Filed by Automated Filing Services Inc. (604) 609-0244 - Rancho Santa Monica Developments Inc. - Exhibit 10.1





 2004 STOCK OPTION PLAN OF 

 

 RANCHO SANTA MONICA DEVELOPMENTS INC. 

 

NOVEMBER 15, 2004 

 

 

A Nevada Corporation 





 2004 STOCK OPTION PLAN 

  OF 

  RANCHO SANTA MONICA DEVELOPMENTS INC. 


TABLE OF CONTENTS 

	  	 Page No.
	 	 
	 PURPOSE OF THE PLAN	 1
	 	 
	 TYPES OF STOCK OPTIONS	 1
	 	 
	 DEFINITIONS	 1
	 	 
	 ADMINISTRATION OF THE PLAN	2
	 	 
	 GRANT OF OPTIONS	 3
	 	 
	 STOCK SUBJECT TO PLAN	 3
	 	 
	 TERMS AND CONDITIONS OF OPTIONS	 3
	 	 
	 TERMINATION OR AMENDMENT OF THE PLAN	 7
	 	 
	 INDEMNIFICATION	 8
	 	 
	 EFFECTIVE DATE AND TERM OF THE PLAN	 8












2004 STOCK OPTION PLAN 


OF 


RANCHO SANTA MONICA DEVELOPMENTS INC. 

 A Nevada Corporation 



 1.            PURPOSE
  OF THE PLAN 

 The purpose of this Plan is to strengthen Rancho Santa Monica
  Developments Inc. (hereinafter the “Corporation”) by providing incentive
  stock options as a means to attract, retain and motivate key corporate personnel,
  through ownership of stock of the Corporation, and to attract individuals of
  outstanding ability to render services to and enter the employment of the Corporation
  or its subsidiaries. 

 2.           
  TYPES OF STOCK OPTIONS 

 There shall be two types of Stock Options (referred to herein
  as "Options" without distinction between such different types) that may be granted
  under this Plan: (1) Options intended to qualify as Incentive Stock Options
  under Section 422 of the Internal Revenue Code (“Qualified Stock Options”),
  and (2) Options not specifically authorized or qualified for favorable income
  tax treatment under the Internal Revenue Code (“Non-Qualified Stock Options”).


 3.            DEFINITIONS


 The following definitions are applicable to the Plan: 

	 	 (1)      	 Board. The Board of Directors of the Corporation.
      

	 	 	 
	 	 (2)      	 Code. The Internal Revenue Code of 1986, as amended
        from time to time. 

	 	 	 
	 	 (3)      	 Common Stock. The shares of Common Stock of the
        Corporation. 

	 	 	 
	 	 (4)      	 Corporation. Rancho Santa Monica Developments Inc.,
        a Nevada corporation. 

	 	 	 
	 	 (5)      	 Consultant. An individual or entity that renders
        professional services to the Corporation as an independent contractor
        and is not an employee or under the direct supervision and control of
        the Corporation. 

	 	 	 
	 	 (6)      	 Disabled or Disability. For the purposes of Section
        7, a disability of the type defined in Section 22(e)(3) of the Code. The
        determination of whether an individual is Disabled or has a Disability
        is determined under procedures established by the Plan Administrator for
        purposes of the Plan. 












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	 	 (7)      	 Fair Market Value. For purposes of the Plan, the
        “fair market value" per share of Common Stock of the Corporation
        at any date shall be: (a) if the Common Stock is listed on an established
        stock exchange or exchanges or the NASDAQ National Market, the closing
        price per share on the last trading day immediately preceding such date
        on the principal exchange on which it is traded or as reported by NASDAQ;
        or (b) if the Common Stock is not then listed on an exchange or the NASDAQ
        National Market, but is quoted on the NASDAQ Small Cap Market, the NASDAQ
        electronic bulletin board or the National Quotation Bureau pink sheets,
        the average of the closing bid and asked prices per share for the Common
        Stock as quoted by NASDAQ or the National Quotation Bureau, as the case
        may be, on the last trading day immediately preceding such date; or (c)
        if the Common Stock is not then listed on an exchange or the NASDAQ National
        Market, or quoted by NASDAQ or the National Quotation Bureau, an amount
        determined in good faith by the Plan Administrator. 

