Unassociated Document


    ITEX
CORPORATION

    2004
EQUITY INCENTIVE PLAN

    Effective
as of March 15, 2004 and amended and restated as of February 14,
2011

    


    


    1.           PURPOSE

    


    The
purpose of this Plan is to provide a flexible framework that will permit the
Board to develop and implement a variety of stock-based programs based on the
changing needs of ITEX Corporation (the “Company”), its competitive market, and
regulatory climate.

    


    The Board
of Directors and senior management of the Company believe it is in the best
interest of its shareholders for officers, employees, and Board Members of the
Company to own stock in the Company and that such ownership will enhance the
Company’s ability to attract highly qualified personnel, strengthen its
retention capabilities, enhance the long-term performance of the Company and its
subsidiaries, to vest in Participants a proprietary interest in the success of
the Company and its subsidiaries, and to provide certain “performance-based
compensation” within the meaning of Section 162(m)(4)(C) of the
Code.

    


    This Plan
is intended to supplement all current stock option plans maintained by the
Company pursuant to which equity awards may granted to Eligible Persons,
including without limitation the 1995-1996 Key Employee Incentive Stock Option
Plan, the 1996-1997 Key Employee Incentive Stock Option Plan, and the 1997-1998
Key Employee Incentive Stock Option Plan.  The previously approved
plans will cease to be used and this Plan will be utilized for all new stock
option and equity incentive grants.  This Plan is not intended to
limit the ability of Company to create additional or new plans, or to issue
additional or new awards.  Capitalized terms used in this Plan not
defined in the text are defined in Section 34.

    


    2.           EFFECTIVE
DATE

    


    This Plan
shall become effective as of March 15, 2004.

    


    3.           TERM OF
PLAN

    


    Unless
earlier terminated as provided herein, this Plan will terminate ten (10) years
from the Effective Date.  Awards may be made under the Plan until
March 14, 2014.

    


    4.           SHARES
SUBJECT TO THIS PLAN

    


    4.1.           Number of Shares
Available. Subject to adjustment as provided by Section 23, the total
number of Shares reserved and available for grant and issuance pursuant to this
Plan will be four hundred thousand (400,000).  Awards granted under
the Plan shall count against the foregoing limits at the time they are granted
but shall again become available for grant under the Plan as
follows:

    


    (a)           Subject
to Section 23, Shares that are subject:

     

    
      	
               
      

            	
              (1)

            	
              to
      issuance upon exercise of an Option but cease to be subject to such Option
      for any reason other than exercise of such
  Option;

            


    

    
      	
               
      

            	
              (2)

            	
              to
      an Award granted hereunder but are forfeited;
or

            


    

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (3)

            	
              to
      an Award that otherwise is cancelled, expires, lapses or terminates
      without Shares being issued

            


    

    


    will
again be available for grant and issuance in connection with future Awards under
this Plan.  However, in the event that prior to the Award’s
forfeiture, termination, expiration or lapse, the holder of the Award at any
time received one or more elements of “beneficial ownership” pursuant to such
Award (as defined by the SEC, pursuant to any rule or interpretations
promulgated under Section 16 of the Exchange Act), the Shares subject to such
Award shall not again be made available for regrant under the Plan.

    


    (b)           At
all times, the Company shall reserve and keep available a sufficient number of
Shares as shall be required to satisfy the requirements of all outstanding
Awards granted under this Plan.  The Shares to be issued hereunder
upon exercise of an Award shall consist of either newly issued shares or
treasury shares, at the discretion of the Administrators.  The
following rules shall apply for purposes of the determination of the number of
Shares available for grant under the Plan:

    


    
      	
               
      

            	
              (1)

            	
              The
      grant of an Option, Stock Bonus Award, or Restricted Stock Award shall
      reduce the Shares available for grant under the Plan by the number of
      Shares subject to such Award.

            


    

    


    
      	
               
      

            	
              (2)

            	
              While
      an Option, Stock Bonus Award, or Restricted Stock Award is outstanding, it
      shall be counted against the authorized pool of Shares regardless of its
      vested status.

            


    

    


    
      	
               
      

            	
              (3)

            	
              If
      any Option is exercised by tendering Common Stock, either actually or by
      attestation, to the Company as full or partial payment in connection with
      the exercise of the Option under the Plan, or if the tax withholding
      requirements are satisfied through such tender, only the number of shares
      of Common Stock issued net of the Common Stock tendered shall be deemed
      delivered for purposes of determining the maximum number of shares
      available for grants under the
Plan.

            


    

    


    5.           ADMINISTRATION
OF THIS PLAN

    


    5.1           Authority.  Authority
to control and manage the operation and administration of this Plan shall be
vested in the Board, which may delegate such responsibilities in whole or in
part to a committee or subcommittee consisting of two (2) or more members of the
Board, all of whom are “non-employee directors” within the meaning of Rule
16b-3 under the Exchange Act (the “Committee”).  Members of the
Committee may be appointed from time to time by, and shall serve at the pleasure
of, the Board.  The Board at any time may abolish the Committee and
reinvest in the Board the administration of this Plan.  As used
herein, the term “Administrator” means the Board or, with respect to any matter
as to which responsibility has been delegated to the Committee, the term
Administrator shall mean the Committee.

    


    5.2.           Administration
.

    


    
      	
               
      

            	
              (a)

            	
              The
      Plan shall be administered by the Administrator. The
      Administrator may from time to time develop and implement
      specific stock-based plans that are consistent with the intent and
      specific terms of the framework created by this Plan. The
      Administrator shall have full authority to administer the Plan,
      including authority to designate the individuals who shall be granted
      Awards and the amount and type of such Awards, interpret and construe
      any provision of the Plan and the terms of any Award issued under it,
      to adopt such rules and regulations for administering the Plan as it may
      deem necessary or appropriate, and to delegate such administrative
      responsibilities as it deems appropriate, provided, however, that the
      Administrator shall retain the responsibility to designate the Award
      recipients and the amount and type of such Awards.  Decisions of
      the Administrator shall be final and binding on all parties. The
      Administrator’s determinations under the Plan may, but need not, be
      uniform and may be made on a Participant-by-Participant basis (whether or
      not two or more Participants are similarly
  situated).

            


    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
 

    
      	
               
      

            	
              (b)

            	
              The
      Administrator may, in its absolute discretion, without amendment to the
      Plan, (i) accelerate the date on which any Option granted under the
      Plan becomes exercisable or otherwise adjust any of the terms of such
      Option (except that no such adjustment shall, without the consent of a
      Participant, reduce the Participant’s rights under any previously
      granted and outstanding Award unless the Administrator determines that
      such adjustment is necessary or appropriate to prevent such Award from
      constituting “applicable employee remuneration” within the meaning of
      Section 162(m) of the Code), (ii) or accelerate the Vesting Date or
      issue date, or waive any condition imposed hereunder, with respect to any
      share of Restricted Stock granted under the Plan or otherwise adjust
      any of the terms of such Restricted
Stock.

            


    

    


    
      	
               
      

            	
              (c)

            	
              Whether
      an authorized leave of absence, or absence in military or government
      service, shall constitute termination of employment shall be
      determined by the Administrator in its absolute discretion, subject
      to applicable law.

            


    

    


    5.3           Limitation on
Liability.  To the extent permitted by applicable law in effect
from time to time, no member of the Committee or the Board of Directors shall be
liable for any action, omission, or determination relating to the Plan, and
the Company shall indemnify and hold harmless each member of the Administrator
and each other director or employee of the Company to whom any duty or
power relating to the administration or interpretation of the Plan has been
delegated against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of the
Administrator) arising out of any action, omission or determination
relating to the Plan, unless, in either case, such action, omission
or determination was taken or made by such member, director or
employee in bad faith and without reasonable belief that it was in the
best interests of the Company.  The Company shall pay expenses
incurred by, and satisfy a judgment or fine rendered or levied against, a
present or former director or member of the Committee or Board in any action
against such person (whether or not the Company is joined as a party defendant)
to impose liability or a penalty on such person for an act alleged to have been
committed by such person while a director or member of the Committee or Board
arising with respect to this Plan or administration thereof or out of membership
on the Committee or Board or by the Company, or all or any combination of the
preceding, provided, the director or Committee member was acting in good faith,
within what such director or Committee member reasonably believed to have been
within the scope of his or her employment or authority and for a purpose which
he or she reasonably believed to be in the best interests of the Company or its
stockholders.  Payments authorized hereunder include amounts paid and
expenses incurred in settling any such action or threatened
action.  The provisions of this section shall apply to the estate,
executor, administrator, heirs, legatees or devisees of a director or Committee
member, and the term “person” as used on this section shall include the estate,
executor, administrator, heirs, legatees, or devisees of such
person.

