Exhibit
10.7





ANTS
SOFTWARE INC.





2008
STOCK PLAN





1.  Purposes of the
Plan.  Awards granted under the ANTs software inc. 2008 Stock
Plan may be Incentive Stock Options, Nonstatutory Stock Options, Restricted
Stock and Restricted Stock Units as determined by the Administrator at the time
of the grant of Awards.  The purposes of this 2008 Stock Plan
are:





(a)  to attract
and retain the best available personnel for positions of substantial
responsibility,




(b)  to provide
incentives to Employees and Consultants, and




(c)  to promote
the success of the Company’s business.





2.  Definitions.  As
used herein, the following definitions shall apply:





(a)  “Administrator” means
the Board or any of its Committees as shall be administering the Plan, in
accordance with Section 4 of the Plan.




(b)  “Affiliate” means any
Parent or Subsidiary (as defined in Section 424(e) and (f) of the Code) of the
Company.




(c)  “Applicable Laws”
means the requirements relating to the administration of equity compensation
plans under U.S. state corporate laws, U.S. federal and state securities laws,
the Code, any stock exchange or quotation system on which the Shares are listed
or quoted and the applicable laws of any other country or jurisdiction where
Awards are granted under the Plan.




(d)  “Award” means,
individually or collectively, a grant under the Plan of Incentive Stock Options,
Nonqualified Stock Options, Restricted Stock or Restricted Stock
Units.




(e)  “Award Agreement”
means the written agreement setting forth the terms and conditions applicable to
each Award granted under the Plan.




(f)  “Board” means the
Board of Directors of the Company.




(g)  “Change of Control”
means the occurrence of any of the following events, in one or a series of
related transactions:




(i)  any
“person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act,
other than the Company, a subsidiary of the Company or a Company employee
benefit plan, including any trustee of such plan acting as trustee, is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company’s then
outstanding securities entitled to vote generally in the election of directors;
or




- 1-




(ii)  a merger
or consolidation of the Company or any direct or indirect subsidiary of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least fifty
percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or




(iii)  the sale
or disposition by the Company of all or substantially all the Company’s assets;
or




(iv)  a change
in the composition of the Board, as a result of which fewer than a majority of
the Directors are Incumbent Directors.  “Incumbent Directors” shall
mean Directors who either (A) are Directors as of the date this Plan is
approved by the Board, or (B) are elected, or nominated for election, to
the Board with the affirmative votes of at least a majority of the Directors and
whose election or nomination was not in connection with any transaction
described in (i) or (ii) above or in connection with an actual or
threatened proxy contest relating to the election of directors of the
Company.





(h)  “Code” means the
Internal Revenue Code of 1986, as amended.  Reference to a specific
section of the Code or regulation thereunder shall include such section or
regulation, any valid regulation promulgated under such section, and any
comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.




(i)  “Committee” means a
Committee appointed by the Board in accordance with Section 4 of the
Plan.




(j)  “Common Stock” means
the Common Stock of the Company.




(k)  “Company” means ANTs
software inc., a Delaware corporation, or any successor thereto.




(l)  “Consultant” means any
person other than an Employee who is engaged by the Company or any Affiliate to
render consulting or advisory services and is compensated for such services,
including a non-Employee director.




(m)  “Continuous Status as an
Employee or Consultant” means that the employment or consulting
relationship with the Company or any Affiliate is not interrupted or
terminated.  For purposes of Awards of Incentive Stock Options, the
term “Continuous Status as an Employee or Consultant” means that the employment
relationship with the Company or any Affiliate is not interrupted or
terminated.  Continuous Status as an Employee or Consultant shall not
be considered interrupted in the case of (i) any leave of absence approved by
the Company or an Affiliate or (ii) transfers between locations of the Company
and its Affiliates or between the Company and any Affiliate, or between
Affiliates or (iii) transfer between Employee and Consultant
Status.  If reemployment upon expiration of a leave of absence
approved by the Company or an Affiliate is not guaranteed by statute or
contract, on the 181st day
after such leave commences any Award which is an Incentive Stock Option held by
the Participant shall cease to be treated as an Incentive Stock Option and shall
be treated for tax purposes as a Nonstatutory Stock Option.  In the
event of a Participant’s change in status from Consultant to Employee or
Employee to Consultant, an Participant’s Continuous Status as an Employee or
Consultant shall not automatically terminate solely as a result of such change
in status.  However, in such event, an Award that is an Incentive
Stock Option held by the Participant shall cease to be treated as an Incentive
Stock Option and shall be treated for tax purposes as a Nonstatutory Stock
Option three months and one day following such change of status.




- 2
-




(n)  “Date of Grant” means,
with respect to an Award, the date that the Award is granted and its
exercise price is set (if applicable), consistent with Applicable Laws and
applicable financial accounting rules.




(o)  “Director” means a
member of the Board.




