Document:

Executive
      Copy

    REGISTRATION
      RIGHTS AGREEMENT

     

    THIS
      REGISTRATION RIGHTS AGREEMENT (this “Agreement”),
      dated
      as of August 7, 2007, is made by and among NexCen Brands, Inc., a Delaware
      corporation (the “Company”),
      Pretzelmaker Franchising, LLC, a Delaware limited liability company
      (“Pretzelmaker”),
      Pretzel Time Franchising, LLC, a Delaware limited liability company
      (“Pretzel
      Time”,
      and
      collectively with Pretzelmaker, the “Sellers”).

     

    WHEREAS, the
      Company, the Sellers, NexCen Asset Acquisition, LLC, a Delaware limited
      liability company (the “Buyer”),
      and
      Mrs. Fields Famous Brands, LLC, a Delaware limited liability company have
      entered into that certain Asset Purchase Agreement, dated as of August 7, 2007
      (the “Purchase
      Agreement”),
      pursuant to which the Buyer has agreed to acquire certain of the assets that
      relate to the operation of Pretzel Time and Pretzelmaker; and

     

    WHEREAS,
      on the
      terms and conditions set forth in the Purchase Agreement, the Company has agreed
      to grant, to the Holders certain registration rights as set forth
      herein.

     

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

     

    1. Definitions.
      All
      capitalized terms used but not defined herein shall have the meanings given
      to
      such terms in the Purchase Agreement. For the purposes of this Agreement, the
      following terms shall have the respective meanings set forth below or elsewhere
      in this Agreement as referred to below:

     

    “Parent
      Shares”
shall
      mean those shares of Common Stock issued to the Sellers upon the Closing
      (including the shares of Common Stock that constitute the Escrow
      Amount).

     

    “Commission”
shall
      mean the Securities and Exchange Commission or any other federal agency at
      the
      time administering the Securities Act.

     

    “Common
      Stock”
shall
      mean common stock, par value $0.01 per share, of the Company.

     

    “Exchange
      Act”
shall
      mean the Securities Exchange Act of 1934, as amended and in effect from time
      to
      time.

     

    “Holder”
means
      the Sellers, for so long as they own any Registrable Securities, and each of
      their respective permitted successors, assigns and direct and indirect
      transferees who become beneficial owners of Registrable Securities.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Prospectus”
means
      the prospectus (including any preliminary prospectus and/or any final prospectus
      filed pursuant to Rule 424(b) under the Securities Act and any prospectus that
      discloses information previously omitted from a prospectus filed as part of
      an
      effective registration statement in reliance on Rule 430A, Rule 430B or Rule
      430C under the Securities Act) included in a Registration Statement, as amended
      or supplemented by any prospectus supplement or any Issuer Free Writing
      Prospectus (as defined in Rule 433(h) under the Securities Act) with respect
      to
      the terms of the offering or any portion of the Registrable Securities covered
      by such Registration Statement and by all other amendments and supplements
      to
      such prospectus, including all material incorporated by reference in such
      prospectus and all documents filed after the date of such prospectus by the
      Company under the Exchange Act and incorporated by reference
      therein. 

     

    “Registrable
      Securities”
      shall mean, collectively, the Parent Shares issued to the Sellers pursuant
      to
      the Purchase Agreement, and
      any
      other securities issued or issuable with respect to the Parent Shares by way
      of
      stock dividend or stock split or in connection with a combination of shares,
      recapitalization, merger, consolidation or other reorganization or
      otherwise;
      provided,
      however,
      that such Parent Shares shall cease to be Registrable Securities for purposes
      of
      this Agreement when it no longer is a Restricted Security.

     

    “Required
      Holders”
shall
      mean, at the relevant time of reference thereto, those Holders holding, in
      the
      aggregate, fifty percent (50%) of the Registrable Securities then outstanding
      and then held by all Holders.

     

    “Restricted
      Security”
      or “Restricted
      Securities”
      means any share of Common Stock except any that (i) has been registered pursuant
      to an effective registration statement under the Securities Act and sold in
      a
      manner contemplated by the prospectus included in such registration statement;
      (ii) has been transferred by the Holder in compliance with the resale provisions
      of Rule 144 under the Securities Act (or any successor provision thereto);
      or
      (iii) otherwise has been transferred by the Holder and a new certificate
      representing a share of Common Stock not subject to any stop transfer order
      or
      any other transfer restrictions has been delivered by or on behalf of the
      Company.

     

    “Securities
      Act”
shall
      mean the Securities Act of 1933, as amended and in effect from time to
      time.

     

    2. Registration
      and Sale.

     

    (a) Registration
      and Sale.
      Subject
      to the limitations set forth in this Section 2(a) and Sections 2(c) and 7(h)
      below, the Company shall file as soon as reasonably practicable after the
      Closing Date but in no event later than 180 days (the “Filing
      Date”)
      of the
      Closing Date, a Registration Statement on Form S-3 (or comparable or successor
      short form registration statement or other registration statement should Form
      S-3 be unavailable) under the Securities Act to register for resale all
      Registrable Securities (a “Registration
      Statement”),
      unless
      the Company is unable to do so as a result of the Commission being unable to
      accept such filing due to unavoidable downtime of the EDGAR filing system
      through no fault of the Company and such obligation to file the Registration
      Statement shall be extended until such delay is resolved.
      The
      Company shall use its commercially reasonable efforts to cause each Registration
      Statement to become effective as soon as possible after filing and to remain
      effective for the period ending on the earlier of (x) the Termination Date
      (as
      defined below) and (y) the date on which there are no Registrable Securities
      covered by the Registration Statement, provided that the Company shall not
      be
      required to maintain the effectiveness of a Registration Statement to the extent
      that a subsequently filed Registration Statement registers the resale of the
      Registrable Securities.

     

    
      
         

      

      
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    (b) The
      Registration Statement shall be filed as a “shelf” registration statement
      pursuant to Rule 415 under the Securities Act (or any successor rule) and shall
      cover the disposition of all Registrable Securities covered by the Registration
      Statement in one or more underwritten offerings, block transactions, broker
      transactions, at-market transactions and in such other manner or manners as
      may
      reasonably be specified by the Required Holders. The Company shall use its
      reasonable best efforts to keep such Registration Statement continuously
      effective (in accordance with the last sentence of the first paragraph of this
      Section 2(a)(i)), and in furtherance of such obligation, shall supplement or
      amend such Registration Statement if, as and when required by the rules,
      regulations and instructions applicable to the form used by the Company for
      such
      registration or by the Securities Act or by any other rules and regulations
      thereunder applicable to shelf registrations.

     

    (c) Blackout
      Periods.

     

    (i) Notwithstanding
      anything to the contrary in this Agreement, if at any time after the filing
      of
      the Registration Statement, the Company, by written notice to the Holders (a
      “Suspension
      Notice”),
      may direct the Holders to suspend sales of the Registrable Securities pursuant
      to a Registration Statement for such times as the Company reasonably may
      determine is necessary and advisable (but in no event for more than (x) an
      aggregate of ninety (90) days in any rolling twelve (12) month period commencing
      on the date of this Agreement or (y) more than sixty (60) days in any rolling
      90-day period), if any of the following events shall occur: (1) a majority
      of
      the Board of Directors of the Company shall have determined in good faith that
      (A) the offer or sale of any Registrable Securities would materially impede,
      delay or interfere with any material proposed financing, offer or sale of
      securities, acquisition, merger, tender offer, business combination, corporate
      reorganization or other significant transaction involving the Company or (B)
      after the advice of counsel, the sale of Registrable Securities pursuant to
      the
      Registration Statement would require disclosure of non-public material
      information not otherwise required to be disclosed under applicable law or
      (2) a
      majority of the Board of Directors of the Company shall have determined in
      good
      faith, after the advice of counsel, that the Company is required by law, rule
      or
      regulation to supplement the Registration Statement or file a post-effective
      amendment to the Registration Statement in order to incorporate information
      into
      the Registration Statement for the purpose of (A) including in the Registration
      Statement any prospectus required under Section 10(a)(3) of the Securities
      Act;
      (B) reflecting in the prospectus included in the Registration Statement any
      facts or events arising after the effective date of the Registration Statement
      (or of the most recent post-effective amendment) that, individually or in the
      aggregate, represents a fundamental change in the information set forth therein;
      or (C) including in the prospectus included in the Registration Statement any
      material information with respect to the plan of distribution not disclosed
      in
      the Registration Statement or any material change to such information. Any
      period in which the use of the Registration Statement has been suspended in
      accordance with this Section 2(c) is sometimes referred to herein as a
“Blackout
      Period.”
      Upon the occurrence of any such suspension, the Company shall use its reasonable
      best efforts to cause the Registration Statement to become effective or to
      promptly amend or supplement the Registration Statement on a post-effective
      basis or to take such action as is necessary to make resumed use of the
      Registration Statement, so as to permit the Holders to resume sales of the
      Registrable Securities as soon as possible.

