Document:

Unassociated Document

    
      EXHIBIT
        10.9

       

      FORTUNE
        OIL & GAS, INC.

      Employment
        Agreement

      

      This
        Employment Agreement (“Agreement”) is made and effective the 1st day of January
        2005 by and between Fortune Oil & Gas, Inc., a Nevada corporation (the
“Company”), and David Nunn (“Executive”).

       

      RECITALS

      

      WHEREAS,
        Executive has the experience to provide services to the Company of an
        extraordinary character which gives such services a unique value:
        and

      

      Whereas
        the Company desires to retain the services of Executive, and Executive desires
        to be employed by the Company for the term of this Agreement.

      

      NOW
        AND THEREFORE, the
        Company and Executive, intending to be legally bound, herby agree as
        follows:

      

      1.
        Employment.
        The
        Company hereby employs Executive as the President of the Company. For the
        term
        of Executive’s employment, and upon the other conditions set forth in this
        Agreement, Executive accepts such employment and agrees to perform services
        for
        the Company, subject always to such resolutions as are established from time
        to
        time by the Board of Directors of the Company.

      

      2.
        Term.
        The
        term
        of Executive’s employment hereunder shall commence on the effective date of this
        Agreement and continue through December 31,
        2014
        subject
        to the termination provisions contained herein. The Agreement may be terminated
        by the Company only for cause as set forth below, and shall not constitute
“at
        will” employment. 

      

      3.
        Position
        and Duties.

       

      3.1
        Services
        with the Company.
        During
        the term of this Agreement, Executive agrees to perform such duties and exercise
        such powers related thereto as may from time to time be assigned to him by
        the
        Company’s Board of Directors (the “Board”). Executive shall duly and diligently
        perform all duties assigned to him while in the employ if the Company. He
        shall
        be bound by and faithfully observe and abide by all rules and regulations
        of the
        Company which are brought to his notice or of which he should be reasonably
        aware.

      

      3.2
        No
        Conflicting Duties.
        Executive
        shall devote sufficient productive time, ability, and attention to the business
        of the Company during the term of this Agreement in a manner that will serve
        the
        best interests of the Company. During the term hereof, Executive shall not
        serve
        as an officer, director, employee, consultant or advisor to any other business
        without the prior written consent of the Company’s Board, which shall not be
        unreasonably withheld. Executive hereby confirms he is under no contractual
        commitments inconsistent with his obligations set forth in this Agreement.
        This
        Agreement shall not be interpreted to prohibit Executive from making passive
        interfere with the services required under this Agreement.    

       

      
        
          
          

        

        
          1

          
            

          

        

        
           

          4.
            Compensation.

        

         

      

      4.1
        Annual
        Salary.
        As
        compensation for all services to be rendered by Executive under this Agreement,
        the Company shall pay to Executive an annual salary of three
        hundred and sixty thousand dollars ($360,000.00)
        (the
“Annual Salary”). Executive’s Annual Salary shall be paid on a regular basis in
        accordance with the Company’s normal payroll procedures and policies. On or
        before the yearly anniversary date of this Agreement, the Board of Directors
        shall determine the increase to the Annual Salary, but in no event shall
        it be
        less than seven
        percent
(7%).
        The
        adjusted Annual Salary shall become effective on or before the yearly
        anniversary date. In addition, Executive shall be entitled to receive cash
        and
        or stock bonuses as may be awarded by the Board of Directors from time to
        time.

      

      4.2 Incentive
        Stock Options.
        The
        Company shall issue incentive stock options to Executive pursuant to the
        Company’s qualified Incentive Stock Option Plan. Upon the execution of this
        Agreement, Executive will receive one million four hundred thousand (1,400,000)
        incentive stock options at an exercise price equal to the fair market value
        at
        the date of grant, but in no event shall the total value exceed $100,000.
        The
        Incentive Stock Options shall vest immediately and shall the terminate ten
        years
        from the date of grant. Executive may exercise the incentive stock options,
        at
        his sole and absolute discretion, by providing the Company with written notice
        accompanied by (1) cash or a cashier’s check an amount equal to the product of
        the incentive stock options exercise price and the number of shares Executive
        desires to purchase pursuant to this provision, or (2) by a cashless exercise
        whereby Executive receives the net amount of shares after deducting the value
        of
        the exercise price.

       

       4.3
        Stock
        and Option Registration Rights.
        The
        Company hereby agrees to use its best efforts to register any shares or any
        securities in which the underlying shares are common stock with the Securities
        and Exchange Commission on Form S-8 for which the securities were issued
        as a
        form of compensation.

       

      4.4
        Expenses.
        The
        Company shall reimburse Executive for all reasonable business or travel expenses
        and office related expenses incurred by Executive in the performance of his
        duties: including but not limited to: airfare, automobile rental, lodging,
        meals, telephone, copy costs, and supplies.

       

      4.5
        Business
        Travel.
        The
        Company and Executive recognize that it may periodically be necessary for
        Executive to travel on behalf of the Company. The Company will pay for Executive
        to travel in business class or better.

      

      4.6
        Annual
        Vacation.
        Executive
        shall be entitled to forty
        five (45) days
        vacation time each year without loss of compensation. In the event that the
        Executive is unable for any reason to take the total amount of vacation time
        authorized herein during any year, any unused vacation time shall carry over
        from year to year. Any earned but unused vacation time will be paid to Executive
        based upon his annual rate of all compensation paid in the previous twelve
        months upon termination or expiration of this Agreement.

       

       4.7
        Sick
        Leave.
        Executive
        shall be entitled to forty
        five (45)
        days
        sick leave each year without loss of compensation. Any earned but unused
        sick
        leave will be paid to Executive based upon his annual rate of all compensation
        paid in the previous twelve months upon termination or expiration of this
        Agreement. 

       

      4.8
        Health
        Insurance.
        The
        Company shall provide Executive and his immediate family members with extensive
        health insurance that shall cover medical, dental and vision.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      4.9
        Payment
        Upon Sale or Merger of Company.
        In
        the
        event the Company shall merge, sell a controlling interest, or sell a majority
        of its assets, the Company shall pay Executive three (3) times his annual
        salary
        then in effect. Further, as to any vested but unexercised options to purchase
        shares in the Company which are held by Executive at the earlier of (1) the
        Company’s execution of a Letter of Intent to (a) merge, (b) sell a controlling
        interest, or (c) sell a majority of its assets, or (2) the date of any such
        merger or sale is consummated, the Company shall pay Executive cash in the
        amount equal to the difference between the consideration paid to the Company
        on
        a per share basis less the exercise price of the option, the value of which
        is
        multiplied to the number of options which Executive holds.

      

      5.
        Compensation
        Upon the Termination of Executive’s Employment.

       

      5.1
        In
        the
        event this Agreement is terminated prior to its expiration for any reason,
        Executive shall be entitled to receive Executive’s then current Base Salary, any
        and all accrued, earned but unpaid bonuses or benefits described in Section
        4 of
        this Agreement. Further, Executive shall retain all rights to shares and
        vested
        stock options, and all other equity rights that may be granted to Executive
        from
        time to time. The benefits provided for in this provision are exclusive of
        any
        other rights or remedies which Executive would posses in the event the Company
        terminates the Agreement without cause. The Company agrees that in the event
        it
        terminates Executive’s employment without cause, Executive retains all rights
        and remedies available under the law and the Company will not urge or otherwise
        argue or assert in any legal, including judicial or arbitration, proceeding
        that
        any provision of this Agreement as constitutes a waiver of rights by
        Executive.

