exh4-1.htm


    
      Exhibit 4.1

      2008
EQUITY COMPENSATION PLAN

      


      I.  ESTABLISHMENT
OF PLAN; DEFINITIONS

      


      1.           Purpose.  The
purpose of the ZAP 2008 Equity Compensation Plan is to encourage certain,
officers, employees, directors and consultants of ZAP, a California corporation
(the "Corporation") to acquire and hold stock in the Corporation as an added
incentive to remain with the Corporation and to increase their efforts in
promoting the interests of the Corporation and to enable the Corporation to
attract and retain capable individuals.

      


      2.           Definitions.  Unless
the context clearly indicates otherwise, the following terms shall have the
meanings set forth below:

      (a)           “Award”
shall mean the grant of any Stock Option or Stock Award pursuant to the
Plan.

      (a)           "Board"
shall mean the Board of Directors of the Corporation.

      (b)           "Code"
shall mean the Internal Revenue Code of 1986, as it may be amended from time to
time.

      (c)           "Committee"
shall mean a committee made up of at least two members of the Board whose
members shall, from time to time, be appointed by the Board.  If a
Committee has not been appointed by the Board, “Committee” shall mean the
Board.

      (d)           "Corporation"
shall mean ZAP, a California corporation.

      (e)           "Consultants"
shall mean individuals or entities that provide services to the Corporation who
are not Employees or Directors.

      (f)           "Directors"
shall mean those members of the Board of Directors of the Corporation who are
not Employees.

      (g)           "Disability"
shall mean a medically determinable physical or mental condition which causes an
Employee, Director or Consultant to be unable to engage in any substantial
gainful activity and which can be expected to result in death or to be of
long-continued and indefinite duration.

      (h)           "Employee"
shall mean any common law employee, including officers, of the Corporation as
determined under the Code and the Treasury Regulations thereunder.

      (i)           "Fair
Market Value" with regards to the grant of Stock Options shall mean (i) if the
Stock is listed on a national securities exchange, the mean between the highest
and lowest sales prices for the Stock on such date, or, if no such prices are
reported for such day, then on the next preceding day on which there were
reported prices; (ii) if the Stock is not listed on a national securities
exchange, the closing price for the shares on such date, or if no such prices
are reported for such day, then on the next preceding day on which there were
reported prices; or (iii) as determined in good faith by the
Board.  “Fair Market Value” with regards to Stock Awards shall be
determined by the Board, in good faith and in its sole discretion.

      (j)           "Grantee"
shall mean an officer, Employee, Director or Consultant granted a Stock Option
or Stock Award under this Plan.

      (k)           "Incentive
Stock Option" shall mean an option granted pursuant to the Incentive Stock
Option provisions as set forth in Part II of this Plan.

      (l)           "Non-Qualified
Stock Option" shall mean an option granted pursuant to the Non-Qualified Stock
Option provisions as set forth in Part III of this Plan.

      (m)           "Plan"
shall mean the ZAP 2008 Equity Compensation Plan as set forth herein and as
amended from time to time.

      (n)           "Restricted
Stock" shall mean Stock which is issued pursuant to the Restricted Stock as set
forth in Part IV of this Plan.


      
        
           


        

        
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      (o)           "Stock"
shall mean authorized but unissued shares of the Common Stock of the Corporation
or reacquired shares of the Corporation's Common Stock.

      (p)           "Stock
Award" shall mean an award of Restricted or Unrestricted Stock granted pursuant
to this Plan.

      (q)           "Stock
Option" shall mean an option granted pursuant to the Plan to purchase shares of
Stock.

      (r)           "Ten
Percent Shareholder" shall mean an Employee who at the time a Stock Option is
granted owns stock possessing more than ten percent (10%) of the total combined
voting power of all stock of the Corporation or of its parent or subsidiary
corporation.

      (s)           "Unrestricted
Stock" shall mean Stock which is issued pursuant to the Unrestricted Stock
provisions as set forth in Part V of this Plan.

