Document:

Unassociated Document

    Exhibit
      10.1

     

    JOINT
      VENTURE AND STRATEGIC INVESTMENT AGREEMENT

     

    

    This
      Joint Venture and Strategic Investment Agreement ("Agreement")
      is
      made and entered into this 13th day of November, 2007 (the "Effective
      Date"),
      by
      and between Cyberkinetics Neurotechnology Systems, Inc., a Delaware corporation
      with its principal offices at 100 Foxborough Blvd., Foxborough MA 02035
      ("CYKN")
      and
      NEUROMetrix, Inc., a Delaware corporation with its principal offices at 62
      Fourth Avenue, Waltham, MA 02451("NURO").

     

    Preliminary
      Statement

     

    This
      Agreement sets forth the agreements which have been reached between the parties
      hereto with respect to (a) a summary of the principal terms and conditions
      of a joint venture relationship to be established by CYKN and NURO, (b) the
      terms and conditions of NURO's strategic purchase of (i) shares of common
      stock, par value of $0.001 per share, of CYKN ("Common
      Stock")
      and
      (ii) a warrant to purchase Common Stock, and (c) certain other related
      matters.

     

    NOW,
      THEREFORE, in consideration of the mutual covenants contained herein and other
      good and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, CYKN and NURO hereby agree as follows:

     

    1.  Joint
      Venture.

     

    (a)  Establishment
      of Joint Venture.
      Immediately after the execution and delivery of this Agreement, CYKN and NURO
      each agree to cause its respective representatives to enter into good faith
      negotiations regarding the establishment of a joint venture (the “Joint
      Venture”).
      The
      Joint Venture will be created by the parties hereto by organizing a new entity
      under the laws of the State of Delaware which will be jointly owned by them
      (“Newco”),
      with
      each of CYKN and NURO owning 50% of the equity interests in Newco. The purpose
      of the Joint Venture will be to develop and commercialize products for the
      treatment of peripheral nerve injury and disease (the “New
      Products”)
      based
      on CYKN’s intellectual property related to CYKN’s Oscillating Field StimulatorTM
device (the “OFSTM
      Device”)
      and
      such other intellectual property as may be contributed to, or acquired or
      developed by, Newco. As consideration for their equity interests in the Joint
      Venture, (i) CYKN will contribute to Newco exclusive rights to the intellectual
      property related to the OFSTM Device for the treatment of peripheral nerve injury
      and disease and (ii) NURO will contribute to Newco over a two-year period an
      aggregate of up to Two Million Dollars ($2,000,000) in cash and/or personnel,
      resources or other value for the initial development efforts of Newco (the
      “Initial
      Contributions”).
      All
      capital and other resources required by Newco after the Initial Contributions
      will be contributed by CYKN and NURO on an equal basis and all expenditures
      of
      Newco will be made in a manner consistent with an annual budget mutually agreed
      upon by CYKN and NURO. The rights, benefits, obligations and liabilities of
      CYKN, NURO and Newco will be governed by the terms and conditions of a written
      agreement to be mutually agreed upon by the parties hereto (the “JV
      Agreement”),
      which
      the parties intend to enter into no later than ninety (90) days after the date
      of this Agreement. Under the JV Agreement, among other things, Newco shall
      be
      responsible for satisfying any royalty obligations of CYKN to any third party
      arising out of the activities of Newco. 

     

    
      
        
        

      

      
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    (b)  Distribution
      Right of First Negotiation.
      Commencing on the earlier of (i) December 31, 2009 or (ii) the date upon which
      the first New Product of Newco is available for commercial distribution, and
      for
      the 90-day period immediately thereafter, the parties shall enter into good
      faith negotiations regarding the terms of, and the definitive agreements
      required to consummate, a mutually agreed upon exclusive arrangement for NURO
      to
      commercialize and distribute anywhere in North America, and if mutually agreed
      upon in other parts of the world, any or all New Products.

     

    2.  Right
      of First Negotiation - the OFSTM Device.
      In the
      event that prior to December 31, 2008 (a) CYKN receives approval from the United
      States Food & Drug Administration for the use of the OFSTM Device in the
      treatment of spinal cord injuries under the Humanitarian Device Exemption;
      (b)
      CYKN desires to grant distribution rights with respect to the OFSTM Device used
      for treatment of spinal cord injuries or the assets related to such OFSTM Device
      to another party or (c) CYKN desires to transfer some or all of its rights,
      title or interest in the OFSTM Device used for treatment of spinal cord injuries
      or the assets related to such OFSTM Device to another party (each, an
“OFS
      Trigger Event”),
      CYKN
      shall, within five (5) days of the occurrence of such OFS Trigger Event, provide
      a written notice describing the occurrence of such OFS Trigger Event and, in
      the
      case of an OFS Trigger Event described in (b) or (c) above, the rights
      (including rights to any tangible or intangible property) it desires to grant
      or
      transfer (an “OFS
      Negotiation Notice”).
      Upon
      receipt of an OFS Negotiation Notice, NURO shall have a ten (10) day period
      in
      which to determine whether it desires to negotiate for, in the case of an OFS
      Trigger Event described in clause (a) or (b) of such term, the exclusive right
      to commercialize and distribute the OFSTM Device anywhere in North America or, in
      the case of an OFS Trigger Event described in clause (c) of such term, the
      acquisition of the rights described in the OFS Negotiation Notice (in either
      case, the “OFS
      Assets”),
      and
      to deliver to CYKN a non-binding term sheet (the “OFS
      Term Sheet”)
      proposing the terms on which NURO would be willing to enter into such a
      transaction. In the event that NURO delivers an OFS Term Sheet, the parties
      shall enter into good faith negotiations regarding the terms of, and the
      definitive documents required to consummate, the transaction described in the
      OFS Term Sheet. In the event that the parties are unable to enter into a
      definitive agreement for a transaction within ninety (90) days of the date
      on
      which CYKN delivers the OFS Negotiation Notice to NURO, then CYKN shall be
      free
      to transfer the OFS Assets to a third party on terms, in the aggregate, no
      more
      favorable to the third party than those set forth on the OFS Term Sheet during
      its negotiations with CYKN or subsequently offered by NURO during its
      negotiations with CYKN. In the event that NURO does not timely provide an OFS
      Term Sheet to CYKN, then CYKN shall be free to license or transfer the OFS
      Assets to a third party on any terms acceptable to CYKN. All rights of NURO
      under this Section
      2
      shall
      expire on December 31, 2008 if no OFS Trigger Event shall occur prior to such
      date. If any OFS Trigger Event shall occur prior to December 31, 2008, the
      parties shall remain obligated to fulfill their obligations hereunder with
      respect to such OFS Trigger Event even if the ninety (90) day period described
      above shall extend beyond December 31, 2008.

     

    3.  Right
      of First Negotiation Regarding a Change of Control Transaction.
      In the
      event that prior to December 31, 2008 the Board of Directors of CYKN determines
      that it is in the best interests of CYKN to initiate any process (a
      "COC
      Trigger Event")
      to
      sell all or substantially all of the assets of CYKN, whether by way or merger
      or
      consolidation, stock purchase, asset sale or otherwise, or otherwise engage
      in
      any transaction (other than any transaction involving the offer or sale of
      securities of CYKN for the purpose of raising capital for CYKN) in which holders
      of CYKN's voting securities immediately prior to such transaction will not,
      directly or indirectly, continue to hold as least a majority of the outstanding
      voting securities of CYKN (each of the events described in this subsection,
      a
      "Change
      of Control Transaction"),
      CYKN
      shall, within five (5) days of the occurrence of such COC Trigger Event, provide
      a written notice describing the occurrence of such COC Trigger Event (a
      "COC
      Negotiation Notice").
      Upon
      receipt of COC Negotiation Notice, NURO shall have a ten (10) day period in
      which to determine whether it desires to negotiate a Change of Control
      Transaction with CYKN, and to deliver to CYKN a non binding term sheet (the
      "COC
      Term Sheet")
      proposing the terms on which NURO would be willing to consummate the Change
      of
      Control Transaction. In the event that NURO delivers a COC Term Sheet, the
      parties shall enter into good faith negotiations regarding the terms of, and
      the
      definitive documents required to consummate, a Change of Control Transaction.
      In
      the event that the parties are unable to enter into a definitive agreement
      for a
      Change of Control Transaction within thirty (30) days of the date on which
      CYKN
      delivers the COC Negotiation Notice to NURO, then CYKN shall be free to enter
      into a Change of Control Transaction with a third party on terms, in the
      aggregate, no more favorable to the third party than those set forth on the
      COC
      Term Sheet or subsequently offered by NURO during its negotiations with CYKN.
      In
      the event that NURO does not timely provide a COC Term Sheet to CYKN, then
      CYKN
      shall be free to enter into a Change of Control Transaction with a third party
      on any terms acceptable to CYKN. All rights of NURO under this Section
      3
      shall
      expire on December 31, 2008 if no COC Trigger Event shall occur prior to such
      date. If a COC Trigger Event shall occur prior to December 31, 2008, the parties
      shall remain obligated to fulfill their obligations hereunder with respect
      to
      such COC Trigger Event even if the thirty (30) day period described above shall
      extend beyond December 31, 2008.

     

    
      
        
        

      

      
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    4.  NURO
      Investment.

     

    (a)  Purchase
      of Common Stock.
      Simultaneously with the execution and delivery of this Agreement, NURO hereby
      purchases from CYKN and CYKN hereby issues and sells to NURO, 5,434,783 shares
      of Common Stock (collectively, the "CYKN
      Shares")
      for an
      aggregate purchase price of Two Million Four Hundred Ninety-Five Thousand
      Dollars ($2,495,000) (the "CYKN
      Shares Consideration").
      

     

    (b)  Purchase
      of Warrant.
      Simultaneously with the execution and delivery of this Agreement, NURO hereby
      purchases from CYKN and CYKN hereby issues and sells to NURO a Warrant to
      Purchase Common Stock, a copy of which is attached hereto and incorporated
      herein as Exhibit
      A
      (the
      "Warrant"),
      whereby NURO has the right to purchase, at $.46 per share, 2,717,391 shares
      of
      Common Stock (collectively,
      the "Warrant
      Shares")
      for an
      aggregate purchase price of Five Thousand Dollars ($5,000) (the "Warrant
      Consideration";
      and
      together with the CYKN Shares Consideration the "Original
      Investment Amount").
      No
      party shall take an inconsistent position in any tax filing with respect to
      the
      allocation of the Original Investment Amount with respect to the CYKN shares
      and
      the Warrant as provided for herein. NURO shall, at its option, be entitled
      to
      exercise the Warrant at any time (in whole or in part) commencing on the date
      of
      this Agreement and continuing thereafter until the fifth anniversary of the
      date
      of this Agreement (the "Warrant
      Exercise Period");
      provided, however, in the event that CYKN receives approval from the United
      States Food & Drug Administration for the use and sale of the OFSTM Device
      under the Humanitarian Device Exemption at any time during the Warrant Exercise
      Period, NURO shall be obligated to exercise the Warrant in full within ten
      (10)
      days after receipt of written notice from CYKN of the receipt of such
      approval.

