Document:

Exhibit 10.5

                          ZYNEX MEDICAL HOLDINGS, INC.

                             2005 STOCK OPTION PLAN

1.   PURPOSE

     The purpose of the Zynex Medical Holdings, Inc. 2005 Stock Option Plan (the
     "Plan") is to provide participants with an increased economic and
     proprietary interest in the Company and its subsidiaries in order to
     encourage those Participants to contribute to the success and progress of
     the Company and its subsidiaries.

2.   DEFINITIONS

     (a)  "Administrator" means the Administrator of the Plan in accordance with
          Section 11.

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

     (c)  "Common Stock" means the Company's common stock, par value $.001,
          subject to adjustment as provided in Section 8.

     (d)  "Company" means Zynex Medical Holdings, Inc., a Nevada corporation,
          and subsidiaries.

     (e)  "Options" shall mean the stock options granted pursuant to the plan.

     (f)  "Participants" shall mean those officers, directors, independent
          contractors, consultants, employees and prospective employees of the
          Company and its subsidiaries to whom Options have been granted from
          time to time by the Administrator and any authorized transferee of
          such officer's, directors, independent contractors, consultants and
          employees.

     (g)  "Plan" means the Zynex Medical Holdings, Inc. 2005 Stock Option Plan.

     (h)  "Retirement" shall have the meaning specified by the Administrator in
          the terms of an option grant or, in the absence of any such term,
          shall mean retirement from active employment with the Company (i) at
          or after age 55 with the approval of the Administrator or (ii) at or
          after age 65. The determination of the Administrator as to an
          individual's Retirement shall be conclusive on all parties.

     (i)  "Total and Permanent Disablement" shall have the meaning specified by
          the Administrator in the terms of an option grant or, in the absence
          of any such term, shall mean a physical condition arising from an
          injury or illness which renders an individual incapable of performing
          work. The determination of the Administrator as to an individual's
          Disablement shall be conclusive on all of the parties.

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     (j)  "ISO" means an option to purchase common stock which at the time the
          Option is granted under the Plan qualifies as an incentive stock
          option within the meaning of Internal Revenue code Section 422.

     (k)  "NSO" means a nonstatutory stock option to purchase common stock which
          at the time the Option is granted under the Plan does not qualify as
          an ISO.

3.   PARTICIPANTS

     Options may only be granted to officers, directors, independent
     contractors, consultants, employees and prospective employees of the
     Company and its subsidiaries as selected by the Board of Directors.

4.   EFFECTIVE DATE AND TERMINATION OF PLAN

     The Plan was adopted by the Board of Directors of the Company on January 3,
     2005 and shall become effective upon approval by the Company's
     shareholders. The Plan shall remain available for the grant of Options
     until December 31, 2014. Notwithstanding the foregoing, the Plan may be
     terminated at such earlier time as the Board of Directors may determine.
     Termination of the Plan will not affect the rights and obligations of the
     Participants and the Company arising under Options theretofore granted and
     then in affect.

5.   SHARES SUBJECT TO THE PLAN AND TO OPTIONS

     The stock subject to Options authorized to be granted under the Plan shall
     consist of three million (3,000,000) shares of the company's common stock,
     or the number and kind of shares of stock or other securities which shall
     be substituted or adjusted for such shares as provided in Section 8. The
     shares to be delivered upon exercise of Options granted under the Plan
     shall be made available, at the discretion of the Board of Directors, from
     the authorized unissued shares or treasury shares of common stock.

6.   GRANT, TERMS AND CONDITIONS OF OPTIONS

     Options may be granted at any time and from time to time prior to the
     termination of the Plan. No Participant shall have any rights as a
     stockholder with respect to any shares of stock subject to Options
     hereunder until said shares have been issued. Each Option shall be
     evidenced by a written stock option agreement and/or such other written
     arrangements as may be approved from time to time by the Administrator.
     Options granted pursuant to the Plan need not be identical but each Option
     must contain and be subject to the following terms and conditions:

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<PAGE>

     (a)  Price: The purchase price under each Option shall be established by
          the Administrator. In no event will the option price be less than the
          fair market value of the stock on the date of grant unless such
          Options are granted in substitution of options granted by a new
          employee's previous employer or the optionee pays or foregoes
          compensation in the amount of any discount. The price may be paid in
          cash or any alternative means acceptable to the Administrator,
          including an irrevocable commitment by a broker to pay over such
          amount from a sale of the shares issuable under an Option and the
          acceptance of a promissory note secured by the number of shares of
          Common Stock then issuable upon exercise of the Options.

     (b)  $100,000 ISO Limitation: The aggregate fair value (determined as of
          the date the Option is granted) of the common stock for which ISOs
          shall first become exercisable by an Optionee in any calendar year
          under all ISO plans of the Company shall not exceed $100,000. Options
          is excess of this limitation shall constitute NSOs.

     (c)  Duration and Exercise or Termination of Option: Unless the
          Administrator provides otherwise, each Option granted must expire
          within a period not more that ten (10) years from the date of grant.

