Document:

ex_10-1.htm

    
      

      

    

    EXHIBIT
10.1

     

     

    BMR
SOLUTIONS, INC.

     

    2008 STOCK INCENTIVE
PLAN

     

     

    ARTICLE
ONE

     

    GENERAL
PROVISIONS

     

    I.          
  Purpose of
the Plan.

     

    This 2008
Stock Incentive Plan is intended to promote the interests of BMR Solutions, Inc.
by providing eligible persons in the Corporation’s service with the opportunity
to acquire a proprietary or economic interest, or otherwise increase their
proprietary or economic interest, in the Corporation as an incentive for them to
remain in such service and render superior performance during such service.
Capitalized terms not otherwise defined herein shall have the meanings assigned
to such terms in the attached Appendix.

     

    II.          
 Structure of the
Plan.

     

    A.           The
Plan is divided into two equity-based incentive programs:

     

    
      	
              ·   
        

            	
              the
      Discretionary Grant Program, under which eligible persons may, at the
      discretion of the Plan Administrator, be granted options to purchase
      shares of Common Stock or stock appreciation rights tied to the value of
      such Common Stock; and

            

    

    

    
      	
              ·    
       

            	
              the
      Stock Issuance Program, under which eligible persons may be issued shares
      of Common Stock pursuant to restricted stock or restricted stock unit
      awards or other stock-based awards, made by and at the discretion of the
      Plan Administrator, that vest upon the completion of a designated service
      period and/or the attainment of pre-established performance milestones, or
      under which shares of Common Stock may be issued through direct purchase
      or as a bonus for services rendered to the Corporation (or any Parent or
      Subsidiary).

            

    

     

    B.           
The provisions of Articles One and Four
shall apply to all equity programs under the Plan and shall govern the interests
of all persons under the Plan.

     

    III.           Administration of the
Plan.

     

    A.           The
Compensation Committee shall have sole and exclusive authority to administer the
Discretionary Grant and Stock Issuance Programs; provided, however, that the
Board may retain, reassume or exercise from time to time the power to administer
those programs with respect to all persons. However, any discretionary Awards to
members of the Compensation Committee must be authorized and approved by a
disinterested majority of the Board.

     

    
      
        
        

      

      
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    B.           
The Plan Administrator shall, within the scope of its administrative functions
under the Plan, have full power and authority (subject to the provisions of the
Plan) to establish such rules and regulations as it may deem appropriate for
proper administration of the Discretionary Grant and Stock Issuance Programs and
to make such determinations under, and issue such interpretations of, the
provisions of those programs and any outstanding Awards thereunder as it may
deem necessary or advisable. Decisions of the Plan Administrator within the
scope of its administrative functions under the Plan shall be final and binding
on all parties who have an interest in the Discretionary Grant and Stock
Issuance Programs under its jurisdiction or any Award thereunder.

     

    C.           
Service on the Compensation Committee shall constitute service as a Board
member, and members of each such committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on such
committee. No member of the Compensation Committee shall be liable for any act
or omission made in good faith with respect to the Plan or any Award under the
Plan.

     

    IV.           Eligibility.

     

    A.           The
persons eligible to participate in the Discretionary Grant and Stock Issuance
Programs are as follows:

     

    (i)            
Employees;

     

    (ii)            non-employee
members of the Board or the board of directors of any Subsidiary (or, in the
case of the Stock Issuance Programs, any Parent or Subsidiary); and

     

    (iii)           Consultants.

     

    B.          
 The Plan Administrator shall, within the scope of its administrative
jurisdiction under the Plan, have full authority to determine (i) with respect
to Awards made under the Discretionary Grant Program, which eligible persons are
to receive such Awards, the time or times when those Awards are to be made, the
number of shares to be covered by each such Award (which number of shares shall
be fixed as of the grant date of the Award), the status of any awarded option as
either an Incentive Option or a Non-Statutory Option, the exercise price per
share in effect for each Award (subject to the limitations set forth in Article Two),
the time or times when each Award is to vest and become exercisable and the
maximum term for which the Award is to remain outstanding, and (ii) with respect
to Awards under the Stock Issuance Program, which eligible persons are to
receive such Awards, the time or times when the Awards are to be made, the
number of shares subject to each such Award, the vesting schedule (if any)
applicable to the shares subject to such Award, and the cash consideration (if
any) payable for such shares.

     

    C.           
The Plan Administrator shall have the absolute discretion to grant options or
stock appreciation rights in accordance with the Discretionary Grant Program and
to effect stock issuances or other stock-based awards in accordance with the
Stock Issuance Program.

     

    
      
        
        

      

      
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    V.       
    Stock Subject to the
Plan.

    
       

      A.           The
stock issuable under the Plan shall be shares of authorized but unissued or
reacquired Common Stock, including shares repurchased by the Corporation on the
open market. Subject to any additional shares authorized by the vote of the
Board and approved by the stockholders, as of October 24, 2008, the number of
shares of Common Stock reserved for issuance over the term of the Plan shall not
exceed 7,500,000 shares; provided, however, that at no
time shall the total number of shares of Common Stock issuable upon exercise of
all outstanding options granted under this Plan and the total number of shares
of Common Stock issuable under any stock bonus or similar plan or agreement of
the Corporation exceed a number of shares of Common Stock which is equal to
thirty percent (30%) of the then outstanding shares of Common Stock of the
Corporation (calculated in accordance with Section 260.140.45 of the California
Code of Regulations), based upon the shares of Common Stock which are
outstanding at the time of calculation.  Any or all of the shares of
Common Stock reserved for issuance under the Plan shall be authorized for
issuance pursuant to Incentive Options or other Awards.

       

      B.           
No one person participating in the Plan may be granted Awards for more than
5,000,000  shares of Common Stock in the aggregate per calendar
year.

       

      C.           
Shares of Common Stock subject to outstanding Awards under the Plan shall be
available for subsequent issuance under the Plan to the extent (i) those Awards
expire or terminate for any reason prior to the issuance of the shares of Common
Stock subject to those Awards or (ii) the Awards are cancelled in accordance
with the cancellation-regrant provisions of Article Two.
Unvested shares issued under the Plan and subsequently cancelled or repurchased
by the Corporation at the original exercise or issue price paid per share
pursuant to the Corporation’s repurchase rights under the Plan shall be added
back to the number of shares of Common Stock reserved for issuance under the
Plan and shall accordingly be available for subsequent reissuance under the
Plan. In addition, should the exercise price of an option under the Plan be paid
with shares of Common Stock, the authorized reserve of Common Stock under the
Plan shall be reduced only by the net number of shares issued under the
exercised stock option. Should shares of Common Stock otherwise issuable under
the Plan be withheld by the Corporation in satisfaction of the withholding taxes
incurred in connection with the issuance, exercise or vesting of an Award under
the Plan, the number of shares of Common Stock available for issuance under the
Plan shall be reduced only by the net number of shares issued with respect to
that Award.

       

      D.          
 If any change is made to the Common Stock by reason of any stock split,
stock dividend, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the
Corporation’s receipt of consideration, appropriate adjustments shall be made by
the Plan Administrator to (i) the maximum number and/or class of securities
issuable under the Plan, (ii) the maximum number and/or class of securities for
which any one person may be granted Awards under the Plan per calendar year,
(iii) the number and/or class of securities and the exercise or base price per
share (or any other cash consideration payable per share) in effect under each
outstanding Award under the Discretionary Grant Program, and (iv) the number
and/or class of securities subject to each outstanding Award under the Stock
Issuance Program and the cash consideration (if any) payable per share
thereunder.  To the extent such adjustments are to be made to
outstanding Awards, those adjustments shall be effected in a manner that shall
preclude the enlargement or dilution of rights and benefits under those Awards.
No adjustments shall be made to any outstanding Awards under the Discretionary
Grant Program to the extent to which any such adjustment would reduce the
exercise price or base price of the stock option or stock appreciation right
below the Fair Market Value per share of Common Stock on the grant date. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive.

       

      
        
          
          

        

        
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      ARTICLE
TWO

      DISCRETIONARY GRANT
PROGRAM

       

      I.            
 Option
Terms.

       

      Each
option shall be evidenced by one or more documents in the form approved by the
Plan Administrator; provided, however, that each
such document shall comply with the terms specified below.  Each
document evidencing an Incentive Option shall, in addition, be subject to the
provisions of the Plan applicable to such options.

       

      A.           
Exercise
Price.

       

      1.         
  The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than 100% of the Fair Market Value per share
of Common Stock on the option grant date.

       

      2.           
The exercise price shall become immediately due upon exercise of the option and
shall be payable in one or more of the following forms that the Plan
Administrator may deem appropriate in each individual instance:

       

      (i)            
cash or check made payable to the Corporation;

       

      (ii)          
shares of Common Stock valued at Fair Market Value on the Exercise Date and held
for the period (if any) necessary to avoid any additional charges to the
Corporation’s earnings for financial reporting purposes; or

       

      (iii)           to
the extent the option is exercised for vested shares, through a special sale and
remittance procedure pursuant to which the Optionee shall concurrently provide
irrevocable instructions to (a) a brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable federal,
state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm to
complete the sale.

       

      Except to
the extent such sale and remittance procedure is utilized, payment of the
exercise price for the purchased shares must be made on the Exercise
Date.

       

      
        
          
          

        

        
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      B.          
 Exercise
and Term of Options. Each option shall be exercisable at such time or
times, during such period and for such number of shares as shall be determined
by the Plan Administrator and set forth in the documents evidencing the option.
However, no option shall have a term in excess of ten years measured from the
option grant date.

       

      C.           
Effect of
Termination of Service.

       

      1.            
The following provisions shall govern the exercise of any options held by the
Optionee at the time of cessation of Service or death:

       

      (i)           
Any option outstanding at the time of the Optionee’s cessation of Service for
any reason shall remain exercisable for such period of time thereafter as shall
be determined by the Plan Administrator and set forth in the documents
evidencing the option or as otherwise specifically authorized by the Plan
Administrator in its sole discretion pursuant to an express written agreement
with Optionee; provided that such options shall remain exercisable for no less
than 30 days from the date of the cessation of Service (or no less than 6 months
from the cessation of Service if the cessation is caused by death or
disability); and provided further that no such option shall be exercisable after
the expiration of the option term.

       

      (ii)           
Any option held by the Optionee at the time of death and exercisable in whole or
in part at that time may be subsequently exercised by the personal
representative of the Optionee’s estate or by the person or persons to whom the
option is transferred pursuant to the Optionee’s will or the laws of inheritance
or by the Optionee’s designated beneficiary or beneficiaries of that
option.

