Document:

Exhibit
      10.3

     

    September
      15, 2007

     

    Passport
      Restaurants, Inc.

    804
      Pier
      View Way

    Oceanside,
      CA 92054

    Attn:
      Steve Carbone, Chief Financial Officer

    

    Dear
      Steve:

    

    Reference
      is hereby made to the Securities Purchase Agreement (the “Agreement”) dated as
      of March 23, 2007 between Passport Restaurants, Inc. (the “Company”), CAMOFI
      Master LDC (“CAMOFI”) and CAMHZN Master LDC (“CAMHZN”). CAMOFI and CAMHZN shall
      collectively be referred to as the “Purchasers”. Each of the Company and the
      Purchasers wish to amend the terms of the Agreement as follows: 

    

    
      	 	
              1.

            	
              Section
                4.14 is hereby deleted in its entirety and replaced with the following
                new
                Section 4.14:

            

    

    

    “Section
      4.14. Issuance
      of Additional Shares/Warrants upon Qualified Equity Offering.
      Upon
      the closing of the first Qualified Equity Offering consummated after the date
      hereof, the Purchasers shall be issued shares of Common Stock and/or warrants
      (the split of such shares of Common Stock and warrants to be determined by
      the
      Purchasers in their sole discretion, provided,
      however,
      that
      the Purchasers agree that collectively, the number of shares of Common Stock
      issued shall not exceed 4.99% of the number of shares of the Common Stock
      outstanding immediately after giving effect to such issuance) such that after
      taking into account the shares of Common Stock or Common Stock Equivalents
      issued in connection with the Qualified Equity Offering (plus any additional
      shares of Common Stock or Common Stock Equivalents issued subsequent to the
      date
      hereof) the Purchasers in the aggregate (assuming the Purchasers continue to
      own
      all of the Warrants issued pursuant to this Agreement) will own 15% of the
      Common Stock of the Company on a fully diluted basis (assuming the conversion
      of
      all convertible notes and the exercise of all options and warrants). Such shares
      of Common Stock and/or warrants shall be issued to the Purchasers pro rata
      based
      upon the aggregate principal amount of such Purchaser’s Note outstanding
      immediately prior to the consummation of the Qualified Equity Offering.”

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    If
      this
      letter is accordance with your understanding, please sign your name in the
      space
      provided below.

     

    Very
      truly yours,

    

    CAMOFI
      MASTER LDC

    CAMHZN
      MASTER LDC

     

    
      	 	 	 	 
	By:	 	 	
            
	
              
                

              

              Name:
                

              Title:

            	 	 	
            

    

    

      	
              ACCEPTED
                AND AGREED TO:

            	 	 	 
	 	 	 	 
	
              Passport
                Restaurants, Inc.

            	 	 	 
	 	 	 	 
	 	 	 	 
	By:	 	 	
            
	
              
                

              

              Name:
                

              Title:Exhibit
        10.4

    

     

    
      

      

    

    

      PACIFIC
        RESTAURANT
        HOLDINGS,
        INC.

    

    

      2007
        STOCK
        INCENTIVE
        PLAN

    Adopted
      by the Board on August ___, 2007

    

    Approved
      by the Stockholders on October ___, 2007

    

    
      

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    TABLE
      OF CONTENTS

    

      
        	 	 	 	 	
                Page

              
	 	 	 	 	 
	
                SECTION
                  1.

              	 	
                PURPOSE.

              	 	
                1

              
	 	 	 	 	 
	
                SECTION
                  2.

              	 	
                DEFINITIONS.

              	 	
                1

              
	
                2.1

              	 	
                “Board”

              	 	
                1

              
	
                2.2

              	 	
                “Change
                  in Control”

              	 	
                1

              
	
                2.3

              	 	
                “Code”

              	 	
                2

              
	
                2.4

              	 	
                “Committee”

              	 	
                2

              
	
                2.5

              	 	
                “Company”

              	 	
                2

              
	
                2.6

              	 	
                “Consultant”

              	 	
                2

              
	
                2.7

              	 	
                “Disability”

              	 	
                2

              
	
                2.8

              	 	
                “Employee”

              	 	
                2

              
	
                2.9

              	 	
                “Exchange
                  Act”

              	 	
                2

              
	
                2.10

              	 	
                “Exercise
                  Price”

              	 	
                2

              
	
                2.11

              	 	
                “Fair
                  Market Value”

              	 	
                2

              
	
                2.12

              	 	
                “ISO”

              	 	
                2

              
	
                2.13

              	 	
                “NSO”

              	 	
                3

              
	
                2.14

              	 	
                “Option”

              	 	
                3

              
	
                2.15

              	 	
                “Optionee”

              	 	
                3

              
	
                2.16

              	 	
                “Outside
                  Director”

              	 	
                3

              
	
                2.17

              	 	
                “Parent”

              	 	
                3

              
	
                2.18

              	 	
                “Plan”

              	 	
                3

              
	
                2.19

              	 	
                “Purchase
                  Price”

              	 	
                3

              
	
                2.20

              	 	
                “Purchaser”

              	 	
                3

              
	
                2.21

              	 	
                “Restricted
                  Share Agreement”

              	 	
                3

              
	
                2.22

              	 	
                “Securities
                  Act”

              	 	
                3

              
	
                2.23

              	 	
                “Service”

              	 	
                3

              
	
                2.24

              	 	
                “Share”

              	 	
                3

              
	
                2.25

              	 	
                “Stock”

              	 	
                3

              
	
                2.26

              	 	
                “Stock
                  Option Agreement”

              	 	
                4

              
	
                2.27

              	 	
                “Subsidiary”

              	 	
                4

              
	
                2.28

              	 	
                “Ten-Percent
                  Stockholder”

              	 	
                4

              
	 	 	 	 	 
	
                SECTION
                  3.

              	 	
                ADMINISTRATION.

              	 	
                4

              
	
                3.1

              	 	
                General
                  Rule

              	 	
                4

              
	
                3.2

              	 	
                Board
                  Authority and Responsibility

              	 	
                4

              
	 	 	 	 	 
	
                SECTION
                  4.

