Unassociated Document


    TELEGEN
      CORPORATION

    


    2007
      STOCK INCENTIVE PLAN

    


    


    SECTION
      1. PURPOSE

    


    The
      purpose of this 2007 Stock Incentive Plan (the “Plan”)
      is to
      enhance the long-term stockholder value of Telegen Corporation, a California
      corporation (the “Company”),
      by
      offering opportunities to employees, directors, officers, consultants, agents,
      advisors and independent contractors of the Company and its Subsidiaries (as
      defined in Section 2) to participate in the Company’s growth and success, and to
      encourage them to remain in the service of the Company and its Subsidiaries
      and
      to acquire and maintain stock ownership in the Company.

    


    SECTION
      2. DEFINITIONS

    


    For
      purposes of the Plan, the following terms shall be defined as set forth
      below:

    


        
      “Award”
means
      an award or grant made pursuant to the Plan, including, without limitation,
      awards or grants of Options and Stock Awards, or any combination of the
      foregoing.

    


     “Board”
means
      the Board of Directors of the Company.

    


        
      “Cause”
means
      dishonesty, fraud, misconduct, unauthorized use or disclosure of confidential
      information, trade secrets or other intellectual property, or conviction or
      confession (including a plea of no contest) of a crime punishable by law (except
      minor violations), or conduct that adversely affects the Company’s business or
      reputation, in each case as determined by the Plan Administrator in its sole
      discretion, and its determination as to whether an action constitutes Cause
      shall be conclusive and binding.

    


    “Code”
means
      the Internal Revenue Code of 1986, as amended from time to time.

    


    “Common
      Stock”
means
      the Company common stock, no par value per share.

    


    “Corporate
      Transaction”
means
      any of the following events:

    


    (a)     Consummation
      of any merger or consolidation of the Company in which the Company is not the
      continuing or surviving corporation, or pursuant to which shares of the Common
      Stock are converted into cash, securities or other property, if following such
      merger or consolidation the holders of the Company’s outstanding voting
      securities immediately prior to such merger or consolidation own less than
      50%
      of the outstanding voting securities of the surviving corporation;

    


    (b)     Consummation
      of any sale, lease, exchange or other transfer in one transaction or a series
      of
      related transactions of all or substantially all of the Company’s assets other
      than a transfer of the Company’s assets to a majority-owned subsidiary
      corporation of the Company; or

    


    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    (c)     Approval
      by the holders of the Common Stock of any plan or proposal for the liquidation
      or dissolution of the Company.

    


    Ownership
      of voting securities shall take into account and shall include ownership as
      determined by applying Rule 13d-3(d)(1)(i) (as in effect on the date of adoption
      of the Plan) under the Exchange Act.

    


    “Disability”
means
      “disability” as that term is defined for purposes of Section 22(e)(3) of the
      Code. As of the date of adoption of this Plan, such terms means the inability
      to
      engage in any substantial gainful activity by reason of any medically
      determinable mental or physical impairment which can be expected to result
      in
      death or which has lasted or can be expected to last for a continuous period
      of
      not less than 12 months.

    


    “Employee”
means
      any person, including officers and directors, employed by the Company (or one
      of
      its parent corporations or subsidiary corporations), with the status of
      employment determined based upon such minimum number of hours or periods worked
      as shall be determined by the Plan Administrator in its discretion, subject
      to
      any requirements of the Code. For purposes of this provision, “parent
      corporation” and “subsidiary corporation” shall have the meanings attributed to
      those terms for purposes of Section 422 of the Code.

    


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

    


        “Fair
      Market Value”
shall
      be the fair market value of the Common Stock, as of any date, as determined
      by
      the Plan Administrator as follows:

    


    (a)     if
      the
      Common Stock is listed on any established stock exchange or a national market
      system, or quoted on a quotation system, including the OTC Bulletin Board,
      the
      Fair Market Value shall be the closing sales price for such stock (or if no
      sales were reported, the closing sales price on the date of determination,
      as
      quoted on such system or exchange, or the system or exchange with the greatest
      volume of trading in Common Stock, on the date of determination, as reported
      in
      The Wall Street Journal or such other source as the Plan Administrator deems
      reliable; or

    


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

    


    “Grant
      Date”
means
      the date the Plan Administrator adopted the granting resolution or a later
      date
      designated in a resolution of the Plan Administrator as the date an Award is
      to
      be granted.

    


    “Holder”
means
      (a) the person to whom an Award is granted, (b) for a Holder who has
      died, the personal representative of the Holder’s estate, the person(s) to whom
      the Holder’s rights under the Award have passed by will or by the applicable
      laws of descent and distribution, or the beneficiary designated in accordance
      with Section 10, or (c) the person(s) to whom an Award has been transferred
      in accordance with Section 10.

    


    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    “Incentive
      Stock Option”
means
      an Option to purchase Common Stock granted under Section 7 with the intention
      that it qualify as an “incentive stock option” as that term is defined in
      Section 422 of the Code.

    


    “Nonqualified
      Stock Option”
means
      an Option to purchase Common Stock granted under Section 7 other than an
      Incentive Stock Option.