(p)  “Disability” means
total and permanent disability as defined in Section 22(e)(3) of the
Code.




(q)  “Earnings Per Share”
means, as to any Performance Period, the Company’s or a business unit’s fully
diluted earnings per share as defined by generally accepted accounting
principles.




(r)  “Employee” means any
person employed by the Company or any Affiliate of the Company.




(s)  “Exchange Act” means
the Securities Exchange Act of 1934, as amended.  Reference to a
specific section of the Exchange Act or regulation thereunder shall include such
section or regulation, any valid regulation promulgated under such section, and
any comparable provision of any future legislation or regulation amending,
supplementing or superseding such section or regulation.




(t)  “Fair Market Value”
means, as of any date, the value of Common Stock determined as
follows:




(i)  If the
Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq National Market of the National
Association of Securities Dealers, Inc. Automated Quotation
(“Nasdaq”) System, or on any bulletin board or similar computer trading
system, the Fair Market Value of a Share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the day of determination, as
reported in The Wall Street Journal or such other source as the Administrator
deems reliable; or




(ii)  In the
absence of an established market for the Common Stock, the Fair Market Value
shall be determined in good faith by the Administrator.





(u)  “Fiscal Year” means a
fiscal year of the Company.




(v)  “Incentive Stock
Option” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.




(w)  “Net Income” means, as
to any Performance Period, the net income of the Company for the Performance
Period determined in accordance with generally accepted accounting
principles.




- 3
-




(x)  “Nonstatutory Stock
Option” means an Option not intended to qualify as an Incentive Stock
Option.




(y)  “Notice of Grant”
means a written or electronic notice evidencing certain terms and conditions of
an individual Award.  The Notice of Grant is part of the Award
Agreement.




(z)  “Operating Margins”
means the ratio of Operating Income to Revenue.




(aa)  “Operating Income”
means the Company’s or a business unit’s income from operations determined in
accordance with generally accepted accounting principles.




(bb)  “Option” means a stock
option granted pursuant to the Plan.




(cc)  “Option Agreement”
means a written or electronic agreement between the Company and a Participant
evidencing the terms and conditions of an individual Option
grant.  The Option Agreement is subject to the terms and conditions of
the Plan.




(dd)  “Parent” means a
“parent corporation”, whether now or hereafter existing, as defined in
Section 424(e) of the Code.




(ee)  “Participant” means
the holder of an outstanding Award granted under the Plan.




(ff)  “Performance Goals”
means the goal(s) (or combined goal(s)) determined by the Administrator (in its
discretion) to be applicable to a Participant with respect to an
Award.  As determined by the Administrator, the Performance Goals
applicable to an Award may provide for a targeted level or levels of achievement
using one or more of the following measures:  (a) Revenue,
(b) Earnings Per Share, (c) Net Income, (d) Operating Margins,
and (e) Total Stockholder Return.  The Performance Goals may
differ from Participant to Participant and from Award to Award.  Any
criteria used may be measured, as applicable, (i) on Pro Forma numbers,
(ii) in absolute terms, (iii) in relative terms (including, but not
limited, the passage of time and/or against other companies or financial
metrics), (iv) on a per share and/or share per capita basis,
(v) against the performance of the Company as a whole or against particular
segments or products of the Company and/or (vi) on a pre-tax or after-tax
basis.  Prior to the Determination Date, the Administrator shall
determine whether any element(s) (for example, but not by way of limitation, the
effect of mergers or acquisitions) shall be included in or excluded from the
calculation of any Performance Goal with respect to any Participants (whether or
not such determinations result in any Performance Goal being measured on a basis
other than generally accepted accounting principles).




(gg)  “Performance Period”
means any Fiscal Year or such longer period as determined by the Administrator
in its sole discretion.




(hh)  “Period of
Restriction” means the period during which the transfer of Shares of
Restricted Stock are subject to restrictions and therefore, the Shares are
subject to a substantial risk of forfeiture.  As provided in
Section 9, such restrictions may be based on the passage of time, the
achievement of target levels of performance, or the occurrence of other events
as determined by the Administrator, in its discretion.




(ii)  “Plan” means this 2008
Stock Plan, as set forth in this instrument and as hereafter amended from time
to time.




- 4
-




(jj)  “Pro Forma” means
calculation of a Performance Goal in a manner that excludes certain unusual or
non-cash expenses or credits, such as restructuring expenses, extraordinary tax
events, expenses or credits related to stock options, other equity compensation
or the like, acquisition related expenses, extraordinary items, income or loss
from discontinued operations, and/or gains or losses from early extinguishment
of debt instead of conforming to generally accepted accounting
principles.




(kk)  “Restricted Stock”
means an Award granted to a Participant pursuant to Section 9.




(ll)  “Restricted Stock
Unit” means an Award granted to a Participant pursuant to
Section 10.




