Document:

EXHIBIT 10.39

 

SYNOPSYS, INC.

 

2006 EMPLOYEE EQUITY INCENTIVE PLAN

 

ADOPTED BY THE BOARD OF DIRECTORS:  MARCH 3, 2006

APPROVED BY THE STOCKHOLDERS:  APRIL 25, 2006

TERMINATION DATE: 
MARCH 3, 2016

 

1.                                      GENERAL.

 

(a)                                  Successor and Continuation of Prior Plans.  The Plan is intended as the successor and
continuation of the (i) Synopsys, Inc. 1992 Stock Option Plan, (ii) Synopsys, Inc.
1998 Nonstatutory Stock Option Plan, and (iii) Synopsys, Inc. 2005
Assumed Stock Option Plan (collectively, the “Prior Plans”).  Following the Effective Date, no additional
stock awards shall be granted under the Prior Plans.  Any shares remaining available for issuance
pursuant to the exercise of options under the Prior Plans shall become available
for issuance pursuant to Stock Awards granted hereunder.  Any shares subject to outstanding stock
awards granted under the Prior Plans that expire or terminate for any reason
prior to exercise or settlement shall become available for issuance pursuant to
Stock Awards granted hereunder.  On the
Effective Date, all outstanding stock options granted under the Prior Plans
shall be deemed to be stock options granted pursuant to the Plan, but shall remain
subject to the terms of the Prior Plans with respect to which they were
originally granted.  

 

(b)                                  Eligible Award Recipients.  The persons eligible to receive Awards are
Employees and Consultants.  Non-employee
Directors are not eligible to receive Awards under this Plan.  

 

(c)                                  Available Awards.  The Plan provides for the grant of the
following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory
Stock Options, (iii) Restricted Stock Awards, (iv) Restricted Stock
Unit Awards, (v) Stock Appreciation Rights, (vi) Performance Stock
Awards, and (vii) Other Stock Awards. 
The Plan also provides for the grant of Performance Cash Awards.  

 

(d)                                  Purpose.  The Company, by means of the Plan, seeks to
secure and retain the services of the group of persons eligible to receive
Stock Awards as set forth in Section 1(b), to provide incentives for such persons
to exert maximum efforts for the success of the Company and any Affiliate and
to provide a means by which such eligible recipients may be given an
opportunity to benefit from increases in value of the Common Stock through the
granting of Stock Awards.

 

2.                                      DEFINITIONS.

 

As used in the Plan, the
following definitions shall apply to the capitalized terms indicated below:

 

1

 

(a)                                  “Affiliate” means (i) any corporation (other than
the Company) in an unbroken chain of corporations ending with the Company,
provided each corporation in the unbroken chain (other than the Company) owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain, and (ii) any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company,
provided each corporation (other than the last corporation) in the unbroken
chain owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain. 
The Board shall have the authority to determine (i) the time or times
at which the ownership tests are applied, and (ii) whether “Affiliate”
includes entities other than corporations within the foregoing definition.  

 

(b)                                  “Award” means a Stock Award or a Performance Cash
Award.  

 

(c)                                  “Board” means the Board of Directors of the Company.

 

(d)                                  “Capitalization Adjustment” has the meaning ascribed to
that term in Section 9(a).

 

(e)                                  “Cause” means, with respect to a Participant, the
occurrence of any of the following: (i) the Participant commits an act of
dishonesty in connection with the Participant’s responsibilities as an Employee
or Consultant; (ii) the Participant commits a felony or any act of moral
turpitude; (iii) the Participant commits any willful or grossly negligent
act that constitutes gross misconduct and/or injures, or is reasonably likely
to injure, the Company or any Affiliate; or (iv) the Participant willfully
and materially violates (A) any written policies or procedures of the
Company or any Affiliate, or (B) the Participant’s obligations to the
Company or any Affiliate.  The
determination that a termination is for Cause shall be made by the Company in
its sole discretion.  Any determination
by the Company that the Continuous Service of a Participant was terminated with
or without Cause for the purposes of outstanding Awards held by such
Participant shall have no effect upon any determination of the rights or
obligations of the Company or such Participant for any other purpose.

 

(f)                                    “Change in Control” means the occurrence, in a single
transaction or in a series of related transactions, of any one or more of the
following events: 

 

(i)                                    any
Exchange Act Person becomes the Owner, directly or indirectly, of securities of
the Company representing more than fifty
percent (50%) of the combined voting power of the Company’s then
outstanding securities other than by virtue of a merger, consolidation or
similar transaction.  Notwithstanding the foregoing, a Change in
Control shall not be deemed to occur (A) on account of the acquisition of
securities of the Company by an investor, any affiliate thereof or any other
Exchange Act Person from the Company in a transaction or series of related
transactions the primary purpose of which is to obtain financing for the
Company through the issuance of equity securities or (B) solely because
the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage
threshold of the outstanding voting securities as a result of a repurchase or
other acquisition of voting securities by the Company reducing the number of
shares outstanding, provided that if a Change in Control would occur (but for
the operation of this sentence) as a 

 

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result of the acquisition of voting securities by the Company, and after
such share acquisition, the Subject Person becomes the Owner of any additional
voting securities that, assuming the repurchase or other acquisition had not
occurred, increases the percentage of the then outstanding voting securities
Owned by the Subject Person over the designated percentage threshold, then a
Change in Control shall be deemed to occur;

 

(ii)                                there
is consummated a merger, consolidation or similar transaction involving
(directly or indirectly) the Company and, immediately after the consummation of
such merger, consolidation or similar transaction, the stockholders of the
Company immediately prior thereto do not Own, directly or indirectly, either (A) outstanding
voting securities representing more than fifty percent (50%) of the combined outstanding voting power of
the surviving Entity in such merger, consolidation or similar transaction or (B) more
than fifty percent (50%) of the
combined outstanding voting power of the parent of the surviving Entity in such
merger, consolidation or similar transaction, in each case in substantially the
same proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such transaction;

 

(iii)                            the
stockholders of the Company approve or the Board approves a plan of complete
dissolution or liquidation of the Company, or a complete dissolution or
liquidation of the Company shall otherwise occur; 

 

(iv)                               there
is consummated a sale, lease, exclusive license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries, other than a sale, lease, license or other disposition of all or
substantially all of the consolidated assets of the Company and its
Subsidiaries to an Entity, more than fifty
percent (50%) of the combined voting power of the voting securities of
which are Owned by stockholders of the Company in substantially the same
proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such sale, lease, license or other disposition; or

 

(v)                                   individuals
who, on the date this Plan is adopted by the Board, are members of the Board
(the “Incumbent Board”)
cease for any reason to constitute at least a majority of the members of the
Board; provided, however, that if the
appointment or election (or nomination for election) of any new Board member
was approved or recommended by a majority vote of the members of the Incumbent
Board then still in office, such new member shall, for purposes of this Plan,
be considered as a member of the Incumbent Board. 

 

For avoidance of doubt, the
term Change in Control shall not include a sale of assets, merger or other
transaction effected exclusively for the purpose of changing the domicile of
the Company.

 

Notwithstanding the
foregoing or any other provision of this Plan, the definition of Change in
Control (or any analogous term) in an individual written agreement between the
Company or any Affiliate and the Participant shall supersede the foregoing
definition with respect to Stock Awards subject to such agreement; provided, however, that if no definition
of Change in Control or any analogous term is set forth in such an individual
written agreement, the foregoing definition shall apply.

 

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(g)                                 “Code” means the Internal Revenue Code of 1986, as
amended.

 

(h)                                 “Committee” means a committee of one (1) or more
members of the Board to whom authority has been delegated by the Board in
accordance with Section 3(c).

 

(i)                                    “Common Stock” means the common stock of the Company.

 

(j)                                    “Company” means Synopsys, Inc., a Delaware
corporation.

 

(k)                                “Consultant”
means any person, including an advisor, who is (i) engaged by the Company
or an Affiliate to render consulting or advisory services and is compensated
for such services, or (ii) serving as a member of the Board of Directors
of an Affiliate and is compensated for such services.  However, service solely as a Director, or
payment of a fee for such service, shall not cause a Director to be considered
a “Consultant” for purposes of the Plan.  

 

(l)                                    “Continuous Service” means that the Participant’s
service with the Company or an Affiliate, whether as an Employee, Director or
Consultant, is not interrupted or terminated. 
A change in the capacity in which the Participant renders service to the
Company or an Affiliate from a Consultant to Employee shall not terminate a
Participant’s Continuous Service. Furthermore, a change in the entity for which
the Participant renders such service, provided that there is no interruption or
termination of the Participant’s service with the Company or an Affiliate,
shall not terminate a Participant’s Continuous Service. However, if the
corporation for which a Participant is rendering service ceases to qualify as
an Affiliate, as determined by the Board in its sole discretion, such
Participant’s Continuous Service shall be considered to have terminated on the
date such corporation ceases to qualify as an Affiliate.  A leave of absence shall be treated as
Continuous Service for purposes of vesting in an Award to such extent as may be
provided in the Company’s leave of absence policy or in the written terms of
the Participant’s leave of absence. 

 

(m)                              “Corporate Transaction” means the occurrence, in a
single transaction or in a series of related transactions, of any one or more
of the following events:

 

(i)                                    a
sale or other disposition of all or
substantially all, as determined by the Board in its sole discretion, of the
consolidated assets of the Company and its Subsidiaries;

 

(ii)                                a
sale or other disposition of at least ninety
percent (90%) of the outstanding securities of the Company;

 

(iii)                            the
consummation of a merger, consolidation or similar transaction following which
the Company is not the surviving corporation; or

 

(iv)                               the
consummation of a merger, consolidation or similar transaction following which
the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger, consolidation or similar
transaction are converted or exchanged by virtue of the merger, consolidation
or similar transaction into other property, whether in the form of securities,
cash or otherwise.

