Document:

TERM
        CREDIT AGREEMENT

       

      THIS
        TERM
        CREDIT AGREEMENT (this “Agreement”) is made and entered into as of August
        22,
        2006, by
        and between I-FIGHT, INC., a California corporation (“Borrower”), and The Hunter
        Fund Limited (“Lender”), with reference to the following:

       

      Lender
        has agreed to make Borrower a term loan subject to and in accordance with
        the
        terms and conditions set forth below.

       

      NOW,
        THEREFORE, in consideration of the mutual covenants and agreements contained
        herein, Borrower, and Lender agree as follows:

       

      1.  Certain
        Defined Terms.
        As used
        in this Agreement, the following terms shall have the following
        meanings:

       

      “Business
        Day”
means
        a
        day (a) other than Saturday or Sunday, and (b) on which commercial banks
        are
        open for business in New York, New York, and Los Angeles,
        California.

       

      “Closing
        Date”
means
        the date each of the conditions precedent set forth in Section
        6
        hereof
        is fully satisfied.

       

      “Event
        of Default”
has
        the
        meaning set forth in Section
        8.

       

      “Interest
        Rate”
has
        the
        meaning set forth in Section
        2(c).

       

      “Lien”
means
        any mortgage, deed of trust, pledge, security interest, assignment, deposit
        arrangement, charge or encumbrance, lien (statutory or other), or other
        preferential arrangement (including any conditional sale or other title
        retention agreement, any financing lease having substantially the same economic
        effect as any of the foregoing or any agreement to give any security
        interest).

       

      “Maturity
        Date”
has
        the
        meaning set forth in Section
        2(b).

       

      “Note”
has
        the
        meaning set forth in Section
        2(d).

       

      “Person”
means
        an individual, corporation, limited liability company, partnership, joint
        venture, trust, unincorporated organization or any other juridical
        entity.

       

      “Private
        Placement”
means
        the private placement of the securities of the Company pursuant to a placement
        agreement between the Company and Hunter World Markets, Inc.

       

      “Term
        Loan”
has
        the
        meaning set forth in Section
        2(a).

       

      2.  Amount
        and Terms of the Term Loan.

       

      (a)  Term
        Loan Advance.
        Subject
        to the terms and conditions of this Agreement, Lender hereby agrees to make
        a
        loan to Borrower (the “Term Loan”) on the Closing Date in the amount of Three
        Hundred Fifty Thousand Dollars ($350,000), which amount may be repaid at
        any
        time prior to the Maturity Date without premium or penalty, but may not be
        reborrowed once repaid.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (b)  Term.
        All
        principal and accrued but unpaid interest shall be payable in full on the
        earlier to occur of the closing of the Private Placement or six months from
        the
        date hereof (the “Maturity Date”), provided, however, that if the Private
        Placement is not closed, the Term Loan shall be extended to the closing of
        a
        financing of at least $1,500,000 but in no event more than six months after
        the
        Maturity Date.

       

      (c)  Bridge
        Loan Fee.
        Borrower shall pay to Lender a Bridge Loan Fee of $43,750 (the “Loan Fee”)
        payable on the maturity date of the Bridge Loan as it may be
        extended.

       

      (d)  Promissory
        Note.
        The
        Term Loan shall be evidenced by a promissory note (the “Note”) in the form of
        Exhibit “A-1” attached hereto, duly executed by Borrower.

       

      (e)  Interest
        on Event of Default.
        Upon
        the occurrence and during the continuance of an Event of Default, Borrower
        agrees to pay interest on the entire unpaid principal amount of the Term
        Loan,
        as well as the Loan Fee, from the date of such Event of Default until the
        date
        the same is cured in full, payable on demand, at a rate per annum of ten
        percent
        (10%).

       

      (f)  Manner
        of Payment.
        All
        payments of principal or interest hereunder or under the Note shall be delivered
        to Lender in immediately available funds on the date due at such place as
        Lender
        may from time to time designate.

       

      (g)  Limitation
        on Interest Rate and Fees.
        In no
        contingency or event whatsoever shall the aggregate of all amounts deemed
        interest hereunder and charged or collected by Lender or any holder of the
        Note
        exceed the highest rate permissible under any law which a court of competent
        jurisdiction shall, in a final determination, deem applicable hereto. In
        the
        event that such a court determines that Lender has charged or received interest
        hereunder or under the Note in excess of the highest applicable rate, the
        rate
        in effect hereunder and under the Note shall automatically be reduced to
        the
        maximum rate permitted by applicable law and Lender shall apply all interest
        paid in excess of the maximum lawful rate to the principal balance of the
        amount
        outstanding hereunder and under the Note. It is the intent of the parties
        hereto
        that Borrower not pay or contract to pay, and that Lender not receive or
        contract to receive, directly or indirectly in any manner whatsoever, interest
        in excess of that which may be paid by Borrower to Lender under applicable
        law.

       

      (h)  Security
        Interest.
        To
        secure Borrower’s obligations with respect to the Term Loan, Borrower hereby
        grants to Lender a first priority security interest in all of its assets,
        wherever located, it being understood, however, that the security interest
        hereunder shall be on parity with loans to Borrower in the aggregate principal
        amount of $250,000 being made concurrently with the Term Loan by shareholders
        of
        Borrower herein regardless of the order of filing of financing
        statements.

