Exhibit 10.2


    EXHIBIT
      10.2

     

    Dragon
      Gold Resources, Inc.

    2007
      Stock Option Plan

     

    ARTICLE
      I - PLAN

    


    1.1 Purpose.
      This
      Plan is a plan for key employees, officers, directors, and consultants of the
      Company and its Affiliates and is intended to advance the best interests of
      the
      Company, its Affiliates, and its stockholders by providing those persons who
      have substantial responsibility for the management and growth of the Company
      and
      its Affiliates with additional incentives and an opportunity to obtain or
      increase their proprietary interest in the Company, thereby encouraging them
      to
      continue in the employ of the Company or any of its Affiliates.

    


    1.2
       Rule
      16b-3 Plan.
      The
      Company is subject to the reporting requirements of the Securities Exchange
      Act
      of 1934, as amended (the “1934 Act”), and therefore the Plan is intended to
      comply with all applicable conditions of Rule 16b-3 (and all subsequent
      revisions thereof) promulgated under the 1934 Act. To the extent any provision
      of the Plan or action by the Board of Directors or Committee fails to so comply,
      it shall be deemed null and void, to the extent permitted by law and deemed
      advisable by the Committee. In addition, the Board of Directors may amend the
      Plan from time to time, as it deems necessary in order to meet the requirements
      of any amendments to Rule 16b-3 without the consent of the shareholders of
      the
      Company.

    


    1.3
       Effective
      Date of Plan.
      The
      Plan shall be effective June 1, 2007 (the “Effective Date”), provided that
      within one year of the Effective Date, the Plan shall have been approved by
      at
      least a majority vote of stockholders voting in person or by proxy at a duly
      held stockholders’ meeting, or if the provisions of the corporate charter,
      by-laws or applicable state law prescribes a greater degree of stockholder
      approval for this action, the approval by the holders of that percentage, at
      a
      duly held meeting of stockholders. No Incentive Option, Nonqualified Option,
      Stock Appreciation Right, Restricted Stock Award or Performance Stock Award
      shall be granted pursuant to the Plan ten years after the Effective
      Date.

    


    ARTICLE
      II - DEFINITIONS

    


    The
      words
      and phrases defined in this Article shall have the meaning set out in these
      definitions throughout this Plan, unless the context in which any such word
      or
      phrase appears reasonably requires a broader, narrower, or different
      meaning.

    


    2.1
       “Affiliate”
      means any subsidiary corporation. The term “subsidiary corporation” means any
      corporation (other than the Company) in an unbroken chain of corporations
      beginning with the Company if, at the time of the action or transaction, each
      of
      the corporations other than the last corporation in the unbroken chain owns
      stock possessing 50% or more of the total combined voting power of all classes
      of stock in one of the other corporations in the chain.

     

    
      
        
           

        

         

      

      
        1

        
          

        

      

      
         

        
        

      

    


          
       2.2
       “Award”
      means each of the following granted under this Plan: Incentive Option,
      Nonqualified Option, Stock Appreciation Right, Restricted Stock Award or
      Performance Stock Award.

    


    2.3
       “Board
      of
      Directors” means the board of directors of the Company. 

    


    2.4
       “Code”
      means the Internal Revenue Code of 1986, as amended. 

    


    2.5
       “Committee”
      means the Compensation Committee of the Board of Directors, or if no
      Compensation Committee has been formed, then it shall mean the entire Board
      of
      Directors. It is intended that the Committee shall be comprised solely of at
      least two members who are both Non-Employee Directors and Outside Directors;
      provided, however, that until such time as two such directors are available
      to
      serve in such roles, the failure to meet this requirement shall not affect
      the
      validity of any grants under this Plan.

    


    2.6
       “Company”
      means Gold Dragon Resources, Inc., a Nevada corporation.

    


    2.7
       “Consultant”
      means any person, including an advisor, engaged by the Company or Affiliate
      to
      render services and who is compensated for such services.

    


    2.8
       “Eligible
      Persons” shall mean, with respect to the Plan, those persons who, at the time
      that an Award is granted, are (i) Employees and all other key personnel,
      including officers and directors, of the Company or Affiliate, or (ii)
      Consultants or independent contractors who provide valuable services to the
      Company or Affiliate as determined by the Committee.

    


    2.9
       “Employee”
      means a person employed by the Company or any Affiliate to whom an Award is
      granted.

    


    2.10
       “Fair
      Market Value” of the Stock as of any date means (a) the average of the high and
      low sale prices of the Stock on that date on the principal securities exchange
      on which the Stock is listed; or (b) if the Stock is not listed on a securities
      exchange, the average of the high and low sale prices of the Stock on that
      date
      as reported on the Nasdaq; or (c) if the Stock is not listed on the Nasdaq,
      the
      average of the high and low bid quotations for the Stock on that date as
      reported by the National Quotation Bureau Incorporated; or (d) if none of the
      foregoing is applicable, an amount at the election of the Committee equal to
      (x), the average between the closing bid and ask prices per share of Stock
      on
      the last preceding date on which those prices were reported or (y) that amount
      as determined by the Committee in good faith.

    


    2.11
       “Incentive
      Option” means an option to purchase Stock granted under this Plan which is
      designated as an “Incentive Option” and satisfies the requirements of Section
      422 of the Code.

    


    2.12
       “Non-Employee
      Directors” means that term as defined in Rule 16b-3 under the 1934 Act.


    


    2.13
       “Nonqualified
      Option” means an option to purchase Stock granted under this Plan other than an
      Incentive Option.

     

    
      
        
           

        

         

      

      
        2

        
          

        

      

      
         

        
        

      

    


    2.14
       “Option”
      means both an Incentive Option and a Nonqualified Option granted under this
      Plan
      to purchase shares of Stock.

    


    2.15
       “Option
      Agreement” means the written agreement by and between the Company and an
      Eligible Person, which sets out the terms of an Option.

    


    2.16
       “Outside
      Director” shall mean a member of the Board of Directors serving on the Committee
      who satisfies Section 162(m) of the Code. 