     (d)  Suspension or Termination of Option: Except as otherwise provided by
          the Administrator, if at any time (including after a notice of
          exercise has been delivered) the Chief Executive Officer or any other
          person designated by the Administrator (each such person, an
          "Authorized Officer") reasonably believes that a participant has
          committed as act of misconduct as described in this Section, the
          Authorized Officer may suspend the Participant's rights to exercise
          any Option pending a determination of whether an act of misconduct has
          been committed.

          Except as otherwise provided by the Administrator, if the
          Administrator or an Authorized Officer determines a Participant has
          committed an act of embezzlement, fraud, dishonesty, nonpayment of any
          obligation owed to the Company, breach of fiduciary duty or deliberate
          violation of the Company rules resulting in loss, damage or injury to
          the Company, or if a Participant makes an unauthorized disclosure of
          any Company trade secret or confidential information, engages in any
          conduct constituting unfair competition, induces any Company customer
          to breach a contract with the Company or induces any principal for
          whom the Company acts as agent to terminate any such agency
          relationship, neither the Participant nor his or her estate nor
          transferee shall be entitled to exercise any Option whatsoever. In
          making such determination, the Administrator or an Authorized Officer
          shall act fairly and shall give the Participant an opportunity to
          appeal and present evidence on his or her behalf at a hearing before
          the Administrator or the Board of Directors. For any Participant who

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<PAGE>

          is an "executive officer" for purposes of Section 16 of the Securities
          and Exchange Act of 1934, the determination of the Authorized Officer
          shall be subject to the approval of the Administrator.

     (e)  Termination of Employment: Subject to Section 6 (b), unless the
          Administrator specifies otherwise, upon termination of the
          Participant's employment, his or her rights to exercise an Option then
          held shall be only as follows:

          (1)  Death. Upon the death of a participant while in the employ of the
               Company, all of the Participant's Options then held shall be
               exercisable by his or her estate, heir or beneficiary at any time
               during the twelve (12) months next succeeding the date of death.
               Any and all Options that are unexercised during the twelve (12)
               months next succeeding the date of death shall terminate as of
               the end of such twelve (12) month period.

          (2)  Total and Permanent Disability. Upon termination as a result of
               the Total and Permanent Disability of any Participant, all of the
               Participant's Options then held shall be exercisable for a period
               of twelve (12) months after termination. Any and all Options that
               are unexercised during the twelve (12) months succeeding the date
               of termination shall terminate as of the end of such twelve (12)
               month period.

          (3)  Retirement. Upon Retirement of a Participant, the Participant's
               Options then held shall be exercisable for a period of twelve
               (12) months after Retirement. The number of shares with respect
               to which the Options shall be exercisable shall equal the total
               number of shares which were exercisable under the Participant's
               Option on the date of his or her retirement. Any and all Options
               that are unexercised during the twelve (12) months succeeding the
               date of termination shall terminate as of the end of such twelve
               (12) month period.

          (4)  Other Reasons. Upon the date of termination of a Participant's
               employment for any reason other that those stated in Sections 6
               (d) (1), (d) (2), and (d) (3) or as described in Section 6 (c)
               above, (A) any Option that is unexercisable as of such
               termination date shall remain unexercisable and shall terminate
               as of such date. And (B) any Option that is exercisable as of
               such termination date shall expire the earlier of (i) thirty (30)
               days following such date or (ii) the expiration date of the
               option.

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<PAGE>

     (f)  Transferability of Option: Unless the Administrator specifies
          otherwise, each Option shall be nontransferable by the Participant
          other that by will or the laws of descent and distribution.

     (g)  Cancellation: The Administrator may, at any time prior to exercise and
          subject to consent of the Participant, cancel any option previously
          granted and may or may not substitute in their place Options at a
          different price and different type under different terms or in
          different amounts.

     (h)  Conditions and Restrictions Upon Securities Subject to Options:

          The Administrator may provide that the shares of Common Stock issued
          upon exercise of an Option shall be subject to further conditions or
          agreements as the Administrator in his or her discretion may specify
          prior to the exercise of such Option, including without limitation,
          conditions on vesting and transferability, forfeiture or repurchase
          provisions and method of payment for the shares issued upon exercise
          (including the actual or constructive surrender of Common Stock
          already owned by the Participant).

     (i)  Other Terms and Conditions: Options may also contain such other
          provisions, which shall not be inconsistent with any of the foregoing
          terms, as the Administrator shall deem appropriate. No Option,
          however, nor anything contained in the Plan shall confer upon any
          Participant any right to continue in the Company's employ or service
          nor limit in any way the Company's right to terminate his or her
          employment at any time.

7.   LOANS

     The Company may make loans, at the request of the Participant and in the
     sole discretion of the Administrator, for the purpose of enabling the
     Participant to exercise Options granted under the Plan and to pay the tax
     liability resulting from an Option exercised under the Plan. The
     Administrator shall have full authority to determine the terms and
     conditions of such loans. Such loans may be secured by the shares received
     upon exercise of such Option.

