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<B><P ALIGN="CENTER">UNITED STATES</P>
<P ALIGN="CENTER">SECURITIES AND EXCHANGE COMMISSION</P>
<FONT SIZE=2><P ALIGN="CENTER">Washington, D.C. 20549</P>
</FONT><FONT SIZE=5><P ALIGN="CENTER">============================================</P>
</B></FONT><P ALIGN="CENTER">_____________________________________________________________________________</P>
<B><P ALIGN="CENTER">FORM S-8</P>
<FONT SIZE=2><P ALIGN="CENTER">REGISTRATION STATEMENT</P>
<P ALIGN="CENTER">Under</P>
<P ALIGN="CENTER">THE SECURITIES ACT OF 1933</P></B></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=578>
<TR><TD VALIGN="TOP">
<B><P ALIGN="CENTER">CHINA MEDIA GROUP CORPORATION</B></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(Exact name of registrant as specified in its charter)</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=576>
<TR><TD WIDTH="45%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Texas</B></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="45%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">33-0034926</B></FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(State or other jurisdiction of </P>
<P ALIGN="CENTER">incorporation or organization)</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="45%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(I.R.S. Employer Identification No.)</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=576>
<TR><TD WIDTH="45%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">1803 Chinachem Tower</P>
<P ALIGN="CENTER">34-37 Connaught Road, Central, Hong Kong</B></FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="45%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="CENTER">n/a</B></FONT></TD>
</TR>
<TR><TD WIDTH="45%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(Address of principal executive offices)</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="45%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(Zip Code)</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=578>
<TR><TD VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">2007 Stock Incentive Plan</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(Full title of the plan)</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=578>
<TR><TD VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Con Unerkov, President</P>
<P ALIGN="CENTER">China Media Group Corporation</P>
<P ALIGN="CENTER">9901 I.H. 10 West, Suite, 800</P>
<P ALIGN="CENTER">San Antonio, Texas 78230</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(Name and address of agent for service)</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=578>
<TR><TD VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">+011 852 3171 1208 (ext.222)</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(Telephone number, including area code, of agent for service)</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=2><P ALIGN="CENTER">copies to:</P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=578>
<TR><TD VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">Kevin Leung, Esq.</P>
<P ALIGN="CENTER">Richardson &amp; Patel LLP</P>
<P ALIGN="CENTER">10900 Wilshire Blvd. Suite 500</P>
<P ALIGN="CENTER">Los Angeles, CA 90024</P>
<P ALIGN="CENTER">310-208-1182</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<B><FONT SIZE=2><P ALIGN="CENTER">CALCULATION OF REGISTRATION FEE</P></B></FONT>
<P ALIGN="CENTER"><CENTER><TABLE BORDER CELLSPACING=1 WIDTH=578>
<TR><TD WIDTH="20%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="CENTER">Title of Securities to </P>
<P ALIGN="CENTER">be registered</B></FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="CENTER">Amount to be </P>
<P ALIGN="CENTER">registered <SUP>(1)</B></SUP></FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="CENTER">Proposed maximum </P>
<P ALIGN="CENTER">offering price per </P>
<P ALIGN="CENTER">share <SUP>(2)</B></SUP></FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="CENTER">Proposed maximum </P>
<P ALIGN="CENTER">aggregate offering </P>
<P ALIGN="CENTER">price <SUP>(2)</B></SUP></FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="CENTER">Amount of </P>
<P ALIGN="CENTER">registration fee</B></FONT></TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P>Common Stock</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">38,400,000</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$.05</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$1,920,000</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">$58.94</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">(1) Includes an indeterminate number of additional shares that may be issued to adjust the number of shares issued pursuant to the stock plan described herein as the result of any future stock split, stock dividend or similar adjustment of the registrant's outstanding common stock.</P>
<P ALIGN="JUSTIFY">(2) Estimated pursuant to Rule 457(h) solely for purposes of calculating amount of registration fee, based upon the average of the high and low prices reported on March 2, 2007, as reported on the OTC Electronic Bulletin Board.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<B><FONT SIZE=2><P ALIGN="CENTER">PART II</P>
