exv4w1






Exhibit 4.1




2006 EQUITY INCENTIVE PLAN




     1. Purpose. The purpose of this 2006 Equity Incentive Plan (the “Plan”) is to advance
the interests of Foothills Resources, Inc. (the “Company”) and its Affiliates (as defined below) by
inducing eligible individuals of outstanding ability and potential to join and remain with, or to
provide consulting or advisory services to, the Company or its Affiliates, by encouraging and
enabling eligible employees, Outside Directors (as defined below), consultants, and advisors to
acquire proprietary interests in the Company, and by providing participating eligible employees,
Outside Directors, consultants, and advisors with an additional incentive to promote the success of
the Company. These purposes are accomplished by providing for the granting of Incentive Stock
Options, Nonqualified Stock Options, Reload Options, Stock Appreciation Rights, and Restricted
Stock (all as defined below) to eligible employees, Outside Directors, consultants, and advisors.



     2. Definitions. As used in the Plan, the following terms have the meanings indicated:



          (a) “Affiliate” means a “parent corporation” or a “subsidiary corporation” (as set forth in
Code Sections 424(e) and 424(f), respectively) of the Company.



          (b) “Applicable Withholding Taxes” means the aggregate minimum amount of federal, state,
local, and foreign income, payroll, and other taxes that an Employer is required to withhold in
connection with the grant, vesting, or exercise of any Award.



          (c) “Award” means an Incentive Stock Option, a Nonqualified Stock Option, a Reload Option, a
Stock Appreciation Right, or Restricted Stock.



          (d) “Beneficiary” means the person or entity designated by the Participant, in a form approved
by the Company, to exercise the Participant’s rights with respect to an Award after the
Participant’s death. If the Participant does not validly designate a Beneficiary, or if the
designated person no longer exists, then the Participant’s Beneficiary shall be his or her estate.



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



          (f) “Cause” shall have the same meaning given to such term (or other term of similar meaning)
to any written employment or other similar agreement between the Participant and the Company or an
Affiliate for purposes of termination of employment under such agreement, and in the absence of any
such agreement or if such agreement does not include a definition of “Cause” (or other term of
similar meaning), the term “Cause” shall mean (i) any material breach by the Participant of any
agreement to which the Participant and the Company or an Affiliate are parties, (ii) any continuing
act or omission to act by the Participant which may have a material and adverse effect on the
Company’s business or on the Participant’s ability to perform services for the Company or an
Affiliate, including, without limitation, the commission of any crime (other than minor traffic
violations), or (iii) any material misconduct or material neglect of duties by the Participant in
connection with the business or affairs of the Company or an Affiliate.



 









 





          (g) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any
rulings or regulations promulgated thereunder.



          (h) “Committee” means the Board, the Compensation Committee of the Board, or such other
committee of the Board as the Board appoints to administer the Plan; provided, however, that should
Section 162(m) of the Code and Section 16 of the Securities Exchange Act of 1934 apply to Awards
under the Plan, if any member of the Committee does not qualify as both an “outside director” for
purposes of Code Section 162(m) and a “nonemployee director” for purposes of Rule 16b-3, the
remaining members of the Committee (but not less than two members) shall be constituted as a
subcommittee of the Committee to act as the Committee for purposes of the Plan.



          (i) “Commission” means the U.S. Securities and Exchange Commission.



          (j) “Company” means Foothills Resources, Inc., a Nevada corporation, and its subsidiaries.



          (k) “Company Stock” means common stock, par value $0.001 per share, of the Company. In the
event of a change in the capital structure of the Company affecting the common stock (as provided
in Section 14), the shares resulting from such a change in the common stock shall be deemed to be
Company Stock within the meaning of the Plan.



          (l) “Date of Grant” means the date on which the Committee grants an Award or such future date
as may be determined by the Committee.



          (m) “Disability” means a disability within the meaning of Code Section 22(e)(3).



          (n) “Employer” means the Company and each Affiliate that employs one or more Participants.



          (o) “Exchange Act” means the Securities Exchange Act of 1934, as amended.



          (p) “Fair Market Value” means on any given date the fair market value of Company Stock as of
such date, as determined by the Committee. If the Common Stock is listed on a national securities
exchange or traded on the over-the-counter market, Fair Market Value means the closing selling
price or, if not available, the closing bid price or, if not available, the high bid price of the
Common Stock quoted on such exchange, or on the over-the-counter market as reported by the NASDAQ
Stock Market (“NASDAQ”), or if the Common Stock is not listed on NASDAQ, then by the National
Quotation Bureau, Incorporated, on the day immediately preceding the day on which the Award is
granted or exercised, as the case may be, or, if there is no selling or bid price on that day, the
closing selling price, closing bid price, or high bid price on the most recent day which precedes
that day and for which such prices are available.