8.   ADJUSTMENT OF AND CHANGES IN THE STOCK

     In the event that the number of shares of Common Stock of the Company shall
     be increased or decreased through recapitalization, reclassification,
     combination of shares, stock splits, reverse stock splits, spin-offs, or
     the payment of a stock dividend, (other than regular, quarterly cash
     dividends) or otherwise, then each share of Common Stock of the Company
     which has been authorized for issuance under the Plan, whether such share
     is then currently subject to or may become subject to an Option under the

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<PAGE>

     Plan, may be proportionately adjusted to reflect such increase or decrease,
     unless the terms of the transaction provide otherwise. Outstanding Options
     may also be amended as to price and other terms if necessary to reflect the
     foregoing events.

     In the event there shall be any other change in the number or kind of
     outstanding shares of Common Stock of the Company, or any stock or other
     securities into which such Common Stock shall have been changed, or for
     which it shall have been exchanged, whether by reason of merger,
     consolidation or otherwise, the Administrator shall, in his sole
     discretion, determine the appropriate adjustment, if any, to be effected.
     In addition, in the event of such change described in this paragraph, the
     Administrator may accelerate the time or times at which any Option may be
     exercised within a time prescribed by the Administrator in his sole
     discretion.

     No right to purchase fractional shares shall result from any adjustment in
     Options pursuant to this Section 8. In case of any adjustment, the shares
     subject to the Option shall be rounded down to the nearest whole share.
     Notice of any adjustment shall be given by the Company to each Participant
     which shall have been so adjusted and such adjustment (whether or not
     notice is given) shall be effective and binding for all purposes of the
     Plan.

9.   REGISTRATION OF STOCK

     In the event the Board of Directors or the Administrator determines in his
     sole discretion that the registration of the plan shares under any
     applicable law or governmental regulation is necessary as a condition to
     the issuance of such shares under the Option, the Option may not be
     exercised in whole or in part unless such consent or approval has been
     unconditionally obtained.

10.  WITHHOLDING

     To the extent required by applicable federal, state and local or foreign
     law, a Participant shall make arrangements satisfactory to the Company for
     the satisfaction of any withholding tax obligations that arise by reason of
     an exercise. The Company shall not be required to issue shares or to
     recognize the disposition of such shares until such obligations are
     satisfied. The Administrator may permit these obligations to be satisfied
     by having the Company withhold a potion of the shares of stock that
     otherwise would be issued to him or her upon exercise of the Option, or to
     the extent permitted, by tendering shares previously acquired, provided
     that such will not result in an accounting charge to the Company.

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<PAGE>

11.  ADMINISTRATION AND AMENDMENT OF THE PLAN

     The Plan shall be administered by the Administrator who shall be the
     Company's President and Chief Executive Officer. Subject to the express
     provisions of this Plan, the Administrator shall be authorized and
     empowered to do all things necessary or desirable in connection with the
     administration of the Plan, including, without limitation: (a) to
     prescribe, amend and rescind rules and regulations relating to the Plan and
     to define terms not otherwise defined herein; (b) to determine which
     persons are Participants (as defined in Section 3 hereof) and to which of
     such Participants, if any, an Option shall be granted hereunder and the
     timing of any such Option grants; (c) to determine the number of shares of
     Common Stock subject to an Option and the exercise or purchase price of
     such shares; (d) to establish and verify the extent of satisfaction of any
     conditions to exercisability applicable to an Option; (e) to waive
     conditions to and/or accelerate exercisability of an Option, either
     automatically upon the occurrence of specified events (including in
     connection with a change of control of the Company) or otherwise in his
     discretion; (f) to prescribe and amend the terms of Option grants made
     under the Plan (which need not be identical); (g) to determine whether, and
     the extent to which, adjustments are required pursuant to Section 8 hereof;
     and (h) to interpret and construe this Plan, any rules and regulations
     under the Plan and the terms and conditions of any Option granted
     hereunder, and to make exceptions to any such provisions in good faith and
     for the benefit of the Company.

     All decisions, determinations and interpretations by the Administrator
     regarding the Plan, any rules and regulations under the Plan and the terms
     and conditions of any Option granted hereunder, shall be final and binding
     on all Participants and optionholders. The Administrator shall consider
     such factors as he deems relevant, in his sole and absolute discretion, to
     making such decisions, determinations and interpretations including,
     without limitation, the recommendations or advice of any officer or other
     employee of the Company and such attorneys, consultants and accountants as
     the Administrator may select.

     The Administrator may, from time to time, delegate some of the
     responsibilities with respect to the administration of the Plan to such
     persons as he may designate in his sole discretion but may not delegate
     authority to grant options to a person who is not a member of the Board of
     Directors.

     The interpretation and construction of any provision of the Plan by the
     Board of Directors shall be final and conclusive. The Board of Directors
     may periodically adopt rules and regulations for carrying out the Plan, and
     amend the Plan as desired, without further action by the Company's
     stockholders except to the extent required by applicable law. Any amendment
     to the Plan will not affect the rights and obligations of the Participants
     and the Company arising under Options theretofore granted and then in
     effect. Notwithstanding the foregoing, and subject to adjustment pursuant
     to Section 8, the Plan may not be amended to increase the number of shares
     of Common Stock authorized for issuance, unless approved by the Company's
     stockholders.

