Document:

EXHIBIT
      10.29

     

    April
      19,
      2007

    

    Keith
      E.
      Palmer

    1506
      Maple Crest Drive

    Castleton,
      NY 12033

    

    Dear
      Keith,

    

    It
      is our
      pleasure to formally continue your position of Chief Financial Officer and
      Executive Vice President, Finance for American Bio Medica Corporation (“ABMC” or
      the “Company”), reporting directly to the ABMC Chief Executive Officer. This
      agreement supersedes all other agreements whether written or verbal and may
      not
      be amended except by a writing signed by you and the Chief Executive Officer,
      and approved by the Board of Directors. Your position will be primarily located
      at our New York corporate facility although overnight travel may be required
      from time to time. You will perform all duties as are generally associated
      with
      the position of Chief Financial Officer and Executive Vice President, Finance,
      as directed by the Chief Executive Officer. Below, we have outlined the major
      terms and conditions applicable to your position.

    

    Term

    

    Your
      employment with ABMC will be for a term of one year unless sooner terminated
      for
      cause, beginning on the date set forth above and automatically renewed for
      successive one-year terms unless either side gives written notice of intent
      not
      to renew at least 60 days prior to the end of any one-year term. If AMBC
      terminates your employment for cause, this agreement shall be terminated and
      you
      will be entitled to no severance and no further compensation or benefits from
      ABMC, other than payment of salary and benefits up to and including the date
      of
      termination. 

    

    Compensation

    

    Effective
      with the signing of this Employment letter, your base salary will be $12,416
      per
      month, which is equivalent to $149,000 on an annualized basis, to be paid
      retroactive to January 1, 2007. You will be eligible for your first performance
      review by the Board of Directors in January 2008.

    

    If
      you so
      desire, the cost of your health insurance (including family coverage if you
      so
      require) shall be borne 100% by the Company. Please notify Human Resources
      if
      you wish to receive this benefit.

    

    You
      shall
      receive a car allowance of $10,000 per year, to be paid on a monthly basis
      and
      subject to tax on your part, and reimbursement for any approved company related
      expenses.

    

    You
      shall
      participate in the Management Bonus Program as approved by the Board of
      Directors on January 19, 2005, and as amended by the Board of Directors on
      November 9, 2005. 

    

    Benefits

    

    
      	
              
                ·

              

            	
              20
                vacation days

            

      	 	 

    

    
      	
              
                ·

              

            	
              Usual
                corporate holidays

            

      	 	 

    

    
      	
              
                ·

              

            	
              2
                personal days

            

      	 	 

    

    
      	
              
                ·

              

            	
              401
                (k)

            

    

    

    Severance

    

    In
      the
      unlikely event that ABMC elects to terminate your employment for anything other
      than cause, you will receive severance pay equal to twelve (12) months of your
      current base salary at the time of separation, with continuation of all medical
      benefits during the twelve-month period at ABMC’s expense. Cause shall be
      defined as (1) death, (2) commission of a felony (3) acts of dishonesty, fraud
      or malfeasance in connection with your service on behalf of the Company, (4)
      gross dereliction of duty willful failure to carry out any lawful directive
      of
      the Chief Executive Officer or the Board of Directors, or material violations
      of
      Company policies which continue after Company has provided Employee with written
      notice thereof and a period of thirty (30) days to cure such action or
      misconduct or (5) disability of a period of more than 6 months). The severance
      payment will be made under the current pay cycle, each pay period, during the
      12
      months, subject to all customary withholdings. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Additionally,
      you may resign your position and elect to exercise this severance provision
      at
      your option under the following circumstances:

    

    
      	
              
                ·

              

            	
              If
                you are required to relocate by the Company or its Board of Directors
                more
                than 50 miles from the Company’s Kinderhook facility as a condition of
                continued employment

            

      	 	 

    

    
      	
              
                ·

              

            	
              A
                substantial change in responsibilities normally assumed by a Chief
                Financial Officer and Executive VP at the direction of the Company
                or its
                Board of Directors (i.e. demotion)

            

      	 	 

    

    
      	
              
                ·

              

            	
              You
                are asked to commit or conceal the commitment of any illegal act
                by any
                officer or member of the board of directors of the
                Company

            

    

    

    Change
      in Control

    

    If
      there
      is a Change in Control (defined below) of ABMC, you may elect to resign your
      position and to receive a lump sum severance payment equal to two times your
      annual base salary (“CIC Payment”). If you elect to resign, ABMC will pay you
      the CIC Payment within thirty days after you make your election, which election
      must be in writing and received by ABMC’s Board of Directors within ten days
      after a Change in Control. In the event you continue employment with ABMC or
      any
      successor to ABMC following a Change in Control or fail to make an election
      within ten days after a Change in Control, you will not be entitled to receive
      the CIC Payment.

    

    Change
      in
      Control is defined as follows:

    

    (i) the
      approval by shareholders of ABMC of a merger or consolidation of ABMC with
      any
      other corporation, other than a merger or consolidation which would result
      in
      the voting securities of ABMC outstanding immediately prior thereto continuing
      to represent (either by remaining outstanding or by being converted into voting
      securities of the surviving entity) more than fifty percent (50%) of the total
      voting power represented by the voting securities of ABMC or such surviving
      entity outstanding immediately after such merger or consolidation;
      or

    

    (ii) the
      approval by the shareholders of ABMC of a plan of complete liquidation of ABMC
      or an agreement for the sale or disposition by ABMC of all or substantially
      all
      of ABMC’s assets.

    

    Restrictive
      Covenants

    

    Company
      Handbook/Compliance Certification

    

    You
      are
      aware that it is your responsibility to read the ABMC Employee Handbook
      thoroughly and comply with the policies contained in the Handbook. You
      understand that the policies, benefits and information contained in the Handbook
      are subject to change and that revisions to the Handbook may be made. Any such
      changes will be communicated through official written notices and you hereby
      acknowledge that any such revisions may supercede, modify or eliminate existing
      policies. Only a majority of the Executive Officers, or a majority of the Board
      of Directors may adopt revisions to the policies contained in the Handbook.
      In
      no circumstance may a change to the employee handbook reduce the salary,
      benefits or other conditions outlined in this employment agreement.

    

    You
      agree
      that in addition to any covenants included in this Employment Letter, you will
      sign a Compliance Certification simultaneously with the signing of this
      Employment Letter. If a conflicting covenant exists between the Employment
      Letter and the Compliance Certification and/or the Company Handbook, the
      Employment Letter shall be the ruling document.

    

    Non-Solicitation

    

    During
      the twelve (12) months immediately following your termination from employment
      with ABMC for any reason, you agree that: 

    

    
      	
              
                ·

              

            	
              You
                will not, directly or indirectly, solicit in any manner or capacity
                whatsoever, including by way of illustration, but not limitation,
                call
                upon, mail or e-mail notices to, or make telephone calls to, any
                Customer
                (defined below) or Customer Prospect (defined below) of ABMC, for
                the
                purpose of selling any Covered Services (defined below) or engaging
                in any
                business which directly or indirectly competes with
                ABMC.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              
                ·

              

            	
              You
                will not solicit, endeavor to entice away from ABMC, or otherwise
                interfere with the relationship of ABMC with any person who is employed
                (or, but for any violation of this agreement, would have been employed)
                by
                or otherwise engaged to perform services for ABMC, whether for your
                own
                account or for the account of any other person or
                entity.

            

    

    

    
      	
              
                ·

              

            	
              You
                will not, directly or indirectly, solicit in any manner or capacity
                whatsoever, including by way of illustration, but not limitation,
                call
                upon, mail, or e-mail notices to, or make telephone call to, any
                supplier
                or vendor of ABMC for the purpose of engaging in any business which
                directly or indirectly competes with
                ABMC.

            

    

    

    
      	 	
              Confidentiality

            

    

    

    You
      agree
      not to disclose any Confidential Information (defined below) and you promise
      to
      take all reasonable precautions to prevent its unauthorized dissemination,
      both
      at all times during your employment with ABMC and after termination of your
      employment for any reason. You agree to limit the disclosure of any Confidential
      Information to only those employees and agents of ABMC who have a need to know
      the information and who have similarly agreed to keep such information
      confidential. Upon termination of your employment or upon request, you will
      deliver to ABMC all documents and electronic files containing Confidential
      Information and any personal property owned by ABMC.

    

    You
      further agree not to use any Confidential Information for your own benefit
      or
      for the benefit of anyone other than ABMC. You acknowledge that all Confidential
      Information is and remains the property of ABMC and that no license or rights
      in
      the Confidential Information has been or is granted to you. 

    

    “Confidential
      Information" means and includes all information not previously known by you
      prior to your employment with ABMC relating to marketing, advertising, public
      relations, development, services, trade secrets, trade "know-how," business
      plans, Customer (as defined below) and Customer Prospect (as defined below)
      lists, distributor lists, Customers and Customer Prospects information,
      distributor information, financial data, personnel data, employee compensation
      and benefits information, new personnel acquisition plans, details of contracts,
      pricing policies, operational methods, marketing plans or strategies, service
      development techniques or plans, business acquisition or investment plans,
      or
      other confidential and proprietary information related to the business or
      affairs of ABMC and/or its Customers or Customer Prospects. 