    


    “Option”
means
      the right to purchase Common Stock granted under Section 7.

    


    “Plan
      Administrator”
means
      the Board or any committee of the Board designated to administer the Plan under
      Section 3.1.

    


    “Restricted
      Stock”
means
      shares of Common Stock granted under Section 9, the rights of ownership of
      which
      are subject to restrictions prescribed by the Plan Administrator.

    


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

     

    “Stock
      Award”
means
      an Award granted under Section 9.

     

    “Subsidiary”
means
      any entity that is directly or indirectly controlled by the Company or in which
      the Company has a significant ownership interest, as determined by the Plan
      Administrator, and any entity that may become a direct or indirect parent of
      the
      Company.

    


    “Successor
      Corporation”
has
      the
      meaning set forth under Section 11.2.

    


    SECTION
      3. ADMINISTRATION

    


    3.1     Plan
      Administrator.
      The
      Plan shall be administered by the Board, or a committee or committees (which
      term includes subcommittees) appointed by, and consisting of two or more members
      of, the Board. For so long as the Common Stock is registered under Section
      12(b)
      or 12(g) of the Exchange Act, the Board shall consider in selecting the Plan
      Administrator and the membership of any committee acting as Plan Administrator,
      with respect to any persons subject or likely to become subject to Section
      16 of
      the Exchange Act, the provisions regarding (a) “outside directors” as
      contemplated by Section 162(m) of the Code, (b) “nonemployee directors” as
      contemplated by Rule 16b-3 under the Exchange Act, and (c) any requirements
      as to “independent directors” pursuant to rules of any securities exchange on
      which the Common Stock is quoted or listed for trading. The Board may delegate
      the responsibility for administering the Plan with respect to designated classes
      of eligible persons to different committees consisting of two or more members
      of
      the Board, subject to such limitations as the Board deems appropriate. Committee
      members shall serve for such term as the Board may determine, subject to removal
      by the Board at any time.

    


    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    3.2     Administration
      and Interpretation by the Plan Administrator.
      Except
      for the terms and conditions explicitly set forth in the Plan, the Plan
      Administrator shall have exclusive authority, in its discretion, to determine
      all matters relating to Awards under the Plan, including the selection of
      individuals to be granted Awards, the type of Awards, the number of shares
      of
      Common Stock subject to an Award, all terms, conditions, restrictions and
      limitations, if any, of an Award and the terms of any document, agreement or
      instrument that evidences the Award. The Plan Administrator shall also have
      exclusive authority to interpret the Plan and may from time to time adopt,
      and
      change, rules and regulations of general application for the Plan’s
      administration. The Plan Administrator’s interpretation of the Plan and its
      rules and regulations, and all actions taken and determinations made by the
      Plan
      Administrator pursuant to the Plan, shall be conclusive and binding on all
      parties involved or affected. The Plan Administrator may delegate administrative
      duties to such of the Company’s officers as it so determines.

    


    3.3     Replacement
      of Options.
      Without
      limiting the authority granted to the Plan Administrator under Section 3.2,
      the
      Plan Administrator, in its sole discretion, shall have the authority, among
      other things, to (a) grant Options subject to the condition that Options
      previously granted at a higher or lower exercise price under the Plan be
      canceled or exchanged in connection with such grant (the number of shares
      covered by the new Options, the exercise price, the term and the other terms
      and
      conditions of the new Option, shall be determined in accordance with the Plan
      and may be different from the provisions of the canceled or exchanged Options),
      and (b) amend or modify outstanding and unexercised Options, with the
      consent of the Holder, to, among other things, reduce the exercise price per
      share, establish the exercise price at the then-current Fair Market Value or
      accelerate or defer the exercise date, vesting schedule or expiration date
      of
      any Option.

    


    SECTION
      4. STOCK SUBJECT TO THE PLAN

    


    4.1     Authorized
      Number of Shares.
      Subject
      to adjustment from time to time as provided in Section 11.1, a maximum of
      10,000,000 (ten million) shares of Common Stock shall be available for issuance
      under the Plan. Shares issued under the Plan shall be drawn from authorized
      and
      unissued shares or shares now held or subsequently acquired by the
      Company.

    


    4.2     Reuse
      of Shares.
      Any
      shares of Common Stock that have been made subject to an Award that cease to
      be
      subject to the Award (other than by reason of exercise or payment of the Award
      to the extent it is exercised for or settled in shares) shall again be available
      for issuance in connection with future grants of Awards under the
      Plan.

    


    SECTION
      5. ELIGIBILITY

    


    Awards
      may be granted under the Plan to those Employees, officers and directors of
      the
      Company and its Subsidiaries as the Plan Administrator from time to time
      selects. Awards may also be made to consultants, agents, advisors and
      independent contractors who provide services to the Company and its
      Subsidiaries, as the Plan Administrator from time to time selects. In granting
      Awards to consultants, agents, advisors and independent contractors, the Plan
      Administrator shall give consideration to the requirements set forth in the
      instructions to the use of Form S-8 registration statement under the Securities
      Act. A member of the Board may be eligible to participate in or receive or
      hold
      Awards under this Plan; provided, however, that no member of the Board shall
      vote with respect to the granting of an Award to himself or
      herself.