      


      3.           Shares of Stock Subject to
the Plan.  Subject to the provisions of Paragraph 2 of Part VI
of the Plan, the Stock which may be issued or transferred pursuant to Stock
Options and Stock Awards granted under the Plan and the Stock which is subject
to outstanding but unexercised Stock Options under the Plan shall not exceed
10,000,000 shares in the aggregate.  If a Stock Option shall expire
and terminate for any reason, in whole or in part, without being exercised or,
if Stock Awards are forfeited because the restrictions with respect to such
Stock Awards shall not have been met or have lapsed, the number of shares of
Stock which are no longer outstanding as Stock Awards or subject to Stock
Options may again become available for the grant of Stock Awards or Stock
Options.  There shall be no terms and conditions in a Stock Award or
Stock Option which provide that the exercise of an Incentive Stock Option
reduces the number of shares of Stock for which an outstanding Non-Qualified
Stock Option may be exercised; and there shall be no terms and conditions in a
Stock Award or Stock Option which provide that the exercise of a Non-Qualified
Stock Option reduces the number of shares of Stock for which an outstanding
Incentive Stock Option may be exercised.

      


      4.           Administration of the
Plan.  The Plan shall be administered by the
Committee.  Subject to the express provisions of the Plan, the
Committee shall have authority to interpret the Plan, to prescribe, amend, and
rescind rules and regulations relating to it, to determine the terms and
provisions of Stock Option agreements, and to make all other determinations
necessary or advisable for the administration of the Plan.  Any
controversy or claim arising out of or related to this Plan shall be determined
unilaterally by and at the sole discretion of the Committee.

      


      5.           Amendment or
Termination.  The Board may, at any time, alter, amend,
suspend, discontinue, or terminate this Plan; provided, however, that such
action shall not adversely affect the right of Grantees to Stock Awards or Stock
Options previously granted and no amendment, without the approval of the
stockholders of the Corporation, shall increase the maximum number of shares
which may be awarded under the Plan in the aggregate, materially increase the
benefits accruing to Grantees under the Plan, change the class of Employees
eligible to receive options under the Plan, or materially modify the eligibility
requirements for participation in the Plan.

      


      6.           Effective Date and Duration
of the Plan.

      


        This
Plan shall become effective on March 12, 2009.  This Plan shall
terminate at such time as may be determined by the Board, and no Stock Award or
Stock Option may be issued or granted under the Plan thereafter, but such
termination shall not affect any Stock Award or Stock Option theretofore issued
or granted.

      


      
        
           


        

        
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      7.           General.


      (a)           Each
Stock Option and Stock Award shall be evidenced by a written instrument (which
may be in the form of a unanimous written consent of the Board) containing such
terms and conditions, not inconsistent with this Plan, as the Committee shall
approve.

      (b)           The
granting of a Stock Option or Stock Award in any year shall not give the Grantee
any right to similar grants in future years or any right to be retained in the
employ of the Corporation, and all Employees shall remain subject to discharge
to the same extent as if the Plan were not in effect.

      (c)           No
officer, Employee, Director or Consultant and no beneficiary or other person
claiming under or through him, shall have any right, title or interest by reason
of any Stock Option or any Stock Award to any particular assets of the
Corporation, or any shares of Stock allocated or reserved for the purposes of
the Plan or subject to any Stock Option or any Stock Award except as set forth
herein.  The Corporation shall not be required to establish any fund
or make any other segregation of assets to assure the payment of any Stock
Option or Stock Award.

      (d)           No
right under the Plan shall be subject to anticipation, sale, assignment, pledge,
encumbrance, or charge except by will or the laws of descent and distribution,
and a Stock Option shall be exercisable during the Grantee's lifetime only by
the Grantee or his conservator.