              	 	
                ELIGIBILITY.

              	 	
                4

              
	
                4.1

              	 	
                General
                  Rule

              	 	
                4

              
	 	 	 	 	 
	
                SECTION
                  5.

              	 	
                STOCK
                  SUBJECT TO PLAN.

              	 	
                4

              
	
                5.1

              	 	
                Share
                  Limit

              	 	
                4

              
	
                5.2

              	 	
                Additional
                  Shares

              	 	
                5

              

      

       

      
        
          
          

        

        
          -
            i
            -

          
            

          

        

        
          
          

        

      

       

      
        	
                SECTION
                  6.

              	 	
                RESTRICTED
                  SHARES.

              	 	
                5

              
	
                6.1

              	 	
                Restricted
                  Share Agreement

              	 	
                5

              
	
                6.2

              	 	
                Duration
                  of Offers and Nontransferability of Purchase Rights

              	 	
                5

              
	
                6.3

              	 	
                Purchase
                  Price

              	 	
                5

              
	
                6.4

              	 	
                Repurchase
                  Rights and Transfer Restrictions

              	 	
                5

              
	 	 	 	 	 
	
                SECTION
                  7.

              	 	
                STOCK
                  OPTIONS.

              	 	
                5

              
	
                7.1

              	 	
                Stock
                  Option Agreement

              	 	
                5

              
	
                7.2

              	 	
                Number
                  of Shares; Kind of Option

              	 	
                6

              
	
                7.3

              	 	
                Exercise
                  Price

              	 	
                6

              
	
                7.4

              	 	
                Term

              	 	
                6

              
	
                7.5

              	 	
                Exercisability

              	 	
                6

              
	
                7.6

              	 	
                Repurchase
                  Rights and Transfer Restrictions

              	 	
                6

              
	
                7.7

              	 	
                Transferability
                  of Options

              	 	
                7

              
	
                7.8

              	 	
                Exercise
                  of Options on Termination of Service

              	 	
                7

              
	
                7.9

              	 	
                No
                  Rights as a Stockholder

              	 	
                7

              
	
                7.10

              	 	
                Modification,
                  Extension and Renewal of Options

              	 	
                7

              
	 	 	 	 	 
	
                SECTION
                  8.

              	 	
                PAYMENT
                  FOR SHARES.

              	 	
                7

              
	
                8.1

              	 	
                General

              	 	
                7

              
	
                8.2

              	 	
                Surrender
                  of Stock

              	 	
                8

              
	
                8.3

              	 	
                Services
                  Rendered

              	 	
                8

              
	
                8.4

              	 	
                Promissory
                  Notes

              	 	
                8

              
	
                8.5

              	 	
                Exercise/Sale

              	 	
                8

              
	
                8.6

              	 	
                Exercise/Pledge

              	 	
                8

              
	
                8.7

              	 	
                Other
                  Forms of Payment

              	 	
                8

              
	 	 	 	 	 
	
                SECTION
                  9.

              	 	
                ADJUSTMENT
                  OF SHARES.

              	 	
                8

              
	
                9.1

              	 	
                General

              	 	
                8

              
	
                9.2

              	 	
                Dissolution
                  or Liquidation

              	 	
                9

              
	
                9.3

              	 	
                Mergers
                  and Consolidations

              	 	
                9

              
	
                9.4

              	 	
                Reservation
                  of Rights

              	 	
                9

              
	 	 	 	 	 
	
                SECTION
                  10.

              	 	
                REPURCHASE
                  RIGHTS.

              	 	
                9

              
	
                10.1

              	 	
                Company’s
                  Right To Repurchase Shares

              	 	
                9

              
	 	 	 	 	 
	
                SECTION
                  11.

              	 	
                WITHHOLDING
                  TAXES.

              	 	
                10

              
	
                11.1

              	 	
                General

              	 	
                10

              
	
                11.2

              	 	
                Share
                  Withholding

              	 	
                10

              
	
                11.3

              	 	
                Cashless
                  Exercise/Pledge

              	 	
                10

              
	
                11.4

              	 	
                Other
                  Forms of Payment

              	 	
                10

              
	 	 	 	 	 
	
                SECTION
                  12.

              	 	
                SECURITIES
                  LAW REQUIREMENTS.

              	 	
                10

              
	
                12.1

              	 	
                General

              	 	
                10

              
	
                12.2

              	 	
                Voting
                  and Dividend Rights

              	 	
                10

              
	 	 	 	 	 
	
                SECTION
                  13.

              	 	
                NO
                  RETENTION RIGHTS.

              	 	
                10

              
	 	 	 	 	 
	
                SECTION
                  14.

              	 	
                DURATION
                  AND AMENDMENTS.

              	 	
                11

              

      

       

      
        
          
          

        

        
          -
            ii
            -

          
            

          

        

        
          
          

        

      

       

      
        	
                14.1

              	 	
                Term
                  of the Plan

              	 	
                11

              
	
                14.2

              	 	
                Right
                  to Amend or Terminate the Plan

              	 	
                11

              
	
                14.3

              	 	
                Effect
                  of Amendment or Termination

              	 	
                11

              
	 	 	 	 	 
	
                SECTION
                  15.

              	 	
                EXECUTION.

              	 	
                11

              

      

    

    
      
        
        

      

      
        -
          iii
          -

        
          

        

      

       

    

     

    
      Pacific
        Restaurant Holdings, Inc.

       

      2007
        STOCK INCENTIVE PLAN

       

      SECTION
        1. PURPOSE.

       

      The
        Plan
        was adopted by the Board of Directors effective August ___, 2007. The purpose
        of
        the Plan is to offer selected service providers the opportunity to acquire
        equity in the Company through awards of Options (which may constitute incentive
        stock options or nonstatutory stock options) and the award or sale of
        Shares.