    

    The
      term
      "Customer" means any person or entity for which ABMC performed any Covered
      Services during the one (1) year period immediately preceding the termination
      of
      your employment with ABMC for any reason whatsoever. 

    

    "Customer
      Prospect" means any person or entity to which ABMC made a new business
      presentation or proposal, whether formal or informal related to Covered Services
      during the one (1) year period immediately preceding the termination of your
      employment with ABMC for any reason whatsoever.

    

    “Covered
      Services” means any services or products of whatever kind or character offered
      or provided by ABMC to any person or entity.

    

    Enforcement

    

    If
      any
      provision of the covenants in this agreement shall be held invalid or
      unenforceable, the remainder nevertheless shall remain in full force and effect.
      If any provision is held invalid or unenforceable with respect to particular
      circumstances, it nevertheless shall remain in full force and effect in all
      other circumstances.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    If,
      in
      connection with any action taken by ABMC to enforce the provisions of the
      covenants of this agreement, a court shall hold that all or any portion of
      the
      restrictions contained therein are unreasonable under the circumstances then
      existing so as to render such covenants invalid or unenforceable, the parties
      agree that any court of competent jurisdiction may reform such unreasonable
      restrictions to the extent necessary to make such restrictions reasonable under
      the circumstances then existing so as to render such restrictions both valid
      and
      enforceable.

    

    You
      acknowledge and agree that all of the covenants contained in this agreement
      are
      necessary for the protection of ABMC's valuable and legitimate business
      interests and are reasonable in scope and content. Accordingly, you acknowledge
      and agree that if you violate any of the provisions of this agreement ABMC
      shall
      sustain irreparable harm and, therefore, in addition to the other remedies
      which
      ABMC may have under this agreement or otherwise, ABMC will be entitled to
      specific performance, injunctive, and other equitable relief. 

    

    You
      agree
      to indemnify, save and hold harmless ABMC
      from and
      against any and all claims, damages, losses, costs and expenses (including
      reasonable attorneys' fees) incurred by ABMC in any action in which a court
      enforces the terms of the covenants of this agreement.

    

    Other
      Employment Information

    

    In
      making
      this offer ofcontinued employment, ABMC has relied on your representations
      that:
      (a) you are not currently a party to any contract of employment that might
      impede your ability to accept this offer or to perform the services completed
      thereby; and (b) that you are not subject to any non-competition arrangement
      or
      other restrictive covenants that might restrict your employment at ABMC as
      contemplated by this offer.

    

    Exclusive
      Service

    

    You
      will
      perform services exclusively for ABMC and you will not perform services for
      any
      other persons or entities related to or conducting business with the Company
      for
      personal profit during the term of this agreement without the written agreement
      of the Board of Directors.

    

    Miscellaneous

    

    This
      writing represents the entire agreement with respect to your employment and
      any
      prior agreements or understandings, written or oral, are merged herein. This
      agreement shall be governed by the laws of the State of New York. ABMC will
      not
      be deemed to have waived any provision of this agreement except by a signed
      writing. This agreement may not be amended, except by a signed writing. Notices
      given pursuant to this Agreement shall be in writing and delivered personally
      or
      by nationally recognized overnight courier in the case of ABMC to its Kinderhook
      facility to the attention of the Chief Executive Officer and in your case to
      your home address as set forth in ABMC’s personnel file.

    

    Keith,
      we
      are enthusiastic about your appointment as Chief Financial Officer and Executive
      Vice President, Finance and our expectation is that you will continue to make
      a
      tremendous contribution to the long-term success of ABMC.

    

    Sincerely,

     

    
      
        	 	 	 	 
	
                
                  /s/
                    Edmund Jaskiewicz 

                

              	 	 	
              
	
                

                
                  Edmund
                    Jaskiewicz

                  Chairman
                    of the Board of Directors & President

                  By
                    order of the American Bio Medica Corporation Board of
                    Directors

                

              	 	 	
              

      

       

      
        
          	
                  
                    Accepted
                      this 19 Day of April, 2007:

                  

                	 	 	 
	 	 	 	 
	 	 	 	 
	
                  
                    
                      /s/
                        Keith E. Palmer  

                    

                  

                	 	 	
                
	
                  

                  
                    
                      Keith
                        E. PalmerUnassociated Document

    

      EXHIBIT
        10.2

      

      Neonode,
        Inc.

      

      2006
        Equity Incentive Plan

      

      Adopted
        by the Board of Directors: January 17, 2006

      Approved
        by the Stockholders: March 21, 2006

      Amended
        by the Stockholders August 10, 2007

      Termination
        Date: January 16, 2016

       

       

      1. General.

       

      (a) Eligible
        Stock Award Recipients.
        The
        persons eligible to receive Stock Awards are Employees, Directors, and
        Consultants.

      

      (b) Available
        Stock Awards. The
        Plan
        provides for the grant of the following Stock Awards: (i) Incentive Stock
        Options, (ii) Nonstatutory Stock Options, and (iii) Stock Bonus
        Awards.

      

      (c) Purpose.
        The
        Company, by means of the Plan, seeks to secure and retain the services of
        the
        group of persons eligible to receive Stock Awards as set forth in Section
        1(a),
        to
        provide incentives for such persons to exert maximum efforts for the success
        of
        the Company and any Affiliate and to provide a means by which such eligible
        recipients may be given an opportunity to benefit from increases in value
        of the
        Common Stock through the granting of Stock Awards.

      

      2. Definitions.

      

      As
        used
        in the Plan, the following definitions shall apply to the capitalized terms
        indicated below:

      

      (a) “Affiliate”
        means
        (i) any corporation (other than the Company) in an unbroken chain of
        corporations ending with the Company, provided each corporation in the unbroken
        chain (other than the Company) owns, at the time of the determination, stock
        possessing fifty percent (50%) or more of the total combined voting power
        of all
        classes of stock in one of the other corporations in such chain, and (ii)
        any
        corporation (other than the Company) in an unbroken chain of corporations
        beginning with the Company, provided each corporation (other than the last
        corporation) in the unbroken chain owns, at the time of the determination,
        stock
        possessing fifty percent (50%) or more of the total combined voting power
        of all
        classes of stock in one of the other corporations in such chain. The Board
        shall
        have the authority to determine (i) the time or times at which the ownership
        tests are applied, and (ii) whether “Affiliate” includes entities other than
        corporations within the foregoing definition. 

      

      (b) “Board”
        means
        the Board of Directors of the Company. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (c) “Capitalization
        Adjustment”
        has the
        meaning ascribed to that term in Section 10(a).

      

      (d) “Change
        in Control”
        means
        the occurrence, in a single transaction or in a series of related transactions,
        of any one or more of the following events: 

      

      (i) any
        Exchange Act Person becomes the Owner, directly or indirectly, of securities
        of
        the Company representing more than fifty percent (50%) of the combined voting
        power of the Company’s then outstanding securities other than by virtue of a
        merger, consolidation or similar transaction. Notwithstanding the foregoing,
        a
        Change in Control shall not be deemed to occur (A) on account of the acquisition
        of securities of the Company by an investor, any affiliate thereof or any
        other
        Exchange Act Person that acquires the Company’s securities in a transaction or
        series of related transactions the primary purpose of which is to obtain
        financing for the Company through the issuance of equity securities, or (B)
        solely because the level of Ownership held by any Exchange Act Person (the
        “Subject
        Person”)
        exceeds the designated percentage threshold of the outstanding voting securities
        as a result of a repurchase or other acquisition of voting securities by
        the
        Company reducing the number of shares outstanding, provided that if a Change
        in
        Control would occur (but for the operation of this sentence) as a result
        of the
        acquisition of voting securities by the Company, and after such share
        acquisition, the Subject Person becomes the Owner of any additional voting
        securities that, assuming the repurchase or other acquisition had not occurred,
        increases the percentage of the then outstanding voting securities Owned
        by the
        Subject Person over the designated percentage threshold, then a Change in
        Control shall be deemed to occur;

      

      (ii) there
        is
        consummated a merger, consolidation or similar transaction involving (directly
        or indirectly) the Company and, immediately after the consummation of such
        merger, consolidation or similar transaction, the stockholders of the Company
        immediately prior thereto do not Own, directly or indirectly, either (A)
        outstanding voting securities representing more than fifty percent (50%)
        of the
        combined outstanding voting power of the surviving Entity in such merger,
        consolidation or similar transaction or (B) more than fifty percent (50%)
        of the
        combined outstanding voting power of the parent of the surviving Entity in
        such
        merger, consolidation or similar transaction, in
        each
        case in substantially the same proportions as their Ownership of the outstanding
        voting securities of the Company immediately prior to such
        transaction;

      

      (iii) the
        stockholders of the Company approve or the Board approves a plan of complete
        dissolution or liquidation of the Company, or a complete dissolution or
        liquidation of the Company shall otherwise occur; or 

      

      (iv) there
        is
        consummated a sale, lease, exclusive license or other disposition of all
        or
        substantially all of the consolidated assets of the Company and its
        Subsidiaries, other than a sale, lease, license or other disposition of all
        or
        substantially all of the consolidated assets of the Company and its Subsidiaries
        to an Entity, more than fifty percent (50%) of the combined voting power
        of the
        voting securities of which are Owned by stockholders of the Company in
        substantially the same proportions as their Ownership of the outstanding
        voting
        securities of the Company immediately prior to such sale, lease, license
        or
        other disposition.