	 	 	 
	 	 (8)      	 Incentive Stock Option. Any Stock Option intended
        to be and designated as an "incentive stock option" within the meaning
        of Section 422 of the Code. 

	 	 	 
	 	 (9)      	 Non-Qualified Stock Option. Any Stock Option that
        is not an Incentive Stock Option. 

	 	 	 
	 	 (10)      	 Optionee. The recipient of a Stock Option. 

	 	 	 
	 	 (11)      	 Plan Administrator. The board or the Committee designated
        by the Board pursuant to Section 4 to administer and interpret the terms
        of the Plan. 

	 	 	 
	 	 (12)      	 Stock Option. Any option to purchase shares of Common
        Stock granted pursuant to Section 7. 



 4.            ADMINISTRATION
  OF THE PLAN 

 This Plan shall be administered by the Board of Directors
  or by a Compensation Committee (hereinafter the “Committee”) composed
  of members selected by, and serving at the pleasure of, the Board of Directors
  (the “Plan Administrator”). Subject to the provisions of the Plan,
  the Plan Administrator shall have authority to construe and interpret the Plan,
  to promulgate, amend, and rescind rules and regulations relating to its administration,
  to select, from time to time, among the eligible employees and non-employee
  consultants (as determined pursuant to Section 5) of the Corporation and its
  subsidiaries those employees and consultants to whom Stock Options will be granted,
  to determine the duration and manner of the grant of the Options, to determine
  the exercise price, the number of shares and other terms covered by the Stock
  Options, to determine the duration and purpose of leaves of absence which may
  be granted to Stock Option holders without constituting termination of their
  employment for purposes of the Plan, and to make all of the determinations necessary
  or advisable for administration of the Plan. The interpretation and construction
  by the Plan Administrator of any provision of the Plan, or of any agreement
  issued and executed under the Plan, shall be final and binding upon all parties.
  No member of the Committee or Board shall be liable for any action or determination
  undertaken or made in good faith with respect to the Plan or any agreement executed
  pursuant to the Plan. 

 If a Committee is established, all of the members of the Committee
  shall be persons who, in the opinion of counsel to the Corporation, are outside
  directors and "non-employee directors" within the meaning of Rule 16b-3(b)(3)(i)
  promulgated by the Securities and Exchange Commission. From 








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 time to time, the Board may increase or decrease the size
  of the Committee, and add additional members to, or remove members from, the
  Committee. The Committee shall act pursuant to a majority vote, or the written
  consent of a majority of its members, and minutes shall be kept of all of its
  meetings and copies thereof shall be provided to the Board. Subject to the provisions
  of the Plan and the directions of the Board, the Committee may establish and
  follow such rules and regulations for the conduct of its business as it may
  deem advisable.

 At the option of the Board, the entire Board of Directors
  of the Corporation may act as the Plan Administrator during such periods of
  time as all members of the Board are “outside directors” as defined
  in Prop. Treas. Regs. '1.162 -27(e)(3), except that this requirement shall not
  apply during any period of time prior to the date the Corporation's Common Stock
  becomes registered pursuant to Section 12 of the Securities Exchange Act of
  1934, as amended. 

 5.            GRANT
  OF OPTIONS 

 The Corporation is hereby authorized to grant Incentive Stock
  Options as defined in section 422 of the Code to any employee or director (including
  any officer or director who is an employee) of the Corporation, or of any of
  its subsidiaries; provided, however, that no person who owns stock possessing
  more than 10% of the total combined voting power of all classes of stock of
  the Corporation, or any of its parent or subsidiary corporations, shall be eligible
  to receive an Incentive Stock Option under the Plan unless at the time such
  Incentive Stock Option is granted the Option price is at least 110% of the fair
  market value of the shares subject to the Option, and such Option by its terms
  is not exercisable after the expiration of five years from the date such Option
  is granted. 