      

      5.2
        In
        the
        event that Executive’s employment is terminated pursuant to section 9.2,
        Executive’s beneficiary or beneficiary designated by Executive in writing to the
        Company, or in the absence of such beneficiary, Executive’s estate, shall be
        entitles to receive Executive’s then current Base Salary for one
        (1)
        year
        after
        the date of his death.

      

      6.
        Proprietary
        Matter.
        Except
        as
        permitted or directed by the Company, Executive shall not during the term
        of his
        employment or at any time thereafter divulge, furnish, disclose, or make
        accessible (other then in the ordinary course of the business of the Company)
        to
        anyone for use in any way confidential, secret, or proprietary knowledge
        or
        information of the Company (“Proprietary Matter”) which Executive has acquired
        or become acquainted with or will acquire or become acquainted with, whether
        developed by himself or by others, including, but not limited to, any trade
        secrets, confidential or secret designs, processes, formulae, software or
        computer programs, plans, devices or material (whether or not patented or
        patentable, copyrighted or copyrightable) directly or indirectly useful in
        any
        aspect of the business of the Company, any confidential customer, distributor
        or
        supplier lists of the Company, any confidential or secret development or
        research work of the Company, or any other confidential, secret or non- public
        aspects of the business of the Company. Executive acknowledges that the
        Proprietary Matter constitutes a unique and valuable asset of the Company
        acquired at great time and expense by the Company, and that any disclosure
        or
        other use of the Proprietary Matter other than for the sole benefit of the
        Company would be wrongful and would cause irreparable harm to the Company.
        Both
        during and after the term of this Agreement, Executive will refrain from
        any
        acts or omissions that would reduce the value of Proprietary Matter to the
        Company. The foregoing obligations of confidentiality, however, shall not
        apply
        to any knowledge or information which is now published or which subsequently
        becomes generally publicly known, other than as a direct or indirect result
        of
        the breach of this Agreement by Executive nor shall it apply to any knowledge
        or
        information Executive had prior to the execution of this Agreement.

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      7.
        Ventures.
        If,
        during the term of this Agreement, Executive is engaged in or associated
        with
        the planning or implementing of any project, program, or venture involving
        the
        Company and a third party or parties, all rights in the project, program,
        or
        venture shall belong to the Company and shall constitute a corporate opportunity
        belonging exclusively to the Company. Except as provided in Section 4.4 above,
        Executive shall not be entitled to any interest in such project, program,
        or
        venture or to any commission, finder’s fee or other compensation in connection
        therewith.

      

      8. Non
        Solicitation of Employees.
        During
        Executive’s employment by the Company hereunder and for the one (1) year period
        following the termination of such employment for any reason, Executive shall
        not, either directly or indirectly, on his own behalf or in the service or
        on
        behalf of others solicit, divert or hire away, or attempt to solicit, divert
        or
        hire away any person then employed full time by the Company.

      

      
        	 	
                9.

              	
                Termination
                  Prior to Expiration of the
                  Term

              

      

       

      9.1
        Disability
        Executive’s employment shall terminate upon Executive becoming totally or
        permanently disabled for a period of three years or more. For purposes of
        this
        Agreement, the term “totally or permanently disabled” or “total or permanent
        disability” means Executive’s inability on account of sickness or accident,
        whether or not job related, to engage in regularly or to perform adequately
        his
        assigned duties under this Agreement. Prior to terminating the Agreement
        pursuant to this provision, the Company shall engage and consult one or more
        physicians as may be reasonable.

       

      9.2
        Death
        of Executive.
        Executive’s employment shall terminate immediately upon the death of
        Executive.

       

      9.3
        Termination
        for Cause.
        The
        Company may only terminate Executive’s employment for “Cause” (as hereinafter
        defined). Further, no termination for “Cause” may be invoked by Company without
        first providing Executive with at least thirty (30) days written notice
and
        one
        hundred twenty (120) days
        to
        correct any breach, default or causation. Such written notice shall set forth
        with reasonable specificity the Company’s basis for such notice of termination
        and Executive shall have thirty (30) days to correct the condition set forth
        in
        the notice.

      

      9.3.1.
        Cause
        Defined.
        For the
        purpose of this section, the termination of this Agreement by Company for
        any of
        the following reasons shall be considered termination for Cause:

      

      
        	 	
                (i)

              	
                Commission
                  of a criminal act involving fraud, embezzlement or breach of trust
                  or
                  other act which would prohibit Executive from holding his position
                  under
                  the rules of the Securities and Exchange
                  Commission.

              

      

      

      
        	 	
                (ii)

              	
                Willful,
                  knowing and malicious violation of written corporate policy or
                  rules of
                  the Company

              

      

      

      
        	 	
                (iii)

              	
                Willful,
                  knowing and malicious misuse, misappropriation, or disclosure of
                  any of
                  the Proprietary Matters.

              

      

      

      
        	 	
                (iv)

              	
                Misappropriation,
                  concealment, or conversion of any money or property of the
                  Company.

              

      

      

      
        	 	
                (v)

              	
                Being
                  under the habitual influence of intoxicating liquors or controlled
                  substances while in the course of
                  employment.

              

      

      

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

         

      

      
        	 	
                (vi)

              	
                Intentional
                  and non-trivial damage or destruction of property of the Company.
                  For
                  purposes of this provision non-trivial is defined to mean damage
                  occurring
                  in the course of a single act or occurrence in an amount exceeding
                  four
                  hundred dollars.

              

      

      

      
        	 	
                (vii)

              	
                Reckless
                  and wanton conduct which endangers the safety of other persons
                  or property
                  during the course of employment or while on premises leased or
                  owned by
                  the Company.

              

      

      

      
        	 	
                (viii)

              	
                The
                  performance of duties in a habitually unsatisfactory manner after
                  being
                  repeatedly advised in writing by the Company of such unsatisfactory
                  performance.

              

      

      

      
        	 	
                (ix)

              	
                Continued
                  incapacity on the part of Executive to perform his duties, unless
                  waived
                  by the Company

              

      

       

      
        9.4
          Surrender
          of Records and Property.
          Upon
          termination of his employment with the Company, Executive shall deliver
          promptly
          to the Company all records, electronic media, manuals, books, blank forms,
          documents, letters, memoranda, notes, notebooks, reports, data, tables,
          and
          calculations or copies thereof, which are the property of the Company and
          which
          relate in any way to the business, products, practices or techniques of
          the
          Company, and all other property (keys, office equipment, computers, mobile
          phones, credit cards, etc.) of the Company and Proprietary Matter, including
          but
          not limited to, all documents which in whole or in part contain any trade
          secrets or confidential information of the Company, which in any of these
          cases
          are in his possession or under his control.

