Exhibit 10.46















Simulations
Plus, Inc.




2007
STOCK OPTION PLAN






(Effective
as of February 23, 2007)



























Prepared
by:


Luce,
Forward, Hamilton & Scripps LLP


600 West
Broadway, Suite 2600


San Diego,
CA 92101


(619)
236-1414











TABLE OF
CONTENTS






PageARTICLE 1 PURPOSE OF THE
      PLAN
              1ARTICLE 2
      DEFINITIONS
              12.1
              “Aministrator
              12.2
              “Affiliate
              12.3
              “Applicable
      Laws
              12.4
              “Award
              12.5
              “Award
      Agreement
              12.6
              “Awarded
      Stock
              12.7
              “Beneficially Owned” and “Beneficial
      Ownership
              12.8
              “Board
              22.9
              “Change in Control
              22.10
              “Code
              22.11
              “Committee
              22.12
              “Common Stock
              22.13
              “Consultant
              32.14
              “Corporation
              32.15
              “Director
              32.16
              “Disability
              32.17
              “Effective
      Date
              32.18
              “Employee
              32.19
              “Exchange
      Act
              32.20
              “Exchange Program
              32.21
              “Fair Market
      Value
              32.22
              “Fiscal
      Year
              42.23
              “Incentive Stock Option
              42.24
              “Non-Qualified Stock Option
              42.25
              “Officer
              42.26
              “Option
              42.27
              “Other
      Stock Based Awards
              42.28
              “Outside
      Director
              42.29
              “Participant
              42.30
              “Performance
      Share
              42.31
              “Performance
      Unit
              42.32
              “Period
      of Restriction
              42.33
              “Plan
              52.34
              “Restricted
      Stock
              52.35
              “Restricted
      Stock Unit
              52.36
              “Rule
      16b-3
              52.37
              “Section 16(b)
              52.38
              “Service
      Provider
              52.39
              “Share
              52.40
              “Stock
      Appreciation Right” or “SAR
              52.41
              “Unrestricted
      Stock
              5
  i
  ARTICLE 3 PLAN
      ADMINISTRATION
              53.1
              Procedure
              53.2
              Powers of the
      Administrator
              63.3
              Effect of Administrator’s
      Decision
              7ARTICLE 4 STOCK SUBJECT TO THE
      PLAN
              74.1
              Stock Subject to the
      Plan
              84.2
              Lapsed Awards
              84.3
              Adjustments for Changes in
      Capitalization and Similar Events
              84.4
              Substitute
    Awards
              9ARTICLE 5
      PARTICIPATION
              95.1
              Eligibility
              95.2
              Termination of
      Participation
              9ARTICLE 6 STOCK
      OPTIONS
              96.1
              Option Grant
              96.2
              Exercise Price
              106.3
              Waiting Period and Exercise
      Dates
              106.4
              Exercise of
    Option
              106.5
              Form of
      Consideration
              126.6
              Promissory
Note
              12ARTICLE 7 RESTRICTED
      STOCK
              137.1
              Grant of Restricted
      Stock
              137.2
              Restricted Stock
      Agreement
              137.3
              Transferability
              137.4
              Other
    Restrictions
              137.5
              Removal of
      Restrictions
              137.6
              Voting Rights
              137.7
              Dividends and Other
      Distributions
              137.8
              Return of Restricted Stock to
      Corporation
              13ARTICLE 8 UNRESTRICTED
      STOCK
              14ARTICLE 9 STOCK APPRECIATION
      RIGHTS
              149.1
              Grant of SARs
              149.2
              Number of
    Shares
              149.3
              Exercise Price and Other
      Terms
              149.4
              SAR Agreement
              149.5
              Expiration of
    SARs
              149.6
              Payment of SAR
      Amount
              149.7
              Buyout
    Provisions
              14ARTICLE 10 PERFORMANCE UNITS
      AND PERFORMANCE SHARES
              1410.1
              Grant of Performance
      Units/Shares
              1410.2
              Value of Performance
      Units/Shares
              1510.3
              Performance Objectives and
      Other Terms
              1510.4
              Earning of Performance
      Units/Shares
              15  ii
  10.5
                Form
      and Timing for Payment of Performance Units/Shares
                1510.6
                Cancellation of Performance
      Units/Shares
                15ARTICLE 11 RESTRICTED STOCK
      UNITS
                15ARTICLE 12 OTHER STOCK BASED
      AWARDS
                15ARTICLE 13 DISSOLUTION OR
      LIQUIDATION; OR CHANGE IN CONTROL
                1613.1
                Dissolution or
      Liquidation
                1613.2
                Change in
    Control
                16ARTICLE 14 MISCELLANEOUS
      PROVISIONS
                1814.1
                No Uniform Rights to
      Awards
                1814.2
                Share
    Certificates
                1814.3
                No Rights as a Service
      Provider
                1814.4
                No Rights as
      Shareholder
                1814.5
                No Trust or Fund
      Created
                1814.6
                No Fractional
      Shares
                1814.7
                Requirement of Consent and
      Notification of Election Under Code § 83(b) or Similar
      Provision
                1914.8
                Requirement of Notification
      Upon Disqualifying Disposition Under
    Code § 421(b)
                1914.9
                Leaves of
    Absence
                1914.10
                Notices
                1914.11
                Non-Transferability of
      Awards
                1914.12
                Date of Grant
                1914.13
                Amendment and Termination of
      Plan
                1914.14
                Conditions Upon Issuance of
      Shares
                2014.15
                Severability
                2014.16
                Inability to Obtain
      Authority
                2014.17
                Shareholder
      Approval
                2014.18
                Governing Law
                20










iii




Simulations
Plus, Inc.




2007
STOCK OPTION PLAN




ARTICLE
1


PURPOSE
OF THE PLAN




The
purpose of this Simulations Plus, Inc. 2007 Stock Option Plan is to promote the
interests of Simulations Plus, Inc. and its shareholders by: (i) attracting
and retaining exceptional Directors, Employees and Consultants (including
prospective Directors, Employees and Consultants) of the Corporation, and
(ii) enabling such individuals to participate in the long-term growth and
financial success of the Corporation.




Accordingly,
the Plan provides for the granting of Incentive Stock Options, Non-Qualified
Stock Options, Restricted Stock Awards, Unrestricted Stock Awards, Restricted
Stock Units, Stock Appreciation Rights, Performance Unit Awards, Performance
Share Awards, and Other Stock Based Awards.




ARTICLE
2


DEFINITIONS




2.1  “Administrator ”means the Board, the
Committee, or any Officer or Employee of the Corporation to whom the Board or
the Committee has delegated authority to administer the Plan.




2.2  “Affiliate ” means a
“parent” or “subsidiary” corporation as defined in
Code §§ 424(e) and (f), or that the Board has designated as
participating in the Plan.




2.3  “Applicable
Laws ”means the requirements
relating to the administration of equity-based awards or equity compensation
plans under U.S. federal and state laws, the Code, any stock exchange or
quotation system on which the Common Stock is listed or quoted, and the
applicable laws of any foreign country or jurisdiction where Awards are, or will
be, granted under the Plan.