       

      3.  Representations
        and Warranties.
        In
        order to induce Lender to enter into this Agreement and to make the Term
        Loan
        contemplated hereunder, Borrower hereby represents and warrants to Lender
        as
        follows:

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      (a)  Legal
        Status.
        Borrower is a corporation duly incorporated, validly existing, and in good
        standing under the laws of the State of Delaware. Borrower is qualified or
        licensed to do business, and is in good standing as a foreign corporation
        in all
        jurisdictions in which such qualification or licensing is required or in
        which
        the failure to so qualify or to be so licensed could have a material adverse
        effect on Borrower.

       

      (b)  Authorization
        and Validity.
        This
        Agreement and the Note have been duly authorized, and upon their execution
        and
        delivery in accordance with the provisions hereof will constitute legal,
        valid
        and binding agreements and obligations of Borrower, enforceable in accordance
        with their respective terms.

       

      (c)  No
        Conflict.
        The
        execution, delivery, and performance by Borrower of this Agreement and the
        Note
        do not and will not conflict with the terms of the Articles of Incorporation
        or
        Bylaws of Borrower, violate any provision of any judgment, decree or order
        of
        any court or governmental authority by which Borrower is bound, or any provision
        of any law or regulation applicable to Borrower, or result in a breach of
        or
        constitute a default under any contract, obligation, indenture, or other
        instrument to which Borrower is a party or by which Borrower may be
        bound.

       

      (d)  No
        Consents.
        The
        execution, delivery, and performance by Borrower of this Agreement and the
        Note
        do not and will not require any authorization, approval, or other action
        by, or
        notice to or filing with, any governmental authority, regulatory body, or
        any
        other person or entity.

       

      (e)  Use
        of
        Proceeds.
        The net
        proceeds of the Term Loan will be used $10,000 for Lender’s legal costs and the
        remainder for general working capital purposes. 

       

      (f)  Margin
        Stock.
        Borrower is not engaged in the business of extending credit for the purpose
        of
        purchasing or carrying margin stock (within the meaning of Regulation G or
        U
        issued by the Board of Governors of the Federal Reserve System), and no proceeds
        of any Revolving Loan will be used to purchase or carry any margin stock
        or
        extend credit to others for the purpose of purchasing or carrying any margin
        stock, or be used for any purpose which violates or is inconsistent with
        the
        provisions of Regulation X of said Board of Governors.

       

      4.  Covenants.
        Borrower hereby covenants that until all amounts outstanding hereunder and
        under
        the Notes have been indefeasibly paid in full, it shall:

       

      (a)  Punctual
        Payments.
        Punctually pay the Loan Fee and principal with respect to the Term Loan as
        provided herein and in the Note.

       

      (b)  Existence.
        Do or
        cause to be done all things necessary to preserve, renew and keep in full
        force
        and effect its existence and comply with the provisions of all documents
        pursuant to which it is organized and/or which govern its continued existence;
        maintain all licenses, permits, governmental approvals, rights, privileges,
        and
        franchises necessary for the conduct of its business; and conduct its business
        in an orderly and regular manner and in accordance with all laws, rules,
        regulations, and orders of any governmental authority having jurisdiction
        over
        it or its business.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      (c)  Books
        and Records.
        Maintain adequate books and records in accordance with generally accepted
        accounting principles consistently applied, and permit any representative
        of
        Lender, at any reasonable time, to inspect, audit and examine such books
        and
        records, to make copies of the same, and to inspect its assets and
        properties
        at their
        expense.

       

      5.  Conditions
        Precedent to Term Loan.
        The
        obligation of Lender to make the Term Loan shall be subject to the condition
        precedent that Agent shall have received each of the following, each in form
        and
        substance satisfactory to Agent:

       

      (a)  This
        Agreement duly executed by all of the parties hereto;

       

      (b)  The
        Note
        duly executed by Borrower;

       

      (c)  Such
        additional supporting documents as Lender or its counsel may reasonably request;
        and

       

      (d)  Borrower’s
        shareholders shall have loaned Borrower $250,000 on the same terms as set
        forth
        herein (the “Shareholders’ Loan”).

       

      6.  Survival
        of Representations and Warranties.
        Borrower covenants, warrants and represents to Lender that all representations
        and warranties of Borrower contained in this Agreement or the Note shall
        be true
        at the time of Borrower’s execution of this Agreement and the Note, and shall
        survive the execution, delivery and acceptance thereof by the parties thereto
        and the closing of the transactions described therein or related
        thereto.

       

      7.  Events
        of Default.
        The
        occurrence of any of the following shall constitute an “Event of Default” and
        shall, at the option of Lender, require immediate payment in full of all
        sums
        then remaining unpaid hereunder and under the Note:

       

      (a)  Failure
        to Pay Note.
        The
        failure of Borrower to pay any principal or other amount due under the Note
        when
        due and payable.

       

      (b)  Breach
        of Covenant, Representation or Warranty.
        The
        failure of Borrower to perform or observe any covenant, condition or agreement
        contained in this Agreement (other than the payment obligations, the breach
        of
        which shall be governed by subsection (a) above) where such failure is not
        cured
        within five (5) business days, or any representation or warranty made or
        deemed
        made by any of them under or in connection with this Agreement, shall prove
        to
        have been false or misleading in any material respect when made.

       

      (c)  Liens.
        Except
        for the security interest granted hereunder or pursuant to the Shareholders’
Loan Borrower creates, incurs, assumes or suffers to exist any Lien upon
        or with
        respect to any of its properties or assets whether now owned or hereafter
        acquired, including, without limitation, any governmental, tax, or judgment
        Lien, and fails to have the same removed or released within two Business
        Days
        after the creation thereof.

