Document:

NONQUALIFIED  STOCK  OPTION  AGREEMENT

                                   PIZZA  INN,  INC.

     1.     Grant  of  Option.  Pursuant  to and in accordance with that certain
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Employment  Agreement  (the "Employment Agreement") dated March 31, 2005 between
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Pizza  Inn,  Inc.,  a  Missouri corporation (the "Company"), and Timothy P. Taft
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(the "Participant") the Company grants to Participant an option (the "Option" or
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"Stock  Option")  to  purchase  Five  Hundred  Thousand  (500,000)  shares  (the
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"Optioned  Shares")  of  common stock of the Company ("Common Stock"), par value
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$0.01  per  share;  the  exercise price (the "Option Price") for purchase of the
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Optioned  Shares  under the Option is $2.50 per share. Such Option is subject to
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the  terms  and  conditions  set forth in this Nonqualified Stock Agreement (the
"Agreement").  The  "Date  of  Grant"  of  this  Stock Option is March 31, 2005.
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     The "Option Period" shall commence on the Date of Grant and shall expire on
the  date  immediately  preceding  the  tenth  (10th) anniversary of the Date of
Grant.  The  Stock  Option  is  a  nonqualified  stock  option.

     2.     Subject  to  Committee.  This  Stock Option shall be subject to such
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administrative  rules  as  may be promulgated by the Compensation Committee (the
"Committee")  appointed  by  the  Company's Board of Directors (the "Board") and
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communicated  to  the  Participant  in  writing.  If  necessary  to  satisfy the
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requirements of Rule 16b-3 promulgated under the Securities Exchange Act of 1934
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(the  "1934 Act"), membership on the Committee shall be limited to those members
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of  the  Board  who  are  "non-employee  directors"  as  defined  in  Rule 16b-3
promulgated  under  the 1934 Act.  The Committee shall select one of its members
to  act as its Chairman.  A majority of the Committee shall constitute a quorum,
and  the  act of a majority of the members of the Committee present at a meeting
at  which  a  quorum is present shall be the act of the Committee. The Committee
shall  have the discretion to interpret the terms of this Stock Option; any such
interpretation  that  is  not  clearly erroneous shall be binding on all parties
interested  herein.

     3.     Vesting;  Time of Exercise.  Except as specifically provided in this
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Agreement,  the  Optioned  Shares  shall be vested and the Stock Option shall be
exercisable  as  follows:

     i.     Fifty  Thousand (50,000) of the total Optioned Shares shall vest and
that  portion of the Stock Option shall become exercisable on the Date of Grant.

     ii.     One  Hundred  Thousand (100,000) of the total Optioned Shares shall
vest  and that portion of the Stock Option shall become exercisable on the first
anniversary  of  the  Date of Grant, provided the Participant is employed by the
Company,  an  affiliate,  or  a  subsidiary  on  that  date.

     iii.     One  Hundred Fifty Thousand (150,000) of the total Optioned Shares
shall  vest and that portion of the Stock Option shall become exercisable on the
second anniversary of the Date of Grant, provided the Participant is employed by
the  Company,  an  affiliate,  or  a  subsidiary  on  that  date.

     iv.     Two  Hundred  Thousand (200,000) of the total Optioned Shares shall
vest  and that portion of the Stock Option shall become exercisable on the third
anniversary  of  the  Date of Grant, provided the Participant is employed by the
Company,  an  affiliate,  or  a  subsidiary  on  that  date.

     v.     Notwithstanding  the  foregoing,  in  the event that (i) a Change in
Control  (as  defined  below)  occurs,  and (ii) within six months following the
Change  in  Control,  the  Company  terminates the employment of the Participant
without  Cause  (as defined below), or the Participant terminates his employment
with  the  Company  for Good Reason (as defined below), then all Optioned Shares
shall  become  immediately  vested  and  the  entire  Stock  Option shall become
exercisable  and shall remain exercisable for a period of 90 days thereafter, at
which  time  the  Stock  Option  shall  expire.

     vi.     For  purposes of this Agreement, "Change in Control" shall have the
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meaning  assigned  to  such  term  in  the  Employment  Agreement.

     vii.     For  purposes  of  this  Agreement,  "Good  Reason" shall have the
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meaning  assigned  to  such  term  in  the  Employment  Agreement.

     viii.     For  purposes  of  this Agreement, "Cause" shall have the meaning
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assigned  to  such  term  in  the  Employment  Agreement

     4.     Term;  Forfeiture.     Except  as  otherwise  provided  in  this
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Agreement,  to the extent the unexercised portion of the Stock Option relates to
Optioned Shares that are not vested on the date of the Participant's Termination
of  Employment  (as  defined below), the Stock Option will be terminated on that
date.  The  unexercised  portion  of  the  Stock Option that relates to Optioned
Shares  that  are  vested will terminate at the first of the following to occur:

     i.     5  p.m.  on  the  date  the  Option  Period  terminates;

     ii.     5  p.m.  on the date of the Participant's Termination of Employment
by  the  Company  for  Cause,  or  the  Participant's  voluntary  Termination of
Employment;

     iii.     5  p.m. on the date that is thirty (30) days following the date of
the  Participant's  Termination  of  Employment  by  the  Company without Cause;

     iv.     5  p.m. on the date the Company causes any portion of the Option to
be  forfeited  pursuant  to  Section  7  hereof.
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     v.     For  purposes  of  this Agreement, "Termination of Employment" shall
occur when the Participant ceases to serve as an employee of the Company and its
Subsidiaries,  for  any  reason.  All  times  are  Central  Standard  Time.

     5.     Who  May Exercise.  Subject to the terms and conditions set forth in
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Sections  3  and  4  above,  the  Stock  Option  may  be  exercised  only by the
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Participant,  or  by  the  Participant's  guardian  or  personal  or  legal
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representative.
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     6.     No  Fractional  Shares.  The Stock Option may be exercised only with
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respect  to  full  shares,  and  no  fractional  share of stock shall be issued.

     7.     Manner  of  Exercise.  Subject to such administrative regulations as
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the  Committee  may  from  time  to  time  adopt  and to standard Company policy
regarding  stock  trading,  the Stock Option may be exercised by the delivery of
written  notice  to  the  Committee setting forth the number of shares of Common
Stock  with  respect  to  which the Stock Option is to be exercised, the date of
exercise  thereof  (the "Exercise Date"), which shall be at least three (3) days
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after  giving such notice unless an earlier time shall have been mutually agreed
upon.  On  the  Exercise  Date,  the  Participant  shall  deliver to the Company
consideration  with  a value equal to the total Option Price of the shares to be
purchased,  payable  as follows:  (a) a cashier's check payable in United States
currency, or (b) if acceptable to the Committee, a personal check, or (c) in any
other  form  of  valid  consideration  that  is  acceptable  to  the  Committee.

