Exhibit
10.1
  THEATER
XTREME ENTERTAINMENT GROUP, INC.
 
 2008
EQUITY INCENTIVE PLAN
 
 As
Adopted March 24, 2008
 
 
 1.           PURPOSE.
 
 The
purpose of this Plan is to provide incentives to attract, retain and motivate
eligible persons whose present and potential contributions are important to the
success of the Company, and its Parent and Subsidiaries (if any), by offering
them an opportunity to participate in the Company’s future performance through
awards of Options, the right to purchase Common Stock and Stock
Bonuses.  Capitalized terms not defined in the text are defined in
Section 2.
 
 2.           DEFINITIONS.
 
 As used
in this Plan, the following terms will have the following meanings:
 
 “AWARD”
means any award under this Plan, including any Option, Stock Award or Stock
Bonus.
 
 “AWARD
AGREEMENT” means, with respect to each Award, the signed written
agreement between the Company and the Participant setting forth the terms and
conditions of the Award.
 
 “BOARD”
means the Board of Directors of the Company.
 
 “CAUSE”
means any cause, as defined by applicable law, for the termination of a
Participant’s employment with the Company or a Parent or Subsidiary of the
Company.
 
 “CODE”
means the Internal Revenue Code of 1986, as amended.
 
 
 “COMPANY”
means Theater Xtreme Entertainment Group, Inc., a Florida corporation, or any
successor corporation.
 
 “COMMITTEE”
means that committee appointed by the Board of Directors to administer and
interpret the Plan as more particularly described in Section 5 of the Plan;
provided, however, that
the term Committee will refer to the Board of Directors during such times as no
Committee is appointed by the Board of Directors.
 
 “DISABILITY”
means a disability, whether temporary or permanent, partial or total, as
determined by the Committee.
 
 “EXCHANGE
ACT” means the Securities Exchange Act of 1934, as amended.
 
 “EXERCISE
PRICE” means the price at which a holder of an Option may purchase the
Shares issuable upon exercise of the Option.
   
 
 “FAIR
MARKET VALUE” means, as of any date, the value of a share of the
Company’s Common Stock determined as follows:
 
 (a)           if
such Common Stock is publicly traded and is then listed on a national securities
exchange, its closing price on the date of determination on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading;
 
 (b)           if
such Common Stock is quoted on the NASDAQ National Market or the NASDAQ Capital
Market, its closing price on the NASDAQ National Market or the NASDAQ Capital
Market, respectively, on the date of determination;
 
 (c)           if
neither of the foregoing is applicable, by the Committee in good
faith.
  “INSIDER”
means an officer or director of the Company or any other person whose
transactions in the Company’s Common Stock are subject to Section 16 of the
Exchange Act.
 
 “OPTION”
means an award of an option to purchase Shares pursuant to Section
6.
 
 “PARENT”
means any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if each of such corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such
chain.
 
 “PARTICIPANT”
means a person who receives an Award under this Plan.
 
 “PERFORMANCE
FACTORS” means the factors selected by the Committee, in its sole and
absolute discretion, from among the following measures to determine whether the
performance goals applicable to Awards have been satisfied:
 
 (a)
              Net
      revenue and/or net revenue growth;
 
 (b)
              Earnings
      before income taxes and amortization and/or earnings before income taxes
      and amortization growth;
 
 (c)
              Operating
      income and/or operating income
growth;
 
 (d)
              Net
      income and/or net income growth;
 
 (e)
              Earnings
      per share and/or earnings per share
growth;
 
 (f)
              Total
      stockholder return and/or total stockholder return
  growth;
 
 (g)
              Return
      on equity;
 
 (h)
              Operating
      cash flow return on income;
 
 (i)
              Adjusted
      operating cash flow return on
income;
 
 (j)
              Economic
      value added; and
 
 (k)
              Individual
      business objectives.
   
 
 “PERFORMANCE
PERIOD” means the period of service determined by the Committee, not to
exceed five years, during which years of service or performance is to be
measured for Stock Awards or Stock Bonuses, if such Awards are
restricted.
 
 “PLAN”
means this Theater Xtreme Entertainment Group, Inc. 2008 Equity Incentive Plan,
as amended from time to time.
 
