Document:

EMPLOYMENT AGREEMENT

 

EXHIBIT 10.25

 

 EMPLOYMENT AGREEMENT

 

This Employment Agreement, Dated as of the Effective Date of Merger (as Merger is defined in Section 1.01 below), between Propell Corporation, a Delaware Corporation (“Company”) with its principal place of business located at 7703 Kingspointe Parkway, Suite 300, Orlando, Florida 32819, and Steven Rhodes (“Employee”) with a residence at [____________], in consideration of the mutual promises made herein, recites and provides as follows:

 

WHEREAS, Company desires to retain the services of Employee on the terms and conditions set forth herein; and

 

WHEREAS, Employee desires to be employed by the Company on the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, Company and Employee agree as follows:

 

ARTICLE 1.  TERM OF EMPLOYMENT

 

Specified Period

 

		
	1.01

	Company employs Employee and Employee accepts employment with Company for a period of three (3) years (36 months) beginning on the Effective Date of the Merger of Company with Crystal Magic, Inc., (currently expected to occur in April 2008), and terminating on the same date in 2011.  If the parties do not execute a new written agreement upon expiration of this Agreement, the employment of Employee shall continue on an at-will basis.

 

“Employment Term” Defined

 

		
	1.02

	“Employment Term” refers to the entire period of employment of Employee by Company, whether for the periods provided above, or whether terminated earlier as hereinafter provided  or extended by mutual agreement between Company and Employee.

 

ARTICLE 2.  DUTIES AND OBLIGATIONS OF EMPLOYEE

 

General Duties

 

		
	2.01

	Employee shall serve as the Chief Financial Officer (CFO) of Propell Corporation as well as President of its Crystal Magic subsidiary.  In his capacity as CFO of Propell Corporation, Employee shall do and perform all services, acts, or things necessary or advisable as CFO of Propell Corporation, and such other roles of similar responsibility as the Company may see fit; provided however that the roles and responsibilities assigned shall be executive in nature and scope.  Employee shall be based in Company’s Orlando, Florida office.  Any change or relocation of the Orlando, Florida office, further than fifty (50) miles, shall be considered “relocation” pursuant to Section 7.02 (c) below.

 

Board of Directors

		
	2.02

	Employee shall also serve on the Board of Directors of Company.  Any involuntary removal of Employee from the Board of Directors shall allow Employee to terminate this Agreement “For Good Reason” pursuant to Section 7.02 below.

 

Outside Employment

 

		
	2.03  

	Employee shall not engage in outside employment that interferes with any of his duties under this Agreement.

 

Competitive Activities

 

		
	2.04  

	During the term of this contract Employee shall not, directly or indirectly, either as an employee, company consultant, agent, principal, partner, stockholder, corporate officer, director, or in any other individual or representative capacity, engage or participate in any business that is in competition with the business of Company and/or its subsidiaries.  Employee shall not be precluded from engaging in investment activities of a personal nature. Employee shall not be precluded from accepting Board of Directors positions with other for profit business entities not in competition with the Company, so long as Employee obtains the written permission from the Board of Directors, which written permission shall not be unreasonably withheld.

 

	
	Adherence to Rules

 

		
	2.05

	Employee, at all times during the performance of this Agreement, shall strictly adhere to and obey all the rules and regulations now in effect or as subsequently modified governing the conduct of employees of Company and its subsidiaries, to the extent that those rules and regulations are approved by the Board of Directors and are not inconsistent with Employee’s rights and obligations under this Agreement. In the event that any rule or regulation conflicts with this Agreement, this Agreement shall control.

 

ARTICLE 3.  COMPENSATION OF EMPLOYEE

 

Annual Salary

 

			
	3.01

	 (a)  

	As compensation for the services to be performed hereunder, Employee shall receive a salary at the rate of One Hundred and Sixty Thousand Dollars ($160,000.00) per annum, payable in equal installments on a bi-weekly basis.

 

		
	(b)  

	Employee shall receive such annual increases in salary, if any, as may be determined by Company’s Board of Directors, in its sole discretion.

 

Discretionary Bonus

 

		
	3.02

	In addition to the Employee’s Annual Salary, the Board of Directors of Company may, in its sole discretion, award to Employee bonus(es) in an amount, if any, in the Board’s sole discretion

 

Stock

 

		
	3.03

	Company hereby grants to Employee an option to purchase, One Hundred Thousand (100,000) shares of common stock of the Company at the purchase/exercise price as set forth below and pursuant to the terms of the Propell Corporation 2008 Stock Option Plan (“SOP”), a copy of which shall be given to Employee.   It is the intent that both the SOP and the grant to Employee of Options shall be approved at the first Board of Directors meeting after the Merger.

 

		
	(a)  

	This Option may be exercised only with respect to the portion of stock that is vested in Employee. Except as set forth in Section 3.03(b) below, Employee’s right to exercise this option shall be vested in annual increments beginning with the first anniversary date of Employee’s employment according to the following vesting schedule:

 

		
	(i)  

	On the first anniversary date of Employee’s employment, 12/36ths of the Option shares shall vest; and

 

		
	(ii)  

	On the second anniversary date of Employee’s employment, an additional 12/36 ths of Option shares shall vest; and

 

		
	(iii)  

	On the third anniversary date of Employee’s employment, the remaining 12/36 ths of the Option shares shall vest.

 

		
	(b) 

	Notwithstanding the above, after the first anniversary date of Employee’s employment, in the event (i) Employee is terminated without Cause, (ii) Employee terminates for Good Reason or (iii) the Employment Term ends without renewal or extension, Employee shall be entitled to additional vesting in the amount of 1/36th for each month of employment completed after the most recent anniversary date of employment. In such event, Employee shall have ninety (90) days after the date of termination or non-renewal or extension in which to purchase/exercise any such Option(s).

 

		
	(c) 

	The purchase price shall be the fair market value of the Company’s common stock as determined by the first Five Hundred Thousand Dollars ($500,000) in capital invested after the Merger is effective.

 

		
	(d) 

	 This Option is not assignable and may only be exercised by Employee during the term of employment under this Agreement except as set forth above in Section 3.03(b).

 

Vacation

 

		
	3.04  

	During the Employment Term, Employee shall be entitled to fifteen (15) days paid vacation per year, which may be used in accordance with the policies, programs and practices of Company, which are in effect generally from time to time with respect to other peer executives of Company.

 

	
	Employee’s Sick Leave

 

		
	3.05  

	During the Employment Term, Employee shall be entitled to paid sick leave in accordance with the policies, programs and practices of Company which are in effect with respect to other peer executives of Company.