      

      

      10.
        Assignment.
        This
        Agreement shall not be assignable, in whole or in part, by either party without
        the written consent of the other party, except that the Company may, without
        the
        consent of Executive, assign its rights and obligations under this Agreement
        to
        any corporation, firm or other business entity (i) with or into which the
        Company may merge or consolidate, or (ii) to which the Company may sell or
        transfer all or substantially all of its assets or of which fifty percent
        (50%)
        or more of the equity investment and of the voting control is owned, directly
        or
        indirectly, by, or is under common ownership with, the Company. Upon such
        assignment by the Company, the Company shall obtain the assignees’ written
        agreement enforceable by Executive to assume and perform, and after the date
        of
        such assignment, the terms, conditions, and provisions imposed by this Agreement
        upon the Company. After any such assignment by the Company and such written
        agreement by the assignee, the Company shall be discharged from all further
        liability hereunder and such assignee shall thereafter be deemed to be the
        Company for the purposes of all provisions of this Agreement including this
        section.

      

      11.
        Indemnification.
        The
        Company shall indemnify Executive as provided in the Nevada General Corporations
        Code, Company’s Charter or Bylaws in effect at the commencement of this
        Agreement. The scope of indemnification to which Executive is entitled shall
        not
        be diminished, but may be expanded by the Company, by amendment of the Company’s
        Bylaws, Articles of Incorporation or otherwise. Executive shall indemnify
        and
        hold the Company harmless from all liability for loss, damages or injury
        resulting from the negligence or misconduct of Executive.

      

      
        	 	
                12.

              	
                Miscellaneous

              

      

       

      12.1
        Governing
        Law.
        This
        Agreement is made under and shall be government by and construed in accordance
        with the laws of the State of California.

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      12.2
        Entire
        Agreement.
        This
        Agreement contains the entire agreement of the parties relating to the subject
        matter hereof and supersedes all prior agreements and understandings with
        respect to such subject matter, and the parties hereto have made no agreements,
        representations or warranties relating to the subject matter of this Agreement
        which are not set forth herein.

      

       12.3
        Legal
        Proceedings.
        Should
        any party institute or should the parties otherwise become a party to any
        action
        or proceeding to enforce or interpret this Agreement, the prevailing party
        in
        any such action or proceeding shall be entitled to receive from the
        non-prevailing party all costs and expenses of prosecuting or defending the
        action or proceeding. This Agreement and the rights of each party under this
        Agreement shall be governed by, interpreted under, and construed and enforced
        in
        accordance with the laws of the State of California.

      

       12.4
        Withholding
        Taxes.
        The
        Company may withhold from any benefits payable under this Agreement all federal,
        state, city or other taxes as shall be required pursuant to any law or
        governmental regulation or ruling.

      

       12.5
        Amendments.
        No
        amendment or modification of this Agreement shall be deemed effective unless
        made in writing signed by the parties hereto.

      

       12.6
        No
        Waiver.
        No term
        or condition of this Agreement shall be deemed to have been waived nor shall
        there be any estoppel to enforce any provisions of this Agreement, except
        by a
        statement in writing signed by the party against whom enforcement of the
        waiver
        or estoppel is sought. Any written waiver shall not be deemed a continuing
        waiver unless specifically stated, shall operate only as to the specific
        term or
        condition waived and shall not constitute a waiver of such term or condition
        for
        the future or as to any act other than that specifically waived.

      

       12.7
        Severability.
        To
        the
        extent any provision of this Agreement shall be invalid or unenforceable,
        it
        shall be considered deleted here from and the remainder of such provision
        and of
        this Agreement shall be unaffected and shall continue in full force and
        effect.

      

       12.8
        Notices.
        Any and
        all notices, requests or other communications required or permitted in or
        by any
        provision of this Agreement shall be in writing and may be delivered personally
        or by certified mail directed to the addressee at such person’s or entity’s last
        known post office address, and if given by certified mail, shall be deemed
        to
        have been delivered when deposited in such, mail postage prepaid.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

               
        This Agreement
        is executed on the date first written above at Los Angeles,
        California.

       

      
        	Company:                                        	 	 	Executive:
	Fortune Oil & Gas,
                Inc.	 	 	 
	 	 	 	 
	/s/ James
                Wensveen	 	 	/s/ David
                Nunn
	
                

              	 	 	
                

              
	James
                Wensveen, CEO	 	 	David
                Nunn

      

       

      
        	Approved
                and Ratified by Executive Board Member	 	 	 
	 	 	 	 
	/s/ James
                Wensveen	 	 	 
	
                

              	 	 	
              
	James
                Wensveen	 	 	 

      

    

     

     

    7Unassociated Document

    EXHIBIT 10.10

      FORTUNE
        OIL & GAS, INC.

      

      2005
        EQUITY INCENTIVE PLAN

      

       

      1. NAME.

      

      The
        name
        of the plan is “Fortune Oil & Gas, Inc., Inc. 2005 Equity Incentive
        Plan”.

      

      2. PURPOSE.

      

      The
        purpose of this Plan is to provide incentives to attract, retain and motivate
        eligible persons whose present and potential contributions are important
        to the
        success of the Company, and its Parent and Subsidiaries (if any), by offering
        them an opportunity to participate in the Company’s future performance through
        awards of Options, Restricted Stock and Stock Awards. Capitalized terms not
        defined in the text are defined in Section 3.

      

      3. DEFINITIONS.

      

      As
        used
        in this Plan, the following terms will have the following meanings:

      

      “AWARD”
        means
        any award under this Plan, including any Option, Restricted Stock or Stock
        Award.

      

      “AWARD
        AGREEMENT”
        means,
        with respect to each Award, the signed written agreement between the Company
        and
        the Participant setting forth the terms and conditions of the
        Award.

      

      “BOARD”
        means
        the Board of Directors of the Company.

      

      “CAUSE”
        means
        any cause, as defined by applicable law, for the termination of a Participant’s
        employment with the Company or a Parent or Subsidiary of the
        Company.

      

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

      

      “COMMITTEE”
        means
        the Board of Directors.

      

      “COMPANY”
        means
        Fortune Oil & Gas, Inc., a Nevada corporation, or any successor
        corporation.

      

      “DISABILITY”
        means a
        disability, whether temporary or permanent, partial or total, as determined
        by
        the Committee.

      

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

      

      “EXERCISE
        PRICE”
        means
        the price at which a holder of an Option may purchase the Shares issuable
        upon
        exercise of the Option.

      

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      “FAIR
        MARKET VALUE”
        means,
        as of any date, the value of a share of the Company’s Common Stock determined as
        follows

       

      (a) if
        such
        Common Stock is publicly traded and is then listed on a national securities
        exchange, its closing price on the date of determination on the principal
        national securities exchange on which the Common Stock is listed or admitted
        to
        trading as reported in The
        Wall Street Journal;

      

      (b) if
        such
        Common Stock is quoted on the NASDAQ National Market, its closing price on
        the
        NASDAQ National Market on the date of determination as reported in The
        Wall Street Journal;

      

      (c) if
        such
        Common Stock is publicly traded but is not listed or admitted to trading
        on a
        national securities exchange, the average of the closing bid and asked prices
        on
        the date of determination as reported in The
        Wall Street Journal;

      

      (d) the
        price
        per share at which shares of the Company’s Common Stock are initially offered
        for sale to the public by the Company’s underwriters in the initial public
        offering of the Company’s Common Stock pursuant to a registration statement
        filed with the SEC under the Securities Act if the Award is made on the
        effective date of such registration statement; or

       

      (e)
        if none of the foregoing is applicable, by the
        Committee in good faith.