     

    5.  Representations
      and Warranties of CYKN.
      CYKN
      hereby makes the representations and warranties set forth below to
      NURO:

     

    (a)  Subsidiaries.
      CYKN
      owns, directly or indirectly, all of the capital stock or other equity interests
      of each subsidiary of CYKN free and clear of any liens (other than the lien
      in
      favor of General Electric Capital Corporation in connection with financial
      accommodations provided by it to CYKN), and all the issued and outstanding
      shares of capital stock of each subsidiary are validly issued and are fully
      paid, non-assessable and free of preemptive and similar rights to subscribe
      for
      or purchase securities. For purposes of this Agreement, this Agreement, the
      Warrant, the Registration Rights Agreement (as hereinafter defined) and any
      other documents or agreements executed in connection with the transactions
      contemplated hereunder are collectively referred to herein as the "Transaction
      Documents".

     

    
      
        
        

      

      
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    (b)  Organization
      and Qualification.
      CYKN
      and each subsidiary of CYKN is an entity duly incorporated or otherwise
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite power and authority to own and use its properties and assets and
      to
      carry on its businesses currently conducted. Neither CYKN nor any subsidiary
      of
      CYKN is in violation or default of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. CYKN and each subsidiary of CYKN is duly qualified to conduct
      business and is in good standing as a foreign corporation or other entity in
      each jurisdiction in which the nature of the business conducted or property
      owned by it makes such qualification necessary, except where the failure to
      be
      so qualified or in good standing, as the case may be, would not result in (i)
      a
      material adverse effect on the legality, validity or enforceability of any
      Transaction Documents, (ii) a material adverse effect on the results of
      operations, assets, business, prospects or financial condition of CYKN and
      the
      subsidiaries of CYKN, taken as a whole, or (iii) a material adverse effect
      on
      CYKN's ability to perform in any material respect on a timely basis its
      obligations under any of the Transaction Documents (any of (i), (ii) or (iii),
      a
      "Material
      Adverse Effect")
      and no
      proceeding has been instituted in any such jurisdiction revoking, limiting
      or
      curtailing or seeking to revoke, limit or curtail such power and authority
      or
      qualification.

     

    (c)  Authorization;
      Enforcement.
      CYKN
      has the requisite corporate power and authority to enter into and to consummate
      the transactions contemplated by each of the Transaction Documents and otherwise
      to carry out its obligations thereunder. The execution and delivery of each
      of
      the Transaction Documents by CYKN and the consummation by it of the transactions
      contemplated thereby have been duly authorized by all necessary corporate action
      on the part of CYKN and no further action is required by CYKN in connection
      therewith other than in connection with the Required Approvals (as hereinafter
      defined). Each of the Transaction Documents has been (or upon delivery will
      have
      been) duly executed by CYKN and, when delivered in accordance with the terms
      hereof, will constitute the valid and binding obligation of CYKN enforceable
      against CYKN in accordance with its terms except (i) as limited by applicable
      bankruptcy, insolvency, reorganization, moratorium and other laws of general
      application affecting enforcement of creditors' rights generally, (ii) as
      limited by laws relating to the availability of specific performance, injunctive
      relief or other equitable remedies and (iii) insofar as indemnification and
      contribution provisions may be limited by applicable law. 

     

    (d)  No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by CYKN, the
      issuance and sale of the CYKN Shares and the Warrant and the consummation by
      CYKN of the other transactions contemplated thereby do not and will not
      (i) conflict with or violate any provision of CYKN or any CYKN subsidiary's
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents, or (ii) conflict with, or constitute a default (or an event
      that with notice or lapse of time or both would become a default) under, result
      in the creation of any lien upon any of the properties or assets of CYKN or
      any
      subsidiary of CYKN, or give to others any rights of termination, amendment,
      acceleration or cancellation (with or without notice, lapse of time or both)
      of,
      any agreement, credit facility, debt or other instrument (evidencing a company
      or subsidiary debt or otherwise) or other understanding to which CYKN or any
      subsidiary of CYKN is a party or by which any property or asset of CYKN or
      any
      subsidiary of CYKN is bound or affected, or (iii) subject to the required
      approvals, conflict with or result in a violation of any law, rule, regulation,
      order, judgment, injunction, decree or other restriction of any court or
      governmental authority to which CYKN or any subsidiary of CYKN is subject
      (including federal and state securities laws and regulations), or by which
      any
      property or asset of CYKN or any subsidiary of CYKN is bound or affected; except
      in the case of each of clauses (ii) and (iii), such as would not result in
      a
      Material Adverse Effect.

     

    
      
        
        

      

      
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    (e)  Filings,
      Consents and Approvals.
      CYKN is
      not required to obtain any consent, waiver, authorization or order of, give
      any
      notice to, or make any filing or registration with, any court or other federal,
      state, local or other governmental authority or other person in connection
      with
      the execution, delivery and performance by CYKN of the Transaction Documents,
      other than consents and approvals already obtained by CYKN and the filing of
      Form D with the United States Securities and Exchange Commission (the
      "Commission")
      and
      such other filings as are required to be made under applicable state securities
      laws (collectively, the "Required
      Approvals").

     

    (f)  Issuance
      of the Securities.
      The
      CYKN Shares, the Warrant and the Warrant Shares (collectively, the "Securities")
      are
      duly authorized and, when issued and paid for in accordance with the Transaction
      Documents, will be duly and validly issued, fully paid and nonassessable, free
      and clear of all liens imposed by CYKN other than restrictions on transfer
      provided for in the Transaction Documents (or as required under federal or
      applicable state securities laws). CYKN has reserved from its duly authorized
      capital stock the maximum number of shares of Common Stock issuable to NURO
      pursuant to this Agreement and the Warrant. 

     

    (g)  Capitalization.
      The
      authorized capital stock of CYKN consists of 100,000,000 shares of common stock,
      $0.001 par value per share, and 50,000,000 shares of undesignated preferred
      stock. As of the date hereof, there were 37,566,908 shares of common stock
      outstanding and no shares of preferred stock outstanding. In addition, there
      were outstanding options and warrants to purchase 14,779,815 shares of Common
      Stock. All of the outstanding shares of capital stock of CYKN are validly
      issued, fully paid and nonassessable, have been issued in compliance with all
      federal and state securities laws, and none of such outstanding shares was
      issued in violation of any preemptive rights or similar rights to subscribe
      for
      or purchase securities. No further approval or authorization of any stockholder,
      the Board of Directors of CYKN or others is required for the issuance and sale
      of the CYKN Shares or the Warrant. There are no stockholders agreements, voting
      agreements or other similar agreements with respect to CYKN's capital stock
      to
      which CYKN is a party or, to the knowledge of CYKN, between or among any of
      CYKN's stockholders. No anti-dilution or other similar rights will be triggered
      by the issuance of the Securities pursuant to this Agreement and the
      Warrant.

     

    (h)  Material
      Changes.
      Since
      June 30, 2007, (i) CYKN has not incurred any liabilities (contingent or
      otherwise) other than (A) trade payables and accrued expenses incurred in the
      ordinary course of business consistent with past practice and (B) liabilities
      not required to be reflected in the Financial Statements (as defined below)
      pursuant to GAAP, (ii) CYKN has not altered its method of accounting, and (iii)
      CYKN has not declared or made any dividend or distribution of cash or other
      property to its stockholders or purchased, redeemed or made any agreements
      to
      purchase or redeem any shares or its capital stock. 

     

    (i)  Litigation.
      There
      is no action, suit, inquiry, notice of violation, proceeding or investigation
      pending or, to the knowledge of CYKN, threatened against or affecting CYKN,
      any
      subsidiary of CYKN or any of their respective properties before or by any court,
      arbitrator, governmental or administrative agency or regulatory authority
      (federal, state, county, local or foreign) (collectively, an "Action")
      which
      (i) adversely affects or challenges the legality, validity or enforceability
      of
      any of the Transaction Documents or the Common Stock or (ii) could, if there
      were an unfavorable decision, result in a Material Adverse Effect. Neither
      CYKN
      nor any subsidiary of CYKN, nor any current director or officer thereof, is
      or
      has been the subject of any action involving a claim of violation of or
      liability under federal or state securities laws or a claim of breach of
      fiduciary duty. There has not been, and to the knowledge of CYKN, there's not
      pending or contemplated, any investigation by the Commission involving CYKN
      or
      any current director or officer of CYKN.

     

    
      
        
        

      

      
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    (j)  Permits.
      CYKN
      and each subsidiary of CYKN possess all certificates, authorizations and permits
      issued by the appropriate federal, state, local or foreign regulatory
      authorities necessary to conduct their respective businesses, except where
      the
      failure to possess such permits would not result in a Material Adverse Effect
      ("Material
      Permits"),
      and
      neither CYKN nor any subsidiary of CYKN has received any written notice of
      proceedings relating to the revocation or modification of any Material
      Permit.

     

    (k)  Patents
      and Trademarks.
      CYKN
      and each Subsidiary of CYKN have, or have rights to use, all patents, patent
      applications, trademarks, trademark applications, service marks, trade names,
      copyrights, licenses and other similar rights necessary or material for use
      in
      connection with their respective businesses and which the failure to so have
      would have a Material Adverse Effect (collectively, the "Intellectual
      Property Rights").
      Neither CYKN nor any subsidiary of CYKN has received a written notice that
      the
      Intellectual Property Rights used by CYKN or any subsidiary of CYKN violates
      or
      infringes upon the rights of any other individual, partnership corporation,
      limited liability company or other entity ("Person").
      To
      the knowledge of CYKN, all such Intellectual Property Rights are enforceable
      and
      there is no existing infringement by any other Person of any of the Intellectual
      Property Rights. There is no claim, action or proceeding pending, or to the
      knowledge of CYKN threatened, against CYKN or any subsidiary of CYKN regarding
      its Intellectual Property Rights.

     

    CYKN
      is
      unaware of any facts or circumstances that would give rise to such foregoing
      infringements, claims, actions or proceedings. CYKN and each subsidiary of
      CYKN
      has taken reasonable security measures to protect the secrecy and
      confidentiality of their Intellectual Property Rights.

     

    (l)  Certain
      Fees.
      No
      brokerage or finder's fees or commissions are or will be payable by CYKN to
      any
      broker, financial advisor or consultant, finder, placement agent, investment
      banker, bank or other person with respect to the transactions contemplated
      by
      this Agreement except as previously disclosed to NURO in writing. Assuming
      NURO
      has not incurred any obligation as a result of its own independent actions,
      NURO
      shall have no obligation with respect to any fees or with respect to any claims
      made by or on behalf of other persons for fees of a type contemplated in this
      section that may be due in connection with the transactions contemplated by
      this
      Agreement.