 

Savings and Retirement Plans

 

		
	3.06  

	During the Employment Term, Employee shall be entitled to participate in all savings and retirement plans to the extent applicable generally to other peer executives of Company, including any 401(k) plan maintained by Company, if any.

 

Benefit Plans

 

		
	3.07  

	During the Employment Term, the Employee and/or the Employee’s family and dependents, as the case may be, shall be eligible for participation in and shall receive all benefits under all welfare benefit plans provided by Company (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, and accidental death and travel accident insurance plans) to the extent applicable generally to other peer executives of Company.

 

ARTICLE 4.  BUSINESS EXPENSES

 

Travel, Entertainment, and Other Expenses

 

		
	4.01

	It is recognized and agreed by the Parties to this Agreement that in connection with the services to be performed for Company, Employee will be obliged to expend money for travel, entertainment of customers, gifts, and similar business expenses.  Employee is authorized to incur reasonable business expenses for promoting the business of Company, in accordance with the policies, practices and procedures of Company.

 

Reimbursement of Business Expenses

 

			
	4.02  

	(a) 

	Company shall promptly reimburse Employee for all reasonable business expenses incurred by Employee in connection with the business of Company.

 

		
	(b) 

	Each such expenditure shall be reimbursable only if it is of a nature qualifying it as a proper deduction on the federal and state income tax return of Company.

 

		
	(c) 

	Each such expenditure shall be reimbursable only if Employee furnishes to Company adequate records and other documentary evidence required by federal and state statutes and regulations issued by the appropriate taxing authorities for the substantiation of each such expenditure as an income tax deduction.

 

 

ARTICLE 5.  PROPERTY RIGHTS OF THE PARTIES

TRADE SECRETS / CONFIDENTIAL INFORMATION

 

Confidential Information

 

		
	5.01  

	As used in this Agreement “Confidential Information” includes, without limitation, [design information, manufacturing information, business, financial, and technical information, sales and processing information, product information, customers, customer lists, vendors, vendor lists, pricing information, corporation and personal business contact and relationships, corporation and personal business opportunities, software, computer disks or files, or any other electronic information of any kind, Rolodex cards or other lists of names, addresses or telephone numbers, financial information, projects, potential projects, current projects, projects in development and future projects, forecasts, plans, contracts, releases, and other documents, materials or writings that belong to Company, including those which are prepared or created by Employee or come into the possession of Employee by any means or manner and which relate directly or indirectly to Company, and each of its owners, predecessors, successors, subsidiaries, affiliates, and all of its shareholders, directors and officers (all of the above collectively referred to as “Confidential Information”).  Confidential Information includes information developed by Employee in the course of Employee’s services for Company for the benefit of Company, as well as other Confidential Information to which Employee may have access in connection with Employee’s services.  Confidential Information also includes the confidential information of other individuals or entities with which Company has a business relationship.

 

Duty of Confidentiality

 

		
	5.02  

	Employee will maintain in confidence and will not, directly or indirectly, disclose or use (or allow others working with Employee to disclose or use), either during the term of this Agreement and for a period of one  (1) year after termination of Employee’s employment, any Confidential Information belonging to Company, whether in oral, written, electronic or permanent form, except solely to the extent necessary to perform services on behalf of Company prior to its termination, Employee shall deliver forthwith possession or control belonging to Company and all tangible items embodying or containing Confidential Information.

 

Documents, Records, Etc.

 

		
	5.03

	All documents, records, data, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to Employee by Company or produced by Employee in connection with Employee’s services will be and remain the sole property of Company.  Employee will return to Company forthwith all such materials and property upon the termination of this Agreement or sooner if requested by Company.

 

Assignment of Rights

 

		
	5.04

	Employee shall make full and prompt disclosure to Company of any and all designs, intellectual property, software, inventions, discoveries, or improvements (individually and collectively, “Inventions”) made by Employee as a result or product of his employment relationship with Company.  Employee hereby assigns to Company without additional compensation the entire worldwide right, title and interest in and to such Inventions, and related intellectual property rights and without limitation all copyrights, copyright renewals or reversions, trademarks, trade names, trade dress rights, industrial design, industrial model, inventions, priority rights, patent rights, patent applications, patents, design patents and any other rights or protections in connection therewith or related thereto, for exploitation in any form or medium, of any kind or nature whatsoever, whether now known or hereafter devised.  To the extent that any work created by Employee can be a work for hire pursuant to U.S. Copyright Law, the parties deem such work a “work for hire” and Employee should be considered the author thereof.  Employee shall, at the request of Company, without additional compensation, from time to time execute, acknowledge and deliver to Company such instruments and documents as Company may require to perfect, transfer and vest in Company the entire rights, title and interest in and to such inventions.  In the event that Employee does not timely perform such obligations, Employee shall cooperate with Company upon Company’s request and at Company’s cost but without additional compensation in the preparation and prosecution of patent, trademark, industrial design and model, and copyright applications worldwide for protection of rights to any Inventions.

 

Injunctive Relief

 

		
	5.05  

	Employee acknowledges that a violation or attempted violation on Employee’s part of any agreement in this Article 5 will cause irreparable damage to Company, and accordingly, Employee agrees that Company shall be entitled as a manner of right to an injunction from any court of competent jurisdiction restraining any violation or further violation of such agreement by Employee; such right to an injunction, however, shall be cumulative and in addition to whatever other remedies that Company may have.  Terms and agreements set forth in this Section 5 shall survive the expiration of the term of this Agreement.

 

Disclosure of Information to Others

 

		
	5.06

	Employee shall not divulge any Confidential Information to anyone outside Company without obtaining both Company’s prior written consent and the disclosee’s signed written confidentiality agreement as approved by Company.

 

ARTICLE 6.  OBLIGATIONS OF COMPANY

 

Indemnification of Losses of Employee

 

		
	6.01

	Company shall indemnify and defend and hold harmless Employee for all necessary expenditures, losses or claims incurred by Employee in direct consequence of the discharge of his duties.

 

ARTICLE 7.  TERMINATION

 

By Company For Cause

 

			
	7.01

	(a)  

	Company may terminate Employee’s employment during the Employment Term for Cause.  For purposes of this Agreement, “Cause” shall mean (i) the conviction of Employee for committing an act of fraud, embezzlement, theft or other act constituting an economic crime or the guilty or nolo contendere pleas of Employee to such a crime; or (ii) fraudulent conduct or an act of dishonesty or breach of trust on the part of Employee in connection with Company’s business, or  (iii) breach of the confidentiality or non competition provisions of this Agreement.

