Unassociated Document

Exhibit
    10.1
    


    
 

    


    PRINCETON
      SECURITY TECHNOLOGIES, INC.

    


    2006
      EQUITY INCENTIVE PLAN

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    TABLE
      OF CONTENTS


    Page
      No.

     

    
      	
              1. 

            	
              PURPOSES 

            	
               1

            
	 	
              (a) 

            	Eligible
              Stock Award Recipients  	
               1

            
	 	
              (b)  

            	Available Stock Awards 	
               1

            
	 	
              (c)  

            	General Purpose 	
               1

            
	 	 	 	 
	
              2. 

            	
              DEFINITIONS 

            	
               1

            
	 	
              (a)  

            	"Affiliate" 	
               1

            
	 	
              (b)  

            	"Board" 	
               1

            
	 	
              (c)  

            	"Cause" 	
               1

            
	 	
              (d)  

            	"Change in Control" 	
              1

            
	 	
              (e)  

            	"Code" 	
               2

            
	 	
              (f)  

            	"Committee" 	
               2

            
	 	
              (g)  

            	"Common Stock" 	
               2

            
	 	
              (h)  

            	"Company" 	
               2

            
	 	
              (i)  

            	"Consultant" 	
               2

            
	 	
              (j)  

            	"Continuous Service" 	
               2

            
	 	(k)  	"Corporate Transaction" 	
               3

            
	 	(l)	[Intentionally Omitted] 	
               3

            
	 	(m)	"Director" 	
               3

            
	 	(n)	"Disability" 	
               3

            
	 	
              (o)

            	
              "Employee" 

            	
               3

            
	 	
              (p)

            	"Exchange
              Act"	
               3

            
	 	
              (q)

            	"Fair
              Market Value"	
               3

            
	 	
              (r)

            	[Intentionally
              Omitted]	
               4

            
	 	
              (s)

            	"Incentive
              Stock Option"	
               4

            
	 	
              (t)

            	"Nonstatutory
              Stock Option"	
               4

            
	 	
              (u)

            	"Option"	
               4

            
	 	
              (v)

            	
              "Option
                Agreement" 

            	
               4

            
	 	
              (w) 

            	"Optionholder"	
               4

            
	 	
              (x)

            	"Participant"	
              4

            
	 	
              (y)

            	"Plan"	
               4

            
	 	
              (a) 

            	"Securities
              Act"	
               4

            
	 	
              (aa) 

            	"Stock
              Award"	
               4

            
	 	
              (bb) 

            	"Stock
              Award Agreement"	
               4

            
	 	
              (cc)

            	[Intentionally
              Omitted]	
              4

            
	 	
              (dd) 

            	
              "Ten
                Percent Shareholder" 

            	
               4

            
	 	 	 	 
	3. 	
              ADMINISTRATION 

            	
               5

            
	 	
              (a) 

            	Administration
              by Board	
               5

            
	 	
              (b) 

            	Powers
              of Board	
               5

            
	 	
              (c)

            	Delegation
              to Committee	
               5

            
	 	
              (d)

            	
              Effect
                of Board's Decision 

            	
              5

            
	 	 	 	 
	
              4. 

            	
              SHARES
                SUBJECT TO THE PLAN

            	
               6

            
	 	
              (a)

            	Share
              Reserve	
               6

            
	 	
              (b)

            	Reversion
              of Shares to the Share Reserve	
               6

            
	 	
              (c) 

            	Source
              of Shares	
               6

            
	 	 	 	 
	
              5. 

            	
              ELIGIBILITY 

            	
               6

            
	 	
              (a) 

            	
              Eligibility
                for Specific Stock Awards 

            	
               6

            
	 	
              (b) 

            	
              Ten
                Percent Shareholders 

            	
               6

            


    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

     

    
      	6. 	
              OPTION
                PROVISIONS

            	
               6

            
	 	
              (a)

            	
              Term 

            	
               6

            
	 	
              (b)

            	
              Exercise
                Price of an Incentive Stock Option 

            	
               6

            
	 	
              (c)

            	
              Exercise
                Price of a Nonstatutory Stock Option 

            	
               7

            
	 	
              (d) 

            	
              Consideration 

            	
               7

            
	 	
              (e)

            	
              Transferability
                of an Incentive Stock Option 

            	
               8

            
	 	
              (f)

            	Transferability
              of a Nonstatutory Stock Option	
               8

            
	 	
              (g)

            	Vesting
              Generally	
               8

            
	 	
              (h)

            	Termination
              of Continuous Service	
               8

            
	 	
              (i) 

            	
              Extension
                of Termination Date 

            	
               8

            
	 	(j) 	
              Disability
                of Optionholder 

            	
              9

            
	 	(k) 	
              Death
                of Optionholder 

            	
               9

            
	 	(l) 	
              Early
                Exercise 

            	
               9

            
	 	 	 	 
	
              7. 

            	PROVISIONS
              OF STOCK AWARDS OTHER THAN OPTIONS	
               9

            
	 	
              (a)

            	
              Stock
                Bonus Awards 

            	
               9

            
	 	
              (b) 

            	
              Restricted
                Stock Purchase Awards 

            	
               10

            
	 	 	 	 
	
              8. 

            	
              COVENANTS
                OF THE COMPANY

            	
               11

            
	 	
              (a)

            	
              Availability
                of Shares 

            	
               11

            
	 	
              (b) 

            	
              Securities
                Law Compliance 

            	
               11

            
	 	 	 	 
	
              9. 

            	
              USE
                OF PROCEEDS FROM STOCK

            	
               11

            
	 	 	 	 
	
              10. 