       

      
        
          
          

        

        
          2.

          
            

          

        

        
          
          

        

      

       

      The
        term
        Change in Control shall not include a sale of assets, merger or other
        transaction effected exclusively for the purpose of changing the domicile
        of the
        Company.

      

      Notwithstanding
        the foregoing or any other provision of this Plan, the definition of Change
        in
        Control (or any analogous term) in an individual written agreement between
        the
        Company or any Affiliate and the Participant shall supersede the foregoing
        definition with respect to Stock Awards subject to such agreement; provided,
        however,
        that if
        no definition of Change in Control or any analogous term is set forth in
        such an
        individual written agreement, the foregoing definition shall apply.

      

      (e) “Code”
        means
        the Internal Revenue Code of 1986, as amended.

      

      (f) “Committee”
        means a
        committee of two (2) or more members of the Board to whom authority has been
        delegated by the Board in accordance with Section 3(c).

      

      (g) “Common
        Stock”
        means
        the common stock of the Company.

      

      (h) “Company”
        means
        Neonode, Inc., a Delaware corporation.

      

      (i) “Consultant”
        means
        any person, including an advisor, who is (i) engaged by the Company or an
        Affiliate to render consulting or advisory services and is compensated for
        such
        services, or
        (ii)
        serving as a member of the Board of Directors of an Affiliate and is compensated
        for such services.
        However, service solely as a Director, or payment of a fee for such service,
        shall not cause a Director to be considered a “Consultant” for purposes of the
        Plan. 

      

      (j) “Continuous
        Service”
        means
        that the Participant’s service with the Company or an Affiliate, whether as an
        Employee, Director or Consultant, is not interrupted or terminated. A change
        in
        the capacity in which the Participant renders service to the Company or an
        Affiliate as an Employee, Consultant or Director or a change in the entity
        for
        which the Participant renders such service, provided that there is no
        interruption or termination of the Participant’s service with the Company or an
        Affiliate, shall not terminate a Participant’s Continuous Service; provided,
        however,
        if the
        corporation for which a Participant is rendering service ceases to qualify
        as an
        Affiliate, as determined by the Board in its sole discretion, such Participant’s
        Continuous Service shall be considered to have terminated on the date such
        corporation ceases to qualify as an Affiliate. For example, a change in status
        from an employee of the Company to a consultant of an Affiliate or to a Director
        shall not constitute an interruption of Continuous Service. To the extent
        permitted by law, the Board or the chief executive officer of the Company,
        in
        that party’s sole discretion, may determine whether Continuous Service shall be
        considered interrupted in the case of any leave of absence approved by that
        party, including sick leave, military leave or any other personal leave.
        Notwithstanding the foregoing, a leave of absence shall be treated as Continuous
        Service for purposes of vesting in a Stock Award only to such extent as may
        be
        provided in the Company’s leave of absence policy or in the written terms of the
        Participant’s leave of absence.

      

      (k) “Corporate
        Transaction”
        means
        the occurrence, in a single transaction or in a series of related transactions,
        of any one or more of the following events:

       

      
        
          
          

        

        
          3.

          
            

          

        

        
          
          

        

      

       

      (i) a
        sale or
        other
        disposition of all or substantially all, as determined by the Board in its
        sole
        discretion, of the consolidated assets of the Company and its
        Subsidiaries;

      

      (ii) a
        sale or
        other disposition of at least ninety percent (90%) of the outstanding securities
        of the Company;

      

      (iii) the
        consummation of a merger, consolidation or similar transaction following
        which
        the Company is not the surviving corporation; or

      

      (iv) the
        consummation of a merger, consolidation or similar transaction following
        which
        the Company is the surviving corporation but the shares of Common Stock
        outstanding immediately preceding the merger, consolidation or similar
        transaction are converted or exchanged by virtue of the merger, consolidation
        or
        similar transaction into other property, whether in the form of securities,
        cash
        or otherwise.

      

      (l) “Covered
        Employee”
        means
        the chief executive officer and the four (4) other highest compensated officers
        of the Company for whom total compensation is required to be reported to
        stockholders under the Exchange Act, as determined for purposes of Section
        162(m) of the Code.

      

      (m) “Director”
        means a
        member of the Board.

      

      (n) “Disability”
        means
        the permanent and total disability of a person within the meaning of Section
        22(e)(3) of the Code.

      

      (o) “Employee”
        means
        any person employed by the Company or an Affiliate. However, service solely
        as a
        Director, or payment of a fee for such services, shall not cause a Director
        to
        be considered an “Employee” for purposes of the Plan.

      

      (p) “Entity”
        means a
        corporation, partnership or other entity.

      

      (q) “Exchange
        Act”
        means
        the Securities Exchange Act of 1934, as amended.

      

      (r) “Exchange
        Act Person” means
        any
        natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d)
        of the Exchange Act), except that “Exchange Act Person” shall not include (i)
        the Company or any Subsidiary of the Company; (ii) any employee benefit plan
        of
        the Company or any Subsidiary of the Company or any trustee or other fiduciary
        holding securities under an employee benefit plan of the Company or any
        Subsidiary of the Company; (iii) an underwriter temporarily holding securities
        pursuant to an offering of such securities; (iv) an Entity Owned, directly
        or
        indirectly, by the stockholders of the Company in substantially the same
        proportions as their Ownership of stock of the Company; or
        (v)
        any natural person, Entity or “group” (within the meaning of Section 13(d) or
        14(d) of the Exchange Act) that, as of the effective date of the Plan as
        set
        forth in Section 13,
        is the
        Owner, directly or indirectly, of securities of the Company representing
        more
        than fifty percent (50%) of the combined voting power of the Company’s then
        outstanding securities.

      

      (s) “Fair
        Market Value”
        means,
        as of any date, the value of the Common Stock determined as
        follows:

       

      
        
          
          

        

        
          4.

          
            

          

        

        
          
          

        

      

       

      (i) If
        the
        Common Stock is listed on any established stock exchange or traded on the
        Nasdaq
        National Market or the Nasdaq SmallCap Market, the Fair Market Value of a
        share
        of Common Stock shall be the closing sales price for such stock (or the closing
        bid, if no sales were reported) as quoted on such exchange or market (or
        the
        exchange or market with the greatest volume of trading in the Common Stock)
        on
        the last market trading day prior to the day of determination, as reported
        in
The
        Wall Street Journal or
        such
        other source as the Board deems reliable. Unless otherwise provided by the
        Board, if there is no closing sales price (or closing bid if no sales were
        reported) for the Common Stock on the last market trading day prior to the
        day
        of determination, then the Fair Market Value shall be the closing sales price
        (or closing bid if no sales were reported) on the last preceding date for
        which
        such quotation exists. 

      (ii) In
        the
        absence of such markets for the Common Stock, the Fair Market Value shall
        be
        determined in good faith by the Board and in a manner consistent with Section
        260.140.50 and Section 409A of the Code.

      

      (t) “Incentive
        Stock Option”
        means an
        Option intended to qualify as an incentive stock option within the meaning
        of
        Section 422 of the Code and the regulations promulgated thereunder.

      

      (u) “Non-Employee
        Director” means
        a
        Director who either (i) is not a current employee or officer of the Company
        or
        an Affiliate, does not receive compensation, either directly or indirectly,
        from
        the Company or an Affiliate for services rendered as a consultant or in any
        capacity other than as a Director (except for an amount as to which disclosure
        would not be required under Item 404(a) of Regulation S-K promulgated pursuant
        to the Securities Act (“Regulation
        S-K”)),
        does
        not possess an interest in any other transaction for which disclosure would
        be
        required under Item 404(a) of Regulation S-K, and is not engaged in a business
        relationship for which disclosure would be required pursuant to Item 404(b)
        of Regulation S-K; or (ii) is otherwise considered a “non-employee director” for
        purposes of Rule 16b-3.

      

      (v) “Nonstatutory
        Stock Option”
        means an
        Option not intended to qualify as an Incentive Stock Option.

      

      (w) “Officer”
        means a
        person who is an officer of the Company within the meaning of Section 16 of
        the Exchange Act and the rules and regulations promulgated
        thereunder.

      

      (x) “Option”
        means an
        Incentive Stock Option or a Nonstatutory Stock Option to purchase shares
        of
        Common Stock granted pursuant to the Plan.

      

      (y) “Option
        Agreement”
        means a
        written agreement between the Company and an Optionholder evidencing the
        terms
        and conditions of an Option grant. Each Option Agreement shall be subject
        to the
        terms and conditions of the Plan.

      

      (z) “Optionholder”
        means a
        person to whom an Option is granted pursuant to the Plan or, if applicable,
        such
        other person who holds an outstanding Option. 

      

      (aa) “Outside
        Director”
        means a
        Director who either (i) is not a current employee of the Company or an
“affiliated corporation” (within the meaning of Treasury Regulations promulgated
        under Section 162(m) of the Code), is not a former employee of the Company
        or an
“affiliated corporation” who receives compensation for prior services (other
        than benefits under a tax-qualified retirement plan) during the taxable year,
        has not been an officer of the Company or an “affiliated corporation,” and does
        not receive remuneration from the Company or an “affiliated corporation,” either
        directly or indirectly, in any capacity other than as a Director, or (ii)
        is
        otherwise considered an “outside director” for purposes of Section 162(m) of the
        Code.

