Exhibit
        4.1

      


      ATSI
        COMMUNICATIONS, INC.

      2005
        STOCK COMPENSATION PLAN

      


      SECTION
        1. PURPOSE OF THE PLAN. The
        purpose of the 2005 Stock Compensation Plan (“Plan”) is to maintain the ability
        of ATSI Communications, Inc., a Nevada corporation (the “Company”) and its
        subsidiaries to attract and retain highly qualified and experienced directors,
        officers and employees and to give such directors, officers and employees
        a
        proprietary interest in the success of the Company and its subsidiaries.
        In
        addition the Plan is intended to encourage ownership of common stock, $.001
        par
        value (“Common Stock”), of the Company by the directors, officers and employees
        of the Company and its Affiliates (as defined below) and to provide increased
        incentive for such persons to render services and to exert maximum effort
        for
        the success of the Company’s business. The Plan provides eligible directors,
        officers and employees the opportunity to participate in the enhancement
        of
        stockholder value by the grants of warrants, options, restricted common,
        unrestricted common and other awards under this Plan. In addition, the Company
        expects that the Plan will further strengthen the identification of the
        directors, officers and employees with the stockholders. Directors, officers
        and
        employees who participate or become eligible to participate in this Plan
        from
        time to time are referred to collectively herein as “Participants”.


      


      SECTION
        2. ADMINISTRATION OF THE PLAN.

      


      (a)
        Committee.
        The
        Plan shall be administered by the Board of Directors of the Company (the
        “Board”) or a committee thereof designated by the Board with the specific
        authority to administer the Plan. When acting in such capacity the Board
        is
        herein referred to as the “Committee”. If the Company is governed by Rule 16b-3
        promulgated by the Securities and Exchange Commission (“Commission”) pursuant to
        the Securities Exchange Act of 1934, as amended (“Exchange Act”), no director
        shall serve as a member of the Committee unless he or she is a “Non-Employee
        Director” within the meaning of such Rule 16b-3.

      


      (b)
        Committee
        Action.
        The
        Committee shall hold its meetings at such times and places as it may determine.
        A majority of its members shall constitute a quorum, and all determinations
        of
        the Committee shall be made by not less than a majority of its members. Any
        decision or determination reduced to writing and signed by a majority of
        the
        members shall be fully as effective as if it had been made by a majority
        vote of
        its members at a meeting duly called and held. The Committee may designate
        the
        Secretary of the Company or other Company employees to assist the Committee
        in
        the administration of the Plan, and may grant authority to such persons to
        execute award agreements or other documents on behalf of the Committee and
        the
        Company. Any duly constituted committee of the Board satisfying the
        qualifications of this Section 2 may be appointed as the Committee.

      


      (c)
        Committee
        Expenses.
        All
        expenses and liabilities incurred by the Committee in the administration
        of the
        Plan shall he borne by the Company. The Committee may employ attorneys,
        consultants, accountants or other persons. 

      


      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (d)
        Committee
        Discretion.
        The
        Committee shall have sole and absolute discretionary authority (i) to determine,
        authorize, and designate those persons pursuant to this Plan who are to receive
        warrants, options or grants of restricted or unrestricted shares under the
        Plan,
        (ii) to determine the number of shares of Common Stock to be covered by such
        grant or such options or warrants and the terms thereof, and (iii) to determine
        whether the grant of Common Stock shall be restricted or unrestricted or
        a
        combination of restricted and unrestricted. Subject to the express provisions
        of
        the Plan, the Committee shall have discretionary authority to prescribe,
        amend
        and rescind rules and regulations relating to the Plan, to interpret the
        Plan,
        to prescribe and amend the terms of the option or warrant agreements (which
        need
        not be identical) and to make all other determinations deemed necessary or
        advisable for the administration of the Plan.