    


    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    


    6.           GRANT OF
OPTIONS; TERMS AND CONDITIONS OF GRANT

    


    6.1.           Grant
of Options.  One or more Options may be granted to any Eligible
Person.  Subject to the express provisions of this Plan, the
Administrator shall determine from the Eligible Persons those individuals to
whom Options under this Plan may be granted.  Each Option granted
under this Plan will be evidenced by an Award Agreement, in such form and
including such terms as the Administrator may from time to time approve, which
will clearly identify the Option as an Incentive Stock Option or a Non-Qualified
Stock Option.  In the absence of such identification, an Option shall
be deemed to be a Non-Qualified Stock Option.

    


    Further, subject to the express
provisions of this Plan, the Administrator shall specify the Grant Date, the
number of Shares covered by the Option, the exercise price and the terms and
conditions for exercise of the Options.  If the Administrator fails to
specify the Grant Date, the Grant Date shall be the date of the action taken by
the Administrator to grant the Option.  As soon as practicable after
the Grant Date, the Company will provide the Participant with a written Award
Agreement in the form approved by the Administrator, which sets out the Grant
Date, the number of Shares covered by the Option, the exercise price and the
terms and conditions for exercise of the Option.

    


    The Administrator may, in its absolute
discretion, grant Options under this Plan at any time and from time to time
before the expiration of this Plan.

    


    6.2.           General Terms and
Conditions.  Except as otherwise provided herein, the Options
shall be subject to the following terms and conditions and such other terms and
conditions not inconsistent with this Plan as the Administrator may
impose:

    


    6.2.1.                      Vesting Schedule. The
Administrator may determine in its discretion whether any Option shall be
subject to vesting and the terms and conditions of any such
vesting.  If subject to vesting, no Option shall be exercisable until
it has vested.  The Award Agreement shall contain any such vesting
schedule; provided
that, in the absence of
any such designation as to vesting at the time of grant the entire Option shall
vest according to the following schedule:

    


    
      	
              NUMBER
      OF YEARS

              FOLLOWING
      DATE OF GRANT

            	
              PERCENTAGE
      OF TOTAL OPTION

              TO
      BE EXERCISABLE

            
	
              1

            	
              25%

            
	
              2

            	
              50%

            
	
              3

              4

            	
              75%

              100%

            


    

    


    Acceleration of
Vesting.  The vesting of one or more outstanding Options may be
accelerated by the Administrator at such times and in such amounts as it shall
determine in its sole discretion.  The vesting of Options also shall
be accelerated under the circumstances described below in Section
24.

    


    6.2.2.                      Option
Term.  Each Option and all rights or obligations thereunder
shall expire on such date as shall be determined by the Administrator, but not
later than 10 years after the grant of the Option (5 years in the case of an
Incentive Stock Option when the Optionee owns more than 10% of the total
combined voting power of all classes of stock of the Company (“Ten Percent
Stockholder”)), and shall be subject to earlier termination as hereinafter
provided.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    6.2.3.                      Exercise
Price.  The Exercise Price of any Option shall be determined by
the Administrator when the Option is granted and may not be less than one
hundred percent (100%) of the Fair Market Value of the Shares on the date of
grant, and the Exercise Price of any Incentive Stock Option granted to a Ten
Percent Stockholder will not be less than one hundred ten percent (110%) of the
Fair Market Value of the Shares on the date of grant.  Payment for the
Shares purchased shall be made in accordance with Section 12 of this
Plan.  The Administrator is authorized to issue Options, whether
Incentive Stock Options or Non-Qualified Stock Options, at an Option price in
excess of the Fair Market Value on the date the Option is granted (the so-called
“Premium Price” Option) to encourage superior performance.

    


    6.2.4           Partial
Exercise.  Each Option shall be exercisable in whole or in
part; provided, however,
that no partial exercise of an Option shall be for an aggregate exercise
price of less than $1,000 unless such partial exercise represents the entire
unexercised portion of the Option or the entire portion of the Option that is
then exercisable.  The partial exercise of an Option shall not cause
the expiration, termination or cancellation of the remaining portion
thereof.  Upon the partial exercise of an Option, the Award Agreement
evidencing such Option shall be returned to the Participant exercising such
Option together with the delivery of the certificates for the purchased
Shares.

    


    6.2.5.                      Method of
Exercise.  An Option shall be exercised by delivering notice to
the Company’s principal office, to the attention of its Secretary, no less
than five business days in advance of the effective date of the
proposed exercise.  Such notice shall be by delivery to the Company of
a written stock option exercise agreement (the “Exercise Agreement”) in a form
approved by the Administrator (which need not be the same for each Participant),
accompanied by the Award Agreement or Agreements evidencing the Option,
shall specify the number of shares of Company Stock with respect to which
the Option is being exercised and the effective date of the proposed exercise
and shall be signed by the Participant.  The Participant may withdraw
such notice at any time prior to the close of business on the business day
immediately preceding the effective date of the proposed exercise, in which
case such Award Agreement or Agreements shall be returned to him. Payment in
full of the Exercise Price for the number of  Shares of Company Stock
being purchased upon the exercise of an Option shall be made on the effective
date of such exercise as provided by Section 12 hereof.

    


    6.2.5.                      Transferability of
Options.  Except as otherwise provided below for Non-Qualified
Stock Options, no Option shall be transferable other than by will or by the laws
of descent and distribution and during the lifetime of a Participant, only the
Participant, his guardian or legal representative may exercise an
Option.  A Participant may designate a beneficiary to exercise his or
her Options after the Participant’s death.  If no beneficiary is
designated, the Administrator, at its discretion, may provide for transfer of an
Option (other than an Incentive Stock Option), without payment of consideration,
to the following family members of the Participant, including adoptive
relationships: a child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, sister-in-law, niece, nephew, former spouse (whether by gift or
pursuant to a domestic relations order), any person sharing the employee’s
household (other than a tenant or employee), a family-controlled partnership,
corporation, limited liability company and trust, or a foundation in which
family members heretofore described control the management of assets. The
assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the Option pursuant to the assignment.  The
terms applicable to the assigned portion shall be the same as those in effect
for the Option immediately prior to such assignment and shall be set forth in
such documents issued to the assignee as the Administrator may deem
appropriate.  A request to assign an Option may be made only by
delivery to Company of a written stock option assignment request  (the
“Assignment Request”) in a form approved by the Administrator, stating the
number of Options and Shares underlying Options requested for assignment, that
no consideration is being paid for the assignment, identifying the proposed
transferee, and containing such other representations and agreements regarding
the Participant’s investment intent and access to information and other matters,
if any, as may be required or desirable by Company to comply with applicable
securities laws.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    6.2.6.                      Exercise After Certain
Events.

    


    (a)           Termination of Employment or
Directorship - Employee/Officer/Director

    


    
      	
               
      

            	
              (1)

            	
              Unless
      otherwise provided in an applicable Award Agreement, in the event
      that the employment or directorship of a Participant with the Company
      shall terminate for any reason other than cause, Disability or
      death,  (i) Options granted to such Participant, to the extent
      that they were exercisable at the time of such termination, shall
      remain exercisable until the expiration of 90 days after
      such termination, on which date they shall expire.  However, if
      an employee or director continues service to the Company after termination
      of employment, the employee or director need not exercise his or her
      Options within 90 days of termination of employment, but may exercise
      within 90 days of termination of his or her continuing service as a
      consultant, advisor, or work performed in a similar
      capacity.  If the options held are Incentive Stock Options and
      the employee exercises after 90 days of termination of employment, the
      Options will be treated as nonqualified stock options; and (ii) Options
      granted to such Participant, to the extent that they were not
      exercisable at the time of such termination, shall expire at the close
      of business on the date of such termination; provided, however, that
      no Option shall be exercisable after the expiration of its
      term.

            


    

    


    
      	
               
      

            	
              (2)

            	
              Unless
      otherwise provided in an applicable Award Agreement, in the event that the
      employment or directorship of a Participant with the Company shall
      terminate on account of the death or Disability of the Participant,
      all Options granted to such Participant, to the extent that they were
      exercisable at the time of such termination, shall remain exercisable
      until the expiration of one year after such termination, on which
      date they shall expire.

            


    

    


    
      	
               
      

            	
              (3)

            	
              In
      the event of the termination of a Participant’s employment or directorship
      for cause or for Detrimental Activity (as defined in Section 21 hereof),
      all outstanding Options granted to such Participant shall expire at
      the commencement of business on the effective date of such
      termination.

            


    

    


    (b)           Effect of Change in
Control.  Upon the
occurrence of a Change in Control (as defined in Section 24 hereof), all vested
Options at such time shall become fully and immediately exercisable at the
date of termination.