    

    
       

      “INSIDER”
        means
        an officer or director of the Company or any other person whose transactions
        in
        the Company’s Common Stock are subject to Section 16 of the Exchange
        Act.

      

      “OPTION”
        means
        an award of an option to purchase Shares pursuant to Section 7.

      

      “PARENT”
        means
        any corporation (other than the Company) in an unbroken chain of corporations
        ending with the Company if each of such corporations other than the Company
        owns
        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.

      

      “PARTICIPANT”
        means a
        person who receives an Award under this Plan.

      

      “PERFORMANCE
        FACTORS”
        means
        the factors selected by the Committee, in its sole and absolute discretion,
        from
        among the following measures to determine whether the performance goals
        applicable to Awards have been satisfied:

      

      
        	 	 	
                (a)

              	
                Net
                  revenue and/or net revenue growth;

              

      

      

      
        	 	 	
                (b)

              	
                Earnings
                  before income taxes and amortization and/or earnings before income
                  taxes
                  and amortization growth;

              

      

      

      
        	 	 	
                (c)

              	
                Operating
                  income and/or operating income
                  growth;

              

      

      

      
        	 	 	
                (d)

              	
                Net
                  income and/or net income growth;

              

      

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
                 

              	 	
                (e)

              	
                Earnings
                  per share and/or earnings per share
                  growth;

              

      

      

      
        	 	 	
                (f)

              	
                Total
                  stockholder return and/or total stockholder return
                  growth;

              

      

      

      
        	 	 	
                (g)

              	
                Return
                  on equity;

              

      

      

      
        	 	 	
                (h)

              	
                Operating
                  cash flow return on income;

              

      

      

      
        	 	 	
                (i)

              	
                Adjusted
                  operating cash flow return on
                  income;

              

      

      

      
        	 	 	
                (j)

              	
                Economic
                  value added; and

              

      

      

      
        	 	 	
                (k)

              	
                Individual
                  business objectives.

              

      

      

      “PERFORMANCE
        PERIOD”
        means
        the period of service determined by the Committee, not to exceed five years,
        during which years of service or performance is to be measured for Restricted
        Stock Awards or Stock Awards.

      

      “PLAN”
        means
        this Fortune Oil & Gas, Inc. 2005 Equity Incentive Plan, as amended from
        time to time.

      

      “RESTRICTED
        STOCK AWARD”
        means
        an award of Shares pursuant to Section 8.

      

      “SEC”
        means
        the Securities and Exchange Commission.

      

      “SECURITIES
        ACT”
        means
        the Securities Act of 1933, as amended.

      

      “SHARES”
        means
        shares of the Company’s Common Stock reserved for issuance under this Plan, as
        adjusted pursuant to Sections 4 and 19, and any successor security.

      

      “STOCK
        AWARD”
        means
        an award of Shares, or cash in lieu of Shares, pursuant to Section
        9.

      

      “SUBSIDIARY”
        means
        any corporation (other than the Company) in an unbroken chain of corporations
        beginning with the Company if each of the corporations other than the last
        corporation in the unbroken chain owns 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.

      

      “TERMINATION”
        or
“TERMINATED”
        means,
        for purposes of this Plan with respect to a Participant, that the Participant
        has for any reason ceased to provide services as an employee, officer, director,
        consultant, independent contractor, or advisor to the Company or a Parent
        or
        Subsidiary of the Company. An employee will not be deemed to have ceased
        to
        provide services in the case of (i) sick leave, (ii) military leave, or (iii)
        any other leave of absence approved by the Company, provided that such leave
        is
        for a period of not more than 90 days, unless reemployment upon the expiration
        of such leave is guaranteed by contract or statute or unless provided otherwise
        pursuant to a formal policy adopted from time to time by the Company and
        issued
        and promulgated to employees in writing. In the case of any employee on an
        approved leave of absence, the Committee may make such provisions respecting
        suspension of vesting of the Award while on leave from the employ of the
        Company
        or a Subsidiary as it may deem appropriate, except that in no event may an
        Option be exercised after the expiration of the term set forth in the Option
        agreement. The Committee will have sole discretion to determine whether a
        Participant has ceased to provide services and the effective date on which
        the
        Participant ceased to provide services (the “Termination Date”).

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      4. SHARES
        SUBJECT TO THE PLAN.

      

      4.1 Number
        of Shares Available.
        Subject
        to Sections 4.2 and 19, the total aggregate number of Shares initially reserved
        and available for grant and issuance pursuant to this Plan will be
        10,000,000 Shares
        and will include Shares that are subject to: (a) issuance upon exercise of
        an
        Option but cease to be subject to such Option for any reason other than exercise
        of such Option; (b) an Award granted hereunder but forfeited or repurchased
        by
        the Company at the original issue price; and (c) an Award that otherwise
        terminates without Shares being issued. At all times the Company shall reserve
        and keep available a sufficient number of Shares as shall be required to
        satisfy
        the requirements of all outstanding Options granted under this Plan and all
        other outstanding but unvested Awards granted under this Plan. .

      

      4.2 Adjustment
        of Shares.
        In the
        event that the number of outstanding shares is changed by a stock dividend,
        recapitalization, stock split, reverse stock split, subdivision, combination,
        reclassification or similar change in the capital structure of the Company
        without consideration, then (a) the number of Shares reserved for issuance
        under
        this Plan, (b) the Exercise Prices of and number of Shares subject to
        outstanding Options, and (c) the number of Shares subject to other outstanding
        Awards will be proportionately adjusted, subject to any required action by
        the
        Board or the stockholders of the Company and compliance with applicable
        securities laws; provided, however, that fractions of a Share will not be
        issued
        but will either be replaced by a cash payment equal to the Fair Market Value
        of
        such fraction of a Share or will be rounded up to the nearest whole Share,
        as
        determined by the Committee.

      

      5. ELIGIBILITY.

      

      ISOs
        (as
        defined in Section 7 below) may be granted only to employees (including officers
        and directors who are also employees) of the Company or of a Parent or
        Subsidiary of the Company. All other Awards may be granted to employees,
        officers, directors, consultants, independent contractors and advisors of
        the
        Company or any Parent or Subsidiary of the Company, provided such consultants,
        contractors and advisors render bona fide services not in connection with
        the
        offer and sale of securities in a capital-raising transaction. A person may
        be
        granted more than one Award under this Plan.

      

      6. ADMINISTRATION.

      

      6.1 Committee
        Authority.
        This
        Plan will be administered by the Committee or by the Board acting as the
        Committee. Subject to the general purposes, terms and conditions of this
        Plan,
        and to the direction of the Board, the Committee will have full power to
        implement and carry out this Plan. Without limitation, the Committee will
        have
        the authority to:

      

      (a) construe
        and interpret this Plan, any Award Agreement and any other agreement or document
        executed pursuant to this Plan;

      

      (b) prescribe,
        amend and rescind rules and regulations relating to this Plan or any
        Award;

       

      (c) select
        persons to receive Awards;

      

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      (d) determine
        the form and terms of Awards;

      

      (e) determine
        the number of Shares or other consideration subject to Awards;

      

      (f) determine
        whether Awards will be granted singly, in combination with, in tandem with,
        in
        replacement of, or as alternatives to, other Awards under this Plan or any
        other
        incentive or compensation plan of the Company or any Parent or Subsidiary
        of the
        Company;

      

      (g) grant
        waivers of Plan or Award conditions;

      

      (h) determine
        the vesting, exercisability and payment of Awards;

      

      (i) correct
        any defect, supply any omission or reconcile any inconsistency in this Plan,
        any
        Award or any Award Agreement;

      

      (j) determine
        whether an Award has been earned; and

      

      (k) make
        all
        other determinations necessary or advisable for the administration of this
        Plan.