     

    (m)  Private
      Placement.
      Assuming
      the accuracy of NURO's representations and warranties set forth in subsections
      (d), (e) and (f) of Section
      6
      hereof,
      no registration under the Securities Act of 1933, as amended (the "Securities
      Act")
      is
      required for the offer and sale of the CYKN Shares or the Warrant by CYKN to
      NURO as contemplated hereby.

     

    (n)  Investment
      Company.
      CYKN is
      not, and is not an affiliate of, and immediately after receipt of payment for
      the CYKN Shares and the Warrant, will not be or be an affiliate of, an
      "investment company" within the meaning of the Investment Company Act of 1940,
      as amended. CYKN shall conduct its business in manner so that it will not become
      subject to the Investment Company Act of 1940.

     

    
      
        
        

      

      
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    (o)  Registration
      Rights.
      Other
      than as contemplated hereby, registrations that CYKN was required to effectuate
      and keep effective in connection with the PIPE transactions that CYKN entered
      into in 2004, 2005 and 2006, and piggy-back registration rights granted to
      certain holders of warrants issued by CYKN, no person has any right to cause
      CYKN to effect the registration under the Securities Act of any securities
      of
      CYKN.

     

    (p)  Financial
      Statements.
      CYKN
      has made available to NURO its (a) audited balance sheets as at December 31,
      2005 and 2006 and related statements of operations, changes in stockholders
      equity and cash flows for the years ended December 31, 2005 and 2006, and (b)
      unaudited balance sheets as at June 30, 2007 and the related statement of
      operations, changes in stockholders equity and cash flows for the six months
      ended June 30, 2007 (collectively, the "Financial
      Statements").
      The
      Financial Statements (i) fairly present the financial position and results
      of
      operations of CYKN as of the dates indicated, and (ii) were prepared in
      accordance with United States generally accepted accounting principles
      ("U.S.
      GAAP")
      in
      effect as of the dates indicated (except that (x) unaudited financial statements
      may not be in accordance with U.S. GAAP because of the absence of footnotes
      normally contained therein, and (y) interim (unaudited) financials are subject
      to normal year-end audit adjustments).

     

    (q)  SEC
      Documents.
      For a
      period of two years prior to the date hereof, CYKN has timely filed all reports,
      schedules, forms, statements and other documents required to be filed by it
      with
      the SEC pursuant to the reporting requirements of the Securities Exchange Act
      of
      1934, as amended (the "1934
      Act")
      (all
      of the foregoing filed prior to the date hereof and all exhibits included
      therein and financial statements, notes and schedules thereto and documents
      incorporated by reference therein being hereinafter referred to as the
      "SEC
      Documents").
      CYKN
      has made available to NURO or their respective representatives true, correct
      and
      complete copies of the SEC Documents not available on the EDGAR system, if
      any.
      As of their respective dates, the SEC Documents complied in all material
      respects with the requirements of the 1934 Act and the rules and regulations
      of
      the SEC promulgated thereunder applicable to the SEC Documents, and none of
      the
      SEC Documents, at the time they were filed with the SEC, contained any untrue
      statement of a material fact or omitted to state a material fact required to
      be
      stated therein or necessary in order to make the statements therein, in the
      light of the circumstances under which they were made, not
      misleading.

     

    (r)  Internal
      Accounting and Disclosure Controls.
      CYKN
      and each subsidiary of CYKN maintains a system of internal accounting controls
      sufficient to provide reasonable assurance that (i) transactions are executed
      in
      accordance with management's general or specific authorizations, (ii)
      transactions are recorded as necessary to permit preparation of financial
      statements in conformity with U.S. GAAP and to maintain asset and liability
      accountability, (iii) access to assets or incurrence of liabilities is permitted
      only in accordance with management's general or specific authorization and
      (iv)
      the recorded accountability for assets and liabilities is compared with the
      existing assets and liabilities at reasonable intervals and appropriate action
      is taken with respect to any difference. Neither CYKN nor any of its
      subsidiaries have received any written notice from any accountant identifying
      a
      material weakness in any part of the system of internal accounting controls
      of
      CYKN or any of its subsidiaries that is not specified in CYKN's Annual Report
      on
      Form 10-KSB for the fiscal year ended December 31, 2006.

     

    (s)  Disclosure.
      All
      disclosure provided to NURO regarding CYKN, its business and the transactions
      contemplated hereby, furnished by or on behalf of CYKN is true and correct
      in
      all material reports and does not contain any untrue statement of a material
      fact or omit to state any material fact necessary in order to make the
      statements made therein, in the light of the circumstances under which they
      were
      made, not misleading.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    6.  Representations
      and Warranties of NURO.
      NURO
      hereby represents and warrants as of the date hereof to CYKN as
      follows:

     

    (a)  Organization.
      NURO is
      an entity duly organized, validly existing and in good standing under the laws
      of the jurisdiction of its organization with full right, corporate power and
      authority to carry on its business as currently conducted.

     

    (b)  Authorization;
      Enforcement.
      NURO
      has the requisite corporate power and authority to enter into and to consummate
      the transactions contemplated by each of the Transaction Documents and otherwise
      to carry out its obligations thereunder. The execution and delivery of each
      of
      the Transaction Documents by NURO and the consummation by it of the transactions
      contemplated thereby have been duly authorized by all necessary action on the
      part of NURO and no further action is required by NURO in connection therewith.
      Each of the Transaction Documents has been (or upon delivery will have been)
      duly executed by NURO and, when delivered in accordance with the terms hereof,
      will constitute the valid and binding obligation of NURO enforceable against
      NURO in accordance with its terms except (i) as limited by applicable
      bankruptcy, insolvency, reorganization, moratorium and other laws of general
      application affecting enforcement of creditors' rights generally, (ii) as
      limited by laws relating to the availability of specific performance, injunctive
      relief or other equitable remedies and (iii) insofar as indemnification and
      contribution provisions may be limited by applicable law. 

     

    (c)  No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by NURO and
      the
      consummation by NURO of the other transactions contemplated thereby do not
      and
      will not (i) conflict with or violate any provision of NURO's certificate
      or articles of incorporation, bylaws or other organizational or charter
      documents, or (ii) conflict with, or constitute a default (or an event that
      with
      notice or lapse of time or both would become a default) under, result in the
      creation of any lien upon any of the properties or assets of NURO or any
      subsidiary of NURO, or give to others any rights of termination, amendment,
      acceleration or cancellation (with or without notice, lapse of time or both)
      of,
      any agreement, credit facility, debt or other instrument (evidencing a company
      or subsidiary debt or otherwise) or other understanding to which NURO or any
      subsidiary of NURO is a party or by which any property or asset of NURO or
      any
      subsidiary of NURO is bound or affected, or (iii) conflict with or result in
      a
      violation of any law, rule, regulation, order, judgment, injunction, decree
      or
      other restriction of any court or governmental authority to which NURO or any
      subsidiary of NURO is subject (including federal and state securities laws
      and
      regulations), or by which any property or asset of NURO or any subsidiary of
      NURO is bound or affected; except in the case of each of clauses (ii) and (iii),
      such as would not result in a Material Adverse Effect.

     

    (d)  Investment
      Intent.
      NURO
      understands that the Securities are "restricted securities" and have not been
      registered under the Securities Act or any applicable state securities law
      and
      NURO is acquiring the CYKN Shares and the Warrant as principal for its own
      account and not with a view to or for distributing or reselling any CYKN Shares
      or the Warrant, or any part thereof, has no present intention of distributing
      any CYKN Shares or the Warrant and has no arrangement or understanding with
      any
      other persons regarding the distribution of any CYKN Shares or the
      Warrant.

     

    (e)  Purchaser
      Status.
      At the
      time NURO was offered the CYKN Shares, it was, and at the date hereof it is,
      an
      "accredited investor" as defined in Regulation D under the Securities
      Act.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (f)  Experience
      of NURO.
      NURO,
      either alone or together with its representatives, has such knowledge,
      sophistication and experience in business and financial matters so as to be
      capable of evaluating the merits and risks of the prospective investment in
      the
      CYKN Shares and the Warrant, and has so evaluated the merits and risks of such
      investment. NURO is able to bear the economic risk of an investment in the
      CYKN
      Shares and the Warrant and, at the present time, is able to afford a complete
      loss of such investment.

     

    (g)  Transfer
      Legends and Restrictions.
      NURO is
      aware that all certificates and instruments representing the Securities shall
      be
      imprinted with a conspicuous legend in substantially the following form:

     

    [THIS
      COMMON STOCK] [THIS WARRANT] HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
      OF
      1933, AS AMENDED, OR ANY STATE OR OTHER SECURITIES LAWS, ANY MAY NOT BE OFFERED,
      SOLD, TRANSFERRED, PLEDGED OR ASSIGNED EXCEPT (i) PURSUANT TO REGISTRATION
      UNDER
      APPLICABLE FEDERAL AND STATE SECURITIES LAWS, OR (ii) IF, IN THE OPINION OF
      COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, THE PROPOSED TRANSFER MAY BE
      EFFECTED IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS WITHOUT
      REGISTRATION.

     

    (h)  Information.
      NURO
      and its advisors have been afforded the opportunity to ask questions of, and
      receive answers from, CYKN concerning CYKN and the Securities.

     

    7.  Closing;
      Deliveries.

     

    (a)  Closing.
      The
      closing of the transactions provided for in Section
      2
      hereof
      (the "Closing")
      is
      being held simultaneously with the execution and delivery of this Agreement
      at
      the principal offices of CYKN in Foxborough, Massachusetts on the Effective
      Date
      (the "Closing
      Date").
      All
      of the agreements, documents, certificates, and instruments delivered by each
      party at the Closing are hereby deemed and acknowledged by the parties to be
      delivered simultaneously.

     

    (i)  Deliveries
      of CYKN.
      At the
      Closing (or on the Closing Date in the case of item (A) below), CYKN is
      delivering to NURO the following duly executed agreements, documents,
      certificates, instruments, and other items:

     

    (A)  A
      certificate for the CYKN Shares issued in the name of NURO;

     

    (B)  A
      counterpart to this Agreement, duly executed by CYKN;

     

    (C)  A
      counterpart to the Warrant, duly executed by CYKN; and

     

    (D)  A
      counterpart to the Registration Rights Agreement (as defined in Section
      13
      below),
      duly executed by CYKN.