          (q) “Incentive Stock Option” means an Option that qualifies for favorable income tax treatment
under Code Section 422.



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          (r) “Mature Shares” means shares of Company Stock for which the shareholder has good title,
free and clear of all liens and encumbrances, and which the shareholder either (i) has held for at
least 6 months or (ii) has purchased on the open market.



          (s) “Nonqualified Stock Option” means an Option that is not an Incentive Stock Option.



          (t) “Option” means a right to purchase Company Stock granted under the Plan, at a price
determined in accordance with the Plan.



          (u) “Outside Director” means a member of the Board who is not an employee of, or a consultant
or advisor to, the Company or an Affiliate as of the Date of Grant.



          (v) “Participant” means any employee, Outside Director, consultant, or advisor (including
independent contractors, professional advisors, and service providers) of the Company or an
Affiliate who receives an Award under the Plan.



          (w) “Restricted Stock” means Company Stock awarded under Section 9 of the Plan.



          (x) “Reload Option” means a reload option grant made in accordance with Section 7 of the Plan.



          (y) “Rule 16b-3” means Rule 16b-3 of the Commission promulgated under the Exchange Act. A
reference in the Plan to Rule 16b-3 shall include a reference to any corresponding rule (or number
redesignation) of any amendments to Rule 16b-3 enacted after the effective date of the Plan’s
adoption.



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



          (aa) “Stock Appreciation Right” means a right to receive amounts awarded under Section 8.



     3. Stock Subject to Section 14 of the Plan, there shall be reserved for issuance under
the Plan an aggregate of 2,000,000 shares of Company Stock, which may be authorized but unissued
shares, or shares held in the Company’s treasury, or shares purchased from stockholders expressly
for use under the Plan. Shares allocable to Awards granted under the Plan that expire, are
forfeited, are cancelled without the delivery of the shares, or otherwise terminate unexercised,
may again be available for Awards under the Plan For purposes of determining the number of shares
that are available for Awards under the Plan, the number shall also include the number of shares
surrendered by a Participant actually or by attestation or retained by the Company in payment of
Applicable Withholding Taxes, and any Mature Shares surrendered by a Participant upon exercise of
an Option or in payment of Applicable Withholding Taxes. Shares issued under the Plan through the
settlement, assumption, or substitution of outstanding awards or obligations to grant future awards
as a condition of an Employer acquiring another entity shall not reduce the maximum number of
shares available for delivery under the Plan.



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     4. Eligibility. Subject to the terms of the Plan, the Committee shall have the power
and complete discretion, as provided in Section 13, to select eligible employees, Outside
Directors, consultants, and advisors to receive an Award under the Plan; provided, however, that
any Award shall be subject to the following terms and conditions:



          (a) Only those individuals who are employees (including officers) of the Company or an
Affiliate at the Date of Grant shall be eligible to receive an Incentive Stock Option under the
Plan.



          (b) All employees (including officers) and Outside Directors of, or consultants and advisors
to, either the Company or an Affiliate at the Date of Grant shall be eligible to receive
Nonqualified Stock Options, Stock Appreciation Rights, and Restricted Stock; provided, however,
that Nonqualified Stock Options, Stock Appreciation Rights, and Restricted Stock may not be granted
to any’ such consultants and advisors unless (i) bona fide services have been or are to be rendered
by such consultant or advisor and (ii) such services are not m connection with the offer or sale of
securities in a capital raising transaction.



          (c) Anything herein to the contrary notwithstanding, any recipient of an Award under the Plan
must be includable in the definition of “employee” provided in the general instructions to Form S-8
Registration Statement under the Securities Act.



          (d) The grant of an Award shall not obligate an Employer to pay any employee, Outside
Director, consultant, or advisor any particular amount of remuneration, to continue the employment
of the employee or engagement of the Outside Director, consultant, or advisor after the grant, or
to make further grants to the employee, Outside Director, consultant, or advisor at any time
thereafter.



     5. Stock Options.



          (a) The Committee may make grants of Options to Participants. Except as otherwise provided
herein, the Committee shall determine the number of shares for which Options are granted, the
Option exercise price per share, whether the Options are Incentive Stock Options or Nonqualified
Stock Options, and any other terms and conditions to which the Options are subject.