 
 “PURCHASE
PRICE” means the
price at which the Participant of a Stock Award may purchase the
Shares.
 
 “SEC”
means the Securities and Exchange Commission.
 
 “SECURITIES
ACT” means the Securities Act of 1933, as amended.
 
 “SHARES”
means shares of the Company’s Common Stock reserved for issuance under this
Plan, as adjusted pursuant to Sections 3 and 19, and any successor
security.
 
 “STOCK
AWARD” means an award of Shares pursuant to Section 7.
 
 “STOCK
BONUS” means an award of Shares, or cash in lieu of Shares, pursuant to
Section 8.
 
 “SUBSIDIARY”
means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
 
 “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 to the Company
or a Parent or Subsidiary 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 Company,
provided that such leave is for a period of not more than 90 days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute or unless provided otherwise pursuant to a 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 Committee may make such provisions respecting suspension of vesting of the
Award while on leave from the employ of the Company or a Subsidiary 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 Option agreement.  The
Committee 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”).
 
 3.           SHARES
SUBJECT TO THE PLAN.
 
 3.1           Number of Shares
Available.  Subject to Sections 3.2 and 19, the total aggregate
number of Shares reserved and available for grant and issuance pursuant to this
Plan, shall be Seven Million (7,000,000) Shares and will include Shares that are
subject to:  (a) issuance upon exercise of an Option but cease to be
subject to such Option for any reason other than exercise of such Option; (b) an
Award granted hereunder but forfeited or repurchased by the Company; and (c) an
Award that otherwise terminates without Shares being issued.  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 Options
granted under this Plan and all other outstanding but unvested Awards granted
under this Plan.
   
 
 3.2           Adjustment of
Shares.  In the event that the number of outstanding shares is
changed by a stock dividend, recapitalization, stock split, reverse stock split,
subdivision, combination, reclassification or similar change in the capital
structure of the Company without consideration, then (a) the number of Shares
reserved for issuance under this Plan, (b) the Exercise Prices of and number of
Shares subject to outstanding Options, and (c) the number of Shares subject to
other outstanding Awards will be proportionately adjusted, subject to any
required action by the Board or the stockholders of the Company and compliance
with applicable securities laws; provided, however, that fractions of a Share
will not be issued but will either be replaced by a cash payment equal to the
Fair Market Value of such fraction of a Share or will be rounded up to the
nearest whole Share, as determined by the Committee.
 
 4.           ELIGIBILITY.
 
 ISOs (as
defined in Section 6 below) may be granted only to employees (including officers
and directors who are also employees) of the Company or of a Parent or
Subsidiary of the Company.  All other Awards may be granted to
employees, officers, directors, consultants, independent contractors and
advisors of the Company or any Parent or Subsidiary of the Company, provided
such consultants, independent contractors and advisors render bona-fide services
not in connection with the offer and sale of securities in a capital-raising
transaction or promotion of the Company’s securities.  A person may be
granted more than one Award under this Plan.
 
 5.           ADMINISTRATION.
 
 5.1           Committee.
 
 (a)           The
Board may appoint a committee consisting of two (2) or more members of the Board
to administer and interpret the Plan.
   
 
 (b)           Members
of the Committee may resign at any time by delivering written notice to the
Board.  The Board shall fill vacancies in the
Committee.  The Committee shall act by a majority of its members in
office.  The Committee may act either by vote at a meeting or by a
memorandum or other written instrument signed by a majority of the
Committee.
 
 (c)           If
the Board, in its discretion, does not appoint a Committee, the Board itself
will administer and interpret the Plan and take such other actions as the
Committee is authorized to take hereunder; provided that the Board may take such
actions hereunder in the same manner as the Board may take other actions under
the Certificate of Incorporation and bylaws of the Company
generally.
 