     

    (ii)  Deliveries
      of NURO.
      At the
      Closing, NURO is delivering to CYKN the following duly executed agreements,
      documents, certificates, instruments, and other items (and is making the
      following payments):

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (A)  The
      Original Investment Amount, payable by NURO to CYKN by wire transfer of
      immediately available federal funds to an account designated in writing by
      CYKN
      on or prior to the Effective Date;

     

    (B)  A
      counterpart to this Agreement, duly executed by NURO;

     

    (C)  A
      counterpart to the Warrant, duly executed by NURO; and

     

    (D)  A
      counterpart to the Registration Rights Agreement (as defined in Section
      13
      below),
      duly executed by NURO.

     

    8.  Board
      Seat.
      Upon
      the Effective Date, the Board of Directors of CYKN will appoint one (1)
      representative designated by NURO (the "NURO
      Director"),
      who
      shall initially be Shai N. Gozani, M.D., Ph.D., to serve on the Board of
      Directors of CYKN (the "Board")
      until
      the later of the next annual meeting of stockholders of CYKN or the date on
      which his successor is duly elected and qualified, or his earlier resignation.
      Commencing on the Effective Date and until the date on which NURO ceases to
      own
      at least five percent (5%) of the then issued and outstanding shares of Common
      Stock, CYKN shall nominate and recommend that its stockholders elect, and
      otherwise use reasonable efforts to insure the election of, the NURO Director
      to
      the Board at each meeting of stockholders of CYKN at which directors are
      elected, unless such NURO Director's term does not expire at such meeting.
      In
      the event of the death, resignation or removal of the NURO Director, NURO shall
      be entitled to designate a successor who will be appointed to the Board upon
      the
      later of the date of such death, resignation or removal or two (2) business
      days
      following NURO's designation of such successor. CYKN shall indemnify the NURO
      Director to the fullest extent permitted by applicable law. CYKN will indemnify
      and advance expenses to, and enter into agreements regarding the same with,
      each
      NURO Director in such manner as to provide such NURO Directors the same rights
      and benefits as are accorded to the most favorably covered of CYKN's officers
      and directors during the same period of service. For so long as a NURO Director
      shall remain a director of CYKN and with respect to any such prior service
      by
      any NURO Director, in all policies of director and officer liability insurance,
      all such NURO Directors shall be named as an insured in such a manner as to
      provide such NURO Directors the same rights and benefits as are accorded to
      the
      most favorably insured of CYKN's officers and directors during the same period
      of service.

     

    9.  Market
      Stand-Off Agreement.
      NURO hereby
      agrees that it will not offer, sell, contract to sell or otherwise dispose
      of
      any shares of Common Stock of CYKN or any securities convertible into or
      exercisable or exchangeable for such Common Stock of CYKN, including, but not
      limited to the Warrant, during the period beginning from the Closing Date and
      continuing thereafter until the first anniversary of the Closing Date
      ("Market
      Standoff Period"),
      provided, that the foregoing shall not be interpreted to prevent exercise of
      the
      Warrant. CYKN may impose stop-transfer instructions to CYKN's transfer agent,
      subject to the foregoing restrictions until the end of such Market Standoff
      Period.

     

    10.  Confidentiality.
      Each of
      the parties hereto agrees that the terms and conditions of that certain
      Confidentiality Agreement, dated on or about August 30, 2007, previously entered
      into by and between the parties hereto (the "Confidentiality
      Agreement")
      are
      hereby incorporated into this Agreement and the parties shall remain bound
      by
      the restrictions set forth therein.

     

    11.  Right
      of Participation.
      

     

    (a)  Participation.
      CYKN
      shall, prior to any proposed issuance of securities by CYKN (including, without
      limitation, options, warrants or rights carrying any rights to purchase or
      receive any securities of CYKN), offer to NURO by written notice the right,
      for
      a period of ten (10) days, to purchase for cash at a price equal to the price
      or
      other consideration for which such securities are to be issued, a number of
      such
      securities so that, after giving effect to such issuance (and the conversion,
      exercise and exchange into or for (whether directly or indirectly) shares of
      Common Stock of all such securities that are so convertible, exercisable or
      exchangeable), NURO will continue to maintain its same proportionate equity
      ownership in CYKN as of the date of such notice (treating NURO, for the purpose
      of such computation, as the holder of the number of shares of Common Stock
      which
      would be issuable to it upon conversion, exercise and exchange of all securities
      (including but not limited to the Warrant) held by it on the date such offer
      is
      made, that are convertible, exercisable or exchangeable into or for (whether
      directly or indirectly) shares of Common Stock and assuming the like conversion,
      exercise and exchange of all such other securities held by other persons)
      (“Pro
      Rata Share”);
      provided, however, that the participation rights of NURO pursuant to this
Section
      11
      shall
      not apply to securities issued:

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (i)  upon
      conversion or exercise of any securities of CYKN;

     

    (ii)  as
      a
      stock dividend or upon any subdivision of shares of Common Stock, provided
      that
      the securities issued pursuant to such stock dividend or subdivision are limited
      to additional shares of Common Stock;

     

    (iii)  solely
      in
      consideration for the acquisition (whether by merger or otherwise) by CYKN
      or
      any of its subsidiaries of the stock (or other equity interests) or assets
      of
      any other entity; 

     

    (iv)  in
      connection with any offering of securities to be sold in an underwritten
      offering registered under the Securities Act; 

     

    (v)  in
      connection with any offer or sale of debt securities (including debt securities
      convertible into Common Stock and debt securities issued together with warrants
      to acquire Common Stock) in an aggregate amount of no more than $15,000,000
      in
      principal amount, but only if a definitive agreement for the sale and purchase
      of such securities is entered into on or before February 12, 2008; or

     

    (vi)  as
      the
      grant or issuance to directors, officers, employees or consultants of CYKN
      or
      any subsidiary pursuant to any equity compensation plan approved by the Board
      of
      Directors of CYKN.

     

    (b)  Mechanics.
      NURO
      may
      accept CYKN's offer as to the full Pro Rata Share of the securities required
      to
      be offered to it pursuant to this Section
      11
      or any
      lesser number, by written notice thereof given by it to CYKN prior to the
      expiration of the aforesaid ten (10) day period, in which event CYKN shall
      sell
      and NURO shall buy, upon the terms specified, not later than the time such
      securities are sold to third parties as contemplated by CYKN's offer, the number
      of securities agreed to be purchased by NURO.

     

    (c)  Termination.
      The
      rights of NURO under this Section
      11
      shall
      terminate and be of no further force or effect as of the date on which NURO
      ceases to own at least five percent (5%) of the then issued and outstanding
      shares of Common Stock. 

     

    12.  Public
      Announcements.
      The
      parties will not issue or make any reports, statements or releases to the public
      with respect to this Agreement or the transactions contemplated hereby without
      the consent of the other, which consent shall not be unreasonably withheld
      or
      delayed. If either party is unable to obtain the approval of its public report,
      statement or release from the other party and such report, statement or release
      is, in the opinion of legal counsel to such party, required by law in order
      to
      discharge such party's disclosure obligations, then such party may make or
      issue
      the legally required report, statement or release and promptly furnish the
      other
      party with a copy thereof.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    13.  Registration
      Rights.
      Simultaneously with the execution and delivery of this Agreement, the parties
      have entered into a Registration Rights Agreement providing for certain
      registration rights with respect to the CYKN Shares and Warrant Shares, a copy
      of which is attached hereto and incorporated herein as Exhibit
      B
      (the
      "Registration
      Rights Agreement").

     

    14.  Indemnification.
      CYKN
      will indemnify and hold NURO and its directors, officers, shareholders,
      partners, employees and agents (each, a “NURO
      Party”)
      harmless from any and all losses, liabilities, obligations, claims,
      contingencies, damages, costs and expenses, including all judgments, amounts
      paid in settlements, court costs and reasonable attorneys’ fees and costs of
      investigation that any such NURO Party may suffer or incur as a result of or
      relating to (a) any breach of any of the representations, warranties, covenants
      or agreements made by CYKN in this Agreement or in the Warrant or (b) any
      action instituted against NURO by any stockholder of CYKN who is not an
      affiliate of NURO, with respect to any of the transactions contemplated hereby
      (unless such action is based upon a breach of NURO’s representations, warranties
      or covenants under this Agreement or in any of the other Transaction Documents
      or based upon agreements NURO may have with any such stockholder or any
      violations or alleged violation by NURO of state or federal securities laws
      or
      any conduct by NURO which constitutes fraud, gross negligence, willful
      misconduct or malfeasance). If any action shall be brought against any NURO
      Party in respect of which indemnity may be sought pursuant to this Agreement,
      such NURO Party shall promptly notify the Company in writing, and CYKN shall
      have the right to assume the defense thereof with counsel of its own choosing.
      Any NURO Party shall have the right to employ separate counsel in any such
      action and participate in the defense thereof, but the fees and expenses of
      such
      counsel shall be at the expense of such NURO Party except to the extent that
      (i) the employment thereof and CYKN’s payment of such fees and expenses has
      been specifically authorized by CYKN in writing, (ii) CYKN has failed after
      a reasonable period of time to assume such defense and to employ counsel or
      (iii) in such action there is, in the reasonable opinion of such separate
      counsel, a material conflict on any material issue between the position of
      CYKN
      and the position of such NURO Party. CYKN will not be liable to any NURO Party
      under this Agreement (i) for any settlement by a NURO Party effected
      without CYKN’s prior written consent, which shall not be unreasonably withheld
      or delayed; or (ii) to the extent, but only to the extent that a loss,
      claim, damage or liability is attributable to NURO’s breach of any of the
      representations, warranties, covenants or agreements made by NURO in this
      Agreement or in the other Transaction Documents.

     

    15.  Miscellaneous.

     

    (a)  Further
      Acts.
      Each of
      the parties hereto acknowledge and agree that it is the intention of the parties
      to prepare, execute and deliver definitive and/or amended agreements and
      instruments giving effect to the transactions described in this Agreement.
      Upon
      execution hereof by the parties hereto, each of the parties hereto hereby agrees
      to cooperate and engage in good faith negotiations pertaining to the drafting,
      execution and delivery of and all documents necessary to effect the terms of
      this Agreement.

     

    (b)  Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the internal
      laws (and not the law of conflicts) of the Commonwealth of
      Massachusetts.

     

    (c)  Entire
      Agreement.
      This
      Agreement, the Warrant, the Confidentiality Agreement, the Registration Rights
      Agreement and the other agreements referenced herein constitute the entire
      agreement between the parties with respect to the subject matter contained
      herein.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (d)  Expenses.
      Each of
      the parties hereto will each bear their own respective costs and expenses
      incurred in connection with the transactions contemplated herein, including
      accountants' and attorneys' fees.

     

    (e)  Amendment.
      This
      Agreement may be amended or modified only by a written agreement executed by
      both
      of
      the parties hereto.