       

      (d)  Insolvency.
        Borrower shall become insolvent; admit in writing its inability to pay its
        debts
        as they mature; make an assignment for the benefit of creditors; or if
        bankruptcy proceedings or other proceedings for relief under any bankruptcy
        law
        or any law for the relief of debtors shall be instituted by or against it
        and,
        if instituted against it, the same is not dismissed within thirty (30) days
        of
        the filing thereof.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      (e)  Dissolution.
        Any
        order, judgment, or decree shall be entered against Borrower decreeing its
        involuntary dissolution or split up and such order shall remain undischarged
        and
        unstayed for a period in excess of thirty (30) days; or Borrower shall otherwise
        dissolve or cease to exist.

       

      8.  Remedies.
        If an
        Event of Default shall occur, (a) all amounts outstanding hereunder or under
        the
        Note, notwithstanding any term of this Agreement, or the Note to the contrary,
        shall at Lender’s option and without notice become immediately due and payable,
        without presentment, demand, protest or notice of dishonor, all of which
        are
        hereby expressly waived by Borrower, and (b) Lender shall have all rights,
        powers and remedies available hereunder, or accorded by law. All rights,
        powers
        and remedies of Lender in connection with this Agreement and the Note may
        be
        exercised at any time by Lender and from time to time after the occurrence
        of an
        Event of Default, are cumulative and not exclusive, and shall be in addition
        to
        any other rights, powers or remedies provided by law or equity.

       

      9.  Warrant.
        In
        consideration of Lender making the Term Loan, Borrower shall issue to Lender
        a
        three-year warrant to purchase such number of shares of Borrower’s Common Stock
        equal to the principal amount of this Note divided by the Per Share Purchase
        Price in the Private Placement. The exercise price of the Warrant shall be
        60%
        of the Per Share Purchase Price in the Private Placement. The Warrant shall
        be
        in form and substance satisfactory to the Lender and shall be delivered at
        the
        closing of the Private Placement.

       

      10.  Miscellaneous.

       

      (a)  Failure
        or Indulgence Not Waiver.
        No
        failure or delay on the part of Lender, or any holder of a Note in the exercise
        of any power, right or privilege hereunder shall operate as a waiver thereof,
        nor shall any single or partial exercise thereof or of any other right, power
        or
        privilege.

       

      (b)  Modification.
        No
        modification, amendment or waiver of any provision of this Agreement, or
        the
        Note, nor the consent to any departure by Borrower therefrom, shall in any
        event
        be effective unless the same shall have been approved by Lender and Borrower
        and
        shall be in writing signed by Lender and Borrower. Such waiver or consent
        shall
        then be effective only in the specific instance and for the purpose for which
        given. No notice to or demand on Borrower in any case shall entitle Borrower
        to
        any other or further notice or demand in the same, similar or other
        circumstances.

       

      (c)  Notices.
        Except
        as otherwise expressly provided herein, any notice herein required or permitted
        to be given shall be in writing and shall be deemed effective when personally
        delivered, mailed, telecopied (with a confirming copy sent by mail) or delivered
        by telex to the appropriate party at the address set forth below (or at such
        other address as may be designated by either party in a written notice sent
        in
        accordance with this Section):

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        	
                If
                  to Borrower:

              	
                I-Fight,
                  Inc.

                9229
                  Sunset Boulevard, Suite 505

                Los
                  Angeles, California 90069

                Attention:
                  David Marshall

                Telecopy
                  No.: 

              
	 	 	 
	 	 	 
	
                with
                  a copy to:

              	
                David
                  L. Ficksman, Esq.

                Troy
                  & Gould

                1801
                  Century Park East, 16th
                  Floor

                Los
                  Angeles, California 90067

                Telecopy
                  No.: (310) 789-1490

              
	 	 	 
	 	 	 
	
                If
                  to Lender

              	
                Hunter
                  World Markets, Inc.

                Penthouse
                  Suite

                9300
                  Wilshire Boulevard

                Beverly
                  Hills, California 90212

                Attn:
                  Todd Ficeto

                Telecopy
                  No.: (310) 286-2373

              
	 	 	 
	 	 	 

      

      (d)  Severability.
        In case
        any provision in this Agreement or the Note shall be invalid, illegal or
        unenforceable, such provision shall be severable from the remainder of such
        contract and the validity, legality and enforceability of the remaining
        provisions shall not in any way be affected or impaired thereby.

       

      (e)  Applicable
        Law.
        This
        Agreement and the Note, and the rights and obligations of the parties thereto,
        shall be governed by the laws of the State of California.

       

      (f)  Assignability.
        Borrower shall not assign its rights or obligations hereunder, or under the
        Note
        to any other Person without the prior written consent of Lender, and any
        attempted assignment in violation hereof shall be null and void ab initio.
        Lender shall have the right to assign its rights and obligations hereunder
        and
        no consent or approval from Borrower is required in connection with any such
        assignment.

       

      (g)  Counterparts.
        This
        Agreement may be executed in two or more counterparts, each of which shall
        be
        deemed an original but all of which together shall constitute one and the
        same
        instrument.

       

      (h)  Section
        Headings.
        The
        various headings used in this Agreement are inserted for convenience only
        and
        shall not affect the meaning or interpretations of this Agreement or any
        provision hereof.

       

      (i)  Attorneys’
        Fees.
        In the
        event any party institutes any action or proceeding to enforce the terms
        and
        conditions of this Agreement, or the Note, the prevailing party shall be
        entitled to reasonable attorneys’ fees and costs.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      (j)  TRIAL
        BY JURY.
        BORROWER HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS
        PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM
        IN
        RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT
        OF OR
        BASED UPON THIS AGREEMENT OR THE NOTE, THE SUBJECT MATTER HEREOF AND THEREOF
        OR
        ANY DOCUMENT RELATING HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING
        OR
        HEREAFTER ARISING OR WHETHER IN CONTRACT OR IN TORT OR OTHERWISE.