      (e)           Notwithstanding
any other provision of this Plan or agreements made pursuant thereto, the
Corporation's obligation to issue or deliver any certificate or certificates for
shares of Stock under a Stock Option or Stock Award, and the transferability of
Stock acquired by exercise of a Stock Option or grant of a Stock Award, shall be
subject to all of the following conditions:

      (i)           Any
registration or other qualification of such shares under any state or federal
law or regulation, or the maintaining in effect of any such registration or
other qualification which the Board shall, in its absolute discretion upon the
advice of counsel, deem necessary or advisable; and

      (ii)           The
obtaining of any other consent, approval, or permit from any state or federal
governmental agency which the Board shall, in its absolute discretion upon the
advice of counsel, determine to be necessary or advisable.

      (f)           All
payments to Grantees or to their legal representatives shall be subject to any
applicable tax, community property, or other statutes or regulations of the
United States or of any state or country having jurisdiction
thereof.  The Grantee may be required to pay to the Corporation the
amount of any withholding taxes which the Corporation is required to withhold
with respect to a Stock Option or its exercise or a Stock Award.  In
the event that such payment is not made when due, the Corporation shall have the
right to deduct, to the extent permitted by law, from any payment of any kind
otherwise due to such person all or part of the amount required to be
withheld.

      (g)           In
the case of a grant of a Stock Option or Stock Award to any Employee of a
subsidiary of the Corporation, the Corporation may, if the Committee so directs,
issue or transfer the shares, if any, covered by the Stock Option or Stock Award
to the subsidiary, for such lawful consideration as the Committee may specify,
upon the condition or understanding that the subsidiary will transfer the shares
to the Employee in accordance with the terms of the Stock Option or Stock Award
specified by the Committee pursuant to the provisions of the
Plan.  For purposes of this Section, a subsidiary shall mean any
subsidiary corporation of the Corporation as defined in Section 424 of the
Code.

      (h)           A
Grantee entitled to Stock as a result of the exercise of a Stock Option or grant
of a Stock Award shall not be deemed for any purpose to be, or have rights as, a
shareholder of the Corporation by virtue of such exercise, except to the extent
a stock certificate is issued therefor and then only from the date such
certificate is issued.  No adjustments shall be made for dividends or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued.  The Corporation shall issue any
stock certificates required to be


      
        
           


        

        
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      issued in
connection with the exercise of a Stock Option with reasonable promptness after
such exercise.

      (i)           The
grant or exercise of Stock Options granted under the Plan or the grant of a
Stock Award under the Plan shall be subject to, and shall in all respects comply
with, applicable law relating to such grant or exercise, or to the number of
shares of Stock which may be beneficially owned or held by any
Grantee.

      (j)           The
Corporation intends that the Plan shall comply with the requirements of Rule
16b-3 (the “Rule”) under the Securities Exchange Act of 1934, as amended, during
the term of this Plan. Should any additional provisions be necessary for the
Plan to comply with the requirements of the Rule, the Board may amend this Plan
to add to or modify the provisions of this Plan accordingly.

      (k)           The
Corporation intends that the Plan shall comply with the requirements of Section
409A of the Code, to the extent applicable.  Should any changes to the
Plan be necessary for the Plan to comply with the requirements of Code Section
409A the Board may amend this Plan to add to or modify the provisions of this
Plan accordingly.

      (l)           The
Corporation will seek stockholder approval in the manner and to the degree
required under applicable laws.  If the Corporation fails to obtain
stockholder approval of the Plan within twelve (12) months after the date this
Plan is adopted by the Board, pursuant to Section 422 of the Code, any Option
granted as an Incentive Option at any time under the Plan will not qualify as an
Incentive Option within the meaning of the Code and will be deemed to be a
Non-Statutory Option.

      (m)           The
Corporation intends that the Plan shall comply with the requirements of the
California Corporations Code during the term of this Plan. Should any additional
provisions be necessary for the Plan to comply with the requirements of the
California Corporations Code, the Board may amend this Plan to add to or modify
the provisions of this Plan accordingly.