    


    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    SECTION
      6. AWARDS

    


    6.1     Form
      and Grant of Awards.
      The
      Plan Administrator shall have the authority, in its sole discretion, to
      determine the type or types of Awards to be made under the Plan. Such Awards
      may
      include, but are not limited to, Incentive Stock Options, Nonqualified Stock
      Options and Stock Awards. Awards may be granted singly or in combination. An
      eligible person may receive one or more grants of Awards as the Plan
      Administrator shall from time to time determine, and such determinations may
      be
      different as to different Holders and may vary as to different grants, even
      when
      made simultaneously.

    


    6.2     Number
      of Shares.
      The
      maximum number of shares that may be issued pursuant to the grant of an Award
      shall be as established by the Plan Administrator. Provided, however, to the
      extent required for compliance with the exclusion from the limitation on
      deductibility of compensation under Section 162(m) of the Code, the Plan
      Administrator shall not grant Awards to any person in any one fiscal year of
      the
      Company in an amount that exceeds, in the aggregate, 1,000,000 (One Million)
      shares of Common Stock (subject to adjustment as provided in Section
      11).

    


    6.3     Acquired
      Company Awards.
      Notwithstanding anything in the Plan to the contrary, the Plan Administrator
      may
      grant Awards under the Plan in substitution for awards issued under other plans,
      or assume under the Plan awards issued under other plans, if the other plans
      are
      or were plans of other acquired entities (“Acquired
      Entities”)
      (or
      the parent of the Acquired Entity) and the new Award is substituted, or the
      old
      award is assumed, by reason of a merger, consolidation, acquisition of property
      or of stock, reorganization or liquidation (the “Acquisition
      Transaction”).
      In
      the event that a written agreement pursuant to which the Acquisition Transaction
      is completed is approved by the Board and said agreement sets forth the terms
      and conditions of the substitution for or assumption of outstanding awards
      of
      the Acquired Entity, said terms and conditions shall be deemed to be the action
      of the Plan Administrator without any further action by the Plan Administrator,
      except as may be required for compliance with Rule 16b-3 under the Exchange
      Act,
      and the persons holding such Awards shall be deemed to be Holders.

    


    SECTION
      7. AWARDS OF OPTIONS

    


    7.1     Grant
      of Options.
      The
      Plan Administrator is authorized under the Plan, in its sole discretion, to
      issue Options as Incentive Stock Options or as Nonqualified Stock Options,
      which
      shall be appropriately designated.

    


    7.2     Option
      Exercise Price.
      The
      exercise price for shares purchased under an Option shall be as determined
      by
      the Plan Administrator, but shall not be less than 100% of the Fair Market
      Value
      of the Common Stock on the Grant Date.

    


    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    7.3     Term
      of Options.
      The
      term of each Option shall be as established by the Plan Administrator or, if
      not
      so established, shall be 10 years from the Grant Date.

    


    7.4     Vesting
      / Exercisability of Options.
      The
      Plan Administrator shall establish and set forth in each agreement that
      evidences an Option the time at which or the installments in which, if any,
      the
      Option shall vest and become exercisable. In the absence of a defined vesting
      schedule in the agreement evidencing the Option, the Option covered by such
      agreement will vest and become exercisable ratably over 36 (thirty-six) months
      from the date of grant. The Plan Administrator, in its absolute discretion,
      may
      waive or accelerate any vesting requirement contained in outstanding and
      unexercised Options.

    


    7.5     Exercise
      of Options.
      Options
      shall be exercised in accordance with the following terms and
      conditions:

    


    (a)     Procedure.
      To the
      extent that an Option has vested and is currently exercisable, an Option may
      be
      exercised from time to time by written notice to the Company, in accordance
      with
      procedures established by the Plan Administrator, setting forth the number
      of
      shares with respect to which the Option is being exercised and accompanied
      by
      payment in full of the exercise price. The Plan Administrator may determine
      at
      any time that an Option may not be exercised as to less than 100 shares at
      any
      one time (or the lesser number of remaining shares covered by the Option).
      Only
      whole shares shall be issued pursuant to the exercise of any
      Option.

    


    (b)     Payment
      of Exercise Price.

    


    (1)     The
      exercise price for shares purchased under an Option shall be paid in full to
      the
      Company by delivery of consideration equal to the product of the Option exercise
      price and the number of shares being purchased. Such consideration must be
      paid
      in any combination of cash and/or bank-certified or cashier’s check (or personal
      check if determined acceptable by the Plan Administrator in its sole
      discretion), either at the time the Option is granted or within three days
      after
      notice of exercise is tendered to the Company.

    


    (2)     In
      addition, to the extent permitted by the Plan Administrator in its sole
      discretion, the exercise price for shares purchased under an Option may be
      paid,
      either singly or in combination with one or more of the alternative forms of
      payment authorized by this Section 7.5, by (y) delivery of a full-recourse
      promissory note or (z) such other consideration as the Plan Administrator
      may permit. The terms of any such promissory note, including the interest rate,
      terms of and security for repayment, and maturity, will be subject to the Plan
      Administrator’s discretion. Any such promissory note shall bear interest at a
      rate specified by the Plan Administrator but in no case less than the rate
      required to avoid imputation of interest (taking into account any exceptions
      to
      the imputed interest rules) for federal income tax purposes.

