2004 STOCK OPTION AND RESTRICTED STOCK PLAN, AS AMENDED

1.               Establishment and Purpose :

(A)                    Establishment . The ARKADOS GROUP, Inc. 2004 Stock Option and Restricted Stock Plan (the “Plan”) is hereby adopted. All options granted under the Plan are Nonqualified Stock Options. All capitalized undefined terms shall have the meanings ascribed to them in section 2 hereof.

(B)                     Purpose . The Plan has been established by ARKADOS GROUP, Inc. (the “Company”) to: (i) attract, retain and motivate Employees, Directors, and Consultants eligible to participate in the Plan; (ii) provide incentive compensation opportunities to Employees, Directors, and Consultants that are competitive with those of other similar companies; (iii) provide a means whereby the Company can recognize and reward significant vendors and service providers in a manner other than the payment of the cost of the goods and services provided by such Persons; and (iv) identify the interests of eligible participants with those of the Company’s other shareholders through compensation that is based on the Company’s common stock, and thereby promote the long-term financial success of the Company and its Affiliates.

2.               Definitions : As used herein, the following definitions shall apply:

(A)                    “Administrator” means the Board of Directors of the Company and/or Committee appointed by the Board pursuant to Section 4 of the Plan.

(B)                    “Affiliate” means a parent or subsidiary corporation as defined in the applicable provisions (currently Section 424(e) and (f), respectively) of the Code.

(C)                    “Applicable Laws” means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted, and the applicable laws of any other country or jurisdiction where Options are granted under the Plan.

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

(E)                    “Cause” means the following:

(i)  Any violation by Employee of any material provision of Employee’s employment agreement, if any, upon written notice of same by the Company describing in detail the breach asserted and stating that it constitutes notice pursuant to this Section 2(E)(i), which breach, if capable of being cured, has not been cured to the Company’s satisfaction within 30 days after such notice;

(ii)  Embezzlement by Employee of funds or property of the Company;

(iii)  Habitual absenteeism, bad faith, fraud, refusal to perform his duties, gross negligence, or willful misconduct on the part of Employee in the performance of his or her duties as an employee of the Company, provided that the Company has given written notice of such

breach which notice describes in detail the breach asserted and stating that it constitutes notice pursuant to this Section 2(E)(iii), provided that no such notice or opportunity needs to be given if, in the judgment of the Company’s Board of Directors, such conduct is habitual or would unnecessarily or unreasonably expose the Company to undue risk of harm; or

(iv)  A felonious act, conviction, or plea of nolo contendere of Employee under the laws of the United States or any state (except for any conviction or plea based on a vicarious liability theory and not the actual conduct of the Employee).

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

(G)                    “Committee” means a committee appointed by the Board to administer the Plan in accordance with Section 4 hereof and to perform the functions set forth herein.

(H)                    “Common Stock” means the Common Stock of the Company.

(I)                      “Company” means ARKADOS GROUP, Inc., a Delaware corporation.

(J)                     “Consultant” means any Person who is engaged by the Company or any Affiliate to render consulting or advisory services or to supply equipment to the Company and is compensated for such activities or its Affiliates.

(K)                    “Director” means a member of the Board of Directors of the Company.

(L)                    “Disability” means, in the sole determination of the Administrator, whose determination shall be final and binding, the reasonable likelihood that the Employee will be unable to perform his or her duties and responsibilities to the Company by reason of a physical or mental disability or infirmity for either: (i) a continuous period of six months; or (ii) 270 days during any consecutive twelve- (12-) month period

(M)                   “Employee” means any person, including Officers and Directors, employed by the Company or any Affiliate designated by the Administrator as eligible to receive Options or Restricted Stock subject to the conditions set forth herein. For purposes hereof, “Employee” shall include individuals who have executed a written offer letter of employment with the Company. A person shall not cease to be an Employee in the case of (i) any leave approved by the Company or (ii) transfers between locations of the Company or between the Company and its Affiliates. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

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

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

(i)  If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the National Market or SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day before the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable,

(ii)  If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid

and low asked prices for the Common Stock on the last market trading day before the day of determination; or

(iii)  In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator whose determination shall be final and binding.