     Upon  payment  of  all  amounts due from the Participant, the Company shall
cause  certificates for the Optioned Shares then being purchased to be delivered
to  the  Participant  in  a  form  (DWAC, physical delivery, or other) and at an
address  designated  by  Participant  within  ten  (10)  business days after the
Exercise  Date.  The obligation of the Company to deliver shares of Common Stock
shall,  however,  be  subject  to  the condition that if at any time the Company
shall  determine  in  its  discretion  that  the  listing,  registration,  or
qualification  of  the  Stock  Option or the Optioned Shares upon any securities
exchange  or  under  any state or federal law, or the consent or approval of any
governmental  regulatory  body, is necessary as a condition of, or in connection
with,  the  Stock  Option  or the issuance or purchase of shares of Common Stock
thereunder,  then  the  Stock  Option  may  not be exercised in whole or in part
unless  such  listing,  registration,  qualification, consent, or approval shall
have  been effected or obtained free of any conditions not reasonably acceptable
to  the  Committee.

     If the Participant fails to pay for any of the Optioned Shares specified in
such  notice  or  fails  to  accept delivery thereof, then the Stock Option, and
right  to  purchase  such  Optioned  Shares may be forfeited by the Participant.

     8.     Nonassignability.  The  Stock  Option  is  not  assignable  or
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transferable  by  the  Participant.

     9.     Rights  as  Stockholder.  The  Participant  will have no rights as a
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stockholder  with  respect  to  any shares covered by the Stock Option until the
issuance  of  a  certificate or certificates to the Participant for the Optioned
Shares.  The  Optioned  Shares  shall  be subject to the terms and conditions of
this  Agreement  regarding such Shares.  Except as otherwise provided in Section
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10  hereof,  no adjustment shall be made for dividends or other rights for which
the  record  date  is prior to the issuance of such certificate or certificates.

     10.     Adjustment  of  Number of Optioned Shares and Related Matters.  The
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number  of  shares  of  Common Stock covered by the Stock Option, and the Option
Prices  thereof,  shall be subject to adjustment as provided in this Section 10.
                                                                     ----------

     i.     No  Effect  on  Company's Authority.  The grant of this Stock Option
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shall  not  affect  in  any  way  the  right  or  power  of  the  Company or its
stockholders  to  make  or  authorize any or all adjustments, recapitalizations,
reorganizations,  or  other  changes  in the Company's capital structure and its
business,  or  any  merger  or  consolidation of the Company, or any issuance of
bonds,  debentures, preferred or preference stocks ranking prior to or otherwise
affecting  the  Common  Stock  or the rights thereof (or any rights, options, or
warrants to purchase same), or the dissolution or liquidation of the Company, or
any  sale or transfer of all or any part of its assets or business, or any other
corporate  act  or  proceeding,  whether  of  a  similar character or otherwise.

ii.     Capital  Adjustments.  In  the  event that the Committee shall determine
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that  any  dividend  or  other distribution (whether in the form of cash, Common
Stock,  other  securities,  or  other  property), recapitalization, stock split,
reverse  stock  split,  rights  offering, reorganization, merger, consolidation,
split-up, spin-off, split-off, combination, subdivision, repurchase, or exchange
of  Common  Stock  or  other  securities of the Company, issuance of warrants or
other  rights  to  purchase  Common Stock or other securities of the Company, or
other  similar corporate transaction or event affects the Common Stock such that
an  adjustment  is  determined by the Committee to be appropriate to prevent the
dilution  or  enlargement  of  the benefits or potential benefits intended to be
made available under this Stock Option, then the Committee shall, in such manner
as it may deem equitable, adjust any or all of (i) the number of shares and type
of  Common  Stock  (or  other securities or property) subject to this Option and
(ii)  the  Option  Price;  provided however, that the number of shares of Common
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Stock  (or  other  securities  or  property)  subject to this Stock Option shall
always  be  a whole number.  In lieu of the foregoing, if deemed appropriate and
not otherwise in violation of Section 409A of the Internal Revenue Code of 1986,
as amended, (the "Code"), the Committee may make provision for a cash payment to
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the Participant.  Such adjustments shall be made in accordance with the rules of
any  securities  exchange,  stock market, or stock quotation system to which the
Company is subject.  Upon the occurrence of any such adjustment or cash payment,
the  Company  shall provide notice to the Participant of its computation of such
adjustment  or cash payment, which shall be conclusive and shall be binding upon
the  Participant.

iii.     Exchange  or Cancellation of Incentives Where Company Does Not Survive.
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     (A)     Subject  to  Section 10.iii.(B) hereof, in the event of any merger,
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consolidation,  or  share  exchange  pursuant  to  which  the Company is not the
surviving or resulting corporation, there shall be substituted for each share of
Common  Stock  subject  to  the  unexercised portions of this Stock Option, that
number  of  shares  of each class of stock or other securities or that amount of
cash,  property,  or assets of the surviving, resulting, or consolidated company
that  were  distributed  or  distributable to the stockholders of the Company in
respect  to each share of Common Stock held by them, and this Stock Option shall
be  thereafter  exercisable  for  such  stock,  securities, cash, or property in
accordance  with  the  terms  of  this  Agreement.

     (B)     Notwithstanding  the  foregoing,  however, this Stock Option may be
canceled by the Company, in its sole discretion, as of the effective date of any
such  reorganization,  merger,  consolidation,  or  share  exchange,  or  of any
proposed  sale  of  all or substantially all of the assets of the Company, or of
any  dissolution  or  liquidation  of  the  Company,  by  either:

     (1)     giving  notice to the Participant or his personal representative of
its intention to cancel this Stock Option and permitting the purchase during the
thirty  (30)  day period next preceding such effective date of any or all of the
shares subject to this Stock Option, including in the Board's discretion some or
all  of  the  shares as to which this Stock Option would not otherwise be vested
and  exercisable;  or

     (2)     provided  it  will not violate Section 409A of the Code, paying the
Participant  an  amount equal to a reasonable estimate of the difference between
the  net  amount  per  share  payable in such transaction or as a result of such
transaction,  and  the  exercise  price  per  share  of  this  Stock Option (the
"Spread"),  multiplied  by the number of shares subject to the Stock Option.  In
estimating  the  Spread, appropriate adjustments to give effect to the existence
of  all  outstanding stock options of the Company shall be made, such as deeming
such  stock  options  to  have  been  exercised,  with the Company receiving the
exercise  price  payable  thereunder,  and  treating  the shares receivable upon
exercise  of  such  stock  options  as  being outstanding in determining the net
amount  per  share.  In  cases  where  the  proposed transaction consists of the
acquisition  of  assets  of  the  Company,  the  net  amount  per share shall be
calculated  on  the basis of the net amount receivable with respect to shares of
Common  Stock  upon  a  distribution and liquidation by the Company after giving
effect  to  expenses and charges, including but not limited to, taxes payable by
the  Company  before  such  liquidation  could  be  completed.

     iv.     Conversion  of  Incentives  Where Company Survives.  Subject to any
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required  action  by  the stockholders, if the Company shall be the surviving or
resulting corporation in any merger, consolidation, or share exchange, the Stock
Option  granted hereunder shall pertain to and apply to the securities or rights
(including  cash, property, or assets) to which a holder of the number of shares
of  Common  Stock  subject  to  this  Stock  Option  would  have  been entitled.

     v.     Liquidation  or  Dissolution.  Subject to Section 10.iii. hereof, in
            ----------------------------              ---------------
case  the  Company  shall, at any time while this Stock Option shall be in force
and remain unexpired, (i) sell all or substantially all of its property, or (ii)
dissolve,  liquidate,  or  wind  up  its  affairs, then the Participant shall be
entitled  to  receive, in lieu of each share of Common Stock of the Company that
such  Participant  could  have been entitled to receive under this Stock Option,
the  same  kind  and  amount  of  any  securities  or assets as may be issuable,
distributable,  or  payable  upon  any  such  sale, dissolution, liquidation, or
winding  up  with  respect to each share of Common Stock of the Company.  If the
Company  shall,  at  any time prior to the expiration of this Stock Option, make
any  partial distribution of its assets, in the nature of a partial liquidation,
whether  payable  in  cash  or in kind (but excluding the distribution of a cash
dividend  payable  out  of  earned  surplus and designated as such) then in such
event  the  Option  Price  shall  be  reduced,  on  the  payment  date  of  such
distribution,  in  proportion  to  the percentage reduction in the tangible book
value of the shares of the Company's Common Stock (determined in accordance with
generally  accepted  accounting  principles)  resulting  by  reason  of  such
distribution.