       

      (k)  Integration.
        This
        Agreement, and the Note reflect the entire understanding of the parties with
        respect to the transactions contemplated hereby and shall not be contradicted
        or
        qualified by any other agreement, oral or written, whether before or after
        the
        date hereof.

       

      IN
        WITNESS WHEREOF, the parties hereto do execute this Agreement as of the date
        first above written.

       

      
        	 	
                “BORROWER”

                 

                I-FIGHT,
                  INC.

                a
                  California corporation

                 

                By:
                  _______________________________  

                Name:
                  _____________________________

                Its:
                  _______________________________

              
	 	 
	 	
                “LENDER”

                 

                THE
                  HUNTER FUND LIMITED

                 

                
                  By:
                    _______________________________  

                  Name:
                    _____________________________

                  Its:
                    _______________________________

                

              

      

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      EXHIBIT

       

      Exhibit
        “A” - Term Note

       

      

       

      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      TERM
        NOTE

       

      
        	 	
                Los
                  Angeles, California

              
	 	 
	$350,000 	
                August
                  22,
                  2006

              

      

       

      FOR
        VALUE
        RECEIVED, the undersigned, I-FIGHT, INC., a California corporation (the
“Borrower”), HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of The Hunter
        Fund Limited (the “Lender”), without offset or counterclaim, the principal sum
        of THREE HUNDRED FIFTY THOUSAND DOLLARS ($350,000) on the Maturity Date (as
        such
        term is defined in the Credit Agreement referred to below) as such Date may
        be
        extended pursuant to the Credit Agreement. Borrower further promises to pay
        a
        bridge loan fee (the “Loan Fee”) on the Term Loan in the amount and payable on
        the date set forth in the Credit Agreement referred to below. This Term Note
        (“Term Note”) may be prepaid at any time prior to the Maturity Date without
        premium or penalty.

       

      1.  Payment.
        Both
        principal and the Loan Fee are payable in lawful money of the United States
        of
        America and in immediately available funds to Lender at Beverly Hills,
        California, or such other place as Lender may designate in writing to Borrower
        from time to time. This Note may be prepaid at any time or from time to time
        without premium or penalty.

       

      2.  Credit
        Agreement.
        This
        Term Note is the Note referred to in, and is subject to and entitled to the
        benefits of, the Term Credit Agreement, dated as of August 22, 2006 (as amended,
        modified, renewed or extended from time to time, the “Credit Agreement”) between
        Borrower and Lender. Capitalized terms used herein shall have the respective
        meanings assigned to them in the Credit Agreement. The Credit Agreement
        provides, among other things, for acceleration (which in certain cases shall
        be
        automatic) of the maturity hereof upon the occurrence of certain stated events,
        in each case without presentment, demand, protest or further notice of any
        kind,
        all of which are hereby expressly waived.

       

      3.  Limitation
        on Interest Rate and Fees.
        In no
        contingency or event whatsoever shall the aggregate of all amounts deemed
        interest hereunder or under the Credit Agreement and charged or collected
        by
        Lender or any holder of this Term Note exceed the highest rate permissible
        under
        any law which a court of competent jurisdiction shall, in a final determination,
        deem applicable hereto. In the event that such a court determines that Lender
        has charged or received interest hereunder or under the Credit Agreement
        in
        excess of the highest applicable rate, the rate in effect hereunder and under
        the Credit Agreement shall automatically be reduced to the maximum rate
        permitted by applicable law and Lender shall apply all interest paid in excess
        of the maximum lawful rate to the principal balance of the amounts outstanding
        hereunder and under the Credit Agreement. It is the intent of the parties
        hereto
        that Borrower not pay or contract to pay, and that Lender not receive or
        contract to receive, directly or indirectly in any manner whatsoever, interest
        in excess of that which may be paid by Borrower to Lender under applicable
        law.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      4.  Governing
        Law.
        THIS
        TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
        OF
        THE STATE OF CALIFORNIA.

       

      

       

      
        	 	
                I-FIGHT,
                  INC.,

                a
                  California corporation

                 

                 

                
                  
                    By:
                      _______________________________  

                    Name:
                      _____________________________

                    Its:
                      _______________________________

                  

                

              

      

      

      

      
        
          
          

        

        
          10PRO
      ELITE, INC.

     

    2006
      STOCK OPTION PLAN

     

    	1.  	
            Establishment,
              Purpose and Definitions.

          

     

    (a)  The
      2006
      Stock Option Plan (the “Plan”)
      of Pro
      Elite, Inc., a New Jersey corporation (the “Company”),
      is
      hereby adopted. The Plan shall provide for the issuance of incentive stock
      options (“ISOs”)
      and
      nonqualified stock options (“NSOs”)
      to
      purchase the Stock of the Company.

     

    (b)  The
      purpose of this Plan is to promote the long-term success of the Company by
      attracting, motivating and retaining directors, officers, employees, consultants
      and advisers of the Company and its Affiliates (the “Participants”)
      through the use of competitive long-term incentives which are tied to
      shareholder value. The Plan seeks to balance Participants’ and shareholders’
interests by providing incentives to the Participants in the form of stock
      options which offer rewards for achieving the long-term strategic and financial
      objectives of the Company.