 

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(n)                                 “Covered Employee” means the chief executive officer and
the four (4) other highest compensated officers of the Company for whom
total compensation is required to be reported to stockholders under the
Exchange Act, as determined for purposes of Section 162(m) of the Code.

 

(o)                                  “Director” means a member of the Board.

 

(p)                                  “Disability” means the permanent and total disability of
a person within the meaning of Section 22(e)(3) of the Code.

 

(q)                                  “Effective Date”
means the effective date of the Plan as specified in Section 12.

 

(r)                                  “Employee”
means any person employed by the Company or an Affiliate.  However, service solely as a Director, or
payment of a fee for such services, shall not cause a Director to be considered
an “Employee” for purposes of the Plan.

 

(s)                                  “Entity” means a corporation, partnership or other
entity.

 

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

 

(u)                                 “Exchange Act Person” means any natural person, Entity
or “group” (within the meaning of Section 13(d) or 14(d) of the
Exchange Act), except that “Exchange Act Person” shall not include (i) the
Company or any Subsidiary of the Company, (ii) any employee benefit plan
of the Company or any Subsidiary of the Company or any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
any Subsidiary of the Company, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, (iv) an Entity
Owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their Ownership of stock of the Company;
or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or
14(d) of the Exchange Act) that, as of the effective date of the Plan as
set forth in Section 12, is the Owner, directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of the
combined voting power of the Company’s then outstanding securities.

 

(v)                                   “Fair Market Value” means, as of any date, the value of
the Common Stock determined as follows:

 

(i)                                    If
the Common Stock is listed on any established stock exchange or traded on any
market system, the Fair Market Value of a share of Common Stock shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Common Stock) on the date in question, as
reported in The Wall Street Journal or
such other source as the Board deems reliable. 
Unless otherwise provided by the Board, if there is no closing sales
price (or closing bid if no sales were reported) for the Common Stock on the
date in question, then the Fair Market Value shall be the closing sales price
(or closing bid if no sales were reported) on the last preceding date for which
such quotation exists.  

 

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(ii)                                In
the absence of such markets for the Common Stock, the Fair Market Value shall
be determined by the Board in a manner that complies with Section 409A of
the Code.

 

(w)                                “Incentive Stock Option” means an Option which qualifies
as an incentive stock option within the meaning of Section 422 of the Code
and the regulations promulgated thereunder.

 

(x)                                  “Non-Employee Director”  means a Director who either (i) is
not a current employee or officer of the Company or an Affiliate, does not
receive compensation, either directly or indirectly, from the Company or an
Affiliate for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act (“Regulation
S-K”)), does not possess an interest in any other transaction
for which disclosure would be required under Item 404(a) of Regulation
S-K, and is not engaged in a business relationship for which disclosure would
be required pursuant to Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a “non-employee director” for purposes of Rule 16b-3.

 

(y)                                  “Nonstatutory Stock Option” means an Option which does
not qualify as an Incentive Stock Option.

 

(z)                                  “Officer” means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

 

(aa)                            “Option” means an Incentive Stock Option or a
Nonstatutory Stock Option to purchase shares of Common Stock granted pursuant
to the Plan.

 

(bb)                            “Option Agreement” means a written agreement between the
Company and an Optionholder evidencing the terms and conditions of an Option
grant.  Each Option Agreement shall be
subject to the terms and conditions of the Plan.

 

(cc)                            “Optionholder” means a person to whom an Option is
granted pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

 

(dd)                            “Other Stock Award”
means an award based in whole or in part by reference to the Common Stock which
is granted pursuant to the terms and conditions of Section 7(e).

 

(ee)                            “Other Stock Award
Agreement” means a written agreement between the Company and a
holder of an Other Stock Award evidencing the terms and conditions of an Other
Stock Award grant.  Each Other Stock
Award Agreement shall be subject to the terms and conditions of the Plan. 

 

(ff)                                “Outside Director” means a Director who either (i) is
not a current employee of the Company or an “affiliated corporation” (within
the meaning of Treasury Regulations promulgated under Section 162(m) of
the Code), is not a former employee of the Company or an “affiliated
corporation” who receives compensation for prior services (other than benefits
under a tax-qualified retirement plan) during the taxable year, has not been an
officer of the Company or an “affiliated corporation,” and does not receive
remuneration from the Company or an 

 

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“affiliated corporation,” either directly or indirectly, in any
capacity other than as a Director, or (ii) is otherwise considered an “outside
director” for purposes of Section 162(m) of the Code.

 

(gg)                          “Own,” “Owned,” “Owner,” “Ownership”  A person or Entity shall be deemed to “Own,”
to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of
securities if such person or Entity, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares
voting power, which includes the power to vote or to direct the voting, with
respect to such securities.

 

(hh)                          “Participant” means a person to whom an Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Award.

 

(ii)                                “Performance Cash Award” means an award of cash granted
pursuant to the terms and conditions of Section 7(d)(ii).

 

(jj)                                “Performance Criteria”
means the one or more criteria that the Board shall select for purposes of
establishing the Performance Goals for a Performance Period.  The Performance Criteria that shall be used
to establish such Performance Goals may be based on any one of, or combination
of, the following: (i) earnings per share; (ii) earnings before
interest, taxes and depreciation; (iii) earnings before interest, taxes,
depreciation and amortization (EBITDA); (iv) net earnings; (v) return
on equity; (vi) return on assets, investment, or capital employed; (vii) operating
margin; (viii) gross margin; (ix) operating income; (x) net income
(before or after taxes); (xi) net operating income; (xii) net operating income
after tax; (xiii) pre- and after-tax income; (xiv) pre-tax profit; (xv)
operating cash flow; (xvi) orders and revenue; (xvii) orders quality metrics; (xviii)
increases in revenue or product revenue; (xix) expenses and cost reduction
goals; (xx) improvement in or attainment of expense levels; (xxi) improvement
in or attainment of working capital levels; (xxii) market share; (xxiii) cash
flow; (xxiv) cash flow per share; (xxv) share price performance; (xxvi) debt
reduction; (xxvii) implementation or completion of projects or processes;
(xxviii) customer satisfaction; (xxix) stockholders’ equity; (xxx) quality
measures; and (xxxi) any other measures of performance selected by the
Board.  Partial achievement of the
specified criteria may result in the payment or vesting corresponding to the
degree of achievement as specified in the Stock Award Agreement or the written
terms of a Performance Cash Award.  The
Board shall, in its sole discretion, define the manner of calculating the
Performance Criteria it selects to use for such Performance Period. 

 

(kk)                        “Performance Goals”
means, for a Performance Period, the one or more goals established by the Board
for the Performance Period based upon the Performance Criteria.  Performance Goals may be set on a
Company-wide basis, with respect to one or more business units, divisions,
Affiliates, or business segments, and in either absolute terms or relative to
internally generated business plans, approved by the Board, the performance of
one or more comparable companies or the performance of one or more relevant
indices.  To the extent consistent with Section 162(m)
of the Code and the regulations thereunder, the Board is authorized to make adjustments
in the method of calculating the attainment of Performance Goals for a
Performance Period as follows: (i) to exclude restructuring and/or other
nonrecurring charges; (ii) to exclude exchange rate effects, as
applicable, for non-U.S. dollar denominated net sales and operating earnings; (iii) to
exclude the effects of changes to generally accepted accounting standards
required by the Financial Accounting Standards Board; (iv) to exclude the 

 

7

 

effects of any statutory adjustments to corporate tax rates; (v) to
exclude stock-based compensation expense determined under generally accepted
accounting principles; (vi) to exclude any other unusual, non-recurring
gain or loss or extraordinary item; (vii) to respond to, or in
anticipation of, any unusual or extraordinary corporate item, transaction,
event or development; (viii) to respond to, or in anticipation of, changes
in applicable laws, regulations, accounting principles, or business conditions;
(ix) to exclude the dilutive effects of acquisitions or joint ventures;
(x) to assume that any business divested by the Company achieved performance
objectives at targeted levels during the balance of a Performance Period
following such divestiture; (xi) to exclude the effect of any change in the
outstanding shares of common stock of the Company by reason of any stock
dividend or split, stock repurchase, reorganization, recapitalization, merger,
consolidation, spin-off, combination or exchange of shares or other similar
corporate change, or any distributions to common shareholders other than
regular cash dividends; (xii) to reflect a corporate transaction, such as a
merger, consolidation, separation (including a spinoff or other distribution of
stock or property by a corporation), or reorganization (whether or not such
reorganization comes within the definition of such term in Section 368 of
the Code); and (xiii) to reflect any partial or complete corporate
liquidation.  The Board also retains the
discretion to reduce or eliminate the compensation or economic benefit due upon
attainment of Performance Goals.

 

(ll)                                “Performance Period”
means the one or more periods of time, which may be of varying and overlapping
durations, as the Committee may select, over which the attainment of one or
more Performance Goals will be measured for the purpose of determining a
Participant’s right to and the payment of a Performance Stock Award or a
Performance Cash Award.  

 

(mm)                    “Performance Stock Award” means either a Restricted
Stock Award or a Restricted Stock Unit Award granted pursuant to the terms and
conditions of Section 7(d)(i).

 

(nn)                          “Plan” means this Synopsys, Inc. 2006 Employee Equity
Incentive Plan.

 

(oo)                            “Prior Plans” means the Company’s 1992 Stock Option Plan,
1998 Nonstatutory Stock Option Plan, and 2005 Assumed Stock Option Plan as in
effect immediately prior to the effective date of the Plan. 