     11.     Nonqualified  Stock  Option.  The Stock Option shall not be treated
             ---------------------------
as  an  incentive  stock  option  under  Section  422  of  the  Code.

     12.     Voting.  The  Participant, as record holder, if applicable, of some
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or  all  of the Optioned Shares following exercise of this Stock Option, has the
exclusive  right to vote, or consent with respect to, such Optioned Shares until
such  time  as  the  Optioned  Shares  are  transferred  in accordance with this
Agreement;  provided,  however,  that  this  Section shall not create any voting
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right  where  the  holders of such Optioned Shares otherwise have no such right.

     13.     Community Property.  Each spouse individually is bound by, and such
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spouse's  interest,  if  any, in any Optioned Shares is subject to, the terms of
this  Agreement.  Nothing  in  this  Agreement shall create a community property
interest  where  none  otherwise  exists.

     14.     Participant's  Representations.  Notwithstanding  any  of  the
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provisions  hereof,  the Participant hereby agrees that he will not exercise the
Stock Option granted hereby, and that the Company will not be obligated to issue
any shares to the Participant hereunder, if the exercise thereof or the issuance
of such shares shall constitute a violation by the Participant or the Company of
any  provision  of  any  law  or  regulation of any governmental authority.  Any
determination  in  this  connection  by the Company shall be final, binding, and
conclusive.  The  obligations  of  the Company and the rights of the Participant
are  subject  to  all  applicable  laws,  rules,  and  regulations.

     15.     Investment  Representation.  Unless  the  Common Stock is issued to
             --------------------------
him  in  a  transaction registered under applicable federal and state securities
laws,  by  his  execution hereof, the Participant represents and warrants to the
Company  that  all Common Stock that may be purchased hereunder will be acquired
by  the Participant for investment purposes for his own account and not with any
intent  for  resale  or distribution in violation of federal or state securities
laws.  Unless  the  Common  Stock  is  issued to him in a transaction registered
under  the applicable federal and state securities laws, all certificates issued
with  respect  to  the  Common  Stock  shall  bear  an  appropriate  restrictive
investment  legend  and shall be held indefinitely, unless they are subsequently
registered  under  the  applicable  federal  and  state  securities  laws or the
Participant obtains an opinion of counsel, in form and substance satisfactory to
the  Company  and  its  counsel,  that  such  registration  is  not  required.

     16.     Legend.  The  following  legend shall be placed on all certificates
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representing  Optioned  Shares:

"The  shares  evidenced  by  this  certificate  are  subject  to  a Stock Option
Agreement containing certain rights and limitations on transfer.  A copy of that
agreement is on file at the principal place of business or the registered office
of  the  Company, and a copy may be obtained without charge upon written request
to  the  Company  at  its principal place of business or its registered office."

     All  Optioned Shares and shares into which Optioned Shares may be converted
owned  by  the  Participant  shall be subject to the terms of this Agreement and
shall  be  represented  by  a  certificate or certificates bearing the foregoing
legend.

     17.     Participant's  Acknowledgments.  The Participant represents that he
             ------------------------------
or  she  is  familiar with the terms and provisions of this Agreement and hereby
accepts  this  Option  subject  to  all  the  terms  and provisions hereof.  The
Participant  hereby  agrees  to  accept  as  binding,  conclusive, and final all
decisions or interpretations of the Committee or the Board, as appropriate, upon
any  questions  arising  under  this  Agreement.

     18.     Law Governing.  This Agreement shall be governed by, construed, and
             -------------
enforced  in  accordance  with  the  laws  of  the State of Texas (excluding any
conflict of laws rule or principle of Texas law that might refer the governance,
construction, or interpretation of this agreement to the laws of another state).

     19.     No  Right  to Continue Service or Employment.  Nothing herein shall
             --------------------------------------------
be  construed to confer upon the Participant the right to continue in the employ
or  to provide services to the Company or any Subsidiary, whether as an employee
or  as  a  consultant or as a director, or interfere with or restrict in any way
the  right  of  the Company or any Subsidiary to discharge the Participant as an
employee,  consultant, or director at any time, subject to the provisions of the
Employment  Agreement.

     20.     Legal  Construction.  In  the  event  that  any  one or more of the
             --------------------
terms,  provisions,  or agreements that are contained in this Agreement shall be
held  by  a  Court  of  competent  jurisdiction  to  be  invalid,  illegal,  or
unenforceable  in  any  respect  for  any  reason,  the  invalid,  illegal,  or
unenforceable  term,  provision,  or  agreement shall not affect any other term,
provision,  or  agreement that is contained in this Agreement and this Agreement
shall  be construed in all respects as if the invalid, illegal, or unenforceable
term,  provision,  or  agreement  had  never  been  contained  herein.

     21.     Covenants  and  Agreements  as  Independent Agreements. Each of the
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covenants  and agreements that is set forth in this Agreement shall be construed
as  a  covenant  and  agreement  independent  of  any  other  provision  of this
Agreement.  The  existence  of  any  claim or cause of action of the Participant
against  the  Company,  whether predicated on this Agreement or otherwise, shall
not  constitute a defense to the enforcement by the Company of the covenants and
agreements  that  are  set  forth  in  this  Agreement.

     22.     Entire  Agreement.  This  Agreement  supersedes  any  and all other
             -----------------
prior  understandings  and  agreements,  either  oral or in writing, between the
parties  with  respect to the subject matter hereof and constitutes the sole and
only agreement between the parties with respect to the said subject matter.  All
prior  negotiations  and  agreements  between  the  parties  with respect to the
subject  matter  hereof  are  merged  into  this  Agreement.  Each party to this
Agreement  acknowledges  that  no  representations,  inducements,  promises,  or
agreements, orally or otherwise, have been made by any party or by anyone acting
on  behalf  of  any party, which are not embodied in this Agreement and that any
agreement,  statement,  or promise that is not contained in this Agreement shall
not  be  valid  or  binding  or  of  any  force  or  effect.

     23.     Parties  Bound.  The  terms,  provisions,  and  agreements that are
             --------------
contained  in  this  Agreement shall apply to, be binding upon, and inure to the
benefit  of  the  parties and their respective heirs, executors, administrators,
legal  representatives,  and  permitted  successors  and assigns, subject to the
limitation  on  assignment  expressly  set  forth  herein.