      


      SECTION
        3. STOCK RESERVED FOR THE PLAN.
        Subject
        to adjustment as provided in Section 8 hereof, the aggregate number of shares
        that may be issued under the Plan is 7,500,000 shares of Common Stock. The
        shares subject to the Plan shall consist of authorized but unissued shares
        of
        Common Stock and such number of shares shall be and is hereby reserved for
        sale
        for such purpose. Any of such shares which may remain unsold and which are
        not
        subject to issuance upon exercise of outstanding options or warrants at the
        termination of the Plan shall cease to be reserved for the purpose of the
        Plan,
        but until termination of the Plan or the termination of the last of the options
        or warrants granted under the Plan, whichever last occurs, the Company shall
        at
        all times reserve a sufficient number of shares to meet the requirements
        of the
        Plan. Should any option or warrant expire or be cancelled prior to its exercise
        in full, the shares theretofore subject to such option or warrant may again
        be
        made subject to an option or warrant under the Plan.

      


      SECTION
        4. ELIGIBILITY.
        The
        Participants shall include directors, officers and employees of the Company
        and
        its divisions and subsidiaries. Participants are eligible to be granted
        warrants, options, restricted common, unrestricted common and other awards
        under
        this Plan. A Participant who has been granted an option or warrant hereunder
        may
        be granted an additional option or warrant, options or warrants, if the
        Committee shall so determines.

      


      SECTION
        5. GRANT OF OPTIONS OR WARRANTS. Each
        option or warrant granted under the Plan shall be evidenced by an agreement,
        in
        a form approved by the Committee, which shall be subject to the following
        express terms and conditions and to such other terms and conditions as the
        Committee may deem appropriate:

      


      (a)
        Option
        or Warrant Period.
        The
        Committee shall promptly notify the Participant of the option or warrant
        grant
        and a written agreement shall promptly be executed and delivered by and on
        behalf of the Company and the Participant, provided that the option or warrant
        grant shall expire if a written agreement is not signed by said Participant
        (or
        his agent or attorney) and returned to the Company within 60 days from date
        of
        receipt by the Participant of such agreement. The date of grant shall be
        the
        date the option or warrant is actually granted by the Committee, even though
        the
        written agreement may be executed and delivered by the Company and the
        Participant after that date. Each option or warrant agreement shall specify
        the
        period for which the option or warrant thereunder is granted (which in no
        event
        shall exceed ten years from the date of grant) and shall provide that the
        option
        or warrant shall expire at the end of such period. If the original term of
        an
        option or warrant is less than ten years from the date of grant, the option
        or
        warrant may be amended prior to its expiration, with the approval of the
        Committee and the Participant, to extend the term so that the term as amended
        is
        not more than ten years from the date of grant. 

      


      
        
           

        

        
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      (b)
        Option
        or Warrant Price.
        The
        purchase price of each share of Common Stock subject to each option or warrant
        granted pursuant to the Plan shall be determined by the Committee at the
        time
        the option or warrant is granted. The Committee shall set the purchase price
        for
        each share subject to an option or warrant at either the fair market value
        of
        each share on the date the option or warrant is granted, or at such other
        price
        as the Committee in its sole discretion shall determine. At the time a
        determination of the fair market value of a share of Common Stock is required
        to
        be made hereunder, the determination of its fair market value shall be made
        by
        the Committee in such manner, as it deems appropriate.

      


      (c)
        Exercise
        Period.
        The
        Committee may provide in the option or warrant agreement that an option or
        warrant may be exercised in whole, immediately, or is to be exercisable in
        increments. In addition, the Committee may provide that the exercise of all
        or
        part of an option or warrant is subject to specified performance by the
        Participant.