    


          2.17
       “Plan”
      means the Gold Dragon Resources, Inc. 2007 Stock Option Plan, as set out in
      this
      document and as it may be amended from time to time.

    


          2.18
       “Plan
      Year” means the Company’s fiscal year. 

    


          2.19
       “Performance
      Stock Award” means an award of shares of Stock to be issued to an Eligible
      Person if specified predetermined performance goals are satisfied as described
      in Article VII.

     

          2.20
       “Restricted
      Stock” means Stock awarded or purchased under a Restricted Stock Agreement
      entered into pursuant to this Plan, together with (i) all rights, warranties
      or
      similar items attached or accruing thereto or represented by the certificate
      representing the stock and (ii) any stock or securities into which or for which
      the stock is thereafter converted or exchanged. The terms and conditions of
      the
      Restricted Stock Agreement shall be determined by the Committee consistent
      with
      the terms of the Plan. 

    


          2.21
       “Restricted
      Stock Agreement” means an agreement between the Company or any Affiliate and the
      Eligible Person pursuant to which the Eligible Person receives a Restricted
      Stock Award subject to Article VI.

    


          2.22
       “Restricted
      Stock Award” means an Award of Restricted Stock. 

    


          2.23
       “Restricted
      Stock Purchase Price” means the purchase price, if any, per share of Restricted
      Stock subject to an Award. The Committee shall determine the Restricted Stock
      Purchase Price. It may be greater than or less than the Fair Market Value of
      the
      Stock on the date of the Stock Award. 

    


           2.24
       “Stock”
      means the common stock of the Company, $.001 par value, or, in the event that
      the outstanding shares of common stock are later changed into or exchanged
      for a
      different class of stock or securities of the Company or another corporation,
      that other stock or security.

    


          2.25
       “Stock
      Appreciation Right” and “SAR” means the right to receive the difference between
      the Fair Market Value of a share of Stock on the grant date and the Fair Market
      Value of the share of Stock on the exercise date. 

     

    
      
        
           

        

         

      

      
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          2.26
       “10%
      Stockholder” means an individual who, at the time the Option is granted, owns
      Stock possessing more than 10% of the total combined voting power of all classes
      of stock of the Company or of any Affiliate. An individual shall be considered
      as owning the Stock owned, directly or indirectly, by or for his brothers and
      sisters (whether by the whole or half blood), spouse, ancestors, and lineal
      descendants; and Stock owned, directly or indirectly, by or for a corporation,
      partnership, estate, or trust, shall be considered as being owned
      proportionately by or for its stockholders, partners, or
      beneficiaries.

     

    ARTICLE
      III - ELIGIBILITY

    


    The
      individuals who shall be eligible to receive Awards shall be those Eligible
      Persons of the Company or any of its Affiliates as the Committee shall determine
      from time to time. However, no member of the Committee shall be eligible to
      receive any Award or to receive Stock, Options, Stock Appreciation Rights,
      or
      any Performance Stock Award under any other plan of the Company or any of its
      Affiliates, if to do so would cause the individual not to be a Non-Employee
      Director or Outside Director. The Board of Directors may designate one or more
      individuals who shall not be eligible to receive any Award under this Plan
      or
      under other similar plans of the Company. 

     

    ARTICLE
      IV - GENERAL PROVISIONS RELATING TO AWARDS

    


          4.1
       Authority
      to Grant Awards.
      The
      Committee may grant to those Eligible Persons of the Company or any of its
      Affiliates, as it shall from time to time determine, Awards under the terms
      and
      conditions of this Plan. The Committee shall determine subject only to any
      applicable limitations set out in this Plan, the number of shares of Stock
      to be
      covered by any Award to be granted to an Eligible Person.

    


          4.2
       Dedicated
      Shares.
      The
      total number of shares of Stock with respect to which Awards may be granted
      under the Plan shall be 6,000,000 shares. The shares may be treasury shares
      or
      authorized but unissued shares. The number of shares stated in this Section
      4.2
      shall be subject to adjustment in accordance with the provisions of Section
      4.5.
      In the event that any outstanding Award shall expire or terminate for any reason
      or any Award is surrendered, the shares of Stock allocable to the unexercised
      portion of that Award may again be subject to an Award under the
      Plan.

    


          4.3
       Non-transferability.
      Awards
      shall not be transferable by the Eligible Person otherwise than by will or
      under
      the laws of descent and distribution, or pursuant to a qualified domestic
      relations order (as
      defined by the Code or the rules thereunder), and
      shall
      be exercisable, during the Eligible Person’s lifetime, only by him or a
      transferee permitted by this Section 4. Any attempt to transfer an Award other
      than under the terms of the Plan and the Agreement shall terminate the Award
      and
      all rights of the Eligible Person to that Award. 

     

    
      
        
           

        

         

      

      
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          4.4
       Requirements
      of Law.
      The
      Company shall not be required to sell or issue any Stock under any Award if
      issuing that Stock would constitute or result in a violation by the Eligible
      Person or the Company of any provision of any law, statute, or regulation of
      any
      governmental authority. Specifically, in connection with any applicable statute
      or regulation relating to the registration of securities, upon exercise of
      any
      Option or pursuant to any Award, the Company shall not be required to issue
      any
      Stock unless the Committee has received evidence satisfactory to it to the
      effect that the holder of that Option or Award will not transfer the Stock
      except in accordance with applicable law, including receipt of an opinion of
      counsel satisfactory to the Company to the effect that any proposed transfer
      complies with applicable law. The determination by the Committee on this matter
      shall be final, binding, and conclusive. The Company may, but shall in no event
      be obligated to, register any Stock covered by this Plan pursuant to applicable
      securities laws of any country or any political subdivision. In the event the
      Stock issuable on exercise of an Option or pursuant to an Award is not
      registered, the Company may imprint on the certificate evidencing the Stock
      any
      legend that counsel for the Company considers necessary or advisable to comply
      with applicable law. The Company shall not be obligated to take any other
      affirmative action in order to cause the exercise of an Option or vesting under
      an Award, or the issuance of shares pursuant thereto, to comply with any law
      or
      regulation of any governmental authority.

