Document:

2006 MEDINA INTERNATIONAL HOLDINGS, INC.

                    STOCK OPTION AND COMPENSATION AWARD PLAN

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                       SECTION 1: GENERAL PURPOSE OF PLAN

     The name of this plan is the 2006 MEDINA INTERNATIONAL HOLDINGS, INC. STOCK
OPTION AND COMPENSATION  AWARD PLAN (the "Plan").  The purpose of the Plan is to
enable  MEDINA  INTERNATIONAL  HOLDINGS,   INC.,  a  Colorado  corporation  (the
"Company"),  and any Parent or any  Subsidiary to obtain and retain the services
of the types of Employees,  Consultants and Directors who will contribute to the
Company's long range success and to provide incentives which are linked directly
to increases in share value which will inure to the benefit of all  stockholders
of the Company.

                             SECTION 2: DEFINITIONS

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

         "Administrator"  shall  have the  meaning  as set forth in  Section  3,
hereof.

         "Board" means the Board of Directors of the Company.

         "Cause"  means (i)  failure  by an  Eligible  Person  to  substantially
perform his or her duties and  obligations  to the Company  (other than any such
failure resulting from his or her incapacity due to physical or mental illness);
(ii)  engaging in misconduct or a fiduciary  breach which is or  potentially  is
materially  injurious to the Company or its stockholders;  (iii) commission of a
felony;  (iv)  the  commission  of a  crime  against  the  Company  which  is or
potentially is materially injurious to the Company; or (v) as otherwise provided
in the Stock Option Agreement or Stock Purchase Agreement.  For purposes of this
Plan,  the existence of Cause shall be determined  by the  Administrator  in its
sole discretion.

         "Change in Control" shall mean:

         The  consummation of a merger or  consolidation  of the Company with or
into another entity or any other corporate  reorganization,  if more than 50% of
the combined  voting power (which  voting power shall be  calculated by assuming
the  conversion of all equity  securities  convertible  (immediately  or at some
future time) into shares  entitled to vote, but not assuming the exercise of any
warrant or right to subscribe to or purchase  those shares) of the continuing or
Surviving  Entity's  securities  outstanding   immediately  after  such  merger,
consolidation  or other  reorganization  is owned,  directly or  indirectly,  by
persons  who were not  stockholders  of the  Company  immediately  prior to such
merger, consolidation or other reorganization; provided, however, that in making
the  determination of ownership by the stockholders of the Company,  immediately
after the reorganization, equity securities which persons own immediately before
the  reorganization as stockholders of another party to the transaction shall be
disregarded; or

         The sale,  transfer or other disposition of all or substantially all of
the Company's assets.

         A  transaction  shall not  constitute  a Change in  Control if its sole
purpose is to change  the state of the  Company's  incorporation  or to create a
holding company that will be owned in substantially  the same proportions by the
persons who held the Company's securities immediately before such transaction.

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

         "Committee"  means a committee of the Board  designated by the Board to
administer the Plan.

         "Company"  means MEDINA  INTERNATIONAL  HOLDINGS,  INC., a  corporation
organized   under  the  laws  of  the  State  of  Colorado  (or  any   successor
corporation).

         "Consultant" means a consultant or advisor who is a natural person or a
legal entity and who provides bona fide  services to the Company,  a Parent or a
Subsidiary;  provided such services are not in connection with the offer or sale
of securities in a capital-raising transaction and do not directly or indirectly
promote or maintain a market for the Company's securities.

         "Date of  Grant"  means the date on which  the  Administrator  adopts a
resolution  expressly  granting a Right to a Participant or, if a different date
is set forth in such  resolution as the Date of Grant,  then such date as is set
forth in such resolution.

         "Director" means a member of the Board.

         "Disability"  means  that the  Optionee  is  unable  to  engage  in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment; provided, however, for purposes of determining the term of an
ISO pursuant to Section 6.6 hereof,  the term Disability  shall have the meaning
ascribed to it under Code  Section  22(e)(3).  The  determination  of whether an
individual has a Disability shall be determined under procedures  established by
the Plan Administrator.

         "Eligible  Person"  means an  Employee,  Consultant  or Director of the
Company, any Parent or any Subsidiary.

         "Employee"  shall  mean any  individual  who is a  common-law  employee
(including officers) of the Company, a Parent or a Subsidiary.

         "Exercise  Price"  shall  have the  meaning  set forth in  Section  6.3
hereof.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Fair  Market  Value"  shall  mean  the fair  market  value of a Share,
determined  as  follows:  (i) if the Stock is listed  on any  established  stock
exchange or a national market system,  including without limitation,  the NASDAQ
National Market,  the Fair Market Value of a share of Stock shall be the closing
sales price for such stock (or the closing  bid, if no sales were  reported)  as
quoted on such system or exchange (or the exchange  with the greatest  volume of
trading  in the  Stock)  on the  last  market  trading  day  prior to the day of
determination,  as reported in the Wall Street  Journal or such other  source as
the  Administrator  deems  reliable;  (ii) if the Stock is quoted on the  NASDAQ
System (but not on the NASDAQ National Market) or any similar system whereby the
stock is  regularly  quoted by a recognized  securities  dealer but closing sale
prices are not reported,  the Fair Market Value of a share of Stock shall be the
mean between the bid and asked  prices for the Stock on the last market  trading
day prior to the day of determination, as reported in the Wall Street Journal or
such other source as the Administrator  deems reliable;  or (iii) in the absence
of an  established  market  for the  Stock,  the  Fair  Market  Value  shall  be
determined in good faith by the  Administrator and such  determination  shall be
conclusive and binding on all persons.

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         "First  Refusal  Right" shall have the meaning set forth in Section 8.7
hereof.

         "ISO" means a Stock Option  intended to qualify as an "incentive  stock
option" as that term is defined in Section 422(b) of the Code.

         "Non-Employee  Director"  means a  member  of the  Board  who is not an
Employee of the Company, a Parent or Subsidiary,  who satisfies the requirements
of such term as defined in Rule 16b-3(b)(3)(i) promulgated by the Securities and
Exchange Commission.

         "Non-Qualified  Stock  Option"  means a Stock  Option not  described in
Section 422(b) of the Code.

         "Offeree"  means a Participant who is granted a Purchase Right pursuant
to the Plan.

         "Optionee"  means a Participant  who is granted a Stock Option pursuant
to the Plan.

         "Outside  Director"  means a member of the Board who is not an Employee
of the Company,  a Parent or Subsidiary,  who satisfies the requirements of such
term as defined in Treasury  Regulations (26 Code of Federal  Regulation Section
1.162-27(e)(3)).

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

         "Participant"  means any Eligible Person selected by the Administrator,
pursuant to the  Administrator's  authority  in Section 3, to receive  grants of
Rights.

     "Plan" means this 2006 MEDINA INTERNATIONAL HOLDINGS, INC. STOCK OPTION AND
COMPENSATION AWARD PLAN, as the same may be amended or supplemented from time to
time.

         "Purchase Price" shall have the meaning set forth in Section 7.3.

         "Purchase  Right" means the right to purchase Stock granted pursuant to
Section 7.

         "Rights" means Stock Options and Purchase Rights.

         "Repurchase  Right"  shall have the meaning set forth in Section 8.8 of
the Plan.

         "Service" shall mean service as an Employee, Director or Consultant.

         "Stock" means Common Stock of the Company.

         "Stock Option" or "Option" means an option to purchase  shares of Stock
granted pursuant to Section 6.

         "Stock  Option  Agreement"  shall have the meaning set forth in Section
6.1.

         "Stock Purchase  Agreement" shall have the meaning set forth in Section
7.1.

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

         "Surviving  Entity"  means the  Company if  immediately  following  any
merger,  consolidation or similar transaction, the holders of outstanding voting
securities of the Company  immediately  prior to the merger or consolidation own
equity  securities  possessing  more  than  50%  of  the  voting  power  of  the
corporation existing following the merger, consolidation or similar transaction.
In all other  cases,  the other  entity to the  transaction  and not the Company
shall be the Surviving  Entity.  In making the determination of ownership by the
stockholders of an entity immediately after the merger, consolidation or similar
transaction,  equity securities which the stockholders  owned immediately before
the merger,  consolidation  or similar  transaction as  stockholders  of another
party to the  transaction  shall be  disregarded.  Further,  outstanding  voting
securities of an entity shall be  calculated  by assuming the  conversion of all
equity securities  convertible  (immediately or at some future time) into shares
entitled to vote.

         "Ten Percent Stockholder" means a person who on the Date of Grant owns,
either  directly or through  attribution as provided in Section 424 of the Code,
Stock  constituting  more than 10% of the  total  combined  voting  power of all
classes  of  stock  of his or  her  employer  corporation  or of any  Parent  or
Subsidiary.

                            SECTION 3: ADMINISTRATION

         3.1  Administrator.  The Plan shall be  administered  by either (i) the
Board,  or (ii) a Committee  appointed by the Board (the group that  administers
the Plan is referred to as the "Administrator").

         3.2  Powers in  General.  The  Administrator  shall  have the power and
authority to grant to Eligible  Persons,  pursuant to the terms of the Plan, (i)
Stock Options, (ii) Purchase Rights or (iii) any combination of the foregoing.

         3.3 Specific Powers. In particular,  the  Administrator  shall have the
authority: (i) to construe and interpret the Plan and apply its provisions; (ii)
to  promulgate,  amend  and  rescind  rules  and  regulations  relating  to  the
administration of the Plan; (iii) to authorize any person to execute,  on behalf
of the Company,  any instrument  required to carry out the purposes of the Plan;
(iv) to determine when Rights are to be granted under the Plan; (v) from time to
time to  select,  subject  to the  limitations  set  forth in this  Plan,  those
Eligible  Persons to whom Rights shall be granted;  (vi) to determine the number
of shares of Stock to be made subject to each Right;  (vii) to determine whether
each Stock Option is to be an ISO or a  Non-Qualified  Stock  Option;  (viii) to
prescribe  the terms and  conditions  of each Stock Option and  Purchase  Right,
including, without limitation, the Purchase Price and medium of payment, vesting
provisions and repurchase provisions, and to specify the provisions of the Stock
Option  Agreement or Stock  Purchase  Agreement  relating to such grant or sale;
(ix) to amend any  outstanding  Rights for the purpose of modifying  the time or
manner of vesting,  the Purchase  Price or Exercise  Price,  as the case may be,
subject to applicable  legal  restrictions and to the consent of the other party
to such  agreement;  (x) to  determine  the  duration  and  purpose of leaves of
absences which may be granted to a Participant without constituting  termination
of their  employment  for  purposes  of the Plan;  (xi) to make  decisions  with
respect to outstanding  Stock Options that may become necessary upon a change in

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corporate control or an event that triggers anti-dilution adjustments; and (xii)
to make any and all other  determinations which it determines to be necessary or
advisable for administration of the Plan.

         3.4 Decisions Final. All decisions made by the  Administrator  pursuant
to the  provisions of the Plan shall be final and binding on the Company and the
Participants.

         3.5 The Committee.  The Board may, in its sole and absolute discretion,
from time to time, and at any period of time during which the Company's Stock is
registered  pursuant to Section 12 of the Exchange  Act,  delegate any or all of
its duties and authority with respect to the Plan to the Committee whose members
are to be appointed  by and to serve at the pleasure of the Board.  From time to
time,  the  Board  may  increase  or  decrease  the size of the  Committee,  add
additional  members to, remove members (with or without cause) from, appoint new
members in substitution  therefor,  and fill vacancies,  however caused,  in the
Committee.  The  Committee  shall act  pursuant to a vote of the majority of its
members  or,  in the case of a  committee  comprised  of only two  members,  the
unanimous  consent of its members,  whether  present or not, or by the unanimous
written  consent of the majority of its members and minutes shall be kept of all
of its meetings and copies  thereof  shall be provided to the Board.  Subject to
the  limitations  prescribed  by the  Plan  and the  Board,  the  Committee  may
establish and follow such rules and  regulations for the conduct of its business
as it may determine to be advisable.  During any period of time during which the
Company's  Stock is  registered  pursuant to Section 12 of the Exchange Act, all
members of the Committee shall be Non-Employee Directors and Outside Directors.

         3.6   Indemnification.   In   addition   to  such   other   rights   of
indemnification  as they may have as Directors or members of the Committee,  and
to the extent  allowed by  applicable  law,  the  Administrator  and each of the
Administrator's  consultants  shall be  indemnified  by the Company  against the
reasonable expenses,  including attorney's fees, actually incurred in connection
with any action, suit or proceeding or in connection with any appeal therein, to
which the  Administrator or any of its consultants may be party by reason of any
action  taken or  failure  to act  under or in  connection  with the Plan or any
option granted under the Plan, and against all amounts paid by the Administrator
or any of its  consultants in settlement  thereof  (provided that the settlement
has been  approved by the  Company,  which  approval  shall not be  unreasonably
withheld) or paid by the Administrator or any of its consultants in satisfaction
of a judgment  in any such  action,  suit or  proceeding,  except in relation to
matters as to which it shall be adjudged in such action, suit or proceeding that
such  Administrator or any of its consultants did not act in good faith and in a
manner which such person reasonably  believed to be in the best interests of the
Company, or was grossly negligent, and in the case of a criminal proceeding, had
no reason to believe  that the conduct  complained  of was  unlawful;  provided,
however,  that  within 60 days after  institution  of any such  action,  suit or
proceeding,  such  Administrator  or any of its  consultants  shall, in writing,
offer the Company the  opportunity  at its own expense to handle and defend such
action, suit or proceeding.

                      SECTION 4: STOCK SUBJECT TO THE PLAN

         4.1 Stock  Subject to the Plan.  Subject to  adjustment  as provided in
Section 9, two million  (2,000,000) shares of Common Stock shall be reserved and
available for issuance under the Plan. Stock reserved hereunder may consist,  in
whole or in part, of authorized and unissued shares or treasury shares.

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         4.2 Basic  Limitation.  The number of shares that are subject to Rights
under the Plan shall not exceed the number of shares that then remain  available
for issuance under the Plan. The Company,  during the term of the Plan, shall at
all times  reserve and keep  available a sufficient  number of shares to satisfy
the requirements of the Plan.

         4.3  Additional  Shares.  In the event that any  outstanding  Option or
other right for any reason expires or is canceled or otherwise  terminated,  the
shares allocable to the unexercised  portion of such Option or other right shall
again be available for the purposes of the Plan. In the event that shares issued
under  the Plan are  reacquired  by the  Company  pursuant  to the  terms of any
forfeiture provision, right of repurchase or right of first refusal, such shares
shall again be available for the purposes of the Plan.

                             SECTION 5: ELIGIBILITY

         Eligible  Persons  who  are  selected  by the  Administrator  shall  be
eligible to be granted Rights hereunder subject to limitations set forth in this
Plan;  provided,  however,  that only Employees  shall be eligible to be granted
ISOs hereunder.

                   SECTION 6: TERMS AND CONDITIONS OF OPTIONS.

         6.1 Stock  Option  Agreement.  Each  grant of an Option  under the Plan
shall be  evidenced  by a Stock  Option  Agreement  between the Optionee and the
Company.  Such Option shall be subject to all applicable terms and conditions of
the Plan and may be  subject  to any other  terms and  conditions  which are not
inconsistent  with the Plan and which the  Administrator  deems  appropriate for
inclusion in a Stock  Option  Agreement.  The  provisions  of the various  Stock
Option Agreements entered into under the Plan need not be identical.

         6.2 Number of Shares.  Each Stock Option  Agreement  shall  specify the
number of shares of Stock that are  subject to the Option and shall  provide for
the  adjustment of such number in accordance  with Section 9, hereof.  The Stock
Option  Agreement  shall  also  specify  whether  the  Option  is  an  ISO  or a
Non-Qualified Stock Option.

         6.3 Exercise Price.

                  6.3.1 In General.  Each Stock Option Agreement shall state the
         price at which shares subject to the Stock Option may be purchased (the
         "Exercise  Price"),  which  shall,  with  respect  to  Incentive  Stock
         Options, be not less than 100% of the Fair Market Value of the Stock on
         the Date of Grant.  In the case of  Non-Qualified  Stock  Options,  the
         Exercise  Price  shall  be  determined  in the sole  discretion  of the
         Administrator.

                  6.3.2  Payment.  The Exercise Price shall be payable in a form
         described in Section 8 hereof.

         6.4 Withholding Taxes. As a condition to the exercise of an Option, the
Optionee  shall  make  such  arrangements  as the  Board  may  require  for  the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in  connection  with such  exercise  or with the  disposition  of
shares acquired by exercising an Option.

         6.5 Exercisability.  Each Stock Option Agreement shall specify the date
when all or any installment of the Option becomes exercisable. In the case of an
Optionee who is not an officer of the Company,  a Director or a  Consultant,  an
Option  shall become  exercisable  at a rate of no more than 25% per year over a

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four-year  period  commencing  on January 1 following  the Date of Grant and 25%
each year  thereafter  on January  1.  Subject to the  preceding  sentence,  the
exercise  provisions  of any Stock Option  Agreement  shall be determined by the
Administrator, in its sole discretion.

         6.6 Term.  The Stock  Option  Agreement  shall  specify the term of the
Option. No Option shall be exercised after the expiration of ten years after the
date the  Option is  granted.  Unless  otherwise  provided  in the Stock  Option
Agreement,  no  Option  may be  exercised  (i) three  months  after the date the
Optionee's Service with the Company,  its Parent or its Subsidiaries  terminates
if such  termination  is for any reason other than death,  Disability  or Cause,
(ii) one year after the date the Optionee's Service with the Company, its Parent
or its  subsidiaries  terminates  if such  termination  is a result  of death or
Disability, and (iii) if the Optionee's Service with the Company, its Parent, or
its Subsidiaries  terminates for Cause, all outstanding  Options granted to such
Optionee  shall  expire as of the  commencement  of business on the date of such
termination.   The  Administrator  may,  in  its  sole  discretion,   waive  the
accelerated expiration provided for in (i) or (ii). Outstanding Options that are
not  exercisable  at the time of  termination of employment for any reason shall
expire at the close of business on the date of such termination.

         6.7 Leaves of Absence. For purposes of Section 6.6 above, to the extent
required  by  applicable  law,  Service  shall be deemed to  continue  while the
Optionee is on a bona fide leave of absence.  To the extent  applicable law does
not  require  such a leave to be deemed to continue  while the  Optionee is on a
bona fide leave of absence,  such leave shall be deemed to continue if, and only
if,  expressly  provided in writing by the  Administrator  or a duly  authorized
officer of the Company,  Parent, or Subsidiary for whom Optionee provides his or
her services.

         6.8  Modification,  Extension  and  Assumption  of Options.  Within the
limitations  of the  Plan,  the  Administrator  may  modify,  extend  or  assume
outstanding  Options  (whether  granted by the Company or another issuer) or may
accept the  cancellation of outstanding  Options (whether granted by the Company
or  another  issuer) in return  for the grant of new  Options  for the same or a
different  number  of  shares  and at the same or a  different  Exercise  Price.
Without limiting the foregoing, the Administrator may amend a previously granted
Option to fully accelerate the exercise schedule of such Option and provide that
upon  the  exercise  of such  Option,  the  Optionee  shall  receive  shares  of
Restricted  Stock that are subject to  repurchase by the Company at the Exercise
Price paid for the Option in accordance  with Section 8.8.1 with such  Company's
right to  repurchase  at such  price  lapsing  at the same rate as the  exercise
provisions  set  forth in  Optionee's  Stock  Option  Agreement.  The  foregoing
notwithstanding,  no modification of an Option shall, without the consent of the
Optionee,  impair the Optionee's  rights or increase the Optionee's  obligations
under such Option.  However,  a termination  of the Option in which the Optionee
receives a cash payment  equal to the  difference  between the Fair Market Value
and the Exercise Price for all shares subject to exercise under any  outstanding
Option  shall not be deemed to impair any rights of the Optionee or increase the
Optionee's obligations under such Option.

               SECTION 7: TERMS AND CONDITIONS OF AWARDS OR SALES

         7.1 Stock  Purchase  Agreement.  Each award or sale of shares under the
Plan  (other  than upon  exercise of an Option)  shall be  evidenced  by a Stock
Purchase  Agreement  between the Purchaser  and the Company.  Such award or sale
shall be subject to all  applicable  terms and conditions of the Plan and may be
subject to any other terms and conditions  which are not  inconsistent  with the
Plan and which the Board deems  appropriate  for  inclusion in a Stock  Purchase
Agreement.  The provisions of the various Stock Purchase Agreements entered into
under the Plan need not be identical.

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         7.2 Duration of Offers. Unless otherwise provided in the Stock Purchase
Agreement,  any right to acquire  shares  under the Plan  (other than an Option)
shall  automatically  expire if not  exercised by the  Purchaser  within 15 days
after the grant of such right was communicated to the Purchaser by the Company.

         7.3 Purchase Price.

                  7.3.1 In General.  Each Stock Purchase  Agreement  shall state
         the price at which the Stock subject to such Stock  Purchase  Agreement
         may be purchased (the "Purchase  Price"),  which, with respect to Stock
         Purchase  Rights,  shall be  determined  in the sole  discretion of the
         Administrator.

                  7.3.2 Payment of Purchase  Price.  The Purchase Price shall be
         payable in a form described in Section 8.

         7.4 Withholding  Taxes.  As a condition to the purchase of shares,  the
Purchaser  shall  make  such  arrangements  as the  Board  may  require  for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such purchase.

                        SECTION 8: PAYMENT; RESTRICTIONS

         8.1 General Rule. The entire Purchase Price or Exercise Price of shares
issued  under  the Plan  shall be  payable  in full by, as  applicable,  cash or
certified check for an amount equal to the aggregate  Purchase Price or Exercise
Price for the number of shares  being  purchased,  or in the  discretion  of the
Administrator,  upon such terms as the Administrator  shall approve,  (i) in the
case of an Option and provided the Company's stock is publicly traded, by a copy
of  instructions  to a broker  directing such broker to sell the Stock for which
such Option is  exercised,  and to remit to the Company the  aggregate  Exercise
Price of such Options (a "cashless exercise"),  (ii) in the case of an Option or
a sale of Stock,  by paying all or a portion of the  Exercise  Price or Purchase
Price for the number of shares being  purchased by tendering  Stock owned by the
Optionee, duly endorsed for transfer to the Company, with a Fair Market Value on
the date of delivery  equal to the  aggregate  Purchase  Price of the Stock with
respect to which such Option or portion  thereof is thereby  exercised  or Stock
acquired (a "stock-for-stock  exercise") or (iii) by a stock-for-stock  exercise
by means of attestation  whereby the Optionee  identifies for delivery  specific
shares of Stock  already  owned by Optionee  and  receives a number of shares of
Stock equal to the difference  between the Option shares  thereby  exercised and
the identified attestation shares of Stock (an "attestation exercise").