       

      
        
          
          

        

        
          5.

          
            

          

        

        
          
          

        

      

       

      (bb) “Own,”
        “Owned,” “Owner,” “Ownership” A
        person
        or Entity shall be deemed to “Own,” to have “Owned,” to be the “Owner” of, or to
        have acquired “Ownership” of securities if such person or Entity, directly or
        indirectly, through any contract, arrangement, understanding, relationship
        or
        otherwise, has or shares voting power, which includes the power to vote or
        to
        direct the voting, with respect to such securities.

      

      (cc) “Participant”
        means a
        person to whom a Stock Award is granted pursuant to the Plan or, if applicable,
        such other person who holds an outstanding Stock Award.

      

      (dd) “Plan”
        means
        this SBE, Inc. 2006 Equity Incentive Plan. 

      

      (ee) “Rule
        16b-3”
        means
        Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3,
        as
        in effect from time to time.

      

      (ff) “Section
        260.140.41”
        means
        Section 260.140.41 of Title 10 of the California Code of Regulations.

      

      (gg) “Section
        260.140.42”
        means
        Section 260.140.42 of Title 10 of the California Code of Regulations.

      

      (hh) “Section
        260.140.45”
        means
        Section 260.140.45 of Title 10 of the California Code of Regulations.

      

      (ii) “Section
        260.140.46”
        means
        Section 260.140.46 of Title 10 of the California Code of Regulations.

      

      (jj) “Section
        260.140.50”
        means
        Section 260.140.50 of Title 10 of the California Code of Regulations.

      

      (kk) “Securities
        Act”
        means
        the Securities Act of 1933, as amended.

      

      (ll) “Stock
        Award”
        means
        any right granted under the Plan, including an Option and a Stock Bonus
        Award.

       

      (mm) “Stock
        Award Agreement”
        means a
        written agreement between the Company and a Participant evidencing the terms
        and
        conditions of a Stock Award grant. Each Stock Award Agreement shall be subject
        to the terms and conditions of the Plan.

      

      (nn) “Stock
        Bonus Award”
        means an
        award of shares of Common Stock which is granted pursuant to the terms and
        conditions of Section 7.

       

      
        
          
          

        

        
          6.

          
            

          

        

        
          
          

        

      

       

      (oo) “Stock
        Bonus Award Agreement”
        means a
        written agreement between the Company and a holder of a Stock Bonus Award
        evidencing the terms and conditions of a Stock Bonus Award grant. Each Stock
        Bonus Award Agreement shall be subject to the terms and conditions of the
        Plan.

      

      (pp) “Subsidiary”
        means,
        with respect to the Company, (i) any corporation of which more than fifty
        percent (50%) of the outstanding capital stock having ordinary voting power
        to
        elect a majority of the board of directors of such corporation (irrespective
        of
        whether, at the time, stock of any other class or classes of such corporation
        shall have or might have voting power by reason of the happening of any
        contingency) is at the time, directly or indirectly, Owned by the Company,
        and
        (ii) any partnership in which the Company has a direct or indirect interest
        (whether in the form of voting or participation in profits or capital
        contribution) of more than fifty percent (50%).

      

      (qq) “Ten
        Percent Stockholder”
        means a
        person who Owns (or is deemed to Own pursuant to Section 424(d) of the Code)
        stock possessing more than ten percent (10%) of the total combined voting
        power
        of all classes of stock of the Company or any Affiliate.

      

      3. Administration.

      

      (a) Administration
        by Board.
        The
        Board shall administer the Plan unless and until the Board delegates
        administration of the Plan to a Committee, as provided in Section 3(c).

      (b) Powers
        of Board.
        The
        Board shall have the power, subject to, and within the limitations of, the
        express provisions of the Plan:

      

      (i) To
        determine from time to time (1) which of the persons eligible under the Plan
        shall be granted Stock Awards; (2) when and how each Stock Award shall be
        granted; (3) what type or combination of types of Stock Award shall be granted;
        (4) the provisions of each Stock Award granted (which need not be identical),
        including the time or times when a person shall be permitted to receive Common
        Stock pursuant to a Stock Award; and (5) the number of shares of Common Stock
        with respect to which a Stock Award shall be granted to each such
        person.

      

      (ii) To
        construe and interpret the Plan and Stock Awards granted under it, and to
        establish, amend and revoke rules and regulations for its administration.
        The
        Board, in the exercise of this power, may correct any defect, omission or
        inconsistency in the Plan or in any Stock Award Agreement, in a manner and
        to
        the extent it shall deem necessary or expedient to make the Plan fully
        effective.

      

      (iii) To
        accelerate the time at which a Stock Award may first be exercised or the
        time
        during which a Stock Award or any part thereof will vest in accordance with
        the
        Plan, notwithstanding the provisions in the Stock Award stating the time
        at
        which it may first be exercised or the time during which it will
        vest.

      (iv) To
        effect, at any time and from time to time, with the consent of any adversely
        affected Optionholder, (1) the reduction of the exercise price of any
        outstanding Option under the Plan; (2) the cancellation of any outstanding
        Option under the Plan and the grant in substitution therefor of (A) a new
        Option
        under the Plan or another equity plan of the Company covering the same or
        a
        different number of shares of Common Stock, (B) a Stock Bonus Award, (C)
        cash,
        and/or (D) other valuable consideration (as determined by the Board, in its
        sole
        discretion); or
        (3)
        any other action that is treated as a repricing under generally accepted
        accounting principles. Shares subject to an Option canceled under this Section
        3(b)(iv)
        shall
        continue to be counted against the maximum award of Options permitted to
        be
        granted pursuant to Section 5(c)
        of the
        Plan. The repricing of an Option under this Section 3(b)(iv),
        resulting in a reduction of the exercise price, shall be deemed to be a
        cancellation of the original Option and the grant of a substitute Option;
        in the
        event of such repricing, both the original and the substituted Options shall
        be
        counted against the maximum awards of Options permitted to be granted pursuant
        to Section 5(c)
        of the
        Plan. The
        exercise price per share of Common Stock shall not be less than that specified
        under the Plan for newly granted Stock Awards (including Ten Percent
        Stockholders), except that the Board may grant an Option with a lower exercise
        price if such Option is granted as part of a transaction to which Section
        424(a)
        of the Code applies. 

       

      
        
          
          

        

        
          7.

          
            

          

        

        
          
          

        

      

       

      (v) To
        amend
        the Plan or a Stock Award as provided in Section 11.

      

      (vi) To
        terminate or suspend the Plan as provided in Section 12.

      

      (vii) Generally,
        to exercise such powers and to perform such acts as the Board deems necessary
        or
        expedient to promote the best interests of the Company and that are not in
        conflict with the provisions of the Plan.

      

      (viii) To
        adopt
        such procedures and sub-plans as are necessary or appropriate to permit
        participation in the Plan by individuals who are foreign nationals or employed
        outside the United States.

       

      (c) Delegation
        to Committee.

      

      (i) General.
        The
        Board may delegate some or all of the administration of the Plan to a Committee
        or Committees. If administration is delegated to a Committee, the Committee
        shall have, in connection with the administration of the Plan, the powers
        theretofore possessed by the Board that have been delegated to the Committee,
        including the power to delegate to a subcommittee any of the administrative
        powers the Committee is authorized to exercise (and references in this Plan
        to
        the Board shall thereafter be to the Committee or subcommittee), subject,
        however, to such resolutions, not inconsistent with the provisions of the
        Plan,
        as may be adopted from time to time by the Board. The Board may retain the
        authority to concurrently administer the Plan with the Committee and may,
        at any
        time, revest in the Board some or all of the powers previously
        delegated.

      

      (ii) Section
        162(m) and Rule 16b-3 Compliance.
        In the
        sole discretion of the Board, the Committee may consist solely of two (2)
        or
        more Outside Directors, in accordance with Section 162(m) of the Code, and/or
        solely of two or more Non-Employee Directors, in accordance with Rule 16b-3.
        In
        addition, the Board or the Committee, in its sole discretion, may (1) delegate
        to a committee of one or more members of the Board who need not be Outside
        Directors the authority to grant Stock Awards to eligible persons who are
        either
        (a) not then Covered Employees and are not expected to be Covered Employees
        at
        the time of recognition of income resulting from such Stock Award, or (b)
        not
        persons with respect to whom the Company wishes to comply with Section 162(m)
        of
        the Code, and/or (2) delegate to a committee of one or more members of the
        Board
        who need not be Non-Employee Directors the authority to grant Stock Awards
        to
        eligible persons who are not then subject to Section 16 of the Exchange
        Act.

       

      
        
          
          

        

        
          8.

          
            

          

        

        
          
          

        

      

       

      (d) Delegation
        to an Officer.
        The
        Board may delegate to one or more Officers of the Company the authority to
        do
        one or both of the following: (i) designate Officers and Employees of the
        Company or any of its Subsidiaries to be recipients of Options and the terms
        thereof, and (ii) determine the number of shares of Common Stock to be subject
        to such Options granted to such Officers and Employees; provided,
        however, that
        the
        Board resolutions regarding such delegation shall specify the total number
        of
        shares of Common Stock that may be subject to the Options granted by such
        Officer and that such Officer may not grant an Option to himself or herself.
        Notwithstanding the foregoing, the Board may not delegate authority to an
        Officer to determine the Fair Market Value of the Common Stock pursuant to
        Section 2(s)(ii)
        above. 