    


          4.5
       Changes
      in the Company’s Capital Structure. 

    


          (a)
       The
      existence of outstanding Options or Awards 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 or other changes in the
      Company’s capital structure or its business, or any merger or consolidation of
      the Company, or any issue of bonds, debentures, preferred or prior preference
      stock ahead of or affecting the Stock or its rights, 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 shall effect a subdivision or
      consolidation of shares or other capital readjustment, the payment of a Stock
      dividend, or other increase or reduction of the number of shares of the Stock
      outstanding, without receiving compensation for it in money, services or
      property, then (a) the number, class, and per share price of shares of Stock
      subject to outstanding Options under this Plan shall be appropriately adjusted
      in such a manner as to entitle an Eligible Person to receive upon exercise
      of an
      Option, for the same aggregate cash consideration, the equivalent total number
      and class of shares he would have received had he exercised his Option in full
      immediately prior to the event requiring the adjustment; and (b) the number
      and
      class of shares of Stock then reserved to be issued under the Plan shall be
      adjusted by substituting for the total number and class of shares of Stock
      then
      reserved, that number and class of shares of Stock that would have been received
      by the owner of an equal number of outstanding shares of each class of Stock
      as
      the result of the event requiring the adjustment.

    


          (b)
       If
      the
      Company is merged or consolidated with another corporation and the Company
      is
      not the surviving corporation, or if the Company is liquidated or sells or
      otherwise disposes of substantially all its assets while unexercised Options
      remain outstanding under this Plan (each of the foregoing referred to as a
      “Corporate Transaction”):

    


    (i) Subject
      to the provisions of clause (ii) below, in the event of such a Corporate
      Transaction, any unexercised Options shall automatically accelerate so that
      they
      shall, immediately prior to the specified effective date for the Corporate
      Transaction become 100% vested and exercisable; provided, however, that any
      unexercised Options shall not accelerate if and to the extent such Option is,
      in
      connection with the Corporate Transaction, either to be assumed by the successor
      corporation or parent thereof (the “Successor Corporation”) or to be replaced
      with a comparable award for the purchase of shares of the capital stock of
      the
      Successor Corporation. Whether or not any unexercised Option is assumed or
      replaced shall be determined by the Company and the Successor Corporation in
      connection with the Corporate Transaction. The Board of Directors shall make
      the
      determination of what constitutes a comparable award to the unexercised Option,
      and its determination shall be conclusive and binding. The unexercised Option
      shall terminate and cease to remain outstanding immediately following the
      consummation of the Corporate Transaction, except to the extent assumed by
      the
      Successor Corporation.

     

    
      
        
           

        

         

      

      
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    (ii)
       All
      outstanding Options may be canceled by the Board of Directors as of the
      effective date of any Corporate Transaction, if (i) notice of cancellation
      shall
      be given to each holder of an Option and (ii) each holder of an Option shall
      have the right to exercise that Option in full (without regard to any
      limitations set out in or imposed under this Plan or the Option Agreement
      granting that Option) during a period set by the Board of Directors preceding
      the effective date of the merger, consolidation, liquidation, sale, or other
      disposition and, if in the event all outstanding Options may not be exercised
      in
      full under applicable securities laws without registration of the shares of
      Stock issuable on exercise of the Options, the Board of Directors may limit
      the
      exercise of the Options to the number of shares of Stock, if any, as may be
      issued without registration. The method of choosing which Options may be
      exercised, and the number of shares of Stock for which Options may be exercised,
      shall be solely within the discretion of the Board of Directors.

    


          (c)
       After
      a
      merger of one or more corporations into the Company or after a consolidation
      of
      the Company and one or more corporations in which the Company shall be the
      surviving corporation, each Eligible Person shall be entitled to have his
      Restricted Stock and shares earned under a Performance Stock Award appropriately
      adjusted based on the manner the Stock was adjusted under the terms of the
      agreement of merger or consolidation.

    


    (d)
       In
      each
      situation described in this Section 4.5, the Committee will make similar
      adjustments, as appropriate, in outstanding Stock Appreciation
      Rights.

    


    (e)
       The
      issuance by the Company of shares of stock of any class, or securities
      convertible into shares of stock of any class, for cash or property, or for
      labor or services either upon direct sale or upon the exercise of rights or
      warrants to subscribe for them, or upon conversion of shares or obligations
      of
      the Company convertible into shares or other securities, shall not affect,
      and
      no adjustment by reason of such issuance shall be made with respect to, the
      number, class, or price of shares of Stock then subject to outstanding Awards.
      

    


    4.6
       Election
      under Section 83(b) of the Code.
      No
      Employee shall exercise the election permitted under Section 83(b) of the Code
      without written approval of the Committee. Any Employee doing so shall forfeit
      all Awards issued to him under this Plan.

     

    
      
        
           

        

         

      

      
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    ARTICLE
      V - OPTIONS AND STOCK APPRECIATION RIGHTS

    


          5.1
       Type
      of Option.
      The
      Committee shall specify at the time of grant whether a given Option shall
      constitute an Incentive Option or a Nonqualified Option. Incentive Stock Options
      may only be granted to Employees.

    


    5.2
       Option
      Exercise Price.
      The
      price at which Stock may be purchased under an Incentive Option shall not be
      less than the greater of: (a) 100% of the Fair Market Value of the shares of
      Stock on the date the Option is granted or (b) the aggregate par value of the
      shares of Stock on the date the Option is granted. The Committee in its
      discretion may provide that the price at which shares of Stock may be purchased
      under an Incentive Option shall be more than 100% of Fair Market Value. In
      the
      case of any 10% Stockholder, the price at which shares of Stock may be purchased
      under an Incentive Option shall not be less than 110% of the Fair Market Value
      of the Stock on the date the Incentive Option is granted. The price at which
      shares of Stock may be purchased under a Nonqualified Option shall be such
      price
      as shall be determined by the Committee in its sole discretion but in no event
      lower than the par value of the shares of Stock on the date the Option is
      granted.