         8.2  Withholding  Payment.  The Purchase  Price or Exercise Price shall
include  payment of the amount of all  federal,  state,  local or other  income,
excise or employment taxes subject to withholding (if any) by the Company or any
parent or subsidiary  corporation as a result of the exercise of a Stock Option.
The  Optionee may pay all or a portion of the tax  withholding  by cash or check
payable to the Company,  or, at the discretion of the  Administrator,  upon such
terms  as  the  Administrator   shall  approve,  by  (i)  cashless  exercise  or
attestation  exercise;  (ii) stock-for-stock  exercise;  (iii) in the case of an
Option,  by paying  all or a portion  of the tax  withholding  for the number of
shares being purchased by withholding shares from any transfer or payment to the
Optionee  ("Stock  withholding");  or (iv) a  combination  of one or more of the
foregoing  payment  methods.  Any shares  issued  pursuant to the exercise of an
Option  and  transferred  by the  Optionee  to the  Company  for the  purpose of
satisfying any withholding  obligation shall not again be available for purposes
of the Plan.  The Fair  Market  Value of the  number of shares  subject to Stock

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withholding shall not exceed an amount equal to the applicable  minimum required
tax withholding rates.

         8.3 Services Rendered.  At the discretion of the Administrator,  shares
may be awarded  under the Plan in  consideration  of  services  rendered  to the
Company, a Parent or a Subsidiary prior to the award.

         8.4  Promissory  Note.  To the extent that a Stock Option  Agreement or
Stock Purchase  Agreement so provides,  in the discretion of the  Administrator,
upon such  terms as the  Administrator  shall  approve,  all or a portion of the
Exercise Price or Purchase Price (as the case may be) of shares issued under the
Plan may be paid with a full-recourse  promissory  note.  However,  in the event
there is a stated par value of the shares and applicable  law requires,  the par
value of the shares, if newly issued, shall be paid in cash or cash equivalents.
The shares shall be pledged as security for payment of the  principal  amount of
the  promissory  note and interest  thereon,  and held in the  possession of the
Company  until said amounts are repaid in full.  The interest rate payable under
the terms of the  promissory  note shall not be less than the  minimum  rate (if
any) required to avoid the  imputation of  additional  interest  under the Code.
Subject to the  foregoing,  the  Administrator  (at its sole  discretion)  shall
specify the term,  interest rate,  amortization  requirements (if any) and other
provisions of such note. Unless the Administrator  determines otherwise,  shares
of Stock  having a Fair Market Value at least equal to the  principal  amount of
the loan shall be pledged by the holder to the Company as  security  for payment
of the unpaid balance of the loan and such pledge shall be evidenced by a pledge
agreement,  the terms of which shall be determined by the Administrator,  in its
discretion;  provided,  however, that each loan shall comply with all applicable
laws,  regulations  and rules of the Board of Governors  of the Federal  Reserve
System and any other governmental agency having jurisdiction.

         8.5  Exercise/Pledge.  To the extent that a Stock  Option  Agreement or
Stock  Purchase  Agreement  so allows and if Stock is  publicly  traded,  in the
discretion  of the  Administrator,  upon such terms as the  Administrator  shall
approve,  payment  may  be  made  all or in  part  by  the  delivery  (on a form
prescribed by the Administrator) of an irrevocable direction to pledge shares to
a securities  broker or lender approved by the Company,  as security for a loan,
and to deliver all or part of the loan proceeds to the Company in payment of all
or part of the Exercise Price and any withholding taxes.

         8.6 Written Notice. The purchaser shall deliver a written notice to the
Administrator  requesting that the Company direct the transfer agent to issue to
the purchaser  (or to his  designee) a  certificate  for the number of shares of
Common Stock being exercised or purchased or, in the case of a cashless exercise
or share withholding exercise, for any shares that were not sold in the cashless
exercise or withheld.

         8.7 First Refusal Right. Each Stock Option Agreement and Stock Purchase
Agreement  may provide  that the Company  shall have the right of first  refusal
(the "First Refusal  Right"),  exercisable in connection with any proposed sale,
hypothecation  or other  disposition  of the Stock  purchased by the Optionee or
Offeree pursuant to a Stock Option Agreement or Stock Purchase Agreement; and in
the event the  holder of such Stock  desires  to accept a bona fide  third-party
offer for any or all of such  Stock,  the Stock  shall  first be  offered to the
Company  upon the same  terms and  conditions  as are set forth in the bona fide
offer.

         8.8 Repurchase  Rights.  Following a termination  of the  Participant's
Service, the Company may repurchase the Participant's Rights as provided in this
Section 8.8 (the "Repurchase Right").

                                       9
<PAGE>

                  8.8.1  Repurchase  Price.   Following  a  termination  of  the
         Participant's  Service the  Repurchase  Right shall be exercisable at a
         price  equal to (i) the Fair  Market  Value of vested  Stock or, in the
         case of  exercisable  options,  the  Fair  Market  Value  of the  Stock
         underlying  such  unexercised  options less the Exercise Price, or (ii)
         the Purchase Price or Exercise  Price,  as the case may be, of unvested
         Stock;  provided,  however,  the right to repurchase  unvested stock as
         described in Section 8.8.1(ii) shall lapse at a rate of at least 33.33%
         per year over three years from the date the Right is granted.

                  8.8.2 Exercise of Repurchase  Right. A Repurchase Right may be
         exercised   only   within  90  days  after  the   termination   of  the
         Participant's  Service (or in the case of Stock issued upon exercise of
         an Option or after the date of  termination  or the  purchase  of Stock
         under a Stock Purchase Agreement after the date of termination,  within
         90 days after the date of the exercise or Stock purchase,  whichever is
         applicable) for cash or for  cancellation  of indebtedness  incurred in
         purchasing the shares.

         8.9  Termination  of Repurchase  and First Refusal  Rights.  Each Stock
Option Agreement and Stock Purchase  Agreement shall provide that the Repurchase
Rights and First  Refusal  Rights shall have no effect with respect to, or shall
lapse and cease to have  effect when the  issuer's  securities  become  publicly
traded  or a  determination  is  made  by  counsel  for the  Company  that  such
Repurchase  Rights and First Refusal Rights are not permitted  under  applicable
federal or state securities laws.

         8.10 No  Transferability.  Except as provided herein, a Participant may
not  assign,  sell or  transfer  Rights,  in  whole or in  part,  other  than by
testament or by operation of the laws of descent and distribution.

                  8.10.1  Permitted   Transfer  of  Non-Qualified   Option.  The
         Administrator,  in its sole  discretion  may permit the  transfer  of a
         Non-Qualified  Option  (but  not an ISO or  Stock  Purchase  Right)  as
         follows: (i) by gift to a member of the Participant's immediate family,
         or (ii) by transfer by instrument to a trust  providing that the Option
         is to be passed to  beneficiaries  upon death of the Settlor (either or
         both (i) or (ii) referred to as a "Permitted Transferee"). For purposes
         of this Section  8.10.1,  "immediate  family" shall mean the Optionee's
         spouse  (including  a former  spouse  subject  to  terms of a  domestic
         relations order); child, stepchild, grandchild,  child-in-law;  parent,
         stepparent, grandparent, parent-in-law; sibling and sibling-in-law, and
         shall include adoptive relationships.

                  8.10.2 Conditions of Permitted Transfer.  A transfer permitted
         under this Section 8.10 hereof may be made only upon written  notice to
         and approval thereof by Administrator.  A Permitted  Transferee may not
         further assign, sell or transfer the transferred Option, in whole or in
         part,  other than by  testament  or by operation of the laws of descent
         and distribution.  A Permitted  Transferee shall agree in writing to be
         bound by the  provisions of this Plan,  which a copy of said  agreement
         shall  be  provided  to the  Administrator  for  approval  prior to the
         transfer.

                    SECTION 9: ADJUSTMENTS; MARKET STAND-OFF

         9.1 Effect of Certain Changes.

                  9.1.1 Stock Dividends,  Splits, Etc. If there is any change in
         the number of  outstanding  shares of Stock by reason of a stock split,
         reverse stock split, stock dividend,  recapitalization,  combination or
         reclassification,  then (i) the number of shares of Stock available for

                                       10
<PAGE>

         Rights,  (ii) the  number  of shares of Stock  covered  by  outstanding
         Rights,  and (iii) the  Exercise  Price or Purchase  Price of any Stock
         Option or Purchase  Right,  in effect  prior to such  change,  shall be
         proportionately  adjusted by the  Administrator to reflect any increase
         or decrease in the number of issued shares of Stock; provided, however,
         that any  fractional  shares  resulting  from the  adjustment  shall be
         eliminated.

                  9.1.2 Liquidation,  Dissolution,  Merger or Consolidation.  In
         the  event of a  dissolution  or  liquidation  of the  Company,  or any
         corporate  separation  or  division,  including,  but not limited to, a
         split-up, a split-off or a spin-off,  or a sale of substantially all of
         the  assets  of the  Company;  a merger or  consolidation  in which the
         Company is not the Surviving  Entity;  or a reverse merger in which the
         Company  is the  Surviving  Entity,  but the  shares of  Company  stock
         outstanding immediately preceding the merger are converted by virtue of
         the merger into other property, whether in the form of securities, cash
         or otherwise,  then, the Company, to the extent permitted by applicable
         law,  but  otherwise  in its sole  discretion  may provide for: (i) the
         continuation  of  outstanding  Rights by the Company (if the Company is
         the  Surviving  Entity);  (ii)  the  assumption  of the  Plan  and such
         outstanding  Rights by the  Surviving  Entity or its parent;  (iii) the
         substitution  by the  Surviving  Entity or its  parent  of Rights  with
         substantially  the same terms for such outstanding  Rights; or (iv) the
         cancellation  of  such  outstanding   Rights  without  payment  of  any
         consideration,  provided  that if such  Rights  would  be  canceled  in
         accordance with the foregoing,  the  Participant  shall have the right,
         exercisable  during the later of the ten-day period ending on the fifth
         day  prior  to such  merger  or  consolidation  or ten days  after  the
         Administrator  provides the Rights holder a notice of cancellation,  to
         exercise  such  Rights  in  whole  or in  part  without  regard  to any
         installment exercise provisions in the Rights agreement.

                  9.1.3 Par Value Changes. In the event of a change in the Stock
         of the Company as presently constituted which is limited to a change of
         all of its  authorized  shares with par value,  into the same number of
         shares  without  par value,  or a change in the par  value,  the shares
         resulting  from any such change shall be "Stock"  within the meaning of
         the Plan.

         9.2 Decision of  Administrator  Final. To the extent that the foregoing
adjustments relate to stock or securities of the Company, such adjustments shall
be made by the  Administrator,  whose  determination  in that  respect  shall be
final, binding and conclusive; provided, however, that each ISO granted pursuant
to the Plan shall not be adjusted  in a manner that causes such Stock  Option to
fail to continue to qualify as an ISO without the prior  consent of the Optionee
thereof.

         9.3 No Other Rights. Except as hereinbefore  expressly provided in this
Section 9, no Participant  shall have any rights by reason of any subdivision or
consolidation  of shares of Company  stock or the payment of any dividend or any
other increase or decrease in the number of shares of Company stock of any class
or by reason of any of the events  described in Section 9.1, above, or any other
issue by the Company of shares of stock of any class, or securities  convertible
into shares of stock of any class;  and,  except as provided in this  Section 9,
none of the foregoing  events shall affect,  and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Stock subject to
Rights.  The grant of a Right  pursuant  to the Plan shall not affect in any way
the  right or  power  of the  Company  to make  adjustments,  reclassifications,
reorganizations or changes of its capital or business  structures or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or part of its
business or assets.

                                       11
<PAGE>

         9.4 Market  Stand-Off.  Each Stock Option  Agreement and Stock Purchase
Agreement  shall  provide  that,  in  connection  with any  underwritten  public
offering  by the  Company  of its equity  securities  pursuant  to an  effective
registration  statement  filed  under the  Securities  Act of 1933,  as amended,
including the Company's initial public offering, the Participant shall agree not
to sell, make any short sale of, loan, hypothecate, pledge, grant any option for
the repurchase of, or otherwise dispose or transfer for value or otherwise agree
to engage in any of the foregoing transactions with respect to any Stock without
the prior written consent of the Company or its underwriters, for such period of
time from and after the effective date of such registration  statement as may be
requested by the Company or such underwriters (the "Market Stand-Off").

                      SECTION 10: AMENDMENT AND TERMINATION

         The Board may amend,  suspend or terminate the Plan at any time and for
any  reason.  At the time of such  amendment,  the Board shall  determine,  upon
advice from counsel,  whether such  amendment  will be contingent on stockholder
approval.

                         SECTION 11: GENERAL PROVISIONS

         11.1 General Restrictions.

                  11.1.1 No View to Distribute.  The  Administrator  may require
         each person acquiring shares of Stock pursuant to the Plan to represent
         to and agree with the Company in writing  that such person is acquiring
         the  shares   without  a  view  towards   distribution   thereof.   The
         certificates   for  such   shares  may  include  any  legend  that  the
         Administrator   deems   appropriate  to  reflect  any  restrictions  on
         transfer.

                  11.1.2 Legends. All certificates for shares of Stock delivered
         under the Plan shall be subject to such stop transfer  orders and other
         restrictions as the  Administrator  may deem advisable under the rules,
         regulations  and other  requirements  of the  Securities  and  Exchange
         Commission,  any stock exchange upon which the Stock is then listed and
         any applicable  federal or state securities laws, and the Administrator
         may cause a legend or  legends  to be put on any such  certificates  to
         make appropriate reference to such restrictions.

                  11.1.3  No  Rights  as  Stockholder.  Except  as  specifically
         provided in this Plan, a  Participant  or a transferee of a Right shall
         have no rights as a stockholder  with respect to any shares  covered by
         the Rights until the date of the issuance of a Stock certificate to him
         or her for such shares,  and no adjustment  shall be made for dividends
         (ordinary  or  extraordinary,  whether  in  cash,  securities  or other
         property) or distributions of other rights for which the record date is
         prior to the date such Stock certificate is issued,  except as provided
         in Section 9.1, hereof.

         11.2 Other  Compensation  Arrangements.  Nothing contained in this Plan
shall  prevent  the  Board  from  adopting  other  or  additional   compensation
arrangements,  subject to stockholder approval if such approval is required; and
such  arrangements  may be either  generally  applicable or  applicable  only in
specific cases.

         11.3  Disqualifying  Dispositions.  Any  Participant  who shall  make a
"disposition"  (as  defined in Section 424 of the Code) of all or any portion of
an ISO  within  two years  from the date of grant of such ISO or within one year
after the  issuance of the shares of Stock  acquired  upon  exercise of such ISO

                                       12
<PAGE>

shall be  required  to  immediately  advise  the  Company  in  writing as to the
occurrence  of the sale and the price  realized  upon the sale of such shares of
Stock.

         11.4 Regulatory Matters. Each Stock Option Agreement and Stock Purchase
Agreement  shall  provide that no shares  shall be purchased or sold  thereunder
unless and until (i) any then  applicable  requirements of state or federal laws
and regulatory  agencies shall have been fully complied with to the satisfaction
of the Company and its counsel and (ii) if required to do so by the Company, the
Optionee or Offeree shall have executed and delivered to the Company a letter of
investment  intent in such form and containing  such  provisions as the Board or
Committee may require.

         11.5 Recapitalizations.  Each Stock Option Agreement and Stock Purchase
Agreement shall contain provisions required to reflect the provisions of Section
9.

         11.6  Delivery.  Upon exercise of a Right granted under this Plan,  the
Company  shall issue Stock or pay any amounts due within a reasonable  period of
time thereafter.  Subject to any statutory obligations the Company may otherwise
have,  for purposes of this Plan,  thirty days shall be  considered a reasonable
period of time.

         11.7 Other  Provisions.  The Stock Option Agreements and Stock Purchase
Agreements  authorized  under the Plan may  contain  such other  provisions  not
inconsistent with this Plan,  including,  without limitation,  restrictions upon
the exercise of the Rights, as the Administrator may deem advisable.

                     SECTION 12: INFORMATION TO PARTICIPANTS

         To the extent  necessary to comply with  Colorado law, the Company each
year shall furnish to Participants its balance sheet and income statement unless
such  Participants  are limited to key  Employees  whose duties with the Company
assure them access to equivalent information.

                       SECTION 13: STOCKHOLDERS AGREEMENT

         As a condition  to the  transfer of Stock  pursuant to a Right  granted
under this Plan, the  Administrator,  in its sole and absolute  discretion,  may
require the  Participant  to execute and become a party to any  agreement by and
among the Company and any of its stockholders  which exists on or after the Date
of Grant (the "Stockholders Agreement"). If the Participant becomes a party to a
Stockholders  Agreement,  in  addition  to the  terms of this Plan and the Stock
Option Agreement or Stock Purchase Agreement  (whichever is applicable) pursuant
to which the Stock is transferred,  the terms and conditions of the Stockholders
Agreement shall govern Participant's rights in and to the Stock; and if there is
any conflict between the provisions of the Stockholders  Agreement and this Plan
or any conflict  between the  provisions of the  Stockholders  Agreement and the
Stock Option  Agreement or Stock  Purchase  Agreement  (whichever is applicable)
pursuant to which the Stock is transferred,  the provisions of the  Stockholders
Agreement shall be controlling. Notwithstanding anything to the contrary in this
Section 13, if the  Stockholders  Agreement  contains any provisions which would
violate the Colorado Corporations Code if applied to the Participant,  the terms
of this  Plan  and the  Stock  Option  Agreement  or  Stock  Purchase  Agreement
(whichever  is  applicable)  pursuant  to which the Stock is  transferred  shall
govern the Participant's rights with respect to such provisions.

                                       13

<PAGE>

                       SECTION 14: EFFECTIVE DATE OF PLAN

         The effective  date of this Plan is August 5, 2006. The adoption of the
Plan is not subject to approval by the  Company's  stockholders,  except that in
the event  that  awards  or  options  are  granted  to  officers,  directors  or
affiliates  then  approval  must be obtained  within 12 months from the date the
Plan is adopted by the Board. In the event that the stockholders fail to approve
the Plan within 12 months after its adoption by the Board, any grants of Options
to  officers,  directors  or  affiliates  or sales or awards of shares that have
already occurred to officers, directors or affiliates shall be rescinded, and no
additional grants, sales or awards shall be made thereafter under the Plan.

                            SECTION 15: TERM OF PLAN

         The Plan shall terminate  automatically on August 4, 2016, but no later
than the tenth  (10th)  anniversary  of the  effective  date.  No Right shall be
granted pursuant to the Plan after such date, but Rights theretofore granted may
extend beyond that date. The Plan may be terminated on any earlier date pursuant
to Section 10 hereof.

                              SECTION 16: EXECUTION

         To record the adoption of the Plan by the Board, the Company has caused
its authorized officer to execute the same as of __________________, 2006.

MEDINA INTERNATIONAL HOLDINGS, INC.

By: _______________________________
Daniel Medina, President

                                       14
<PAGE>

                             STOCK OPTION AGREEMENT
                    2006 MEDINA INTERNATIONAL HOLDINGS, INC.
                    STOCK OPTION AND COMPENSATION AWARD PLAN
                          Notice Of Stock Option Grant

You have been granted the  following  option to purchase  Common Stock of MEDINA
INTERNATIONAL HOLDINGS, INC. (the "Company"):

Name of Optionee:

Total Number of Shares Granted:

Type of Option:

Exercise Price Per Share:

Date of Grant:

Vesting Commencement Date:

Vesting Schedule:

Expiration Date:

By your signature and the signature of the Company's  authorized  representative
below,  you and the Company agree that this option is granted under and governed
by the terms and  conditions  of the 2006 MEDINA  INTERNATIONAL  HOLDINGS,  INC.
STOCK OPTION AND COMPENSATION AWARD PLAN and the STOCK OPTION AGREEMENT, both of
which are attached  hereto and are  incorporated  herein by reference.  Optionee
hereby  represents that both the option and any shares acquired upon exercise of
the option have been or will be acquired for  investment for his own account and
not with a view to or for sale in connection with any  distribution or resale of
the security.

Optionee:                           MEDINA INTERNATIONAL HOLDINGS, INC.

By:_________________________        By:______________________
                                            Daniel Medina
Name:______________________         Its: President

<PAGE>

                                     ANNEX I

THE OPTION GRANTED  PURSUANT TO THIS AGREEMENT AND THE SHARES  ISSUABLE UPON THE
EXERCISE  THEREOF HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED,  AND MAY NOT BE SOLD,  PLEDGED,  OR  OTHERWISE  TRANSFERRED  WITHOUT AN
EFFECTIVE  REGISTRATION  THEREOF  UNDER  SUCH  ACT  OR AN  OPINION  OF  COUNSEL,
SATISFACTORY  TO THE  COMPANY AND ITS  COUNSEL,  THAT SUCH  REGISTRATION  IS NOT
REQUIRED.

                    2006 MEDINA INTERNATIONAL HOLDINGS, INC.
                    STOCK OPTION AND COMPENSATION AWARD PLAN:
                             STOCK OPTION AGREEMENT

                           SECTION 1: GRANT OF OPTION

         1.1  Option.  On the terms and  conditions  set forth in the  notice of
stock option grant to which this  agreement (the  "Agreement")  is attached (the
"Notice of Stock Option  Grant") and this  agreement,  the Company grants to the
individual named in the Notice of Stock Option Grant (the "Optionee") the option
to purchase at the exercise price  specified in the Notice of Stock Option Grant
(the  "Exercise  Price")  the  number of Shares set forth in the Notice of Stock
Option  Grant.  This option is  intended to be either an ISO or a  Non-Qualified
Stock Option, as provided in the Notice of Stock Option Grant.

