**Exhibit 10.1****JMAR TECHNOLOGIES, INC. 2006 EQUITY INCENTIVE PLAN****SECTION I.****PURPOSE**     The purpose of the JMAR Technologies, Inc. 2006 Equity Incentive Plan (the “*Plan*”) isto promote the long-term growth and financial success of JMAR Technologies, Inc. (the“*Company*”) and its subsidiaries by enabling the Company to compete successfully inattracting and retaining employees and directors (and consultants and advisors) of outstandingability, stimulating the efforts of such persons to achieve the Company’s long-range performancegoals and objectives, and encouraging the identification of their interests with those of theCompany’s shareholders.**SECTION II.****DEFINITIONS**     For purposes of this Plan, the following terms shall have the following meanings:     **2.1**“*Advisor*” means a person who provides bona fide advisory or consulting services tothe Company or a Subsidiary and whose Shares subject to an Award are eligible for registration onForm S-8 under the Securities Act of 1933.     **2.2**“*Award*” means any form of Stock Option, Restricted Stock Award, Unrestricted StockAward, or Stock Appreciation Right granted under this Plan.     **2.3**“*Award Agreement*” means a written agreement setting forth the terms of an Award.     **2.4**“*Award Date*” or “*Grant Date*” means the date designated by the Committee asthe date upon which an Award is granted.     **2.5**“*Award Period*” or “*Term*” means the period beginning on an Award Date andending on the expiration date of such Award.     **2.6**“*Board*” means the Board of Directors of the Company.     **2.7**“*Cause*” means, unless otherwise defined in an Award Agreement, a Participant’sengaging in any of the following acts:     (i) any type of disloyalty to the Company or a Subsidiary, including, without limitation,fraud, embezzlement, theft, or dishonesty in the course of a Participant’s employment orbusiness relationship with the Company or Subsidiary; or     (ii) conviction of a felony or other crime involving a breach of trust or fiduciary dutyowed to the Company or a Subsidiary; or     (iii) unauthorized disclosure of trade secrets or confidential information of the Companyor a Subsidiary; or     (iv) a material breach of any agreement with the Company or a Subsidiary in respect ofconfidentiality, non-disclosure, non-competition or otherwise; or     (v) any serious violation of a policy of the Company or a Subsidiary that is materiallydamaging to the interests of the Company or Subsidiary.     **2.8**“*Change in Control*” means the occurrence after the Effective Date of any of thefollowing events:
 

 
     (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act),other than an Exempt Entity, is or becomes the “beneficial owner” (as defined in Rules 13d-3and 13d-5 under the Exchange Act, except that a person shall be deemed to have “beneficialownership” of all shares that such person has the right to acquire, whether such right isexercisable immediately or only after the passage of time), directly or indirectly, of 30% ormore of the total voting power of all of the Company’s voting securities then outstanding(“*Voting Shares*”);     (ii) immediately after a merger or consolidation of the Company or any Subsidiary of theCompany with or into, or the sale or other disposition of all or substantially all of theCompany’s assets to, any other corporation (where pursuant to the terms of such transactionoutstanding Awards are assumed by the surviving, resulting or acquiring corporation or newAwards are substituted therefore), the Voting Shares of the Company outstanding immediatelyprior to such transaction do not represent (either by remaining outstanding or by beingconverted into voting securities of the surviving or acquiring entity or any parent thereof)more than 50% of the total voting power of the voting securities of the Company or surviving oracquiring entity or any parent thereof outstanding immediately after such merger orconsolidation.     **2.9**“*Code*” means the United States Internal Revenue Code of 1986, as amended, and theregulations and rulings thereunder. References to any particular section of the Code includereferences to any successor amendments or replacements of such section.     **2.10**“*Committee*” means the committee appointed by the Board and consisting of two ormore Directors of the Company, each of whom shall be a “non-employee director” as defined in Rule16b-3 and an “outside director” as defined in the regulations under Section 162(m) of the Code.     **2.11**“*Common Stock*” means the Company’s Common Stock, par value $.01 per share, andany successor security.     **2.12**“*Company*” means JMAR Technologies, Inc.     **2.13**“*Designated Payment Date*” has the meaning set forth in Section 8.2(a).     **2.14**“*Director*” means any person serving on the Board of Directors of the Company orany of its Subsidiaries who is not an Officer (or officer) or Employee of the Company or anySubsidiary, except that a person serving as Chief Executive Officer and director shall beconsidered a “Director”.     **2.15**“*Disability*” means (i) a “permanent and total disability” within the meaning ofSection 22(e)(3) of the Code as determined by the Committee in good faith upon receipt of medicaladvice from one or more individuals, selected by the Committee, who are qualified to giveprofessional medical advice, or (ii) in the case of an Employee, a disability that qualifies as along-term disability under the Company’s or a Subsidiary’s Long Term Disability insurance, or (iii)any other definition of disability set forth in an Award Agreement.     **2.16**“*Effective Date*” means June 23, 2006.     **2.17**“*Eligible Person*” means any person who is either an Employee, Director orAdvisor.     **2.18**“*Employee*” means (i) any officer or employee of the Company or a Subsidiary(including those employees on military leave, sick leave, or other bona fide leave of absenceapproved by the Company or a Subsidiary) or (ii) any person who has received and accepted an offerof employment from the Company or a Subsidiary.     **2.19**“*Exchange Act*” means the Securities Exchange Act of 1934.     **2.20**“*Exempt Entity*” means (i) an underwriter temporarily holding securities pursuantto an offering of such securities and (ii) the Company, any of its Subsidiaries or any employeebenefit plan (or related trust) sponsored or maintained by the Company or any of its Subsidiaries.