2.4  “Award ”means, individually or
collectively, a grant under the Plan of Incentive Stock Options, Non-Qualified
Stock Options, Restricted Stock Awards, Unrestricted Stock Awards, Restricted
Stock Units, Stock Appreciation Rights, Performance Unit Awards, Performance
Share Awards or Other Stock Based Awards.




2.5  “Award
Agreement ”means the written or
electronic agreement setting forth the terms and provisions applicable to each
Award granted under the Plan. The Award Agreement is subject to the terms and
conditions of the Plan.




2.6  “Awarded
Stock ”means the Common Stock
subject to an Award.




2.7  “Beneficially
Owned” and “Beneficial Ownership ”means as set forth in
Rule 13d-3 of the Exchange Act, provided that the exercise of voting rights
by a nominee or proxy holder of the Board in connection with a meeting or
proposed action by shareholders of the Corporation shall not be deemed to
constitute such ownership and any ownership or voting power of the trustee under
an employee benefit plan of the Corporation shall not be deemed to constitute
such ownership.




1




2.8  “Board ”means the Board of
Directors of the Corporation.




2.9  “Change
in Control ”means, unless otherwise
defined under Code § 409A and reflected in the Award Agreement, the
occurrence of any of the following events:




(a)  the
shareholders of the Corporation approve a merger or consolidation of the
Corporation with any other entity such that after the transaction more than 50%
of the outstanding “Voting Securities” (defined as securities the holders of
which are entitled to vote for the election of Directors) of the surviving
entity would be Beneficially Owned by “Persons” (as such term is used in
§§ 13(d) and 14(d) of the Exchange Act) who did not Beneficially
Own “Voting Securities” of the Corporation prior to the
transaction;




(b)  Directors
who were members of the Board immediately prior to a meeting of the shareholders
of the Corporation which meeting involves a contest for the election of at least
one directorship, do not constitute at least a majority of the Directors
following such meeting or election;




(c)  an
acquisition, directly or indirectly, of more than 50% of the outstanding shares
of any class of “Voting Securities” of the Corporation by any
“Person;”




(d)  the
shareholders of the Corporation approve a sale of all or substantially all of
the assets of the Corporation or the liquidation of the Corporation;
OR




(e)  there is
a change, during any period of two consecutive years or less of a majority of
the Board as constituted as of the beginning of such period, unless the election
of each Director who is not a Director at the beginning of such period was
approved by a vote of at least two-thirds of the Directors then in office who
were Directors at the beginning of the period.




Notwithstanding
the foregoing, a Change in Control shall not be deemed to have occurred in the
event the Corporation forms a holding company as a result of which the holders
of the Corporation’s “Voting Securities” immediately prior to the transaction,
hold, in approximately the same relative proportions as they held prior to the
transaction, substantially all of the “Voting Securities” of a holding
company owning all of the Corporation’s “Voting Securities” after the completion
of the transaction.




2.10  “Code ”means the Internal
Revenue Code of 1986, as amended, and the Treasury regulations promulgated
thereunder.  Any reference to a section of the Code herein will be a
reference to any successor or amended section of the Code.




2.11  “Committee ”means a committee of
Directors or other individuals satisfying Applicable Laws and appointed by the
Board in accordance with Article 3 of the Plan.  If the Committee
is comprised of two Directors, both Directors shall be “non-employee directors”
as that term is defined in Rule 16b-3.




2.12  “Common
Stock ”means the Common Stock
of the Corporation, or in the case of Awards not based on Shares, the cash
equivalent thereof.




2




2.13  “Consultant ”means any person,
including an advisor, engaged by the Corporation or an Affiliate to render
services to such entity.




2.14  “Corporation ”means Simulations Plus,
Inc., a California corporation.




2.15  “Director ” means a
member of the Board.




2.16  “Disability ”means, unless otherwise
defined under Code § 409A and reflected in the Award Agreement, total and
permanent disability as defined in Code § 22(e)(3), provided that in the
case of Awards other than Incentive Stock Options, the Administrator in its
discretion may determine whether a permanent and total disability exists in
accordance with uniform and non-discriminatory standards adopted by the
Administrator from time to time.




2.17  “Effective
Date ”means as of February
23, 2007, provided that the Plan as amended and restated is approved by the
shareholders of the Corporation on or within 12 months of such
date.




2.18  “Employee ”means any person,
including Officers and Directors, employed by the Corporation or an
Affiliate.  Neither service as a Director nor payment of a director’s
fee by the Corporation will be sufficient to constitute “employment” by the
Corporation.




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




2.20  “Exchange
Program ”means a program under
which (i) outstanding Awards are surrendered or cancelled in exchange for
Awards of the same type (which may have lower exercise prices and different
terms), Awards of a different type, and/or cash; or (ii) the exercise price
of an outstanding Award is reduced.  The terms and conditions of any
Exchange Program will be determined by the Administrator in its sole
discretion.




2.21  “Fair
Market Value ”means, as of any date
and unless the Administrator determines otherwise, the value of Common Stock
determined as follows:




(a)  If the
Common Stock is listed on any established stock exchange or a national market
system, including without limitation the American Stock Exchange, the NASDAQ
National Market or the NASDAQ SmallCap Market of the NASDAQ Stock Market, its
Fair Market Value will be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or system for the day
of determination, as reported in The Wall Street Journalor such other source as the Administrator deems reliable;




(b)  If the
Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a Share of Common Stock will
be the mean between the high bid and low asked prices for the Common Stock for
the day of determination, as reported in The Wall Street Journalor
such other source as the Administrator deems reliable; or




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




3




Notwithstanding
the preceding, for federal, state, and local income tax reporting purposes and
for such other purposes as the Administrator deems appropriate, the Fair Market
Value shall be determined by the Administrator in accordance with uniform and
nondiscriminatory standards adopted by it from time to time.




2.22  “Fiscal
Year ”means the fiscal year
of the Corporation.




2.23  “Incentive
Stock Option ”means an Option
intended to qualify as an incentive stock option within the meaning of Code
§ 422 and the Treasury regulations promulgated thereunder.




2.24  “Non-Qualified
Stock Option ”means an Option that by
its terms does not qualify or is not intended to qualify as an Incentive Stock
Option.




2.25  “Officer ” means a
person who is an officer of the Corporation within the meaning of § 16 of
the Exchange Act and the rules and regulations promulgated
thereunder.




2.26  “Option ”means an Incentive
Stock Option or a Non-Qualified Stock Option or both, as the context
requires.




2.27  “Other
Stock Based Awards ”means any other awards
not specifically described in the Plan that are valued in whole or in part by
reference to, or are otherwise based on, Shares and are created by the
Administrator pursuant to Article 12.




2.28  “Outside
Director ”means a Director who
either: (i) is not a current Employee of the Corporation or an “affiliated
corporation” (within the meaning of the Treasury regulations promulgated under
Code § 162(m)), is not a former employee of the Corporation or an
“affiliated corporation” receiving compensation for prior services (other than
benefits under a tax qualified retirement plan), was not an officer of the
Corporation or an “affiliated corporation” at any time, and is not currently
receiving direct or indirect remuneration (within the meaning of the Treasury
regulations promulgated under Code § 162(m)) from the Corporation or an
“affiliated corporation” for services in any capacity other than as a Director;
or (ii) is otherwise considered an “outside director” for purposes of Code
§ 162(m).