         1.2 Stock Plan and Defined  Terms.  This option is granted  pursuant to
and subject to the terms of the 2006 MEDINA INTERNATIONAL  HOLDINGS,  INC. STOCK
OPTION AND  COMPENSATION  AWARD PLAN, as in effect on the date  specified in the
Notice of Stock  Option  Grant (which date shall be the later of (i) the date on
which the Board  resolved  to grant  this  option,  or (ii) the first day of the
Optionee's  Service)  and as amended from time to time (the  "Plan"),  a copy of
which is attached hereto and which the Optionee  acknowledges  having  received.
Capitalized  terms not otherwise  defined in this Agreement have the definitions
ascribed to them in the Plan.

                          SECTION 2: RIGHT TO EXERCISE

         2.1 Exercisability. Subject to Sections 2.2 and 2.3 below and the other
conditions  set  forth  in this  Agreement,  all or part of this  option  may be
exercised  prior to its  expiration at the time or times set forth in the Notice
of Stock Option Grant. Shares purchased by exercising this option may be subject
to the Right of Repurchase  under  Section 7. In addition,  all of the remaining
unexercised options shall become vested and fully exercisable if (i) a Change in
Control occurs before the Optionee's Service terminates,  and (ii) the option is
not assumed or an equivalent  option is not substituted by the successor  entity
that  employs  the  Optionee  immediately  after the Change in Control or by its
parent or subsidiary.

         2.2 Limitation. If this option is designated as an ISO in the Notice of
Stock Option Grant,  then to the extent (and only to the extent) the  Optionee's
right to exercise this option causes this option (in whole or in part) to not be
treated as an ISO by reason of the  $100,000  annual  limitation  under  Section
422(d) of the  Code,  such  options  shall be  treated  as  Non-Qualified  Stock
Options,  but shall be exercisable by their terms. The  determination of options
to be treated as  Non-Qualified  Stock Options  shall be made by taking  options
into account in the order in which they are granted. If the terms of this option
cause the $100,000  annual  limitation  under  Section  422(d) of the Code to be

                                       1
<PAGE>

exceeded,  a pro rata portion of each exercise  shall be treated as the exercise
of a Non-Qualified Stock Option.

         2.3  Stockholder  Approval.  Any  other  provision  of  this  Agreement
notwithstanding,  no portion of this  option  shall be  exercisable  at any time
prior to the approval of the Plan by the Company's stockholders.

                 SECTION 3: NO TRANSFER OR ASSIGNMENT OF OPTION

         Except as provided herein, an Optionee may not assign, sell or transfer
the option,  in whole or in part, other than by testament or by operation of the
laws of descent and distribution. The Administrator,  in its sole discretion may
permit the transfer of a Non-Qualified  Option (but not an ISO) as follows:  (i)
by gift to a member of the  Participant's  immediate family, or (ii) by transfer
by  instrument  to a  trust  providing  that  the  Option  is  to be  passed  to
beneficiaries  upon death of the Settlor (either or both (i) or (ii) referred to
as a "Permitted Transferee"). For purposes of this Section 3, "immediate family"
shall mean the Optionee's  spouse (including a former spouse subject to terms of
a domestic relations order); child, stepchild, grandchild, child-in-law; parent,
stepparent,  grandparent,  parent-in-law;  sibling and sibling-in-law, and shall
include adoptive relationships. A transfer permitted under this Section 3 hereof
may be made only upon written notice to and approval thereof by Administrator. A
Permitted  Transferee may not further  assign,  sell or transfer the transferred
option, in whole or in part, other than by testament or by operation of the laws
of descent and distribution. A Permitted Transferee shall agree in writing to be
bound by the provisions of this Plan,  which agreement shall be submitted to and
approved by the Administrator before the transfer.

                         SECTION 4: EXERCISE PROCEDURES

         4.1 Notice of Exercise.  The Optionee or the Optionee's  representative
may exercise this option by delivering a written notice in the form of Exhibit A
attached  hereto  ("Notice of Exercise") to the Company in the manner  specified
pursuant to Section  14.4  hereof.  Such Notice of  Exercise  shall  specify the
election to  exercise  this  option,  the number of Shares for which it is being
exercised and the form of payment,  which must comply with Section 5. The Notice
of  Exercise  shall be signed by the person who is  entitled  to  exercise  this
option.  In the event  that this  option is to be  exercised  by the  Optionee's
representative,  the notice shall be accompanied by proof  (satisfactory  to the
Company) of the representative's right to exercise this option.

         4.2 Issuance of Shares.  After  receiving a proper  Notice of Exercise,
the  Company  shall cause to be issued a  certificate  or  certificates  for the
Shares as to which this option has been exercised, registered in the name of the
person  exercising  this  option (or in the names of such  person and his or her
spouse as community  property or as joint  tenants with right of  survivorship).
The Company  shall cause such  certificate  or  certificates  to be deposited in
escrow or delivered to or upon the order of the person exercising this option.

         4.3 Withholding Taxes. In the event that the Company determines that it
is required to withhold any tax as a result of the exercise of this option,  the
Optionee, as a condition to the exercise of this option, shall make arrangements
satisfactory   to  the  Company  to  enable  it  to  satisfy   all   withholding
requirements.  The Optionee  shall also make  arrangements  satisfactory  to the
Company to enable it to satisfy any withholding  requirements  that may arise in
connection  with the vesting or  disposition  of Shares  purchased by exercising
this option, and shall provide to the Company his/her/its social security number
or employment identification number.

                                       2
<PAGE>

                          SECTION 5: PAYMENT FOR STOCK

         5.1 General Rule. The entire  Exercise Price of Shares issued under the
Plan shall be payable in full by cash or cashier's  check for an amount equal to
the  aggregate  Exercise  Price  for  the  number  of  shares  being  purchased.
Alternatively,  in the sole discretion of the Plan  Administrator  and upon such
terms as the Plan  Administrator  shall approve,  the Exercise Price may be paid
by:

                  5.1.1 Cashless  Exercise.  Provided the Company's Common Stock
         is publicly  traded,  a copy of instructions to a broker directing such
         broker to sell the Shares for which this  option is  exercised,  and to
         remit to the  Company  the  aggregate  Exercise  Price  of such  option
         ("Cashless Exercise");

                  5.1.2 Stock-For-Stock Exercise. Paying all or a portion of the
         Exercise  Price for the number of Shares  being  purchased by tendering
         Shares  owned  by the  Optionee,  duly  endorsed  for  transfer  to the
         Company,  with a Fair Market Value on the date of delivery equal to the
         Exercise Price multiplied by the number of Shares with respect to which
         this option is being exercised (the "Purchase  Price") or the aggregate
         Purchase  Price of the shares  with  respect  to which  this  option or
         portion hereof is exercised ("Stock-for-Stock Exercise"); or

                  5.1.3 Attestation  Exercise.  By a stock for stock exercise by
         means of  attestation  whereby the  Optionee  identifies  for  delivery
         specific  Shares  already  owned by Optionee  and  receives a number of
         Shares  equal to the  difference  between  the  Option  Shares  thereby
         exercised  and  the   identified   attestation   Shares   ("Attestation
         Exercise").

         5.2  Withholding  Payment.  The Exercise Price shall include payment of
the amount of all federal,  state,  local or other income,  excise or employment
taxes subject to withholding (if any) by the Company or any parent or subsidiary
corporation as a result of the exercise of a Stock Option.  The Optionee may pay
all or a portion of the tax withholding by cash or check payable to the Company,
or, at the discretion of the Administrator, upon such terms as the Administrator
shall  approve,  by  (i)  Cashless  Exercise  or  Attestation   Exercise;   (ii)
Stock-for-Stock  Exercise;  (iii) in the case of an  Option,  by paying all or a
portion of the tax  withholding  for the  number of shares  being  purchased  by
withholding  shares  from  any  transfer  or  payment  to the  Optionee  ("Stock
withholding");  or (iv) a combination  of one or more of the  foregoing  payment
methods. Any shares issued pursuant to the exercise of an Option and transferred
by the  Optionee to the Company for the purpose of  satisfying  any  withholding
obligation  shall not again be  available  for  purposes  of the Plan.  The fair
market  value of the  number of shares  subject to Stock  withholding  shall not
exceed an amount equal to the applicable minimum required tax withholding rates.

         5.3 Promissory  Note. The Plan  Administrator,  in its sole discretion,
upon such terms as the Plan  Administrator  shall  approve,  may permit all or a
portion of the Exercise  Price of Shares issued under the Plan to be paid with a
full-recourse promissory note. However, in the event there is a stated par value
of the shares and applicable law requires, the par value of the shares, if newly
issued,  shall be paid in cash or cash equivalents.  The Shares shall be pledged
as  security  for payment of the  principal  amount of the  promissory  note and
interest  thereon,  and shall be held in the possession of the Company until the
promissory  note  is  repaid  in  full.  Subject  to  the  foregoing,  the  Plan
Administrator  (at its sole discretion)  shall specify the term,  interest rate,
amortization requirements (if any) and other provisions of such note.

                                       3
<PAGE>

         5.4 Exercise/Pledge.  In the discretion of the Plan Administrator, upon
such terms as the Plan Administrator  shall approve,  payment may be made all or
in part by the delivery (on a form prescribed by the Plan  Administrator)  of an
irrevocable direction to pledge Shares to a securities broker or lender approved
by the Company,  as security for a loan,  and to deliver all or part of the loan
proceeds to the Company in payment of all or part of the Exercise  Price and any
withholding taxes.

                         SECTION 6: TERM AND EXPIRATION

         6.1 Basic Term.  This option shall expire and shall not be  exercisable
after the expiration of the earliest of (i) the Expiration Date specified in the
Notice of Stock Option  Grant,  (ii) three months after the date the  Optionee's
Service with the Company and its Subsidiaries  terminates if such termination is
for any reason other than death,  Disability or Cause,  (iii) one year after the
date the Optionee's Service with the Company and its Subsidiaries  terminates if
such termination is a result of death or Disability,  and (iv) if the Optionee's
Service  with  the  Company  and its  Subsidiaries  terminates  for  Cause,  all
outstanding Options granted to such Optionee shall expire as of the commencement
of business on the date of such  termination.  Outstanding  Options that are not
exercisable at the time of termination of employment for any reason shall expire
at the close of business on the date of such termination. The Plan Administrator
shall have the sole  discretion to determine when this option is to expire.  For
any purpose under this Agreement,  Service shall be deemed to continue while the
Optionee  is on a bona  fide  leave of  absence,  if such  leave  to the  extent
required by applicable law. To the extent applicable law does not require such a
leave to be deemed to  continue  while the  Optionee  is on a bona fide leave of
absence,  such leave  shall be deemed to  continue  if,  and only if,  expressly
provided in writing by the  Administrator  or a duly  authorized  officer of the
Company, Parent or Subsidiary for whom Optionee provides his or her services.

         6.2 Exercise  After Death.  All or part of this option may be exercised
at any time before its  expiration  under  Section 6.1 above by the executors or
administrators  of the Optionee's  estate or by any person who has acquired this
option  directly  from the  Optionee  by  beneficiary  designation,  bequest  or
inheritance,  but only to the extent  that this  option  had become  exercisable
before the Optionee's  death.  When the Optionee dies,  this option shall expire
immediately  with  respect to the number of Shares for which this  option is not
yet  exercisable  and with  respect to any Share that is subject to the Right of
Repurchase (as such term is defined in below) (the "Restricted Stock").

         6.3 Notice Concerning ISO Treatment. If this option is designated as an
ISO in the Notice of Stock Option Grant,  it ceases to qualify for favorable tax
treatment  as an ISO to the extent it is  exercised  (i) more than three  months
after the date the  Optionee  ceases to be an Employee for any reason other than
death or permanent and total  disability (as defined in Section  22(e)(3) of the
Code),  (ii)  more than 12 months  after the date the  Optionee  ceases to be an
Employee by reason of such  permanent and total  disability,  or (iii) after the
Optionee  has  been on a leave of  absence  for more  than 90 days,  unless  the
Optionee's reemployment rights are guaranteed by statute or by contract.

                                       4

<PAGE>

                         SECTION 7: RIGHT OF REPURCHASE

         7.1 Option Repurchase Right.  Following a termination of the Optionee's
Service,  the Company shall have the option to repurchase the Optionee's  vested
and  exercisable  options at a price equal to the Fair Market Value of the Stock
underlying  such  options,  less the  Exercise  Price  (the  "Option  Repurchase
Right").

         7.2  Stock  Repurchase  Right.   Unless  they  have  become  vested  in
accordance  with the Notice of Stock  Option  Grant and Section  7.4 below,  the
stock  acquired  under this Agreement  initially  shall be Restricted  Stock and
shall  be  subject  to a right  (but not an  obligation)  of  repurchase  by the
Company,  which shall be exercisable at a price equal to the Exercise Price paid
for the Restricted Stock (the "Stock Repurchase  Right").  Vested stock acquired
under this  Agreement  shall be subject  to a right (but not an  obligation)  of
repurchase by the Company,  which shall be  exercisable  at a price equal to the
Fair Market Value of the vested Stock.

         7.3 Condition  Precedent to Exercise.  The Option  Repurchase Right and
Stock  Repurchase  Rights  (collectively,  the "Right of  Repurchase")  shall be
exercisable  over Restricted  Stock only during the 90-day period next following
the later of:

                  7.3.1 The date when the Optionee's  Service terminates for any
         reason, with or without Cause,  including (without limitation) death or
         disability; or

                  7.3.2 The date when this option was exercised by the Optionee,
         the executors or administrators of the Optionee's estate, or any person
         who has  acquired  this option  directly  from the Optionee by bequest,
         inheritance or beneficiary designation.

         7.4 Lapse of Right of Repurchase.  The Right of Repurchase  shall lapse
with respect to the Shares subject to this option in accordance with the vesting
schedule set forth in the Notice of Stock Option Grant.  In addition,  the Right
of Repurchase shall lapse and all of the remaining Restricted Stock shall become
vested  if  (i) a  Change  in  Control  occurs  before  the  Optionee's  Service
terminates,  and (ii) the Right of Repurchase is not assigned to the entity that
employs the Optionee immediately after the Change in Control or to its parent or
subsidiary.  The Right of Repurchase shall lapse with respect to (i) Shares that
are registered  under a then currently  effective  registration  statement under
applicable  federal  securities  laws and the issuer is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act or becomes an investment
company registered or required to be registered under the Investment Company Act
of 1940,  or (ii)  Shares for which a  determination  is made by counsel for the
Company  that  such  Exercise  Price   restrictions  are  not  required  in  the
circumstances under applicable federal or state securities laws.

         7.5 Exercise of Right of  Repurchase.  The Company  shall  exercise the
Right of Repurchase  by written  notice  delivered to the Optionee  prior to the
expiration of the 90-day period specified in Section 7.3 above. The notice shall
set forth the date on which the  repurchase is to be effected,  which must occur
within 31 days of the notice.  The  certificate(s)  representing  the Restricted
Stock to be  repurchased  shall,  prior to the  close  of  business  on the date
specified for the repurchase,  be delivered to the Company properly endorsed for
transfer.   The   Company   shall,   concurrently   with  the  receipt  of  such
certificate(s),  pay to the Optionee the Purchase Price determined  according to
this  Section  7.  Payment  shall  be made in  cash  or cash  equivalents  or by
canceling  indebtedness to the Company  incurred by the Optionee in the purchase
of the Restricted Stock. The Right of Repurchase shall terminate with respect to
any Restricted Stock for which it has not been timely exercised pursuant to this
Section 7.5.

                                       5
<PAGE>

         7.6  Rights of  Repurchase  Adjustments.  If there is any change in the
number of outstanding shares of Stock by reason of a stock split,  reverse stock
split,  stock dividend,  an extraordinary  dividend payable in a form other than
stock,   recapitalization,   combination  or  reclassification,   or  a  similar
transaction  affecting the Company's  outstanding  securities without receipt of
consideration,  then (i) any new, substituted or additional  securities or other
property  (including  money  paid  other  than  as an  ordinary  cash  dividend)
distributed  with respect to any Restricted Stock (or into which such Restricted
Stock thereby become  convertible)  shall immediately be subject to the Right of
Repurchase; and (ii) appropriate adjustments to reflect the distribution of such
securities  or  property  shall  be  made  to the  number  and/or  class  of the
Restricted  Stock and to the price per share to be paid upon the exercise of the
Right of  Repurchase;  provided,  however,  that the  aggregate  Purchase  Price
payable for the Restricted Stock shall remain the same.

         7.7  Termination  of  Rights  as  Stockholder.  If  the  Company  makes
available,  at the time and place and in the  amount and form  provided  in this
Agreement,  the  consideration  for the  Restricted  Stock to be  repurchased in
accordance  with this  Section 7, then after such time the person from whom such
Restricted  Stock is to be  repurchased  shall no  longer  have any  rights as a
holder of such Restricted Stock (other than the right to receive payment of such
consideration in accordance with this Agreement). Such Restricted Stock shall be
deemed to have been  repurchased in accordance  with the  applicable  provisions
hereof,  whether or not the  certificate(s)  therefore  have been  delivered  as
required by this Agreement.

         7.8 Escrow. Upon issuance,  the certificates for Restricted Stock shall
be  deposited  in escrow  with the  Company  to be held in  accordance  with the
provisions of this Agreement.  Any new, substituted or additional  securities or
other property  described in Section 7.6 above shall immediately be delivered to
the  Company to be held in escrow,  but only to the extent the Shares are at the
time Restricted  Stock. All regular cash dividends on Restricted Stock (or other
securities  at the time held in escrow)  shall be paid  directly to the Optionee
and shall  not be held in  escrow.  Restricted  Stock,  together  with any other
assets or securities held in escrow  hereunder,  shall be (i) surrendered to the
Company for repurchase and cancellation upon the Company's exercise of its Right
of  Repurchase  or Right of First  Refusal or (ii) released to the Optionee upon
the Optionee's  request to the extent the Shares are no longer  Restricted Stock
(but not more frequently than once every six months).  In any event,  all Shares
which have  vested  (and any other  vested  assets and  securities  attributable
thereto)  shall  be  released  within  60  days  after  the  earlier  of (i) the
Optionee's cessation of Service or (ii) the lapse of the Right of First Refusal.

                        SECTION 8: RIGHT OF FIRST REFUSAL

         8.1 Right of First  Refusal.  In the event that the Company's  stock is
not  readily  tradable  on an  established  securities  market and the  Optionee
proposes  to sell,  pledge or  otherwise  transfer  to a third  party any Shares
acquired under this  Agreement,  or any interest in such Shares,  to any person,
entity or organization  (the  "Transferee")  the Company shall have the Right of
First  Refusal  with  respect to all (and not less than all) of such Shares (the
"Right of First  Refusal").  If the Optionee desires to transfer Shares acquired
under  this  Agreement,  the  Optionee  shall  give a  written  transfer  notice
("Transfer  Notice")  to the Company  describing  fully the  proposed  transfer,
including the number of Shares proposed to be transferred, the proposed transfer
price, the name and address of the proposed Transferee and proof satisfactory to
the Company that the proposed sale or transfer  will not violate any  applicable
federal or state  securities  laws. The Transfer  Notice shall be signed both by
the  Optionee  and by the  proposed  Transferee  and must  constitute  a binding
commitment of both parties to the transfer of the Shares. The Company shall have
the right to purchase  all, and not less than all, of the Shares on the terms of
the  proposal  described  in the  Transfer  Notice  by  delivery  of a notice of

                                       6
<PAGE>

exercise  of the Right of First  Refusal  within 30 days after the date when the
Transfer  Notice was received by the Company.  The  Company's  rights under this
Section 8.1 shall be freely assignable, in whole or in part.

         8.2 Additional  Shares or Substituted  Securities.  In the event of the
declaration of a stock dividend,  the declaration of an  extraordinary  dividend
payable in a form other than stock, a spin-off,  a stock split, an adjustment in
conversion  ratio, a  recapitalization  or a similar  transaction  affecting the
Company's  outstanding  securities  without receipt of  consideration,  any new,
substituted  or additional  securities or other property  (including  money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed  with respect to any Shares  subject to this Section 8 or into which
such Shares  thereby  become  convertible  shall  immediately be subject to this
Section  8.  Appropriate   adjustments  to  reflect  the  distribution  of  such
securities  or property  shall be made to the number  and/or class of the Shares
subject to this Section 8.

         8.3 Termination of Right of First Refusal.  Any other provision of this
Section 8 notwithstanding, in the event that the Stock is readily tradable on an
established  securities market when the Optionee desires to transfer Shares, the
Company  shall have no Right of First  Refusal,  and the Optionee  shall have no
obligation to comply with the procedures prescribed by this Section 8.

         8.4 Permitted  Transfers.  This Section 8 shall not apply to a transfer
(i) by  gift  to a  member  of the  Participant's  immediate  family  or (ii) by
transfer by instrument to a trust  providing  that the Option is to be passed to
beneficiaries  upon death of the  Settlor.  For  purposes of this  Section  8.4,
"immediate  family" shall mean the Optionee's  spouse (including a former spouse
subject to terms of a domestic relations order); child,  stepchild,  grandchild,
child-in-law;  parent,  stepparent,  grandparent,   parent-in-law;  sibling  and
sibling-in-law, and shall include adoptive relationships.

         8.5  Termination  of  Rights  as  Stockholder.  If  the  Company  makes
available,  at the time and place and in the  amount and form  provided  in this
Agreement,  the  consideration for the Shares to be purchased in accordance with
this  Section 8, then after such time the person from whom such Shares are to be
purchased shall no longer have any rights as a holder of such Shares (other than
the right to  receive  payment of such  consideration  in  accordance  with this
Agreement).  Such Shares shall be deemed to have been  purchased  in  accordance
with  the  applicable  provisions  hereof,  whether  or not  the  certificate(s)
therefore have been delivered as required by this Agreement.

                         SECTION 9: OBLIGATION TO SELL.

         Notwithstanding  anything  herein  to  the  contrary,  if at  any  time
following  Optionee's  acquisition  of  Shares  hereunder,  stockholders  of the
Company  owning 51% or more of the  shares of the  Company  (on a fully  diluted
basis) (the "Control Sellers") enter into an agreement  (including any agreement
in  principal) to transfer all of their shares to any person or group of persons
who are not  affiliated  with the  Control  Sellers,  such  Control  Sellers may
require each stockholder who is not a Control Seller (a "Non-Control Seller") to
sell all of their  shares to such  person or group of  persons at a price and on
terms and conditions the same as those on which such Control Sellers have agreed
to  sell  their  shares,  other  than  terms  and  conditions  relating  to  the
performance or  non-performance  of services.  For the purposes of the preceding
sentence,  an affiliate of a Control  Seller is a person who controls,  which is
controlled by, or which is under common control with, the Control Seller.