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<PAGE>

12.  TIME OF GRANTING OPTIONS

     The effective date of such Option shall be the date on which the grant was
     made. Within a reasonable time thereafter, the Company will deliver the
     Option to the Participant.

12.  GOVERNING LAW; SEVERABILITY

     The Plan shall be governed by the laws of the State of Nevada. The
     invalidity or unenforceability of any provision of the Plan or any Option
     granted pursuant to the Plan shall not affect the validity and
     enforceability of the remaining provisions of the Plan and the Options
     granted hereunder, and such invalid or unenforceable provision shall be
     stricken to the extent necessary to preserve the validity and
     enforceability of the Plan and the options granted hereunder.

     Dated this 3rd day of January 2005.

                                                     By:  /s/ Thomas Sandgaard
                                                          ----------------------
                                                          Thomas Sandgaard
                                                          President and Chief
                                                          Executive Officer

                                        8ATTACHMENT NO

Exhibit 10.2 1999 Stock Option Plan

BEDINI TECHNOLOGY, INC.

1999 STOCK OPTION PLAN

(Adopted by the Board of Directors on October 7th 1999)

(Approved by the Stockholders on October 7, 1999)

1.

Purpose.

This 1999 Stock Option Plan is intended to encourage stock ownership in BEDINI TECHNOLOGY, INC. by the officers, directors, employees, consultants, and advisors of the Company or its affiliates in order to promote their interest in the success of the Company and to encourage their continued affiliation.  All options granted under this 1999 Stock Option Plan are intended to be either (a) Incentive Stock Options or (b) Non-Statutory Stock Options.

2.

Definitions.

As used herein the following definitions shall apply:

"Act" shall mean the Securities Exchange Act of 1934, as amended from time to time.

“Advisor” shall mean an individual who provides bona fide services to the Company or Affiliate pursuant to a written contract.

"Affiliate" shall mean any corporation defined as a "parent corporation" or a "subsidiary corporation" by Code Section 424(e) and (f), respectively.

"Agreement" shall mean either a 1999 Incentive Stock Option Agreement or a 1999 Non-Statutory Stock Option Agreement, embodying the terms of the agreement between the Company and the Optionee with respect to Optionee's Option.

"Board" shall mean the Board of Directors of the Company.

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

"Company" shall mean BEDINI TECHNOLOGY, INC., a Nevada corporation.

"Consultant" shall mean any person who is placed on the Company's Consultants List by the Board and who agrees in writing to be included thereon.

"Disability" or "Disabled" shall mean the condition of being "disabled" within the meaning of Section 422(c)(6) of the Code or any successor provision.

"Director" shall mean an individual member of the Board.

“Disinterested Person” means a Non-Employee Director as defined in Rule 16b-3 of the Exchange Act of 1934, as amended.

"Employee" shall mean any salaried employee of the Company or its Affiliates, including those employees who are officers of the Company or its Affiliates.

"Fair Market Value" of Stock on a given date shall mean an amount per share as determined by the Board or its delegates by applying any reasonable valuation method determined without regard to any restriction other than a restriction that, by its terms, will never lapse.  Notwithstanding the preceding, if the Stock is traded upon an established stock exchange, then the "Fair Market Value" of Stock on a given date per share shall be deemed to be the average of the highest and lowest selling price per share of the Stock on the principal stock exchange on which the Stock is then trading or, if there was no trading of the Stock on that day, on the next preceding day on which there was such trading; if the Stock is not traded upon an established stock exchange but is quoted on a quotation system, the "Fair Market Value" of Stock on a given date shall be deemed to be the mean between the closing representative "bid" and "ask" prices per share of the Stock on such date as reported by such quotation system or, if there was no trading of the Stock on that day, on the next preceding day on which there was such trading.

"Incentive Stock Option" shall mean an option granted pursuant to the Plan that is designated by the Board or its delegates as an "Incentive Stock Option" and which qualifies as an incentive stock option under Section 422 of the Code or any successor provision.

"Non-Statutory Stock Option" shall mean a stock option granted pursuant to the Plan that is not an Incentive Stock Option.

"Option" shall refer to either an Incentive Stock Option or Non-Statutory Stock Option, or both, as the context shall indicate.

"Optionee" shall mean the recipient of an Incentive Stock Option or a Non-Statutory Stock Option.

"Option Price" shall mean the price per share of Stock to be paid by the Optionee upon exercise of the Option.

"Option Stock" shall mean the total number of shares of Stock the Optionee shall be entitled to purchase pursuant to the Agreement.

"Plan" shall mean this BEDINI TECHNOLOGY, INC. 1999 Stock Option Plan, as amended from time to time.

"Reporting Person" shall mean an Optionee who is required to file statements relating to his or her beneficial ownership of Stock with the SEC pursuant to Section 16(a) of the Act.