2.29  “Participant ”means the holder of an
outstanding Award granted under the Plan.




2.30  “Performance
Share ”means, pursuant to
Article 10, an Award granted to a Service Provider under which, upon the
satisfaction of predetermined individual or Corporation performance goals and/or
objectives, shares of Common Stock are paid to the Participant.




2.31  “Performance
Unit ”means, pursuant to
Article 10, an Award granted to a Service Provider under which, upon the
satisfaction of predetermined individual or Corporation performance goals and/or
objectives, a cash payment shall be paid to the Participant based on the number
of “units” awarded to the Participant.  For this purpose, the term
“unit” means bookkeeping units, each of which represents such monetary amount as
shall be designated by the Administrator in each Award Agreement.




2.32  “Period
of Restriction ”means the period during
which the transfer of Shares of Restricted Stock are subject to
restrictions.  Such restrictions may be based on the passage of time,
the achievement of target levels of performance, or the occurrence of other
events as determined by the Administrator.




4




2.33  “Plan ”means this Simulations
Plus, Inc. 2007 Stock Option Plan, as amended from time to time.




2.34  “Restricted
Stock ”means shares of Common
Stock issued pursuant to a Restricted Stock Award under the Plan or issued
pursuant to the early exercise of an Option.




2.35  “Restricted
Stock Unit ”means an Award that the
Administrator permits to be paid in installments or on a deferred basis, and
that represents an unfunded and unsecured promise to deliver Shares, cash, other
securities, other Awards or other property in accordance with the terms of the
applicable Award Agreement.




2.36  “Rule
16b-3 ”means Rule 16b-3 of the
Exchange Act or any successor to Rule 16b-3, as in effect when discretion
is being exercised with respect to the Plan.




2.37  “Section 16(b) ”means
Section 16(b) of the Exchange Act.




2.38  “Service
Provider ”means an Employee,
Director or Consultant.




2.39  “Share ”means a share of the
Common Stock, as adjusted in accordance with Section 4.3 and
Article 13 of the Plan.




2.40  “Stock
Appreciation Right” or “SAR ”means an Award that is
designated as a SAR, and represents an unfunded and unsecured promise to deliver
Shares, cash, other securities, other Awards or other property equal in value to
the excess, if any, of the Fair Market Value per Share over the exercise price
per Share of the SAR, subject to the terms of the applicable Award
Agreement.




2.41  “Unrestricted
Stock ”means as defined in
Article 8 of the Plan.




ARTICLE
3


PLAN
ADMINISTRATION




3.1  Procedure.




(a)  Board’s
Delegation.The Board may delegate administration of the Plan
to a Committee(s).  If administration is delegated to a Committee, the
Committee shall have, in connection with the administration of the Plan, the
powers possessed by the Board, subject, however, to such resolutions, not
inconsistent with the provisions of this Plan, as may be adopted from time to
time by the Board.  The Board may abolish the Committee at any time
and revest in the Board the administration of the Plan.  Different
Committees with respect to different groups of Service Providers may administer
the Plan.




(b)  Code
§ 162(m).  To the extent that the Administrator determines
it to be desirable and necessary to qualify Awards granted hereunder as
“performance-based compensation” within the meaning of Code § 162(m), the
Plan will be administered by a Committee of two or more Outside
Directors.




5




(c)  Rule 16b-3.To the
extent desirable to qualify transactions hereunder as exempt under Rule 16b-3,
the transactions contemplated hereunder will be structured to satisfy the
requirements for exemption under Rule 16b-3.




(d)  Other
Administration.Other than as provided above, the Plan will be
administered by: (i) the Board, or (ii) a Committee, which committee
will be constituted to satisfy Applicable Laws.




(e)  Delegation of Authority for
Day-to-Day Administration.Except to the extent prohibited by
Applicable Law, the Administrator may delegate to one or more individuals the
day-to-day administration of the Plan and any of the functions assigned to it in
this Plan.  Such delegation may be revoked at any time.




3.2  Powers of the
Administrator .  Subject to the
provisions of the Plan, and in the case of a Committee, subject to the specific
duties delegated by the Board to such Committee, the Administrator will have the
authority, in its discretion:




(a)  To
determine the Fair Market Value.




(b)  To select
the Service Providers to whom Awards may be granted hereunder.




(c)  To
determine the number of Shares to be covered by each Award granted
hereunder.




(d)  To
approve forms of agreement for use under the Plan.




(e)  To
determine the terms and conditions, not inconsistent with the terms of the Plan,
of any Award granted hereunder.  Such terms and conditions include,
but are not limited to, the exercise price, the time or times when Awards may be
exercised (which may be based on performance criteria), any vesting acceleration
or waiver of forfeiture or repurchase restrictions, and any restriction or
limitation regarding any Award or the Shares relating thereto, based in each
case on such factors as the Administrator will determine in its sole
discretion.




(f)  To reduce
the exercise price of any Award to the then current Fair Market Value if the
Fair Market Value of the Common Stock covered by such Award shall have declined
since the date the Award was granted.




(g)  To
institute an Exchange Program.




(h)  To
construe and interpret the terms of the Plan and Awards granted pursuant to the
Plan, and to establish, amend and revoke rules and regulations for its
administration.




(i)  To
prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the
purpose of satisfying applicable foreign laws and/or qualifying for preferred
tax treatment under applicable foreign tax laws.




6




(j)  To modify
or amend each Award (subject to Section 14.13(c) of the Plan),
including the discretionary authority to extend the post-termination exercise
period of Awards longer than is otherwise provided for in the Plan.




(k)  To allow
Participants to satisfy withholding tax obligations by electing to have the
Corporation withhold from the Shares or cash to be issued upon exercise or
vesting of an Award that number of Shares or cash having a Fair Market Value
equal to the minimum amount required to be withheld.  The Fair Market
Value of any Shares to be withheld will be determined on the date that the
amount of tax to be withheld is to be determined.  All elections by a
Participant to have Shares or cash withheld for this purpose will be made in
such form and under such conditions as the Administrator may deem necessary or
advisable.




(l)  To
authorize any person to execute on behalf of the Corporation any instrument
required to affect the grant of an Award previously granted by the
Administrator.




(m)  To allow
a Participant to defer the receipt of the payment of cash or the delivery of
Shares that would otherwise be due to such Participant under an
Award.




(n)  To
determine whether Awards will be settled in Shares, cash or in any combination
thereof.




(o)  To create
Other Stock Based Awards for issuance under the Plan.




(p)  To
establish a program whereby Service Providers designated by the Administrator
can reduce compensation otherwise payable in cash in exchange for Awards under
the Plan.




(q)  To impose
such restrictions, conditions or limitations as it determines appropriate as to
the timing and manner of any resales by a Participant or other subsequent
transfers by the Participant of any Shares issued as a result of or under an
Award, including without limitation, (i) restrictions under an insider
trading policy, and (ii) restrictions as to the use of a specified
brokerage firm for such resales or other transfers.  AND




(r)  To make
all other determinations deemed necessary or advisable for administering the
Plan.