                                       7
<PAGE>

                       SECTION 10: STOCKHOLDERS AGREEMENT

         As a condition to the  transfer of Stock  pursuant to this Stock Option
Agreement, the Administrator,  in its sole and absolute discretion,  may require
the  Participant to execute and become a party to any agreement by and among the
Company and any of its  stockholders  which exists on or after the Date of Grant
(the  "Stockholders  Agreement").  If  the  Participant  becomes  a  party  to a
Stockholders  Agreement,  in  addition  to the terms of the Plan and this  Stock
Option  Agreement,  the terms and  conditions of  Stockholders  Agreement  shall
govern  Participant's  rights in and to the Stock;  and if there is any conflict
between  the  provisions  of the  Stockholders  Agreement  and  the  Plan or any
conflict  between the  provisions of the  Stockholders  Agreement and this Stock
Option  Agreement,  the  provisions  of  the  Stockholders  Agreement  shall  be
controlling. Notwithstanding anything to the contrary in this Section 10, if the
Stockholders  Agreement  contains any  provisions  which would violate  Colorado
corporate  law if  applied  to the  Participant,  the terms of the Plan and this
Stock Option  Agreement  shall govern the  Participant's  rights with respect to
such provisions.

                    SECTION 11: LEGALITY OF INITIAL ISSUANCE

         No Shares shall be issued upon the  exercise of this option  unless and
until the Company has determined that:

         11.1 It and the  Optionee  have taken any actions  required to register
the Shares,  provided the Stock is publicly traded,  under the Securities Act of
1933, as amended (the  "Securities  Act"),  or to perfect an exemption  from the
registration requirements thereof;

         11.2 Any applicable listing  requirement of any stock exchange on which
Stock is listed has been satisfied; and

         11.3 Any other  applicable  provision  of state or federal law has been
satisfied.

                       SECTION 12: NO REGISTRATION RIGHTS

         The Company may, but shall not be obligated to, register or qualify the
sale of Shares under the Securities Act or any other applicable law. The Company
shall not be obligated to take any affirmative action in order to cause the sale
of Shares under this Agreement to comply with any law.

                      SECTION 13: RESTRICTIONS ON TRANSFER

         13.1  Securities Law  Restrictions.  Regardless of whether the offering
and sale of Shares under the Plan have been registered  under the Securities Act
or have been registered or qualified under the securities laws of any state, the
Company,  at its discretion,  may impose  restrictions  upon the sale, pledge or
other transfer of such Shares (including the placement of appropriate legends on
stock  certificates or the imposition of stop-transfer  instructions) if, in the
judgment of the Company,  such  restrictions are necessary or desirable in order
to achieve  compliance with the Securities Act, the securities laws of any state
or any other law.

         13.2 Market Stand-Off.  In the event of an underwritten public offering
by the Company of its equity  securities  pursuant to an effective  registration
statement filed under the Act,  including the Company's  initial public offering
(a "Public  Offering"),  the Optionee shall not transfer for value any shares of
Stock without the prior written consent of the Company or its underwriters,  for

                                       8
<PAGE>

such  period  of time from and after  the  effective  date of such  registration
statement as may be requested by the Company or such  underwriters  (the "Market
Stand-Off").  The Market  Stand-off  shall be in effect for such  period of time
following the date of the final  prospectus for the offering as may be requested
by the Company or such underwriters.  In the event of the declaration of a stock
dividend,  a spin-off,  a stock split,  an  adjustment in  conversion  ratio,  a
recapitalization  or a similar transaction  affecting the Company's  outstanding
securities without receipt of consideration,  any new, substituted or additional
securities which are by reason of such  transaction  distributed with respect to
any Shares  subject to the Market  Stand-Off,  or into which such Shares thereby
become  convertible,  shall immediately be subject to the Market  Stand-Off.  In
order to enforce the Market  Stand-Off,  the  Company  may impose  stop-transfer
instructions  with respect to the Shares acquired under this Agreement until the
end of the applicable stand-off period.

         13.3  Investment  Intent at Grant.  The Optionee  represents and agrees
that the Shares to be acquired upon  exercising this option will be acquired for
investment, and not with a view to the sale or distribution thereof.

         13.4  Investment  Intent at  Exercise.  In the  event  that the sale of
Shares  under  the  Plan  is not  registered  under  the  Securities  Act but an
exemption is available  which  requires an  investment  representation  or other
representation,  the Optionee shall  represent and agree at the time of exercise
that the Shares being  acquired upon  exercising  this option are being acquired
for  investment,  and not with a view to the sale or distribution  thereof,  and
shall make such other  representations as are deemed necessary or appropriate by
the Company and its counsel.

         13.5 Legends.  All certificates  evidencing Shares purchased under this
Agreement in an unregistered  transaction  shall bear the following  legend (and
such other  restrictive  legends as are required or deemed  advisable  under the
provisions of any applicable law):

"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933,  AS AMENDED,  AND MAY NOT BE SOLD,  PLEDGED,  OR OTHERWISE  TRANSFERRED
WITHOUT  AN  EFFECTIVE  REGISTRATION  THEREOF  UNDER  SUCH ACT OR AN  OPINION OF
COUNSEL,  SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED."

         13.6  Removal of  Legends.  If, in the  opinion of the  Company and its
counsel, any legend placed on a stock certificate representing Shares sold under
this Agreement no longer is required,  the holder of such  certificate  shall be
entitled to exchange such  certificate for a certificate  representing  the same
number of Shares but without such legend.

         13.7  Administration.  Any determination by the Company and its counsel
in  connection  with any of the  matters  set forth in this  Section 13 shall be
conclusive and binding on the Optionee and all other persons.

                      SECTION 14: MISCELLANEOUS PROVISIONS

         14.1 Rights as a  Stockholder.  Neither the Optionee nor the Optionee's
representative shall have any rights as a stockholder with respect to any Shares
subject to this  option  until the  Optionee  or the  Optionee's  representative
becomes  entitled  to receive  such  Shares by filing a notice of  exercise  and
paying the Exercise Price pursuant to Section 4 and Section 5 hereof.

                                       9
<PAGE>

         14.2  Adjustments.  If there is any change in the number of outstanding
shares of Stock by reason of a stock split, reverse stock split, stock dividend,
recapitalization, combination or reclassification, then (i) the number of shares
subject to this option and (ii) the  Exercise  Price of this  option,  in effect
prior to such change, shall be proportionately  adjusted to reflect any increase
or decrease in the number of issued shares of Stock; provided, however, that any
fractional shares resulting from the adjustment shall be eliminated.

         14.3 No Retention  Rights.  Nothing in this option or in the Plan shall
confer  upon the  Optionee  any right to  continue  in Service for any period of
specific duration or interfere with or otherwise  restrict in any way the rights
of the Company (or any Parent or Subsidiary employing or retaining the Optionee)
or of the  Optionee,  which  rights are hereby  expressly  reserved by each,  to
terminate  his or her  Service at any time and for any  reason,  with or without
Cause.

         14.4 Notice.  Any notice  required by the terms of this Agreement shall
be given in writing and shall be deemed effective upon personal delivery or upon
deposit with the United States Postal Service,  by registered or certified mail,
with postage and fees  prepaid.  Notice  shall be addressed  the Optionee at the
address set forth in the records of the  Company.  Notice  shall be addressed to
the Company at:

MEDINA INTERNATIONAL HOLDINGS, INC.
10088 6th Street, Suite G
Rancho Cucamonga, CA  91730

         14.5 Entire Agreement. The Notice of Stock Option Grant, this Agreement
and the Plan  constitute  the entire  contract  between the parties  hereto with
regard to the  subject  matter  hereof.  They  supersede  any other  agreements,
representations  or understandings  (whether oral or written and whether express
or implied) that relate to the subject matter hereof.

         14.6 Choice of Law. THIS AGREEMENT  SHALL BE GOVERNED BY, AND CONSTRUED
IN  ACCORDANCE  WITH,  THE LAWS OF THE STATE OF COLORADO  WITHOUT  REGARD TO ITS
CHOICE OF LAWS  PROVISIONS,  AS TENNESSEE LAWS ARE APPLIED TO CONTRACTS  ENTERED
INTO AND PERFORMED IN SUCH STATE.

         14.7 Attorneys' Fees. In the event that any action,  suit or proceeding
is instituted upon any breach of this Agreement,  the prevailing  party shall be
paid by the other party thereto an amount equal to all of the prevailing party's
costs and expenses,  including  attorneys'  fees incurred in each and every such
action,  suit  or  proceeding  (including  any  and  all  appeals  or  petitions
therefrom). As used in this Agreement, "attorneys' fees" shall mean the full and
actual cost of any legal  services  actually  performed in  connection  with the
matter involved calculated on the basis of the usual fee charged by the attorney
performing  such  services  and shall not be limited to  "reasonable  attorneys'
fees" as defined in any statute or rule of court.

                                       10
<PAGE>

                                    EXHIBIT A
                                       TO
              2006 MEDINA INTERNATIONAL HOLDINGS, INC.
                   STOCK OPTION AND COMPENSATION AWARD PLAN:
                             STOCK OPTION AGREEMENT
                                     ANNEX I

                               NOTICE OF EXERCISE

                 (To be signed only upon exercise of the Option)

MEDINA INTERNATIONAL HOLDINGS, INC.
10088 6th Street, Suite G
Rancho Cucamonga, CA  91730

The  undersigned,  the holder of the  enclosed  Stock Option  Agreement,  hereby
irrevocably elects to exercise the purchase rights represented by the Option and
to  purchase   thereunder   __________*   shares  of  Common   Stock  of  MEDINA
INTERNATIONAL HOLDINGS,  INC. (the "Company"),  and herewith encloses payment of
$_______ and/or  _________  shares of the Company's common stock in full payment
of the purchase price of such shares being purchased.

Dated:

------------------------------

NOTICE:  YOUR STOCK MAY BE SUBJECT TO  RESTRICTIONS  AND  FORFEITABLE  UNDER THE
NOTICE OF STOCK OPTION GRANT AND STOCK OPTION AGREEMENT

(Signature  must  conform in all  respects to name of holder as specified on the
face of the Option)

--------------------------------------------------------------

--------------------------------------------------------------
(Please Print Name)

--------------------------------------------------------------

--------------------------------------------------------------
(Address)

* Insert here the number of shares called for on the face of the Option,  or, in
the case of a partial exercise, the number of shares being exercised,  in either
case without making any  adjustment for additional  Common Stock of the Company,
other securities or property that, pursuant to the adjustment  provisions of the
Option, may be deliverable upon exercise.

<PAGE>

                               RESOLUTION FORM #1

                      FORM OF RESOLUTIONS FOR OPTION GRANTS

                RESOLUTIONS ADOPTED BY UNANIMOUS WRITTEN CONSENT
                          OF THE BOARD OF DIRECTORS OF
                       MEDINA INTERNATIONAL HOLDINGS, INC.

As of  August 5, 2006

The  undersigned  directors,  constituting  the entire board of  directors  (the
"Board") of MEDINA  INTERNATIONAL  HOLDINGS,  INC., a Colorado  corporation (the
"Company"),  hereby take the following actions, adopt the following resolutions,
and transact the following business, by written consent without a meeting, as of
the date above written,  pursuant to the applicable  corporate laws of the State
of Colorado and the Company's Bylaws.

WHEREAS, the Company previously adopted the 2006 MEDINA INTERNATIONAL  HOLDINGS,
INC. STOCK OPTION AND  COMPENSATION  AWARD PLAN (the "Plan"),  and has delegated
the responsibility to administer the Plan to the Board;

WHEREAS,  two  million  shares of Common  Stock of the Company  were  originally
reserved for issuance under the Plan;

WHEREAS, as of the date hereof, two million shares remain available for issuance
under the Plan; and

WHEREAS,  the  Board has  determined  that it is in the best  interests  of this
Company and its stockholders to provide,  under the Plan,  equity  incentives to
those employees, directors and/or consultants of the Company identified below.

NOW, THEREFORE,  BE IT RESOLVED, that the persons listed on the Exhibit A, which
is attached  hereto and  incorporated  herein by  reference,  which  exhibit was
reviewed  by the Board and shall be  included  with  this  Consent,  are  hereby
granted,  as of the date hereof, an option (the "Option") to purchase the number
of shares with the vesting  schedule and exercise  price as set forth in Exhibit
A;

RESOLVED FURTHER, that each of the Options shall be either a Non-Qualified Stock
Option or an ISO (as such terms are defined in the Plan) as specified in Exhibit
A;

RESOLVED FURTHER, that the Options shall be evidenced by stock option agreements
and be  subject  to  the  restrictions  (including  transfer  and/or  repurchase
rights), if any, set forth in such stock option agreements;

RESOLVED  FURTHER,  that the Options shall be granted pursuant to the exemptions
provided under Section 701 of the  Securities Act Rules and Colorado  Securities
Laws;

RESOLVED FURTHER, that there is hereby reserved and set aside under the Plan the
number of shares  adequate to cover the shares  underlying  the Options  granted
herein; and
<PAGE>

RESOLVED FURTHER,  that the officers of this Company,  and each of them, be, and
they hereby are,  authorized,  directed and  empowered  for and on behalf of the
Company to do or cause to be done all such acts and things and to sign,  deliver
and/or  file all such  documents  and notices as any of such  officers  may deem
necessary  or  advisable  in  order  to  carry  out and  perform  the  foregoing
resolutions and the intention thereof.

The Secretary of the Corporation is directed to file the original  executed copy
of this Consent with the minutes of proceedings of the Board.

IN WITNESS WHEREOF,  each of the undersigned has executed this consent as of the
date first written above.

DIRECTORS:

-----------------------------------        -----------------------------------
Daniel Medina                              Madhava Rao Mankal

-----------------------------------        -----------------------------------
Mike Swanson                               Tony Eshiet

-----------------------------------
Arun Madhav

<PAGE>

                                    EXHIBIT A
                                       TO
                      FORM OF RESOLUTIONS FOR OPTION GRANTS

<TABLE>
<CAPTION>

                         Stock Option Grant Information

<S>                     <C>                   <C>                  <C>                   <C>
----------------------- --------------------- -------------------- --------------------- --------------------
Name                    No. Shares            ISO or NQSO          Exercise Price*       Vesting Schedule
----------------------- --------------------- -------------------- --------------------- --------------------
----------------------- --------------------- -------------------- --------------------- --------------------

----------------------- --------------------- -------------------- --------------------- --------------------
----------------------- --------------------- -------------------- --------------------- --------------------

----------------------- --------------------- -------------------- --------------------- --------------------
----------------------- --------------------- -------------------- --------------------- --------------------

----------------------- --------------------- -------------------- --------------------- --------------------
----------------------- --------------------- -------------------- --------------------- --------------------

----------------------- --------------------- -------------------- --------------------- --------------------
----------------------- --------------------- -------------------- --------------------- --------------------

----------------------- --------------------- -------------------- --------------------- --------------------
----------------------- --------------------- -------------------- --------------------- --------------------

----------------------- --------------------- -------------------- --------------------- --------------------
----------------------- --------------------- -------------------- --------------------- --------------------

----------------------- --------------------- -------------------- --------------------- --------------------
----------------------- --------------------- -------------------- --------------------- --------------------

----------------------- --------------------- -------------------- --------------------- --------------------
----------------------- --------------------- -------------------- --------------------- --------------------

----------------------- --------------------- -------------------- --------------------- --------------------
</TABLE>

* In the case of an ISO, the per share  exercise  price must be at least 100% of
the Fair  Market  Value (as such term is defined in the Plan) of the  underlying
share as of the date of grant.  In the case of a NQSO,  the per  share  exercise
price must be at least 85% of the Fair Market Value of the  underlying  share as
of the date of grant.

<PAGE>

                               RESOLUTION FORM #2

                      FORM OF RESOLUTIONS FOR COMPENSATION

                RESOLUTIONS ADOPTED BY UNANIMOUS WRITTEN CONSENT
                          OF THE BOARD OF DIRECTORS OF
                       MEDINA INTERNATIONAL HOLDINGS, INC.

As of August 5, 2006

The  undersigned  directors,  constituting  the entire board of  directors  (the
"Board") of MEDINA  INTERNATIONAL  HOLDINGS,  INC., a Colorado  corporation (the
"Company"),  hereby take the following actions, adopt the following resolutions,
and transact the following business, by written consent without a meeting, as of
the date above written,  pursuant to the applicable  corporate laws of the State
of Colorado and the Company's Bylaws.

WHEREAS, the Company previously adopted the 2006 MEDINA INTERNATIONAL  HOLDINGS,
INC. STOCK OPTION AND  COMPENSATION  AWARD PLAN (the "Plan"),  and has delegated
the responsibility to administer the Plan to the Board;

WHEREAS,  two million  shares of Common  Stock of the Company are  reserved  for
issuance under the Plan;

WHEREAS, as of the date hereof, two million shares remain available for issuance
under the Plan; and

WHEREAS,  the  Board has  determined  that it is in the best  interests  of this
Company and its stockholders to provide,  under the Plan,  equity  incentives or
compensation to those  employees,  directors  and/or  consultants of the Company
identified below.

NOW, THEREFORE,  BE IT RESOLVED, that the persons listed on the Exhibit A, which
is attached  hereto and  incorporated  herein by  reference,  which  exhibit was
reviewed  by the Board and shall be  included  with  this  Consent,  are  hereby
awarded as compensation for services per contracts attached hereto as Exhibit B,
as of the date hereof, the number of shares as set forth in Exhibit A;

RESOLVED FURTHER, that there is hereby reserved and set aside under the Plan the
number of shares adequate to cover the shares granted herein; and

RESOLVED FURTHER,  that the officers of this Company,  and each of them, be, and
they hereby are,  authorized,  directed and  empowered  for and on behalf of the
Company to do or cause to be done all such acts and things and to sign,  deliver
and/or  file all such  documents  and notices as any of such  officers  may deem
necessary  or  advisable  in  order  to  carry  out and  perform  the  foregoing
resolutions and the intention thereof.

<PAGE>

The Secretary of the Corporation is directed to file the original  executed copy
of this Consent with the minutes of proceedings of the Board.

IN WITNESS WHEREOF,  each of the undersigned has executed this consent as of the
date first written above.

DIRECTORS:

/s/Daniel Medina                        /s/Madhava Rao Mankal
-----------------------------------      --------------------------------------
Daniel Medina                            Madhava Rao Mankal

/s/Mike Swanson                         /s/Tony Eshiet
-----------------------------------      --------------------------------------
Mike Swanson                             Tony Eshiet

/s/Arun Madhav
-----------------------------------
Arun Madhav

<PAGE>

                                    EXHIBIT A
                                       TO
                      FORM OF RESOLUTIONS FOR COMPENSATION

                      Compensation/Share Grant Information

------------------------------------------ ------------------------------------
Name                                       No. Shares
------------------------------------------ -------------------------------------
------------------------------------------ -------------------------------------
Frank F. Fahim                                  200,000
------------------------------------------ -------------------------------------
------------------------------------------ -------------------------------------
Christopher Smith                                50,000
------------------------------------------ -------------------------------------
------------------------------------------ -------------------------------------
Huang I. San                                    200,000
------------------------------------------ -------------------------------------
------------------------------------------ -------------------------------------
Walter Wright                                   100,000
------------------------------------------ -------------------------------------
------------------------------------------ -------------------------------------
<PAGE>

                                    EXHIBIT B
                                       TO
                      FORM OF RESOLUTIONS FOR COMPENSATION

Frank F. Fahim - June 15, 2006
Huang I. San - June 18, 2006
Christopher Smith - July 7, 2006
Walter Wright - July 7, 2006

<PAGE>

                               RESOLUTION FORM #3

                 FORM OF RESOLUTIONS FOR PURCHASE RIGHTS GRANTS

                RESOLUTIONS ADOPTED BY UNANIMOUS WRITTEN CONSENT
                          OF THE BOARD OF DIRECTORS OF
                       MEDINA INTERNATIONAL HOLDINGS, INC.

                         As of __________________, 2006

The  undersigned  directors,  constituting  the entire board of  directors  (the
"Board") of MEDINA  INTERNATIONAL  HOLDINGS,  INC., a Colorado  corporation (the
"Company"),  hereby take the following actions, adopt the following resolutions,
and transact the following business, by written consent without a meeting, as of
the date above written,  pursuant to the applicable  corporate laws of the State
of Colorado and the Company's Bylaws.

WHEREAS, The Company Previously Adopted The 2006 MEDINA INTERNATIONAL  HOLDINGS,
INC. STOCK OPTION AND  COMPENSATION  AWARD PLAN (The "Plan"),  and has delegated
the responsibility to administer the Plan to the Board;

WHEREAS,  _______________  shares of Common Stock of the Company were originally
reserved for issuance under the Plan;

WHEREAS,  as of the date  hereof,  _____________  shares  remain  available  for
issuance under the Plan; and

WHEREAS,  the  Board has  determined  that it is in the best  interests  of this
company and its stockholders to provide,  under the plan,  equity  incentives to
those employees of the company identified below.