(mm)  “Revenue” means the
Company’s or a business unit’s net sales for the Performance Period, determined
in accordance with generally accepted accounting principles.




(nn)  “Rule 16b-3” means
Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when
discretion is being exercised with respect to the Plan.




(oo)  “Section 16(b)”
means Section 16(b) of the Securities Exchange Act of 1934, as
amended.




(pp)  “Share” means a share
of the Common Stock, as adjusted in accordance with Section 13 of the
Plan.




(qq)  “Subsidiary” means a
“subsidiary corporation”, whether now or hereafter existing, as defined in
Section 424(f) of the Code.




(rr)  “Total Stockholder
Return” means the total return (change in share price plus reinvestment
of any dividends) of a share of the Company’s common stock.





3.  Stock Subject to the
Plan.




(a)  Subject to
the provisions of Section 13 of the Plan, the maximum aggregate number of
Shares which may be issued under the Plan is 5,000,000.




(b)  The Shares
may be authorized, but unissued, or reacquired Common Stock.  If an
Award expires or becomes unexercisable without having been exercised in full, or
with respect to Restricted Stock or Restricted Stock Units, is forfeited to or
repurchased by the Company, the unpurchased Shares (or for Awards other than
Options, the forfeited or repurchased Shares) which were subject thereto will
become available for future grant or sale under the Plan (unless the Plan has
terminated).  Shares that have actually been issued under the Plan
under any Award will not be returned to the Plan and will not become available
for future distribution under the Plan; provided, however, that if unvested
Shares of Restricted Stock or Restricted Stock Units are repurchased by the
Company or are forfeited to the Company, such Shares will become available for
future grant under the Plan.  Shares used to pay the tax and exercise
price of an Award will not become available for future grant or sale under the
Plan.  To the extent an Award under the Plan is paid out in cash
rather than Shares, such cash payment will not result in reducing the number of
Shares available for issuance under the Plan.  Notwithstanding the
foregoing and, subject to adjustment provided in Section 13, the maximum
number of Shares that may be issued upon the exercise of Incentive Stock Options
shall equal the aggregate Share number stated in this Section 3(a), plus,
to the extent allowable under Section 422 of the Code, any Shares that
become available for issuance under the Plan under this
Section 3(b).





- 5
-




4.  Administration of the
Plan.




(a)  Procedure.




(i)  Multiple
Administrative Bodies. The Plan may be administered by different Administrators
with respect to different groups of Employees or Consultants.




(ii)  Section 162(m).  To
the extent that the Administrator determines it to be desirable to qualify
Awards granted hereunder as “performance-based compensation” within the meaning
of Section 162(m) of the Code, the Plan shall be administered by a
Committee of two or more “outside directors” within the meaning of
Section 162(m) of the Code.




(iii)  Rule
16b-3.  To the extent desirable to qualify transactions hereunder as
exempt under Rule 16b-3, the transactions contemplated hereunder shall be
structured to satisfy the requirements for exemption under Rule
16b-3.




(iv)  Other
Administration.  Other than as provided above, the Plan shall be
administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.




(b)  Powers of
the Administrator.  Subject to the provisions of the Plan, and in the
case of a Committee, subject to the specific duties delegated by the Board to
such Committee, the Administrator shall have the authority, in its
discretion:




(i)  to
determine the Fair Market Value of the Common Stock, in accordance with
Section 2(r) of the Plan;




(ii)  to select
the Employees and Consultants to whom Awards may be granted
hereunder;




(iii)  to
determine whether and to what extent Awards are granted hereunder;




(iv)  to
determine the number of Shares to be covered by each Award granted
hereunder;




(v)  to approve
forms of agreement for use under the Plan;




(vi)  to
determine the terms and conditions, not inconsistent with the terms of the Plan,
of any Award granted hereunder.  With respect to Options, such terms
and conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;




(vii)  to
construe and interpret the terms of the Plan and Awards granted
hereunder;




- 6
-




(viii)  to
prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax
laws;




(ix)  to modify
or amend each Award (not inconsistent with the terms of the Plan), including the
discretionary authority to extend the post-termination exercisability period of
Options longer than is otherwise provided for in the Plan;




(x)  to
authorize any person to execute on behalf of the Company any instrument required
to effect the grant of an Award previously granted by the
Administrator;




(xi)  to allow
Participants to satisfy withholding tax obligations by electing to have the
Company withhold from the Shares to be issued upon exercise or vesting of an
Award that number of Shares having a Fair Market Value equal to the minimum
amount required to be withheld (but no more).  The Fair Market Value
of any Shares to be withheld shall be 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 shall be made in such form
and under such conditions as the Administrator may deem necessary or
advisable;




(xii)  to
determine the terms and restrictions applicable to Awards; and




(xiii)  to make
all other determinations deemed necessary or advisable for administering the
Plan.