      

      (e) Effect
        of Board’s Decision.
        All
        determinations, interpretations and constructions made by the Board in good
        faith shall not be subject to review by any person and shall be final, binding
        and conclusive on all persons.

      

      4. Shares
        Subject to the Plan.

       

      (a) Share
        Reserve.
        Subject
        to the provisions of Section 10(a)
        relating
        to Capitalization Adjustments, the number of shares of Common Stock that
        may be
        issued pursuant to Stock Awards shall not exceed in the aggregate two million
        five hundred thousand (2,500,000) shares of Common Stock. 

       

      (b) Reversion
        of Shares to the Share Reserve.
        If any
        Stock Award shall for any reason expire or otherwise terminate, in whole
        or in
        part, without having been exercised in full, or if any shares of Common Stock
        issued to a Participant pursuant to a Stock Award are forfeited back to or
        repurchased by the Company, including, but not limited to, any repurchase
        or
        forfeiture caused by the failure to meet a contingency or condition required
        for
        the vesting of such shares, then the shares of Common Stock not acquired
        under
        such Stock Award shall revert to and again become available for issuance
        under
        the Plan. If any shares subject to a Stock Award are not delivered to a
        Participant because such shares are withheld for the payment of taxes or
        the
        Stock Award is exercised through a reduction of shares subject to the Stock
        Award (i.e.,
“net
        exercised”), then the number of shares that are not delivered shall revert to
        and again become available for issuance under the Plan. If the exercise price
        of
        any Stock Award is satisfied by tendering shares of Common Stock held by
        the
        Participant (either by actual delivery or attestation), then the number of
        such
        tendered shares shall revert to and again become available for issuance under
        the Plan.  

       

      (c) Incentive
        Stock Option Limit.
        Notwithstanding anything to the contrary in Section 4(b),
        subject
        to the provisions of Section 10(a)
        relating
        to Capitalization Adjustments the aggregate maximum number of shares of Common
        Stock that may be issued pursuant to the exercise of Incentive Stock Options
        shall be two million five hundred thousand (2,500,000) shares of Common
        Stock. 

       

      
        
          
          

        

        
          9.

          
            

          

        

        
          
          

        

      

       

      (d) Share
        Reserve Limitation.
        Notwithstanding anything to the contrary in Section 4(a),
        if at
        the time of each grant of a Stock Award under the Plan, the Company is subject
        to Section 260.140.45, the total number of securities issuable upon exercise
        of
        all outstanding options and the total number of shares provided for under
        this
        Plan and any other stock bonus or similar plan or agreement of the Company
        shall
        not exceed 30% of the then outstanding capital stock of the Company (as
        determined pursuant to Section 260.140.45), unless stockholder approval has
        been
        obtained in compliance with Section 260.140.45 to exceed 30%, in which case
        the
        limit shall be such higher percentage as approved by the stockholders.

      

      (e) Source
        of Shares.
        The
        stock issuable under the Plan shall be shares of authorized but unissued
        or
        reacquired Common Stock, including shares repurchased by the Company on the
        open
        market.

      

      5. Eligibility.

      

      (a) Eligibility
        for Specific Stock Awards.
        Incentive Stock Options may be granted only to Employees. Stock Awards other
        than Incentive Stock Options may be granted to Employees, Directors and
        Consultants.

       

      (b) Ten
        Percent Stockholders. 

      

      (i) A
        Ten
        Percent Stockholder shall not be granted an Incentive Stock Option unless
        the
        exercise price of such Option is at least one hundred ten percent (110%)
        of the
        Fair Market Value of the Common Stock on the date of grant and the Option
        is not
        exercisable after the expiration of five (5) years from the date of grant.
        

      

      (ii) To
        the
        extent that the Company is subject to Section 260.140.41 at the time the
        Option
        is granted, a Ten Percent Stockholder shall not be granted a Nonstatutory
        Stock
        Option unless the exercise price of such Option is at least (i) one hundred
        ten
        percent (110%) of the Fair Market Value of the Common Stock on the date of
        grant.

       

      (c) Section
        162(m) Limitation on Annual Grants.
        Subject
        to the provisions of Section 10(a)
        relating
        to Capitalization Adjustments, no Employee shall be eligible to be granted
        Options covering more than two hundred fifty thousand (250,000)
        shares of Common Stock during any calendar year.

      

      (d) Consultants.
        A
        Consultant shall not be eligible for the grant of a Stock Award if, at the
        time
        of grant, a Form S-8 Registration Statement under the Securities Act
        (“Form
        S-8”)
        is not
        available to register either the offer or the sale of the Company’s securities
        to such Consultant because of the nature of the services that the Consultant
        is
        providing to the Company, because the Consultant is not a natural person,
        or
        because of any other rule governing the use of Form S-8.

      

      6. Option
        Provisions.

      

      Each
        Option shall be in such form and shall contain such terms and conditions
        as the
        Board shall deem appropriate. All Options shall be separately designated
        Incentive Stock Options or Nonstatutory Stock Options at the time of grant,
        and,
        if certificates are issued, a separate certificate or certificates shall
        be
        issued for shares of Common Stock purchased on exercise of each type of Option.
        The provisions of separate Options need not be identical; provided,
        however,
        that
        each Option Agreement shall include (through incorporation of provisions
        hereof
        by reference in the Option or otherwise) the substance of each of the following
        provisions:

       

      
        
          
          

        

        
          10.

          
            

          

        

        
          
          

        

      

       

      (a) Term.
        Subject
        to the provisions of Section 5(b)
        regarding Ten Percent Stockholders, no Option shall be exercisable after
        the
        expiration of ten (10) years from the date of grant, or such shorter period
        specified in the Option Agreement.

      

      (b) Exercise
        Price of an Incentive Stock Option.
        Subject
        to the provisions of Section 5(b)
        regarding Ten Percent Stockholders, the exercise price of each Incentive
        Stock
        Option shall be not less than one hundred percent (100%) of the Fair Market
        Value of the Common Stock subject to the Option on the date the Option is
        granted. Notwithstanding the foregoing, an Incentive Stock Option may be
        granted
        with an exercise price lower than that set forth in the preceding sentence
        if
        such Option is granted pursuant to an assumption or substitution for another
        option in a manner consistent with the provisions of Section 424(a) of the
        Code.

      

      (c) Exercise
        Price of a Nonstatutory Stock Option.
        Subject
        to the provisions of Section 5(b)
        regarding Ten Percent Stockholders, the exercise price of each Nonstatutory
        Stock Option shall be not less than eighty-five percent (85%) of the Fair
        Market
        Value of the Common Stock subject to the Option on the date the Option is
        granted. Notwithstanding the foregoing, a Nonstatutory Stock Option may be
        granted with an exercise price lower than that set forth in the preceding
        sentence if such Option is granted pursuant to an assumption or substitution
        for
        another option in a manner consistent with the provisions of Section 424(a)
        of
        the Code.

       

      (d) Consideration.
        The
        purchase price of Common Stock acquired pursuant to the exercise of an Option
        shall be paid, to the extent permitted by applicable law and as determined
        by
        the Board in its sole discretion, by any combination of the methods of payment
        set forth below. The Board shall have the authority to grant Options that
        do not
        permit all of the following methods of payment (or otherwise restrict the
        ability to use certain methods) and to grant Options that require the consent
        of
        the Company to utilize a particular method of payment. The methods of payment
        permitted by this Section 6(d)
        are:

      

      (i) by
        cash
        or check; 

      

      (ii) pursuant
        to a program developed under Regulation T as promulgated by the Federal Reserve
        Board that, prior to the issuance of Common Stock, results in either the
        receipt
        of cash (or check) by the Company or the receipt of irrevocable instructions
        to
        pay the aggregate exercise price to the Company from the sales proceeds;
        

      

      (iii) by
        delivery to the Company (either by actual delivery or attestation) of shares
        of
        Common Stock; 

      

      (iv) by
        a “net
        exercise” arrangement pursuant to which the Company will reduce the number of
        shares of Common Stock issued upon exercise by the largest whole number of
        shares with a Fair Market Value that does not exceed the aggregate exercise
        price; provided,
        however,
        the
        Company shall accept a cash or other payment from the Participant to the
        extent
        of any remaining balance of the aggregate exercise price not satisfied by
        such
        reduction in the number of whole shares to be issued; provided,
        however,
        shares
        of Common Stock will no longer be outstanding under an Option and will not
        be
        exercisable thereafter to the extent that (i) shares are used to pay the
        exercise price pursuant to the “net exercise,” (ii) shares are delivered to the
        Participant as a result of such exercise, and (iii) shares are withheld to
        satisfy tax withholding obligations; 

       

      
        
          
          

        

        
          11.

          
            

          

        

        
          
          

        

      

       

      (v) according
        to a deferred payment or similar arrangement with the Optionholder; provided,
        however,
        that
        interest shall compound at least annually and shall be charged at the minimum
        rate of interest necessary to avoid (i) the imputation of interest income
        to the
        Company and compensation income to the Optionholder under any applicable
        provisions of the Code, and (ii) the treatment of the Option as a variable
        award
        or classification of the Option as a liability award for financial accounting
        purposes; or 

      

      (vi) in
        any
        other form of legal consideration that may be acceptable to the Board.

