Document:

Exhibit 10.3

 

BEHRINGER HARVARD OPPORTUNITY REIT II, INC.

2007 AMENDED AND RESTATED INCENTIVE AWARD PLAN

(ADOPTED DECEMBER 19, 2007)

 

 

Section 1.

PURPOSE

 

The
purpose of this Plan is to promote the interests of the Company by providing
the opportunity to purchase or receive Shares, or to receive compensation that
is based upon appreciation in the value of Shares to Eligible Recipients in
order to attract and retain Eligible Recipients by providing an incentive to
work to increase the value of Shares and a stake in the future of the Company
that corresponds to the stake of each of the Company’s stockholders.  The Plan provides for the grant of Incentive
Stock Options, Non-Qualified Stock Options, Restricted Stock Awards, Restricted
Stock Units,  Stock Appreciation Rights,
Dividend Equivalents and Other Stock-Based Awards to aid the Company in
obtaining these goals.

 

 

Section 2.

DEFINITIONS

 

Each
term set forth in this Section shall have the meaning set forth opposite
such term for purposes of this Plan and any Incentive Award Agreements under
this Plan (unless noted otherwise), and for purposes of such definitions, the
singular shall include the plural and the plural shall include the singular,
and reference to one gender shall include the other gender.  Note that some definitions may not be used in
this Plan, and may be inserted here solely for possible use in Incentive Award
Agreements issued under this Plan.

 

2.1           Affiliate means Behringer Harvard Holdings,
LLC, Behringer Harvard Partners, LLC, Harvard Property Trust, LLC, IMS, LLC,
Behringer Harvard Opportunity Advisors II LP, Behringer Securities LP, HPT
Management Services LP, Behringer Harvard Opportunity Management Services LLC,
Behringer Harvard Opportunity OP II LP, BHO Business Trust II and BHO II, Inc.

 

2.2           Board means
the Board of Directors of the Company.

 

2.3           Cause shall
mean an act or acts by an Eligible Recipient involving (a) the use for
profit or disclosure to unauthorized persons of confidential information or
trade secrets of the Company, a Parent or a Subsidiary, (b) the breach of
any contract with the Company, a Parent or a Subsidiary, (c) the violation
of any fiduciary obligation to the Company, a Parent or a Subsidiary, (d) the
unlawful trading in the securities of the Company, a Parent or a Subsidiary, or
of another corporation based on information gained as a result of the
performance of services for the Company, a Parent or a Subsidiary, (e) a
felony conviction or the failure to contest prosecution of a felony, or (f) willful
misconduct, dishonesty, embezzlement, fraud, deceit or civil rights violations,
or other unlawful acts.

 

2.4           Change of Control
means either of the following:

 

(a)           any transaction or series of
transactions pursuant to which the Company sells, transfers, leases, exchanges
or disposes of substantially all (i.e., at least
eighty-five percent (85%)) of its assets for cash or property, or for a
combination of cash and property, or for other consideration; or

 

(b)           any transaction pursuant to which
persons who are not current stockholders of the Company acquire by merger,
consolidation, reorganization, division or other business combination or
transaction, or by a purchase of an interest in the Company, an interest in the
Company so that after such transaction, the stockholders of the Company
immediately prior to such transaction no longer have a controlling (i.e., 50% or more) voting interest in the Company.

 

2.5           Code means
the Internal Revenue Code of 1986, as amended.

 

 

Behringer Harvard Opportunity REIT II, Inc.

2007 Incentive Award Plan

 

 

 

2.6           Committee
means any committee appointed by the Board to administer the Plan, as specified
in Section 5 hereof.  Any such
committee shall be comprised entirely of Directors or such other persons as
permitted under applicable law.

 

2.7           Common Stock
means the common stock of the Company.

 

2.8           Company
means Behringer Harvard Opportunity REIT II, Inc. a Maryland corporation,
and any successor to such organization.

 

2.9           Constructive Discharge
means a termination of employment with the Company by an Employee due to any of
the following events if the
termination occurs within thirty (30) days of such event:

 

(a)           Forced Relocation or Transfer.  The Employee may continue employment with the
Company, a Parent or a Subsidiary (or a successor employer), but such
employment is contingent on the Employee’s being transferred to a site of
employment which is located further than 50 miles from the Employee’s current
site of employment.  For this purpose, an
Employee’s site of employment shall be the site of employment to which they are
assigned as their home base, from which their work is assigned, or to which
they report, and shall be determined by the Committee in its sole discretion on
the basis of the facts and circumstances.

 

(b)           Decrease in Salary or Wages. 
The Employee may continue employment with the Company, a Parent or a
Subsidiary (or a successor employer), but such employment is contingent upon
the Employee’s acceptance of a salary or wage rate which is less than the
Employee’s prior salary or wage rate.

 

(c)           Significant and Substantial Reduction in Benefits.  The Employee may continue employment with the
Company, a Parent or a Subsidiary (or a successor employer), but such
employment is contingent upon the Employee’s acceptance of a reduction in the
pension, welfare or fringe benefits provided which is both significant and
substantial when expressed as a dollar amount or when expressed as a percentage
of the Employee’s cash compensation.  The
determination of whether a reduction in pension, welfare or fringe benefits is
significant and substantial shall be made on the basis of all pertinent facts
and circumstances, including the entire benefit (pension, welfare and fringe)
package provided to the Employee, and any salary or wages paid to the Employee.  However, notwithstanding the preceding, any
modification or elimination of benefits which results solely from the provision
of new benefits to an Employee by a successor employer as a result of a change
of the Employee’s employment from employment with the Company to employment
with such successor shall not be deemed a Significant and Substantial Reduction
in Benefits where such new benefits are identical to the benefits provided to
similarly situated Employees of the successor.

 

2.10         Director
means a member of the Board.

 

2.11         Dividend Equivalents
mean a right to receive payments based on the dividends paid by the Company to
its stockholders pursuant to the terms of Section 7.6.

 

2.12         Eligible Recipient
means an Employee and/or a Key Person.

 

2.13         Employee
means a common law employee of the Company, a Subsidiary, a Parent or an
Affiliate.

 

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

 

2.15         Exercise Price
means the price that shall be paid to purchase one (1) Share upon the exercise
of an Option granted under this Plan.

 

2.16         Fair Market Value
of each Share on any date means the price determined below as of the close of
business on such date (provided, however, if for any reason, the Fair Market
Value per share cannot be ascertained or is unavailable for such date, the Fair
Market Value per share shall be determined as of the nearest preceding date on
which such Fair Market Value can be ascertained):

 

2

 

(a)           If
the Share is listed or traded on any established stock exchange or a national
market system, including without limitation the National Market of the National
Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”)
System, its Fair Market Value shall be the closing sale price for the Share (or
the mean of the closing bid and ask prices, if no sales were reported), on such
exchange or system on the date of such determination, as reported in The Wall
Street Journal or such other source as the Board deems reliable; or

 

(b)           If
the Share is not listed or traded on any established stock exchange or a
national market system, its Fair Market Value shall be the average of the
closing dealer “bid” and “ask” prices of a Share as reflected on the NASDAQ
interdealer quotation system of the National Association of Securities Dealers, Inc.
on the date of such determination; or

 

(c)           In the absence of an established public trading
market for the Share, the Fair Market Value of a Share shall be determined in
good faith by the Board.

 

2.17         FLSA Exclusion means
the provisions of Section 7(e) of the Fair Labor Standards Act of
1938 (the “FLSA”) that exempt certain stock-based compensation from inclusion
in overtime determinations under the FLSA.

 

2.18         Incentive Award
means an ISO, a NQSO, a Restricted Stock Award, a Restricted Stock Unit, a
Stock Appreciation Right, a Dividend Equivalent or an Other Stock-Based Award.

 

2.19         Incentive Award Agreement
means an agreement between the Company, a Parent or a Subsidiary, and a
Participant evidencing an award of an Incentive Award.

 

2.20         Insider
means an individual who is, on the relevant date, an officer, director or ten
percent (10%) beneficial owner of any class of the Company’s equity securities
that is registered pursuant to Section 12 of the Exchange Act, all as
defined under Section 16 of the Exchange Act.

 

2.21         ISO means
an option granted under this Plan to purchase Shares that is intended by the
Company to satisfy the requirements of Code §422 as an incentive stock option.

 

2.22         Key Person
means (1) a member of the Board who is not an Employee, or (2) a
consultant or advisor; provided, however, that such consultant or advisor must
be a natural person who is providing or will be providing bona fide
services to the Company, a Subsidiary, a Parent or an Affiliate, with such
services (1) not being in connection with the offer or sale of securities
in a capital-raising transaction, and (2) not directly or indirectly
promoting or maintaining a market for securities of the Company, a Subsidiary,
a Parent or an Affiliate, within the meaning of the general instructions to SEC
Form S-8.

 

2.23         Non-Employee Director
means a Director who is not also an Employee.

 

2.24         NQSO means
an option granted under this Plan to purchase Shares that is not intended by
the Company to satisfy the requirements of Code §422.

 

2.25         Option
means an ISO or a NQSO.

 

2.26         Other Stock-Based Awards
means such other Incentive Awards other than those specifically described in
the Plan that may be denominated or payable in, valued in whole or in part by
reference to, or otherwise based on, or related to, Shares and granted pursuant
to the terms of Section 7.7.

 

2.27         Outside Director
means a Director who is not an Employee and, effective upon the Company
registering any of its equity securities under the 1934 Act, who qualifies as (1) a
“non-employee director” under Rule 16b-3(b)(3) under the 1934 Act, as
amended from time to time, and (2) an “outside director” under Code §162(m) and
the regulations promulgated thereunder.

 

3

 

2.28         Parent
means any corporation (other than the corporation employing a Participant) in
an unbroken chain of corporations ending with the corporation employing a
Participant if, at the time of the granting of the Incentive Award, each of the
corporations other than the corporation employing the Participant owns stock
possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporation in such chain.  However, for purposes of interpreting any
Incentive Award Agreement issued under this Plan as of a date of determination,
Parent shall mean any corporation (other than the corporation employing a
Participant) in an unbroken chain of corporations ending with the corporation
employing a Participant if, at the time of the granting of the Incentive Award
and thereafter through such date of determination, each of the corporations
other than the corporation employing the Participant owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes
of stock in one of the other corporation in such chain.

 

2.29         Participant
means an individual who receives an Incentive Award hereunder.

 

2.30         Performance-Based
Exception means the performance-based exception from the tax
deductibility limitations of Code §162(m).

 

2.31         Plan means
the Behringer Harvard Opportunity REIT II, Inc. 2007 Incentive Award Plan,
as may be amended from time to time.

 

2.32         Restricted Stock Award
means an award of Shares granted to a Participant under this Plan whereby the
Participant has immediate rights of ownership in the Shares underlying the
award, but such Shares are subject to restrictions in accordance with the terms
and provisions of this Plan and the Incentive Award Agreement pertaining to the
award and may be subject to forfeiture by the individual until the earlier of (a) the
time such restrictions lapse or are satisfied, or (b) the time such shares
are forfeited, pursuant to the terms and provisions of the Incentive Award
Agreement pertaining to the award.