          (b) The exercise price of shares of Company Stock covered by an Option shall be not less than
100 percent of the Fair Market Value of Company Stock on the Date of Grant Except as provided in
Section 14, (i) the exercise price of an Option may not be decreased after the Date of Grant and
(ii) a Participant may not surrender an Option in consideration for the grant of a new Option with
a lower exercise price or another Award. If a Participant’s Option is cancelled before its
termination date, the Participant may not receive another Option within 6 months of the
cancellation unless the exercise price of such Option is no less than the exercise price of the
cancelled Option.



          (c) All Options granted hereunder shall be subject to the following terms and conditions.



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               (i) All Options shall be evidenced by a written stock option agreement (the “Stock Option
Agreement”) setting forth all the relevant terms of the Award.



               (ii) No Option shall be exercisable more than 10 years after the Date of Grant.



               (iii) The aggregate Fair Market Value, determined at the Date of Grant, of shares for which
Incentive Stock Options become exercisable by a Participant during any calendar year shall not
exceed $100,000



               (iv) If an Incentive Stock Option is granted to an employee who owns, at the Date of Grant,
more than 10 percent of the total combined voting power of all classes of stock of the Company or
an Affiliate, then (A) the option price of the shares subject to the Incentive Stock Option shall
be at least 110% of the Fair Market Value of the Company Stock at the Date of Grant and (B) such
Incentive Stock Option shall not be exercisable after the expiration of 5 years from the Date of
Grant.



               (v) If the employment of an employee by, or the services of an Outside Director for, or
consultant or advisor to, the Company or an Affiliate should be terminated for Cause or terminated
voluntarily by the grantee, then any outstanding Option shall terminate immediately. If such
employment or services terminates for any other reason, unless otherwise provided in a written
employment, consulting or other related agreement executed between the Company and the employee,
Outside Director or consultant or advisor, any such Option exercisable as of the date of
termination may be exercised at any time within 3 months of termination. For purposes of this
subsection, (A) the retirement of an individual either pursuant to a pension or retirement plan
maintained by the Company or an Affiliate or at the applicable normal retirement date prescribed
from time to time by the Company shall be deemed to be termination of the individual’s employment
other than voluntarily or for Cause, and (B) an individual who leaves the employ or services of the
Company or an Affiliate to become an employee or Outside Director of, or a consultant or advisor
to, an entity that has assumed the Option as a result of a corporate reorganization or the like
shall not be considered to have terminated employment or services.



               (vi) If the holder of an Option under the Plan ceases employment or services because of
Disability while employed by, or while serving as an Outside Director for or a consultant or
advisor to, the Company or an Affiliate, then such Option may, subject to the provisions of
subsection (viii) below and the provisions of any effective written employment, consulting or other
related agreement executed between the Company and the employee, Outside Director or consultant or
advisor, be exercised at any time within 1 year after the termination of employment or services due
to the Disability.



               (vii) If the holder of an Option under the Plan dies (A) while employed by, or while serving
as an Outside Director for or a consultant or advisor to, the Company or an Affiliate, or (B)
within 3 months after the termination of employment or services other than voluntarily by the
grantee or for Cause, then such Option may, subject to the provisions of subsection (viii) below
and the provisions of any effective written employment, consulting or other related agreement
executed between the Company and the employee, Outside Director or



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consultant or advisor,, be exercised by the Participant’s Beneficiary at any time within 1
year after the Participant’s death.



               (viii) An Option may not be exercised after termination of employment, termination of
directorship, termination of consulting or advisory services, Disability or death except to the
extent that the bolder was entitled to exercise the Option at the time of such termination or as
otherwise provided in a currently effective written employment, consulting or other related
agreement executed between the Company and the employee, Outside Director or consultant or advisor,
and in any event may not be exercised after the expiration of the Option in accordance with the
terms of the grant.



               (ix) The employment relationship of an employee of the Company or an Affiliate shall be
treated as continuing intact while the employee is on military or sick leave or other bona fide
leave of absence if such leave does not exceed 90 days or, if longer, so long as the employee’s
right to reemployment is guaranteed either by statute or by contract.



          (d) The holder of any Option granted under the Plan shall have none of the rights of a
stockholder with respect to the shares covered by the Option until such stock shall be transferred
to the holder upon the exercise of the Option.