 

(pp)                            “Restricted Stock Award”
means an award of shares of Common Stock which is granted pursuant to the terms
and conditions of Section 7(a).

 

(qq)                            “Restricted Stock Award
Agreement” means a written agreement between the Company and a
holder of a Restricted Stock Award evidencing the terms and conditions of a
Restricted Stock Award grant.  Each
Restricted Stock Award Agreement shall be subject to the terms and conditions
of the Plan.

 

(rr)                            “Restricted Stock Unit
Award” means a right to receive shares of Common Stock which is
granted pursuant to the terms and conditions of Section 7(b).

 

(ss)                            “Restricted Stock Unit
Award Agreement” means a written agreement between the Company
and a holder of a Restricted Stock Unit Award evidencing the terms and
conditions of a Restricted Stock Unit Award grant.  Each Restricted Stock Unit Award Agreement
shall be subject to the terms and conditions of the Plan. 

 

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(tt)                                “Rule 16b-3” means Rule 16b-3 promulgated
under the Exchange Act or any successor to Rule 16b-3, as in effect from
time to time.

 

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

 

(vv)                              “Stock Appreciation Right”
means a right to receive the appreciation on Common Stock that is granted
pursuant to the terms and conditions of Section 7(c).

 

(ww)                        “Stock Appreciation Right
Agreement” means a written agreement between the Company and a
holder of a Stock Appreciation Right evidencing the terms and conditions of a
Stock Appreciation Right grant.  Each
Stock Appreciation Right Agreement shall be subject to the terms and conditions
of the Plan.

 

(xx)                            “Stock Award”
means any right granted under the Plan, including an Option, a Stock
Appreciation Right, a Restricted Stock Award, a Restricted Stock Unit Award, a
Performance Stock Award, or an Other Stock Award.

 

(yy)                            “Stock Award Agreement”
means a written agreement between the Company and a Participant evidencing the
terms and conditions of a Stock Award grant. 
Each Stock Award Agreement shall be subject to the terms and conditions
of the Plan.

 

(zz)                            “Subsidiary” means, with respect to the Company, (i) any
corporation of which more than fifty percent (50%) of the outstanding capital
stock having ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether, at the time, stock of
any other class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time, directly
or indirectly, Owned by the Company, and (ii) any partnership in which the
Company has a direct or indirect interest (whether in the form of voting or participation
in profits or capital contribution) of more than fifty percent (50%).

 

(aaa)                      “Ten Percent Stockholder” means a person who Owns (or is
deemed to Own pursuant to Section 424(d) of the Code) stock
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Affiliate.

 

3.                                      ADMINISTRATION.

 

(a)                                  Administration
by Board.  The Board shall administer
the Plan unless and until the Board delegates administration of the Plan to a
Committee, as provided in Section 3(c). 

 

(b)                                  Powers
of Board.  The Board shall have the
power, subject to, and within the limitations of, the express provisions of the
Plan:

 

(i)                                    To
construe and interpret the Plan and Awards granted under it, and to establish,
amend and revoke rules and regulations for its administration.  The Board, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan or in any Stock Award
Agreement or in the written terms of a Performance Cash Award, in a manner and to
the extent it shall deem necessary or expedient to make the Plan fully
effective.

 

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(ii)                                To
determine from time to time (1) which of the persons eligible under the
Plan shall be granted Awards; (2) when and how each Award shall be
granted; (3) what type or combination of types of Award shall be granted; (4) the
provisions of each Award granted (which need not be identical), including the
time or times when a person shall be permitted to receive cash or Common Stock
pursuant to a Award; and (5) the number of shares of Common Stock with
respect to which a Stock Award shall be granted to each such person.

 

(iii)                            To
accelerate the time at which an Award may first be exercised or the time during
which an Award or any part thereof will vest in accordance with the Plan,
notwithstanding the provisions in the Award stating the time at which it may
first be exercised or the time during which it will vest.

 

(iv)                               To
amend the Plan or an Award as provided in Section 10.

 

(v)                                   To
terminate or suspend the Plan as provided in Section 11.

 

(vi)                               Generally,
to exercise such powers and to perform such acts as the Board deems necessary
or expedient to promote the best interests of the Company and that are not in
conflict with the provisions of the Plan.

 

(vii)                           To
adopt such procedures and sub-plans as are necessary or appropriate to permit
participation in the Plan by individuals who are foreign nationals or employed
outside the United States.

 

(c)                                  Delegation
to Committee.

 

(i)                                    General.  The Board may delegate some or all of the
administration of the Plan to a Committee or Committees.  If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board that have been
delegated to the Committee, including the power to delegate to a subcommittee
any of the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board.  The Board may retain the authority to
concurrently administer the Plan with the Committee and may, at any time,
revest in the Board some or all of the powers previously delegated.

 

(ii)                                Section 162(m) and Rule 16b-3
Compliance.  In the sole
discretion of the Board, the Committee may consist solely of two or more
Outside Directors, in accordance with Section 162(m) of the Code, and/or
solely of two or more Non-Employee Directors, in accordance with Rule 16b-3.  In addition, the Board or the Committee, in
its sole discretion, may (1) delegate to a committee of one or more
members of the Board who need not be Outside Directors the authority to grant
Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Award, or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code, and/or (2) delegate
to a committee of one or more members of the Board who need not be Non-Employee
Directors the authority to grant Stock Awards to eligible persons who are not
then subject to Section 16 of the Exchange Act.

 

10

 

(d)                                  Delegation to an Officer.  The Board may delegate to one or more
Officers of the Company the authority to do one or both of the following (i) designate
Employees of the Company or any of its Subsidiaries to be recipients of Options
and the terms thereof, and (ii) determine the number of shares of Common
Stock to be subject to such Options granted to such Employees; provided, however, that the Board
resolutions regarding such delegation shall specify the total number of shares
of Common Stock that may be subject to the Options granted by such
Officer.  Notwithstanding anything to the
contrary in this Section 3(d), the Board may not delegate to an Officer
authority to determine the Fair Market Value of the Common Stock pursuant to Section 2(v)(ii) above.  

 

(e)                                  Effect of Board’s Decision. All
determinations, interpretations and constructions made by the Board in good
faith shall not be subject to review by any person and shall be final, binding
and conclusive on all persons.

 

(f)                                    Cancellation and Re-Grant of Stock Awards.  Neither the Board nor any Committee shall
have the authority to: (i) reprice any outstanding Stock Awards under the
Plan, or (ii) cancel and re-grant any outstanding Stock Awards under the
Plan, unless the stockholders of the Company have approved such an action
within twelve (12) months prior to such an event, provided, however, that this
provision shall not prevent cancellations of Stock Awards upon expiration or termination
of such Stock Awards and the return of the underlying shares of Common Stock to
the Plan for future issuance pursuant to Section 4(b) hereof. 

 

4.                                      SHARES
SUBJECT TO THE PLAN.

 

(a)                                  Share
Reserve.  Subject to the provisions
of Section 9(a) relating to
Capitalization Adjustments, the number of shares of Common Stock that may be
issued pursuant to Stock Awards shall not exceed Forty-Seven Million Four
Hundred Ninety-Seven Thousand Two Hundred Forty-Eight (47,497,248) shares of
Common Stock in the aggregate.  Such maximum
number of shares reserved for issuance is approximately equal to the number of
shares remaining available for issuance under the Prior Plans, including shares
subject to outstanding stock awards under the Prior Plans as of the Effective
Date.  Subject to Section 4(b),
the number of shares available for issuance under the Plan shall be reduced by:
(i) one (1) share for each share of stock issued pursuant to (A) an
Option granted under Section 6, or (B) a Stock Appreciation Right
granted under Section 7(c), and (ii) one and thirty-six hundredths (1.36)
shares for each share of Common Stock issued pursuant to a Restricted Stock
Award, Restricted Stock Unit Award, or Other Stock Award granted under Section 7.  Shares may be issued in connection with a
merger or acquisition as permitted by NASD Rule 4350(i)(1)(A)(iii) or,
if applicable, NYSE Listed Company Manual Section 303A(8) and such
issuance shall not reduce the number of shares available for issuance under the
Plan.  

 

(b)                                  Reversion
of Shares to the Share Reserve.  

 

(i)                                    Shares Available For Subsequent Issuance.  If any (i) Stock Award shall for any
reason expire or otherwise terminate, in whole or in part, without having been
exercised in full, (ii) shares of Common Stock issued to a Participant
pursuant to a Stock Award are forfeited to or repurchased by the Company at
their original exercise or purchase price pursuant to the Company’s reacquisition
or repurchase rights under the Plan, including any 

 

11

 

forfeiture or repurchase caused by the failure to meet a contingency or
condition required for the vesting of such shares, or (iii) Stock Award is
settled in cash, then the shares of Common Stock not issued under such Stock
Award, or forfeited to or repurchased by the Company, shall revert to and again
become available for issuance under the Plan. 
To the extent there is issued a share of Common Stock pursuant to a Stock
Award that counted as one and thirty-six hundredths (1.36) shares against the
number of shares available for issuance under the Plan pursuant to Section 4(a) and
such share of Common Stock again becomes available for issuance under the Plan
pursuant to this Section 4(b)(i), then the number of shares of Common
Stock available for issuance under the Plan shall increase by one and thirty-six
hundredths (1.36) shares.  