 

By Company Without Cause

 

		
	(b)  

	Company may terminate Employee’s employment at any time without cause.

 

By Company Upon Employee’s Death or Disability

 

		
	(c)  

	Employee’s employment shall terminate automatically upon Employee’s death or upon a good faith determination by Company that Employee is disabled.  Company will deem Employee disabled if and when, in the good faith judgment of Company, Employee is unable to perform the material functions of Employee’s job, even with reasonable accommodation, for a total of ninety (90) days out of any six (6) month period.

 

Termination By Employee For Good Reason

 

		
	7.02  

	Employee may terminate his employment with Company for Good Reason.  For purposes of this Agreement, “Good Reason” shall mean, in the absence of the consent of Employee, a reasonable determination by Employee that any of the following has occurred:

 

		
	(a)  

	the assignment to Employee of any duties inconsistent in any material respect with Employee’s position (including titles and reporting requirements, authority, duties or responsibilities as contemplated by Section 2.01 of this Agreement), or any other action by Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated and insubstantial action not taken in bad faith and which is remedied by Company promptly after receipt of notice thereof given by Employee; or

 

		
	(b)  

	any failure by Company to comply with any of the provisions of this Agreement applicable to it, other than any isolated and insubstantial failure not occurring in bad faith and which is remedied promptly after notice thereof from Employee.

 

		
	(c)  

	Relocation, unless such relocation is mutually agreed upon in writing.

 

ARTICLE 8.  OBLIGATION OF COMPANY

UPON EARLY TERMINATION

 

Termination For Cause

 

		
	8.01  

	If Employee’s employment shall be terminated for Cause, this Agreement shall terminate without any further obligation to Employee whatsoever, other than any obligation that may be required by law.

 

Termination By Company Without Cause;

Termination By Employee For Good Reason

 

		
	8.02

	In the event Company terminates Employee’s employment during the Employment Term without cause, or Employee terminates his employment for Good Reason, then Company shall pay or provide to Employee the following:

 

		
	(a)  

	Company shall pay to Employee, within thirty (30) days after the Date of Termination, any accrued Annual Base Salary, bonuses that have been declared, vacation pay, expense reimbursement and any other entitlements accrued by Employee under Article 3 above, to the extent not theretofore paid (the sum of these amounts shall hereinafter by referred to as the “Accrued Obligations”).

 

		
	(b)  

	Company shall continue to pay to Employee, in regular bi-weekly installments, Employee’s Annual Salary under this Agreement for six (6) months.  However, if the employment of Employee becomes at-will, Company will continue to pay to Employee, in regular bi-weekly installments, Employee’s Annual Salary under this Agreement for the duration of six (6) months.

 

		
	(c)  

	Company shall continue to provide and pay for benefits to Employee and/or Employee’s family and dependents at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies which are generally applicable to peer executives, for three months.  If Employee commences employment with another employer and is eligible to receive medical or other welfare benefits under another employer-provider plan, the medical and other welfare benefits to be provided by Company as described herein shall terminate.

 

Upon Death of Employee

 

		
	8.03  

	If Employee’s employment is terminated by reason of Employee’s death during the Employment Term, this Agreement shall terminate without further obligation to Employee, other than payment of any Accrued Obligations (which shall be paid to Employee’s estate or beneficiary, as applicable, in a lump sum in cash within thirty (30) days of the Date of Termination, and the timely payment or provision of all welfare benefit plans.

 

Upon Disability of Employee

 

		
	8.04  

	If Employee’s employment shall be terminated by reason of Employee’s Disability during the Employment Term, this Agreement shall terminate without further obligation to Employee, other than for payment of any Accrued Obligations (which shall be paid to Employee in a lump sum in cash within 30 days of the Date of Termination, and the timely payment or provision of all welfare benefit plans.

 

 

		
	  

	ARTICLE 9.  POST TERMINATION

 

		
	  

	Non Solicitation of Customers

 

		
	9.01

	For a period of One (1) year immediately following the termination of Employee’s employment with Company, Employee shall not directly or indirectly make known to any person, firm, corporation, etc., the names or addresses of any of the customers of Company and/or its subsidiaries, of the information pertaining to them, or call on, solicit, or take away from any of the customers of Company of whom Employee called or with whom Employee became acquainted during Employee’s employment with Company, either for himself or for any other person, firm, corporation, etc.

 

		
	  

	Non Solicitation of Employees of Company

 

		
	9.02

	For a period of One (1) year immediately following the termination of Employee’s employment with Company, Employee shall not directly or indirectly solicit, recruit, or encourage any other employee of Company or any of its related entities or subsidiaries, or any of its subsidiaries, to leave the employment of Company or work for any person or entity that is in competition with Company, or its subsidiaries.

 

		
	  

	Non Competition

 

		
	9.03

	To the extent allowed by law, for a period of One (1) year immediately following the termination of Employee’s employment with Company, Employee agrees that Employee will not directly or indirectly, in any capacity, compete or attempt to compete with the business of Company or any of its subsidiaries, whether by taking employment with a competitor, consulting to a competitor, as an owner of a business entity competing with Company, or otherwise.

 

ARTICLE 10.  GENERAL PROVISIONS

 

Notices

 

		
	10.01  

	Any notice to be given hereunder by either party to the other shall be in writing and may be transmitted by personal delivery or by mail, registered or certified, postage prepaid with return receipt requested.  Mailed notices shall be addressed to the parties at the addresses appearing in the introductory paragraph of this Agreement, accompanied by courtesy e-mails and faxes to the e-mail addresses and fax numbers set forth in the introductory paragraph of this Agreement, but each party may change that address and/or email address and/or fax number by written notice in accordance with this section.  Notices delivered personally shall be deemed communicated as of the date of actual receipt; mailed notices shall be deemed communicated as of three (3) days after the date of mailing.

 

Arbitration

 

			
	10.02  

	(a)  

	No dispute between Company (or any of its officers, directors, employees, subsidiaries or affiliates) and Employee, which is in any way related to the employment of Employee (including but not limited to claims of wrongful termination; racial, sexual or other discrimination or harassment; defamation; and other employment-related claims or allegations) shall be the subject of a lawsuit filed in state or federal court.  Instead, any such dispute shall be submitted to binding arbitration before a sole arbitrator of the American Arbitration Association (AAA) or any other individual or organization on which the Parties agree or which a court may appoint.  It is understood that both sides are hereby waiving the right to a jury trial.