            	
              MISCELLANEOUS 

            	
               11

            
	 	
              (a) 

            	
              Acceleration
                of Exercisability and Vesting 

            	
               11

            
	 	
              (b)

            	
              Shareholder
                Rights 

            	
               11

            
	 	
              (c) 

            	
              No
                Employment or other Service Rights 

            	
               11

            
	 	
              (d)

            	
              Incentive
                Stock Option $100,000 Limitation 

            	
               12

            
	 	
              (e)

            	
              Investment
                Assurances 

            	
               12

            
	 	
              (f)

            	
              Withholding
                Obligations 

            	
               12

            
	 	
              (g) 

            	
              [Intentionally
                Omitted]  

            	
               13

            
	 	 	 	 
	
              11. 

            	
              ADJUSTMENTS
                UPON CHANGES IN COMMON STOCK

            	
               13

            
	 	
              (a)

            	
              Capitalization
                Adjustments 

            	
               13

            
	 	
              (b)

            	
              Dissolution
                or Liquidation 

            	
               13

            
	 	
              (c)

            	
              Corporate
                Transaction 

            	
               13

            
	 	
              (d) 

            	
              Change
                in Control 

            	
               13

            
	 	 	 	 
	
              12. 

            	
              AMENDMENT
                OF THE PLAN AND STOCK AWARDS

            	
               14

            
	 	
              (a)

            	
              Amendment
                of Plan 

            	
               14

            
	 	
              (b)

            	
              Shareholder
                Approval 

            	
               14

            
	 	
              (c)

            	
              Contemplated
                Amendments 

            	
               14

            
	 	
              (d)

            	
              No
                Impairment of Rights 

            	
               14

            
	 	
              (e)

            	
              Amendment
                of Stock Awards 

            	
               14

            
	 	
               

            	 	 
	
              13. 

            	
              
                TERMINATION
                  OR SUSPENSION OF THE PLAN

              

            	
               14

            
	 	
              (a)

            	
              Plan
                Term 

            	
               14

            
	 	
              (b) 

            	
              No
                Impairment of Rights 

            	
               14

            
	 	 	 	 
	
              14. 

            	
              EFFECTIVE
                DATE OF PLAN

            	
               14

            
	 	 	 	 
	
              15. 

            	
              CHOICE
                OF LAW

            	
               15

            


    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    


    PRINCETON
      SECURITY TECHNOLOGIES, INC.

    


    2006
      EQUITY INCENTIVE PLAN

     

    1.    PURPOSES.

    


    (a)    Eligible
      Stock Award Recipients.
      The
      persons eligible to receive Stock Awards are the Employees, Directors and
      Consultants of the Company and its Affiliates.

    


    (b)    Available
      Stock Awards.
      The
      purpose of the Plan is to provide a means by which eligible recipients of Stock
      Awards may be given an opportunity to benefit from increases in value of the
      Common Stock through the granting of the following Stock Awards: (i) Incentive
      Stock Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses and (iv)
      rights to acquire restricted stock. 

    


    (c)    General
      Purpose.
      The
      Company, by means of the Plan, seeks to retain the services of the group of
      persons eligible to receive Stock Awards, to secure and retain the services
      of
      new members of this group and to provide incentives for such persons to exert
      maximum efforts for the success of the Company and its Affiliates.

    


    2.    DEFINITIONS.

    


    (a)    "Affiliate"
      means
      any parent corporation or subsidiary corporation of the Company, whether now
      or
      hereafter existing, as those terms are defined in Sections 424(e) and (f),
      respectively, of the Code.

    


    (b)    "Board"
      means
      the Board of Directors of the Company.

    


    (c)    "Cause"
      means
      the occurrence of any one or more of the following: 

    


    (i)    the
      Participant's conviction of any felony or any crime involving moral turpitude
      or
      dishonesty; 

    


    (ii)   the
      Participant's participation in an act of fraud or dishonesty involving the
      Company or its Affiliates which results in material harm to the business of
      the
      Company or its Affiliates; or 

     

    (iii)   the
      Participant's intentional, material violation of any contract between the
      Participant and the Company or its Affiliates or any statutory duty the
      Participant owes to the Company or its Affiliates that the Participant does
      not
      correct within thirty (30) days after written notice thereof has been provided
      to the Participant.

    


    (d)    "Change
      in Control"
      means
      the occurrence of any one or more of the following:

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (i)    a
      Corporate Transaction after which persons who were not shareholders of the
      Company immediately prior to such Corporate Transaction own, directly or
      indirectly, immediately following such Corporate Transaction, fifty percent
      (50%) or more of the outstanding voting power of each of (a) the continuing
      or
      surviving entity and (b) any direct or indirect parent corporation of the
      continuing or surviving entity;

    


    (ii)    an
      acquisition by any person, entity or group within the meaning of Section 13(d)
      or 14(d) of the Exchange Act, or any comparable successor provisions (excluding
      any employee benefit plan, or related trust, sponsored or maintained by the
      Company or an Affiliate) of the beneficial ownership (within the meaning of
      Rule
      13d-3 promulgated under the Exchange Act, or comparable successor rule) of
      securities of the Company representing at least fifty percent (50%) of the
      combined voting power entitled to vote in the election of Directors;
provided
      that
      such acquisition does not occur in connection with, in contemplation of or
      as a
      result of a Corporate Transaction; or 

    


    (iii)   during
      any consecutive two (2) year period the individuals who, as of the start of
      such
      period, are members of the Board (the "Incumbent Board"),
      cease
      for any reason to constitute at least fifty percent (50%) of the Board,
provided
      that
      such change in the Incumbent Board does not occur in connection with, in
      contemplation of or as a result of a Corporate Transaction, and further provided
      that if
      the election, or nomination for election, by the Company's shareholders of
      any
      new Director was approved by a vote of at least fifty percent (50%) of the
      Incumbent Board, such new Director shall be considered as a member of the
      Incumbent Board.