      

      6.2 Committee
        Discretion.
        Any
        determination made by the Committee with respect to any Award will be made
        at
        the time of grant of the Award or, unless in contravention of any express
        term
        of this Plan or Award, at any later time, and such determination will be
        final
        and binding on the Company and on all persons having an interest in any Award
        under this Plan. The Committee may delegate to one or more officers of the
        Company the authority to grant an Award under this Plan to Participants who
        are
        not Insiders of the Company.

      

      7. OPTIONS.

      

      The
        Committee may grant Options to eligible persons and will determine whether
        such
        Options will be Incentive Stock Options within the meaning of the Code (“ISO”)
        or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the
        Option, the Exercise Price of the Option, the period during which the Option
        may
        be exercised, and all other terms and conditions of the Option, subject to
        the
        following:

      

      7.1 Form
        of Option Grant.
        Each
        Option granted under this Plan will be evidenced by an Award Agreement which
        will expressly identify the Option as an ISO or an NQSO (hereinafter referred
        to
        as the “Stock Option Agreement”), and will be in such form and contain such
        provisions (which need not be the same for each Participant) as the Committee
        may from time to time approve, and which will comply with and be subject
        to the
        terms and conditions of this Plan.

      

      7.2 Date
        of Grant.
        The
        date of grant of an Option will be the date on which the Committee makes
        the
        determination to grant such Option, unless otherwise specified by the Committee.
        The Stock Option Agreement and a copy of this Plan will be delivered to the
        Participant within a reasonable time after the granting of the
        Option.

      

      7.3 Exercise
        Period.
        Options
        may be exercisable within the times or upon the events determined by the
        Committee as set forth in the Stock Option Agreement governing such Option;
        provided, however, that no Option will be exercisable after the expiration
        of
        ten (10) years from the date the Option is granted; and provided further
        that no
        ISO granted to a person who directly or by attribution owns more than ten
        percent (10%) of the total combined voting power of all classes of stock
        of the
        Company or of any Parent or Subsidiary of the Company (“Ten Percent
        Stockholder”) will be exercisable after the expiration of five (5) years from
        the date the ISO is granted. The Committee also may provide for Options to
        become exercisable at one time or from time to time, periodically or otherwise,
        in such number of Shares or percentage of Shares as the Committee determines,
        provided, however, that in all events a Participant will be entitled to exercise
        an Option at the rate of at least 20% per year over five years from the date
        of
        grant, subject to reasonable conditions such as continued employment; and
        further provided that an Option granted to a Participant who is an officer,
        director or consultant may become fully exercisable, subject to reasonable
        conditions such as continued employment, at any time or during any period
        established by the Company.

      

      
        
          
          

        

        
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      7.4 Exercise
        Price.
        The
        Exercise Price of an Option will be determined by the Committee when the
        Option
        is granted and may be not less than 85% of the Fair Market Value of the Shares
        on the date of grant; provided that: (a) the Exercise Price of an ISO will
        be
        not less than 100% of the Fair Market Value of the Shares on the date of
        grant;
        and (b) the Exercise Price of an Option granted to a Ten Percent Stockholder
        will not be less than 110% of the Fair Market Value of the Shares on the
        date of
        grant. Payment for the Shares purchased may be made in accordance with Section
        10 of this Plan.

      

      7.5 Method
        of Exercise.
        Options
        may be exercised only by delivery to the Company of a written stock option
        exercise agreement (the “Exercise Agreement”) in a form approved by the
        Committee, (which need not be the same for each Participant), stating the
        number
        of Shares being purchased, the restrictions imposed on the Shares purchased
        under such Exercise Agreement, if any, and such representations and agreements
        regarding the Participant’s investment intent and access to information and
        other matters, if any, as may be required or desirable by the Company to
        comply
        with applicable securities laws, together with payment in full of the Exercise
        Price for the number of Shares being purchased.

      

      7.6 Termination.
        Notwithstanding the exercise periods set forth in the Stock Option Agreement,
        exercise of an Option will always be subject to the following:

      

      (a) If
        the
        Participant’s service is Terminated for any reason except death or Disability,
        then the Participant may exercise such Participant’s Options only to the extent
        that such Options would have been exercisable upon the Termination Date no
        later
        than three (3) months after the Termination Date (or such longer time period
        not
        exceeding five (5) years as may be determined by the Committee, with any
        exercise beyond three (3) months after the Termination Date deemed to be
        an
        NQSO).

      

      (b) If
        the
        Participant’s service is Terminated because of the Participant’s death or
        Disability (or the Participant dies within three (3) months after a Termination
        other than for Cause or because of Participant’s Disability), then the
        Participant’s Options may be exercised only to the extent that such Options
        would have been exercisable by the Participant on the Termination Date and
        must
        be exercised by the Participant (or the Participant’s legal representative) no
        later than twelve (12) months after the Termination Date (or such longer
        time
        period not exceeding five (5) years as may be determined by the Committee,
        with
        any such exercise beyond (i) three (3) months after the Termination Date
        when
        the Termination is for any reason other than the Participant’s death or
        Disability, or (ii) twelve (12) months after the Termination Date when the
        Termination is for Participant’s death or Disability, deemed to be an
        NQSO).

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      (c) Notwithstanding
        the provisions in paragraph 7.6(a) above, if the Participant’s service is
        Terminated for Cause, as defined by applicable law, neither the Participant,
        the
        Participant’s estate nor such other person who may then hold the Option shall be
        entitled to exercise any Option with respect to any Shares whatsoever, after
        Termination, whether or not after Termination the Participant may receive
        payment from the Company or a Subsidiary for vacation pay, for services rendered
        prior to Termination, for services rendered for the day on which Termination
        occurs, for salary in lieu of notice, or for any other benefits. For the
        purpose
        of this paragraph, subject to the foregoing, Termination shall be deemed
        to
        occur on the date when the Company dispatches notice or advice to the
        Participant that his service is Terminated.

      

      7.7 Limitations
        on Exercise.
        The
        Committee may specify a reasonable minimum number of Shares that may be
        purchased on any exercise of an Option, provided that such minimum number
        will
        not prevent the Participant from exercising the Option for the full number
        of
        Shares for which it is then exercisable.

      

      7.8 Limitations
        on ISO.
        The
        aggregate Fair Market Value (determined as of the date of grant) of Shares
        with
        respect to which ISO are exercisable for the first time by a Participant
        during
        any calendar year (under this Plan or under any other incentive stock option
        plan of the Company, Parent or Subsidiary of the Company) will not exceed
        $100,000. If the Fair Market Value of Shares on the date of grant with respect
        to which ISO are exercisable for the first time by a Participant during any
        calendar year exceeds $100,000, then the Options for the first $100,000 worth
        of
        Shares to become exercisable in such calendar year will be ISO and the Options
        for the amount in excess of $100,000 that become exercisable in that calendar
        year will be NQSOs. In the event that the Code or the regulations promulgated
        thereunder are amended after the Effective Date of this Plan to provide for
        a
        different limit on the Fair Market Value of Shares permitted to be subject
        to
        ISO, such different limit will be automatically incorporated herein and will
        apply to any Options granted after the effective date of such
        amendment.