 5.2           Committee
Authority.  Without limitation, the Committee will have the
authority to:
 
 (a)           construe
and interpret this Plan, any Award Agreement and any other agreement or document
executed pursuant to this Plan;
  
 (b)           prescribe,
amend and rescind rules and regulations relating to this Plan or any
Award;
 
 (c)           select
persons to receive Awards;
 
 (d)           determine
the form and terms of Awards;
 
 (e)           determine
the number of Shares or other consideration subject to Awards;
 
 (f)           determine
whether Awards will be granted singly, in combination with, in tandem with, in
replacement of, or as alternatives to, other Awards under this Plan or any other
incentive or compensation plan of the Company or any Parent or Subsidiary of the
Company;
 
 (g)           grant
waivers of Plan or Award conditions;
 
 (h)           determine
the vesting, exercisability and payment of Awards;
 
 (i)           correct
any defect, supply any omission or reconcile any inconsistency in this Plan, any
Award or any Award Agreement;
 
 (j)           determine
whether an Award has been earned; and
 
 (k)           make
all other determinations necessary or advisable for the administration of this
Plan.
 
 5.3           Committee
Discretion.  Any determination made by the Committee with
respect to any Award will be made at the time of grant of the Award or, unless
in contravention of any express term of this Plan or Award, at any later time,
and such determination will be final and binding on the Company and on all
persons having an interest in any Award under this Plan.  The
Committee may delegate to one or more officers of the Company the authority to
grant an Award under this Plan to Participants who are not Insiders of the
Company.  No member of the Committee shall be personally liable for
any action taken or decision made in good faith relating to this Plan, and all
members of the Committee shall be fully protected and indemnified to the fullest
extent permitted under applicable law by the Company in respect to any such
action, determination, or interpretation.
 
 6.           OPTIONS.
 
 The
Committee may grant Options to eligible persons and will determine whether such
Options will be Incentive Stock Options within the meaning of the Code (“ISO”)
or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the
Option, the Exercise Price of the Option, the period during which the Option may
be exercised, and all other terms and conditions of the Option, subject to the
following:
 
 6.1           Form of Option
Grant.  Each Option granted under this Plan will be evidenced
by an Award Agreement which will expressly identify the Option as an ISO or an
NQSO (hereinafter referred to as the “Stock Option Agreement”), and will be in
such form and contain such provisions (which need not be the same for each
Participant) as the Committee may from time to time approve, and which will
comply with and be subject to the terms and conditions of this
Plan.
   
 
 6.2           Date of
Grant.  The date of grant of an Option will be the date on
which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee.  The Stock Option Agreement and
a copy of this Plan will be delivered to the Participant within a reasonable
time after the granting of the Option.
 
 6.3           Exercise
Period.  Options may be exercisable within the times or upon
the events determined by the Committee as set forth in the Stock Option
Agreement governing such Option; provided, however, that no Option will be
exercisable after the expiration of ten (10) years from the date the Option is
granted; and provided further that no ISO granted to a person who directly or by
attribution owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of any Parent or Subsidiary of the
Company (“Ten Percent Stockholder”) will be exercisable after the expiration of
five (5) years from the date the ISO is granted.  The Committee also
may provide for Options to become exercisable at one time or from time to time,
periodically or otherwise, in such number of Shares or percentage of Shares as
the Committee determines, provided, however, that in all events a Participant
will be entitled to exercise an Option at the rate of at least 20% per year over
five years from the date of grant, subject to reasonable conditions such as
continued employment; and further provided that an Option granted to a
Participant who is an officer or director may become fully exercisable, subject
to reasonable conditions such as continued employment, at any time or during any
period established by the Company.
 
 6.4           Exercise
Price.  The Exercise Price of an Option will be determined by
the Committee when the Option is granted and may be not less than 85% of the
Fair Market Value of the Shares on the date of grant; provided
that:  (a) the Exercise Price of an ISO will be not less than 100% of
the Fair Market Value of the Shares on the date of grant; and (b) the Exercise
Price of any Option granted to a Ten Percent Stockholder will not be less than
110% of the Fair Market Value of the Shares on the date of
grant.  Payment for the Shares purchased may be made in accordance
with Section 9 of this Plan.
 
 6.5           Method of
Exercise.  Options may be exercised only by delivery to the
Company of a written stock option exercise agreement  (the “Exercise
Agreement”) in a form approved by the Committee, (which need not be the same for
each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such 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 the Company to comply with applicable securities laws,
together with payment in full of the Exercise Price for the number of Shares
being purchased.
 