       

      The
        award
        of Options and the award or sale of Shares under the Plan is intended to
        be
        exempt from the securities qualification requirements of the California
        Corporations Code by satisfying the exemption under section 25102(o) of the
        California Corporations Code. However, awards of Options and the award or
        sale
        of Shares may be made in reliance upon other state securities law exemptions.
        To
        the extent that such other exemptions are relied upon, the terms of this
        Plan
        which are included only to comply with section 25102(o) shall be disregarded
        to
        the extent provided in the Stock Option Agreement or Restricted Share Agreement.
        In
        addition, to the extent that section 25102(o) or the regulations promulgated
        thereunder are amended to delete any requirements set forth in such law or
        regulations, the terms of this Plan which are included only to comply with
        section 25102(o) or the regulations promulgated thereunder as in effect prior
        to
        any such amendment shall be disregarded to the extent permitted by applicable
        law.

       

      SECTION
        2. DEFINITIONS.

       

      
        	
                2.1

              	
                “Board”
                  shall
                  mean the Board of Directors of the Company, as constituted from
                  time to
                  time.

              

      

       

      
        	
                2.2

              	
                “Change
                  in Control” shall
                  mean the occurrence of any of the following
                  events:

              

      

       

      
        	 	
                (a)

              	
                The
                  consummation of a merger or consolidation of the Company with or
                  into
                  another entity or any other corporate reorganization, if persons
                  who were
                  not stockholders of the Company immediately prior to such merger,
                  consolidation or other reorganization own immediately after such
                  merger,
                  consolidation or other reorganization fifty percent (50%) or more
                  of the
                  voting power of the outstanding securities of each of (A) the continuing
                  or surviving entity and (B) any direct or indirect parent corporation
                  of
                  such continuing or surviving
                  entity;

              

      

       

      
        	 	
                (b)

              	
                The
                  consummation of the sale, transfer or other disposition of all
                  or
                  substantially all of the Company’s assets or the stockholders of the
                  Company approve a plan of complete liquidation of the Company;
                  or

              

      

       

      
        	 	
                (c)

              	
                Any
                  “person” (as defined below) who, by the acquisition or aggregation of
                  securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3
                  under the Exchange Act), directly or indirectly, of securities
                  of the
                  Company representing fifty percent (50%) or more of the combined
                  voting
                  power of the Company’s then outstanding securities ordinarily (and apart
                  from rights accruing under special circumstances) having the right
                  to vote
                  at elections of directors (the “Base Capital Stock”); except that any
                  change in the relative beneficial ownership of the Company’s securities by
                  any person resulting solely from a reduction in the aggregate number
                  of
                  outstanding shares of Base Capital Stock, and any decrease thereafter
                  in
                  such person’s ownership of securities, shall be disregarded until such
                  person increases in any manner, directly or indirectly, such person’s
                  beneficial ownership of any securities of the
                  Company.

              

      

       

      
        
          
          

        

        
          -
            1
            -

          
            

          

        

        
          
          

        

      

       

      For
        purposes of Section 2.2(c), the term “person” shall have the same meaning as
        when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude
        (1)
        a trustee or other fiduciary holding securities under an employee benefit
        plan
        maintained by the Company or a Parent or Subsidiary and (2) a corporation
        owned
        directly or indirectly by the stockholders of the Company in substantially
        the
        same proportions as their ownership of the Stock.

       

      Notwithstanding
        the foregoing, the term “Change in Control” shall not include (a) a transaction
        the sole purpose of which is to change the state of the Company’s incorporation,
        (b) a transaction the sole purpose of which is to form a holding company
        that
        will be owned in substantially the same proportions by the persons who held
        the
        Company’s securities immediately before such transaction, (c) a transaction the
        sole purpose of which is to make an initial public offering of the Company’s
        Stock or (d) any change in the beneficial ownership of the securities of
        the
        Company as a result of a private financing of the Company that is approved
        by
        the Board.

       

      
        	
                2.3

              	
                “Code”
                  shall
                  mean the Internal Revenue Code of 1986, as
                  amended.

              

      

       

      
        	
                2.4

              	
                “Committee”
                  shall
                  mean the committee designated by the Board, which is authorized
                  to
                  administer the Plan, as described in Section 3
                  hereof.

              

      

       

      
        	
                2.5

              	
                “Company”
                  shall
                  mean Pacific Restaurant Holdings, Inc., a Delaware
                  corporation.

              

      

       

      
        	
                2.6

              	
                “Consultant”
                  shall
                  mean a consultant or advisor who is not an Employee or Outside
                  Director
                  and who performs bona fide services for the Company, a Parent or
                  Subsidiary.

              

      

       

      
        	
                2.7

              	
                “Disability”
                  shall
                  mean a condition that renders an individual unable to engage in
                  substantial gainful activity by reason of any medically determinable
                  physical or mental
                  impairment.

              

      

       

      
        	
                2.8

              	
                “Employee”
                  shall
                  mean any individual who is a common-law employee of the Company,
                  a Parent
                  or a Subsidiary and who is an “employee” within the meaning of section
                  3401(c) of the Code and regulations issued
                  thereunder.

              

      

       

      
        	
                2.9

              	
                “Exchange
                  Act” shall
                  mean the U.S. Securities and Exchange Act of 1934, as
                  amended.

              

      

       

      
        	
                2.10

              	
                “Exercise
                  Price” shall
                  mean the amount for which one Share may be purchased upon the exercise
                  of
                  an Option, as specified in a Stock Option
                  Agreement.

              

      

       

      
        	
                2.11

              	
                “Fair
                  Market Value” means,
                  with respect to a Share, the market price of one Share of Stock,
                  determined by the Board in good faith. Such determination shall
                  be
                  conclusive and binding on all
                  persons.

              

      

       

      
        	
                2.12

              	
                “ISO”
                  shall
                  mean an incentive stock option described in section 422(b) of the
                  Code.

              

      

       

      
        
          
          

        

        
          -
            2
            -

          
            

          

        

        
          
          

        

      

       

      
        	
                2.13

              	
                “NSO”
                  shall
                  mean a stock option that is not an
                  ISO.

              

      

       

      
        	
                2.14

              	
                “Option”
                  shall
                  mean an ISO or NSO granted under the Plan and entitling the holder
                  to
                  purchase Shares.