    


    (e)    "Code"
      means
      the Internal Revenue Code of 1986, as amended.

    


    (f)    "Committee"
      means a
      committee of one or more members of the Board appointed by the Board in
      accordance with Subsection 3(c). 

    


    (g)    "Common
      Stock"
      means
      the common stock of the Company.

    


    (h)    "Company"
      means
      Princeton Security Technologies, Inc., a Nevada corporation.

    


    (i)    "Consultant"
      means
      any person, including an advisor, (i) engaged by the Company or an Affiliate
      to
      render consulting or advisory services and who is compensated for such
      services.

    


    (j)    "Continuous
      Service"
      means
      that the Participant's service with the Company or an Affiliate, whether as
      an
      Employee, Director or Consultant, is not interrupted or terminated. The
      Participant's Continuous Service shall not be deemed to have terminated merely
      because of a change in the capacity in which the Participant renders service
      to
      the Company or an Affiliate as an Employee, Consultant or Director or a change
      in the entity for which the Participant renders such service, provided
      that
      there is no interruption or termination of the Participant's Continuous Service.
      For example, a change in status from an Employee of the Company to a Consultant
      of an Affiliate or a Director will not constitute an interruption of Continuous
      Service. The Board or the chief executive officer of the Company, in that
      party's sole discretion, may determine whether Continuous Service shall be
      considered interrupted in the case of any leave of absence approved by that
      party, including sick leave, military leave or any other personal
      leave.

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    (k)    "Corporate
      Transaction"
      means
      the occurrence of any one or more of the following: 

    


    (i)    a
      sale,
      lease or other disposition of all or substantially all of the securities or
      assets of the Company;

    


    (ii)    a
      merger
      or consolidation following which the Company is not the surviving
      corporation;

    


    (iii)   a
      reverse
      merger following which the Company is the surviving corporation but the shares
      of Common Stock outstanding immediately preceding the merger are converted
      by
      virtue of the merger into other property, whether in the form of securities,
      cash or otherwise; or

    


    (iv)    any
      other
      transaction described as a "corporate transaction" in Treasury Regulations
      Section 1.425-1(a)(1)(ii). 

    


    (l)    
[Intentionally
      Omitted]

    


    (m)    "Director"
      means a
      member of the Board of Directors of the Company.

    


    (n)    "Disability"
      means
      the permanent and total disability of a person within the meaning of Section
      22(e)(3) of the Code.

    


    (o)    "Employee"
      means
      any person employed by the Company or an Affiliate. Mere service as a Director
      or payment of a director's fee by the Company or an Affiliate shall not be
      sufficient to constitute "employment" by the Company or an
      Affiliate.

    


    (p)    "Exchange
      Act"
      means
      the Securities Exchange Act of 1934, as amended.

    


    (q)    "Fair
      Market Value"
      means,
      as of any date, the value of the Common Stock determined as follows:


    


    (i)    If
      the
      Common Stock is listed on any established stock exchange or traded on the Nasdaq
      National Market or the Nasdaq SmallCap Market, 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 exchange or market (or the
      exchange or market with the greatest volume of trading in the Common Stock)
      on
      the last market trading day prior to the day of determination, as reported
      in
      The Wall Street Journal or such other source as the Board deems
      reliable.

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    (ii)    In
      the
      absence of such markets for the Common Stock, the Fair Market Value shall be
      determined in good faith by the Board. 

    


    (r)    [Intentionally
      Omitted] 

    


    (s)    "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.

    


    (t)    "Nonstatutory
      Stock Option"
      means
      an Option not intended to qualify as an Incentive Stock Option. 

    


    (u)    "Option"
      means
      an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to
      the
      Plan.

    


    (v)    "Option
      Agreement"
      means a
      written agreement between the Company and an Optionholder evidencing the terms
      and conditions of an individual Option grant. Each Option Agreement shall be
      subject to the terms and conditions of the Plan.

    


    (w)    "Optionholder"
      means a
      person to whom an Option is granted pursuant to the Plan or, if applicable,
      such
      other person who holds an outstanding Option.

    


    (x)    "Participant"
      means a
      person to whom a Stock Award is granted pursuant to the Plan or, if applicable,
      such other person who holds an outstanding Stock Award. 

    


    (y)    "Plan"
      means
      this Princeton Security Technologies, Inc. 2006 Equity Incentive Plan.


    


    (z)    "Securities
      Act"
      means
      the Securities Act of 1933, as amended.

    


    (aa)         
      "Stock
      Award"
      means
      any right granted under the Plan, including an Option, a stock bonus and a
      right
      to acquire restricted stock. 

    


    (bb)         "Stock
      Award Agreement"
      means a
      written agreement between the Company and a holder of a Stock Award evidencing
      the terms and conditions of an individual Stock Award grant. Each Stock Award
      Agreement shall be subject to the terms and conditions of the Plan.

    


    (cc)   [Intentionally
      Omitted]

    


    (dd)         
      "Ten
      Percent Shareholder"
      means a
      person who owns (or is deemed to own pursuant to 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 or of any of its Affiliates.

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    3.    ADMINISTRATION.