(P)                     “Grantee” means a person to whom Restricted Stock has been granted or sold under the Plan.

(Q)                    Reserved.

(R)                    “Nonqualified Stock Option” or “NQO” means an Option that is not an Incentive Stock Option.

(S)                     “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.

(T)                    “Option” means a stock option granted pursuant to the Plan. The grant of an Option entitles the Optionee to purchase Shares at an exercise price established by the Administrator.

(U)                    “Option Agreement” means an agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.

(V)                    “Optioned Stock” means the Common Stock subject to an Option,

(W)                   “Optionee” means a person to whom an Option has been granted under the Plan.

(X)                    “Person” means any natural person, or entity validly organized and existing under the laws of the United States or any State, Commonwealth, or possession thereof.

(Y)                    “Parent” means a “Parent” corporation within the meaning of Section 424(e) of the Code, whether now or hereafter existing.

(Z)                    “Plan” means the ARKADOS GROUP, Inc. 2004Stock Option and Restricted Stock Plan.

(AA)                 “Plan Year” shall be a calendar year.

(BB)                  “Restricted Stock” means Common Stock of the Company granted or sold in accordance with the Plan; such Restricted Stock may also contain a Sale and Repurchase Agreement or similar document determined by the Administrator.

(CC)                  “Section 16(b)” means Section 16(b) of the Exchange Act.

(DD)                  “Share” means a share of the Common Stock, as adjusted in accordance with Section 12 of the Plan.

(EE)                   “Subsidiary” means a “subsidiary corporation” within the meaning of Section 424(f) of the Code, whether now or hereafter existing.

(FF)                   “Ten Percent Stockholder” means an Employee, who, at the time an Incentive Stock Option is to be granted to him or her, owns (within the meaning of Section 422(b)(6) 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.                 Stock Subject to the Plan . Subject to Section 12 of the Plan, the maximum aggregate number of Shares which may be subject to options and sold under the Plan is 22,500,000 ¹ Shares. If an Option expires, is canceled, is surrendered (without exercise), or otherwise becomes unexercisable for any reason, the Shares allocable to the canceled, surrendered, or otherwise terminated Option may again be the subject of Options granted hereunder (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon exercise of an Option, shall not be returned to the Plan and shall not become available for future distribution under the Plan. Shares that are retained by the Company upon exercise of an Option in order to satisfy the exercise price for such Option or any withholding taxes due with respect to such exercise shall be treated as not issued and shall continue to be available under the Plan.

4.                 Administration .

(A)                     Administrator . The Plan shall be administered by the Board and/or by a duly appointed Committee of the Board having such powers as shall be specified by the Board and/or the Plan. A majority of a quorum of the Board or Committee, as the case may be, may authorize any action.

(B)                     Compliance with Section 162(m) of the Code . If the Company is a “publicly held corporation” as defined in paragraph (2) of section 162(m) of the Code, as amended, and the regulations promulgated thereunder (“Section 162(m)”), the Company may establish a committee of outside directors meeting the requirements of Section 162(m) to approve the grant of Options which might reasonably be anticipated to “result in the payment of employee remuneration that would otherwise exceed the limit on employee remuneration deductible for income tax purposes” pursuant to Section 162(m).

(C)                     Powers of the Administrator . Subject to the provisions of the Plan and in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

(i)  To determine the Fair Market Value;

(ii)  To select Employees, Directors, and Consultants to whom (a) Options may from time to time be granted hereunder and (b) Restricted Stock Options may from time to time be granted or sold hereunder;

(iii)  To determine the terms and conditions of any Option and Restricted Stock granted hereunder. Such terms and conditions include, without limitation, the exercise price, the time when Options may be exercised, any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the Restricted Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

(iv)  To determine the number of shares of Common Stock to be covered by each such Option granted hereunder;

(v)  To approve forms of agreement for use under the Plan;

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¹ As amdended November 10, 2009.