 

2.33         Restricted Stock Unit means a
contractual right granted to a Participant under this Plan to receive a Share
that is subject to restrictions of this Plan and the applicable Incentive Award
Agreement.

 

2.34         SAR Exercise Price
means the amount per Share specified in an Incentive Award Agreement with
respect to a Stock Appreciation Right, the excess of the Fair Market Value of a
Share over and above such amount, the holder of such Stock Appreciation Right
may be able to receive upon the exercise or payment of such Stock Appreciation
Right.

 

2.35         Share means
a share of the Common Stock of the Company.

 

2.36         Stock Appreciation Right
means a right granted to a Participant pursuant to the terms and provisions of
this Plan whereby the individual, without payment to the Company (except for
any applicable withholding or other taxes), receives cash, Shares, a
combination thereof, or such other consideration as the Board may determine, in
an amount equal to the excess of the Fair Market Value per Share on the date on
which the Stock Appreciation Right is exercised over the exercise price per
Share noted in the Stock Appreciation Right for each Share subject to the Stock
Appreciation Right.

 

2.37         Subsidiary
means any corporation (other than the corporation employing such Participant)
in an unbroken chain of corporations beginning with the corporation employing
such Participant if, at the time of the granting of the Incentive Award, each
of the corporations other than the last corporation in the unbroken chain owns
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.  However, for purposes of interpreting any
Incentive Award Agreement issued under this Plan as of a date of determination,
Subsidiary shall mean any corporation (other than the corporation employing
such Participant) in an unbroken chain of corporations beginning with the
corporation employing such Participant if, at the time of the granting of the
Incentive Award and thereafter through such date of determination, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

 

4

 

 

2.38         Ten Percent Stockholder
means a person who owns (after taking into account the attribution rules of
Code §424(d)) more than ten percent (10%) of the total combined voting power of
all classes of shares of stock of either the Company, a Subsidiary or a Parent.

 

 

Section 3.

SHARES
SUBJECT TO INCENTIVE AWARDS

 

3.1           Shares Subject to
Incentive Awards.  The total
number of Shares that may be issued pursuant to Incentive Awards under this
Plan (and the total number of Shares that may be issued pursuant to the
exercise of ISOs under this Plan) shall not exceed ten million, as adjusted
pursuant to Section 10.  Such Shares
shall be reserved, to the extent that the Company deems appropriate, from
authorized but unissued Shares, and from Shares which have been reacquired by
the Company.

 

3.2           Availability of Shares not
Delivered.  Any Shares
subject to an Incentive Award that have not been issued under such Incentive
Award as of the date of  the
cancellation, expiration or exchange of such Incentive Award thereafter shall
again become available for grant under this Plan.   If any Shares issued pursuant to an
Incentive Award are forfeited back to or repurchased by the Company, including,
but not limited to, any repurchase or forfeiture caused by the failure to meet
a contingency or condition required for the vesting of such Shares, then the
Shares forfeited back or repurchased shall revert to and again become available
for issuance under the Plan.

 

If any Incentive Award,
is settled for cash or otherwise does not result in the issuance of all or a
portion of the Shares subject to such Incentive Award, the Shares shall, to the
extent of such cash settlement or non-issuance, again be available for grant
under the Plan, subject to the last sentence of this paragraph.  Subject to the last sentence of this
paragraph, in the event that any Incentive Award granted hereunder is exercised
through the tendering of  Shares (either
actually or by attestation) or by the withholding of Shares by the Company, or
withholding tax liabilities arising from such Incentive Award are satisfied by
the tendering of Shares (either actually or by attestation) or by the
withholding of Shares by the Company, then only the number of Shares issued net
of the Shares tendered or withheld shall be counted for purposes of determining
the number of Shares issued under the Award and any Shares not tendered or
withheld shall not be considered issued and shall again be available under the
Plan.  Notwithstanding anything in this Section 3.2
to the contrary and solely for purposes of determining whether Shares are
available for the grant of ISOs, the maximum aggregate number of shares that
may be granted under this Plan shall be determined without regard to any Shares
restored pursuant to this Section 3.2 that, if taken into account, would
cause the Plan to fail the requirement under Code Section 422 that the
Plan designate a maximum aggregate number of shares that may be issued.

 

3.3           Annual Limitation on
Grants to Participants.  
Notwithstanding anything herein to the contrary, after Incentive Awards
granted under the Plan are subject to the tax deductibility limitations of Section 162(m) of
the Code, no Participant may be granted Incentive Awards covering an aggregate
number of Shares in excess of five million in any calendar year, and any Shares
subject to an Incentive Award which again become available for use under this
Plan after the cancellation, expiration or exchange of such Incentive Award
thereafter shall continue to be counted in applying this calendar year
Participant limitation.

 

 

Section 4.

EFFECTIVE
DATE

 

The
effective date of this Plan shall be the date it is adopted by the Board, as
noted in resolutions effectuating such adoption, provided the stockholders of
the Company approve this Plan within twelve (12) months after such effective
date.  If such effective date comes before
such stockholder approval, any Incentive Awards granted under this Plan before
the date of such approval automatically shall be granted subject to such
approval.

 

 

Section 5.

ADMINISTRATION

 

5.1           General Administration.  This Plan shall be administered by the
Board.  The Board, acting in its absolute
discretion, shall exercise such powers and take such action as expressly called
for under this Plan.  The Board shall
have the 

 

5

 

power to interpret this Plan and, subject to the terms and
provisions of this Plan, to take such other action in the administration and
operation of the Plan as it deems equitable under the circumstances.  The Board’s actions shall be binding on the
Company, on each affected Eligible Recipient, and on each other person directly
or indirectly affected by such actions.

 

5.2           Authority of the Board.  Except as limited by law or by the Articles
of Incorporation or Bylaws of the Company, and subject to the provisions
herein, the Board shall have full power to select Eligible Recipients who shall
participate in the Plan, to determine the sizes and types of Incentive Awards
in a manner consistent with the Plan, to determine the terms and conditions of
Incentive Awards in a manner consistent with the Plan, to construe and
interpret the Plan and any agreement or instrument entered into under the Plan,
to establish, amend or waive rules and regulations for the Plan’s
administration, and to amend the terms and conditions of any outstanding
Incentive Awards as allowed under the Plan and such Incentive Awards.  Further, the Board may make all other
determinations that may be necessary or advisable for the administration of the
Plan.

 

5.3           Delegation of Authority.  The Board may delegate its authority under
the Plan, in whole or in part, to a Committee appointed by the Board consisting
of  not less than one (1) Director
or to a Committee of one or more other persons to whom the powers of the Board
hereunder may be delegated in accordance with applicable law.  The members of the Committee and any other
persons to whom authority has been delegated shall be appointed from time to
time by, and shall serve at the discretion of, the Board.  The Committee or other delegate (if
appointed) shall act according to the policies and procedures set forth in the
Plan and to those policies and procedures established by the Board, and the
Committee or other delegate shall have such powers and responsibilities as are
set forth by the Board.  Reference to the
Board in this Plan shall specifically include reference to the Committee or
other delegate where the Board has delegated its authority to the Committee or
other delegate, and any action by the Committee or other delegate pursuant to a
delegation of authority by the Board shall be deemed an action by the Board under
the Plan.  Notwithstanding the above, the
Board may assume the powers and responsibilities granted to the Committee or
other delegate at any time, in whole or in part.  With respect to Committee appointments and
composition, only a Committee (or a sub-committee thereof) comprised solely of
two (2) or more Outside Directors may grant Incentive Awards that will
meet the Performance-Based Exception, and only a Committee comprised solely of
Outside Directors may grant Incentive Awards to Insiders that will be exempt
from Section 16(b) of the Exchange Act.

 

5.4           Decisions Binding.  All determinations and decisions made by the
Board (or its delegate) pursuant to the provisions of this Plan and all related
orders and resolutions of the Board shall be final, conclusive and binding on
all persons, including the Company, its stockholders, Directors, Eligible
Recipients, Participants, and their estates and beneficiaries.

 

5.5           Indemnification for Decisions. No member of the
Board, the Committee (or a sub-committee thereof) shall be liable in connection with or by reason of any act or omission performed or
omitted to be performed on behalf of the Company in such capacity, provided,
that the Board has determined, in good faith, that the course of conduct that
caused the loss or liability was in the best interests of the Company.  Service on the Committee (or a sub-committee
thereof) shall constitute service as a Director or an officer (as applicable)
of the Company so that the members of the Committee (or a sub-committee
thereof) shall be entitled to indemnification and reimbursement as Directors or
officers, as applicable, of the Company pursuant to its articles of
incorporation, bylaws and applicable law. 
In addition, the members of the Board, Committee (or a sub-committee
thereof) shall be indemnified by the Company against the following losses or
liabilities reasonably incurred in connection with or by reason of any act or
omission performed or omitted to be performed on behalf of the Company in such
capacity, provided, that the Board has determined, in good faith, that the
course of conduct which caused the loss or liability was in the best interests
of the Company:  (a) the reasonable
expenses, including attorneys’ fees actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, 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, any Incentive Award granted hereunder,
and (b) 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 relation to matters as to which it shall be adjudged
in such action, suit or proceeding that such individual is liable for gross
negligence or misconduct in the performance of his duties, provided that within
60 days after institution of any such action, suit or proceeding a Committee
member or delegatee shall in writing offer the Company the opportunity, at its
own expense, to handle and defend the same. 
The Company shall not indemnify or hold 

 

6

 

harmless the member of the Board or the Committee
(or a subcommittee thereof) if: (a) in the case of a Director or other
person (other than an independent Director), the loss or liability was the
result of negligence or misconduct by the Director or other person, or (b) in
the case that the Director is an independent Director, the loss or liability
was the result of gross negligence or willful misconduct by the Director.  Any indemnification of expenses or agreement
to hold harmless may be paid only out of the net assets of the Company, and no
portion may be recoverable from the Stockholders.

 

 

Section 6.

ELIGIBILITY

 

Eligible
Recipients selected by the Board shall be eligible for the grant of Incentive
Awards under this Plan, but no Eligible Recipient shall have the right to be
granted an Incentive Award under this Plan merely as a result of his or her
status as an Eligible Recipient.  Only
Employees of the Company, a Parent or a Subsidiary, shall be eligible to
receive a grant of ISO’s.

 

 

Section 7.

TERMS OF INCENTIVE AWARDS

 

7.1           Terms and Conditions of All Incentive Awards.

 

(a)           Grants of Incentive Awards. 
The Board, in its absolute discretion, shall grant Incentive Awards
under this Plan from time to time and shall have the right to grant new
Incentive Awards in exchange for outstanding Incentive Awards, including, but
not limited to, exchanges of Stock Options for the purpose of achieving a lower
Exercise Price.  Incentive Awards shall
be granted to Eligible Recipients selected by the Board, and the Board shall be
under no obligation whatsoever to grant any Incentive Awards, or to grant
Incentive Awards to all Eligible Recipients, or to grant all Incentive Awards
subject to the same terms and conditions.

 

(b)           Shares Subject to
Incentive Awards.  The number
of Shares as to which an Incentive Award shall be granted shall be determined
by the Board in its sole discretion, subject to the provisions of Section 3
as to the total number of Shares available for grants under the Plan.