(c)  Effect of
Administrator’s Decision.  The Administrator’s decisions,
determinations and interpretations shall be final and binding on all
Participants and any other holders of Awards and shall be given the maximum
deference permitted by law.




5.  Eligibility.  Awards
may be granted only to Employees and Consultants.




6.  No Employment
Rights.  Neither the Plan nor any Award shall confer upon a
Participant any right with respect to continuing the Participant’s employment
with the Company, or continued Contractor status with the Company, or its
Affiliates, nor shall they interfere in any way with the Participant’s right or
the Company’s or Subsidiary’s right, as the case may be, to terminate such
employment or Contractor status at any time, with or without cause or
notice.




7.  Term of
Plan.  The Plan shall become effective on March 26, 2008
and continue in effect, expiring at the close of business, pacific daylight
time, on March 25, 2018.




8.  Stock
Options.




(a)  Grant of
Options.  Subject to the terms and provisions of the Plan, Options may
be granted to Employees and Consultants at any time and from time to time as
determined by the Administrator in its sole discretion.  The
Administrator, in its sole discretion, shall determine the number of Shares
subject to each Option.  The Administrator may grant Incentive Stock
Options, Nonstatutory Stock Options, or a combination thereof.




(b)  Term.  The
term of each Option shall be stated in the Notice of Grant; provided, however,
that the term shall be no longer than ten (10) years from the Date of
Grant.  Moreover, in the case of an Incentive Stock Option granted to
a Participant who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes
of stock of the Company or any Affiliate, the term of the Incentive Stock Option
shall be no longer than five (5) years from the Date of
Grant.  Subject to the five (5) and ten (10) year limits set
forth in the preceding sentence, the Administrator may, after an Option is
granted, extend the maximum term of the Option.  Unless otherwise
determined by the Administrator, any extension of the term of an Option pursuant
to this Section 8(b) shall comply with Code Section 409A.




- 7
-




(c)  Option
Exercise Price.   The per share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be determined by the
Administrator and shall be no less than 100% of the Fair Market Value per share
on the Date of Grant; provided, however, that in the case of an Incentive Stock
Option granted to an Employee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Affiliate, the per Share
exercise price shall be no less than 110% of the Fair Market Value per Share on
the Date of Grant.  Notwithstanding the foregoing, in the event that
the Company or a Subsidiary consummates a transaction described in
Section 424(a) of the Code (e.g., the acquisition of property or stock from
an unrelated corporation), persons who become Employees on account of such
transaction may be granted Options in substitution for options granted by their
former employer.  If such substitute Options are granted, the
Administrator, in its sole discretion and consistent with Section 424(a) of
the Code, may determine that such substitute Options shall have an exercise
price less than one hundred percent (100%) of the Fair Market Value of the
Shares on the Date of Grant.




(d)  Waiting
Period and Exercise Dates.  At the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and
shall determine any conditions which must be satisfied before the Option may be
exercised.  In so doing, the Administrator may specify that an Option
may not be exercised until the completion of a service period or until
performance milestones are satisfied.




(e)  Form of
Consideration.  The Administrator shall determine the acceptable form
of consideration for exercising an Option, including the method of
payment.  In the case of an Incentive Stock Option, the Administrator
shall determine the acceptable form of consideration at the time of
grant.  Subject to Applicable Laws, such consideration may consist
entirely of:




(i)  cash;




(ii)  check;




(iii)  other
Shares which (A) in the case of Shares acquired upon exercise of an option,
have been owned by the Participant for more than six months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal
to the aggregate exercise price of the Shares as to which said Option shall be
exercised;




(iv)  delivery
to the Company of (A) a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if applicable,
shall require to effect an exercise of the Option and (B) the sale proceeds
required to pay the exercise price;




(v)  any
combination of the foregoing methods of payment; or




- 8
-




(vi)  such other
consideration and method of payment for the issuance of Shares to the extent
permitted by Applicable Laws.




(f)  Exercise
of Option; Rights as a Stockholder.  Any Option granted hereunder
shall be exercisable according to the terms of the Plan and at such times and
under such conditions as determined by the Administrator and set forth in the
Option Agreement.  An Option may not be exercised for a fraction of a
Share.  An Option shall be deemed exercised when the Company
receives:  (i) written or electronic notice of exercise (in
accordance with the Option Agreement) from the person entitled to exercise
the Option, and (ii) full payment for the Shares with respect to which the
Option is exercised.  Full payment may consist of any consideration
and method of payment authorized by the Administrator and permitted by the
Option Agreement and the Plan.  Shares issued upon exercise of an
Option shall be issued in the name of the Participant.  Until the
stock certificate evidencing such Shares is issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other rights
as a stockholder shall exist with respect to the optioned stock, notwithstanding
the exercise of the Option.  The Company shall issue (or cause to be
issued) such stock certificate promptly after the Option is
exercised.  No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 13 of the Plan.  Exercising an
Option in any manner shall decrease the number of Shares thereafter available
for sale under the Option, by the number of Shares as to which the Option is
exercised.




