**EXHIBIT 2.3****MASTER REPLICAS INC**.**2004 STOCK OPTION/RESTRICTED STOCK PLAN****EFFECTIVE AS OF MAY 17, 2004**
 

 
TABLE OF CONTENTS       PageSECTION 1. INTRODUCTION  1 SECTION 2. DEFINITIONS  1 (a) “Affiliate”  1 (b) “Award”  1 (c) “Board”  1 (d) “Change in Control”  1 (e) “Code”  3 (f) “Committee”  3 (g) “Common Stock”  3 (h) “Company”  3 (i) “Consultant”  3 (j) “Director”  3 (k) “Disability”  3 (l) “Employee”  3 (m) “Exchange Act”  3 (n) “Exercise Price”  3 (o) “Fair Market Value”  3 (p) “Grant”  4 (q) “Incentive Stock Option” or “ISO”  4 (r) “Key Employee”  4 (s) “Non-Employee Director”  4 (t) “Nonstatutory Stock Option” or “NSO”  4 (u) “Option”  4 (v) “Optionee”  4 (w) “Parent”  4 (x) “Participant”  4 (y) “Plan”  4 (z) “Restricted Stock”  4 (aa) “Restricted Stock Agreement”  5 (bb) “Securities Act”  5 (cc) “Service”  5 (dd) “Share”  5 -i-
 

 
       Page(ee) “Stock Option Agreement”  5 (ff) “Subsidiary”  5 (gg) “10-Percent Shareholder”  5 SECTION 3. ADMINISTRATION  5 (a) Committee Composition  5 (b) Authority of the Committee  6 (c) Indemnification  6 (d) Financial Information  6 SECTION 4. ELIGIBILITY  6 (a) General Rules  6 (b) Incentive Stock Options  7 SECTION 5. SHARES SUBJECT TO PLAN  7 (a) Basic Limitation  7 (b) Additional Shares  7 (c) Dividend Equivalents  7 SECTION 6. TERMS AND CONDITIONS OF OPTIONS  7 (a) Stock Option Agreement  7 (b) Number of Shares  7 (c) Exercise Price  7 (d) Exercisability and Term  7 (e) Modifications or Assumption of Options  8 (f) Transferability of Options  8 (g) Restrictions on Transfer  8 SECTION 7. PAYMENT FOR OPTION SHARES  9 (a) General Rule  9 (b) Surrender of Stock  9 (c) Promissory Note  9 (d) Other Forms of Payment  9 SECTION 8. TERMS AND CONDITIONS FOR AWARDS OF RESTRICTED STOCK  9 (a) Time, Amount and Form of Awards  9 (b) Restricted Stock Agreement  9 (c) Payment for Restricted Stock  9 -ii-
 

 
       Page(d) Vesting Conditions  9 (e) Assignment or Transfer of Restricted Stock  10 (f) Trusts  10 (g) Voting and Dividend Rights  10 SECTION 9. ADJUSTMENTS  10 (a) Adjustment of Shares  10 (b) Terms for Additional Shares  11 SECTION 10. EFFECT OF A CHANGE IN CONTROL  11 (a) Merger or Reorganization  11 (b) Acceleration  11 SECTION 11. LIMITATIONS ON RIGHTS  11 (a) Retention Rights  11 (b) Stockholders’ Rights  11 (c) Regulatory Requirements  12 SECTION 12. WITHHOLDING TAXES  12 (a) General  12 (b) Share Withholding  12 SECTION 13. DURATION AND AMENDMENTS  12 (a) Term of the Plan  12 (b) Right to Amend or Terminate the Plan  12 SECTION 14. EXECUTION  13 -iii-
 

 
**MASTER REPLICAS INC.****2004 STOCK OPTION/RESTRICTED STOCK PLAN****EFFECTIVE AS OF MAY 17, 2004****SECTION 1. INTRODUCTION.**The Company’s Board of Directors adopted the Master Replicas Inc. 2004 StockOption/Restricted Stock Plan on May 17, 2004, subject to approval by the Company’sstockholders.The purpose of the Plan is to promote the long-term success of the Company and the creationof stockholder value by offering Key Employees an opportunity to acquire a proprietaryinterest in the success of the Company, or to increase such interest; to encourage suchselected persons to continue to provide services to the Company, and to attract to theCompany new individuals with outstanding qualifications.The Plan seeks to achieve this purpose by providing for Awards in the form of RestrictedStock and Options (which may constitute Incentive Stock Options or Nonstatutory StockOptions).The Plan shall be governed by, and construed in accordance with, the laws of the State ofDelaware (except its choice-of-law provisions). Capitalized terms shall have the meaningprovided in Section 2 unless otherwise provided in this Plan or the applicable Stock OptionAgreement or Restricted Stock Agreement.**SECTION 2. DEFINITIONS.**(a) “**Affiliate**” means any entity other than a Subsidiary, if the Company and/or one or moreSubsidiaries directly or indirectly own not less than 50% of such entity. For purposes ofdetermining an individual’s “Service,” this definition shall include any entity other than aSubsidiary, if the Company, a Parent and/or one or more Subsidiaries own not less than 50%of such entity.(b) **“Award”**means an award of an Option or Restricted Stock under the Plan.(c) “**Board**” means the Board of Directors of the Company, as constituted from time to time.