       

      (iii)           During
the applicable post-Service exercise period, the option may not be exercised in
the aggregate for more than the number of vested shares for which that option is
at the time exercisable. No additional shares shall vest under the option
following the Optionee’s cessation of Service, except to the extent (if any)
specifically authorized by the Plan Administrator in its sole discretion
pursuant to an express written agreement with Optionee. Upon the expiration of
the applicable exercise period or (if earlier) upon the expiration of the option
term, the option shall terminate and cease to be outstanding for any shares for
which the option has not been exercised.

       

      2.            
The Plan Administrator shall have complete discretion, exercisable either at the
time an option is granted or at any time while the option remains outstanding,
to:

       

      (i)           
extend the period of time for which the option is to remain exercisable
following the Optionee’s cessation of Service from the limited exercise period
otherwise in effect for that option to such greater period of time as the Plan
Administrator shall deem appropriate, but in no event beyond the expiration of
the option term, and/or

       

      
        
          
          

        

        
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      (ii)           permit
the option to be exercised, during the applicable post-Service exercise period,
not only with respect to the number of vested shares of Common Stock for which
such option is exercisable at the time of the Optionee’s cessation of Service
but also with respect to one or more additional installments in which the
Optionee would have vested had the Optionee continued in Service.

       

      D.        
   Stockholder
Rights. The holder of an option shall have no stockholder rights with
respect to the shares subject to the option until such person shall have
exercised the option, paid the exercise price and become a holder of record of
the purchased shares.

       

      E.          
  Repurchase
Rights. The Plan Administrator shall have the discretion to grant options
that are exercisable for unvested shares of Common Stock. Should the Optionee
cease Service while holding such unvested shares, the Corporation shall have the
right to repurchase, at the exercise price paid per share, any or all of those
unvested shares. The terms upon which such repurchase right shall be exercisable
(including the period and procedure for exercise and the appropriate vesting
schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such repurchase
right.

       

      F.         
   Transferability
of Options. The transferability of options granted under the Plan shall
be governed by the following provisions:

       

      (i)           
 Incentive
Options. During the lifetime of the Optionee, Incentive Options shall be
exercisable only by the Optionee and shall not be assignable or transferable
other than by will or the laws of inheritance following the Optionee’s
death.

       

      (ii)          
Non-Statutory
Options. Non-Statutory Options shall be subject to the same limitation on
transfer as Incentive Options, except that the Plan Administrator may structure
one or more Non-Statutory Options so that the option may be assigned in whole or
in part during the Optionee’s lifetime to one or more Family Members of the
Optionee or to a trust established exclusively for the Optionee and/or one or
more such Family Members, to the extent such assignment is in connection with
the Optionee’s estate plan or pursuant to a domestic relations order. The
assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem
appropriate.

       

      (iii)           Beneficiary
Designations. Notwithstanding the foregoing, the Optionee may designate
one or more persons as the beneficiary or beneficiaries of his or her
outstanding options under this Article Two
(whether Incentive Options or Non-Statutory Options), and those options shall,
in accordance with such designation, automatically be transferred to such
beneficiary or beneficiaries upon the Optionee’s death while holding those
options. Such beneficiary or beneficiaries shall take the transferred options
subject to all the terms and conditions of the applicable agreement evidencing
each such transferred option, including (without limitation) the limited time
period during which the option may be exercised following the Optionee’s
death.

       

      
        
          
          

        

        
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      II.          
  Incentive
Options.

       

      The terms
specified below, together with any additions, deletions or changes thereto
imposed from time to time pursuant to the provisions of the Code governing
Incentive Options, shall be applicable to all Incentive Options. Except as
modified by the provisions of this Section II, all
the provisions of Articles One, Two and
Four shall be applicable to Incentive Options. Options that are
specifically designated as Non-Statutory Options when issued under the Plan
shall not be subject to the terms of this Section II.

       

      A.         
  Eligibility.
Incentive Options may only be granted to Employees.

       

      B.            
Exercise
Price. The exercise price per share shall not be less than 100% of the
Fair Market Value per share of Common Stock on the option grant
date.

       

      C.           
 Dollar
Limitation. The aggregate Fair Market Value of the shares of Common Stock
(determined as of the respective date or dates of grant) for which one or more
options granted to any Employee under the Plan (or any other option plan of the
Corporation or any Parent or Subsidiary) may for the first time become
exercisable as Incentive Options during any one calendar year shall not exceed
the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee
holds two or more such options which become exercisable for the first time in
the same calendar year, then for purposes of the foregoing limitation on the
exercisability of those options as Incentive Options, such options shall be
deemed to become first exercisable in that calendar year on the basis of the
chronological order in which they were granted, except to the extent otherwise
provided under applicable law or regulation.

       

      D.           
10%
Stockholder. If any Employee to whom an Incentive Option is granted is a
10% Stockholder, then the exercise price per share shall not be less than 110%
of the Fair Market Value per share of Common Stock on the option grant date, and
the option term shall not exceed five years measured from the option grant
date.

       

      III.           Stock
Appreciation Rights.

       

      A.           Authority.
The Plan Administrator shall have full power and authority, exercisable in its
sole discretion, to grant stock appreciation rights in accordance with this
Section III to
selected Optionees or other individuals eligible to receive option grants under
the Discretionary Grant Program.

       

      B.           Types.
Three types of stock appreciation rights shall be authorized for issuance under
this Section III: (i)
tandem stock appreciation rights (“Tandem Rights”), (ii)
standalone stock appreciation rights (“Standalone Rights”)
and (iii) limited stock appreciation rights (“Limited
Rights”).

       

      C.           Tandem
Rights. The following terms and conditions shall govern the grant and
exercise of Tandem Rights.

       

      
        
          
          

        

        
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      1.          
 One or more Optionees may be granted a Tandem Right, exercisable upon such
terms and conditions as the Plan Administrator may establish, to elect between
the exercise of the underlying stock option for shares of Common Stock or the
surrender of that option in exchange for a distribution from the Corporation in
an amount equal to the excess of (i) the Fair Market Value (on the option
surrender date) of the number of shares in which the Optionee is at the time
vested under the surrendered option (or surrendered portion thereof) over (ii)
the aggregate exercise price payable for such vested shares.

       

      2.         
   No such option surrender shall be effective unless it is approved
by the Plan Administrator, either at the time of the actual option surrender or
at any earlier time. If the surrender is so approved, then the distribution to
which the Optionee shall accordingly become entitled under this Section III may
be made in shares of Common Stock valued at Fair Market Value on the option
surrender date, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.

       

      3.        
   If the surrender of an option is not approved by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of
(i) five business days after the receipt of the rejection notice or (ii) the
last day on which the option is otherwise exercisable in accordance with the
terms of the instrument evidencing such option, but in no event may such rights
be exercised more than ten years after the date of the option
grant.

       

      D.          
 Standalone
Rights. The following terms and conditions shall govern the grant and
exercise of Standalone Rights under this Article Two:

       

      1.            
One or more individuals eligible to participate in the Discretionary Grant
Program may be granted a Standalone Right not tied to any underlying option
under this Discretionary Grant Program. The Standalone Right shall relate to a
specified number of shares of Common Stock and shall be exercisable upon such
terms and conditions as the Plan Administrator may establish. In no event,
however, may the Standalone Right have a maximum term in excess of ten years
measured from the grant date. Upon exercise of the Standalone Right, the holder
shall be entitled to receive a distribution from the Corporation in an amount
equal to the excess of (i) the aggregate Fair Market Value (on the exercise
date) of the shares of Common Stock underlying the exercised right over (ii) the
aggregate base price in effect for those shares.

       

      2.            
The number of shares of Common Stock underlying each Standalone Right and the
base price in effect for those shares shall be determined by the Plan
Administrator in its sole discretion at the time the Standalone Right is
granted. In no event, however, may the base price per share be less than the
Fair Market Value per underlying share of Common Stock on the grant
date.

       

      3.          
  Standalone Rights shall be subject to the same transferability
restrictions applicable to Non-Statutory Options and may not be transferred
during the holder’s lifetime, except to one or more Family Members of the holder
or to a trust established exclusively for the holder and/or such Family Members,
to the extent such assignment is in connection with the holder’s estate plan or
pursuant to a domestic relations order covering the Standalone Right as marital
property. In addition, one or more beneficiaries may be designated for an
outstanding Standalone Right in accordance with substantially the same terms and
provisions as set forth in Section I.F of
this Article Two.

       

      
        
          
          

        

        
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      4.           
 The distribution with respect to an exercised Standalone Right may be made
in shares of Common Stock valued at Fair Market Value on the exercise date, in
cash, or partly in shares and partly in cash, as the Plan Administrator shall in
its sole discretion deem appropriate.

       

      5.           
 The holder of a Standalone Right shall have no stockholder rights with
respect to the shares subject to the Standalone Right unless and until such
person shall have exercised the Standalone Right and become a holder of record
of shares of Common Stock issued upon the exercise of such Standalone
Right.

       

      E.           Limited
Rights. The following terms and conditions shall govern the grant and
exercise of Limited Rights under this Article Two:

       

      1.           
 One or more Section 16 Insiders may, in the Plan Administrator’s sole
discretion, be granted Limited Rights with respect to their outstanding options
under this Article Two.

       

      2.            
Upon the occurrence of a Hostile Take-Over, the Section 16 Insider shall
have the unconditional right (exercisable for a 30-day period following such
Hostile Take-Over) to surrender each option with such a Limited Right to the
Corporation. The Section 16 Insider shall in return be entitled to a cash
distribution from the Corporation in an amount equal to the excess of (i) the
Take-Over Price of the number of shares in which the Optionee is at the time
vested under the surrendered option (or surrendered portion thereof) over (ii)
the aggregate exercise price payable for those vested shares. Such cash
distribution shall be made within five days following the option surrender
date.

       

      3.           
 The Plan Administrator shall pre-approve, at the time such Limited Right
is granted, the subsequent exercise of that right in accordance with the terms
of the grant and the provisions of this Section III. No
additional approval of the Plan Administrator or the Board shall be required at
the time of the actual option surrender and cash distribution. Any unsurrendered
portion of the option shall continue to remain outstanding and become
exercisable in accordance with the terms of the instrument evidencing such
grant.

       

      F.           
 Post-Service
Exercise. The provisions governing the exercise of Tandem, Standalone and
Limited Stock Appreciation Rights following the cessation of the recipient’s
Service or the recipient’s death shall be substantially the same as those set
forth in Section I.C of
this Article Two for
the options granted under the Discretionary Grant Program.

       

      G.          
 Net
Counting. Upon the exercise of any Tandem, Standalone or Limited Right
under this Section III, the
share reserve under Section V of
Article One
shall only be reduced by the net number of shares actually issued by the
Corporation upon such exercise, and not by the gross number of shares as to
which such Tandem, Standalone or Limited Right is exercised.