      

      7.9 Modification,
        Extension or Renewal.
        The
        Committee may modify, extend or renew outstanding Options and authorize the
        grant of new Options in substitution therefore, provided that any such action
        may not, without the written consent of a Participant, impair any of such
        Participant’s rights under any Option previously granted. Any outstanding ISO
        that is modified, extended, renewed or otherwise altered will be treated
        in
        accordance with Section 424(h) of the Code. The Committee may reduce the
        Exercise Price of outstanding Options without the consent of Participants
        affected by a written notice to them; provided, however, that the Exercise
        Price
        may not be reduced below the minimum Exercise Price that would be permitted
        under Section 7.4 of this Plan for Options granted on the date the action
        is
        taken to reduce the Exercise Price.

      

      7.10 No
        Disqualification.
        Notwithstanding any other provision in this Plan, no term of this Plan relating
        to ISO will be interpreted, amended or altered, nor will any discretion or
        authority granted under this Plan be exercised, so as to disqualify this
        Plan
        under Section 422 of the Code or, without the consent of the Participant
        affected, to disqualify any ISO under Section 422 of the Code.

      

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      8. RESTRICTED
        STOCK.

      

      A
        Restricted Stock Award is an offer by the Company to sell to an eligible
        person
        Shares that are subject to restrictions. The Committee will determine to
        whom an
        offer will be made, the number of Shares the person may purchase, the price
        to
        be paid (the “Purchase Price”), the restrictions to which the Shares will be
        subject, and all other terms and conditions of the Restricted Stock Award,
        subject to the following:

      

      8.1 Form
        of Restricted Stock Award.
        All
        purchases under a Restricted Stock Award made pursuant to this Plan will
        be
        evidenced by an Award Agreement (the “Restricted Stock Purchase Agreement”) that
        will be in such form (which need not be the same for each Participant) as
        the
        Committee will from time to time approve, and will comply with and be subject
        to
        the terms and conditions of this Plan. The offer of Restricted Stock will
        be
        accepted by the Participant’s execution and delivery of the Restricted Stock
        Purchase Agreement and full payment for the Shares to the Company within
        thirty
        (30) days from the date the Restricted Stock Purchase Agreement is delivered
        to
        the person. If such person does not execute and deliver the Restricted Stock
        Purchase Agreement along with full payment for the Shares to the Company
        within
        thirty (30) days, then the offer will terminate, unless otherwise extended
        by
        the Committee.

      

      8.2 Purchase
        Price.
        The
        Purchase Price of Shares sold pursuant to a Restricted Stock Award will be
        determined by the Committee on the date the Restricted Stock Award is granted
        and may not be less than 85% of the Fair Market Value of the Shares on the
        grant
        date, except in the case of a sale to a Ten Percent Stockholder, in which
        case
        the Purchase Price will be 100% of the Fair Market Value. Payment of the
        Purchase Price must be made in accordance with Section 10 of this
        Plan.

      

      8.3 Terms
        of Restricted Stock Awards.
        Restricted Stock Awards shall be subject to such restrictions as the Committee
        may impose. These restrictions may be based upon completion of a specified
        number of years of service with the Company or upon completion of the
        performance goals as set out in advance in the Participant’s individual
        Restricted Stock Purchase Agreement. Restricted Stock Awards may vary from
        Participant to Participant and between groups of Participants. Prior to the
        grant of a Restricted Stock Award, the Committee shall: (a) determine the
        nature, length and starting date of any Performance Period for the Restricted
        Stock Award; (b) select from among the Performance Factors to be used to
        measure
        performance goals, if any; and (c) determine the number of Shares that may
        be
        awarded to the Participant. Prior to the payment of any Restricted Stock
        Award,
        the Committee shall determine the extent to which such Restricted Stock Award
        has been earned. Performance Periods may overlap and Participants may
        participate simultaneously with respect to Restricted Stock Awards that are
        subject to different Performance Periods and have different performance goals
        and other criteria.

      

      8.4 Termination
        During Performance Period.
        If a
        Participant is terminated during a Performance Period for any reason, then
        such
        Participant will be entitled to payment (whether in Shares, cash or otherwise)
        with respect to the Restricted Stock Award only to the extent earned as of
        the
        date of Termination in accordance with the Restricted Stock Purchase Agreement,
        unless the Committee determines otherwise.

      

      
        
          
          

        

        
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      9. STOCK
        AWARDS.

      

      9.1 Awards
        of Stock.
        A Stock
        Award is an award of Shares (which may consist of Restricted Stock) for services
        rendered to the Company or any Parent or Subsidiary of the Company. A Stock
        Award will be awarded pursuant to an Award Agreement (the “Stock Award
        Agreement”) that will be in such form (which need not be the same for each
        Participant) as the Committee will from time to time approve, and will comply
        with and be subject to the terms and conditions of this Plan. A Stock Award
        may
        be awarded upon satisfaction of such performance goals as are set out in
        advance
        in the Participant’s individual Stock Award Agreement (the “Performance Stock
        Award Agreement”) that will be in such form (which need not be the same for each
        Participant) as the Committee will from time to time approve, and will comply
        with and be subject to the terms and conditions of this Plan. Stock Awards
        may
        vary from Participant to Participant and between groups of Participants,
        and may
        be based upon the achievement of the Company, Parent or Subsidiary and/or
        individual performance factors or upon such other criteria as the Committee
        may
        determine.

      

      9.2 Terms
        of Stock Awards.
        The
        Committee will determine the number of Shares to be awarded to the Participant.
        If the Stock Award is being earned upon the satisfaction of performance goals
        pursuant to a Performance Stock Award Agreement, then the Committee will:
        (a)
        determine the nature, length and starting date of any Performance Period
        for
        each Stock Award; (b) select from among the Performance Factors to be used
        to
        measure the performance, if any; and (c) determine the number of Shares that
        may
        be awarded to the Participant. Prior to the payment of any Stock Award, the
        Committee shall determine the extent to which such Stock Award has been earned.
        Performance Periods may overlap and Participants may participate simultaneously
        with respect to Stock Awards that are subject to different Performance Periods
        and different performance goals and other criteria. The number of Shares
        may be
        fixed or may vary in accordance with such performance goals and criteria
        as may
        be determined by the Committee. The Committee may adjust the performance
        goals
        applicable to the Stock Awards to take into account changes in law and
        accounting or tax rules and to make such adjustments as the Committee deems
        necessary or appropriate to reflect the impact of extraordinary or unusual
        items, events or circumstances to avoid windfalls or hardships.

      

      9.3 Form
        of Payment.
        The
        earned portion of a Stock Award may be paid to the Participant by the Company
        either currently or on a deferred basis, with such interest or dividend
        equivalent, if any, as the Committee may determine. Payment may be made in
        the
        form of cash or whole Shares or a combination thereof, either in a lump sum
        payment or in installments, all as the Committee will determine.