    


    5.3
       Duration
      of Options and SARS.
      No
      Option or SAR shall be exercisable after the expiration of ten (10) years from
      the date the Option or SAR is granted. In the case of a 10% Stockholder, no
      Incentive Option shall be exercisable after the expiration of five years from
      the date the Incentive Option is granted.

    


    5.4
       Amount
      Exercisable -- Incentive Options.
      Each
      Option may be exercised from time to time, in whole or in part, in the manner
      and subject to the conditions the Committee, in its sole discretion, may provide
      in the Option Agreement, as long as the Option is valid and outstanding. To
      the
      extent that the aggregate Fair Market Value (determined as of the time an
      Incentive Option is granted) of the Stock with respect to which Incentive
      Options first become exercisable by the optionee during any calendar year (under
      this Plan and any other incentive stock option plan(s) of the Company or any
      Affiliate) exceeds $100,000, the portion in excess of $100,000 of the Incentive
      Option shall be treated as a Nonqualified Option. In making this determination,
      Incentive Options shall be taken into account in the order in which they were
      granted. 

    


    5.5
       Exercise
      of Options.
      Each
      Option shall be exercised by the delivery of written notice to the Committee
      setting forth the number of shares of Stock with respect to which the Option
      is
      to be exercised, together with: 

    


          (a)
       cash,
      certified check, bank draft, or postal or express money order payable to the
      order of the Company for an amount equal to the option price of the
      shares;

    


    (b)
       stock
      at
      its Fair Market Value on the date of exercise (if approved in advance in writing
      by the Committee);

     

    
      
        
           

        

         

      

      
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          (c)
       an
      election to make a cashless exercise through a registered broker-dealer (if
      approved in advance in writing by the Committee);

    


    (d) an
      election to have shares of Stock, which otherwise would be issued on exercise,
      withheld in payment of the exercise price (if approved in advance in writing
      by
      the Committee); and/or 

    


    (e)
       any
      other
      form of payment which is acceptable to the Committee, including without
      limitation, payment in the form of a promissory note, and specifying the address
      to which the certificates for the shares are to be mailed. 

    


    As
      promptly as practicable after receipt of written notification and payment,
      the
      Company shall deliver to the Eligible Person certificates for the number of
      shares with respect to which the Option has been exercised, issued in the
      Eligible Person’s name. If shares of Stock are used in payment, the aggregate
      Fair Market Value of the shares of Stock tendered must be equal to or less
      than
      the aggregate exercise price of the shares being purchased upon exercise of
      the
      Option, and any difference must be paid by cash, certified check, bank draft,
      or
      postal or express money order payable to the order of the Company. Delivery
      of
      the shares shall be deemed effected for all purposes when a stock transfer
      agent
      of the Company shall have deposited the certificates in the United States mail,
      addressed to the Eligible Person, at the address specified by the Eligible
      Person. 

    


    Whenever
      an Option is exercised by exchanging shares of Stock owned by the Eligible
      Person, the Eligible Person shall deliver to the Company certificates registered
      in the name of the Eligible Person representing a number of shares of Stock
      legally and beneficially owned by the Eligible Person, free of all liens,
      claims, and encumbrances of every kind, accompanied by stock powers duly
      endorsed in blank by the record holder of the shares represented by the
      certificates (with signature guaranteed by a commercial bank or trust company
      or
      by a brokerage firm having a membership on a registered national stock
      exchange). The delivery of certificates upon the exercise of Options is subject
      to the condition that the person exercising the Option provides the Company
      with
      the information the Company might reasonably request pertaining to exercise,
      sale or other disposition. 

    


    5.6
       Stock
      Appreciation Rights.
      All
      Eligible Persons shall be eligible to receive Stock Appreciation Rights. The
      Committee shall determine the SAR to be awarded from time to time to any
      Eligible Person. The grant of a SAR to be awarded from time to time shall
      neither entitle such person to, nor disqualify such person from, participation
      in any other grant of awards by the Company, whether under this Plan or any
      other plan of the Company. If granted as a stand-alone SAR Award, the terms
      of
      the Award shall be provided in a Stock Appreciation Rights Agreement.


     

    
      
        
           

        

         

      

      
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    5.7
       Stock
      Appreciation Rights in Tandem with Options.
      Stock
      Appreciation Rights may, at the discretion of the Committee, be included in
      each
      Option granted under the Plan to permit the holder of an Option to surrender
      that Option, or a portion of the part which is then exercisable, and receive
      in
      exchange, upon the conditions and limitations set by the Committee, an amount
      equal to the excess of the Fair Market Value of the Stock covered by the Option,
      or the portion of it that was surrendered, determined as of the date of
      surrender, over the aggregate exercise price of the Stock. In the event of
      the
      surrender of an Option, or a portion of it, to exercise the Stock Appreciation
      Rights, the shares represented by the Option or that part of it which is
      surrendered, shall not be available for reissuance under the Plan. Each Stock
      Appreciation Right issued in tandem with an Option (a) will expire not later
      than the expiration of the underlying Option, (b) may be for no more than 100%
      of the difference between the exercise price of the underlying Option and the
      Fair Market Value of a share of Stock at the time the Stock Appreciation Right
      is exercised, (c) is transferable only when the underlying Option is
      transferable, and under the same conditions, and (d) may be exercised only
      when
      the underlying Option is eligible to be exercised. 

    


    5.8
       Conditions
      of Stock Appreciation Rights.
      All
      Stock Appreciation Rights shall be subject to such terms, conditions,
      restrictions or limitations as the Committee deems appropriate, including by
      way
      of illustration but not by way of limitation, restrictions on transferability,
      requirement of continued employment, individual performance, financial
      performance of the Company, or payment of any applicable employment or
      withholding taxes.