 

(c)           Incentive Award
Agreements.  Each Incentive
Award shall be evidenced by an Incentive Award Agreement executed by the
Company, a Parent or a Subsidiary, and the Participant, which shall be in such
form and contain such terms and conditions as the Board in its discretion may,
subject to the provisions of the Plan, from time to time determine.

 

(d)           Date of Grant.  The date an Incentive Award is granted shall
be the date on which the Board (1) has approved the terms and conditions
of the Incentive Award Agreement, (2) has determined the recipient of the
Incentive Award and the number of Shares covered by the Incentive Award and (3) has
taken all such other action necessary to direct the grant of the Incentive
Award.

 

7.2                                 Terms and Conditions of Options.

 

(a)           Necessity of Incentive Award Agreements.  Each grant of an Option shall be evidenced by
an Incentive Award Agreement that shall specify whether the Option is an ISO or
NQSO, and incorporate such other terms and conditions as the Board, acting in
its absolute discretion, deems consistent with the terms of this Plan,
including (without limitation) a restriction on the number of Shares subject to
the Option that first become exercisable during any calendar year.  The Board and/or the Company shall have
complete discretion to modify the terms and provisions of an Option in
accordance with Section 12 of this Plan even though such modification may
change the Option from an ISO to a NQSO.

 

(b)           Determining Optionees. 
In determining Eligible Recipient(s) to whom an Option shall be
granted and the number of Shares to be covered by such Option, the Board may
take into account the recommendations of the Chief Executive Officer of the
Company and its other officers, the duties of the Eligible Recipient, the
present and potential contributions of the Eligible Recipient to the success of
the Company, and other factors deemed relevant by the Board, in its sole
discretion, in connection with accomplishing the purpose of this Plan.  An Eligible Recipient who has

 

7

 

been granted an Option to purchase Shares, whether under
this Plan or otherwise, may be granted one or more additional Options.  If the Board grants an ISO and a NQSO to an
Eligible Recipient on the same date, the right of the Eligible Recipient to
exercise one such Option shall not be conditioned on his or her failure to
exercise the other such Option.

 

(c)           Exercise Price. 
Subject to adjustment in accordance with Section 10 and the other
provisions of this Section, the Exercise Price shall be as set forth in the
applicable Incentive Award Agreement.  With respect to each grant of an
ISO to a Participant who is not a Ten Percent Stockholder, the Exercise Price
shall not be less than the Fair Market Value on the date the ISO is
granted.  With respect to each grant of
an ISO to a Participant who is a Ten Percent Stockholder, the Exercise Price
shall not be less than one hundred ten percent (110%) of the Fair Market Value
on the date 

 

the ISO is granted. 
If an Option is a NQSO, the Exercise Price for each Share shall be no
less than the Fair Market Value on the date the NQSO is granted, provided that
an NQSO may be granted with any exercise price less than the Fair Market Value,
so long as the NQSO contains (i) such additional terms as necessary to
comply with or be exempt under Section 409A of the Code; (ii) the
exercise price is equal to or greater than the minimum price required by
applicable state law or the minimum price required by the Company’s governing
instrument and (iii) if the NQSO is intended to meet the FLSA Exclusion,
the NQSO must be granted with an Exercise Price equivalent to or greater than
eighty-five percent (85%) of the Fair Market Value of the Shares subject
thereto on the date granted determined as of the date of such grant. Any Option
intended to meet the Performance-Based Exception must be granted with an
Exercise Price equal to or greater than the Fair Market Value of the Shares
subject thereto determined as of the date of such grant.

 

(d)           Option Term.  Each Option granted under this Plan shall
be exercisable in whole or in part at such time or times as set forth in the
related Incentive Award Agreement, but no Incentive Award Agreement shall:

 

(i)            make
an Option exercisable before the date such Option is granted; or

 

(ii)           make
an Option exercisable after the earlier of:

 

(A)                              the date such Option is exercised in
full; or

 

(B)           the date that is the tenth (10th)
anniversary of the date such Option is granted, if such Option is a NQSO or an
ISO granted to a non-Ten Percent Stockholder, or the date that is the fifth
(5th) anniversary of the date such Option is granted, if such Option is an ISO
granted to a Ten Percent Stockholder.  An
Incentive Award Agreement may provide for the exercise of an Option after the
employment of an Employee has terminated for any reason whatsoever, including
death or disability.  The Employee’s
rights, if any, upon termination of employment will be set forth in the
applicable Incentive Award Agreement.

 

(e)           Payment. 
Options shall be exercised by the delivery of a written notice of exercise to
the Company, setting forth the number of Shares with respect to which the
Option is to be exercised accompanied by full payment for the Shares.  Payment for shares of Stock purchased
pursuant to exercise of an Option shall be made in (i) cash (including by
check or money order), (ii) unless the Incentive Award Agreement provides
otherwise, by delivery to the Company of a number of Shares (either previously
owned Shares or Shares from those to be received upon exercise of the Option
(i.e., a “net exercise”)) having an aggregate Fair Market Value equal to the
amount to be tendered to the extent the use of such Shares does not have any
adverse consequences to the Company for financial accounting purposes (as
determined by the Committee), (iii) any other legal form of consideration
deemed acceptable by the Board, or (iv) a combination thereof.  In addition, unless the Incentive Award
Agreement provides otherwise, the Option may be exercised through a brokerage
transaction following registration of the Company’s equity securities under Section 12
of the Exchange Act as permitted under the provisions of Regulation T
applicable to cashless exercises promulgated by the Federal Reserve Board,
unless prohibited by Section 402 of the Sarbanes-Oxley Act of 2002.  However, notwithstanding the foregoing, with
respect to any Option recipient who is an Insider, a tender of shares or a
cashless exercise must (1) have met the requirements of an exemption under
Rule 16b-3 promulgated under the Exchange Act, or (2) be a subsequent
transaction the terms of which were provided for in a transaction initially
meeting the requirements of an exemption under Rule 16b-3 promulgated
under the Exchange Act. Unless the Incentive Award Agreement provides
otherwise, the foregoing exercise payment methods shall be subsequent
transactions approved by the original grant of an Option.  Except as provided in subparagraph (f) below,
payment shall be made at the time that the Option or any part thereof is
exercised, and no Shares 

 

8

 

shall be issued or
delivered upon exercise of an Option until full payment has been made by the
Participant.  The holder of an Option, as such, shall have none of the
rights of a stockholder.

 

(f)            Conditions to Exercise of
an Option.  Each Option granted under the Plan shall vest and
shall be exercisable at such time or times, or upon the occurrence of such
event or events, and in such amounts, as the Board shall specify in the
Incentive Award Agreement; provided, however, that subsequent to the grant of
an Option, the Board, at any time before complete termination of such Option,
may accelerate the time or times at which such Option may vest or be exercised
in whole or in part.  Notwithstanding the
foregoing, an Option intended to meet the FLSA Exclusion shall not be
exercisable for at least six (6) months following the date it is granted,
except by reason of death, disability, retirement, a change in corporate
ownership or other circumstances permitted under regulations promulgated under
the FLSA Exclusion.  Furthermore, if the
recipient of an Option receives a hardship distribution from a Code §401(k) plan
of the Company, or any Parent or Subsidiary, the Option may not be exercised
during the six (6) month period following the hardship distribution,
unless the Company determines that such exercise would not jeopardize the
tax-qualification of the Code §401(k) plan.  The Board may impose such restrictions on any
Shares acquired pursuant to the exercise of an Option as it may deem advisable,
including, without limitation, vesting or performance-based restrictions,
rights of the Company to re-purchase Shares acquired pursuant to the exercise
of an Option, voting restrictions, investment intent restrictions, restrictions
on transfer, “first refusal” rights of the Company to purchase Shares acquired
pursuant to the exercise of an Option prior to their sale to any other person, “drag
along” rights requiring the sale of shares to a third party purchaser in
certain circumstances, “lock up” type restrictions in the case of an initial
public offering of the Company’s stock, restrictions or limitations or other
provisions that would be applied to stockholders under any applicable agreement
among the stockholders, and restrictions under applicable federal securities
laws, under the requirements of any stock exchange or market upon which such
Shares are then listed and/or traded, and/or under any blue sky or state
securities laws applicable to such Shares.

 

(g)           Transferability of Options. 
An Option shall not be transferable or assignable except by will or by the laws
of descent and distribution and shall be exercisable, during the Participant’s
lifetime, only by the Participant; provided, however, that in the event the
Participant is incapacitated and unable to exercise his or her Option, if such
Option is a NQSO, such Option may be exercised by such Participant’s legal
guardian, legal representative, or other representative whom the Board deems
appropriate based on applicable facts and circumstances.  The determination of incapacity of a
Participant and the determination of the appropriate representative of the
Participant who shall be able to exercise the Option if the Participant is
incapacitated shall be determined by the Board in its sole and absolute
discretion.  Notwithstanding the
foregoing, except as otherwise provided in the Incentive Award Agreement, a
NQSO may also be transferred by a Participant as a bona fide gift (i) to
his spouse, lineal descendant or lineal ascendant, siblings and children by
adoption, (ii) to a trust for the benefit of one or more individuals
described in clause (i) and no other persons, or (iii) to a
partnership of which the only partners are one or more individuals described in
clause (i), in which case the transferee shall be subject to all provisions of
the Plan, the Incentive Award Agreement and other agreements with the
Participant in connection with the exercise of the Option and purchase of
Shares.  In the event of such a gift, the
Participant shall promptly notify the Board of such transfer and deliver to the
Board such written documentation as the Board may in its discretion request,
including, without limitation, the written acknowledgment of the donee that the
donee is subject to the provisions of the Plan, the Incentive Award Agreement
and other agreements with the Participant.

 

(h)           Special Provisions for
Certain Substitute Options.  Notwithstanding anything to the
contrary in this Section, any Option in substitution for a stock option
previously issued by another entity, which substitution occurs in connection
with a transaction to which Code §424(a) is applicable, may provide
for an exercise price computed in accordance with Code §424(a) and the
regulations thereunder and may contain such other terms and conditions as the
Board may prescribe to cause such substitute Option to contain as nearly as
possible the same terms and conditions (including the applicable vesting and
termination provisions) as those contained in the previously issued stock
option being replaced thereby.

 

(i)            ISO Tax Treatment
Requirements.  With respect to
any Option that purports to be an ISO, to the extent that the aggregate Fair
Market Value (determined as of the date of grant of such Option) of stock with
respect to which such Option is exercisable for the first time by any
individual during any calendar year exceeds one hundred thousand dollars
($100,000.00), such Option shall not be treated as an ISO in accordance with
Code §422(d) and instead shall be treated as a NQSO.  The rule of the preceding sentence is
applied in the order in which Options are granted.

 

9

 

 

 

(j)            Potential
Repricing of Stock Options. 
With respect to any Option granted pursuant to, and under, this Plan,
the Board (or a committee thereof) may determine that the repricing of all or
any portion of existing outstanding Options is appropriate without the need for
any additional approval of the Stockholders of the Company.  For this purpose, “repricing” of Options
shall include, but not be limited to, any of the following actions (or any
similar action): (1) lowering the Exercise Price of an existing Option; (2) any
action which would be treated as a “repricing” under generally accepted
accounting principles; or (3) canceling of an existing Option at a time
when its Exercise Price exceeds the Fair Market Value of the underlying stock
subject to such Option, in exchange for another Option, a Restricted Stock
Award, or other equity in the Company.