     

    (f)  Benefit
      of Parties; Assignability.
      All of
      the terms and conditions of this Agreement shall be binding upon and inure
      to
      the benefit of the parties and their respective successors and assigns;
      provided, however, neither of the parties hereto may delegate its respective
      responsibilities or assign its rights under this Agreement without the prior
      written consent of the other party, except that each party is expressly
      permitted to make an assignment of the Agreement in its entirety without the
      other party’s consent to affiliates of such party or to any entity that acquires
      all or substantially all of the assets of such party, whether in a merger,
      consolidation, reorganization, acquisition, sale or otherwise.

     

    (g)  Cooperation.
      The
      parties agree that after the Closing they will from time to time, upon the
      request of the other party and without further consideration, execute,
      acknowledge, and deliver in proper form any further instruments and take such
      other action as any other party may reasonably require to carry out effectively
      the transactions contemplated by this Agreement.

     

    (h)  Counterparts.
      This
      Agreement may be executed simultaneously in counterparts, each of which shall
      be
      deemed an original, but both of which together shall constitute one and the
      same
      instrument.

     

    (i)  Survival.
      The
      representations and warranties of the parties in this Agreement shall
      indefinitely survive the execution and delivery of this Agreement and the
      consummation of the transactions contemplated hereby.
      Each
      party may rely upon the representations and warranties of the other party in
      this Agreement notwithstanding any review or investigation carried out by or
      on
      behalf of such party. 

     

    

     

    [Remainder
      of Page Left Blank]

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    IN
      THE
      WITNESS WHEREOF, CYKN and NURO have executed and delivered this Agreement as
      of
      the Effective Date.

     

     

     

    
      	 	 	 
	 	CYBERKINETICS
              NEUROTECHNOLOGY SYSTEMS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Timothy
              Surgenor
	 	
              
Timothy
              Surgenor, President and
              CEO

    

    
       

       
         Address: 100 Foxborough Blvd., Suite 240

                  
        Foxborough,
        MA 02035

    

     

    
       

      
        	 	 	 
	 	NEUROMETRIX,
                INC.
	 
 	 
 	 
 
	 	By:  	/s/ Shai
                N.
                Gozani
	 	
                
Shai
                N. Gozani, President and
                CEO

      

       

            
        Address: 62 Fourth Avenue

                              Waltham,
        MA 02451

      
         

        
          
            
            

          

          
            14

            
              

            

          

          
            
            

          

        

        
           

        

      

    

    Exhibit
      A

     

    Warrant
      to Purchase Common Stock

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    Exhibit
      B

     

    Registration
      Rights Agreement

     

    
      
        
        

      

      
        16Unassociated Document

    TELEGEN
      CORPORATION

    

    2007
      STOCK INCENTIVE PLAN

    

    

    SECTION
      1. PURPOSE

    

    The
      purpose of this 2007 Stock Incentive Plan (the “Plan”)
      is to
      enhance the long-term stockholder value of Telegen Corporation, a California
      corporation (the “Company”),
      by
      offering opportunities to employees, directors, officers, consultants, agents,
      advisors and independent contractors of the Company and its Subsidiaries (as
      defined in Section 2) to participate in the Company’s growth and success, and to
      encourage them to remain in the service of the Company and its Subsidiaries
      and
      to acquire and maintain stock ownership in the Company.

    

    SECTION
      2. DEFINITIONS

    

    For
      purposes of the Plan, the following terms shall be defined as set forth
      below:

    

        
      “Award”
means
      an award or grant made pursuant to the Plan, including, without limitation,
      awards or grants of Options and Stock Awards, or any combination of the
      foregoing.

    

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

    

        
      “Cause”
means
      dishonesty, fraud, misconduct, unauthorized use or disclosure of confidential
      information, trade secrets or other intellectual property, or conviction or
      confession (including a plea of no contest) of a crime punishable by law (except
      minor violations), or conduct that adversely affects the Company’s business or
      reputation, in each case as determined by the Plan Administrator in its sole
      discretion, and its determination as to whether an action constitutes Cause
      shall be conclusive and binding.

    

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

    

    “Common
      Stock”
means
      the Company common stock, no par value per share.

    

    “Corporate
      Transaction”
means
      any of the following events:

    

    (a)     Consummation
      of any merger or consolidation of the Company in which the Company is not the
      continuing or surviving corporation, or pursuant to which shares of the Common
      Stock are converted into cash, securities or other property, if following such
      merger or consolidation the holders of the Company’s outstanding voting
      securities immediately prior to such merger or consolidation own less than
      50%
      of the outstanding voting securities of the surviving corporation;

    

    (b)     Consummation
      of any sale, lease, exchange or other transfer in one transaction or a series
      of
      related transactions of all or substantially all of the Company’s assets other
      than a transfer of the Company’s assets to a majority-owned subsidiary
      corporation of the Company; or

    

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    (c)     Approval
      by the holders of the Common Stock of any plan or proposal for the liquidation
      or dissolution of the Company.

    

    Ownership
      of voting securities shall take into account and shall include ownership as
      determined by applying Rule 13d-3(d)(1)(i) (as in effect on the date of adoption
      of the Plan) under the Exchange Act.

    

    “Disability”
means
      “disability” as that term is defined for purposes of Section 22(e)(3) of the
      Code. As of the date of adoption of this Plan, such terms means the inability
      to
      engage in any substantial gainful activity by reason of any medically
      determinable mental or physical impairment which can be expected to result
      in
      death or which has lasted or can be expected to last for a continuous period
      of
      not less than 12 months.

    

    “Employee”
means
      any person, including officers and directors, employed by the Company (or one
      of
      its parent corporations or subsidiary corporations), with the status of
      employment determined based upon such minimum number of hours or periods worked
      as shall be determined by the Plan Administrator in its discretion, subject
      to
      any requirements of the Code. For purposes of this provision, “parent
      corporation” and “subsidiary corporation” shall have the meanings attributed to
      those terms for purposes of Section 422 of the Code.

    

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

    

        “Fair
      Market Value”
shall
      be the fair market value of the Common Stock, as of any date, as determined
      by
      the Plan Administrator as follows:

    

    (a)     if
      the
      Common Stock is listed on any established stock exchange or a national market
      system, or quoted on a quotation system, including the OTC Bulletin Board,
      the
      Fair Market Value shall be the closing sales price for such stock (or if no
      sales were reported, the closing sales price on the date of determination,
      as
      quoted on such system or exchange, or the system or exchange with the greatest
      volume of trading in Common Stock, on the date of determination, as reported
      in
      The Wall Street Journal or such other source as the Plan Administrator deems
      reliable; or

    

    (b)     In
      the
      absence of an established market for the Common Stock, the Fair Market Value
      shall be determined in good faith by the Plan Administrator.

    

    “Grant
      Date”
means
      the date the Plan Administrator adopted the granting resolution or a later
      date
      designated in a resolution of the Plan Administrator as the date an Award is
      to
      be granted.

    

    “Holder”
means
      (a) the person to whom an Award is granted, (b) for a Holder who has
      died, the personal representative of the Holder’s estate, the person(s) to whom
      the Holder’s rights under the Award have passed by will or by the applicable
      laws of descent and distribution, or the beneficiary designated in accordance
      with Section 10, or (c) the person(s) to whom an Award has been transferred
      in accordance with Section 10.

    

    
      
        
        

      

      
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    “Incentive
      Stock Option”
means
      an Option to purchase Common Stock granted under Section 7 with the intention
      that it qualify as an “incentive stock option” as that term is defined in
      Section 422 of the Code.

    

    “Nonqualified
      Stock Option”
means
      an Option to purchase Common Stock granted under Section 7 other than an
      Incentive Stock Option.

    

    “Option”
means
      the right to purchase Common Stock granted under Section 7.

    

    “Plan
      Administrator”
means
      the Board or any committee of the Board designated to administer the Plan under
      Section 3.1.

    

    “Restricted
      Stock”
means
      shares of Common Stock granted under Section 9, the rights of ownership of
      which
      are subject to restrictions prescribed by the Plan Administrator.

    

    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

     

    “Stock
      Award”
means
      an Award granted under Section 9.

     

    “Subsidiary”
means
      any entity that is directly or indirectly controlled by the Company or in which
      the Company has a significant ownership interest, as determined by the Plan
      Administrator, and any entity that may become a direct or indirect parent of
      the
      Company.

    

    “Successor
      Corporation”
has
      the
      meaning set forth under Section 11.2.

    

    SECTION
      3. ADMINISTRATION

    

    3.1     Plan
      Administrator.
      The
      Plan shall be administered by the Board, or a committee or committees (which
      term includes subcommittees) appointed by, and consisting of two or more members
      of, the Board. For so long as the Common Stock is registered under Section
      12(b)
      or 12(g) of the Exchange Act, the Board shall consider in selecting the Plan
      Administrator and the membership of any committee acting as Plan Administrator,
      with respect to any persons subject or likely to become subject to Section
      16 of
      the Exchange Act, the provisions regarding (a) “outside directors” as
      contemplated by Section 162(m) of the Code, (b) “nonemployee directors” as
      contemplated by Rule 16b-3 under the Exchange Act, and (c) any requirements
      as to “independent directors” pursuant to rules of any securities exchange on
      which the Common Stock is quoted or listed for trading. The Board may delegate
      the responsibility for administering the Plan with respect to designated classes
      of eligible persons to different committees consisting of two or more members
      of
      the Board, subject to such limitations as the Board deems appropriate. Committee
      members shall serve for such term as the Board may determine, subject to removal
      by the Board at any time.

    

    
      
        
        

      

      
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    3.2     Administration
      and Interpretation by the Plan Administrator.
      Except
      for the terms and conditions explicitly set forth in the Plan, the Plan
      Administrator shall have exclusive authority, in its discretion, to determine
      all matters relating to Awards under the Plan, including the selection of
      individuals to be granted Awards, the type of Awards, the number of shares
      of
      Common Stock subject to an Award, all terms, conditions, restrictions and
      limitations, if any, of an Award and the terms of any document, agreement or
      instrument that evidences the Award. The Plan Administrator shall also have
      exclusive authority to interpret the Plan and may from time to time adopt,
      and
      change, rules and regulations of general application for the Plan’s
      administration. The Plan Administrator’s interpretation of the Plan and its
      rules and regulations, and all actions taken and determinations made by the
      Plan
      Administrator pursuant to the Plan, shall be conclusive and binding on all
      parties involved or affected. The Plan Administrator may delegate administrative
      duties to such of the Company’s officers as it so determines.