      


      (d)
        Procedure
        for Exercise.
        Options
        or warrants shall be exercised in the manner specified in the option or warrant
        agreement. The notice of exercise shall specify the address to which the
        certificates for such shares are to be mailed. As promptly as practicable,
        the
        Company shall deliver to the Participant or other holder of the warrant,
        certificates for the number of shares with respect to which such option or
        warrant has been so exercised, issued in the holder’s name or such other name as
        holder directs; provided, however, that such delivery shall be deemed effected
        for all purposes when a stock transfer agent of the Company shall have deposited
        such certificates with a carrier for overnight delivery, addressed to the
        holder
        at the address specified pursuant to this Section 5.

      


      (e)
        Termination
        of Employment.
        If a
        Participant employee to whom an option or warrant is granted ceases to be
        employed by the Company for any reason other than death or disability, any
        option or warrant which is exercisable on the date of such termination of
        employment may be exercised during a period beginning on such date and ending
        at
        the time set forth in the option or warrant agreement; provided, however,
        that
        if a Participant’s employment is terminated because of the Participant’s theft
        or embezzlement from the Company, disclosure of trade secrets of the Company
        or
        the commission of a willful, felonious act while in the employment of the
        Company (such reasons shall hereinafter be collectively referred to as “for
        cause”), then any option or warrant or unexercised portion thereof granted to
        said Participant shall expire upon such termination of employment. 

      


      (f)
        Disability
        or Death of Participant.
        In the
        event of the determination of disability or death of a Participant under
        the
        Plan while he or she is employed by the Company, the options or warrants
        previously granted to him may be exercised (to the extent he or she would
        have
        been entitled to do so at the date of the determination of disability or
        death)
        at any time and from time to time, within a period beginning on the date
        of such
        determination of disability or death and ending at the time set forth in
        the
        option or warrant agreement, by the former employee, the guardian of his
        estate,
        the executor or administrator of his estate or by the person or persons to
        whom
        his rights under the option or warrant shall pass by will or the laws of
        descent
        and distribution, but in no event may the option or warrant be exercised
        after
        its expiration under the terms of the option or warrant agreement. A Participant
        shall be deemed to be disabled if, in the opinion of a physician selected
        by the
        Committee, he or she is incapable of performing services for the Company
        of the
        kind he or she was performing at the time the disability occurred by reason
        of
        any medically determinable physical or mental impairment which can be expected
        to result in death or to be of long, continued and indefinite duration. The
        date
        of determination of disability for purposes hereof shall be the date of such
        determination by such physician.

      


      
        
           

        

        
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      (g)
        No
        Right as Stockholder.
        No
        Participant shall have any rights as a stockholder with respect to shares
        covered by an option or warrant until the option or warrant is exercised
        as
        provided in clause (d) above. A Participant shall be deemed to be a stockholder
        with respect to shares covered by an option or warrant on the date of exercise
        pursuant to the option or warrant agreement. 

      


      (h)
        Assignability.
        An
        option or warrant shall not be assignable or otherwise transferable, in whole
        or
        in part, by a Participant except that an option or warrant may be transferable
        to a member of the Participant’s immediate family or to a trust in which the
        Participant and members of his immediate family are the only beneficiaries.
        The
        foregoing notwithstanding, no option or warrant shall be transferable to
        or
        awarded to the spouse of the recipient pursuant to a property settlement
        or
        division order in a divorce or annulment proceeding. 

      


      SECTION
        6. GRANT OF RESTRICTED STOCK. 

      


      (a)
        Awards.
        Awards
        of restricted stock under this Plan shall be subject to all the applicable
        provisions of this Plan and to such other terms and conditions not inconsistent
        therewith, as the Committee shall determine. Awards of restricted stock may
        be
        in addition to or in lieu of option or warrant grants. Awards may be conditioned
        on the attainment of particular performance goals based on criteria established
        by the Committee at the time of each award of restricted stock. 