 

		
	(b)  

	In order to commence an arbitration proceeding, the claimant shall file with the AAA (or other agreed or appointed arbitrator) and serve on the other party a complaint in accordance with the laws of the State of California; the other party shall file and serve a response in accordance with the laws of that state.  The arbitration shall be initiated in Orlando, Florida.  The arbitration must be filed within one (1) year of the act or omission which gives rise to the claim.  Each Party shall be entitled to take a minimum of one deposition, and to take any other discovery as is permitted by the Arbitrator.  In determining the extent of discovery, the Arbitrator shall exercise discretion, but shall consider the expense of the desired discovery and the importance of the discovery to a just adjudication.  The Arbitrator shall hear motions pertaining to the pleadings, discovery or summary judgment or adjudication, in accordance with the law as it would be applied by a court of the State of Florida.

 

		
	(c)  

	The Arbitrator shall render a decision which conforms to the facts, supported by competent evidence (except that the Arbitrator may accept written declarations under penalty of perjury, in addition to live testimony), and the law as it would be applied by a court sitting in the state in which the arbitration is brought.  The Arbitrator shall not impose any requirement of “just cause,” not otherwise imposed by law.  At the conclusion of the arbitration, the Arbitrator shall make written findings of fact, and state the evidentiary basis for each such finding.  The Arbitrator shall also issue a ruling and explain how the findings of fact justify his or her ruling.

 

		
	(d)  

	Any party may apply to a court of competent jurisdiction for entry of judgment on the arbitration award.  The court shall review the arbitration award, including the ruling and findings of fact, and shall determine whether they are supported by competent evidence and by a proper application of law to the facts.  If the court finds that the award is properly supported by the facts and law, then it shall enter judgment on the award; if the court finds that the award is not supported by the facts or the law, then the court may enter a different judgment (if such is compelled by the uncontradicted evidence) or may direct the parties to return to arbitration for further proceedings consistent with the order of the court.

 

		
	(e)  

	Notwithstanding the above, either Company or Employee may file with an appropriate state or federal court a claim for injunctive relief in any case where the filing party seeks provisional injunctive relief or where permanent injunctive relief is not available in arbitration.  The filing of a claim for injunctive relief in state or federal court shall not allow either party to raise any other claim outside of arbitration.

 

Entire Agreement

 

		
	10.03

	This agreement supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the employment of Employee by Company and contains all of the covenants and agreements between the parties with respect to that employment in any manner whatsoever.  Each Party to this agreement acknowledges that no representation, inducements, promises, or agreements regarding Employee’s employment, orally or otherwise, have been made by any party, or anyone acting on behalf of any party, with respect to the employment of Employee, which are not embodied herein, and that no other Agreement, statement, or promise not contained in this Agreement shall be valid or binding on either party.  Any modification of this Agreement will be effective only if it is in writing signed by the party to be charged.

 

Partial Invalidity

 

		
	10.04

	If any provision in this agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way.

 

Law Governing Agreement

 

		
	10.05

	This agreement shall be governed by and constructed in accordance with the laws of the State of Florida.

 

Payment of Sums Due Deceased Employee

 

		
	10.06

	If Employee dies prior to the expiration of the term of his employment, any moneys that may be due him from Company under this agreement as of the date of death shall be paid to Employee’s executors, administrators, heirs, personal representatives, successors, and assigns.

 

IN WITNESS WHEREOF, the Parties so agree:

 

 

		
	COMPANY:

	EMPLOYEE:

	 Propell Corporation

	 

 

 

		
	By: /s/ Edward L. Bernstein

	By: /s/ Steve Rhodes

	      Edward L. Bernstein

	       Steve Rhodes

		
	  

	 President and CEOex10_1.htm

    

    

    T3
MOTION, INC.

    2007
STOCK
OPTION/STOCK ISSUANCE PLAN

    

    I.           GENERAL
PROVISIONS

    

    
      	
               
      

            	
              A.

            	
              PURPOSE
      OF THE PLAN

            

    

     

                  
This 2007 Stock Option/Stock Issuance Plan (the "Plan") is intended to
promote
the interests of T3 Motion, Inc., a Delaware corporation, by providing eligible
persons with the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest in the Corporation as an incentive for them
to remain in the service of the Corporation.

     

                   Capitalized
terms herein shall have the meanings assigned to such terms in the
attached Appendix.

    
      	
            	
              B.

            	
              STRUCTURE
      OF THE PLAN

            

       

    

            1.           The
Plan shall be divided into two (2) separate equity programs:

     

                         
(a) the Option Grant Program under which eligible persons may, at the discretion
of the Plan Administrator, be granted options to purchase shares of Common
Stock, and

     

              (b) the Stock Issuance Program
under which eligible persons may, at the discretion of the Plan Administrator,
be issued shares of Common Stock directly, either through the immediate purchase
of  such  shares  or  as a bonus for services rendered the
Corporation (or any Parent or Subsidiary).

    

             2.           The
provisions of Sections I and IV shall
apply to both equity programs under the Plan and shall accordingly govern the
interests of all persons under the Plan.

    

    
      	
            	
              C.

            	
              ADMINISTRATION
      OF THE PLAN

            

       

    

            
1.            The Plan
shall be administered by the Board. However, any or all administrative functions
otherwise exercisable by the Board may be delegated to the Committee. Members of
the Committee shall serve for  such  period of
time as the Board may determine and shall be subject to removal by the Board at
any time. The Board may also at any time terminate the functions of the
Committee and reassume all powers and authority  previously delegated to the Committee.

     

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

            

            
 2.             The
Plan Administrator shall have full power and authority (subject to the
provisions of the Plan) to establish such rules and regulations as it may deem
appropriate for proper administration of the Plan and to make
such determinations under, and issue such interpretations of, the Plan and any
outstanding options thereunder as it may deem necessary or advisable. Decisions
of the Plan Administrator shall be final and binding on all parties who have an
interest in the Plan or any option thereunder.

    

    
      	
               
      

            	
              D.

            	
              ELIGIBILITY

            

       

    

            1.           The
persons eligible to participate in the Plan are as follows:

     

                   (a)    Employees,

     

                   (b)    non-employee
members of the Board or the non-employee members of the board of directors of
any Parent or Subsidiary, and

     

                   (c)    consultants
and other independent advisors who provide services to the Corporation (or any
Parent or Subsidiary).