       

      
        
          
          

        

        
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      IV.           Change in Control/ Hostile
Take-Over.

       

      A.        
   No Award outstanding under the Discretionary Grant Program at
the time of a Change in Control shall vest and become exercisable on an
accelerated basis if and to the extent that: (i) such Award is, in connection
with the Change in Control, assumed by the successor corporation (or parent
thereof) or otherwise continued in full force and effect pursuant to the terms
of the Change in Control transaction, (ii) such Award is replaced with a cash
retention program of the successor corporation that preserves the spread
existing at the time of the Change in Control on the shares of Common Stock as
to which the Award is not otherwise at that time vested and exercisable and
provides for subsequent payout of that spread in accordance with the same
exercise/vesting schedule applicable to those shares, or (iii) the acceleration
of such Award is subject to other limitations imposed by the Plan Administrator.
However, if none of the foregoing conditions are satisfied, each Award
outstanding under the Discretionary Grant Program at the time of the Change in
Control but not otherwise vested and exercisable as to all the shares at the
time subject to that Award shall automatically accelerate so that each such
Award shall, immediately prior to the effective date of the Change in Control,
vest and become exercisable as to all the shares of Common Stock at the time
subject to that Award and may be exercised as to any or all of those shares as
fully vested shares of Common Stock.

       

      B.          
 All outstanding repurchase rights under the Discretionary Grant Program
shall also terminate automatically, and the shares of Common Stock subject to
those terminated rights shall immediately vest in full, in the event of any
Change in Control, except to the extent: (i) those repurchase rights are
assigned to the successor corporation (or parent thereof) or otherwise continue
in full force and effect pursuant to the terms of the Change in Control
transaction or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator.

       

      C.          
 Immediately following the consummation of the Change in Control, all
outstanding Awards under the Discretionary Grant Program shall terminate and
cease to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof) or otherwise expressly continued in full force
and effect pursuant to the terms of the Change in Control
transaction.

       

      D.          
 Each option that is assumed in connection with a Change in Control or
otherwise continued in effect shall be appropriately adjusted, immediately after
such Change in Control, to apply to the number and class of securities that
would have been issuable to the Optionee in consummation of such Change in
Control had the option been exercised immediately prior to such Change in
Control. In the event outstanding Standalone Rights are to be assumed in
connection with a Change in Control transaction or otherwise continued in
effect, the shares of Common Stock underlying each such Standalone Right shall
be adjusted immediately after such Change in Control to apply to the number and
class of securities into which those shares of Common Stock would have been
converted in consummation of such Change in Control had those shares actually
been outstanding at that time. Appropriate adjustments to reflect such Change in
Control shall also be made to (i) the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such
securities shall remain the same, (ii) the base price per share in effect under
each outstanding Standalone Right, provided the aggregate base price shall
remain the same, (iii) the maximum number and/or class of securities available
for issuance over the remaining term of the Plan, and (iv) the maximum number
and/or class of securities for which any one person may be granted Awards under
the Plan per calendar year. To the extent the actual holders of the
Corporation’s outstanding Common Stock receive cash consideration for their
Common Stock in consummation of the Change in Control, the successor corporation
may, in connection with the assumption or continuation of the outstanding Awards
under the Discretionary Grant Program, substitute, for the securities underlying
those assumed Awards, one or more shares of its own common stock with a fair
market value equivalent to the cash consideration paid per share of Common Stock
in such Change in Control transaction.

       

      
        
          
          

        

        
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      E.         
  The Plan Administrator shall have the discretionary authority to
structure one or more outstanding Awards under the Discretionary Grant Program
so that those Awards shall, immediately prior to the effective date of a Change
in Control or a Hostile Take-Over, vest and become exercisable as to all the
shares at the time subject to those Awards and may be exercised as to any or all
of those shares as fully vested shares of Common Stock, whether or not those
Awards are to be assumed or otherwise continued in full force and effect
pursuant to the express terms of such transaction. In addition, the Plan
Administrator shall have the discretionary authority to structure one or more of
the Corporation’s repurchase rights under the Discretionary Grant Program so
that those rights shall immediately terminate at the time of such Change in
Control or consummation of such Hostile Take-Over and shall not be assignable to
successor corporation (or parent thereof), and the shares subject to those
terminated rights shall accordingly vest in full at the time of such Change in
Control or consummation of such Hostile Take-Over.

       

      F.          
 The Plan Administrator shall have full power and authority to structure
one or more outstanding Awards under the Discretionary Grant Program so that
those Awards shall immediately vest and become exercisable as to all of the
shares at the time subject to those Awards in the event the Optionee’s Service
is subsequently terminated by reason of an Involuntary Termination within a
designated period (not to exceed 18 months) following the effective date of any
Change in Control or a Hostile Take-Over in which those Awards do not otherwise
vest on an accelerated basis. Any Awards so accelerated shall remain exercisable
as to fully vested shares until the expiration or sooner termination of their
term. In addition, the Plan Administrator may structure one or more of the
Corporation’s repurchase rights under the Discretionary Grant Program so that
those rights shall immediately terminate with respect to any shares held by the
Optionee at the time of his or her Involuntary Termination, and the shares
subject to those terminated repurchase rights shall accordingly vest in full at
that time.

       

      G.          
 The portion of any Incentive Option accelerated in connection with a
Change in Control shall remain exercisable as an Incentive Option only to the
extent the applicable One Hundred Thousand Dollar ($100,000) limitation is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-Statutory Option under the
federal tax laws.

       

      H.        
   Awards outstanding under the Discretionary Grant Program shall
in no way affect the right of the Corporation to adjust, reclassify, reorganize
or otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      V.         
  Exchange/
Repricing Programs.

       

      A.           
The Plan Administrator shall have the authority to effect, at any time and from
time to time, with the consent of the affected holders, the cancellation of any
or all outstanding options or stock appreciation rights under the Discretionary
Grant Program and to grant in exchange one or more of the following: (i) new
options or stock appreciation rights covering the same or a different number of
shares of Common Stock but with an exercise or base price per share not less
than the Fair Market Value per share of Common Stock on the new grant date or
(ii) cash or shares of Common Stock, whether vested or unvested, equal in value
to the value of the cancelled options or stock appreciation rights; provided
that no such exchange shall be effected so as to constitute the deferral of
compensation or an additional deferral feature that would subject the stock
options or stock appreciation rights to Section 409A of the Code or the
Treasury Regulations promulgated thereunder.

       

      B.          
 The Plan Administrator shall also have the authority, exercisable at any
time and from time to time, with or, if the affected holder is not a
Section 16 Insider, then without, the consent of the affected holders, to
issue new stock options or stock appreciation rights with a lower exercise or
base price in immediate cancellation of outstanding stock options or stock
appreciation rights with a higher exercise or base price; provided that no such
cancellation shall be effected so as to constitute the deferral of compensation
or an additional deferral feature that would subject the stock options or stock
appreciation rights to Section 409A of the Code or the Treasury Regulations
promulgated thereunder.

       

      ARTICLE
THREE

      STOCK ISSUANCE
PROGRAM

       

      I.            
Stock Issuance
Terms.

       

      A.          
 Issuances.
Shares of Common Stock may be issued under the Stock Issuance Program through
direct and immediate issuances without any intervening option grants. Each such
stock issuance shall be evidenced by a Stock Issuance Agreement that complies
with the terms specified below. Shares of Common Stock may also be issued under
the Stock Issuance Program pursuant to restricted stock awards or restricted
stock units, awarded by and at the discretion of the Plan Administrator, that
entitle the recipients to receive the shares underlying those awards or units
upon the attainment of designated performance goals and/or the satisfaction of
specified Service requirements or upon the expiration of a designated time
period following the vesting of those awards or units.

       

      B.           
 Issue
Price.

       

      1.           
 The price per share at which shares of Common Stock may be issued under
the Stock Issuance Program shall be fixed by the Plan Administrator, but shall
not be less than 100% of the Fair Market Value per share of Common Stock on the
issuance date.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      2.          
  Shares of Common Stock may be issued under the Stock Issuance
Program for any of the following items of consideration that the Plan
Administrator may deem appropriate in each individual instance:

       

      (i)          
  cash or check made payable to the Corporation;

       

      (ii)         
  past services rendered to the Corporation (or any Parent or
Subsidiary); or

       

      (iii)           any
other valid form of consideration permissible under the Nevada Revised Statutes
at the time such shares are issued.

       

      C.          
  Vesting
Provisions.

       

      1.         
   Shares of Common Stock issued under the Stock Issuance Program
may, in the discretion of the Plan Administrator, be fully and immediately
vested upon issuance or may vest in one or more installments over the
Participant’s period of Service and/or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested
shares of Common Stock issued under the Stock Issuance Program shall be
determined by the Plan Administrator and incorporated into the Stock Issuance
Agreement. Shares of Common Stock may also be issued under the Stock Issuance
Program pursuant to restricted stock awards or restricted stock units that
entitle the recipients to receive the shares underlying those awards and/or
units upon the attainment of designated performance goals or the satisfaction of
specified Service requirements or upon the expiration of a designated time
period following the vesting of those awards or units, including (without
limitation) a deferred distribution date following the termination of the
Participant’s Service.

       

      2.           
 The Plan Administrator shall also have the discretionary authority,
consistent with Code Section 162(m), to structure one or more Awards under
the Stock Issuance Program so that the shares of Common Stock subject to those
Awards shall vest (or vest and become issuable) upon the achievement of certain
pre-established corporate performance goals based on one or more of the
following criteria: (i) return on total stockholders’ equity; (ii) net income
per share of Common Stock; (iii) net income or operating income; (iv) earnings
before interest, taxes, depreciation, amortization and stock-compensation costs,
or operating income before depreciation and amortization; (v) sales or revenue
targets; (vi) return on assets, capital or investment; (vii) cash flow; (viii)
market share; (ix) cost reduction goals; (x) budget comparisons; (xi)
implementation or completion of projects or processes strategic or critical to
the Corporation’s business operations; (xii) measures of customer satisfaction;
(xiii) any combination of, or a specified increase in, any of the foregoing; and
(xiv) the formation of joint ventures, research and development collaborations,
marketing or customer service collaborations, or the completion of other
corporate transactions intended to enhance the Corporation’s revenue or
profitability or expand its customer base; provided, however, that for
purposes of items (ii), (iii) and (vii) above, the Plan Administrator may, at
the time the Awards are made, specify certain adjustments to such items as
reported in accordance with generally accepted accounting principles in the
United States (“GAAP”), which will
exclude from the calculation of those performance goals one or more of the
following: certain charges related to acquisitions, stock-based compensation,
employer payroll tax expense on certain stock option exercises, settlement
costs, restructuring costs, gains or losses on strategic investments,
non-operating gains or losses, certain other non-cash charges, valuation
allowance on deferred tax assets, and the related income tax effects, purchases
of property and equipment, and any extraordinary non-recurring items as
described in Accounting Principles Board Opinion No. 30 or its successor,
provided that such adjustments are in conformity with those reported by the
Corporation on a non-GAAP basis. In addition, such performance goals may be
based upon the attainment of specified levels of the Corporation’s performance
under one or more of the measures described above relative to the performance of
other entities and may also be based on the performance of any of the
Corporation’s business groups or divisions thereof or any Parent or Subsidiary.
Performance goals may include a minimum threshold level of performance below
which no award will be earned, levels of performance at which specified portions
of an award will be earned, and a maximum level of performance at which an award
will be fully earned. The Plan Administrator may provide that, if the actual
level of attainment for any performance objective is between two specified
levels, the amount of the award attributable to that performance objective shall
be interpolated on a straight-line basis.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      3.         
   Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) that the
Participant may have the right to receive with respect to the Participant’s
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation’s
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant’s unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem
appropriate.