    


    (a)    Administration
      by Board.
      The
      Board shall administer the Plan unless and until the Board delegates
      administration to a Committee, as provided in Subsection 3(c).

    


    (b)    Powers
      of Board.
      The
      Board shall have the power, subject to, and within the limitations of, the
      express provisions of the Plan:

    


    (i)    To
      determine from time to time which of the persons eligible under the Plan shall
      be granted Stock Awards; when and how each Stock Award shall be granted; what
      type or combination of types of Stock Award shall be granted; the provisions
      of
      each Stock Award granted (which need not be identical), including the time
      or
      times when a person shall be permitted to receive Common Stock pursuant to
      a
      Stock Award; and the number of shares of Common Stock with respect to which
      a
      Stock Award shall be granted to each such person.

    


    (ii)    To
      construe and interpret the Plan and Stock Awards granted under it, and to
      establish, amend and revoke rules and regulations for its administration. The
      Board, in the exercise of this power, may correct any defect, omission or
      inconsistency in the Plan or in any Stock Award Agreement, in a manner and
      to
      the extent it shall deem necessary or expedient to make the Plan fully
      effective.

    


    (iii)   To
      amend
      the Plan or a Stock Award as provided in Section 12.

    


    (iv)   Generally,
      to exercise such powers and to perform such acts as the Board deems necessary
      or
      expedient to promote the best interests of the Company which are not in conflict
      with the provisions of the Plan.

    


    (c)    Delegation
      to Committee.
      The
      Board may delegate administration of the Plan to a Committee or Committees
      of
      one (1) or more members of the Board, and the term "Committee" shall apply
      to
      any person or persons to whom such authority has been delegated. If
      administration is delegated to a Committee, the Committee shall have, in
      connection with the administration of the Plan, the powers theretofore possessed
      by the Board, including the power to delegate to a subcommittee any of the
      administrative powers the Committee is authorized to exercise (and references
      in
      this Plan to the Board shall thereafter be to the Committee or subcommittee),
      subject, however, to such resolutions, not inconsistent with the provisions
      of
      the Plan, as may be adopted from time to time by the Board. The Board may
      abolish the Committee at any time and revest in the Board the administration
      of
      the Plan.

    


    (d)    Effect
      of Board's Decision.
      All
      determinations, interpretations and constructions made by the Board in good
      faith shall not be subject to review by any person and shall be final, binding
      and conclusive on all persons. 

    


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    4.    SHARES
      SUBJECT TO THE PLAN.

    


    (a)    Share
      Reserve.
      Subject
      to the provisions of Section 11 relating to adjustments upon changes in Common
      Stock, the Common Stock that may be issued pursuant to Stock Awards shall not
      exceed in the aggregate 16,465,496 shares of Common Stock (the “Reserved
      Shares”).
      

    


    (b)    Reversion
      of Shares to the Share Reserve.
      If any
      Stock Award shall for any reason expire or otherwise terminate, in whole or
      in
      part, without having been exercised in full, the shares of Common Stock not
      acquired under such Stock Award shall revert to and again become available
      for
      issuance under the Plan.

    


    (c)    Source
      of Shares.
      The
      shares of Common Stock subject to the Plan may be unissued shares or reacquired
      shares, bought on the market or otherwise. 

    


    5.    ELIGIBILITY.

    


    (a)    Eligibility
      for Specific Stock Awards.
      Incentive Stock Options may be granted only to Employees. Stock Awards other
      than Incentive Stock Options may be granted to Employees, Directors and
      Consultants.

    


    (b)    Ten
      Percent Shareholders.
      A Ten
      Percent Shareholder shall not be granted an Incentive Stock Option unless the
      exercise price of such Option is at least one hundred ten percent (110%) of
      the
      Fair Market Value of the Common Stock at the date of grant and the Option is
      not
      exercisable after the expiration of five (5) years from the date of grant.
      

    


    6.    OPTION
      PROVISIONS.

    


    Each
      Option shall be in such form and shall contain such terms and conditions as
      the
      Board shall deem appropriate. All Options shall be separately designated
      Incentive Stock Options or Nonstatutory Stock Options at the time of grant,
      and,
      if certificates are issued, a separate certificate or certificates will be
      issued for shares of Common Stock purchased on exercise of each type of Option.
      The provisions of separate Options need not be identical, but each Option shall
      include (through incorporation of provisions hereof by reference in the Option
      or otherwise) the substance of each of the following provisions:

    


    (a)    Term.
      Subject
      to the provisions of Subsection 5(b) regarding Ten Percent Shareholders, no
      Incentive Stock Option shall be exercisable after the expiration of ten (10)
      years from the date it was granted. 

    


    (b)    Exercise
      Price of an Incentive Stock Option.
      Subject
      to the provisions of Subsection 5(b) regarding Ten Percent Shareholders, the
      exercise price of each Incentive Stock Option shall be not less than one hundred
      percent (100%) of the Fair Market Value of the Common Stock subject to the
      Option on the date the Option is granted. Notwithstanding the foregoing, an
      Incentive Stock Option may be granted with an exercise price lower than that
      set
      forth in the preceding sentence if such Option is granted pursuant to an
      assumption or substitution for another option in a manner satisfying the
      provisions of Section 424(a) of the Code. 

    


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

      
        (c)    Exercise
          Price of a Nonstatutory Stock Option.
          The
          exercise price of each Nonstatutory Stock Option shall be not less than
          eighty-five percent (85%) of the Fair Market Value of the Common Stock
          subject
          to the Option on the date the Option is granted. Notwithstanding the foregoing,
          a Nonstatutory Stock Option may be granted with an exercise price lower
          than
          that set forth in the preceding sentence if such Option is granted pursuant
          to
          an assumption or substitution for another option in a manner satisfying
          the
          provisions of Section 424(a) of the Code. 