              

      

       

      
        	
                2.15

              	
                “Optionee”
                  shall
                  mean an individual or estate that holds an
                  Option.

              

      

       

      
        	
                2.16

              	
                “Outside
                  Director” shall
                  mean a member of the Board of the Company, a Parent or a Subsidiary
                  who is
                  not an Employee.

              

      

       

      
        	
                2.17

              	
                “Parent”
                  shall
                  mean any corporation (other than the Company) in an unbroken chain
                  of
                  corporations ending with the Company, if each of the corporations
                  other
                  than the Company owns stock possessing fifty percent (50%) or more
                  of the
                  total combined voting power of all classes of stock in one of the
                  other
                  corporations in such chain. A corporation that attains the status
                  of a
                  Parent on a date after the adoption of the Plan shall be considered
                  a
                  Parent commencing as of such
                  date.

              

      

       

      
        	
                2.18

              	
                “Plan”
                  shall
                  mean the Pacific Restaurant Holdings, Inc. 2007 Stock Incentive
                  Plan.

              

      

       

      
        	
                2.19

              	
                “Purchase
                  Price” shall
                  mean the consideration for which one Share may be acquired under
                  the Plan
                  (other than upon exercise of an
                  Option).

              

      

       

      
        	
                2.20

              	
                “Purchaser”
                  shall
                  mean a person to whom the Board has offered the right to acquire
                  Shares
                  under the Plan (other than upon exercise of an
                  Option).

              

      

       

      
        	
                2.21

              	
                “Restricted
                  Share Agreement” shall
                  mean the agreement between the Company and a Purchaser who acquires
                  Shares
                  under the Plan that contains the terms, conditions and restrictions
                  pertaining to the acquisition of such
                  Shares.

              

      

       

      
        	
                2.22

              	
                “Securities
                  Act” shall
                  mean the U.S. Securities Act of 1933, as
                  amended.

              

      

       

      
        	
                2.23

              	
                “Service”
                  shall
                  mean service as an Employee, a Consultant or an Outside Director,
                  subject
                  to such further limitations as may be set forth in the applicable
                  Stock
                  Option Agreement or Restricted Share Agreement. Service shall be
                  deemed to
                  continue during a bona fide leave of absence approved by the Company
                  in
                  writing if and to the extent that continued crediting of Service
                  for
                  purposes of the Plan is expressly required by the terms of such
                  leave or
                  by applicable law, as determined by the Company. However, for purposes
                  of
                  determining whether an Option is entitled to ISO status, and to
                  the extent
                  required under the Code, an Employee’s employment will be treated as
                  terminating ninety (90) days after such Employee went on leave,
                  unless
                  such Employee’s right to return to active work is guaranteed by law or by
                  a contract or such Employee immediately returns to active work.
                  The
                  Company determines which leaves count toward Service, and when
                  Service
                  terminates for all purposes under the
                  Plan.

              

      

       

      
        	
                2.24

              	
                “Share”
                  shall
                  mean one share of Stock, as adjusted in accordance with Section
                  9 (if
                  applicable).

              

      

       

      
        	
                2.25

              	
                “Stock”
                  shall
                  mean the common stock of the
                  Company.

              

      

       

      
        
          
          

        

        
          -
            3
            -

          
            

          

        

        
          
          

        

      

       

      
        	
                2.26

              	
                “Stock
                  Option Agreement” shall
                  mean the agreement between the Company and an Optionee which contains
                  the
                  terms, conditions and restrictions pertaining to the Optionee’s
                  Option.

              

      

       

      
        	
                2.27

              	
                “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
                  fifty percent (50%) or more of the total combined voting power
                  of all
                  classes of stock in one of the other corporations in such chain.
                  A
                  corporation that attains the status of a Subsidiary on a date after
                  the
                  adoption of the Plan shall be considered a Subsidiary commencing
                  as of
                  such date.

              

      

       

      
        	
                2.28

              	
                “Ten-Percent
                  Stockholder” means
                  an individual who owns more than ten percent (10%) of the total
                  combined
                  voting power of all classes of outstanding stock of the Company,
                  its
                  Parent or any of its Subsidiaries. In determining stock ownership
                  for
                  purposes of this Section 2.28, the attribution rules of section
                  424(d) of
                  the Code shall be
                  applied.

              

      

       

      SECTION
        3. ADMINISTRATION.

       

      
        	
                3.1

              	
                General
                  Rule.
                  The Plan shall be administered by the Board. However, the Board
                  may
                  delegate any or all administrative functions under the Plan otherwise
                  exercisable by the Board to one or more Committees. Each Committee
                  shall
                  consist of at least one member of the Board who has been appointed
                  by the
                  Board. Each Committee shall have the authority and be responsible
                  for such
                  functions as the Board has assigned to it. If a Committee has been
                  appointed, any reference to the Board in the Plan shall be construed
                  as a
                  reference to the Committee to whom the Board has assigned a particular
                  function. The Board may also authorize one or more officers of
                  the Company
                  to designate Employees, other than such authorized officer or officers,
                  to
                  receive Awards and/or to determine the number of such Awards to
                  be
                  received by such persons; provided, however, that the Board shall
                  specify
                  the total number of Awards that such officer or officers may so
                  award.

              

      

       

      
        	
                3.2

              	
                Board
                  Authority and Responsibility.
                  Subject to the provisions of the Plan, the Board shall have full
                  authority
                  and discretion to take any actions it deems necessary or advisable
                  for the
                  administration of the Plan. All decisions, interpretations and
                  any other
                  actions of the Board with respect to the Plan shall be final and
                  binding
                  on all persons deriving rights under the
                  Plan.

              

      

       

      SECTION
        4. ELIGIBILITY.

       

      
        	
                4.1

              	
                General
                  Rule.
                  Only Employees shall be eligible for the grant of ISOs. Only Employees,
                  Consultants and Outside Directors shall be eligible for the grant
                  of NSOs
                  or the award or sale of
                  Shares.

              

      

       

      SECTION
        5. STOCK
        SUBJECT TO PLAN.