       

      4.        
    The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant’s interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares. The Participant
shall not have any stockholder rights with respect to the shares of Common Stock
subject to a restricted stock unit award until that award vests and the shares
of Common Stock are actually issued thereunder. However, dividend-equivalent
units may be paid or credited, either in cash or in actual or phantom shares of
Common Stock, on outstanding restricted stock unit or restricted stock awards,
subject to such terms and conditions as the Plan Administrator may deem
appropriate.

       

      5.         
   Should the Participant cease to remain in Service while holding one
or more unvested shares of Common Stock issued under the Stock Issuance Program
or should the performance objectives not be attained with respect to one or more
such unvested shares of Common Stock, then except as set forth in Section I.C.6 of
this Article Three,
those shares shall be immediately surrendered to the Corporation for
cancellation, and the Participant shall have no further stockholder rights with
respect to those shares. To the extent the surrendered shares were previously
issued to the Participant for consideration paid in cash, cash equivalent or
otherwise, the Corporation shall repay to the Participant the same amount and
form of consideration as the Participant paid for the surrendered
shares.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      6.          
  The Plan Administrator may in its discretion waive the surrender and
cancellation of one or more unvested shares of Common Stock that would otherwise
occur upon the cessation of the Participant’s Service or the non-attainment of
the performance objectives applicable to those shares. Any such waiver shall
result in the immediate vesting of the Participant’s interest in the shares of
Common Stock as to which the waiver applies. Such waiver may be effected at any
time, whether before or after the Participant’s cessation of Service or the
attainment or non-attainment of the applicable performance objectives. However,
no vesting requirements tied to the attainment of performance objectives may be
waived with respect to shares that were intended at the time of issuance to
qualify as performance-based compensation under Code Section 162(m), except
in the event of the Participant’s Involuntary Termination or as otherwise
provided in Section II.E of
this Article Three.

       

      7.          
  Outstanding restricted stock awards or restricted stock units under
the Stock Issuance Program shall automatically terminate, and no shares of
Common Stock shall actually be issued in satisfaction of those awards or units,
if the performance goals or Service requirements established for such awards or
units are not attained or satisfied. The Plan Administrator, however, shall have
the discretionary authority to issue vested shares of Common Stock under one or
more outstanding restricted stock awards or restricted stock units as to which
the designated performance goals or Service requirements have not been attained
or satisfied. However, no vesting requirements tied to the attainment of
performance goals may be waived with respect to awards or units which were at
the time of grant intended to qualify as performance-based compensation under
Code Section 162(m), except in the event of the Participant’s Involuntary
Termination or as otherwise provided in Section II.E of
this Article Three.

       

      
        	
                 
      

              	
                II.

              	
                Change in Control/
      Hostile Take-Over.

              

      

       

      A.           All
of the Corporation’s outstanding repurchase rights under the Stock Issuance
Program shall terminate automatically, and all the shares of Common Stock
subject to those terminated rights shall immediately vest in full, in the event
of any Change in Control, except to the extent (i) those repurchase rights are
to be assigned to the successor corporation (or parent thereof) or otherwise
continued in full force and effect pursuant to the express terms of the Change
in Control transaction or (ii) such accelerated vesting is precluded by other
limitations imposed in the Stock Issuance Agreement.

       

      B.           
Each outstanding Award under the Stock Issuance Program that is assumed in
connection with a Change in Control or otherwise continued in effect shall be
adjusted immediately after the consummation of that Change in Control to apply
to the number and class of securities into which the shares of Common Stock
subject to the Award immediately prior to the Change in Control would have been
converted in consummation of such Change in Control had those shares actually
been outstanding at that time, and appropriate adjustments shall also be made to
the cash consideration (if any) payable per share thereunder, provided the
aggregate amount of such consideration shall remain the same. If any such Award
is not so assumed or otherwise continued in effect or replaced with a cash
retention program which preserves the Fair Market Value of the shares underlying
the Award at the time of the Change in Control and provides for the subsequent
payout of that value in accordance with the vesting schedule in effect for the
Award at the time of such Change in Control, such Award shall vest, and the
shares of Common Stock subject to that Award shall be issued as fully-vested
shares, immediately prior to the consummation of the Change in
Control.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      C.          
 The Plan Administrator shall have the discretionary authority to structure
one or more unvested Awards under the Stock Issuance Program so that the shares
of Common Stock subject to those Awards shall automatically vest (or vest and
become issuable) in whole or in part immediately upon the occurrence of a Change
in Control or upon the subsequent termination of the Participant’s Service by
reason of an Involuntary Termination within a designated period (not to exceed
18 months) following the effective date of that Change in Control
transaction.

       

      D.          
 The Plan Administrator shall also have the discretionary authority to
structure one or more unvested Awards under the Stock Issuance Program so that
the shares of Common Stock subject to those Awards shall automatically vest (or
vest and become issuable) in whole or in part immediately upon the occurrence of
a Hostile Take-Over or upon the subsequent termination of the Participant’s
Service by reason of an Involuntary Termination within a designated period (not
to exceed 18 months) following the effective date of that Hostile
Take-Over.

       

      E.        
   The Plan Administrator’s authority under Paragraphs C and D of
this Section II shall
also extend to any Award intended to qualify as performance-based compensation
under Code Section 162(m), even though the automatic vesting of those
Awards pursuant to Paragraph C or D of this Section II may
result in their loss of performance-based status under Code
Section 162(m).

       

      F.         
  Awards outstanding under the Stock Issuance Program shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

       

      G.          
 To the extent it is necessary for the term “Change in Control” to be
defined in order for compensation provided under any Award to avoid the
imposition of taxes under Section 409A of the Code, then the term “Change
in Control,” only insofar as it applies to any such Award and its treatment
under Section 409A, shall be defined as that term is defined by Section 409A-3
of the Treasury Regulations promulgated under Section 409A (26 CFR
§ 409A-3), rather than as provided in the Appendix of this Plan, and the
terms of this Section
II shall be applied and interpreted with respect to such
Section 409A mandated definition in such manner as the Plan Administrator
in its discretion determines to be equitable and reflect the intention of this
Section
II.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      ARTICLE
FOUR

      MISCELLANEOUS

       

      
        	
                 
      

              	
                I.

              	
                Tax
      Withholding.

              

      

       

      A.           The
Corporation’s obligation to deliver shares of Common Stock upon the issuance,
exercise or vesting of Awards under the Plan shall be subject to the
satisfaction of all applicable federal, state and local income and employment
tax withholding requirements.

       

      B.          
 Subject to applicable laws, rules and regulations and policies of the
Corporation, the Plan Administrator may, in its discretion, provide any or all
Optionees or Participants to whom Awards are made under the Plan with the right
to utilize any or all of the following methods to satisfy all or part of the
Withholding Taxes to which those holders may become subject in connection with
the issuance, exercise or vesting of those Awards.

       

      (i)           
Stock
Withholding: The election to have the Corporation withhold, from the
shares of Common Stock otherwise issuable upon the issuance, exercise or vesting
of those Awards a portion of those shares with an aggregate Fair Market Value
equal to the percentage of the Withholding Taxes (not to exceed 100%) designated
by the Optionee or Participant and make a cash payment equal to such Fair Market
Value directly to the appropriate taxing authorities on such individual’s
behalf. The shares of Common Stock so withheld shall not reduce the number of
shares of Common Stock authorized for issuance under the Plan.

       

      (ii)          
 Stock
Delivery: The election to deliver to the Corporation, at the time the
Award is issued, exercised or vests, one or more shares of Common Stock
previously acquired by such the Optionee or Participant (other than in
connection with the issuance, exercise or vesting triggering the Withholding
Taxes) with an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes (not to exceed 100%) designated by such holder. The shares of
Common Stock so delivered shall not be added to the shares of Common Stock
authorized for issuance under the Plan.

       

      (iii)           Sale and
Remittance: The election to deliver to the Corporation, to the extent the
Award is issued or exercised for vested shares, through a special sale and
remittance procedure pursuant to which the Optionee or Participant shall
concurrently provide irrevocable instructions to a brokerage firm to effect the
immediate sale of the purchased or issued shares and remit to the Corporation,
out of the sale proceeds available on the settlement date, sufficient funds to
cover the Withholding Taxes required to be withheld by the Corporation by reason
of such issuance, exercise or vesting.

       

      
        	
                 
      

              	
                II.

              	
                Share
      Escrow/Legends.

              

      

       

      Unvested
shares issued under the Plan may, in the Plan Administrator’s discretion, be
held in escrow by the Corporation until the Participant’s interest in such
shares vests or may be issued directly to the Participant with restrictive
legends on the certificates evidencing those unvested shares.

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                III.

              	
                Effective Date and
      Term of the Plan.

              

      

       

      A.           The
Plan was adopted by the Board on October 24, 2008, subject to stockholder
approval within twelve months after that date.  Should stockholder
approval not be obtained within such period, the Plan will be
terminated.

       

      B.           The
Plan shall become effective on the Plan Effective Date. Awards may be granted
under the Discretionary Grant Program and the Stock Issuance Program at any time
on or after the Plan Effective Date.

       

      C.           The
Plan shall terminate upon the earliest to occur of (i) October 24, 2009, if
stockholder approval of the Plan has not yet been obtained, (ii) October 24,
2018, (iii) the date on which all shares available for issuance under the Plan
shall have been issued as fully-vested shares, (iv) the termination of all
outstanding Awards in connection with a Change in Control or (v) such other date
as the Board in its sole discretion terminates the Plan. If the Plan terminates
on October 24, 2018 or on such other date as the Board terminates the Plan, then
all Awards outstanding at that time shall continue to have force and effect in
accordance with the provisions of the documents evidencing such
Awards.