(vi)  To determine the terms and conditions, not inconsistent with the terms of the Plan, of any Option and Restricted Stock granted hereunder;

(vii)  To determine whether and under what circumstances an Option may be settled in cash under Section 9(e) instead of Common Stock;

(viii)  To fulfill the purposes of the Plan and without amending the Plan, to modify grants of Options to participants who are foreign nationals or employed outside of the United States in order to recognize differences in local law, tax policies customs;

(ix)  To allow Optionees or Grantees to satisfy withholding tax obligations as contemplated by Section 11 hereof;

(x)  To construe and interpret the terms of the Plan and awards granted pursuant to the Plan and to establish, amend, and revoke rules and regulations for the administration of the Plan, including, but without limitation, correcting any defect or supplying any omission, or reconciling any inconsistency in the Plan or in any Agreement, in the manner and to the extent it shall deem necessary or advisable to make the Plan fully effective;

(xi)  To determine the duration and purposes for leaves of absence which may be granted to an Optionee or Grantee on an individual basis without constituting a termination of employment or service for purposes of the Plan and to determine whether a Disability has occurred or is continuing;

(xii)  To exercise its discretion with respect to the powers and rights granted to it as set forth in the Plan;

(xiii)  Generally, to exercise such powers and to perform such acts as are deemed necessary or advisable to promote the best interests of the Company with respect to the Plan; and

(xiv)  Any other powers and duties set forth in the Plan.

(D)                     Effect of Administrator’s Decision . All decisions, determinations, and interpretations of the Administrator shall be final, binding, and conclusive upon the Company and its Affiliates, the Optionees or Grantees, and all other persons having any interest therein.

(E)                     Indemnification . The Administrator shall not be liable for any action, failure to act, determination, or interpretation made in good faith with respect to this Plan or any transaction hereunder, except for liability arising from his or her own willful misfeasance, gross negligence, or reckless disregard of his or her duties. The Company hereby agrees to indemnify and hold harmless the Administrator for all costs and expenses and, to the extent permitted by applicable law, any liability, damages, losses, and expenses incurred in connection with defending against, responding to, negotiation for the settlement of, or otherwise dealing with any claim, cause of action, or dispute of any kind arising in connection with any actions in administering this Plan or in authorizing or denying authorization to any transaction hereunder.

5.                 Eligibility .

(A)                   Nonqualified Stock Options may be granted to Employees, Directors, or Consultants. Incentive Stock Options may be granted only to Employees. Restricted Stock may be granted or sold to Employees, Directors, or Consultants.

(B)                    Each Option shall be designated in the Option Agreement as a Nonqualified Stock Option.

(C)                    The aggregate number of Options that may be granted to any Optionee under the Plan shall not exceed fifty percent (50%) of the aggregate number of Shares referred to in Section 3 hereof.

(D)                    Neither the Plan nor any Option shall confer upon any Optionee any right with respect to continuing the Optionee’s relationship as an Employee, Director, or Consultant with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate such relationship at any time, with or without cause.

6.                 Term of Plan . The Plan shall become effective upon its adoption by the Board. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 15 of the Plan or renewed by the Board.

7.                 Term of Option . The term of each Option shall be the term stated in the Option Agreement and the vesting period, if any, of any Restricted Stock shall be the term stated in the applicable Stock Restriction Agreement; provided, however, that the term shall be no more than ten (10) years from the date it is granted (five (5) years in the case of an Incentive Stock Option granted to a Ten Percent Stockholder), or such shorter term as the Administrator may, subsequent to the granting of any Option, provide.

8.                 Option Exercise Price and Consideration .

(A)                     Exercise Price . The per-share exercise price for the Shares to be issued pursuant to exercise of an Option, and the price per Share for the Restricted Stock to be sold or granted hereunder, shall be such price as is determined by the Administrator.

