**Exhibit 10.12**

         

         

**2007 STOCK INCENTIVE        PLAN**

**OF         **

**SILVERSTAR HOLDINGS, LTD.**

        1.     Purposes of the Plan. This stock incentive plan (the        "Plan") is intended to provide an incentive to employees (including directors and officers        who are employees), consultants and non-employee directors of Silverstar Holdings, Ltd.        (the "Company"), a Bermuda corporation, or any Parent or Subsidiaries (as such terms are        defined in Paragraph 17), and to offer an additional inducement in obtaining the services        of such individuals. The Plan provides for the grant of "incentive stock options" ("ISOs")        within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the        "Code"), stock options which do not qualify as ISOs ("NQSOs"), and shares of stock of the        Company that may be subject to contingencies or restrictions ("Stock Awards"; collectively,        with an ISO or NQSO, each an “Award”). The Company makes no representation or        warranty, express or implied, as to the qualification of any option as an "incentive stock        option" or any other treatment of an Award under the Code.

        2.     Stock Subject to the Plan. Subject to the provisions        of Paragraph 10, the aggregate number of shares of the Company's common stock, par value        $.01 per share ("Common Stock"), for which Awards may be granted under the Plan shall not        exceed 2,000,000 shares. ISOs may be granted up to the full number of shares available        under the Plan. Such shares of Common Stock may, in the discretion of the Board of        Directors of the Company (the "Board of Directors"), consist either in whole or in part of        authorized but unissued shares of Common Stock or shares of        Common Stock held in the treasury of the Company. Subject to the termination provisions of        Paragraph 11, any shares of Common Stock subject to an Award which for any reason expires        or is forfeited, canceled, or terminated unexercised or which ceases for any reason to be        exercisable, shall again become available for the granting of Awards under the Plan. The        Company shall at all times during the term of the Plan reserve and keep available such        number of shares of Common Stock as will be sufficient to satisfy the requirements of the        Plan. As further set forth in Section 9 hereof, all Awards shall be granted by one or more        written instruments (the "Contract") which shall set forth all terms and conditions of the        Award.

3.     Administration of the        Plan. The Plan will be administered by the Board of        Directors, or by a committee (the “Committee”) consisting of two or more        directors appointed by the Board of Directors. Those administering the Plan shall be        referred to herein as the "Administrators." Notwithstanding the foregoing, if the Company        is or becomes a corporation issuing any class of common equity securities required to be        registered under Section 12 of the Securities Exchange Act of 1934, as amended (the        "Exchange Act"), to the extent necessary to preserve any deduction under Section 162(m) of        the Code or to comply with Rule 16b-3 promulgated under the Exchange Act, or any successor        rule ("Rule 16b-3"), any Committee appointed by the Board of Directors to administer the        Plan shall be comprised of two or more directors each of whom shall be a "non-employee        director," within the meaning of Rule 16b-3, and an "outside director," within the meaning        of Treasury Regulation Section 1.162-27(e)(3), and the delegation of powers to the        Committee shall be consistent with applicable laws and regulations (including, without        limitation, applicable state law and Rule 16b-3).  Unless

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otherwise provided in the**By**        -Laws of the Company, by resolution of the Board of Directors or applicable law, a majority        of the members of the Committee shall constitute a quorum, and the acts of a majority of        the members present at any meeting at which a quorum is present, and any acts approved in        writing by all members without a meeting, shall be the acts of the Committee.

Subject to the express provisions of the Plan, the        Administrators shall have the authority, in their sole discretion, to determine each person        who shall be granted an Award; the type of Award to be granted, the times when an Award        shall be granted; whether an option granted to an Award Holder (as such term is defined in        Paragraph 4) shall be an ISO or a NQSO; the number of shares of Common        Stock to be subject to each Award; the term of each Award; the date each Award shall become        exercisable; whether an Award shall be exercisable in whole or in installments, and, if in        installments, the number of shares of Common Stock to be subject to each installment;        whether the installments shall be cumulative; the date each installment shall become        exercisable and the term of each installment; whether to accelerate the date of exercise of        any Award or installment thereof in the event of the death of the Award Holder or upon        other conditions to be specified by the Administrators in the applicable Contract or        subsequent thereto; whether shares of Common Stock may be issued upon the exercise of an        Award as partly paid, and, if so, the dates when future installments of the exercise price        shall become due and the amounts of such installments; the exercise price or other amount        to be paid in connection with the exercise of an Award; the form of payment of the exercise        price; subject to Section 7 of the Plan, the fair market value of a share of Common Stock;        the restrictions, if any, imposed with respect to an Award and whether and under what        conditions to waive any such restrictions; whether and under what conditions to restrict        the sale or other disposition of the shares of Common Stock acquired upon the grant or        exercise of an Award and, if so, whether and under what conditions to waive any such        restriction; whether and under what conditions to subject the grant or exercise of all or        any portion of an Award, the vesting of an Award, or the shares acquired pursuant to the        exercise of an Award, to the fulfillment of certain restrictions or contingencies all as        specified in the Contract, including without limitation restrictions or contingencies        relating to (a) entering into a covenant not to compete with the Company, any Parent (if        any) (as such term is defined in Paragraph 17) and any of its Subsidiaries (as such term is        defined in Paragraph 17), (b) financial objectives for the Company, any of its        Subsidiaries, a division, a product line or other category and/or (c) the period of        continued employment, consultancy or directorship with the Company or any of its        Subsidiaries, and to determine whether such restrictions or contingencies have been met;        the amount, if any, necessary to satisfy the obligation of the Company, any of its        Subsidiaries or any Parent to withhold taxes or other amounts; whether an Award Holder has        a Disability (as such term is defined in Paragraph 17); with the consent of the Award        Holder, to cancel or modify an Award, provided, however, that the modified provision is        permitted to be included in an Award granted under the Plan on the date of the        modification; provided, further, however, that in the case of a modification (within the        meaning of Section 424(h) of the Code) of an ISO, such option as modified would be        permitted to be granted on the date of such modification under the terms of the Plan; to        construe the respective Contracts and the Plan; to prescribe, amend and rescind rules and        regulations relating to the Plan; to approve any provision of the Plan or any Award granted        under the Plan or any amendment to either which, under Rule 16b-3 or Section 162(m) of the        Code, requires the approval of the Board of Directors, a committee of non-employee        directors or the stockholders, in order to be exempt under Section 16(b) of the        Exchange Act (unless otherwise specifically provided herein), or to preserve any deduction        under Section 162(m) of the Code or exemption