       

      
        	
                 
      

              	
                IV.

              	
                Amendment, Suspension
      or Termination of the Plan.

              

      

       

      The Board
may suspend or terminate the Plan at any time, without notice, and in its sole
discretion. The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall materially impair the rights and obligations with respect to
Awards at the time outstanding under the Plan unless the Optionee or the
Participant consents to such amendment or modification. In addition, stockholder
approval will be required for any amendment to the Plan that (i) materially
increases the number of shares of Common Stock available for issuance under the
Plan, (ii) materially expands the class of individuals eligible to receive
option grants or other awards under the Plan, (iii) materially increases the
benefits accruing to the Optionees and Participants under the Plan or materially
reduces the price at which shares of Common Stock may be issued or purchased
under the Plan, (iv) materially extends the term of the Plan, (v) expands the
types of awards available for issuance under the Plan or (vi) is required under
applicable laws, rules or regulations to be approved by
stockholders.

       

      
        	
                 
      

              	
                V.

              	
                Use of
      Proceeds.

              

      

       

      Any cash
proceeds received by the Corporation from the sale of shares of Common Stock
under the Plan shall be used for general corporate purposes.

       

      
        	
                 
      

              	
                VI.

              	
                Regulatory
      Approvals.

              

      

       

      A.           The
implementation of the Plan, the grant of any Award and the issuance of shares of
Common Stock in connection with the issuance, exercise or vesting of any Award
made under the Plan shall be subject to the Corporation’s procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the Awards made under the Plan and the shares of Common Stock
issuable pursuant to those Awards.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      B.          
 No shares of Common Stock or other assets shall be issued or delivered
under the Plan unless and until there shall have been compliance with all
applicable requirements of federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of the OTCBB, if applicable, and any stock exchange or other market on which
Common Stock is then quoted or listed for trading.

       

      
        	
                 
      

              	
                VII.

              	
                No Employment/ Service
      Rights.

              

      

       

      Nothing
in the Plan shall confer upon the Optionee or the Participant any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee or the
Participant, which rights are hereby expressly reserved by each, to terminate
such person’s Service at any time for any reason, with or without
cause.

      
         

        
          	
                   
      

                	
                  

                    VIII.

                  

                	
                  

                    Non-Exclusivity of the
      Plan.

                  

                

        

      

       

      Nothing
contained in the Plan is intended to amend, modify, or rescind any previously
approved compensation plans, programs or options entered into by the
Corporation. This Plan shall be construed to be in addition to and independent
of any and all other arrangements. Neither the adoption of the Plan by the Board
nor the submission of the Plan to the stockholders of the Corporation for
approval shall be construed as creating any limitations on the power or
authority of the Board to adopt, with or without stockholder approval, such
additional or other compensation arrangements as the Board may from time to time
deem desirable.

       

      
        	
                 
      

              	
                IX.

              	
                Governing
      Law.

              

      

       

      All
questions and obligations under the Plan and agreements issued pursuant to the
Plan shall be construed and enforced in accordance with the laws of the State of
Nevada.

       

      
        	
                 
      

              	
                X.

              	
                Information to
      Optionees and Participants.

              

      

       

      Optionees
and Participants under the Plan who do not otherwise have access to financial
statements of the Corporation will receive the Corporation’s financial
statements at least annually.

       

      XI.           Compliance
with Section 409A of the Code. It is the intention of the Corporation
that no option or stock appreciation right granted under the Plan shall be
"deferred compensation" that is subject to Section 409A of the
Code.  If any option granted under the Plan is subject to Section 409A
of the Code, notwithstanding any provision of this Plan to the contrary, the
provisions hereof shall be interpreted, applied and amended, to the extent
determined to be necessary by the Plan Administrator (and without consent of the
stockholders of the Corporation) and permitted by applicable law, to comply with
the provisions of Section 409A of the Code and the Treasury Regulations
promulgated thereunder so as to preserve, to the extent possible, the
Corporation’s intentions with respect to the Plan and the Options issued
hereunder.  In no event shall the Corporation be liable for any
interest, additional tax or penalties that may be imposed under Section 409A of
the Code with respect to any stock rights issued hereunder.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      APPENDIX

       

      The
following definitions shall be in effect under the Plan:

       

      A.           
“Award” means
any of the following stock or stock-based awards authorized for issuance or
grant under the Plan: stock option, stock appreciation right, direct stock
issuance, restricted stock or restricted stock unit award or other stock-based
award.

       

      B.          
  “Board” means the
Corporation’s board of directors.

       

      C.            
“Change in
Control” shall be deemed to have occurred if, in a single transaction or
series of related transactions:

       

      (i)          
 any person (as such term is used in Section 13(d) and 14(d) of the
1934 Act, or persons acting as a group, other than a trustee or fiduciary
holding securities under an employment benefit program, is or becomes a
“beneficial owner” (as defined in Rule 13-3 under the 1934 Act), directly or
indirectly of securities of the Corporation representing 51% or more of the
combined voting power of the Corporation, or

       

      (ii)           there
is a merger, consolidation, or other business combination transaction of the
Corporation with or into an other corporation, entity or person, other than a
transaction in which the holders of at least a majority of the shares of voting
capital stock of the Corporation outstanding immediately prior to such
transaction continue to hold (either by such shares remaining outstanding or by
their being converted into shares of voting capital stock of the surviving
entity) a majority of the total voting power represented by the shares of voting
capital stock of the Corporation (or surviving entity) outstanding immediately
after such transaction, or

       

      (iii)           all
or substantially all of the Corporation’s assets are sold.

       

      D.          
  “Code” means the
Internal Revenue Code of 1986, as amended.

       

      E.            
 “Common
Stock” means the Corporation’s common stock, $0.001 par value per
share.

       

      F.           
 “Compensation
Committee” means a committee of the Board comprised solely of two or more
Eligible Directors who are appointed by the Board to administer the
Discretionary Grant and Stock Issuance Programs, who are “outside directors”
within the meaning of Section 162(m) of the Code and who are “non-employee
directors” within the meaning of Rule 16b-3(b)(3)(i).

       

      G.         
  “Consultant” means a
consultant or other independent advisor who is under written contract with the
Corporation or any Subsidiary (or, in the case of the Stock Issuance Programs,
any Parent or Subsidiary) to provide consulting or advisory services to the
Corporation or any Subsidiary (or, in the case of the Stock Issuance Programs,
any Parent or Subsidiary) and whose securities issued pursuant to the Plan could
be registered on Form S-8.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      H.         
  “Corporation” means
BMR Solutions, Inc., a Nevada corporation, and any corporate successor to all or
substantially all of the assets or voting stock of BMR Solutions, Inc. that
shall by appropriate action adopt the Plan.

       

      I.             
“Discretionary Grant
Program” means the discretionary grant program in effect under Article Two of
the Plan pursuant to which stock options and stock appreciation rights may be
granted to one or more eligible individuals.

       

      J.             
“Eligible
Director” means a Board member who is not, at the time of such
determination, an employee of the Corporation (or any Parent or
Subsidiary).

       

      K.          
  “Employee” means an
individual who is in the employ of the Corporation or any Subsidiary (or, in the
case of the Stock Issuance Programs, any Parent or Subsidiary), subject to the
control and direction of the employer entity as to both the work to be performed
and the manner and method of performance.

       

      L.             
“Exercise Date”
means the date on which the Corporation shall have received written notice of
the option exercise.

       

      M.         
  “Fair
Market Value” per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:

       

      (i)           
 If the Common Stock is at the time traded on the OTCBB, then the Fair
Market Value shall be the closing selling price per share of Common Stock at the
close of regular hours trading (i.e., before after- hours trading begins) on the
OTCBB on the date in question, as such price is reported by the Financial
Institution Regulatory Authority. If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation
exists.

       

      (ii)         
  If the Common Stock is not traded on the OTCBB but is at the time
listed or quoted on any other market or exchange, then the Fair Market Value
shall be the closing selling price per share of Common Stock at the close of
regular hours trading (i.e., before after-hours trading begins) on the date in
question on the market or exchange determined by the Plan Administrator to be
the primary market for the Common Stock, as such price is officially quoted in
the composite tape of transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for which
such quotation exists.

       

      (iii)           In
the absence of an established market for the Common Stock, or if the Plan
Administrator determines in good faith that the Common Stock is too thinly
traded for Fair Market Value to be determined pursuant to clause (i) or clause
(ii) above, the Fair Market Value shall be determined in good faith by the Plan
Administrator, provided that such valuation shall take into account all
available information material to the value of the Corporation, including but
not limited to the value of the tangible and intangible assets of the
Corporation, the present value of its anticipated future cash flows, the market
value of the stock or equity interests in other entities engaged in
substantially the same business, recent arm’s length transactions involving the
sale of such stock, and other relevant factors, including, in the event that the
Plan Administrator determines in good faith that the Common Stock is too thinly
traded for Fair Market Value to be determined pursuant to clause (i) or clause
(ii) above, such factors as the percentage of Common Stock traded, the
percentage of Common Stock held by the public versus affiliates of the
Corporation, the frequency of trading in the Common Stock, recent spreads
between bid and ask prices for the Common Stock, and whether the market value of
the Common Stock is greater or less than the Corporation’s third-party interest
bearing debt and preferred stock.

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      In
addition, with respect to any Incentive Option, the Fair Market Value shall be
determined in a manner consistent with any regulations issued by the Secretary
of the Treasury for the purpose of determining fair market value of securities
subject to an Incentive Option plan under the Code.

       

      N.         
  “Family
Member” means, with respect to a particular Optionee or Participant, any
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationships.

       

      O.           
 “Hostile
Take-Over” means either of the following events effecting a change in
control or ownership of the Corporation:

       

      (i)         
  the acquisition, directly or indirectly, by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than 50% of the total combined voting
power of the Corporation’s outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation’s stockholders that the Board
does not recommend such stockholders to accept, or

       

      (ii)           a
change in the composition of the Board over a period of 36 consecutive months or
less such that a majority of the Board members ceases, by reason of one or more
contested elections for Board membership, to be composed of individuals who
either (A) have been Board members continuously since the beginning of such
period or (B) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in
clause (A) who were still in office at the time the Board approved such election
or nomination.