      


      (b)
        Restriction
        Period.
        During
        a period set forth in the agreement (the “Restriction Period”), the recipient
        shall not be permitted to sell, transfer, pledge, or otherwise encumber the
        shares of restricted stock; except that such shares may be used, if the
        agreement permits, to pay the option or warrant price pursuant to any option
        or
        warrant granted under this Plan, provided an equal number of shares delivered
        to
        the Participant shall carry the same restrictions as the shares so used.
        Shares
        of restricted stock shall become free of all restrictions if during the
        Restriction Period, (i) the recipient dies, (ii) the recipient’s directorship,
        employment, or consultancy terminates by reason of permanent disability,
        as
        determined by the Committee, (iii) the recipient retires after attaining
        both 59
        1/2 years of age and five years of continuous service with the Company and/or
        a
        division or subsidiary, or (iv) if provided in the agreement, there is a
“change
        in control” of the Company (as defined in such agreement). The Committee may
        require medical evidence of permanent disability, including medical examinations
        by physicians selected by it. Unless and to the extent otherwise provided
        in the
        agreement, shares of restricted stock shall be forfeited and revert to the
        Company upon the recipient’s termination of directorship, employment or
        consultancy during the Restriction Period for any reason other than death,
        permanent disability, as determined by the Committee, retirement after attaining
        both 59 1/2
        years
        of age and five years of continuous service with the Company and/or a subsidiary
        or division, or, to the extent provided in the agreement, a “change in control”
        of the Company (as defined in such agreement), except to the extent the
        Committee, in its sole discretion, finds that such forfeiture might not be
        in
        the best interests of the Company and, therefore, waives all or part of the
        application of this provision to the restricted stock held by such recipient.
        

      


      
        
           

        

        
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      (c)
        Restriction.
        Certificates for restricted stock shall be registered in the name of the
        recipient but shall be imprinted with the appropriate legend and returned
        to the
        Company by the recipient, together with a stock power endorsed in blank by
        the
        recipient. The recipient shall be entitled to vote shares of restricted stock
        and shall be entitled to all dividends paid thereon, except that dividends
        paid
        in Common Stock or other property shall also be subject to the same
        restrictions.

      


      (d)
        Termination
        of Restriction.
        Restricted Stock shall become free of the foregoing restrictions upon expiration
        of the applicable Restriction Period and the Company shall then deliver to
        the
        recipient Common Stock certificates evidencing such stock. Restricted stock
        and
        any Common Stock received upon the expiration of the restriction period shall
        be
        subject to such other transfer restrictions and/or legend requirements as
        are
        specified in the applicable agreement.

      


      SECTION
        7. GRANT OF UNRESTRICTED STOCK.
        Awards
        of unrestricted stock under this Plan shall be subject to all the applicable
        provisions of this Plan and to such other terms and conditions not inconsistent
        therewith, as the Committee shall determine. Awards of unrestricted stock
        may be
        in addition to or in lieu of option or warrant grants. 

      


      SECTION
        8. ADJUSTMENTS.

      