    

    3.3     Replacement
      of Options.
      Without
      limiting the authority granted to the Plan Administrator under Section 3.2,
      the
      Plan Administrator, in its sole discretion, shall have the authority, among
      other things, to (a) grant Options subject to the condition that Options
      previously granted at a higher or lower exercise price under the Plan be
      canceled or exchanged in connection with such grant (the number of shares
      covered by the new Options, the exercise price, the term and the other terms
      and
      conditions of the new Option, shall be determined in accordance with the Plan
      and may be different from the provisions of the canceled or exchanged Options),
      and (b) amend or modify outstanding and unexercised Options, with the
      consent of the Holder, to, among other things, reduce the exercise price per
      share, establish the exercise price at the then-current Fair Market Value or
      accelerate or defer the exercise date, vesting schedule or expiration date
      of
      any Option.

    

    SECTION
      4. STOCK SUBJECT TO THE PLAN

    

    4.1     Authorized
      Number of Shares.
      Subject
      to adjustment from time to time as provided in Section 11.1, a maximum of
      10,000,000 (ten million) shares of Common Stock shall be available for issuance
      under the Plan. Shares issued under the Plan shall be drawn from authorized
      and
      unissued shares or shares now held or subsequently acquired by the
      Company.

    

    4.2     Reuse
      of Shares.
      Any
      shares of Common Stock that have been made subject to an Award that cease to
      be
      subject to the Award (other than by reason of exercise or payment of the Award
      to the extent it is exercised for or settled in shares) shall again be available
      for issuance in connection with future grants of Awards under the
      Plan.

    

    SECTION
      5. ELIGIBILITY

    

    Awards
      may be granted under the Plan to those Employees, officers and directors of
      the
      Company and its Subsidiaries as the Plan Administrator from time to time
      selects. Awards may also be made to consultants, agents, advisors and
      independent contractors who provide services to the Company and its
      Subsidiaries, as the Plan Administrator from time to time selects. In granting
      Awards to consultants, agents, advisors and independent contractors, the Plan
      Administrator shall give consideration to the requirements set forth in the
      instructions to the use of Form S-8 registration statement under the Securities
      Act. A member of the Board may be eligible to participate in or receive or
      hold
      Awards under this Plan; provided, however, that no member of the Board shall
      vote with respect to the granting of an Award to himself or
      herself.

    

    
      
        
        

      

      
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    SECTION
      6. AWARDS

    

    6.1     Form
      and Grant of Awards.
      The
      Plan Administrator shall have the authority, in its sole discretion, to
      determine the type or types of Awards to be made under the Plan. Such Awards
      may
      include, but are not limited to, Incentive Stock Options, Nonqualified Stock
      Options and Stock Awards. Awards may be granted singly or in combination. An
      eligible person may receive one or more grants of Awards as the Plan
      Administrator shall from time to time determine, and such determinations may
      be
      different as to different Holders and may vary as to different grants, even
      when
      made simultaneously.

    

    6.2     Number
      of Shares.
      The
      maximum number of shares that may be issued pursuant to the grant of an Award
      shall be as established by the Plan Administrator. Provided, however, to the
      extent required for compliance with the exclusion from the limitation on
      deductibility of compensation under Section 162(m) of the Code, the Plan
      Administrator shall not grant Awards to any person in any one fiscal year of
      the
      Company in an amount that exceeds, in the aggregate, 1,000,000 (One Million)
      shares of Common Stock (subject to adjustment as provided in Section
      11).

    

    6.3     Acquired
      Company Awards.
      Notwithstanding anything in the Plan to the contrary, the Plan Administrator
      may
      grant Awards under the Plan in substitution for awards issued under other plans,
      or assume under the Plan awards issued under other plans, if the other plans
      are
      or were plans of other acquired entities (“Acquired
      Entities”)
      (or
      the parent of the Acquired Entity) and the new Award is substituted, or the
      old
      award is assumed, by reason of a merger, consolidation, acquisition of property
      or of stock, reorganization or liquidation (the “Acquisition
      Transaction”).
      In
      the event that a written agreement pursuant to which the Acquisition Transaction
      is completed is approved by the Board and said agreement sets forth the terms
      and conditions of the substitution for or assumption of outstanding awards
      of
      the Acquired Entity, said terms and conditions shall be deemed to be the action
      of the Plan Administrator without any further action by the Plan Administrator,
      except as may be required for compliance with Rule 16b-3 under the Exchange
      Act,
      and the persons holding such Awards shall be deemed to be Holders.

    

    SECTION
      7. AWARDS OF OPTIONS

    

    7.1     Grant
      of Options.
      The
      Plan Administrator is authorized under the Plan, in its sole discretion, to
      issue Options as Incentive Stock Options or as Nonqualified Stock Options,
      which
      shall be appropriately designated.

    

    7.2     Option
      Exercise Price.
      The
      exercise price for shares purchased under an Option shall be as determined
      by
      the Plan Administrator, but shall not be less than 100% of the Fair Market
      Value
      of the Common Stock on the Grant Date.

    

    
      
        
        

      

      
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    7.3     Term
      of Options.
      The
      term of each Option shall be as established by the Plan Administrator or, if
      not
      so established, shall be 10 years from the Grant Date.

    

    7.4     Vesting
      / Exercisability of Options.
      The
      Plan Administrator shall establish and set forth in each agreement that
      evidences an Option the time at which or the installments in which, if any,
      the
      Option shall vest and become exercisable. In the absence of a defined vesting
      schedule in the agreement evidencing the Option, the Option covered by such
      agreement will vest and become exercisable ratably over 36 (thirty-six) months
      from the date of grant. The Plan Administrator, in its absolute discretion,
      may
      waive or accelerate any vesting requirement contained in outstanding and
      unexercised Options.

    

    7.5     Exercise
      of Options.
      Options
      shall be exercised in accordance with the following terms and
      conditions:

    

    (a)     Procedure.
      To the
      extent that an Option has vested and is currently exercisable, an Option may
      be
      exercised from time to time by written notice to the Company, in accordance
      with
      procedures established by the Plan Administrator, setting forth the number
      of
      shares with respect to which the Option is being exercised and accompanied
      by
      payment in full of the exercise price. The Plan Administrator may determine
      at
      any time that an Option may not be exercised as to less than 100 shares at
      any
      one time (or the lesser number of remaining shares covered by the Option).
      Only
      whole shares shall be issued pursuant to the exercise of any
      Option.

    

    (b)     Payment
      of Exercise Price.

    

    (1)     The
      exercise price for shares purchased under an Option shall be paid in full to
      the
      Company by delivery of consideration equal to the product of the Option exercise
      price and the number of shares being purchased. Such consideration must be
      paid
      in any combination of cash and/or bank-certified or cashier’s check (or personal
      check if determined acceptable by the Plan Administrator in its sole
      discretion), either at the time the Option is granted or within three days
      after
      notice of exercise is tendered to the Company.

    

    (2)     In
      addition, to the extent permitted by the Plan Administrator in its sole
      discretion, the exercise price for shares purchased under an Option may be
      paid,
      either singly or in combination with one or more of the alternative forms of
      payment authorized by this Section 7.5, by (y) delivery of a full-recourse
      promissory note or (z) such other consideration as the Plan Administrator
      may permit. The terms of any such promissory note, including the interest rate,
      terms of and security for repayment, and maturity, will be subject to the Plan
      Administrator’s discretion. Any such promissory note shall bear interest at a
      rate specified by the Plan Administrator but in no case less than the rate
      required to avoid imputation of interest (taking into account any exceptions
      to
      the imputed interest rules) for federal income tax purposes.

    

    (3)     For
      so
      long as the Common Stock is registered under Section 12 of the Exchange Act,
      then, to the extent permitted by applicable laws and regulations (including,
      but
      not limited to, federal tax and securities laws and regulations) and unless
      the
      Plan Administrator determines otherwise, an Option also may be exercised by
      (a) delivery of shares of Common Stock (which shares, if tendered by an
      affiliate of the Company, shall have been held by the Holder for at least six
      months) having a Fair Market Value equal to the aggregate exercise price (such
      payment in stock may occur in the context of a single exercise of an option
      or
      successive and simultaneous exercises, sometimes referred to as “pyramiding,”
which provides that, rather than physically exchanging certificates for a series
      of exercises, bookkeeping entries will be made pursuant to which the Holder
      is
      permitted to retain his existing stock certificate and a new stock certificate
      is issued for the net shares), or (b) delivery of a properly executed
      exercise notice together with irrevocable instructions to (i) a brokerage
      firm acceptable to the Company to deliver promptly to the Company the aggregate
      amount of sale or loan proceeds to pay the Option exercise price and any
      withholding tax obligations that may arise in connection with such exercise,
      and
      (ii) the Company to deliver the certificates for such purchased shares
      directly to such brokerage firm, all in accordance with the requirements of
      the
      Federal Reserve Board.

    

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    7.6     Rights
      as Stockholder.
      Until
      the issuance (as evidenced by the appropriate entry on the books of the Company
      or of a duly authorized transfer agent of the Company) of the stock certificate
      evidencing such shares, no right to vote or receive dividends or any other
      rights as a stockholder shall exist with respect to shares of Common Stock
      acquired on exercise of an Option, notwithstanding the exercise of the Option.
      The Company shall issue (or cause to be issued) such stock certificate promptly
      upon proper exercise of the Option and payment in full of the aggregate exercise
      price. In the event that the exercise of an Option is treated in part as the
      exercise of a Nonqualified Stock Option (pursuant to the provisions of Section
      8.1), the Company shall issue a stock certificate evidencing the shares treated
      as acquired upon the exercise of an Incentive Stock Option and a separate stock
      certificate evidencing the shares treated as acquired upon the exercise of
      a
      Nonqualified Stock Option, and shall identify each such certificate accordingly
      in its stock transfer records. No adjustment will be made for a dividend or
      other right for which the record date is prior to the date the stock certificate
      is issued, except as provided in Section 11 of this Plan.

    

    7.7     Post-Termination
      Exercises.
      The
      Plan Administrator shall establish and set forth in each agreement that
      evidences an Option whether the Option will continue to be exercisable, and
      the
      terms and conditions of such exercise, if a Holder ceases to be employed by,
      or
      to provide services to, the Company or its Subsidiaries, which provisions may
      be
      waived or modified by the Plan Administrator at any time. If not so established
      in the instrument evidencing the Option, the Option will be exercisable
      according to the following terms and conditions, which may be waived or modified
      by the Plan Administrator at any time.

    

    (a)     Termination
      other than Death, Disability or Cause.
      In case
      of termination of the Holder’s employment or services other than by reason of
      death, Disability or Cause, the Holder may exercise his or her Options at any
      time prior to the expiration of three months after the date the Holder ceases
      to
      be an Employee, director, officer, consultant, agent, advisor or independent
      contractor of the Company or a Subsidiary (but in no event later than the
      remaining term of the Option), but only if and to the extent the Holder was
      entitled to exercise the option at the date of such termination. A transfer
      of
      employment or services between or among the Company and its Subsidiaries shall
      not be considered a termination of employment or services. The effect of a
      Company-approved leave of absence on the terms and conditions of an Option
      shall
      be determined by the Plan Administrator, in its sole discretion.