(d) **“Change in Control”**except as may otherwise be provided in a Stock Option Agreement,Restricted Stock Agreement or other applicable agreement, means the occurrence of any of thefollowing:
 

 
     (i) The consummation of a merger or consolidation of the Company with or intoanother entity or any other corporate reorganization, if the Company’s stockholdersimmediately prior to such merger, consolidation or reorganization cease to directlyor indirectly own immediately after such merger, consolidation or reorganization atleast a majority of the combined voting power of the continuing or survivingentity’s securities outstanding immediately after such merger, consolidation orother reorganization;     (ii) The consummation of the sale, transfer or other disposition of all orsubstantially all of the Company’s assets (other than (1) to a corporation or otherentity of which at least a majority of its combined voting power is owned directlyor indirectly by the Company, (2) to a corporation or other entity owned directly orindirectly by the stockholders of the Company in substantially the same proportionsas their ownership of the common stock of the Company or (3) to a continuing orsurviving entity described in Section 2(d)(i) in connection with a merger,consolidation or corporate reorganization which does not result in a Change inControl under Section 2(d)(i));     (iii) A change in the composition of the Board, as a result of which fewer thanone-half of the incumbent directors are directors who either (1) had been directorsof the Company on the date 24 months prior to the date of the event that mayconstitute a Change in Control (the “original directors”) or (2) were elected, ornominated for election, to the Board with the affirmative votes of at least amajority of the aggregate of the original directors who were still in office at thetime of the election or nomination and the directors whose election or nominationwas previously so approved;     (iv) The consummation of any transaction as a result of which any personbecomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),directly or indirectly, of securities of the Company representing at least 51% ofthe total voting power represented by the Company’s then outstanding votingsecurities. For purposes of this Paragraph (iv), the term “person” shall have thesame meaning as when used in sections 13(d) and 14(d) of the Exchange Act but shallexclude:     (A) A trustee or other fiduciary holding securities under an employeebenefit plan of the Company or an affiliate of the Company;     (B) A corporation or other entity owned directly or indirectly by thestockholders of the Company in substantially the same proportions as theirownership of the common stock of the Company;     (C) The Company; and     (D) A corporation or other entity of which at least a majority of itscombined voting power is owned directly or indirectly by the Company; or
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     (v) A complete winding up, liquidation or dissolution of the Company.     A transaction shall not constitute a Change in Control if its sole purpose is to changethe state of the Company’s incorporation or to create a holding company that will be ownedin substantially the same proportions by the persons who held the Company’s securitiesimmediately before such transactions.(e) “**Code**” means the Internal Revenue Code of 1986, as amended.(f) “**Committee**” means a committee consisting of one or more members of the Board that isappointed by the Board (as described in Section 3) to administer the Plan.(g) “**Common Stock**” means the Company’s common stock, par value $.0001 per share and anyother securities into which such shares are changed, for which such shares are exchanged orwhich may be issued in respect thereof.(h) “**Company**” means Master Replicas Inc., a Delaware corporation.(i) “**Consultant**” means an individual who performs bona fide services to the Company, aParent, a Subsidiary or an Affiliate other than as an Employee, Director or a Non-EmployeeDirector.(j) “**Director**” means a member of the Board who is also an Employee.(k) “**Disability**” means that the Key Employee is unable to engage in any substantial gainfulactivity by reason of any medically determinable physical or mental impairment which can beexpected to result in death or which has lasted or can be expected to last for a continuousperiod of not less than 12 months.(l) “**Employee**” means any individual who is a common-law employee of the Company, a Parent, aSubsidiary or an Affiliate.(m) “**Exchange Act**” means the Securities Exchange Act of 1934, as amended.(n) “**Exercise Price**” means the amount for which a Share may be purchased upon exercise of anOption, as specified in the applicable Stock Option Agreement.(o) “**Fair Market Value**” means the market price of Shares, determined by the Committee asfollows:     (i) If the Shares were traded on a stock exchange on the date in question, thenthe Fair Market Value shall be equal to the closing price reported by the applicablecomposite transactions report for the applicable date;     (ii) If the Shares were traded over-the-counter on the date in question andwere classified as a national market issue or small-cap issue, then the Fair