 6.6           Termination.  Notwithstanding
the exercise periods set forth in the Stock Option Agreement, exercise of an
Option will always be subject to the following:
 
 (a)           If
the Participant’s service is Terminated for any reason except death or
Disability, then the Participant may exercise such Participant’s Options only to
the extent that such Options would have been exercisable upon the Termination
Date no later than three (3) months after the Termination Date (or such longer
time period not exceeding five (5) years as may be determined by the Committee,
with any exercise beyond three (3) months after the Termination Date deemed to
be an NQSO).
   
 
 (b)           If
the Participant’s service is Terminated because of the Participant’s death or
Disability (or the Participant dies within three (3) months after a Termination
other than for Cause or because of Participant’s Disability), then the
Participant’s Options may be exercised only to the extent that such Options
would have been exercisable by the Participant on the Termination Date and must
be exercised by the Participant (or the Participant’s legal representative) no
later than twelve (12) months after the Termination Date (or such longer time
period not exceeding five (5) years as may be determined by the Committee, with
any such exercise beyond (i) three (3) months after the Termination Date when
the Termination is for any reason other than the Participant’s death or
Disability, or (ii) twelve (12) months after the Termination Date when the
Termination is for Participant’s death or Disability, deemed to be an
NQSO).
 
 I           Notwithstanding
the provisions in paragraph 6.6(a) above, if the Participant’s service is
Terminated for Cause, neither the Participant, the Participant’s estate nor such
other person who may then hold the Option shall be entitled to exercise any
Option with respect to any Shares whatsoever, after Termination, whether or not
after Termination the Participant may receive payment from the Company or a
Subsidiary for vacation pay, for services rendered prior to Termination, for
services rendered for the day on which Termination occurs, for salary in lieu of
notice, or for any other benefits.  For the purpose of this paragraph,
Termination shall be deemed to occur on the date when the Company dispatches
notice or advice to the Participant that his service is Terminated.
 
 6.7           Limitations on
Exercise.  The Committee may specify a reasonable minimum
number of Shares that may be purchased on any exercise of an Option, provided
that such minimum number will not prevent the Participant from exercising the
Option for the full number of Shares for which it is then
exercisable.
 
 6.8           Limitations on
ISO.  The aggregate Fair Market Value (determined as of the
date of grant) of Shares with respect to which ISO are exercisable for the first
time by a Participant during any calendar year (under this Plan or under any
other incentive stock option plan of the Company, Parent or Subsidiary of the
Company) will not exceed $100,000.  If the Fair Market Value of Shares
on the date of grant with respect to which ISO are exercisable for the first
time by a Participant during any calendar year exceeds $100,000, then the
Options for the first $100,000 worth of Shares to become exercisable in such
calendar year will be ISO and the Options for the amount in excess of $100,000
that become exercisable in that calendar year will be NQSOs.  In the
event that the Code or the regulations promulgated thereunder are amended after
the Effective Date of this Plan to provide for a different limit on the Fair
Market Value of Shares permitted to be subject to ISO, such different limit will
be automatically incorporated herein and will apply to any Options granted after
the effective date of such amendment.
 
 6.9           Modification, Extension or
Renewal.  The Committee may modify, extend or renew outstanding
Options and authorize the grant of new Options in substitution therefore,
provided that any such action may not, without the written consent of a
Participant, impair any of such Participant’s rights under any Option previously
granted.  Any outstanding ISO that is modified, extended, renewed or
otherwise altered will be treated in accordance with Section 424(h) of the
Code.  The Committee may reduce the Exercise Price of outstanding
Options without the consent of Participants affected by a written notice to
them; provided, however, that the Exercise Price may not be reduced below the
minimum Exercise Price that would be permitted under Section 6.4 of this Plan
for Options granted on the date the action is taken to reduce the Exercise
Price.
   