 An employee may receive more than one Option under the Plan.
  Non-Employee Directors shall be eligible to receive Non-Qualified Stock Options
  in the discretion of the Plan Administrator. In addition, Non-Qualified Stock
  Options may be granted to employees, officers, directors and consultants who
  are selected by the Plan Administrator. 

 6.            STOCK
  SUBJECT TO PLAN 

 The stock available for grant of Options under the Plan shall
  be shares of the Corporation's authorized but unissued, or reacquired, Common
  Stock. Subject to adjustment as provided herein, the maximum aggregate number
  of shares of the Corporation’s common stock that may be optioned and sold
  under the Plan is 750,000 shares.

 The maximum number of shares for which an Option may be granted
  to any Optionee during any calendar year shall not exceed three percent (3%)
  of the issued and outstanding common shares of the Corporation. In the event
  that any outstanding Option under the Plan for any reason expires or is terminated,
  the shares of Common Stock allocable to the unexercised portion of the Option
  shall again be available for Options under the Plan as if no Option had been
  granted with regard to such shares. 

 7.            TERMS
  AND CONDITIONS OF OPTIONS 

 Options granted under the Plan shall be evidenced by agreements
  (which need not be identical) in such form and containing such provisions that
  are consistent with the Plan as the Plan Administrator 








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 shall from time to time approve. Such agreements may incorporate
  all or any of the terms hereof by reference and shall comply with and be subject
  to the following terms and conditions: 

	 	 (1)      	 Number of Shares. Each Option agreement shall specify
        the number of shares subject to the Option. 

	 
	 	 (2)      	 Option Price. The purchase price for the shares
        subject to any Option shall be determined by the Plan Administrator at
        the time of the grant, but shall not be less than 85% of Fair Market Value
        per share. Anything to the contrary notwithstanding, the purchase price
        for the shares subject to any Incentive Stock Option shall not be less
        than 100% of the Fair Market Value of the shares of Common Stock of the
        Corporation on the date the Stock Option is granted. In the case of any
        Incentive Stock Option granted to an employee who owns stock possessing
        more than 10% of the total combined voting power of all classes of stock
        of the Corporation, or any of its parent or subsidiary corporations, the
        Option price shall not be less than 110% of the Fair Market Value per
        share of the Common Stock of the Corporation on the date the Option is
        granted. For purposes of determining the stock ownership of an employee,
        the attribution rules of Section 424(d) of the Code shall apply. 

	 
	 	 (3)      	 Notice and Payment. Any exercisable portion of a
        Stock Option may be exercised only by: (a) delivery of a written notice
        to the Corporation prior to the time when such Stock Option becomes unexercisable
        herein, stating the number of shares bring purchased and complying with
        all applicable rules established by the Plan Administrator; (b) payment
        in full of the exercise price of such Option by, as applicable, delivery
        of: (i) cash or check for an amount equal to the aggregate Stock Option
        exercise price for the number of shares being purchased, (ii) in the discretion
        of the Plan Administrator, upon such terms as the Plan Administrator shall
        approve, a copy of instructions to a broker directing such broker to sell
        the Common Stock for which such Option is exercised, and to remit to the
        Corporation the aggregate exercise price of such Stock Option (a “cashless
        exercise”), or (iii) in the discretion of the Plan Administrator,
        upon such terms as the Plan Administrator shall approve, shares of the
        Corporation's Common Stock owned by the Optionee, duly endorsed for transfer
        to the Corporation, with a Fair Market Value on the date of delivery equal
        to the aggregate purchase price of the shares with respect to which such
        Stock Option or portion is thereby exercised (a "stock-for-stock exercise");
        (c) payment of the amount of tax required to be withheld (if any) by the
        Corporation, or any parent or subsidiary corporation as a result of the
        exercise of a Stock Option. At the discretion of the Plan Administrator,
        upon such terms as the Plan Administrator shall approve, the Optionee
        may pay all or a portion of the tax withholding by: (i) cash or check
        payable to the Corporation, (ii) a cashless exercise, (iii) a stock-for-stock
        exercise, or (iv) a combination of one or more of the foregoing payment
        methods; and (d) delivery of a written notice to the Corporation requesting
        that the Corporation direct the transfer agent to issue to the Optionee
        (or his designee) a certificate for the number of shares of Common Stock
        for which the Option was exercised or, in the case of a cashless exercise,
        for any shares that were not sold in the cashless exercise. Notwithstanding
        the foregoing, the Corporation, in its sole discretion, may extend and
        maintain, or arrange for the extension and maintenance of credit to any
        Optionee to finance the Optionee's purchase of shares pursuant to the
        exercise of any Stock Option, on such terms as may be approved by the
        Plan Administrator, subject to applicable regulations of the Federal Reserve
        Board and any other laws or regulations in effect at the time such credit
        is extended. 