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Market Value shall be equal to the closing price quoted by the NASDAQ systemfor the applicable date;     (iii) If the Shares were traded over-the-counter on the date in question butwere not classified as a national market issue or small-cap issue, then the FairMarket Value shall be equal to the mean between the last reported representative bidand asked prices quoted by the applicable trading market for the applicable date;and     (iv) If none of the foregoing provisions is applicable, then the Fair MarketValue shall be determined by the Committee in good faith on such basis as it deemsappropriate.     Whenever possible, the determination of Fair Market Value by the Committeeshall be based on the prices reported in the Western Edition of The Wall StreetJournal. Such determination shall be conclusive and binding on all persons.(p) “**Grant**” means any grant of an Award under the Plan.(q) “**Incentive Stock Option**” or “**ISO**” means an incentive stock option described in Codesection 422(b).(r) “**Key Employee**” means an Employee, Director, Non-Employee Director or Consultant who hasbeen selected by the Committee to receive an Award under the Plan.(s) “**Non-Employee Director**” means a member of the Board who is not an Employee.(t) “**Nonstatutory Stock Option**” or “**NSO**” means a stock option that is not an ISO.(u) “**Option**” means an ISO or NSO granted under the Plan entitling the Optionee to purchaseShares.(v) “**Optionee**” means an individual, estate or other entity that holds an Option.(w) “**Parent**” means a “parent corporation” of the Company as defined under Code section 424or its successor provision. An entity that attains the status of a Parent on a date afterthe adoption of the Plan shall be considered a Parent commencing as of such date.(x) **“Participant”**means an individual or estate or other entity that holds an Award.(y) “**Plan**” means this Master Replicas Inc. 2004 Stock Option/Restricted Stock Plan as it maybe amended from time to time.(z) **“Restricted Stock”**means a Share awarded under Section 8 of the Plan.
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(aa) **“Restricted Stock Agreement”**means the agreement described in Section 8 evidencing anAward of Restricted Stock.(bb) “**Securities Act**” means the Securities Act of 1933, as amended.(cc) “**Service**” means service as an Employee, Director, Non-Employee Director or Consultant.(dd) “**Share**” means one share of Common Stock.(ee) “**Stock Option Agreement**” means the agreement described in Section 6 evidencing a Grantof an Option.(ff) “**Subsidiary**” means any “subsidiary corporation” of the Company as defined under Codesection 424(f) or its successor provision (other than the Company). An entity that attainsthe status of a Subsidiary on a date after the adoption of the Plan shall be considered aSubsidiary commencing as of such date.(gg) “**10-Percent Shareholder**” means an individual who owns more than ten percent (10%) ofthe total combined voting power of all classes of outstanding stock of the Company, itsParent or any of its Subsidiaries. In determining stock ownership, the attribution rules ofsection 424(d) of the Code shall be applied.**SECTION 3. ADMINISTRATION.**(a) **Committee Composition**. A Committee appointed by the Board shall administer the Plan.The Board shall designate one of the members of the Committee as chairperson. If noCommittee has been appointed, the entire Board shall constitute the Committee. Members ofthe Committee shall serve for such period of time as the Board may determine and shall besubject to removal by the Board at any time. The Board may also at any time terminate thefunctions of the Committee and reassume all powers and authority previously delegated to theCommittee.Effective with the Company’s initial public offering, the Committee shall consist either(i) of those individuals who shall satisfy the requirements of Rule 16b-3 (or its successor)under the Exchange Act with respect to Awards granted to persons who are officers ordirectors subject to Section 16 of the Exchange Act or (ii) of the Board itself.The Board may also appoint one or more separate committees of the Board, each composed ofone or more directors of the Company who need not qualify under Rule 16b-3, who mayadminister the Plan with respect to Key Employees who are not considered officers ordirectors of the Company under Section 16 of the Exchange Act, may grant Awards under thePlan to such Key Employees and may determine all terms of such Awards.Notwithstanding the foregoing, the Board shall constitute the Committee and shall administerthe Plan with respect to all Awards granted to Non-Employee Directors.