 

7.3           Terms
and Conditions of Stock Appreciation Rights.  A Stock
Appreciation Right may be granted in connection with all or any portion of a
previously or contemporaneously granted Option or not in connection with an
Option.  A Stock Appreciation Right shall entitle the Participant to
receive upon exercise or payment the excess of the Fair Market Value of a
specified number of Shares at the time of exercise, over a SAR Exercise
Price that shall be not less than the Exercise Price for that number of Shares
in the case of a Stock Appreciation Right granted in connection with a
previously or contemporaneously granted Option, or in the case of any other
Stock Appreciation Right, not less than one hundred percent (100%) of the Fair
Market Value of that number of Shares at the time the Stock Appreciation Right
was granted.  The exercise of a Stock
Appreciation Right shall result in a pro rata surrender of the related Option
to the extent the Stock Appreciation Right has been exercised.

 

(a)           Payment.  Upon exercise or payment of a Stock
Appreciation Right, the Company shall pay to the Participant the appreciation
in cash or Shares (at the aggregate Fair Market Value on the date of payment or
exercise) as provided in the Incentive Award Agreement or, in the absence of
such provision, as the Board may determine.

 

(b)           Conditions to Exercise.  Each Stock Appreciation Right granted under
the Plan shall be exercisable at such time or times, or upon the occurrence of
such event or events, and in such amounts, as the Board shall specify in the
Incentive Award Agreement; provided, however, that subsequent to the grant of a
Stock Appreciation Right, the Board, at any time before complete termination of
such Stock Appreciation Right, may accelerate the time or times at which such
Stock Appreciation Right may be exercised in whole or in part.  Furthermore,
if the recipient of a Stock Appreciation Right receives a hardship distribution
from a Code §401(k) plan of the Company, or any Parent or Subsidiary, the
Stock Appreciation Right may not be exercised during the six (6) month
period following the hardship distribution, unless the Company determines that
such exercise would not jeopardize the tax-qualification of the Code §401(k) plan.

 

(c)           Transferability of Stock
Appreciation Rights.  Except
as otherwise provided in a Participant’s Incentive Award Agreement, no Stock
Appreciation Right granted under the Plan may be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. 
Further, except as otherwise provided in a Participant’s Incentive Award
Agreement, all Stock Appreciation Rights granted to a Participant under the
Plan shall be exercisable, during the Participant’s lifetime, only by the
Participant; provided, however,
that in the event the Participant is incapacitated and unable to exercise his
or her Stock Appreciation Right, such Stock Appreciation Right may be exercised
by such Participant’s legal guardian, legal representative, or other
representative whom the Board deems appropriate based on applicable facts and
circumstances in accordance with the terms and provisions of the Incentive
Award Agreement governing such Stock Appreciation Right.  The determination of incapacity of a
Participant and the determination of the appropriate representative of the
Participant shall be determined by the Board in its sole and absolute
discretion.  Notwithstanding the
foregoing, except as otherwise provided in the Incentive Award Agreement, (A) a
Stock Appreciation Right which is granted in connection with the grant of a
NQSO may be transferred, but only with the NQSO, and (B) a Stock
Appreciation Right which is not granted in connection with the grant of a NQSO,
may be transferred by the Participant as a bona fide gift (i) to his
spouse, lineal descendant or lineal ascendant, siblings and children by
adoption, (ii) to a trust for the benefit of one or more individuals
described in clause (i), or (iii) to a partnership of which the only
partners are one or more individuals described in clause (i), in which case the
transferee shall be subject to all provisions of the Plan, the Incentive Award
Agreement and other agreements with the Participant in connection with the
exercise of the Stock Appreciation Right. 
In the event of such a gift, the Participant shall promptly notify the
Board of such transfer and deliver to the Board such written documentation as
the Board may in its discretion request, including, without limitation, the
written acknowledgment of the donee that the donee is subject to the provisions
of the Plan, the Incentive Award Agreement and other agreements with the
Participant in connection with the exercise of the Stock Appreciation Right.

 

10

 

(d)           Special Provisions for
Tandem SAR’s.  A Stock
Appreciation Right granted in connection with an Option may only be exercised
to the extent that the related Option has not been exercised.  A Stock Appreciation Right granted in
connection with an ISO (1) will expire no later than the expiration of the
underlying ISO, (2) may be for no more than the difference between the
exercise price of the underlying ISO and the Fair Market Value of the Shares
subject to the underlying ISO at the time the Stock Appreciation Right is
exercised, (3) may be transferable only when, and under the same
conditions as, the underlying ISO is transferable, and (4) may be
exercised only (i) when the underlying ISO could be exercised and (ii) when
the Fair Market Value of the Shares subject to the ISO exceeds the exercise
price of the ISO.

 

(e)           Code
§409A Requirements.  A Stock
Appreciation Right must meet certain restrictions contained in Code §409A if it
is to avoid taxation under Code §409A
as a “nonqualified deferred compensation plan.” 
No Stock Appreciation Right should be granted under this Plan without
careful consideration of the impact of Code §409A with respect to such grant
upon both the Company and the recipient of the Stock Appreciation Right.

 

7.4           Terms
and Conditions of Restricted Stock Awards.

 

(a)             Grants
of Restricted Stock Awards. 
Shares awarded pursuant to Restricted Stock Awards shall be subject to
such restrictions as determined by the Board for periods determined by the
Board.  Restricted Stock Awards issued under the Plan may have
restrictions which lapse based upon the service of a Participant, or based upon
the attainment (as determined by the Board) of performance goals established by
the Board, which goals shall be pursuant to the business criteria listed in Section 14
to the extent the Board intends the Restricted Stock Award to meet the
Performance-Based Exception, or based upon any other criteria that the Board may
determine appropriate.  Any Restricted
Stock Award which becomes exercisable based on the attainment of performance
goals must be granted by a Committee, must have its performance goals
determined by such a Committee based upon one or more of the business criteria
listed in Section 14, and must have the attainment of such performance
goals certified in writing by such a Committee in order to meet the
Performance-Based Exception.  The Board
may require a cash payment from the Participant in exchange for the grant of a
Restricted Stock Award or may grant a Restricted Stock Award without the
requirement of a cash payment to the extent permitted under applicable law;
provided, however, if the recipient of a Restricted Stock Award receives a
hardship distribution from a Code §401(k) plan of the Company, or any
Parent or Subsidiary, the recipient may not pay any amount for such Restricted
Stock Award during the six (6) month period following the hardship
distribution, unless the Company determines that such payment would not
jeopardize the tax-qualification of the Code §401(k) plan.

 

(b)             Acceleration
of Award.  The Board shall
have the power to permit, in its discretion, an acceleration of the expiration
of the applicable restrictions or the applicable period of such restrictions
with respect to any part or all of the Shares awarded to a Participant.

 

(c)             Necessity
of Incentive Award Agreement. 
Each grant of a Restricted Stock Award shall be evidenced by an
Incentive Award Agreement that shall specify the terms, conditions and
restrictions regarding the Shares awarded to a Participant, and shall
incorporate such other terms and conditions as the Board, acting in its
absolute discretion, deems consistent with the terms of this Plan.  The Board shall have complete discretion to
modify the terms and provisions of Restricted Stock Awards in accordance with Section 12
of this Plan.

 

(d)             Restrictions
on Shares Awarded.  Shares
awarded pursuant to Restricted Stock Awards shall be subject to such
restrictions as determined by the Board for periods determined by the
Board.  The Board may impose such
restrictions on any Shares acquired pursuant to a Restricted Stock Award as it
may deem advisable, including, without limitation, vesting or performance-based
restrictions, rights of the Company to re-purchase Shares acquired pursuant to
the Restricted Stock Award, voting restrictions, investment intent
restrictions, restrictions on transfer, “first refusal” rights of the Company
to purchase Shares acquired pursuant to the Restricted Stock Award prior to
their sale to any other person, “drag along” rights requiring the sale of
shares to a third party purchaser in certain circumstances, “lock up” type
restrictions in connection with public offerings of the Company’s stock,
restrictions or limitations or other provisions that would be applied to
stockholders under any applicable agreement among the stockholders, and
restrictions under applicable federal securities laws, under the requirements
of any stock exchange or market upon which such Shares are then listed and/or
traded, and/or under any blue sky or state securities laws applicable to such
Shares.

 

11

 

(e)             Transferability
of Restricted Stock Awards.  Except
as otherwise permitted in the Incentive Award Agreement, a Restricted Stock
Award may not be transferred by the holder Participant, except upon the death
of the holder Participant by will or by the laws of descent and distribution.

 

(f)              Voting,
Dividend & Other Rights. 
Unless the applicable Incentive Award Agreement provides otherwise,
holders of Restricted Stock Awards shall be entitled to vote and shall receive
dividends during the periods of restriction.

 

7.5           Terms
and Conditions of Restricted Stock Units.

 

(a)           Grants
of Restricted Stock Units.  A
Restricted Stock Unit shall entitle the Participant to receive one Share at
such future time and upon such terms as specified by the Board in the Incentive
Award Agreement evidencing such award. 
Restricted Stock Units issued under the Plan may have restrictions which
lapse based upon the service of a Participant, or based upon other criteria
that the Board may determine appropriate. 
The Board may require a cash payment from the Participant in exchange
for the grant of Restricted Stock Units or may grant Restricted Stock Units
without the requirement of a cash payment; provided, however, if the recipient
of a Restricted Stock Unit receives a hardship distribution from a Code §401(k) plan
of the Company, or any Parent or Subsidiary, no payment for the Restricted
Stock Unit may be made by the recipient during the six (6) month period
following the hardship distribution, unless the Company determines that such
payment would not jeopardize the tax-qualification of the Code §401(k) plan.

 

(b)           Vesting of Restricted Stock Units.  The
Board shall establish the vesting schedule applicable to Restricted
Stock Units and shall specify the times, vesting and performance goal
requirements, if any.  Until the end of
the period(s) of time specified in the vesting schedule and/or the
satisfaction of any performance criteria, the Restricted Stock Units subject to
such Incentive Award Agreement shall remain subject to forfeiture.   The performance goals established by the
Board shall be pursuant to the terms and the business criteria listed in Section 14
to the extent the Board intends the Restricted Stock Unit to meet the
Performance-Based Exception.

 

(c)           Acceleration
of Award.  The Board shall
have the power to permit, in its sole discretion, an acceleration of the
applicable restrictions or the applicable period of such restrictions with
respect to any part or all of the Restricted Stock Units awarded to a
Participant.

 

(d)           Necessity
of Incentive Award Agreement. 
Each grant of Restricted Stock Unit(s) shall be evidenced by an
Incentive Award Agreement that shall specify the terms, conditions and
restrictions regarding the Participant’s right to receive Share(s) in the
future, and shall incorporate such other terms and conditions as the Board,
acting in its sole discretion, deems consistent with the terms of this
Plan.  The Board shall have sole
discretion to modify the terms and provisions of Restricted Stock Unit(s) in
accordance with Section 12 of this Plan.