 5

	 	 (4)      	 Terms of Option. No Option shall be exercisable
        after the expiration of the earliest of: (a) ten years after the date
        the Option is granted, (b) three months after the date the Optionee's
        employment with the Corporation and its subsidiaries terminates, or a
        Non-Employee Director or Consultant ceases to provide services to the
        Corporation, if such termination or cessation is for any reason other
        than Disability or death, (c) one year after the date the Optionee's employment
        with the Corporation, and its subsidiaries, terminates, or a Non-Employee
        Director or Consultant ceases to provide services to the Corporation,
        if such termination or cessation is a result of death or Disability; provided,
        however, that the Option agreement for any Option may provide for shorter
        periods in each of the foregoing instances. In the case of an Incentive
        Stock Option granted to an employee who owns stock possessing more than
        10% of the total combined voting power of all classes of stock of the
        Corporation, or any of its parent or subsidiary corporations, the term
        set forth in (a) above shall not be more than five years after the date
        the Option is granted. 

	 
	 	 (5)      	 Exercise of an Option. No Option shall be exercisable
        during the lifetime of an Optionee by any person other than the Optionee.
        Subject to the foregoing, the Plan Administrator shall have the power
        to set the time or times within which each Option shall vest or be exercisable
        and to accelerate the time or times of vesting and exercise; provided,
        however each Option shall provide the right to exercise at the rate of
        at least 20% per year over five years from the date the Option is granted.
        Unless otherwise provided by the Plan Administrator, each Option will
        not be subject to any vesting requirements. To the extent that an Optionee
        has the right to exercise an Option and purchase shares pursuant hereto,
        the Option may be exercised from time to time by written notice to the
        Corporation, stating the number of shares being purchased and accompanied
        by payment in full of the exercise price for such shares. 

	 
	 	 (6)      	 No Transfer of Option. No Option shall be transferable
        by an Optionee otherwise than by will or the laws of descent and distribution.
      

	 
	 	 (7)      	 Limit on Incentive Stock Option. The aggregate Fair
        Market Value (determined at the time the Option is granted) of the stock
        with respect to which an Incentive Stock Option is granted and exercisable
        for the first time by an Optionee during any calendar year (under all
        Incentive Stock Option plans of the Corporation and its subsidiaries)
        shall not exceed $100,000. To the extent the aggregate Fair Market
        Value (determined at the time the Stock Option is granted) of the Common
        Stock with respect to which Incentive Stock Options are exercisable for
        the first time by an Optionee during any calendar year (under all Incentive
        Stock Option plans of the Corporation and any parent or subsidiary corporations)
        exceeds $100,000, such Stock Options shall be treated as Non-Qualified
        Stock Options. The determination of which Stock Options shall be treated
        as Non-Qualified Stock Options shall be made by taking Stock Options into
        account in the Order in which they were granted. 

	 
	 	 (8)      	 Restriction on Issuance of Shares. The issuance
        of Options and shares shall be subject to compliance with all of the applicable
        requirements of law with respect to the issuance and sale of securities,
        including, without limitation, any required qualification under state
        securities laws. If an Optionee acquires shares of Common Stock pursuant
        to the exercise of an Option, the Plan Administrator, in its sole discretion,
        may require as a condition of issuance of shares covered by the Option
        that the shares of Common Stock be subject to restrictions on transfer.
        The 












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	 	 	 Corporation may place a legend on the share certificates
        reflecting the fact that they are subject to restrictions on transfer
        pursuant to the terms of this Section. In addition, the Optionee may be
        required to execute a buy-sell agreement in favor of the Corporation or
        its designee with respect to all or any of the shares so acquired. In
        such event, the terms of any such agreement shall apply to the optioned
        shares. 