     

    (c)  The
      Plan
      is intended to provide a means whereby Participants may be given an opportunity
      to purchase shares of Stock of the Company pursuant to (i) options which may
      qualify as ISOs under Section 422 of the Internal Revenue Code of 1986, as
      amended (the “Internal
      Revenue Code”),
      or
      (ii) NSOs which may not so qualify.

     

    (d)  The
      term
“Affiliates”
as
      used
      in this Plan means, in the case of an ISO, parent or subsidiary corporations,
      as
      defined in Section 424(e) and (f) of the Code (but substituting “the Company”
for “employer corporation”), including parents or subsidiaries which become such
      after adoption of the Plan, and in all other cases, any entity which is
      controlled by or which controls the Company.

     

    	2.  	
            Administration
              of the Plan.

          

     

    (a)  The
      Plan
      shall be administered by the Compensation Committee of the Board of Directors
      (the “Board”)
      or
      such other committee appointed by the Board to administer the Plan (the
“Committee”)
      or in
      the absence of a Committee, by the Board acting in such capacity.

     

    (b)  The
      Committee may from time to time determine which Participants (each an
“option
      holder”)
      shall
      be granted options under the Plan, the terms thereof (including without
      limitation determining whether the option is an ISO and the times at which
      the
      options shall become exercisable), and the number of shares of Common Stock
      for
      which an option or options may be granted.

     

    (c)  If
      rights
      of the Company to repurchase Stock are imposed, the Board or the Committee
      may,
      in its sole discretion, accelerate, in whole or in part, the time for lapsing
      of
      any rights of the Company to repurchase shares of such Stock or forfeiture
      restrictions.

     

    (d)  If
      rights
      of the Company to repurchase Stock are imposed, the certificates evidencing
      such
      shares of Stock awarded hereunder, although issued in the name of the option
      holder concerned, shall be held by the Company or a third party designated
      by
      the Committee in escrow subject to delivery to the option holder or to the
      Company at such times and in such amounts as shall be directed by the Board
      under the terms of this Plan. Share certificates representing Stock which is
      subject to repurchase rights shall have imprinted or typed thereon a legend
      or
      legends summarizing or referring to the repurchase rights.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (e)  The
      Board
      or the Committee shall have the sole authority, in its absolute discretion,
      to
      adopt, amend and rescind such rules and regulations, consistent with the
      provisions of the Plan, as, in its opinion, may be advisable in the
      administration of the Plan, to construe and interpret the Plan, the rules and
      regulations, and the instruments evidencing options granted under the Plan
      and
      to make all other determinations deemed necessary or advisable for the
      administration of the Plan. All decisions, determinations and interpretations
      of
      the Committee shall be binding on all option holders under the
      Plan.

     

    	3.  	
            Stock
              Subject to the Plan.

          

     

    (a)  “Stock”
shall
      mean the Common Stock of the Company or such stock as may be changed as
      contemplated by Section 3(c) below. Stock shall include shares drawn from either
      the Company’s authorized but unissued shares of Common Stock or from reacquired
      shares of Common Stock, including without limitation shares repurchased by
      the
      Company in the open market.

     

    (b)  Options
      may be granted under the Plan from time to time to eligible persons to purchase
      an aggregate of up to 5,000,000 shares of Stock. Stock options awarded pursuant
      to the Plan which are forfeited, terminated, surrendered or cancelled for any
      reason prior to exercise shall again become available for grants under the
      Plan
      (including any option cancelled in accordance with the cancellation regrant
      provisions of Section 6(f) herein). 

     

    (c)  If
      there
      shall be any change in the Stock subject to the Plan, including Stock subject
      to
      any option granted hereunder, through merger, consolidation, recapitalization,
      reorganization, reincorporation, stock split, reverse stock split, stock
      dividend, combination or reclassification of the Company’s Stock or other
      similar events, an appropriate adjustment shall be made by the Committee in
      the
      number of shares and/or the option price with respect to any unexercised shares
      of Stock. Consistent with the foregoing, in the event that the outstanding
      Stock
      is changed into another class or series of capital stock of the Company,
      outstanding options to purchase Stock granted under the Plan shall become
      options to purchase such other class or series and the provisions of this
      Section 3(c) shall apply to such new class or series.

     

    (d)  The
      Company may grant options under the Plan in substitution for options held by
      employees of another company who become employees of the Company as a result
      of
      merger or consolidation. The Company may direct that substitute options be
      granted on such terms and conditions as deemed appropriate by the Board or
      the
      Committee. 

     

    (e)  The
      aggregate number of shares of Stock approved by the Plan may not be exceeded
      without amending the Plan and obtaining shareholder approval within twelve
      months of such amendment. 

     

    
      
         

      

      
        -
          2 -

        
          

        

      

      
         

      

    

    	4.  	
            Eligibility.

          

     

    Persons
      who shall be eligible to receive stock options granted under the Plan shall
      be
      those Participants referred to in Section 1(b) above; provided, however, that
      (i) ISOs may only be granted to employees of the Company and its Affiliates
      and (ii) any person holding capital stock possessing more than 10% of the
      total combined voting power of all classes of capital stock of the Company
      or
      any Affiliate shall not be eligible to receive ISOs unless the exercise price
      per share of Stock is at least 110% of the fair market value of the Stock on
      the
      date the option is granted.

     

    	5.  	
            Exercise
              Price for Options Granted under the Plan.

          

     

    (a)  All
      ISOs
      will have option exercise prices per option share equal to the fair market
      value
      of a share of the Stock on the date the option is granted, except that in the
      case of any option granted to any person possessing more than 10% of the total
      combined voting power of all classes of stock of the Company or any Affiliate
      (a
“Ten
      Percent Stockholder”)
      the
      price shall be not less than 110% of such fair market value. The option exercise
      prices per option for NSO’s shall be as determined by the Committee, provided
      that NSO’s shall have an exercise price that is not less than 85% of such fair
      market value except that the exercise price shall be 110% of such fair market
      value in the case of NSO’s granted to any Ten Percent Stockholder. The price of
      ISOs or NSOs granted under the Plan shall be subject to adjustment to the extent
      provided in Section 3(c) above.

