufficient to satisfy any applicable Federal, state, and
local tax withholding requirements with respect to any Options
exercised.  To the extent permissible under applicable tax, securities
and other laws, the Administrator may, in its sole discretion and upon such
terms and conditions as it may deem appropriate, permit a Participant to satisfy
his or her obligation to pay any such tax, in whole or in part, up to an amount
determined on the basis of the highest marginal tax rate applicable to such
Participant, by (a) directing the Company to apply shares of Common Stock
to which the Participant is entitled as a result of the exercise of an Option,
or (b) delivering to the Company shares of Common Stock owned by the
Participant.  The shares of Common Stock so applied or delivered in
satisfaction of the Participant’s tax withholding obligation shall be valued at
their Fair Market Value as of the date of measurement of the amount of income
subject to withholding.





ARTICLE
10.





MISCELLANEOUS





10.1         Benefits Not
Alienable.  Other than as provided above, benefits under this
Plan may not be assigned or alienated, whether voluntarily or
involuntarily.  Any unauthorized attempt at assignment, transfer,
pledge or other disposition shall be without effect.





10.2         No Enlargement of Employee
Rights.  This Plan is strictly a voluntary undertaking on the
part of the Company and shall not be deemed to constitute a contract between the
Company and any Participant to be consideration for, or an inducement to, or a
condition of, the employment of any Participant.  Nothing contained in
the Plan shall be deemed to give the right to any Participant to be retained as
an employee of the Company or any Affiliated Company or to interfere with the
right of the Company or any Affiliated Company to discharge any Participant at
any time.





10.3         Application of
Funds.  The proceeds received by the Company from the sale of
Common Stock pursuant to Option Agreements, except as otherwise provided herein,
will be used for general corporate purposes.





10.4         Annual
Reports.During
the term of this Plan, the Company will furnish to each Participant who does not
otherwise receive such materials, copies of all reports, proxy statements and
other communications that the Company distributes generally to its
stockholders.


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