         

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under Section 409A of the Code; and to make all other determinations        necessary or advisable for administering the Plan. Any        controversy or claim arising out of or relating to the Plan, any Award granted under the        Plan or any Contract shall be determined unilaterally by the Administrators in their sole        discretion. The determinations of the Administrators on matters referred to in this        Paragraph 3 shall be conclusive and binding on all parties. No Administrator or former        Administrator shall be liable for any action or determination made in good faith with        respect to the Plan or any Award granted hereunder.

4.     Eligibility. The        Administrators may from time to time, consistent with the purposes of the Plan, grant        Awards to (a) employees (including officers and directors who are employees) of the        Company, any Parent or any of its Subsidiaries, (b) consultants to the Company, any Parent,        or any of its Subsidiaries, and/or (c) to such directors of the Company who, at the        time of grant, are not common law employees of the Company, any Parent or of any of its        Subsidiaries, as the Administrators may determine in their sole discretion (each, an        “Award Holder”). Such Awards granted shall cover such number of shares of        Common Stock as the Administrators may determine in their sole discretion; provided,        however, that if on the date of grant of an Award, any class of common stock of the Company        (including without limitation the Common Stock) is required to be registered under Section        12 of the Exchange Act, the maximum number of shares subject to an Award that may be        granted to any Award Holder during any calendar year under the Plan shall be 210,000 shares        (the "Section 162(m) Maximum"); provided, further, however, that the aggregate market value        (determined at the time the option is granted) of the shares of Common Stock for which any        eligible employee may be granted ISOs under the Plan or any other plan of the Company, or        of a Parent or a Subsidiary of the Company, which are exercisable for the first time by        such employee during any calendar year shall not exceed $100,000. The $100,000 ISO        limitation amount shall be applied by taking ISOs into account in the order in which they        were granted. Any option (or portion thereof) granted in excess of such ISO limitation        amount shall be treated as a NQSO to the extent of such excess number of shares.

5.     Options.

(a)     Grant. The        Administrators may from time to time, in their sole discretion, consistent with the        purposes of the Plan, grant options to one or more Award Holders.

(b)     Exercise Price. The        exercise price of the shares of Common Stock under each option shall be determined by the        Administrators in their sole discretion; provided, however, that the exercise price        of an ISO, or of any Award intended to satisfy the performance-based compensation exemption        to the deduction limitation under Section 162(m) of the Code or the exemption to the        requirements of Section 409A of the Code, shall not be less than the fair market value of        the Common Stock subject to such option on the date of grant; and provided,        further, however, that if, at the time an ISO is granted, the        Award Holder owns (or is deemed to own under Section 424(d) of the Code) stock constituting        more than ten percent (10%) of the total combined voting power of all classes of stock of        the Company, of any of its Subsidiaries or of a Parent, the exercise price of such ISO        shall not be less than one hundred ten percent (110%) of the fair market value of the        Common Stock subject to such ISO on the date of grant.

(c)     Term. Each option        granted pursuant to the Plan shall be for such

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term as is established by the Administrators, in their sole        discretion, at or before the time such option is granted; provided, however, that the term        of each option granted pursuant to the Plan shall be for a period not exceeding ten (10)        years from the date of grant thereof, and provided further, that if, at the time an ISO is        granted, the Award Holder owns (or is deemed to own under Section 424(d) of the Code) stock        possessing more than ten percent (10%) of the total combined voting power of all classes of        stock of the Company, of any of its Subsidiaries, or of a Parent, the term of the ISO shall        be for a period not exceeding five (5) years from the date of grant. Options shall be        subject to earlier termination as hereinafter provided.