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     **2.21**“*Fair Market Value*” means, as of any date, (i) in case the Common Stock shallthen be listed and traded upon a recognized securities exchange, upon the basis of the average ofthe closing selling prices at which shares of the Common Stock were traded on such recognizedsecurities exchange for the 5 days prior to the Date of Grant or, if the Common Stock was nottraded on said date, upon the basis of the average of the closing selling prices for the 5 daysprior to the nearest date preceding the Date of Grant, or (ii) in case the Common Stock shall notthen be listed and traded upon a recognized securities exchange, upon the basis of the averagebetween the closing bid and asked quotations for such stock (or the closing selling price for suchstock, if applicable) for the 5 days prior to the Date of Grant (as reported by a newspaper ofgeneral circulation or a recognized stock quotation service) or, in the event that there shall beno bid or asked quotations (or reported closing selling price) on the Date of Grant, then upon thebasis of the average between the closing bid and asked quotations (or the closing selling price, asthe case may be), for the 5 days prior to the nearest date preceding the Date of Grant.     **2.22**“*Immediate Family*” means any child, stepchild, grandchild, spouse, son-in-law ordaughter-in-law and shall include adoptive relationships; provided, however, that if the Committeeadopts a different definition of “immediate family” (or similar term) in connection with thetransferability of Stock Options and SARs awarded under this Plan, such definition shall apply,without further action of the Board.     **2.23**“*Incentive Stock Option*” means any Stock Option awarded under Section VII of thisPlan intended to be and designated as an “Incentive Stock Option” within the meaning of Section 422of the Code.     **2.24**“*Non-Qualified Stock Option*” means any Stock Option awarded under Section VII ofthis Plan that is not an Incentive Stock Option.     **2.25**“*Officer*” means a person who has been determined to be an officer of the Companyunder Rule 16a-1(f) in a resolution adopted by the Board.     **2.26**“*Option Price*” or “*Exercise Price*” means the price per share at whichCommon Stock may be purchased upon the exercise of an Option or an Award.     **2.27**“*Participant*” means an Eligible Person to whom an Award has been made pursuant tothis Plan.     **2.28**“*Performance-Based Compensation**”*means compensation intended to satisfy therequirements for “performance-based compensation” within the meaning of Section 162(m) of the Codeand the Treasury Regulations thereunder.     **2.29**“*Performance Measures*” means any one or more of the following, as selected by theCommittee and applied to the Company as a whole or individual units thereof, and measured eitherabsolutely or relative to a designated group of comparable companies: (i) earnings before interest,taxes, depreciation, and amortization (“EBITDA”); (ii) appreciation in the Fair Market Value, bookvalue or other measure of value of the Common Stock; (iii) cash flow; (iv) earnings (including,without limitation, earnings per share); (v) return on equity; (vi) return on investment; (vii)total stockholder return; (viii) return on capital; (ix) return on assets or net assets; (x)revenue; (xi) income (including, without limitation, net income); (xii) operating income(including, without limitation, net operating income); (xiii) operating profit (including, withoutlimitation, net operating profit); (xiv) operating margin; (xv) return on operating revenue; and(xvi) market share.     **2.30**“*Reference Price*” with respect to a SAR means a dollar amount determined by theCommittee at the time of Grant.     **2.31**“*Replacement Option*” means a Stock Option granted pursuant to Section 7.4 uponthe exercise of a Stock Option granted pursuant to the Plan where the Option Price is paid withpreviously owned shares of Common Stock.     **2.32**“*Restricted Stock*” means those shares of Common Stock issued pursuant to aRestricted Stock Award which are subject to the restrictions set forth in the related AwardAgreement.
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     **2.33**“*Restricted Stock Award*” means an award of a fixed number of Shares to aParticipant which is subject to forfeiture provisions and other conditions set forth in the AwardAgreement.     **2.34**“*Retirement*” means an Employee’s or Director’s Separation from Service (in eachcase other than by reason of death or Disability or for Cause) on or after (i) attainment of age 65or (ii) attainment of age 55 with 10 years of employment with, or service on the Board of, theCompany or a Subsidiary.     **2.35**“*Rule 16b-3*” and “*Rule 16a-1(f)*” mean Rules 16b-3 and 16a-1(f) under theExchange Act or any corresponding successor rules or regulations.     **2.36**“*Separation from Service*” or *“**Separates from Service**”*has the meaningascribed to such term in Section 409A of the Code.     **2.37**“*Share*” means one share of the Company’s Common Stock.     **2.38***“**Short-term Deferral Deadline**”*means the later of the 15th day of the third monthfollowing the Participant’s first taxable year in which an Award is no longer subject to asubstantial risk of forfeiture (within the meaning of Section 409A of the Code) or the 15th day ofthe third month following the end of the Company’s first taxable year in which an Award is nolonger subject to a substantial risk of forfeiture (within the meaning of Section 409A of theCode). Notwithstanding the foregoing, if it is administratively impracticable for the Company tomake a payment or to deliver Shares by the end of the applicable 2 1/2 monthperiod, or if making the payment or delivering the Shares by the end of the applicable 21/2 month period would jeopardize the solvency of the Company, and, as of theGrant Date, such impracticability or insolvency was unforeseeable, the payment or delivery shall bemade as soon as reasonably practicable after the applicable 2 1/2 monthperiod and shall be considered as having been made prior to the Short-term Deferral Deadline. Forpurposes of this definition, an action or failure to act of the Participant or a person under theParticipant’s control, such as a failure to provide necessary information or documentation, is notan unforeseeable event.     **2.39**“*Specified Employee Delayed Payment Date*” has the meaning set forth in Section8.2(a).     **2.40**“*Stock Appreciation Right*” or “*SAR*” means the right to receive, for eachunit of the SAR, an amount of cash, a number of Shares or a combination thereof equal in value to,the excess of the Fair Market Value of one Share on the date of exercise of the SAR over theReference Price of the SAR.     **2.41**“*Stock Option*” or “*Option*” means the right to purchase shares of CommonStock (including a Replacement Option) granted pursuant to Section VII of this Plan.     **2.42**“*Subsidiary*” means, with respect to grants of Awards (other than Incentive StockOptions), any entity directly or indirectly controlled by the Company or any entity, including anacquired entity, in which the Company has a significant equity interest, as determined by theCommittee, in its sole discretion, provided such entity is considered a service recipient (withinthe meaning of Section 409A) that may be aggregated with the Company.     With respect to grants of Incentive Stock Options, the term “*Subsidiary*” means anycorporation and any other entity considered a subsidiary as defined in Section 424(f) of the Code.     **2.43**“*Transfer*” means alienation, attachment, sale, assignment, pledge, encumbrance,charge or other disposition; and the terms “*Transferred*” or “*Transferable*” havecorresponding meanings.     **2.44**“*Unrestricted Stock Award*” means an Award granted pursuant to Section 8.3.     **2.45**“*Vest*” means, in the case of any Award, to become exercisable or become free ofrestrictions solely as a result of either (i) the passage of required time periods specified underthe terms of the Award (“*Passage of Time Criteria*”) or (ii) the inapplicability of Passage ofTime Criteria due to a Change ofControl or a Separation from Service pursuant to the provisions of Section X. For purposes of thisPlan, “Vest” does not refer to an Award becoming exercisable or free of restrictions due to theattainment of performance criteria or any other criteria not solely related to the passage of time(“*Other Criteria*”). An Award whose terms specify Other Criteria that have not been fullysatisfied at the time of a Change of Control or Separation from Service will not Vest
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(unlessotherwise determined by the Committee or specifically provided by such terms) as a result of suchChange of Control or Separation from Service (even if the terms of such Award contain Passage ofTime Criteria in addition to, in combination with, or as an alternative to such Other Criteria).**SECTION III.****ADMINISTRATION**     **3.1****The Committee****.**This Plan shall be administered and interpreted by the Committee.Except as provided in Section 3.4, any function of the Committee also may be performed by theBoard. Actions of the Committee may be taken by a majority of its members at a meeting or by theunanimous written consent of all of its members without a meeting.     **3.2****Powers of the Committee****.**The Committee shall have the power and authority tooperate, manage and administer the Plan on behalf of the Company, which includes, but is notlimited to, the power and authority:     (i) to grant to Eligible Persons one or more Awards consisting of any or a combination ofStock Options, Restricted Stock, Unrestricted Stock, and Stock Appreciation Rights;     (ii) to select the Eligible Persons to whom Awards may be granted;     (iii) to determine the types and combinations of Awards to be granted to Eligible Persons;     (iv) to determine the number of Shares or units which may be subject to each Award;     (v) to determine the terms and conditions, not inconsistent with the terms of the Plan, ofany Award (including, but not limited to, the term, price, exercisability, method of exerciseand payment, any restriction or limitation on transfer, any applicable performance measures orcontingencies, any vesting schedule or acceleration, or any forfeiture provisions or waiver,regarding any Award) and the related Shares, based on such factors as the Committee shalldetermine; and     (vi) to modify or waive any restrictions, contingencies or limitations contained in, andgrant extensions to the terms or exercise periods of, or accelerate the vesting of, anyoutstanding Awards, as long as such modifications, waivers, extensions or accelerations wouldnot either cause the Award to be treated as the granting of a new Award under Code Section 409Athat is not exempt from, or compliant with, the requirements of Section 409A or be inconsistentwith the terms of the Plan, but no such changes shall impair the rights of any Participantwithout his or her consent unless required by law or integrally related to a requirement oflaw.     **3.3****Guidelines****.**The Committee will have the authority and discretion to interpret thePlan and any Awards granted under the Plan, to establish, amend, and rescind any rules andregulations relating to the Plan, and to make all other determinations that may be necessary oradvisable for the administration of the Plan. The Committee may correct any defect, supply anyomission or reconcile any inconsistency in the Plan or in any related Award Agreement in the mannerand to the extent it deems necessary to carry the Plan into effect.     **3.4****Delegation of Authority****.**The Committee may delegate to one or more of theCompany’s Officers or (in the case of ministerial duties only) other employees all or any portionof the Committee’s authority, powers, responsibilities and administrative duties under the Plan,with such conditions and limitations as the Committee shall prescribe in writing; provided,however, that only the Committee is authorized to grant Awards to, or make any decisions withrespect to Awards granted to, Officers. A record of all actions taken by any Officer to whom theCommittee has delegated a portion of its powers or responsibilities shall be filed with the minutesof the meetings of the Committee and shall be made available for review by the Committee uponrequest.     **3.5****Decisions Final****.**Any action, decision, interpretation or determination by or atthe direction of the Committee (or of any person acting under a delegation pursuant to Section 3.4)concerning the application or administration of the Plan or any Award(s) shall be final and bindingupon all persons and need not be uniform with respect to its determination of recipients, amount,timing, form, terms or provisions of Awards.     **3.6****Award Agreements****.**Each Award under the Plan shall be evidenced by an AwardAgreement substantially in the form approved by the Committee from time to time.