     

    (b)  The
      fair
      market value on the date of grant shall be determined based upon the closing
      price on an exchange on that day or, if the Stock is not listed on an exchange,
      on the average of the closing bid and asked prices in the Over the Counter
      Market on that day. 

     

    	6.  	
            Terms
              and Conditions of Options.

          

     

    (a)  Each
      option granted pursuant to the Plan shall be evidenced by a written stock option
      agreement, employment agreement, consulting agreement or services loanout
      agreement (the “Option
      Agreement”)
      executed by the Company and the person to whom such option is granted. The
      Option Agreement shall designate whether the option is an ISO or an
      NSO.

     

    (b)  The
      term
      of each ISO and NSO shall be no more than 10 years, except that the term of
      each
      ISO issued to any person possessing more than 10% of the voting power of all
      classes of stock of the Company or any Affiliate shall be no more than 5
      years.

     

    (c)  In
      the
      case of ISOs, the aggregate fair market value (determined as of the time such
      option is granted) of the Stock to which ISOs are exercisable for the first time
      by any individual during any calendar year (under this Plan and any other plans
      of the Company or its Affiliates if any) shall not exceed the amount specified
      in Section 422(d) of the Internal Revenue Code, or any successor provision
      in
      effect at the time an ISO becomes exercisable.

     

    (d)  The
      Option Agreement may contain such other terms, provisions and conditions
      regarding vesting, repurchase or other similar provisions as may be determined
      by the Committee and not inconsistent with this Plan. If an option, or any
      part
      thereof, is intended to qualify as an ISO, the Option Agreement shall contain
      those terms and conditions which the Committee determines are necessary to
      so
      qualify under Section 422 of the Internal Revenue Code.

     

    
      
         

      

      
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          3 -

        
          

        

      

      
         

      

    

    (e)  The
      Committee shall have full power and authority to extend the period of time
      for
      which any option granted under the Plan is to remain exercisable following
      the
      option holder’s cessation of service as an employee or consultant, including
      without limitation cessation as a result of death or disability; provided,
      however, that in no event shall such option be exercisable after the specified
      expiration date of the option term. 

     

    (f)  The
      Committee shall have full power and authority to effect at any time and from
      time to time, with the consent of the affected option holders, the cancellation
      of any or all outstanding options under the Plan and to grant in substitution
      new options under the Plan covering the same or different numbers of shares
      of
      Stock with the same or different exercise prices.

     

    (g)  As
      a
      condition to option grants under the Plan, the option holder agrees to grant
      the
      Company the repurchase rights as Company may at its option require and as may
      be
      set forth in the Option Agreement or a separate repurchase agreement.

     

    (h)  Any
      option granted under the Plan may be subject to a vesting schedule as provided
      in the Option Agreement and, except as provided in this Section 6 herein, only
      the vested portion of such option may be exercised at any time during the Option
      Period. All rights to exercise any option shall lapse and be of no further
      effect whatsoever immediately if the option holder’s service as an employee is
      terminated for “Cause” (as hereinafter defined). The unvested portion of the
      option will lapse and be of no further effect immediately upon any termination
      of employment of the option holder for any reason. Unless employment is
      terminated for Cause, the right to exercise an option in the event of
      termination of employment, to the extent that the Participant is otherwise
      entitled to exercise an option on the date employment terminates, shall
      be:

     

    (i)  at
      least
      six months from the date of termination of employment if termination was caused
      by death or disability;

     

    (ii)  at
      least
      30 days from the date of termination if termination of employment was caused
      by
      other than death or disability; and

     

    (iii)  but
      in no
      event later than the remaining term of the option.

     

    There
      shall be “Cause” for termination as set forth in any applicable employment or
      consulting agreement or, in the absence of such agreement if (i) the option
      holder is convicted of a felony, (ii) the option holder engages in any
      fraudulent or other dishonest act to the detriment of the Company,
      (iii) the option holder fails to report for work on a regular basis, except
      for periods of authorized absence or bona fide illness, (iv) the option
      holder misappropriates trade secrets, customer lists or other proprietary
      information belonging to the Company for the option holder’s own benefit or for
      the benefit of a competitor, (v) the option holder engages in any willful
      misconduct designed to harm the Company or its shareholders, or (vi) the
      option holder fails to perform properly assigned duties with a failure to cure
      after 20 days notice.

     

    
      
         

      

      
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          4 -

        
          

        

      

      
         

      

    

    (i) No
      fractional shares of Stock shall be issued under the Plan, whether by initial
      grants or any adjustments to the Plan. 

     

    	7.  	
            Use
              of Proceeds.

          

     

    Cash
      proceeds realized from the sale of Stock under the Plan shall constitute general
      funds of the Company.

     

    	8.  	
            Amendment,
              Suspension or Termination of the Plan.

          

     

    (a)  The
      Board
      may at any time suspend or terminate the Plan, and may amend it from time to
      time in such respects as the Board may deem advisable provided that (i) such
      amendment, suspension or termination complies with all applicable state and
      federal requirements and requirements of any stock exchange on which the Stock
      is then listed, including any applicable requirement that the Plan or an
      amendment to the Plan be approved by the shareholders. The Plan shall terminate
      on the earlier of (i) ten (10) years from October 3, 2006,
      (ii) the date on which no additional shares of Stock are available for
      issuance under the Plan, or (iii) ten years after the date the Plan is approved
      by the Company’s shareholders.