    


    (3)     For
      so
      long as the Common Stock is registered under Section 12 of the Exchange Act,
      then, to the extent permitted by applicable laws and regulations (including,
      but
      not limited to, federal tax and securities laws and regulations) and unless
      the
      Plan Administrator determines otherwise, an Option also may be exercised by
      (a) delivery of shares of Common Stock (which shares, if tendered by an
      affiliate of the Company, shall have been held by the Holder for at least six
      months) having a Fair Market Value equal to the aggregate exercise price (such
      payment in stock may occur in the context of a single exercise of an option
      or
      successive and simultaneous exercises, sometimes referred to as “pyramiding,”
which provides that, rather than physically exchanging certificates for a series
      of exercises, bookkeeping entries will be made pursuant to which the Holder
      is
      permitted to retain his existing stock certificate and a new stock certificate
      is issued for the net shares), or (b) delivery of a properly executed
      exercise notice together with irrevocable instructions to (i) a brokerage
      firm acceptable to the Company to deliver promptly to the Company the aggregate
      amount of sale or loan proceeds to pay the Option exercise price and any
      withholding tax obligations that may arise in connection with such exercise,
      and
      (ii) the Company to deliver the certificates for such purchased shares
      directly to such brokerage firm, all in accordance with the requirements of
      the
      Federal Reserve Board.

    


    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    7.6     Rights
      as Stockholder.
      Until
      the issuance (as evidenced by the appropriate entry on the books of the Company
      or of a duly authorized transfer agent of the Company) of the stock certificate
      evidencing such shares, no right to vote or receive dividends or any other
      rights as a stockholder shall exist with respect to shares of Common Stock
      acquired on exercise of an Option, notwithstanding the exercise of the Option.
      The Company shall issue (or cause to be issued) such stock certificate promptly
      upon proper exercise of the Option and payment in full of the aggregate exercise
      price. In the event that the exercise of an Option is treated in part as the
      exercise of a Nonqualified Stock Option (pursuant to the provisions of Section
      8.1), the Company shall issue a stock certificate evidencing the shares treated
      as acquired upon the exercise of an Incentive Stock Option and a separate stock
      certificate evidencing the shares treated as acquired upon the exercise of
      a
      Nonqualified Stock Option, and shall identify each such certificate accordingly
      in its stock transfer records. No adjustment will be made for a dividend or
      other right for which the record date is prior to the date the stock certificate
      is issued, except as provided in Section 11 of this Plan.

    


    7.7     Post-Termination
      Exercises.
      The
      Plan Administrator shall establish and set forth in each agreement that
      evidences an Option whether the Option will continue to be exercisable, and
      the
      terms and conditions of such exercise, if a Holder ceases to be employed by,
      or
      to provide services to, the Company or its Subsidiaries, which provisions may
      be
      waived or modified by the Plan Administrator at any time. If not so established
      in the instrument evidencing the Option, the Option will be exercisable
      according to the following terms and conditions, which may be waived or modified
      by the Plan Administrator at any time.

    


    (a)     Termination
      other than Death, Disability or Cause.
      In case
      of termination of the Holder’s employment or services other than by reason of
      death, Disability or Cause, the Holder may exercise his or her Options at any
      time prior to the expiration of three months after the date the Holder ceases
      to
      be an Employee, director, officer, consultant, agent, advisor or independent
      contractor of the Company or a Subsidiary (but in no event later than the
      remaining term of the Option), but only if and to the extent the Holder was
      entitled to exercise the option at the date of such termination. A transfer
      of
      employment or services between or among the Company and its Subsidiaries shall
      not be considered a termination of employment or services. The effect of a
      Company-approved leave of absence on the terms and conditions of an Option
      shall
      be determined by the Plan Administrator, in its sole discretion.

    


    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (b)     Disability.
      In case
      of termination of the Holder’s employment or services by reason of the Holder’s
      Disability, the Holder (or personal representative) may exercise his or her
      Options at any time prior to the expiration of one year after the date of such
      termination (but in no event later than the remaining term of the Option),
      but
      only if and to the extent the Holder was entitled to exercise the option at
      the
      date of such termination.

    


    (c)     Death.
      In the
      event of the death of a Holder, any Options held may be exercised at any time
      on
      or prior to the expiration of one year after the date of death (but in no event
      later than the remaining term of the Option), but only if and to the extent
      the
      Holder was entitled to exercise the option at the date of his or her death,
      and
      only by the Holder’s personal representative (if then subject to administration
      as part of the Holder’s estate) or by the person(s) to whom the Holder’s rights
      under the Option shall have passed by will or by the applicable laws of descent
      and distribution or by Holder’s Permitted Transferee.

    


    (d)     Cause.
      In case
      of termination of the Holder’s employment or services for Cause, all Options
      held by Holder or his or her Permitted Transferee shall automatically terminate
      upon first notification to the Holder of such termination, unless the Plan
      Administrator determines otherwise. If a Holder’s employment or services with
      the Company are suspended pending an investigation of whether the Holder shall
      be terminated for Cause, all the Holder’s rights under any Option likewise shall
      be suspended during the period of investigation.