     

    
      
         

      

      
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    (ii) No
      Holder shall effect any sales of the Registrable Securities pursuant to such
      Registration Statement (or such filings) at any time after it has received
      a
      Suspension Notice from the Company and prior to receipt of an End of Suspension
      Notice (as defined below). If so directed by the Company, each Holder will
      deliver to the Company all copies (other than permanent file copies) then in
      such Holder’s possession of the prospectus covering the Registrable Securities
      at the time of receipt of the Suspension Notice. Any Holder may recommence
      effecting sales of the Registrable Securities pursuant to the Registration
      Statement (or such filings) following further notice to such effect (an
“End
      of Suspension Notice”)
      from the Company, which End of Suspension Notice shall be given by the Company
      to the Holders in the manner described above promptly following the conclusion
      of any Suspension Event and its effect. Until the End of Suspension Notice
      is so
      given to the Holders, the Company’s obligations under Section 3 to update or
      keep current the Registration Statement and the Holders’ right to sell
      Registrable Securities pursuant to the Registration Statement shall be
      suspended, provided that such suspension shall not exceed the periods specified
      in Section 2(c)(i) above.

     

    (d) The
      Company shall be entitled to include in the Registration Statement filed or
      to
      be filed by the Company pursuant to Section 2(a) above shares of the capital
      stock of the Company to be sold by the Company for its own account or for the
      account of any other shareholder of the Company except as and to the extent
      that, such inclusion would reduce the number of Registrable Securities
      registered on such Registration Statement.

     

    3. Further
      Obligations of the Company.
      In
      connection with the Registration Statement, the Company agrees that it shall
      also use its reasonable best efforts to do the following:

     

    (a) prepare
      and file with the Commission such amendments and post-effective amendments
      to
      the Registration Statement and the prospectus used in connection therewith
      as
      may be necessary under applicable law to keep such Registration Statement
      effective for the applicable period; and cause each Prospectus to be
      supplemented by any required prospectus supplement or Issuer Free Writing
      Prospectus (as defined in Rule 433(h) under the Securities Act), and cause
      the
      Prospectus as so supplemented or any such Issuer Free Writing Prospectus, as
      the
      case may be, to be filed pursuant to Rule 424 or Rule 433, respectively (or
      any
      similar provision then in force) under the Securities Act and to comply with
      the
      provisions of the Securities Act, the Exchange Act and the rules and regulations
      applicable to it with respect to the disposition of all Registrable Securities
      covered by the Registration Statement in accordance with each Holder’s intended
      method of disposition set forth in the Registration Statement;

     

    (b) furnish
      to each Holder offering Registrable Securities under the Registration Statement
      (A) after the same is prepared and publicly distributed, filed with the
      Commission, or received by the Company, one copy of the Registration Statement,
      each Prospectus,
      each Issuer Free Writing Prospectus, and each amendment or supplement to any
      of
      the foregoing, and (B) such number of copies of the Prospectus, each Issuer
      Free
      Writing Prospectus, and all amendments and supplements thereto, as the Holders
      may reasonably request to facilitate the disposition of the Registrable
      Securities owned by the Holders;

     

    
      
         

      

      
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    (c) register
      or qualify the Registrable Securities covered by the Registration Statement
      under the securities or “blue sky” laws of such jurisdictions within the United
      States as each Holder shall reasonably request unless an available exemption
      to
      such registration or qualification requirements is then available; provided
      that the Company shall not be obligated to register or qualify such Registrable
      Securities in any jurisdiction in which such registration or qualification
      would
      require the Company (A) to subject itself to general taxation in any such
      jurisdiction, (B) file any general consent to service of process, or (C) to
      qualify to do business in any jurisdiction where it would not otherwise be
      required to qualify but for this Section 3(c);

     

    (d) timely
      file with the Commission such information as the Commission may prescribe under
      Sections 13 or 15(d) of the Exchange Act, and otherwise use commercially
      reasonable efforts to ensure that the public information requirements of Rule
      144 under the Securities Act are satisfied with respect to the
      Company;

     

    (e) notify
      the Holders promptly in writing (A) of any comments by the Commission with
      respect to the Registration Statement or the Prospectus, or any request by
      the
      Commission for the amending or supplementing thereof or for additional
      information with respect thereto, (B) of the issuance by the Commission of
      any
      stop order or other suspension of the effectiveness of the Registration
      Statement which is known to the Company or the initiation of any proceedings
      for
      that purpose which are known to the Company and (C) of the receipt by the
      Company of any notification with respect to the suspension of the qualification
      of such Registrable Securities for sale in any jurisdiction or the initiation
      or
      threatening of any proceeding for such purposes; and

     

    (f) as
      promptly as practicable after becoming aware of such event, notify the Holders
      of the occurrence of any event of which the Company has knowledge, as a result
      of which the Prospectus included in the Registration Statement, as then in
      effect, or any Issuer Free Writing Prospectus, taken as a whole with the
      Prospectus, includes an untrue statement of a material fact or omits to state
      a
      material fact required to be stated therein or necessary to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading, and to use its commercially reasonable efforts to promptly prepare
      an amendment to the Registration Statement and supplement to the Prospectus
      to
      correct such untrue statement or omission, and deliver a number of copies of
      such supplement or amendment to the Holders as the Holders may reasonably
      request.

     

    4. Obligations
      of the Holders.
      In
      connection with the registration of the Registrable Securities, the Holders
      shall have the following obligations:

     

    (a) It
      shall
      be a condition precedent to the obligations of the Company to complete the
      registration pursuant to this Agreement of the Registrable Securities of each
      Holder that such Holder shall furnish to the Company in writing such information
      regarding itself, the Registrable Securities held by it, and the intended method
      of disposition of the Registrable Securities held by it, as shall be reasonably
      required to effect the registration of such Registrable Securities, and such
      Holder shall execute such documents in connection with such registration as
      the
      Company may reasonably request. 

     

    
      
         

      

      
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    (b) The
      Holder, by such Holder’s acceptance of the Registrable Securities, agrees to
      cooperate with the Company as reasonably requested by the Company in connection
      with the preparation and filing of the Registration Statement hereunder, unless
      such Holder has notified the Company in writing of such Holder’s election to
      exclude all of such Holder’s Registrable Securities from the Registration
      Statement.

     

    (c) The
      Holders shall not prepare or use any Free Writing Prospectus (as such term
      is
      defined in Rule 405 under the Securities Act) unless any and all issuer
      information included therein has been approved by the Company and such approval
      shall not be unreasonably delayed, conditioned or withheld.

     

    (d)  As
      promptly as practicable after becoming aware of such event, the Holders shall
      notify the Company of the occurrence of any event, as a result of which the
      Prospectus included in a Registration Statement, as then in effect, includes
      an
      untrue statement of a material fact or omits to state a material fact required
      to be stated therein or necessary to make the statements therein, in light
      of
      the circumstances under which they were made, not misleading.

     

    (e) Each
      Holder agrees that, upon receipt of any notice from the Company of the happening
      of any event of the kind described in Sections 3(e)(B), 3(e)(C) or 3(f) above,
      such Holder shall immediately discontinue its disposition of Registrable
      Securities pursuant to the Registration Statement.

     

    (f) Each
      Holder shall take all other reasonable actions necessary to expedite and
      facilitate the disposition by the Holder of the Registrable Securities pursuant
      to the Registration Statement.

     

    (g) Each
      Holder hereby covenants and agrees that it will comply with any prospectus
      delivery requirements of the Securities Act applicable to it in connection
      with
      sales of Registrable Securities pursuant to the Registration
      Statement.