    


    6.3.           Limitations on Grant of
Incentive Stock Options.

    


    6.3.1.                        To
the extent that the aggregate Fair Market Value (determined as of the time the
option is granted) of any stock with respect to which Incentive Stock Options
granted under this Plan and all other plans of the Company (and any plans of any
“Subsidiary Corporation” or “parent corporation” of the Company within the
meaning of Section 424 of the Code) are first exercisable by any employee during
any calendar year shall exceed the maximum limit, if any, imposed from time to
time under section 422 of the Code, such Options in excess of such limit shall
be treated as Non-Qualified Stock Options.  In such an event, the
determination of which Options shall remain Incentive Stock Options and which
shall be treated as Non-Qualified Stock Options shall be based on the order in
which such Options were granted. All other terms and provisions of such Options
that are deemed to be Non-Qualified Stock Options shall remain
unchanged.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    6.3.2           No
Incentive Stock Option may be granted to an individual if, at the time of the
proposed grant, such individual owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any of its “Subsidiary Corporations” (within the meaning of Section 424 of
the Code), unless (i) the exercise price of such Incentive Stock Option is at
least one hundred ten percent (110%) of the Fair Market Value of a share of
Company Stock at the time such Incentive Stock Option is granted and (ii) such
Incentive Stock Option is not exercisable after the expiration of five years
from the date such Incentive Stock Option is granted.

    


    7.           RESTRICTED
STOCK

    


    The
Administrator may grant shares of Restricted Stock pursuant to the Plan,
and a portion of a Participant’s earned bonus may be granted in the form of
Restricted Stock. Each grant of shares of Restricted Stock shall be
evidenced by an Award Agreement in such form and containing such terms and
conditions and subject to such agreements or understandings as the
Administrator shall from time to time approve. Each grant of shares of
Restricted Stock shall comply with and be subject to the following terms
and conditions:

    


    7.1           Issue Date and Vesting
Date

    


     At
the time of the grant of shares of Restricted Stock, the Administrator shall
establish an issue date or issue dates and a Vesting Date or Vesting Dates
with respect to such shares.  The Administrator may divide such shares into
classes and assign a different issue date and/or Vesting Date for each
class. Except as provided in Sections 7.3 and 7.6 hereof, upon
the occurrence of the issue date with respect to a share of Restricted
Stock, a share of Restricted Stock shall be issued in accordance with the
provisions of Section 7.4 hereof.  Provided that all conditions to the
vesting of a share of Restricted Stock imposed pursuant to Section 7.2
hereof are satisfied, and except as provided in Sections 7.3 and 7.6 hereof,
upon the occurrence of the Vesting Date with respect to a share of
Restricted Stock, such share shall vest and the restrictions of Section 7.3
hereof shall cease to apply to such share.

    


    7.2           Conditions to
Vesting

    


    At the
time of the grant of shares of Restricted Stock, the Administrator may impose
such restrictions or conditions, not inconsistent with the provisions
hereof, to the vesting of such shares, as it, in its absolute discretion, deems
appropriate.  By way of example and not by way of limitation, the
Administrator may require, as a condition to the vesting of any class or
classes of shares of Restricted Stock, that the Participant or the Company
achieve such performance criteria including, but not limited to the period
of active service as the Administrator may specify at the time of the grant of
such shares.

    


    7.3           Restrictions on Transfer
Prior to Vesting

    


    Prior to
the vesting of a share of Restricted Stock, no transfer of a Participant’s
rights with respect to such share, whether voluntary or involuntary, by
operation of law or otherwise, shall vest the transferee with any interest or
right in or with respect to such share, but immediately upon any attempt to
transfer such rights, such share, and all of the rights related
thereto, shall be forfeited by the Participant and the transfer shall be of
no force or effect.

    


    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    


    7.4           Issuance of
Certificates

    


    
      	
               
      

            	
              (a)

            	
              Except
      as provided in Sections 7.3 or 7.6 hereof, reasonably promptly after the
      issue date with respect to shares of Restricted Stock, the Company
      shall cause to be issued a stock certificate, registered in the name
      of the Participant to whom such shares were granted, evidencing such
      shares; provided, that the
      Company shall not cause to be issued such a stock certificate unless it
      has received a stock power duly endorsed in blank with respect to
      such shares.  Each such stock certificate shall bear the
      following legend:

            


    

    


    The
transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and conditions
(including forfeiture provisions and restrictions against transfer)
contained in the ITEX 2004 Equity Incentive Plan and an Agreement entered
into between the registered owner of such shares and ITEX. A copy of the
Plan and Agreement is on file in the office of the Secretary of ITEX
Corporation.

    


    Such
legend shall not be removed from the certificate evidencing such shares until
such shares vest pursuant to the terms hereof.

    


    
      	
               
      

            	
              (b)

            	
              Each
      certificate issued pursuant to Section 7.4(a) hereof, together with the
      stock powers relating to the shares of Restricted Stock evidenced by
      such certificate, shall be deposited by the Company with a custodian
      designated by the Company (which custodian may be the Company).
       The Company shall cause such custodian to issue to the
      Participant a receipt evidencing the certificates held by it which
      are registered in the name of the
Participant.

            


    

    


    7.5           Consequences Upon
Vesting

    


    Upon the
vesting of a share of Restricted Stock pursuant to the terms hereof, the
restrictions of Section 7.3 hereof shall cease to apply to such share.
 Reasonably promptly after a share of Restricted Stock vests pursuant to
the terms hereof, the Company shall cause to be issued and delivered to the
Participant to whom such shares were granted, a certificate evidencing such
share, free of the legend set forth in Section 7.4(a) hereof, together with any
other property of the Participant held by the custodian pursuant to Section
17 hereof.

    


    7.6           Effect of Termination of
Employment

    


    
      	
               
      

            	
              (a)

            	
              In
      the event that the employment of a Participant with the Company shall
      terminate for any reason (other than a termination that is, or is
      deemed to have been, for cause) prior to the vesting of shares of
      Restricted Stock granted to such Participant, a proportion of such shares,
      to the extent not forfeited or canceled on or prior to such
      termination pursuant to any provision hereof, shall vest on the date
      of such termination.  The proportion referred to in the preceding
      sentence shall initially be determined by the Administrator at the
      time of the grant of such shares of Restricted Stock and may be based
      on the achievement of any conditions imposed by the Administrator with
      respect to such shares pursuant to Section 7.2.  Such proportion may
      be equal to zero.  In the absence of any such provision in an
      agreement evidencing an Award of Restricted Stock, the termination of
      a Participant’s employment with the Company for any reason (including
      death or Disability) shall cause the immediate forfeiture of all
      shares of Restricted Stock that have not vested as of the date
      of such termination.

            


    

    


    
      	
               
      

            	
              (b)

            	
              In
      the event a Participant’s employment is or is deemed to have been
      terminated for cause, all shares of Restricted Stock granted to such
      Participant that have not vested as of the effective date of such
      termination immediately shall be
forfeited.

            


    

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    7.7           Effect of Change in
Control

    


    Upon the
occurrence of a Change in Control (as defined in Section 24), all shares of
Restricted Stock which have not theretofore vested (including those with
respect to which the Issue Date has not yet occurred), or been canceled or
forfeited pursuant to any provision hereof, immediately shall
vest.

    


    7.8           Voting Rights and
Dividends

    


    
      	
               
      

            	
              (a)

            	
              The
      Participant shall have the right to vote all shares of Restricted Stock
      during the period the restriction is enforced.  Whenever such
      voting rights are to be exercised, the Company shall provide the
      Participant with the same notices and other materials as are provided to
      other holders of the Stock, and the Participant shall be provided
      adequate opportunity to review the notices and material and vote the
      Restricted Stock allocated to him or
her.

            


    

    


    
      	
               
      

            	
              (b)

            	
              Dividends
      will be authorized by the Company to be paid to the Participant during the
      period the restriction is enforced, subject to the same restrictions
      as the underlying shares upon which the restriction is
      declared.

            


    

    


    8.           STOCK AND
CASH BONUSES

    


    8.1           The
Administrator may grant Stock Bonuses in such amounts as it shall determine from
time to time. A Stock Bonus shall be paid at such time (including a future
date selected by the Administrator at the time of grant) and subject to
such conditions as the Administrator shall determine at the time of the
grant of such Stock Bonus.  By way of example and not by way of
limitation, the Administrator may require, as a condition to the payment of a
Stock Bonus, that the Participant or the Company achieve such performance
criteria as the Administrator may specify at the time of the grant.
 Certificates for shares of Company Stock granted as a Stock Bonus
shall be issued in the name of the Participant to whom such grant was made and
delivered to such Participant as soon as practicable after the date on
which such Stock Bonus is required to be paid.  Prior to the date
on which a Stock Bonus awarded hereunder is required to be paid, such Award
shall constitute an unfunded, unsecured promise by the Company to
distribute Company Stock in the future.