3.3  Effect of Administrator’s
Decision .  The
Administrator’s decisions, determinations and interpretations will be final and
binding on all Participants and any other holders of Awards.




ARTICLE
4


STOCK
SUBJECT TO THE PLAN




4.1  Stock Subject to the
Plan .  Subject to the
provisions of this Article 4 and Article 13 of the Plan, the maximum
aggregate number of Shares that may be issued under the Plan is 500,000, of
which the maximum number of Shares that may be delivered pursuant to Incentive
Stock Options granted under the Plan shall be 500,000.  The Shares may
be authorized and unissued, or reacquired Common Stock.  Shares shall
not be deemed to have been issued pursuant to the Plan with respect to any
portion of an Award that is paid in cash.  Upon payment in Shares
pursuant to the exercise of an Award, the number of Shares available for
issuance under the Plan shall be reduced only by the number of Shares actually
issued in such payment.  If a Participant pays the exercise price (or
purchase price, if applicable) of an Award through the tender of Shares, or if
Shares are tendered or withheld to satisfy any Corporation withholding
obligations, the number of Shares so tendered or withheld shall again be
available for issuance pursuant to future Awards under the Plan.




7




4.2  Lapsed
Awards .  If any
outstanding Award expires or is terminated or canceled without having been
exercised or settled in full, or if Shares acquired pursuant to an Award subject
to forfeiture or repurchase are forfeited or repurchased by the Corporation, the
Shares allocable to the terminated portion of such Award or such forfeited or
repurchased Shares shall again be available for grant under the
Plan.




4.3  Adjustments for Changes in
Capitalization and Similar Events .  In the event that
any dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
change in corporate structure or other transaction not involving the receipt of
consideration by the Company, then the Administrator shall:




(a)  appropriately
adjust any or all of (i) the number of Shares or other securities of the
Company (or number and kind of other securities or property) with respect to
which Awards may be granted, including (1) the aggregate number of Shares
that may be delivered pursuant to Awards granted under the Plan, and the maximum
number of Shares that may be delivered pursuant to Incentive Stock Options
granted under the Plan, as provided in Section 4.1 of the Plan, and
(2) the maximum number of Shares or other securities of the Company (or
number and kind of other securities or property) with respect to which Awards
may be granted to any Participant in any fiscal year of the Company, and
(ii) the terms of any outstanding Award, including (1) the number of
Shares or other securities of the Company (or number and kind of other
securities or property) subject to outstanding Awards or to which outstanding
Awards relate, and (2) the exercise price with respect to outstanding
Awards; OR




(b)  if
required under the terms of an Award, make provision for a cash payment to the
holder of an outstanding Award in consideration for the cancellation of such
Award, including, in the case of an outstanding Option or SAR, a cash payment to
the holder of such Option or SAR in consideration for the cancellation of such
Option or SAR in an amount equal to the excess, if any, of the Fair Market Value
(as of a date specified by the Administrator) of the Shares subject to such
Option or SAR over the aggregate exercise price of such Option or SAR (it being
understood that, in such event, any Option or SAR having a per Share exercise
price equal to, or in excess of, the Fair Market Value of a Share subject to
such Option or SAR may be cancelled and terminated without any payment or
consideration therefore).




Such
adjustments made by the Administrator shall be final, binding and
conclusive.  Any Shares issuable as a result of any such adjustment
shall be rounded to the next lower whole Share; no fractional Shares shall be
issued.  At all times the conversion of any convertible securities of
the Company shall not be treated as a “transaction not involving the receipt of
consideration by the Company.”




8




4.4  Substitute
Awards .  Awards may, in
the discretion of the Administrator, be granted under the Plan in assumption of,
or in substitution for, outstanding awards previously granted by the Corporation
and any Affiliate or a company acquired by the Corporation or with which the
Corporation combines (“Substitute Awards”).  The number of Shares
underlying any Substitute Awards shall be counted against the aggregate number
of Shares available for Awards under the Plan; provided, however, that
Substitute Awards issued in connection with the assumption of, or in
substitution for, outstanding awards previously granted by an entity that is
acquired by the Corporation or its Affiliate through a merger or acquisition
shall not be counted against the aggregate number of Shares available for Awards
under the Plan; provided further, however, that Substitute Awards issued in
connection with the assumption of, or in substitution for, outstanding stock
options intended to qualify for special tax treatment under Code §§ 421 and
422 that were previously granted by an entity that is acquired by the
Corporation or an Affiliate through a merger or acquisition shall be counted
against the aggregate number of Shares available for Incentive Stock Options
under the Plan.




ARTICLE
5


PARTICIPATION




5.1  Eligibility .  Any Director,
Employee or Consultant (including any prospective Director, Employee or
Consultant) of the Corporation and any Affiliate shall be eligible to be
designated a Participant in the Plan for purposes of receiving
Awards.  However, Incentive Stock Options may be granted only to
Employees.




5.2  Termination of
Participation .  If a Participant
is no longer a Service Provider due to a termination for “Cause,” then all
Awards granted to the Participant shall expire upon the earlier of: (i) the
date of the occurrence giving rise to such termination, or (ii) the natural
expiration of the Award according to its underlying
terms.  Thereafter, the Participant shall have no rights with respect
to any Awards under the Plan.




(a)  Defining
“Cause.”  For purposes of the Plan, “Cause” shall mean a
Participant’s personal dishonesty; misconduct; breach of fiduciary duty;
incompetence; intentional failure to perform stated obligations; willful
violation of any law, rule, regulation or final cease and desist order; or any
material breach of any provision of this Plan, Award Agreement, or any
employment agreement.




ARTICLE
6


STOCK
OPTIONS




6.1  Option
Grant .  Subject to the
provisions of the Plan, the Administrator shall have sole and plenary authority
to determine the Participants to whom Options shall be granted, the number of
Shares to be covered by each Option, whether the Option will be an Incentive
Stock Option or a Non-Qualified Stock Option and the conditions and limitations
applicable to the vesting and exercise of the Option.  However, no
Participant shall be granted more than 50,000 Options in any calendar
year.  In the case of Incentive Stock Options, the terms and
conditions of such grants shall be subject to and comply with such rules as may
be prescribed by Code § 422 and any regulations related thereto, as may be
amended from time to time.  All Options granted under the Plan shall
be Non-Qualified Stock Options unless the applicable Award Agreement expressly
states that the Option is intended to be an Incentive Stock
Option.  If an Option is intended to be an Incentive Stock Option, and
if for any reason such Option (or any portion thereof) shall not qualify as an
Incentive Stock Option, then, to the extent of such non-qualification, such
Option (or portion thereof) shall be regarded as a Non-Qualified Stock Option
appropriately granted under the Plan, provided that such Option (or portion
thereof) otherwise complies with the Plan’s requirements relating to
Non-Qualified Stock Options.