     

    (b)  No
      option
      may be granted during any suspension or after the termination of the Plan,
      and
      no amendment, suspension or termination of the Plan shall, without the option
      holder’s consent, alter or impair any rights or obligations under any option
      granted under the Plan.

     

    (c)  The
      Committee, with the consent of affected option holders, shall have the authority
      to cancel any or all outstanding options under the Plan and grant new options
      having an exercise price which may be higher or lower than the exercise price
      of
      cancelled options. 

     

    	9.  	
            Assignability
              of Options and Rights.

          

     

    (a)  Subject
      to Subparagraph (b), no Option issued under the Plan shall be assignable or
      transferable by an option holder other than by will or the laws of descent
      and
      distribution. An Option awarded to an option holder during such option holder’s
      lifetime shall be exercisable only by an option holder or his or her guardian
      or
      legal representation.

     

    (b)  Notwithstanding
      Subparagraph (a), in the case of an NSO, an option holder shall be permitted
      to
      transfer the Option to the option holder’s spouse, adult lineal descendants,
      adult spouses of adult lineal descendants and trusts for the benefit of the
      option holder’s minor or adult lineal descendants (a “Related
      Transferee”)
      if the
      Option Agreement under which the Option is granted so specifies. If the Option
      is transferred to a Related Transferee pursuant to the preceding sentence,
      the
      Related Transferee shall, upon exercise of the Option, hold the Stock subject
      to
      all the provisions of the transferor’s Option Agreement in the same manner as
      the transferor and shall execute and deliver to the Company such instruments
      as
      the Company shall require to evidence the same.

     

    
      
         

      

      
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          5 -

        
          

        

      

      
         

      

    

    	10.  	
            Payment
              Upon Exercise.

          

     

    Payment
      of the purchase price upon exercise of any option or right to purchase Stock
      granted under this Plan shall be made by giving the Company written notice
      of
      such exercise, specifying the number of such shares of Stock as to which the
      option is exercised. Such notice shall be accompanied by payment of an amount
      equal to the Option Price of such shares of Stock. Such payment may be
      (i) cash, (ii) by check drawn against sufficient funds, (iii) at
      the discretion of the Committee, by delivery to the Company of the option
      holder’s promissory note, (iv) such other consideration as the Committee,
      in its sole discretion, determines and is consistent with the Plan’s purpose and
      applicable law, or (v) any combination of the foregoing. Any Stock used to
      exercise options to purchase Stock (including Stock withheld upon the exercise
      of an option to pay the purchase price of the shares of Stock as to which the
      option is exercised) shall be valued in accordance with procedures established
      by the Committee. Any promissory note used to exercise options to purchase
      Stock
      shall be a full recourse, interest-bearing obligation secured by Stock in the
      Company being purchased and containing such terms as the Committee shall
      determine. If a promissory note is used to exercise options the option holder
      agrees to execute such further documents as the Company may deem necessary
      or
      appropriate in connection with issuing the promissory note, perfecting a
      security interest in the stock purchased with the promissory note and any
      related terms the Company may propose. Such further documents may include,
      without limitation, a security agreement and an assignment separate from
      certificate. If accepted by the Committee in its discretion, such consideration
      also may be paid through a broker-dealer sale and remittance procedure pursuant
      to which the option holder (I) shall provide irrevocable written
      instructions to a designated brokerage firm to effect the immediate sale of
      the
      purchased Stock and remit to the Company, out of the sale proceeds available
      on
      the settlement date, sufficient funds to cover the aggregate option price
      payable for the purchased Stock plus all applicable Federal and State income
      and
      employment taxes required to be withheld by the Company in connection with
      such
      purchase and (II) shall provide written directives to the Company to
      deliver the certificates for the purchased Stock directly to such brokerage
      firm
      in order to complete the sale transaction. 

     

    	11.  	
            Withholding
              Taxes.

          

     

    (a)  Shares
      of
      Stock issued hereunder shall be delivered to an option holder only upon payment
      by such person to the Company of the amount of any withholding tax required
      by
      applicable federal, state, local or foreign law. The Company shall not be
      required to issue any Stock to an option holder until such obligations are
      satisfied. 

     

    (b)  The
      Committee may, under such terms and conditions as it deems appropriate,
      authorize an option holder to satisfy withholding tax obligations under this
      Section 11 by surrendering a portion of any Stock previously issued to the
      option holder or by electing to have the Company withhold shares of Stock from
      the Stock to be issued to the option holder, in each case having a fair market
      value equal to the amount of the withholding tax required to be
      withheld.

     

    
      
         

      

      
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          6 -

        
          

        

      

      
         

      

    

    	12.  	
            Corporate
              Transactions.

          

     

    (a)  For
      the
      purpose of this Section 12, a “Corporate
      Transaction”
shall
      include any of the following shareholder-approved transactions to which the
      Company is a party:

     

    (i)  a
      merger
      or consolidation in which the Company is not the surviving entity, except for
      a
      transaction the principal purpose of which is to change the State of the
      Company’s incorporation; or

     

    (ii)  the
      sale,
      transfer or other disposition of all or substantially all of the assets of
      the
      Company in liquidation or dissolution of the Company.