    


    8.2           The
Administrator may, in its absolute discretion, in connection with any grant of
Restricted Stock or Stock Bonus or at any time thereafter, grant a cash
bonus, payable promptly after the date on which the Participant is required to
recognize income for federal income tax purposes in connection with such
grant of Restricted Stock or Stock Bonus, in such amounts as the
Administrator shall determine from time to time; provided, however, that in no
event shall the amount of a Cash Bonus exceed the Fair Market Value of the
related shares of Restricted Stock or Stock Bonus on such date. A cash bonus
shall be subject to such conditions as the Administrator shall determine at
the time of the grant of such cash bonus.

    


    9.           EMPLOYEE
STOCK PURCHASE PLAN

    


    The
Administrator may grant Awards pursuant to the Plan to all employees, which
Awards shall be evidenced by Award Agreements in such form as the
Administrator shall from time to time approve. Awards shall comply with and
be subject to the following terms and conditions:

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    9.1           Company Stock Available for
Awards

    


    The
aggregate number of shares of Company Stock that may be granted as Options under
the Employee Stock Purchase Plan shall be determined on an annual basis by
the Administrator.  Shares shall be deemed to have been granted
under the Plan only to the extent actually issued and delivered pursuant to
the Award. To the extent that an Award lapses or the rights of the
Participant terminate, any shares of Company Stock subject to such Award shall
again be available for the grant of future Awards.

    


    9.2           Eligibility

    


    An Award
made pursuant to the Employee Stock Purchase Plan may be granted to an
individual who, at the time of grant, is an employee of the Company or a
Subsidiary and has been determined to be eligible for participation.  An
Award made pursuant to the Plan may be granted on more than
one occasion to the same person; each Award shall be evidenced by
a written instrument duly executed by or on behalf of the Company.
 Notwithstanding the foregoing, no employee of the Company or a
Subsidiary shall be granted an Option if such employee, immediately after the
Option is granted, owns stock possessing five percent (5%) or more of the
total combined voting power or five percent (5%) or more of the value of
all classes of stock of the Company or any Subsidiary.  For the
purpose of determining stock ownership, the rules of Section 424(d) of the
Code shall apply.  In addition, the Company Stock which the Participant may
purchase under any outstanding Options shall be treated as stock owned by
the Participant. The Administrator may exclude the following employees from
receiving Options under the Plan:

    


    
      	
               
      

            	
              (a)

            	
              Employees
      who have been employed by the Company or a Subsidiary less than two (2)
      years;

            


    

    


    
      	
               
      

            	
              (b)

            	
              Employees
      whose customary employment with the Company or a Subsidiary is twenty (20)
      hours or less per week;

            


    

    


    
      	
               
      

            	
              (c)

            	
              Employees
      whose customary employment with the Company or a Subsidiary is not for
      more than five (5) months in any calendar year;
  and

            


    

    


    
      	
               
      

            	
              (d)

            	
              Highly
      compensated employees within the meaning of Section 414(q) of the
      Code.

            


    

    


    9.3           Employee Stock Purchase Plan
Stock Option Agreement

    


    Each
Option shall be evidenced by an Option Agreement between the Company and the
Participant which shall contain such terms and conditions as may be
approved by the Administrator and are consistent with Section 423 of the Code.
 The terms and conditions of the respective Option Agreements need not
be identical.  Each Option Agreement shall specify the effect of
termination of employment, total and permanent Disability, retirement or death
on the exercisability of the Option. Under each Option Agreement, a
Participant shall have the right to appoint any individual or legal entity in
writing as his or her Beneficiary in the event of his or her death.
 Such designation may be revoked in writing by the Participant at any time
and a new Beneficiary may be appointed in writing on the form provided by
the Administrator for such purpose.  In the absence of
such appointment, the Beneficiary shall be the legal representative of the
Participant’s estate.

    


    9.4           Option
Period

    


    The term
of each Option shall be as specified by the Administrator at the date of grant
and shall be stated in the Option Agreement; provided, however, that an
Option may not be exercised after the expiration of:

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (a)

            	
              Five
      (5) years from the date such Option is granted if the Employee Stock
      Purchase Plan requires that the Option price must be not less than
      eighty-five percent (85%) of the Fair Market Value of the Company
      Stock at the time the Option is exercised;
or

            


    

    


    
      	
               
      

            	
              (b)

            	
              Twenty-Seven
      (27) months from the date such Option is granted if the Option provides
      for an Option Price in some other permissible manner under Section
      423 of the Code (such as a flat
  dollar amount).

            


    

    


    9.5           Limitation on Exercise of
Option

    


    An Option
may be exercisable in whole or in such installments and at such times as
determined by the Administrator and the applicable term relating to the
exercise of the option shall be stated in the Option Agreement and must be
uniform for all employees with the following exceptions: (1) the
Administrator may limit the maximum number of Options that can be
exercised under the Employee Stock Purchase Plan, and (2) the Administrator
may limit the amount of Options that all employees may be granted to a
specified relationship to total compensation or the base or regular rate of
compensation; and provided, however, that an Option may be exercised at the
rate of at least twenty percent (20%) per year over five (5) years from the date
it is granted.

    


    9.6           Special Limitation Regarding
Exercise of Option

    


    No
employee may be granted an Option which permits his or her rights to exercise
Options under the Employee Stock Purchase Plan of the Company and
subsidiaries to accrue at a rate that exceeds $25,000 of the Fair Market
Value of such stock (determined at the time of grant) for each calendar
year in which such Option is outstanding at any time. For the purpose
of this rule:

    


    
      	
               
      

            	
              (a)

            	
              The
      right to purchase Company Stock under an Option accrues when the Option
      (or any portion thereof) first becomes exercisable during the
      calendar year;

            


    

    


    
      	
               
      

            	
              (b)

            	
              The
      right to purchase Company Stock under an Option accrues at the rate
      provided in the Option, but in no case shall such rate exceed $25,000
      of Fair Market Value of such stock (determined at the time of grant)
      for any one calendar year; and

            


    

    


    
      	
               
      

            	
              (c)

            	
              A
      right to purchase Company Stock which has accrued under one Option granted
      pursuant to the Plan may not be carried over to any other
      Option.

            


    

    


    The
Administrator shall determine, in accordance with applicable provisions of the
Code, Treasury Regulations, and other administrative pronouncements
which Options will not constitute Options under Section 423 of the Code
because of such limitation and shall notify the Participant of such
determination as soon as practicable after such determination.

    


    9.7           Option
Price

    


    The
purchase price of Company Stock issued under each Option shall be determined by
the Administrator and shall be stated in the Option Agreement, but such
purchase price shall not be less than the lesser of:

    


    
      	
               
      

            	
              (1)

            	
              An
      amount equal to eighty-five percent (85%) of the Fair Market Value of the
      Company Stock at the time the Option is granted;
  or

            


    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (2)

            	
              An
      amount which under the terms of the Option may not be less than eight-five
      percent (85%) of the Fair Market Value of such Company Stock at the
      time of the exercise of the Option.

            


    

    


    9.8           Options and Rights in
Substitution for Stock Options Granted by Other Companies

    


    Options
may be granted under the Plan from time to time in substitution for stock
options held by employees of companies who become, or who became prior to
the effective date of the Plan, employees of the Company or of any
Subsidiary as a result of a merger or consolidation of the employing
company with the Company, or such Subsidiary, or the acquisition by the
Company or a Subsidiary of all or a portion of the assets of the employing
company with the result that such employing company becomes a
subsidiary.

    


    9.9           Awards

    


    The size
of Awards to individual Participants shall be determined by the Administrator
in consultation with the Chief Executive Officer.

    


    9.10        Adjustments to
Stock

    


    In the
event of any change in the outstanding Company Stock of the Company for the
reason of a stock dividend, recapitalization, reorganization, merger,
consolidation, split-up, combination or any similar transaction, the number of
shares of Company Stock which may be or have been awarded under the
Employee Stock Purchase Plan may be adjusted to prevent dilution or
enlargement of the rights to the Participants under this Plan, at the sole
determination of the Administrator.

    


    10.           OTHER
EQUITY-BASED AWARDS

    


    The
Administrator may grant other types of equity-based Awards in such amounts and
subject to such terms and conditions, as the Administrator in its sole
discretion may determine, subject to the provisions of the Plan.
 Awards may entail the transfer of actual shares of Company Stock to
Participants, or payment in cash or otherwise of amounts based on the value
of shares of Company Stock.