 
 6.10           No
Disqualification.  Notwithstanding any other provision in this
Plan, no term of this Plan relating to ISO will be interpreted, amended or
altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
 
 7.           STOCK
AWARD.
 
 A Stock
Award is an offer by the Company to sell to an eligible person Shares that may
or may not be subject to restrictions.  The Committee will determine
to whom an offer will be made, the number of Shares the person may purchase, the
price to be paid (the “Purchase Price”), the restrictions to which the Shares
will be subject, if any, and all other terms and conditions of the Stock Award,
subject to the following:
 
 7.1           Form of Stock
Award.  All purchases under a Stock Award made pursuant to this
Plan will be evidenced by an Award Agreement (the “Stock Purchase Agreement”)
that will be in such form (which need not be the same for each Participant) as
the Committee will from time to time approve, and will comply with and be
subject to the terms and conditions of this Plan.  The offer of a
Stock Award will be accepted by the Participant’s execution and delivery of the
Stock Purchase Agreement and payment for the Shares to the Company in accordance
with the Stock Purchase Agreement.
 
 7.2           Purchase
Price.  The Purchase Price of Shares sold pursuant to a Stock
Award will be determined by the Committee on the date the Stock Award is granted
and may not be less than 85% of the Fair Market Value of the Shares on the grant
date, except in the case of a sale to a Ten Percent Stockholder, in which case
the Purchase Price will be 100% of the Fair Market Value.  Payment of
the Purchase Price must be made in accordance with Section 9 of this
Plan.
 
 7.3           Terms of Stock
Awards.  Stock Awards may be subject to such restrictions as
the Committee may impose.  These restrictions may be based upon
completion of a specified number of years of service with the Company or upon
completion of the performance goals as set out in advance in the Participant’s
individual Stock Purchase Agreement.  Stock Awards may vary from
Participant to Participant and between groups of Participants.  Prior
to the grant of a Stock Award subject to restrictions, the Committee
shall:  (a) determine the nature, length and starting date of any
Performance Period for the Stock Award; (b) select from among the Performance
Factors to be used to measure performance goals, if any; and (c) determine the
number of Shares that may be awarded to the Participant.  Prior to the
transfer of any Stock Award, the Committee shall determine the extent to which
such Stock Award has been earned.  Performance Periods may overlap and
Participants may participate simultaneously with respect to Stock Awards that
are subject to different Performance Periods and have different performance
goals and other criteria.
 
 7.4           Termination During
Performance Period.  If a Participant is Terminated during a
Performance Period for any reason, then such Participant will be entitled to
payment (whether in Shares, cash or otherwise) with respect to the Stock Award
only to the extent earned as of the date of Termination in accordance with the
Stock Purchase Agreement, unless the Committee determines
otherwise.
   
 
 8.           STOCK
BONUSES.
 
 8.1           Awards of Stock
Bonuses.  A Stock Bonus is an award of Shares for extraordinary
services rendered to the Company or any Parent or Subsidiary of the
Company.  A Stock Bonus will be awarded pursuant to an Award Agreement
(the “Stock Bonus Agreement”) that will be in such form (which need not be the
same for each Participant) as the Committee will from time to time approve, and
will comply with and be subject to the terms and conditions of this
Plan.  A Stock Bonus may be awarded upon satisfaction of such
performance goals as are set out in advance in the Participant’s individual
Award Agreement (the “Performance Stock Bonus Agreement”) that will be in such
form (which need not be the same for each Participant) as the Committee will
from time to time approve, and will comply with and be subject to the terms and
conditions of this Plan.  Stock Bonuses may vary from Participant to
Participant and between groups of Participants, and may be based upon the
achievement of the Company, Parent or Subsidiary and/or individual performance
factors or upon such other criteria as the Committee may determine.
 
 8.2           Terms of Stock
Bonuses.  The Committee will determine the number of Shares to
be awarded to the Participant.  If the Stock Bonus is being earned
upon the satisfaction of performance goals pursuant to a Performance Stock Bonus
Agreement, then the Committee will: (a) determine the nature, length and
starting date of any Performance Period for each Stock Bonus; (b) select from
among the Performance Factors to be used to measure the performance, if any; and
(c) determine the number of Shares that may be awarded to the
Participant.  Prior to the payment of any Stock Bonus, the Committee
shall determine the extent to which such Stock Bonuses have been
earned.  Performance Periods may overlap and Participants may
participate simultaneously with respect to Stock Bonuses that are subject to
different Performance Periods and different performance goals and other
criteria.  The number of Shares may be fixed or may vary in accordance
with such performance goals and criteria as may be determined by the
Committee.  The Committee may adjust the performance goals applicable
to the Stock Bonuses to take into account changes in law and accounting or tax
rules and to make such adjustments as the Committee deems necessary or
appropriate to reflect the impact of extraordinary or unusual items, events or
circumstances to avoid windfalls or hardships.
 