9




(a)  Term of
Option.The term of each Option will be stated in the Award
Agreement. In the case of an Incentive Stock Option, the term will be 10 years
from the date of grant or such shorter term as may be provided in the Award
Agreement. Moreover, in the case of an Incentive Stock Option granted to a
Participant who, at the time the Incentive Stock Option is granted, owns stock
representing more than 10% of the total combined voting power of all classes of
stock of the Corporation or any Affiliate, the term of the Incentive Stock
Option will be five years from the date of grant or such shorter term as may be
provided in the Award Agreement.




(b)  $100,000 Limitation for Incentive
Stock Options.  Each Option will be designated in the Award
Agreement as either an Incentive Stock Option or a Non-Qualified Stock
Option.  However, notwithstanding such designation, to the extent the
aggregate Fair Market Value of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by the Participant during any
calendar year (under all plans of the Corporation and any Affiliate) exceeds
$100,000, such Options will be treated as Non-Qualified Stock
Options.  For purposes of this Section 6.1(b), Incentive Stock
Options will be taken into account in the order in which they were
granted.  The Fair Market Value of the Shares will be determined as of
the time the Option with respect to such Shares is granted.




6.2  Exercise
Price .  Except as
otherwise established by the Administrator at the time an Option is granted and
set forth in the applicable Award Agreement, the exercise price of each Share
covered by an Option shall be not less than 100% of the Fair Market Value of
such Share (determined as of the date the Option is granted); provided, however,
that in the case of an Incentive Stock Option granted to an Employee who, at the
time of the grant of such Option, owns stock representing more than 10% of the
voting power of all classes of stock of the Corporation and any Affiliate, the
per Share exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of the grant.  Options are intended to qualify as
“qualified performance-based compensation” under Code
§ 162(m).




Notwithstanding the foregoing, Options
may be granted with an exercise price of less than 100% of the Fair Market Value
per Share on the date of grant if such Option is granted pursuant to an
assumption or substitution for another option in a manner satisfying the
provisions of Code § 424(a) (involving a corporate
reorganization).




6.3  Waiting Period and Exercise
Dates .  At the time an
Option is granted, the Administrator will fix the period within which the Option
may be exercised and will determine any conditions that must be satisfied before
the Option may be exercised.




6.4  Exercise of
Option.




(a)  Procedure for Exercise; Rights as a
Shareholder.  Any Option granted hereunder will be exercisable
according to the terms of the Plan and at such times and under such conditions
as determined by the Administrator and set forth in the Award
Agreement.  An Option may not be exercised for a fraction of a
Share.




10




An Option
will be deemed exercised when the Corporation receives: (i) written or
electronic notice of exercise (in accordance with the Award Agreement) from the
person entitled to exercise the Option, and (ii) full payment for the
Shares with respect to which the Option is exercised.  Full payment
may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Award Agreement and the
Plan.  Shares issued upon exercise of an Option will be issued in the
name of the Participant or, if requested by the Participant, in the name of the
Participant and his or her spouse.  Until the Shares are issued (as
evidenced by the appropriate entry on the books of the Corporation or of a duly
authorized transfer agent of the Corporation), no right to vote or receive
dividends or any other rights as a shareholder will exist with respect to the
Awarded Stock, notwithstanding the exercise of the Option.  The
Corporation will issue (or cause to be issued) such Shares promptly after the
Option is exercised.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are
issued, except as provided in Articles 4 and 13 of the Plan or the
applicable Award Agreement.




Exercising
an Option in any manner will decrease the number of Shares thereafter available
for sale under the Option, by the number of Shares as to which the Option is
exercised.




(b)  Termination of Relationship as
Service Provider.If a Participant ceases to be a Service
Provider, other than upon the Participant’s death or Disability, the Participant
may exercise his or her Option within such period of time as is specified in the
Award Agreement to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Award Agreement).  In the absence of a
specified time in the Award Agreement, the Option will remain exercisable for
three months following the Participant’s termination.




(c)  Disability of
Participant.If a Participant ceases to be a Service Provider
as a result of the Participant’s Disability, the Participant may exercise his or
her Option within such period of time as is specified in the Award Agreement to
the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Award
Agreement).  In the absence of a specified time in the Award
Agreement, the Option will remain exercisable for 12 months following the
Participant’s termination.




(d)  Death of
Participant.If a Participant dies while a Service Provider,
the Option may be exercised following the Participant’s death within such period
of time as is specified in the Award Agreement to the extent that the Option is
vested on the date of death (but in no event may the option be exercised later
than the expiration of the term of such Option as set forth in the Award
Agreement), by the Participant’s designated beneficiary, provided such
beneficiary has been designated prior to Participant’s death in a form
acceptable to the Administrator.  If no such beneficiary has been
designated by the Participant, then such Option may be exercised by the personal
representative of the Participant’s estate or by the person(s) to whom the
Option is transferred pursuant to the Participant’s will or in accordance with
the laws of descent and distribution.  In the absence of a specified
time in the Award Agreement, the Option will remain exercisable for 12 months
following Participant’s death.




11




(e)  Buyout
Provisions.The Administrator may at any time offer to buy out
for a payment in cash or Shares an Option previously granted based on such terms
and conditions as the Administrator shall establish and communicate to the
Participant at the time that such offer is made.




(f)  Reversion to
Plan.  Unless otherwise provided by the Administrator, if on
the date of termination, Disability or death as provided in
Sections 6.4(b), (c), and (d) of the Plan, Participant is not vested
as to his or her entire Option, the Shares covered by the unvested portion of
the Option will immediately revert to the Plan following the Participant’s
termination, Disability or death.  If the Option is not so exercised
within the time specified herein, the Option will terminate, and the Shares
covered by such Option will revert to the Plan.




6.5  Form of
Consideration .  The Administrator
will determine the acceptable form of consideration for exercising an Option,
including the method of payment. In the case of an Incentive Stock Option, the
Administrator will determine the acceptable form of consideration at the time of
grant.  To the extent permitted by Applicable Laws, consideration may
consist entirely of:




(a)  cash;




(b)  check;




(c)  promissory
note (subject to Section 6.6);




(d)  other
Shares which meet the conditions established by the Administrator to avoid
adverse accounting consequences (as determined by the
Administrator);




(e)  consideration
received by the Corporation under a cashless exercise program implemented by the
Corporation in connection with the Plan;




(f)  a
reduction in the amount of any Corporation liability to the Participant,
including any liability attributable to the Participant’s participation in any
Corporation-sponsored deferred compensation program or arrangement;




(g)  any
combination of the foregoing methods of payment; or




(h)  such
other consideration and method of payment for the issuance of Shares to the
extent permitted by Applicable Laws.




6.6  Promissory
Note .  Where applicable
and subject to the requirements of Applicable Law, payment of all or part of the
purchase price of an Award may be made by delivery of a full recourse promissory
note (“Promissory Note”).  The Promissory Note shall be executed by
the Participant, made payable to the Corporation and bear interest at such rate
as the Administrator shall determine, but in no case less than the minimum rate
which will not cause under the Code: (i) imputed interest,
(ii) original issue discount, or (iii) any other similar
result.  Unless otherwise determined by the Administrator, interest on
the Promissory Note shall be payable in quarterly installments on March 31,
June 30, September 30, and December 31 of each calendar
year.  A Promissory Note shall contain such other terms and conditions
as may be determined by the Administrator; provided, however, that the full
principal amount of the Promissory Note and all unpaid interest accrued thereon
shall be due not later than five years from the date of exercise.  The
Corporation may obtain from the Participant a security interest in all Awards
issued to the Participant under the Plan for the purpose of securing payment
under the Promissory Note and may retain possession of, where applicable, the
Share certificates in order to perfect its security interest.