    


    5.9
       Payment
      of Stock Appreciation Rights.
      The
      amount of payment to which the Eligible Person who reserves an SAR shall be
      entitled upon the exercise of each SAR shall be equal to the amount, if any
      by
      which the Fair Market Value of the specified shares of Stock on the exercise
      date exceeds the Fair Market Value of the specified shares of Stock on the
      date
      of grant of the SAR. The SAR shall be paid in either cash or Stock, as
      determined in the discretion of the Committee as set forth in the SAR agreement.
      If the payment is in Stock, the number of shares to be paid shall be determined
      by dividing the amount of such payment by the Fair Market Value of Stock on
      the
      exercise date of such SAR.

    


    5.10
       Exercise
      on Termination of Employment.
      Unless
      it is expressly provided otherwise in the Option or SAR agreement, Options
      and
      SAR’s granted to Employees shall terminate three months after severance of
      employment of the Employee from the Company and all Affiliates for any reason,
      with or without Cause (defined below), other than death, retirement under the
      then established rules of the Company, or severance for disability. The
      Committee shall determine whether authorized leave of absence or absence on
      military or government service shall constitute severance of the employment
      of
      the Employee at that time. Notwithstanding anything contained herein,
      no
      Option or SAR may be exercised after termination of employment for any reason
      (whether by death, disability, retirement or otherwise) if it has not vested
      as
      at the date of termination of employment. Cause
      shall mean any of the following: (A) conviction of a crime (including conviction
      on a nolo
      contendere
      plea)
      involving a felony or dishonesty, or moral turpitude; (B) deliberate and
      continual refusal to perform employment duties reasonably requested by the
      Company or an affiliate after thirty (30) days’ written notice by certified mail
      of such failure to perform, specifying that the failure constitutes cause (other
      than as a result of vacation, sickness, illness or injury); (C) fraud or
      embezzlement as determined by an independent certified public accountant firm;
      or (D) gross misconduct or gross negligence in connection with the business
      of
      the Company or an affiliate which has substantial effect on the Company or
      the
      affiliate. 

     

    
      
        
           

        

         

      

      
        9

        
          

        

      

      
         

        
        

      

    


          5.11
       Death.
      If,
      before the expiration of an Option or SAR, the Eligible Person, whether in
      the
      employ of the Company or after he has retired or was severed for disability,
      or
      otherwise dies, the Option or SAR may be exercised until the earlier of the
      Option’s or SAR’s expiration date or six months following the date of his death,
      unless it is expressly provided otherwise in the Option or SAR agreement. After
      the death of the Eligible Person, his executors, administrators, or any persons
      to whom his Option or SAR may be transferred by will or by the laws of descent
      and distribution shall have the right, at any time prior to the Option’s or
      SAR’s expiration or termination, whichever is earlier, to exercise it, to the
      extent to which he was entitled to exercise it immediately prior to his death,
      unless it is expressly provided otherwise in the Option or SAR’s
      agreement.

    


    5.12
       Retirement.
      Unless
      it is expressly provided otherwise in the Option Agreement, before the
      expiration of an Option or SAR, the Employee shall be retired in good standing
      from the employ of the Company under the then established rules of the Company,
      the Option or SAR may be exercised until the earlier of the Option’s or SAR’s
      expiration date or three months following the date of his retirement, unless
      it
      is expressly provided otherwise in the Option or SAR agreement.

    


    5.13
       Disability.
      If,
      before the expiration of an Option or SAR, the Employee shall be severed from
      the employ of the Company for disability, the Option or SAR shall terminate on
      the earlier of the Option’s or SAR’s expiration date or six months after the
      date he was severed because of disability, unless it is expressly provided
      otherwise in the Option or SAR agreement.

    


    5.14
       Substitution
      Options.
      Options
      may be granted under this Plan from time to time in substitution for stock
      options held by employees of other corporations who are about to become
      employees of or affiliated with the Company or any Affiliate as the result
      of a
      merger or consolidation of the employing corporation with the Company or any
      Affiliate, or the acquisition by the Company or any Affiliate of the assets
      of
      the employing corporation, or the acquisition by the Company or any Affiliate
      of
      stock of the employing corporation as the result of which it becomes an
      Affiliate of the Company. The terms and conditions of the substitute Options
      granted may vary from the terms and conditions set out in this Plan to the
      extent the Committee, at the time of grant, may deem appropriate to conform,
      in
      whole or in part, to the provisions of the stock options in substitution for
      which they are granted. 

     

    
      
        
           

        

         

      

      
        10

        
          

        

      

      
         

        
        

      

    


    5.15
       Reload
      Options.
      Without
      in any way limiting the authority of the Board of Directors or Committee to
      make
      or not to make grants of Options hereunder, the Board of Directors or Committee
      shall have the authority (but not an obligation) to include as part of any
      Option Agreement a provision entitling the Eligible Person to a further Option
      (a “Reload Option”) in the event the Eligible Person exercises the Option
      evidenced by the Option Agreement, in whole or in part, by surrendering other
      shares of Stock in accordance with this Plan and the terms and conditions of
      the
      Option Agreement. Any such Reload Option (a) shall be for a number of shares
      equal to the number of shares surrendered as part or all of the exercise price
      of such Option; (b) shall have an expiration date which is the greater of (i)
      the same expiration date of the Option the exercise of which gave rise to such
      Reload Option or (ii) one year from the date of grant of the Reload Option;
      and
      (c) shall have an exercise price which is equal to one hundred percent (100%)
      of
      the Fair Market Value of the Stock subject to the Reload Option on the date
      of
      exercise of the original Option. Notwithstanding the foregoing, a Reload Option
      which is an Incentive Option and which is granted to a 10% Stockholder, shall
      have an exercise price which is equal to one hundred ten percent (110%) of
      the
      Fair Market Value of the Stock subject to the Reload Option on the date of
      exercise of the original Option and shall have a term which is no longer than
      five (5) years.