 

(ii)                                Shares Not Available for Subsequent Issuance.  If any shares subject to a Stock Award are
not delivered to a Participant because the Stock Award is exercised through a
reduction of shares subject to the Stock Award (i.e.,
“net exercised”) or an appreciation distribution in respect of a Stock
Appreciation Right is paid in shares of Common Stock, the number of shares
subject to the Stock Award that are not delivered to the Participant shall not
remain available for subsequent issuance under the Plan.  If any shares subject to a Stock Award are
not delivered to a Participant because such shares are withheld in satisfaction
of the withholding of taxes incurred in connection with the exercise of an
Option, Stock Appreciation Right, or the issuance of shares under a Restricted Stock
Award or Restricted Stock Unit Award, the number of shares that are not
delivered to the Participant shall not remain available for subsequent issuance
under the Plan.  If the exercise price of
any Stock Award is satisfied by tendering shares of Common Stock held by the
Participant (either by actual delivery or attestation), then the number of
shares so tendered shall not remain available for subsequent issuance under the
Plan.  

 

(c)                                  Incentive
Stock Option Limit.  Notwithstanding
anything to the contrary in this Section 4, subject to the provisions of Section 9(a) relating
to Capitalization Adjustments the aggregate maximum number of shares of Common
Stock that may be issued pursuant to the exercise of Incentive Stock Options
shall be Forty-Seven Million Four
Hundred Ninety-Seven Thousand Two Hundred Forty-Eight (47,497,248) shares
of Common Stock.

 

(d)                                  Source
of Shares.  The stock issuable under
the Plan shall be shares of authorized but unissued or reacquired Common Stock,
including shares repurchased by the Company on the open market.

 

5.                                      ELIGIBILITY.

 

(a)                                  Eligibility
for Specific Stock Awards.  Incentive
Stock Options may be granted only to Employees. 
Stock Awards other than Incentive Stock Options may be granted to
Employees and Consultants.  Stock Awards
under this Plan may not be granted to non-employee Directors.  

 

(b)                                  Ten
Percent Stockholders.  An Employee
who is also a Ten Percent Stockholder shall not be granted an Incentive Stock
Option unless the exercise price of such Option is at least one hundred ten
percent (110%) of the Fair Market Value of the Common Stock on the date of
grant and the Option has a term of no more than five (5) years from the
date of grant and is not exercisable after the expiration of five (5) years
from the date of grant. 

 

12

 

(c)                                  Section 162(m) Limitation on Annual
Awards.  Subject to the
provisions of Section 9(a) relating to Capitalization Adjustments no
Employee shall be eligible to be granted Stock Awards whose value is determined
by reference to an increase over an exercise or strike price of at least one
hundred percent (100%) of the Fair Market Value of the Common Stock on the date
the Stock Award is granted covering more than one million (1,000,000) shares of
Common Stock during any calendar year.

 

6.                                      OPTION
PROVISIONS.

 

Each Option shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate.  All Options shall be separately designated
Incentive Stock Options or Nonstatutory Stock Options at the time of grant,
and, if certificates are issued, a separate certificate or certificates shall
be issued for shares of Common Stock purchased on exercise of each type of
Option.  The provisions of separate
Options need not be identical; provided,
however, that each Option Agreement shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

 

(a)                                  Term.  No Option shall be exercisable after the
expiration of ten (10) years from the date of grant, or such shorter
period specified in the Option Agreement; provided,
however, that an Incentive Stock Option granted to a Ten Percent
Stockholder shall be subject to the provisions of Section 5(b).

 

(b)                                  Exercise
Price of an Incentive Stock Option. 
Subject to the provisions of Section 5(b) regarding Ten
Percent Stockholders, the exercise price of each Incentive Stock Option shall
be not less than one hundred percent (100%) of the Fair Market Value of the
Common Stock subject to the Option on the date the Option is granted.  Notwithstanding the foregoing, an Incentive
Stock Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner consistent with the provisions of Section 424(a) of
the Code.

 

(c)                                  Exercise
Price of a Nonstatutory Stock Option. 
The exercise price of each Nonstatutory Stock Option shall be not less
than one hundred percent (100%) of the Fair Market Value of the Common Stock
subject to the Option on the date the Option is granted.  Notwithstanding the foregoing, a Nonstatutory
Stock Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or substitution
for another option in a manner consistent with the provisions of Section 424(a) of
the Code.

 

(d)                                  Consideration.  The purchase price of Common Stock acquired
pursuant to the exercise of an Option shall be paid, to the extent permitted by
applicable law and as determined by the Board in its sole discretion, by any
combination of the methods of payment set forth below.  The Board shall have the authority to grant
Options that do not permit all of the following methods of payment (or
otherwise restrict the ability to use certain methods) and to grant Options
that require the consent of the Company to utilize a particular method of
payment.  The methods of payment
permitted by this Section 6(d) are:

 

13

 

(i)                                    by
cash or check; 

 

(ii)                                pursuant
to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the
receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from the sales
proceeds; 

 

(iii)                            by
delivery to the Company (either by actual delivery or attestation) of shares of
Common Stock; 

 

(iv)                               by
a “net exercise” arrangement pursuant to which the Company will reduce the
number of shares of Common Stock issued upon exercise by the largest whole
number of shares with a Fair Market Value that does not exceed the aggregate
exercise price; provided, however,
the Company shall accept a cash or other payment from the Participant to the
extent of any remaining balance of the aggregate exercise price not satisfied
by such reduction in the number of whole shares to be issued; provided, however, that shares of Common
Stock will no longer be outstanding under an Option and will not be exercisable
thereafter to the extent that (i) shares are used to pay the exercise
price pursuant to the “net exercise,” (ii) shares are delivered to the
Participant as a result of such exercise, and (iii) shares are withheld to
satisfy tax withholding obligations; or

 

(v)                                   in
any other form of legal consideration that may be acceptable to the Board.  

 

(e)                                  Transferability
of Options.  The Board may, in its
sole discretion, impose such limitations on the transferability of Options as
the Board shall determine.  In the
absence of such a determination by the Board to the contrary, the following
restrictions on the transferability of Options shall apply:

 

(i)                                    Restrictions
on Transfer.  An Option shall not be
transferable except by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Optionholder only by the
Optionholder.  

 

(ii)                                Domestic
Relations Orders.  Notwithstanding
the foregoing, an Option may be transferred pursuant to a domestic relations
order; provided, however, that if an Option is
an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock
Option as a result of such transfer.  

 

(iii)                            Beneficiary
Designation.  Notwithstanding the
foregoing, the Optionholder may, by delivering written notice to the Company,
in a form provided by or otherwise satisfactory to the Company and any broker
designated by the Company to effect Option exercises, designate a third party
who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.  In the
absence of such a designation, the executor or administrator of the
Optionholder’s estate shall be entitled to exercise the Option. 

 

(f)                                    Vesting
of Options Generally.  The total
number of shares of Common Stock subject to an Option may vest and therefore
become exercisable in periodic installments that may or may not be equal.  The Option may be subject to such other terms
and conditions on the time 

 

14

 

or times when it may or may not be exercised (which may be based on
performance or other criteria) as the Board may deem appropriate.  The vesting provisions of individual Options
may vary.  The provisions of this Section 6(f) are
subject to any Option provisions governing the minimum number of shares of
Common Stock as to which an Option may be exercised. 

 

(g)                                 Termination of Continuous Service.  In the event that an Optionholder’s
Continuous Service terminates (other than for Cause or upon the Optionholder’s
death or Disability), the Optionholder may exercise his or her Option (to the
extent that the Optionholder was entitled to exercise such Option as of the
date of termination of Continuous Service) but only within such period of time
ending on the earlier of (i) the date three (3) months following the
termination of the Optionholder’s Continuous Service (or such longer or shorter
period specified in the Option Agreement), or (ii) the expiration of the
term of the Option as set forth in the Option Agreement.  If, after termination of Continuous Service,
the Optionholder does not exercise his or her Option within the time specified
herein or in the Option Agreement (as applicable), the Option shall terminate.  

 

(h)                                 Extension of Termination Date.  An Optionholder’s Option Agreement may
provide that if the exercise of the Option following the termination of the
Optionholder’s Continuous Service (other than upon the Optionholder’s death or
Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of a period of three (3) months after the termination of the
Optionholder’s Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements, or (ii) the
expiration of the term of the Option as set forth in the Option Agreement.

 

(i)                                    Disability of Optionholder.  In the event that an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s Disability, the
Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise such Option as of the date of termination
of Continuous Service), but only within such period of time ending on the
earlier of (i) the date twelve (12) months following such termination of
Continuous Service (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth
in the Option Agreement.  If, after
termination of Continuous Service, the Optionholder does not exercise his or
her Option within the time specified herein or in the Option Agreement (as
applicable), the Option shall terminate.

 

(j)                                    Death of Optionholder.  In the event that (i) an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s death, or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder’s Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder’s estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder’s death, but only within the period ending on the
earlier of (i) the date twelve (12) months following the date of death (or
such longer or shorter period specified in the Option Agreement), or (ii) the
expiration of the term of such Option as set forth in the Option
Agreement.  If, after the 

 

15

 

Optionholder’s death, the Option is not exercised within the time specified
herein or in the Option Agreement (as applicable), the Option shall terminate.

 

(k)                                Termination for Cause.  In the event that an Optionholder’s
Continuous Service is terminated for Cause, the Option shall terminate
immediately and cease to remain outstanding and the Option shall cease to be
exercisable with respect to any shares of Common Stock (whether vested or
unvested) at the time of such termination.

 

7.                                      PROVISIONS
OF STOCK AWARDS OTHER THAN OPTIONS.

 

(a)                                  Restricted
Stock Awards.  Each Restricted Stock
Award Agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. 
To the extent consistent with the Company’s Bylaws, at the Board’s
election, shares of Common Stock may be (i) held in book entry form
subject to the Company’s instructions until any restrictions relating to the Restricted
Stock Award lapse; or (ii) evidenced by a certificate, which certificate
shall be held in such form and manner as determined by the Board.  The terms and conditions of Restricted Stock
Award Agreements may change from time to time, and the terms and conditions of
separate Restricted Stock Award Agreements need not be identical; provided, however, that each Restricted Stock
Award Agreement shall include (through incorporation of the provisions hereof
by reference in the agreement or otherwise) the substance of each of the
following provisions:

 

(i)                                    Consideration.  A Restricted Stock Award may be awarded in
consideration for (i) past or future services rendered to the Company or
an Affiliate, or (ii) any other form of legal consideration that may be
acceptable to the Board, in its sole discretion, and permissible under
applicable law.