    


    7.8     Waiver
      or Extension of Time Periods.
      The
      Plan Administrator shall have the authority, prior to or within the times
      specified in this Section 7 for the exercise of any such Option, to extend
      such
      time period or waive in its entirety any such time period to the extent that
      such time period expires prior to the expiration of the term of such option.
      In
      addition, the Plan Administrator may modify or eliminate the time periods
      specified in this Section 7 with respect to particular Option grants. However,
      no Incentive Stock Option may be exercised after the expiration of ten years
      from the date such option is granted. If a Holder holding an Incentive Stock
      Option exercises such Option, by express permission of the Plan Administrator,
      after the expiration of the time periods specified in this Section 7, the Option
      will no longer be treated as an Incentive Stock Option under the Code and shall
      automatically be converted into a Nonqualified Stock Option.

    


    7.9     Termination
      of Options.
      Any
      portion of an Option that is not vested and exercisable on the date of
      termination of the Holder’s employment or services shall terminate on such date,
      unless the Plan Administrator determines otherwise. In addition, to the extent
      that any Options of any Holder whose employment or services have terminated
      shall not have been exercised within the limited periods prescribed in this
      Section 7, the Options and all further rights to purchase shares pursuant to
      such Options shall cease and terminate at the expiration of such
      period.

    


    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    SECTION
      8. INCENTIVE STOCK OPTION LIMITATIONS

    


    To
      the
      extent required by Section 422 of the Code, Incentive Stock Options shall be
      subject to the following additional terms and conditions:

    


    8.1     Limitation
      on Amount of Grants to any one Holder.
      To the
      extent that a Holder is granted Incentive Stock Options that in the aggregate
      (together with all other Incentive Stock Options granted by the Company or
      Subsidiaries to such Holder under this Plan and any other stock option plans
      of
      the Company) entitle the Holder to purchase, in any calendar year during which
      such Options first become exercisable, Common Stock having a Fair Market Value
      (determined as of the Grant Date) in excess of $100,000, such portion of the
      Options in excess of $100,000 shall be treated as a Nonqualified Stock Option.
      In the event the Holder holds two or more such Options that become exercisable
      for the first time in the same calendar year, such limitation shall be applied
      on the basis of the order in which such Options are granted.

    


    8.2     Grants
      to 10% Stockholders.
      Incentive Stock Options may be granted to a person who, at the time the option
      is granted, owns more than 10% of the total combined voting power of all classes
      of stock of the Company or any Subsidiary only
      if
      (a) the exercise price per share shall not be less than 110% of the Fair
      Market Value of the Common Stock on the Grant Date, and (b) the Option term
      shall not exceed five years from the Grant Date. The determination of 10%
      ownership shall be made by the Plan Administrator in accordance with Section
      422
      of the Code.

    


    8.3     Eligible
      Persons.
      Only
      persons who are Employees may receive Incentive Stock Options. Persons who
      are
      not Employees may not be granted Incentive Stock Options and will only be
      eligible to receive Nonqualified Stock Options.

    


    8.4     Term.
      The
      term of an Incentive Stock Option shall not exceed 10 years.

    


    8.5     Exercisability.
      To
      qualify for Incentive Stock Option tax treatment, an Option designated as an
      Incentive Stock Option must be exercised within three months after termination
      of employment for reasons other than death, except that, in the case of
      termination of employment due to Disability, such Option must be exercised
      within one year after such termination. Employment shall not be deemed to
      continue beyond the first 90 days of a leave of absence unless the Holder’s
      reemployment rights are guaranteed by statute or contract.

    


    8.6     Taxation
      of Incentive Stock Options.
      In
      order to obtain certain tax benefits afforded to Incentive Stock Options under
      Section 422 of the Code, the Holder must hold the shares issued upon the
      exercise of an Incentive Stock Option for (a) at least two years after the
      Grant Date of the Incentive Stock Option and (b) at least one year from the
      date of exercise. The Plan Administrator may require a Holder to give the
      Company prompt notice of any disposition of shares acquired upon exercise of
      an
      Incentive Stock Option which occurs prior to the expiration of such holding
      periods. A Holder may be subject to the alternative minimum tax at the time
      of
      exercise of an Incentive Stock Option.

    


    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    SECTION
      9. STOCK AWARDS

    


    9.1     Grant
      of Stock Awards.
      The
      Plan Administrator is authorized to make Awards of Common Stock on such terms
      and conditions and subject to such restrictions, if any (which may be based
      on
      continuous service with the Company or the achievement of performance goals)
      as
      the Plan Administrator shall determine, in its sole discretion, which terms,
      conditions and restrictions shall be set forth in the instrument evidencing
      the
      Award. The terms, conditions and restrictions that the Plan Administrator shall
      have the power to determine shall include, without limitation, the manner in
      which shares subject to Stock Awards are held during the periods they are
      subject to restrictions, the circumstances under which forfeiture of Restricted
      Stock shall occur by reason of termination of the Holder’s services, and the
      purchase price, if any.