12




ARTICLE
7


RESTRICTED
STOCK




7.1  Grant of Restricted
Stock .  Subject to the
terms and provisions of the Plan, the Administrator, at any time and from time
to time, may grant Shares of Restricted Stock to Service Providers in such
amounts as the Administrator, in its sole discretion, will
determine.




7.2  Restricted Stock
Agreement .  Each Award of
Restricted Stock will be evidenced by an Award Agreement that will specify the
Period of Restriction, the number of Shares granted, and such other terms and
conditions as the Administrator will determine in its sole
discretion.  Unless the Administrator determines otherwise, Shares of
Restricted Stock will be held by the Corporation as escrow agent until the
restrictions on such Shares have lapsed.




7.3  Transferability .  Except as
provided in this Article 7, Shares of Restricted Stock may not be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated until the
end of the applicable Period of Restriction.




7.4  Other
Restrictions .  The
Administrator, in its sole discretion, may impose such other restrictions on
Shares of Restricted Stock as it may deem advisable or appropriate.




7.5  Removal of
Restrictions .  Except as
otherwise provided in this Article 7, Shares of Restricted Stock covered by
each Restricted Stock grant made under the Plan will be released from escrow as
soon as practicable after the last day of the Period of
Restriction.  The Administrator, in its discretion, may accelerate the
time at which any restrictions will lapse or be removed.




7.6  Voting
Rights .  During the Period
of Restriction, Service Providers holding Shares of Restricted Stock granted
hereunder may exercise full voting rights with respect to those Shares, unless
the Administrator determines otherwise.




7.7  Dividends and Other
Distributions .  During the Period
of Restriction, Service Providers holding Shares of Restricted Stock will be
entitled to receive all dividends and other distributions paid with respect to
such Shares unless otherwise provided in the Award Agreement.  If any
such dividends or distributions are paid in Shares, the Shares will be subject
to the same restrictions on transferability and forfeitability as the Shares of
Restricted Stock with respect to which they were paid.




7.8  Return of Restricted Stock
to Corporation .  On the date set
forth in the Award Agreement, the Restricted Stock for which restrictions have
not lapsed will revert to the Corporation and again will become available for
grant under the Plan.




13




ARTICLE
8


UNRESTRICTED
STOCK




Pursuant
to the terms of the applicable Award Agreement, a Service Provider may be
awarded (or sold at a discount) shares of Common Stock that are not subject to a
Period of Restriction, in consideration for past services rendered thereby to
the Corporation and any Affiliate or for other valid consideration.




ARTICLE
9


STOCK
APPRECIATION RIGHTS




9.1  Grant of
SARs .  Subject to the
terms and conditions of the Plan, a SAR may be granted to Service Providers at
any time and from time to time as will be determined by the Administrator, in
its sole discretion.




9.2  Number of
Shares .  The Administrator
will have sole discretion to determine the number of SARs granted to any Service
Provider.




9.3  Exercise Price and Other
Terms .  The
Administrator, subject to the provisions of the Plan, will have sole discretion
to determine the terms and conditions of SARs granted under the
Plan.




9.4  SAR
Agreement .  Each SAR grant
will be evidenced by an Award Agreement that will specify the exercise price,
the term of the SAR, the conditions of exercise, and such other terms and
conditions as the Administrator, in its sole discretion, will
determine.




9.5  Expiration of
SARs .  A SAR granted
under the Plan will expire upon the date determined by the Administrator, in its
sole discretion, and as set forth in the Award Agreement. Notwithstanding the
foregoing, the rules of Sections 6.4(b), (c) and (d) will also
apply to SARs.




9.6  Payment of SAR
Amount .  Upon exercise of
a SAR, a Participant will be entitled to receive payment from the Corporation an
amount determined by multiplying: (i) the difference between the Fair
Market Value of a Share on the date of exercise over the exercise price; times
(ii) the number of Shares with respect to which the SAR is
exercised.  At the discretion of the Administrator, the payment upon
SAR exercise may be in cash, in Shares of equivalent value, other securities,
other Awards, other property or a combination of any of the
foregoing.




9.7  Buyout
Provisions .  The Administrator
may at any time offer to buy out for a payment in cash or Shares a SAR
previously granted based on such terms and conditions as the Administrator shall
establish and communicate to the Participant at the time that such offer is
made.




ARTICLE
10


PERFORMANCE
UNITS AND PERFORMANCE SHARES




10.1  Grant of Performance
Units/Shares .  Subject to the
terms and conditions of the Plan, Performance Units and Performance Shares may
be granted to Service Providers at any time and from time to time, as will be
determined by the Administrator, in its sole discretion.  The
Administrator will have complete discretion in determining the number of
Performance Units and Performance Shares granted to each
Participant.




14




10.2  Value of Performance
Units/Shares .  Each Performance
Unit will have an initial value that is established by the Administrator on or
before the date of grant.  Each Performance Share will have an initial
value equal to the Fair Market Value of a Share on the date of
grant.




10.3  Performance Objectives and
Other Terms .  The Administrator
will set performance objectives in its discretion which, depending on the extent
to which they are met, will determine the number or value of Performance
Units/Shares that will be paid out to the Service Providers.  The time
period during which the performance objectives must be met will be called the
“Performance Period.”  Each Award of Performance Units/Shares will be
evidenced by an Award Agreement that will specify the “Performance Period,” and
such other terms and conditions as the Administrator, in its sole discretion,
will determine.  The Administrator may set performance objectives
based upon the achievement of Corporation-wide, divisional, or individual goals,
applicable federal or state securities laws, or any other basis determined by
the Administrator in its discretion.




10.4  Earning of Performance
Units/Shares .  After the
applicable “Performance Period” has ended, the holder of Performance
Units/Shares will be entitled to receive a payout of the number of Performance
Units/Shares earned by the Participant over the “Performance Period,” to be
determined as a function of the extent to which the corresponding performance
objectives have been achieved.  After the grant of a Performance
Unit/Share, the Administrator, in its sole discretion, may reduce or waive any
performance objectives for such Performance Unit/Share.




10.5  Form and Timing for Payment
of Performance Units/Shares .  Payment of earned
Performance Units/Shares will be made as soon after the expiration of the
applicable Performance Period at the time determined by the
Administrator.  The Administrator, in its sole discretion, may pay
earned Performance Units/Shares in the form of cash, in Shares (which have an
aggregate Fair Market Value equal to the value of the earned Performance
Units/Shares at the close of the applicable Performance Period) or in a
combination thereof.




10.6  Cancellation of Performance
Units/Shares .  On the date set
forth in the Award Agreement, all unearned or unvested Performance Units/Shares
will be forfeited to the Corporation, and again will be available for grant
under the Plan.