 

(ii)                                Vesting.  Shares of Common Stock awarded under a Restricted
Stock Award Agreement may be subject to forfeiture to the Company in accordance
with a vesting schedule to be determined by the Board.  

 

(iii)                            Termination
of Participant’s Continuous Service. 
In the event a Participant’s Continuous Service terminates, the Company
may receive via a forfeiture condition, any or all of the shares of Common
Stock held by the Participant which have not vested as of the date of
termination of Continuous Service under the terms of the Restricted Stock Award
Agreement.

 

(iv)                               Transferability. 
Rights to acquire shares of Common Stock under the Restricted Stock
Award Agreement shall be transferable by the Participant only upon such terms
and conditions as are set forth in the Restricted Stock Award Agreement, as the
Board shall determine in its sole discretion, so long as Common Stock awarded
under the Restricted Stock Award Agreement remains subject to the terms of the Restricted
Stock Award Agreement.

 

(b)                                  Restricted
Stock Unit Awards.  Each Restricted Stock
Unit Award Agreement shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. 
The terms and conditions of Restricted Stock Unit Award Agreements may
change from time to time, and the terms and conditions of separate Restricted Stock
Unit Award Agreements need not be identical; provided,
however, that each Restricted Stock Unit Award 

 

16

 

Agreement shall include (through incorporation of the provisions hereof
by reference in the agreement or otherwise) the substance of each of the
following provisions:

 

(i)                                    Consideration.  A Restricted Stock Unit Award may be awarded
in consideration for (i) past or future services rendered to the Company
or an Affiliate, or (ii) any other form of legal consideration that may be
acceptable to the Board, in its sole discretion, and permissible under
applicable law.

 

(ii)                                Vesting. 
At the time of the grant of a Restricted Stock Unit Award,
the Board may impose such restrictions or conditions to the vesting of the Restricted
Stock Unit Award as it, in its sole discretion, deems appropriate.  

 

(iii)                            Payment.  A Restricted Stock Unit Award may be settled
by the delivery of shares of Common Stock, their cash equivalent, any
combination thereof or in any other form of consideration, as determined by the
Board and contained in the Restricted Stock Unit Award Agreement.

 

(iv)                               Termination of Participant’s Continuous
Service.  Except as otherwise
provided in the applicable Restricted Stock Unit Award Agreement, such portion
of the Restricted Stock Unit Award that has not vested will be forfeited upon
the Participant’s termination of Continuous Service. 

 

(c)                                  Stock Appreciation Rights.  Each Stock Appreciation Right
Agreement shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate.  The
terms and conditions of Stock Appreciation Right Agreements may change from
time to time, and the terms and conditions of separate Stock Appreciation Right
Agreements need not be identical; provided,
however, that each Stock Appreciation Right Agreement shall include
(through incorporation of the provisions hereof by reference in the agreement
or otherwise) the substance of each of the following provisions:

 

(i)                                    Term.  No Stock Appreciation Right shall be exercisable
after the expiration of ten (10) years from the date of grant, or such
shorter period specified in the Stock Appreciation Right Agreement.  

 

(ii)                                Strike Price.  Each Stock Appreciation Right will be
denominated in shares of Common Stock equivalents.  The strike price of each Stock Appreciation
Right shall not be less than one hundred percent (100%) of the Fair Market
Value of the Common Stock equivalents subject to the Stock Appreciation Right
on the date of grant. 

 

(iii)                            Calculation of Appreciation.  The appreciation distribution payable on the
exercise of a Stock Appreciation Right will be not greater than an amount equal
to the excess of (i) the aggregate Fair Market Value (on the date of the
exercise of the Stock Appreciation Right) of a number of shares of Common Stock
equal to the number of share of Common Stock equivalents in which the
Participant is vested under such Stock Appreciation Right, and with respect to
which the Participant is exercising the Stock Appreciation Right on such date,
over (ii) the strike price that is determined by the Board on the date of
grant of the Stock Appreciation Right.  

 

17

 

(iv)                               Vesting. 
At the time of the grant of a Stock Appreciation Right, the
Board may impose such restrictions or conditions to the vesting of such Stock
Appreciation Right as it, in its sole discretion, deems appropriate.  

 

(v)                                   Exercise.  To exercise any outstanding Stock
Appreciation Right, the Participant must provide written notice of exercise to
the Company in compliance with the provisions of the Stock Appreciation Right
Agreement evidencing such Stock Appreciation Right.  

 

(vi)                               Payment.  The appreciation distribution in respect of a
Stock Appreciation Right may be paid in Common Stock, in cash, in any
combination of the two or in any other form of consideration, as determined by
the Board and set forth in the Stock Appreciation Right Agreement evidencing
such Stock Appreciation Right.

 

(vii)                           Termination of Continuous Service.  In the event that a Participant’s Continuous
Service terminates (other than for Cause or upon the Participant’s death or
Disability), the Participant may exercise his or her Stock Appreciation Right
(to the extent that the Participant was entitled to exercise such Stock
Appreciation Right as of the date of termination of Continuous Service) but
only within such period of time ending on the earlier of (i) the date
three (3) months following the termination of the Participant’s Continuous
Service (or such longer or shorter period specified in the Stock Appreciation
Right Agreement), or (ii) the expiration of the term of the Stock
Appreciation Right as set forth in the Stock Appreciation Right Agreement.  If, after termination of Continuous Service,
the Participant does not exercise his or her Stock Appreciation Right within
the time specified herein or in the Stock Appreciation Right Agreement (as
applicable), the Stock Appreciation Right shall terminate.

 

(viii)                       Extension
of Termination Date.  A Participant’s Stock Appreciation Right
Agreement may provide that if the exercise of the Stock Appreciation Right
following the termination of the Participant’s Continuous Service (other than
upon the Participant’s death or Disability) would be prohibited at any time
solely because the issuance of shares of Common Stock would violate the
registration requirements under the Securities Act, then the Stock Appreciation
Right shall terminate on the earlier of (i) the expiration of a period of
three (3) months after the termination of the Participant’s Continuous
Service during which the exercise of the Stock Appreciation Right would not be
in violation of such registration requirements, or (ii) the expiration of
the term of the Stock Appreciation Right as set forth in the Stock Appreciation
Right Agreement.

 

(ix)                              Disability
of Participant.  In the event that a Participant’s Continuous
Service terminates as a result of the Participant’s Disability, the Participant
may exercise his or her Stock Appreciation Right (to the extent that the Participant
was entitled to exercise such Stock Appreciation Right as of the date of
termination of Continuous Service), but only within such period of time ending
on the earlier of (i) the date twelve (12) months following such
termination of Continuous Service (or such longer or shorter period specified
in the Stock Appreciation Right Agreement), or (ii) the expiration of the
term of the Stock Appreciation Right as set forth in the Stock Appreciation
Right Agreement.  If, after termination
of Continuous Service, the Participant does not exercise his or her Stock
Appreciation Right within the time 

 

18

 

specified herein or in the Stock Appreciation Right Agreement (as
applicable), the Stock Appreciation Right shall terminate.

 

(x)                                  Death
of Participant.  In the event that (i) a Participant’s
Continuous Service terminates as a result of the Participant’s death, or (ii) the
Participant dies within the period (if any) specified in the Stock Appreciation
Right Agreement after the termination of the Participant’s Continuous Service
for a reason other than death, then the Stock Appreciation Right may be
exercised (to the extent the Participant was entitled to exercise such Stock
Appreciation Right as of the date of death) by the Participant’s estate, by a
person who acquired the right to exercise the Stock Appreciation Right by
bequest or inheritance or by a person designated to exercise the Stock
Appreciation Right upon the Participant’s death, but only within the period ending
on the earlier of (i) the date twelve (12) months following the date of
death (or such longer or shorter period specified in the Stock Appreciation
Right Agreement), or (ii) the expiration of the term of such Stock
Appreciation Right as set forth in the Stock Appreciation Right Agreement.  If, after the Participant’s death, the Stock
Appreciation Right is not exercised within the time specified herein or in the
Stock Appreciation Right Agreement (as applicable), the Stock Appreciation
Right shall terminate.

 

(xi)                              Termination
for Cause.  In the event that a Participant’s Continuous
Service is terminated for Cause, the Stock Appreciation Right shall terminate
immediately and cease to remain outstanding and the Stock Appreciation Right
shall cease to be exercisable with respect to any shares of Common Stock
(whether vested or unvested) at the time of such termination.

 

(d)                                  Performance
Awards.  

 

(i)                                    Performance
Stock Awards.  A Performance Stock Award is either a
Restricted Stock Award or Restricted Stock Unit Award that may be granted, may
vest, or may be exercised based upon the attainment during a Performance Period
of certain Performance Goals.  A
Performance Stock Award may, but need not, require the completion of a specified
period of Continuous Service. The length of any Performance Period, the
Performance Goals to be achieved during the Performance Period, and the measure
of whether and to what degree such Performance Goals have been attained shall
be conclusively determined by the Committee in its sole discretion.  The maximum benefit to be received by any
Participant in any calendar year attributable to Performance Stock Awards
described in this Section 7(d)(i) shall not exceed the value of one
million (1,000,000) shares of Common Stock. 