    

    

           
2.    The
Plan Administrator shall have full authority to determine, (i) with respect to
the option grants under the Option Grant Program, which eligible persons are to
receive option grants, the time or times when such option grants are to be made,
the number of shares to be covered by each such grant, the status of the granted
option as either an Incentive Option or a Non-Statutory Option, the time or
times at which each option is to become exercisable, the vesting schedule (if
any) applicable to the option shares and the maximum term for which the option
is to remain outstanding, and (ii) with respect to stock issuances under the
Stock Issuance Program, which eligible persons are to receive stock issuances,
the time or times when such issuances are to be made, the number of shares to be
issued to each Participant, the vesting schedule (if any) applicable to the
issued shares and the consideration to be paid by the Participant for such
shares.

     

            3.    The Plan Administrator
shall have the absolute discretion either to grant options in accordance with
the Option Grant Program or to effect stock issuances in accordance with the
Stock Issuance Program.

    

    

    
      	
               
      

            	
              E.

            	
              STOCK
      SUBJECT TO THE PLAN

            

       

    

                   
1.     The stock issuable
under the Plan shall be shares of authorized but unissued or reacquired Common
Stock. The maximum number of shares of Common Stock which may be issued over the
term of the Plan shall not exceed 7,000,000 shares.

    

           
2.     Shares of Common
Stock subject to outstanding options shall be available for subsequent issuance
under the Plan to the extent (i) the options expire or terminate for any reason
prior to exercise in full or (ii) the options are cancelled in accordance
with the cancellation-regrant provisions of Section II. Unvested shares issued
under the Plan and subsequently repurchased by the Corporation, at the option
exercise price paid per share, pursuant to the Corporation's repurchase rights
under the Plan shall be added back to the number of shares of Common Stock
reserved for issuance under the Plan and shall accordingly be available for
reissuance through one or more subsequent option grants or direct stock
issuances under the Plan.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    

           
3.     Should any change be
made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration, appropriate adjustments shall be made to (i) the
maximum number and/or class of securities issuable under the Plan and (ii) the
number and/or class of securities and the exercise price per share in effect
under each outstanding option in order to prevent the dilution or enlargement of
benefits thereunder. The adjustments determined by the Plan Administrator shall
be final, binding and conclusive. In no event shall any such adjustments be made
in connection with the conversion of one or more outstanding shares of the
Corporation's preferred stock into shares of Common Stock.

    

    II.     OPTION GRANT
PROGRAM

    

    
      	
               
      

            	
              A.

            	
              OPTION
      TERMS

            

    

     

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

     

            1.     Exercise
Price.

    
 

            (a)     The exercise
price per share shall be fixed by the Plan Administrator in accordance with the
following provisions:

    
 

              (i)     The exercise
price per share shall not be less than eighty-five percent (85%) of the Fair
Market Value per share of Common Stock on the option grant date.

     

                      (ii)      If the
person to whom the option is granted is a 10% Shareholder, then the exercise
price per share shall not be less than one hundred ten percent (110%) of the
Fair Market Value per share of Common Stock 

    on the option grant date.

     

    
                                             (b)      The
exercise price shall become immediately due upon exercise of the option and
shall, subject to the provisions of Section IV.A and the documents evidencing
the option, be payable in cash or check made payable to
the  Corporation. Should the Common Stock be registered under Section
12(g) of the 1934 Act at the time the option is exercised, then the exercise
price may also be paid as follows:

    

     

    
                            (i)     in
shares of Common Stock held for the requisite period necessary to avoid a charge
to the Corporation's earnings for financial reporting purposes and valued at
Fair Market Value on the Exercise Date, or

                   

    

    
                        (ii)     to
the extent the option is exercised for vested shares, through a special sale and
remittance procedure pursuant to which the Optionee shall concurrently provide
irrevocable written instructions (A) to a Corporation designated brokerage firm
to effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the purchased
shares plus all applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such exercise and (8) to
the Corporation to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale.

       

    

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

     

      2.           Exercise
and Term of Options. Each option shall be
exercisable at such time or times, during such period and for such number of shares as shall
be determined by the Plan Administrator and set forth in the documents
evidencing the option grant. However, no option shall have a term in excess of
ten (10) years measured from the option grant date.

     

                     
3.           Effect of
Termination of Service.

    
 

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

     

    
                              
(i)     Should the Optionee
cease to remain in Service for any reason other than Disability or death, then
the Optionee shall have a period of three (3) months following the date of such
cessation of Service during which to exercise each outstanding option held by
such Optionee.

       

      
                                
(ii)     Should Optionee's
Service terminate by reason of Disability, then the Optionee shall have a period
of twelve (12) months following the date of such cessation of Service during
which to exercise each outstanding option held by such
Optionee.

      

    

    
            

                                               

      

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

             

    
                                
(iii)     If
the Optionee dies while holding an outstanding option, then the personal
representative of his or her estate or the person or persons to whom the option
is transferred pursuant to the Optionee's will or the laws of inheritance shall
have a twelve (l2)-month period following the date of the Optionee's death to
exercise such option.

    

                             

                         

    

             
 (iv)    Under no circumstances,
however, shall any such option be exercisable after the specified expiration of
the option term.

    

           (v)     During the
applicable post-Service exercise period, the option may not be exercised in the
aggregate for more than the number of vested shares for which the option is
exercisable on the date of the Optionee's cessation of Service. Upon the
expiration of the applicable exercise period or (if earlier) upon the expiration
of the option term, the option shall terminate and cease to be outstanding for
any vested shares for which the option has not been exercised. However, the
option shall, immediately upon the Optionee's cessation of Service, terminate
and cease to be outstanding with respect to any and all option shares for which
the option is not otherwise at the time exercisable or in which the Optionee is
not otherwise at that time vested.

      

        (b)      The
Plan Administrator shall have the discretion, exercisable either at the time an
option is granted or at any time while the option remains outstanding,
to:

    

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

      

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

      

    

    

    

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

    

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

         

                
 5.     Unvested Option Shares. The
Plan Administrator shall have the discretion to grant options which are
exercisable for unvested shares of Common Stock ("Unvested Option Shares").
Should the Optionee cease Service while holding such Unvested Option Shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, all or (at the discretion of the Corporation and with the consent of the
Optionee) any of those Unvested Option Shares. The terms upon which such
repurchase right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares) shall be
established by the Plan Administrator and set forth in the document evidencing
such repurchase right. The Plan Administrator may not impose a vesting schedule
upon any option grant or any shares of Common Stock subject to the option which
is more restrictive than twenty percent (20%) per year vesting, with the initial
vesting to occur not later than one (1) year after the option grant
date.