      (a)
        Extraordinary
        Corporate Transactions.
        The
        existence of outstanding options or warrants shall not affect in any way
        the
        right or power of the Company or its stockholders to make or authorize any
        or
        all adjustments, recapitalizations, reorganizations, exchanges, or other
        changes
        in the Company’s capital structure or its business, or any merger or
        consolidation of the Company, or any issuance of Common Stock or other
        securities or subscription rights thereto, or any issuance of bonds, debentures,
        preferred or prior preference stock ahead of or affecting the Common Stock
        or
        the rights thereof, or the dissolution or liquidation of the Company, or
        any
        sale or transfer of all or any part of its assets or business, or any other
        corporate act or proceeding, whether of a similar character or otherwise.
        If the
        Company recapitalizes or otherwise changes its capital structure, or merges,
        consolidates, sells all of its assets or dissolves (each of the foregoing
        a
“Fundamental Change”), then thereafter upon any exercise of an option or warrant
        theretofore granted the Participant shall be entitled to purchase under such
        option or warrant, in lieu of the number of shares of Common Stock as to
        which
        option or warrant shall then be exercisable, the number and class of shares
        of
        stock and securities to which the Participant would have been entitled pursuant
        to the terms of the Fundamental Change if, immediately prior to such Fundamental
        Change, the Participant had been the holder of record of the number of shares
        of
        Common Stock as to which such option or warrant is then exercisable. If (i)
        the
        Company shall not be the surviving entity in any merger or consolidation
        (or
        survives only as a subsidiary of another entity), (ii) the Company sells
        all or
        substantially all of its assets to any other person or entity (other than
        a
        wholly owned subsidiary), (iii) any person or entity (including a “group” as
        contemplated by Section 13(d)(3) of the Exchange Act) acquires or gains
        ownership or control of (including, without limitation, power to vote) more
        than
        50% of the outstanding shares of Common Stock, (iv) the Company is to be
        dissolved and liquidated, or (v) as a result of or in connection with a
        contested election of directors, the persons who were directors of the Company
        before such election shall cease to constitute a majority of the Board (each
        such event in clauses (i) through (v) above is referred to herein as a
“Corporate Change”), the Committee, in its sole discretion, may accelerate the
        time at which all or a portion of a Participant’s option or warrants may be
        exercised for a limited period of time before or after a specified
        date.

      


      
        
           

        

        
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      (b)
        Changes
        in Company’s Capital Structure.
        If the
        outstanding shares of Common Stock or other securities of the Company, or
        both,
        for which the option or warrant is then exercisable at any time be changed
        or
        exchanged by declaration of a stock dividend, stock split, combination of
        shares, recapitalization, or reorganization, the number and kind of shares
        of
        Common Stock or other securities which are subject to the Plan or subject
        to any
        options or warrants theretofore granted, and the option or warrant prices,
        shall
        be ratably adjusted to reflect an increase or decrease in the number of shares
        of Common Stock that may be purchased and a decrease or increase in the purchase
        price pursuant to such options or warrants.

      


      (c)
        Acceleration
        of Options and Warrants.
        Except
        as hereinbefore expressly provided, (i) the issuance by the Company of shares
        of
        stock or any class of securities convertible into shares of stock of any
        class,
        for cash, property, labor or services, upon direct sale, upon the exercise
        of
        rights or warrants to subscribe therefor, or upon conversion of shares or
        obligations of the Company convertible into such shares or other securities,
        (ii) the payment of a dividend in property other than Common Stock or (iii)
        the
        occurrence of any similar transaction, and in any case whether or not for
        fair
        value, shall not affect, and no adjustment by reason thereof shall be made
        with
        respect to, the number of shares of Common Stock subject to options or warrants
        theretofore granted or the purchase price per share, unless the Committee
        shall
        determine, in its sole discretion, that an adjustment is necessary to provide
        equitable treatment to Participant. Notwithstanding anything to the contrary
        contained in this Plan, the Committee may, in its sole discretion, accelerate
        the time at which any option or warrant may be exercised, including, but
        not
        limited to, upon the occurrence of the events specified in this Section 8,
        and
        is authorized at any time (with the consent of the Participant) to purchase
        options or warrants pursuant to Section 9.

      


      SECTION
        9. RELINQUISHMENT OF OPTIONS OR WARRANTS. 

      


      (a)
        The
        Committee, in granting options or warrants hereunder, shall have discretion
        to
        determine whether or not options or warrants shall include a right of
        relinquishment as hereinafter provided by this Section 9. The Committee shall
        also have discretion to determine whether an option or warrant agreement
        evidencing an option or warrant initially granted by the Committee without
        a
        right of relinquishment shall be amended or supplemented to include such
        a right
        of relinquishment. Neither the Committee nor the Company shall be under any
        obligation or incur any liability to any person by reason of the Committee’s
        refusal to grant or include a right of relinquishment in any option or warrant
        granted hereunder or in any option or warrant agreement evidencing the same.
        Subject to the Committee’s determination in any case that the grant by it of a
        right of relinquishment is consistent with Section 1 hereof, any option or
        warrant granted under this Plan, and the option or warrant agreement evidencing
        such option or warrant, may provide:

      


      
        
           

        

        
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      (i)
        That
        the Participant, or his or her heirs or other legal representatives to the
        extent entitled to exercise the option or warrant under the terms thereof,
        in
        lieu of purchasing the entire number of shares subject to purchase thereunder,
        shall have the right to relinquish all or any part of the then unexercised
        portion of the option or warrant (to the extent then exercisable) for a number
        of shares of Common Stock to be determined in accordance with the following
        provisions of this clause (i):

      


      (A)
        The
        written notice of exercise of such right of relinquishment shall state the
        percentage of the total number of shares of Common Stock issuable pursuant
        to
        such relinquishment (as defined below) that the Participant elects to
        receive;

      


      (B)
        The
        number of shares of Common Stock, if any, issuable pursuant to such
        relinquishment shall be the number of such shares, rounded to the next greater
        number of full shares, as shall be equal to the quotient obtained by dividing
        (i) the Appreciated Value by (ii) the purchase price for each of such shares
        specified in such option or warrant;

      


      (C)
        For
        the purpose of clause (B), “Appreciated Value” means the excess, if any, of (x)
        the total current market value of the shares of Common Stock covered by the
        option or warrant or the portion thereof to be relinquished over (y) the
        total
        purchase price for such shares specified in such option or warrant;

      


      (ii)
        That
        such right of relinquishment may be exercised only upon receipt by the Company
        of a written notice of such relinquishment which shall be dated the date
        of
        election to make such relinquishment; and that, for the purposes of this
        Plan,
        such date of election shall be deemed to be the date when such notice is
        sent by
        registered or certified mail, or when receipt is acknowledged by the Company,
        if
        mailed by other than registered or certified mail or if delivered by hand
        or by
        any telegraphic communications equipment of the sender or otherwise delivered;
        provided, that, in the event the method just described for determining such
        date
        of election shall not be or remain consistent with the provisions of Section
        16(b) of the Exchange Act or the rules and regulations adopted by the Commission
        thereunder, as presently existing or as may be hereafter amended, which
        regulations exempt from the operation of Section 16(b) of the Exchange Act
        in
        whole or in part any such relinquishment transaction, then such date of election
        shall be determined by such other method consistent with Section 16(b) of
        the
        Exchange Act or the rules and regulations thereunder as the Committee shall
        in
        its discretion select and apply;

      


      (iii)
        That the “current market value” of a share of Common Stock on a particular date
        shall be deemed to be its fair market value on that date; and

      


      (iv)
        That
        the option or warrant, or any portion thereof, may be relinquished only to
        the
        extent that (A) it is exercisable on the date written notice of relinquishment
        is received by the Company, and (B) the holder of such option or warrant
        pays,
        or makes provision satisfactory to the Company for the payment of, any taxes
        which the Company is obligated to collect with respect to such
        relinquishment.

      


      
        
           

        

        
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      (b)
        The
        Committee shall have sole discretion to consent to or disapprove, and neither
        the Committee nor the Company shall be under any liability by reason of the
        Committee’s disapproval of, any election by a holder of options or warrants to
        relinquish such options or warrants in whole or in part as provided in Paragraph
        9(a), except that no such consent to or approval of a relinquishment shall
        be
        required under the following circumstances. Each Participant who is subject
        to
        the short-swing profits recapture provisions of Section 16(b) of the Exchange
        Act (“Covered Participant”) shall not be entitled to receive shares of Common
        Stock when options or warrants are relinquished during any window period
        commencing on the third business day following the Company’s release of a
        quarterly or annual summary statement of sales and earnings and ending on
        the
        twelfth business day following such release (“Window Period”). A Covered
        Participant shall be entitled to receive shares of Common Stock upon the
        relinquishment of options or warrants outside a Window Period.