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**SECTION IV.****SHARES SUBJECT TO PLAN**     **4.1****Shares Available for Issuance of Awards****.**Subject to adjustment as provided inSection 4.3, the aggregate number of Shares which may be issued under this Plan shall not exceed2,000,000 Shares. As determined from time to time by the Committee, the Shares available under thisPlan for grants of Awards may consist either in whole or in part of authorized but unissued Sharesor Shares which have been reacquired by the Company following original issuance.     **4.2****Re-Use of Shares****.**If any Award granted under this Plan shall expire, terminate orbe forfeited or canceled for any reason before it has vested or been exercised in full, the numberof unissued or undelivered Shares subject to such Award shall again be available for future grants.The Committee may make such other determinations regarding the counting of Shares issued pursuantto this Plan as it deems necessary or advisable, provided that such determinations shall bepermitted by law. Notwithstanding the foregoing, Shares that are tendered to or withheld by theCompany as full or partial payment in connection with any Award under the Plan, as well as anyShares tendered to or withheld by the Company to satisfy the tax withholding obligations related toany Award, shall not be available for subsequent Awards under the Plan. In addition, a SAR settledin Shares of Common Stock shall be considered settled in full against the number of Sharesavailable for award.     **4.3****Adjustment Provisions****.**          ***(a) Adjustment for Change in Capitalization.***If the Company shall at any time change thenumber of issued Shares without new consideration to the Company (such as by stock dividend, stocksplit, recapitalization, reorganization, exchange of shares, liquidation, combination or otherchange in corporate structure affecting the Shares) or make a distribution to shareholders of cashor property which, in the Committee’s sole judgment, has a substantial impact on the value ofoutstanding Shares, then the numbers of Shares and SAR units specified in Section 4.1, thespecified or fixed numbers of Shares or SAR units covered by each outstanding Award, and, ifapplicable, the Option Price or Reference Price for each outstanding Award shall be proportionatelyadjusted in such manner as the Committee in its sole judgment determines to be equitable andappropriate; provided that (i) any adjustments made in the number of Shares with respect to whichIncentive Stock Options may be or have been granted shall be made in accordance with Code Section424, (ii) the numbers of Shares or SAR units covered by each outstanding Award shall be made inaccordance with Section 409A of the Code, and (iii) fractions of a Share will not be issued buteither will be replaced by a cash payment equal to Fair Market Value of such fraction of a Share orwill be rounded down to the nearest whole Share, as determined by the Committee.          ***(b) Other Equitable Adjustments.***Notwithstanding any other provision of the Plan, and withoutaffecting the number of Shares or SAR units reserved or available hereunder, the Committee mayauthorize the issuance, continuation or assumption of Awards or provide for equitable adjustmentsor changes in the terms of Awards, in connection with any merger, consolidation, sale of assets,acquisition of property or stock, recapitalization, reorganization or similar occurrence in whichthe Company is the continuing or surviving corporation, upon such terms and conditions as it maydeem equitable and appropriate; provided, that the numbers and types of Shares or SAR units coveredby each outstanding Award shall be made in accordance with Section 409A of the Code.**SECTION V.****CHANGE IN CONTROL; MERGER, CONSOLIDATION, ETC.**     **5.1****Effect of Change in Control On Outstanding Awards****.**In the event of, and upon aChange in Control, all Awards outstanding on the date of such Change in Control shall become fully(100%) Vested.     **5.2****Separation from Service After Change in Control****.**In the event that an Employee hasa Separation from Service as a result of the Company or a Subsidiary terminating such Employee’sservice for any reason other than for Cause within one (1) year after a Change in Control, all ofthe outstanding Vested Stock Options and SARs held by such Employee on the date of Separation fromService shall be exercisable for a period
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ending on the earlier to occur of the first anniversaryof the date of Separation from Service or the respective Expiration Dates of such Stock Options andSARs.     **5.3****Merger, Consolidation, Etc.** In the event that the Company shall, pursuant toaction by its Board of Directors, propose to (i) merge into, consolidate with, sell or otherwisedispose of all or substantially all of its assets, to another corporation or other entity andprovision is not made pursuant to the terms of such transaction for the assumption by thesurviving, resulting or acquiring corporation of outstanding Awards under the Plan, or thesubstitution of new Awards therefor, or (ii) dissolve or liquidate, then (A) the Committee shallcause written notice of such proposed transaction to be given to each Participant not less than 30days prior to the anticipated date on which such proposed transaction is to be consummated, and (B)all outstanding Awards that are not so assumed or substituted for shall become fully (100%) Vestedimmediately prior, but subject, to actual consummation of the transaction. Prior to a datespecified in the notice, which shall not be more than 3 days prior to the consummation of suchtransaction, each Participant shall have the right to exercise all Stock Options and SARs held bysuch Participant that are not so assumed or substituted for on the following basis: (x) suchexercise shall be conditioned on consummation of such transaction, (y) such exercise shall beeffective immediately prior to the consummation of such transaction, and (z) the Option Price forany such Stock Options shall not be required to be paid until 7 days after written notice by theCompany to the Participant that such transaction has been consummated. If such transaction isconsummated, each Stock Option and SAR, to the extent not previously exercised prior to the datespecified in the foregoing notice of proposed transaction, shall terminate upon the consummation ofsuch transaction. If such transaction is abandoned, (a) any and all conditional exercises of StockOptions and SARs in accordance with this Section 5.3 shall be deemed annulled and of no force oreffect and (b) to the extent that any Award shall have Vested solely by operation of this Section5.3, such Vesting shall be deemed annulled and of no force or effect and the Vesting provisions ofsuch Award shall be reinstated.     **5.4****Applicability of Section V****.**The provisions of Section V shall apply to all Awardsgranted under the Plan, unless and to the extent that the Committee expressly provides otherwise inthe terms of an Award at the time it is granted.**SECTION VI.****EFFECTIVE DATE AND DURATION OF PLAN**     **6.1****Duration of Plan****.**The Plan shall continue in effect indefinitely until terminatedby the Board pursuant to Section XI. Notwithstanding the continued effectiveness of this Plan, noIncentive Stock Option shall be granted under this Plan on or after the tenth anniversary of theEffective Date.**SECTION VII.****STOCK OPTIONS**     **7.1****Grants****.**Stock Options may be granted alone or in addition to other Awards grantedunder this Plan. Each Option granted shall be designated as either a Non-Qualified Stock Option oran Incentive Stock Option. One or more Stock Options may be granted to any Eligible Person, exceptthat only Non-Qualified Stock Options may be granted to any Director of or Advisor to the Company.     **7.2****Terms of Options****.**Except as otherwise required by Sections 7.3 and 7.4, Optionsgranted under this Plan shall be subject to the following terms and conditions and shall be in suchform and contain such additional terms and conditions, not inconsistent with the terms of thisPlan, as the Committee shall deem desirable:          ***(a) Option Price*****.**The Option Price per share of Common Stock purchasable under a Stock Optionshall be determined by the Committee at the time of grant, except that in the case of IncentiveStock Options in no event shall the Option Price be less than 100% of Fair Market Value on theGrant Date.          ***(b) Option Term*****.**The Term of each Stock Option shall be fixed by the Committee, but no StockOption shall be exercisable more than ten (10) years after its Award Date.