    

         6.     First Refusal
Rights. Until
such time as the Common Stock is first registered under Section 12(g) of the
1934 Act, the Corporation shall have the right of first refusal with respect to
any proposed disposition by the Optionee (or any successor in interest) of any
shares of Common Stock issued under the Plan. Such right of first refusal shall
be exercisable in accordance with the terms established by the Plan
Administrator and set forth in the document evidencing such right.

    

         7.     Limited Transferability of
Options. During
the lifetime of the Optionee, the option shall be exercisable only by the
Optionee and shall not be assignable or transferable other than by will or by
the laws of descent and distribution following the Optionee's
death.

    

                         8.     Withholding. The
Corporation's obligation to deliver shares of Common Stock upon the exercise of
any options granted under the Plan shall be subject to the satisfaction of all
applicable Federal, state and local income and employment tax withholding
requirements.

    
 

    
      	
               
      

            	
              B.

            	
              INCENTIVE
      OPTIONS

            

       

    

            The terms specified
below shall be applicable to all Incentive Options. Except as modified by the
provisions of this Section B, all the provisions of the Plan shall be applicable
to Incentive Options. Options which are specifically designated as
Non­-Statutory Options shall not
be subject to the terms of this Section B.

    

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

    

           
2.           Exercise Price.
The exercise price per share shall not be less than one hundred percent
(100%) of the Fair Market Value per share of Common Stock on the option grant
date.

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

          

                 
 
 3.           Dollar Limitation. The
aggregate Fair Market Value of the shares of Common Stock (determined as of the
respective date or dates of grant) for which one or more options granted to any
Employee under the Plan (or any other option plan of the Corporation or any
Parent or Subsidiary) may for the first time become exercisable as Incentive
Options during any one (1)
calendar year shall not exceed the sum of One Hundred Thousand Dollars
($100,000). To the extent the Employee holds two (2) or more such options which
become exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such options as Incentive Options shall be
applied on the basis of the order in which such options are
granted.

    

            
4.           10% Shareholder. If any
Employee to whom an Incentive Option is granted is a 10% Shareholder, then the
option term shall not exceed five (5) years measured from the option grant
date.

    

    
      	
               
      

            	
              C.

            	
              CORPORATE
      TRANSACTION

            

       

    

                   
 1.    The Plan and each option
outstanding under the Plan at the time of a Corporate Transaction shall
terminate and cease to be outstanding. However, the outstanding options shall
not terminate and cease to be outstanding if and to the extent such options are
assumed by the successor corporation (or parent thereof) in the Corporate
Transaction.

    

             2.    Each option which
is assumed in connection with a Corporate Transaction shall be appropriately
adjusted, immediately after such Corporate Transaction, to apply to the number
and class of securities which would have been issuable to the Optionee in
consummation of such Corporate Transaction, had the option been exercised
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to (i) the number and class of securities available for issuance
under the Plan following the consummation of such Corporate Transaction and (ii)
the exercise price payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the
same.

    

           
 3.    The
Plan Administrator shall have the discretion, exercisable either at the time the
option is granted or at any time while the option remains outstanding, to
provide for the automatic acceleration (in whole or in part) of one or more
outstanding options or Unvested Option Shares (and the automatic termination of
one or more outstanding repurchase rights, with the immediate vesting of the
shares of Common Stock subject to those terminated rights) upon the occurrence
of a Corporate Transaction, whether or not those options or Unvested Option
Shares are to be assumed or replaced in the Corporate Transaction.

    

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

            

                   
 4.    The Plan Administrator
shall also have full power and authority, exercisable either at the time the
option is granted or at any time while the option remains outstanding, to
structure such option so that the shares subject to that option will
automatically
vest on an accelerated basis should the Optionee's Service terminate by reason
of an Involuntary Termination within a period designated by the Plan
Administrator following the effective date of any Corporate Transaction in which
the option is assumed and the repurchase rights applicable to those shares do
not otherwise terminate. Any such option shall remain exercisable for the
fully-vested option shares until the earlier of (i) the expiration of the option
term or (ii) the expiration of the one (l) ­year period measured from the
effective date of the Involuntary Termination, or for such other period of time
as the Plan Administrator may designate. In addition, the Plan Administrator may
provide that one or more of the outstanding repurchase rights with respect to
shares held by the Optionee at the time of such Involuntary Termination shall
immediately terminate on an accelerated basis, and the shares subject to those
terminated rights shall accordingly vest.

    

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

                      

                          
 6.     The grant of options
under the Plan shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.

    

    
      	
               
      

            	
              D.

            	
              CANCELLATION
      AND REGRANT OF OPTIONS

            

    

     

                           
The Plan Administrator shall have the authority to effect, at any time and from
time to time, with the consent of the affected option holders, the cancellation
of any or all outstanding options under the Plan and to grant in substitution
therefor new options covering the same or different number of shares of Common
Stock but with an exercise price per share based on the Fair Market Value per
share of Common Stock on the new option grant date.

     

    III.  STOCK ISSUANCE
PROGRAM

    

    
      	
               
      

            	
              A.

            	
              STOCK
      ISSUANCE TERMS

            

       

    

                   
Shares of Common Stock may be issued under the Stock Issuance Program through
direct and immediate issuances without any intervening option grants. Each such
stock issuance shall be evidenced by a Stock Issuance Agreement which complies
with the terms specified below.

    

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

                           
1.     Purchase Price.

    

                   (a)     The purchase
price per share shall be fixed by the Plan Administrator but shall not be less
than eighty-five percent (85%) of the Fair Market Value per share of Common
Stock on the issue date. However, the purchase price per share of Common Stock
issued to a 10% Shareholder shall not be less than one hundred and ten percent
(l 10%) of such Fair Market Value.

    

          
(b)     Subject to the
provisions of Section IV.A, shares of Common Stock may be issued under the Stock
Issuance Program for any of the following items of consideration which the Plan
Administrator may deem appropriate in each individual instance:

    

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

    

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

    

          
2.     Vesting Provisions.

    

               
(a)     Shares of Common
Stock issued under the Stock Issuance Program may, in the discretion of the Plan
Administrator, be fully and immediately vested upon issuance or may vest in one
or more installments over the Participant's period of Service or upon attainment
of specified performance objectives. However, the Plan Administrator may not
impose a vesting schedule upon any stock issuance effected under the Stock
Issuance Program which is more restrictive than twenty percent (20%) per year
vesting, with initial vesting to occur not later than one (l) year after the
issuance date.

    

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

    

                       
(c)     The Participant shall
have full shareholder rights with respect to any shares of Common Stock issued
to the Participant under the Stock Issuance Program, whether or not the
Participant's interest in those shares is vested. Accordingly, the Participant
shall have the right to vote such shares and to receive any regular cash
dividends paid on such shares.