(g)  Termination
of Continuous Status as an Employee or Consultant.  If a Participant’s
Continuous Status as an Employee or Consultant terminates, other than upon the
Participant’s death or Disability, the Participant may exercise his or her
Option within such period of time as is specified in the Option Agreement to the
extent that the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement).  In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for three (3) months
following termination of the Participant’s Continuous Status as an Employee or
Consultant.  If, on the date of termination, the Participant is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan.  If, after
termination, the Participant does not exercise his or her Option within the time
specified by the Administrator, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.




(h)  Disability.  If
a Participant’s Continuous Status as an Employee or Consultant terminates as a
result of the Participant’s Disability, the Participant may exercise his or her
Option for twelve (12) months following the Participant’s termination (but
in no event may the Option be exercised later than the expiration of the term of
such Option as set forth in the Option Agreement).  If, on the date of
termination, the Participant is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the
Plan.  If, after termination, the Participant does not exercise his or
her Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.




(i)  Death of
Participant.  If a Participant dies while in Continuous Status as an
Employee or Consultant, the Option may be exercised for twelve (12) months
following Participant’s death (but in no event may the option be exercised later
than the expiration of the term of such Option as set forth in the Option
Agreement), by the Participant’s designated beneficiary, provided such
beneficiary has been designated prior to Participant’s death in a form
acceptable to the Administrator.  If no such beneficiary has been
designated by the Participant, then such Option may be exercised by the personal
representative of the Participant’s estate or by the person(s) to whom the
Option is transferred pursuant to the Participant’s will or in accordance with
the laws of descent and distribution.  If the Option is not so
exercised within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.




- 9
-




(j)  ISO
$100,000 Rule.  Each Option shall be designated in the Notice of Grant
as either an Incentive Stock Option or a Nonstatutory Stock
Option.  However, notwithstanding such designations, to the extent
that the aggregate Fair Market Value of Shares subject to a Participant’s
Incentive Stock Options granted by the Company, any Affiliate, which become
exercisable for the first time during any calendar year (under all plans of the
Company or any Affiliate) exceeds $100,000, such excess Options shall be
treated as Nonstatutory Stock Options.  For purposes of this
Section 8(j), Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of the Shares shall
be determined as of the time of grant.




(k)  Misconduct.  In
the event of termination of a Participant’s Continuous Status as an Employee or
Consultant as a result of misconduct (including, but not limited to, any act of
dishonesty, willful misconduct, fraud or embezzlement) or should the Participant
make or attempt to make any unauthorized use or disclosure of material
confidential information or trade secrets of the Company or any Affiliate, then
in any such event  his or her option shall terminate and cease to be
exercisable immediately upon the termination of Participant’s Continuous Status
as an Employee or Consultant Status or such unauthorized disclosure or use of
confidential or secret information or attempt thereat.




9.  Restricted
Stock.




(a)  Grant of
Restricted Stock.  Subject to the terms and provisions of the Plan,
the Administrator, at any time and from time to time, may grant Shares of
Restricted Stock to Employees or Consultants as the Administrator, in its sole
discretion, shall determine.  The Administrator, in its sole
discretion, shall determine the number of Shares to be granted to each
Participant.




(b)  Restricted
Stock Agreement.  Each Award of Restricted Stock shall be evidenced by
an Award Agreement that shall specify the Period of Restriction, the number of
Shares granted, and such other terms and conditions as the Administrator, in its
sole discretion, shall determine.  Unless the Administrator determines
otherwise, Shares of Restricted Stock shall be held by the Company as escrow
agent until the restrictions on such Shares have lapsed.




(c)  Transferability.  Except
as provided in this Section 9, Shares of Restricted Stock may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until the
end of the applicable Period of Restriction.




(d)  Other
Restrictions.  The Administrator, in its sole discretion, may impose
such other restrictions on Shares of Restricted Stock as it may deem advisable
or appropriate, in accordance with this Section 9(d).




(i)  General
Restrictions.  The Administrator may set restrictions based upon
continued employment or service with the Company and its affiliates, the
achievement of specific performance objectives (Company-wide, departmental, or
individual), applicable federal or state securities laws, or any other basis
determined by the Administrator in its discretion.




- 10
-




(ii)  Section 162(m)
Performance Restrictions.  For purposes of qualifying grants of
Restricted Stock as “performance-based compensation” under Section 162(m)
of the Code, the Administrator, in its discretion, may set restrictions based
upon the achievement of Performance Goals.  The Performance Goals
shall be set by the Administrator on or before the latest date permissible to
enable the Restricted Stock to qualify as “performance-based compensation” under
Section 162(m) of the Code.  In granting Restricted Stock which
is intended to qualify under Section 162(m) of the Code, the Administrator
shall follow any procedures determined by it from time to time to be necessary
or appropriate to ensure qualification of the Restricted Stock under
Section 162(m) of the Code (e.g., in determining the Performance
Goals).