       

      P.            
“Incentive
Option” means an option that satisfies the requirements of Code
Section 422.

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      Q.           
 “Involuntary
Termination” means the termination of the Service of any individual that
occurs by reason of:

       

      (i)            if
such individual is providing services to the Corporation pursuant to a written
contract that defines “cause” or “misconduct” or similar reasons such individual
could be dismissed or discharged by the Corporation, then such individual’s
involuntary dismissal or discharge by the Corporation other than for any of such
reasons and other than for Misconduct shall be an Involuntary
Termination;

       

      (ii)          
if such individual is not providing services to the Corporation pursuant to a
written contract that defines “cause” or “misconduct” or similar reasons such
individual could be dismissed or discharged by the Corporation, then such
individual’s involuntary dismissal or discharge by the Corporation for reasons
other than Misconduct shall be an Involuntary Termination;

       

      (iii)           if
such individual is providing services to the Corporation pursuant to a written
contract that defines “good reason” or similar reasons such individual could
voluntarily resign, then such individual’s voluntary resignation for any of such
reasons shall be an Involuntary Termination; or

       

      (iv)           if
such individual is providing services to the Corporation pursuant to a written
contract that does not define “good reason” or similar reasons such individual
could voluntarily resign, then such individual’s voluntary resignation following
(A) a change in his or her position with the Corporation that materially reduces
his or her duties and responsibilities or the level of management to which he or
she reports, (B) a reduction in his or her level of compensation (including base
salary, fringe benefits and target bonus under any corporate-performance based
bonus or incentive programs) by more than 15% or (C) a relocation of such
individual’s place of employment by more than 50 miles, provided and only if
such change, reduction or relocation is effected by the Corporation without the
individual’s consent, shall be an Involuntary Termination.

       

      R.            “Misconduct” means the
commission of: any act of fraud, embezzlement or dishonesty by the Optionee or
Participant; any unauthorized use or disclosure by such person of confidential
information or trade secrets of the Corporation (or any Parent or Subsidiary);
any illegal or improper conduct or intentional misconduct, gross negligence or
recklessness by such person that has adversely affected or, in the determination
of the Plan Administrator, is likely to adversely affect, the business,
reputation, goodwill or affairs of the Corporation (or any Parent or Subsidiary)
in a material manner; any conduct that provides a basis for the Corporation to
terminate for “cause,” “misconduct” or similar reasons the written contract
pursuant to which the Optionee or Participant is providing Services to the
Corporation; resignation by the Optionee or Participant on fewer than 30 days’
prior written notice and in violation of an agreement to remain in Service of
the Corporation, in anticipation of a termination for “cause,” “misconduct” or
similar reasons under the agreement, or in lieu of a formal discharge for
“cause,” “misconduct” or similar reasons.  The foregoing definition
shall not in any way preclude or restrict the right of the Corporation (or any
Parent or Subsidiary) to discharge or dismiss any Optionee, Participant or other
person in the Service of the Corporation (or any Parent or Subsidiary) for any
other acts or omissions, but such other acts or omissions shall not be deemed,
for purposes of the Plan, to constitute grounds for termination for
Misconduct.

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      S.           
 “1934
Act” means the Securities Exchange Act of 1934, as amended.

       

      T.           
 “Non-Statutory
Option” means an option not intended to satisfy the requirements of Code
Section 422.

       

      U.          
  “Optionee” means any
person to whom an option is granted under the Discretionary Grant
Program.

       

      V.            
“OTCBB” means
the Over-the-Counter Bulletin Board.

       

      W.           “Parent” means any
corporation (other than the Corporation) in an unbroken chain of corporations
ending with the Corporation, provided each corporation in the unbroken chain
(other than the Corporation) owns, at the time of the determination, stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

       

      X.            
“Participant”
means any person who is issued shares of Common Stock or restricted stock units
or other stock-based awards under the Stock Issuance Program.

       

      Y.           
“Permanent
Disability” or “Permanently Disabled”
means the inability of the Optionee or the Participant to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment expected to result in death or to be of continuous duration of
twelve months or more.

       

      X.            
“Plan” means
the 2008 Stock Incentive Plan, as set forth in this document.

       

      AA.         “Plan Administrator”
means the particular entity, whether the Compensation Committee or the Board,
which is authorized to administer the Discretionary Grant and Stock Issuance
Programs with respect to one or more classes of eligible persons, to the extent
such entity is carrying out its administrative functions under those programs
with respect to the persons then subject to its jurisdiction.

       

      BB.          “Plan Effective Date”
means the date that stockholder approval of the Plan is obtained in accordance
with Section III.A.
of Article Four.

       

      CC.          “Section 16
Insider” means an officer or director of the Corporation subject to the
short-swing profit liability provisions of Section 16 of the 1934
Act.

       

      DD.          “Service” means the
performance of services for the Corporation (or any Parent or Subsidiary) by a
person in the capacity of an Employee, an Eligible Director or a Consultant,
except to the extent otherwise specifically provided in the documents evidencing
the Award made to such person. For purposes of the Plan, an Optionee or
Participant shall be deemed to cease Service immediately upon the occurrence of
the either of the following events: (i) the Optionee or Participant no longer
performs services in any of the foregoing capacities for the Corporation or any
Parent or Subsidiary or (ii) the entity for which the Optionee or Participant is
performing such services ceases to remain a Parent or Subsidiary of the
Corporation, even though the Optionee or Participant may subsequently continue
to perform services for that entity.

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      EE.           “Stock Issuance
Agreement” means the agreement entered into by the Corporation and the
Participant at the time of issuance of shares of Common Stock under the Stock
Issuance Program.

       

      FF.           “Stock Issuance
Program” means the stock issuance program in effect under Article Three of
the Plan.

       

      GG.          “Subsidiary” means any
corporation (other than the Corporation) in an unbroken chain of corporations
beginning with the Corporation, provided each corporation (other than the last
corporation) in the unbroken chain owns, at the time of the determination, stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

       

      HH.          “Take-Over Price”
means the greater of (i) the Fair Market Value per share of Common Stock on the
date the option is surrendered to the Corporation in connection with a Hostile
Take-Over or, if applicable, (ii) the highest reported price per share of Common
Stock paid by the tender offeror in effecting such Hostile Take-Over through the
acquisition of such Common Stock. However, if the surrendered option is an
Incentive Option, the Take-Over Price shall not exceed the clause (i) price per
share.

       

      II.            
“10%
Stockholder” means the owner of stock (as determined under Code
Section 424(d)) possessing more than 10% of the total combined voting power
of all classes of stock of the Corporation (or any Parent or
Subsidiary).

       

      JJ.            “Withholding Taxes”
means the federal, state and local income and employment taxes to which the
Optionee or Participant may become subject in connection with the issuance,
exercise or vesting of the Award made to him or her under the Plan.

       

       

      25ex_10-2.htm

    
      

      

    

    EXHIBIT
10.2

     

     

    BALQON
CORPORATION

    

    2008
STOCK INCENTIVE PLAN

    STOCK
OPTION GRANT NOTICE AND

    STOCK
OPTION AGREEMENT

     

    Balqon
Corporation, a Nevada corporation (the “Corporation”),
pursuant to its 2008 Stock Incentive Plan (the “Plan”), hereby grants
to the holder listed below (“Optionee”), an option
to purchase the number of shares of the Corporation’s Common Stock set forth
below (the “Option”). This Option
is subject to all of the terms and conditions as set forth herein and in the
Stock Option Agreement attached hereto as Exhibit A (the
“Stock Option
Agreement”) and the Plan, which are incorporated herein by reference.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Stock Option Grant Notice and the Stock Option
Agreement.

     

    
      	
              Optionee:

            	______________________________________________________________________________
	 	 
	
              Grant
      Date:

            	
              ________________________,
      2008

            
	 	 
	
              Exercise
      Price per Share:

            	
              $_______________________

            
	 	 
	
              Total
      Exercise Price:

            	
              $_______________________

            
	 	 
	
              
                Total
      Number of Shares Subject
      to the Option:

              

            	
              _______________
      shares of Common Stock

            
	 	 
	
              Expiration
      Date:

            	
              _________________________,
      2018

            
	 	 
	
              Type
      of Option:

            	
              £
      Incentive Option   £
      Non-Statutory Option

            
	 	 
	
              Vesting
      Schedule:

            	
              ______________________________________________________________________________

            
	 
      	
              ______________________________________________________________________________

            
	 
      	
              ______________________________________________________________________________

            

    

     

    By his or
her signature, Optionee agrees to be bound by the terms and conditions of the
Plan, the Stock Option Agreement and this Grant Notice. Optionee has reviewed
the Stock Option Agreement, the Plan and this Grant Notice in their entirety,
has had an opportunity to obtain the advice of counsel prior to executing this
Grant Notice and fully understands all provisions of this Grant Notice, the
Stock Option Agreement and the Plan. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator of the Plan upon any questions arising under the Plan or the
Option.

     

    
      
        	BALQON
      CORPORATION  	 	OPTIONEE
	 	 	 	 	 
	By:	
                /s/
      Balwinder Samra

              	 	
                By:  
       

              	
                 

              
	Name:	Balwinder
      Samra	 	Print
      Name:	 
	Title:  	President and Chief
      Executive Officer	 	 	 
	Address:
      	1701
      E. Edinger, Unit E3	 	Address:
      	 
	 	
                Santa
      Ana, CA 92705 

              	 	 	 

      

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
A

    TO
STOCK OPTION GRANT NOTICE

     

    STOCK OPTION
AGREEMENT

     

    Pursuant
to the Stock Option Grant Notice (“Grant Notice”) to
which this Stock Option Agreement (this “Agreement”) is
attached, Balqon Corporation, a Nevada corporation (the “Corporation”), has
granted to Optionee an option under the Corporation’s 2008 Stock Incentive Plan
(the “Plan”) to
purchase the number of shares of Common Stock indicated in the Grant
Notice.

     

    ARTICLE
I

    GENERAL

     

    1.1           Defined
Terms. Capitalized terms not specifically defined herein shall have the
meanings specified in the Plan and the Grant Notice.

     

    1.2           Incorporation
of Terms of Plan. This Option is subject to the terms and conditions of
the Plan which are incorporated herein by reference.

     

    ARTICLE
II

    GRANT OF
OPTION

     

    2.1           Grant of
Option. In consideration of Optionee’s past and/or continued employment
with or service to the Corporation or a Parent or Subsidiary and for other good
and valuable consideration, effective as of the Grant Date set forth in the
Grant Notice (the “Grant Date”), the
Corporation irrevocably grants to Optionee the Option to purchase any part or
all of an aggregate of the number of shares of Common Stock set forth in the
Grant Notice, upon the terms and conditions set forth in the Plan and this
Agreement. Unless designated as a Non-Statutory Option in the Grant Notice, the
Option shall be an Incentive Option to the maximum extent permitted by
law.