      


      II.  INCENTIVE
STOCK OPTION PROVISIONS

      


      1.           Granting of Incentive Stock
Options.

      (a)           Only
Employees of the Corporation shall be eligible to receive Incentive Stock
Options under the Plan.  Officers, Directors and Consultants of the
Corporation who are not also Employees shall not be eligible to receive
Incentive Stock Options.

      (b)           The
purchase price of each share of Stock subject to an Incentive Stock Option shall
not be less than 100% of the Fair Market Value of a share of the Stock on the
date the Incentive Stock Option is granted; provided, however, that the purchase
price of each share of Stock subject to an Incentive Stock Option granted to a
Ten Percent Shareholder shall not be less than 110% of the Fair Market Value of
a share of the Stock on the date the Incentive Stock Option is
granted.

      (c)           No
Incentive Stock Option shall be exercisable more than ten years from the date
the Incentive Stock Option was granted; provided, however, that an Incentive
Stock Option granted to a Ten Percent Shareholder shall not be exercisable more
than five years from the date the Incentive Stock Option was
granted.

      (d)           The
Committee shall determine and designate from time to time those Employees who
are to be granted Incentive Stock Options and specify the number of shares
subject to each Incentive Stock Option.

      (e)           The
Committee, in its sole discretion, shall determine whether any particular
Incentive Stock Option shall become exercisable in one or more installments,
specify the installment dates, and, within the limitations herein provided,
determine the total period during

       

      
        
          
          

        

        
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      which the
Incentive Stock Option is exercisable.  Further, the Committee may
make such other provisions as may appear generally acceptable or desirable to
the Committee or necessary to qualify its grants under the provisions of Section
422 of the Code.

      (f)           The
Committee may grant at any time new Incentive Stock Options to an Employee who
has previously received Incentive Stock Options or other options whether such
prior Incentive Stock Options or other options are still outstanding, have
previously been exercised in whole or in part, or are canceled in connection
with the issuance of new Incentive Stock Options.  The purchase price
of the new Incentive Stock Options may be established by the Committee without
regard to the existing Incentive Stock Options or other options.

      (g)           Notwithstanding
any other provisions hereof, the aggregate Fair Market Value (determined at the
time the option is granted) of the Stock with respect to which Incentive Stock
Options are exercisable for the first time by the Employee during any calendar
year (under all such plans of the Grantee's employer corporation and its parent
and subsidiary corporation) shall not exceed $100,000.

       

      2.              Exercise of Incentive Stock
Options.  Upon the exercise of any Incentive Stock Option, the
option price for the Shares being purchased shall be payable to the Corporation
in full either: (a) in cash or its equivalent; or (b) subject to
the Committee’s approval, by delivery of previously acquired Shares having an
aggregate Fair Market Value at the time of exercise equal to the total option
price (provided that the Shares that are delivered must have been held by the
Grantee for at least six (6) months prior to their delivery to satisfy the
option price); or (c) by a combination of (a) and (b); or (d) by any
other method approved by the Committee in its sole discretion. Unless otherwise
determined by the Committee, the delivery of previously acquired Shares may be
done through attestation. No fractional shares may be tendered or accepted in
payment of the option price.

       

      Unless
otherwise determined by the Committee, cashless exercises are permitted pursuant
to 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 this Plan’s purpose and applicable law.

       

      Subject
to any governing rules or regulations, as soon as practicable after receipt of
notification of exercise and full payment, the Company shall deliver to the
Grantee, in the Grantee’s name, Share certificates in an appropriate amount
based upon the number of Shares purchased pursuant to the Incentive Stock
Option(s).

       

      Unless
otherwise determined by the Committee, all payments under all of the methods
indicated above shall be paid in United States dollars.


      3.              Termination of
Employment.

      (a)           If
a Grantee's employment with the Corporation is terminated other than by
Disability or death, the terms of any then outstanding Incentive Stock Option
held by the Grantee shall extend for a period ending on the earlier of the date
on which such Stock Option would otherwise expire or three months after such
termination of employment, and such Stock Option shall be exercisable to the
extent it was exercisable as of such last date of employment.