     

    5. Expenses.

     

    All
      expenses incurred by the Company in complying with its obligations under this
      Agreement shall be paid by the Company, except that the Company shall not be
      liable for any discounts or selling commissions to any underwriter in respect
      of
      the Registrable Securities sold by any Holders but shall be liable for the
      reasonable fees and expenses of one form of counsel for all the Holders (which
      fees and expenses shall not exceed $15,000 in the aggregate).

     

    6. Indemnification
      and Contribution.

     

    (a) Indemnification
      by the Company.
      If any
      Registrable Securities are registered for resale under the Securities Act
      pursuant to this Agreement, the Company shall indemnify and hold harmless each
      Holder of such Registrable Securities and such Holder’s directors, officers,
      employees and agents, against any losses, claims, damages, liabilities or
      expenses, joint or several, to which such Holder or any such director, officer,
      employee or agent may become subject under the Securities Act or any other
      statute or at common law, insofar as such losses, claims, damages, liabilities
      or expenses (or actions in respect thereof) arise out of or are based upon
      (i)
      any untrue statement of any material fact contained, on the effective date
      thereof, in the registration statement under which such Registrable Securities
      were registered under the Securities Act or any final prospectus contained
      therein (in each case as amended or supplemented, including without limitation,
      any update pursuant to Rule 424(b) under the Securities Act), provided that
      such
      final prospectus was used to effect a sale by such Holder. (ii) the omission
      or
      alleged omission to state therein a material fact required to be stated therein
      or necessary to make the statements therein not misleading or, with respect
      to
      any prospectus, necessary to make the statements therein in light of the
      circumstances under which they were made not misleading, or (iii) any violation
      by the Company of the Securities Act or state securities or blue sky laws
      applicable to the Company and relating to any action or inaction required of
      the
      Company in connection with such registration or qualification under such state
      securities or blue sky laws; provided,
      however,
      that
      the Company shall not be liable in any such case to the extent that any such
      loss, claim, damage, liability or expense arises out of or is based upon any
      untrue statement or any omission made in such registration statement, final
      prospectus, or amendment or supplement based upon and in conformity with written
      information furnished to the Company by such Holder specifically for use in
      such
      registration statement, prospectus, or amendment or supplement. Such indemnity
      shall remain in full force and effect regardless of any investigation made
      by or
      on behalf of such Holder or such director, officer, employee or
      agent.

     

    
      
         

      

      
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    (b) Holders’
      Indemnification.
      In
      connection with the Registration Statement, each such Holder will furnish to
      the
      Company such information as shall reasonably be requested by the Company for
      use
      in such registration statement or prospectus and shall severally, and not
      jointly, indemnify, to the extent permitted by law, the Company, its directors,
      officers, employees and agents against any losses, claims, damages, liabilities
      and expenses (under the Securities Act, at common law or otherwise), insofar
      as
      such losses, claims, damages, liabilities or expenses arise out of or are based
      upon any untrue statement or alleged untrue statement of a material fact
      contained on the effective date thereof in the Registration Statement, or any
      final prospectus included therein (in each case as amended or supplemented,
      including without limitation, any update pursuant to Rule 424(b) under the
      Securities Act), but only to the extent that such untrue statement of a material
      fact is contained in, or such material fact is omitted from, written information
      furnished by such Holder, specifically for use in such registration statement
      or
      prospectus; provided,
      however,
      that
      the obligations of such Holders hereunder shall be limited to an amount equal
      to
      the net proceeds to each Holder of Registrable Securities sold in connection
      with such registration.

     

    (c) Indemnification
      Procedures.
      Promptly after receipt by an indemnified party hereunder of notice of the
      commencement of any action, such indemnified party shall, if a claim in respect
      thereof is to be made against the indemnifying party hereunder, notify the
      indemnifying party in writing thereof (an “Indemnification
      Notice”),
      but
      the omission so to notify the indemnifying party shall not relieve it from
      any
      liability which it may have to any indemnified party unless the indemnifying
      party is materially and adversely affected thereby. In case any such action
      shall be brought against any indemnified party and it shall notify the
      indemnifying party of the commencement thereof, the indemnifying party shall
      be
      entitled to participate in and, to the extent it shall wish, to assume and
      undertake the defense thereof and, after notice from the indemnifying party
      to
      such indemnified party of its election so to assume and undertake the defense
      thereof, the indemnifying party shall not be liable to such indemnified party
      under this Section 6(c) for any legal expenses subsequently incurred by such
      indemnified party in connection with the defense thereof. Notwithstanding the
      foregoing, the indemnified party shall have the right to employ its own counsel
      at its expense unless (i) the employment of such counsel shall have been
      authorized in writing by the indemnifying party or (ii) the attorneys for the
      indemnifying party shall have concluded that there are defenses available to
      the
      indemnified party that are different from or additional to those available
      to
      the indemnifying party and such counsel reasonably concludes that it is
      therefore unable to represent the interests of both the indemnified and
      indemnifying party (in which case the indemnifying party may employ separate
      counsel). In no event shall the indemnifying party be liable for fees and
      expenses of more than one counsel separate from its own counsel.

     

    
      
         

      

      
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    (d) In
      order
      to provide for just and equitable contribution to joint liability under the
      Securities Act in any case in which either (i) any Holder of Registrable
      Securities exercising rights under this Agreement, or any controlling person
      of
      any such Holder, makes a claim for indemnification pursuant to this Section
      6
      but it is judicially determined (by the entry of a final judgment or decree
      by a
      court of competent jurisdiction and the expiration of time to appeal or the
      denial of the last right of appeal) that such indemnification may not be
      enforced in such case notwithstanding the fact that this Section 6 provides
      for
      indemnification in such case, or (ii) contribution under the Securities Act
      may
      be required on the part of any such selling Holder or any such controlling
      person in circumstances for which indemnification is provided under this Section
      6; then, and in each such case, the Company and such Holder will contribute
      to
      the aggregate losses, claims, damages or liabilities to which they may be
      subject (after contribution from others) in such proportion so that such Holder
      is responsible for the portion represented by the percentage that the public
      offering price of its Registrable Securities offered by the Registration
      Statement bears to the public offering price of all securities offered by such
      Registration Statement, and the Company is responsible for the remaining
      portion; provided,
      however,
      that,
      in any such case, (A) no such Holder will be required to contribute any amount
      in excess of the net proceeds received by such Holder from the sale of such
      Registrable Securities offered by it pursuant to such Registration Statement;
      and (B) no person or entity guilty of fraudulent misrepresentation (within
      the
      meaning of Section 11(f) of the Securities Act) will be entitled to contribution
      from any person or entity who was not guilty of such fraudulent
      misrepresentation.

     

    7. Miscellaneous.
      

     

    (a) Notices.
      All
      notices and other communications pursuant to this Agreement shall be in writing,
      either hand delivered or sent by certified or registered mail with charges
      prepaid or by commercial courier guaranteeing next business day delivery, or
      sent by facsimile, and shall be addressed:

     

    (i) in
      the
      case of the Company, to the Company at its principal office set forth in the
      Purchase Agreement; and

     

    (ii) in
      the
      case of a Holder, to the address provided by such Holder to the
      Company.

     

    
      
         

      

      
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    Any
      notice or other communication pursuant to this Agreement shall be deemed to
      have
      been duly given or made and to have become effective (i) when delivered in
      hand
      to the party to which it was directed, (ii) if sent by facsimile and properly
      addressed in accordance with the foregoing provisions of this Section 7(a),
      when
      received by the addressee, (iii) if sent by commercial courier guaranteeing
      next
      business day delivery, on the business day following the date of delivery to
      such courier, or (iv) if sent by first-class mail, postage prepaid, and properly
      addressed in accordance with the foregoing provisions of this Section 7(a),
      (A)
      when received by the addressee, or (B) on the third business day following
      the
      day of dispatch thereof, whichever of (A) or (B) shall be the
      earlier.