      


      (c)
        The
        Committee, in granting options or warrants hereunder, shall have discretion
        to
        determine the terms upon which such options or warrants shall be relinquishable,
        subject to the applicable provisions of this Plan, and including such provisions
        as are deemed advisable to permit the exemption from the operation from Section
        16(b) of the Exchange Act of any such relinquishment transaction, and options
        or
        warrants outstanding, and option agreements evidencing such options, may
        be
        amended, if necessary, to permit such exemption. If options or warrants are
        relinquished, such option or warrant shall be deemed to have been exercised
        to
        the extent of the number of shares of Common Stock covered by the option
        or
        warrant or part thereof which is relinquished, and no further options or
        warrants may be granted covering such shares of Common Stock.

      


      (d)
        Any
        options or warrants or any right to relinquish the same to the Company as
        contemplated by this Section 9 shall be assignable by the Participant, provided
        the transaction complies with any applicable securities laws.

      


      (e)
        Except as provided in Section 9(f) below, no right of relinquishment may
        be
        exercised within the first six months after the initial award of any option
        or
        warrant containing, or the amendment or supplementation of any existing option
        or warrant agreement adding, the right of relinquishment.

      


      (f)
        No
        right of relinquishment may be exercised after the initial award of any option
        or warrant containing, or the amendment or supplementation of any existing
        option or warrant agreement adding the right of relinquishment, unless such
        right of relinquishment is effective upon the Participant’s death, disability or
        termination of his relationship with the Company for a reason other than
“for
        cause.”

      


      SECTION
        10. AMENDMENTS OR TERMINATION.
        The
        Board may amend, alter or discontinue the Plan, but no amendment or alteration
        shall be made which would impair the rights of any Participant, without his
        consent, under any option or warrant theretofore granted.

      


      SECTION
        11. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The
        Plan,
        the grant and exercise of options or warrants thereunder, and the obligation
        of
        the Company to sell and deliver shares under such options or warrants, shall
        be
        subject to all applicable federal and state laws, rules and regulations and
        to
        such approvals by any governmental or regulatory agency as may be required.
        The
        Company shall not be required to issue or deliver any certificates for shares
        of
        Common Stock prior to the completion of any registration or qualification
        of
        such shares under any federal or state law or issuance of any ruling or
        regulation of any government body which the Company shall, in its sole
        discretion, determine to be necessary or advisable. Any adjustments provided
        for
        in Section 8 shall be subject to any stockholder action required by the
        corporate law of the state of incorporation of the Company.

      


      
        
           

        

        
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      SECTION
        12. PURCHASE FOR INVESTMENT. Unless
        the options, warrants, and shares of Common Stock covered by this Plan have
        been
        registered under the Securities Act of 1933, as amended, or the Company has
        determined that such registration is unnecessary, each person acquiring or
        exercising an option or warrant under this Plan may be required by the Company
        to give a representation in writing that he or she is acquiring such option
        or
        warrant or such shares for his own account for investment and not with a
        view
        to, or for sale in connection with, the distribution of any part
        thereof.

      


      SECTION
        13. TAXES.

      


      (a)
        The
        Company may make such provisions as it may deem appropriate for the withholding
        of any taxes which it determines is required in connection with any options
        or
        warrants granted under this Plan.