     

    2.2           Exercise
Price. The exercise price of the shares of Common Stock subject to the
Option shall be as set forth in the Grant Notice, without commission or other
charge; provided, however, that:

     

    (a)           the
exercise price per share shall not be less than 100% of the Fair Market Value
per share of Common Stock on the Grant Date; and

     

    (b)           if
this Option is designated as an Incentive Option, the price per share of the
shares subject to the Option shall not be less than the greater of (i) 100% of
the Fair Market Value of a share of Common Stock on the Grant Date, or (ii) 110%
of the Fair Market Value of a share of Common Stock on the Grant Date in the
case of an Optionee then owning (within the meaning of Section 424(d) of
the Code) more than 10% of the total combined voting power of all classes of
stock of the Corporation or any “subsidiary corporation” of the Corporation or
any “parent corporation” of the Corporation (each within the meaning of
Section 424 of the Code).

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    2.3           Consideration
to the Corporation. In consideration of the grant of the Option by the
Corporation, Optionee agrees to render faithful and efficient services to the
Corporation or any Parent or Subsidiary. Nothing in the Plan or this Agreement
shall confer upon Optionee any right to (a) continue in the employ of the
Corporation or any Parent or Subsidiary or shall interfere with or restrict in
any way the rights of the Corporation and its Subsidiaries, which are hereby
expressly reserved, to discharge Optionee, if Optionee is an Employee, or (b)
continue to provide services to the Corporation or any Parent or Subsidiary or
shall interfere with or restrict in any way the rights of the Corporation or its
Parents and Subsidiaries, which are hereby expressly reserved, to terminate the
services of Optionee, if Optionee is a consultant, at any time for any reason
whatsoever, with or without cause, except to the extent expressly provided
otherwise in a written agreement between the Corporation, a Parent or a
Subsidiary and Optionee, or (c) continue to serve as a member of the Board or
shall interfere with or restrict in any way the rights of the Corporation, which
are hereby expressly reserved, to discharge Optionee in accordance with the
Corporation’s Bylaws.

     

    ARTICLE
III

    PERIOD OF
EXERCISABILITY

     

    3.1           Commencement
of Exercisability.

     

    (a)           Subject
to Sections 3.3 and
5.8, the Option shall become vested and exercisable in such amounts and
at such times as are set forth in the Grant Notice.

     

    (b)           No
portion of the Option which has not become vested and exercisable at the date of
Optionee’s Termination of Service shall thereafter become vested and
exercisable, except as may be otherwise provided by the Administrator or as set
forth in a written agreement between the Corporation and Optionee.

     

    3.2           Duration
of Exercisability. The installments provided for in the vesting schedule
set forth in the Grant Notice are cumulative. Each such installment which
becomes vested and exercisable pursuant to the vesting schedule set forth in the
Grant Notice shall remain vested and exercisable until it becomes unexercisable
under Section 3.3.

     

    3.3           Expiration
of Option. The Option may not be exercised to any extent by anyone after
the first to occur of the following events:

     

    (a)           The
expiration of ten years from the Grant Date;

     

    (b)           If
this Option is designated as an Incentive Option and Optionee owned (within the
meaning of Section 424(d) of the Code), at the time the Option was granted,
more than 10% of the total combined voting power of all classes of stock of the
Corporation or any “subsidiary corporation” of the Corporation or “parent
corporation” of the Corporation (each within the meaning of Section 424 of
the Code), the expiration of five years from the date the Option was granted;
or

     

    (c)           Except
as set forth in a written agreement with the Corporation, the expiration of
three (3) months following the date of Optionee’s termination of Service, unless
such cessation occurs by reason of Optionee’s death, disability or Optionee’s
discharge for cause;

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (d)           The
expiration of twelve (12) months following the date of Optionee’s termination of
Service by reason of Optionee’s death or disability; or

     

    (e)           The
date of Optionee’s termination of Service by the Corporation or any Parent or
Subsidiary by reason of Optionee’s discharge for cause.

     

    Optionee
acknowledges that an Incentive Option exercised more than three (3) months after
Optionee’s termination of status as an Employee, other than by reason of death
or disability, will be taxed as a Non-Statutory Option.

     

    3.4           Special
Tax Consequences. Optionee acknowledges that, to the extent that the
aggregate Fair Market Value (determined as of the time the Option is granted) of
all shares of Common Stock with respect to which Incentive Options, including
the Option, are exercisable for the first time by Optionee in any calendar year
exceeds $100,000 (or such other limitation as imposed by Section 422(d) of
the Code), the Option and such other options shall be treated as not qualifying
under Section 422 of the Code but rather shall be considered Non-Statutory
Options. Optionee further acknowledges that the rule set forth in the preceding
sentence shall be applied by taking Options and other “incentive stock options”
into account in the order in which they were granted, as determined under
Section 422(d) of the Code and the Treasury Regulations
thereunder.

     

    ARTICLE
IV

    EXERCISE OF
OPTION

     

    4.1           Person
Eligible to Exercise. Except as provided in Sections 5.2(b) and
5.2(c), during the lifetime of Optionee, only Optionee may exercise the
Option or any portion thereof. After the death of Optionee, any exercisable
portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be
exercised by Optionee’s personal representative or by any person empowered to do
so under the deceased Optionee’s will or under the then applicable laws of
descent and distribution.

     

    4.2           Partial
Exercise. Any exercisable portion of the Option or the entire Option, if
then wholly exercisable, may be exercised in whole or in part at any time prior
to the time when the Option or portion thereof becomes unexercisable under Section 3.3.

     

    4.3           Manner of
Exercise. The Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Plan Administrator, at the address given
beneath the signature of the Corporation’s authorized officer on the Grant
Notice, of all of the following prior to the time when the Option or such
portion thereof becomes unexercisable under Section 3.3:

     

    (a)           An
exercise notice in writing signed by Optionee or any other person then entitled
to exercise the Option or portion thereof, stating that the Option or portion
thereof is thereby exercised, such notice complying with all applicable rules
established by the Plan Administrator. Such notice shall be substantially in the
form attached as Exhibit B to the
Grant Notice (or such other form as is prescribed by the Plan
Administrator);

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (b)           Full
payment for the shares of Common Stock with respect to which the Option or
portion thereof is exercised in one or more of the following forms:

     

    (i)           cash
or check made payable to the Corporation;

     

    (ii)           shares
of Common Stock valued at Fair Market Value on the Exercise Date which have been
owned by Optionee for at least six (6) months, duly endorsed for transfer to the
Corporation;

     

    (iii)           through
the delivery of a notice that Optionee has placed a market sell order with a
broker with respect to shares of Common Stock then issuable upon exercise of the
Option, and that the broker has been directed to pay a sufficient portion of the
net proceeds of the sale to the Company in satisfaction of the Option exercise
price; provided, that payment of such proceeds is made to the Company upon
settlement of such sale; or

     

    (iv)           subject
to any applicable laws, any combination of the consideration provided in the
foregoing paragraphs (i), (ii) and (iii).

     

    (c)           A
bona fide written representation and agreement, in such form as is prescribed by
the Administrator, signed by Optionee or the other person then entitled to
exercise such Option or portion thereof, stating that the shares of Common Stock
are being acquired for Optionee’s own account, for investment and without any
present intention of distributing or reselling said shares or any of them except
as may be permitted under the Securities Act of 1933, as amended (the “1933 Act”) and then
applicable rules and regulations thereunder and any other applicable law, and
that Optionee or other person then entitled to exercise such Option or portion
thereof will indemnify the Corporation against and hold it free and harmless
from any loss, damage, expense or liability resulting to the Corporation if any
sale or distribution of the shares by such person is contrary to the
representation and agreement referred to above. The Plan Administrator may, in
its absolute discretion, take whatever additional actions it deems appropriate
to ensure the observance and performance of such representation and agreement
and to effect compliance with the 1933 Act and any other federal or state
securities laws or regulations and any other applicable law. Without limiting
the generality of the foregoing, the Plan Administrator may require an opinion
of counsel acceptable to it to the effect that any subsequent transfer of shares
acquired on an Option exercise does not violate the 1933 Act, and may issue
stop-transfer orders covering such shares. Share certificates evidencing Common
Stock issued on exercise of the Option shall bear an appropriate legend
referring to the provisions of this subsection (c) and the agreements herein.
The written representation and agreement referred to in the first sentence of
this subsection (c) shall, however, not be required if the shares to be issued
pursuant to such exercise have been registered under the 1933 Act, and such
registration is then effective in respect of such shares;

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (d)           The
receipt by the Company of full payment for such shares, including payment of any
applicable withholding tax, which may be in the form of consideration used by
Participant to pay for such shares under Section 4.3(b),
subject to Article Four, Section I of the Plan; and

     

    (e)           In
the event the Option or portion thereof shall be exercised pursuant to Section 4.1 by
any person or persons other than Optionee, appropriate proof of the right of
such person or persons to exercise the Option.

     

    4.4           Conditions
to Issuance of Stock Certificates. The shares of Common Stock deliverable
upon the exercise of the Option, or any portion thereof, may be either
previously authorized but unissued shares or issued shares which have then been
reacquired by the Corporation. Such shares shall be fully paid and
nonassessable. The Corporation shall not be required to issue or deliver any
shares of Stock purchased upon the exercise of the Option or portion thereof
prior to fulfillment of all of the following conditions:

     

    (a)           The
admission of such shares to listing on all stock exchanges on which such Common
Stock is then listed; and

     

    (b)           The  compliance
with all applicable requirements of federal and state securities laws, and all
applicable listing requirements of any stock exchange or other market on which
Common Stock is then quoted or listed for trading including:

     

    (i)           The
completion of any registration or other qualification of such shares under any
state or federal law or under rulings or regulations of the Securities and
Exchange Commission or of any other governmental regulatory body, which the Plan
Administrator shall, in its absolute discretion, deem necessary or advisable;
and

     

    (ii)           The
obtaining of any approval or other clearance from any state or federal
governmental agency which the Plan Administrator shall, in its absolute
discretion, determine to be necessary or advisable; and

     

    (c)           The
receipt by the Corporation of full payment for such shares, including payment of
any applicable Withholding Taxes, which may be in the form of consideration used
by Optionee to pay for such shares under Section 4.3(b),
subject to Article Four, Section I of the Plan; and

     

    (d)           The
lapse of such reasonable period of time following the exercise of the Option as
the Plan Administrator may from time to time establish for reasons of
administrative convenience.