       

      (b)           If
a Grantee's employment with the Corporation is terminated by reason of
Disability, the term of any then outstanding Incentive Stock Option held by the
Grantee shall extend for a period ending on the earlier of the date on which
such Stock Option would otherwise expire or twelve months after such termination
of employment, and such Stock Option

       

      
        
          
          

        

        
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      shall be
exercisable to the extent it was exercisable as of such last date of
employment.

       

      (c)           If
a Grantee's employment with the Corporation is terminated by reason of death,
the representative of his estate or beneficiaries thereof to whom the Stock
Option has been transferred shall have the right during the period ending on the
earlier of the date on which such Stock Option would otherwise expire or twelve
months after such date of death, to exercise any then outstanding Incentive
Stock Options in whole or in part.  If a Grantee dies without having
fully exercised any then outstanding Incentive Stock Options, the representative
of his estate or beneficiaries thereof to whom the Stock Option has been
transferred shall have the right to exercise such Stock Options in whole or in
part.

       

      III.  NON-QUALIFIED
STOCK OPTION PROVISIONS

       

      1.           Granting of Stock
Options.

       

      (a)           Officers,
Employees, Directors and Consultants shall be eligible to receive Non-Qualified
Stock Options under the Plan.

       

      (b)           The
Committee shall determine and designate from time to time those officers,
Employees, Directors and Consultants who are to be granted Non-Qualified Stock
Options and the amount subject to each Non-Qualified Stock Option.

       

      (c)           The
Committee may grant at any time new Non-Qualified Stock Options to an Employee,
Director or Consultant who has previously received Non-Qualified Stock Options
or other Stock Options, whether such prior Non-Qualified Stock Options or other
Stock Options are still outstanding, have previously been exercised in whole or
in part, or are canceled in connection with the issuance of new Non-Qualified
Stock Options.

       

      (d)           The
Committee shall determine the purchase price of each share of Stock subject to a
Non-Qualified Stock Option.  Such price shall not be less than 100% of
the Fair Market Value of such Stock on the date the Non-Qualified Stock Option
is granted.

       

      (e)           The
Committee, in its sole discretion, shall determine whether any particular
Non-Qualified Stock Option shall become exercisable in one or more installments,
specify the installment dates, and, within the limitations herein provided,
determine the total period during which the Non-Qualified Stock Option is
exercisable.  Further, the Committee may make such other provisions as
may appear generally acceptable or desirable to the Committee, including the
extension of a Non-Qualified Stock Option, provided that such extension does not
extend the option
beyond the period specified in paragraph (f) below.

       

      (f)           No
Non-Qualified Stock Option shall be exercisable more than ten years from the
date such option is granted.

       

      2.              Exercise of Stock
Options.   Upon the exercise of any Non-Qualified Stock
Option, the option price for the Shares being purchased shall be payable to the
Corporation in full either: (a) in cash or its equivalent;
or (b) subject to the Committee’s approval, by delivery of previously
acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the total option price (provided that the Shares that are delivered
must have been held by the Grantee for at least six (6) months prior to their
delivery to satisfy the option price); or (c) by a combination of (a) and
(b); or (d) by any other method approved by the Committee in its
sole

       

      
        
          
          

        

        
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      discretion.
Unless otherwise determined by the Committee, the delivery of previously
acquired Shares may be done through attestation. No fractional shares may be
tendered or accepted in payment of the option price.

       

      Unless
otherwise determined by the Committee, cashless exercises are permitted pursuant
to 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 this Plan’s purpose and applicable law.

       

      Subject
to any governing rules or regulations, as soon as practicable after receipt of
notification of exercise and full payment, the Company shall deliver to the
Grantee, in the Grantee’s name, Share certificates in an appropriate amount
based upon the number of Shares purchased pursuant to the Non-Qualified Stock
Option(s).