(B)                     Payment of Option Price . Subject to this provision, the full exercise price for Shares purchased upon the exercise of any Option shall be paid at the time of such exercise (except that, in the case of an exercise arrangement described in (ii) below, payment may be made as soon as practicable after the exercise) and the full grant price for Restricted Stock shall be paid at the time of such grant. The consideration to be paid for the Shares to be issued upon exercise of an Option or purchased as Restricted Stock, including the method of payment, shall be determined by the Administrator. Such consideration may consist of (i) cash, by check, or cash equivalent; or (ii) consideration received by the Company under a cashless exercise program.

9.                 Exercise of Option .

(A)                    Procedure for Exercise, Rights as a Shareholder . Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator, including performance criteria with respect to the Company and/or the Optionee, and as shall be permissible under the terms of the Plan. An Option may not be exercised for a fraction of a Share.

(i)  An Option shall be deemed to be exercised when the Company receives: (a) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option and (b) full payment for the Shares with respect to which the Option is exercised. Full payment may, as authorized by the Administrator, consist of any consideration and method of payment authorized by the Administrator and permitted by the

Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Option. No adjustment shall be made for a dividend or other right for which the record date is before the date the stock certificate is issued, except as provided in Section 12 of the Plan.

(ii)  Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. Granting of Restricted Stock in any manner shall result in a decrease in the number of Shares thereafter available, for purposes of the Plan, by the number of Shares of Restricted Stock so granted.

(B)                     Termination of Relationship as Employee, Director, or Consultant . If an Optionee ceases to be an Employee, Director, or Consultant, as the case may be, such Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. The same provisions shall be applicable with respect to a Grantee of Restricted Stock which is the subject of a repurchase right in the Company or which is the subject of a forfeiture of Shares in the event of a termination. No termination shall be deemed to occur if (i) the Optionee or Grantee is a Consultant or Director who becomes an Employee within the time specified herein; or (ii) the Optionee or Grantee is an Employee who becomes a Consultant or Director who is not also an employee, within the time specified herein. Notwithstanding anything herein to the contrary, if an Optionee or Grantee ceases to be an Employee, Director, or Consultant because of such Optionee’s or Grantee’s violation of his or her duties to the Company, as conclusively determined by the Administrator in its sole discretion, all of such Optionee’s unexercised Options shall immediately terminate, and all of such Grantee’s Shares of Restricted Stock shall be forfeited, on the termination date and he or she shall have no right to exercise any unexercised Option on or after such date.

(C)                     Disability of Optionee or Grantee . If an Optionee ceases to be an Employee, Director, or Consultant as a result of Optionee’s Disability, the Optionee may within six (6) months from the date of such termination (but in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), exercise all vested Options through such termination date. If Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. All unvested Options shall terminate. Upon the Disability of a Grantee, any Shares of Restricted Stock still subject to forfeiture shall be forfeited and terminated as of the date of termination. This clause may be waived by the Administrator in whole or in part to allow for continuing or accelerated vesting of Options or decelerated or no forfeiture of Restricted Stock.

(D)                     Death of Optionee or Grantee . If an Optionee dies while an Employee, Director, or Consultant, all vested Options may be exercised at any time within six (6) months following the date of death (but in no event later than the expiration date of the term of such Option as set forth in the Option Agreement), and all unvested Options shall be terminated. The Option may be exercised by the executor or administrator of the Optionee’s estate or, if none, by the person(s) entitled to exercise the Option under the Optionee’s will or under the laws of descent and distribution. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. Upon the death of a Grantee, any Shares of Restricted Stock still subject to forfeiture shall be forfeited and terminated as of the date of termination. This clause may be waived by the Administrator in whole or in part to allow for continuing or accelerated vesting of Options or decelerated or no forfeiture of Restricted Stock.

(E)                     Buyout Provisions . The Administrator may at any time offer to buy out for a payment in cash or Shares, an Option previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made. The Company shall have the right to offset against any such payment any amounts owed by Optionee to the Company.

10.                Restricted Stock . The Administrator may award to an Employee, Director, or Consultant Shares, subject to this Section 10 and such other terms and conditions as the Administrator may prescribe.