 

(e)           Transferability
of Restricted Stock Units.  Except
as otherwise provided in a Participant’s Restricted Stock Unit Award, no
Restricted Stock Unit granted under the Plan may be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated by the holder Participant,
except upon the death of the holder Participant by will or by the laws of
descent and distribution.

 

(f)            Voting,
Dividend & Other Rights. 
Unless the applicable Incentive Award Agreement provides for dividend
equivalents pursuant to Section 7.5(h) below, holders of Restricted Stock
Units shall not be entitled to vote or to receive dividends until they become
owners of the Shares pursuant to their Restricted Stock Units.

 

(g)           Code
§409A Requirements.  A
Restricted Stock Unit must meet certain restrictions contained in Code §409A if
it is to avoid taxation under Code
§409A as a “nonqualified deferred compensation plan.”  Restricted Stock Units shall be granted with
terms that require the delivery of the Shares or cash, as applicable, no later
than two and one-half months after the respective Restricted Stock Units vest,
unless such Restricted Stock Units have been drafted to comply with or
otherwise be exempt from Code §409A.

 

(h)           Dividend Equivalents. 
Unless otherwise determined by the Board at date of grant, any Dividend
Equivalents that are granted with respect to any Award of Stock Units shall be
either (A) paid with respect to such Stock Units at the dividend payment
date in cash or in Shares of unrestricted Stock having a Fair Market Value
equal

 

12

 

to the amount of
such dividends or (B) deferred with respect to such Stock Units and the
amount or value thereof automatically deemed reinvested in additional Stock
Units, other Awards or other investment vehicles, as the Board shall determine
or permit the Participant to elect.

 

                7.6           Dividend Equivalents.
The Board is authorized to grant Dividend Equivalents to any Eligible Recipient
entitling the Eligible Recipient to receive cash, Shares, other Awards, or
other property equal in value to dividends paid with respect to a specified
number of Shares, or other periodic payments. Dividend Equivalents may be
awarded on a free-standing basis or in connection with another Incentive Award.
The terms of an award of Dividend Equivalents shall be set forth in a written
Incentive Award Agreement which shall contain provisions determined by the
Board and not inconsistent with the Plan. The Board may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to have
been reinvested in additional Stock, Awards, or other investment vehicles, and
subject to such restrictions on transferability and risks of forfeiture, as the
Board may specify. Notwithstanding any other provision of the Plan, unless
otherwise exempt from Section 409A of the Code or otherwise specifically
determined by the Board, each Dividend Equivalent shall be structured to avoid
the imposition of any excise tax under Section 409A of the Code.

 

                7.7           Other Stock-Based Awards.
The Board is authorized, subject to limitations under applicable law, to grant
to any Eligible Recipient such other Incentive Awards that may be denominated
or payable in, valued in whole or in part by reference to, or otherwise based
on, or related to, Shares, as deemed by the Board to be consistent with the
purposes of the Plan, including, without limitation, convertible or
exchangeable debt securities, other rights convertible or exchangeable into
Shares, purchase rights for Shares, Incentive Awards with value and payment
contingent upon performance of the Company or any other factors designated by
the Board, and Incentive Awards valued by reference to the book value of Shares
or the value of securities of or the performance of specified Affiliates or
business units. The Board shall determine the terms and conditions of such
Other Stock-Based Awards. The terms of any Incentive Award pursuant to this Section shall
be set forth in a written Incentive Award Agreement which shall contain
provisions determined by the Board and not inconsistent with the Plan. Shares
delivered pursuant to an Incentive Award in the nature of a purchase right
granted under this Section shall be purchased for such consideration
(including without limitation loans from the Company or an Affiliate), paid for
at such times, by such methods, and in such forms, including, without
limitation, cash, Shares, other Incentive Awards or other property, as the
Board shall determine.Cash awards, as an element of or supplement to any other
Award under the Plan, may also be granted pursuant to this Section. Notwithstanding
any other provision of the Plan, unless otherwise exempt from Section 409A
of the Code or otherwise specifically determined by the Board, each such Award
shall be structured to avoid the imposition of any excise tax under Section 409A
of the Code.

 

 

Section 8.

SECURITIES
REGULATION

 

Each
Incentive Award Agreement may provide that, upon the receipt of Shares as a
result of the exercise of an Incentive Award or otherwise, the Participant
shall, if so requested by the Company, hold such Shares for investment and not
with a view of resale or distribution to the public and, if so requested by the
Company, shall deliver to the Company a written statement satisfactory to the
Company to that effect.  Each Incentive Award
Agreement may also provide that, if so requested by the Company, the
Participant shall make a written representation to the Company that he or she
will not sell or offer to sell any of such Shares unless a registration
statement shall be in effect with respect to such Shares under the Securities
Act of 1933, as amended (“1933 Act”), and any applicable state securities law
or, unless he or she shall have furnished to the Company an opinion, in form
and substance satisfactory to the Company, of legal counsel acceptable to the
Company, that such registration is not required.  Certificates representing the Shares
transferred upon the exercise of an Incentive Award granted under this Plan may
at the discretion of the Company bear a legend to the effect that such Shares
have not been registered under the 1933 Act or any applicable state securities
law and that such Shares may not be sold or offered for sale in the absence of
an effective registration statement as to such Shares under the 1933 Act and
any applicable state securities law or an opinion, in form and substance
satisfactory to the Company, of legal counsel acceptable to the Company, that
such registration is not required.

 

13

 

Section 9.

LIFE OF PLAN

 

No Incentive Award shall be granted under this Plan on
or after the earlier of:

 

(a)           the
tenth (10th) anniversary of the effective date of this Plan (as determined
under Section 4 of this Plan), in which event this Plan otherwise
thereafter shall continue in effect until all outstanding Incentive Awards have
been exercised in full or no longer are exercisable; or

 

(b)           the
date on which all of the Shares reserved under Section 3 of this Plan have
(as a result of the exercise of Incentive Awards granted under this Plan or
lapse of all restrictions under a Restricted Stock Award or Restricted Stock
Unit) been issued or no longer are available for use under this Plan, in which
event this Plan also shall terminate on such date.

 

This Plan shall continue in effect until all
outstanding Incentive Awards have been exercised in full or are no longer
exercisable and all Restricted Stock Awards or Restricted Stock Units have
vested or been forfeited.

 

 

Section 10.

ADJUSTMENT
AND CORPORATE TRANSACTION

 

Notwithstanding
anything in Section 12 to the contrary, the number of Shares reserved
under Section 3 of this Plan, the limit on the number of Shares that may
be granted during a calendar year to any individual under Section 3 of
this Plan, the number of Shares subject to Incentive Awards granted under this
Plan, and the Exercise Price of any Options and the SAR Exercise Price of any
Stock Appreciation Rights, shall be adjusted by the Board in an equitable
manner to reflect any change in the capitalization of the Company, including,
but not limited to, such changes as stock dividends or stock splits.  Furthermore, the Board shall adjust (in a
manner that satisfies the requirements of Code §424(a)) the number of Shares
reserved under Section 3, and the number of Shares subject to Incentive
Awards granted under this Plan, and the Exercise Price of any Options and the
SAR Exercise Price of any Stock Appreciation Rights in the event of any
corporate transaction described in Code §424(a) that provides for the
substitution or assumption of such Incentive Awards.  If any adjustment under this Section creates
a fractional Share or a right to acquire a fractional Share, such fractional
Share shall be disregarded, and the number of Shares reserved under this Plan
and the number subject to any Incentive Awards granted under this Plan shall be
the next lower number of Shares, rounding all fractions downward.  An adjustment made under this Section by
the Board shall be conclusive and binding on all affected persons and, further,
shall not constitute an increase in the number of Shares reserved under Section 3.

 

In the
event of a corporate transaction described in Code §424(a) other than such
corporate transaction that also qualifies as a Change of Control, all Incentive
Awards shall be either assumed, continued or substituted for in connection with
the corporate transaction.  Any
assumption or substitution shall not result in any decrease in the benefits or
economic value provided under each Incentive Award.

 

 

Section 11.

CHANGE
OF CONTROL OF THE COMPANY

 

11.1         General Rule for
Options.  Except as otherwise
provided in an Incentive Award Agreement, if a Change of Control occurs, and if
the agreements effectuating the Change of Control do not provide for the
assumption or substitution of all Options granted under this Plan, with respect
to any Option granted under this Plan that is not so assumed or substituted (a “Non-Assumed
Option”), the Committee, in its sole and absolute discretion, may, with respect
to any or all of such Non-Assumed Options, take any or all of the following
actions to be effective as of the date of the Change of Control (or as of any
other date fixed by the Committee occurring within the thirty (30) day period
ending on the date of the Change of Control, but only if such action remains
contingent upon the effectuation of the Change of Control) (such date referred
to as the “Action Effective Date”):

 

14

 

(a)           Accelerate
the vesting and/or exercisability of such Non-Assumed Option; and/or

 

(b)           Unilaterally
cancel any such Non-Assumed Option which has not vested and/or which has not
become exercisable as of the Action Effective Date; and/or

 

(c)           Unilaterally
cancel such Non-Assumed Option in exchange for:

 

(i)              whole and/or
fractional Shares (or for whole Shares and cash in lieu of any fractional
Share) that, in the aggregate, are equal in value to the excess of the Fair
Market Value of the Shares that could be purchased subject to such Non-Assumed
Option determined as of the Action Effective Date (taking into account vesting
and/or exercisability) over the aggregate Exercise Price for such Shares; or

 

(ii)           cash or other
property equal in value to the excess of the Fair Market Value of the Shares
that could be purchased subject to such Non-Assumed Option determined as of the
Action Effective Date (taking into account vesting and/or exercisability) over
the aggregate Exercise Price for such Shares; and/or

 

(d)           Unilaterally
cancel such Non-Assumed Option after providing the holder of such Option with (1) an
opportunity to exercise such Non-Assumed Option to the extent vested and/or
exercisable within a specified period prior to the date of the Change of
Control, and (2) notice of such opportunity to exercise prior to the
commencement of such specified period; and/or

 

(e)           Unilaterally
cancel such Non-Assumed Option and notify the holder of such Option of such
action, but only if the Fair Market Value of the Shares that could be purchased
subject to such Non-Assumed Option determined as of the Action Effective Date
(taking into account vesting and/or exercisability) does not exceed the
aggregate Exercise Price for such Shares.

 

However, notwithstanding the foregoing, to the extent
that the recipient of a Non-Assumed Option is an Insider and subject to Section 16
of the Exchange Act at the time of the Change of Control, payment of cash in
lieu of whole or fractional Shares or shares of a successor may only be made to
the extent that such payment (1) has met the requirements of an exemption
under Rule 16b-3 promulgated under the Exchange Act, or (2) is a
subsequent transaction the terms of which were provided for in a transaction
initially meeting the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act. 
Unless an Incentive Award Agreement provides otherwise, the payment of
cash in lieu of whole or fractional Shares or in lieu of whole or fractional
shares of a successor shall be considered a subsequent transaction approved by
the original grant of an Option.