      

      10. PAYMENT
        FOR SHARE PURCHASES.

      

      10.1 Payment.
        Payment
        for Shares purchased pursuant to this Plan may be made in cash (by check)
        or,
        where expressly approved for the Participant by the Committee and where
        permitted by law:

      

      (a) by
        cancellation of indebtedness of the Company to the Participant;

      

      (b) by
        surrender of shares that either: (1) have been owned by the Participant for
        more
        than six (6) months and have been paid for within the meaning of SEC Rule
        144
        (and, if such shares were purchased from the Company by use of a promissory
        note, such note has been fully paid with respect to such shares); or (2)
        were
        obtained by the Participant in the public market;

      

      (c) by
        tender
        of a full recourse promissory note having such terms as may be approved by
        the
        Committee and bearing interest at a rate sufficient to avoid imputation of
        income under Sections 483 and 1274 of the Code; provided, however, that
        Participants who are not employees of the Company and officers and directors
        of
        the Company will not be entitled to purchase Shares with a promissory
        note;

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      (d) by
        waiver
        of compensation due or accrued to the Participant for services
        rendered;

      

      (e) with
        respect only to purchases upon exercise of an Option, and provided that a
        public
        market for the Company’s stock exists:

      

      (1) through
        a
“same day sale” commitment from the Participant and a broker-dealer that is a
        member of the National Association of Securities Dealers (an “NASD Dealer”)
        whereby the Participant irrevocably elects to exercise the Option and to
        sell a
        portion of the Shares so purchased to pay for the Exercise Price, and whereby
        the NASD Dealer irrevocably commits upon receipt of such Shares to forward
        the
        Exercise Price directly to the Company; or

       

      (2) through
        a
“margin” commitment from the Participant and a NASD Dealer whereby the
        Participant irrevocably elects to exercise the Option and to pledge the Shares
        so purchased to the NASD Dealer in a margin account as security for a loan
        from
        the NASD Dealer in the amount of the Exercise Price, and whereby the NASD
        Dealer
        irrevocably commits upon receipt of such Shares to forward the Exercise Price
        directly to the Company; or

      

      (f) by
        any
        combination of the foregoing.

      

      10.2 Loan
        Guarantees.
        The
        Committee may help the Participant pay for Shares purchased under this Plan
        by
        authorizing a guarantee by the Company of a third-party loan to the
        Participant.

      

      11. WITHHOLDING
        TAXES.

      

      11.1 Withholding
        Generally.
        Whenever Shares are to be issued in satisfaction of Awards granted under
        this
        Plan, the Company may require the Participant to remit to the Company an
        amount
        sufficient to satisfy federal, state and local withholding tax requirements
        prior to the delivery of any certificate or certificates for such Shares.
        Whenever, under this Plan, payments in satisfaction of Awards are to be made
        in
        cash, such payment will be net of an amount sufficient to satisfy federal,
        state, and local withholding tax requirements.

      

      11.2 Stock
        Withholding.
        When,
        under applicable tax laws, a participant incurs tax liability in connection
        with
        the exercise or vesting of any Award that is subject to tax withholding and
        the
        Participant is obligated to pay the Company the amount required to be withheld,
        the Committee may allow the Participant to satisfy the minimum withholding
        tax
        obligation by electing to have the Company withhold from the Shares to be
        issued
        that number of Shares having a Fair Market Value equal to the minimum amount
        required to be withheld, determined on the date that the amount of tax to
        be
        withheld is to be determined. All elections by a Participant to have Shares
        withheld for this purpose will be made in accordance with the requirements
        established by the Committee and will be in writing in a form acceptable
        to the
        Committee.

      

      
        
          
          

        

        
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      12. PRIVILEGES
        OF STOCK OWNERSHIP.

      

      12.1 Voting
        and Dividends.
        No
        Participant will have any of the rights of a stockholder with respect to
        any
        Shares until the Shares are issued to the Participant. After Shares are issued
        to the Participant, the Participant will be a stockholder and will have all
        the
        rights of a stockholder with respect to such Shares, including the right
        to vote
        and receive all dividends or other distributions made or paid with respect
        to
        such Shares; provided, that if such Shares are Restricted Stock, then any
        new,
        additional or different securities the Participant may become entitled to
        receive with respect to such Shares by virtue of a stock dividend, stock
        split
        or any other change in the corporate or capital structure of the Company
        will be
        subject to the same restrictions as the Restricted Stock.

      

      12.2 Financial
        Statements.
        The
        Company will provide financial statements to each Participant prior to such
        Participant’s purchase of Shares under this Plan, and to each Participant
        annually during the period such Participant has Awards outstanding; provided
        however, there shall be no obligation on the part of the Company to provide
        financial statements or information that is not publicly available.

      

      13. NON-TRANSFERABILITY
        OF AWARDS.

      

      Awards
        of
        Stock and Restricted Stock granted under this Plan, and any interest therein,
        will not be transferable or assignable by the Participant, and may not be
        made
        subject to execution, attachment or similar process, other than by will or
        by
        the laws of descent and distribution. Awards of Options granted under this
        Plan,
        and any interest therein, will not be transferable or assignable by the
        Participant, and may not be made subject to execution, attachment or similar
        process, other than by will or by the laws of descent and distribution, by
        instrument to an inter vivos or testamentary trust in which the options are
        to
        be passed to beneficiaries upon the death of the trustor, or by gift to
“immediate family” as that term is defined in 17 C.F.R. 240.16a-1(e). During the
        lifetime of the Participant an Award will be exercisable only by the
        Participant. During the lifetime of the Participant, any elections with respect
        to an Award may be made only by the Participant unless otherwise determined
        by
        the Committee and set forth in the Award Agreement with respect to Awards
        that
        are not ISOs.

      

      14. CERTIFICATES.

      

      All
        certificates for Shares or other securities delivered under this Plan will
        be
        subject to such stop transfer orders, legends and other restrictions as the
        Committee may deem necessary or advisable, including restrictions under any
        applicable federal, state or foreign securities law, or any rules, regulations
        and other requirements of the SEC or any stock exchange or automated quotation
        system upon which the Shares may be listed or quoted.

      

      15. ESCROW;
        PLEDGE OF SHARES.

      

      To
        enforce any restrictions on a Participant’s Shares, the Committee may require
        the Participant to deposit all certificates representing Shares, together
        with
        stock powers or other instruments of transfer approved by the Committee
        appropriately endorsed in blank, with the Company or an agent designated
        by the
        Company to hold in escrow until such restrictions have lapsed or terminated,
        and
        the Committee may cause a legend or legends referencing such restrictions
        to be
        placed on the certificates. Any Participant who is permitted to execute a
        promissory note as partial or full consideration for the purchase of Shares
        under this Plan will be required to pledge and deposit with the Company all
        or
        part of the Shares so purchased as collateral to secure the payment of the
        Participant’s obligation to the Company under the promissory note; provided,
        however, that the Committee may require or accept other or additional forms
        of
        collateral to secure the payment of such obligation and, in any event, the
        Company will have full recourse against the Participant under the promissory
        note notwithstanding any pledge of the Participant’s Shares or other collateral.
        In connection with any pledge of the Shares, the Participant will be required
        to
        execute and deliver a written pledge agreement in such form as the Committee
        will from time to time approve. The Shares purchased with the promissory
        note
        may be released from the pledge on a pro rata basis as the promissory note
        is
        paid.

      

      
        
          
          

        

        
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      16. EXCHANGE
        OF AWARDS.