(A)                    Certificate Registration . Restricted Stock awarded under the Plan shall be evidenced by certificates. Each certificate for Restricted Stock shall be registered in the name of the Employee, Director, or Consultant granted Restricted Stock and deposited, together with a stock power endorsed in blank, with the Company.

(B)                     Restriction Period . There shall be established for each Restricted Stock grant a restriction period of such length as shall be determined by the Administrator (the “Restriction Period”), but in no event less than thirty (30) days. Shares of Restricted Stock may not be sold, assigned, transferred, pledged, or otherwise encumbered, except as hereinafter provided, during the Restriction Period. Except for such restrictions on transfer and such other restrictions as the Administrator may impose, the Employee, Director, or Consultant shall have all the rights of a holder of Common Stock as to such Restricted Stock (including, but not limited to, voting rights and the right to receive dividends). At the expiration of the Restriction Period, the Company shall deliver to the Employee, Director, or Consultant (or in the case of death or disability, his or her legal representative) the certificates deposited pursuant to this Section 10.

(C)                     Other Terms and Conditions . The Administrator may impose other terms and conditions on the granting of the Restricted Stock, including those otherwise set forth in the Plan and that the Grantee execute any shareholders agreement, lock up agreement, repurchase and other agreements deemed appropriate by the Administrator.

(D)                     Termination of Relationship . Except as otherwise determined by the Administrator in its sole discretion, upon a termination of the relationship with the Company by the Employee, Director, or Consultant, as the case may be, for any reason during the Restriction Period, all Shares that are subject to restriction as of the date of termination shall be forfeited.

(E)                     Change of Control . In the event of a Change of Control, restrictions on all Restricted Stock shall lapse as of the date six (6) months after the date of such Change of Control as determined by the Administrator.

11.               Withholding To Satisfy Tax Obligations .

(A)                   Permitted Methods . At the discretion of the Administrator, Optionees may satisfy withholding obligations as provided in this Section 11. When an Optionee incurs tax liability in connection with an Option, which tax liability is subject to tax withholding under applicable tax laws, and the Optionee is obligated to pay the Company an amount required to be withheld under applicable tax laws, the Optionee may satisfy the withholding tax obligation by one or some combination of the following methods: (i) by cash payment; (ii) out of Optionee’s current compensation; (iii) if permitted by the Administrator, in its discretion, by surrendering to the Company Shares that (a) in the case of Shares previously acquired from the Company, have been owned by the Optionee for more than six months on the date of surrender, and (b) have a Fair Market Value on the date of surrender equal to or less than Optionee’s marginal tax rate times the ordinary income recognized; or (iv) by electing to have the Company withhold from the Shares to be issued upon exercise of the Option, if any, that number of Shares having a Fair Market Value equal to the amount of withholding due. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined.

(B)                     Procedures for Stock Withholding . All elections by an Optionee to have Shares withheld to satisfy tax withholding obligations shall be made in writing in a form acceptable to the Administrator and shall be subject to the following restrictions: (i) the election must be made on or before the applicable tax withholding date, (ii) once made, the election shall be irrevocable as to the particular Shares of the Option as to which the election is made; (iii) all elections shall be subject to the consent or disapproval of the Administrator, (iv) if the Optionee is an Officer, Director, or greater than Ten Percent Stockholder within the meaning of Rule 16a-2 under the Exchange Act (“Reporting Person”), the election must comply with the applicable provisions of Rule 16b3 and shall be subject to such additional conditions or restrictions as may be required thereunder to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions.

12.                Adjustments upon Changes in Capitalization, Merger or, Certain Other Transactions .

(A)                   Changes in Capitalization . Subject to any required action by the shareholders of the Company, the number and class of shares of Common Stock with respect to which Options may be granted under the Plan, the number and class of Shares of Common Stock which are subject to outstanding Options granted under the Plan, and the purchase price per Share of Common Stock, if applicable, shall be proportionately adjusted for any increase or decrease in the number of issued Shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued Shares of Common Stock effected without receipt of consideration by the Company. The conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Any such adjustment in the Shares subject to outstanding Incentive Stock Options (including any adjustments in the purchase price) shall be made in such manner as not to constitute a modification as defined by Section 424(h)(3) of the Code and only to the extent otherwise permitted by Sections 422 and 424 of the Code. Adjustments shall be made by the Administrator, whose determination in that respect shall be final, binding, and conclusive. If, by reason of a change in Capitalization, an Optionee shall be entitled to exercise an Option with respect to new, additional, or different shares of stock, such new, additional, or different shares shall thereupon be subject to all of the conditions which were applicable to the Shares subject to the Option, as the case may be, before such Change in Capitalization.