      


      (b)
        Notwithstanding the terms of Paragraph 13(a), any Participant may pay all
        or any
        portion of the taxes required to be withheld by the Company or paid by him
        or
        her in connection with the exercise of an option or warrant by electing to
        have
        the Company withhold shares of Common Stock, or by delivering previously
        owned
        shares of Common Stock, having a fair market value equal
        to
        the amount required to be withheld or paid. A Participant must make the
        foregoing election on or before the date that the amount of tax to be withheld
        is determined (“Tax Date”). All such elections are irrevocable and subject to
        disapproval by the Committee. Elections by Covered Participants are subject
        to
        the following additional restrictions: (i) such election may not be made
        within
        six months of the grant of an option or warrant, provided that this limitation
        shall not apply in the event of death or disability, and (ii) such election
        must
        be made either six months or more prior to the Tax Date or in a Window Period.
        Where the Tax Date in respect of an option or warrant is deferred until six
        months after exercise and the Covered Participant elects share withholding,
        the
        full amount of shares of Common Stock will be issued or transferred to him
        upon
        exercise of the option or warrant, but he or she shall be unconditionally
        obligated to tender back to the Company the number of shares necessary to
        discharge the Company’s withholding obligation or his estimated tax obligation
        on the Tax Date.

      


      SECTION
        14. REPLACEMENT OF OPTIONS AND WARRANTS.
        The
        Committee from time to time may permit a Participant under the Plan to surrender
        for cancellation any unexercised outstanding option or warrant and receive
        from
        the Company in exchange an option or warrant for such number of shares of
        Common
        Stock as may be designated by the Committee. The Committee may, with the
        consent
        of the holder of any outstanding option or warrant, amend such option or
        warrant, including reducing the exercise price of any option or warrant to
        not
        less than the fair market value of the Common Stock at the time of the amendment
        and extending the exercise term of any warrant or option.

      


      
        
           

        

        
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      SECTION
        15. NO RIGHT TO COMPANY EMPLOYMENT.
        Nothing
        in this Plan or as a result of any option or warrant granted pursuant to
        this
        Plan shall confer on any individual any right to continue in the employ of
        the
        Company or interfere in any way with the right of the Company to terminate
        an
        individual’s employment at any time. The option or warrant agreements may
        contain such provisions as the Committee may approve with reference to the
        effect of approved leaves of absence.

      


      SECTION
        16. LIABILITY OF COMPANY.
        The
        Company and any Affiliate which is in existence or hereafter comes into
        existence shall not be liable to a Participant or other persons as
        to:

      


      (a)
        The
        Non-Issuance of Shares.
        The
        non-issuance or sale of shares as to which the Company has been unable to
        obtain
        from any regulatory body having jurisdiction the authority deemed by the
        Company’s counsel to be necessary to the lawful issuance and sale of any shares
        hereunder; and

      


      (b)
        Tax
        Consequences.
        Any
        tax
        consequence expected, but not realized, by any Participant or other person
        due
        to the exercise of any option or warrant granted hereunder.

      


      SECTION
        17. EFFECTIVENESS AND EXPIRATION OF PLAN.
        The Plan
        shall be effective on the date the Board adopts the Plan. The Plan shall
        expire
        ten years after the date the Board approves the Plan and thereafter no option
        or
        warrant shall be granted pursuant to the Plan.

      


      SECTION
        18. NON-EXCLUSIVITY OF THE PLAN. Neither
        the adoption by the Board nor the submission of the Plan to the stockholders
        of
        the Company for approval shall be construed as creating any limitations on
        the
        power of the Board to adopt such other incentive arrangements as it may deem
        desirable, including without limitation, the granting of restricted stock
        or
        stock options or warrants otherwise than under the Plan, and such arrangements
        may be either generally applicable or applicable only in specific
        cases.

      


      SECTION
        19. GOVERNING LAW.
        This
        Plan and any agreements hereunder shall be interpreted and construed in
        accordance with the laws of the state of incorporation of the Company and
        applicable federal law.

      


      SECTION
        20. CASHLESS EXERCISE.
        The
        Committee also may allow cashless exercises as permitted under Federal Reserve
        Board’s Regulation T, subject to applicable securities law restrictions, or by
        any other means which the Committee determines to be consistent with the
        Plan’s
        purpose and applicable law. The proceeds from such a payment shall be added
        to
        the general funds of the Company and shall be used for general corporate
        purposes.

       

      
        
           

        

          10