 

11.2         General Rule for
SARs.  Except as otherwise
provided in an Incentive Award Agreement, if a Change of Control occurs, and if
the agreements effectuating the Change of Control do not provide for the
assumption or substitution of all Stock Appreciation Rights granted under this
Plan, with respect to any Stock Appreciation Right granted under this Plan that
is not so assumed or substituted (a “Non-Assumed SAR”), the Committee, in its
sole and absolute discretion, may, with respect to any or all of such
Non-Assumed SARs, take either or both of the following actions to be effective
as of the date of the Change of Control (or as of any other date fixed by the
Committee occurring within the thirty (30) day period ending on the date of the
Change of Control, but only if such action remains contingent upon the
effectuation of the Change of Control) (such date referred to as the “Action
Effective Date”):

 

(a)           Accelerate
the vesting and/or exercisability of such Non-Assumed SAR; and/or

 

(b)           Unilaterally
cancel any such Non-Assumed SAR which has not vested or which has not become
exercisable as of the Action Effective Date; and/or

 

(c)           Unilaterally
cancel such Non-Assumed SAR in exchange for:

 

(i)            whole and/or
fractional Shares (or for whole Shares and cash in lieu of any fractional
Share) that, in the aggregate, are equal in value to the excess of the Fair
Market Value of the Shares subject to such 

 

15

 

Non-Assumed SAR determined as of the Action Effective Date (taking into
account vesting and/or exercisability) over the SAR Exercise Price for such
Non-Assumed SAR; or

 

(ii)           cash or other
property equal in value to the excess of the Fair Market Value of the Shares
subject to such Non-Assumed SAR determined as of the Action Effective Date
(taking into account vesting and/or exercisability) over the SAR Exercise Price
for such Non-Assumed SAR; and/or

 

(d)           Unilaterally
cancel such Non-Assumed SAR after providing the holder of such SAR with (1) an
opportunity to exercise such Non-Assumed SAR to the extent vested and/or
exercisable within a specified period prior to the date of the Change of
Control, and (2) notice of such opportunity to exercise prior to the
commencement of such specified period; and/or

 

(e)           Unilaterally
cancel such Non-Assumed SAR and notify the holder of such SAR of such action,
but only if the Fair Market Value of the Shares that could be purchased subject
to such Non-Assumed SAR determined as of the Action Effective Date (taking into
account vesting and/or exercisability) does not exceed the SAR Exercise Price
for such Non-Assumed SAR.

 

However, notwithstanding the foregoing, to the extent
that the recipient of a Non-Assumed SAR is an Insider and subject to Section 16
of the Exchange Act at the time of the Change of Control, payment of cash in
lieu of whole or fractional Shares or shares of a successor may only be made to
the extent that such payment (1) has met the requirements of an exemption
under Rule 16b-3 promulgated under the Exchange Act, or (2) is a
subsequent transaction the terms of which were provided for in a transaction
initially meeting the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act. 
Unless an Incentive Award Agreement provides otherwise, the payment of
cash in lieu of whole or fractional Shares or in lieu of whole or fractional
shares of a successor shall be considered a subsequent transaction approved by
the original grant of a SAR.

 

11.3         General Rule for
Restricted Stock Units. 
Except as otherwise provided in an Incentive Award Agreement, if a
Change of Control occurs, and if the agreements effectuating the Change of
Control do not provide for the assumption or substitution of all Restricted
Stock Units granted under this Plan, with respect to any Restricted Stock Unit
granted under this Plan that is not so assumed or substituted (a “Non-Assumed
RSU”), the Committee, in its sole and absolute discretion, may, with respect to
any or all of such Non-Assumed RSUs, take either or both of the following
actions to be effective as of the date of the Change of Control (or as of any
other date fixed by the Committee occurring within the thirty (30) day period
ending on the date of the Change of Control, but only if such action remains
contingent upon the effectuation of the Change of Control) (such date referred
to as the “Action Effective Date”):

 

(a)           Accelerate
the vesting of such Non-Assumed RSU; and/or

 

(b)           Unilaterally
cancel any such Non-Assumed RSU which has not vested as of the Action Effective
Date; and/or

 

(c)           Unilaterally
cancel such Non-Assumed RSU in exchange for:

 

(i)            whole and/or
fractional Shares (or for whole Shares and cash in lieu of any fractional
Share) that are equal to the number of Shares subject to such Non-Assumed RSU
determined as of the Action Effective Date (taking into account vesting); or

 

(ii)           cash or other
property equal in value to the Fair Market Value of the Shares subject to such
Non-Assumed RSU determined as of the Action Effective Date (taking into account
vesting); and/or

 

(d)           Unilaterally
cancel such Non-Assumed RSU and notify the holder of such RSU of such action,
but only if the Fair Market Value of the Shares that were subject to such
Non-Assumed RSU determined as of the Action Effective Date (taking into account
vesting) is zero.

 

16

 

However, notwithstanding the foregoing, to the extent
that the recipient of a Non-Assumed RSU is an Insider and subject to Section 16
of the Exchange Act at the time of the Change of Control, payment of cash in lieu
of whole or fractional Shares or shares of a successor may only be made to the
extent that such payment (1) has met the requirements of an exemption
under Rule 16b-3 promulgated under the Exchange Act, or (2) is a
subsequent transaction the terms of which were provided for in a transaction
initially meeting the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act. 
Unless an Incentive Award Agreement provides otherwise, the payment of
cash in lieu of whole or fractional Shares or in lieu of whole or fractional
shares of a successor shall be considered a subsequent transaction approved by
the original grant of an RSU.

 

11.4         General Rule for
Restricted Stock Awards. 
Except as otherwise provided in an Incentive Award Agreement, if a
Change of Control occurs, and if the agreements effectuating the Change of
Control do not provide for the assignment of the forfeiture or repurchase
rights for all Restricted Stock Awards granted under this Plan, with respect to
any Restricted Stock Award granted under this Plan where the forfeiture or
repurchase rights are not assigned (a “Non-Assumed Restricted Stock Award”),
the Committee, in its sole and absolute discretion, may, with respect to any or
all of such Non-Assumed Restricted Stock Award, take either or both of the
following actions to be effective as of the date of the Change of Control (or
as of any other date fixed by the Committee occurring within the thirty (30)
day period ending on the date of the Change of Control, but only if such action
remains contingent upon the effectuation of the Change of Control) (such date
referred to as the “Action Effective Date”):

 

(e)           Accelerate
the vesting of such Non-Assumed Restricted Stock Award (i.e., cancel any
forfeiture or repurchase right); and/or

 

(f)            Unilaterally
exercise the forfeiture or repurchase right for any such Non-Assumed Restricted
Stock Award which has not vested as of the Action Effective Date; and/or

 

(g)           Unilaterally
repurchase such Non-Assumed Restricted Stock Award in exchange for cash or
other property equal in value to the Fair Market Value of the Shares subject to
such Non-Assumed Restricted Stock Award determined as of the Action Effective
Date (taking into account vesting); and/or

 

(h)           Unilaterally
cancel such Non-Assumed Restricted Stock Award and notify the holder of such
Restricted Stock Award of such action, but only if the Fair Market Value of the
Shares that were subject to such Non-Assumed Restricted Stock Award determined
as of the Action Effective Date (taking into account vesting) is zero.

 

However, notwithstanding the foregoing, to the extent
that the recipient of a Non-Assumed Restricted Stock Award is an Insider and
subject to Section 16 of the Exchange Act at the time of the Change of
Control, payment of cash in lieu of whole or fractional Shares or shares of a
successor may only be made to the extent that such payment (1) has met the
requirements of an exemption under Rule 16b-3 promulgated under the
Exchange Act, or (2) is a subsequent transaction the terms of which were
provided for in a transaction initially meeting the requirements of an
exemption under Rule 16b-3 promulgated under the Exchange Act.  Unless an Incentive Award Agreement provides
otherwise, the payment of cash in lieu of whole or fractional Shares or in lieu
of whole or fractional shares of a successor shall be considered a subsequent
transaction approved by the original grant of a Restricted Stock Award.

 

11.5         General Rule for
Other Incentive Award Agreements. 
If a Change of Control occurs, then, except to the extent otherwise
provided in the Incentive Award Agreement pertaining to a particular Incentive
Award or as otherwise provided in this Plan, each Incentive Award shall be
governed by applicable law and the documents effectuating the Change of
Control.

 

 

Section 12.

AMENDMENT
OR TERMINATION

 

This Plan may be amended by the Board from time to
time to the extent that the Board deems necessary or appropriate; provided,
however, no such amendment shall be made absent the approval of the stockholders
of the Company (a) to increase the number of Shares reserved under Section 3,
except as set forth in Section 10, (b) to extend the maximum life of
the Plan under Section 9 or the maximum exercise period under Section 7,
(c) to decrease the minimum Exercise 

 

17

 

Price under Section 7,
or (d) to change the designation of Eligible Recipients eligible for
Incentive Awards under Section 6. 
Stockholder approval of other material amendments (such as an expansion
of the types of awards available under the Plan, an extension of the term of
the Plan, a change to the method of determining the Exercise Price of Options
issued under the Plan, or a change to the provisions of Section 7.2(j))
may also be required pursuant to rules promulgated by an established stock
exchange or a national market system if the Company is, or become, listed or
traded on any such established stock exchange or national market system, or for
the Plan to continue to be able to issue Incentive Awards which meet the
Performance-Based Exception.  The Board
also may suspend the granting of Incentive Awards under this Plan at any time
and may terminate this Plan at any time. 
The Company shall have the right to modify, amend or cancel any Incentive
Award after it has been granted if (I) the modification, amendment or
cancellation does not diminish the rights or benefits of the Incentive Award
recipient under the Incentive Award (provided, however, that a modification,
amendment or cancellation that results solely in a change in the tax
consequences with respect to an Incentive Award shall not be deemed as a
diminishment of rights or benefits of such Incentive Award), (II) the
Participant consents in writing to such modification, amendment or cancellation,
(III) there is a dissolution or liquidation of the Company, (IV) this
Plan and/or the Incentive Award Agreement expressly provides for such
modification, amendment or cancellation, or (V) the Company would
otherwise have the right to make such modification, amendment or cancellation
by applicable law.

 

 

Section 13.

MISCELLANEOUS

 

13.1         Stockholder Rights.  No Participant shall have any rights as a
stockholder of the Company as a result of the grant of an Incentive Award to
him or to her under this Plan or his or her exercise of such Incentive Award
pending the actual delivery of Shares subject to such Incentive Award to such
Participant.

 

13.2         No Guarantee of Continued
Relationship.  The grant
of an Incentive Award to a Participant under this Plan shall not constitute a
contract of employment and shall not confer on a Participant any rights upon
his or her termination of employment or relationship with the Company in
addition to those rights, if any, expressly set forth in the Incentive Award
Agreement that evidences his or her Incentive Award.