     

    4.5           Rights as
Stockholder. The holder of the Option shall not be, nor have any of the
rights or privileges of, a stockholder of the Corporation in respect of any
shares purchasable upon the exercise of any part of the Option unless and until
such shares shall have been issued by the Corporation to such holder (as
evidenced by the appropriate entry on the books of the Corporation or of a duly
authorized transfer agent of the Corporation). No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
shares are issued, except as provided in Article Two, Section
IV of the Plan.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    ARTICLE
V

    OTHER
PROVISIONS

     

    5.1           Administration.
The Plan Administrator shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret, amend or
revoke any such rules. All actions taken and all interpretations and
determinations made by the Plan Administrator in good faith shall be final and
binding upon Optionee, the Corporation and all other interested persons. No
member of the Plan Administrator shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan,
this Agreement or the Option. In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the Plan
Administrator under the Plan and this Agreement.

     

    5.2           Option
Not Transferable.

     

    (a)           Subject
to Section 5.2(b),
the Option may not be sold, pledged, assigned or transferred in any manner other
than by will or the laws of descent and distribution, unless and until the
shares underlying the Option have been issued, and all restrictions applicable
to such shares have lapsed.  Neither the Option nor any interest or
right therein shall be liable for the debts, contracts or engagements of
Optionee or his or her successors in interest or shall be subject to disposition
by transfer, alienation, anticipation, pledge, encumbrance, assignment or any
other means whether such disposition be voluntary or involuntary or by operation
of law by judgment, levy, attachment, garnishment or any other legal or
equitable proceedings (including bankruptcy), and any attempted disposition
thereof shall be null and void and of no effect, except to the extent that such
disposition is permitted by the preceding sentence.

     

    (b)           Notwithstanding
any other provision in this Agreement, with the consent of the Plan
Administrator and to the extent the Option is not intended to qualify as an
Incentive Option, the Option may be transferred to one or more Family Members of
the Optionee or to a trust established exclusively for the Optionee and/or one
or more such Family Member, subject to the terms and conditions set forth in
Article Two,
Section I(F)(ii) of the Plan.

     

    (c)           Unless
transferred in accordance with Section 5.2(b),
during the lifetime of Optionee, only Optionee may exercise the Option or any
portion thereof.  Subject to such conditions and procedures as the
Plan Administrator may require, a person or persons who acquire a proprietary
interest in this Option pursuant to a transfer in accordance with Section 5.2(b)
may exercise this Option or any portion thereof during Optionee’s
lifetime.

     

    (d)           Notwithstanding
the foregoing, Optionee may designate one or more persons as the beneficiary or
beneficiaries of this Option, and this Option shall (if it is outstanding), in
accordance with such designation, automatically be transferred to such
beneficiary or beneficiaries upon Optionee’s death. Such beneficiary or
beneficiaries shall take the transferred Option subject to all the terms and
conditions of the applicable agreement evidencing each such transferred Option,
including (without limitation) the limited time period during which the Option
may be exercised following Optionee’s death.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (e)           Subject
to Section
5.2(d), after the death of Optionee, any exercisable portion of this
Option may, prior to the time when the Option becomes unexercisable under Section 3.3, be
exercised by Optionee’s personal representative or by any person empowered to do
so under the deceased Optionee’s will or under the then applicable laws of
descent and distribution.

     

    5.3           Lock-Up
Period. Optionee hereby agrees that, if so requested by the Corporation
in connection with any registration of the offering of any securities of the
Corporation under the 1933 Act, Optionee shall not sell or otherwise transfer
any shares of Stock or other securities of the Corporation during such period as
may be requested in writing by the Corporation and agreed to in writing by the
Corporation (which period shall not be longer than one hundred eighty days) (the
“Market Standoff
Period”) following the effective date of a registration statement of the
Corporation filed under the 1933 Act; provided, however, that such
restriction shall apply only to the first registration statement of the
Corporation to become effective under the 1933 Act that includes securities to
be sold on behalf of the Corporation to the public in an underwritten public
offering under the 1933 Act.

     

    5.4           Restrictive
Legends and Stop-Transfer Orders.

     

    (a)           The
share certificate or certificates evidencing the shares of Common Stock
purchased hereunder shall be endorsed with any legends that may be required by
state or federal securities laws.

     

    (b)           Optionee
agrees that, in order to ensure compliance with the restrictions referred to
herein, the Corporation may issue appropriate “stop transfer” instructions to
its transfer agent, if any, and that, if the Corporation transfers its own
securities, it may make appropriate notations to the same effect in its own
records.

     

    (c)           The
Corporation shall not be required: (i) to transfer on its books any shares of
Common Stock that have been sold or otherwise transferred in violation of any of
the provisions of this Agreement, or (ii) to treat as owner of such shares of
Common Stock or to accord the right to vote or pay dividends to any purchaser or
other transferee to whom such shares shall have been so
transferred.

     

    5.5           Shares to
Be Reserved. The Corporation shall at all times during the term of the
Option reserve and keep available such number of shares of Common Stock as will
be sufficient to satisfy the requirements of this Agreement.

     

    5.6           Notices.
Any notice to be given under the terms of this Agreement to the Corporation
shall be addressed to the Corporation in care of the Plan Administrator at the
address given beneath the signature of the Corporation’s authorized officer on
the Grant Notice, and any notice to be given to Optionee shall be addressed to
Optionee at the address given beneath Optionee’s signature on the Grant Notice.
By a notice given pursuant to this Section 5.6,
either party may hereafter designate a different address for notices to be given
to that party. Any notice which is required to be given to Optionee shall, if
Optionee is then deceased, be given to the person entitled to exercise his or
her Option pursuant to Section 4.1 by
written notice under this Section 5.6. Any
notice shall be deemed duly given when sent via email or when sent by certified
mail (return receipt requested) and deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    5.7          
 Titles.
Titles are provided herein for convenience only and are not to serve as a basis
for interpretation or construction of this Agreement.

     

    5.8       
    Stockholder
Approval. Stockholder approval of the Plan will be obtained within
twelve months of ____________, 2008.

     

    5.9       
    Governing
Law; Severability. This Agreement shall be administered, interpreted and
enforced under the laws of the State of Nevada, without regard to the conflicts
of law principles thereof.  Should any provision of this Agreement be
determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain
enforceable.

     

    5.10        
 Conformity
to Securities Laws. Optionee acknowledges that the Plan is intended to
conform to the extent necessary with all provisions of the 1933 Act and the 1934
Act and any and all regulations and rules promulgated by the Securities and
Exchange Commission thereunder, and state securities laws and regulations.
Notwithstanding anything herein to the contrary, the Plan shall be administered,
and the Option is granted and may be exercised, only in such a manner as to
conform to such laws, rules and regulations. To the extent permitted by
applicable law, the Plan and this Agreement shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.

     

    5.11          Amendments.
This Agreement may not be amended or modified adversely to the Optionee’s
interest except by an instrument in writing, signed by Optionee or such other
person as may be permitted to exercise the Option pursuant to Section 4.1 and by
a duly authorized representative of the Corporation.

     

    5.12          Successors
and Assigns. The Corporation may assign any of its rights under this
Agreement to single or multiple assignees, and this Agreement shall inure to the
benefit of the successors and assigns of the Corporation. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.

     

    5.13          Notification
of Disposition. If this Option is designated as an Incentive Option,
Optionee shall give prompt notice to the Corporation of any disposition or other
transfer of any shares of Common Stock acquired under this Agreement if such
disposition or transfer is made (a) within two years from the Grant Date with
respect to such shares or (b) within one year after the transfer of such shares
to the Optionee. Such notice shall specify the date of such disposition or other
transfer and the amount realized, in cash, other property, assumption of
indebtedness or other consideration, by Optionee in such disposition or other
transfer.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    5.14          Limitations
Applicable to Section 16 Persons. Notwithstanding any other
provision of the Plan or this Agreement, if Optionee is subject to
Section 16 of the 1934 Act, the Plan, the Option and this Agreement shall
be subject to any additional limitations set forth in any applicable exemptive
rule under Section 16 of the 1934 Act (including any amendment to Rule
16b-3 of the Exchange Act) that are requirements for the application of such
exemptive rule. To the extent permitted by applicable law, this Agreement shall
be deemed amended to the extent necessary to conform to such applicable
exemptive rule.

     

    5.15          Entire
Agreement. The Plan and this Agreement (including all Exhibits hereto)
constitute the entire agreement of the parties and supersede in their entirety
all prior undertakings and agreements of the Corporation (including Balqon
Corporation, a California Corporation which merged with and into the Corporation
on ____________, 2008) and Optionee with respect to the subject matter
hereof.

     

     

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
B

    TO
STOCK OPTION GRANT NOTICE

     

    FORM OF EXERCISE
NOTICE

     

    Effective
as of today, ______________, ____________ the undersigned (“Optionee”) hereby
elects to exercise Optionee’s option to purchase ___________ shares of the
Common Stock (the “Shares”) of Balqon
Corporation, a Nevada corporation (the “Corporation”), under
and pursuant to the 2008 Stock Incentive Plan (the “Plan”) and the Stock
Option Grant Notice and Stock Option Agreement dated _______________ (the “Option Agreement”).
Capitalized terms used herein without definition shall have the meanings given
in the Option Agreement.

     

    
      	
              Grant
      Date:

            	______________________________________________________________________________
	 	 
	
              Number
      of Shares as to which Option is Exercised:

            	______________________________________________________________________________
	
                 

            	 
      
	
              Exercise
      Price per Share:

            	
              $__________________

            
	 	 
	
              Total
      Exercise Price:

            	
              $__________________

            
	 	 
	
              Certificate
      to be issued in name of: 

            	 
	
              Payment
      delivered herewith:

            	$_____________________________
      (Representing the full Exercise Price for the Shares, as well as any
      applicable withholding tax) 

               

              Form
      of Payment:
      ________________________________________________________________

            
	
               

            	
                                       
      (Please specify)

            
	
               

            	
                                                             

            
	
              Type
      of Option:

            	
              £
      Incentive
      Option                
      £
      Non-Statutory Option

            

    

     

    Optionee
acknowledges that Optionee has received, read and understood the Plan and the
Option Agreement. Optionee agrees to abide by and be bound by their terms and
conditions. Optionee understands that Optionee may suffer adverse tax
consequences as a result of Optionee’s purchase or disposition of the Shares.
Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Corporation for any tax advice.
The Plan and Option Agreement are incorporated herein by reference. This
Agreement, the Plan and the Option Agreement constitute the entire agreement of
the parties and supersede in their entirety all prior undertakings and
agreements of the Corporation and Optionee with respect to the subject matter
hereof.

     

    ACCEPTED
BY:

     

    
      
        
          	BALQON
      CORPORATION  	 	PARTICIPANT
	 	 	 	 	 
	 	 	 	 	 
	By:	
                   

                	 	
                  By:  
       

                	
                   

                
	Print
      Name:	 	 	Print
      Name:	 
	Title:  	 	 	 	 
	Address:
      	 	 	Address:

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