     

    (b)  Upon
      the
      occurrence of a Corporate Transaction, if the surviving corporation or the
      purchaser, as the case may be, does not assume the obligations of the Company
      under the Plan, then irrespective of the vesting provisions contained in
      individual option agreements, all outstanding options shall become immediately
      exercisable in full and each option holder will be afforded an opportunity
      to
      exercise their options prior to the consummation of the merger or sale
      transaction so that they can participate on a pro rata basis in the transaction
      based upon the number of shares of Stock purchased by them on exercise of
      options if they so desire. To the extent that the Plan is unaffected and assumed
      by the successor corporation or its parent company a Corporate Transaction
      will
      have no effect on outstanding options and the options shall continue in effect
      according to their terms.

     

    (c)  Each
      outstanding option under this Plan which is assumed in connection with the
      Corporate Transaction or is otherwise to continue in effect shall be
      appropriately adjusted, immediately after such Corporate Transaction, to apply
      and pertain to the number and class of securities which would have been issued
      to the option holder in connection with the consummation of such Corporate
      Transaction had such person exercised the option immediately prior to such
      Corporate Transaction. Appropriate adjustments shall also be made to the option
      price payable per share, provided the aggregate option price payable for such
      securities shall remain the same. In addition, the class and number of
      securities available for issuance under this Plan following the consummation
      of
      the Corporate Transaction shall be appropriately adjusted.

     

    (d)  The
      grant
      of options under this Plan shall in no way affect the right of the Company
      to
      adjust, reclassify, reorganize or otherwise change its capital or business
      structure or to merge, consolidate, dissolve, liquidate or sell or transfer
      all
      or any part of its business or assets.

     

    	13.  	
            Loans
              or Guarantee of Loans.

          

     

    (a)  The
      Committee may, in its discretion, assist any option holder in the exercise
      of
      options granted under this Plan, including the satisfaction of any income and
      employment tax obligations arising therefrom by (i) authorizing the
      extension of a loan from the Company to such option holder, (ii) permitting
      the option holder to pay the exercise price for the Stock in installments over
      a
      period of years or (iii) authorizing a guarantee by the Company of a third
      party loan to the option holder. The terms of any loan, installment method
      of
      payment or guarantee (including the interest rate and terms of repayment) will
      be upon such terms as the Committee specifies in the applicable option or
      issuance agreement or otherwise deems appropriate under the circumstances.
      Loans, installment payments and guarantees may be granted with or without
      security or collateral (other than to option holders who are not employees,
      in
      which event the loan must be adequately secured by collateral other than the
      purchased Stock). However, the maximum credit available to the option holder
      may
      not exceed the exercise or purchase price of the acquired shares of Stock plus
      any Federal and State income and employment tax liability incurred by the option
      holder in connection with the acquisition of such shares of Stock.

     

    
      
         

      

      
        -
          7 -

        
          

        

      

      
         

      

    

    (b)  The
      Committee may, in its absolute discretion, determine that one or more loans
      extended under this financial assistance program shall be subject to forgiveness
      by the Company in whole or in part upon such terms and conditions as the
      Committee may deem appropriate.

     

    	14.  	
            Regulatory
              Approvals.

          

     

    The
      obligation of the Company with respect to Stock issued under the Plan shall
      be
      subject to all applicable laws, rules and regulations and such approvals by
      any
      governmental agencies or stock exchanges as may be required. The Company
      reserves the right to restrict, in whole or in part, the delivery of Stock
      under
      the Plan until such time as any legal requirements or regulations have been
      met
      relating to the issuance of Stock, to their registration or qualification under
      the Securities Exchange Act of 1934, if applicable, or any applicable state
      securities laws, or to their listing on any stock exchange at which time such
      listing may be applicable. 

     

    	15.  	
            No
              Employment/Service Rights.

          

     

    Neither
      the action of the Company in establishing this Plan, nor any action taken by
      the
      Board or the Committee hereunder, nor any provision of this Plan shall be
      construed so as to grant any individual the right to remain in the employ or
      service of the Company (or any parent, subsidiary or affiliated corporation)
      for
      any period of specific duration, and the Company (or any parent, subsidiary
      or
      affiliated corporation retaining the services of such individual) may terminate
      or change the terms of such individual’s employment or service at any time and
      for any reason, with or without cause.

     

    	16.  	
            Miscellaneous
              Provisions.

          

     

    (a)  The
      provisions of this Plan shall be governed by the laws of the State of
      California, as such laws are applied to contracts entered into and performed
      in
      such State, without regard to its rules concerning conflicts of
      law.

     

    (b)  The
      provisions of this Plan shall inure to the benefit of, and be binding upon,
      the
      Company and its successors or assigns, whether by Corporate Transaction or
      otherwise, and the option holders, the legal representatives of their respective
      estates, their respective heirs or legatees and their permitted
      assignees.

     

    (c)  The
      option holders shall have no dividend rights, voting rights or any other rights
      as a shareholder with respect to any options under the Plan prior to the
      issuance of a stock certificate for such Stock. 

     

    
      
         

      

      
        -
          8 -

        
          

        

      

      
         

      

    

    (d)  With
      respect to grants to non-U.S. residents, options may be granted hereunder which
      may vary from the terms of the Plan but which are consistent with the terms
      hereof to the extent necessary or appropriate to comply with foreign laws
      including but not limited to tax laws.

     

    (e)  Any
      option exercised before stockholder approval is obtained shall be rescinded
      if
      stockholder approval is not obtained within 12 months before or after the Plan.
      Such shares shall not be counted in determining whether such approval is
      obtained.

     

    (f)  The
      Company shall provide annual financial statements of the Company to each
      Participant holding an outstanding option under the Plan.

     

    

    
      
         

      

      
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          9 -

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