<P ALIGN="CENTER">INFORMATION REQUIRED IN THE REGISTRATION STATEMENT</P></B></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>Item 3.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>Incorporation of Documents by Reference.</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">China Media Group Corporation (the "Company") hereby incorporates by reference into this registration statement the following documents previously filed with the Securities and Exchange Commission (the "Commission"):</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=580>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>(a)</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Annual Report for the fiscal year ended December 31, 2006, filed by the Company with the Commission on Form 10KSB on February 15, 2007, which contains audited consolidated financial statements for the Company's most recent annual report for which such statements have been filed.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=580>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>(b)</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The description of the Company's common stock included in the registration statement on Form SB-2, file no. 333-104555, filed with the Commission on April 15, 2003, including any amendments or reports filed for the purpose of updating that description.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=582>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>(c)</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">In addition, all documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference into this registration statement and to be a part hereof from the date of filing of such documents.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>Item 4.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>Description of Securities.</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P>Not applicable. The class of securities to be offered is registered under Section 12 of the Exchange Act.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>Item 5.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>Interests of Named Experts and Counsel.</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Richardson &amp; Patel LLP has given an opinion on the validity of the securities being registered hereunder. Erick Richardson and Nimish Patel, partners of the law firm, are eligible to receive shares of the Company's common stock pursuant to this Form S-8 registration statement.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>Item 6.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>Indemnification of Directors and Officers.</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Texas Business Corporation Act ("TBCA") permits, and in some cases requires, corporations to indemnify directors and officers who are or have been a party or are threatened to be made a party to litigation against judgments, penalties (including excise and similar taxes), fines, settlements, and reasonable expenses under certain circumstances. As authorized by Article 2.02-1 of the TBCA, each director and officer of the Company may be indemnified by the Company against expenses (including attorney's fees, judgments, fines and amounts paid in settlement) actually and reasonably incurred in connection with the defense or settlement of any threatened, pending or completed legal proceedings in which he is involved by reason of the fact that he is or was a director or officer of the Company if he acted in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, if he had no reasonable cause to believe that his conduct was unlawful. In each case, such indemnity shall be to the fullest extent authorized by the TBCA. If the director or officer is found liable for willful or intentional misconduct in the performance of his duty to the Company, then indemnification will not be made.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Article V of the Company's Bylaws provides that the Company "shall indemnify any and all of its Directors and Officers, and its former Directors and Officers, or any person who may have served at the corporation's request as a Director or Officer of another corporation in which it owns shares of capital stock or of which it is a creditor, against expenses actually and necessarily incurred by them in connection with the defense of any action, suit or proceeding in which they, or any of them, are made parties, or a party, by reason of being or having been Director(s) or Officer(s) of the corporation, or of such other corporation, except, in relation to matters as to which any such Director or Officer or former Director or Officer or person shall be adjudged in such action, suit or proceeding to be liable for negligence or misconduct in the performance of duty. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled, under By-Law, agreement, vote of shareholders or otherwise."</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Company has been advised that it is the position of the Commission that insofar as the provision in the Company's Bylaws may be invoked for liabilities arising under the Securities Act, the provision is against public policy and is therefore unenforceable.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>Item 7.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>Exemption from Registration Claimed.</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Not applicable.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>Item 8.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>Exhibits.</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="11%" VALIGN="BOTTOM" BGCOLOR="#ffffff">
<B><FONT SIZE=2><P ALIGN="CENTER">Exhibit No.</B></FONT></TD>
<TD WIDTH="2%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<P>&nbsp;</TD>
<TD WIDTH="87%" VALIGN="BOTTOM" BGCOLOR="#ffffff">
<B><FONT SIZE=2><P>Description</B></FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<P>&nbsp;</TD>
<TD WIDTH="2%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<P>&nbsp;</TD>
<TD WIDTH="87%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<FONT SIZE=2><P ALIGN="CENTER">4</FONT></TD>
<TD WIDTH="2%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<P>&nbsp;</TD>
<TD WIDTH="87%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<FONT SIZE=2><P>2007 Stock Incentive Plan</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<FONT SIZE=2><P ALIGN="CENTER">5</FONT></TD>
<TD WIDTH="2%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<P>&nbsp;</TD>