     6. Grants to Outside Directors. Awards, other than Incentive Stock Options, may be
made to Outside Directors. The Committee shall have the power and complete discretion to select
Outside Directors to receive Awards. The Committee shall have the complete discretion, under
provisions consistent with Section 13, to determine the terms and conditions, the nature of the
Award and the number of shares to be allocated as part of each Award for each Outside Director.
The grant of an Award shall not obligate the Company to make further grants to the Outside Director
at any time thereafter or to retain any person as a director for any period of time.



     7. Reload Options. The Committee may grant Options with a reload feature. A reload
feature shall only apply when the exercise price is paid by delivery of Company Stock in accordance
with Section 10. The Stock Option Agreement for the Option containing the reload feature shall
provide that the holder of the Option shall receive, contemporaneously with the payment of the
exercise price in shares of Common Stock, a Reload Option to purchase that number of shares of
Company Stock equal to the sum of (i) the number of shares used to exercise the Option, and (ii)
with respect to Nonqualified Stock Options, the number of shares used to satisfy Applicable
Withholding Taxes. The terms of the Plan applicable to the Option shall be equally applicable to
the Reload Option with the following exceptions: (i) the option price per share of Company Stock
deliverable upon the exercise of the Reload Option (A) in the case of a Reload Option that is an
Incentive Stock Option being granted to a Participant who owns more than 10 percent of the total
combined voting power of all classes of stock of the Company or an Affiliate, shall be 1l0% of the
Fair Market Value of a share of Company Stock on the Date of Grant of the Reload Option, and (B) in
the case of a Reload Option which is an Incentive Stock Option being granted to any other
Participant, or which is a Nonqualified Stock Option, shall be the Fair Market Value of a share of
Company Stock on the Date of Grant of the Reload Option; and (ii) the term of the Reload Option
shall be evidenced by an appropriate amendment to the Stock Option Agreement for the Option which
gave rise to the Reload Option. If the exercise



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price of an Option containing a reload feature is paid in cash and not in shares of Company
Stock, the reload feature shall have no application with respect to such exercise.



     8. Stock Appreciation Rights. Concurrently with, or subsequent to, the award of any
Option to purchase one or more shares of Common Stock, the Committee may, in its sole discretion,
award to the optionee with respect to each share of Common Stock covered by an Option a related
Stock Appreciation Right, which permits the optionee to be paid the appreciation on the related
Option in lieu of exercising the Option. The Committee shall establish as to each award of Stock
Appreciation Rights the terms and conditions to which the Stock Appreciation Rights are subject,
provided, however, that the following terms and conditions shall apply to all Stock Appreciation
Rights:



          (a) A Stock Appreciation Right granted with respect to an Incentive Stock Option must be
granted together with the related Option. A Stock Appreciation Right granted with respect to a
Nonqualified Stock Option may be granted together with, or subsequent to, the grant of the related
Option.



          (b) A Stock Appreciation Right shall entitle the Participant, upon exercise of the Stock
Appreciation Right, to receive in exchange an amount equal to the excess of (i) the Fair Market
Value on the date of exercise of Company Stock covered by the surrendered Stock Appreciation Right
over (ii) the Fair Market Value of Company Stock on the Date of Grant of the Stock Appreciation
Right. The Committee may limit the amount that the Participant will be entitled to receive upon
exercise of a Stock Appreciation Right.



          (c) A Stock Appreciation Right may be exercised only if and to the extent the underlying
Option is exercisable, and a Stock Appreciation Right may not be exercisable in any event more than
10 years after the Date of Grant.



          (d) A Stock Appreciation Right may only be exercised at a time when the Fair Market Value of
Company Stock covered by the Stock Appreciation Right exceeds the Fair Market Value of Company
Stock on the Date of Grant of the Stock Appreciation Right. The Stock Appreciation Right may
provide for payment in Company Stock or cash, or a fixed combination of Company Stock and cash, or
the Committee may reserve the right to determine the manner of payment at the time the Stock
Appreciation Right is exercised.



          (e) To the extent a Stock Appreciation Right is exercised, the underlying Option shall be
cancelled, and the shares of Company Stock represented by the Option shall no longer be available
for Awards under the Plan.



     9. Restricted Stock Awards.



          (a) The Committee may make grants of Restricted Stock to a Participant. The Committee shall
establish as to each award of Restricted Stock the terms and conditions to which the Restricted
Stock is subject, including the period of time before which all restrictions shall lapse and the
Participant shall have full ownership of the Company Stock The Committee in its discretion may
award Restricted Stock without cash consideration. All Restricted Stock Awards shall be evidenced
by a Restricted Stock Agreement setting forth all the relevant terms of the Award.