         

      

    

    (d)    Consideration.
      The
      purchase price of Common Stock acquired pursuant to an Option shall be paid,
      to
      the extent permitted by applicable statutes and regulations, either (i) in
      cash
      at the time the Option is exercised or (ii) at the discretion of the Board
      at
      the time of the grant of the Option (or subsequently in the case of a
      Nonstatutory Stock Option) (1) by delivery to the Company of other Common Stock
      or (2) in any other form of legal consideration that may be acceptable to the
      Board. Unless otherwise specifically provided in the Option, (A) the purchase
      price of Common Stock acquired pursuant to an Option that is paid by delivery
      to
      the Company of other Common Stock acquired, directly or indirectly from the
      Company, shall be paid only by shares of the Common Stock of the Company that
      have been held for more than six (6) months (or such longer or shorter period
      of
      time required to avoid a charge to earnings for financial accounting purposes)
      or (B) by "cashless exercise", but only when a registration statement under
      the
      Securities Act providing for the resale of the Common Stock is not then in
      effect. Notwithstanding any provisions herein to the contrary, if (i) the Fair
      Market Value of one share of Common Stock is greater than the exercise price
      (at
      the date of calculation as set forth below) and (ii) a registration statement
      under the Securities Act providing for the resale of the Common Stock is not
      then in effect, in lieu of exercising an Option by payment of cash, the
      Participant may exercise an Option by a cashless exercise and shall receive
      the
      number of shares of Common Stock equal to an amount (as determined below) by
      surrender of the Option at the principal office of the Company in which event
      the Company shall issue to the Participant a number of shares of Common Stock
      computed using the following formula:

    


    X
      = Y -
(A)(Y)

                     
      B

     

    
      
        	Where 	
                X =

              	
                the
                  number of shares of Common Stock to be issued to the
                  Participant. 

              


      

       

    

    
      	 	
              Y
                =

            	
              the
                number of shares of Common Stock purchasable upon exercise of all
                of the
                Option or, if only a portion of the Option is being exercised, the
                portion
                of the Option being exercised. 

            


    

    


    
      	 	
              A
                =

            	
              the
                Exericse Price. 

            


    

     

    
      	 	B = 	the Fair Market Value of one share of Common
              Stock.  


    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (e)    Transferability
      of an Incentive Stock Option.
      An
      Incentive Stock Option shall not be transferable except by will or by the laws
      of descent and distribution and shall be exercisable during the lifetime of
      the
      Optionholder only by the Optionholder. Notwithstanding the foregoing, the
      Optionholder may, by delivering written notice to the Company, in a form
      satisfactory to the Company, designate a third party who, in the event of the
      death of the Optionholder, shall thereafter be entitled to exercise the Option.
      

    


    (f)    Transferability
      of a Nonstatutory Stock Option.
      A
      Nonstatutory Stock Option shall be transferable to the extent provided in the
      Option Agreement. If the Nonstatutory Stock Option does not provide for
      transferability, then the Nonstatutory Stock Option shall not be transferable
      except by will or by the laws of descent and distribution and shall be
      exercisable during the lifetime of the Optionholder only by the Optionholder.
      Notwithstanding the foregoing, the Optionholder may, by delivering written
      notice to the Company, in a form satisfactory to the Company, designate a third
      party who, in the event of the death of the Optionholder, shall thereafter
      be
      entitled to exercise the Option. 

    


    (g)    Vesting
      Generally.
      The
      total number of shares of Common Stock subject to an Option may, but need not,
      vest and therefore become exercisable in periodic installments that may, but
      need not, be equal. The Option may be subject to such other terms and conditions
      on the time or times when it may be exercised (which may be based on performance
      or other criteria) as the Board may deem appropriate. The vesting provisions
      of
      individual Options may vary. The provisions of this Subsection 6(g) are subject
      to any Option provisions governing the minimum number of shares of Common Stock
      as to which an Option may be exercised. 

    


    (h)    Termination
      of Continuous Service.
      In the
      event an Optionholder's Continuous Service terminates (other than upon the
      Optionholder's death or Disability), the Optionholder may exercise his or her
      Option (to the extent that the Optionholder was entitled to exercise such Option
      as of the date of termination) but only within such period of time ending on
      the
      earlier of (i) the date three (3) months following the termination of the
      Optionholder's Continuous Service (or such longer or shorter period specified
      in
      the Option Agreement), or (ii) the expiration of the term of the Option as
      set
      forth in the Option Agreement. If, after termination, the Optionholder does
      not
      exercise his or her Option within the time specified in the Option Agreement,
      the Option shall terminate. 

    


    (i)    Extension
      of Termination Date.
      An
      Optionholder's Option Agreement may also provide that if the exercise of the
      Option following the termination of the Optionholder's Continuous Service (other
      than upon the Optionholder's death or Disability) would be prohibited at any
      time solely because the issuance of shares of Common Stock would violate the
      registration requirements under the Securities Act, then the Option shall
      terminate on the earlier of (i) the expiration of the term of the Option set
      forth in Subsection 6(a) or (ii) the expiration of a period of three (3) months
      after the termination of the Optionholder's Continuous Service during which
      the
      exercise of the Option would not be in violation of such registration
      requirements.