     24.     Modification.  No change or modification of this Agreement shall be
             ------------
valid  or  binding  upon  the  parties  unless  the change or modification is in
writing  and  signed  by  the  parties;  provided, however, that the Company may
change  or  modify this Agreement without the Participant's consent or signature
if  the  Company  determines,  that such change or modification is necessary for
purposes  of  compliance with or exemption from the requirements of Section 409A
of  the  Code  or  any  regulations  or  other  guidance  issued  thereunder.

     25.     Headings.  The  headings  that  are used in this Agreement are used
             --------
for  reference  and  convenience purposes only and do not constitute substantive
matters  to  be  considered  in  construing  the  terms  and  provisions of this
Agreement.

     26.     Gender  and  Number.  Words  of  any  gender used in this Agreement
             -------------------
shall  be  held  and  construed  to  include  any other gender, and words in the
singular  number shall be held to include the plural, and vice versa, unless the
context  requires  otherwise.

     27.     Notice.  Any notice required or permitted to be delivered hereunder
             ------
shall be deemed to be delivered only when actually received by the Company or by
the  Participant,  as  the  case may be, at the addresses set forth below, or at
such  other  addresses  as  they  have  specified by written notice delivered in
accordance  herewith:

     i.     Notice  to  the Company shall be addressed and delivered as follows:

               Pizza  Inn,  Inc.
               3551  Plano  Parkway
               The  Colony,  Texas  75056
               Attn:  Chairman,  Compensation  Committee
               Facsimile:  469.384.5061

     ii.     Notice  to  the Participant shall be addressed and delivered to the
address  shown  from  time  to  time  on  the employment records of the Company.

     28.     Tax  Requirements.  The  Participant  shall  be required to pay the
             -----------------
Company  or  a  Subsidiary,  as applicable (for purposes of this Section 28, the
                                                                 ----------
term Company shall be deemed to include an applicable Subsidiary), the amount of
any  and  all  taxes that the Company is required to withhold in connection with
this  Stock Option, the issuance of stock hereunder, or otherwise arising out of
this  Stock  Option.  The  Participant's  obligation  to  pay  such taxes may be
satisfied  by any of the following or any combination thereof:  (i) the delivery
of  cash  to  the  Company  in  an  amount  that equals or exceeds (to avoid the
issuance  of  fractional  shares under (iii) below) the required tax withholding
obligation  of  the  Company;  (ii)  if the Company, so consents in writing, the
actual delivery by the exercising Participant to the Company of shares of Common
Stock  other  than  Common Stock that the Participant owns but has acquired from
the  Company  within  six  months prior to the date of exercise, which shares so
delivered  have  an aggregate Fair Market Value that equals or exceeds (to avoid
the  issuance  of  fractional  shares  under  (iii)  below)  the  required  tax
withholding  payment;  or  (iii)  if  the  Company,  in  its sole discretion, so
consents  in  writing,  the  Company's  withholding  of a number of shares to be
delivered  upon  the exercise of the Stock Option, which shares so withheld have
an  aggregate  Fair  Market Value that equals (but does not exceed) the required
tax  withholding payment; provided that, shares cannot be withheld in connection
with  the exercise of this Stock Option in excess of the minimum number required
for  tax  withholding,  and  to permit the Stock Option to be accounted for as a
fixed  award.  Any such withholding payments with respect to the exercise of any
portion  of  the  Stock Option in cash or by actual delivery of shares of Common
Stock  shall  be  made when required by the Company and prior to the delivery of
any  certificate  representing the shares of Common Stock acquired upon exercise
of  the  Stock  Option.  The  Company may, in its sole discretion, withhold such
taxes  from  any  other  cash  remuneration otherwise paid by the Company to the
Participant.

     29.     Confidentiality.  Participant agrees that, as partial consideration
             ---------------
for the granting of this Stock Option, he will keep confidential all information
and  knowledge that he has relating to the manner and amount of his Option Share
grant  hereunder;  provided,  however,  that  such  information  may be given in
confidence  to the Participant's spouse or to a financial institution or advisor
to  the  extent that such information is necessary in order to secure a loan, or
for  tax  or  retirement  planning  purposes.

     30.     Use  of  Proceeds.  Proceeds from the sale of Common Stock pursuant
             -----------------
to  the  exercise  of  this  Stock  Option shall constitute general funds of the
Company.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its  duly  authorized  officer, and the Participant, to evidence his consent and
approval  of  all  the terms hereof, has duly executed this Agreement, as of the
date  specified  in  Section  1  hereof.
                     ----------

                                             PIZZA  INN,  INC.

                                             By:   /s/ Mark E. Schwarz
                                             Name:     Mark E. Schwarz
                                             Title:    Chairman of the Board

                                         /s/ Timothy  P.  Taft
                                             Timothy  P.  TaftExhibit 10.1

Exhibit 10.1

McMoRan
EXPLORATION CO.

2005
STOCK INCENTIVE PLAN

 

SECTION
1  

 

Purpose. The
purpose of the McMoRan Exploration Co. 2005 Stock Incentive Plan (the “Plan”) is
to motivate and reward key employees, consultants and advisers by giving them a
proprietary interest in the Company’s success.

 

SECTION
2  

 

Definitions. As used
in the Plan, the following terms shall have the meanings set forth
below:

 

“Award”
shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock Unit or Other Stock-Based Award.

 

“Award
Agreement” shall mean any written or electronic notice of grant, agreement,
contract or other instrument or document evidencing any Award, which may, but
need not, be required to be executed,
acknowledged or accepted by a Participant.

 

“Board”
shall mean the Board of Directors of the Company.

 

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

 

“Committee”
shall mean, until otherwise determined by the Board, the Corporate Personnel
Committee of the Board.

 

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

 

“Company”
shall mean McMoRan Exploration Co.

 

“Designated
Beneficiary” shall mean the beneficiary designated by the Participant, in a
manner determined by the Committee, to receive the benefits due the Participant
under the Plan in the event of the Participant’s death. In the absence of an
effective designation by the Participant, Designated Beneficiary shall mean the
Participant’s estate.

 

“Eligible
Individual” shall mean (i) any person providing services as an officer of the
Company or a Subsidiary, whether or not employed by such entity, including any
such person who is also a director of the Company, (ii) any employee of the
Company or a Subsidiary, including any director who is also an employee of the
Company or a Subsidiary, (iii) any officer or employee of an entity with which
the Company has contracted to receive executive, management or legal services
who provides services to the Company or a Subsidiary through such arrangement,
(iv) any consultant or adviser to the Company, a Subsidiary or to an entity
described in clause (iii) hereof who provides services to the Company or a
Subsidiary through such arrangement and (v) any person who has agreed in writing
to become a person described in clauses (i), (ii), (iii) or (iv) within not more
than 30 days following the date of grant of such person’s first Award under the
Plan.

 

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

 

“Incentive
Stock Option” shall mean an option granted under Section 6 of the Plan that is
intended to meet the requirements of Section 422 of the Code or any successor
provision thereto.

 

“Nonqualified
Stock Option” shall mean an option granted under Section 6 of the Plan that is
not intended to be an Incentive Stock Option.

 

“Option”
shall mean an Incentive Stock Option or a Nonqualified Stock
Option.