"Rule 16b-3" shall mean Rule 16b-3 (as amended from time to time), promulgated by the SEC under the Act, and any successor thereto.

"SEC" shall mean the Securities and Exchange Commission.

"Stock" shall mean the $0.001 par value Common Stock of the Company.

3.

Administration.

The Plan shall be administered by the Board; provided, however, that the Board may delegate all or any part of its authority to administer the Plan in its entirety or, with respect to any group or groups of persons eligible to receive Options hereunder, to such committee as the Board shall in its sole discretion determine.  Such committee shall be composed of not fewer than two members (the “Committee”), all of the members of which Committee shall be Disinterested Persons, if required.  Any Disinterested Person shall comply with the requirements of Rule 16b-3.  The Board or its Committee may adopt, amend and rescind such rules and regulations for carrying out the Plan and implementing agreements and take such actions as it deems proper.  The interpretation, construction and application by the Board or its Committee of any of the provisions of the Plan or any Option granted thereunder shall be final and binding on the Company, all Optionees, their legal representatives, and any person who may acquire an Option directly from an Optionee by permitted transfer, bequest or inheritance.  Reference to administrative acts by the Board in the Plan shall also refer to acts by its Committee, unless the context otherwise indicates.  Whether or not the Board has delegated administrative authority, the Board has the final power to determine all questions of policy or expediency that may arise in administration of the Plan.

4.

Eligibility.

Only Employees are eligible to receive Incentive Stock Options under the Plan.  Employees, Officers, Directors, Consultants and Advisors of the Company or its Affiliates are eligible to receive Non-Statutory Stock Options under the Plan.

No person shall be eligible to receive an Option for a larger number of shares than is recommended for him or her by the Board.  Any Optionee may hold more than one Option (whether Incentive Stock Options, Non-Statutory Stock Options, or both, but only on the terms and conditions and subject to the restrictions set forth herein.

Incentive Stock Options granted to an Employee who owns stock at the time the Incentive Stock Option is granted, representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company and its Affiliates, shall be granted at an Option Price at least one hundred ten percent (110%) of the Fair Market Value of the Stock at the time the Incentive Stock Option is granted.  In determining ownership of Stock by an Employee, the attribution standards set forth in Code Section 424(d) shall be applicable.

5.

Stock Subject to the Plan.

Options granted under the Plan shall be for shares of the Company's authorized but unissued or re-acquired Stock.  The aggregate number of shares of Stock which may be subject to Options pursuant to the Plan shall not exceed three hundred thousand (300,000) shares, unless adjusted by the Board pursuant to Paragraph 6(l).  Stock issued under other stock option plans of the Company shall not be counted against the maximum number of shares that can be issued under the Plan.

In the event that any outstanding Option expires or is terminated for any reason, the shares of Stock allocable to the unexercised portion of such Option may again be subject to an Option under the Plan.

If an Optionee pays all or part of any Option Price with shares of Stock, the number of shares deemed to be issued to the Optionee (and counted against the maximum number of shares that can be issued under the Plan) shall be the number of shares transferred to the Optionee by the Company, less the number of shares transferred by the Optionee to the Company as payment.  Stock issued on the exercise of an Option which is forfeited in accordance with the conditions contained in the grant by the Optionee after issuance shall be deemed to have never been issued under the Plan and, accordingly, shall not be counted against the maximum number of shares that can be issued under the Plan.  Notwithstanding the terms of the previous two sentences, the maximum number of shares for which Incentive Stock Options may be issued under the Plan shall be three hundred thousand (300,000) shares, subject to adjustment by the Board as provided under Paragraph 6(l), regardless of the fact that under the terms of the preceding sentences, a lesser number of shares is deemed to be issued pursuant to the exercise of Incentive Stock Options.

6.

Terms and Conditions of Options.

The Board or its delegates shall authorize the granting of all Options under the Plan with such Options to be evidenced by Incentive Stock Option Agreements or Non-Statutory Stock Option Agreements, as the case may be.  Each Agreement shall be in such form as the Board may approve from time to time.  Each Agreement shall comply with and be subject to the following terms and conditions:

(a)

Type of Option; Number of Shares.  Each particular Option Agreement shall state the type of Options to be granted (whether Incentive Stock Options or Non-Statutory Stock Options) and the number of shares to which the Option pertains.  Under no circumstances shall the aggregate Fair Market Value of the Stock (determined as of the time the Option is granted) with respect to which Incentive Stock Options are exercisable for the first time by any Employee during any calendar year (under all incentive stock option plans of the Company and its Affiliates) exceed $100,000.

(b)

Option Price.  Each particular Option Agreement shall state the Option Price.  The Option Price for an Incentive Stock Option shall not be less than one hundred percent (100%) of the Fair Market Value per share of Stock on the date the Incentive Stock Option is granted.  The Option Price for a Non-Statutory Stock Option shall be the price per share of Stock set by the Board or its delegates.