      

      (e) Transferability
        of Options.
        The
        Board may, in its sole discretion, impose such limitations on the
        transferability of Options as the Board shall determine. In the absence of
        such
        a determination by the Board to the contrary, the following restrictions
        on the
        transferability of Options shall apply:

      

      (i) Restrictions
        on Transfer.
        An
        Option shall not be transferable except by will or by the laws of descent
        and
        distribution and shall be exercisable during the lifetime of the Optionholder
        only by the Optionholder. 

      

      (ii) Domestic
        Relations Orders.
        Notwithstanding the foregoing, an Option may be transferred pursuant to a
        domestic relations order; provided,
        however,
        that if
        an Option is an Incentive Stock Option, such Option shall be deemed to be
        a
        Nonstatutory Stock Option as a result of such transfer. 

      (iii) Beneficiary
        Designation.
        Notwithstanding the foregoing, the Optionholder may, by delivering written
        notice to the Company, in a form provided by or otherwise satisfactory to
        the
        Company, designate a third party who, in the event of the death of the
        Optionholder, shall thereafter be entitled to exercise the Option. In the
        absence of such a designation, the executor or administrator of the
        Optionholder’s estate shall be entitled to exercise the Option.

       

      (f) Vesting
        of Options Generally.
        The
        total number of shares of Common Stock subject to an Option may vest and
        therefore become exercisable in periodic installments that may or may not
        be
        equal. The Option may be subject to such other terms and conditions on the
        time
        or times when it may or may not be exercised (which may be based on performance
        or other criteria) as the Board may deem appropriate. The vesting provisions
        of
        individual Options may vary. The provisions of this Section 6(f)
        are
        subject to any Option provisions governing the minimum number of shares of
        Common Stock as to which an Option may be exercised.

       

      
        
          
          

        

        
          12.

          
            

          

        

        
          
          

        

      

       

      (g) Minimum
        Vesting.
        Notwithstanding the provisions of Section 6(f),
        to the
        extent that the Company is subject to the following restrictions on vesting
        under Section 260.140.41(f) at the time of the grant of the Option,
        then:

      

      (i) Options
        granted to an Employee who is not an Officer, Director or Consultant shall
        provide for vesting of the total number of shares of Common Stock at a rate
        of
        at least twenty percent (20%) per year over five (5) years from the date
        the
        Option was granted, subject to reasonable conditions such as continued
        employment; and

      

      (ii) Options
        granted to Officers, Directors or Consultants may be made fully exercisable,
        subject to reasonable conditions such as continued employment, at any time
        or
        during any period established by the Company.

      

      (h) Termination
        of Continuous Service.
        In the
        event that an Optionholder’s Continuous Service terminates (other than upon the
        Optionholder’s death or Disability), the Optionholder may exercise his or her
        Option (to the extent that the Optionholder was entitled to exercise such
        Option
        as of the date of termination of Continuous Service) but only within such
        period
        of time ending on the earlier of (i) the date three (3) months following
        the
        termination of the Optionholder’s Continuous Service (or such longer or shorter
        period specified in the Option Agreement, which period, to the extent that
        the
        Company is subject to Section 260.140.41 at the time the Option is granted,
        shall not be less than thirty (30) days unless such termination is for cause),
        or (ii) the expiration of the term of the Option as set forth in the Option
        Agreement. If, after termination of Continuous Service, the Optionholder
        does
        not exercise his or her Option within the time specified herein or in the
        Option
        Agreement (as applicable), the Option shall terminate.

      

      (i) Extension
        of Termination Date.
        An
        Optionholder’s Option Agreement may provide that if the exercise of the Option
        following the termination of the Optionholder’s Continuous Service (other than
        upon the Optionholder’s death or Disability) would be prohibited at any time
        solely because the issuance of shares of Common Stock would violate the
        registration requirements under the Securities Act, then the Option shall
        terminate on the earlier of (i) the expiration of a period of three (3) months
        after the termination of the Optionholder’s Continuous Service during which the
        exercise of the Option would not be in violation of such registration
        requirements, or (ii) the expiration of the term of the Option as set forth
        in
        the Option Agreement.

      

      (j) Disability
        of Optionholder.
        In the
        event that an Optionholder’s Continuous Service terminates as a result of the
        Optionholder’s Disability, the Optionholder may exercise his or her Option (to
        the extent that the Optionholder was entitled to exercise such Option as
        of the
        date of termination of Continuous Service), but only within such period of
        time
        ending on the earlier of (i) the date twelve (12) months following such
        termination of Continuous Service (or such longer or shorter period specified
        in
        the Option Agreement, which period, to the extent that the Company is subject
        to
        Section 260.140.41 at the time the Option is granted, shall not be less than
        six
        (6) months), or (ii) the expiration of the term of the Option as set forth
        in
        the Option Agreement. If, after termination of Continuous Service, the
        Optionholder does not exercise his or her Option within the time specified
        herein or in the Option Agreement (as applicable), the Option shall
        terminate.

       

      
        
          
          

        

        
          13.

          
            

          

        

        
          
          

        

      

       

      (k) Death
        of Optionholder.
        In the
        event that (i) an Optionholder’s Continuous Service terminates as a result of
        the Optionholder’s death, or (ii) the Optionholder dies within the period (if
        any) specified in the Option Agreement after the termination of the
        Optionholder’s Continuous Service for a reason other than death, then the Option
        may be exercised (to the extent the Optionholder was entitled to exercise
        such
        Option as of the date of death) by the Optionholder’s estate, by a person who
        acquired the right to exercise the Option by bequest or inheritance or by
        a
        person designated to exercise the option upon the Optionholder’s death pursuant
        to Section 6(e)(iii),
        but
        only within the period ending on the earlier of (i) the date eighteen (18)
        months following the date of death (or such longer or shorter period specified
        in the Option Agreement, which period, to the extent that the Company is
        subject
        to Section 260.140.41 at the time the Option is granted, shall not be less
        than
        six (6) months), or (ii) the expiration of the term of such Option as set
        forth
        in the Option Agreement. If, after the Optionholder’s death, the Option is not
        exercised within the time specified herein or in the Option Agreement (as
        applicable), the Option shall terminate.

      

      (l) Early
        Exercise.
        The
        Option may include a provision whereby the Optionholder may elect at any
        time
        before the Optionholder’s Continuous Service terminates to exercise the Option
        as to any part or all of the shares of Common Stock subject to the Option
        prior
        to the full vesting of the Option. Subject to the “Repurchase Limitation” in
        Section 9(h),
        any
        unvested shares of Common Stock so purchased may be subject to a repurchase
        option in favor of the Company or to any other restriction the Board determines
        to be appropriate. Provided that the “Repurchase Limitation” in Section
9(h)
        is not
        violated, the Company will not exercise its repurchase option until at least
        six
        (6) months (or such longer or shorter period of time necessary to avoid a
        charge
        to earnings for financial accounting purposes) have elapsed following exercise
        of the Option unless the Board otherwise specifically provides in the
        Option.

       

      7. Stock
        Bonus Award Provisions. 

      

      Each
        Stock Bonus Award Agreement shall be in such form and shall contain such
        terms
        and conditions as the Board shall deem appropriate. At the Board’s election,
        shares of Common Stock may be (i) held in book entry form subject to the
        Company’s instructions until any restrictions relating to the Stock Bonus Award
        lapse; or (ii) evidenced by a certificate, which certificate shall be held
        in
        such form and manner as determined by the Board. The terms and conditions
        of
        Stock Bonus Award Agreements may change from time to time, and the terms
        and
        conditions of separate Stock Bonus Award Agreements need not be identical;
        provided,
        however,
        that
        each Stock Bonus Award Agreement shall include (through incorporation of
        provisions hereof by reference in the agreement or otherwise) the substance
        of
        each of the following provisions:

      

      (a) Consideration.
        A Stock
        Bonus Award may be awarded in consideration for (i) past or future services
        rendered to the Company or an Affiliate, or (ii) any other form of legal
        consideration that may be acceptable to the Board in its sole discretion
        and
        permissible under applicable law.

      

      (b) Vesting.
        Subject
        to the “Repurchase Limitation” in Section 9(h),
        shares
        of Common Stock awarded under a Stock Bonus Award Agreement may be subject
        to
        forfeiture to the Company in accordance with a vesting schedule to be determined
        by the Board. 

       

      
        
          
          

        

        
          14.

          
            

          

        

        
          
          

        

      

       

      (c) Termination
        of Participant’s Continuous Service.
        Subject
        to the “Repurchase Limitation” in Section 9(h),
        in the
        event a Participant’s Continuous Service terminates, the Company may receive via
        a forfeiture condition, any or all of the shares of Common Stock held by
        the
        Participant which have not vested as of the date of termination of Continuous
        Service under the terms of the Stock Bonus Award Agreement.

      

      (d) Transferability.
        Rights
        to acquire shares of Common Stock under the Stock Bonus Award Agreement shall
        be
        transferable by the Participant only upon such terms and conditions as are
        set
        forth in the Stock Bonus Award Agreement, as the Board shall determine in
        its
        sole discretion, so long as Common Stock awarded under the Stock Bonus Award
        Agreement remains subject to the terms of the Stock Bonus Award
        Agreement.