 

“Other
Stock-Based Award” shall mean any right or award granted under Section 10 of the
Plan.

 

“Participant”
shall mean any Eligible Individual granted an Award under the Plan.

 

“Person”
shall mean any individual, corporation, partnership, limited liability company,
association, joint-stock company, trust, unincorporated organization, government
or political subdivision thereof or other entity.

 

“Restricted
Stock” shall mean any restricted stock granted under Section 8 of the
Plan.

 

“Restricted
Stock Unit” shall mean any restricted stock unit granted under Section 9 of the
Plan.

 

“Section
162(m)” shall mean Section 162(m) of the Code and all regulations promulgated
thereunder as in effect from time to time.

 

“Section
409A” shall mean Section 409A of the Code and all regulations and guidance
promulgated thereunder as in effect from time to time.

 

“Shares”
shall mean the shares of Common Stock and such other securities of the Company
or a Subsidiary as the Committee may from time to time designate.

 

“Stock
Appreciation Right” shall mean any right granted under Section 7 of the
Plan.

 

“Subsidiary”
shall mean (i) any corporation or other entity in which the Company possesses
directly or indirectly equity interests representing at least 50% of the total
ordinary voting power or at least 50% of the total value of all classes of
equity interests of such corporation or other entity and (ii) any other entity
in which the Company has a direct or indirect economic interest that is
designated as a Subsidiary by the Committee.

 

SECTION
3  

 

(a)  Administration. The
Plan shall be administered by the Committee. Subject to the terms of the Plan
and applicable law, and in addition to other express powers and authorizations
conferred on the Committee by the Plan, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or types of
Awards to be granted to an Eligible Individual; (iii) determine the number of
Shares to be covered by, or with respect to which payments, rights or other
matters are to be calculated in connection with, Awards; (iv) determine the
terms and conditions of any Award; (v) determine whether, to what extent, and
under what circumstances Awards may be settled or exercised in cash, whole
Shares, other whole securities, other Awards, other property or other cash
amounts payable by the Company upon the exercise of that or other Awards, or
canceled, forfeited or suspended and the method or methods by which Awards may
be settled, exercised, canceled, forfeited or suspended; (vi) determine whether,
to what extent, and under what circumstances cash, Shares, other securities,
other Awards, other property, and other amounts payable by the Company with
respect to an Award shall be deferred either automatically or at the election of
the holder thereof or of the Committee; (vii) interpret and administer the Plan
and any instrument or agreement relating to, or Award made under, the Plan;
(viii) establish, amend, suspend or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of the
Plan; and (ix) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be
made at any time and shall be final, conclusive and binding upon all Persons,
including the Company, any Subsidiary, any Participant, any holder or
beneficiary of any Award, any stockholder of the Company and any Eligible
Individual.

 

(b)  Delegation. Subject
to the terms of the Plan and applicable law, the Committee may delegate to one
or more officers of the Company the authority, subject to such terms and
limitations as the Committee shall determine, to grant and set the terms of, to
cancel, modify or waive rights with respect to, or to alter, discontinue,
suspend, or terminate Awards held by Eligible Individuals who are not officers
or directors of the Company for purposes of Section 16 of the Exchange Act, or
any successor section thereto, or who are otherwise not subject to such Section;
provided, however, that the per share exercise price of any Option granted under
this Section 3(b) shall be equal to the fair market value of the underlying
Shares on the date of grant.

 

SECTION
4  

 

Eligibility. Any
Eligible Individual shall be eligible to be granted an Award.

 

SECTION
5  

 

(a)  Shares
Available for Awards. Subject
to adjustment as provided in Section 5(b):

 

(i)  Calculation
of Number of Shares Available.

 

(A)  Subject
to the other provisions of this Section 5(a), the number of Shares with respect
to which Awards payable in Shares may be granted under the Plan shall be
3,500,000. Awards that by their terms may be settled only in cash shall not be
counted against the maximum number of Shares provided herein.

 

(B)  The
number of Shares that may be issued pursuant to Incentive Stock Options may not
exceed 3,500,000 Shares.

 

(C)  Subject
to the other provisions of this Section 5(a):

 

(1)  the
maximum number of Shares with respect to which Awards in the form of Restricted
Stock, Restricted Stock Units or Other Stock-Based Awards payable in Shares for
which a per share purchase price that is less than 100% of the fair market value
of the securities to which the Award relates shall be 875,000 Shares;
and

 

(2)  up to
150,000 Shares may be issued pursuant to Awards in the form of Restricted Stock,
Restricted Stock Units or Other Stock-Based Awards payable in Shares without
compliance with the minimum vesting periods set forth in Sections 8(b), 9(b),
and 10(b), respectively. If (x) Restricted Stock, Restricted Stock Units or an
Other Stock-Based Award is granted with a minimum vesting period of at least
three years or a minimum vesting period of at least one year, subject to the
attainment of specific performance goals, and (y) the vesting of such Award is
accelerated in accordance with Section 12(a) hereof as a result of the
Participant’s death, retirement or other termination of employment or cessation
of consulting or advisory services to the Company, or a change in control of the
Company, such Shares shall not count against the 150,000 limitation described
herein. 

 

(D)  To the
extent any Shares covered by an Award are not issued because the Award is
forfeited or canceled or the Award is settled in cash, such Shares shall again
be available for grant pursuant to new Awards under the Plan.

 

(E)  In the
event that Shares are issued as Restricted Stock or Other Stock-Based Awards
under the Plan and thereafter are forfeited or reacquired by the Company
pursuant to rights reserved upon issuance thereof, such Shares shall again be
available for grant pursuant to new Awards under the Plan. With respect to Stock
Appreciation Rights, if the Award is payable in Shares, all Shares to which the
Award relates are counted against the Plan limits, rather than the net number of
Shares delivered upon exercise of the Award.

 

(ii)  Shares
Deliverable Under Awards. Any
Shares delivered pursuant to an Award may consist of authorized and unissued
Shares or of treasury Shares, including Shares held by the Company or a
Subsidiary and Shares acquired in the open market or otherwise obtained by the
Company or a Subsidiary. The issuance of Shares may be effected on a
non-certificated basis, to the extent not prohibited by applicable law or the
applicable rules of any stock exchange.

 

(iii)  Individual
Limit. Any
provision of the Plan to the contrary notwithstanding, no individual may receive
in any year Awards under the Plan, whether payable in cash or Shares, that
relate to more than 500,000 Shares. 

 

(iv)  Use of
Shares. Subject
to the terms of the Plan and the overall limitation on the number of Shares that
may be delivered under the Plan, the Committee may use available Shares as the
form of payment for compensation, grants or rights earned or due under any other
compensation plans or arrangements of the Company or a Subsidiary and the plans
or arrangements of the Company or a Subsidiary assumed in business
combinations.