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(b) **Authority of the Committee**. Subject to the provisions of the Plan, the Committee shallhave full authority and discretion to take any actions it deems necessary or advisable forthe administration of the Plan. Such actions shall include: (i) selecting Key Employees who are to receive Awards under the Plan;  (ii) determining the type, number, vesting requirements and otherfeatures and conditions of such Awards;  (iii) interpreting the Plan;  (iv) effectuating an exchange of Awards for other Awards or otherconsideration;  (v) creating such plans or subplans as may be necessary oradvisable to allow the grant of Awards under the Plan in non-United Statesjurisdictions or to non-United States taxpayers; and  (vi) making all other decisions relating to the operation of the Plan.The Committee may adopt such rules or guidelines, as it deems appropriate to implement thePlan. The Committee’s determinations under the Plan shall be final and binding on allpersons.(c) **Indemnification**. Except arising from any action taken, or failure to act, in bad faith,each member of the Committee, or of the Board, shall be indemnified and held harmless by theCompany against and from (i) any loss, cost, liability, or expense that may be imposed uponor reasonably incurred by him or her in connection with or resulting from any claim, action,suit, or proceeding to which he or she may be a party or in which he or she may be involvedby reason of any action taken or failure to act under the Plan or any Stock Option Agreementor Restricted Stock Agreement, and (ii) from any and all amounts paid by him or her, withthe Company’s prior approval, in settlement thereof or paid by him or her in satisfaction ofany judgment in any such claim, action, suit, or proceeding against him or her, provided heor she shall have given the Company a reasonable opportunity, at its own expense, to handleand defend the same before he or she undertakes to handle and defend it on his or her ownbehalf. The foregoing right of indemnification shall not be exclusive of any other rightsof indemnification to which such persons may be entitled under the Company’s Certificate ofIncorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any powerthat the Company may have to indemnify them or hold them harmless.(d) **Financial Information**. To the extent required by applicable law, the Company willfurnish certain Participants with Company financial information on at least an annual basis.**SECTION 4. ELIGIBILITY.**(a) **General Rules**. Only Employees, Directors, Non-Employee Directors and Consultants shallbe eligible for designation as Key Employees by the Committee.
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(b) **Incentive Stock Options**. Only Key Employees who are common-law employees of theCompany, a Parent or a Subsidiary shall be eligible for the grant of ISOs. In addition, aKey Employee who is a 10-Percent Shareholder shall not be eligible for the grant of an ISOunless the requirements set forth in section 422(c)(5) of the Code are satisfied.**SECTION 5. SHARES SUBJECT TO PLAN.**(a) **Basic Limitation**. The stock issuable under the Plan shall be authorized but unissuedShares or treasury Shares. The aggregate number of Shares reserved for Awards under thePlan shall not exceed One Million Three Hundred Twenty Thousand (1,320,000) Shares on afully diluted basis, subject to adjustment pursuant to Section 9.(b) **Additional Shares**. If Awards are forfeited or terminate for any other reason beforebeing exercised, then the Shares underlying such Awards shall again become available forAwards under the Plan.(c) **Dividend Equivalents**. Any dividend equivalents distributed under the Plan shall not beapplied against the number of Shares available for Awards.**SECTION 6. TERMS AND CONDITIONS OF OPTIONS.**(a) **Stock Option Agreement**. Each Grant under the Plan shall be evidenced by a Stock OptionAgreement between the Optionee and the Company. Such Option shall be subject to allapplicable terms and conditions of the Plan and may be subject to any other terms andconditions that are not inconsistent with the Plan and that the Committee deems appropriatefor inclusion in a Stock Option Agreement. The provisions of the various Stock OptionAgreements entered into under the Plan need not be identical. A Stock Option Agreement mayprovide that new Options will be granted automatically to the Optionee when he or sheexercises the prior Options. The Stock Option Agreement shall also specify whether theOption is an ISO or an NSO.