ARTICLE
11


RESTRICTED
STOCK UNITS




Restricted
Stock Units are Awards consisting of Restricted Stock, Performance Shares and/or
Performance Units that the Administrator, in its sole discretion permits to be
paid out in installments or on a deferred basis, in accordance with rules and
procedures established by the Administrator and in conformance with Code
§ 409A.




ARTICLE
12


OTHER
STOCK BASED AWARDS




Other
Stock Based Awards may be granted either alone, in addition to, or in tandem
with, other Awards granted under the Plan and/or cash awards made outside of the
Plan. The Administrator shall have authority to determine the Service Providers
to whom and the time or times at which Other Stock Based Awards shall be made,
the amount of such Other Stock Based Awards, and all other conditions of the
Other Stock Based Awards including any dividend and/or voting
rights.




15




ARTICLE
13


DISSOLUTION
OR LIQUIDATION; OR CHANGE IN CONTROL




13.1  Dissolution or
Liquidation .  In the event of
the proposed dissolution or liquidation of the Corporation, the Administrator
will notify each Participant as soon as practicable prior to the effective date
of such proposed transaction. The Administrator in its discretion may provide
for a Participant to have the right to exercise his or her Award, to the extent
applicable, until 10 days prior to such transaction as to all of the Awarded
Stock covered thereby, including Shares as to which the Award would not
otherwise be exercisable. In addition, the Administrator may provide that any
Corporation repurchase option or forfeiture rights applicable to any Award shall
lapse 100%, and that any Award vesting shall accelerate 100%, provided the
proposed dissolution or liquidation takes place at the time and in the manner
contemplated. To the extent it has not been previously exercised or vested, an
Award will terminate immediately prior to the consummation of such proposed
action.




13.2  Change in
Control.




(a)  Options and
SARs.  In the event of a Change in Control, each outstanding
Option and SAR shall be assumed or an equivalent option or SAR substituted by
the successor corporation or Affiliate of the successor corporation. With
respect to Options and SARs granted to an Outside Director that are assumed or
substituted for, if immediately prior to or after the Change in Control the
Participant’s status as a Director or a director of the successor corporation,
as applicable, is terminated other than upon a voluntary resignation by the
Participant, then the Participant shall fully vest in and have the right to
exercise such Options and SARs as to all of the Awarded Stock, including Shares
as to which it would not otherwise be vested or exercisable. Unless otherwise
determined by the Administrator, in the event that the successor corporation
refuses to assume or substitute for the Option or SAR, the Participant shall
fully vest in and have the right to exercise the Option or SAR as to all of the
Awarded Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option or SAR is not assumed or substituted in the event of a
Change in Control, the Administrator shall notify the Participant in writing or
electronically that the Option or SAR shall be exercisable for a period of up to
15 days from the date of such notice, and the Option or SAR shall terminate upon
the expiration of such period. For the purposes of this paragraph, the Option or
SAR shall be considered assumed if, following the Change in Control, the option
or stock appreciation right confers the right to purchase or receive, for each
Share of Awarded Stock subject to the Option or SAR immediately prior to the
Change in Control, the consideration (whether stock, cash, or other securities
or property) received in the Change in Control by holders of Common Stock for
each Share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the Change in Control is not solely common stock
of the successor corporation or its Affiliate, the Administrator may, with the
consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or SAR, for each Share of Awarded Stock
subject to the Option or SAR, to be solely common stock of the successor
corporation or its Affiliate equal in fair market value to the per share
consideration received by holders of Common Stock in the Change in Control.
Notwithstanding anything herein to the contrary, an Award that vests, is earned
or paid-out upon the satisfaction of one or more performance goals will not be
considered assumed if the Corporation or its successor modifies any of such
performance goals without the Participant’s consent; provided, however, a
modification to such performance goals only to reflect the successor
corporation’s post-Change in Control corporate structure will not be deemed to
invalidate an otherwise valid Award assumption.




16




(b)  Restricted Stock, Unrestricted
Stock, Performance Shares, Performance Units, Restricted Stock Units, and Other
Stock Based Awards.  In the event of a Change in Control, each
outstanding Restricted Stock, Unrestricted Stock, Performance Share, Performance
Unit, Other Stock Based Award and Restricted Stock Unit awards shall be assumed
or an equivalent Restricted Stock, Unrestricted Stock, Performance Share,
Performance Unit, Other Stock Based Award and Restricted Stock Unit award
substituted by the successor corporation or an Affiliate of the successor
corporation.  With respect to Awards granted to an Outside Director
that are assumed or substituted for, if immediately prior to or after the Change
in Control the Participant’s status as a Director or a director of the successor
corporation, as applicable, is terminated other than upon a voluntary
resignation by the Participant, then the Participant shall fully vest in such
Awards, including Shares as to which it would not otherwise be
vested.  Unless determined otherwise by the Administrator, in the
event that the successor corporation refuses to assume or substitute for the
Restricted Stock, Unrestricted Stock, Performance Share, Performance Unit, Other
Stock Based Award or Restricted Stock Unit award, the Participant shall fully
vest in the Restricted Stock, Unrestricted Stock, Performance Share, Performance
Unit, Other Stock Based Award or Restricted Stock Unit including as to Shares
which would not otherwise be vested. For the purposes of this paragraph, a
Restricted Stock, Unrestricted Stock, Performance Share, Performance Unit, Other
Stock Based Award and Restricted Stock Unit award shall be considered assumed if
following the Change in Control, the award confers the right to purchase or
receive, for each Share subject to the Award immediately prior to the Change in
Control, the consideration (whether stock, cash, or other securities or
property) received in the Change in Control by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the Change in Control is not solely common stock of
the successor corporation or its Affiliate, the Administrator may, with the
consent of the successor corporation, provide for the consideration to be
received, for each Share and each unit/right to acquire a Share subject to the
Award, to be solely common stock of the successor corporation or its Affiliate
equal in fair market value to the per share consideration received by holders of
Common Stock in the Change in Control. Notwithstanding anything herein to the
contrary, an Award that vests, is earned or paid-out upon the satisfaction of
one or more performance goals will not be considered assumed if the Corporation
or its successor modifies any of such performance goals without the
Participant’s consent; provided, however, a modification to such performance
goals only to reflect the successor corporation’s post-Change in Control
corporate structure will not be deemed to invalidate an otherwise valid Award
assumption.




17




ARTICLE
14


MISCELLANEOUS
PROVISIONS




14.1  No Uniform Rights to
Awards .  The Corporation
has no obligation to uniformly treat Participants or holders or beneficiaries of
Awards.  The terms and conditions of Awards and the Administrator’s
determinations and interpretations with respect thereto need not be the same
with respect to each Participant and may be made selectively among Participants,
whether or not such Participants are similarly situated.




14.2  Share
Certificates .  All certificates
for Shares or other securities of the Corporation or Affiliate delivered under
the Plan pursuant to any Award or the exercise thereof shall be subject to such
stop transfer orders and other restrictions as the Administrator may deem
advisable under the Plan, the applicable Award Agreement or the rules,
regulations and other requirements of the SEC, the NYSE or any other stock
exchange or quotation system upon which such Shares or other securities are then
listed or reported and any applicable Federal or state laws, and the
Administrator may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions.