    


    Any
      such
      Reload Option may be an Incentive Option or a Nonqualified Option, as the Board
      of Directors or Committee may designate at the time of the grant of the original
      Option; provided, however, that the designation of any Reload Option as an
      Incentive Option shall be subject to the provisions of the Code. There shall
      be
      no Reload Options on a Reload Option. Any such Reload Option shall be subject
      to
      the availability of sufficient shares under Section 4.2 herein and shall be
      subject to such other terms and conditions as the Board of Directors or
      Committee may determine which are not inconsistent with the express provisions
      of the Plan regarding the terms of Options.

    


    5.16
       No
      Rights as Stockholder.
      No
      Eligible Person shall have any rights as a stockholder with respect to Stock
      covered by his Option until the date a stock certificate is issued for the
      Stock.

     

    ARTICLE
      VI - AWARDS

    


    6.1
       Restricted
      Stock Awards.
      The
      Committee may issue shares of Stock to an Eligible Person subject to the terms
      of a Restricted Stock Agreement. The Restricted Stock may be issued for no
      payment by the Eligible Person or for a payment below the Fair Market Value
      on
      the date of grant. Restricted Stock shall be subject to restrictions as to
      sale,
      transfer, alienation, pledge or other encumbrance and generally will be subject
      to vesting over a period of time specified in the Restricted Stock Agreement.
      The Committee shall determine the period of vesting, the number of shares,
      the
      price, if any, of Stock included in a Restricted Stock Award, and the other
      terms and provisions which are included in a Restricted Stock
      Agreement.

    


    6.2
       Restrictions.
      Restricted Stock shall be subject to the terms and conditions as determined
      by
      the Committee, including without limitation, any or all of the
      following:

     

    
      
        
           

        

         

      

      
        11

        
          

        

      

      
         

        
        

      

    

     

    (a)
       a
      prohibition against the sale, transfer, alienation, pledge, or other encumbrance
      of the shares of Restricted Stock, such prohibition to lapse (i) at such time
      or
      times as the Committee shall determine (whether in annual or more frequent
      installments, at the time of the death, disability, or retirement of the holder
      of such shares, or otherwise);

    


    (b)
       a
      requirement that the holder of shares of Restricted Stock forfeit, or in the
      case of shares sold to an Eligible Person, resell back to the Company at his
      cost, all or a part of such shares in the event of termination of the Eligible
      Person’s employment during any period in which the shares remain subject to
      restrictions;

    


    (c)
       a
      prohibition against employment of the holder of Restricted Stock by any
      competitor of the Company or its Affiliates, or against such holder’s
      dissemination of any secret or confidential information belonging to the Company
      or an Affiliate;

    


    (d)
       unless
      stated otherwise in the Restricted Stock Agreement, (i) if restrictions remain
      at the time of severance of employment with the Company and all Affiliates,
      other than for reason of disability or death, the Restricted Stock shall be
      forfeited; and (ii) if severance of employment is by reason of disability or
      death, the restrictions on the shares shall lapse and the Eligible Person or
      his
      heirs or estate shall be 100% vested in the shares subject to the Restricted
      Stock Agreement.

     

    6.3
       Stock
      Certificate.
      Shares
      of Restricted Stock shall be registered in the name of the Eligible Person
      receiving the Restricted Stock Award and deposited, together with a stock power
      endorsed in blank, with the Company. Each such certificate shall bear a legend
      in substantially the following form: 

    


    “The
      transferability of this certificate and the shares of Stock represented by
      it is
      restricted by and subject to the terms and conditions (including conditions
      of
      forfeiture) contained in the Behavioral Recognition Systems, Inc. 2007 Stock
      Option Plan, and an agreement entered into between the registered owner and
      the
      Company. A copy of the Plan and agreement is on file in the office of the
      Secretary of the Company.”

    


    6.4
       Rights
      as Stockholder.
      Subject
      to the terms and conditions of the Plan, each Eligible Person receiving a
      certificate for Restricted Stock shall have all the rights of a stockholder
      with
      respect to the shares of Stock included in the Restricted Stock Award during
      any
      period in which such shares are subject to forfeiture and restrictions on
      transfer, including without limitation, the right to vote such shares. Dividends
      paid with respect to shares of Restricted Stock in cash or property other than
      Stock in the Company or rights to acquire stock in the Company shall be paid
      to
      the Eligible Person currently. Dividends paid in Stock in the Company or rights
      to acquire Stock in the Company shall be added to and become a part of the
      Restricted Stock.

     

    
      
        
           

        

         

      

      
        12

        
          

        

      

      
         

        
        

      

    


    6.5
       Lapse
      of Restrictions.
      At the
      end of the time period during which any shares of Restricted Stock are subject
      to forfeiture and restrictions on sale, transfer, alienation, pledge, or other
      encumbrance, such shares shall vest and will be delivered in a certificate,
      free
      of all restrictions, to the Eligible Person or to the Eligible Person’s legal
      representative, beneficiary or heir; provided the certificate shall bear such
      legend, if any, as the Committee determines is reasonably required by applicable
      law. By accepting a Stock Award and executing a Restricted Stock Agreement,
      the
      Eligible Person agrees to remit when due any federal and state income and
      employment taxes required to be withheld. 

    


    6.6 Restriction
      Period.
      No
      Restricted Stock Award may provide for restrictions continuing beyond ten (10)
      years from the date of grant. 

     

    ARTICLE
      VII - PERFORMANCE STOCK AWARDS

    


    7.1
       Award
      of Performance Stock.
      The
      Committee may award shares of Stock, without any payment for such shares, to
      designated Eligible Persons if specified performance goals established by the
      Committee are satisfied. The terms and provisions herein relating to these
      performance-based awards are intended to satisfy Section 162(m) of the Code
      and
      regulations issued thereunder. The designation of an employee eligible for
      a
      specific Performance Stock Award shall be made by the Committee in writing
      prior
      to the beginning of the period for which the performance is measured (or within
      such period as permitted by IRS regulations). The Committee shall establish
      the
      maximum number of shares of Stock to be issued to a designated Employee if
      the
      performance goal or goals are met. The Committee reserves the right to make
      downward adjustments in the maximum amount of an Award if in its discretion
      unforeseen events make such adjustment appropriate. 