(b) **Number of Shares**. Each Stock Option Agreement shall specify the number of Shares thatare subject to the Option and shall provide for the adjustment of such number in accordancewith Section 9.(c) **Exercise Price**. An Option’s Exercise Price shall be established by the Committee andset forth in a Stock Option Agreement. To the extent required by applicable law theExercise Price of an ISO shall not be less than 100% of the Fair Market Value (110% for10-Percent Shareholders) of a Share on the date of Grant. In the case of an NSO, a StockOption Agreement may specify an Exercise Price that varies inaccordance with a predetermined formula while the NSO is outstanding. To the extentrequired by applicable law, the Exercise Price for an NSO shall not be less than 85% of theFair Market Value (110% for 10-Percent Shareholders) of a Share on the date of Grant.(d) **Exercisability and Term**. Each Stock Option Agreement shall specify the date when all orany installment of the Option is to become exercisable. To the extent required by
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applicable law, Options shall vest at least as rapidly as 20% annually over a five-yearperiod. The Stock Option Agreement shall also specify the term of the Option; provided thatthe term of an ISO, and to the extent required by applicable law a NSO, shall in no eventexceed ten (10) years from the date of Grant. An ISO that is granted to a 10-PercentShareholder shall have a maximum term of five (5) years. To the extent required byapplicable law, vested Options shall be exercisable for a minimum period of six (6) monthsfollowing termination of employment due to death or Disability and thirty (30) daysfollowing termination of employment (other than terminations for cause, as defined in theCompany’s personnel policies). Notwithstanding the previous sentence, no Option can beexercised after the expiration date provided in the applicable Stock Option Agreement. AStock Option Agreement may provide for accelerated exercisability in the event of theOptionee’s death, disability or retirement or other events and may provide for expirationprior to the end of its term in the event of the termination of the Optionee’s service. AStock Option Agreement may permit an Optionee to exercise an Option before it is vested,subject to the Company’s right of repurchase over any Shares acquired under the unvestedportion of the Option (an “early exercise”), which right of repurchase shall lapse at thesame rate the Option would have vested had there been no early exercise. In no event shallthe Company be required to issue fractional Shares upon the exercise of an Option.(e) **Modifications or Assumption of Options**. Within the limitations of the Plan, theCommittee may modify, extend or assume outstanding options (including modification of theExercise Price thereof) or may accept the cancellation of outstanding options (whethergranted by the Company or by another issuer) in return for the grant of new Awards for thesame or a different number of Shares and, in the case of new Options, at the same or adifferent Exercise Price. The foregoing notwithstanding, no such modification of an Optionshall, without the consent of the Optionee, alter or impair his or her rights or obligationsunder such Option.(f) **Transferability of Options**. Except as otherwise provided in the applicable Stock OptionAgreement and then only to the extent permitted by applicable law, no Option shall betransferable by the Optionee other than by will or by the laws of descent and distribution.Except as otherwise provided in the applicable Stock Option Agreement, an Option may beexercised during the lifetime of the Optionee only or by the guardian or legalrepresentative of the Optionee. No Option or interest therein may be assigned, pledged orhypothecated by the Optionee during his lifetime, whether by operation of law or otherwise,or be made subject to execution, attachment or similar process.(g) **Restrictions on Transfer.**Any Shares issued upon exercise of an Option shall be subjectto such rights of repurchase, rights of first refusal and other transfer restrictions as theCommittee may determine. Such restrictions shall apply in addition to any restrictions thatmay apply to holders of Shares generally and shall also comply to the extent necessary withapplicable law.