       

      
        	
                5.1

              	
                Share
                  Limit.
                  Subject to Sections 5.2 and 9, the aggregate number of Shares which
                  may be
                  issued under the Plan shall not exceed 2,000,000 Shares. The number
                  of
                  Shares which are subject to Options or other rights outstanding
                  at any
                  time shall not exceed the number of Shares which then remain available
                  for
                  issuance under the Plan. The Company, during the term of the Plan,
                  shall
                  at all times reserve and keep available sufficient Shares to satisfy
                  the
                  requirements of the Plan. Shares offered under the Plan may be
                  authorized
                  but unissued Shares or treasury
                  Shares.

              

      

       

      
        
          
          

        

        
          -
            4
            -

          
            

          

        

        
          
          

        

      

       

      
        	
                5.2

              	
                Additional
                  Shares.
                  In the event that any outstanding Option or other right expires
                  or is
                  canceled for any reason, the Shares allocable to the unexercised
                  portion
                  of such Option or other right shall remain available for issuance
                  pursuant
                  to the Plan. If a Share previously issued under the Plan is reacquired
                  by
                  the Company pursuant to a forfeiture provision, right of repurchase
                  or
                  right of first refusal, then such Share shall again become available
                  for
                  issuance under the Plan.

              

      

       

      SECTION
        6. RESTRICTED
        SHARES.

       

      
        	
                6.1

              	
                Restricted
                  Share Agreement.
                  Each award or sale of Shares under the Plan (other than upon exercise
                  of
                  an Option) shall be evidenced by a Restricted Share Agreement between
                  the
                  Purchaser and the Company. Such award or sale shall be subject
                  to all
                  applicable terms and conditions of the Plan and may be subject
                  to any
                  other terms and conditions imposed by the Board, as set forth in
                  the
                  Restricted Share Agreement, that are not inconsistent with the
                  Plan. The
                  provisions of the various Restricted Share Agreements entered into
                  under
                  the Plan need not be
                  identical.

              

      

       

      
        	
                6.2

              	
                Duration
                  of Offers and Nontransferability of Purchase Rights.
                  Any right to acquire Shares (other than an Option) shall automatically
                  expire if not exercised by the Purchaser within thirty (30) days
                  after the
                  Company communicates the grant of such right to the Purchaser.
                  Such right
                  shall be nontransferable and shall be exercisable only by the Purchaser
                  to
                  whom the right was
                  granted.

              

      

       

      
        	
                6.3

              	
                Purchase
                  Price.
                  To the extent an award consists of newly issued Shares, the award
                  recipient shall furnish consideration having a value not less than
                  the par
                  value of such Shares as determined by the Board. Subject to the
                  foregoing
                  in this Section 6.3, the Board shall determine the amount of the
                  Purchase
                  Price in its sole discretion. The Purchase Price shall be payable
                  in a
                  form described in Section
                  8.

              

      

       

      
        	
                6.4

              	
                Repurchase
                  Rights and Transfer Restrictions.
                  Each award or sale of Shares shall be subject to such forfeiture
                  conditions, rights of repurchase, rights of first refusal and other
                  transfer restrictions as the Board may determine, subject to the
                  requirements of Section 10. Such restrictions shall be set forth
                  in the
                  applicable Restricted Share Agreement and shall apply in addition
                  to any
                  restrictions otherwise applicable to holders of Shares
                  generally.

              

      

       

      SECTION
        7. STOCK
        OPTIONS.

       

      
        	
                7.1

              	
                Stock
                  Option Agreement.
                  Each grant of an Option under the Plan shall be evidenced by a
                  Stock
                  Option Agreement between the Optionee and the Company. The Option
                  shall be
                  subject to all applicable terms and conditions of the Plan and
                  may be
                  subject to any other terms and conditions imposed by the Board,
                  as set
                  forth in the Stock Option Agreement, which are not inconsistent
                  with the
                  Plan. The provisions of the various Stock Option Agreements entered
                  into
                  under the Plan need not be
                  identical.

              

      

       

      
        
          
          

        

        
          -
            5
            -

          
            

          

        

        
          
          

        

      

       

      
        	
                7.2

              	
                Number
                  of Shares; Kind of Option.
                  Each Stock Option Agreement shall specify the number of Shares
                  that are
                  subject to the Option and shall provide for the adjustment of such
                  number
                  in accordance with Section 9. The Stock Option Agreement shall
                  also
                  specify whether the Option is intended to be an ISO or an
                  NSO.

              

      

       

      
        	
                7.3

              	
                Exercise
                  Price.
                  Each Stock Option Agreement shall set forth the Exercise Price,
                  which
                  shall be payable in a form described in Section 8. Subject to the
                  following requirements, the Exercise Price under any Option shall
                  be
                  determined by the Board in its sole
                  discretion:

              

      

       

      
        	 	
                (a)

              	
                Minimum
                  Exercise Price for ISOs.
                  The Exercise Price per Share of an ISO shall not be less than one
                  hundred
                  percent (100%) of the Fair Market Value of a Share on the date
                  of grant;
                  provided, however, that the Exercise Price per Share of an ISO
                  granted to
                  a Ten-Percent Stockholder shall not be less than one hundred ten
                  percent
                  (110%) of the Fair Market Value of a Share on the date of
                  grant.

              

      

       

      
        	 	
                (b)

              	
                Minimum
                  Exercise Price for NSOs.
                  The Exercise Price per Share of an NSO shall not be less than one-hundred
                  percent (100%) of the Fair Market Value of a Share on the date
                  of
                  grant.

              

      

       

      
        	
                7.4

              	
                Term.
                  Each Stock Option Agreement shall specify the term of the Option.
                  The term
                  of an Option shall in no event exceed ten (10) years from the date
                  of
                  grant. The term of an ISO granted to a Ten-Percent Stockholder
                  shall not
                  exceed five (5) years from the date of grant. Subject to the foregoing,
                  the Board in its sole discretion shall determine when an Option
                  shall
                  expire.