NOW, THEREFORE,  BE IT RESOLVED, that the persons listed on the Exhibit A, which
exhibit was reviewed by the Board and shall be included with this  Consent,  are
hereby  granted,  as of the date  hereof,  the current  right to  purchase  (the
"Purchase  Right") the number of shares at the per share  purchase  price as set
forth in Exhibit A at any time on or prior to the date which is 15 days from the
date this grant is first communicated to each recipient;

RESOLVED FURTHER, that this Company be, and it hereby is, authorized to accept a
promissory note from each purchaser as consideration for the stock so purchased,
in such form  (including  security  for the  obligation  thereunder)  heretofore
approved by the Board;

RESOLVED FURTHER,  that the officers of this Company,  and each of them, be, and
they hereby are,  authorized,  directed and  empowered for and on behalf of this
Company  to  prepare  or  cause  to be  prepared  a  stock  purchase  agreement,
promissory  note  and/or  security  agreement  (the  "Purchase  Agreements")  to
represent  the rights  granted at this meeting  substantially  in the form,  and
containing  the terms and  provisions,  heretofore  approved  by the Board,  and
containing such other terms and provisions as such officers  shall,  upon advice
of counsel,  determine to be necessary or  appropriate,  their execution of such
Purchase Agreements to conclusively evidence such determination;

<PAGE>

RESOLVED FURTHER,  that the Purchase Rights shall be evidenced by stock purchase
agreements  and  be  subject  to the  restrictions  (including  transfer  and/or
repurchase rights), if any, set forth in such stock purchase agreements;

RESOLVED  FURTHER,  that the Purchase  Rights  shall be granted  pursuant to the
exemptions  provided  under Section 701 of the Securities Act Rules and Colorado
Corporate Securities Laws;

RESOLVED FURTHER, that there is hereby reserved and set aside under the Plan the
number of shares  adequate to cover the shares  underlying  the Purchase  Rights
granted herein;

RESOLVED  FURTHER,  that upon receipt of executed  Purchase  Agreements from the
person or persons granted rights  hereunder,  the officers of this Company,  and
each of them,  be, and they hereby are,  authorized,  directed and empowered for
and on behalf of this  Company  to issue  the stock so  purchased,  and to do or
cause to be done all such  further acts and things and to sign,  deliver  and/or
file all such  documents and notices as any of such officers may deem  necessary
or advisable in order to carry out and perform the foregoing resolutions and the
intention thereof; and

RESOLVED FURTHER,  that the officers of this Company,  and each of them, be, and
they hereby are,  authorized,  directed and  empowered  for and on behalf of the
Company to do or cause to be done all such acts and things and to sign,  deliver
and/or  file all such  documents  and notices as any of such  officers  may deem
necessary  or  advisable  in  order  to  carry  out and  perform  the  foregoing
resolutions and the intention thereof.

The Secretary of the Corporation is directed to file the original  executed copy
of this Consent with the minutes of proceedings of the Board.

IN WITNESS WHEREOF,  each of the undersigned has executed this consent as of the
date first written above.

DIRECTORS:

-----------------------------------          -----------------------------------
Daniel Medina                                Madhava Rao Mankal

-----------------------------------          -----------------------------------
Mike Swanson                                 Tony Eshiet

-----------------------------------
Arun Madhav

<PAGE>

                                    EXHIBIT A

<TABLE>
<CAPTION>

                        Purchase Rights Grant Information

<S>                                   <C>                                 <C>
------------------------------------- ----------------------------------- -----------------------------------
Name                                  No. Shares                          Purchase Price*
------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------

------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------

------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------

------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------

------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------

------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------

------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------

------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------

------------------------------------- ----------------------------------- -----------------------------------
------------------------------------- ----------------------------------- -----------------------------------

------------------------------------- ----------------------------------- -----------------------------------
</TABLE>

* The per share purchase price must be at least 85% of the Fair Market Value (as
such  term is  defined  in the Plan) of the  underlying  share as of the date of
grant.

<PAGE>

                            STOCK PURCHASE AGREEMENT

<PAGE>

                           STOCK PURCHASE CERTIFICATE

THIS  IS TO  CERTIFY  that  MEDINA  INTERNATIONAL  HOLDINGS,  INC.,  a  Colorado
corporation  (the  "Company"),  has offered you (the  "Purchaser")  the right to
purchase  Common Stock (the  "Stock" or "Shares") of the Company  under its 2006
MEDINA  INTERNATIONAL  HOLDINGS,  INC. STOCK OPTION AND COMPENSATION  AWARD PLAN
(the "Plan"), as follows:
<TABLE>
<CAPTION>
<S>                                                     <C>
------------------------------------------------------- -----------------------------------------------------
Name of Purchaser:
------------------------------------------------------- -----------------------------------------------------
------------------------------------------------------- -----------------------------------------------------
Address of Purchaser:
------------------------------------------------------- -----------------------------------------------------
------------------------------------------------------- -----------------------------------------------------

------------------------------------------------------- -----------------------------------------------------
------------------------------------------------------- -----------------------------------------------------
Number of Shares:
------------------------------------------------------- -----------------------------------------------------
------------------------------------------------------- -----------------------------------------------------
Purchase Price:                                         $
------------------------------------------------------- -----------------------------------------------------
------------------------------------------------------- -----------------------------------------------------
Offer Grant Date:
------------------------------------------------------- -----------------------------------------------------
------------------------------------------------------- -----------------------------------------------------
Offer Expiration Date:                                  15 days after the Offer Grant Date
------------------------------------------------------- -----------------------------------------------------
------------------------------------------------------- -----------------------------------------------------
Vesting Commencement Date:
------------------------------------------------------- -----------------------------------------------------
------------------------------------------------------- -----------------------------------------------------
Vesting Schedule:
------------------------------------------------------- -----------------------------------------------------
------------------------------------------------------- -----------------------------------------------------

------------------------------------------------------- -----------------------------------------------------
</TABLE>

By your signature and the signature of the Company's  representative  below, you
and the  Company  agree to be bound by all of the  terms and  conditions  of the
Stock Purchase Agreement, which is attached hereto as Annex I and the Plan (both
incorporated herein by this reference as if set forth in full in this document).
By executing this Agreement, Purchaser hereby irrevocably elects to exercise the
purchase rights granted pursuant to the Stock Purchase Agreement and to purchase
________ shares of Stock of MEDINA  INTERNATIONAL  HOLDINGS,  INC., and herewith
encloses  payment of $  ____________  in payment  of the  purchase  price of the
shares being purchased.

PURCHASER:                          MEDINA INTERNATIONAL HOLDINGS, INC.

By:_________________________        By:______________________
                                            Daniel Medina
Print Name:__________________       Its:President

<PAGE>

                                     ANNEX I
                                       to
                            STOCK PURCHASE AGREEMENT

THE STOCK GRANTED  PURSUANT TO THIS AGREEMENT HAS NOT BEEN REGISTERED  UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,  AND MAY NOT BE SOLD,  PLEDGED, OR OTHERWISE
TRANSFERRED  WITHOUT AN EFFECTIVE  REGISTRATION  UNDER SUCH ACT OR AN OPINION OF
COUNSEL,  SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED.

                    2006 MEDINA INTERNATIONAL HOLDINGS, INC.
                    STOCK OPTION AND COMPENSATION AWARD PLAN:
                            STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this "Agreement") is made and entered into on the
execution  date of the Stock  Purchase  Certificate to which it is attached (the
"Certificate"),  by and between MEDINA INTERNATIONAL HOLDINGS,  INC., a Colorado
corporation   (the  "Company"),   and  the  Director,   Employee  or  Consultant
("Purchaser") named in the Certificate.

Pursuant  to the 2006  MEDINA  INTERNATIONAL  HOLDINGS,  INC.  STOCK  OPTION AND
COMPENSATION  AWARD  PLAN  (the  "Plan"),  the  Administrator  of the  Plan  has
authorized  the  grant to  Purchaser  of the  right to  purchase  shares  of the
Company's  Common Stock,  upon the terms and subject to the conditions set forth
in this Agreement and in the Plan. Capitalized terms not otherwise defied herein
shall have the meanings ascribed to them in the Plan.

                              SECTION 1: THE OFFER.

         1.1 Offer of the Stock.  The Company hereby offers to sell to purchaser
the  number of shares  of stock  set forth in the  certificate  at the price and
subject to the  restrictions  set forth in this  Agreement  (the shares of stock
which you  purchase  under this  agreement  are  referred  to as the  "Stock" or
"Shares").

         1.2 Purchase  Price.  The Purchase  Price for the Stock is set forth in
the Certificate.

         1.3  Payment  For  The  Stock.  Purchaser  may pay  for  the  stock  by
delivering  to the company the  purchase  price in the form of cash or cashier's
check.

         1.4 Expiration of Offer. This offer expires at 5:00 o'clock p.m. on the
date set forth in the certificate.

                                       2
<PAGE>

                       SECTION 2: ACCEPTANCE OF THE OFFER.

There is no  obligation  to  exercise  the  rights  granted  to you  under  this
Agreement,  in whole or in part.  Purchaser  may purchase  fewer shares than the
number offered to Purchaser in this  Agreement.  If Purchaser  decides to accept
the offer and purchase any shares offered, Purchaser must do the following:

         2.1  Complete  Documents.  Complete,  sign  and  date  one  copy of the
Certificate,  and, if Purchaser is paying by delivery of a promissory  note, one
copy  each  of the  attached  Promissory  Note,  Security  Agreement  and  Stock
Assignment;

         2.2 Spousal Consent.  If Purchaser is married,  Purchaser must have his
or her spouse sign and date one copy of the attached Spousal Consent; and

         2.3  Deliver to  Company.  Deliver to the Company on or before the time
the offer expires,  the signed copy of this Agreement,  the Spousal Consent, and
payment for the Stock, in cash, by cashier's check or by the Promissory Note. If
Purchaser is paying for the stock by the  Promissory  Note,  Purchaser must also
deliver to the Company the executed original Promissory Note, Security Agreement
and Stock Assignment.

Purchaser  should  retain a copy of all of the signed  documents  for his or her
files,  and if Purchaser does so, Purchaser should mark the retained copy of the
Promissory Note "COPY." THE SIGNED  PROMISSORY  NOTE IS A NEGOTIABLE  INSTRUMENT
AND IS ENFORCEABLE  AGAINST  PURCHASER BY ANY HOLDER OF THE PROMISSORY NOTE, AND
ANY ADDITIONAL  SIGNED COPIES WHICH ARE NOT MARKED "COPY" MAY ALSO BE NEGOTIABLE
INSTRUMENTS WHICH ARE ENFORCEABLE AGAINST PURCHASER BY THEIR HOLDER.

                      SECTION 3: RESTRICTIONS ON THE STOCK.

         3.1 Restrictions on Transfer of Shares.  Purchaser shall not sell, make
any  short  sale  of,  loan,  hypothecate,  pledge,  grant  any  option  for the
repurchase of, or otherwise dispose or transfer for value (each a "Transfer") or
otherwise agree to engage in any of the foregoing  transactions  with respect to
any shares of Stock.  The Company  shall not be  required  to register  any such
Transfer and the Company may  instruct  its  transfer  agent not to register any
such Transfer, unless and until all of the following events shall have occurred:

                  3.1.1 The Company has  declined to exercise the right of first
         refusal provided for in Section 5 hereof;

                  3.1.2 The Shares are Transferred pursuant to and in conformity
         with:  (i) (x) an  effective  registration  statement  filed  with  the
         Securities and Exchange  Commission (the "Commission")  pursuant to the
         Securities Act of 1933, as amended (the "Act") or (y) an exemption from
         registration  under the Act; and (ii) the securities  laws of any state
         of the United States; and

                  3.1.3 Purchaser has, prior to the Transfer of such Shares, and
         if requested by the Company,  provided all relevant  information to the
         Company's  counsel so that upon the  Company's  request,  the Company's
         counsel is able to deliver,  and actually  prepares and delivers to the
         Company  a written  opinion  that the  proposed  Transfer  is:  (i) (x)
         pursuant  to a  registration  statement  which has been  filed with the

                                       3
<PAGE>

         Commission and is then effective or (y) exempt from registration  under
         the  Act as then  in  effect,  and the  Rules  and  Regulations  of the
         Commission thereunder; and (ii) is either qualified or registered under
         any applicable state securities laws, or exempt from such qualification
         or  registration.  The  Company  shall  bear  all  reasonable  costs of
         preparing such opinion.

         3.2 Additional Restrictions on Transfer of Non-Vested Shares. Purchaser
agrees, for himself or herself and for his or her heirs, successors and assigns,
that Purchaser  shall have no right or power under any  circumstance to Transfer
any interest in shares of the Stock which are "Non-Vested Shares," as determined
by the schedule set forth in the Certificate,  except to the Company. As used in
this  Agreement,  "Vested  Shares" means all shares of the Stock which Purchaser
has the right to Transfer at a specified point in time and  "Non-Vested  Shares"
means  all  shares  of the  Stock  which  Purchaser  does not have the  right to
Transfer at a specified  point in time. The  Certificate  sets forth the vesting
schedule.

         3.3 Company's Repurchase Right.

                  3.3.1  Scope of  Repurchase  Right.  Unless  they have  become
         vested,  the Shares  acquired under this Agreement  initially  shall be
         "Restricted  Stock"  and  shall  be  subject  to a  right  (but  not an
         obligation) of repurchase by the Company (the "Repurchase  Right"). The
         Purchaser shall not transfer,  assign, encumber or otherwise dispose of
         any Restricted Stock, except as provided in the following sentence. The
         Purchaser may transfer Restricted Stock:

                           3.3.1.1 By testament or  intestate  succession  or by
                  transfer  by  instrument  to  a  trust   providing   that  the
                  Restricted Stock is to be passed to one or more  beneficiaries
                  upon death of the Settlor; or

                           3.3.1.2 To the  Purchaser's  "immediate  family,"  as
                  that term is defined in the Plan (together, "Transferee").

                           Provided, however, in either case the Transferee must
                  agree in writing  on a form  prescribed  by the  Company to be
                  bound by all  provisions of this  Agreement.  If the Purchaser
                  transfers any Restricted Stock, then this Section 3 will apply
                  to the Transferee to the same extent as to the Purchaser.

                  3.3.2  Exercise   Period.   The  Repurchase   Right  shall  be
         exercisable  only during the 90-day  period  following the later of the
         date when the Purchaser's  service as an Employee,  outside Director or
         Consultant  ("Service")  terminates  for any  reason,  with or  without
         cause, including (without limitation) death or disability.

                  3.3.3 Non  Applicability  and Lapse of Repurchase  Right.  The
         Repurchase  Right shall lapse with respect to the Shares in  accordance
         with the vesting  schedule set forth in the  Certificate.  In addition,
         the  Repurchase  Right shall  lapse and all of such Stock shall  become
         vested if (i) a Change in Control occurs before the Purchaser's Service
         terminates and (ii) the options are not assumed by, or Repurchase Right
         is not assigned to, the entity that employs the Participant immediately
         after the Change in Control or to its parent or subsidiary.

                  The Repurchase Right shall not exist with respect to shares of
         Stock  that  have  been  registered  under a then  currently  effective
         registration statement under applicable federal securities laws and the
         issuer is subject to the reporting  requirements of Section 13 or 15(d)
         of the  Exchange Act or becomes an  investment  company  registered  or

                                       4
<PAGE>

         required to be registered under the Investment  Company Act of 1940, or
         (ii) a  determination  is made by  counsel  for the  Company  that such
         Exercise Price restrictions are not required in the circumstances under
         applicable federal or state securities laws.

                  3.3.4  Repurchase  Price.   Following  a  termination  of  the
         Participant's  Service,  which  does  not  result  from  the  Company's
         termination  of  Service  for  Cause,  the  Repurchase  Right  shall be
         exercisable  at a price  equal to (i) the Fair  Market  Value of vested
         Stock and (ii) the  Purchase  Price of unvested  Stock.  Following  the
         termination  of the  Participant's  Service for Cause,  the  Repurchase
         Right shall be exercisable  as to both vested and unvested  Shares at a
         price equal to the Purchase Price as set forth in the Certificate.

                  3.3.5 Rights of Repurchase Adjustments. If there is any change
         in the  number  of  outstanding  shares  of Stock by  reason of a stock
         split, reverse stock split, stock dividend,  an extraordinary  dividend
         payable in a form other than stock,  recapitalization,  combination  or
         reclassification,  or a similar  transaction  affecting  the  Company's
         outstanding  securities without receipt of consideration,  then (i) any
         new, substituted or additional  securities or other property (including
         money paid other than as an ordinary cash  dividend)  distributed  with
         respect to any Restricted  Stock (or into which such  Restricted  Stock
         thereby become  convertible)  shall immediately be subject to the Right
         of  Repurchase;   and  (ii)  appropriate  adjustments  to  reflect  the
         distribution of such securities or property shall be made to the number
         and/or class of the  Restricted  Stock and to the price per share to be
         paid upon the exercise of the Right of Repurchase;  provided,  however,
         that the  aggregate  Purchase  Price payable for the  Restricted  Stock
         shall remain the same.

                  3.3.6 Escrow.  Upon issuance,  the certificates for Restricted
         Stock  shall be  deposited  in escrow  with the  Company  to be held in
         accordance with the provisions of this Agreement.  Any new, substituted
         or additional  securities or other property  described in Section 3.3.5
         above  shall  immediately  be  delivered  to the  Company to be held in
         escrow,  but only to the extent  the Shares are at the time  Restricted
         Stock.  All  regular  cash  dividends  on  Restricted  Stock  (or other
         securities  at the time held in escrow)  shall be paid  directly to the
         Purchaser and shall not be held in escrow.  Restricted Stock,  together
         with any other assets or securities held in escrow hereunder,  shall be
         (i) surrendered to the Company for repurchase and cancellation upon the
         Company's exercise of its Right of Repurchase or Right of First Refusal
         or (ii) released to the Purchaser upon the  Purchaser's  request to the
         extent  the  Shares  are no  longer  Restricted  Stock  (but  not  more
         frequently than once every six months).  In any event, all Shares which
         have vested (and any other vested  assets and  securities  attributable
         thereto) shall be released  within 60 days after the earlier of (i) the
         Purchaser's  cessation  of  Service  or (ii) the  lapse of the Right of
         First Refusal.

         3.4 Retention of Non-Vested Shares. Purchaser shall immediately deliver
to the  Company  each  certificate  representing  Non-Vested  Shares  issued  to
Purchaser  hereunder,  or deemed to be issued to Purchaser  hereunder,  together
with the collateral instruments of transfer executed in blank, to be held by the
Company until such time as all shares represented by that certificate are Vested
Shares and any indebtedness  with respect to those shares has been paid in full;
provided,  however, that if the Company holds a certificate  representing Vested
Shares and Non-Vested  Shares,  and any indebtedness  with respect to the Vested
Shares has been paid in full, upon Purchaser's  request the Company will cause a

                                       5
<PAGE>

certificate representing the Vested Shares to be delivered to Purchaser, but the
Company will retain any certificate representing the Non-Vested Shares.

         3.5 Non-Complying Transfers.  Every attempted Transfer of any shares of
the Stock in violation  of this Section 3 shall be null and void ab initio,  and
of no force or effect.

                    SECTION 4: LEGENDS ON STOCK CERTIFICATES.

Purchaser  agrees that the Company  may place on each  certificate  representing
Shares the following legend:

"THE  SECURITIES  EVIDENCED BY THIS  CERTIFICATE  MAY NOT BE SOLD,  TRANSFERRED,
ASSIGNED,  PLEDGED,  HYPOTHECATED OR OTHERWISE  DISPOSED OF EXCEPT IN ACCORDANCE
WITH THE TERMS OF AN AGREEMENT  BETWEEN THE ISSUER AND THE REGISTERED  HOLDER OF
THIS CERTIFICATE,  WHICH AGREEMENT PROVIDES, AMONG OTHER THINGS, THAT THE ISSUER
HAS A RIGHT TO REPURCHASE THE SECURITIES  EVIDENCED BY THIS CERTIFICATE.  A COPY
OF THAT AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER."

                       SECTION 5: RIGHT OF FIRST REFUSAL.

         5.1 Right of First Refusal.  In the event that the Stock is not readily
tradable on an established securities market and the Purchaser proposes to sell,
pledge or  otherwise  transfer to a third party any Shares  acquired  under this
Agreement, or any interest in such Shares, to any person, entity or organization
(the  "Transferee")  the  Company  shall  have the Right of First  Refusal  with
respect  to all (and not less  than  all) of such  Shares  (the  "Right of First
Refusal").  If the  Purchaser  desires to transfer  Shares  acquired  under this
Agreement,  the  Purchaser  shall  give a  written  transfer  notice  ("Transfer
Notice") to the Company  describing fully the proposed  transfer,  including the
number of Shares proposed to be transferred,  the proposed  transfer price,  the
name and  address  of the  proposed  Transferee  and proof  satisfactory  to the
Company  that the  proposed  sale or transfer  will not  violate any  applicable
federal or state  securities  laws. The Transfer  Notice shall be signed both by
the  Purchaser  and by the  proposed  Transferee  and must  constitute a binding
commitment of both parties to the transfer of the Shares. The Company shall have
the right to purchase  all, and not less than all, of the Shares on the terms of
the  proposal  described  in the  Transfer  Notice  by  delivery  of a notice of
exercise  of the Right of First  Refusal  within 30 days after the date when the
Transfer  Notice was received by the Company.  The  Company's  rights under this
Section 5 shall be freely assignable, in whole or in part.

         5.2 Additional  Shares or Substituted  Securities.  In the event of the
declaration of a stock dividend,  the declaration of an  extraordinary  dividend
payable in a form other than stock, a spin-off,  a stock split, an adjustment in
conversion  ratio, a  recapitalization  or a similar  transaction  affecting the
Company's  outstanding  securities  without receipt of  consideration,  any new,
substituted  or additional  securities or other property  (including  money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed  with respect to any Shares  subject to this Section 5 or into which
such Shares  thereby  become  convertible  shall  immediately be subject to this
Section  5.  Appropriate   adjustments  to  reflect  the  distribution  of  such
securities  or property  shall be made to the number  and/or class of the Shares
subject to this Section 5.

         5.3 Termination of Right of First Refusal.  Any other provision of this
Section 5 notwithstanding, in the event that the Stock is readily tradable on an

                                       6
<PAGE>

established securities market when the Purchaser desires to transfer Shares, the
Company shall have no Right of First  Refusal,  and the Purchaser  shall have no
obligation to comply with the procedures prescribed by this Section 5.

         5.4 Permitted  Transfers.  This Section 5 shall not apply to a transfer
(i) by  gift  to a  member  of the  Participant's  immediate  family  or (ii) by
transfer by instrument to a trust  providing  that the Shares is to be passed to
beneficiaries  upon death of the  Settlor.  For  purposes of this  Section  5.4,
"immediate  family" shall mean the Purchaser's spouse (including a former spouse
subject to terms of a domestic relations order); child,  stepchild,  grandchild,
child-in-law;  parent,  stepparent,  grandparent,   parent-in-law;  sibling  and
sibling-in-law, and shall include adoptive relationships.

         5.5  Termination  of  Rights  as  Stockholder.  If  the  Company  makes
available,  at the time and place and in the  amount and form  provided  in this
Agreement,  the  consideration for the Shares to be purchased in accordance with
this  Section 5, then after such time the person from whom such Shares are to be
purchased shall no longer have any rights as a holder of such Shares (other than
the right to  receive  payment of such  consideration  in  accordance  with this
Agreement).  Such Shares shall be deemed to have been  purchased  in  accordance
with  the  applicable  provisions  hereof,  whether  or not  the  certificate(s)
therefor have been delivered as required by this Agreement.

