| 1. | Purpose and Scope of Plan |
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|   | (i) | To select the eligible employees to whom options shall be granted under the Plan; |
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|   | (ii) | To determine the terms and conditions of each option including but not limited to the date of grant, the dates(s) of exercise, the number of shares of Common Stock subject to the option, the exercise price, and the restrictions, if any, to be imposed upon the transfer of shares purchased pursuant to the option; |
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|   | (iii) | To prescribe the form of all stock option agreements and any other agreement or document which the Committee determines is appropriate in connection with the Plan; |
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|   | (iv) | To prescribe rules and regulations for the administration of the Plan; |
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|   | (v) | To construe and interpret any provision of the Plan and any option agreement or other agreement executed in connection with the Plan; and |
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|   | (vi) | To determine whether the option is an incentive stock option or a nonstatutory stock option. |
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|   | 5.1 | The price to be paid for shares of Common Stock upon the exercise of each option shall be determined by the Committee at the time such option is granted, but such price in no event shall be less than the fair market value of the Common Stock on the date on which such option is granted.  For purposes of the Plan, “fair market value” shall mean the closing price of a share of Common Stock, as reported by the Nasdaq Stock Market, or by any other exchange upon which the shares may be traded, on the day on which the value is to be determined or if that day is not a stock trading day, then on the last preceding stock trading day.  Notwithstanding the foregoing, in the case of an incentive stock option granted to any person who, at the time of grant of such option, owns stock of the Company possessing more than 10% of the total combined voting power of all classes of stock of the Company, the option price must be at least 110% of the fair market value of the stock subject to the option and such option by its terms must not be exercisable after the expiration of five years from the date such option is granted. |
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|   | 5.2 | Each option shall be exercisable during and over such period ending not later than ten years from the date it was granted, as may be determined by the Committee and stated in the option, except as otherwise required in Paragraph 5.1 above.  No incentive stock option shall be granted after the date 10 years after the date this Plan is first adopted and approved by the Board of Directors or the date the Plan is approved by the shareholders, whichever is earlier.  The term “Board of Directors” as used herein shall mean the Board of Directors of the Company and not a committee thereof. |
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|   | 5.3 | In the case of incentive stock options, the aggregate fair market value (determined as of the date an incentive stock option is granted) of stock with respect to which stock options intended to meet the requirements of Code Section 422 become exercisable for the first time by an individual during any calendar year under all plans of the Company shall not exceed $100,000; provided further, that if the limitation is exceeded, the incentive stock option(s) which cause the limitation to be exceeded shall be treated as nonstatutory stock options. |
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|   | 5.4 | Payment for shares purchased pursuant to exercise of an option shall be made either in cash or by check, or by delivery in exchange for such option shares Company shares with a fair market value on the date of exercise equal to the option price, or a combination of both.  If Company shares are used, an optionee may tender only shares without legend that such optionee has owned for six months or longer prior to the exercise date of the option.  The Committee also may allow exercises by any other means which the Committee determines to be consistent with the Plan's purpose and applicable law. Fair market value for the purpose of this Paragraph 5.4 shall have the same meaning as provided in Paragraph 5.1.  No optionee shall have any rights to dividends or other rights of a stockholder with respect to shares subject to an option until such optionee has given written notice of exercise of such option and paid in full for such shares.  Whenever the Company proposes or is required to issue or transfer shares of Common Stock under the Plan, the Company shall have the right to require the optionee or his or her legal representative to remit to the Company an amount sufficient to satisfy any federal, state and/or local withholding tax requirements prior to the delivery of any certificate or certificates for such shares. If required by the Committee, or,  pursuant to procedures established by the Committee, an optionee so elects, shares of Common Stock having an aggregate fair market value, as determined by the Committee, consistent with the requirements of Treas. Reg. § 20.2031-2 sufficient to satisfy the applicable withholding taxes, shall be withheld from the shares otherwise to be received upon the exercise of a non-qualified option. The maximum number of shares that may be withheld by the Company from option shares at the time of an option exercise shall not exceed the number of shares necessary to meet the optionee’s required tax withholding based on the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to the optionee’s supplemental taxable income generated by the exercise. |
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|   | 5.5 | The Committee shall, in its sole discretion, provide in an award agreement for the automatic grant of a new option to any optionee who delivers Company shares as full or partial payment of the exercise price of the original option.  Any new option granted in such a case shall: |
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|   | (i) | Be for the same number of shares as the optionee delivered in exercising the original option; |
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|   | (ii) | Have an exercise price of 100% of the fair market value of the shares on the date of exercise of the original option (the grant date for the new option); and |
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|   | (iii) | Have a term equal to the remaining term of the original option. |
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|   | 5.6 | If an optionee’s employment by the Company or a subsidiary terminates by reason of the optionee’s retirement, death or permanent and total disability (as defined in Section 22(e)(3) of the Code), all of the optionee’s outstanding options must thereafter be exercised during the period of twelve months after the date of the optionee’s retirement, death or disability, or the stated period of the option, whichever period is shorter.  Notwithstanding the foregoing, in the case of an incentive stock option, if an optionee’s employment by the Company or a subsidiary terminates solely by reason of the optionee’s retirement, all such outstanding options must thereafter be exercised during the period of three months after the date of the optionee’s retirement, or the stated period of the option, whichever period is shorter. (The term “retirement” as used herein means such termination of employment in circumstances under which an individual is entitled to early or normal retirement benefits under any then existing pension plan of the Company or a subsidiary.) |
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|   | 5.7 | If an optionee’s employment by the Company or a subsidiary is terminated by reason other than retirement, death or permanent and total disability, all of the optionee’s unexercised outstanding options, unless otherwise provided in an employment agreement, shall become null and void. |
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|   | 5.8 | The Committee may require each person purchasing shares pursuant to the option to represent to and agree with the Company in writing that he/she is acquiring the shares without a view to distribution thereof.  The certificates for such may include any legend which the Committee deems appropriate to reflect any restrictions on transfers. |
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|   | 5.9 | Except as provided in Paragraph 5.10, no option granted pursuant to this Plan shall be transferable otherwise than by will or by the laws of descent and distribution, or pursuant to a qualified domestic relations order.  The Company shall not be liable to any person for honoring the exercise of the option of a deceased optionee by the person or persons it shall have determined in good faith to have acquired the option.  During the lifetime of an optionee, the option shall be exercisable only by the optionee. |
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|   | 5.10 | Subject to such rules as the Committee may adopt to preserve the purposes of the Plan, an optionee may transfer a nonstatutory stock option without consideration to the following (“Permitted Transferees”): |
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|   | (i) | a member of the optionee’s immediate family, including only his or her spouse, lineal descendants, and adopted children, the spouse’s lineal descendants and adopted children, and the legal representatives of any of those persons who are minors; |
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|   | (ii) | an irrevocable trust solely for the benefit of the optionee and his or her immediate family; |
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|   | (iii) | a partnership, limited liability company, or corporate entity for which the sole owners of its capital interests are the optionee and his or her immediate family; or |
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|   | (iv) | a revocable trust with respect to which the optionee, as settlor of the trust, retains the right of revocation or amendment until his or her death. |
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|   | (i) | Increase the total number of shares reserved for the purposes of the Plan. |
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|   | (ii) | Change the employees (or class of employees) eligible to receive options under the Plan. |
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|   | (iii) | Change the class of shares for which options may be granted. |
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|   | (iv) | Change the provisions of Paragraph 5.1 concerning the exercise price. |
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|   | (v) | Change the provisions of Paragraph 5.2 concerning the maximum term of the options. |
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