	 
	 	 (9)      	 Investment Representation. Any Optionee may be required,
        as a condition of issuance of shares covered by his or her Option, to
        represent that the shares to be acquired pursuant to exercise will be
        acquired for investment and without a view toward distribution thereof,
        and in such case, the Corporation may place a legend on the share certificate(s)
        evidencing the fact that they were acquired for investment and cannot
        be sold or transferred unless registered under the Securities Act of 1933,
        as amended, or unless counsel for the Corporation is satisfied that the
        circumstances of the proposed transfer do not require such registration.
      

	 
	 	 (10)      	 Rights as a Stockholder or Employee. An Optionee
        or transferee of an Option shall have no right as a stockholder of the
        Corporation with respect to any shares covered by any Option until the
        date of the issuance of a share certificate for such shares. 

	 
	 	 	 No adjustment shall be made for dividends (Ordinary
        or extraordinary, whether cash, securities, or other property), or distributions
        or other rights for which the record date is prior to the date such share
        certificate is issued, except as provided in paragraph (13) below. Nothing
        in the Plan or in any Option agreement shall confer upon any employee
        any right to continue in the employ of the Corporation or any of its subsidiaries
        or interfere in any way with any right of the Corporation or any subsidiary
        to terminate the Optionee's employment at any time. 

	 
	 	 (11)      	 No Fractional Shares. In no event shall the Corporation
        be required to issue fractional shares upon the exercise of an Option.
      

	 
	 	 (12)      	 Exercise in the Event of Death. In the event of
        the death of the Optionee, any Option or unexercised portion thereof granted
        to the Optionee, to the extent exercisable by him or her on the date of
        death, may be exercised by the Optionee's personal representatives, heirs,
        or legatees subject to the provisions of paragraph (4) above. 

	 
	 	 (13)      	 Recapitalization or Reorganization of the Corporation.
        Except as otherwise provided herein, appropriate and proportionate adjustments
        shall be made (1) in the number and class of shares subject to the Plan,
        (2) to the Option rights granted under the Plan, and (3) in the exercise
        price of such Option rights, in the event that the number of shares of
        Common Stock of the Corporation are increased or decreased as a result
        of a stock dividend (but only on Common Stock), stock split, reverse stock
        split, recapitalization, reorganization, merger, consolidation, separation,
        or like change in the corporate or capital structure of the Corporation.
        In the event there shall be any other change in the number or kind of
        the outstanding shares of Common Stock of the Corporation, or any stock
        or other securities into which such common stock shall have been changed,
        or for which it shall have been exchanged, whether by reason of a complete
        liquidation of the Corporation or a merger, reorganization, or consolidation
        with any other corporation in which the Corporation is not the surviving
        corporation, or the Corporation becomes a wholly-owned subsidiary of another
        corporation, then if the Plan Administrator shall, in its sole discretion,
        determine that such change equitably requires an adjustment to shares
        of Common Stock currently subject to Options under the Plan, or to prices
        or terms of 












 7

	 	 	 outstanding Options, such adjustment shall be made
        in accordance with such determination. 

	 
	 	 	 To the extent that the foregoing adjustments relate
        to stock or securities of the Corporation, such adjustment shall be made
        by the Plan Administrator, the determination of which in that respect
        shall be final, binding, and conclusive. No right to purchase fractional
        shares shall result from any adjustment of Options pursuant to this Section.
        In case of any such adjustment, the shares subject to the Option shall
        he rounded down to the nearest whole share. Notice of any adjustment shall
        be given by the Corporation to each Optionee whose Options shall have
        been so adjusted and such adjustment (whether or not notice is given)
        shall be effective and binding for all purposes of the Plan. 