    


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    (j)    Disability
      of Optionholder.
      In the
      event that an Optionholder's Continuous Service terminates as a result of the
      Optionholder's Disability, the Optionholder may exercise his or her Option
      (to
      the extent that the Optionholder was entitled to exercise such Option as of
      the
      date of termination), but only within such period of time ending on the earlier
      of (i) the date twelve (12) months following such termination (or such longer
      or
      shorter period specified in the Option Agreement) or (ii) the expiration of
      the
      term of the Option as set forth in the Option Agreement. If, after termination,
      the Optionholder does not exercise his or her Option within the time specified
      herein, the Option shall terminate. 

    


    (k)    Death
      of Optionholder.
      In the
      event (i) an Optionholder's Continuous Service terminates as a result of the
      Optionholder's death or (ii) the Optionholder dies within the period (if any)
      specified in the Option Agreement after the termination of the Optionholder's
      Continuous Service for a reason other than death, then the Option may be
      exercised (to the extent the Optionholder was entitled to exercise such Option
      as of the date of death) by the Optionholder's estate, by a person who acquired
      the right to exercise the Option by bequest or inheritance or by a person
      designated to exercise the Option upon the Optionholder's death pursuant to
      Subsection 6(e) or 6(f), but only within the period ending on the earlier of
      (1)
      the date twelve (12) months following the date of death (or such longer or
      shorter period specified in the Option Agreement) or (2) the expiration of
      the
      term of such Option as set forth in the Option Agreement. If, after death,
      the
      Option is not exercised within the time specified herein, the Option shall
      terminate. 

    


    (l)    Early
      Exercise.
      The
      Option may, but need not, include a provision whereby the Optionholder may
      elect
      at any time before the Optionholder's Continuous Service terminates to exercise
      the Option as to any part or all of the shares of Common Stock subject to the
      Option prior to the full vesting of the Option. Any unvested shares of Common
      Stock so purchased may be subject to a repurchase option in favor of the Company
      or to any other restriction the Board determines to be appropriate.

    


    7.    PROVISIONS
      OF STOCK AWARDS OTHER THAN OPTIONS.

    


    (a)    Stock
      Bonus Awards.
      Each
      stock bonus agreement shall be in such form and shall contain such terms and
      conditions as the Board shall deem appropriate. The terms and conditions of
      stock bonus agreements may change from time to time, and the terms and
      conditions of separate stock bonus agreements need not be identical, but each
      stock bonus agreement shall include (through incorporation of provisions hereof
      by reference in the agreement or otherwise) the substance of each of the
      following provisions:

    


    (i)    Consideration.
      A stock
      bonus may be awarded in consideration for past services actually rendered to
      the
      Company or an Affiliate for its benefit. 

    


    (ii)   Vesting.
      Shares
      of Common Stock awarded under the stock bonus agreement may, but need not,
      be
      subject to a share reacquisition right in favor of the Company in accordance
      with a vesting schedule to be determined by the Board.

    


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

       

    

    (iii)   Termination
      of Participant's Continuous Service.
      In the
      event a Participant's Continuous Service terminates, the Company may reacquire
      any or all of the shares of Common Stock held by the Participant which have
      not
      vested as of the date of termination under the terms of the stock bonus
      agreement. 

    


    (iv)   Transferability.
      Rights
      to acquire shares of Common Stock under the stock bonus agreement shall be
      transferable by the Participant only upon such terms and conditions as are
      set
      forth in the stock bonus agreement, as the Board shall determine in its
      discretion, so long as Common Stock awarded under the stock bonus agreement
      remains subject to the terms of the stock bonus agreement.

    


    (b)    Restricted
      Stock Purchase Awards.
      Each
      restricted stock purchase agreement shall be in such form and shall contain
      such
      terms and conditions as the Board shall deem appropriate. The terms and
      conditions of the restricted stock purchase agreements may change from time
      to
      time, and the terms and conditions of separate restricted stock purchase
      agreements need not be identical, but each restricted stock purchase agreement
      shall include (through incorporation of provisions hereof by reference in the
      agreement or otherwise) the substance of each of the following
      provisions:

    


    (i)    Purchase
      Price.
      The
      purchase price under each restricted stock purchase agreement shall be such
      amount as the Board shall determine and designate in such restricted stock
      purchase agreement. The purchase price shall not be less than eighty-five
      percent (85%) of the Common Stock's Fair Market Value on the date such award
      is
      made or at the time the purchase is consummated.

    


    (ii)   Consideration.
      The
      purchase price of Common Stock acquired pursuant to the restricted stock
      purchase agreement shall be paid either: (i) in cash at the time of purchase;
      (ii) at the discretion of the Board, according to a deferred payment or other
      similar arrangement with the Participant; or (iii) in any other form of legal
      consideration that may be acceptable to the Board in its
      discretion.

    


    (iii)   Vesting.
      Shares
      of Common Stock acquired under the restricted stock purchase agreement may,
      but
      need not, be subject to a share repurchase option in favor of the Company in
      accordance with a vesting schedule to be determined by the Board. 

    


    (iv)   Termination
      of Participant's Continuous Service.
      In the
      event a Participant's Continuous Service terminates, the Company may repurchase
      or otherwise reacquire any or all of the shares of Common Stock held by the
      Participant which have not vested as of the date of termination under the terms
      of the restricted stock purchase agreement.

    


    (v)   Transferability.
      Rights
      to acquire shares of Common Stock under the restricted stock purchase agreement
      shall be transferable by the Participant only upon such terms and conditions
      as
      are set forth in the restricted stock purchase agreement, as the Board shall
      determine in its discretion, so long as Common Stock awarded under the
      restricted stock purchase agreement remains subject to the terms of the
      restricted stock purchase agreement.