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          ***(c) Exercisability***. A Stock Option shall be exercisable at such time or times and subject tosuch terms and conditions as shall be specified in the Award Agreement; provided, however, that anOption may not be exercised as to less than one hundred (100) Shares at any time unless the numberof Shares for which the Option is exercised is the total number available for exercise at that timeunder the terms of the Option.          ***(d) Method of Exercise***. A Stock Option may be exercised in whole or in part at any time duringits Term by giving written notice of exercise to the Company specifying the number of Shares to bepurchased. Such notice shall be accompanied by payment in full of the Option Price in cash unlesssome other form of consideration is approved by the Committee at or after the grant. Payment infull or in part also may be made in the form of Shares of Common Stock owned by the Participant forat least six (6) months prior to exercise, which Shares shall be valued at the Fair Market Value ofthe Common Stock on the date of exercise.          ***(e) Cashless Exercise.***A Participant may elect to pay the Exercise Price upon the exercise ofan Option by authorizing a broker to sell all or a portion of the Shares acquired upon exercise ofthe Option and remit to the Company a sufficient portion of the sale proceeds to pay the entireExercise Price and any tax withholding resulting from such exercise.          ***(f) Non-Transferability of Options.***Stock Options shall be Transferable only to the extentprovided in Section 12.3 of this Plan.          ***(g) Termination.***Stock Options shall terminate in accordance with Section X of this Plan.          ***(h) No Right to Defer***. In no event shall a Stock Option awarded under this Plan include anyfeature for the deferral of compensation other than the deferral of recognition of income until thelater of exercise or disposition of the Stock Option under Treas. Reg. § 1.83-7, or the time theShares acquired pursuant to the exercise of the Stock Option first become substantially vested (asdefined in Treas. Reg. § 1.83-3(b)).          ***(i) Fixed Number of Shares***. The number of Shares subject to a Stock Option shall be fixed onthe Grant Date.     **7.3****Incentive Stock Options****.**Incentive Stock Options shall be subject to the followingterms and conditions:          ***(a) Award Agreement.***Any Award Agreement relating to an Incentive Stock Option shall containsuch terms and conditions as are required for the Option to be an “incentive stock option” as thatterm is defined in Section 422 of the Code.          ***(b) Ten Percent Shareholder.***An Incentive Stock Option shall not be awarded to any person who,at the time of the Award, owns or is deemed to own (by reason of attribution rules of Section424(d) of the Code) Shares possessing more than ten percent (10%) of the total combined votingpower of all classes of stock of the Company, its parent corporation (as defined in Section 424(e)of the Code), if any, and its subsidiary corporations (as defined in Section 424(f) of the Code).          ***(c) Qualification under the Code.***Notwithstanding anything in this Plan to the contrary, noterm of this Plan relating to Incentive Stock Options shall be interpreted, amended or altered, norshall any discretion or authority granted under this Plan be exercised, so as to disqualify thisPlan under Section 422 of the Code, or, without the consent of an affected Participant, todisqualify any Incentive Stock Option under Section 422 of the Code, except as may result in theevent of a Change of Control.          ***(d) Notification of Disqualifying Disposition.***Each Award Agreement with respect to anIncentive Stock Option shall require the Participant to notify the Company of any disposition ofShares of Common Stock issued pursuant to the exercise of such Option under the circumstancesdescribed in Section 421(b) of the Code (relating to certain disqualifying dispositions), withinten (10) days of such disposition.     **7.4****Replacement Options****.**Each grant of an Option shall automatically include the rightto acquire a Replacement Option upon the exercise of such Option (in whole or in part) prior to anEmployee’s Separation from Service if the payment of the Option Price is paid in Shares. Inaddition to any other terms and conditions the Committee deems appropriate, the Replacement Optionshall be subject to the following terms:          ***(a) Number of Shares.***The number of Shares subject to the Replacement Option shall not exceedthe sum of the number of whole Shares used to satisfy the Option Price (whether by delivery ofShares to the Company or by reduction of Shares otherwise deliverable to the Participant onexercise) of the original Option
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and the number of whole Shares, if any, used to satisfy thepayment for withholding taxes (whether by such delivery or such reduction) in accordance withSection 12.6.          ***(b) Grant Date.***The Replacement Option Grant Date will be the date of the exercise of theoriginal Option.          ***(c) Option Price.***The Option Price per share of Common Stock purchasable under a ReplacementOption shall be determined by the Committee at the time of grant, except that in the case ofIncentive Stock Options in no event shall the Option Price be less than 100% of Fair Market Valueon the Replacement Option Grant Date.          ***(d) Vesting.***The Replacement Option shall be exercisable no earlier than one (1) year afterthe Replacement Option Grant Date.**SECTION VIII.****RESTRICTED AND UNRESTRICTED STOCK AWARDS**     **8.1****Grants of Restricted Stock Awards****.**The Committee may, in its discretion, grant oneor more Restricted Stock Awards to any Eligible Person. Each Restricted Stock Award shall specifythe number of Shares to be issued to the Participant, the date of such issuance, the price, if any,to be paid for such Shares by the Participant and the restrictions imposed on such Shares. TheCommittee may grant Awards of Restricted Stock subject to the attainment of specified performancegoals, continued employment or such other limitations or restrictions as the Committee maydetermine. Such conditions may, but need not, be conditions that cause the Award to be treated assubject to a substantial risk of forfeiture (within the meaning of Sections 83 or 409A of theCode).     **8.2****Terms and Conditions of Restricted Awards****.**Restricted Stock Awards shall besubject to the following provisions:          ***(a) Issuance of Shares*****.**Shares of Restricted Stock may be issued immediately upon grant orupon vesting, as determined by the Committee. If Shares are to be issued upon vesting, such Sharesshall be delivered on or before the Short-term Deferral Deadline, except that Shares that vest onaccount of the Participant’s Separation from Service by reason of Retirement in accordance withSection 10.1(a) shall be delivered on the first payroll date following the date of Separation fromService (the “*Designated Payment Date*”). If the Shares cannot be delivered on theDesignated Payment Date because it is administratively impracticable, the Shares will be deliveredas soon as administratively practicable, but in no event later than a date within the same calendaryear as the Designated Payment Date or, if later, by the 15th day of the third calendar monthfollowing the Designated Payment Date. Notwithstanding the forgoing, (i) if it is reasonablydetermined that Section 409A of the Code will result in the imposition of additional tax on accountof the delivery of the Shares before the expiration of the 6-month period described in Section409A(a)(2)(B)(i) (relating to the required delay in payment to a specified employee pursuant to aSeparation from Service), such delivery will in lieu thereof be made on the date that is six (6)months and one (1) day following the date of the Participant’s Separation from Service (or, ifearlier, the date of death of the Participant) (the “*Specified Employee Delayed PaymentDate*”), and (ii) a Participant may deferdelivery of the Shares subject to a Restricted Stock Award to a date or dates after theRestricted Stock Award is no longer subject to a substantial risk of forfeiture (within the meaningof Section 409A of the Code) if the terms of the Restricted Stock Award and any deferral electioncomply with the requirements of Section 409A of the Code.          ***(b) Stock Powers and Custody.***If shares of Restricted Stock are issued immediately upon grant,the Committee may require the Participant to deliver a duly signed stock power, endorsed in blank,relating to the Restricted Stock covered by such an Award. The Committee may also require that thestock certificates evidencing such Shares be held in custody by the Company until the restrictionson them shall have lapsed.          ***(c) Shareholder Rights.***Participants receiving Restricted Stock Awards that provide forissuance of the Shares upon vesting (including Shares that vest on account of the Participant’sSeparation from Service by reason of Retirement in accordance with Section 10.1(a)) shall not beentitled to dividend or voting rights in respect of any such Shares until they are fully vested andissued.
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     **8.3****Unrestricted Stock Awards****.**The Committee may make Awards of unrestricted CommonStock to (i) Eligible Persons in recognition of outstanding achievements or contributions by suchpersons or (ii) Directors for service on the Board or Committees of the Board. Unrestricted Sharesissued under this Section 8.3 may be issued for no cash consideration. In the event an UnrestrictedStock Award is granted, the Shares subject to such Award shall be issued immediately upon (or aspromptly as is administratively practicable after) grant; provided that a Participant may deferdelivery of the Shares subject to an Unrestricted Stock Award to a later date or dates if the termsof the Unrestricted Stock Award and any deferral election comply with the requirements of Section409A of the Code.**SECTION IX.****STOCK APPRECIATION RIGHTS**     **9.1****Stock Appreciation Rights****.**The Committee may, in its discretion, grant StockAppreciation Rights. Any Stock Appreciation Right granted shall be for a specified number of unitsand have such terms and conditions, not inconsistent with this Plan, as are established by theCommittee in connection with the Award.     **9.2****Terms and Conditions of Stock Appreciation Rights****.**Stock Appreciation Rightsgranted pursuant to this Section IX shall be subject to the following terms and conditions:          ***(a) Reference Price*****.**The Reference Price per Share unit subject to a SAR shall be determinedby the Committee at the time of grant, except that in no event shall the Reference Price be lessthan 100% of Fair Market Value on the Award Date.          ***(b) Term.***The term of each Stock Appreciation Right shall be fixed by the Committee, but noStock Appreciation Right shall be exercisable more than ten (10) years after its Award Date.          ***(c) Exercise.***A Stock Appreciation Right shall be exercisable at such time or times andsubject to such terms and conditions as shall be specified in the Award Agreement.          ***(d) Distribution.***The Committee shall determine in its sole discretion, at or after the AwardDate, whether Shares, cash or a combination thereof shall be delivered to the holder upon exerciseof a SAR. Shares so delivered shall be valued at their Fair Market Value on the date of the SAR’sexercise.          ***(e) Non-Transferability and Termination.***SARs shall be Transferable only to the extentprovided in Section 12.3 of this Plan and shall terminate in accordance with Section X of thisPlan.          ***(f) No Right to Defer***. In no event shall a SAR awarded under this Plan include any feature forthe deferral of compensation other than the deferral of recognition of income until the exercise ofthe SAR.          ***(g) Fixed Number of Shares.***The number of Shares subject to a SAR shall be fixed on the AwardDate.**SECTION X.****TERMINATION OF AWARDS**     **10.1****Termination of Awards to Employees and Directors****.**Subject to the provisions ofSection 10.2, all Awards issued to Employees and Directors under this Plan shall terminate asfollows:          ***(a) Termination by Death, Disability or Retirement.***Unless otherwise determined by theCommittee at the time of grant, if such a Participant Separates from Service by reason of his orher death, Disability or Retirement, all of the Participant’s Vested or otherwise exercisable StockOptions and SARs may thereafter be exercised by the Participant or by the Participant’s beneficiaryor legal representative for a period of one (1) year after the date of such Separation from Serviceor until the expiration of the stated term of such Award, whichever period is shorter.          ***(b) Termination For Cause.***If such a Participant Separates from Service for Cause, or if aftersuch separation the Participant engages in any act which would have warranted a Separation fromService for Cause, the Participant shall forfeit all of his or her rights to any outstanding Awardswhich have not been exercised and