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          (b) Restricted Stock may not be sold, assigned, transferred, pledged, hypothecated, or
otherwise encumbered or disposed of until the restrictions have lapsed or been removed.
Certificates representing Restricted Stock shall be held by the Company until the restrictions
lapse, and the Participant shall provide the Company with appropriate stock powers endorsed in
blank.



     10. Method of Exercise of Options.



          (a) Options may be exercised by the Participant (or his or her legal guardian or personal
representative) by giving written notice of the exercise to the Company at its principal office
(attention of the Corporate Secretary) pursuant to procedures established by the Company. The
notice shall state the number of shares the Participant has elected to purchase under the Option.
Such notice shall be accompanied, or followed within 10 days of delivery thereof, by payment of the
full exercise price of such shares The exercise price may be paid in cash by means of a check
payable to the order of the Company or, if the terms of an Option permit, (i) by delivery or
attestation of Mature Shares (valued at their Fair Market Value) in satisfaction of all or any part
of the exercise price, (ii) by delivery of a properly executed exercise notice with irrevocable
instructions to a broker to deliver to the Company the amount necessary to pay the exercise price
from the sale or proceeds of a loan from the broker w the respect to the sale of Company Stock or a
broker loan secured by the Company Stock, or (iii) a combination of (i) and (ii)



          (b) (Unless prior to the exercise of the Option the shares issuable upon such exercise have
been registered with the Securities and Exchange Commission pursuant to the Securities Act of 1933,
the notice of exercise shall be accompanied by a representation or agreement of the individual or
entity exercising the Option to the Company to the effect that such shares are being acquired for
investment purposes and not with a view to the distribution thereof, and such other documentation
as may be required by the Company, unless in the opinion of counsel to the Company such
representation, agreement or documentation is not necessary to comply with any such act.



          (c) The Company shall not be obligated to deliver any Company Stock until the shares have been
listed on each securities exchange or market on which the Company Stock may then be listed or until
there has been qualification under or compliance with such federal or state laws, rules or
regulations as the Company may deem applicable. The Company shall use reasonable efforts to obtain
such listing, qualification and compliance.



     11. Tax Withholding. Each Participant shall agree as a condition of receiving an
Award payable in the form of Company Stock to pay to the Employer, or make an arrangement
satisfactory to the Employer regarding the payment to the Employer of, Applicable Withholding
Taxes. Under procedures established by the Committee or its delegate, a Participant may elect to
satisfy Applicable Withholding Taxes by (i) making a cash payment or authorizing additional
withholding from cash compensation, (ii) delivering Mature Shares (valued at their Fair Market
Value), or (iii) if the applicable Stock Option Agreement or Restricted Stock Agreement permits,
having the Company retain that number of shares of Company Stock (valued at their Fair Market
Value) that would satisfy all or a specified portion of the Applicable Withholding Taxes.



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     12. Transferability of Awards. Awards shall not be transferable except by will or by
the laws of descent and distribution.



     13. Administration of the Plan.



          (a) The Committee shall administer the Plan. Subject to the terms and conditions set forth in
the Plan, the Committee shall have general authority to impose any term, limitation, or condition
upon an Award that the Committee deems appropriate to achieve the objectives of the Award and of
the Plan. The Committee may adopt rules and regulations for carrying out the Plan with respect to
Participants and Beneficiaries. The interpretation and construction of any provision of the Plan
by the Committee shall be final and conclusive as to any Participant or Beneficiary.



          (b) The Committee shall have the power to amend the terms and conditions of previously granted
Awards so long as the terms as amended are consistent with the terms of the Plan and provided that
the consent of the Participant is obtained with respect to any amendment that would be detrimental
to him or her, except that such consent will not be required if such amendment is for the purpose
of complying with Rule 16b-3 or any requirement of the Code or of other securities laws applicable
to the Award.



          (c) The Committee shall have the power and complete discretion (t) to delegate to any
Individual, or to any group of individuals employed by the Company or any Affiliate, the authority
to grant Awards under the Plan and (ii) to determine the terms and limitations of any delegation of
authority; provided, however, that the Committee may not delegate power and discretion to the
extent such action would cause noncompliance with, or the imposition of penalties, excise taxes, or
other sanctions under, applicable corporate law, Rule 16b-3, Code Section 162(m) or 409A, or any
other applicable securities or tax law.