(iii)  Legend on
Certificates.  The Administrator, in its discretion, may legend the
certificates representing Restricted Stock to give appropriate notice of such
restrictions.




(e)  Removal of
Restrictions.  Except as otherwise provided in this Section 9,
Shares of Restricted Stock covered by each Restricted Stock grant made under the
Plan shall be released from escrow as soon as practicable after the last day of
the Period of Restriction.  The Administrator, in its discretion, may
accelerate the time at which any restrictions shall lapse or be
removed.  After the restrictions have lapsed, the Participant shall be
entitled to have any legend or legends under Section 9(d)(iii) removed from
his or her Share certificate, and the Shares shall be freely transferable by the
Participant.  The Administrator (in its discretion) may establish
procedures regarding the release of Shares from escrow and the removal of
legends, as necessary or appropriate to minimize administrative burdens on the
Company.




(f)  Voting
Rights.  During the Period of Restriction, Participants holding Shares
of Restricted Stock granted hereunder may exercise full voting rights with
respect to those Shares, unless the Administrator determines
otherwise.




(g)  Dividends
and Other Distributions.  During the Period of Restriction,
Participants holding Shares of Restricted Stock shall be entitled to receive all
dividends and other distributions paid with respect to such Shares unless
otherwise provided in the Award Agreement.  Any such dividends or
distribution shall be subject to the same restrictions on transferability and
forfeitability as the Shares of Restricted Stock with respect to which they were
paid, unless otherwise provided in the Award Agreement.




(h)  Return of
Restricted Stock to the Company.  On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed shall
revert to the Company and again shall become available for grant under the
Plan.




10.  Restricted Stock
Units.




(a)  Grant of
Restricted Stock Units.  Restricted Stock Units may be granted to
Employees or Consultants at any time and from time to time, as shall be
determined by the Administrator, in its sole discretion.  The
Administrator shall have complete discretion in determining the number of
Restricted Stock Units granted to each Participant.




(b)  Value of
Restricted Stock Units.  Each Restricted Stock Unit shall have an
initial value equal to the Fair Market Value of a Share on the Grant
Date.




(c)  Restricted
Stock Unit Agreement.  Each Award of Restricted Stock Units shall be
evidenced by an Award Agreement that shall specify any vesting conditions, the
number of Restricted Stock Units granted, and such other terms and conditions as
the Administrator, in its sole discretion, shall determine.




- 11
-




(d)  Performance
Objectives and Other Terms.  The Administrator, in its sole
discretion, shall set performance objectives or other vesting criteria which,
depending on the extent to which they are met, will determine the number or
value of Restricted Stock Units that will be paid out to the
Participants.  Each Award of Restricted Stock Units shall be evidenced
by an Award Agreement that shall specify the Performance Period, and such other
terms and conditions as the Administrator, in its sole discretion, shall
determine.




(i)  General
Performance Objectives or Vesting Criteria.  The Administrator may set
performance objectives or vesting criteria based upon the achievement of
Company-wide, departmental, or individual goals, applicable federal or state
securities laws, or any other basis determined by the Administrator in its
discretion (for example, but not by way of limitation, Continuous Status as an
Employee or Consultant).




(ii)  Section 162(m)
Performance Objectives.  For purposes of qualifying grants of
Restricted Stock Units as “performance-based compensation” under
Section 162(m) of the Code, the Administrator, in its discretion, may
determine that the performance objectives applicable to Restricted Stock Units
shall be based on the achievement of Performance Goals.  The
Performance Goals shall be set by the Administrator on or before the latest date
permissible to enable the Restricted Stock Units to qualify as
“performance-based compensation” under Section 162(m) of the
Code.  In granting Restricted Stock Units that are intended to qualify
under Section 162(m) of the Code, the Administrator shall follow any
procedures determined by it from time to time to be necessary or appropriate to
ensure qualification of the Restricted Stock Units under Section 162(m) of
the Code (e.g., in determining the Performance Goals).




(e)  Earning of
Restricted Stock Units.  After the applicable Performance Period has
ended, the holder of Restricted Stock Units shall be entitled to receive a
payout of the number of Restricted Stock Units earned by the Participant over
the Performance Period, to be determined as a function of the extent to which
the corresponding performance objectives have been achieved.  After
the grant of a Restricted Stock Unit, the Administrator, in its sole discretion,
may reduce or waive any performance objectives for such Restricted Stock
Unit.




(f)  Form and
Timing of Payment of Restricted Stock Units.  Payment of vested
Restricted Stock Units shall be made as soon as practicable after vesting
(subject to any deferral permitted under Section 18).  The
Administrator, in its sole discretion, may pay Restricted Stock Units in the
form of cash, in Shares or in a combination thereof.