              

      

       

      
        	
                7.5

              	
                Exercisability.
                  Each Stock Option Agreement shall specify the date when all or
                  any
                  installment of the Option is to become exercisable; provided, however,
                  that no Option shall be exercisable unless the Optionee has delivered
                  to
                  the Company an executed copy of the Stock Option Agreement. Subject
                  to the
                  following restrictions, the Board in its sole discretion shall
                  determine
                  when all or any installment of an Option is to become exercisable
                  and may,
                  in its discretion, provide for accelerated exercisability in the
                  event of
                  a Change in Control or other
                  events:

              

      

       

      
        	 	
                (a)

              	
                Options
                  Granted to Outside Directors.
                  The exercisability of an Option granted to an Optionee for service
                  as an
                  Outside Director shall be automatically accelerated in full in
                  the event
                  of a Change in Control.

              

      

       

      
        	 	
                (b)

              	
                Early
                  Exercise.
                  A
                  Stock Option Agreement may permit the Optionee to exercise the
                  Option as
                  to Shares that are subject to a right of repurchase by the Company
                  in
                  accordance with the requirements of Section
                  10.1.

              

      

       

      
        	
                7.6

              	
                Repurchase
                  Rights and Transfer Restrictions.
                  Shares purchased on exercise of Options shall be subject to such
                  forfeiture conditions, rights of repurchase, rights of first refusal
                  and
                  other transfer restrictions as the Board may determine, subject
                  to the
                  requirements of Section 10. Such restrictions shall be set forth
                  in the
                  applicable Stock Option Agreement and shall apply in addition to
                  any
                  restrictions otherwise applicable to holders of Shares
                  generally.

              

      

       

      
        
          
          

        

        
          -
            6
            -

          
            

          

        

        
          
          

        

      

       

      
        	
                7.7

              	
                Transferability
                  of Options.
                  During an Optionee’s lifetime, his or her Options shall be exercisable
                  only by the Optionee or by the Optionee’s guardian or legal
                  representatives, and shall not be transferable other than by beneficiary
                  designation, will or the laws of descent and distribution. Notwithstanding
                  the foregoing, however, to the extent permitted by the Board in
                  its sole
                  discretion, an NSO may be transferred by the Optionee to a revocable
                  trust
                  or to one or more family members or a trust established for the
                  benefit of
                  the Optionee and/or one or more family members to the extent permitted
                  by
                  section 260.140.41(c) of Title 10 of the California Code of Regulations
                  and Rule 701 of the Securities Act.

              

      

       

      
        	
                7.8

              	
                Exercise
                  of Options on Termination of Service.
                  Each Option shall set forth the extent to which the Optionee shall
                  have
                  the right to exercise the Option following termination of the Optionee’s
                  Service. Each Stock Option Agreement shall provide the Optionee
                  with the
                  right to exercise the Option following the Optionee’s termination of
                  Service during the Option term, to the extent the Option was exercisable
                  for vested Shares upon termination of Service, for at least thirty
                  (30)
                  days if termination of Service is due to any reason other than
                  cause,
                  death or Disability, and for at least six (6) months after termination
                  of
                  Service if due to death or Disability (but in no event later than
                  the
                  expiration of the Option term). If the Optionee’s Service is terminated
                  for cause, the Stock Option Agreement may provide that the Optionee’s
                  right to exercise the Option terminates immediately on the effective
                  date
                  of the Optionee’s termination. To the extent the Option was not
                  exercisable for vested Shares upon termination of Service, the
                  Option
                  shall terminate when the Optionee’s Service terminates. Subject to the
                  foregoing, such provisions shall be determined in the sole discretion
                  of
                  the Board, need not be uniform among all Options issued pursuant
                  to the
                  Plan, and may reflect distinctions based on the reasons for termination
                  of
                  Service.

              

      

       

      
        	
                7.9

              	
                No
                  Rights as a Stockholder.
                  An Optionee, or a transferee of an Optionee, shall have no rights
                  as a
                  stockholder with respect to any Shares covered by the Option until
                  such
                  person becomes entitled to receive such Shares by filing a notice
                  of
                  exercise and paying the Exercise Price pursuant to the terms of
                  the
                  Option. No adjustments shall be made, except as provided in Section
                  9.

              

      

       

      
        	
                7.10

              	
                Modification,
                  Extension and Renewal of Options.
                  Within the limitations of the Plan, the Board may modify, extend
                  or renew
                  outstanding Options or may accept the cancellation of outstanding
                  Options
                  (to the extent not previously exercised), whether or not granted
                  hereunder, in return for the grant of new Options for the same
                  or a
                  different number of Shares and at the same or a different Exercise
                  Price.
                  The foregoing notwithstanding, no modification of an Option shall,
                  without
                  the consent of the Optionee, materially impair his or her rights
                  or
                  increase the Optionee’s obligations under such
                  Option.

              

      

       

      SECTION
        8. PAYMENT
        FOR SHARES.

       

      
        	
                8.1

              	
                General.
                  The entire Purchase Price or Exercise Price of Shares issued under
                  the
                  Plan shall be payable in cash, cash equivalents or one of the other
                  forms
                  provided in this Section
                  8.

              

      

       

      
        
          
          

        

        
          -
            7
            -

          
            

          

        

        
          
          

        

      

       

      
        	
                8.2

              	
                Surrender
                  of Stock.
                  To the extent permitted by the Board in its sole discretion, payment
                  may
                  be made in whole or in part by surrendering (in good form for transfer),
                  or attesting to ownership of, Shares which have already been owned
                  by the
                  Optionee; provided, however, that payment may not be made in such
                  form if
                  such action would cause the Company to recognize any (or additional)
                  compensation expense with respect to the Option for financial reporting
                  purposes. Such Shares shall be valued at their Fair Market Value
                  on the
                  date of Option
                  exercise.

              

      

       

      
        	
                8.3

              	
                Services
                  Rendered.
                  As determined by the Board in its discretion, Shares may be awarded
                  under
                  the Plan in consideration of past or future services rendered to
                  the
                  Company, a Parent or
                  Subsidiary.