(d)     Termination of        Relationship. Except as may otherwise be expressly        provided in the applicable Contract, any Award Holder, whose employment or        consulting relationship with the Company, any Parent or any of its        Subsidiaries, has terminated for any reason other than the death or Disability of the Award        Holder, may exercise any option granted to the Award Holder as an employee or consultant,        to the extent exercisable on the date of such termination, at any time within three (3)        months after the date of termination, but not thereafter and in no event after the date the        option would otherwise have expired; provided, however, that if such relationship is        terminated for Cause (as defined in Paragraph 17), such option shall terminate        immediately.

        For the purposes of the Plan, an employment relationship shall be deemed to exist between        an individual and the Company if, at the time of the determination, the individual was an        employee of the Company, its Parent or any of its Subsidiaries for        purposes of Section 422(a) of the Code. As a result, an individual on military leave, sick        leave or other bona fide leave of absence shall continue to be considered an employee for        purposes of the Plan during such leave if the period of the leave does not exceed three        months, or, if longer, so long as the individual's right to re-employment with the Company,        any of its Subsidiaries, a Parent, is guaranteed either by statute or by contract. If the        period of leave exceeds three months and the individual's right to re-employment is not        guaranteed by statute or by contract, the employment shall be deemed to have terminated on        the first day after the end of such three-month period.

        Except as may otherwise be expressly provided in the applicable Contract, an Award Holder        whose directorship with the Company has terminated for any reason other than the Award        Holder’s death or Disability, may exercise the options granted to the Award Holder as        a director who was not an employee of or consultant to the Company, any Parent or any of        its Subsidiaries, to the extent exercisable on the date of such termination, at any time        within three (3) months after the date of termination, but not thereafter and in no event        after the date the option would otherwise have expired; provided, however, that if the        Award Holder’s directorship is terminated for Cause, such option shall terminate        immediately.

Except as may otherwise be expressly provided in the        applicable Contract, options granted under this Plan to a director, officer, employee,        consultant or advisor shall not be affected by any change in the status of the Award Holder        so long as such Award Holder continues to be a director of the Company, or an officer or        employee of, or a consultant or advisor to, the Company or any of its Subsidiaries or a        Parent (regardless of having changed from one to the other or having been transferred        from one entity to another), except that if an Award Holder who was an employee        becomes a consultant and does not exercise vested options within the above specified        three-month time period after the date of termination of employment, such options will no        longer have the status of ISOs.

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        Nothing in the Plan or in any option granted under the Plan shall confer on any person any        right to continue in the employ of or as a consultant or advisor of the Company, its Parent        or any of its Subsidiaries, or as a director of the Company, or interfere in any way with        any right of the Company, any Parent or any of its Subsidiaries to terminate such        relationship at any time for any reason whatsoever without liability to the Company, any        Parent or any of its Subsidiaries.

             (e)     Death or Disability of an        Award Holder. Except as may otherwise be expressly provided in the applicable Contract,        if an Award Holder dies (a) while the Award Holder is employed by, or is a consultant to,        the Company, its Parent, or any of its Subsidiaries, (b) within three (3) months after the        termination of the Award Holder's employment or consulting relationship with the Company,        its Parent, and any its Subsidiaries (unless such termination was for Cause) or (c) within        one (1) year following the termination of such employment or consulting relationship by        reason of the Award Holder's Disability, the options granted to the Award Holder as an        employee of, or consultant to, the Company or any Parent or any of its Subsidiaries, may be        exercised, to the extent exercisable on the date of the Award Holder's death, by the Award        Holder's Legal Representative (as such term is defined in Paragraph 17), at any time within        one (1) year after death, but not thereafter and in no event after the date the option        would otherwise have expired. Except as may otherwise be expressly provided in the        applicable Contract, any Award Holder whose employment or consulting relationship with the        Company, its Parent, and any of its Subsidiaries has terminated by reason of the Award        Holder's Disability may exercise such options, to the extent exercisable upon the effective        date of such termination, at any time within one (1) year after such date, but not        thereafter and in no event after the date the option would otherwise have expired.

Except as may otherwise be expressly provided in the        applicable Contract, if an Award Holder dies (a) while the Award Holder is a director of        the Company, (b) within three (3) months after the termination of the Award Holder's        directorship with the Company (unless such termination was for Cause) or (c) within one (1)        year after the termination of the Award Holder's directorship by reason of the Award        Holder's Disability, the options granted to the Award Holder as a director who was not an        employee of or consultant to the Company, its Parent, or any of its Subsidiaries, may be        exercised, to the extent exercisable on the date of the Award Holder's death, by the Award        Holder's Legal Representative at any time within one (1) year after death, but not        thereafter and in no event after the date the option would otherwise have expired. Except        as may otherwise be expressly provided in the applicable Contract, an Award Holder whose        directorship with the Company has terminated by reason of Disability, may exercise such        options, to the extent exercisable on the effective date of such termination, at any time        within one (1) year after such date, but not thereafter and in no event after the date the        option would otherwise have expired.