(g)  Cancellation
of Restricted Stock Units.  On the date set forth in the Award
Agreement, all unvested Restricted Stock Units shall be forfeited to the Company
and, except as otherwise determined by the Administrator, again shall be
available for grant under the Plan.




11.  Leaves of
Absence.  Unless the Administrator provides otherwise or except
as otherwise required by Applicable Laws, vesting of Awards granted hereunder
shall continue during any leave of absence approved by the
Administrator.




12.  Non-Transferability of
Awards.  Unless determined otherwise by the Administrator, an
Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed
of in any manner other than by will or by the laws of descent or distribution
and may be exercised, during the lifetime of the recipient, only by the
recipient.  If the Administrator makes an Award transferable, such
Award shall contain such additional terms and conditions as the Administrator
deems appropriate; provided, however, that such Award shall in no event be
transferable for value.  Notwithstanding the foregoing, a Participant
may, if the Administrator (in its discretion) so permits, transfer an Award to
an individual or entity other than the Company.  Any such transfer
shall be made in accordance with such procedures as the Administrator may
specify from time to time.




- 12
-




13.  Adjustments Upon Changes in
Capitalization.




(a)  Subject to
any required action by the stockholders of the Company, the number of Shares
covered by each outstanding Award, the number of Shares which have been
authorized for issuance under the Plan but as to which no Awards have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Award, as well as the price per Share of Common Stock covered by each such
outstanding Award and the 162(m) Fiscal Year share issuance limits under
Sections 8(a), 9(a) and 10(a) hereof, shall be proportionately adjusted for any
increase or decrease in the number of issued Shares resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
Shares effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been “effected without receipt of
consideration.”  Such adjustment shall be made by the Administrator,
whose determination in that respect shall be final, binding and
conclusive.  Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of Shares subject to an
Award.




(b)  Dissolution
or Liquidation.  In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Participant as
soon as practicable prior to the effective date of such proposed
transaction.  The Administrator in its sole discretion may provide for
a Participant to have the right to exercise his or her Award until ten
(10) days prior to such transaction as to all of the Shares covered
thereby, including Shares as to which the Award would not otherwise be
exercisable.  In addition, the Administrator may provide that any
Company repurchase option or forfeiture rights applicable to any Award shall
lapse 100%, and that any Award vesting shall accelerate 100%, provided the
proposed dissolution or liquidation takes place at the time and in the manner
contemplated.  To the extent it has not been previously exercised, an
Award will terminate immediately prior to the consummation of such proposed
action.




(c)  Change of
Control.  In the event of a Change of Control, each outstanding Award
shall be assumed or an equivalent Award substituted by the successor corporation
or a Parent or Subsidiary of the successor corporation.  In the event
that the successor corporation refuses to assume or substitute for the Award,
the Participant shall fully vest in and have the right to exercise all of his or
her outstanding Options, including Shares as to which such Awards would not
otherwise be vested or exercisable, all restrictions on Restricted Stock will
lapse, and, with respect to Awards with performance-based vesting, including but
not limited to Restricted Stock and Restricted Stock Units, all performance
goals or other vesting criteria will be deemed achieved at one hundred percent
(100%) of target levels and all other terms and conditions
met.  In addition, if an Option is not assumed or substituted in the
event of a Change of Control, the Administrator shall notify the Participant in
writing or electronically that the Option shall be fully vested and exercisable
for a period of fifteen (15) days from the date of such notice, and the
Option shall terminate upon the expiration of such period.  For the
purposes of this paragraph, an Award shall be considered assumed if, following
the Change of Control, the




- 13
-
 
  Award
confers the right to purchase or receive, for each Share subject to the Award
immediately prior to the Change of Control, the consideration (whether stock,
cash, or other securities or property) received in the Change of Control by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the Change of Control
is not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of an Option or upon the
payout of the Restricted Stock Unit Award, for each Share subject to the Award,
to be solely common stock of the successor corporation or its Parent equal in
fair market value to the per share consideration received by holders of Common
Stock in the Change of Control.  Notwithstanding anything in this
Section 13(c) to the contrary, an Award that vests, is earned or paid-out
upon the satisfaction of one or more performance goals will not be considered
assumed if the Company or its successor modifies any of such performance goals
without the Participant’s consent; provided, however, a modification to such
performance goals only to reflect the successor corporation’s post-Change of
Control corporate structure will not be deemed to invalidate an otherwise valid
Award assumption.


14.  Amendment and Termination of
the Plan.




(a)  Amendment
and Termination.  The Board may at any time amend, alter, suspend or
terminate the Plan; provided, however, that the Board may not materially amend
the Plan without obtaining stockholder approval.  For this purpose,
the following shall be considered material amendments requiring stockholder
approval:  (i) increasing the number of Shares that may be issued
under the Plan (other than in accordance with Section 13(a) hereof),
(ii) modifying the persons eligible for participation under the Plan or
(iii) as otherwise may be required by Applicable Laws.