    


    11.           RIGHT OF
RECAPTURE

    


    If at any
time within one year after the date on which a Participant exercises an Option,
or Stock Appreciation Right or on which Restricted Stock vests or on which
a Stock Bonus or a cash bonus was granted to a Participant, or on
which income is realized by a Participant in connection with any other
stock-based award (each of which events shall be a “realization event”), if
the Administrator determines in its discretion that the Company has been
materially harmed by the Participant, whether such harm (a) results in the
Participant’s termination or deemed termination of employment for cause, (b)
results from any activity of the Participant determined by the
Administrator to be in competition with any activity of the Company, or
otherwise prejudicial, contrary or harmful to the interests of the Company
(including, but not limited to, accepting employment with or serving as a
consultant, adviser or in any other capacity to an entity that is in competition
with or acting against the interests of the Company), or (c) results from
the Participant engaging in any “Detrimental Activity as defined in Section 21
below, then any gain realized by the Participant from the realization event
shall be paid by the Participant to the Company upon notice from the
Company.  Such gain shall be determined as of the date of the realization
event, without regard to any subsequent change in the Fair Market Value of
a share of Company Stock.  The Company shall have the right to
offset such gain against any amounts otherwise owed to the Participant by
the Company (whether as wages, vacation pay, or pursuant to any benefit
plan or other compensatory arrangement).

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    12.           PAYMENT
FOR SHARE PURCHASES

    


    12.1.           Payment.  Payment
for Shares purchased pursuant to this Plan may be made in cash, by certified
check, bank cashier’s check or wire transfer, or, where expressly approved for
the Participant at the discretion of the Administrator and where permitted by
law:

    


    (a)           by
cancellation of indebtedness of the Company to the Participant;

    


    (b)           unless
provided otherwise in the applicable Award Agreement, in shares of
Company Stock owned by the Participant (which, if acquired pursuant to the
exercise of a stock option, were acquired at least six months prior to the
option exercise date) and valued at their Fair Market Value on the
effective date of such exercise, or partly in shares of Company Stock with
the balance in cash, by certified check, bank cashier’s check or
wire transfer; or

    


    (c)           at
the discretion of the Administrator and to the extent permitted by law, by such
other provision as the Administrator may from time to time
prescribe.

    


    Any
payment in shares of Company Stock shall be effected by the delivery of such
shares to the Secretary of the Company, duly endorsed in blank or
accompanied by stock powers duly executed in blank, together with any other
documents and evidences as the Secretary of the Company shall require from
time to time.

    


    12.2.           No
Loans.  The Company shall not lend money to any Participant to
finance a transaction under this Plan.

    


    13.           WITHHOLDING
TAXES

    


    13.1.           Cash
Remittance

    


    Whenever
shares of Company Stock are to be issued upon the exercise of an Option, the
Company shall have the right to require the Participant to remit to the Company,
in cash, an amount sufficient to satisfy the federal, state and local
withholding tax requirements, if any, attributable to such exercise, occurrence
or payment prior to the delivery of any certificate or certificates for such
shares.  In addition, upon the grant of a cash bonus, the Company shall
have the right to withhold from any cash payment required to be made pursuant
thereto an amount sufficient to satisfy the federal, state and local withholding
tax requirements, if any, attributable to such exercise or grant.

    


    13.2           Stock
Remittance

    


    At the
election of the Participant, subject to the approval of the Administrator, when
shares of Company Stock are to be issued upon the exercise of an Option, the
occurrence of the issue date or the Vesting Date with respect to a share of
Restricted Stock or the grant of a Stock Bonus in lieu of the remittance
required by Section 13.1 hereof, the Participant may tender to the Company a
number of shares of Company Stock, the Fair Market Value of which at the tender
date the Administrator determines to be sufficient to satisfy the federal, state
and local withholding tax requirements, if any, attributable to such exercise,
occurrence, grant or payment and not greater than the Participant’s estimated
total federal, state and local tax obligations associated with such exercise,
occurrence, grant or payment.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    13.3           Stock
Withholding

    


    The
Administrator, at its sole discretion, shall have the right, when shares of
Company Stock are to be issued upon the exercise of an Option, the occurrence of
the issue date or the Vesting Date with respect to a share of Restricted Stock
or the grant of a Stock Bonus in lieu of requiring the remittance required by
Section 13.1 hereof, to withhold a number of such shares, the Fair Market Value
of which at the exercise date the Administrator determines to be sufficient to
satisfy the federal, state and local withholding tax requirements, if any,
attributable to such exercise, occurrence, grant or payment and is not greater
than the Participant’s estimated total federal, state and local tax obligations
associated with such exercise, occurrence, grant or payment.

    


    14.           RIGHTS AS
A STOCKHOLDER

    


    No person
shall have any rights as a stockholder with respect to any shares of Company
Stock covered by or relating to any Award granted pursuant to this Plan until
the date that the Participant becomes the registered owner of such
shares.  Subject to Section 23, no adjustment to any Stock Award shall
be made for dividends or other rights for which the record date occurs prior to
the date such stock certificate is issued.

    


    15.           TRANSFERABILITY

    


    Unless
otherwise provided, Awards granted under this Plan, and any interest therein,
will not be transferable or assignable by the Participant, and may not be made
subject to execution, attachment or similar process, otherwise than by will or
by the laws of descent and distribution or as consistent with the Award
Agreement provisions relating thereto.  Unless otherwise provided in
this Plan, during the lifetime of the Participant an Award will be exercisable
only by the Participant, and any elections with respect to an Award may be made
only by the Participant.

    


    16.           CERTIFICATES

    


    All
certificates for Shares or other securities delivered under this Plan will be
subject to such stock transfer orders, legends and other restrictions as the
Administrator may deem necessary or advisable, including restrictions under any
applicable federal, state or foreign securities law, or any rules, regulations
and other requirements of the SEC or any stock exchange or automated quotation
system upon which the Shares may be listed or quoted.

    


    17.           ESCROW,
PLEDGE OF SHARES

    


    To
enforce any restrictions on a Participant’s Shares, the Administrator may
require the Participant to deposit all certificates representing Shares,
together with stock powers or other instruments of transfer approved by the
Administrator, appropriately endorsed in blank, with the Company or an agent
designated by the Company to hold in escrow until such restrictions have lapsed
or terminated, and the Administrator may cause a legend or legends referencing
such restrictions to be placed on the certificates.

    


    18.           EXCHANGE
AND BUYOUT OF AWARDS

    


    The
Administrator may, at any time or from time to time, authorize the Company, with
the consent of the respective Participants, to issue new Awards in exchange for
the surrender and cancellation of any or all outstanding Awards.  The
Administrator may at any time buy from a Participant an Award previously granted
with payment in cash, Shares (including Restricted Stock) or other
consideration, based on such terms and conditions as the Administrator and the
Participant may agree.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    19.           SECURITIES
LAW AND OTHER REGULATORY COMPLIANCE

    


    19.1           The
Company shall be under no obligation to effect the registration pursuant to the
Securities Act of any interests in the Plan or any shares of Company Stock to be
issued hereunder or to effect similar compliance under any state laws.
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to cause to be issued or delivered any certificates evidencing shares
of Company Stock pursuant to the Plan unless and until the Company is advised by
its counsel that the issuance and delivery of such certificates is in compliance
with all applicable laws, regulations of governmental authority and the
requirements of any securities exchange on which shares of Company Stock are
traded.  The Administrator may require, as a condition of the issuance and
delivery of certificates evidencing shares of Company Stock pursuant to the
terms hereof, that the recipient of such shares make such covenants, agreements
and representations, and that such certificates bear such legends, as the
Administrator, in its sole discretion, deems necessary or
desirable.

    


    19.2           The
exercise of any Option granted hereunder shall be effective only at such time as
counsel to the Company shall have determined that the issuance and delivery of
shares of Company Stock pursuant to such exercise is in compliance with all
applicable laws, regulations of governmental authority and the requirements of
any securities exchange on which shares of Company Stock are traded. The
Administrator may, in its sole discretion, defer the effectiveness of any
exercise of an Option granted hereunder in order to allow the issuance of shares
of Company Stock pursuant thereto to be made pursuant to registration or an
exemption from registration or other methods for compliance available under
federal or state securities laws. The Administrator shall inform the Participant
in writing of its decision to defer the effectiveness of the exercise of an
Option granted hereunder.  During the period that the effectiveness of the
exercise of an Option has been deferred, the Participant may, by written notice,
withdraw such exercise and obtain a refund of any amount paid with respect
thereto.

    


    20.           NO
SPECIAL EMPLOYMENT RIGHTS; NO RIGHT TO STOCK AWARD

    


    20.1.          Nothing
contained in the Plan or any Award shall confer upon any Participant any right
with respect to the continuation of his or her employment by the Company or
interfere in any way with the right of the Company, subject to the terms of any
separate employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the Participant from
the rate in existence at the time of the grant of a Stock Award.

    


    20.2           No
person shall have any claim or right to receive a Award hereunder.  The
Administrator’s granting of a Stock Award to a Participant at any time shall
neither require the Administrator to grant a Stock Award to such Participant or
any other Participant or other person at any time nor preclude the Administrator
from making subsequent grants to such Participant or any other Participant or
other person.