 8.3           Form of
Payment.  The earned portion of a Stock Bonus may be paid to
the Participant by the Company either currently or on a deferred basis, with
such interest or dividend equivalent, if any, as the Committee may
determine.  Payment of an interest or dividend equivalent (if any) may
be made in the form of cash or whole Shares or a combination thereof, either in
a lump sum payment or in installments, all as the Committee will
determine.
 
 9.           PAYMENT
FOR SHARE PURCHASES.
 
 Payment
for Shares purchased pursuant to this Plan may be made in cash (by check) or,
where expressly approved for the Participant by the Committee and where
permitted by law:
 
 (a)           by
cancellation of indebtedness of the Company to the Participant;
 
 (b)           by
surrender of shares that either: (1) have been owned by the Participant for more
than six (6) months and have been paid for within the meaning of SEC Rule 144;
or (2) were obtained by the Participant in the public market;
 
 (c)           by
waiver of compensation due or accrued to the Participant for services
rendered;
   
 
 (d)           with
respect only to purchases upon exercise of an Option, and provided that a public
market for the Company’s stock exists:
 
 (1)           through
a “same day sale” commitment from the Participant and a broker-dealer that is a
member of the Financial Industry Regulatory Authority (a “FINRA Dealer”) whereby
the Participant irrevocably elects to exercise the Option and to sell a portion
of the Shares so purchased to pay for the Exercise Price, and whereby the FINRA
Dealer irrevocably commits upon receipt of such Shares to forward the Exercise
Price directly to the Company; or
 
 (2)           through
a “margin” commitment from the Participant and a FINRA Dealer whereby the
Participant irrevocably elects to exercise the Option and to pledge the Shares
so purchased to the FINRA Dealer in a margin account as security for a loan from
the FINRA Dealer in the amount of the Exercise Price, and whereby the FINRA
Dealer irrevocably commits upon receipt of such Shares to forward the Exercise
Price directly to the Company; or
 
 (e)           by
any combination of the foregoing.
 
 10.           WITHHOLDING
TAXES.
 
 10.1           Withholding
Generally.  Whenever Shares are to be issued in satisfaction of
Awards granted under this Plan, the Company may require the Participant to remit
to the Company an amount sufficient to satisfy federal, state and local
withholding tax requirements prior to the delivery of any certificate or
certificates for such Shares.  Whenever, under this Plan, payments in
satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
 
 10.2           Stock
Withholding.  When, under applicable tax laws, a participant
incurs tax liability in connection with the exercise or vesting of any Award
that is subject to tax withholding and the Participant is obligated to pay the
Company the amount required to be withheld, the Committee may allow the
Participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of Shares
having a Fair Market Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to be withheld is to be
determined.  All elections by a Participant to have Shares withheld
for this purpose will be made in accordance with the requirements established by
the Committee and will be in writing in a form acceptable to the
Committee.
 
 11.           PRIVILEGES
OF STOCK OWNERSHIP.
 
 11.1           Voting and
Dividends.  No Participant will have any of the rights of a
stockholder with respect to any Shares until the Shares are issued to the
Participant.  After Shares are issued to the Participant, the
Participant will be a stockholder and will have all the rights of a stockholder
with respect to such Shares, including the right to vote and receive all
dividends or other distributions made or paid with respect to such Shares;
provided, that if such Shares are issued pursuant to a Stock Award with
restrictions, then any new, additional or different securities the Participant
may become entitled to receive with respect to such Shares by virtue of a stock
dividend, stock split or any other change in the corporate or capital structure
of the Company will be subject to the same restrictions as the Stock Award;
provided, further, that the Participant will have no right to retain such stock
dividends or stock distributions with respect to Shares that are repurchased at
the Participant’s Purchase Price or Exercise Price pursuant to Section
13.
   
 
 11.2           Financial
Statements.  The Company will provide financial statements to
each Participant prior to such Participant’s purchase of Shares under this Plan,
and to each Participant annually during the period such Participant has Awards
outstanding; provided, however, the Company will not be required to provide such
financial statements to Participants whose services in connection with the
Company assure them access to equivalent information.
 