    


    7.2
       Performance
      Goals.
      Performance goals determined by the Committee may be based on specified
      increases in cash flow; net profits; Stock price; Company, segment, or Affiliate
      sales; market share; earnings per share; return on assets; and/or return on
      stockholders’ equity.

    


    7.3
       Eligibility.
      The
      employees eligible for Performance Stock Awards are the senior officers (i.e.,
      chief executive officer, president, vice presidents, secretary, treasurer,
      and
      similar positions) of the Company and its Affiliates, and such other employees
      of the Company and its Affiliates as may be designated by the
      Committee.

    


    7.4
       Certificate
      of Performance.
      The
      Committee must certify in writing that a performance goal has been attained
      prior to issuance of any certificate for a Performance Stock Award to any
      Employee. If the Committee certifies the entitlement of an Employee to the
      Performance Stock Award, the certificate will be issued to the Employee as
      soon
      as administratively practicable, and subject to other applicable provisions
      of
      the Plan, including but not limited to, all legal requirements and tax
      withholding. However, payment may be made in shares of Stock, in cash, or partly
      in cash and partly in shares of Stock, as the Committee shall decide in its
      sole
      discretion. If a cash payment is made in lieu of shares of Stock, the number
      of
      shares represented by such payment shall not be available for subsequent
      issuance under this Plan.

     

    ARTICLE
      VIII - ADMINISTRATION

    


    The
      Committee shall administer the Plan. All questions of interpretation and
      application of the Plan and Awards shall be subject to the determination of
      the
      Committee. A majority of the members of the Committee shall constitute a quorum.
      All determinations of the Committee shall be made by a majority of its members.
      Any decision or determination reduced to writing and signed by a majority of
      the
      members shall be as effective as if it had been made by a majority vote at
      a
      meeting properly called and held. This Plan shall be administered in such a
      manner as to permit the Options, which are designated to be Incentive Options,
      to qualify as Incentive Options. In carrying out its authority under this Plan,
      the Committee shall have full and final authority and discretion, including
      but
      not limited to the following rights, powers and authorities, to:

    


    (a)
       determine
      the Eligible Persons to whom and the time or times at which Options or Awards
      will be made;

    


          (b)
       determine
      the number of shares and the purchase price of Stock covered in each Option
      or
      Award, subject to the terms of the Plan;

     

    (c)
       determine
      the terms, provisions, and conditions of each Option and Award, which need
      not
      be identical;

    


    (d)
       accelerate
      the time at which any outstanding Option or SAR may be exercised, or Restricted
      Stock Award will vest;

    


    (e)
       define
      the effect, if any, on an Option or Award of the death, disability, retirement,
      or termination of employment of the Employee;

    


    (f)
       prescribe,
      amend and rescind rules and regulations relating to administration of the Plan;
      and

    


    (g)
       make
      all
      other determinations and take all other actions deemed necessary, appropriate,
      or advisable for the proper administration of this Plan.

    


    The
      actions of the Committee in exercising all of the rights, powers, and
      authorities set out in this Article and all other Articles of this Plan, when
      performed in good faith and in its sole judgment, shall be final, conclusive
      and
      binding on all parties.

     

    
      
        
           

        

         

      

      
        13

        
          

        

      

      
         

        
        

      

    

     

    ARTICLE
      IX - AMENDMENT OR TERMINATION OF PLAN

     

    The
      Board
      of Directors of the Company may amend, terminate or suspend this Plan at any
      time, in its sole and absolute discretion; provided, however, that to the extent
      required to qualify this Plan under Rule 16b-3 promulgated under Section 16
      of
      the Securities Exchange Act of 1934, as amended, no amendment that would (a)
      materially increase the number of shares of Stock that may be issued under
      this
      Plan, (b) materially modify the requirements as to eligibility for participation
      in this Plan, or (c) otherwise materially increase the benefits accruing to
      participants under this Plan, shall be made without the approval of the
      Company’s stockholders; provided further, however, that to the extent required
      to maintain the status of any Incentive Option under the Code, no amendment
      that
      would (a) change the aggregate number of shares of Stock which may be issued
      under Incentive Options, (b) change the class of employees eligible to receive
      Incentive Options, or (c) decrease the Option price for Incentive Options below
      the Fair Market Value of the Stock at the time it is granted, shall be made
      without the approval of the Company’s stockholders. Subject to the preceding
      sentence, the Board of Directors shall have the power to make any changes in
      the
      Plan and in the regulations and administrative provisions under it or in any
      outstanding Incentive Option as in the opinion of counsel for the Company may
      be
      necessary or appropriate from time to time to enable any Incentive Option
      granted under this Plan to continue to qualify as an incentive stock option
      or
      such other stock option as may be defined under the Code so as to receive
      preferential federal income tax treatment.

     

    ARTICLE
      X - MISCELLANEOUS

    


    10.1
       No
      Establishment of a Trust Fund.
      No
      property shall be set aside nor shall a trust fund of any kind be established
      to
      secure the rights of any Eligible Person under this Plan. All Eligible Persons
      shall at all times rely solely upon the general credit of the Company for the
      payment of any benefit which becomes payable under this Plan.

    


    10.2
       No
      Employment Obligation.
      The
      granting of any Option or Award shall not constitute an employment contract,
      express or implied, nor impose upon the Company or any Affiliate any obligation
      to employ or continue to employ any Eligible Person. The right of the Company
      or
      any Affiliate to terminate the employment of any person shall not be diminished
      or affected by reason of the fact that an Option or Award has been granted
      to
      him.