6.     Stock Awards. The        Administrators, in their sole discretion, may from time to time, consistent with the        purposes of the Plan, grant shares of Common Stock to persons eligible for such        grant under Paragraph 4. The grant may be for no consideration (except the minimum required        by Bermuda law), or may require the Award Holder to pay such        price per share therefor, if any, as the Administrators may determine, in their sole        discretion. Payment for

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any shares so granted may be made in such manner (including        for services), consistent with Bermuda law, as the Administrators may determine. Such        shares may be subject to such contingencies and restrictions as the Administrators may        determine, as set forth in the Contract, including the right to repurchase such shares upon        specified events determined by the Administrators as set forth in the Contract, or events        of forfeiture as determined by the Administrators as set forth in the Contract. Such rights        of repurchase or forfeiture may be based on such factors as determined by the        Administrators, including but not limited to factors relating to the tenure of the        employment or consulting relationship between the Award Holder and the Company, performance        criteria related to the Award Holder or the Company, and whether the relationship between        the Award Holder and the Company has terminated with or without Cause or with or without        the Company's consent. Upon the issuance of the stock certificate for a Stock Award, or in        the case of uncertificated shares, the entry on the books of the Company’s transfer        agent representing such shares, notwithstanding any contingencies or restrictions to which        the shares are subject, the Award Holder shall be considered to be the record owner of the        shares, and subject to the contingencies and restrictions set forth in the Award Agreement,        shall have all rights of a shareholder of record with respect to such shares, including the        right to vote and to receive distributions. The shares shall vest in the Award Holder when        all of the vesting restrictions and contingencies lapse, including the lapse of any rights        of repurchase or forfeiture as provided in the Contract. Until such time, the        Administrators may require that such shares be held by the Company, together with a stock        power duly endorsed in blank by the Award Holder.

7.     Rules of        Operation.

(a)     Fair Market Value.        The fair market value of a share of Common Stock on any day shall be (i) if the principal        market for the Common Stock is a national securities exchange, the closing prices per share        of the Common Stock on such day as reported by such exchange or on a consolidated        tape reflecting transactions on such exchange or the first preceding day on which closing        prices were reported, (ii) if the principal market for the Common Stock is not a national        securities exchange and the Common Stock is quoted on the Nasdaq Stock Market ("Nasdaq"),        and (A) if actual sales price information is available with respect to the Common Stock,        the closing sales price per share of the Common Stock on such day on Nasdaq or on the first        preceding day on which sales price information is available, or (B) if such information is        not available, the closing bid and the asked prices per share for the Common Stock on such        day on Nasdaq or the first preceding day on which sales price information is available, or        (iii) if the principal market for the Common Stock is not a national securities exchange        and the Common Stock is not quoted on Nasdaq, the closing bid and asked prices per share        for the Common Stock on such day or the first preceding day as reported on the OTC Bulletin        Board Service or by National Quotation Bureau, Incorporated or a comparable service;        provided, however, that if clauses (i), (ii) and (iii) of this Paragraph 7(a) are all        inapplicable because the Company's Common Stock is not publicly traded, or if no trades        have been made or no quotes are available, the fair market value of a share of Common Stock        shall be determined by the Administrators by any method consistent with any applicable        regulations adopted by the Treasury Department relating to ISOs and that is a reasonable        valuation method for purposes of Section 409A of the Code.

(b)     Exercise. An Award        (or any installment thereof), to the extent then exercisable, shall be exercised by giving        written notice to the Company at its principal

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xxx office identifying which Award is being exercised,        specifying the number of shares of Common Stock as to which such Award is being exercised        and accompanied by payment in full of the aggregate exercise price therefor (or the amount        due on exercise if the applicable Contract permits installment payments) and any        applicable withholding under Section 13 (i) in cash and/or by certified check, (ii) with        the authorization of the Administrators, with previously        acquired shares of Common Stock having an aggregate fair        market value, on the date of exercise, equal to the aggregate exercise price of all Awards        being exercised, (iii) with the authorization of the Administrators and to the extent not        prohibited under the Sarbanes-Oxley Act of 2002, by delivering a full or limited recourse,        interest bearing promissory note payable in one or more installments and secured by the        shares of Common Stock for which the Award is exercised, for any amount of the purchase        price in excess of the minimum required under Bermuda law to be paid upon issuance, or (iv)        some combination thereof; provided, however, that in no case may shares be tendered if such        tender would require the Company to incur a charge against its earnings for financial        accounting purposes. The Company shall not be required to issue any shares of Common Stock        pursuant to the exercise of any Award until all required payments with respect thereto,        including payments for any required withholding amounts, have been made.

The Administrators may, in their sole discretion, permit        payment of the exercise price of an Award by the Award Holder’s delivery of a        properly executed notice, together with a copy of the Award Holder's irrevocable        instructions to a broker acceptable to the Administrators to deliver promptly to the        Company the amount of sale or loan proceeds sufficient to pay such exercise price. In        connection therewith, the Company may enter into agreements for coordinated procedures with        one or more brokerage firms.

In no case may a fraction of a share of Common Stock be        purchased or issued under the Plan.