 12.           NON-TRANSFERABILITY.
 
 Awards of
Shares 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, other than by will or by the laws of
descent and distribution.  Awards of Options 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, other than by will or by the laws of descent and distribution, by
instrument to an inter vivos or testamentary trust in which the options are to
be passed to beneficiaries upon the death of the trustor, or by gift to
“immediate family” as that term is defined in 17 C.F.R.
240.16a-1(e).  During the lifetime of the Participant an Award will be
exercisable only by the Participant.  During the lifetime of the
Participant, any elections with respect to an Award may be made only by the
Participant unless otherwise determined by the Committee and set forth in the
Award Agreement with respect to Awards that are not ISOs.
 
 13.           REPURCHASE
RIGHTS.
 
 At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right to repurchase a portion of or all of the unvested Shares held by a
Participant following such Participant’s Termination Date.  Such
repurchase by the Company shall be for cash and/or cancellation of purchase
money indebtedness and the price per share shall be the Participant’s Exercise
Price or Purchase Price, as applicable.
 
 14.           CERTIFICATES.
 
 All
certificates for Shares or other securities delivered under this Plan will be
subject to such stop transfer orders, legends and other restrictions as the
Committee 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.
 
 15.           ESCROW;
PLEDGE OF SHARES.
 
 To
enforce any restrictions on a Participant’s Shares, the Committee may require
the Participant to deposit all certificates representing Shares, together with
stock powers or other instruments of transfer approved by the Committee
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 Committee may cause a legend or legends referencing such restrictions to be
placed on the certificates.
 
 16.           EXCHANGE
AND BUYOUT OF AWARDS.
 
 The
Committee 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
Committee may at any time buy from a Participant an Award previously granted
with payment in cash, Shares or other consideration, based on such terms and
conditions as the Committee and the Participant may agree.
   
 
 17.           SECURITIES
LAW AND OTHER REGULATORY COMPLIANCE.
 
 An Award
will not be effective unless such Award is in compliance with all applicable
federal and state securities laws, rules and regulations of any governmental
body, and the requirements of any stock exchange or automated quotation system
upon which the Shares may then be listed or quoted, as they are in effect on the
date of grant of the Award and also on the date of exercise or other issuance.
Notwithstanding any other provision in this Plan, the Company will have no
obligation to issue or deliver certificates for Shares under this Plan prior to:
(a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable; and/or (b) completion of any registration
or other qualification of such Shares under any state or federal law or ruling
of any governmental body that the Company determines to be necessary or
advisable.  The Company will be under no obligation to register the
Shares with the SEC or to effect compliance with the registration, qualification
or listing requirements of any state securities laws, stock exchange or
automated quotation system, and the Company will have no liability for any
inability or failure to do so.
 
 18.           NO
OBLIGATION TO EMPLOY.
 
 Nothing
in this Plan or any Award granted under this Plan will confer or be deemed to
confer on any Participant any right to continue in the employ of, or to continue
any other relationship with, the Company or any Parent or Subsidiary of the
Company or limit in any way the right of the Company or any Parent or Subsidiary
of the Company to terminate Participant’s employment or other relationship at
any time, with or without cause.
 