      

      The
        Committee may, at any time or from time to time, authorize the Company, with
        the
        consent of the respective Participants, to issue new Awards in exchange for
        the
        surrender and cancellation of any or all outstanding Awards.

      

      17. SECURITIES
        LAW AND OTHER REGULATORY COMPLIANCE.

      

      An
        Award
        will not be effective unless such Award is in compliance with all applicable
        federal and state securities laws, rules and regulations of any governmental
        body, and the requirements of any stock exchange or automated quotation system
        upon which the Shares may then be listed or quoted, as they are in effect
        on the
        date of grant of the Award and also on the date of exercise or other issuance.
        Notwithstanding any other provision in this Plan, the Company will have no
        obligation to issue or deliver certificates for Shares under this Plan prior
        to:
        (a) obtaining any approvals from governmental agencies that the Company
        determines are necessary or advisable; and/or (b) completion of any registration
        or other qualification of such Shares under any state or federal law or ruling
        of any governmental body that the Company determines to be necessary or
        advisable. The Company will be under no obligation to register the Shares
        with
        the SEC or to effect compliance with the registration, qualification or listing
        requirements of any state securities laws, stock exchange or automated quotation
        system, and the Company will have no liability for any inability or failure
        to
        do so.

      

      18. NO
        OBLIGATION TO EMPLOY.

      

      Nothing
        in this Plan or any Award granted under this Plan will confer or be deemed
        to
        confer on any Participant any right to continue in the employ of, or to continue
        any other relationship with, the Company or any Parent or Subsidiary of the
        Company or limit in any way the right of the Company or any Parent or Subsidiary
        of the Company to terminate Participant’s employment or other relationship at
        any time, with or without cause.

      

      19. CORPORATE
        TRANSACTIONS.

      

      19.1 Assumption
        or Replacement of Awards by Successor.
        In the
        event of (a) a dissolution or liquidation of the Company, (b) a merger or
        consolidation in which the Company is not the surviving corporation (other
        than
        a merger or consolidation with a wholly-owned subsidiary, a reincorporation
        of
        the Company in a different jurisdiction, or other transaction in which there
        is
        no substantial change in the stockholders of the Company or their relative
        stock
        holdings and the Awards granted under this Plan are assumed, converted or
        replaced by the successor corporation, which assumption will be binding on
        all
        Participants), (c) a merger in which the Company is the surviving corporation
        but after which the stockholders of the Company immediately prior to such
        merger
        (other than any stockholder that merges, or which owns or controls another
        corporation that merges, with the Company in such merger) cease to own their
        shares or other equity interest in the Company, (d) the sale of substantially
        all of the assets of the Company, or (e) the acquisition, sale, or transfer
        of
        more than 50% of the outstanding shares of the Company by tender offer or
        similar transaction, any or all outstanding Awards may be assumed, converted
        or
        replaced by the successor corporation (if any), which assumption, conversion
        or
        replacement will be binding on all Participants. In the alternative, the
        successor corporation may substitute equivalent Awards or provide substantially
        similar consideration to Participants as was provided to stockholders (after
        taking into account the existing provisions of the Awards). The successor
        corporation may also issue, in place of outstanding Shares of the Company
        held
        by the Participant, substantially similar shares or other property subject
        to
        repurchase restrictions no less favorable to the Participant. In the event
        such
        successor corporation (if any) refuses to assume or substitute Awards, as
        provided above, pursuant to a transaction described in this Subsection 19.1,
        such Awards will expire on such transaction at such time and on such conditions
        as the Committee will determine. Notwithstanding anything in this Plan to
        the
        contrary, the Committee may provide that the vesting of any or all Awards
        granted pursuant to this Plan will accelerate upon a transaction described
        in
        this Section 19. If the Committee exercises such discretion with respect
        to
        Options, such Options will become exercisable in full prior to the consummation
        of such event at such time and on such conditions as the Committee determines,
        and if such Options are not exercised prior to the consummation of the corporate
        transaction, they shall terminate at such time as determined by the
        Committee.

      

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      19.2 Other
        Treatment of Awards.
        Subject
        to any greater rights granted to Participants under the foregoing provisions
        of
        this Section 19, in the event of the occurrence of any transaction described
        in
        Section 19.1, any outstanding Awards will be treated as provided in the
        applicable agreement or plan of merger, consolidation, dissolution, liquidation,
        or sale of assets.

      

      19.3 Assumption
        of Awards by the Company.
        The
        Company, from time to time, also may substitute or assume outstanding awards
        granted by another company, whether in connection with an acquisition of
        such
        other company or otherwise, by either; (a) granting an Award under this Plan
        in
        substitution of such other company’s award; or (b) assuming such award as if it
        had been granted under this Plan if the terms of such assumed award could
        be
        applied to an Award granted under this Plan. Such substitution or assumption
        will be permissible if the holder of the substituted or assumed award would
        have
        been eligible to be granted an Award under this Plan if the other company
        had
        applied the rules of this Plan to such grant. In the event the Company assumes
        an award granted by another company, the terms and conditions of such award
        will
        remain unchanged (except that the exercise price and the number and nature
        of
        Shares issuable upon exercise of any such option will be adjusted appropriately
        pursuant to Section 424(a) of the Code). In the event the Company elects
        to
        grant a new Option rather than assuming an existing option, such new Option
        may
        be granted with a similarly adjusted Exercise Price.

      

      20. ADOPTION
        AND EFFECTIVE DATE.

      

      This
        Fortune Oil & Gas, Inc. 2005 Equity Incentive Plan is effective as of August
        1, 2005 the date it was adopted by the Board.

      

      21. STOCKHOLDER
        APPROVAL.

      

      This
        Plan
        shall be approved by the stockholders of the Company within twelve (12) months
        before or after the date this Plan is adopted by the Board.

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      22. TERM
        OF PLAN/GOVERNING LAW.

      

      Unless
        earlier terminated as provided herein, this Plan will terminate on May 15,
        2011.
        This Plan and all agreements thereunder shall be governed by and construed
        in
        accordance with the laws of the State of Nevada.

      

      23. AMENDMENT
        OR TERMINATION OF PLAN.

      

      The
        Board
        may at any time terminate or amend this Plan in any respect, including without
        limitation amendment of any form of Award Agreement or instrument to be executed
        pursuant to this Plan; provided, however, that the Board will not, without
        the
        approval of the stockholders of the Company, amend this Plan in any manner
        that
        requires such stockholder approval under the Code, if applicable, or by any
        stock exchange or market on which the Common Stock of the Company is listed
        for
        trading.

      

      24. NONEXCLUSIVITY
        OF THE PLAN.

      

      Neither
        the adoption of this Plan by the Board, the submission of this Plan to the
        stockholders of the Company for approval, nor any provision of this Plan
        will be
        construed as creating any limitations on the power of the Board to adopt
        such
        additional compensation arrangements as it may deem desirable, including,
        without limitation, the granting of stock options and bonuses otherwise than
        under this Plan, and such arrangements may be either generally applicable
        or
        applicable only in specific cases.

      

      25. ACTION
        BY COMMITTEE.

      

      Any
        action permitted or required to be taken by the Committee or any decision
        or
        determination permitted or required to be made by the Committee pursuant
        to this
        Plan shall be taken or made in the Committee’s sole and absolute
        discretion.

      

      *****************************************

       

      14

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