         

(c)     Stockholder Rights.        An Award Holder shall not have the rights of a stockholder with respect to such shares of        Common Stock to be received upon the exercise or grant of an Award until the date of        issuance of a stock certificate to the Award Holder for such shares or, in the case of        uncertificated shares, until the date an entry is made on the books of the Company's        transfer agent representing such shares; provided, however, that until such stock        certificate is issued or until such book entry is made, any Award Holder using        previously**-**acquired shares of Common Stock in payment of an option        exercise price shall continue to have the rights of a stockholder with respect to such        previously**-**        acquired shares.

8.     Compliance with Securities LawsIt is a condition to the receipt or exercise of any Award that        either (a) a Registration Statement under the Securities Act of 1933, as amended (the        "Securities Act"), with respect to the shares of Common Stock to be issued upon such grant        or exercise shall be effective and current at the time of such grant or exercise, or (b)        there is an exemption from registration under the Securities Act for the issuance of the        shares of Common Stock upon such grant or exercise. Nothing herein shall be construed as        requiring the Company to register shares subject to any Award under the Securities Act or        to keep any Registration Statement effective or current.

The Administrators may require, in their sole discretion, as a        condition to the grant or exercise of an Award, that the Award Holder execute and deliver        to the Company the Award Holder's representations and warranties, in form, substance and        scope satisfactory to the

         

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Administrators, which the Administrators determine is        necessary or convenient to facilitate the perfection of an exemption from the registration        requirements of the Securities Act, applicable state securities laws or other legal        requirements, including without limitation, that (a) the shares of Common Stock to be        issued upon the receipt or exercise of an Award are being acquired by the Award Holder for        the Award Holder's own account, for investment only and not with a view to the resale or        distribution thereof, and (b) any subsequent resale or distribution of shares of Common        Stock by such Award Holder will only be made pursuant to (i) a Registration Statement under        the Securities Act which is effective and current with respect to the shares of Common        Stock being sold, or (ii) a specific exemption from the registration requirements of the        Securities Act, but in claiming such exemption, the Award Holder, prior to any offer of        sale or sale of such shares of Common Stock, shall provide the Company with a favorable        written opinion of counsel satisfactory to the Company, in form, substance and scope        satisfactory to the Company, as to the applicability of such exemption to the proposed sale        or distribution.

In addition, if at any time the Administrators shall determine        that the listing or qualification of the shares of Common Stock subject to any Award on any        securities exchange, Nasdaq or under any applicable law, or that the consent or approval of        any governmental agency or regulatory body, is necessary or desirable as a condition to, or        in connection with, the granting of an Award or the issuance of shares of Common Stock upon        exercise of an Award, such Award may not be granted or exercised in whole or in part, as        the case may be, unless such listing, qualification, consent or approval has been effected        or obtained free of any conditions unacceptable to the Administrators.

9.     Award Contracts.        Each Award shall be evidenced by an appropriate Contract, which shall be duly executed by        the Company and the Award Holder. Such Contract shall contain such terms, provisions and        conditions not inconsistent herewith as may be determined by the Administrators in their        sole discretion. The terms of Awards and Contracts issued under the Plan need not be        identical.

10.     Adjustments upon Changes in Common        Stock. Notwithstanding any other provision of the        Plan, and except as set forth below in the event of a Change in Control, in the event of a        stock dividend, recapitalization, merger, consolidation, spin-off, stock-split, combination        or exchange of shares or the like which results in a change in the number or kind of shares        of Common Stock which are outstanding immediately prior to such event, the aggregate number        and kind of shares subject to the Plan, the aggregate number and kind of shares subject to        each outstanding Award, the exercise price of each Award, and the maximum number of shares        subject to each Award that may be granted to any employee in any calendar year, and the        Section 162(m) Maximum, shall be appropriately adjusted by the Board of Directors, whose        determination shall be conclusive and binding on all parties. Such adjustment may provide        for the elimination of fractional shares that might otherwise be subject to options without        payment therefor. Notwithstanding the foregoing, no adjustment shall be made pursuant to        this Paragraph 10 if such adjustment (a) would cause the Plan to fail to comply with        Section 422 of the Code or with Rule 16b-3 of the Exchange Act (if applicable to such        Award), and (b) would be considered as the adoption of a new plan requiring stockholder        approval or would cause any Award to lose its exemption from Section 409A of the Code. The        conversion of one or more outstanding shares of preferred stock that the Company may issue        from time to time into Common Stock shall not in and of itself        require any adjustment under this Paragraph 10.