	 
	 	 	 In the event of a complete liquidation of the Corporation
        or a merger, reorganization, or consolidation of the Corporation with
        any other corporation in which the Corporation is not the surviving corporation,
        or the Corporation becomes a wholly-owned subsidiary of another corporation,
        any unexercised Options granted under the Plan shall be deemed cancelled
        unless the surviving corporation in any such merger, reorganization, or
        consolidation elects to assume the Options under the Plan or to issue
        substitute Options in place thereof; provided, however, that notwithstanding
        the foregoing, if such Options would be cancelled in accordance with the
        foregoing, the Optionee shall have the right exercisable during a ten-day
        period ending on the fifth day prior to such liquidation, merger, or consolidation
        to exercise such Option in whole or in part without regard to any installment
        exercise provisions in the Option agreement. 

	 
	 	 (14)      	 Modification, Extension and Renewal of Options.
        Subject to the terms and conditions and within the limitations of the
        Plan, the Plan Administrator may modify, extend or renew outstanding options
        granted under the Plan and accept the surrender of outstanding Options
        (to the extent not theretofore exercised). The Plan Administrator shall
        not, however, without the approval of the Board, modify any outstanding
        Incentive Stock Option in any manner that would cause the Option not to
        qualify as an Incentive Stock Option within the meaning of Section 422
        of the Code. 

	 
	 	 	 Notwithstanding the foregoing, no modification of
        an Option shall, without the consent of the Optionee, alter or impair
        any rights of the Optionee under the Option. 

	 
	 	 (15)      	 Other Provisions. Each Option may contain such other
        terms, provisions, and conditions not inconsistent with the Plan as may
        be determined by the Plan Administrator. 



 8.            TERMINATION
  OR AMENDMENT OF THE PLAN 

 The Board may at any time terminate or amend the Plan; provided
  that, without approval of the holders of a majority of the shares of Common
  Stock of the Corporation represented and voting at a duly held meeting at which
  a quorum is present or the written consent of a majority of the outstanding
  shares of Common Stock, there shall be (except by operation of the provisions
  of paragraph (13) above) no increase in the total number of shares covered by
  the Plan, no change in the class of persons eligible to receive options granted
  under the Plan, no reduction in the limits for determination of the minimum
  exercise price of Options granted under the Plan, and no extension of the limits
  for determination of the latest date upon which Options may be exercised; and
  provided 








 8

 further that, without the consent of the Optionee, no amendment
  may adversely affect any then outstanding Option or any unexercised portion
  thereof. 

 9.           INDEMNIFICATION


 In addition to such other rights of indemnification as they
  may have as members of the Board Committee that administers the Plan, the members
  of the Plan Administrator shall be indemnified by the Corporation against reasonable
  expense, including attorney's fees, actually and necessarily incurred in connection
  with the defense of any action, suit or proceeding, or in connection with any
  appeal therein to which they, or any of them, may be a party by reason of any
  action taken or failure to act under or in connection with the Plan or any Option
  granted thereunder, and against any and all amounts paid by them in settlement
  thereof (provided such settlement is approved by independent legal counsel selected
  by the Corporation). In addition, such members shall be indemnified by the Corporation
  for any amount paid by them in satisfaction of a judgment in any action, suit,
  or proceeding, except in relation to matters as to which it shall have been
  adjudged that such member is liable for negligence or misconduct in the performance
  of his or her duties, provided however that within sixty (60) days after institution
  of any such action, suit, or proceeding, the member shall in writing offer the
  Corporation the opportunity, at its own expense, to handle and defend the same.


 10.           EFFECTIVE
  DATE AND TERM OF THE PLAN 

 This Plan shall become effective (the "Effective Date") on
  the date of adoption by the board of directors. Options granted under the Plan
  prior to stockholder approval are subject to cancellation by the Plan Administrator
  if stockholder approval is not obtained within 12 months of the date of adoption.
  Unless sooner terminated by the Board in its sole discretion, this Plan will
  expire on November 15, 2014. 

 IN WITNESS WHEREOF, the Corporation by its duly authorized
  officer, has caused this Plan to be executed as of the 15th day of
  November, 2004. 


RANCHO SANTA MONICA DEVELOPMENTS INC. 

	/s/ Graham Alexander  	 
	
      By:  	
      Graham Alexander  	 
	 Its:  	 President