       

      Unless
otherwise determined by the Committee, all payments under all of the methods
indicated above shall be paid in United States dollars.

      


       

       3.           Termination of
Relationship.

       

      (a)           If
a Grantee's employment with the Corporation is terminated, a Director Grantee
ceases to be a Director, or a Consultant Grantee ceases to be a Consultant,
other than by reason of Disability or death, the terms of any then outstanding
Non-Qualified Stock Option held by the Grantee shall extend for a period ending
on the earlier of the date established by the Committee at the time of grant or
three months after the Grantee's last date of employment or cessation of being a
Director or Consultant, and such Stock Option shall be exercisable to the extent
it was exercisable as of the date of termination of employment or cessation of
being a Director or Consultant.

       

      (b)           If
a Grantee's employment is terminated by reason of Disability, a Director Grantee
ceases to be a Director by reason of Disability or a Consultant Grantee ceases
to be a Consultant by reason of Disability, the term of any then outstanding
Non-Qualified Stock Option held by the Grantee shall extend for a period ending
on the earlier of the date on which such Stock Option would otherwise expire or
twelve months after the Grantee's last date of employment or cessation of being
a Director or Consultant, and such Stock Option shall be exercisable to the
extent it was exercisable as of such last date of employment or cessation of
being a Director or Consultant.


      (c)           If
a Grantee's employment is terminated by reason of death, a Director Grantee
ceases to be a Director by reason of death or a Consultant Grantee ceases to be
a Consultant by reason of death, the representative of his estate or
beneficiaries thereof to whom the Stock Option has been transferred shall have
the right during the period ending on the earlier of the date on which such
Stock Option would otherwise expire or twelve months following his death to
exercise any then outstanding Non-Qualified Stock Options in whole or in
part.  If a Grantee dies without having fully exercised any then
outstanding Non-Qualified Stock Options, the representative of his estate or
beneficiaries thereof to whom the Stock Option has been transferred shall have
the right to exercise such Stock Options in whole or in part.

       

      


      
        
          
          

        

        
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      IV.  RESTRICTED
STOCK AWARDS

       

      1.           Grant of Restricted
Stock.

       

      (a)  Officers,
Employees, Directors and Consultants shall be eligible to receive grants of
Restricted Stock under the Plan.

       

      (b)           The
Committee shall determine and designate from time to time those officers,
Employees, Directors and Consultants who are to be granted Restricted Stock and
the number of shares of Stock subject to such Stock Award.

       

      (c)           The
Committee, in its sole discretion, shall make such terms and conditions
applicable to the grant of Restricted Stock as may appear generally acceptable
or desirable to the Committee.

       

      2.           Termination of
Relationship.

       

      (a)           If
a Grantee's employment with the Corporation, a Director Grantee ceases to be a
Director, or a Consultant Grantee ceases to be a Consultant, prior to the lapse
of any restrictions applicable to the Restricted Stock such Stock shall be
forfeited and the Grantee shall return the certificates representing such Stock
to the Corporation.

       

      (b)           If
the restrictions applicable to a grant of Restricted Stock shall lapse, the
Grantee shall hold such Stock free and clear of all such restrictions except as
otherwise provided in the Plan.

       

      
 

       


      
        
           


        

        
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      V.  UNRESTRICTED
STOCK AWARDS

       

      1.           Grant of Unrestricted
Stock.

       

      (a)           Officers,
Employees, Directors and Consultants shall be eligible to receive grants of
Unrestricted Stock under the Plan.

       

      (b)           The
Committee shall determine and designate from time to time those officers,
Employees, Directors and Consultants who are to be granted Unrestricted Stock
and number of shares of Stock subject to such Stock Award.

       

      2.           Issuance of
Stock.  The Grantee shall hold Stock issued pursuant to an
Unrestricted Stock award free and clear of all restrictions except as otherwise
provided in the Plan.