    


    9.2     Issuance
      of Shares.
      Upon
      the satisfaction of any terms, conditions and restrictions prescribed in respect
      to a Stock Award, or upon the Holder’s release from any terms, conditions and
      restrictions of a Stock Award, as determined by the Plan Administrator, the
      Company shall release, as soon as practicable, to the Holder or, in the case
      of
      the Holder’s death, to the personal representative of the Holder’s estate or as
      the appropriate court directs, the appropriate number of shares of Common
      Stock.

    


    9.3     Waiver
      of Restrictions.
      Notwithstanding any other provisions of the Plan, the Plan Administrator may,
      in
      its sole discretion, waive the forfeiture period and any other terms, conditions
      or restrictions on any Restricted Stock under such circumstances (including
      the
      death or Disability of Holder, or material change in the Holder’s circumstances
      after the date of the Award) and subject to such terms and conditions (including
      forfeiture of the shares) as the Plan Administrator shall deem
      appropriate.

    


    SECTION
      10. ASSIGNABILITY

    


    No
      Option
      granted under the Plan may be assigned or transferred by the Holder other than
      by will or by the applicable laws of descent and distribution, and, during
      the
      Holder’s lifetime, such Awards may be exercised only by the Holder.
      Notwithstanding the foregoing, and to the extent permitted by Section 422 of
      the
      Code, the Plan Administrator, in its sole discretion, may permit such
      assignment, transfer and exercisability and may permit a Holder of such Awards
      to designate a beneficiary who may exercise the Award or receive compensation
      under the Award after the Holder’s death; provided, however, that any Award so
      assigned or transferred shall be subject to all the same terms and conditions
      contained in the instrument evidencing the Award.

    


    SECTION
      11. ADJUSTMENTS

    


    11.1     Adjustments
      Upon Changes in Capitalization.
      In the
      event that, at any time or from time to time, a stock dividend, stock split,
      spin-off, combination or exchange of shares, recapitalization, merger,
      consolidation, distribution to stockholders other than a normal cash dividend,
      or other similar change in the Company’s corporate or capital structure results
      in (a) the outstanding shares of Common Stock, or any securities exchanged
      therefor or received in their place, being exchanged for a different number
      or
      class of securities of the Company or of any other corporation, or (b) new,
      different or additional securities of the Company or of any other corporation
      being received by the holders of shares of Common Stock, then the Plan
      Administrator shall make proportional adjustments in (i) the maximum number
      and kind of securities subject to the Plan as set forth in Section 4.1, and
      (ii) the number and kind of securities that are subject to any outstanding
      Award and the per share price of such securities (but without any change in
      the
      aggregate price to be paid therefor). The determination by the Plan
      Administrator as to the terms of any of the foregoing adjustments shall be
      conclusive and binding. Notwithstanding the foregoing, a Corporate Transaction
      shall not be governed by this Section 11.1 but shall be governed by Section
      11.2.

    


    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    11.2     Adjustments
      upon a Corporate Transaction.
      Except
      as otherwise provided in the instrument that evidences the Award, in the event
      of any Corporate Transaction, each Award that is at the time outstanding shall
      automatically accelerate so that each such Award shall, immediately prior to
      the
      specified effective date for the Corporate Transaction, become 100% vested
      and
      exercisable. Such Award shall not so accelerate, however, if and to the extent
      that such Award is, in connection with the Corporate Transaction, either to
      be
      assumed by the successor corporation or parent thereof (the “Successor
      Corporation”)
      or to
      be replaced with a comparable award for the purchase of shares of the capital
      stock of the Successor Corporation. The determination of Award comparability
      shall be made by the Plan Administrator, and its determination shall be
      conclusive and binding. All outstanding Awards shall terminate and cease to
      remain outstanding immediately following the consummation of the Corporate
      Transaction, except to the extent assumed by the Successor
      Corporation.

    


    11.3     Further
      Adjustment of Awards.
      Subject
      to Section 11.2, the Plan Administrator shall have the discretion, exercisable
      at any time before a sale, merger, consolidation, reorganization, liquidation
      or
      change in control of the Company, as defined by the Plan Administrator, to
      take
      such further action as it determines to be necessary or advisable, and fair
      and
      equitable to Holders, with respect to Awards. Such authorized action may include
      (but shall not be limited to) establishing, amending or waiving the type, terms,
      conditions or duration of, or restrictions on, Awards so as to provide for
      earlier, later, extended or additional time for exercise, lifting restrictions
      and other modifications, and the Plan Administrator may take such actions with
      respect to all Holders, to certain categories of Holders or only to individual
      Holders. The Plan Administrator may take such action before or after granting
      Awards to which the action relates and before or after any public announcement
      with respect to such sale, merger, consolidation, reorganization, liquidation
      or
      change in control that is the reason for such action.

    


    11.4     No
      Fractional Shares.
      In the
      event of any adjustment in the number of shares covered by any Award, any
      fractional shares resulting from such adjustment shall be disregarded and each
      such option shall cover only the number of full shares resulting from such
      adjustment.