     

    (b) Assignment.
      The
      right to have the Company register Registrable Securities pursuant to this
      Agreement may be assigned or transferred only with the prior written consent
      of
      the Company
      (such consent not to be unreasonably withheld, conditioned or delayed), and
      any
      such assignment or transfer without such consent shall be void and of no effect.
      In the event of any such permitted assignment or transfer by any Holder to
      any
      permitted transferee of all or any portion of such Registrable Securities,
      such
      transfer will be allowed only if: (a) the Holder agrees in writing with the
      transferee or assignee to assign such rights, and a copy of such agreement
      is
      furnished to the Company within a reasonable time after such assignment, (b)
      the
      Company is, within a reasonable time after such transfer or assignment,
      furnished with written notice of (i) the name and address of such transferee
      or
      assignee and (ii) the Registrable Securities with respect to which such
      registration rights are being transferred or assigned, (c) immediately following
      such transfer or assignment, the Registrable Securities so transferred or
      assigned to the transferee or assignee constitute Restricted Securities,
(d)
      at or before the time the Company received the written notice contemplated
      by
      clause (b) of this sentence the transferee or assignee agrees in writing with
      the Company to be bound by all of the provisions contained herein, and (e)
      the
      Company is furnished with an opinion of counsel, which counsel and opinion
      shall
      be satisfactory to the Company, to the effect that the permitted assignment
      would be in compliance with the Securities Act and any applicable state or
      other
      securities laws.

     

    (c) Amendment
      and Waiver.
      This
      Agreement may not be amended except by an instrument in writing signed by the
      Company and by the Required Holders. Any Holder may waive any of its, his or
      her
      rights under this Agreement (including, without limitation, such Holder’s right
      to cause any other Person to comply with such other Person’s obligations under
      this Agreement) only by an instrument in writing signed by such Holder;
provided,
      however,
      that
      (i) any rights under this Agreement which inure to the benefit of any and all
      Holders (including, without limitation, the right of any and all Holders to
      cause any other Person to comply with such other Person’s obligations under this
      Agreement) may be waived on behalf of any and all Holders by an instrument
      in
      writing signed by the Required Holders. Any waiver, pursuant to this Subsection
      9(c), of a breach of this Agreement shall not operate or be construed as a
      waiver of any subsequent breach.

     

    (d) Governing
      Law; Headings.
      This
      agreement shall be governed by and construed in accordance with the laws of
      the
      State of Delaware without regard to conflict of law provisions of such state.
      The headings in this Agreement are for convenience only and shall not affect
      the
      construction hereof.

     

    (e) Severability.
      In the
      event that any provision of this Agreement shall be invalid, illegal or
      unenforceable, the validity, legality and enforceability of the remaining
      provisions shall not in any way be affected or impaired thereby.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (f) Entire
      Agreement.
      This
      Agreement is intended by the parties as a final expression of their agreement
      and intended to be a complete and exclusive statement of the agreement and
      understanding of the parties hereto in respect of the subject matter contained
      herein and therein. This Agreement and the Purchase Agreement supersede all
      prior agreements and understandings between the parties with respect to the
      subject matter contained herein and therein.

     

    (g) Counterparts.
      This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original, and it shall not be necessary in making proof of this
      Agreement to produce or account for more than one such counterpart.

     

    (h) Termination
      of Registration Rights.
      All of
      the Company's obligations to register Registrable Securities covered by a
      Registration Statement (including without limitation to keep the Registration
      Statement covering such Registrable Securities continuously effective) shall
      terminate, if not previously terminated pursuant to the terms of Section 2(a),
      upon the earlier of (x) two (2) years from the date of the effectiveness of
      such
      Registration Statement and (y) such date that each Holder may sell all of the
      Registrable Securities held by such Holder within a three-month period in
      accordance with Rule 144(d) (the “Termination
      Date”);
      provided that
      such
      Termination Date will be extended solely with respect to the Additional Shares
      for a period of one (1) year after receipt of such shares by the Holder;
      provided further that the Termination Date shall be extended for the Registrable
      Securities for a period of time equal to the length of: (1) any Blackout
      Periods; plus (2) a period of time of up to three months to the extent that
      the
      Required Holders determine in good faith and after consultation with the Company
      that an extension is so required due to market conditions; plus (3) the period
      during which a stop order issued by the Commission is in effect. The parties
      acknowledge and agree that any extension described above shall begin to run
      upon
      its occurrence regardless of whether a prior extension is in
      effect.

     

    [Remainder
      of page intentionally left blank]

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF,
      the
      Company and the Sellers have executed this Agreement as of the date first above
      written.

    
      	 	 	 
	 	NEXCEN
              BRANDS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Robert
              W.
              D’Loren 
	 	
              
Name: Robert
              W. D’Loren
	 	Title:  
Chief
              Executive Officer

    

     

     

    

    
      
         

      

      
        Registration
          Rights Agreement

        
          

        

      

      
         

      

    

    	 	 	 
	 	PRETZELMAKER
            FRANCHISING, LLC
	 
 	 
 	 
 
	 	By:  	/s/ Michael
            Ward
	 	
            
Name: Michael
            Ward
	 	Title:  
            EVP and Chief Legal Officer 

     

    
      	 	 	 
	 	PRETZEL
              TIME FRANCHISING, LLC
	 
 	 
 	 
 
	 	By:  	/s/ Michael
              Ward
	 	
              
Name: Michael
              Ward
	 	Title:  
              EVP and Chief Legal Officer 

    
      
         

      

      
        Registration
          Rights AgreementDRINKS AMERICAS HOLDINGS, LTD.

                            2007 STOCK INCENTIVE PLAN

1.    Purposes of the Plan.

      The  purposes of this Stock  Incentive  Plan are to attract and retain the
best  available  personnel,   to  provide  additional  incentive  to  Employees,
Directors and Consultants and to promote the success of the Company's business.

2.    Definitions.

      As used herein, the following definitions shall apply:

      (a)  "Administrator"  means  the  Board  or  any  Committee  appointed  to
administer the Plan.

      (b)  "Affiliate"  and  "Associate"  shall  have  the  respective  meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.

      (c)  "Applicable  Laws"  means  the  legal  requirements  relating  to the
administration of stock incentive plans, if any, under applicable  provisions of
federal  securities  laws,  state  corporate and securities  laws, the Code, the
rules of any applicable stock exchange or national market system,  and the rules
of any foreign jurisdiction applicable to Awards granted to residents therein.

      (d) "Award" means the grant of an Option,  SAR, Dividend Equivalent Right,
Restricted Stock,  Performance Unit,  Performance Share,  Common Stock, or other
right or benefit under the Plan.

      (e) "Award Agreement" means the written agreement  evidencing the grant of
an Award  executed by the  Company and the  Grantee,  including  any  amendments
thereto.

      (f) "Board" means the Board of Directors of the Company.

      (g) "Cause"  means,  with respect to the  termination  by the Company or a
Related Entity of the Grantee's Continuous Service, that such termination is for
"Cause" as such term is expressly defined in a then-effective  written agreement
between the Grantee and the Company or such Related Entity, or in the absence of
such  then-effective  written  agreement  and  definition,  is based  on, in the
determination of the Administrator, the Grantee's:

            (i)  refusal  or  failure to act in  accordance  with any  specific,
      lawful direction or order of the Company or a Related Entity;

            (ii)  unfitness  or  unavailability  for  service or  unsatisfactory
      performance (other than as a result of Disability);

                                       1
<PAGE>

            (iii)  performance  of any act or failure to perform any act, in bad
      faith and to the detriment of the Company or a Related Entity;

            (iv)  dishonesty,  intentional  misconduct or material breach of any
      agreement with the Company or a Related Entity; or

            (v) commission of a crime involving dishonesty,  breach of trust, or
      physical or emotional harm to any person.

      (h) "Code" means the Internal Revenue Code of 1986, as amended.

      (i) "Committee"  means any committee  appointed by the Board to administer
the Plan.

      (j) "Common Stock" means the common stock of the Company.

      (k)  "Company"   means  Drinks   Americas   Holdings,   Ltd.,  a  Delaware
corporation.

      (l)  "Consultant"  means any person (other than an Employee or a Director,
solely  with  respect to  rendering  services  in such  person's  capacity  as a
Director)  who is  engaged  by the  Company  or any  Related  Entity  to  render
consulting or advisory services to the Company or such Related Entity.

      (m)  "Continuous  Service"  means that the  provision  of  services to the
Company or a Related Entity in any capacity of Employee, Director or Consultant,
is not  interrupted  or terminated.  Continuous  Service shall not be considered
interrupted  in the case of (i) any leave of absence  approved by the Company or
Related  Entity,  (ii) transfers  between  locations of the Company or among the
Company,  any Related  Entity,  or any  successor,  in any capacity of Employee,
Director or Consultant,  or (iii) any change in status as long as the individual
remains in the  service of the  Company or a Related  Entity in any  capacity of
Employee,  Director or  Consultant  (except as  otherwise  provided in the Award
Agreement).  For purposes of Incentive Stock Options,  no such approved leave of
absence may exceed ninety (90) days,  unless  re-employment  upon  expiration of
such leave is guaranteed by statute or contract.