    


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

    

    8.    COVENANTS
      OF THE COMPANY.

    


    (a)    Availability
      of Shares.
      During
      the terms of the Stock Awards, the Company shall keep available at all times
      the
      number of shares of Common Stock required to satisfy such Stock Awards.


    


    (b)    Securities
      Law Compliance.
      The
      Company shall seek to obtain from each regulatory commission or agency having
      jurisdiction over the Plan such authority as may be required to grant Stock
      Awards and to issue and sell shares of Common Stock upon exercise of the Stock
      Awards; provided,
      however,
      that
      this undertaking shall not require the Company to register under the Securities
      Act or any state securities law the Plan, any Stock Award or any Common Stock
      issued or issuable pursuant to any such Stock Award. If, after reasonable
      efforts, the Company is unable to obtain from any such regulatory commission
      or
      agency the authority which counsel for the Company deems necessary for the
      lawful issuance and sale of Common Stock under the Plan, the Company shall
      be
      relieved from any liability for failure to issue and sell Common Stock upon
      exercise of such Stock Awards unless and until such authority is
      obtained.

    


    9.    USE
      OF
      PROCEEDS FROM STOCK.

    


    Proceeds
      from the sale of Common Stock pursuant to Stock Awards shall constitute general
      funds of the Company.

    


    10.          
      MISCELLANEOUS.

    


    (a)    Acceleration
      of Exercisability and Vesting.
      The
      Board shall have the power to accelerate the time at which a Stock Award may
      first be exercised or the time during which a Stock Award or any part thereof
      will vest in accordance with the Plan, notwithstanding the provisions in the
      Stock Award stating the time at which it may first be exercised or the time
      during which it will vest. 

    


    (b)    Shareholder
      Rights.
      No
      Participant shall be deemed to be the holder of, or to have any of the rights
      of
      a holder with respect to, any shares of Common Stock subject to such Stock
      Award
      unless and until such Participant has satisfied all requirements for exercise
      of
      the Stock Award pursuant to its terms.

    


    (c)    No
      Employment or other Service Rights.
      Nothing
      in the Plan or any instrument executed or Stock Award granted pursuant thereto
      shall confer upon any Participant any right to continue to serve the Company
      or
      an Affiliate in the capacity in effect at the time the Stock Award was granted
      or shall affect the right of the Company or an Affiliate to terminate (i) the
      employment of an Employee with or without notice and with or without cause,
      (ii)
      the service of a Consultant pursuant to the terms of such Consultant's agreement
      with the Company or an Affiliate or (iii) the service of a Director pursuant
      to
      the Bylaws of the Company or an Affiliate, and any applicable provisions of
      the
      corporate law of the state in which the Company or the Affiliate is
      incorporated, as the case may be.

    


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

    

    (d)    Incentive
      Stock Option $100,000 Limitation.
      To the
      extent that the aggregate Fair Market Value (determined at the time of grant)
      of
      Common Stock with respect to which Incentive Stock Options are exercisable
      for
      the first time by any Optionholder during any calendar year (under all plans
      of
      the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000),
      the Options or portions thereof which exceed such limit (according to the order
      in which they were granted) shall be treated as Nonstatutory Stock
      Options.

    


    (e)    Investment
      Assurances.
      The
      Company may require a Participant, as a condition of exercising or acquiring
      Common Stock under any Stock Award, (i) to give written assurances satisfactory
      to the Company as to the Participant's knowledge and experience in financial
      and
      business matters and/or to employ a purchaser representative reasonably
      satisfactory to the Company who is knowledgeable and experienced in financial
      and business matters and that he or she is capable of evaluating, alone or
      together with the purchaser representative, the merits and risks of exercising
      the Stock Award; and (ii) to give written assurances satisfactory the Company
      stating that the Participant is acquiring Common Stock subject to the Stock
      Award for the Participant's own account and not with any present intention
      of
      selling or otherwise distributing the Common Stock. The foregoing requirements,
      and any assurances given pursuant to such requirements, shall be inoperative
      if
      (1) the issuance of the shares of Common Stock upon the exercise or acquisition
      of Common Stock under the Stock Award has been registered under a then currently
      effective registration statement under the Securities Act or (2) as to any
      particular requirement, a determination is made by counsel for the Company
      that
      such requirement need not be met in the circumstances under the then applicable
      securities laws. The Company may, upon advice of counsel to the Company, place
      legends on stock certificates issued under the Plan as such counsel deems
      necessary or appropriate in order to comply with applicable securities laws,
      including, but not limited to, legends restricting the transfer of the Common
      Stock.

    


    (f)    Withholding
      Obligations.
      To the
      extent provided by the terms of a Stock Award Agreement, the Participant may
      satisfy any federal, state or local tax withholding obligation relating to
      the
      exercise or acquisition of Common Stock under a Stock Award by any of the
      following means (in addition to the Company's right to withhold from any
      compensation paid to the Participant by the Company) or by a combination of
      such
      means: 

    


    (i)    tendering
      a cash payment; 

    


    (ii)   authorizing
      the Company to withhold shares of Common Stock from the shares of Common Stock
      otherwise issuable to the Participant as a result of the exercise or acquisition
      of Common Stock under the Stock Award, provided,
      however,
      that
      the Company shall not be authorized to withhold shares of Common Stock in excess
      of the minimum statutory rates for federal or state tax purposes, including
      payroll taxes; or 

    


    (iii)   delivering
      to the Company owned and unencumbered shares of Common Stock.