    


    21.           CANCELLATION
AND RESCISSION OF AWARDS

    


    21.1           Unless
the Award Agreement specifies otherwise, the Administrator may cancel, rescind,
suspend, withhold or otherwise limit or restrict any unexpired, unpaid, or
deferred Awards at any time if the Participant is not in compliance with all
applicable provisions of the Award Agreement and the Plan, or if the Participant
engages in any “Detrimental Activity.”  For purposes of this Section,
“Detrimental Activity” shall include: (i) the rendering of services for any
organization or engaging directly or indirectly in any business which is or
becomes competitive with the Company, or which organization or business, or the
rendering of services to such organization or business, is or becomes otherwise
prejudicial to or in conflict with the interests of the Company; (ii) the
disclosure to anyone outside the Company, or the use in other than the Company’s
business, without prior written authorization from the Company, of any trade
secret, confidential information or material, as defined in the Company’s
Agreement Regarding Confidential Information and Intellectual Property, relating
to the business of the Company or a Subsidiary, acquired by the Participant
either during or after employment with the Company;  (iii) the failure
or refusal to disclose promptly and to assign to the Company, pursuant to the
Company’s Agreement Regarding Confidential Information and Intellectual
Property, all right, title and interest in any invention or idea, patentable or
not, made or conceived by the Participant during employment by the Company,
relating in any manner to the actual or anticipated business, research or
development work of the Company or the failure or refusal to do anything
reasonably necessary to enable the Company to secure a patent where appropriate
in the United States and in other countries; (iv) activity that results in
termination of the Participant’s employment for cause; (v) a violation of any
rules, policies, procedures or guidelines of the Company, including but not
limited to the Company’s Business Conduct Guidelines; (vi) any attempt directly
or indirectly to induce any employee of the Company to break any contract with
the Company or a Subsidiary or to be employed or perform services elsewhere or
any attempt directly or indirectly to solicit the trade or business of any
current or prospective customer, supplier or partner of the Company; (vii) the
Participant having committed an act of embezzlement, fraud, dishonesty, breach
of fiduciary duty to the Company or a Subsidiary, or being convicted of, or
entering a guilty plea with respect to, a crime, whether or not connected with
the Company; or (viii) deliberately disregarding the rules of the Company or a
Subsidiary which resulted in loss, damage or injury to Company or a Subsidiary,
or any other conduct or act determined to be injurious, detrimental or
prejudicial to any interest of the Company.  The determination of the
Board shall be final and conclusive.  In making its determination, the
Board shall give the Participant an opportunity to appear and be heard at a
hearing before the full Board and present evidence on the Participant’s
behalf.  Without limiting the generality of the foregoing, the
Agreement may provide that the Participant shall also pay to Company any gain
realized by the Participant from exercising all or any portion of the Options
hereunder during a period beginning twelve (12) months prior to such suspension
or cancellation.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    
 

    21.2           Upon
exercise, payment or delivery pursuant to an Award, the Participant shall
certify in a manner acceptable to the Company that he or she is in compliance
with the terms and conditions of the Plan.  In the event a Participant
fails to comply with the provisions of paragraph 21.1 prior to, or during the
twelve months after any exercise, payment or delivery pursuant to an Award, such
exercise, payment or delivery may be rescinded within two years
thereafter.  In addition, in the event of any such rescission, the
Participant shall pay to the Company the amount of any gain realized or payment
received as a result of the rescinded exercise, payment or delivery, in
accordance with the provisions of Section 13 herein, and the Company shall be
entitled to set-off against the amount of any such gain any amount owed to the
Participant by the Company.

    


    21.3           Should
any provision of this Section 21 be held to be invalid or illegal, such
illegality shall not invalidate the whole of this Section, but, rather, this
Plan shall be construed as if it did not contain the illegal part or narrowed to
permit its enforcement, and the rights and obligations of the parties shall be
construed and enforced accordingly.

    


    22.           ADJUSTMENT
FOR CHANGES IN CAPITALIZATION

    


    The
existence of outstanding Awards shall not affect the Company’s right to effect
adjustments, recapitalizations, reorganizations or other changes in its or any
other corporation’s capital structure or business, any merger or consolidation,
any issuance of bonds, debentures, preferred or prior preference stock ahead of
or affecting the Stock, the dissolution or liquidation of the Company’s or any
other corporation’s assets or business or any other corporate act whether
similar to the events described above or otherwise.  Shares shall be
adjusted pursuant to Section 23.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    23.           ADJUSTMENT
UPON CHANGES IN COMPANY STOCK

    


    23.1           Shares Available for
Grants

    


    Subject
to any required action by the stockholders of the Company, in the event of any
change in the number of shares of Company Stock outstanding by reason of
any stock dividend or split, reverse stock split, recapitalization,
merger, consolidation, combination or exchange of shares or similar
corporate change, the maximum number of shares of Company Stock with
respect to which the Administrator may grant Stock Awards under Section 4 hereof
shall be appropriately adjusted by the Administrator.  In the event of
any change in the number of shares of Company Stock outstanding by reason of any
other event or transaction, the Administrator may, but need not, make such
adjustments in the number and class of shares of Company Stock with respect
to which Awards may be granted under Section 4 hereof as the Administrator may
deem appropriate. Any such adjustment pursuant to this Section 23.1 shall
be made by the Administrator, whose determination shall be final, binding
and conclusive.

    


    23.2            Outstanding Restricted
Stock

    


    Unless
the Administrator in its absolute discretion otherwise determines, any
securities or other property (including dividends paid in cash) received by
a Participant with respect to a share of Restricted Stock, the issue date with
respect to which occurs prior to such event, but which has not vested as of
the date of such event, as a result of any dividend, stock split, reverse
stock split, recapitalization, merger, consolidation, combination, exchange of
shares or otherwise shall not vest until such share of Restricted Stock
vests, and shall be promptly deposited with the custodian designated pursuant to
Paragraph 7.4 hereof. The Administrator may, in its absolute discretion,
adjust any grant of shares of Restricted Stock, the issue date with respect
to which has not occurred as of the date of the occurrence of any of the
following events to reflect any dividend, stock split, reverse stock split,
recapitalization, merger, consolidation, combination, exchange of shares or
similar corporate change as the Administrator may deem appropriate
to prevent the enlargement or dilution of rights of a Participant under the
grant.

    


    
      23.3           
Outstanding Options
― Increase or Decrease in
Issued Shares Without Consideration

    

    


    Subject
to any required action by the stockholders of the Company, in the event of any
increase or decrease in the number of issued shares of Company Stock
resulting from a subdivision or consolidation of shares of Company Stock or
the payment of a stock dividend (but only on the shares of Company Stock),
or any other increase or decrease in the number of such shares effected
without receipt of consideration by the Company, the Administrator shall
proportionally adjust the number of shares of Company Stock subject to each
outstanding Option, and the exercise price-per-share of Company Stock of
each such Option. Any such adjustment pursuant to this Section shall be
made by the Administrator, whose determination shall be final, binding and
conclusive.

    


    23.4            Outstanding Options
― Certain Other
Transactions

    


    In the
event of (1) a dissolution or liquidation of the Company, (2) a sale of all or
substantially all of the Company’s assets, (3) a merger or consolidation
involving the Company in which the Company is not the surviving corporation or
(4) a merger or consolidation involving the Company in which the Company is
the surviving corporation but the holders of shares of Company Stock
receive securities of another corporation and/or other property, including cash,
the Administrator shall, in its absolute discretion, have the power
to:

    


    
      	
               
      

            	
              (a)

            	
              cancel,
      effective immediately prior to the occurrence of such event, each Option
      outstanding immediately prior to such event (whether or not then
      exercisable), and, in full consideration of such cancellation, pay to
      the Participant to whom such Option was granted an amount in cash,
      for each share of Company Stock subject to such Option, equal to the
      excess of (A) the value, as determined by the Administrator in its
      absolute discretion, of the property (including cash) received by the
      holder of a share of Company Stock as a result of such event over (B)
      the exercise price of such Option;
or

            


    

     

    
      
         

      

      
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              (b)

            	
              provide
      for the exchange of each Option outstanding immediately prior to
      such event (whether or not then exercisable) for an option on or
      stock appreciation right with respect to, as appropriate, some or all
      of the property which a holder of the number of shares of Company
      Stock subject to such Option would have received in such transaction
      and, incident thereto, make an equitable adjustment as determined by the
      Administrator in its absolute discretion in the exercise price of the
      option or stock appreciation right, or the number of shares or amount
      of property subject to the option or stock appreciation right or, if
      appropriate, provide for a cash payment to the Participant to
      whom such Option was granted in partial consideration for the
      exchange of the Option.