(b)  Stockholder
Approval.  The Company shall obtain stockholder approval of any Plan
amendment to the extent necessary and desirable to comply with Applicable
Laws.  Such stockholder approval, if required, shall be obtained in
such a manner and to such a degree as is required by the applicable law, rule or
regulation.




- 14
-




(c)  Effect of
Amendment or Termination.  No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Participant, unless
mutually agreed otherwise between the Participant and the Administrator, which
agreement must be in writing (or electronic format) and signed by the
Participant and the Company.




15.  Conditions Upon Issuance of
Shares.




(a)  Legal
Compliance.  Shares shall not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and delivery of such
Shares shall comply with Applicable Laws and shall be further subject to the
approval of counsel for the Company with respect to such
compliance.




(b)  Investment
Representations.  As a condition to the exercise or receipt of Shares
pursuant to an Award, the Company may require the person exercising or receiving
Shares pursuant to an Award to represent and warrant at the time of any such
exercise or receipt that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is
required.




16.  Liability of
Company.




(a)  Inability
to Obtain Authority.  The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not have
been obtained.




(b)  Grants
Exceeding Allotted Shares.  If the Shares covered by an Award exceed,
as of the Date of Grant, the number of Shares which may be issued under the Plan
without additional stockholder approval, such Award shall be void with respect
to such excess Shares, unless stockholder approval of an amendment sufficiently
increasing the number of Shares subject to the Plan is timely obtained in
accordance with Section 14(b) of the Plan.




17.  Reservation of
Shares.  The Company, during the term of this Plan, will at all
times reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.




18.  Deferrals.  The
Administrator, in its sole discretion, may permit a Participant to defer receipt
of the payment of cash or the delivery of Shares that would otherwise be due to
such Participant under an Award.  Any such deferral elections shall be
subject to such rules and procedures as shall be determined by the Administrator
in its sole discretion.




19.  Participation.  No
Employee or Consultant shall have the right to be selected to receive an Award
under this Plan, or, having been so selected, to be selected to receive a future
Award.




20.  No Rights as
Stockholder.  Except to the limited extent provided in
Section 9(f), no Participant (nor any beneficiary) shall have any of the
rights or privileges of a stockholder of the Company with respect to any Shares
issuable pursuant to an Award (or exercise thereof), unless and until
certificates representing such Shares shall have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to
the Participant (or beneficiary).




21.  Withholding
Requirements.  Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Company shall have the power and
the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local and foreign taxes
(including the Participant’s FICA obligation) required to be withheld with
respect to such Award (or exercise thereof).  Notwithstanding any
contrary provision of the Plan, if a Participant fails to remit to the Company
such withholding amount within the time period specified by the Administrator
(in its discretion), the Participant’s Award may, in the Administrator’s
discretion, be forfeited and in such case the Participant shall not receive any
of the Shares subject to such Award.




22.  Withholding
Arrangements.  The Administrator, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit or
require a Participant to satisfy all or part of the tax withholding obligations
in connection with an Award by (a) having the Company withhold otherwise
deliverable Shares, or (b) delivering to the Company already-owned Shares
having a Fair Market Value equal to the amount required to be
withheld.  The amount so withheld shall not exceed the amount
determined by using the minimum federal, state, local or foreign jurisdiction
statutory withholding rates applicable to the Participant with respect to the
Award on the date that the amount of tax to be withheld is to be
determined.  The Fair Market Value of the Shares to be withheld or
delivered shall be determined as of the date that the taxes are required to be
withheld.




- 15
-




23.  Indemnification.  Each
person who is or shall have been a member of the Committee, or of the Board,
shall be indemnified and held harmless by the Company against and from
(a) any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action taken or failure to act under
the Plan or any Award Agreement, and (b) from any and all amounts paid by
him or her in settlement thereof, with the Company’s approval, or paid by him or
her in satisfaction of any judgment in any such claim, action, suit, or
proceeding against him or her, provided he or she shall give the Company an
opportunity, at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf.  The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company’s
Certificate of Incorporation or Bylaws, by contract, as a matter of law, or
otherwise, or under any power that the Company may have to indemnify them or
hold them harmless.




24.  Successors.  All
obligations of the Company under the Plan, with respect to Awards granted
hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
or assets of the Company.




25.  Gender and
Number.  Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.




26.  Severability.  In
the event any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.




27.  Governing
Law.  The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of California (with the
exception of its conflict of laws provisions).




28.  Captions.  Captions
are provided herein for convenience of reference only and shall not serve as a
basis for interpretation or construction of the Plan.




29.  No Rules of
Construction.  No rules of construction are intended to apply
to the interpretation of this Plan and for all purposes this Plan shall be
deemed to be jointly authored by the Administrator and the
Participants.