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Except as may otherwise be expressly provided in an applicable        Contract, in the event of a Change in Control (as defined in Paragraph 17)        outstanding options shall vest in full at such date, with respect to each Award Holder who        is then an employee or consultant of the Company, any Parent or any of its Subsidiaries, or        a director of the Company, so that each such Option shall, immediately prior to the        effective date of the Change in Control, become fully exercisable for all of the shares of        Common Stock at the time subject to that Option and may be exercised for any or all of        those shares as fully-vested shares of Common Stock and all outstanding options (whether or        not vesting has been so accelerated) shall otherwise terminate as of the effective date of        the Change in Control; provided, however, that the Award Holder shall be given notice of        the Change in Control not less than five (5) days in advance so he will be given an        opportunity to exercise any options prior to the Change in Control (to the extent then        exercisable), which exercise may be conditioned upon consummation of such Change        in Control. However, except as may be expressly provided in an        applicable Contract, the shares subject to an outstanding Option shall not vest on such an        accelerated basis, and such Option shall not terminate, if and to the extent that: (a) such        Option is assumed (i.e., appropriate provision for any outstanding options is made by        substitution on an equitable basis of appropriate stock of the Company or of the successor        corporation which will be issuable in respect to one share of Common Stock of the Company)        by the successor corporation (or parent thereof) in the Change in Control and the Company's        repurchase rights, if any, are concurrently assigned to such successor corporation (or        parent thereof), or if the Change in Control is of the type specified in Paragraph        17(c)(i)(C) the Company expressly agrees to allow the option to continue or (b) such Option        is to be replaced with a cash incentive program of the successor corporation which        preserves the spread existing on the unvested Option shares at the time of the Change in        Control and provides for subsequent payout in accordance with the same vesting schedule        applicable to those unvested Option shares, or (c) the acceleration of such Option is        subject to other limitations imposed by the Administrators at the time of the Award grant.        Except as may otherwise be expressly provided in an applicable Contract, all outstanding        repurchase rights under a Contract (for shares acquired pursuant to the exercise of an        Option or shares acquired pursuant to a Stock Award), with respect to each Award        Holder who is then an employee or consultant of the Company, any Parent or any of its        Subsidiaries, or a director of the Company, shall also terminate automatically, and the        shares of Common Stock subject to those terminated rights shall immediately vest in full,        in the event of a Change in Control, and any other Stock Awards for which outstanding        purchase rights have not then terminated pursuant to vesting of the shares of Common Stock        in the event of the Change in Control shall be terminated, without the vesting of the        shares of Common Stock covered thereby and the applicable repurchase rights exercised as of        the effective date of the Change in Control, except to the extent        that (x) those repurchase rights are assigned to the successor        corporation (or Parent thereof) in connection with such transaction or, if the Change in        Control is of the type specified in Paragraph 17(c)(i)(C) the Company expressly agrees to        provide for the continuation of such repurchase rights or (y) such accelerated vesting is        precluded by other limitations imposed by the Administrators at the time the Award is        granted.

The Administrators shall have the discretionary authority,        exercisable at the time the unvested Award shares are issued or any time while the        repurchase rights with respect to those shares remain outstanding, to provide that those        rights shall automatically terminate on an accelerated basis, and the shares subject to        those terminated rights shall immediately vest, in the event that the Award Holder's        employment, consultancy or directorship should subsequently be

         

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terminated by the Company or the successor without Cause        within a designated period (not to exceed eighteen (18) months) following the effective        date of any Change in Control in which those repurchase rights are assigned to the        successor corporation (or parent thereof).

11.     Amendments and Termination of the        Plan. The Plan was adopted by the Board of        Directors on June 27, 2007. No Award may be granted under the Plan after June 27, 2017. The        Board of Directors, without further approval of the Company's stockholders, may at any time        suspend or terminate the Plan, in whole or in part, or amend it from time to time in such        respects as it may deem advisable, including without limitation, in order that ISOs granted        hereunder meet the requirements for "incentive stock options" under the Code, or to comply        with the provisions of Rule 16b-3 or Sections 162(m) or 409A        of the Code or any change in applicable laws or regulations,        ruling or interpretation of any governmental agency or regulatory body; provided, however,        that no amendment shall be effective, without the requisite prior or subsequent stockholder        approval, which would (a) except as contemplated in Paragraph 10, increase the maximum        number of shares of Common Stock for which any Awards may be granted under the Plan or        change the Section 162 Maximum, (b) change the eligibility requirements for individuals        entitled to receive Awards hereunder, or (c) make any change for which applicable law or        any governmental agency or regulatory body requires stockholder approval. No termination,        suspension or amendment of the Plan shall adversely affect the rights of an Award Holder        under any Award previously granted under the Plan        without such Award Holder's consent. The power of the Administrators to construe and        administer any Award granted under the Plan prior to the termination or suspension of the        Plan shall continue after such termination or during such suspension.

12.     Non-Transferability.        Except as may otherwise be expressly provided in the applicable Contract, no option granted        under the Plan shall be transferable other than by will or the laws of descent and        distribution, and Awards may be exercised, during the lifetime of the Award Holder, only by        the Award Holder or the Award Holder's Legal Representatives. Except as may otherwise be        expressly provided in the applicable Contract, a Stock Award, to the extent not vested,        shall not be transferable otherwise than by will or the laws or descent and distribution.        Except to the extent provided above, Awards may not be assigned, transferred, pledged,        hypothecated or disposed of in any way (whether by operation of law or otherwise) and shall        not be subject to execution, attachment or similar process, and any such attempted        assignment, transfer, pledge, hypothecation or disposition shall be null and void ab initio        and of no force or effect.