 

13.3         Withholding.  The Company shall have the power and the
right to deduct or withhold, or require a Participant to remit to the Company
as a condition precedent for the fulfillment of any Incentive Award, an amount
sufficient to satisfy Federal, state and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan and/or any action taken by a Participant with
respect to an Incentive Award.  Whenever
Shares are to be issued to a Participant upon exercise of an Option or a Stock
Appreciation Right, or satisfaction of conditions under a Restricted Stock
Unit, or grant of or substantial vesting of a Restricted Stock Award, the Company
shall have the right to require the Participant to remit to the Company, as a
condition of exercise of the Option or Stock Appreciation Right, or as a
condition to the fulfillment of the Restricted Stock Unit, or as a condition to
the grant or substantial vesting of the Restricted Stock Award, an amount in
cash (or, unless the Incentive Award Agreement provides otherwise, in Shares)
sufficient to satisfy federal, state and local withholding tax requirements at
the time of such exercise, satisfaction of conditions, or grant or substantial
vesting.  However, notwithstanding the
foregoing, to the extent that a Participant is an Insider, satisfaction of
withholding requirements by having the Company withhold Shares may only be made
to the extent that such withholding of Shares (1) has met the requirements
of an exemption under Rule 16b-3 promulgated under the Exchange Act, or (2) is
a subsequent transaction the terms of which were provided for in a transaction
initially meeting the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act. 
Unless the Incentive Award Agreement provides otherwise, the withholding
of shares to satisfy federal, state and local withholding tax requirements
shall be a subsequent transaction approved by the original grant of an
Incentive Award.  Notwithstanding the
foregoing, in no event shall payment of withholding taxes be made by a
retention of Shares by the Company unless the Company retains only Shares with
a Fair Market Value equal to the minimum amount of taxes required to be
withheld.

 

13.4         Notification of
Disqualifying Dispositions of ISO Options.  If a Participant sells or otherwise disposes
of any of the Shares acquired pursuant to an Option that is an ISO on or before
the later of (1) the date two (2) years after the date of grant of
such Option, or (2) the date one (1) year after the exercise of such
Option, then the Participant shall immediately notify the Company in writing of
such sale or disposition and shall cooperate with the Company in providing
sufficient information to the Company for the Company to properly report such
sale or disposition to the Internal Revenue 

 

18

 

Service.  The
Participant acknowledges and agrees that he may be subject to federal, state
and/or local tax withholding by the Company on the compensation income
recognized by Participant from any such early disposition, and agrees that he
shall include the compensation from such early disposition in his gross income
for federal tax purposes.  Participant
also acknowledges that the Company may condition the exercise of any Option
that is an ISO on the Participant’s express written agreement with these
provisions of this Plan.

 

13.5         Transfer.  The transfer of an Employee between or among
the Company, a Subsidiary or a Parent shall not be treated as a termination of
his or her employment under this Plan. 
However, notwithstanding the foregoing, a termination of employment may
nonetheless occur for purposes of determining whether an Option will satisfy
the requirements of the Code to be an ISO.

 

13.6         Construction.  This Plan shall be construed under the laws
of the State of Maryland.

 

 

Section 14.

PERFORMANCE
CRITERIA

 

14.1         Performance Goal Business
Criteria.  Unless and
until the Board proposes for stockholder vote and stockholders approve a change
in the general performance measures set forth in this Section, the attainment
of which may determine the degree of payout and/or vesting with respect to
Incentive Awards to Employees and Key Persons pursuant to this Plan which are
designed to qualify for the Performance-Based Exception, the performance
measure(s) to be used by a Committee composed of two (2) or more
Outside Directors for purposes of such grants shall be chosen from among the following:

 

(a)           Earnings
per share;

 

(b)           Net
income (before or after taxes);

 

(c)           Return
measures (including, but not limited to, return on assets, equity or sales);

 

(d)           Cash
flow return on investments which equals net cash flows divided by owners
equity;

 

(e)           Earnings
before or after taxes, depreciation and/or amortization;

 

(f)            Gross
revenues;

 

(g)           Operating
income (before or after taxes);

 

(h)           Total
stockholder returns;

 

(i)            Corporate
performance indicators (indices based on the level of certain services provided
to customers);

 

(j)            Cash
generation, profit and/or revenue targets;

 

(k)           Growth
measures, including revenue growth, as compared with a peer group or other
benchmark;

 

(l)            Share
price (including, but not limited to, growth measures and total stockholder
return); and/or

 

(m)          Pre-tax
profits.

 

14.2         Discretion in Formulation
of Performance Goals.  The
Board shall have the discretion to adjust the determinations of the degree of
attainment of the pre-established performance goals; provided, however, that
Incentive 

 

19

 

Awards that are to qualify for the Performance-Based
Exception may not be adjusted upward (although the Committee shall retain the
discretion to adjust such Incentive Awards downward).

 

14.3         Performance Periods.  The Board shall have the discretion to
determine the period during which any performance goal must be attained with
respect to an Incentive Award.  Such
period may be of any length, and must be established prior to the start of such
period or within the first ninety (90) days of such period (provided that the
performance criteria is not in any event set after 25% or more of such period
has elapsed).

 

14.4         Modifications to
Performance Goal Business Criteria.  In the event that the applicable tax and/or
securities laws change to permit Board discretion to alter the governing
performance measures noted above without obtaining stockholder approval of such
changes, the Board shall have sole discretion to make such changes without
obtaining stockholder approval.  In
addition, in the event that the Board determines that it is advisable to grant
Incentive Awards that shall not qualify for the Performance-Based Exception,
the Board may make such grants without satisfying the requirements of Code
§162(m); otherwise, a Committee composed exclusively of two (2) of more
Outside Directors must make such grants.

 

20Untitled Page

		

			

			

			Exhibit 10.1

				

			

		

		
			ASSET SALE AGREEMENT

						

					

		

		
			ASSET SALE AGREEMENT, dated as of October 2, 2007 (the “Agreement”), by and between

				

			

		

		
			
				
					(1)       BRITTON INTERNATIONAL, INC., a Nevada corporation (“Seller”),

						            and

						

						(2)       BRITTON JEWELLERY INC., a British Columbia, Canada company

						            (“Purchaser”).

				

			

		

		

		

		

		WITNESSETH:

				

			

		
			          WHEREAS, Seller was in the business of operating a website known as www.Britton.com (the “Website”) which has been in the business of retailing jewelry and related products over the Internet;

				

				          WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, the Website and certain of the business assets of the Seller utilized in the operation of the Website, together with the goodwill associated with the Website and the assets, as are identified to be purchased by Purchaser under this Agreement (collectively, the “Purchased Assets”), upon the terms and subjects to the conditions set forth in this Agreement;

				

				          NOW, THEREFORE, in consideration of the mutual benefits to be derived and the representations and warranties, conditions and promises herein contained, and intending to be legally bound hereby, Seller and Purchaser hereby agree as follows:

				

			

		

		
			ARTICLE I

					

					GENERAL

					

				

		

		
			          1.01. Assets Included.

				

				                    (a)  As of the date hereof, Seller shall convey, sell, transfer, assign and deliver unto Purchaser, and its successors and assigns forever, the Purchased Assets as set on Exhibit 1.01 hereof, together with all other intangible assets which derive from the Purchased Assets together with copies of all files, books and records relating to the Purchased Assets.

				

				                    (b)  From and after the date hereof, Seller shall give to Purchaser or its representatives free and unrestricted access to the books, files and records of Seller relating to the Purchased Assets.  Prior to destroying or disposing of such books, files and records, Seller shall give 30-days notice to Purchaser of the intended destruction or disposition, and Purchaser shall have the right to take possession of the same or to make copies of the same at its expense.

				

				          1.02.  Excluded Assets.  The Purchased Assets shall not include any right, title, interest and claims of Seller in, to or under any of the following assets: cash and cash equivalents; tax returns; articles of incorporation and by-laws of Seller; corporate minutes; seals and stock books of Seller; bank deposits or accounts of Seller, other than Seller’s PayPal account; refunds or claims for refunds of taxes payable by Seller; and any assets tangible or intangible, which do not relate to the Purchased Assets.

				

				

				

			

		

		
			i

		

		

		

		

		

		

		

		          1.03. No Liabilities Assumed by Purchaser. Except as described on Exhibit 1.03, Purchaser shall not assume any liabilities, payments or obligations of the Seller (absolute, contingent or otherwise) arising out of the Purchased Assets, the ownership or operation of any of the Purchased Assets, or the consummation of the transactions under this Agreement or otherwise.

		

		          1.04. The Seller will provide the Purchaser with sufficient vendor information regarding the third party which has supplied the Seller with leased hardware and standard operating software for operation of the Website so that the Purchaser might form its own arrangements with this supplier;

		

		          1.05. Functional Currency. All amounts included in this Agreement are state in United States dollars;

		

		          1.06. Net Consideration. Payment for the Purchased Assets is as described on Exhibit 1.06 and is $2,356.08.

		

		          1.07. Form of Payment. It is agreed receipt of a confirmation letter from the supplier listed in Exhibit 1.03 will form evidence of payment by Purchaser. This letter must be received within 15 days from the date herein of this Agreement and must state that Purchaser has confirmed to the supplier that it is responsible for the debts of Seller to said supplier. Additionally, with respect to the assumption of customer credits, Seller will accept Purchaser’s warranty made herein that it will maintain on Purchaser’s books these deposits made by customers of Seller and will deliver to said customers either: (i) full refunds of deposits; or (ii) satisfactory merchandise as agreed between Purchaser and each customer.    

		

		
			ARTICLE II

					

				REPRESENTATIONS AND WARRANTIES

					

				

		

		
			          2.01. Representations and Warranties of Seller. Seller represents and warrants to Purchaser as follows, and acknowledges and confirms that Purchaser is relying upon such representations and warranties in connection with the execution, delivery and performance of this Agreement:

				

				                    (a)  Organization and Good Standing. Seller is a company duly organized, validly existing and in good standing under the laws of the State of Nevada.

				

				                    (b)  Consents, Authorizations, Binding Effect, Etc. Seller may execute, deliver and perform this Agreement without the necessity of any consent, approval, authorization or waiver or giving any notice or otherwise (including without limitation any consent of or notice to any other stockholder of Seller), except for such consents, approvals, authorizations, waivers and notices which have been obtained and are unconditional and remain in full force and effect and such notices which have been given. This Agreement has been duly authorized, executed and delivered by Seller and this Agreement constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms. The execution, delivery and performance of this Agreement by Seller will not (1) constitute a violation of the certificate of information or the by-laws of Seller, as amended and in effect on the date hereof (2) conflict with, result in the breach of or constitute a default under any contract, lease, agreement, license, commitment or order of, or binding upon, Seller, (3) constitute a violation of any statute, judgment, order, decree or regulation or rule of any court, governmental authority or arbitrator applicable or relating to Seller or the Purchased Assets, or (4) result in the creation of any lien 

				

				

				

			

		

		
			ii

		

		
			

			

			

			

			

			upon any of the Purchased Assets pursuant to the provisions of any of the foregoing. Each tangible and intangible Purchased Asset owned or used by Seller immediately prior hereto will be owned or available for use by Purchaser immediately subsequent to the Closing hereunder on the same basis as the Seller used such asset or right.

			

			                    (c)  Litigation and Compliance. There are no actions, suits, claims or proceedings, whether in equity or at law, pending or threatened, and to the best knowledge of Seller, there are no governmental or administrative investigations pending or threatened, against Seller with respect to the Purchased Assets.

			

			                    To the best of its knowledge, Seller has duly filed all reports and returns required to be filed by it with governmental authorities and has obtained all governmental permits and licenses and other governmental consents which are required in connection with the operation of the Purchased Assets by Seller.