(c)

Certificate Legends.  Certificates for shares of Stock issued and delivered to Reporting Persons may be legended, as the Board deems appropriate, if required by the provisions of any applicable rule or regulation.

(d)

Medium and Time of Payment.  The aggregate Option Price shall be payable upon the exercise of the Option and shall be paid in any combination of:

(i)

United States cash currency;

(ii)

a cashier's or certified check to the order of the Company;

(iii)

a personal check acceptable to the Company;

(iv)

to the extent permitted by the Board, shares of Stock of the Company (including previously owned Stock or Stock issuable in connection with the Option exercise), properly endorsed to the Company, whose Fair Market Value on the date of exercise equals the aggregate Option Price of the Option being exercised; or

(v)

to the extent permitted by the Board, the Optionee's entering into an agreement with the Company, whereby a portion of the Optionee's Options are terminated and where the "built-in gain" on any Options which are terminated as part of such agreement equals the aggregate Option Price of the Option being exercised.  The Company may establish, from time to time, procedures for a “cashless exercise” of options. "Built-in gain" means the excess of the aggregate Fair Market Value of any Stock otherwise issuable on exercise of a terminated Option, over the aggregate Option Price otherwise due the Company on such exercise.

The Board may permit deemed or constructive transfer of shares in lieu of actual transfer and physical delivery of certificates.  Except to the extent prohibited by applicable law, the Board may take any necessary or appropriate steps in order to facilitate the payment of any such Option Price.  Without limiting the foregoing, the Board may cause the Company to loan the Option Price to the Optionee or to guarantee that any Stock to be issued will be delivered to a broker or lender in order to allow the Optionee to borrow the Option Price.  The Board, in its sole and exclusive discretion, may require satisfaction of any rules or conditions in connection with payment of the Option Price at any particular time, in any particular form, or with the Company's assistance.  If Stock used to pay any Option Price is subject to any prior restrictions imposed in connection with any plan of the Company (including this Plan), an equal number of the shares of Stock acquired on exercise shall be made subject to such prior restrictions in addition to any further restrictions imposed on such Stock by the terms of the Optionee's Agreement or by the Plan.

(e)

Vesting.  The total number of shares of Stock subject to an Option may, but need not, be allotted in periodic installments (which may, but need not, be equal).  The Option Agreement may provide that from time to time during each of such installment periods, the Option may become exercisable ("vest") with respect to some or all of the shares allotted to that period, and may be exercised with respect to some or all of the shares allotted to such period and/or any prior period as to which the Option became vested but was not fully exercised.  During the remainder of the term of the Option (if its term extends beyond the end of the installment periods), any unexercised Option Stock may be exercised from time to time.

(f)

Duration of Options.  Each particular Option Agreement shall state the term of the Option; provided, however, that all Incentive Stock Options granted under this Plan shall expire and not be exercisable after the expiration of ten (10) years from the date granted; provided, further, that any Incentive Stock Option granted to an Employee who owns stock at the time the Incentive Stock Option is granted representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company and its Affiliates shall expire and not be exercisable after the expiration of five (5) years from the date granted.  Non-Statutory Stock Options shall expire and not be exercisable after the date set by the Board or its delegates in the particular Option Agreement, or on any later date subsequently approved by the Board or its delegates.

(g)

Exercise of Options.

(i)

Each particular Option Agreement shall state when the Optionee's right to purchase Stock pursuant to the terms of an Option are exercisable in whole or in part, provided, however, that Incentive Stock Options shall not be exercisable by an Employee more than 90 days after the date that the employment of such Employee is voluntarily or involuntarily terminated.  Subject to the earlier termination of the right to exercise the Options as provided under this Plan, Options shall be exercisable in whole or in part as the Board, in its sole and exclusive discretion, may provide in the particular Option Agreement, as amended.  The Board may at any time increase the percentage of an Option that is otherwise exercisable under the terms of a particular Option Agreement.  The Board, in its sole and exclusive discretion, may permit the issuance of Stock underlying an Option prior to the date the Option is otherwise exercisable, provided such Stock is subject to repurchase rights which expire pro rata as the Option would otherwise have become exercisable.

(ii)

If the Optionee does not exercise in any one (1) year period the full number of shares to which he or she is then entitled to exercise, the Optionee may exercise those shares in any subsequent year during the term of the Option.

(h)

Transfer of Options.  An Option shall not be transferable except by will or by the laws of decent and distribution, and shall be exercisable during the lifetime of the person to whom the Option is granted only by such person, except as specifically provided for by the Board.  An attempted non-permitted transfer of an Option shall be void.

(i)

Disability of Optionee.  In the event an Optionee's Continuous Status as an Employee, Director or Consultant terminates as a result of the Optionee's Disability, the Optionee may exercise his or her Option, but only within twelve (12) months from the date of such termination (or such shorter period specified in the Option Agreement), and only to the extent that the Optionee was entitled to exercise it at the date of such termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement).  If, at the date of termination, the Optionee is not entitled to exercise his of her entire Option, the shares covered by the unexercisable portion of the Option shall revert to the Plan.  If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to the Plan.