                         SECTION 6: OBLIGATION TO SELL.

Notwithstanding  anything  herein  to the  contrary,  if at any  time  following
Purchaser's acquisition of Shares hereunder,  stockholders of the Company owning
51% or  more of the  shares  of the  Company  (on a fully  diluted  basis)  (the
"Control  Sellers")  enter  into  an  agreement   (including  any  agreement  in
principal) to transfer all of their shares to any person or group of persons who
are not affiliated  with the Control  Sellers,  such Control Sellers may require
each  stockholder who is not a Control Seller (a  "Non-Control  Seller") to sell
all of their  shares to such  person or group of persons at a price and on terms
and  conditions  the same as those on which such Control  Sellers have agreed to
sell their shares,  other than terms and conditions  relating to the performance
or non-performance of services.  For the purposes of the preceding sentence,  an
affiliate of a Control Seller is a person who controls,  which is controlled by,
or which is under common control with, the Control Seller.

                       SECTION 7: STOCKHOLDERS AGREEMENT.

As a  condition  to the  transfer  of  Stock  pursuant  to this  Stock  Purchase
Agreement, the Administrator,  in its sole and absolute discretion,  may require
the  Participant to execute and become a party to any agreement by and among the
Company and any of its  stockholders  which exists on or after the Date of Grant
(the  "Stockholders  Agreement").  If  the  Participant  becomes  a  party  to a
Stockholders  Agreement,  in  addition  to the terms of the Plan and this  Stock
Purchase  Agreement,  the terms and conditions of  Stockholders  Agreement shall
govern  Participant's  rights in and to the Stock;  and if there is any conflict
between  the  provisions  of the  Stockholders  Agreement  and  the  Plan or any
conflict  between the  provisions of the  Stockholders  Agreement and this Stock
Purchase  Agreement,  the  provisions  of the  Stockholders  Agreement  shall be
controlling.  Notwithstanding anything to the contrary in this Section 7, if the
Stockholders  Agreement contains any provisions which would violate Colorado law
if applied  to the  Participant,  the terms of the Plan and this Stock  Purchase
Agreement shall govern the Participant's rights with respect to such provisions.

                                       7
<PAGE>

                 SECTION 8: WAIVER OF RIGHTS TO PURCHASE STOCK.

By signing this Agreement,  Purchaser  acknowledges  and agrees that neither the
Company  nor any other  person or  entity  is under  any  obligation  to sell or
transfer to Purchaser any option or equity  security of the Company,  other than
the shares of Stock  subject to this  Agreement and any other right or option to
purchase Stock which was previously granted in writing to Purchaser by the Board
(or a committee thereof).  By signing this Agreement,  except as provided in the
immediately preceding sentence,  Purchaser  specifically waives all rights he or
she may have had prior to the date of this Agreement to receive any other option
or equity security of the Company, except under this or subsequent Plans.

                          SECTION 9: INVESTMENT INTENT.

Purchaser  represents  and agrees that if he or she purchases the Stock in whole
or in part and if at the time of such purchase the Stock has not been registered
under the Act,  that he or she will acquire the Stock upon such purchase for the
purpose of investment and not with a view to the  distribution of such Stock and
upon each purchase, he or she will furnish to the Company a written statement to
such effect.

                         SECTION 10: GENERAL PROVISIONS.

         10.1 Further Assurances.  Purchaser shall promptly take all actions and
execute all  documents  requested by the Company  which the Company  deems to be
reasonably  necessary to effectuate the terms and intent of this Agreement.  Any
sale or transfer of the Stock to Purchaser by the Company  shall be made free of
any and all claims,  encumbrances,  liens and  restrictions of every kind, other
than those imposed by this Agreement.

         10.2 Notices. All notices,  requests,  demands and other communications
under  this  Agreement  shall be in  writing  and shall be given to the  parties
hereto as follows:

                  10.2.1 If to the Company, to:

                  MEDINA INTERNATIONAL HOLDINGS, INC.
                  10088 6th Street, Suite G
                  Rancho Cucamonga, CA  91730

                  10.2.2  If to  Purchaser,  to the  address  set  forth  in the
         records of the Company.

                  10.2.3 Any such notice request,  demand or other communication
         shall  be  effective  (i)  if  given  by  mail,  72  hours  after  such
         communication  is deposited in the mail by first-class  certified mail,
         return receipt requested,  postage pre-paid, addressed as aforesaid, or
         (ii) if  given  by any  other  means,  when  delivered  at the  address
         specified in this Section 10.2.

         10.3  Transfer of Rights under this  Agreement.  The Company may at any
time  transfer  and assign its rights and delegate  its  obligations  under this
Agreement to any other person, Company, firm or entity,  including its officers,
Directors and stockholders, with or without consideration.

         10.4  Purchase  Rights  Non  Transferable.   Purchaser  may  not  sell,
transfer,  assign  or  otherwise  dispose  of any  rights  hereunder  except  by
testament or the laws of descent and  distribution  and the rights hereunder may

                                       8
<PAGE>

be exercised during the lifetime of Purchaser only by the Purchaser or by his or
her guardian or legal representative.

         10.5 Market Stand-Off.  In the event of an underwritten public offering
by the Company of its equity  securities  pursuant to an effective  registration
statement filed under the Act,  including the Company's  initial public offering
(a "Public  Offering"),  Purchaser  shall not  transfer  for value any shares of
Stock without the prior written consent of the Company or its underwriters,  for
such  period  of time from and after  the  effective  date of such  registration
statement as may be requested by the Company or such  underwriters  (the "Market
Stand-Off").  The Market  Stand-Off  shall be in effect for such  period of time
following the date of the final  prospectus for the offering as may be requested
by the Company or such underwriters.  In the event of the declaration of a stock
dividend,  a spin-off,  a stock split,  an  adjustment in  conversion  ratio,  a
recapitalization  or a similar transaction  affecting the Company's  outstanding
securities without receipt of consideration,  any new, substituted or additional
securities which are by reason of such  transaction  distributed with respect to
any Shares  subject to the Market  Stand-Off,  or into which such Shares thereby
become  convertible,  shall immediately be subject to the Market  Stand-Off.  In
order to enforce the Market  Stand-Off,  the  Company  may impose  stop-transfer
instructions  with respect to the Shares acquired under this Agreement until the
end of the applicable stand-off period.

         10.6  Adjustment.  If there is any change in the number of  outstanding
shares of Stock by reason of a stock split, reverse stock split, stock dividend,
an extraordinary dividend payable in a form other than stock,  recapitalization,
combination  or  reclassification,   or  a  similar  transaction  affecting  the
Company's outstanding securities without receipt of consideration,  then (i) any
new,  substituted or additional  securities or other property  (including  money
paid other than as an ordinary cash  dividend)  distributed  with respect to any
Restricted   Stock  (or  into  which  such   Restricted   Stock  thereby  become
convertible)  shall  immediately  be subject to the Repurchase  Right;  and (ii)
appropriate  adjustments  to reflect  the  distribution  of such  securities  or
property shall be made to the number and/or class of the Restricted Stock and to
the  price  per  share to be paid upon the  exercise  of the  Repurchase  Right;
provided,  however, that the aggregate purchase price payable for the Restricted
Stock shall remain the same.

         10.7  Successors  and Assigns.  Except to the extent this  Agreement is
specifically  limited  by the  terms  and  provisions  of this  Agreement,  this
Agreement  shall be binding upon and inure to the benefit of the parties  hereto
and their respective successor, assigns, heirs and personal representatives.

         10.8 Governing Law. THIS AGREEMENT  SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE  WITH,  THE LAWS OF THE STATE OF COLORADO,  WITHOUT  REGARD TO ITS
CHOICE OF LAW PROVISIONS, AS COLORADO LAWS ARE APPLIED TO CONTRACTS ENTERED INTO
AND PERFORMED IN SUCH STATE.

         10.9  Severability.  Should any  paragraph  or any part of a  paragraph
within this Stock Purchase  Agreement be rendered void, invalid or unenforceable
by any court of law for any reason,  such invalidity or  unenforceability  shall
not void or render  invalid or  unenforceable  any other  paragraph or part of a
paragraph in this Stock Purchase Agreement.

         10.10 Attorneys' Fees. In the event that any action, suit or proceeding
is instituted upon any breach of this Agreement,  the prevailing  party shall be
paid by the other party thereto an amount equal to all of the prevailing party's
costs and expenses,  including  attorneys'  fees incurred in each and every such
action,  suit  or  proceeding  (including  any  and  all  appeals  or  petitions

                                       9
<PAGE>

therefrom). As used in this Agreement, "attorneys' fees" shall mean the full and
actual cost of any legal  services  actually  performed in  connection  with the
matter involved calculated on the basis of the usual fee charged by the attorney
performing  such  services  and shall not be limited to  "reasonable  attorneys'
fees" as defined in any statute or rule of court.

         10.11 The Plan.  This Agreement is made pursuant to the Plan, and it is
intended,  and  shall be  interpreted  in a  manner,  to  comply  herewith.  Any
provision of this Agreement  inconsistent  with the Plan shall be superseded and
governed by the Plan.

         10.12 Miscellaneous. Title and captions contained in this Agreement are
inserted for convenience and reference only and do not constitute a part of this
Agreement for any purpose.

                                       10
<PAGE>

                                 SPOUSAL CONSENT

The undersigned spouse of __________________________  does hereby consent to the
execution  of  the  foregoing  Agreement  by   _____________________,   and  the
performance by him (or her) of his (or her) obligations thereunder.

DATED:

--------------------                -------------------------------------------
                                    (Signature)

                                       11
<PAGE>

                                LETTER REGARDING
                      FEDERAL AND COLORADO TAX CONSEQUENCES

                       MEDINA INTERNATIONAL HOLDINGS, INC.
                            10088 6th Street, Suite G
                           Rancho Cucamonga, CA 91730

[Purchaser]

Dear :
------------------------------

This  letter is to  notify  you of  certain  federal  and  Colorado  income  tax
consequences  to you as a result of your  purchase of shares (the  "Shares")  of
Common Stock of MEDINA INTERNATIONAL  HOLDINGS, INC. (the "Company") pursuant to
the Stock Purchase Agreement dated __________, 2006 between you and the Company.

The  conclusion  of this letter is that,  if the  purchase  price for the Shares
equals  their  fair  market  value  on the date  you  sign  the  Stock  Purchase
Agreement,  you should send copies of the attached  form (the "Section 83 Form")
relating to Section 83 ("Section 83") of the Internal  Revenue Code of 1986 (the
"Internal Revenue Code"),  to the Internal Revenue Service and the Company,  not
later  than 30 days  after  the date of the  Stock  Purchase  Agreement.  If the
purchase  price for the Shares is less than their fair market  value on the date
you sign the Stock Purchase Agreement,  you should consider carefully whether or
not you should  file the Section 83 Form within 30 days after you sign the Stock
Purchase Agreement.

Federal Income Tax Consequences

Certain federal income tax  consequences to you in connection with your purchase
of the Shares are determined in accordance with Section 83.

Section 83(a).  Under Section 83(a), a person to whom property is transferred in
connection  with the  performance  of  services  ("Section  83  property")  must
recognize  ordinary  income in the year the property is transferred in an amount
equal to the fair  market  value of the  Section 83  property  at the time it is
transferred  less the amount,  if any, paid for the Section 83 property,  unless
the Section 83 property is not transferable and is subject to a substantial risk
of  forfeiture  (collectively,  a  "Restriction  on  Transfer").  If  there is a
Restriction on Transfer,  then the person acquiring Section 83 property will not
recognize  income until the  Restriction  on Transfer  lapses  (unless a Section
83(b) election is made - see below),  at which time the person must recognize as
ordinary  income the fair  market  value of the Section 83 property at that time
less the amount, if any, paid for the Section 83 property.

                                       1
<PAGE>

Your  purchase  of the Shares  probably  constitutes  a  transfer  of Section 83
property.  Further,  the Stock Purchase Agreement provides that, if you cease to
be employed by the Company for any reason,  the Company must repurchase from you
and you must sell to the Company all Non-Vested  Shares (as defined in the Stock
Purchase  Agreement)  for an amount  which may be less than  their  fair  market
value. Under Regulations promulgated under Section 83, these provisions probably
constitute a Restriction on Transfer over your Non-Vested  Shares.  Thus,  under
Section 83(a),  you would not be required to recognize any income as a result of
your  purchase  of the  Shares  until they  vest;  when they vest,  you would be
required under Section 83(a) to recognize as ordinary income the excess, if any,
of the fair market  value of the Shares (as of the day they vest) over the price
you paid for those Shares under the Stock  Purchase  Agreement.  If the price of
the  Company's  Common  Stock is  greater  when the  Shares  vest  than when you
purchased  them, you could have a substantial  tax liability in connection  with
your purchase of the Shares when they vest.

Section 83(b) Election.  Section 83(b) provides an alternative method for taxing
Section 83  property.  Under  Section  83(b),  a person  may elect to  recognize
ordinary  income in the year Section 83 property is  transferred  to him or her,
rather then waiting until it vests.  Thus, if you make a Section 83(b) election,
you will be required to  recognize  as ordinary  income in the year you purchase
the Shares the difference,  if any,  between the fair market value of the Shares
on the date you sign the Stock Purchase Agreement and the purchase price you pay
for the Shares. For example, if you make the Section 83(b) election and you paid
a purchase  price for the Shares equal to their fair market value,  you will not
pay any taxes in the year of the purchase in  connection  with your  purchase of
the Shares.  On the other hand, if you make the Section  83(b)  election and the
purchase  price of the Shares is less than their fair  market  value on the date
you sign the Stock Purchase Agreement,  you will be required to pay taxes on the
difference  between those  amounts in the year of the purchase.  In either case,
however,  if you make the Section  83(b)  election,  you will not be required to
recognize any income when the Shares vest.

To make the Section 83(b) election,  you must file the Section 83 Form with both
the Company and the  Internal  Revenue  Service  office  where you file  federal
income tax  returns.  You must file the Section  83(b) Form within 30 days after
you sign the Stock Purchase  Agreement.  In addition,  you must attach a copy of
the  Section  83(b) Form to your income tax return that covers the year in which
you filed the Form.

Sale of Section 83  Property.  If a person sells  Section 83 property  after the
Restriction on Transfer lapses (or after making a Section 83(b) election), he or
she will  recognize  taxable  gain or loss equal to the  difference  between the
amount  realized  upon the sale of the  Section  83  property  and the  person's
"adjusted  basis" for the Section 83 property.  The person's  adjusted basis for
the Section 83 property  will be (i) the amount paid for the Section 83 property
plus (ii) any amount which the person has  included in gross income  pursuant to
the Section 83(b) election.  Thus, upon sale, you will recognize taxable gain or
loss  equal to the  difference  between  the sale  price of the  Shares and your
adjusted basis for the Shares.

In general,  the gain or loss you recognize  will be capital gain or loss if the
following  "Capital Gain Requirements" are met: (i) the Section 83 property is a
capital  asset and (ii) the  Section 83 property is held for more than 12 months
from either the date the  Restrictions  on Transfer lapse or, if a Section 83(b)
election is made,  the date the Section 83 property is  acquired.  Thus,  as the
Shares are probably a capital asset in your hands,  you will  recognize  capital
gain or loss upon  their  sale if you hold  them for more  than 12  months  from
either the date they vest or, if you make the Section 83(b)  election,  from the
date you sign the Stock Purchase Agreement.

                                       2
<PAGE>

Forfeiture of Section 83 Property. If a person's interest in Section 83 property
is forfeited,  the person will  recognize  gain or loss equal to the  difference
between the amount  realized upon forfeiture and the amount paid for the Section
83 property.  In your case,  if your  employment  with the Company is terminated
before all of the Shares have vested,  the Company is  obligated  to  repurchase
from you, and you are obligated to sell to the Company, any Non-Vested Shares at
the price you paid for them. As there would be no difference  between the amount
realized upon  forfeiture  and the amount paid for the Shares,  you would not be
required to recognize any gain or loss at that time.  However,  upon forfeiture,
you would not be able to recoup any taxes you pay  pursuant  to a Section  83(b)
election.

Colorado Income Tax Consequences.

The Colorado income tax  consequences to you in connection with your purchase of
the Shares are  identical to the federal  income tax  consequences.  To make the
Section  83(b)  election in Colorado,  you must file the Section 83(b) Form with
the Internal  Revenue  Service,  as described  above;  there are no extra filing
requirements for making the Section 83(b) election in Colorado.

If you have any  questions  concerning  the tax  consequences  described in this
letter, please feel free to call me.

Sincerely,

MEDINA INTERNATIONAL HOLDINGS, INC.

By: __________________________________________________
Daniel Medina
Its:President

                                       3
<PAGE>

                     ELECTION TO INCLUDE IN GROSS INCOME IN
                   YEAR OF TRANSFER PURSUANT TO SECTION 83(b)
                          OF THE INTERNAL REVENUE CODE

The undersigned  hereby makes an election  pursuant to the provisions of Section
83(b) of the Internal  Revenue Code of 1986, as amended,  and the regulations of
the Commissioner of Internal Revenue promulgated thereunder, with respect to the
Section 83 property  described below, and supplies the following  information in
connection with that election:

The  name,  address,  taxable  year and  taxpayer  identification  number of the
undersigned are:

Name
----------------------------------------------------

Address
-----------------------------------------------------

Taxable Year ____                            Taxpayer I.D. No.______________

The description of the Section 83 property with respect to which the undersigned
is making the election is as follows:

                  _______________  (_____) shares (the "Subject  Shares") of the
         Common  Stock  of  MEDINA  INTERNATIONAL  HOLDINGS,  INC.,  a  Colorado
         corporation (the "Company").

The date upon which the Subject Shares were transferred to, and acquired by, the
undersigned was ____________, ________.

The  Subject  Shares are subject to  restrictions  under a  ___________  vesting
period. If the undersigned's employment terminates,  the Company is obligated to
purchase  and the  undersigned  is  obligated to sell to the Company all Subject
Shares that are not vested for a purchase price, which in certain  circumstances
may be less than the fair market value of the Subject Shares.

The fair market value of the Subject  Shares at the time of the transfer to, and
acquisition by, the undersigned  (determined  without regard to any restrictions
other than  restrictions  which by their terms will never  lapse) was $_____ per
share.

The amount paid by the undersigned for the Subject Shares was $____ per share.

The undersigned has furnished a copy of this election to the Company.

[Signature Page Follows]

<PAGE>

Dated:
---------------------------

------------------------------------------------------
(Signature)

Make 4 copies

(1)      IRS (to be filed at the IRS where  you  ordinarily  file your  returns)
         within 30 days of the purchase
(1)      IRS (to be filed with your income tax return)
(1)      MEDINA INTERNATIONAL HOLDINGS, INC.
(1)      Copy for purchaserExhibit 10.1

 

bebe stores, inc.

1997 STOCK PLAN

 

(As amended and
restated through August 15, 2006)

 

 

 

TABLE OF CONTENTS

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Establishment and Purpose.

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Administration.

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Committees of the Board of Directors.

  	
   

  	
  1

  
	
   

  	
  (b)

  	
  Authority of the Board of Directors.

  	
   

  	
  1

  
	
   

  	
  (c)

  	
  Administration with Respect to Insiders.

  	
   

  	
  1

  
	
   

  	
  (d)

  	
  Committee Complying with Section 162(m).

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Eligibility and Award Limitation.

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  General Rule.

  	
   

  	
  1

  
	
   

  	
  (b)

  	
  Ten-Percent Shareholders.

  	
   

  	
  2

  
	
   

  	
  (c)

  	
  Section 162(m) Grant Limit.

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Stock Subject to Plan.

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Basic Limitation.

  	
   

  	
  2

  
	
   

  	
  (b)

  	
  Additional Shares.

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Terms and Conditions of Restricted Stock Awards or
  Sales.

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Restricted Stock Agreement.

  	
   

  	
  3

  
	
   

  	
  (b)

  	
  Duration and Nontransferability of Stock Purchase
  Rights.

  	
   

  	
  3

  
	
   

  	
  (c)

  	
  Purchase Price.

  	
   

  	
  3

  
	
   

  	
  (d)

  	
  Restrictions on Transfer of Shares and Vesting.

  	
   

  	
  3

  
	
   

  	
  (e)

  	
  Accelerated Vesting.

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Terms and Conditions of Options.

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Stock Option Agreement.

  	
   

  	
  3

  
	
   

  	
  (b)

  	
  Number of Shares.

  	
   

  	
  4

  
	
   

  	
  (c)

  	
  Exercise Price.

  	
   

  	
  4

  
	
   

  	
  (d)

  	
  Exercisability.

  	
   

  	
  4

  
	
   

  	
  (e)

  	
  Accelerated Vesting and Exercisability.

  	
   

  	
  4

  
	
   

  	
  (f)

  	
  Basic Term.

  	
   

  	
  4

  
	
   

  	
  (g)

  	
  Transferability of Options.

  	
   

  	
  4

  
	
   

  	
  (h)

  	
  Termination of Service (Except by Death or for Cause).

  	
   

  	
  5

  
	
   

  	
  (i)

  	
  Leaves of Absence.

  	
   

  	
  5

  
	
   

  	
  (j)

  	
  Death of Participant.

  	
   

  	
  5

  
	
   

  	
  (k)

  	
  Termination for Cause.

  	
   

  	
  6

  
	
   

  	
  (l)

  	
  No Rights as a Shareholder.

  	
   

  	
  6

  
	
   

  	
  (m)

  	
  Modification, Extension and Assumption of Options.

  	
   

  	
  6

  
	
   

  	
  (n)

  	
  Restrictions on Transfer of Shares and Vesting.

  	
   

  	
  6

  

 

 i
 

 

 

	
  

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Terms and Conditions of Restricted Stock Units.

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Restricted Stock Units Agreement.

  	
   

  	
  6

  
	
   

  	
  (b)

  	
  Purchase Price.

  	
   

  	
  7

  
	
   

  	
  (c)

  	
  Vesting.

  	
   

  	
  7

  
	
   

  	
  (d)

  	
  Voting.

  	
   

  	
  7

  
	
   

  	
  (e)

  	
  Effect of Termination of Service.