 

(ii)                                Performance
Cash Awards.  A Performance Cash
Award is a cash award that may be granted upon the attainment during a
Performance Period of certain Performance Goals.  A Performance Cash Award may also require the
completion of a specified period of Continuous Service.  The length of any Performance Period, the
Performance Goals to be achieved during the Performance Period, and the measure
of whether and to what degree such Performance Goals have been attained shall
be conclusively determined by the Committee in its sole discretion.  The maximum benefit to be received by any
Participant in any calendar year attributable to Performance Cash Awards
described in this Section 7(d)(ii) shall not exceed two million
dollars ($2,000,000).  

 

19

 

(e)                                  Other Stock Awards.  Other forms of Stock Awards valued in whole
or in part by reference to, or otherwise based on, Common Stock may be granted
either alone or in addition to Stock Awards provided for under Section 6
and the preceding provisions of this Section 7.  Subject to the provisions of the Plan, the
Board shall have sole and complete authority to determine the persons to whom
and the time or times at which such Other Stock Awards will be granted, the
number of shares of Common Stock (or the cash equivalent thereof) to be granted
pursuant to such Other Stock Awards and all other terms and conditions of such
Other Stock Awards.  

 

8.                                      MISCELLANEOUS.

 

(a)                                  Use
of Proceeds.  Proceeds from the sale
of shares of Common Stock pursuant to Stock Awards shall constitute general
funds of the Company.

 

(b)                                  Stockholder
Rights.  No Participant shall be
deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Common Stock subject to such Stock Award unless and
until such Participant has exercised the Stock Award pursuant to its terms and
the issuance of the Common Stock has been entered into the books and records of
the Company.

 

(c)                                  No
Employment or Other Service Rights. 
Nothing in the Plan, any Stock Award Agreement or other instrument
executed thereunder or in connection with any Award granted pursuant thereto shall
confer upon any Participant any right to continue to serve the Company or an
Affiliate in the capacity in effect at the time the Award was granted or shall
affect the right of the Company or an Affiliate to terminate (i) the
employment of an Employee with or without notice and with or without cause, (ii) the
service of a Consultant pursuant to the terms of such Consultant’s agreement with
the Company or an Affiliate, or (iii) the service of a Director pursuant
to the Bylaws of the Company or an Affiliate, and any applicable provisions of
the corporate law of the state in which the Company or the Affiliate is
incorporated, as the case may be.

 

(d)                                  Incentive
Stock Option $100,000 Limitation.  To
the extent that the aggregate Fair Market Value (determined at the time of
grant) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionholder during any calendar year
(under all plans of the Company and any Affiliates) exceeds one hundred
thousand dollars ($100,000), the Options or portions thereof that exceed such
limit (according to the order in which they were granted) shall be treated as Nonstatutory
Stock Options, notwithstanding any contrary provision of the applicable Option
Agreement(s).

 

(e)                                  Investment
Assurances.  The Company may require
a Participant, as a condition of exercising or acquiring Common Stock under any
Stock Award, (i) to give written assurances satisfactory to the Company as
to the Participant’s knowledge and experience in financial and business matters
and/or to employ a purchaser representative reasonably satisfactory to the
Company who is knowledgeable and experienced in financial and business matters
and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Stock Award;
and (ii) to give written assurances satisfactory to the Company stating that
the Participant is acquiring Common Stock subject to the Stock Award for 

 

20

 

the Participant’s own account and not with any present intention of
selling or otherwise distributing the Common Stock.  The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative if (i) the
issuance of the shares upon the exercise or acquisition of Common Stock under
the Stock Award has been registered under a then currently effective
registration statement under the Securities Act, or (ii) as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws.  The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to
comply with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Common Stock.

 

(f)                                    Securities
Law Compliance.  The Company shall
seek to obtain from each regulatory commission or agency having jurisdiction
over the Plan such authority as may be required to grant Stock Awards and to
issue and sell shares of Common Stock upon exercise of the Stock Awards; provided, however, that this undertaking shall not require
the Company to register under the Securities Act the Plan, any Stock Award or
any Common Stock issued or issuable pursuant to any such Stock Award.  If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
that counsel for the Company deems necessary for the lawful issuance and sale
of Common Stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell Common Stock upon exercise of such
Stock Awards unless and until such authority is obtained.  A Participant shall not be eligible for the
grant of a Stock Award or the subsequent issuance of Common Stock pursuant to
the Stock Award if such grant or issuance would be in violation of any
applicable securities laws.  

 

(g)                                 Withholding
Obligations.  To the extent provided
by the terms of a Stock Award Agreement, the Company may, in its sole discretion,
satisfy any federal, state or local tax withholding obligation relating to a
Stock Award by any of the following means (in addition to the Company’s right
to withhold from any compensation paid to the Participant by the Company) or by
a combination of such means: (i) causing the Participant to tender a cash
payment; (ii) withholding shares of Common Stock from the shares of Common
Stock issued or otherwise issuable to the Participant in connection with the
Stock Award; provided, however, that no shares
of Common Stock are withheld with a value exceeding the minimum amount of tax
required to be withheld by law (or such lower amount as may be necessary to
avoid classification of the Stock Award as a liability for financial accounting
purposes); (iii) withholding payment from any amounts otherwise payable to
the Participant; or (iv) by such other method as may be set forth in the
Stock Award Agreement. 

 

(h)                                 Electronic
Delivery.  Any reference herein to a “written”
agreement or document shall include any agreement or document delivered
electronically or posted on the Company’s intranet.

 

9.                                      ADJUSTMENTS
UPON CHANGES IN COMMON STOCK; CORPORATE TRANSACTIONS.

 

(a)                                  Capitalization
Adjustments.  If any change is made
in, or other events occur with respect to, the Common Stock subject to the Plan
or subject to any Stock Award after the effective date of the Plan set forth in
Section 12 without the receipt of consideration by the 

 

21

 

Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company (each a “Capitalization Adjustment”)), the Board
shall appropriately adjust: (i) the class(es) and maximum number of
securities subject to the Plan pursuant to Section 4(a), (ii) the
class(es) and maximum number of securities that may be issued pursuant to the
exercise of Incentive Stock Options pursuant to Section 4(c), (iii) the
class(es) and maximum number of securities that may be awarded to any person
pursuant to Sections 5(c) and 7(d)(i), and (iv) the class(es) and
number of securities and price per share of stock subject to outstanding Stock
Awards.  The Board shall make such
adjustments, and its determination shall be final, binding and conclusive.  (Notwithstanding the foregoing, the
conversion of any convertible securities of the Company shall not be treated as
a transaction “without receipt of consideration” by the Company.)  

 

(b)                                  Dissolution
or Liquidation.  In the event of a
dissolution or liquidation of the Company, all outstanding Stock Awards (other
than Stock Awards consisting of vested and outstanding shares of Common Stock
not subject to the Company’s right of repurchase) shall terminate immediately
prior to the completion of such dissolution or liquidation, and the shares of
Common Stock subject to the Company’s repurchase option may be repurchased by
the Company notwithstanding the fact that the holder of such Stock Award is
providing Continuous Service, provided,
however, that the Board may, in its sole discretion, cause some or
all Stock Awards to become fully vested, exercisable and/or no longer subject
to repurchase or forfeiture (to the extent such Stock Awards have not
previously expired or terminated) before the dissolution or liquidation is
completed but contingent on its completion. 

 

(c)                                  Corporate
Transaction.  The following
provisions shall apply to Stock Awards in the event of a Corporate Transaction
unless otherwise provided in a written agreement between the Company or any
Affiliate and the holder of the Stock Award: 

 

(i)                                    Stock Awards May Be Assumed.  In the event of a Corporate Transaction, any
surviving corporation or acquiring corporation (or the surviving or acquiring
corporation’s parent company) may assume or continue any or all Stock Awards
outstanding under the Plan or may substitute similar stock awards for Stock
Awards outstanding under the Plan (including, but not limited to, awards to
acquire the same consideration paid to the stockholders of the Company pursuant
to the Corporate Transaction), and any reacquisition or repurchase rights held
by the Company in respect of Common Stock issued pursuant to Stock Awards may
be assigned by the Company to the successor of the Company (or the successor’s
parent company, if any), in connection with such Corporate Transaction.  A surviving corporation or acquiring
corporation may choose to assume or continue only a portion of a Stock Award or
substitute a similar stock award for only a portion of a Stock Award.  The terms of any assumption, continuation or
substitution shall be set by the Board in accordance with the provisions of Section 3(b).  

 

(ii)                                Stock Awards Held by Current Participants.  In the event of a Corporate Transaction in
which the surviving corporation or acquiring corporation (or its parent
company) does not assume or continue any or all outstanding Stock Awards or
substitute similar stock awards for such outstanding Stock Awards, then with
respect to Stock Awards that have 

 

22

 

not been assumed, continued or substituted and that are held by
Participants whose Continuous Service has not terminated prior to the effective
time of the Corporate Transaction (referred to as the “Current Participants”),
the vesting of such Stock Awards (and, if applicable, the time at which such
Stock Awards may be exercised) shall (contingent upon the effectiveness of the
Corporate Transaction) be accelerated in full to a date prior to the effective
time of such Corporate Transaction as the Board shall determine (or, if the
Board shall not determine such a date, to the date that is five (5) days
prior to the effective time of the Corporate Transaction), and such Stock
Awards shall terminate if not exercised (if applicable) at or prior to the
effective time of the Corporate Transaction, and any reacquisition or
repurchase rights held by the Company with respect to such Stock Awards shall
lapse (contingent upon the effectiveness of the Corporate Transaction).  No vested Restricted Stock Unit Award shall
terminate pursuant to this Section 9(c)(ii) without being settled by
delivery of shares of Common Stock, their cash equivalent, any combination
thereof, or in any other form of consideration, as determined by the Board,
prior to the effective time of the Corporate Transaction.