 

(b)  Adjustments. In the
event that the Committee determines that any dividend or other distribution
(whether in the form of cash, Shares, Subsidiary securities, other securities or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the Company,
or other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate to prevent dilution
or enlargement of the benefits or potential benefits intended to be made
available under the Plan, then the Committee may, in its sole discretion and in
such manner as it may deem equitable, adjust any or all of (i) the number and
type of Shares (or other securities or property) with respect to which Awards
may be granted, (ii) the number and type of Shares (or other securities or
property) subject to outstanding Awards, and (iii) the grant or exercise price
with respect to any Award and, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award and, if deemed appropriate, adjust
outstanding Awards to provide the rights contemplated by Section 11(b) hereof;
provided, in each case, that with respect to Awards of Incentive Stock Options
no such adjustment shall be authorized to the extent that such authority would
cause the Plan to violate Section 422(b)(1) of the Code or any successor
provision thereto and, with respect to all Awards under the Plan, no such
adjustment shall be authorized to the extent that such authority would be
inconsistent with the requirements for full deductibility under Section 162(m);
and provided further that the number of Shares subject to any Award denominated
in Shares shall always be a whole number.

 

(c)  Performance
Goals for Section 162(m) Awards. The
Committee shall determine at the time of grant if the grant of Restricted Stock,
Restricted Stock Units or an Other Stock-Based Award is intended to qualify as
“performance-based compensation” as that term is used in Section 162(m). Any
such grant shall be conditioned on the achievement of one or more performance
measures. The performance measures pursuant to which Restricted Stock,
Restricted Stock Units and Other Stock-Based Awards shall vest shall be any or a
combination of the following: earnings per share, return on assets, an economic
value added measure, shareholder return, earnings, share price, return on
equity, return on investment, return on fully-employed capital, reduction of
expenses, containment of expenses within budget, reserve recognition, addition
to reserves, cash provided by operating activities, increase in cash flow,
return on cash flow, cash flow per equivalent barrel, finding costs per
equivalent barrel, or increase in production of the Company, a division of the
Company or a Subsidiary. For any performance period, such performance objectives
may be measured on an absolute basis or relative to a group of peer companies
selected by the Committee, relative to internal goals or relative to levels
attained in prior years. For grants of Restricted Stock, Restricted Stock Units
and Other Stock-Based Awards intended to qualify as “performance-based
compensation,” the grants and the establishment of performance measures shall be
made during the period required under Section 162(m).

 

SECTION
6  

 

(a)  Stock
Options. Subject
to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Eligible Individuals to whom Options shall be
granted, the number of Shares to be covered by each Option, the option price
thereof, the conditions and limitations applicable to the exercise of the Option
and the other terms thereof. The Committee shall have the authority to grant
Incentive Stock Options, Nonqualified Stock Options or both. In the case of
Incentive Stock Options, the terms and conditions of such grants shall be
subject to and comply with such rules as may be required by Section 422 of the
Code, as from time to time amended, and any implementing regulations. Except in
the case of an Option granted in assumption of or substitution for an
outstanding award of a company acquired by the Company or with which the Company
combines, the exercise price of any Option granted under this Plan shall not be
less than 100% of the fair market value of the underlying Shares on the date of
grant.

 

(b)  Exercise. Each
Option shall be exercisable at such times and subject to such terms and
conditions as the Committee may, in its sole discretion, specify in the
applicable Award Agreement or thereafter, provided, however, that in no event
may any Option granted hereunder be exercisable after the expiration of 10 years
after the date of such grant. The Committee may impose such conditions with
respect to the exercise of Options, including without limitation, any condition
relating to the application of Federal or state securities laws, as it may deem
necessary or advisable. An Option may be exercised, in whole or in part, by
giving written notice to the Company, specifying the number of Shares to be
purchased. The exercise notice shall be accompanied by the full purchase price
for the Shares. 

 

(c)  Payment. The
Option price shall be payable in United States dollars and may be paid by (i)
cash or cash equivalent; (ii) delivery of shares of Common Stock, which shares
shall be valued for this purpose at the fair market value (valued in accordance
with procedures established by the Committee) on the business day immediately
preceding the date such Option is exercised and, unless otherwise determined by
the Committee, shall have been held by the optionee for at least six months; or
(iii) in such other manner as may be authorized from time to time by the
Committee. Prior to the issuance of Shares upon the exercise of an Option, a
Participant shall have no rights as a shareholder.

 

SECTION
7  

 

(a)  Stock
Appreciation Rights. Subject
to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Eligible Individuals to whom Stock Appreciation
Rights shall be granted, the number of Shares to be covered by each Award of
Stock Appreciation Rights, the grant price thereof, the conditions and
limitations applicable to the exercise of the Stock Appreciation Right and the
other terms thereof. Stock Appreciation Rights may be granted in tandem with
another Award, in addition to another Award, or freestanding and unrelated to
any other Award. Stock Appreciation Rights granted in tandem with or in addition
to an Option or other Award may be granted either at the same time as the Option
or other Award or at a later time. Stock Appreciation Rights shall not be
exercisable after the expiration of 10 years after the date of grant. Except in
the case of a Stock Appreciation Right granted in assumption of or substitution
for an outstanding award of a company acquired by the Company or with which the
Company combines, the grant price of any Stock Appreciation Right granted under
this Plan shall not be less than 100% of the fair market value of the Shares
covered by such Stock Appreciation Right on the date of grant or, in the case of
a Stock Appreciation Right granted in tandem with a then outstanding Option or
other Award, on the date of grant of such related Option or Award.

 

(b)  A Stock
Appreciation Right shall entitle the holder thereof to receive upon exercise,
for each Share to which the Stock Appreciation Right relates, an amount equal to
the excess, if any, of the fair market value of a Share on the date of exercise
of the Stock Appreciation Right over the grant price. The Committee shall
determine at the time of grant of a Stock Appreciation Right whether it shall be
settled in cash, Shares or a combination of cash and Shares. 

 

SECTION
8  

 

(a)  Restricted
Stock. Subject
to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Eligible Individuals to whom Restricted Stock shall
be granted, the number of Shares to be covered by each Award of Restricted Stock
and the terms, conditions, and limitations applicable thereto. An Award of
Restricted Stock may be subject to the attainment of specified performance goals
or targets, restrictions on transfer, forfeitability provisions and such other
terms and conditions as the Committee may determine, subject to the provisions
of the Plan. An award of Restricted Stock may be made in lieu of the payment of
cash compensation otherwise due to an Eligible Individual. To the extent that
Restricted Stock is intended to qualify as “performance-based compensation”
under Section 162(m), it must be made subject to the attainment of one or more
of the performance goals specified in Section 5(c) hereof and meet the
additional requirements imposed by Section 162(m).

 

(b)  The
Restricted Period. At the
time that an Award of Restricted Stock is made, the Committee shall establish a
period of time during which the transfer of the Shares of Restricted Stock shall
be restricted (the “Restricted Period”). Each Award of Restricted Stock may have
a different Restricted Period. Except for Restricted Stock that vests based on
the attainment of performance goals, and except as provided in Section
5(a)(i)(C)(2), a Restricted Period of at least three years is required with
incremental vesting of the Award over the three-year period permitted. If the
grant or vesting of the Shares is subject to the attainment of specified
performance goals, a Restricted Period of at least one year with incremental
vesting is permitted. The expiration of the Restricted Period shall also occur
as provided in the Award Agreement in accordance with Section 12(a) hereof.