              

      

       

      
        	
                8.4

              	
                Promissory
                  Notes.
                  To the extent permitted by the Board in its sole discretion, payment
                  may
                  be made in whole or in part with a full-recourse promissory note
                  executed
                  by the Optionee or Purchaser. The interest rate payable under the
                  promissory note shall not be less than the minimum rate required
                  to avoid
                  the imputation of income for U.S. federal income tax purposes.
                  Shares
                  shall be pledged as security for payment of the principal amount
                  of the
                  promissory note, and interest thereon; provided that if the Optionee
                  or
                  Purchaser is a Consultant, such note must be collateralized with
                  such
                  additional security to the extent required by applicable laws.
                  In no event
                  shall the stock certificate(s) representing such Shares be released
                  to the
                  Optionee or Purchaser until such note is paid in full. Subject
                  to the
                  foregoing, the Board shall determine the term, interest rate and
                  other
                  provisions of the note.

              

      

       

      
        	
                8.5

              	
                Exercise/Sale.
                  To the extent permitted by the Board in its sole discretion, and
                  if a
                  public market for the Shares exists, payment may be made in whole
                  or in
                  part by delivery (on a form prescribed by the Company) of an irrevocable
                  direction to a securities broker approved by the Company to sell
                  Shares
                  and to deliver all or part of the sale proceeds to the Company
                  in payment
                  of all or part of the Exercise Price and any withholding
                  taxes.

              

      

       

      
        	
                8.6

              	
                Exercise/Pledge.
                  To the extent permitted by the Board in its sole discretion, and
                  if a
                  public market for the Shares exists, payment may be made in whole
                  or in
                  part by delivery (on a form prescribed by the Company) of an irrevocable
                  direction to a securities broker or lender approved by the Company
                  to
                  pledge Shares, as security for a loan, and to deliver all or part
                  of the
                  loan proceeds to the Company in payment of all or part of the Exercise
                  Price and any withholding
                  taxes.

              

      

       

      
        	
                8.7

              	
                Other
                  Forms of Payment1.
                  To the extent permitted by the Board in its sole discretion, payment
                  may
                  be made in any other form that is consistent with applicable laws,
                  regulations and rules.

              

      

       

      SECTION
        9. ADJUSTMENT
        OF SHARES.

       

      
        	
                9.1

              	
                General.
                  In the event of a subdivision of the outstanding Stock, a declaration
                  of a
                  dividend payable in Shares, a declaration of an extraordinary dividend
                  payable in a form other than Shares in an amount that has a material
                  effect on the Fair Market Value of the Stock, a combination or
                  consolidation of the outstanding Stock into a lesser number of
                  Shares, a
                  recapitalization, a spin-off, a reclassification, or a similar
                  occurrence,
                  the Board shall make appropriate adjustments to the following:
                  (i) the number of Shares available for future awards under Section
                  5;
                  (ii) the number of Shares covered by each outstanding Option;
                  (iii) the Exercise Price under each outstanding Option; and
                  (iv) the price of Shares subject to the Company’s right of
                  repurchase.

              

      

       

      
        
          
          

        

        
          -
            8
            -

          
            

          

        

        
          
          

        

      

       

      
        	
                9.2

              	
                Dissolution
                  or Liquidation.
                  To the extent not previously exercised or settled, Options shall
                  terminate
                  immediately prior to the dissolution or liquidation of the
                  Company.

              

      

       

      
        	
                9.3

              	
                Mergers
                  and Consolidations.
                  In the event that the Company is a party to a merger or other
                  consolidation, or in the event of a transaction providing for the
                  sale of
                  all or substantially all of the Company’s stock or assets, outstanding
                  Options shall be subject to the agreement of merger, consolidation
                  or
                  sale. Such agreement may provide for one or more of the following:
                  (i) the continuation of the outstanding Options by the Company, if
                  the Company is a surviving corporation; (ii) the assumption of the
                  Plan and outstanding Options by the surviving corporation or its
                  parent;
                  (iii) the substitution by the surviving corporation or its parent of
                  options with substantially the same terms for such outstanding
                  Options;
                  (iv) immediate exercisability of such outstanding Options followed by
                  the cancellation of such Options; or (v) settlement of the intrinsic
                  value of the outstanding Options (whether or not then exercisable)
                  in cash
                  or cash equivalents or equity (including cash or equity subject
                  to
                  deferred vesting and delivery consistent with the vesting restrictions
                  applicable to such Options or the underlying Shares) followed by
                  the
                  cancellation of such Options; in each case without the Optionee’s
                  consent.

              

      

       

      
        	
                9.4

              	
                Reservation
                  of Rights.
                  Except as provided in this Section 9, an Optionee or offeree shall
                  have no
                  rights by reason of any subdivision or consolidation of shares
                  of stock of
                  any class, the payment of any dividend or any other increase or
                  decrease
                  in the number of shares of stock of any class. Any issuance by
                  the Company
                  of shares of stock of any class, or securities convertible into
                  shares of
                  stock of any class, shall not affect, and no adjustment by reason
                  thereof
                  shall be made with respect to, the number or Exercise Price of
                  Shares
                  subject to an Option. The grant of an Option pursuant to the Plan
                  shall
                  not affect in any way the right or power of the Company to make
                  adjustments, reclassifications, reorganizations or changes of its
                  capital
                  or business structure, to merge or consolidate or to dissolve,
                  liquidate,
                  sell or transfer all or any part of its business or
                  assets.

              

      

       

      SECTION
        10. REPURCHASE
        RIGHTS.

       

      
        	
                10.1

              	
                Company’s
                  Right To Repurchase Shares.
                  The Company shall have the right to repurchase Shares that have
                  been
                  acquired through an award or sale of Shares or exercise of an Option
                  upon
                  termination of the Purchaser’s or Optionee’s Service if provided in the
                  applicable Restricted Share Agreement or Stock Option Agreement.
                  The Board
                  in its sole discretion shall determine when the right to repurchase
                  shall
                  lapse as to all or any portion of the Shares, and may, in its discretion,
                  provide for accelerated vesting in the event of a Change in Control
                  or
                  other events; provided, however, that the right to repurchase shall
                  lapse
                  as to all of the Shares issued to an Outside Director for service
                  as an
                  Outside Director in the event of Change in
                  Control.