13.     Withholding Taxes.        The Company, or its Parent or Subsidiary, as applicable, may withhold (a) cash or (b) with        the consent of the Administrators (in the Contract or otherwise), shares of Common Stock to        be issued under an Award or a combination of cash and shares, having an aggregate fair        market equal to the amount which the Administrators determine is necessary to satisfy        the minimum obligation of the Company, a Subsidiary or        Parent to withhold federal, state and local income taxes or other amounts incurred by        reason of the grant, vesting, exercise or disposition of an option or the disposition of        the underlying shares of Common Stock. Alternatively, the Company may require the Award        Holder to pay to the Company such amount, in cash, promptly upon demand.

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14.     Legends; Payment of Expenses; Share        Escrow. The Company may endorse such legend or        legends upon the certificates for shares of Common Stock issued upon the grant or exercise        of an Award and may issue such "stop transfer" instructions to its transfer agent in        respect of such shares as it determines, in its sole discretion, to be necessary or        appropriate to (a) prevent a violation of, or to perfect an exemption from, the        registration requirements of the Securities Act, applicable state securities laws or other        legal requirements, (b) implement the provisions of the Plan or any agreement between the        Company and the Award Holder with respect to such shares of Common Stock, or (c) permit the        Company to determine the occurrence of a "disqualifying disposition," as described in        Section 421(b) of the Code, of the shares of Common Stock transferred upon the exercise of        an ISO granted under the Plan.

The Company shall pay all issuance taxes with respect to the        issuance of shares of Common Stock upon grant or exercise of an Award, as well as all fees        and expenses incurred by the Company in connection with such issuance.

Shares with respect to Stock Awards may, in the        Administrator's discretion, be held in escrow by the Company until the Award Holder's        interest in such shares vests.

15.     Use of Proceeds.        The cash proceeds to be received upon the grant or exercise of an Award shall be added to        the general funds of the Company and used for such corporate purposes as the Board of        Directors may determine, in its sole discretion.

16.     Substitutions and Assumptions of Awards of Certain        Constituent Corporations. Anything in this Plan to        the contrary notwithstanding, the Board of Directors may, without further approval by the        stockholders, substitute new Awards for prior Awards of a Constituent Corporation (as such        term is defined in Paragraph 17) or assume the prior options or restricted stock of such        Constituent Corporation

17.     Definitions.

(a)     "        Cause," in connection with the termination of an        Award Holder, shall mean (i) "cause," as such term (or any similar term, such as "with        cause") is defined in any employment, consulting or other applicable agreement for services        between the Company and such Award Holder, or (ii) in the absence of such an agreement,        "cause" as such term is defined in the Contract executed by the Company and such Award        Holder, or (iii) in the absence of both of the foregoing, (A) conviction of such Award        Holder for any felony or the entering by him of a plea        of guilty or*nolo        contendere*with respect thereto, (B) willful and        repeated failures in any material respect of such Award Holder to perform any of the Award        Holder's reasonable duties and responsibilities assigned to him and the failure of the        Award Holder to cure such failures hereunder within thirty (30) days after written notice        thereof from the Company, (C) the commission of any act or failure to act by such Award        Holder that involves moral turpitude, dishonesty, theft, destruction of property, fraud,        embezzlement or unethical business conduct, or that is otherwise injurious to the Company,        any of its Subsidiaries or any Parent or any other affiliate of the Company (or its or        their respective employees), whether financially or otherwise, or (D) any material        violation by such Award Holder of the requirements of such Contract, any other contract or        agreement between the Company and such Award Holder or this Plan (as in effect from time to        time); in each case, with respect to subsections (A) through (D), as determined by the        Board of Directors.

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(b)     "        Constituent Corporation" shall mean any corporation        which engages with the Company, its Parent or any Subsidiary in a transaction to which        Section 424(a) of the Code applies (or would apply if the option assumed or substituted        were an ISO), or any Parent or any Subsidiary of such corporation.

(c)     "        Change in Control" shall mean

(i)     any of the following        transactions effected with a Person not an Affiliate of the Company immediately prior to        the transaction:

**(A)** a merger or consolidation of the Company        with or into another entity; (B) the exchange or sale of all or a portion of the        outstanding shares of the Company for securities of another entity, or other consideration        provided by such entity; or (C) the issuance of equity securities of the Company or        securities convertible into equity securities, in exchange for securities of another entity        or other consideration provided by such entity; and in the case of either (A), (B) or (C)        the Company's shareholders prior to the transaction, do not possess, immediately after such        transaction, more than fifty percent (50%) (not including the holdings of the other entity        or Affiliate thereof, if such person was a shareholder of the Company prior to the        transaction) of the voting power of any of the following: (X) the Company; (Y) such other        entity; or (Z) any direct or indirect Parent of such other entity; provided, however, that        the above percentage will be seventy percent (70%) (in lieu of fifty percent (50%)) if the        Company is at the time of the event described in this subparagraph (c)(i) a reporting        company under the Securities Exchange Act of 1934;

         

        (ii)     a sale of all or substantially all of the Company's        assets to a third party not an Affiliate of the Company immediately prior to such        transaction; excluding, however, a sale of assets pursuant to a reorganization, merger,        consolidation or other transaction involving the Company that will not itself constitute a        Change in Control pursuant to subsections (c)(i) or (iii) of this definition. 