      

      8. Covenants
        of the Company.

      

      (a) Availability
        of Shares.
        During
        the terms of the Stock Awards, the Company shall keep available at all times
        the
        number of shares of Common Stock required to satisfy such Stock
        Awards.

      

      (b) Securities
        Law Compliance.
        The
        Company shall seek to obtain from each regulatory commission or agency having
        jurisdiction over the Plan such authority as may be required to grant Stock
        Awards and to issue and sell shares of Common Stock upon exercise of the
        Stock
        Awards; provided,
        however,
        that
        this undertaking shall not require the Company to register under the Securities
        Act the Plan, any Stock Award or any Common Stock issued or issuable pursuant
        to
        any such Stock Award. If, after reasonable efforts, the Company is unable
        to
        obtain from any such regulatory commission or agency the authority that counsel
        for the Company deems necessary for the lawful issuance and sale of Common
        Stock
        under the Plan, the Company shall be relieved from any liability for failure
        to
        issue and sell Common Stock upon exercise of such Stock Awards unless and
        until
        such authority is obtained.

      

      9. Miscellaneous.

      

      (a) Use
        of Proceeds.
        Proceeds from the sale of shares of Common Stock pursuant to Stock Awards
        shall
        constitute general funds of the Company.

      

      (b) Stockholder
        Rights.
        No
        Participant shall be deemed to be the holder of, or to have any of the rights
        of
        a holder with respect to, any shares of Common Stock subject to such Stock
        Award
        unless and until such Participant has satisfied all requirements for exercise
        of
        the Stock Award pursuant to its terms.

      

      (c) No
        Employment or Other Service Rights.
        Nothing
        in the Plan, any Stock Award Agreement, or other instrument executed thereunder
        or any Stock Award granted pursuant thereto shall confer upon any Participant
        any right to continue to serve the Company or an Affiliate in the capacity
        in
        effect at the time the Stock Award was granted or shall affect the right
        of the
        Company or an Affiliate to terminate (i) the employment of an Employee with
        or
        without notice and with or without cause, (ii) the service of a Consultant
        pursuant to the terms of such Consultant’s agreement with the Company or an
        Affiliate, or (iii) the service of a Director pursuant to the Bylaws of the
        Company or an Affiliate, and any applicable provisions of the corporate law
        of
        the state in which the Company or the Affiliate is incorporated, as the case
        may
        be.

       

      
        
          
          

        

        
          15.

          
            

          

        

        
          
          

        

      

       

      (d) Incentive
        Stock Option $100,000 Limitation.
        To the
        extent that the aggregate Fair Market Value (determined at the time of grant)
        of
        Common Stock with respect to which Incentive Stock Options are exercisable
        for
        the first time by any Optionholder during any calendar year (under all plans
        of
        the Company and any Affiliates) exceeds one hundred thousand dollars ($100,000),
        the Options or portions thereof that exceed such limit (according to the
        order
        in which they were granted) shall be treated as Nonstatutory Stock Options,
        notwithstanding any contrary provision of the applicable Option
        Agreement(s).

      

      (e) Investment
        Assurances.
        The
        Company may require a Participant, as a condition of exercising or acquiring
        Common Stock under any Stock Award, (i) to give written assurances satisfactory
        to the Company as to the Participant’s knowledge and experience in financial and
        business matters and/or to employ a purchaser representative reasonably
        satisfactory to the Company who is knowledgeable and experienced in financial
        and business matters and that he or she is capable of evaluating, alone or
        together with the purchaser representative, the merits and risks of exercising
        the Stock Award; and (ii) to give written assurances satisfactory to the
        Company
        stating that the Participant is acquiring Common Stock subject to the Stock
        Award for the Participant’s own account and not with any present intention of
        selling or otherwise distributing the Common Stock. The foregoing requirements,
        and any assurances given pursuant to such requirements, shall be inoperative
        if
        (i) the issuance of the shares upon the exercise or acquisition of Common
        Stock
        under the Stock Award has been registered under a then currently effective
        registration statement under the Securities Act, or (ii) as to any particular
        requirement, a determination is made by counsel for the Company that such
        requirement need not be met in the circumstances under the then applicable
        securities laws. The Company may, upon advice of counsel to the Company,
        place
        legends on stock certificates issued under the Plan as such counsel deems
        necessary or appropriate in order to comply with applicable securities laws,
        including, but not limited to, legends restricting the transfer of the Common
        Stock.

      

      (f) Withholding
        Obligations. To
        the
        extent provided by the terms of a Stock Award Agreement, the Company may,
        in its
        sole discretion, satisfy any federal, state or local tax withholding obligation
        relating to a Stock Award by any of the following means (in addition to the
        Company’s right to withhold from any compensation paid to the Participant by the
        Company) or by a combination of such means: (i) causing the Participant to
        tender a cash payment; (ii) withholding shares of Common Stock from the shares
        of Common Stock issued or otherwise issuable to the Participant in connection
        with the Stock Award; [provided,
        however,
        that no
        shares of Common Stock are withheld with a value exceeding the minimum amount
        of
        tax required to be withheld by law (or such lower amount as may be necessary
        to
        avoid classification of the Stock Award as a liability); or
        (iii)
        by such other method as may be set forth in the Stock Award
        Agreement.

       

      (g) Information
        Obligation.
        To the
        extent that the Company is subject to Section 260.140.46, the Company shall
        deliver financial statements to Participants at least annually. This Section
        9(g)
        shall
        not apply to key Employees whose duties in connection with the Company assure
        them access to equivalent information.

       

      
        
          
          

        

        
          16.

          
            

          

        

        
          
          

        

      

       

      (h) Repurchase
        Limitation.
        The
        terms of any repurchase option shall be specified in the Stock Award, and
        the
        repurchase price may be either the Fair Market Value of the shares of Common
        Stock on the date of termination of Continuous Service or the lower of (i)
        the
        Fair Market Value of the shares of Common Stock on the date of repurchase
        or
        (ii) their original purchase price. To the extent that the Company is subject
        to
        Section 260.140.41 and Section 260.140.42 at the time a Stock Award is made,
        any
        repurchase option contained in a Stock Award granted to a person who is not
        an
        Officer, Director or Consultant shall be upon the terms described
        below:

      

      (i) Fair
        Market Value.
        If the
        repurchase option gives the Company the right to repurchase the shares of
        Common
        Stock upon termination of Continuous Service at not less than the Fair Market
        Value of the shares of Common Stock to be purchased on the date of termination
        of Continuous Service, then (i) the right to repurchase shall be exercised
        for
        cash or cancellation of purchase money indebtedness for the shares of Common
        Stock within ninety (90) days of termination of Continuous Service (or in
        the
        case of shares of Common Stock issued upon exercise of Stock Awards after
        such
        date of termination, within ninety (90) days after the date of the exercise)
        or
        such longer period as may be agreed to by the Company and the Participant,
        and
        (ii) the right terminates when the shares of Common Stock become publicly
        traded.

      

      (ii) Original
        Purchase Price.
        If the
        repurchase option gives the Company the right to repurchase the shares of
        Common
        Stock upon termination of Continuous Service at the lower of (i) the Fair
        Market
        Value of the shares of Common Stock on the date of repurchase, or (ii) their
        original purchase price, then (x) the right to repurchase at the original
        purchase price shall lapse at the rate of at least twenty percent (20%) of
        the
        shares of Common Stock per year over five (5) years from the date the Stock
        Award is granted (without respect to the date the Stock Award was exercised
        or
        became exercisable) and (y) the right to repurchase shall be exercised for
        cash
        or cancellation of purchase money indebtedness for the shares of Common Stock
        within ninety (90) days of termination of Continuous Service (or in the case
        of
        shares of Common Stock issued upon exercise of Options after such date of
        termination, within ninety (90) days after the date of the exercise) or such
        longer period as may be agreed to by the Company and the
        Participant.

      

      (i) Electronic
        Delivery.
        Any
        reference herein to a “written” agreement or document shall include any
        agreement or document delivered electronically or posted on the Company’s
        intranet.

      

      10. Adjustments
        upon Changes in Common Stock; Corporate Transactions.

       

      (a) Capitalization
        Adjustments.
        If any
        change is made in, or other events occur with respect to, the Common Stock
        subject to the Plan or subject to any Stock Award without the receipt of
        consideration by the Company (through merger, consolidation, reorganization,
        recapitalization, reincorporation, stock dividend, dividend in property other
        than cash, stock split, liquidating dividend, combination of shares, exchange
        of
        shares, change in corporate structure or other transaction not involving
        the
        receipt of consideration by the Company (each a “Capitalization
        Adjustment”)),
        the
        Board shall appropriately adjust: (i) the class(es) and maximum number of
        securities subject to the Plan pursuant to Section 4(a),
        (ii)
        the class(es) and maximum number of securities that may be issued pursuant
        to
        the exercise of Incentive Stock Options pursuant to Section 4(c),
        (iii)
        the class(es) and maximum number of securities that may be awarded to any
        person
        pursuant to Section 5(c),
        and
        (iv) the class(es) and number of securities and price per share of stock
        subject
        to outstanding Stock Awards. The Board shall make such adjustments, and its
        determination shall be final, binding and conclusive. (Notwithstanding the
        foregoing, the conversion of any convertible securities of the Company shall
        not
        be treated as a transaction “without receipt of consideration” by the
        Company.) 