(B)                     Dissolution or Liquidation . In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable before the effective date of such proposed action. The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until fifteen (15) days before such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. To the extent it has not been previously exercised, an Option will terminate immediately before the consummation of such proposed action.

(C)                     Merger or Sale of Assets . If the Company is to be consolidated with or acquired by another unrelated entity in a merger or other reorganization in which the holders of the outstanding voting stock of the Company immediately preceding the consummation of such event, shall immediately following such event, hold, in the aggregate, less than a majority of the voting securities of the surviving or successor entity, or in the event of a sale of all or substantially all of the Company’s assets or otherwise (each, a “Change-of-Control”), then each outstanding Option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. If the successor corporation refuses to assume or substitute for the Option, the Optionee shall fully vest in and have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify the Optionee in writing that the Option shall be fully exercisable for a period of fifteen (15) days from the date of such notice and the Option shall terminate upon the expiration of such period. For purposes of this paragraph, the Option shall be considered assumed if, following the Change of Control, the Option confers the right to purchase for each Share of Optioned Stock subject to the Option immediately before the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per-share consideration received by holders of Common Stock in the merger or sale of assets.

(D)                     Certain Distributions . In the event of any distribution to the Company’s shareholders of securities of any other entity or other assets (other than dividends payable in cash or stock of the Company) without receipt of consideration by the Company, the Administrator may, in its discretion, appropriately adjust the price per share of Common Stock covered by each outstanding Option to reflect the effect of such distribution.

13.                Non-Transferability of Options and Restricted Stock . Except as otherwise provided in this Section, Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised or purchased during the lifetime of the Optionee, only by the Optionee. Notwithstanding the foregoing, the Administrator may, in its discretion and consistent with applicable laws, authorize all or a portion of the Options and/or Restricted Stock to be granted to an Optionee to be transferred by such Optionee to (i) the spouse, children, or grandchildren of such Optionee (“Immediate Family Members”), (ii) a trust of trusts for the benefit of an Immediate Family Member, or (iii) a partnership or limited liability company in which Immediate Family Members are the only partners or members, provided, that (x) there is no consideration for such transfer, (y) the Option Agreement expressly provides for the transfer of the Options in accordance with this Section, and (z) subsequent transfers of such Options are prohibited except by or in accordance with the laws of descent or distribution.

14.               Time of Granting Options . The date of grant of an Option shall, for all purposes, be the date on which the Administrator makes the determination granting such Option, or such other date as is determined by the Administrator. Notice of the determination shall be given to each Employee, Director, or Consultant to whom an Option is so granted within a reasonable time after the date of such grant.

15.               Amendment and Termination of the Plan .

(A)                     Amendment and Termination . The Board or the Administrator may at any time amend, alter, suspend, or terminate the Plan.

(B)                     Shareholder Approval . To the extent necessary and desirable to comply with Applicable Laws, the Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required.

(C)                     Effect of Amendment or Termination . No amendment, alteration, suspension, or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan before the date of such termination.

16.                Conditions Upon Issuance of Shares .

(A)                     Legal Compliance . Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any Stock Exchange.

(B)                     Investment Representation . As a condition to the exercise of an Option, the Administrator may require the person exercising such Option to represent and warrant to the Company in writing at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares, and will not be sold or transferred other than pursuant to an effective registration thereof under the Exchange Act or pursuant to an exemption applicable under the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder. The certificates evidencing any such Shares shall be appropriately legended to reflect their status as restricted securities.

(C)                     Settlement of Award . Shares