    

    
      
        
        

      

      
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    (b)     Disability.
      In case
      of termination of the Holder’s employment or services by reason of the Holder’s
      Disability, the Holder (or personal representative) may exercise his or her
      Options at any time prior to the expiration of one year after the date of such
      termination (but in no event later than the remaining term of the Option),
      but
      only if and to the extent the Holder was entitled to exercise the option at
      the
      date of such termination.

    

    (c)     Death.
      In the
      event of the death of a Holder, any Options held may be exercised at any time
      on
      or prior to the expiration of one year after the date of death (but in no event
      later than the remaining term of the Option), but only if and to the extent
      the
      Holder was entitled to exercise the option at the date of his or her death,
      and
      only by the Holder’s personal representative (if then subject to administration
      as part of the Holder’s estate) or by the person(s) to whom the Holder’s rights
      under the Option shall have passed by will or by the applicable laws of descent
      and distribution or by Holder’s Permitted Transferee.

    

    (d)     Cause.
      In case
      of termination of the Holder’s employment or services for Cause, all Options
      held by Holder or his or her Permitted Transferee shall automatically terminate
      upon first notification to the Holder of such termination, unless the Plan
      Administrator determines otherwise. If a Holder’s employment or services with
      the Company are suspended pending an investigation of whether the Holder shall
      be terminated for Cause, all the Holder’s rights under any Option likewise shall
      be suspended during the period of investigation.

    

    7.8     Waiver
      or Extension of Time Periods.
      The
      Plan Administrator shall have the authority, prior to or within the times
      specified in this Section 7 for the exercise of any such Option, to extend
      such
      time period or waive in its entirety any such time period to the extent that
      such time period expires prior to the expiration of the term of such option.
      In
      addition, the Plan Administrator may modify or eliminate the time periods
      specified in this Section 7 with respect to particular Option grants. However,
      no Incentive Stock Option may be exercised after the expiration of ten years
      from the date such option is granted. If a Holder holding an Incentive Stock
      Option exercises such Option, by express permission of the Plan Administrator,
      after the expiration of the time periods specified in this Section 7, the Option
      will no longer be treated as an Incentive Stock Option under the Code and shall
      automatically be converted into a Nonqualified Stock Option.

    

    7.9     Termination
      of Options.
      Any
      portion of an Option that is not vested and exercisable on the date of
      termination of the Holder’s employment or services shall terminate on such date,
      unless the Plan Administrator determines otherwise. In addition, to the extent
      that any Options of any Holder whose employment or services have terminated
      shall not have been exercised within the limited periods prescribed in this
      Section 7, the Options and all further rights to purchase shares pursuant to
      such Options shall cease and terminate at the expiration of such
      period.

    

    
      
        
        

      

      
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    SECTION
      8. INCENTIVE STOCK OPTION LIMITATIONS

    

    To
      the
      extent required by Section 422 of the Code, Incentive Stock Options shall be
      subject to the following additional terms and conditions:

    

    8.1     Limitation
      on Amount of Grants to any one Holder.
      To the
      extent that a Holder is granted Incentive Stock Options that in the aggregate
      (together with all other Incentive Stock Options granted by the Company or
      Subsidiaries to such Holder under this Plan and any other stock option plans
      of
      the Company) entitle the Holder to purchase, in any calendar year during which
      such Options first become exercisable, Common Stock having a Fair Market Value
      (determined as of the Grant Date) in excess of $100,000, such portion of the
      Options in excess of $100,000 shall be treated as a Nonqualified Stock Option.
      In the event the Holder holds two or more such Options that become exercisable
      for the first time in the same calendar year, such limitation shall be applied
      on the basis of the order in which such Options are granted.

    

    8.2     Grants
      to 10% Stockholders.
      Incentive Stock Options may be granted to a person who, at the time the option
      is granted, owns more than 10% of the total combined voting power of all classes
      of stock of the Company or any Subsidiary only
      if
      (a) the exercise price per share shall not be less than 110% of the Fair
      Market Value of the Common Stock on the Grant Date, and (b) the Option term
      shall not exceed five years from the Grant Date. The determination of 10%
      ownership shall be made by the Plan Administrator in accordance with Section
      422
      of the Code.

    

    8.3     Eligible
      Persons.
      Only
      persons who are Employees may receive Incentive Stock Options. Persons who
      are
      not Employees may not be granted Incentive Stock Options and will only be
      eligible to receive Nonqualified Stock Options.

    

    8.4     Term.
      The
      term of an Incentive Stock Option shall not exceed 10 years.

    

    8.5     Exercisability.
      To
      qualify for Incentive Stock Option tax treatment, an Option designated as an
      Incentive Stock Option must be exercised within three months after termination
      of employment for reasons other than death, except that, in the case of
      termination of employment due to Disability, such Option must be exercised
      within one year after such termination. Employment shall not be deemed to
      continue beyond the first 90 days of a leave of absence unless the Holder’s
      reemployment rights are guaranteed by statute or contract.

    

    8.6     Taxation
      of Incentive Stock Options.
      In
      order to obtain certain tax benefits afforded to Incentive Stock Options under
      Section 422 of the Code, the Holder must hold the shares issued upon the
      exercise of an Incentive Stock Option for (a) at least two years after the
      Grant Date of the Incentive Stock Option and (b) at least one year from the
      date of exercise. The Plan Administrator may require a Holder to give the
      Company prompt notice of any disposition of shares acquired upon exercise of
      an
      Incentive Stock Option which occurs prior to the expiration of such holding
      periods. A Holder may be subject to the alternative minimum tax at the time
      of
      exercise of an Incentive Stock Option.

    

    
      
        
        

      

      
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    SECTION
      9. STOCK AWARDS

    

    9.1     Grant
      of Stock Awards.
      The
      Plan Administrator is authorized to make Awards of Common Stock on such terms
      and conditions and subject to such restrictions, if any (which may be based
      on
      continuous service with the Company or the achievement of performance goals)
      as
      the Plan Administrator shall determine, in its sole discretion, which terms,
      conditions and restrictions shall be set forth in the instrument evidencing
      the
      Award. The terms, conditions and restrictions that the Plan Administrator shall
      have the power to determine shall include, without limitation, the manner in
      which shares subject to Stock Awards are held during the periods they are
      subject to restrictions, the circumstances under which forfeiture of Restricted
      Stock shall occur by reason of termination of the Holder’s services, and the
      purchase price, if any.

    

    9.2     Issuance
      of Shares.
      Upon
      the satisfaction of any terms, conditions and restrictions prescribed in respect
      to a Stock Award, or upon the Holder’s release from any terms, conditions and
      restrictions of a Stock Award, as determined by the Plan Administrator, the
      Company shall release, as soon as practicable, to the Holder or, in the case
      of
      the Holder’s death, to the personal representative of the Holder’s estate or as
      the appropriate court directs, the appropriate number of shares of Common
      Stock.

    

    9.3     Waiver
      of Restrictions.
      Notwithstanding any other provisions of the Plan, the Plan Administrator may,
      in
      its sole discretion, waive the forfeiture period and any other terms, conditions
      or restrictions on any Restricted Stock under such circumstances (including
      the
      death or Disability of Holder, or material change in the Holder’s circumstances
      after the date of the Award) and subject to such terms and conditions (including
      forfeiture of the shares) as the Plan Administrator shall deem
      appropriate.

    

    SECTION
      10. ASSIGNABILITY

    

    No
      Option
      granted under the Plan may be assigned or transferred by the Holder other than
      by will or by the applicable laws of descent and distribution, and, during
      the
      Holder’s lifetime, such Awards may be exercised only by the Holder.
      Notwithstanding the foregoing, and to the extent permitted by Section 422 of
      the
      Code, the Plan Administrator, in its sole discretion, may permit such
      assignment, transfer and exercisability and may permit a Holder of such Awards
      to designate a beneficiary who may exercise the Award or receive compensation
      under the Award after the Holder’s death; provided, however, that any Award so
      assigned or transferred shall be subject to all the same terms and conditions
      contained in the instrument evidencing the Award.

    

    SECTION
      11. ADJUSTMENTS

    

    11.1     Adjustments
      Upon Changes in Capitalization.
      In the
      event that, at any time or from time to time, a stock dividend, stock split,
      spin-off, combination or exchange of shares, recapitalization, merger,
      consolidation, distribution to stockholders other than a normal cash dividend,
      or other similar change in the Company’s corporate or capital structure results
      in (a) the outstanding shares of Common Stock, or any securities exchanged
      therefor or received in their place, being exchanged for a different number
      or
      class of securities of the Company or of any other corporation, or (b) new,
      different or additional securities of the Company or of any other corporation
      being received by the holders of shares of Common Stock, then the Plan
      Administrator shall make proportional adjustments in (i) the maximum number
      and kind of securities subject to the Plan as set forth in Section 4.1, and
      (ii) the number and kind of securities that are subject to any outstanding
      Award and the per share price of such securities (but without any change in
      the
      aggregate price to be paid therefor). The determination by the Plan
      Administrator as to the terms of any of the foregoing adjustments shall be
      conclusive and binding. Notwithstanding the foregoing, a Corporate Transaction
      shall not be governed by this Section 11.1 but shall be governed by Section
      11.2.

    

    
      
        
        

      

      
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    11.2     Adjustments
      upon a Corporate Transaction.
      Except
      as otherwise provided in the instrument that evidences the Award, in the event
      of any Corporate Transaction, each Award that is at the time outstanding shall
      automatically accelerate so that each such Award shall, immediately prior to
      the
      specified effective date for the Corporate Transaction, become 100% vested
      and
      exercisable. Such Award shall not so accelerate, however, if and to the extent
      that such Award is, in connection with the Corporate Transaction, either to
      be
      assumed by the successor corporation or parent thereof (the “Successor
      Corporation”)
      or to
      be replaced with a comparable award for the purchase of shares of the capital
      stock of the Successor Corporation. The determination of Award comparability
      shall be made by the Plan Administrator, and its determination shall be
      conclusive and binding. All outstanding Awards shall terminate and cease to
      remain outstanding immediately following the consummation of the Corporate
      Transaction, except to the extent assumed by the Successor
      Corporation.

    

    11.3     Further
      Adjustment of Awards.
      Subject
      to Section 11.2, the Plan Administrator shall have the discretion, exercisable
      at any time before a sale, merger, consolidation, reorganization, liquidation
      or
      change in control of the Company, as defined by the Plan Administrator, to
      take
      such further action as it determines to be necessary or advisable, and fair
      and
      equitable to Holders, with respect to Awards. Such authorized action may include
      (but shall not be limited to) establishing, amending or waiving the type, terms,
      conditions or duration of, or restrictions on, Awards so as to provide for
      earlier, later, extended or additional time for exercise, lifting restrictions
      and other modifications, and the Plan Administrator may take such actions with
      respect to all Holders, to certain categories of Holders or only to individual
      Holders. The Plan Administrator may take such action before or after granting
      Awards to which the action relates and before or after any public announcement
      with respect to such sale, merger, consolidation, reorganization, liquidation
      or
      change in control that is the reason for such action.