  	
   

  	
  7

  
	
   

  	
  (f)

  	
  Settlement of Restricted Stock Unit Award.

  	
   

  	
  7

  
	
   

  	
  (g)

  	
  Accelerated Vesting and Settlement of Restricted
  Stock Unit Awards.

  	
   

  	
  8

  
	
   

  	
  (h)

  	
  Restrictions on Transfer of Restricted Stock Unit
  Awards.

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Payment for Shares.

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  General Rule.

  	
   

  	
  8

  
	
   

  	
  (b)

  	
  Surrender of Stock.

  	
   

  	
  8

  
	
   

  	
  (c)

  	
  Services Rendered.

  	
   

  	
  8

  
	
   

  	
  (d)

  	
  Exercise/Sale.

  	
   

  	
  8

  
	
   

  	
  (e)

  	
  Exercise/Pledge.

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Adjustment of Shares.

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  General.

  	
   

  	
  9

  
	
   

  	
  (b)

  	
  Mergers and Consolidations.

  	
   

  	
  9

  
	
   

  	
  (c)

  	
  Reservation of Rights.

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Securities Law Requirements.

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  General.

  	
   

  	
  10

  
	
   

  	
  (b)

  	
  Financial Reports.

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Compliance with Section 409A.

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Awards Subject to Section 409A.

  	
   

  	
  10

  
	
   

  	
  (b)

  	
  Deferral and/or Distribution Elections.

  	
   

  	
  10

  
	
   

  	
  (c)

  	
  Subsequent Elections.

  	
   

  	
  11

  
	
   

  	
  (d)

  	
  Distributions Pursuant to Deferral Elections.

  	
   

  	
  11

  
	
   

  	
  (e)

  	
  Unforeseeable Emergency.

  	
   

  	
  12

  
	
   

  	
  (f)

  	
  Disabled.

  	
   

  	
  12

  
	
   

  	
  (g)

  	
  Death.

  	
   

  	
  13

  
	
   

  	
  (h)

  	
  No Acceleration of Distributions.

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Tax Withholding.

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Tax Withholding in General.

  	
   

  	
  13

  
	
   

  	
  (b)

  	
  Withholding in Shares.

  	
   

  	
  13

  

 

 ii
 

 

 

	
  

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  No Retention Rights.

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  Duration and Amendments.

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Term of the Plan.

  	
   

  	
  14

  
	
   

  	
  (b)

  	
  Right to Amend or Terminate the Plan.

  	
   

  	
  14

  
	
   

  	
  (c)

  	
  Effect of Amendment or Termination.

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  Definitions.

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  Execution.

  	
   

  	
  18

  

 

 iii

 

bebe stores, inc.

1997 STOCK PLAN

1.                                       Establishment
and Purpose.

The purpose of the Plan is to offer selected
individuals an opportunity to acquire a proprietary interest in the success of
the Company, or to increase such interest, by acquiring Shares of the Company’s
Stock.  The Plan provides for the direct
award or sale of Shares, the grant of Options to purchase Shares and the grant
of Restricted Stock Units.  Options
granted under the Plan may include Nonstatutory Options (“NSOs”) as well as
Incentive Stock Options (“ISOs”) intended to qualify under Section 422 of
the Code.

Capitalized terms are defined in Section 14.

2.                                       Administration.

(a)                                  Committees
of the Board of Directors.  The Plan
may be administered by one or more Committees. 
Each Committee shall consist of two or more members of the Board of
Directors who have been appointed by the Board of Directors.  Each Committee shall have such authority and
be responsible for such functions as the Board of Directors has assigned to
it.  If no Committee has been appointed,
the entire Board of Directors shall administer the Plan.  Any reference to the Board of Directors in
the Plan shall be construed as a reference to the Committee (if any) to whom
the Board of Directors has assigned a particular function.

(b)                                 Authority
of the Board of Directors.  Subject
to the provisions of the Plan, the Board of Directors shall have full authority
and discretion to take any actions it deems necessary or advisable for the
administration of the Plan.  All
decisions, interpretations and other actions of the Board of Directors shall be
final and binding on all Participants and all persons deriving their rights
from a Participant.

(c)                                  Administration
with Respect to Insiders.  With
respect to participation by Insiders in the Plan, at any time that any class of
equity security of the Company is registered pursuant to Section 12 of the
Exchange Act, the Plan shall be administered in compliance with the
requirements, if any, of Rule 16b-3.

(d)                                 Committee
Complying with Section 162(m).  If
the Company (or any Parent or Subsidiary) is a “publicly held corporation”
within the meaning of Section 162(m), the Board of Directors may establish a
committee of “outside directors” within the meaning of Section 162(m) to
approve any grants under the Plan which might reasonably be anticipated to
result in the payment of employee remuneration that would otherwise exceed the
limit on employee remuneration deductible for income tax purposes pursuant to
Section 162(m).

3.                                       Eligibility
and Award Limitation.

(a)                                  General
Rule.  Only Employees, Outside
Directors and Consultants shall be eligible for the grant of Options, the
direct award or sale of Shares and the grant of Restricted

  
 1
 

 

Stock Units.  For purposes of the grant of Options, “Employees,”
“Outside Directors” and “Consultants” shall include prospective Employees,
prospective Outside Directors and prospective Consultants to whom Options are
granted in connection with written offers of an employment or other service
relationship with the Company (or any Parent or Subsidiary).  Only Employees shall be eligible for the
grant of ISOs.

(b)                                 Ten-Percent
Shareholders.  An individual who owns
more than 10% of the total combined voting power of all classes of outstanding
stock of the Company, its Parent or any of its Subsidiaries shall not be
eligible to be granted an ISO unless (i) the Exercise Price is at least
110% of the Fair Market Value of a Share on the date of grant, and
(ii) the ISO, by its terms is not exercisable after the expiration of five
years from the date of grant.  For
purposes of this Subsection (b), in determining stock ownership, the
attribution rules of Section 424(d) of the Code shall be applied.

(c)                                  Section
162(m) Grant Limit.  Subject to adjustment as provided in Section
9(a), at any such time as the Company is a “publicly held corporation” within
the meaning of Section 162(m), no Employee or prospective Employee shall be
granted one or more Options within any fiscal year of the Company which in the
aggregate are for the purchase of more than one million six hundred
eighty-seven thousand five hundred (1,687,500) shares (the “Section 162(m) Grant Limit”).  An Option which is canceled in the same
fiscal year of the Company in which it was granted shall continue to be counted
against the Section 162(m) Grant Limit for such period.

4.                                       Stock
Subject to Plan.

(a)                                  Basic
Limitation.  The aggregate number of
Shares that may be issued under the Plan (upon exercise of Options, Stock
Purchase Rights, Restricted Stock Units or other rights to acquire Shares) shall
not exceed nineteen million six hundred thirteen thousand seven hundred fifty
(19,613,750) Shares, subject to adjustment pursuant to Section 9.  The number of Shares that are subject to
Options or other rights outstanding at any time under the Plan shall not exceed
the number of Shares that then remain available for issuance under the
Plan.  The Company, during the term of
the Plan, shall at all times reserve and keep available sufficient Shares to
satisfy the requirements of the Plan.

(b)                                 Additional
Shares.  In the event that any
outstanding Option, Stock Purchase Right, Restricted Stock Units or other right
for any reason expires or is canceled or otherwise terminated, the Shares
allocable to the portion of such award which has not been exercised or settled
as of the time of such termination shall again be available for the purposes of
the Plan.  In the event that Shares
issued under the Plan are reacquired by the Company pursuant to any forfeiture
provision, right of repurchase or right of first refusal, such Shares shall
again be available for the purposes of the Plan, except that the aggregate
number of Shares which may be issued upon the exercise of ISOs shall in no
event exceed nineteen million six hundred thirteen thousand seven hundred fifty
(19,613,750) Shares (subject to adjustment pursuant to Section 9).

  
 2
 

 

5.                                       Terms
and Conditions of Restricted Stock Awards or Sales.

(a)                                  Restricted
Stock Agreement.  Each award or sale
of Shares pursuant to Section 5 shall be evidenced by a Restricted Stock Agreement
between the Participant and the Company. 
Such award or sale shall be subject to all applicable terms and
conditions of the Plan and may be subject to any other terms and conditions
which are not inconsistent with the Plan and which the Board of Directors deems
appropriate for inclusion in a Restricted Stock Agreement.  The provisions of the various Restricted
Stock Agreements entered into under the Plan need not be identical.

(b)                                 Duration
and Nontransferability of Stock Purchase Rights.  Any Stock Purchase Right granted pursuant to
Section 5 shall automatically expire if not exercised by the Participant within
30 days after the grant of such right was communicated to the Participant
by the Company in writing.  A Stock
Purchase Right shall not be transferable and shall be exercisable only by the
Participant to whom such right was granted.

(c)                                  Purchase
Price.  The purchase price of Shares
to be offered for sale pursuant to a Stock Purchase Right shall not be less
than 85% of the Fair Market Value of such Shares.  Subject to the preceding sentence, the
purchase price shall be determined by the Board of Directors at its sole
discretion.  The purchase price shall be
payable in a form or combination of the forms of consideration applicable to
payment of the purchase price, as described in Section 8.

(d)                                 Restrictions
on Transfer of Shares and Vesting. 
Any Shares awarded or sold pursuant to this Section 5 shall be subject
to such forfeiture conditions, rights of repurchase, rights of first refusal
and other transfer restrictions as the Board of Directors may determine.  Such restrictions shall be set forth in the
applicable Restricted Stock Agreement and shall apply in addition to any
restrictions that may apply to holders of Shares generally.

(e)                                  Accelerated
Vesting.  Unless the applicable
Restricted Stock Agreement provides otherwise, any right to automatically
reacquire for no consideration Shares awarded pursuant to this Section 5 or to
repurchase Shares sold pursuant to this Section 5 at their original purchase
price upon termination of the Participant’s Service shall lapse and all of such
Shares shall become vested if the Company is subject to a Change in Control and
the reacquisition right or repurchase right is not assigned to the entity that
employs the Participant immediately after the Change in Control or to its
parent or subsidiary.

6.                                       Terms
and Conditions of Options.

(a)                                  Stock
Option Agreement.  Each grant of an
Option under the Plan shall be evidenced by a Stock Option Agreement between
the Participant and the Company.  Such
Option shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Board of Directors deems appropriate for inclusion
in a Stock Option Agreement.  The
provisions of the various Stock Option Agreements entered into under the Plan
need not be identical.

  
 3
 

 

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

(c)                                  Exercise
Price.  Each Stock Option Agreement
shall specify the Exercise Price.  The Exercise
Price of an ISO shall not be less than 100% of the Fair Market Value of a Share
on the date of grant, and a higher percentage may be required by
Section 3(b).  The Exercise Price of
an NSO shall not be less than 85 % of the Fair Market Value of a Share on the
date of grant; provided, however, that any NSO constituting Section 409A
Deferred Compensation shall comply with the requirements of Section 11 of
the Plan and Section 409A of the Code. 
Subject to the preceding two sentences, the Exercise Price under any
Option shall be determined by the Board of Directors at its sole
discretion.  The Exercise Price shall be
payable in a form or combination of the forms of consideration applicable to
Options, as described in Section 8.

(d)                                 Exercisability.  Each Stock Option Agreement shall specify the
date when, or the terms, performance criteria or other conditions upon the
satisfaction of which, all or any installment of the Option is to become
exercisable.  The exercisability
provisions of any Stock Option Agreement shall be determined by the Board of
Directors at its sole discretion.

(e)                                  Accelerated
Vesting and Exercisability.  Unless
the applicable Stock Option Agreement or, with respect to any NSO constituting
Section 409A Deferred Compensation, the requirements of Section 11 of the
Plan and Section 409A of the Code, provides otherwise, all of a Participant’s
Options shall become exercisable and vested in full if (i) the Company is
subject to a Change in Control, (ii) such Options are not assumed by the
surviving corporation or its parent and (iii) the surviving corporation or
its parent does not substitute options with substantially the same terms for
such Options.  Any options which are not
assumed or substituted for in connection with the Change in Control shall, to
the extent not exercised as of the date of the Change in Control, terminate and
cease to be outstanding effective as of the date of the Change in Control.

(f)                                    Basic
Term.  The Stock Option Agreement
shall specify the term of the Option. 
The term of an ISO shall not exceed 10 years from the date of
grant, and a shorter term may be required by Section 3(b).  Subject to the preceding sentence, the Board
of Directors at its sole discretion shall determine when an Option is to
expire.

(g)                                 Transferability
of Options.  No Option shall be
transferable by the Participant other than by beneficiary designation, will or
the laws of descent and distribution.  An
Option may be exercised during the lifetime of the Participant only by the
Participant or by the Participant’s guardian or legal representative.  No Option or interest therein may be
transferred, assigned, pledged or hypothecated by the Participant during the
Participant’s lifetime, whether by operation of law or otherwise, or be made
subject to execution, attachment or similar process.  Notwithstanding the foregoing, an NSO shall
be assignable or transferable to the extent permitted by the Board of Directors
and set forth in the Stock Option Agreement evidencing such Option.

  
 4
 

 

(h)                                 Termination
of Service (Except by Death or for Cause). 
Unless otherwise specified in the Stock Option Agreement, if a
Participant’s Service terminates for any reason other than the Participant’s
death or for Cause (as defined below), then the Participant’s Options shall
expire on the earliest of the following occasions:

(i)                                     The
expiration date determined pursuant to Subsection (g) above;

(ii)                                  The
date three months after the termination of the Participant’s Service for any
reason other than Disability; or

(iii)                               The
date six months after the termination of the Participant’s Service by reason of
Disability.

The Participant may exercise all or part of the
Participant’s Options at any time before the expiration of such Options under
the preceding sentence, but only to the extent that such Options had become
exercisable before the Participant’s Service terminated (or became exercisable
as a result of the termination) and the underlying Shares had vested before the
Participant’s Service terminated (or vested as a result of the termination).  The balance of such Options shall lapse when
the Participant’s Service terminates.  In
the event that the Participant dies after the termination of the Participant’s
Service but before the expiration of the Participant’s Options, all or part of
such Options may be exercised (prior to expiration) by the executors or
administrators of the Participant’s estate or by any person who has acquired
such Options directly from the Participant by beneficiary designation, bequest
or inheritance, but only to the extent that such Options had become exercisable
before the Participant’s Service terminated (or became exercisable as a result
of the termination) and the underlying Shares had vested before the Participant’s
Service terminated (or vested as a result of the termination).

(i)                                     Leaves
of Absence.  For purposes of
Subsection (i) above, Service shall be deemed to continue while the
Participant is on a bona fide leave of absence, if such leave was approved by
the Company in writing and if continued crediting of Service for this purpose
is expressly required by the terms of such leave or by applicable law (as
determined by the Company).

(j)                                     Death
of Participant.  Unless otherwise
specified in the Stock Option Agreement, if a Participant dies while the
Participant is in Service, then the Participant’s Options shall expire on the
earlier of the following dates:

(i)                                     The
expiration date determined pursuant to Subsection (g) above; or

(ii)                                  The
date 12 months after the Participant’s death.

All or part of the Participant’s Options may be
exercised at any time before the expiration of such Options under the preceding
sentence by the executors or administrators of the Participant’s estate or by
any person who has acquired such Options directly from the Participant by
beneficiary designation, bequest or inheritance, but only to the extent that
such Options had become exercisable before the Participant’s death (or became
exercisable as a result of the death)

  
 5
 

 

and the underlying Shares had vested before the
Participant’s death (or vested as a result of the Participant’s death).  The balance of such Options shall lapse when
the Participant dies.

(k)                                  Termination
for Cause.  Unless otherwise
specified in the Stock Option Agreement, if a Participant’s Service is
terminated for Cause, the Option shall terminate and cease to be exercisable
immediately upon such termination of Service. 
Unless otherwise defined by the
Participant’s Stock Option Agreement or contract of employment or service, for
purposes of this Section 6(l) “Cause” shall mean any of the following:
(1) the Participant’s theft, dishonesty, or falsification of any Company
documents or records; (2) the Participant’s improper use or disclosure of
a the Company’s confidential or proprietary information; (3) any action by
the Participant which has a material detrimental effect on the Company’s
reputation or business; (4) the Participant’s failure or inability to
perform any reasonable assigned duties after written notice from the Company
of, and a reasonable opportunity to cure, such failure or inability;
(5) any material breach by the Participant of any employment or service
agreement between the Participant and the Company, which breach is not cured
pursuant to the terms of such agreement; (6) the Participant’s conviction
(including any plea of guilty or nolo contendere) of any criminal act which
impairs the Participant’s ability to perform his or her duties with the
Company; or (7) Participant’s conviction for a violation of any securities law.

(l)                                     No
Rights as a Shareholder.  A Participant,
or a transferee of a Participant, shall have no rights as a shareholder with
respect to any Shares covered by the Participant’s Option until such person
becomes entitled to receive such Shares by filing a notice of exercise and
paying the Exercise Price pursuant to the terms of such Option.

(m)                               Modification,
Extension and Assumption of Options. 
Within the limitations of the Plan, the Board of Directors may modify,
extend or assume outstanding Options or may accept the cancellation of
outstanding Options (whether granted by the Company or another issuer) in
return for the grant of new Options for the same or a different number of
Shares and at the same or a different Exercise Price.  The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Participant, impair
the Participant’s rights or increase the Participant’s obligations under such
Option.

(n)                                 Restrictions
on Transfer of Shares and Vesting. 
Any Shares issued upon exercise of an Option shall be subject to such
forfeiture conditions, rights of repurchase, rights of first refusal and other
transfer restrictions as the Board of Directors may determine.  Such restrictions shall be set forth in the
applicable Stock Option Agreement and shall apply in addition to any
restrictions that may apply to holders of Shares generally.

7.                                       Terms
and Conditions of Restricted Stock Units.

(a)                                  Restricted
Stock Units Agreement.  Each
Restricted Stock Unit award pursuant to Section 7 shall be evidenced by a
Restricted Stock Units Agreement between the Participant and the Company.  Such award shall be subject to all applicable
terms and conditions of the Plan and may be subject to any other terms and
conditions which are not inconsistent with the Plan and which the Board of
Directors deems appropriate for inclusion in a Restricted Stock

  
 6
 

 

Units
Agreement.  The provisions of the various
Restricted Stock Units Agreements entered into under the Plan need not be
identical.

(b)                                 Purchase
Price.  No monetary payment (other
than applicable tax withholding, if any) shall be required as a condition of
receiving a Restricted Stock Unit award, the consideration for which shall be
services actually rendered to the Company, a Parent or Subsidiary, or for its
benefit.

(c)                                  Vesting.  Restricted Stock Units may or may not be made
subject to vesting conditions based upon the satisfaction of such Service
requirements, conditions or restrictions, as shall be established by the Board
of Directors and set forth in the Restricted Stock Units Agreement.

(d)                                 Voting.  A Participant shall have no voting rights
with respect to shares of Stock represented by Restricted Stock Units until the
date of the issuance of such shares (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the
Company).

(e)                                  Effect
of Termination of Service.  Unless
otherwise provided by the Board of Directors in the grant of Restricted Stock
Units and set forth in the Restricted Stock Units Agreement, if a Participant’s
Service terminates for any reason, whether voluntary or involuntary (including
the Participant’s death or disability), then the Participant shall forfeit to
the Company any Restricted Stock Units which remain subject to vesting
conditions as of the date of the Participant’s termination of Service.

(f)                                    Settlement
of Restricted Stock Unit Award.  The
Company shall issue to the Participant on the date on which the Restricted
Stock Units subject to the Participant’s Restricted Stock Unit award vests or
on such other date as determined by the Board of Directors, in its discretion,
and set forth in the Participant’s Restricted Stock Units Agreement a number of
whole shares of Stock equal to the number of whole Restricted Stock Units as
set forth in and subject to the Restricted Stock Units Agreement which are no
longer subject to vesting conditions or which are otherwise to be settled on
such date, subject to withholding of applicable taxes, if any.  If permitted by the Board of Directors, the Participant
may elect, consistent with the requirements of Section 11 of the Plan and
Section 409A of the Code, to defer receipt of all or any portion of the
shares of Stock or other property otherwise issuable to the Participant
pursuant to this Section, and such deferred issuance date(s) and amount(s)
elected by the Participant shall be set forth in the Restricted Stock Units
Agreement.  Notwithstanding the
foregoing, the Board of Directors, in its discretion, may provide for
settlement of any Restricted Stock Unit award by payment to the Participant in
cash of an amount equal to the Fair Market Value on the payment date of the
shares of Stock or other property otherwise issuable to the Participant
pursuant to this Section.  The Board of
Directors, in its discretion, may provide in any Restricted Stock Units
Agreement that, if the settlement of the award with respect to any shares would
otherwise occur on a day on which the sale of such shares would violate the
provisions of the Insider Trading Policy, then the settlement with respect to
such shares shall occur on the next day on which the sale of such shares would
not violate the Insider Trading Policy, but in any

  
 7
 

 

event on or
before the later of the last day of the calendar year of, or the 15th day of
the third calendar month following, the original settlement date.

(g)                                 Accelerated
Vesting and Settlement of Restricted Stock Unit Awards.  Unless the applicable Restricted Stock Units
Agreement provides otherwise, all of a Participant’s Restricted Stock Units
shall become vested in full if (i) the Company is subject to a Change in
Control, (ii) such Restricted Stock Units do not remain outstanding,
(iii) such Restricted Stock Units are not assumed by the surviving
corporation or its parent and (iv) the surviving corporation or its parent
does not substitute a substantially equivalent award.  Except as required by Section 11 of the
Plan and Section 409A of the Code with respect to any Restricted Stock Units
award constituting Section 409A Deferred Compensation, Restricted Stock Units
shall be settled in accordance with Section 7(f) immediately prior to the
effective time of the Change in Control to the extent the Restricted Stock
Units are neither assumed or substituted for in connection with the Change in
Control.

(h)                                 Restrictions
on Transfer of Restricted Stock Unit Awards.  Prior to the issuance of shares of Stock in
settlement of a Restricted Stock Unit award, the award shall not be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or garnishment by creditors of the Participant or the Participant’s
beneficiary, except by will or by the laws of descent and distribution.