 

(iii)                            Stock Awards Held by Former Participants.  In the event of a Corporate Transaction in
which the surviving corporation or acquiring corporation (or its parent
company) does not assume or continue any or all outstanding Stock Awards or
substitute similar stock awards for such outstanding Stock Awards, then with
respect to Stock Awards that have not been assumed, continued or substituted
and that are held by persons other than Current Participants, the vesting of
such Stock Awards (and, if applicable, the time at which such Stock Award may
be exercised) shall not be accelerated and such Stock Awards (other than a
Stock Award consisting of vested and outstanding shares of Common Stock not
subject to the Company’s right of repurchase) shall terminate if not exercised
(if applicable) prior to the effective time of the Corporate Transaction; provided, however, that any reacquisition
or repurchase rights held by the Company with respect to such Stock Awards
shall not terminate and may continue to be exercised notwithstanding the
Corporate Transaction.  No vested
Restricted Stock Unit Award shall terminate pursuant to this Section 9(c)(iii) without
being settled by delivery of shares of Common Stock, their cash equivalent, any
combination thereof, or in any other form of consideration, as determined by
the Board, prior to the effective time of the Corporate Transaction.

 

(iv)                               Payment for Stock Awards in Lieu of Exercise.  Notwithstanding the foregoing, in the event a
Stock Award will terminate if not exercised prior to the effective time of a
Corporate Transaction, the Board may provide, in its sole discretion, that the
holder of such Stock Award may not exercise such Stock Award but will receive a
payment, in such form as may be determined by the Board, equal in value to the
excess, if any, of (i) the value of the property the holder of the Stock
Award would have received upon the exercise of the Stock Award, over (ii) any
exercise price payable by such holder in connection with such exercise.  

 

(d)                                  Change
in Control.  A Stock Award may be subject
to additional acceleration of vesting and exercisability upon or after a Change
in Control as may be provided in the Stock Award Agreement for such Stock Award
or as may be provided in any other written agreement between the Company or any
Affiliate and the Participant.  A Stock
Award may vest as to all or any portion of the shares subject to the Stock
Award (i) immediately upon the occurrence of a Change in Control, whether
or not such Stock Award is assumed, continued, or substituted by a surviving or
acquiring entity in the Change in Control, or (ii) in the event a
Participant’s 

 

23

 

Continuous Service is terminated, actually or constructively, within a
designated period following the occurrence of a Change in Control.  In the absence of such provisions, no such
acceleration shall occur.  

 

10.                               AMENDMENT
OF THE PLAN AND STOCK AWARDS.

 

(a)                                  Amendment
of Plan.  Subject to the limitations of
applicable law, the Board at any time, and from time to time, may amend the
Plan.  However, stockholder approval
shall be required for any amendment of the Plan that either (i) materially
increases the number of shares of Common Stock available for issuance under the
Plan, (ii) materially expands the class of individuals eligible to receive
Awards under the Plan, (iii) materially increases the benefits accruing to
Participants under the Plan or materially reduces the price at which shares of
Common Stock may be issued or purchased under the Plan, (iv) materially
extends the term of the Plan, or (v) expands the types of Awards available
for issuance under the Plan, but only to the extent required by applicable law
or listing requirements.

 

(b)                                  Stockholder
Approval.  The Board, in its sole
discretion, may submit any other amendment to the Plan for stockholder
approval, including, but not limited to, amendments to the Plan intended to
satisfy the requirements of Section 162(m) of the Code and the regulations
thereunder regarding the exclusion of performance-based compensation from the
limit on corporate deductibility of compensation paid to Covered Employees.

 

(c)                                  Contemplated
Amendments.  It is expressly
contemplated that the Board may amend the Plan in any respect the Board deems
necessary or advisable to provide eligible Employees with the maximum benefits
provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to bring the
Plan and/or Incentive Stock Options granted under it into compliance therewith.

 

(d)                                  Amendment
of Awards.  The Board, at any time
and from time to time, may amend the terms of any one or more Awards (either
directly or by amending the Plan), including, but not limited to, amendments to
provide terms more favorable than previously provided in the Stock Award
Agreement or the written terms of a Performance Cash Award, subject to any
specified limits in the Plan that are not subject to Board discretion; provided, however, that the rights under any Award outstanding
at the time of such amendment shall not be impaired by any such amendment
unless (i) the Company requests the consent of the affected Participant,
and (ii) such Participant consents in writing.

 

11.                               TERMINATION
OR SUSPENSION OF THE PLAN.

 

(a)                                  Plan
Term.  The Board may suspend or
terminate the Plan at any time.  Unless
sooner terminated, the Plan shall terminate on the day before the tenth (10th)
anniversary of the earlier of (i) the date the Plan is adopted by the
Board, or (ii) the date the Plan is approved by the stockholders of the
Company.  No Awards may be granted under
the Plan while the Plan is suspended or after it is terminated.

 

(b)                                  No
Impairment of Rights.  Suspension or
termination of the Plan shall not impair rights and obligations under any Award
granted while the Plan is in effect except with the written consent of the
affected Participant.

 

24

 

12.                               EFFECTIVE
DATE OF PLAN.

 

The Plan shall become
effective upon approval by the stockholders at the 2006 Annual Meeting as of
the Effective Date.  

 

13.                               CHOICE
OF LAW.

 

The law of the State of
Delaware shall govern all questions concerning the construction, validity and
interpretation of this Plan, without regard to that state’s conflict of laws
rules.

 

25Exhibit 10.1

    
      
        

      

    

    

      CONSULTING
        AGREEMENT

      

      This
        Consulting Agreement (the "Agreement") is by and between HOUSE
        OF BRUSSELS CHOCOLATES INC.,
        a
        Nevada corporation ("Company") and ROBERT
        WESOLEK
        ("Consultant").

      

      

      W
        I T N E S S E T H:

      

      WHEREAS,
        Consultant has provided services to the Company; and

      

      WHEREAS,
        the Company has not compensated the Consultant for his services;
        and

      

      WHEREAS,
        Company
        desires to engage Consultant to provide services as provided herein;
        and

      

      WHEREAS,
        Consultant desires to accept such engagement.

      

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

      

      1.    Service.
        Company
        hereby engages Consultant and Consultant hereby accepts engagement with Company
        upon the terms and conditions hereinafter set forth.

      

      2.    Duties.
        Subject
        to the power of the Chief Executive Officer of Company, Consultant will serve
        the Company as a Financial Consultant. In general, the scope of the Consultant’s
        duties shall be to provide advice and assistance to the Company with respect
        to;
        a) its treasury functions, b) financial accounting and reporting issues,
        c)
        regulatory reporting and d) significant equity or financial transactions.
        Company and Consultant expressly understand the scope of such services are
        strictly advisory. The nature and content of any actions, reports, decisions
        or
        obligations undertaken in connection with the advice or assistance provided
        by
        the Consultant are solely the obligation of the Company.

      

      3.    Term.
        Subject
        to the terms and conditions hereof, the term of engagement of Consultant
        will
        terminate on December 1, 2006, unless earlier terminated by either party
        pursuant to the terms hereof. 

      

      4.    Compensation
        and Benefits During the Engagement Term.

      

      
        	 	
                (a)

              	
                S-8
                  Stock.
                  As quickly as practicable, the Company shall cause to be issued
                  to the
                  Consultant 280,000 shares of the Company’s registered common stock under
                  the terms of an Form S-8 filing with the Securities and Exchange
                  Commission. 

              

      

      

      
        	 	
                (b)

              	
                Expenses.
                  Upon
                  submission of a detailed statement and reasonable documentation,
                  Company
                  will reimburse Consultant in the same manner as officers of the
                  Company
                  for all reasonable and necessary or appropriate out-of-pocket travel
                  and
                  other expenses incurred by Consultant in rendering services required
                  under
                  this Agreement,

              

      

      
        
          Consulting
            Agreement - Page  1

           

        

        
           

          
            

          

        

        
           

        

      

      
        	 	
                (c)

              	
                Benefits;
                  Insurance. The
                  Consultant will be entitled to participate in any benefit plan
                  or program
                  of the Company that may currently be in place or implemented during
                  the
                  term of this engagement. 

              

      

      

      
        	 	
                (d)

              	
                Intellectual
                  Property.
                  It is agreed by the Parties that all intellectual property rights
                  and
                  other intangible assets, including, without limitation, tradenames,
                  trademarks, servicemarks, corporate names, logos and any existence
                  or
                  possible combination or derivation of any and all of the same and
                  any food
                  products created by Consultant during the term of this Agreement
                  shall
                  remain the sole property of the
                  Company.

              

      

      

      5.    Confidentiality
        and Non-Competition.

      

      (a)
        Confidentiality.
        In the
        course of the performance of Consultant's duties hereunder, Consultant
        recognizes and acknowledges that Consultant may have access to certain
        confidential and proprietary information of Company or any of its affiliates.
        Without the prior written consent of Company, Consultant shall not disclose
        any
        such confidential or proprietary information to any person or firm, corporation,
        association, or other entity for any reason or purpose whatsoever, and shall
        not
        use such information, directly or indirectly, for Consultant's own behalf
        or on
        behalf of any other party. Consultant agrees and affirms that all such
        information is the sole property of Company and that at the termination and/or
        expiration of this Agreement, at Company's written request, Consultant shall
        promptly return to Company any and all such information so requested by
        Company.