      (n) "Corporate Transaction" means any of the following transactions:

            (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 in which the Company is incorporated;

            (ii) the sale, transfer or other disposition of all or substantially
      all of the  assets of the  Company  (including  the  capital  stock of the
      Company's  subsidiary   corporations)  in  connection  with  the  complete
      liquidation or dissolution of the Company;

            (iii)  any  reverse  merger in which the  Company  is the  surviving
      entity but in which  securities  possessing more than eighty percent (80%)
      of the total combined voting power of the Company's outstanding securities
      are transferred to a person or persons  different from those who held such
      securities immediately prior to such merger; or

                                       2
<PAGE>

            (iv) an acquisition by any person or related group of persons (other
      than the  Company  or by a  Company-sponsored  employee  benefit  plan) of
      beneficial  ownership  (within the  meaning of Rule 13d-3 of the  Exchange
      Act) of securities  possessing  more than fifty percent (50%) of the total
      combined voting power of the Company's outstanding voting securities,  but
      excluding any such transaction that the Administrator determines shall not
      be a Corporate Transaction.

      (o)  "Director"  means a member of the Board or the board of  directors of
any Related Entity.

      (p) "Disability"  means that a Grantee is permanently  unable to carry out
the responsibilities and functions of the position held by the Grantee by reason
of any medically determinable physical or mental impairment.  A Grantee will not
be considered to have incurred a Disability  unless he or she furnishes proof of
such impairment sufficient to satisfy the Administrator in its discretion.

      (q)  "Dividend  Equivalent  Right" means a right  entitling the Grantee to
compensation measured by dividends paid with respect to Common Stock.

      (r) "Employee" means any person,  including an Officer or Director, who is
an employee of the Company or any Related  Entity.  The payment of a  director's
fee by the Company or a Related  Entity shall not be  sufficient  to  constitute
"employment" by the Company.

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

      (t) "Fair Market Value" means,  as of any date,  the value of Common Stock
      determined as follows:

            (i) Where there  exists a public  market for the Common  Stock,  the
      Fair Market Value shall be (A) the closing  price for a Share for the last
      market  trading  day  prior to the time of the  determination  (or,  if no
      closing price was reported on that date, on the last trading date on which
      a closing  price was  reported) on the stock  exchange  determined  by the
      Administrator  to be the primary market for the Common Stock or the Nasdaq
      National Market, whichever is applicable or (B) if the Common Stock is not
      traded on any such exchange or national market system,  the average of the
      closing bid and asked prices of a share on the Nasdaq Small Cap Market for
      the day prior to the time of the determination (or, if no such prices were
      reported  on that  date,  on the  last  date on  which  such  prices  were
      reported),  in each case,  as reported in The Wall Street  Journal or such
      other source as the Administrator deems reliable; or

                                       3
<PAGE>

            (ii) In the absence of an established market for the Common Stock of
      the type described in subparagraph (i), above, the Fair Market Value shall
      be determined by the Administrator in good faith.

      (u) "Grantee"  means an Employee,  Director or Consultant  who receives an
Award pursuant to an Award Agreement under the Plan.

      (v)  "Incentive  Stock Option"  means an Option  intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

      (w)  "Non-Qualified  Stock Option" means an Option not intended to qualify
as an Incentive Stock Option.

      (x) "Officer" means a person who is an officer of the Company or a Related
Entity  within the meaning of Section 16 of the  Exchange  Act and the rules and
regulations promulgated thereunder.

      (y)  "Option"  means an option to  purchase  Shares  pursuant  to an Award
Agreement granted under the Plan.

      (z)  "Parent"  means a  "parent  corporation",  whether  now or  hereafter
existing, as defined in Section 424(e) of the Code.

      (aa)  "Performance  Shares" means Shares or an Award denominated in Shares
which may be earned in whole or in part upon attainment of performance  criteria
established by the Administrator.

      (bb) "Performance Units" means an Award which may be earned in whole or in
part upon attainment of performance  criteria  established by the  Administrator
and which may be settled for cash,  Shares or other  securities or a combination
of cash, Shares or other securities as established by the Administrator.

      (cc) "Plan" means this 2007 Stock Incentive Plan.

      (dd) "Registration Date" means the first to occur of:

            (i) the closing of the first sale to the  general  public of (A) the
      Common  Stock  or  (B)  the  same  class  of  securities  of  a  successor
      corporation (or its Parent) issued pursuant to a Corporate  Transaction in
      exchange  for  or in  substitution  of the  Common  Stock,  pursuant  to a
      registration statement filed with and declared effective by the Securities
      and Exchange Commission under the Securities Act of 1933, as amended; and

            (ii)  in the  event  of a  Corporate  Transaction,  the  date of the
      consummation of the Corporate  Transaction if the same class of securities
      of the successor  corporation  (or its Parent)  issuable in such Corporate
      Transaction  shall  have been sold to the  general  public  pursuant  to a
      registration  statement filed with and declared  effective by, on or prior
      to the date of consummation of such Corporate Transaction,  the Securities
      and Exchange Commission under the Securities Act of 1933, as amended.

                                       4
<PAGE>

      (ee)  "Related  Entity"  means any Parent,  Subsidiary  and any  business,
corporation, partnership, limited liability company or other entity in which the
Company,  a Parent  or a  Subsidiary  holds a  substantial  ownership  interest,
directly or indirectly.

      (ff) "Restricted  Stock" means Shares issued under the Plan to the Grantee
for such  consideration,  if any, and subject to such  restrictions on transfer,
rights of first refusal, repurchase provisions, forfeiture provisions, and other
terms and conditions as established by the Administrator.

      (gg) "Rule 16b-3" means Rule 16b-3  promulgated  under the Exchange Act or
any successor thereto.

      (hh) "SAR"  means a stock  appreciation  right  entitling  the  Grantee to
Shares or cash compensation,  as established by the  Administrator,  measured by
appreciation in the value of Common Stock.

      (ii) "Share" means a share of the Common Stock.

      (jj)  "Subsidiary"  means  a  "subsidiary  corporation",  whether  now  or
hereafter existing, as defined in Section 424(f) of the Code.

      (kk) "Related Entity  Disposition"  means the sale,  distribution or other
disposition  by  the  Company  of  all or  substantially  all  of the  Company's
interests in any Related Entity effected by a sale,  merger or  consolidation or
other  transaction  involving  that  Related  Entity  or  the  sale  of  all  or
substantially all of the assets of that Related Entity.

3.    Stock Subject to the Plan.

      (a) Subject to the provisions of Section 10, below, the maximum  aggregate
number of Shares which may be issued pursuant to all Awards (including Incentive
Stock Options) is 7,000,000  Shares.  The Shares to be issued pursuant to Awards
may be authorized, but unissued, or reacquired Common Stock.

      (b) Any  Shares  covered  by an Award (or  portion  of an Award)  which is
forfeited  or  canceled,  expires or is settled in cash,  shall be deemed not to
have been issued for purposes of  determining  the maximum  aggregate  number of
Shares which may be issued under the Plan.  If any unissued  Shares are retained
by the Company upon exercise of an Award in order to satisfy the exercise  price
for such Award or any  withholding  taxes due with  respect to such Award,  such
retained Shares subject to such Award shall become available for future issuance
under the Plan (unless the Plan has terminated).  Shares that actually have been
issued under the Plan pursuant to an Award shall not be returned to the Plan and
shall not become  available for future  issuance under the Plan,  except that if
unvested  Shares are forfeited,  or repurchased by the Company at their original
purchase  price,  such Shares shall become  available for future grant under the
Plan.

                                       5
<PAGE>

4.    Administration of the Plan.

      (a) Plan Administrator.

            (i)  Administration  with Respect to Directors  and  Officers.  With
      respect  to  grants  of  Awards to  Directors  or  Employees  who are also
      Officers or Directors of the Company,  the Plan shall be  administered  by
      (A) the Board or (B) a Committee  designated by the Board, which Committee
      shall be constituted  in such a manner as to satisfy the  Applicable  Laws
      and to permit such grants and  related  transactions  under the Plan to be
      exempt from  Section  16(b) of the Exchange  Act in  accordance  with Rule
      16b-3.  Once  appointed,  such  Committee  shall  continue to serve in its
      designated capacity until otherwise directed by the Board.