(j)

Death of Optionee.  In the event of the death of an Optionee, the Option may be exercised, at any time within sixteen (16) months following the date of death (or such other period specified in the Option Agreement but in no event later than the expiration of the term of such Option as set forth in the Option Agreement), by the Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent the Optionee was entitled to exercise the Option at the date of death.  If, at the time of death, the Optionee was not entitled to exercise his or her entire Option, the shares covered by the unexercisable portion of the Option shall revert to the Plan.  If, after death, the Optionee's estate or a person who acquired the right to exercise the Option by bequest or inheritance does not exercise the Option within the time specified herein, the Option shall terminate, and the shares covered by such Option shall revert to the Plan.

(k)

Termination of Employment or Relationship as an Officer, Director, Consultant or Advisor.  In the event that an Optionee who is an Employee, Officer, Director, Consultant or Advisor of the Company or its Affiliates shall cease to be employed by or perform services for the Company or its Affiliates prior to the Option's expiration date (other than upon the Optionee's death or Disability), the exercise of Options held by such Optionee shall be subject to such limitations on the periods of time during which such Options, except for Incentive Stock Options limitations under section 6(g)(i) herein, may be exercised as may be specified in the particular Option Agreement, as amended, between the Optionee and the Company.  Whether authorized leave of absence or absence for military or governmental service shall constitute termination of employment for purposes of the Plan shall be determined by the Board in their sole and exclusive discretion.  No provision of the Plan shall be construed so as to grant any individual the right to remain in the employ or service of the Company for any period of specific duration.

(l)

Recapitalization.

(i)

The number of shares issuable under the Plan and the number and amount of the Option Stock and the Option Price of outstanding Options may be proportionately adjusted by the Board, in its sole and exclusive discretion, for any increase or decrease in the number of issued shares of Stock resulting from a subdivision or consolidation of shares, or for the payment of a stock dividend, or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company in order to preclude the dilution or enlargement of benefits under the Plan.

(ii)

The Board, in its sole and exclusive discretion, may make such equitable adjustments to the Plan and outstanding Options as it deems appropriate in order to preclude the dilution or enlargement of benefits under the Plan, upon exchange of all of the outstanding stock of the Company for a different class or series of capital stock or the separation of assets of the Company, including a spin-off or other distribution of stock or property by the Company.

(iii)

If the Company shall be the surviving corporation in any merger or consolidation, each outstanding Option shall pertain to and apply to the securities to which a holder of the number of shares of Option Stock would have been entitled.  A dissolution or liquidation of the Company, a merger (other than a merger the principal purpose of which is to change the state of the Company's incorporation) or consolidation in which the Company is not the surviving corporation, a reverse merger in which the Company is the surviving corporation but the Company's Common Stock outstanding immediately preceding the merger is converted by virtue of the merger into other property, or other capital reorganization in which more than fifty percent (50%) of the Company's Common Stock is exchanged (unless the dissolution or liquidation plan, merger or consolidation agreement or capital reorganization corporate documents expressly provide to the contrary) shall cause each outstanding Option to terminate, provided, that each Optionee shall, immediately prior to such event, have the right to exercise his or her Option in whole or in part, unless the Option in connection with such event is either to be assumed by the successor corporation or parent thereof, or to be replaced with a comparable option to purchase shares of the capital stock of the successor corporation or parent thereof, or the Option is to be replaced by a comparable cash incentive program of the successor corporation based on the value of the Option on the date of such event.  Notwithstanding the preceding, if, within one (1) year from the date of such event, an Employee's employment is involuntarily terminated, then the Employee's outstanding Options, if any, shall become immediately exercisable.

(iv)

All adjustments required by the preceding paragraphs shall be made by the Board, whose determination in that respect shall be final, binding and conclusive, provided, that adjustments shall not be made in a manner that causes an Incentive Stock Option to fail to continue to qualify as an "incentive stock option" within the meaning of Code Section 422.

(v)

Except as expressly provided in this Paragraph 6(l), an Optionee shall have no rights by reason of any subdivision or consolidation of shares of stock of any class, or the payment of any stock dividend, or any other increase in the number of shares of stock of any class by reason of any dissolution, liquidation, merger, consolidation, reorganization, or separation of assets, and any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or amount of the Option Stock or the Option Price of outstanding Options.

(vi)

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

(m)

Rights as a Shareholder.  An Optionee shall not have rights as a shareholder with respect to any shares until the date of the issuance of a stock certificate to him or her for such shares.  No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date of issuance of such stock certificate, except as provided in Paragraph 6(l) above.

(n)

Modification, Extension and Renewal of Options.  Subject to the terms and conditions of the Plan, the Board may modify (including lowering the Option Price or changing Incentive Stock Options into Non-Statutory Stock Options), extend or renew outstanding Options granted under the Plan, or accept the surrender of outstanding Options under this Plan and/or other stock option plans of the Company (to the extent not previously exercised) and authorize the granting of new Options in substitution therefor.  Notwithstanding the foregoing, no modification of an Option shall, without the consent of the Optionee, alter or impair any rights or obligations under any Option previously granted under the Plan.