    

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

               

                 
 (d)     Should the
Participant cease to remain in Service while holding one or more unvested shares
of Common Stock issued under the Stock Issuance Program or should the
performance objectives not be attained with respect to one or more such unvested
shares of Common Stock, then those shares shall be immediately surrendered to
the Corporation for cancellation, and the Participant shall have no further
shareholder rights with respect to those shares. To the extent the surrendered
shares were previously issued to the Participant for consideration paid in cash
or cash equivalent (including the Participant's purchase-money indebtedness),
the Corporation shall repay to the Participant the cash consideration paid for
the surrendered shares and shall cancel the unpaid principal balance of any
outstanding purchase-money note of the Participant attributable to such
surrendered shares.

    

               
(e)     The Plan
Administrator may in its discretion waive the surrender and cancellation of one
or more unvested shares of Common Stock (or other assets attributable thereto)
which would otherwise occur upon the non-completion of the vesting schedule
applicable to such shares. Such waiver shall result in the immediate vesting of
the Participant's interest in the shares of Common Stock as to which the waiver
applies. Such waiver may be effected at any time, whether before or after the
Participant's cessation of Service or the attainment or non-attainment of the
applicable performance objectives.

    

         
3.      First Refusal Rights. Until
such time as the Common Stock is first registered under Section 12(g) of the
1934 Act, the Corporation shall have the right first refusal with respect to any
proposed disposition by the Participant (or any successor in interest) of any
shares of Common Stock issued under the Stock Issuance Program. Such right of
first refusal shall be exercisable in accordance with the terms established by
the Plan Administrator and set forth in the document evidencing such
right.

    

    
      	
               
      

            	
              B.

            	
              CORPORATE
      TRANSACTION

            

          
1.     Upon the occurrence
of a Corporate Transaction all unvested shares not assumed by the successor
corporation (or parent thereof) shall be immediately surrendered to the
Corporation for cancellation, and the Participant shall have no further
shareholder rights with respect to those shares. To the extent the surrendered
shares were previously issued to the Participant for consideration paid in cash
or cash equivalent (including the Participant's purchase-money indebtedness),
the Corporation shall repay to the Participant the cash consideration paid for
the surrendered shares and shall cancel the unpaid principal balance of any
outstanding purchase-money note of the Participant attributable to such
surrendered shares.

    

          2.     The Plan
Administrator shall have the discretionary authority, exercisable either at the
time the unvested shares are issued or any time while the Corporation's
repurchase rights with respect to those shares remaining outstanding, to
provide
that those rights shall automatically terminate on an accelerated basis, and the
shares of Common Stock subject to those terminated rights shall immediately
vest, in the event of a Corporate Transaction or in the event that the
Participant's Service should subsequently terminate by reason of an Involuntary
Termination within a period designated by the Plan Administrator following the
effective date of any Corporate Transaction in which those repurchase rights are
assumed by the successor corporation (or parent thereof).

    

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              C.

            	
              SHARE
      ESCROW/LEGENDS

            

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

    

    IV.   MISCELLANEOUS

     

    
      	
               
      

            	
              A.

            	
              
                FINANCING

              

            

            The Plan
Administrator may permit any Optionee or Participant to pay the option exercise
price or the purchase price for shares issued to such person under the Plan by
delivering a full-recourse, interest-bearing promissory note payable in one or
more installments and secured by the purchased shares. In no event shall the
maximum credit available to the Optionee or Participant exceed the sum of (i)
the aggregate option exercise price or purchase price payable for the purchased
shares plus (ii) any Federal state and local income and employment tax liability
incurred by the Optionee or the Participant in connection with the option
exercise or share purchase.

    

    
      	
               
      

            	
              B.

            	
              
                EFFECTIVE
      DATE AND TERM OF PLAN

              

            

    

     

            1.     The Plan shall become
effective when adopted by the Board, but no option granted under the Plan may be
exercised, and no shares shall be issued under the Plan, until the Plan is
approved by the Corporation's shareholders. If such shareholder approval is not
obtained within twelve (12) months after the date of the Board's adoption of the
Plan, then all options previously granted under the Plan shall terminate and
cease to be outstanding, and no further options shall be granted and no shares
shall be issued under the Plan. Subject to such limitation, the Plan
Administrator may grant options and issue shares under the Plan at any time
after the effective date of the Plan and before the date fixed herein for
termination of the Plan.

    

            2.     The Plan shall
terminate upon the earliest of (i)
the expiration of the ten (10)-year
period measured from the date the Plan is adopted by the Board, (ii) the date on
which all shares available for issuance under the Plan shall have been issued or
(iii) the
termination of all outstanding options in connection with a Corporate
Transaction.
All options and unvested stock issuances outstanding at that time under the Plan
shall continue to have full force and effect in accordance with the provisions
of the documents evidencing such options or issuances.

     

    
 

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

       

    

    
      	
                

            	
              C.

            	
              
                AMENDMENT
      OF THE PLAN

              

            

            1.     The Board shall have
complete and exclusive power and authority to amend or modify the Plan in any or
all respects. However, no such amendment or modification shall adversely affect
the rights and obligations with respect to options or unvested stock issuances
at the time outstanding under the Plan unless the Optionee or the Participant
consents to such amendment or modification. In addition, certain amendments may
require shareholder approval pursuant to applicable laws and
regulations.

    

            2.     Options may be
granted under the Option Grant Program and shares may be issued under the Stock
Issuance Program which are in each instance in excess of the number of shares of
Common Stock then available for issuance under the Plan, provided any excess
shares actually issued under those programs shall be held in escrow until there
is obtained shareholder approval of an amendment sufficiently increasing the
number of shares of Common Stock available for issuance under the Plan. If such
shareholder approval is not obtained within twelve (12) months after the date
the first such excess issuances are made, then (i) any unexercised options
granted on the basis of such excess shares shall terminate and cease to be
outstanding and (ii) the Corporation shall promptly refund to the Optionees and
the Participants the exercise or purchase price paid for any excess shares
issued under the Plan and held in escrow, together with interest (at the
applicable Short Term Federal Rate) for the period the shares were held in
escrow, and such shares shall thereupon be automatically cancelled and cease to
be outstanding.

    

    
      	
               
      

            	
              D.

            	
              
                USE
      OF PROCEEDS

              

            

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

     

    
      	
               
      

            	
              E.