       

      


       

      VI.  ADJUSTMENTS
UPON MERGER, REORGANIZATION, DISSOLUTION OR CHANGE IN CONTROL

       

      1.           Substitution of
Options.  In the event of a corporate merger or consolidation,
or the acquisition by the Corporation of property or stock of an acquired
corporation or any reorganization or other transaction qualifying under Section
424 of the Code, the Committee may, in accordance with the provisions of that
Section, substitute Stock Options and Stock Awards under this Plan for Stock
Options and Stock Awards and under the plan of the acquired corporation provided
(i) the excess of the aggregate Fair Market Value of the shares of Stock
subject to Stock Option immediately after the substitution over the aggregate
option price of such Stock is not more than the similar excess immediately
before such substitution and (ii) the new Stock Option does not give the
Grantee additional benefits, including any extension of the exercise
period.   Alternatively, the Committee may provide, that each
Stock Option and Stock Award granted under the Plan shall terminate as of a date
to be fixed by the Board; provided, that no
less than thirty days written notice of the date so fixed shall be given to each
holder, and each holder shall have the right, during the period of fifteen days
preceding such termination, to exercise the Stock Options and Stock Awards as to
all or any part of the Stock covered thereby, including Stock as to which such
would not otherwise be exercisable.

       

      2.           Adjustment
Provisions.

       

      (a)           In
the event that a dividend shall be declared upon the Stock payable in shares of
the Corporation's common stock, the number of shares of Stock then subject to
any Stock Option or Stock Award outstanding under the Plan and the number of
shares reserved for the grant of Stock Options or Stock Awards pursuant to the
Plan shall be adjusted by adding to each such share the number of shares which
would be distributable in respect thereof if such shares had been outstanding on
the date fixed for determining the shareholders of the Corporation entitled to
receive such share dividend.

       

      (b)           If
the shares of Stock outstanding are changed into or exchanged for a different
number or class or other securities of the Corporation or of another
corporation, whether through split-up, merger, consolidation, reorganization,
reclassification or  recapitalization then there shall be substituted
for each share of Stock subject to any such Stock Option or Stock Award and for
each share of Stock reserved for the grant of Stock Options or Stock Awards
pursuant to the

       


      
        
           


        

        
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      Plan the
number and kind of shares or other securities into which each outstanding share
of Stock shall have been so changed or for which each share shall have been
exchanged.

       

      (c)           In
the event there shall be any change, other than as specified above in this
Section 2, in the number or kind of outstanding shares of Stock or of any shares
or other securities into which such shares shall have been changed or for which
they shall have been exchanged, then if the Board shall, in its sole discretion,
determine that such change equitably requires an adjustment in the number or
kind of shares theretofore reserved for the grant of Stock Options or Stock
Awards pursuant to the Plan and of the shares then subject to Stock Options or
Stock Awards, such adjustment shall be made by the Board and shall be effective
and binding for all purposes of the Plan and of each Stock Option and Stock
Award outstanding thereunder.

       

      (d)           In
the case of any such substitution or adjustment as provided for in this Section
2, the option price set forth in each outstanding Stock Option for each share
covered thereby prior to such substitution or adjustment will be the option
price for all shares or other securities which shall have been substituted for
such share or to which such share shall have been adjusted pursuant to this
Section 2, and the price per share shall be adjusted accordingly.

       

      (e)           No
adjustment or substitution provided for in this Section 2 shall require the
Corporation to sell a fractional share, and the total substitution or adjustment
with respect to each outstanding Stock Option shall be limited
accordingly.

       

      (f)           Upon
any adjustment made pursuant to this Section 2 the Corporation will, upon
request, deliver to the Grantee a certificate setting forth the option price
thereafter in effect and the number and kind of shares or other securities
thereafter purchasable on the exercise of such Stock Option.

       

      3.           Dissolution or
Liquidation.  In the event of a proposed dissolution or
liquidation of the Corporation, to the extent an Award has not been previously
exercised, it will terminate immediately prior to the consummation of such
proposed action.