          (d) If a Participant or former Participant (A) becomes associated with, recruits or solicits
customers or other employees of the Company or an Affiliate, is employed by, renders services to,
or owns any interest in (other than any nonsubstantial interest, as determined by the Committee)
any business that is in competition with the Company or any of its Affiliates, or (B) engages in,
or has engaged in, conduct which the Committee determines to be detrimental to the interests of the
Company or any of its Affiliates, the Committee may, in its sole discretion,



               (i) cancel all outstanding Awards, including immediately terminating any Options held by the
Participant, regardless of whether then exercisable,



               (ii) require the Participant or former Participant to repay any payment or benefit received
under an Award within the previous 2 years, and/or



               (iii) offset any other amounts owed to the Participant by any payment received under an Award
within the previous 2 years.



     14. Change in Capital Structure.



          (a) In the event of a stock dividend, stock split, or combination of shares, share exchange,
share distribution, recapitalization or merger in which the Company is the surviving



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corporation, a spin-off or split-off of a subsidiary or Affiliate, or other change in the
Company’s capital stock (including, but not limited to, the creation or issuance to shareholders
generally of rights, options, or warrants for the purchase of common stock or preferred stock of
the Company), the aggregate number and kind of shares of stock or securities of the Company to be
subject to the Plan and to Awards then outstanding or to be granted, the maximum number of shares
or securities which may be delivered under the Plan under Sections 3(a), 3(b), or 9, the per share
exercise price of Options, the terms of Awards, and other relevant provisions shall be
proportionately and appropriately adjusted by the Committee in its discretion, and the
determination of the Committee shall be binding on all persons. If the adjustment would produce
fractional shares with respect to any unexercised Option, the Committee may adjust appropriately
and in a nondiscriminatory manner the number of shares covered by the Option so as to eliminate the
fractional shares.



          (b) If the Company is a party to a consolidation or a merger in which the Company is not the
surviving corporation, a transaction that results in the acquisition of substantially all of the
Company’s outstanding stock by a single person or entity, or a sale or transfer of substantially
all of the Company’s assets, the Committee may take such actions with respect to outstanding Awards
as the Committee deems appropriate.



     15. Effective Date. The effective date of the Plan is April 4, 2006. The Plan shall
be submitted to the shareholders of the Company for approval. Until (i) the Plan has been approved
by the Company’s shareholders, and (ii) the requirements of any applicable federal or state
securities laws have been met, no Restricted Stock shall be awarded, and no Option shall be granted
or exercisable, that is not contingent on these events.



     16. Termination, Modification. If not sooner terminated by the Board, this Plan shall
terminate at the close of business on April 4, 2016. No Awards shall be made under the Plan after
its termination. The Board may amend or terminate the Plan as it shall deem advisable; provided,
however, that no change shall be made that increases the total number of shares of Company Stock
reserved for issuance pursuant to Awards granted under the Plan (except pursuant to Section 14), or
reduces the minimum exercise price for Options, or exchanges an Option for another Award, unless
such change is authorized by the shareholders of the Company. Except as otherwise specifically
provided herein, a termination or amendment of the Plan shall not, without the consent of the
Participant, adversely affect a Participant’s rights under an Award previously granted to him or
her.



     17. American Jobs Creation Act of 2004.



          (a) It is intended that the Plan comply in all applicable respects with the American Jobs
Creation Act of 2004 and Code Section 409A, as either may be amended from time to time, and any
rulings, regulations, or other guidelines promulgated under either or both statutes (such statutes,
rulings, regulations and other guidelines to be referred to collectively herein as “Section 409A”),
This Plan, and any amendments thereto, shall therefore be interpreted and implemented at all times
so as to (i) ensure compliance with Section 409A and (ii) avoid any penalty or early taxation of
any payment or benefit under the Plan.



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          (b) Anything herein to the contrary notwithstanding, the Board shall approve and implement
such amendments as it deems necessary or desirable to ensure compliance with Section 409A and to
avoid any penalty or early taxation of any payment or benefit under this Plan; provided, however,
that no change shall be made that increases the total number of shares of Company Stock reserved
for issuance pursuant to Awards granted under the Plan (except pursuant to Section 14), or reduces
the minimum exercise price for Options, or exchanges an Option for another Award, unless such
change is authorized by the shareholders of the Company. No such amendment shall require the
consent of any Participant.



     18. Interpretation and Venue. Except to the extent preempted by applicable federal
law, the terms of this Plan shall be governed by the laws of the State of Nevada without regard to
its conflict of laws rules.




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