       

      
        
          
          

        

        
          17.

          
            

          

        

        
          
          

        

         

      

      (b) Dissolution
        or Liquidation.
        In the
        event of a dissolution or liquidation of the Company, all outstanding Stock
        Awards (other than Stock Awards consisting of vested and outstanding shares
        of
        Common Stock not subject to the Company’s right of repurchase) shall terminate
        immediately prior to the completion of such dissolution or liquidation, and
        the
        shares of Common Stock subject to the Company’s repurchase option may be
        repurchased by the Company notwithstanding the fact that the holder of such
        Stock Award is providing Continuous Service, provided,
        however,
        that the
        Board may, in its sole discretion, cause some or all Stock Awards to become
        fully vested, exercisable and/or no longer subject to repurchase or forfeiture
        (to the extent such Stock Awards have not previously expired or terminated)
        before the dissolution or liquidation is completed but contingent on its
        completion. 

      

      (c) Corporate
        Transaction.
        The
        following provisions shall apply to Stock Awards in the event of a Corporate
        Transaction unless otherwise provided in a written agreement between the
        Company
        or any Affiliate and the holder of the Stock Award: 

      

      (i) Stock
        Awards May Be Assumed.
        In the
        event of a Corporate Transaction, any surviving corporation or acquiring
        corporation (or the surviving or acquiring corporation’s parent company) may
        assume or continue any or all Stock Awards outstanding under the Plan or
        may
        substitute similar stock awards for Stock Awards outstanding under the Plan
        (including but not limited to, awards to acquire the same consideration paid
        to
        the stockholders of the Company pursuant to the Corporate Transaction), and
        any
        reacquisition or repurchase rights held by the Company in respect of Common
        Stock issued pursuant to Stock Awards may be assigned by the Company to the
        successor of the Company (or the successor’s parent company, if any), in
        connection with such Corporate Transaction. A surviving corporation or acquiring
        corporation may choose to assume or continue only a portion of a Stock Award
        or
        substitute a similar stock award for only a portion of a Stock Award. The
        terms
        of any assumption, continuation or substitution shall be set by the Board
        in
        accordance with the provisions of Section 3(b).
        

       

      (ii) Stock
        Awards Held by Current Participants.
        In the
        event of a Corporate Transaction in which the surviving corporation or acquiring
        corporation (or its parent company) does not assume or continue any or all
        outstanding Stock Awards or substitute similar stock awards for such outstanding
        Stock Awards, then with respect to Stock Awards that have not been assumed,
        continued or substituted and that are held by Participants whose Continuous
        Service has not terminated prior to the effective time of the Corporate
        Transaction (referred to as the “Current
        Participants”),
        the
        vesting of such Stock Awards (and, if applicable, the time at which such
        Stock
        Awards may be exercised) shall (contingent upon the effectiveness of the
        Corporate Transaction) be accelerated in full to a date prior to the effective
        time of such Corporate Transaction as the Board shall determine (or, if the
        Board shall not determine such a date, to the date that is five (5) days
        prior
        to the effective time of the Corporate Transaction), and such Stock Awards
        shall
        terminate if not exercised (if applicable) at or prior to the effective time
        of
        the Corporate Transaction, and any reacquisition or repurchase rights held
        by
        the Company with respect to such Stock Awards shall lapse (contingent upon
        the
        effectiveness of the Corporate Transaction). 

       

      
        
          
          

        

        
          18.

          
            

          

        

        
          
          

        

      

       

      (iii) Stock
        Awards Held by Former Participants.
        In the
        event of a Corporate Transaction in which the surviving corporation or acquiring
        corporation (or its parent company) does not assume or continue any or all
        outstanding Stock Awards or substitute similar stock awards for such outstanding
        Stock Awards, then with respect to Stock Awards that have not been assumed,
        continued or substituted and that are held by persons other than Current
        Participants, the vesting of such Stock Awards (and, if applicable, the time
        at
        which such Stock Award may be exercised) shall not be accelerated and such
        Stock
        Awards (other than a Stock Award consisting of vested and outstanding shares
        of
        Common Stock not subject to the Company’s right of repurchase) shall terminate
        if not exercised (if applicable) prior to the effective time of the Corporate
        Transaction; provided,
        however,
        that any
        reacquisition or repurchase rights held by the Company with respect to such
        Stock Awards shall not terminate and may continue to be exercised
        notwithstanding the Corporate Transaction. 

      

      (iv) Payment
        for Stock Awards in Lieu of Exercise.
        Notwithstanding the foregoing, in the event a Stock Award will terminate
        if not
        exercised prior to the effective time of a Corporate Transaction, the Board
        may
        provide, in its sole discretion, that the holder of such Stock Award may
        not
        exercise such Stock Award but will receive a payment, in such form as may
        be
        determined by the Board, equal in value to the excess, if any, of (i) the
        value
        of the property the holder of the Stock Award would have received upon the
        exercise of the Stock Award, over (ii) any exercise price payable by such
        holder
        in connection with such exercise. 

      

      (d) Change
        in Control.
        A Stock
        Award may be subject to additional acceleration of vesting and exercisability
        upon or after a Change in Control as may be provided in the Stock Award
        Agreement for such Stock Award or as may be provided in any other written
        agreement between the Company or any Affiliate and the Participant. A Stock
        Award may vest as to all or any portion of the shares subject to the Stock
        Award
        (i) immediately upon the occurrence of a Change in Control, whether or not
        such
        Stock Award is assumed, continued, or substituted by a surviving or acquiring
        entity in the Change in Control, or (ii) in the event a Participant’s Continuous
        Service is terminated, actually or constructively, within a designated period
        following the occurrence of a Change in Control. In the absence of such
        provisions, no such acceleration shall occur. 

       

      11. Amendment
        of the Plan and Stock Awards.

      

      (a) Amendment
        of Plan.
        Subject
        to the limitations, if any, of applicable law, the Board at any time, and
        from
        time to time, may amend the Plan. However, except as provided in Section
        10(a)
        relating
        to Capitalization Adjustments, no amendment shall be effective unless approved
        by the stockholders of the Company to the extent stockholder approval is
        necessary to satisfy applicable law.

       

      
        
          
          

        

        
          19.

          
            

          

        

        
          
          

        

      

       

      (b) Stockholder
        Approval.
        The
        Board, in its sole discretion, may submit any other amendment to the Plan
        for
        stockholder approval, including, but not limited to, amendments to the Plan
        intended to satisfy the requirements of Section 162(m) of the Code and the
        regulations thereunder regarding the exclusion of performance-based compensation
        from the limit on corporate deductibility of compensation paid to Covered
        Employees.

      

      (c) Contemplated
        Amendments.
        It is
        expressly contemplated that the Board may amend the Plan in any respect the
        Board deems necessary or advisable to provide eligible Employees with the
        maximum benefits provided or to be provided under the provisions of the Code
        and
        the regulations promulgated thereunder relating to Incentive Stock Options
        and/or to bring the Plan and/or Incentive Stock Options granted under it
        into
        compliance therewith.

      

      (d) No
        Impairment of Rights.
        Rights
        under any Stock Award granted before amendment of the Plan shall not be impaired
        by any amendment of the Plan unless (i) the Company requests the consent
        of the
        affected Participant, and (ii) such Participant consents in
        writing.

      

      (e) Amendment
        of Stock Awards.
        The
        Board, at any time and from time to time, may amend the terms of any one
        or more
        Stock Awards, including, but not limited to, amendments to provide terms
        more
        favorable than previously provided in the Stock Award Agreement, subject
        to any
        specified limits in the Plan that are not subject to Board discretion;
provided,
        however,
        that the
        rights under any Stock Award shall not be impaired by any such amendment
        unless
        (i) the Company requests the consent of the affected Participant, and (ii)
        such
        Participant consents in writing.

       

      12. Termination
        or Suspension of the Plan.

       

      (a) Plan
        Term.
        The
        Board may suspend or terminate the Plan at any time. Unless sooner terminated,
        the Plan shall terminate on the day before the tenth (10th) anniversary of
        the
        earlier of (i) the date the Plan is adopted by the Board, or (ii) the date
        the
        Plan is approved by the stockholders of the Company. No Stock Awards may
        be
        granted under the Plan while the Plan is suspended or after it is
        terminated.

      

      (b) No
        Impairment of Rights.
        Suspension or termination of the Plan shall not impair rights and obligations
        under any Stock Award granted while the Plan is in effect except with the
        written consent of the affected Participant.

       

      13. Effective
        Date of Plan.

      

      The
        Plan
        shall become effective as determined by the Board, but no Stock Award shall
        be
        exercised (or, in the case of a Stock Bonus Award shall be granted) unless
        and
        until the Plan has been approved by the stockholders of the Company, which
        approval shall be within twelve (12) months before or after the date the
        Plan is
        adopted by the Board. 

      

      14. Choice
        of Law.

      

      The
        law
        of the State of Delaware shall govern all questions concerning the construction,
        validity and interpretation of this Plan, without regard to that state’s
        conflict of laws rules.

       

      
        
          
          

        

        
          20.

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