            


    

    


    23.5            Outstanding Options
― Other
Changes

    


    In the
event of any change in the capitalization of the Company or a corporate change
other than those specifically referred to in Sections 23.2 through 23.4
hereof, the Administrator may, in its absolute discretion, make such adjustments
in the number and class of shares subject to Options outstanding on the
date on which such change occurs and in the per share exercise price
of each such Option, as the Administrator may consider appropriate to prevent
dilution or enlargement of rights.  In addition, if and to the extent
the Administrator determines it is appropriate, the Administrator may elect
to cancel each Option outstanding immediately prior to such event
(whether or not then exercisable), and, in full consideration of such
cancellation, pay to the Participant to whom such Option was granted an amount
in cash, for each share of Company Stock subject to such Option, equal to
the excess of (A) the Fair Market Value of Company Stock on the date of
such cancellation over (B) the exercise price of such Option.

    


    23.6            Effect of Loss of Affiliate
Status

    


    If an
entity ceases to be an Affiliate because the Company sells its interest in such
entity to another party or parties, such event may constitute at the sole
discretion of the Administrator, a termination of employment from the Company
and its Affiliates by Participants employed by such entity as of the date
it ceases to be an Affiliate. The Administrator may, but need not, adjust
the provisions of the Plan related to the expiration of any Stock Awards not yet
exercisable at termination of employment, as it considers appropriate in
connection with the specific event resulting in loss of Affiliate
status.

    


    23.7            No Other
Rights

    


    Except as
expressly provided in the Plan, no Participant shall have any rights by reason
of any subdivision or consolidation of shares of stock of any class, the
payment of any dividend, any increase or decrease in the number of shares
of stock of any class or any dissolution, liquidation, merger or
consolidation of the Company or any other corporation. Except as expressly
provided in the Plan, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Company Stock subject to an Award or the exercise price
of any Option.

     

    
      
         

      

      
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    24.           CHANGE OF
CONTROL

    


    24.1.           Definition.  If
there is a “change of control” in the Company, all outstanding Awards shall
fully vest immediately prior to the effectiveness of such a change.  A
“change of control” shall mean the occurrence of any one of the
following:

    


    
      	
               
      

            	
              (a)

            	
              any
      person, including a group or entity, becoming the beneficial owner of, or
      acquiring the power to direct the exercise of voting power with respect
      to, directly or indirectly, securities which represent fifty percent (50%)
      or more of the combined voting power of the Company’s outstanding
      securities thereafter; or

            


    

    


    
      	
               
      

            	
              (b)

            	
              the
      stockholders of the Company approving a merger or consolidation of the
      Company with any other corporation, other than a merger or consolidation
      which would result in the voting securities of the Company immediately
      prior to the merger or consolidation continuing to represent (either by
      remaining outstanding or by being converted into voting securities of the
      surviving or parent entity) 50% or more of the combined voting power of
      the voting securities of any new company or surviving or parent entity
      outstanding immediately after such merger or consolidation;
    or

            


    

    


    
      	
               
      

            	
              (c)

            	
              the
      stockholders of the Company approving an agreement for the sale or
      disposition by the Company of all or substantially all of the
      Company’s assets (or any transaction having a similar
    effect).

            


    

    


    24.2.           Limitation on
Awards.  Notwithstanding any other provisions of this Plan and
unless provided otherwise in the Award Agreement, if the right to receive or
benefit from an Award under this Plan, either alone or together with payments
that a Participant has a right to receive from the Company, would constitute a
“parachute payment” (as defined in Code Section 280G), all such payments shall
be reduced to the largest amount that will result in no portion being subject to
the excise tax imposed by Code Section 4999.

    


    25.           AMENDMENT
OR TERMINATION OF THE PLAN

    


    The Board
and/or the Committee may, at any time, suspend or discontinue the Plan or revise
or amend it in any respect whatsoever without stockholder approval; provided, however, that if
and to the extent required under Section 422 of the Code (if and to the extent
that the Administrator deems it appropriate to comply with Section 422) and if
and to the extent required to treat some or all of the Stock Awards as
“performance-based compensation” within the meaning of Section 162(m) of the
Code (if and to the extent that the Administrator deems it appropriate to meet
such requirements), no amendment shall be effective without the approval of the
stockholders of the Company, that (i) except as provided in Section 23 hereof,
increases the number of shares of Company Stock with respect to which Stock
Awards may be issued under the Plan, (ii) modifies the class of individuals
eligible to participate in the Plan or (iii) materially increases the benefits
accruing to individuals pursuant to the Plan.  Nothing herein shall
restrict the Administrator’s ability to exercise its discretionary authority
hereunder pursuant to Section 5 hereof, which discretion may be exercised
without amendment to the Plan.  No action under this Section 25 may,
without the consent of a Participant, reduce the Participant’s rights under any
previously granted and outstanding Stock Award except to the extent that the
Administrator determines that such amendment is necessary or appropriate to
prevent such Stock Awards from constituting “applicable employee remuneration”
within the meaning of Section 162(m) of the Code.

     

    
      
         

      

      
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    26.           NO
OBLIGATION TO EXERCISE

    


    The grant
to a Participant of an Option shall impose no obligation upon such Participant
to exercise such Option.

    


    27.           TRANSFERS
UPON DEATH

    


    Upon the
death of a Participant, outstanding Awards granted to such Participant may be
exercised only by the executors or administrators of the Participant’s estate or
by any person or persons who shall have acquired such right to exercise by will
or by the laws of descent and distribution.  No transfer by will or the
laws of descent and distribution of any Award, or the right to exercise any
Award, shall be effective to bind the Company unless the Administrator
shall have been furnished with (a) written notice thereof and with a copy
of the will and/or such evidence as the Administrator may deem necessary to
establish the validity of the transfer and (b) an agreement by the transferee to
comply with all the terms and conditions of the Award that are or would have
been applicable to the Participant and to be bound by the acknowledgments made
by the Participant in connection with the grant of the Award. In the event that
at any time any doubt exists as to the right of any person to exercise or
receive a payment under an Award, the Administrator shall be entitled, in its
discretion, to delay such exercise or payment until it is satisfied that such
right has been confirmed (which may, but need not be, by order of a court of
competent jurisdiction), or to permit such exercise or make payment only upon
receipt of a bond or similar indemnification (in such amount and in such form as
is satisfactory to the Administrator). Except as provided in this
Section  or otherwise provided in the Plan or any applicable Award
Agreement with respect to transfers to immediate family members or trusts for
the benefit of immediate family members, no Award shall be transferable, and
Awards shall be exercisable only by a Participant during the Participant’s
lifetime.

    


    28.           EXPENSES
AND RECEIPTS

    


    The
expenses related to administering the Plan shall be paid by the Company.
 Any proceeds received by the Company in connection with any Award will be
used for general corporate purposes.

    


    29.           COMPLIANCE
WITH RULE 16b-3

    


    It is
intended that the Plan be applied and administered in compliance with Rule
16b-3.  If any provision of the Plan would be in violation of Rule 16b-3 if
applied as written, such provision shall not have effect as written and shall be
given effect so as to comply with Rule 16b-3, as determined be the
Administrator.  The Administrator is authorized to amend the Plan and to
make any such modifications to Award Agreements to comply with Rule 16b-3, as it
may be amended from time to time, and to make any other such amendments or
modifications deemed necessary or appropriate to better accomplish the purposes
of the Plan in light of any amendments made to Rule 16b-3.

    


    30.           LIMITATIONS
IMPOSED BY SECTION 162(m)

    


    30.1           Notwithstanding
any other provision hereunder, prior to a Change in Control, if and to the
extent that the Administrator determines the Company’s federal tax deduction in
respect of a Award may be limited as a result of Section 162(m) of the Code, the
Administrator may take the following actions:

    


    
      	
               
      

            	
              (a)

            	
              With
      respect to Options, the Administrator may delay the payment in respect of
      such Options until a date that is within 30 days after the earlier to
      occur of (i) the date that compensation paid to the Participant no longer
      is subject to the deduction limitation under Section 162(m) of the Code
      and (ii) the occurrence of a Change in Control.  In the event that a
      Participant exercises an Option at a time when the Participant is a
      “covered employee,” and the Administrator determines to delay the payment
      in respect of such any Stock Award, the Administrator shall credit cash
      or, in the case of an amount payable in Company Stock, the Fair Market
      Value of the Company Stock, payable to the Participant to an Account.
       The Participant shall have no rights in respect of such Account and
      the amount credited thereto shall not be transferable by the Participant
      other than by will or laws of descent and distribution.  The
      Administrator may credit additional amounts to such Account as it may
      determine in its sole discretion.  Any Account created hereunder
      shall represent only an unfunded unsecured promise by the Company to pay
      the amount credited thereto to the Participant in the
    future.