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all of such unexercised Awards shall terminate upon the earlierto occur of the date of Separation from Service or the date upon which the Participant has engagedin any of the conduct described as justifying such a separation for Cause.          ***(c) Other Termination.***Unless otherwise determined by the Committee at the time of grant, ifsuch a Participant Separates from Service for any reason other than death, Disability, Retirementor Cause, all of the Participant’s Vested or otherwise exercisable Stock Options and SARs willterminate on the earlier to occur of the stated expiration date of the Awards or sixty (60)calendar days after such Separation from Service. If a Participant dies during the sixty (60) dayperiod following the Separation from Service, any unexercised Award held by the Participant shallbe exercisable, to the full extent that such Award was exercisable at the time of death, for aperiod of one (1) year from the date of death or until the expiration of the stated term of theAward, whichever occurs first.     **10.2****Awards to Advisors****.**An Award granted to an Advisor shall terminate as provided inthe Award Agreement.     **10.3****Acceleration of Vesting Upon Termination****.**Upon a Participant’s Separation fromService, excluding, however, any Participant who has been terminated for Cause, either theCommittee or, unless the Committee determines otherwise, the Chief Executive Officer may, in its orhis sole discretion, accelerate the Vesting of, or otherwise cause to be exercisable or free ofrestrictions, all or part of any Awards held by the Participant so that such Awards will be fullyor partially exercisable as of the date of Separation from Service or such other date as theCommittee or Chief Executive Officer may choose; provided, however, that (i) no person or entityother than the Committee shall have the authority or discretion to accelerate the Vesting of,otherwise cause to be exercisable or free of restrictions or conditions, any Award granted to anOfficer or Director of the Company, and (ii) such acceleration or waivers shall not cause the Awardto be treated as the granting of a new Award under Section 409A of the Code that is not exemptfrom, or compliant with, the requirements of Section 409A.     **10.4****Repricing, Exchange and Repurchase of Awards****.**Notwithstanding any otherprovisions of this Plan, without shareholder approval and the consent of each affected Participant,this Plan does not permit (i) any decrease in the Exercise Price, Reference Price or other purchaseprice of an Award or any other decrease in the pricing of an outstanding Award, (ii) the issuanceof any substitute Option or SAR with a lower Exercise Price or Reference Price than an existingOption or SAR which is forfeited or cancelled in exchange for the substitute Option or SAR, or(iii) the repurchase by the Company of any Option or SAR with an Exercise Price or Reference Priceabove Fair Market Value at the time of such repurchase. Additionally, in no event shall any offerto reprice, exchange or repurchase an Award cause the original Award, the newly granted Award orthe consideration to be paid upon repurchase to be treated as the granting of a new award underSection 409A of the Code that is not exempt from, or compliant with, the requirements of Section409A.**SECTION XI.**          **TERMINATION OR AMENDMENT OF THIS PLAN**     **11.1****Termination or Amendment****.**The Board may at any time, amend, in whole or in part,any or all of the provisions of this Plan, or suspend or terminate it entirely; provided, however,that, unless otherwise required by law or integrally related to a requirement of law, the rights ofa Participant with respect to any Awards granted prior to such amendment, suspension or terminationmay not be impaired without the consent of such Participant. In addition, no amendment may be madewithout first obtaining shareholder approval if such amendment would increase the maximum number ofShares or amount of cash which may be granted to any individual Participant, or increase the totalnumber of Shares available for issuance under this Plan, or if such approval is required pursuantto applicable requirements of the Code, the Exchange Act or the listing requirements of any stockexchange on which the Common Stock is traded. Notwithstanding anything in this Plan to thecontrary, the Board, in its discretion, may amend the Plan or any Award to cause the Plan and suchAward to remain beyond the scope of the types of compensatory arrangements that are subject to therequirements of Section 409A of the Code or to otherwise comply with the requirements of Section409A. If any amendment to the Plan or any provision of an Award would cause the Participant to besubject to a tax penalty under Section 409A of the Code, such amendment or provision shall bedeemed modified in such manner as to