 19.           CORPORATE
TRANSACTIONS.
 
 19.1           Assumption or Replacement of
Awards by Successor.  In the event of (a) a dissolution or
liquidation of the Company, (b) a merger or consolidation in which the Company
is not the surviving corporation (other than a merger or consolidation with a
wholly-owned subsidiary, a reincorporation of the Company in a different
jurisdiction, or other transaction in which there is no substantial change in
the stockholders of the Company or their relative stock holdings and the Awards
granted under this Plan are assumed, converted or replaced by the successor
corporation, which assumption will be binding on all Participants), (c) a merger
in which the Company is the surviving corporation but after which the
stockholders of the Company immediately prior to such merger (other than any
stockholder that merges, or which owns or controls another corporation that
merges, with the Company in such merger) cease to own their shares or other
equity interest in the Company, (d) the sale of substantially all of the assets
of the Company, or (e) the acquisition, sale, or transfer of more than 50% of
the outstanding shares or the Company by tender offer or similar transaction,
any or all outstanding Awards may be assumed, converted or replaced by the
successor corporation (if any), which assumption, conversion or replacement will
be binding on all Participants.  In the alternative, the successor
corporation may substitute equivalent Awards or provide substantially similar
consideration to Participants as was provided to stockholders (after taking into
account the existing provisions of the Awards).  The successor
corporation may also issue, in place of outstanding Shares of the Company held
by the Participant, substantially similar shares or other property subject to
repurchase restrictions no less favorable to the Participant.  In the
event such successor corporation (if any) refuses to assume or substitute
Awards, as provided above, pursuant to a transaction described in this
Subsection 19.1, (i) the vesting of any or all Awards granted pursuant to this
Plan will accelerate upon a transaction described in this Section 19 and (ii)
any or all Options granted pursuant to this Plan will become exercisable in full
prior to the consummation of such event at such time and on such conditions as
the Committee determines.  If such Options are not exercised prior to
the consummation of the corporate transaction, they shall terminate at such time
as determined by the Committee.
   
 
 19.2           Other Treatment of
Awards.  Subject to any greater rights granted to Participants
under the foregoing provisions of this Section 19, in the event of the
occurrence of any transaction described in Section 19.1, any outstanding Awards
will be treated as provided in the applicable agreement or plan of merger,
consolidation, dissolution, liquidation, or sale of assets.
 
 19.3           Assumption of Awards by the
Company.  The Company, from time to time, also may substitute
or assume outstanding awards granted by another company, whether in connection
with an acquisition of such other company or otherwise, by either; (a) granting
an Award under this Plan in substitution of such other company’s award; or (b)
assuming such award as if it had been granted under this Plan if the terms of
such assumed award could be applied to an Award granted under this
Plan.  Such substitution or assumption will be permissible if the
holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant.  In the event the Company assumes an award
granted by another company, the terms and conditions of such award will remain
unchanged (except that the exercise price and the number and nature of Shares
issuable upon exercise of any such option will be adjusted appropriately
pursuant to Section 424(a) of the Code).  In the event the Company
elects to grant a new Option rather than assuming an existing option, such new
Option may be granted with a similarly adjusted Exercise Price.
 
 20.           ADOPTION
AND STOCKHOLDER APPROVAL.
 
 This Plan
will become effective on the date on which it is adopted by the Board (the
“Effective Date”).  Upon the Effective Date, the Committee may grant
Awards pursuant to this Plan.  The Company intends to seek stockholder
approval of the Plan within twelve (12) months after the date this Plan is
adopted by the Board; provided, however, if the Company fails to obtain
stockholder approval of the Plan during such 12-month period, pursuant to
Section 422 of the Code, any Option granted as an ISO at any time under the Plan
will not qualify as an ISO within the meaning of the Code and will be deemed to
be an NQSO.
 
 21.           TERM
OF PLAN/GOVERNING LAW.
 
 Unless
earlier terminated as provided herein, this Plan will terminate ten (10) years
from the date this Plan is adopted by the Board or, if earlier, the date of
stockholder approval.  This Plan and all agreements thereunder shall
be governed by and construed in accordance with the laws of the State of
Delaware.
 
 22.           AMENDMENT
OR TERMINATION OF PLAN.
 
 The Board
may at any time terminate or amend this Plan in any respect, including without
limitation amendment of any form of Award Agreement or instrument to be executed
pursuant to this Plan; provided, however, that the Board will not, without the
approval of the stockholders of the Company, amend this Plan in any manner that
requires such stockholder approval.
   
 
 23.           NONEXCLUSIVITY
OF THE PLAN.
 
 Neither
the adoption of this Plan by the Board, the submission of this Plan to the
stockholders of the Company for approval, nor any provision of this Plan will be
construed as creating any limitations on the power of the Board to adopt such
additional compensation arrangements as it may deem desirable, including,
without limitation, the granting of stock options and bonuses otherwise than
under this Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.
 
 24.           ACTION
BY COMMITTEE.
 
 Any action permitted or required to be
taken by the Committee or any decision or determination permitted or required to
be made by the Committee pursuant to this Plan shall be taken or made in the
Committee’s sole and absolute discretion.
 
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