            	
              
                WITHHOLDING

              

            

    

     

            The Corporation's
obligation to deliver shares of Common Stock upon the exercise of any options or
upon the vesting of any shares issued under the Plan shall be subject to the
satisfaction of all applicable Federal, state and local income and employment
tax withholding requirements.

     

    
 

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

       

    

    
      	
               
      

            	
              F.

            	
              
                REGULATORY
      APPROVALS

              

            

    

     

            The implementation of
the Plan, the granting of any options under the Plan and the issuance of any
shares of Common Stock (i) upon the exercise of any option or (ii)
under the Stock Issuance Program shall be subject to the Corporation's
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the options granted under it and the shares
of Common Stock issued pursuant to it.

     

    
      	
               
      

            	
              G.

            	
              
                NO
      EMPLOYMENT OR SERVICE RIGHTS

              

            

    

     

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

     

    
      	
               
      

            	
              H.

            	
              
                FINANCIAL
      REPORTS

              

            

    

    

            The Corporation shall
deliver a balance sheet and an income statement at least annually to each
individual holding an outstanding option under the Plan, unless such individual
is a key Employee whose duties in connection with the Corporation (or any Parent
or Subsidiary) assure such individual access to equivalent
information.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    APPENDIX

    

            The following
definitions shall be in effect under the Plan:

     

            Board shall mean the
Corporation's Board of Directors.

     

            Code shall mean the
Internal Revenue Code of 1986, as amended.

     

            Committee shall mean a
committee of two (2) or more Board members appointed by the Board to exercise
one or more administrative functions under the Plan.

     

            Common Stock shall mean the
Corporation's common stock.

     

            Corporate Transaction shall
mean either of the following shareholder approved transactions to which the
Corporation is a party:

    

            (a)     a merger or
consolidation in which securities possessing more than fifty percent (50%) of
the total combined voting power of the Corporation's outstanding securities are
transferred to a person  or  persons different  from  the
persons holding those securities immediately prior to such transaction,
or

    

            (b)     the sale, transfer or
other disposition of all or substantially all of the Corporation's assets in
complete liquidation or dissolution of the Corporation.

    

           
Corporation shall mean T3
Motion, Inc., a Delaware corporation.

     

           
Disability shall mean the
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment and shall be determined by the Plan Administrator on the basis of
such medical evidence as the Plan Administrator deems warranted under the
circumstances.

     

            Employee shall mean an
individual who is in the employ of the Corporation (or any Parent or
Subsidiary), subject to the control and direction of the employer entity as to
both the work to be performed and the manner and method of
performance.

     

            Exercise Date shall mean the
date on which the Corporation shall have received written notice of the option
exercise.

     

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

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

     

    
                   (a)     If the Common
Stock is at the time traded on the Nasdaq National Market, then the Fair Market
Value shall be the closing selling price per share of Common Stock on the date
in question, as such price is reported by the National Association of Securities
Dealers on the Nasdaq National Market or any successor system. If there is no
closing selling price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.

    

    

    
                   (b)     If the Common
Stock is at the time listed on any Stock Exchange, then the Fair Market Value
shall be the closing selling price per share of Common Stock on the date in
question on the Stock Exchange determined by the Plan Administrator to be the
primary market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which such
quotation exists.

    

     

    
                   (c)     If the Common
Stock is at the time neither listed on any Stock Exchange nor traded on the
Nasdaq National Market, then the Fair Market Value shall be determined by the
Plan Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.

     

            Incentive Option shall
mean an option which satisfies the requirements of Code Section
422.

    

            Involuntary Termination shall mean the
termination of the Service of any individual which occurs by reason
of:

    

    (a)     such individual's
involuntary dismissal or discharge by the Corporation for reasons other than
Misconduct, or

     

    
                 
(b)     such individual's
voluntary resignation following (A) a change in his or her position with the
Corporation which materially reduces his or her level of responsibility, (B) a
reduction in his or her level of compensation (including base salary, fringe
benefits and target bonuses under any corporate ­performance based bonus or
incentive programs) by more than fifteen percent (15%) or (C) a relocation of
such individual's place of employment by more than fifty (50) miles, provided
and only if such change, reduction or relocation is effected without the
individual's consent.

    

    

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

            The Plan
Administrator shall be entitled to revise the definition of Involuntary
Termination and Misconduct with respect to individual Optionees or Participants
under the Plan.

    

            Misconduct shall mean the
commission of any act of fraud, embezzlement or dishonesty by the Optionee or
Participant, any unauthorized use or disclosure by such person of confidential
information or trade secrets of the Corporation (or any Parent or Subsidiary),
or any other intentional misconduct by such person adversely affecting the
business or affairs of the Corporation (or any Parent or Subsidiary) in a
material manner. The foregoing definition shall not be deemed to be inclusive of
all the acts or omissions which the Corporation (or any Parent or Subsidiary)
may consider as grounds for the dismissal or discharge of any Optionee,
Participant or other person in the Service of the Corporation (or any Parent or
Subsidiary).

    

            1934 Act shall mean the
Securities Exchange Act of 1934, as amended.

    

            Non-Statutory Option shall mean
an option not intended to satisfy the requirements of Code Section
422.

    

            Option Grant Program shall mean
the option grant program in effect under the Plan.

    

            Optionee shall mean any person
to whom an option is granted under the Plan.

    

            Parent shall mean any
corporation (other than the Corporation) in an unbroken chain of corporations
ending with the Corporation, provided each corporation in the unbroken chain
(other than the Corporation) owns, at the time of the determination, stock
possessing 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.

    

            Participant shall mean any
person who is issued shares of Common Stock under the Stock Issuance
Program.

    

            Plan shall mean the
Corporation's 2007 Stock Option/Stock Issuance Plan, as set forth in this
document. 

    

            Plan Administrator shall mean
either the Board or the Committee acting in its capacity as administrator of the
Plan.

    

            Service shall mean the
provision of services to the Corporation (or any Parent or Subsidiary) by a
person in the capacity
of an Employee, a non-employee member of the board of directors or a consultant
or independent advisor, except to the extent otherwise specifically provided in
the documents evidencing the option grant.

     

    
       

       

      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      

       

    

            Stock Exchange shall mean
either the American Stock Exchange or the New York Stock Exchange.

    

            Stock Issuance Agreement shall
mean the agreement entered into by the Corporation and the Participant at the
time of issuance of shares of Common Stock under the Stock Issuance
Program.

    

            Stock Issuance Program shall
mean the stock issuance program in effect under the Plan.

    

            10% Shareholder shall mean the
owner of stock (as determined under Code Section 424(d)) possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Corporation (or any Parent or Subsidiary).

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