(o)

Securities Compliance.  The Company may require any Optionee, or any person to whom an Option is transferred under subsection 6(d), as a condition of exercising any such Option, (1) to give written assurances satisfactory to the Company as to the Optionee's knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters, and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Option; and (2) to give written assurances satisfactory to the Company stating that such person is acquiring the stock subject to the Option for such person's own account and not with any present intention of selling or otherwise distributing the stock.  These requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares upon the exercise of the Option has been registered under a then currently effective registration statement under the Securities Act of 1933, as amended (the "Securities Act"), or (ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws.  Unless an Optionee could otherwise exercise a Stock Option or dispose of Stock delivered upon exercise of a Stock Option granted under the Plan without incurring liability under Section 16(b) of the Exchange Act, at least six months shall elapse from the date of acquisition of the Stock Option to the date of disposition of its underlying Stock.

(p)

Transfer and Exercise of Options.  To the extent required by Code Section 422, each Incentive Stock Option shall state that it is not transferable or assignable by Optionee otherwise than by will or the laws of descent and distribution, and that during an Optionee's lifetime, such Incentive Stock Option shall be exercisable only by the Optionee.

(q)

Other Provisions.  Each Option Agreement may contain such other provisions, including without limitation, restrictions upon the exercise or transferability of the Option, as the Board may deem advisable.  Any Incentive Stock Option Agreement shall contain such limitations and restrictions upon the exercise of the Incentive Stock Option as shall be necessary in order that such Incentive Stock Option shall be an "incentive stock option" as defined in Code Section 422, or to conform to any change in the law.

(r)

Withholding Taxes.  When the Company becomes required to collect federal and state income and employment taxes in connection with the exercise of an Option ("withholding taxes"), the Optionee shall promptly pay to the Company the amount of such taxes in cash, unless the Board permits or requires payment in another form.  Subject to such conditions as it may require, the Board, in its sole discretion, may allow an Optionee to reimburse the Company for payment of withholding taxes with shares of Stock.  If an Optionee is a Reporting Person at the time of exercise and is given an election to pay any withholding taxes with Stock, the Board shall have sole discretion to approve or disapprove such election.

7.

Term of Plan.

The Board may suspend or terminate the Plan at any time.  Unless sooner terminated, the Plan shall not extend beyond a date ten (10) years from the date of adoption hereof by the Board.  No Incentive Stock Options or Non-statutory Stock Options may be granted under the Plan while the Plan is suspended or after it is terminated.  Rights and obligations under any Option granted while the Plan is in effect shall not be altered or impaired by suspension or termination of the Plan, except with the consent of the person to whom the Option was granted.

8.

Amendment of Plan.

With respect to any shares at the time not subject to Options, the Board may from time to time, insofar as permitted by law, suspend or discontinue the Plan or revise or amend the Plan in any respect whatsoever, except that, without approval of the stockholders, no such revision or amendment shall change the number of shares for which Options may be granted under the Plan, except as provided in Section 6(l), change the designation of the class of persons eligible to receive Options under the Plan, materially increase the benefits accruing to Optionees under the Plan, or decrease the price at which Incentive Stock Options may be granted.  Furthermore, without the approval of the stockholders, the Plan may not be amended in any manner that will cause Incentive Stock Options issued under it to fail to meet the requirements of "incentive stock options" as defined in Code Section 422.  The Board may amend the Plan from time to time to the extent necessary to comply with any applicable law, rule or other regulatory requirement.

9.

Application of Funds.

The proceeds received by the Company from the sale of Stock pursuant to the exercise of an Option will be used for general corporate purposes.

10.

No Obligation to Exercise Option.

The granting of an Option shall impose no obligation upon the Optionee to exercise such Option.

11.

Indemnification.

In addition to such other rights of indemnification as they may have as Directors, Employees or agents of the Company, the Directors, or any individuals who are delegated authority by the Board to administer the Plan, shall be indemnified by the Company against: (i) their reasonable expenses, including attorneys' fees actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Option granted thereunder; and (ii) against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company), or paid by them in satisfaction of a judgment in any such action,. suit or proceeding, except in actions to matters as to which it shall be adjudged in such action, suit or proceeding that such Director or individual is liable for negligence or misconduct in the performance of his duties; this indemnification is expressly conditioned upon the indemnified party, within ninety (90) days after institution of any such action, suit or proceeding, offering the Company in writing the opportunity, at its own expense, to handle and defend the same.

12.

Approval of Stockholders.

The portions of the Plan dealing with Incentive Stock Options shall not take effect unless approved by the stockholders of the Company's preferred (if any) and Common Stock, which approval must occur within a period commencing twelve (12) months before and ending twelve (12) months after the date the Plan is adopted by the Board.  Nothing in the Plan shall be construed to limit the authority of the Company to exercise its corporate rights and powers, including the right of the Company to grant Non-Statutory Options for proper corporate purposes.

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