    


    11.5     Determination
      of Plan Administrator to be Final.
      All
      adjustments made pursuant to this Section 11 shall be made by the Plan
      Administrator and its determination as to what adjustments shall be made, and
      the extent thereof, shall be final, binding and conclusive.

    


    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    11.6     Limitations.
      The
      grant of Awards will in no way affect the Company’s right to adjust, reclassify,
      reorganize or otherwise change its capital or business structure or to merge,
      consolidate, dissolve, liquidate or sell or transfer all or any part of its
      business or assets.

    


    SECTION
      12. WITHHOLDING

    


    The
      Company may require the Holder to pay to the Company the amount of any
      withholding taxes that the Company is required to withhold with respect to
      the
      grant, vesting or exercise of any Award. Upon exercise of an Award, the Holder
      shall, upon notification of the amount due and prior to or concurrently with
      the
      delivery of the certificates representing the shares, pay to the Company all
      amounts necessary to satisfy applicable federal, state and local withholding
      tax
      requirements or shall otherwise make arrangements satisfactory to the Company
      for such requirements. Subject to the Plan and applicable law, the Plan
      Administrator may, in its sole discretion, permit the Holder to satisfy
      withholding obligations, in whole or in part, by paying cash, by electing to
      have the Company withhold shares of Common Stock or by transferring shares
      of
      Common Stock to the Company, in such amounts as are equivalent to the Fair
      Market Value of the withholding obligation. The Company shall have the right
      to
      withhold from any Award or any shares of Common Stock issuable pursuant to
      an
      Award or from any cash amounts otherwise due or to become due from the Company
      to the Holder an amount equal to such taxes. The Company may also deduct from
      any Award any other amounts due from the Holder to the Company or a
      Subsidiary.

    


    SECTION
      13. SECURITIES REGULATIONS

    


    13.1     Compliance
      with Laws.
      Shares
      shall not be issued with respect to an Award granted under this Plan unless
      the
      adoption of this Plan, the grant and exercise of such Award and the issuance
      and
      delivery of such shares pursuant thereto shall comply with all relevant
      provisions of law, including, without limitation, any applicable state
      securities laws, the Securities Act, the Exchange Act, the rules and regulations
      promulgated thereunder, and the requirements of any stock exchange, national
      market system, over the counter system, or any electronic bulletin board, upon
      which the Common Stock may then be listed, quoted or traded, and shall further
      be subject to the approval of counsel for the Company with respect to such
      compliance. Inability of the Company to obtain from any regulatory body having
      jurisdiction the authority deemed by the Company’s counsel to be necessary for
      the lawful issuance and sale of any shares hereunder shall relieve the Company
      of any liability in respect of the nonissuance or sale of such shares as to
      which such requisite authority shall not have been obtained. In addition,
      notwithstanding anything in the Plan to the contrary, the Board, in its sole
      discretion, may bifurcate the Plan so as to restrict, limit or condition the
      use
      of any provision of the Plan to Holders who are officers or directors subject
      to
      Section 16 of the Exchange Act without so restricting, limiting or conditioning
      the Plan with respect to other Holders.

    


    13.2     Representations
      by Holder.
      With
      respect to the exercise of an Option or any other receipt of Common Stock
      pursuant to an Award under the Plan, the Company may require the Holder to
      represent and warrant at the time of such exercise or receipt that the shares
      are being purchased or received only for Holder’s own account investment and
      without any present intention to sell or distribute such shares, if, in the
      opinion of counsel for the Company, such representation is required by any
      relevant provision of the laws referred to in Section 13.1 above. At the option
      of the Company, a stop transfer order against any shares of stock may be placed
      on the official stock books and records of the Company, and a legend indicating
      that the stock may not be pledged, sold or otherwise transferred unless an
      opinion of counsel was provided (concurred in by counsel for the Company)
      stating that such transfer is not in violation of any applicable law or
      regulation, may be stamped on the stock certificate in order to assure exemption
      from registration. The Plan Administrator may also require such other action
      or
      agreement by the Holder as may from time to time be necessary to comply with
      the
      federal and state securities laws.

    


    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    13.3     No
      Registration Required.
      The
      Company shall be under no obligation to any Holder to register for offering
      or
      resale or to qualify for exemption under the Securities Act, or to register
      or
      qualify under state securities laws, any shares of Common Stock, security or
      interest in a security paid or issued under, or created by, the Plan, or to
      continue in effect any such registrations or qualifications if made. The Company
      may issue certificates for shares with such legends and subject to such
      restrictions on transfer and stop-transfer instructions as counsel for the
      Company deems necessary or desirable for compliance by the Company with federal
      and state securities laws.

    


    SECTION
      14. AMENDMENT AND TERMINATION OF PLAN

    


    14.1     Amendment
      of Plan.
      The
      Board may modify or amend the Plan in such respects as it shall deem advisable
      or in order to conform to any changes in law or regulation applicable thereto,
      or in other respects; provided,
      however,
      that,
      to the extent required for compliance with Section 422 of the Code or any
      applicable law or regulation, the Board may not, without further approval by
      the
      stockholders of the Company, effect any amendment that will (a) increase
      the total number of shares as to which Awards may be granted under the Plan,
      (b) modify the class of persons eligible to receive Awards, or
      (c) change the terms of the Plan which causes the Plan to lose its
      qualification as an incentive stock option plan under Section 422(b) of the
      Code, or (d) otherwise require stockholder approval under any applicable
      law, regulation or rule of any stock exchange.