			

			                    (d)  Intellectual Property. To the best of its knowledge, Seller owns or has the right to use pursuant to written license, sublicense, agreement or permission all intellectual property necessary for the operation of the Purchased Assets as presently conducted. As used in this Agreement, intellectual property means and includes (i) patents, patent applications, patent disclosures and improvements thereto; (ii) trademarks, service marks, trade dress, logos, trade names and corporate names (including without limitation all brand names and trade style), and registrations and applications for registration thereof and all rights related thereto, including all goodwill; (iii) copyrights and registrations and applications for registration thereof; (iv) computer software, data and documentation; (v) trade secrets and confidential business information (including ideas, know-how, inventions, drawings, specifications, manuals, designs, plans, proposals, technical data, copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information and all other proprietary information); and (vi) license agreements or other rights related to the foregoing and any rights or causes of action resulting from any infringement or violation of any of the foregoing.

			

			                    Seller is not aware of any basis for any claim by any third party that Seller's operation of the Purchased Assets infringes the patents, trademarks, copyrights, trade secrets or other intellectual property rights of any third party. Seller has made no claims that a third party has violated or infringed any of Seller's patents, trademarks, copyrights, trade secrets or other proprietary rights.

			

			                    Exhibit 1.01 sets forth all patents and patent applications, trademarks, service marks, trade names and registrations and applications for registrations, copyright registrations and license agreements or other rights related to the foregoing and any rights or causes of action resulting from any infringement or violation of any of the foregoing. Except as disclosed on Exhibit 1.01 Seller has not made any registration or application with respect to any of the intellectual property transferred to Purchaser hereunder. All of patents, trademark and service mark registrations, and copyright registrations listed in Exhibit 1.01 are in full force, are held of record in Seller's name free and clear of all liens and encumbrances, and are not the subject of any cancellation or reexamination proceeding or any other proceeding challenging their extent or validity. Seller is the applicant of record in all patent applications, and applications for trademark, service mark, and copyright registration listed in Exhibit 1.01, and no opposition, extension of time to oppose, interference, rejection, or refusal to register has been received in connection with any such application. No order, holding, decision or judgment has been rendered by any governmental authority, and no agreement, consent or stipulation exists, which would limit Seller's use of any intellectual property included in the Purchased Assets.

			

			

			

		

		
			iii

		

		

		

		

		

		

		

		

		

		                    Exhibit 1.01 also identifies each material item of intellectual property that any third party owns and that Seller uses pursuant to license, sublicense, agreement or permission. Seller has made available to representatives of Purchaser correct and complete copies of all such licenses, sublicenses, agreements and permissions (as amended to date). With respect to each such item of intellectual property, the license, sublicense, agreement or permission covering the item is legal, valid, binding, enforceable and in full force and effect and will continue to be legal, valid, binding, enforceable and in full force and effect following the consummation of the transactions contemplated by this Agreement.

		

		                    (e)  Contracts, etc. All contracts, leases, instruments, licenses, commitments, orders and other agreements relating to the Purchased Assets to which Seller is party or by which Seller is bound or which relate to the Purchased Assets are listed on Exhibit 1.01 hereto. Each of such agreements remain in full force and effect, and, to the best of Seller's knowledge, there are no existing defaults by Seller under any of such agreements.

		

		          2.02. Representations and Warranties of Purchaser. Purchaser represents and warrants to Seller as follows, and acknowledges and confirms that Seller is relying upon such representations and warranties in connection with the execution, delivery and performance of this Agreement:

		

		                    (a)  Organization and Good Standing. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the Province of British Columbia.

		

		                    (b)  Consents, Authorizations, Binding Effect, Etc. Purchaser may execute, deliver and perform this Agreement without the necessity of any consent, approval, authorization or waiver or giving any notice or otherwise (including without limitation any consent of or notice to any other stockholder of Purchaser), except for such consents, approvals, authorizations, waivers and notices which have been obtained and are unconditional and remain in full force and effect and such notices which have been given. This Agreement has been duly authorized, executed and delivered by Purchaser and this Agreement constitutes legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms. The execution, delivery and performance of this Agreement by Purchaser will not (1) constitute a violation of the certificate of incorporation or the by-laws of Purchaser, as amended and in effect on the date hereof (2) conflict with, result in the breach of or constitute a default under any contract, lease, agreement, license, commitment or order of, or binding upon, Purchaser, or (3) constitute a violation of any statute, judgment, order, decree or regulation or rule of any court, governmental authority or arbitrator applicable or relating to Purchaser.

		

		
			ARTICLE III

					

				CLOSING

					

				

		

		
			          3.01  Deliveries at the Closing. Simultaneously with the execution of this Agreement, (i) Seller shall execute, acknowledge (if appropriate) and deliver to Purchaser the Bill of Sale and such other instruments of sale, transfer, conveyance and assignment as Purchaser reasonably may request, in each case sufficient to convey, transfer and deliver to Purchaser good and marketable title to all the Purchased Assets; and (ii) Purchaser shall execute, acknowledge (if appropriate) and deliver to Seller such instruments of assumption as Seller reasonably may request.

				

				

				

			

		

		
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			ARTICLE IV

					

				MISCELLANEOUS

					

				

		

		
			          4.01. Further Actions. From time to time, as and when requested by Purchaser or Seller, Seller (if requested by Purchaser), and Purchaser (if requested by Seller), shall execute and deliver, or cause to be executed and delivered, such documents and instruments and shall take, or cause to be taken, such further or other actions as may be deemed necessary or desirable to carry out the intent and purposes of this Agreement, to convey, transfer, assign and deliver to Purchaser, and its successors and assigns, the Purchased Assets (or to evidence any of the foregoing) and to consummate and give effect to the other transactions, covenants and agreements contemplated hereby.

				

				          4.02. Broker's Fees. Seller and Purchaser represent and warrant to the other that each has no obligation or liability to any broker or finder by reason of the transactions which are the subject of this Agreement.

				

				          4.03. Expenses. Except as otherwise specifically provided herein, Seller and Purchaser shall each bear its own costs and expenses in connection with the negotiation, execution and the delivery of this Agreement and the consummation of the transactions hereunder. Seller shall pay all sales taxes and any other transfer fees and taxes arising out of the transactions contemplated by this Agreement.

				

				          4.04. Entire Agreement. This Agreement, which includes Exhibits hereto and the other documents, agreements and instruments executed and delivered pursuant to or in connection with this Agreement, contains the entire agreement among the parties hereto with respect to the transactions contemplated by this Agreement and supersedes all prior arrangements or understandings with respect thereto.

				

				          4.05. Descriptive Headings. The headings of this Agreement are descriptive and are for convenience only and shall not control or affect the meaning or construction of any provision of this Agreement.

				

				          4.06. Notices. All notices or other communications which are required or permitted hereunder shall be in writing and sufficient if sent by registered or certified mail (receipt requested), facsimile transmission (with receipt confirmed), or receipted courier or delivery service, addressed as follows, and shall be deemed given when received at the office indicated below:

				

				          If to Seller:                 Britton International, Inc.

				                                            725 Kendall Lane

				                                            Boulder City, Nevada, USA  89005

				                                            Phone:     702.293.3613

				                                            Fax:         702.293.3613

				

				          If to Purchaser:           Britton Jewellery, Inc.

				                                            455 Howe Street

				                                            Vancouver, BC, Canada  V6C 2B3

				                                            Phone:     604.687.3344

				                                            Fax:         604.687.8770

				

				

				

			

		

		
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			Any party may by notice change the address to which notice or other communications to it are to be directed.

			

			          4.07. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada (other than the choice of law principles thereof).

			

			                    Any action, suit or other proceeding initiated by a Seller or Purchaser against the other under or in connection with, this Agreement may be brought only in any Federal or state court in the State of Nevada, as the party bringing such action, suit or proceeding shall elect, having jurisdiction over the subject matter thereof. Seller and Purchaser hereby submit themselves to the jurisdiction of any such court, and agree to refrain from initiating or maintaining any legal proceeding in any other forum or jurisdiction. Seller and Purchaser further agree to waive any right to trial by jury in connection with any such proceeding, or any claim in connection therewith.

			

			          4.08. Survival of Representations and Warranties. All representations and warranties contained herein or made pursuant hereto shall survive the closing of the transactions hereunder and the delivery of the Bill of Sale for a period of eighteen months after the closing.

			

			          4.09. Waivers and Amendments. Any waiver of any term or condition of this Agreement, or any amendment or supplementation of this Agreement, shall be effective only if in writing. A waiver of any breach or failure to enforce any of the terms or conditions of this Agreement shall not in any way affect, limit or waive a party's rights hereunder at any time to enforce strict compliance thereafter with every term or condition of this Agreement.

			

			          4.10. Third Party Rights. Notwithstanding any other provision of this Agreement, this Agreement shall not create benefits on behalf of any third party or other person, and this Agreement shall be effective only as between the parties hereto, their successors and permitted assigns. 

			

			          4.11. Illegalities. In the event that any provision contained in this Agreement shall be determined to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and the remaining provisions of this Agreement shall not, at the election of the party for whose benefit the provision exists, be in any way impaired.

			

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

			

			

			                                                                                                    BRITTON INTERNATIONAL, INC.

			

			                                                                                                    By: /s/ Jacek Oscilowicz

				                                                                                                    Name:  Jacek Oscilowicz

			                                                                                                    Title: President

			

			                                                                                                    BRITTON JEWELLRY, INC.

			

			                                                                                                    By: /s/ Tony Loureiro

				                                                                                                    Name:  Tony Loureiro

			                                                                                                    Title: President

			

			

			

		

		
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			Exhibit 1.01 - Purchased Assets

					

				

		

		
			PURCHASED ASSETS:

				

			

		

		

					The URL www.Britton.com;

					

				
	All software and design work created or in process, to present, operate and support the www.Britton.com Website;

					

				
	Any and all Goodwill associated with said URL, which for certainty, shall include all future customer orders placed to www.britton.com;

					

				
	One ImageDome Gem Camera;

					

				
	One Canon Powershot G6 7.1 Megapixel digital Camera; and
			

		
		

			

			(Note: hardware and standard vendor software required to operate the Purchased Assets are acquired from a third party supplier on a leased basis and do not form part of this exhibit schedule)

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

			

		

		
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			Exhibit 1.03 – Liabilities Assumed

						

						

					

		

		
			LIABILITIES ASSUMED:

				

			

		

		

					Customer order credits due to customers as follows:

					

			

		
		
			
				
					(i)  customer #1                                     $(254.00)

						(ii) customer #2                                       (160.00)

						(iii) supplier #1                                         (127.50)

						TOTAL                                                 $(541.50)

				

			

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		
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			Exhibit 1.06 – Net Consideration

					

					

				

		

		
			CALCULATION OF NET CONSIDERATION:

				

				

			

		

		
			
				The Net Consideration is determined as follows:

					

					I. Value of Purchased Assets:

					

				

			

			
				
					(i)   Gem Camera                                     $ 2,242.50

						(ii)  Digital Camera                                      307.50

						(iii) Website & goodwill                                          -

						(iv) Forgiveness of BJI

						     Account Payable Credit                           347.58

						                                                                                        2,897.58

						

				

			

			
				LESS:

						

					II. Amount of Liabilities Assumed:                   $  (541.50)

					                                                                                                $ (541.50)

					     Net Consideration                                                           $ 2,356.08

			

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		

		
			ix

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