      

      The
        provisions of this Section 5 shall not, however, prohibit Consultant from
        disclosing to others or using in any manner information that: 

      

      
        	 	
                (i)

              	
                has
                  been published or has become part of the public domain other than
                  by acts,
                  omissions or fault of Consultant;

              

      

      
        	 	
                (ii)

              	
                has
                  been furnished or made known to Consultant by third parties (other
                  than
                  those acting directly or indirectly for or on behalf of Consultant)
                  as a
                  matter of legal right without restriction on its use or disclosure;
                  

              

      

      
        	 	
                (iii)

              	
                was
                  in the possession of Consultant prior to obtaining such information
                  from
                  Company in connection with the performance of this Agreement;
                  or

              

      

      
        	 	
                (iv)

              	
                is
                  required to be disclosed by law.

              

      

      

      (b) Non-Competition.
        Consultant agrees that without consent of the Company, he will not, for himself,
        on behalf of, or in conjunction with any person, firm, corporation or entity,
        either as principal, Consultant, shareholder, member, director, partner,
        consultant, owner or part-owner of any corporation, partnership or any other
        type of business entity, directly or indirectly, own, manage, operate, control,
        be employed by, participate in, or be connected in any manner with the
        ownership, management, operation, or control of any business that engages
        in the
        same business as the Company or is in any business similar to or competitive
        with the business presently conducted by the Company during the course of
        this
        engagement.

      
        
          Consulting
            Agreement - Page  2

           

        

        
           

          
            

          

        

        
           

        

      

       

      Consultant
        agrees not to hire, solicit or attempt to solicit for engagement by Consultant
        or any company to which he may be involved, either directly or indirectly,
        any
        party who is an Consultant or independent contractor of the Company or any
        entity which is affiliated with the Company, or any person who was an Consultant
        or independent contractor of the Company or any entity which is affiliated
        with
        the Company within the three year period immediately following the termination
        of this Agreement.

      

      Consultant
        acknowledges that he has carefully read and considered all provisions of
        this
        Agreement and agrees that:

      

      
        	 	
                (i)

              	
                Due
                  to the nature of the Company's business, the foregoing covenants
                  place no
                  greater restraint upon Consultant than is reasonably necessary
                  to protect
                  the business and goodwill of the Company;

              

      

      
        	 	
                (ii)

              	
                These
                  covenants protect the legitimate interests of the Company and do
                  not serve
                  solely to limit the Company's future
                  competition;

              

      

      
        	 	
                (iii)

              	
                This
                  Agreement is not an invalid or unreasonable restraint of
                  trade;

              

      

      
        	 	
                (iv)

              	
                A
                  breach of these covenants by Consultant would cause irreparable
                  damage to
                  the Company;

              

      

      
        	 	
                (v)

              	
                These
                  covenants are reasonable in scope and are reasonably necessary
                  to protect
                  the Company's business and goodwill which the Company has established
                  through its own expense and effort;
                  and

              

      

      
        	 	
                (vi)

              	
                The
                  signing of this Agreement is necessary as part of the consummation
                  of the
                  transactions described in the preamble.

              

      

      

      6.    Termination.
        This
        Agreement and the engagement created hereby will terminate (i) upon the death
        or
        disability of Consultant under section 6(a) or 6(b), or without cause under
        Section 6(c). Regardless of the manner in which the Agreement terminates,
        all
        compensation provided in this Agreement shall be considered fully vested
        in and
        earned by the Consultant upon termination.

      

      
        	 	
                (a)

              	
                Disability.
                  The
                  Company shall have the right to terminate the engagement of the
                  Consultant
                  under this Agreement for disability in the event Consultant suffers
                  an
                  injury, illness, or incapacity of such character as to substantially
                  disable him from performing his duties without reasonable accommodation
                  by
                  the Company hereunder for a period of more than one hundred twenty
                  (120)
                  consecutive days upon the Company giving at least thirty (30) days
                  written
                  notice of termination.

              

      

      
        	 	
                (b)

              	
                Death.
                  This
                  Agreement will terminate on the Death of the
                  Consultant.

              

      

      
        	 	
                (c)

              	
                Without
                  Cause. The
                  Company may terminate this Agreement without
                  cause.

              

      

      

      8    Waiver
        of Breach.
        The
        waiver by any party hereto of a breach of any provision of this Agreement
        will
        not operate or be construed as a waiver of any subsequent breach by any
        party.

      

      9.    Costs.
        If any
        action at law or in equity is necessary to enforce or interpret the terms
        of
        this Agreement, the prevailing party will be entitled to reasonable attorney's
        fees, costs and necessary disbursements in addition to any other relief to
        which
        he or it may be entitled.

      
        
          Consulting
            Agreement - Page  3

           

        

        
           

          
            

          

        

        
           

        

      

      10.    Notices.
        Any
        notices, consents, demands, requests, approvals and other communications
        to be
        given under this Agreement by either party to the other will be deemed to
        have
        been duly given if given in writing and personally delivered or within two
        days
        if sent by mail, registered or certified, postage prepaid with return receipt
        requested, as follows:

      

      
        	
                If
                  to Company:

              	
                House
                  of Brussels Chocolates Inc.

              
	 	
                1658
                  Fosters Way

              
	 	
                Delta,
                  B.C., Canada, V3M 6S6

              
	 	
                Attention:
                  Grant Petersen, President

              
	 	 
	
                If
                  to Consultant:

              	
                Robert
                  Wesolek

              
	 	
                3
                  Farther Point

              
	 	
                Houston,
                  Texas 77024

              

      

      

      11.    Entire
        Agreement.
        This
        Agreement and the agreements contemplated hereby constitute the entire agreement
        of the parties regarding the subject matter hereof, and supersede all prior
        agreements and understanding, both written and oral, among the parties, or
        any
        of them, with respect to the subject matter hereof.

      

      12.    Severability.
        If
        any
        provision of this Agreement is held to be illegal, invalid or unenforceable
        under present or future laws effective during this Agreement, such provision
        will be fully severable and this Agreement will be construed and enforced
        as if
        such illegal, invalid or unenforceable provision never comprised a part hereof;
        and the remaining provisions hereof will remain in full force and effect
        and
        will not be affected by the illegal, invalid or unenforceable provision or
        by
        its severance herefrom. Furthermore, in lieu of such illegal, invalid or
        unenforceable provision there will be added automatically as part of this
        Agreement a provision as similar in its terms to such illegal, invalid or
        unenforceable provision as may be possible and be legal, valid and
        enforceable.

      

      13.    Arbitration.
        If
        a
        dispute should arise regarding this Agreement the parties agree that all
        claims,
        disputes, controversies, differences or other matters in question arising
        out of
        this relationship shall be settled finally, completely and conclusively by
        arbitration in Texas in accordance with the Commercial Arbitration Rules
        of the
        American Arbitration Association (the "Rules"). The governing law of this
        Agreement shall be the substantive law of the State of Nevada, without giving
        effect to conflict of laws. A decision of the arbitrator shall be final,
        conclusive and binding on the Company and Consultant. Any arbitration held
        in
        accordance with this paragraph shall be private and confidential and no person
        shall be entitled to attend the hearings except the arbitrator, Consultant,
        Consultant's attorneys, a representative of the Company, the Company's
        attorneys, and advisors to or witnesses for any party. The matters submitted
        to
        arbitration, the hearings and proceedings and the arbitration award shall
        be
        kept and maintained in the strictest confidence by Consultant and the Company
        and shall not be discussed, disclosed or communicated to any persons except
        as
        may be required for the preparation of expert testimony. On request of any
        party, the record of the proceeding shall be sealed and may not be disclosed
        except insofar, and only insofar, as may be necessary to enforce the award
        of
        the arbitrator and any judgment enforcing an award. The prevailing party
        shall
        be entitled to recover reasonable and necessary attorneys' fees and costs
        from
        the non-prevailing party and the determination of such fees and costs and
        the
        award thereof shall be included in the claims to be resolved by the arbitrator
        hereunder.

      
        
          Consulting
            Agreement - Page  4

           

        

        
           

          
            

          

        

        
           

        

      

      14.    Captions.
        The
        captions in this Agreement are for convenience of reference only and will
        not
        limit or otherwise affect any of the terms or provisions hereof.

      

      15.    Gender
        and Number.
        When
        the
        context requires, the gender of all words used herein will include the
        masculine, feminine and neuter and the number of all words will include the
        singular and plural.

      

      16.    Counterparts.
        This
        Agreement may be executed in one or more counterparts, each of which will
        be
        deemed an original and all of which will constitute one and the same instrument,
        but only one of which need be produced. 

      

      17.    Counterparts
        and Facsimiles.
        This
        Agreement may be executed in multiple counterparts and in any number of
        counterparts, each of which shall be deemed an original but all of which
        taken
        together shall constitute and be deemed to be one and the same instrument
        and
        each of which shall be considered and deemed an original for all purposes.
        This
        Agreement shall be effective with the facsimile signature of any of the parties
        set forth below and the facsimile signature shall be deemed as an original
        signature for all purposes and the Agreement shall be deemed as an original
        for
        all purposes.

      

      IN
        WITNESS WHEREOF,
        the
        parties hereto have duly executed this Agreement effective as of the day
        and
        year first above written.

      

      

      
        	 	
                COMPANY:

              
	 	 
	 	
                HOUSE
                  OF BRUSSELS CHOCOLATES INC.

              
	 	 	 
	 	
                By:     
                  

              	
                /s/
                  Grant Petersen

              
	 	 	
                Grant
                  Petersen, Chief Executive Officer

              
	 	 	
                Date:
                  April 21, 2006

              
	 	 	 
	 	
                CONSULTANT:

              
	 	 	 
	 	
                By:

              	
                /s/
                  Robert Wesolek

              
	 	 	
                Robert
                  Wesolek

              
	 	 	
                Date:
                  April 21, 2006

              

      

     

    
Consulting
      Agreement - Page  5

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