            (ii) Administration With Respect to Consultants and Other Employees.
      With  respect  to grants of Awards to  Employees  or  Consultants  who are
      neither  Directors  nor  Officers  of  the  Company,  the  Plan  shall  be
      administered by (A) the Board or (B) a Committee  designated by the Board,
      which  Committee  shall be  constituted in such a manner as to satisfy the
      Applicable Laws. Once appointed, such Committee shall continue to serve in
      its designated  capacity until otherwise  directed by the Board. The Board
      may authorize one or more Officers to grant such Awards and may limit such
      authority as the Board determines from time to time.  Except for the power
      to amend the Plan as provided in Section 13 and except for  determinations
      regarding  Employees  who are subject to Section 16 of the Exchange Act or
      certain key Employees  who are, or may become,  as determined by the Board
      or the  Committee,  subject  to  Section  162(m) of the Code  compensation
      deductibility  limit,  and  except  as may  otherwise  be  required  under
      applicable  stock exchange rules,  the Board or the Committee may delegate
      any or all of its duties,  powers and authority under the Plan pursuant to
      such conditions or limitations as the Board of the Committee may establish
      to any Officer or Officers of the Company

            (iii)  Administration  Errors. In the event an Award is granted in a
      manner  inconsistent  with the provisions of this  subsection,  such Award
      shall be presumptively  valid as of its grant date to the extent permitted
      by Applicable Laws.

      (b)  Powers  of the  Administrator.  Subject  to  Applicable  Laws and the
provisions of the Plan  (including  any other powers given to the  Administrator
hereunder),  and except as otherwise  provided by the Board,  the  Administrator
shall have the authority, in its discretion:

            (i) to select  the  Employees,  Directors  and  Consultants  to whom
      Awards may be granted from time to time hereunder;

            (ii) to  determine  whether  and to what  extent  Awards are granted
      hereunder;

                                       6
<PAGE>

            (iii) to  determine  the  number of  Shares  or the  amount of other
      consideration to be covered by each Award granted hereunder;

            (iv) to approve forms of Award Agreements for use under the Plan;

            (v) to  determine  the terms  and  conditions  of any Award  granted
      hereunder;

            (vi) to amend the terms of any  outstanding  Award granted under the
      Plan,  provided  that  any  amendment  that  would  adversely  affect  the
      Grantee's rights under an outstanding  Award shall not be made without the
      Grantee's written consent;

            (vii) to  construe  and  interpret  the terms of the Plan and Awards
      granted pursuant to the Plan, including without limitation,  any notice of
      Award or Award Agreement, granted pursuant to the Plan;

            (viii)  to  establish   additional  terms,   conditions,   rules  or
      procedures  to  accommodate  the  rules  or  laws  of  applicable  foreign
      jurisdictions and to afford Grantees favorable  treatment under such laws;
      provided,  however,  that  no  Award  shall  be  granted  under  any  such
      additional terms, conditions, rules or procedures with terms or conditions
      which are inconsistent with the provisions of the Plan; and

            (ix) to take such other action,  not inconsistent  with the terms of
      the Plan, as the Administrator deems appropriate.

      (c) Effect of Administrator's Decision. All decisions,  determinations and
interpretations  of the  Administrator  shall be  conclusive  and binding on all
persons.

5.    Eligibility, Awards other than  Incentive Stock  Options may be granted to
Employees,  Directors and  Consultants.  Incentive  Stock Options may be granted
only to  Employees  of the  Company,  a Parent  or a  Subsidiary.  An  Employee,
Director or Consultant who has been granted an Award may, if otherwise eligible,
be granted additional Awards. Awards may be granted to such Employees, Directors
or Consultants who are residing in foreign  jurisdictions  as the  Administrator
may determine from time to time.

6.    Terms and Conditions of Awards.

      (a) Type of Awards.  The  Administrator  is  authorized  under the Plan to
award any type of arrangement to an Employee, Director or Consultant that is not
inconsistent  with the  provisions of the Plan and that by its terms involves or
might involve the issuance of (i) Shares, (ii) an Option, a SAR or similar right
with a fixed or variable  price  related to the Fair Market  Value of the Shares
and with an exercise or conversion privilege related to the passage of time, the
occurrence of one or more events, or the satisfaction of performance criteria or
other  conditions,  or (iii) any other  security with the value derived from the
value of the Shares.  Such awards include,  without limitation,  Options,  SARs,
sales or bonuses of Restricted Stock,  Dividend  Equivalent Rights,  Performance
Units or  Performance  Shares,  and an Award may consist of one such security or
benefit, or two (2) or more of them in any combination or alternative.

                                       7
<PAGE>

      (b)  Designation  of Award.  Each Award shall be  designated  in the Award
Agreement. In the case of an Option, the Option shall be designated as either an
Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding
such  designation,  to the extent that the aggregate Fair Market Value of Shares
subject  to  Options   designated  as  Incentive   Stock  Options  which  become
exercisable  for the first time by a Grantee during any calendar year (under all
plans of the Company or any Parent or Subsidiary) exceeds $100,000,  such excess
Options,  to the extent of the Shares covered thereby in excess of the foregoing
limitation,  shall be treated as Non-Qualified Stock Options.  For this purpose,
Incentive  Stock  Options shall be taken into account in the order in which they
were granted,  and the Fair Market Value of the Shares shall be determined as of
the date the Option with respect to such Shares is granted.

      (c)  Conditions  of  Award.   Subject  to  the  terms  of  the  Plan,  the
Administrator  shall  determine the  provisions,  terms,  and conditions of each
Award  including,  but not limited to, the Award  vesting  schedule,  repurchase
provisions,  rights of first  refusal,  forfeiture  provisions,  form of payment
(cash,  Shares, or other  consideration)  upon settlement of the Award,  payment
contingencies,  and  satisfaction of any performance  criteria.  The performance
criteria  established  by the  Administrator  may be  based  on any one  of,  or
combination of, increase in share price,  earnings per share,  total stockholder
return, return on equity, return on assets, return on investment,  net operating
income,   cash  flow,  revenue,   economic  value  added,   personal  management
objectives,  or other  measure of  performance  selected  by the  Administrator.
Partial achievement of the specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the Award Agreement.

      (d)  Acquisitions  and Other  Transactions.  The  Administrator  may issue
Awards under the Plan in settlement, assumption or substitution for, outstanding
awards or obligations to grant future awards in connection with the Company or a
Related Entity  acquiring  another  entity,  an interest in another entity or an
additional interest in a Related Entity whether by merger, stock purchase, asset
purchase or other form of transaction.

      (e) Deferral of Award Payment. The Administrator may establish one or more
programs under the Plan to permit selected  Grantees the opportunity to elect to
defer  receipt of  consideration  upon  exercise  of an Award,  satisfaction  of
performance  criteria, or other event that absent the election would entitle the
Grantee to payment or receipt of Shares or other  consideration  under an Award.
The  Administrator  may  establish the election  procedures,  the timing of such
elections,  the  mechanisms  for  payments  of, and accrual of interest or other
earnings,  if any, on amounts,  Shares or other  consideration so deferred,  and
such other terms, conditions,  rules and procedures that the Administrator deems
advisable for the administration of any such deferral program.

      (f) Award Exchange  Programs.  The Administrator may establish one or more
programs under the Plan to permit  selected  Grantees to exchange an Award under
the Plan for one or more other types of Awards  under the Plan on such terms and
conditions as determined by the Administrator from time to time.

                                       8
<PAGE>

      (g)  Separate  Programs.  The  Administrator  may  establish  one or  more
separate programs under the Plan for the purpose of issuing  particular forms of
Awards to one or more  classes  of  Grantees  on such  terms and  conditions  as
determined by the Administrator from time to time.

      (h) Early  Exercise.  The Award  Agreement  may,  but need not,  include a
provision whereby the Grantee may elect at any time while an Employee,  Director
or  Consultant to exercise any part or all of the Award prior to full vesting of
the Award. Any unvested Shares received pursuant to such exercise may be subject
to a  repurchase  right in favor of the  Company  or a Related  Entity or to any
other restriction the Administrator determines to be appropriate.