       

      4.           Change in
Control.  Notwithstanding Sections 1 and 2 above, in the event
of a Change of Control (as defined below), except as otherwise determined by the
Board, the Grantee shall fully vest in and have the right to exercise the Awards
as to all of the Stock, including Stock as to which it would not otherwise be
vested or exercisable.  If an Award becomes fully vested and
exercisable as the result of a Change of Control, the Committee shall notify the
Grantee in writing or electronically prior to the Change of Control that the
Award shall be fully vested and exercisable for a period of fifteen (15) days
from the date of such notice, and the Award shall terminate upon the expiration
of such period.  For purposes of this Agreement, a “Change of Control”
means the happening of any of the following events:

       

      When any
“person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (“Exchange Act”) (other than the
Corporation, a subsidiary or a Corporation employee benefit plan, including any
trustee of such plan acting as trustee) is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing fifty percent (50%) or more of the
combined voting power of the Corporation’s then outstanding securities entitled
to vote


      
        
           


        

        
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      generally
in the election of directors; or

      


      The
stockholders of the Corporation approve a merger or consolidation of the
Corporation with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the total voting power represented by
the voting securities of the Corporation or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Corporation approve an agreement for the sale or disposition by the Corporation
of all or substantially all the Corporation’s assets; or


      A change
in the composition of the Board of the Corporation, as a result of which less
than a majority of the directors are Incumbent Directors.  “Incumbent
Directors” shall mean directors who either (A) are directors of the
Corporation as of the date the Plan is approved by the stockholders, or
(B) are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Incumbent Directors at the time
of such election or nomination (but shall not include an individual whose
election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Corporation).

      


       

      VII.
INDEMNIFICATION

       

      Each
person who is or shall have been a member of the Committee, or of the Board,
shall be indemnified and held harmless by the Corporation against and from any
loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, notion,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan or
any Award agreement and against and from any and all amounts paid by him or her
in settlement thereof, with the Corporation’s approval, or paid by him or her in
settlement thereof, with the Corporation’s approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against him
or her, provided he or she shall give the Corporation an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf.  The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Corporation’s Articles of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the
Corporation may have to indemnify them or hold them harmless.

       

       

      VIII.
CONDITIONS UPON ISSUANCE OF SHARES

       

      1.           Legal
Compliance.  Stock shall not be issued pursuant to the exercise
of an Award unless the exercise of such Award and the issuance and delivery of
Stock shall comply with applicable laws and shall be further subject to the
approval of counsel for the Corporation with respect to such
compliance.

       

       

      2.           Investment
Representations.  As a condition to the exercise of an Award,
the Corporation may require the Grantee exercising such Award to represent and
warrant at the time of any such exercise that the Stock is being purchased only
for investment and without any present intention to sell or distribute such
Stock if, in the opinion of counsel for the Corporation,

       


      
        
           


        

        
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      such a
representation is required.

       

       

      3.           No Rights as
Stockholder. No
Grantee will have any of the rights of a stockholder with respect to any Stock
until the Stock is issued to the said Grantee.  After Stock is issued
to the Grantee, the Grantee will be a stockholder and will have all the rights
of a stockholder with respect to such Stock, including the right to vote and
receive all dividends or other distributions made or paid with respect to such
Stock.

       

      


      X.  LEGAL
CONSTRUCTION

       

       

      1.           Gender and
Number.  Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

       

       

      2.           Severability.  In
the event any provision of the Plan shall be held illegal or invalid for any
reason, such illegality or invalidity shall not affect the remaining parts of
the Plan, and the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.

       

       

      3.           Requirements of
Law.  The granting of Awards and the issuance of Stock under
the Plan shall be subject to all applicable laws.

       

       

      4.           Governing
Law.  The Plan and all Award agreements shall be construed in
accordance with and governed by the laws of the State of
California.

       

       

      5.           Captions.   Captions
are provided herein for convenience only, and shall not serve as a basis for
interpretation or construction of the Plan.

       

      


      [End of
Document]

       

       

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