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render the Plan or Award exempt from, or compliant with, therequirements of Section 409A and to effectuate as nearly as possible the original intention of theBoard.**SECTION XII.****GENERAL PROVISIONS**     **12.1****No Right to Continued Employment****.**The adoption of this Plan and the granting ofAwards hereunder shall not confer upon any Employee the right to continued employment nor shall itinterfere in any way with the right of the Company or any Subsidiary to terminate the employment ofany Employee at any time.     **12.2****Awards to Persons Outside the United States****.**To the extent necessary orappropriate to comply with foreign law or practice, the Committee may, without amending this Plan:(i) establish special rules applicable to Awards granted to Eligible Persons who are either or bothforeign nationals or employed outside the United States, including rules that differ from those setforth in this Plan, and (ii) grant Awards to such Eligible Persons in accordance with those rules;provided that such special rules and provisions of the Award Agreements evidencing such Awards donot cause the Plan or such Awards to be considered to be compensatory arrangements subject to therequirements of Section 409A of the Code in violation of the exemption for foreign arrangementscontained in any guidance issued thereunder.     **12.3****Non-Transferability of Awards****.**Except as provided in the following sentence, noAward or benefit payable under this Plan shall be Transferable by the Participant during his or herlifetime, nor may it be assigned, exchanged, pledged, transferred or otherwise encumbered ordisposed of except by will or the laws of descent and distribution; and no Award shall beexercisable by anyone other than the Participant or the Participant’s guardian or legalrepresentative during such Participant’s lifetime. The Committee may in its sole discretion, at thetime of grant, permit a Participant to transfer a Non-Qualified Stock Option, SAR, or RestrictedStock Award for no consideration to a member of, or for the benefit of, the Participant’s ImmediateFamily (including, without limitation, to a trust in which members of the Immediate Family havemore than a 50% beneficial interest, to a partnership or limited liability company for one or moremembers of the Immediate Family, or to a foundation in which members of the Immediate Family holdmore than 50% of the voting interests), subject to such limits as the Committee may establish andso long as the transferee remains subject to all the terms and conditions applicable to such Award.The following shall be considered transfers for no consideration: (i) a transfer under a domesticrelations order in settlement of marital property rights; and (ii) a transfer to an entity in whichmore than 50% of the voting interests are owned by the Participant or members of the ImmediateFamily, in exchange for an interest in that entity.     **12.4****Other Plans****.**In no event shall the value of, or income arising from, any Awardsissued under this Plan be treated as compensation for purposes of any pension, profit sharing, lifeinsurance, disability or other retirement or welfare benefit plan now maintained or hereafteradopted by the Company or any Subsidiary, unless such plan specifically provides to the contrary.     **12.5****Unfunded Plan****.**For purposes of the Employee Retirement Income Security Act of1974, this Plan is intended to constitute an unfunded plan of incentive compensation, and it is notintended to provide retirement income, to result in a deferral of income for periods extending tothe termination of employment or beyond, or to provide welfare benefits. This Plan shall beunfunded and shall not create (or be construed to create) a trust or a separate fund or funds. ThisPlan shall not establish any fiduciary relationship between the Company or any of its Subsidiariesand any Participant or any other person. To the extent any person holds any rights by virtue of anAward granted under this Plan, such rights shall be no greater than the rights of an unsecuredgeneral creditor of the Company.     **12.6****Withholding of Taxes****.**The Company shall have the right to deduct from any paymentto be made pursuant to this Plan, or to otherwise require, prior to the issuance or delivery of anyShares or the payment of any cash to a Participant, payment by the Participant of any Federal,state, local or foreign taxes which the Company reasonably believes are required by law to bewithheld. The Committee may permit all or a portion of any such withholding obligation (notexceeding the minimum amount required to be so withheld) to be satisfied by reducing the number ofshares otherwise deliverable or by accepting the delivery of Shares previously owned by theParticipant, which Shares shall be valued at the Fair Market Value of the Common Stock on theexercise
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date in the case of a Stock Option and on the vesting date in the case of a RestrictedStock Award. Any fraction of a Share required to satisfy such tax obligations shall be disregardedand the amount due shall be paid instead in cash by the Participant. The Company or a Subsidiarymay also withhold from any future earnings of salary, bonus or any other payment due to theParticipant the amount necessary to satisfy any outstanding tax obligations related to the grant orexercise of any Award granted pursuant to this Plan.     **12.7****Governing Law****.**This Plan and all actions taken in connection with it shall begoverned by the laws of the State of Delaware, without regard to the principles of conflict oflaws.     **12.8****Liability****.**No employee of the Company or a Subsidiary nor member of the Committeeor the Board shall be liable for any action or determination taken or made in good faith withrespect to the Plan or any Award granted hereunder and, to the fullest extent permitted by law, allemployees and members of the Committee and the Board shall be indemnified by the Company and itsSubsidiaries for any liability and expenses which they may incur through any claim or cause ofaction arising under or in connection with this Plan or any Awards granted under this Plan.     **12.9****Successors****.**All obligations of the Company under this Plan shall be binding uponand inure to the benefit of any successor to the Company, whether the existence of such successoris the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all orsubstantially all of the business, stock, and/or assets of the Company.     **12.10****Transactions Involving Common Stock**. Under no circumstances shall the Sharesissued under this Plan include or be subject to a permanent mandatory repurchase obligation or putor call right that is based on a purchase price other than a purchase price equal to the FairMarket Value of such Shares.     **12.11****Exemption from, or Compliance with, Section 409A**. For federal income taxpurposes, the Plan and the Awards granted hereunder are intended to be either exempt from, orcompliant with, Section 409A of the Code. This Plan and all Awards granted hereunder shall beinterpreted, operated and administered in a manner consistent with these intentions.
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