      (i) Term of Award.  The term of each Award shall be the term stated in the
Award Agreement,  provided,  however, that the term of an Incentive Stock Option
shall be no more than ten (10) years from the date of grant thereof. However, in
the case of an Incentive  Stock Option granted to a Grantee who, at the time the
Option is granted,  owns stock  representing  more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the term of the Incentive  Stock Option shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the Award Agreement.

      (j)  Transferability  of  Awards.  Except as  otherwise  provided  in this
Section,  all Awards  under the Plan shall be  nontransferable  and shall not be
assignable,  alienable,  saleable or otherwise transferable by the Grantee other
than by will or the  laws of  descent  and  distribution  except  pursuant  to a
domestic  relations  order  entered  by  a  court  of  competent   jurisdiction.
Notwithstanding the preceding  sentence,  the Board or the Committee may provide
that  any  Award of  Non-Qualified  Stock  Options  may be  transferable  by the
recipient to family  members or family trusts  established  by the Grantee.  The
Board or the  Committee  may also  provide  that,  in the  event  that a Grantee
terminates employment with the Company to assume a position with a governmental,
charitable,  educational  or  similar  non-profit  institution,  a third  party,
including but not limited to a "blind" trust,  may be authorized by the Board or
the Committee to act on behalf of and for the benefit of the respective  Grantee
with respect to any  outstanding  Awards.  Except as otherwise  provided in this
Section,  during  the  life of the  Grantee,  Awards  under  the  Plan  shall be
exercisable  only by him or her except as otherwise  determined  by the Board or
the Committee.  In addition,  if so permitted by the Board or the  Committee,  a
Grantee may designate a beneficiary or  beneficiaries  to exercise the rights of
the Grantee and receive any  distributions  under the Plan upon the death of the
Grantee.

(k) Time of  Granting  Awards.  The date of  grant  of an  Award  shall  for all
purposes be the date on which the Administrator makes the determination to grant
such Award, or such other date as is determined by the Administrator.  Notice of
the grant determination shall be given to each Employee,  Director or Consultant
to whom an Award is so granted  within a reasonable  time after the date of such
grant.

7.    Award Exercise or Purchase Price, Consideration, Taxes and Reload Options.

      (a) Exercise or Purchase  Price.  The exercise or purchase  price, if any,
for an Award shall be as follows:

                                       9
<PAGE>

            (i) In the case of an  Incentive  Stock  Option:  (A)  granted to an
      Employee who, at the time of the grant of such Incentive Stock Option owns
      stock  representing more than ten percent (10%) of the voting power of all
      classes of stock of the Company or any Parent or Subsidiary, the per Share
      exercise  price shall be not less than one  hundred ten percent  (110%) of
      the Fair  Market  Value per Share on the date of grant;  or (B) granted to
      any Employee other than an Employee described in the preceding clause, the
      per Share exercise price shall be not less than one hundred percent (100%)
      of the Fair Market Value per Share on the date of grant.

            (ii) In the case of a  Non-Qualified  Stock  Option,  the per  Share
      exercise  price shall be not less than one hundred  percent  (100%) of the
      Fair  Market  Value  per  Share  on the  date of  grant  unless  otherwise
      determined by the Administrator.

            (iii) In the case of other  Awards,  such price as is  determined by
      the Administrator.

            (iv)  Notwithstanding the foregoing provisions of this Section 7(a),
      in the case of an Award  issued  pursuant  to  Section  6(d),  above,  the
      exercise or purchase price for the Award shall be determined in accordance
      with the principles of Section 424(a) of the Code.

      (b)  Consideration.  Subject to Applicable  Laws, the  consideration to be
paid for the Shares to be issued upon exercise or purchase of an Award including
the method of payment,  shall be  determined by the  Administrator  (and, in the
case of an Incentive Stock Option, shall be determined at the time of grant). In
addition to any other types of consideration  the  Administrator  may determine,
the  Administrator  is authorized to accept as  consideration  for Shares issued
under the Plan the  following,  provided  that the portion of the  consideration
equal  to the par  value  of the  Shares  must be  paid in cash or  other  legal
consideration permitted by the Delaware General Corporation Law:

            (i) ct 12 ash;

            (ii) check;

            (iii)  delivery of  Grantee's  promissory  note with such  recourse,
      interest,   security,  and  redemption  provisions  as  the  Administrator
      determines is appropriate;

            (iv) if the exercise or purchase occurs on or after the Registration
      Date,  surrender  of Shares or  delivery  of a properly  executed  form of
      attestation  of  ownership  of Shares  as the  Administrator  may  require
      (including  withholding of Shares  otherwise  deliverable upon exercise of
      the Award)  which have a Fair  Market  Value on the date of  surrender  or
      attestation  equal to the  aggregate  exercise  price of the  Shares as to
      which  said Award  shall be  exercised  (but only to the extent  that such
      exercise  of the Award  would not  result  in an  accounting  compensation
      charge with  respect to the Shares used to pay the  exercise  price unless
      otherwise determined by the Administrator);

                                       10
<PAGE>

            (v) with respect to options,  if the exercise occurs on or after the
      Registration  Date,  payment through a  broker-dealer  sale and remittance
      procedure  pursuant  to  which  the  Grantee  (A)  shall  provide  written
      instructions  to  a  Company  designated  brokerage  firm  to  effect  the
      immediate  sale of some or all of the  purchased  Shares  and remit to the
      Company,  out of the  sale  proceeds  available  on the  settlement  date,
      sufficient  funds to cover the  aggregate  exercise  price payable for the
      purchased  Shares and (B) shall provide written  directives to the Company
      to deliver the  certificates  for the  purchased  Shares  directly to such
      brokerage firm in order to complete the sale transaction; or

            (vi) any combination of the foregoing methods of payment.

      (c) Taxes.  No Shares shall be delivered  under the Plan to any Grantee or
other person until such Grantee or other person has made arrangements acceptable
to the  Administrator  for the satisfaction of any foreign,  federal,  state, or
local income and  employment tax  withholding  obligations,  including,  without
limitation,  obligations  incident to the receipt of Shares or the disqualifying
disposition of Shares  received on exercise of an Incentive  Stock Option.  Upon
exercise of an Award,  the Company  shall  withhold or collect  from  Grantee an
amount sufficient to satisfy such tax obligations.

      (d) Reload Options.  In the event the exercise price or tax withholding of
an Option is  satisfied  by the Company or the  Grantee's  employer  withholding
Shares otherwise  deliverable to the Grantee,  the  Administrator  may issue the
Grantee an additional Option,  with terms identical to the Award Agreement under
which the Option was  exercised,  but at an exercise  price as determined by the
Administrator in accordance with the Plan.

8.    Exercise of Award.

      (a) Procedure for Exercise; Rights as a Stockholder.

            (i) Any Award granted  hereunder  shall be exercisable at such times
      and under such  conditions as determined  by the  Administrator  under the
      terms of the Plan and specified in the Award Agreement.

            (ii) An Award  shall be  deemed  to be  exercised  upon the later of
      receipt by the Company of written  notice of such  exercise in  accordance
      with the terms of the Award by the person  entitled to exercise  the Award
      and

            (iii) full payment for the Shares with respect to which the Award is
      exercised,  including,  to the extent selected,  use of the  broker-dealer
      sale and  remittance  procedure to pay the  purchase  price as provided in
      Section 7(b)(v). Until the issuance (as evidenced by the appropriate entry
      on the books of the Company or of a duly authorized  transfer agent of the
      Company) of the stock certificate evidencing such Shares, no right to vote
      or receive dividends or any other rights as a stockholder shall exist with
      respect to Shares subject to an Award,  notwithstanding the exercise of an
      Option or other  Award.  The  Company  shall issue (or cause to be issued)
      such stock certificate  promptly upon exercise of the Award. No adjustment
      will be made for a dividend  or other  right for which the record  date is
      prior to the date the stock  certificate is issued,  except as provided in
      the Award Agreement or Section 10, below.

                                       11
<PAGE>

      (b) Exercise of Award Following Termination of Continuous Service.

            (i) An Award may not be exercised after the termination date of such
      Award set forth in the Award Agreement and may be exercised  following the
      termination of a Grantee's  Continuous Service only to the extent provided
      in the Award Agreement.

            (ii)  Where the Award  Agreement  permits a Grantee to  exercise  an
      Award following the termination of the Grantee's  Continuous Service for a
      specified period, the Award shall terminate to the extent not exercised on
      the last day of the specified  period or the last day of the original term
      of the Award, whichever occurs first.