              

      

       

      
        
          
          

        

        
          -
            9
            -

          
            

          

        

        
          
          

        

      

       

      SECTION
        11. WITHHOLDING
        TAXES.

       

      
        	
                11.1

              	
                General.
                  An Optionee or Purchaser or his or her successor shall pay, or
                  make
                  arrangements satisfactory to the Board for the satisfaction of,
                  any
                  federal, state, local or foreign withholding tax obligations that
                  may
                  arise in connection with the Plan. The Company shall not be required
                  to
                  issue any Shares or make any cash payment under the Plan until
                  such
                  obligations are
                  satisfied.

              

      

       

      
        	
                11.2

              	
                Share
                  Withholding.
                  The Board may permit an Optionee or Purchaser to satisfy all or
                  part of
                  his or her withholding or income tax obligations by having the
                  Company
                  withhold all or a portion of any Shares that would otherwise be
                  issued to
                  him or her upon exercise of an Option, or by surrendering all or
                  a portion
                  of any Shares that he or she previously acquired; provided, however,
                  that
                  in no event may an Optionee or Purchaser surrender Shares in excess
                  of the
                  legally required withholding amount based on the minimum statutory
                  withholding rates for federal and state tax purposes that apply
                  to
                  supplemental taxable income. Such Shares shall be valued at their
                  Fair
                  Market Value on the date when taxes otherwise would be withheld
                  in cash.
                  Any payment of taxes by assigning Shares to the Company may be
                  subject to
                  restrictions, including any restrictions required by rules of any
                  federal
                  or state regulatory body or other authority. All elections by Optionees
                  or
                  Purchasers to have Shares withheld for this purpose shall be made
                  in such
                  form and under such conditions as the Board may deem necessary
                  or
                  advisable.

              

      

       

      
        	
                11.3

              	
                Cashless
                  Exercise/Pledge.
                  The Board may provide that if Company Shares are publicly traded
                  at the
                  time of exercise, arrangements may be made to meet the Optionee’s or
                  Purchaser’s withholding obligation by cashless exercise or
                  pledge.

              

      

       

      
        	
                11.4

              	
                Other
                  Forms of Payment.
                  The Board may permit such other means of tax withholding as it
                  deems
                  appropriate.

              

      

       

      SECTION
        12. SECURITIES
        LAW REQUIREMENTS.

       

      
        	
                12.1

              	
                General.
                  Shares shall not be issued under the Plan unless the issuance and
                  delivery
                  of such Shares complies with (or is exempt from) all applicable
                  requirements of law, including (without limitation) the Securities
                  Act,
                  the rules and regulations promulgated thereunder, state securities
                  laws
                  and regulations, and the regulations of any stock exchange or other
                  securities market on which the Company’s securities may then be
                  listed.

              

      

       

      
        	
                12.2

              	
                Dividend
                  Rights.
                  A
                  Restricted Share Agreement may require that the holders of Shares
                  invest
                  any cash dividends received in additional Shares. Such additional
                  Shares
                  shall be subject to the same conditions and restrictions as the
                  award with
                  respect to which the dividends were
                  paid.

              

      

       

      SECTION
        13. NO
        RETENTION RIGHTS.

       

      No
        provision of the Plan, or any right or Option granted under the Plan, shall
        be
        construed to give any Optionee or Purchaser any right to become an Employee,
        to
        be treated as an Employee, or to continue in Service for any period of time,
        or
        restrict in any way the rights of the Company (or Parent or subsidiary to
        whom
        the Optionee or Purchaser provides Service), which rights are expressly
        reserved, to terminate the Service of such person at any time and for any
        reason, with or without cause, without thereby incurring any liability to
        him or
        her.

       

      
        
          
          

        

        
          -
            10
            -

          
            

          

        

        
          
          

        

      

       

      SECTION
        14. DURATION
        AND AMENDMENTS.

       

      
        	
                14.1

              	
                Term
                  of the Plan.
                  The Plan, as set forth herein, shall become effective on the date
                  of its
                  adoption by the Board, subject to the approval of the Company’s
                  stockholders. In the event that the stockholders fail to approve
                  the Plan
                  within twelve (12) months after its adoption by the Board, any
                  grants,
                  exercises or sales that have already occurred under the Plan shall
                  be
                  rescinded, and no additional grants, exercises or sales shall be
                  made
                  under the Plan after such date. The Plan shall terminate automatically
                  ten
                  (10) years after its adoption by the Board. The Plan may be terminated
                  on
                  any earlier date pursuant to Section 14.2
                  below.

              

      

       

      
        	
                14.2

              	
                Right
                  to Amend or Terminate the Plan.
                  The Board may amend, suspend, or terminate the Plan at any time
                  and for
                  any reason. An amendment of the Plan shall not be subject to the
                  approval
                  of the Company’s stockholders unless it (i) increases the number of
                  Shares available for issuance under the Plan (except as provided
                  in
                  Section 9) or (ii) materially changes the class of persons who are
                  eligible for the grant of Options or the award or sale of Shares.
                  

              

      

       

      
        	
                14.3

              	
                Effect
                  of Amendment or Termination.
                  No Shares shall be issued or sold under the Plan after the termination
                  thereof, except upon exercise of an Option granted prior to such
                  termination. The termination of the Plan, or any amendment thereof,
                  shall
                  not adversely affect any Shares previously issued or any Option
                  previously
                  granted under the Plan without the holder’s
                  consent.

              

      

       

      SECTION
        15. EXECUTION.

       

      To
        record
        the adoption of the Plan by the Board on August ___, 2007, effective on such
        date, the Company has caused its authorized officer to execute the
        same.

       

      
        	 	 	 
	 	
                Pacific
                  Restaurant Holdings, Inc.

              
	 
 	 
 	 
 
	
              	By:  	
              
	 	
                

                Name:
                  John M. Creed

              
	 	
                Title:
                  Chairman and Chief Executive
                  Officer

              

      

       

      
        
          
          

        

        
          -
            11
            -

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