    


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

       

    

    (g)    [Intentionally
      Omitted]

    


    11.          
      ADJUSTMENTS
      UPON CHANGES IN COMMON STOCK.

    


    (a)    Capitalization
      Adjustments.
      If any
      change is made in the Common Stock subject to the Plan, or subject to any Stock
      Award, without the receipt of consideration by the Company (through merger,
      consolidation, reorganization, recapitalization, reincorporation, stock
      dividend, dividend in property other than cash, stock split, liquidating
      dividend, combination of shares, exchange of shares, change in corporate
      structure or other transaction not involving the receipt of consideration by
      the
      Company), the Plan will be appropriately adjusted in the class(es) and maximum
      number of securities subject to the Plan pursuant to Subsection 4(a), and the
      outstanding Stock Awards will be appropriately adjusted in the class(es) and
      number of securities and price per share of Common Stock subject to such
      outstanding Stock Awards. The Board shall make such adjustments, and its
      determination shall be final, binding and conclusive. (The conversion of any
      convertible securities of the Company shall not be treated as a transaction
      "without receipt of consideration" by the Company.)

    


    (b)    Dissolution
      or Liquidation.
      In the
      event of a dissolution or liquidation of the Company, then all outstanding
      Stock
      Awards shall terminate immediately prior to such event.

    


    (c)    Corporate
      Transaction.
      In the
      event of a Corporate Transaction, any surviving corporation or acquiring
      corporation may assume any Stock Awards outstanding under the Plan or may
      substitute similar stock awards (including an award to acquire the same
      consideration paid to the shareholders pursuant to the Corporate Transaction).
      In the event any surviving corporation or acquiring corporation refuses to
      assume such Stock Awards or to substitute similar stock awards for those
      outstanding under the Plan, then with respect to Stock Awards held by
      Participants whose Continuous Service has not terminated as of the effective
      date of the Corporate Transaction, the vesting of such Stock Awards (and, if
      applicable, the time during which such Stock Awards may be exercised) shall
      be
      accelerated in full, and the Stock Awards shall terminate if not exercised
      (if
      applicable) at or prior to such effective date. With respect to any other Stock
      Awards outstanding under the Plan, such Stock Awards shall terminate if not
      exercised (if applicable) prior the effective date of the Corporate Transaction.
      

    


    (d)    Change
      in Control.
      If a
      Change in Control occurs and within thirteen (13) months after the effective
      date of such Change in Control the Continuous Service of a Participant
      terminates due to an involuntary termination (not including death or Disability)
      without Cause, then the vesting and exercisability of all Stock Awards held
      by
      such Participant shall be accelerated in full. 

    


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

       

    

    12.          
      AMENDMENT
      OF THE PLAN AND STOCK AWARDS.

    


    (a)    Amendment
      of Plan.
      The
      Board at any time, and from time to time, may amend the Plan. However, except
      as
      provided in Section 11 relating to adjustments upon changes in Common Stock,
      no
      amendment shall be effective unless approved by the shareholders of the Company
      to the extent shareholder approval is necessary to satisfy the requirements
      of
      Section 422 of the Code. 

    


    (b)    Shareholder
      Approval.
      The
      Board may, in its sole discretion, submit any other amendment to the Plan for
      shareholder approval. 

    


    (c)    Contemplated
      Amendments.
      It is
      expressly contemplated that the Board may amend the Plan in any respect the
      Board deems necessary or advisable to provide eligible Employees with the
      maximum benefits provided or to be provided under the provisions of the Code
      and
      the regulations promulgated thereunder relating to Incentive Stock Options
      and/or to bring the Plan and/or Incentive Stock Options granted under it into
      compliance therewith. 

    


    (d)    No
      Impairment of Rights.
      Rights
      under any Stock Award granted before amendment of the Plan shall not be impaired
      by any amendment of the Plan unless (i) the Company requests the consent of
      the
      Participant and (ii) the Participant consents in writing.

    


    (e)    Amendment
      of Stock Awards.
      The
      Board at any time, and from time to time, may amend the terms of any one or
      more
      Stock Awards; provided,
      however,
      that
      the rights under any Stock Award shall not be impaired by any such amendment
      unless (i) the Company requests the consent of the Participant and (ii) the
      Participant consents in writing. 

    


    13.          
      TERMINATION
      OR SUSPENSION OF THE PLAN.

    


    (a)    Plan
      Term.
      The
      Board may suspend or terminate the Plan at any time. Unless sooner terminated,
      the Plan shall terminate on the day before the tenth (10th) anniversary of
      the
      date the Plan is adopted by the Board or approved by the shareholders of the
      Company, whichever is earlier. No Stock Awards may be granted under the Plan
      while the Plan is suspended or after it is terminated.

    


    (b)    No
      Impairment of Rights.
      Suspension or termination of the Plan shall not impair rights and obligations
      under any Stock Award granted while the Plan is in effect except with the
      written consent of the Participant. 

    


    14.          
      EFFECTIVE
      DATE OF PLAN.

    


    The
      Plan
      shall become effective on September 1, 2006, but no Stock Award shall be
      exercised (or, in the case of a stock bonus, shall be granted) unless and until
      the Plan has been approved by the shareholders of the Company, which approval
      shall be within twelve (12) months after the date the Plan is adopted by the
      Board.

    


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

       

    

    15.          
      CHOICE
      OF LAW.

    


    The
      law
      of the State of Nevada shall govern all questions concerning the construction,
      validity and interpretation of this Plan, without regard to such state's
      conflict of law rules.

     

     

     

     

     

     

    15