14.3  No Rights as a Service
Provider .  Neither the Plan
nor any Award shall confer upon a Participant any right with respect to
continuing his or her relationship as a Service Provider, nor shall they
interfere in any way with the right of the Participant or the right of the
Corporation or its Affiliate to terminate such relationship at any time, with or
without cause.




14.4  No Rights as
Shareholder .  No Participant or
holder or beneficiary of any Award shall have any rights as a shareholder with
respect to any Shares to be distributed under the Plan until he or she has
become the holder of such Shares.  In connection with each grant of
Restricted Stock, except as provided in the applicable Award Agreement, the
Participant shall not be entitled to the rights of a shareholder in respect of
such Restricted Shares.  Except as otherwise provided in
Section 4.3 or the applicable Award Agreement, no adjustments shall be made
for dividends or distributions on (whether ordinary or extraordinary, and
whether in cash, Shares, other securities or other property), or other events
relating to, Shares subject to an Award for which the record date is prior to
the date such Shares are delivered.




14.5  No Trust or Fund
Created .  Neither the Plan
nor any Award shall create or be construed to create a trust or separate fund of
any kind or a fiduciary relationship between the Corporation or Affiliate, on
one hand, and a Participant or any other person, on the other.  To the
extent that any person acquires a right to receive payments from the Corporation
or Affiliate pursuant to an Award, such right shall be no greater than the right
of any unsecured general creditor of the Corporation or Affiliate.




14.6  No Fractional
Shares .  No fractional
Shares shall be issued or delivered pursuant to the Plan or any Award, and the
Administrator shall determine whether cash, other securities or other property
shall be paid or transferred in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be cancelled, terminated or
otherwise eliminated.




18




14.7  Requirement of Consent and
Notification of Election Under Code § 83(b) or Similar
Provision .  No election under
Code § 83(b) (to include in gross income in the year of transfer the
amounts specified in Code § 83(b)) or under a similar provision of law may
be made unless expressly permitted by the terms of the applicable Award
Agreement or by action of the Administrator in writing prior to the making of
such election.  If an Award recipient, in connection with the
acquisition of Shares under the Plan or otherwise, is expressly permitted under
the terms of the applicable Award Agreement or by such Administrator action to
make such an election and the Participant makes the election, the Participant
shall notify the Administrator of such election within 10 days of filing notice
of the election with the IRS or other governmental authority, in addition to any
filing and notification required pursuant to regulations issued under Code
§ 83(b) or other applicable provision.




14.8  Requirement of Notification
Upon Disqualifying Disposition Under Code § 421(b) .  If any
Participant shall make any disposition of Shares delivered pursuant to the
exercise of an Incentive Stock Option under the circumstances described in Code
§ 421(b) (relating to certain disqualifying dispositions) or any
successor provision of the Code, such Participant shall notify the Corporation
of such disposition within 10 days of such disposition.




14.9  Leaves of
Absence .  Unless the
Administrator provides otherwise, vesting of Awards granted hereunder will be
suspended during any unpaid leave of absence and will resume on the date the
Participant returns to work on a regular schedule as determined by the
Corporation; provided, however, that no vesting credit will be awarded for the
time vesting has been suspended during such leave of absence.  A
Service Provider will not cease to be an Employee in the case of (i) any
leave of absence approved by the Corporation or (ii) transfers between
locations of the Corporation or between the Corporation or its
Affiliate.  For purposes of Incentive Stock Options, no such leave may
exceed 3 months, unless reemployment upon expiration of such leave is guaranteed
by statute or contract.  If reemployment upon expiration of a leave of
absence approved by the Corporation is not so guaranteed, then 6 months from the
first day of such leave any Incentive Stock Option held by the Participant will
cease to be treated as an Incentive Stock Option and will be treated for tax
purposes as a Non-Qualified Stock Option.




14.10  Notices .  Any written
notice to the Corporation required by any provisions of the Plan shall be
addressed to the Secretary of the Corporation and shall be effective when
received.




14.11  Non-Transferability of
Awards .  Other than
pursuant to a domestic relations order (within the meaning of Rule 16a-12
promulgated under the Exchange Act) and unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution, and may be exercised, during the lifetime of the
Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award will contain such additional terms and conditions as
the Administrator deems appropriate.




14.12  Date of
Grant .  The date of grant
of an Award will be, for all purposes, the date on which the Administrator makes
the determination granting such Award, or such other later date as is determined
by the Administrator. Notice of the determination will be provided to each
Participant within a reasonable time after the date of such grant.




14.13  Amendment and Termination of
Plan.




(a)  Amendment and
Termination.  The Board may at any time amend, alter, suspend
or terminate the Plan.  Unless sooner terminated, this Plan shall
terminate on February 23, 2017, the date that is 10 years from the date the Plan
was originally adopted by the Board or approved by the shareholders of the
Corporation, whichever was earlier.




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(b)  Shareholder
Approval.The Corporation will obtain shareholder approval of
any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.




(c)  Effect of Amendment or
Termination.Subject to Section 14.15 of the Plan, no
amendment, alteration, suspension or termination of the Plan will impair the
rights of any Participant, unless mutually agreed upon between the Participant
and the Administrator, which agreement must be in writing and signed by the
Participant and the Corporation. Termination of the Plan will not affect the
Administrator’s ability to exercise the powers granted to it hereunder with
respect to Awards granted under the Plan prior to the date of such
termination.




14.14  Conditions Upon Issuance of
Shares.




(a)  Legal
Compliance.Shares will not be issued pursuant to the exercise
of an Award unless the exercise of such Award and the issuance and delivery of
such Shares will comply with Applicable Laws and will be further subject to the
approval of counsel for the Corporation with respect to such
compliance.




(b)  Investment
Representations.As a condition to the exercise or receipt of
an Award, the Corporation may require the person exercising or receiving such
Award to represent and warrant at the time of any such exercise or receipt that
the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Corporation, such a representation is required.




14.15  Severability .  Notwithstanding
any contrary provision of the Plan or an Award to the contrary, if any one or
more of the provisions (or any part thereof) of this Plan or the Awards shall be
held invalid, illegal or unenforceable in any respect, such provision shall be
modified so as to make it valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions (or any part thereof) of
the Plan or Award, as applicable, shall not in any way be affected or impaired
thereby.




14.16  Inability to Obtain
Authority .  The inability of
the Corporation to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Corporation’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, will relieve
the Corporation of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority will not have been
obtained.




14.17  Shareholder
Approval .  The Plan will be
subject to approval by the shareholders of the Corporation within 12 months
after the date the Plan is adopted. Such shareholder approval will be obtained
in the manner and to the degree required under Applicable Laws, and is effective
as of the Effective Date.




14.18  Governing
Law .  The validity,
construction and effect of the Plan and any rules and regulations relating to
the Plan and any Award Agreement shall be determined in accordance with the laws
of the State of California, without giving effect to the conflict of laws
provisions thereof.




Adopted
by the Board of Directors: February 23, 2007




Approved
by the Shareholders: February 23, 2007






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