            (iii) Any  Award  designated  as an  Incentive  Stock  Option to the
      extent not exercised  within the time permitted by law for the exercise of
      Incentive   Stock  Options   following  the  termination  of  a  Grantee's
      Continuous  Service shall convert  automatically to a Non-Qualified  Stock
      Option  and  thereafter  shall  be  exercisable  as  such  to  the  extent
      exercisable by its terms for the period specified in the Award Agreement.

      (c) Buyout Provisions.  The Administrator may at any time offer to buy out
for a payment  in cash or Shares,  an Award  previously  granted,  based on such
terms and conditions as the Administrator shall establish and communicate to the
Grantee at the time that such offer is made.

9.    Conditions Upon Issuance of Shares.

      (a) Shares shall not be issued pursuant to the exercise of an Award unless
the exercise of such Award and the issuance and delivery of such Shares pursuant
thereto shall comply with all Applicable  Laws, and shall be further  subject to
the approval of counsel for the Company with respect to such compliance.

      (b) As a condition  to the  exercise of an Award,  the Company may require
the person  exercising  such Award to  represent  and warrant at the time of any
such  exercise  that the  Shares are being  purchased  only for  investment  and
without  any  present  intention  to sell or  distribute  such Shares if, in the
opinion of counsel for the  Company,  such a  representation  is required by any
Applicable Laws.

10.   Adjustments Upon Changes in Capitalization. Subject to any required action
by the stockholders of the Company,  the  Administrator  may, in its discretion,
proportionately  adjust the number of Shares covered by each outstanding  Award,
and the number of Shares which have been  authorized for issuance under the Plan
but as to which no Awards have yet been  granted or which have been  returned to
the Plan, the exercise or purchase price of each such outstanding Award, as well
as any other terms that the Administrator  determines require adjustment for (a)
any increase or decrease in the number of issued Shares  resulting  from a stock
split,  reverse stock split, stock dividend,  combination or reclassification of
the Shares,  (b) any other  increase or decrease in the number of issued  Shares
effected  without  receipt  of  consideration  by  the  Company,  or  (c) as the
Administrator  may  determine  in its  discretion,  any other  transaction  with
respect to Common Stock to which Section  424(a) of the Code applies;  provided,
however that conversion of any  convertible  securities of the Company shall not
be  deemed  to have been  "effected  without  receipt  of  consideration."  Such
adjustment shall be made by the  Administrator  and its  determination  shall be
final,  binding  and  conclusive.  Except as the  Administrator  determines,  no
issuance  by the  Company  of  shares  of  stock  of any  class,  or  securities
convertible into shares of stock of any class,  shall affect,  and no adjustment
by reason  hereof  shall be made with  respect to, the number or price of Shares
subject to an Award.

                                       12
<PAGE>

11.   Corporate  Transactions and Related Entity Dispositions.  Except as may be
provided in an Award Agreement:

      (a) The  Administrator  shall have the  authority,  exercisable  either in
advance of any actual or  anticipated  Corporate  Transaction  or Related Entity
Disposition or at the time of an actual Corporate  Transaction or Related Entity
Disposition  and exercisable at the time of the grant of an Award under the Plan
or any  time  while  an  Award  remains  outstanding,  to  provide  for the full
automatic vesting and exercisability of one or more outstanding  unvested Awards
under the Plan and the release from  restrictions  on transfer and repurchase or
forfeiture  rights of such Awards in connection with a Corporate  Transaction or
Related Entity  Disposition,  on such terms and conditions as the  Administrator
may specify.  The  Administrator  also shall have the authority to condition any
such Award vesting and  exercisability or release from such limitations upon the
subsequent  termination  of the  Continuous  Service  of the  Grantee  within  a
specified  period  following the effective date of the Corporate  Transaction or
Related  Entity  Disposition.  Effective  upon the  consummation  of a Corporate
Transaction  or Related Entity  Disposition,  all  outstanding  Awards under the
Plan, shall remain fully exercisable until the expiration or sooner  termination
of the Award.

      (b) The  portion of any  Incentive  Stock  Option  accelerated  under this
Section  11 in  connection  with  a  Corporate  Transaction  or  Related  Entity
Disposition shall remain exercisable as an Incentive Stock Option under the Code
only to the extent the $ 100,000 dollar limitation of Section 422(d) of the Code
is not  exceeded.  To  the  extent  such  dollar  limitation  is  exceeded,  the
accelerated   excess   portion  of  such  Option  shall  be   exercisable  as  a
Non-Qualified Stock Option.

12.   Effective Date and Term of Plan. The Plan shall become  effective upon the
earlier  to  occur  of  its  adoption  by  the  Board  or  its  approval  by the
stockholders of the Company.  It shall continue in effect for a term of ten (10)
years unless  sooner  terminated.  Subject to Section 13 below,  and  Applicable
Laws, Awards may be granted under the Plan upon its becoming effective.

13.   Amendment, Suspension or Termination of the Plan.

      (a) The Board may at any time amend, suspend or terminate the Plan. To the
extent  necessary  to comply with  Applicable  Laws,  the Company  shall  obtain
stockholder approval of any Plan amendment in such a manner and to such a degree
as required.

                                       13
<PAGE>

      (b) No Award may be  granted  during any  suspension  of the Plan or after
termination of the Plan.

      (c) Any  amendment,  suspension  or  termination  of the  Plan  (including
termination of the Plan under Section 12, above) shall not affect Awards already
granted,  and such Awards  shall  remain in full force and effect as if the Plan
had not been amended, suspended or terminated,  unless mutually agreed otherwise
between the Grantee and the  Administrator,  which  agreement must be in writing
and signed by the Grantee and the Company.

14.   Reservation of Shares.

      (a) The Company,  during the term of the Plan,  will at all times  reserve
and keep  available  such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

      (b) The inability of the Company to obtain  authority  from any regulatory
body having jurisdiction,  which authority is deemed by the Company's counsel to
be necessary  to the lawful  issuance  and sale of any Shares  hereunder,  shall
relieve the Company of any  liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

15.   No Effect on Terms of Employment/Consulting  Relationship.  The Plan shall
not confer upon any Grantee any right with respect to the  Grantee's  Continuous
Service,  nor  shall  it  interfere  in any way  with  his or her  right  or the
Company's right to terminate the Grantee's  Continuous Service at any time, with
or without cause.

16.   Unfunded Plan. Unless otherwise  determined by the Board or the Committee,
the Plan shall be unfunded and shall not create (or construed to create) a trust
or a  separate  fund or  funds.  The Plan  shall  not  establish  any  fiduciary
relationship  between the Company and any Grantee or other person. To the extent
any person holds any rights by virtue of an Award granted  under the Plan,  such
right (unless  otherwise  determined by the Board or the Committee)  shall be no
greater than the right of an unsecured general creditor of the Company.

17.   No Effect on Retirement  and Other Benefit Plans.  Except as  specifically
provided  in a  retirement  or other  benefit  plan of the  Company or a Related
Entity,  Awards  shall not be deemed  compensation  for  purposes  of  computing
benefits or contributions  under any retirement plan of the Company or a Related
Entity,  and shall not affect any benefits  under any other  benefit plan of any
kind or any benefit plan subsequently instituted under which the availability or
amount  of  benefits  is  related  to level of  compensation.  The Plan is not a
"Retirement  Plan" or  "Welfare  Plan"  under  the  Employee  Retirement  Income
Security Act of 1974, as amended.

                                       14
<PAGE>

18.   Stockholder Approval.  The grant of Incentive Stock Options under the Plan
shall be subject to approval by the  stockholders  of the Company  within twelve
(12)  months  before or after the date the Plan is adopted  excluding  Incentive
Stock Options issued in  substitution  for  outstanding  Incentive Stock Options
pursuant  to Section  424(a) of the Code.  Such  stockholder  approval  shall be
obtained  in  the  degree  and  manner  required  under   Applicable  Laws.  The
Administrator may grant Incentive Stock Options under the Plan prior to approval
by the  stockholders,  but until such  approval is obtained,  no such  Incentive
Stock Option shall be exercisable. In the event that stockholder approval is not
obtained within the twelve (12) month period provided above, all Incentive Stock
Options  previously granted under the Plan shall be exercisable as Non-Qualified
Stock Options.

                                       15

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