    


    10.3
       Forfeiture.
      Notwithstanding any other provisions of this Plan, if the Committee finds by
      a
      majority vote after full consideration of the facts that an Eligible Person,
      before or after termination of his employment with the Company or an Affiliate
      for any reason (a) committed or engaged in fraud, embezzlement, theft,
      commission of a felony, or proven dishonesty in the course of his employment
      by
      the Company or an Affiliate, which conduct damaged the Company or Affiliate,
      or
      disclosed trade secrets of the Company or an Affiliate, or (b) participated,
      engaged in or had a material, financial, or other interest, whether as an
      employee, officer, director, consultant, contractor, stockholder, owner, or
      otherwise, in any commercial endeavor in the United States which is competitive
      with the business of the Company or an Affiliate without the written consent
      of
      the Company or Affiliate, the Eligible Person shall forfeit all outstanding
      Options and all outstanding Awards, and including all exercised Options and
      other situations pursuant to which the Company has not yet delivered a stock
      certificate. Clause (b) shall not be deemed to have been violated solely by
      reason of the Eligible Person’s ownership of stock or securities of any publicly
      owned corporation, if that ownership does not result in effective control of
      the
      corporation.

     

    
      
        
           

        

         

      

      
        14

        
          

        

      

      
         

        
        

      

    


    The
      decision of the Committee as to the cause of an Employee’s discharge, the damage
      done to the Company or an Affiliate, and the extent of an Eligible Person’s
      competitive activity shall be final. No decision of the Committee, however,
      shall affect the finality of the discharge of the Employee by the Company or
      an
      Affiliate in any manner.

    


    10.4
       Tax
      Withholding.
      The
      Company or any Affiliate shall be entitled to deduct from other compensation
      payable to each Eligible Person any sums required by federal, state, or local
      tax law to be withheld with respect to the grant or exercise of an Option or
      SAR, lapse of restrictions on Restricted Stock, or award of Performance Stock.
      In the alternative, the Company may require the Eligible Person (or other person
      exercising the Option, SAR or receiving the Stock) to pay the sum directly
      to
      the employer corporation. If the Eligible Person (or other person exercising
      the
      Option or SAR or receiving the Stock) is required to pay the sum directly,
      payment in cash or by check of such sums for taxes shall be delivered within
      10
      days after the date of exercise or lapse of restrictions. The Company shall
      have
      no obligation upon exercise of any Option or lapse of restrictions on Stock
      until payment has been received, unless withholding (or offset against a cash
      payment) as of or prior to the date of exercise or lapse of restrictions is
      sufficient to cover all sums due with respect to that exercise. The Company
      and
      its Affiliates shall not be obligated to advise an Eligible Person of the
      existence of the tax or the amount which the employer corporation will be
      required to withhold.

    


    10.5
       Written
      Agreement.
      Each
      Option and Award shall be embodied in a written agreement which shall be subject
      to the terms and conditions of this Plan and shall be signed by the Eligible
      Person and by a member of the Committee on behalf of the Committee and the
      Company or an executive officer of the Company, other than the Eligible Person,
      on behalf of the Company. The agreement may contain any other provisions that
      the Committee in its discretion shall deem advisable which are not inconsistent
      with the terms of this Plan.

     

    
      
        
           

        

         

      

      
        15

        
          

        

      

      
         

        
        

      

    


    10.6
       Indemnification
      of the Committee and the Board of Directors.
      With
      respect to administration of this Plan, the Company shall indemnify each present
      and future member of the Committee and the Board of Directors against, and
      each
      member of the Committee and the Board of Directors shall be entitled without
      further act on his part to indemnity from the Company for, all expenses
      (including attorney’s fees, the amount of judgments, and the amount of approved
      settlements made with a view to the curtailment of costs of litigation, other
      than amounts paid to the Company itself) reasonably incurred by him in
      connection with or arising out of any action, suit, or proceeding in which
      he
      may be involved by reason of his being or having been a member of the Committee
      and/or the Board of Directors, whether or not he continues to be a member of
      the
      Committee and/or the Board of Directors at the time of incurring the expenses,
      including, without limitation, matters as to which he shall be finally adjudged
      in any action, suit or proceeding to have been found to have been negligent
      in
      the performance of his duty as a member of the Committee or the Board of
      Directors. However, this indemnity shall not include any expenses incurred
      by
      any member of the Committee and/or the Board of Directors in respect of matters
      as to which he shall be finally adjudged in any action, suit or proceeding
      to
      have been guilty of gross negligence or willful misconduct in the performance
      of
      his duty as a member of the Committee and the Board of Directors. In addition,
      no right of indemnification under this Plan shall be available to or enforceable
      by any member of the Committee and the Board of Directors unless, within 60
      days
      after institution of any action, suit or proceeding, he shall have offered
      the
      Company, in writing, the opportunity to handle and defend same at its own
      expense. This right of indemnification shall inure to the benefit of the heirs,
      executors or administrators of each member of the Committee and the Board of
      Directors and shall be in addition to all other rights to which a member of
      the
      Committee and the Board of Directors may be entitled as a matter of law,
      contract, or otherwise.

    


    10.7
       Gender.
      If the
      context requires, words of one gender when used in this Plan shall include
      the
      others and words used in the singular or plural shall include the
      other.

    


    10.8
       Headings.
      Headings of Articles and Sections are included for convenience of reference
      only
      and do not constitute part of the Plan and shall not be used in construing
      the
      terms of the Plan.

    


    10.9
       Other
      Compensation Plans.
      The
      adoption of this Plan shall not affect any other stock option, incentive or
      other compensation or benefit plans in effect for the Company or any Affiliate,
      nor shall the Plan preclude the Company from establishing any other forms of
      incentive or other compensation for employees of the Company or any
      Affiliate.

    


          10.10
       Other
      Options or Awards.
      The
      grant of an Option or Award shall not confer upon the Eligible Person the right
      to receive any future or other Options or Awards under this Plan, whether or
      not
      Options or Awards may be granted to similarly situated Eligible Persons, or
      the
      right to receive future Options or Awards upon the same terms or conditions
      as
      previously granted.

    


          10.11
       Governing
      Law.
      The
      provisions of this Plan shall be construed, administered, and governed under
      the
      laws of the State of Texas.