            

(iii)     any person or entity (other        than the Company, any trustee or other fiduciary holding securities under an employee        benefit plan of the Company or any Affiliate of the        Company), 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 30% or        more of the combined voting power of the Company’s then outstanding securities;        excluding, however, any person or entity acquiring such beneficial ownership (A) directly        from the Company or from an Affiliate of the company who acquired such beneficial        ownership directly from the Company (including any acquisition resulting from exercise of a        conversion or exchange privilege in respect of outstanding convertible or exchangeable        securities acquired from the Company or such an Affiliate), and (B) pursuant to a        reorganization, merger or consolidation involving the Company which does not itself        constitute a Change in Control pursuant to subsection (c)(i) of this definition; provided,        however, that the above percentage will be fifty percent (50%) (in lieu of thirty percent        (30%)) if the Company is at the time of an event described in        this subparagraph (c)(iii) a reporting company under the Securities Exchange Act of        1934;

(iv)     during any period of not        more than 12 months (not including any period prior to        the date of this Agreement), individuals who at the beginning of such period constitute the        Board cease for any reason to constitute at least a majority thereof,

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unless the election, or the nomination for election, by        shareholders of the Company of each new director was approved or ratified by a vote of at        least a majority of the directors then still in office who were directors at the beginning        of the period or who were new directors approved by such a vote; provided, however, that        this subparagraph (c)(iv) shall be inapplicable if the Company is not at the time of an        event described in this subparagraph (c)(iv), a reporting company under the Securities        Exchange Act of 1934; or

(v)     the shareholders of the        Company approve a plan of complete liquidation or dissolution of the Company;        excluding, however, a complete liquidation or dissolution of the Company pursuant to a        reorganization, merger or consolidation involving the Company which does not itself        constitute a Change in Control pursuant to subsection (c)(i) of this        definition.

                         For        the purposes of this definition, the term        “Affiliate        ” of any person or entity (“Person”) shall mean any other person or        entity which controls, is controlled by, or is under common control with such Person. As        used herein, “control” shall mean the possession, directly or        indirectly, of more than fifty percent (50%) of the total value or voting power of the        other person or entity**.**

(d)     "        Disability" shall mean a permanent and total        disability within the meaning of Section 22(e)(3) of the Code.

(e)     "        Legal Representative" shall mean the executor,        administrator or other person who at the time is entitled by law to exercise the rights of        a deceased or incapacitated Award Holder with respect to an Award granted under the        Plan.

(f)     "        Parent" shall mean a "parent corporation" within        the meaning of Section 424(e) of the Code.

(g)     "Subsidiary        " shall mean a "subsidiary corporation" within the meaning of Section 424(f) of the        Code.

18.     Section 409A.        Notwithstanding anything to the contrary contained herein, none of the awards        issuable under this Plan are intended to be deferred compensation pursuant to Section 409A        of the Code. Towards that end, all options under the Plan shall contain such terms as will        qualify the options for the exemption from Section 409A of the Code in accordance with the        Treasury Regulation Section 1.409A-1(b)(5) and all Stock Awards under the Plan shall        contain such terms as will qualify the Stock Awards for exemption from Section 409A of the        Code in accordance with Treasury Regulation Section 1.409A-1(b)(6). This Plan’s        provisions will be administered and construed by the Administrators in a manner to fulfill        such intent. Notwithstanding the foregoing, the Company shall not be liable to any Award        Holder if any Award fails to be exempt or in compliance with Section 409A of the Code.

19.     Governing Law. The        Plan, any Awards granted hereunder, the Contracts and all related matters shall be governed        by, and construed in accordance with, the laws of Bermuda, other than those laws which        would defer to the substantive law of the other jurisdiction.

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Neither the Plan nor any Contract shall be construed or        interpreted with any presumption against the Company by reason of the Company causing the        Plan or Contract to be drafted. Whenever from the context it appears appropriate, any term        stated in either the singular or plural shall include the singular and plural, and any term        stated in the masculine, feminine or neuter gender shall include the masculine, feminine        and neuter.

20.     Partial Invalidity.        The invalidity, illegality or unenforceability of any provision in the Plan, any Award or        Contract shall not affect the validity, legality or enforceability of any other provision,        all of which shall be valid, legal and enforceable to the fullest extent permitted by        applicable law.

21     Stockholder        Approval. The Plan shall be subject to approval of        the Company's stockholders. No options granted hereunder may be exercised prior to such        approval, provided, however, that upon receiving stockholder’s approval the date of        grant of any option shall be determined as if the Plan had not been subject to such        approval. Notwithstanding the foregoing, if the Plan is not approved by a vote of the        stockholders of the Company on or before June 27, 2008, the Plan and any Awards granted        hereunder shall terminate.