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**SECTION 7. PAYMENT FOR OPTION SHARES.**(a) **General Rule**. The entire Exercise Price of Shares issued upon exercise of Options shallbe payable in cash at the time when such Shares are purchased, except as follows:     (i) In the case of an ISO granted under the Plan, payment shall be made only pursuantto the express provisions of the applicable Stock Option Agreement. The Stock OptionAgreement may specify that payment may be made in any form(s) described in this Section 7.     (ii) In the case of an NSO granted under the Plan, the Committee may in its discretion,at any time accept payment in any form(s) described in this Section 7.(b) **Surrender of Stock**. To the extent that this Section 7(b) is applicable, payment for allor any part of the Exercise Price may be made with Shares which have already been owned bythe Optionee for such duration as shall be specified by the Committee. Such Shares shall bevalued at their Fair Market Value on the date when the new Shares are purchased under thePlan.(c) **Promissory Note**. To the extent that this Section 7(c) is applicable, payment for all orany part of the Exercise Price may be made with a promissory note if permitted by applicablelaws, regulations and rules.(d) **Other Forms of Payment**. To the extent that this Section 7(d) is applicable, payment maybe made in any other form that is consistent with applicable laws, regulations and rules.**SECTION 8. TERMS AND CONDITIONS FOR AWARDS OF RESTRICTED STOCK.**(a) **Time, Amount and Form of Awards**. Awards under this Section 8 may be granted in the formof Restricted Stock.(b) **Restricted Stock Agreement**. Each Award of Restricted Stock under the Plan shall beevidenced by a Restricted Stock Agreement between the Participant and the Company. SuchAwards shall be subject to all applicable terms and conditions of the Plan and applicablelaw and may be subject to any other terms and conditions that are not inconsistent with thePlan and applicable law and that the Committee deems appropriatefor inclusion in a Restricted Stock Agreement. The provisions of the various RestrictedStock Agreements entered into under the Plan need not be identical.(c) **Payment for Restricted Stock.**Restricted Stock may be issued with or without cashconsideration under the Plan.(d) **Vesting Conditions.**Each Award of Restricted Stock shall become vested, in full or ininstallments, upon satisfaction of the conditions specified in the Restricted StockAgreement. A Restricted Stock Agreement may provide for accelerated vesting in the event ofthe Participant’s death, Disability or retirement or other events.
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(e) **Assignment or Transfer of Restricted Stock.**Except as provided in Section 12, or in aRestricted Stock Agreement, or as required by applicable law, a Restricted Stock Awardgranted under the Plan shall not be anticipated, assigned, attached, garnished, optioned,transferred or made subject to any creditor’s process, whether voluntarily, involuntarily orby operation of law. Any act in violation of this Section 8(e) shall be void. However,this Section 8(e) shall not preclude a Participant from designating a beneficiary who willreceive any outstanding Restricted Stock Awards in the event of the Participant’s death, norshall it preclude a transfer of Restricted Stock Awards by will or by the laws of descentand distribution.(f) **Trusts.**Neither this Section 8 nor any other provision of the Plan shall preclude aParticipant from transferring or assigning Restricted Stock to (a) the trustee of a trustthat is revocable by such Participant alone, both at the time of the transfer or assignmentand at all times thereafter prior to such Participant’s death, or (b) the trustee of anyother trust to the extent approved in advance by the Committee in writing. A transfer orassignment of Restricted Stock from such trustee to any person other than such Participantshall be permitted only to the extent approved in advance by the Committee in writing, andRestricted Stock held by such trustee shall be subject to all of the conditions andrestrictions set forth in the Plan and in the applicable Restricted Stock Agreement, as ifsuch trustee were a party to such Agreement.(g) **Voting and Dividend Rights.**The holders of Restricted Stock awarded under the Planshall have the same voting, dividend and other rights as the Company’s other stockholders.A Restricted Stock Agreement, however, may require that the holders of Restricted Stockinvest any cash dividends received in additional Restricted Stock. Such additionalRestricted Stock shall be subject to the same conditions and restrictions as the Award withrespect to which the dividends were paid. Such additional Restricted Stock shall not reducethe number of Shares available under Section 5.**SECTION 9. ADJUSTMENTS.**(a) **Adjustment of Shares.**In the event of a subdivision of the outstanding Shares, adeclaration of a dividend payable in Shares, a declaration of a dividend payable in a formother than Shares in an amount that has a material effect on the price of Shares, areclassification of the Shares, a combination or consolidation of the outstanding Shares (byreclassification or otherwise), a recapitalization, reorganization, merger, liquidation,spin-off, split-up, distribution, stock split or reverse stock split, exchange of shares,repurchase of shares, change in corporate structure or other similar occurrence, theCommittee shall make such adjustments, if any, as it deems appropriate in its solediscretion (and, if required by applicable law, shall make proportionate adjustments) in oneor more of:     (i) the number and class of Shares or other stock or securities available for futureAwards under Section 5;