            


    

     

    
      
         

      

      
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              (b)

            	
              With
      respect to Restricted Stock and Stock Bonuses, the Administrator may
      require the Participant to surrender to the Administrator any certificates
      with respect to Restricted Stock and Stock Bonuses in order to cancel the
      Awards of such Restricted Stock and Stock Bonuses (and any related Cash
      Bonuses).  In exchange for such cancellation, the Administrator shall
      credit to an Account a cash amount equal to the Fair Market Value of the
      shares of Company Stock subject to such awards.  The amount credited
      to the Account shall be paid to the Participant within 30 days after the
      earlier to occur of (i) the date that compensation paid to the Participant
      no longer is subject to the deduction limitation under Section 162(m) of
      the Code and (ii) the occurrence of a Change in Control.  The
      Participant shall have no rights in respect of such Account and the amount
      credited thereto shall not be transferable by the Participant other than
      by will or laws of descent and distribution.  The Administrator may
      credit additional amounts to such Account as it may determine in its sole
      discretion.  Any Account created hereunder shall represent only an
      unfunded unsecured promise by the Company to pay the amount credited
      thereto to the Participant in the
future.

            


    

    


    31.           FAILURE
TO COMPLY

    


    In
addition to the remedies of the Company elsewhere provided for herein, a failure
by a Participant (or Beneficiary or permitted transferee) to comply with any of
the terms and conditions of the Plan or the agreement executed by such
Participant (or Beneficiary or permitted transferee) evidencing a Stock Award,
unless such failure is remedied by such Participant (or Beneficiary or permitted
transferee) within ten days after having been notified of such failure by the
Administrator, shall be grounds for the cancellation and forfeiture of such
Stock Award, in whole or in part, as the Administrator, in its
absolute

    discretion,
may determine.

    


    32.           SEPARABILITY
OF PROVISIONS

    


    If any
provision of this Plan is held to be invalid or unenforceable, the other
provisions of the Plan shall not be affected but shall be applied as if the
invalid or unenforceable provision had not been included in the
Plan.

    


    33.           APPLICABLE
LAW

    


    Except to
the extent preempted by any applicable federal law, the Plan will be construed
and administered in accordance with the laws of the State of Washington, without
reference to the principles of conflicts of law.

     

    
      
         

      

      
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    34.           DEFINITIONS.  As used in this
Plan, the following terms will have the following meanings:

    


    34.1           “Administrator”
means the Board or, with respect to any matter as to which responsibility has
been delegated to the Committee, the term “Administrator” shall mean the
Committee.

    


    34.2           “Award”
means, individually and collectively, any award under this Plan, including any
Option, Restricted Stock, or Stock Bonus.

    


    34.3           “Award
Agreement” means an agreement, in such form and including such terms as the
Administrator in its sole discretion shall determine, evidencing an
Award.

    


    34.4           “Board”
means the Board of Directors of the Company.

    


    34.5           “Change
of Control” has the meaning set forth in Section 25.

    


    34.6           “Code”
means the Internal Revenue Code of 1986, as amended from time to
time.

    


    34.7           “Committee”
means the Committee appointed by the Board to administer this Plan, or if no
such committee is appointed, the Board; provided, however, that any
Committee appointed by the Board shall at all times consist of two or more
persons, all of whom are “non-employee directors” within the meaning of
Rule 16b-3 under the Exchange Act.

    


    34.8           “Company”
means ITEX Corporation, a Nevada corporation and its subsidiaries, or any
successor corporation.

    


    34.9           “Detrimental
Activity” has the meaning set forth in Section 22.

    


    34.10         “Disability”
means a disability, whether temporary or permanent, partial or total, within the
meaning of Section 22(e)(3) of the Code  The existence of a Disability
shall be determined by the Administrator in its absolute
discretion.

    


    34.11         “Effective
Date” has the meaning set forth in Section 2.

    


    34.12         “Eligible
Person” means, in the case of the grant of an Incentive Stock Option, all
officers and salaried employees of the Company or a subsidiary of the Company
(including employees who are also directors and prospective salaried employees
conditioned on their becoming salaried employees) and, in the case of a
Non-Qualified Stock Option, Restricted Stock, and Stock Bonus, any director,
officer or employee of the Company or other person who, in the opinion of the
Board, is rendering valuable services to the Company or its subsidiary,
including without limitation, an independent contractor, outside consultant, or
advisor to the Company or its subsidiary.

    


    34.13         “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time.

    


    34.14         “Exercise
Price” means the price at which a holder of an Option may purchase the Shares
issuable upon exercise of the Option.

    


    34.15         “Fair
Market Value” means

    


    
      	
               
      

            	
              (i)

            	
              if
      the principal market for the Company Stock (the “Market”) is a national
      securities exchange or the National Association of Securities Dealers
      Automated Quotation System (“NASDAQ”) National Market, the last sale
      price or, if no reported sales take place on the applicable date, the
      average of the high bid and low asked price of Company Stock
      as reported for such Market on such date or, if no such quotation is
      made on such date, on the next preceding day on which there were
      quotations, provided that such quotations shall have been made within
      the ten (10) business days preceding the applicable
  date;

            


    

     

    
      
         

      

      
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              (ii)

            	
              if
      the Market is the NASDAQ National List, the NASDAQ Supplemental List or
      another market, the average of the high bid and low asked price for
      Company Stock on the applicable date, or, if no such quotations shall
      have been made on such date, on the next preceding day on which there
      were quotations, provided that such quotations shall have been made
      within the ten (10) business days preceding the applicable date;
      or

            


    

    


    
      	
               
      

            	
              (iii)

            	
              if
      the Market is the OTC Bulletin Board, with respect to stock awards, the
      average price per share during the twelve months immediately preceding the
      issuance, or the closing bid price on the day of grant, whichever is
      higher; and for stock options, the closing bid price on the day of the
      grant, provided
      however, that the Fair Market Value on any day may be determined in
      good faith by the Administrator in a manner consistently
      applied.

            


    

    


    34.16         “Incentive
Stock Option” means an option, which is an incentive stock option within the
meaning of Section 422 of the Code, and that is identified as an Incentive Stock
Option in the agreement by which it is evidenced.

    


    34.17         “Non-Qualified
Stock Option” means an option that is not an Incentive Stock Option within the
meaning of Section 422 of the Code.

    


    34.18         “Option”
means an award of an option to purchase Shares pursuant to this
Plan.

    


    34.19         “Optionee”
means the holder of an Option.

    


    34.20         “Participant”
means a person who receives an Award under this Plan.

    


    34.21         “Plan”
means this 2004 Equity Incentive Plan, as amended from time to
time.

    


    34.22         “Restricted
Stock Award” means an award of Shares pursuant to Section 7.

     

    34.23         “Rule
16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act, as amended from
time to time, and any successor rule.

    


    34.24         “SEC”
means the Securities and Exchange Commission.

    


    34.25         “Securities
Act” means the Securities Act of 1933, as amended from time to
time.

    


    34.26         “Shares”
means shares of the Company’s Common Stock reserved for issuance under this
Plan, as adjusted pursuant to Section 4, and any successor
security.

    


    34.27         “Stock”
means the Common Stock, $.01 par value, of the Company, and any successor
entity.

    


    34.28         “Stock
Bonus” means an award of Shares, or cash in lieu of Shares, pursuant to Section
8.

     

    
      
         

      

      
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    34.29         “Subsidiary”
means a company (whether a corporation, partnership, joint venture or other form
of entity) in which the Company, or a company in which the Company owns a
majority of the shares of capital stock directly or indirectly, owns an
equity interest of fifty percent (50%) or more.

    


    34.30         “Termination”
or “Terminated” means, for purposes of this Plan with respect to a Participant,
that the Participant has for any reason ceased to provide services as an
employee, officer, director, consultant, independent contractor or advisor of
the Company.  An employee will not be deemed to have ceased to provide
services in the case of (i) sick leave, (ii) military leave, or (iii) any other
leave of absence approved by the Administrator; provided, that such leave is for
a period of not more than ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute or unless provided
otherwise pursuant to formal policy adopted from time to time by the Company and
issued and promulgated to employees in writing.  In the case of any
employee on an approved leave of absence, the Administrator may make such
provisions respecting suspension of vesting of the Award while on leave from the
employ of the Company as it may deem appropriate, except that in no event may an
Option be exercised after the expiration of the term set forth in the Award
Agreement.  The Administrator will have sole discretion to determine
whether a Participant has ceased to provide services and the effective date on
which the Participant ceased to provide services (the “Termination
Date”).

    


    34.31         “Vesting
Date” means the date established by the Administrator on which a Participant has
the ability to acquire all or a portion of a grant of a Stock Option or the
date upon which the restriction on a Restricted Stock grant shall
lapse.

     

     

    
      
         

      

      
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