    


    The
      Plan
      shall comply with the requirements of, and shall be operated, administered,
      and
      interpreted in accordance with, a good faith interpretation of Code
      Section 409A and Section 885 of the American Jobs Creation Act of 2004
      (the “AJCA”) to the extent applicable. If any provision of the Plan is
      inconsistent with the restrictions imposed by Code Section 409A, that
      provision shall be deemed to be amended to the extent necessary to reflect
      the
      new restrictions imposed by Code Section 409A. Any Award granted under the
      Plan prior to issuance of definitive guidance from the Internal Revenue Service
      or the Department of Treasury with regard to any issue related to Code
      Section 409A shall be subject to the condition that the Plan Administrator
      may make such changes to the Award as necessary or appropriate in the Plan
      Administrator’s discretion to reflect the restrictions imposed by Code
      Section 409A, without the consent of the Participant.

    


    14.2     Termination
      of Plan.
      The
      Board may suspend or terminate the Plan at any time. The Plan will have no
      fixed
      expiration date; provided, however, that no Incentive Stock Options may be
      granted more than 10 years after the earlier of the Plan’s adoption by the Board
      and approval by the stockholders.

    


    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    14.3     Consent
      of Holder.
      The
      amendment or termination of the Plan shall not, without the consent of the
      Holder of any Award under the Plan, impair or diminish any rights or obligations
      under any Award theretofore granted under the Plan. Any change or adjustment
      to
      an outstanding Incentive Stock Option shall not, without the consent of the
      Holder, be made in a manner so as to constitute a “modification” that would
      cause such Incentive Stock Option to fail to continue to qualify as an Incentive
      Stock Option.

    


    SECTION
      15. GENERAL

    


    15.1     Award
      Agreements.
      Each
      Award granted under the Plan shall be evidenced by a written agreement that
      shall contain such terms, conditions, limitations and restrictions as the Plan
      Administrator shall deem advisable and that are not inconsistent with the Plan.
      In addition, all such agreements evidencing Options shall include or incorporate
      by reference the following terms and conditions: number of shares, exercise
      price, vesting schedule, term and termination.

    


    15.2     No
      Rights to Continued Employment or Service.
      Nothing
      in this Plan or any Award granted pursuant hereto, or any action of the Plan
      Administrator taken under the Plan, shall confer upon any Holder any right
      to be
      retained in the employment or service of the Company or any Subsidiary, or
      to
      remain a director thereof or a consultant thereto, or to interfere in anyway
      with the right of the Company or any Subsidiary, in its sole discretion, to
      terminate such Holder’s employment or service at any time or to remove the
      Holder as a director or consultant at any time.

    


    15.3     No
      Rights as a Stockholder.
      No
      Option shall entitle the Holder to any cash dividend, voting or other right
      of a
      stockholder unless and until the date of issuance under the Plan of the shares
      that are the subject of such Option, free of all applicable
      restrictions.

    


    15.4     No
      Trust or Fund.
      The
      Plan is intended to constitute an “unfunded” plan. Nothing contained herein
      shall require the Company to segregate any monies or other property, or shares
      of Common Stock, or to create any trusts, or to make any special deposits for
      any immediate or deferred amounts payable to any Holder, and no Holder shall
      have any rights that are greater than those of a general unsecured creditor
      of
      the Company.

    


    15.5     Severability.
      If any
      provision of the Plan or any Award is determined to be invalid, illegal or
      unenforceable in any jurisdiction, or as to any person, or would disqualify
      the
      Plan or any Award under any law deemed applicable by the Plan Administrator,
      such provision shall be construed or deemed amended to conform to applicable
      laws, or, if it cannot be so construed or deemed amended without, in the Plan
      Administrator’s determination, materially altering the intent of the Plan or the
      Award, such provision shall be stricken as to such jurisdiction, person or
      Award, and the remainder of the Plan and any such Award shall remain in full
      force and effect.

    


    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    SECTION
      16. EFFECTIVE DATE

    


    This
      Plan
      shall become effective on the date of its adoption by the Board and Awards
      Options may be granted immediately thereafter, but no Option may be exercised
      under the Plan unless and until the Plan shall have been approved by the
      stockholders within 12 months after the date of adoption of the Plan by the
      Board of Directors. If such approval is not obtained within such period the
      Plan
      and any Options granted shall be null and void.

    


    Adopted
      by the Board of Directors on October 26, 2007, and approved by the Company’s
      stockholders on _________________, 2007.

    


    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    PLAN
      ADOPTION AND AMENDMENTS/ADJUSTMENTS

     

    
      	
              Date
                of Adoption/

              Amendment/Adjustment

            	
               

              Section

            	
               

              Effect
                of Amendment

            	
              Date
                of

              Stockholder
                Approval

            
	 	 	 	 
	 	 	 	 
	 	 	 	 


    

     

    
      
         

      

      
        -16-