 

(c)  Escrow. The
Participant receiving Restricted Stock shall enter into an Award Agreement with
the Company setting forth the conditions of the grant. Certificates representing
Shares of Restricted Stock shall be registered in the name of the Participant
and deposited with the Company, together with a stock power endorsed in blank by
the Participant. Each such certificate shall bear a legend in substantially the
following form:

 

The
transferability of this certificate and the shares of Common Stock represented
by it are subject to the terms and conditions (including conditions of
forfeiture) contained in the McMoRan Exploration Co. 2005 Stock Incentive Plan
(the “Plan”) and a notice of grant issued thereunder to the registered owner by
McMoRan Exploration Co. Copies of the Plan and the notice of grant are on file
at the principal office of McMoRan Exploration Co.

 

(d)  Dividends
on Restricted Stock. Any and
all cash and stock dividends paid with respect to the Shares of Restricted Stock
shall be subject to any restrictions on transfer, forfeitability provisions or
reinvestment requirements as the Committee may, in its discretion, prescribe in
the Award Agreement.

 

(e)  Forfeiture. In the
event of the forfeiture of any Shares of Restricted Stock under the terms
provided in the Award Agreement (including any additional Shares of Restricted
Stock that may result from the reinvestment of cash and stock dividends, if so
provided in the Award Agreement), such forfeited shares shall be surrendered and
the certificates canceled. The Participants shall have the same rights and
privileges, and be subject to the same forfeiture provisions, with respect to
any additional Shares received pursuant to Section 5(b) or Section 11(b) due to
a recapitalization, merger or other change in capitalization.

 

(f)  Expiration
of Restricted Period. Upon
the expiration or termination of the Restricted Period and the satisfaction of
any other conditions prescribed by the Committee or at such earlier time as
provided in the Award Agreement or an amendment thereto, the restrictions
applicable to the Restricted Stock shall lapse and a stock certificate for the
number of Shares of Restricted Stock with respect to which the restrictions have
lapsed shall be delivered, free of all such restrictions and legends, except any
that may be imposed by law, to the Participant or the Participant’s estate, as
the case may be.

 

(g)  Rights
as a Stockholder. Subject
to the terms and conditions of the Plan and subject to any restrictions on the
receipt of dividends that may be imposed in the Award Agreement, each
Participant receiving Restricted Stock shall have all the rights of a
stockholder with respect to Shares of stock during any period in which such
Shares are subject to forfeiture and restrictions on transfer, including without
limitation, the right to vote such Shares.

 

SECTION
9   

 

(a)  Restricted
Stock Units. Subject
to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Eligible Individuals to whom Restricted Stock Units
shall be granted, the number of Shares to be covered by each Award of Restricted
Stock Units and the terms, conditions, and limitations applicable thereto. An
Award of Restricted Stock Units is a right to receive shares of Common Stock in
the future and may be subject to the attainment of specified performance goals
or targets, restrictions on transfer, forfeitability provisions and such other
terms and conditions as the Committee may determine, subject to the provisions
of the Plan. An award of Restricted Stock Units may be made in lieu of the
payment of cash compensation otherwise due to an Eligible Individual. To the
extent that an Award of Restricted Stock Units is intended to qualify as
“performance-based compensation” under Section 162(m), it must be made subject
to the attainment of one or more of the performance goals specified in Section
5(c) hereof and meet the additional requirements imposed by Section
162(m).

 

(b)  The
Vesting Period. At the
time that an Award of Restricted Stock Units is made, the Committee shall
establish a period of time during which the Restricted Stock Units shall vest
(the “Vesting Period”). Each Award of Restricted Stock may have a different
Vesting Period. Except for Restricted Stock Units that vest based on the
attainment of performance goals, and except as provided in Section
5(a)(i)(C)(2), a Vesting Period of at least three years is required with
incremental vesting of the Award over the three-year period permitted. If the
grant or vesting is subject to the attainment of specified performance goals, a
Vesting Period of at least one year with incremental vesting is permitted. The
expiration of the Vesting Period shall also occur as provided in the Award
Agreement in accordance with Section 12(a) hereof. 

 

(c)  Rights
as a Stockholder. Subject
to the terms and conditions of the Plan and subject to any restrictions may be
imposed in the Award Agreement, each Participant receiving Restricted Stock
Units shall have no rights as a stockholder with respect to such Restricted
Stock Units until such time as Shares are issued to the
Participant.

 

SECTION
10  

 

(a)  Other
Stock-Based Awards. The
Committee is hereby authorized to grant to Eligible Individuals an “Other
Stock-Based Award”, which shall consist of an Award that is not an instrument or
Award specified in Sections 6 through 9 of this Plan, the value of which is
based in whole or in part on the value of Shares. Other Stock-Based Awards may
be awards of Shares or may be denominated or payable in, valued in whole or in
part by reference to, or otherwise based on or related to, Shares (including,
without limitation, securities convertible or exchangeable into or exercisable
for Shares), as deemed by the Committee consistent with the purposes of the
Plan. The Committee shall determine the terms and conditions of any such Other
Stock-Based Award and may provide that such awards would be payable in whole or
in part in cash. To the extent that an Other Stock-Based Award is intended to
qualify as “performance-based compensation” under Section 162(m), it must be
made subject to the attainment of one or more of the performance goals specified
in Section 5(c) hereof and meet the additional requirements imposed by Section
162(m).

 

(b)  Limitations. Except
for Other Stock-Based Awards that vest based on the attainment of performance
goals, and except as provided in Section 5(a)(i)(C)(2), a vesting period of at
least three years is required with incremental vesting of the Award over the
three-year period permitted. If the grant or vesting is subject to the
attainment of specified performance goals, a vesting period of at least one year
with incremental vesting is permitted. The expiration of the vesting period
shall also occur as provided in the Award Agreement in accordance with Section
12(a) hereof. 

 

(c)  Dividend
Equivalents. In the
sole and complete discretion of the Committee, an Award, whether made as an
Other Stock-Based Award under this Section 10 or as an Award granted pursuant to
Sections 6 through 9 hereof, may provide the holder thereof with dividends or
dividend equivalents, payable in cash, Shares, Subsidiary securities, other
securities or other property on a current or deferred basis.

 

SECTION
11  

 

(a)  Amendment
or Discontinuance of the Plan. The
Board may amend or discontinue the Plan at any time; provided, however, that no
such amendment may 

 

(i)  without
the approval of the stockholders, (a) increase, subject to adjustments permitted
herein, the maximum number of shares of Common Stock that may be issued through
the Plan, (b) materially increase the benefits accruing to Participants under
the Plan, (c) materially expand the classes of persons eligible to participate
in the Plan, (d) expand the types of Awards available for grant under the Plan,
(e) materially extend the term of the Plan, (f) materially change the method of
determining the exercise price of Options or Stock Appreciation Rights, or (g)
amend Section 11(c) to permit a reduction in the exercise price of Options;
or

 

(ii)  materially
impair, without the consent of the recipient, an Award previously
granted.

 

(b)  Adjustment
of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. The
Committee is hereby authorized to make adjustments in the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 5(b) hereof) affecting the Company, or the financial statements of the
Company or any Subsidiary, or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that such adjustments
are appropriate to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan.