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     (ii) the number and class of Shares or other stock or securities covered by eachoutstanding Award; or     (iii) the Exercise Price under each outstanding Option.(b) **Terms for Additional Shares.**If by reason of an adjustment pursuant to this Section 9 aParticipant’s Award covers additional or different shares of stock or securities, then suchadditional or different shares and the Award in respect thereof shall be subject to all ofthe terms, conditions and restrictions which were applicable to the Award and the Sharessubject to the Award prior to such adjustment.**SECTION 10. EFFECT OF A CHANGE IN CONTROL.**(a) **Merger or Reorganization.**In the event that the Company is a party to a merger,reorganization or other corporate transaction, outstanding Awards shall be subject to theagreement providing for such merger, reorganization or corporate transaction. Suchagreement need not provide for uniform treatment of Awards (or portions thereof) and mayprovide, without limitation, for the assumption of outstanding Awards (or portions thereof)by the surviving corporation or its parent, for their continuation by the Company (if theCompany is a surviving corporation), for accelerated vesting or for their cancellation withor without consideration, in all cases without the consent of the Participant.(b) **Acceleration.**Except as otherwise provided in the applicable Stock Option Agreement orRestricted Stock Agreement, in the event that a Change in Control occurs and the applicableagreement providing for the merger, reorganization or corporate transaction provides forassumption or continuation of Awards pursuant to Section 10(a), no acceleration of vestingshall occur. In the event that a Change in Control occurs and there is no assumption orcontinuation of Awards pursuant to Section 10(a), all Awards shall vest and becomeimmediately exercisable.**SECTION 11. LIMITATIONS ON RIGHTS.**(a) **Retention Rights**. Neither the Plan nor any Award granted under the Plan shall be deemedto give any individual a right to remain or become an employee, consultant or director ofthe Company, a Parent, a Subsidiary or an Affiliate. The Company and its Parents andSubsidiaries and Affiliates reserve the right to terminate theService of any person at any time, and for any reason, subject to applicable laws, theCompany’s Certificate of Incorporation and Bylaws and a written employment agreement (ifany).(b) **Stockholders’ Rights**. A Participant shall have no dividend rights, voting rights orother rights as a stockholder with respect to any Shares covered by his or her Award priorto the issuance of a stock certificate for such Shares. No adjustment shall be made forcash dividends or other rights for which the record date is prior to the date when suchcertificate is issued, except as expressly provided in Section 9.
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(c) **Regulatory Requirements**. Any other provision of the Plan notwithstanding, theobligation of the Company to issue Shares under the Plan shall be subject to all applicablelaws, rules and regulations and such approval by any regulatory body as may be required.The Company reserves the right to restrict, in whole or in part, the delivery of Sharespursuant to any Award prior to the satisfaction of all legal requirements relating to theissuance of such Shares, to their registration, qualification or listing or to an exemptionfrom registration, qualification or listing.**SECTION 12. WITHHOLDING TAXES.**(a) **General**. A Participant shall make arrangements satisfactory to the Company for thesatisfaction of any withholding tax obligations that arise in connection with his or herAward. The Company shall not be required to issue any Shares or make any cash payment underthe Plan until such obligations are satisfied.(b) **Share Withholding**. If a public market for the Company’s Shares exists, the Committeemay permit a Participant to satisfy all or part of his or her withholding or income taxobligations by having the Company withhold all or a portion of any Shares that otherwisewould be issued to him or her or by surrendering all or a portion of any Shares that he orshe previously acquired. Such Shares shall be valued at their Fair Market Value on the datewhen taxes otherwise would be withheld in cash. Any payment of taxes by assigning Shares tothe Company may be subject to restrictions, including, but not limited to, any restrictionsrequired by rules of the Securities and Exchange Commission.**SECTION 13. DURATION AND AMENDMENTS.**(a) **Term of the Plan**. The Plan, as set forth herein, shall become effective on the date ofits adoption by the Board, subject to the approval of the Company’s stockholders. NoOptions shall be exercised until such stockholder approval is obtained. In the event thatthe stockholders fail to approve the Plan within twelve (12) months after its adoption bythe Board, any Awards made shall be null and void and no additional Awards shall be made.The Plan shall terminate on the date that is ten (10) years after its adoption by the Boardand may be terminated on any earlier date pursuant to Section 13(b).(b) **Right to Amend or Terminate the Plan**. The Board may amend or terminate the Plan at anytime and for any reason. The termination of the Plan, or any amendment thereof, shall notaffect any Award previously granted under the Plan. No Awards shall be granted under thePlan after the Plan’s termination. An amendment of the Plan shall be subject to theapproval of the Company’s stockholders only to the extent required by applicable laws,regulations or rules.
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**SECTION 14. EXECUTION.**To record the adoption of the Plan by the Board, the Company has caused its duly authorizedofficer to execute this Plan on behalf of the Company.         **MASTER REPLICAS INC.**           By             Title           
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