    

    11.4     No
      Fractional Shares.
      In the
      event of any adjustment in the number of shares covered by any Award, any
      fractional shares resulting from such adjustment shall be disregarded and each
      such option shall cover only the number of full shares resulting from such
      adjustment.

    

    11.5     Determination
      of Plan Administrator to be Final.
      All
      adjustments made pursuant to this Section 11 shall be made by the Plan
      Administrator and its determination as to what adjustments shall be made, and
      the extent thereof, shall be final, binding and conclusive.

    

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    11.6     Limitations.
      The
      grant of Awards will in no way affect the Company’s right to adjust, reclassify,
      reorganize or otherwise change its capital or business structure or to merge,
      consolidate, dissolve, liquidate or sell or transfer all or any part of its
      business or assets.

    

    SECTION
      12. WITHHOLDING

    

    The
      Company may require the Holder to pay to the Company the amount of any
      withholding taxes that the Company is required to withhold with respect to
      the
      grant, vesting or exercise of any Award. Upon exercise of an Award, the Holder
      shall, upon notification of the amount due and prior to or concurrently with
      the
      delivery of the certificates representing the shares, pay to the Company all
      amounts necessary to satisfy applicable federal, state and local withholding
      tax
      requirements or shall otherwise make arrangements satisfactory to the Company
      for such requirements. Subject to the Plan and applicable law, the Plan
      Administrator may, in its sole discretion, permit the Holder to satisfy
      withholding obligations, in whole or in part, by paying cash, by electing to
      have the Company withhold shares of Common Stock or by transferring shares
      of
      Common Stock to the Company, in such amounts as are equivalent to the Fair
      Market Value of the withholding obligation. The Company shall have the right
      to
      withhold from any Award or any shares of Common Stock issuable pursuant to
      an
      Award or from any cash amounts otherwise due or to become due from the Company
      to the Holder an amount equal to such taxes. The Company may also deduct from
      any Award any other amounts due from the Holder to the Company or a
      Subsidiary.

    

    SECTION
      13. SECURITIES REGULATIONS

    

    13.1     Compliance
      with Laws.
      Shares
      shall not be issued with respect to an Award granted under this Plan unless
      the
      adoption of this Plan, the grant and exercise of such Award and the issuance
      and
      delivery of such shares pursuant thereto shall comply with all relevant
      provisions of law, including, without limitation, any applicable state
      securities laws, the Securities Act, the Exchange Act, the rules and regulations
      promulgated thereunder, and the requirements of any stock exchange, national
      market system, over the counter system, or any electronic bulletin board, upon
      which the Common Stock may then be listed, quoted or traded, and shall further
      be subject to the approval of counsel for the Company with respect to such
      compliance. Inability of the Company to obtain from any regulatory body having
      jurisdiction the authority deemed by the Company’s counsel to be necessary for
      the lawful issuance and sale of any shares hereunder shall relieve the Company
      of any liability in respect of the nonissuance or sale of such shares as to
      which such requisite authority shall not have been obtained. In addition,
      notwithstanding anything in the Plan to the contrary, the Board, in its sole
      discretion, may bifurcate the Plan so as to restrict, limit or condition the
      use
      of any provision of the Plan to Holders who are officers or directors subject
      to
      Section 16 of the Exchange Act without so restricting, limiting or conditioning
      the Plan with respect to other Holders.

    

    13.2     Representations
      by Holder.
      With
      respect to the exercise of an Option or any other receipt of Common Stock
      pursuant to an Award under the Plan, the Company may require the Holder to
      represent and warrant at the time of such exercise or receipt that the shares
      are being purchased or received only for Holder’s own account investment and
      without any present intention to sell or distribute such shares, if, in the
      opinion of counsel for the Company, such representation is required by any
      relevant provision of the laws referred to in Section 13.1 above. At the option
      of the Company, a stop transfer order against any shares of stock may be placed
      on the official stock books and records of the Company, and a legend indicating
      that the stock may not be pledged, sold or otherwise transferred unless an
      opinion of counsel was provided (concurred in by counsel for the Company)
      stating that such transfer is not in violation of any applicable law or
      regulation, may be stamped on the stock certificate in order to assure exemption
      from registration. The Plan Administrator may also require such other action
      or
      agreement by the Holder as may from time to time be necessary to comply with
      the
      federal and state securities laws.

    

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    13.3     No
      Registration Required.
      The
      Company shall be under no obligation to any Holder to register for offering
      or
      resale or to qualify for exemption under the Securities Act, or to register
      or
      qualify under state securities laws, any shares of Common Stock, security or
      interest in a security paid or issued under, or created by, the Plan, or to
      continue in effect any such registrations or qualifications if made. The Company
      may issue certificates for shares with such legends and subject to such
      restrictions on transfer and stop-transfer instructions as counsel for the
      Company deems necessary or desirable for compliance by the Company with federal
      and state securities laws.

    

    SECTION
      14. AMENDMENT AND TERMINATION OF PLAN

    

    14.1     Amendment
      of Plan.
      The
      Board may modify or amend the Plan in such respects as it shall deem advisable
      or in order to conform to any changes in law or regulation applicable thereto,
      or in other respects; provided,
      however,
      that,
      to the extent required for compliance with Section 422 of the Code or any
      applicable law or regulation, the Board may not, without further approval by
      the
      stockholders of the Company, effect any amendment that will (a) increase
      the total number of shares as to which Awards may be granted under the Plan,
      (b) modify the class of persons eligible to receive Awards, or
      (c) change the terms of the Plan which causes the Plan to lose its
      qualification as an incentive stock option plan under Section 422(b) of the
      Code, or (d) otherwise require stockholder approval under any applicable
      law, regulation or rule of any stock exchange.

    

    The
      Plan
      shall comply with the requirements of, and shall be operated, administered,
      and
      interpreted in accordance with, a good faith interpretation of Code
      Section 409A and Section 885 of the American Jobs Creation Act of 2004
      (the “AJCA”) to the extent applicable. If any provision of the Plan is
      inconsistent with the restrictions imposed by Code Section 409A, that
      provision shall be deemed to be amended to the extent necessary to reflect
      the
      new restrictions imposed by Code Section 409A. Any Award granted under the
      Plan prior to issuance of definitive guidance from the Internal Revenue Service
      or the Department of Treasury with regard to any issue related to Code
      Section 409A shall be subject to the condition that the Plan Administrator
      may make such changes to the Award as necessary or appropriate in the Plan
      Administrator’s discretion to reflect the restrictions imposed by Code
      Section 409A, without the consent of the Participant.

    

    14.2     Termination
      of Plan.
      The
      Board may suspend or terminate the Plan at any time. The Plan will have no
      fixed
      expiration date; provided, however, that no Incentive Stock Options may be
      granted more than 10 years after the earlier of the Plan’s adoption by the Board
      and approval by the stockholders.

    

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    14.3     Consent
      of Holder.
      The
      amendment or termination of the Plan shall not, without the consent of the
      Holder of any Award under the Plan, impair or diminish any rights or obligations
      under any Award theretofore granted under the Plan. Any change or adjustment
      to
      an outstanding Incentive Stock Option shall not, without the consent of the
      Holder, be made in a manner so as to constitute a “modification” that would
      cause such Incentive Stock Option to fail to continue to qualify as an Incentive
      Stock Option.

    

    SECTION
      15. GENERAL

    

    15.1     Award
      Agreements.
      Each
      Award granted under the Plan shall be evidenced by a written agreement that
      shall contain such terms, conditions, limitations and restrictions as the Plan
      Administrator shall deem advisable and that are not inconsistent with the Plan.
      In addition, all such agreements evidencing Options shall include or incorporate
      by reference the following terms and conditions: number of shares, exercise
      price, vesting schedule, term and termination.

    

    15.2     No
      Rights to Continued Employment or Service.
      Nothing
      in this Plan or any Award granted pursuant hereto, or any action of the Plan
      Administrator taken under the Plan, shall confer upon any Holder any right
      to be
      retained in the employment or service of the Company or any Subsidiary, or
      to
      remain a director thereof or a consultant thereto, or to interfere in anyway
      with the right of the Company or any Subsidiary, in its sole discretion, to
      terminate such Holder’s employment or service at any time or to remove the
      Holder as a director or consultant at any time.

    

    15.3     No
      Rights as a Stockholder.
      No
      Option shall entitle the Holder to any cash dividend, voting or other right
      of a
      stockholder unless and until the date of issuance under the Plan of the shares
      that are the subject of such Option, free of all applicable
      restrictions.

    

    15.4     No
      Trust or Fund.
      The
      Plan is intended to constitute an “unfunded” plan. Nothing contained herein
      shall require the Company to segregate any monies or other property, or shares
      of Common Stock, or to create any trusts, or to make any special deposits for
      any immediate or deferred amounts payable to any Holder, and no Holder shall
      have any rights that are greater than those of a general unsecured creditor
      of
      the Company.

    

    15.5     Severability.
      If any
      provision of the Plan or any Award is determined to be invalid, illegal or
      unenforceable in any jurisdiction, or as to any person, or would disqualify
      the
      Plan or any Award under any law deemed applicable by the Plan Administrator,
      such provision shall be construed or deemed amended to conform to applicable
      laws, or, if it cannot be so construed or deemed amended without, in the Plan
      Administrator’s determination, materially altering the intent of the Plan or the
      Award, such provision shall be stricken as to such jurisdiction, person or
      Award, and the remainder of the Plan and any such Award shall remain in full
      force and effect.

    

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    SECTION
      16. EFFECTIVE DATE

    

    This
      Plan
      shall become effective on the date of its adoption by the Board and Awards
      Options may be granted immediately thereafter, but no Option may be exercised
      under the Plan unless and until the Plan shall have been approved by the
      stockholders within 12 months after the date of adoption of the Plan by the
      Board of Directors. If such approval is not obtained within such period the
      Plan
      and any Options granted shall be null and void.

    

    Adopted
      by the Board of Directors on October 26, 2007, and approved by the Company’s
      stockholders on _________________, 2007.

    

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    PLAN
      ADOPTION AND AMENDMENTS/ADJUSTMENTS

     

    
      	
              Date
                of Adoption/

              Amendment/Adjustment

            	
               

              Section

            	
               

              Effect
                of Amendment

            	
              Date
                of

              Stockholder
                Approval

            
	 	 	 	 
	 	 	 	 
	 	 	 	 

    

     

    
      
         

      

      
        -16-

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