 

(c)  Cancellation. Any
provision of this Plan or any Award Agreement to the contrary notwithstanding,
the Committee may cause any Award granted hereunder to be canceled in
consideration of a cash payment or alternative Award made to the holder of such
canceled Award equal in value to such canceled Award. Notwithstanding the
foregoing, except for adjustments permitted under Sections 5(b) and 11(b), no
action by the Committee shall, unless approved by the stockholders of the
Company, (i) cause a reduction in the exercise price of Options granted under
the Plan or (ii) permit an outstanding Option with an exercise price greater
than the current fair market value of a Share to be surrendered as consideration
for a new Option with a lower exercise price, shares of Restricted Stock,
Restricted Stock Units, and Other Stock-Based Award, a cash payment or Common
Stock. The determinations of value under this subparagraph shall be made by the
Committee in its sole discretion.

 

SECTION
12  

 

(a)  Award
Agreements. Each
Award hereunder shall be evidenced by an agreement or notice delivered to the
Participant (by paper copy or electronically) that shall specify the terms and
conditions thereof and any rules applicable thereto, including but not limited
to the effect on such Award of the death, retirement or other termination of
employment or cessation of consulting or advisory services of the Participant
and the effect thereon, if any, of a change in control of the
Company.

 

(b)  Withholding. 
 (i) A
Participant shall be required to pay to the Company, and the Company shall have
the right to deduct from all amounts paid to a Participant (whether under the
Plan or otherwise), any taxes required by law to be paid or withheld in respect
of Awards hereunder to such Participant. The Committee may provide for
additional cash payments to holders of Awards to defray or offset any tax
arising from the grant, vesting, exercise or payment of any Award.

 

(ii)  At any
time that a Participant is required to pay to the Company an amount required to
be withheld under the applicable tax laws in connection with the issuance of
Shares under the Plan, the Participant may, if permitted by the Committee,
satisfy this obligation in whole or in part by electing (the “Election”) to have
the Company withhold from the issuance Shares having a value equal to the
minimum amount required to be withheld. The value of the Shares withheld shall
be based on the fair market value of the Shares on the date as of which the
amount of tax to be withheld shall be determined in accordance with applicable
tax laws (the “Tax Date”).

 

(iii)  If
permitted by the Committee, a Participant may also satisfy up to his or her
total tax liability related to an Award by delivering Shares owned by the
Participant, which Shares may be subject to holding period requirements
determined by the Committee. The value of the Shares delivered shall be based on
the fair market value of the Shares on the Tax Date.

 

(iv)  Each
Election to have Shares withheld must be made prior to the Tax Date. If a
Participant wishes to deliver Shares in payment of taxes, the Participant must
so notify the Company prior to the Tax Date. 

 

(c)  Transferability. No
Awards granted hereunder may be transferred, pledged, assigned or otherwise
encumbered by a Participant except: (i) by will; (ii) by the laws of descent and
distribution; (iii) pursuant to a domestic relations order, as defined in the
Code, if permitted by the Committee and so provided in the Award Agreement or an
amendment thereto; or (iv) if permitted by the Committee and so provided in the
Award Agreement or an amendment thereto, Options may be transferred or assigned
(w) to Immediate Family Members, (x) to a partnership in which Immediate Family
Members, or entities in which Immediate Family Members are the owners, members
or beneficiaries, as appropriate, are the partners, (y) to a limited liability
company in which Immediate Family Members, or entities in which Immediate Family
Members are the owners, members or beneficiaries, as appropriate, are the
members, or (z) to a trust for the benefit of Immediate Family Members;
provided, however, that no more than a de minimus beneficial interest in a
partnership, limited liability company or trust described in (x), (y) or (z)
above may be owned by a person who is not an Immediate Family Member or by an
entity that is not beneficially owned solely by Immediate Family Members.
“Immediate Family Members” shall be defined as the spouse and natural or adopted
children or grandchildren of the Participant and their spouses. To the extent
that an Incentive Stock Option is permitted to be transferred during the
lifetime of the Participant, it shall be treated thereafter as a Nonqualified
Stock Option. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of Awards, or levy of attachment or similar process upon Awards not
specifically permitted herein, shall be null and void and without effect. The
designation of a Designated Beneficiary shall not be a violation of this Section
12(c).

 

(d)  Share
Certificates. All
certificates for Shares or other securities delivered under the Plan pursuant to
any Award or the exercise thereof shall be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under the Plan or the
rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other securities are
then listed, and any applicable federal or state laws, and the Committee may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

 

(e)  No
Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company from adopting or continuing in
effect other compensation arrangements, which may, but need not, provide for the
grant of options, stock appreciation rights and other types of Awards provided
for hereunder (subject to stockholder approval of any such arrangement if
approval is required), and such arrangements may be either generally applicable
or applicable only in specific cases.

 

(f)  No
Right to Employment. The
grant of an Award shall not be construed as giving a Participant the right to be
retained in the employ of or as a consultant or adviser to the Company or any
Subsidiary or in the employ of or as a consultant or adviser to any other entity
providing services to the Company. The Company or any Subsidiary or any such
entity may at any time dismiss a Participant from employment, or terminate any
arrangement pursuant to which the Participant provides services to the Company
or a Subsidiary, free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award Agreement. No Eligible
Individual or other person shall have any claim to be granted any Award, and
there is no obligation for uniformity of treatment of Eligible Individuals,
Participants or holders or beneficiaries of Awards.

 

(g)  Governing
Law. The
validity, construction, and effect of the Plan, any rules and regulations
relating to the Plan and any Award Agreement shall be determined in accordance
with the laws of the State of Delaware.

 

(h)  Severability. If any
provision of the Plan or any Award is or becomes or is deemed to be invalid,
illegal, or unenforceable in any jurisdiction or as to any Person or Award, or
would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Award, such provision shall be stricken as to such jurisdiction, Person or
Award and the remainder of the Plan and any such Award shall remain in full
force and effect.

 

(i)  No
Trust or Fund Created. Neither
the Plan nor any Award shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the Company and a
Participant or any other Person. To the extent that any Person acquires a right
to receive payments from the Company pursuant to an Award, such right shall be
no greater than the right of any unsecured general creditor of the
Company.

 

(j)  No
Fractional Shares. No
fractional Shares shall be issued or delivered pursuant to the Plan or any
Award, and the Committee shall determine whether cash, other securities or other
property shall be paid or transferred in lieu of any fractional Shares or
whether such fractional Shares or any rights thereto shall be canceled,
terminated, or otherwise eliminated.

 

(k)  Compliance
with Law. The
Company intends that Awards granted under the Plan, or any deferrals thereof,
will comply with the requirements of Section 409A to the extent
applicable.

 

(l)  Deferral
Permitted. Payment
of cash or distribution of any Shares to which a Participant is entitled under
any Award shall be made as provided in the Award Agreement. Payment may be
deferred at the option of the Participant if provided in the Award
Agreement.

 

(m)  Headings.
Headings are given to the subsections of the Plan solely as a convenience to
facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision
thereof.

 

SECTION
13  

 

Term
of the Plan. Subject
to Section 11(a), no Awards may be granted under the Plan after May 5, 2015,
which is ten years after the date the Plan was approved by the Company’s
stockholders; provided, however, that Awards granted prior to such date shall
remain in effect until such Awards have either been satisfied, expired or
canceled under the terms of the Plan, and any restrictions imposed on Shares in
connection with their issuance under the Plan have lapsed.

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