8.                                       Payment
for Shares.

(a)                                  General
Rule.  The entire purchase price for
Shares acquired pursuant to a Stock Purchase Right or Exercise Price of Shares
acquired pursuant to an Option shall be payable in cash or cash equivalents at
the time when such Shares are purchased, except as otherwise provided in this
Section 8.

(b)                                 Surrender
of Stock.  To the extent that a Stock
Option Agreement so provides, payment may be made all or in part with Shares
owned by the Participant or the Participant’s representative.  Such Shares shall be surrendered to the
Company in good form for transfer and shall be valued at their Fair Market
Value on the date when the Option is exercised. 
This Subsection (b) shall not apply to the extent that acceptance
of Shares in payment of the Exercise Price would cause the Company to recognize
compensation expense with respect to the Option for financial reporting
purposes.

(c)                                  Services
Rendered.  At the discretion of the
Board of Directors, Shares may be awarded under the Plan in consideration of
services rendered to the Company, a Parent or a Subsidiary prior to the award.

(d)                                 Exercise/Sale.  To the extent that a Stock Option Agreement
so provides, and if Stock is publicly traded, payment may be made all or in
part by the delivery (on a form prescribed by the Company) of an irrevocable
direction to a securities broker approved by the Company to sell Shares and to
deliver all or part of the sales proceeds to the Company in payment of all or
part of the Exercise Price and any withholding taxes.

  
 8
 

 

(e)                                  Exercise/Pledge.  To the extent that a Stock Option Agreement
so provides, and if Stock is publicly traded, payment may be made all or in
part by the delivery (on a form prescribed by the Company) of an irrevocable
direction to pledge Shares to a securities broker or lender approved by the
Company, as security for a loan, and to deliver all or part of the loan
proceeds to the Company in payment of all or part of the Exercise Price and any
withholding taxes.

9.                                       Adjustment
of Shares.

(a)                                  General.  In the event of a subdivision of the
outstanding Stock, a declaration of a dividend payable in Shares, a declaration
of an extraordinary dividend payable in a form other than Shares in an amount
that has a material effect on the Fair Market Value of the Stock, a combination
or consolidation of the outstanding Stock into a lesser number of Shares, a
recapitalization, a spin-off, a reclassification or a similar occurrence, the
Board of Directors shall make appropriate adjustments in one or more of
(i) the number of Shares available for future grants under Section 4,
(ii) the number of Shares covered by each outstanding Option, Stock
Purchase Right and Restricted Stock Unit award, (iii) the Section 162(m)
Grant Limit set forth in Section 3(c) or (vi) the Exercise Price under each
outstanding Option.  Notwithstanding the
foregoing, any fractional shares resulting from an adjustment pursuant to this
Section 9 shall be rounded down to the nearest whole number, and no any event
may the exercise price be decreased to an amount less than the par value, if
any, of the Stock.

(b)                                 Mergers
and Consolidations.  In the event
that the Company is a party to a merger or consolidation, outstanding Options,
Stock Purchase Rights and Restricted Stock Units shall be subject to the
agreement of merger or consolidation. 
Such agreement, without the Participants’ consent, may provide for:

(i)                                     The
continuation of such outstanding Options, Stock Purchase Right or Restricted
Stock Units by the Company (if the Company is the surviving corporation);

(ii)                                  The
assumption of the Plan and such outstanding Options, Stock Purchase Rights or
Restricted Stock Units by the surviving corporation or its parent;

(iii)                               The
substitution by the surviving corporation or its parent of options, stock
purchase rights or restricted stock units with substantially the same terms for
such outstanding Options, Stock Purchase Rights or Restricted Stock Units; or

(iv)                              The
cancellation of such outstanding Options without payment of any consideration.

(c)                                  Reservation
of Rights.  Except as provided in
this Section 9, a Participant shall have no rights by reason of
(i) any subdivision or consolidation of shares of stock of any class,
(ii) the payment of any dividend or (iii) any other increase or
decrease in the number of shares of stock of any class.  Any issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any
class, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or Exercise Price of Shares subject to an

  
 9
 

 

Option.  The grant of an Option pursuant to the Plan
shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure, to merge or consolidate or to dissolve, liquidate, sell or
transfer all or any part of its business or assets.

10.                                 Securities
Law Requirements.

(a)                                  General.  Shares shall not be issued under the Plan
unless the issuance and delivery of such Shares comply with (or are exempt
from) all applicable requirements of law, including (without limitation) the
Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder, state securities laws and regulations, and the regulations of any
stock  exchange or other securities
market on which the Company’s securities may then be traded.

(b)                                 Financial
Reports.  Each Participant shall be
given access to information concerning the Company equivalent to that
information generally made available to the Company’s common shareholders.

11.                                 Compliance
with Section 409A.

(a)                                  Awards
Subject to Section 409A.  The
provisions of this Section 11 shall apply to any award or portion thereof
that constitutes Section 409A Deferred Compensation, notwithstanding any
provision to the contrary contained in the Plan or the award agreement
applicable to such award.  Section 409A
Deferred Compensation includes, without limitation:

(i)                                     Any
NSO having an Exercise Price less than 100% of the Fair Market Value of a Share
on the date of grant of the NSO or that permits the deferral of compensation
other than the deferral of recognition of income until the exercise of the NSO.

(ii)                                  Any
Restricted Stock Unit award if either (A) the award provides by its terms
for settlement of all or any portion of the award on one or more dates
following the Short-Term Deferral Period (as defined below) or (B) the
Board of Directors permits or requires the Participant to elect one or more
dates on which the award will be settled.

Subject to any
applicable U.S. Treasury Regulations promulgated pursuant to Section 409A
or other applicable guidance, the term “Short-Term Deferral Period”
means the period ending on the later of (i) the 15th day of the third
month following the end of the Company’s fiscal year in which the applicable
portion of the award is no longer subject to a substantial risk of forfeiture
or (ii) the 15th day of the third month following the end of the
Participant’s taxable year in which the applicable portion of the award is no
longer subject to a substantial risk of forfeiture.  For this purpose, the term “substantial risk
of forfeiture” shall have the meaning set forth in any applicable U.S. Treasury
Regulations promulgated pursuant to Section 409A or other applicable
guidance.

(b)                                 Deferral
and/or Distribution Elections. 
Except as otherwise permitted or required by Section 409A or any
applicable U.S. Treasury Regulations promulgated pursuant to Section 409A
or other applicable guidance, the following rules shall apply to any deferral
and/or

  
 10
 

 

distribution
elections (each, an “Election”) that may be permitted or required by the
Board of Directors pursuant to an award constituting Section 409A Deferred
Compensation:

(i)                                     All
Elections must be in writing and specify the amount of the distribution in
settlement of an award being deferred, as well as the time and form of
distribution as permitted by this Plan.

(ii)                                  All
Elections shall be made by the end of the Participant’s taxable year prior to
the year in which services commence for which an award may be granted to such
Participant; provided, however, that if the award qualifies as “performance-based
compensation” for purposes of Section 409A and is based on services
performed over a period of at least twelve (12) months, then the Election may
be made no later than six (6) months prior to the end of such period.

(iii)                               Elections
shall continue in effect until a written election to revoke or change such
Election is received by the Company, except that a written election to revoke
or change such Election must be made prior to the last day for making an
Election determined in accordance with paragraph (ii) above or as
permitted by Section 11(c).

(c)                                  Subsequent
Elections.  Except as otherwise
permitted or required by Section 409A or any applicable U.S. Treasury
Regulations promulgated pursuant to Section 409A or other applicable guidance,
any award constituting Section 409A Deferred Compensation which permits a
subsequent Election to delay the distribution or change the form of
distribution in settlement of such award shall comply with the following
requirements:

(i)                                     No
subsequent Election may take effect until at least twelve (12) months after the
date on which the subsequent Election is made;

(ii)                                  Each
subsequent Election related to a distribution in settlement of an Award not
described in Section 11(d)(ii), 11(d)(iii), or 11(d)(vi) must result in a
delay of the distribution for a period of not less than five (5) years from the
date such distribution would otherwise have been made; and

(iii)                               No
subsequent Election related to a distribution pursuant to
Section 11(d)(iv) shall be made less than twelve (12) months prior to the
date of the first scheduled payment under such distribution.

(d)                                 Distributions
Pursuant to Deferral Elections. 
Except as otherwise permitted or required by Section 409A or any
applicable U.S. Treasury Regulations promulgated pursuant to Section 409A or
other applicable guidance, no distribution in settlement of an award
constituting Section 409A Deferred Compensation may commence earlier than:

(i)                                     Separation
from service (as determined by the Secretary of the United States Treasury);

(ii)                                  The
date the Participant becomes Disabled (as defined below);

  
 11
 

 

(iii)                               Death;

(iv)                              A
specified time (or pursuant to a fixed schedule) that is either
(A) specified by the Board of Directors upon the grant of an award and set
forth in the award agreement evidencing such award or (B) specified by the
Participant in an Election complying with the requirements of
Section 11(b) and/or 11(c), as applicable;

(v)                                 To
the extent provided by the Secretary of the U.S. Treasury, a change in the
ownership or effective control or the Company or in the ownership of a
substantial portion of the assets of the Company; or

(vi)                              The
occurrence of an Unforeseeable Emergency (as defined by applicable U.S.
Treasury Regulations promulgated pursuant to Section 409A).

Notwithstanding anything else herein to the contrary, to
the extent that a Participant is a “Specified Employee” (as defined in Section
409A(a)(2)(B)(i) of the Code) of the Company, no distribution pursuant to
Section 11(d)(i) in settlement of an award constituting Section 409A
Deferred Compensation may be made before the date (the “Delayed Payment Date”) which is six (6) months
after such Participant’s date of separation from service, or, if earlier, the
date of the Participant’s death.  All
such amounts that would, but for this paragraph, become payable prior to the
Delayed Payment Date shall be accumulated and paid on the Delayed Payment Date.

(e)                                  Unforeseeable
Emergency.  The Board of Directors
shall have the authority to provide in the award agreement evidencing any award
constituting Section 409A Deferred Compensation for distribution in
settlement of all or a portion of such award in the event that a Participant
establishes, to the satisfaction of the Board of Directors, the occurrence of
an Unforeseeable Emergency.  In such
event, the amount(s) distributed with respect to such Unforeseeable Emergency
cannot exceed the amounts necessary to satisfy such Unforeseeable Emergency
plus amounts necessary to pay taxes reasonably anticipated as a result of such
distribution(s), after taking into account the extent to which such hardship is
or may be relieved through reimbursement or compensation by insurance or
otherwise, by liquidation of the Participant’s assets (to the extent the
liquidation of such assets would not itself cause severe financial hardship) or
by cessation of deferrals under the award. 
All distributions with respect to an Unforeseeable Emergency shall be
made in a lump sum as soon as practicable following the Committee’s
determination that an Unforeseeable Emergency has occurred.

The occurrence of an Unforeseeable Emergency shall be
judged and determined by the Board of Directors.  The Board of Directors’ decision with respect
to whether an Unforeseeable Emergency has occurred and the manner in which, if
at all, the distribution in settlement of an Award shall be altered or
modified, shall be final, conclusive, and not subject to approval or appeal.

(f)                                    Disabled.  The Board of Directors shall have the
authority to provide in any award constituting Section 409A Deferred
Compensation for distribution in settlement of such award in the event that the
Participant becomes Disabled.  A
Participant shall be considered “Disabled” if either:

  
 12
 

 

(i)                                     the
Participant is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, or

(ii)                                  the
Participant is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than twelve (12) months, receiving income
replacement benefits for a period of not less than three (3) months under an
accident and health plan covering employees of the Participant’s employer.

All distributions payable by reason of a Participant
becoming Disabled shall be paid in a lump sum or in periodic installments as
established by the Participant’s Election, commencing as soon as practicable
following the date the Participant becomes Disabled.  If the Participant has made no Election with
respect to distributions upon becoming Disabled, all such distributions shall
be paid in a lump sum as soon as practicable following the date the Participant
becomes Disabled.

(g)                                 Death.  If a Participant dies before complete
distribution of amounts payable upon settlement of an award constituting
Section 409A Deferred Compensation, such undistributed amounts shall be
distributed to his or her beneficiary under the distribution method for death
established by the Participant’s Election as soon as administratively possible
following receipt by the Committee of satisfactory notice and confirmation of
the Participant’s death.  If the
Participant has made no Election with respect to distributions upon death, all
such distributions shall be paid in a lump sum as soon as practicable following
the date of the Participant’s death.

(h)                                 No
Acceleration of Distributions.  Notwithstanding anything to the
contrary herein, this Plan does not permit the acceleration of the time or
schedule of any distribution under an award constituting Section 409A
Deferred Compensation, except as provided by Section 409A and/or the
Secretary of the U.S. Treasury.

12.                                 Tax
Withholding.

(a)                                  Tax
Withholding in General.  The Company
shall have the right to deduct from any and all payments made under the Plan,
or to require the Participant, through payroll withholding, cash payment or
otherwise, to make adequate provision for, the federal, state, local and foreign
taxes, if any, required by law to be withheld by such the Participant’s
employer with respect to an award or the shares acquired pursuant thereto.  The Company shall have no obligation to
deliver Shares, to release Shares from an escrow established pursuant to an
award agreement, or to make any payment in cash under the Plan until such tax
withholding obligations have been satisfied.

(b)                                 Withholding
in Shares.  The Company shall have
the right, but not the obligation, to deduct from the Shares issuable to a
Participant upon the exercise or settlement of an award, or to accept from the
Participant the tender of, a number of whole Shares having a Fair Market Value,
as determined by the Company, equal to all or any part of the tax withholding

  
 13
 

 

obligations of
the Participant’s employer.  The Fair
Market Value of any Shares withheld or tendered to satisfy any such tax
withholding obligations shall not exceed the amount determined by the
applicable minimum statutory withholding rates.

13.                                 No
Retention Rights.

Nothing in the Plan or in any right, Option or
Restricted Stock Unit granted under the Plan shall confer upon the Participant
any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Company (or
any Parent or Subsidiary employing or retaining the Participant) or of the
Participant which rights are hereby expressly reserved by each, to terminate
his or her Service at any time and for any reason, with or without cause.

14.                                 Duration
and Amendments.

(a)                                  Term
of the Plan.  The Plan, as set forth
herein, shall become effective on the date of its adoption by the Board of
Directors, subject to the approval of the Company’s shareholders.  In the event that the shareholders fail to
approve the Plan within 12 months after its adoption by the Board of
Directors, any grants of Options or sales or awards of Shares that have already
occurred shall be rescinded, and no additional grants, sales or awards shall be
made thereafter under the Plan.  The Plan
shall continue in effect until the earlier of its termination by the Board or
the date on which all of the Shares available for issuance under the Plan have
been issued and all restrictions on such Shares under the terms of the Plan and
the agreements evidencing Options and awards granted under the Plan have
lapsed.  However, all ISOs shall be
granted, if at all, within ten (10) years from the earlier of the date the Plan
is adopted by the Board of Directors or the date the Plan is duly approved by
the shareholders of the Company. 
Notwithstanding the foregoing, if the maximum number of Shares issuable
pursuant to the Plan as provided in Section 4 has been increased at any time
(other than pursuant to Section 9), all ISOs shall be granted, if at all,
within ten (10) years from the earlier of (i) the date on which the latest such
increase in the maximum number of Shares issuable under the Plan was approved
by the shareholders of the Company or (ii) the date such amendment was adopted
by the Board of Directors.

(b)                                 Right
to Amend or Terminate the Plan.  The
Board of Directors may amend, suspend or terminate the Plan at any time and for
any reason; provided, however, that any amendment of the Plan which increases
the number of Shares available for issuance under the Plan (except as provided
in Section 9), or which materially changes the class of persons who are
eligible for the grant of ISOs, shall be subject to the approval of the Company’s
shareholders.  Shareholder approval shall
not be required for any other amendment of the Plan.

(c)                                  Effect
of Amendment or Termination.  No
Shares shall be issued or sold under the Plan after the termination thereof,
except in settlement of Restricted Stock Unit awards and upon exercise of an
Option granted prior to such termination. 
The termination of the Plan, or any amendment thereof, shall not affect
any Share previously issued or any Option previously granted under the Plan;
provided, however, that notwithstanding any other provision of the Plan to the
contrary, the Board of Directors may, in its sole and absolute discretion and
without the

  
 14
 

 

consent of any
Participant, amend the Plan or any award agreement, to take effect
retroactively or otherwise, as it deems necessary or advisable for the purpose
of conforming the Plan or such award agreement to any present or future law,
regulation or rule applicable to the Plan, including, but not limited to,
Section 409A.

15.                                 Definitions.

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

(b)                                 “Change
in Control” shall mean:

(i)                                     The
consummation of a merger or consolidation of the Company with or into another
entity or any other corporate reorganization, unless 50% or more of the
combined voting power of the continuing or surviving entity’s securities
outstanding immediately after such merger, consolidation or other
reorganization is owned by persons who were shareholders of the Company
immediately prior to such merger, consolidation or other reorganization, in
substantially the same proportions as their ownership of Company stock prior to
the transaction ; or

(ii)                                  The
sale, transfer or other disposition of all or substantially all of the Company’s
assets.

Notwithstanding
the foregoing, to the extent that any amount constituting Section 409A Deferred
Compensation would become payable under this Plan by reason of a Change in
Control, such amount shall become payable only if the event constituting a
Change in Control would also constitute a change in ownership or effective control
of the Company or a change in the ownership of a substantial portion of the
assets of the Company within the meaning of Section 409A.  A transaction shall not constitute a Change
in Control if its sole purpose is to change the state of the Company’s
incorporation or to create a holding company that will be owned in
substantially the same proportions by the persons who held the Company’s
securities immediately before such transaction.

(c)                                  “Code”
shall mean the Internal Revenue Code of 1986, as amended, and any applicable
regulations or administrative guidelines promulgated thereunder.

(d)                                 “Committee”
shall mean a committee of the Board of Directors, as described in
Section 2(a).

(e)                                  “Company”
shall mean bebe stores, inc., a California corporation.

(f)                                    “Consultant”
shall mean an individual who performs bona fide services for the Company, a
Parent or a Subsidiary as a consultant or advisor, excluding Employees and
Outside Directors.

  
 15
 

 

(g)                                 “Disability”
shall mean that the Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment.

(h)                                 “Employee”
shall mean any individual who is a common-law employee of the Company, a Parent
or a Subsidiary.

(i)                                     “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

(j)                                     “Exercise
Price” shall mean the amount for which one Share may be purchased upon
exercise of an Option, as specified by the Board of Directors in the applicable
Stock Option Agreement.

(k)                                  “Fair
Market Value” shall mean, as of any date, the value of a Share as
determined by the Board of Directors, in its sole discretion, subject to the
following:

(i)                                     If,
on such date, there is a public market for the Stock, the Fair Market Value of
a Share shall be the closing sale price of a Share (or the mean of the closing
bid and asked prices of a Share if the Stock is so quoted instead) as quoted on
such national or regional securities exchange or market system as constitutes
the primary market for the Stock, as reported in The Wall Street Journal
or such other source as the Company deems reliable.  If the relevant date does not fall on a day
on which the Stock has traded on such securities exchange or market system, the
date on which the Fair Market Value shall be established shall be the last day
on which the Stock was so traded prior to the relevant date, or such other
appropriate day as shall be determined by the Board of Directors, in its sole
discretion.

(ii)                                  If,
on such date, there is no public market for the Stock, the Fair Market Value of
a Share shall be as determined by the Board of Directors in good faith and in a
manner consistent with the requirements of Section 409A.

(l)                                     “Insider”
shall mean an officer or a director of the Company or any other person whose
transactions in Stock are subject to Section 16 of the Exchange Act.

(m)                               “Insider
Trading Policy” shall mean the written policy of the Company pertaining to
the purchase, sale, transfer or other disposition of the Company’s equity
securities by persons who may possess material, nonpublic information regarding
the Company or its securities.

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

(o)                                 “NSO”
shall mean a stock option not described in Sections 422(b) or 423(b) of
the Code.

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

  
 16
 

 

(q)                                 “Outside
Director” shall mean a member of the Board of Directors who is not an
Employee.

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

(s)                                  “Plan”
shall mean this bebe stores, inc. 1997 Stock Plan.

(t)                                    “Participant”
shall mean an individual to whom the Board of Directors has granted an award
pursuant to the Plan.

(u)                                 “Restricted
Stock Unit” shall mean a right granted to a Participant pursuant to Section
7 of the Plan to receive a share of Stock on a date determined in accordance
with the provisions of Section 7 and the Participant’s Restricted Stock Units
Agreement.

(v)                                 “Restricted
Stock Units Agreement” shall mean a written agreement between the Company
and a Participant who is granted Restricted Stock Units under the Plan which
contains the terms, conditions and restrictions pertaining to the acquisition
of such award.

(w)                               “Rule
16b-3” shall mean Rule 16b-3 under the Exchange Act, as amended from time
to time, or any successor rule or regulation.

(x)                                   “Section
162(m)” shall mean Section 162(m) of the Code.

(y)                                 “Section
409A” shall mean Section 409A of the Code.

(z)                                   “Section
409A Deferred Compensation”
shall mean compensation provided pursuant to the Plan that constitutes deferred
compensation subject to and not exempted from the requirements of Section 409A.

(aa)                            “Service”
shall mean service as an Employee, Outside Director or Consultant.  Service shall not be deemed to have
terminated merely because of a change in the capacity in which an individual
renders Service to the Company (or any Parent or Subsidiary) or a change in the
corporation for which the individual renders such Service, provided that there
is no interruption or termination of the individual’s Service.

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

(cc)                            “Stock”
shall mean the Common Stock of the Company.

  
 17
 

 

(dd)                          “Stock
Option Agreement” shall mean the agreement between the Company and a
Participant which contains the terms, conditions and restrictions pertaining to
the Participant’s Option.

(ee)                            “Restricted
Stock Agreement” shall mean the agreement between the Company and a
Participant who acquires Shares under Section 5 which contains the terms,
conditions and restrictions pertaining to the acquisition of such Shares.

(ff)                                “Stock
Purchase Right” means a right to purchase Shares granted under Section 5.

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

16.                                 Execution.

The undersigned hereby certifies that the foregoing is
the bebe stores, inc. 1997 Stock Plan as amended and restated.

 

	
  

  	
  bebe stores, inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Manny Mashouf

  
	
   

  	
   

  
	
   

  	
  Title:

  	
    President

  
				

 

 

  
 18

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]