<TD WIDTH="87%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<FONT SIZE=2><P>Opinion of Richardson &amp; Patel LLP regarding legality of the Common Stock being registered</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<FONT SIZE=2><P ALIGN="CENTER">23.1</FONT></TD>
<TD WIDTH="2%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<P>&nbsp;</TD>
<TD WIDTH="87%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<FONT SIZE=2><P>Consent of Kabani &amp; Company, Inc.</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<FONT SIZE=2><P ALIGN="CENTER">23.3</FONT></TD>
<TD WIDTH="2%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<P>&nbsp;</TD>
<TD WIDTH="87%" VALIGN="MIDDLE" BGCOLOR="#ffffff">
<FONT SIZE=2><P>Consent of Richardson &amp; Patel LLP (included in Exhibit 5)</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>Item 9.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>Undertakings.</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The undersigned Registrant hereby undertakes:</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(a)</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The undersigned registrant hereby undertakes to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement (1) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2) that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(b)</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">(c)</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<B><FONT SIZE=2><P ALIGN="CENTER">SIGNATURES</P></B></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=578>
<TR><TD WIDTH="48%" VALIGN="BOTTOM">
<P>&nbsp;</TD>
<TD WIDTH="52%" VALIGN="TOP" COLSPAN=2>
<B><FONT SIZE=2><P>CHINA MEDIA GROUP CORPORATION,</P>
</B><P>a Texas corporation</P>
<P>(Registrant)</FONT></TD>
</TR>
<TR><TD WIDTH="48%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">
<FONT SIZE=2><P>By:</FONT></TD>
<TD WIDTH="47%" VALIGN="TOP">
<FONT SIZE=2><P>/s/Con Unerkov</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP" COLSPAN=2>
<P>&nbsp;</TD>
<TD WIDTH="47%" VALIGN="TOP">
<FONT SIZE=2><P>___________________________________</P>
<P>Con Unerkov</FONT></TD>
</TR>
<TR><TD WIDTH="53%" VALIGN="TOP" COLSPAN=2>
<P>&nbsp;</TD>
<TD WIDTH="47%" VALIGN="TOP">
<FONT SIZE=2><P>President</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Pursuant to the requirements of the Securities Act of 1933, this Form S-8 registration statement has been signed by the following persons in the capacities and on the dates indicated:</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=572>
<TR><TD WIDTH="30%" VALIGN="BOTTOM">
<B><U><FONT SIZE=2><P>Name</B></U>_________________</FONT></TD>
<TD WIDTH="9%" VALIGN="MIDDLE">
<P>&nbsp;</TD>
<TD WIDTH="37%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">______________<B><U>Title</B></U>______________</FONT></TD>
<TD WIDTH="7%" VALIGN="MIDDLE">
<P>&nbsp;</TD>
<TD WIDTH="17%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">_____<B><U>Date</B></U>_____</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<P>/s/ Con Unerkov</P>
<P>_____________________</P>
<FONT SIZE=2><P>Con Unerkov</FONT></TD>
<TD WIDTH="9%" VALIGN="MIDDLE">
<P>&nbsp;</TD>
<TD WIDTH="37%" VALIGN="TOP">
<FONT SIZE=2><P>President and Director</FONT></TD>
<TD WIDTH="7%" VALIGN="MIDDLE">
<P>&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">March 8, 2007</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<P>/s/ Alex Ho</P>
<P>_____________________</P>
<FONT SIZE=2><P>Alex Ho Te Heng</FONT></TD>
<TD WIDTH="9%" VALIGN="MIDDLE">
<P>&nbsp;</TD>
<TD WIDTH="37%" VALIGN="TOP">
<FONT SIZE=2><P>Treasurer, Secretary and Director</FONT></TD>
<TD WIDTH="7%" VALIGN="MIDDLE">
<P>&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">March 8, 2007</FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="9%" VALIGN="MIDDLE">
<P>&nbsp;</TD>
<TD WIDTH="37%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="7%" VALIGN="MIDDLE">
<P>&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">
<P>&nbsp;</TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="79%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">EXHIBIT 4</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<B><FONT SIZE=2><P ALIGN="CENTER">CHINA MEDIA GROUP CORPORATION</P>
<P ALIGN="CENTER">2007 STOCK INCENTIVE PLAN</P>
</B><P ALIGN="CENTER">Adopted as of February 19, 2007</P>
<B><P ALIGN="CENTER">ARTICLE ONE</P>
<P ALIGN="CENTER">GENERAL PROVISIONS</P></B></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>I.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>PURPOSE OF THE PLAN</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">This 2007 Stock Incentive Plan (the "Plan") is intended to promote the interests of China Media Group Corporation (the "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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Capitalized terms shall have the meanings assigned to such terms in the attached Appendix.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>II.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>STRUCTURE OF THE PLAN</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>A.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P>The Plan shall be divided into two separate equity programs:</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="17%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>1.</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">the Discretionary 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 stock appreciation rights; and</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="17%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>2.</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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).</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>B.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The provisions of Articles One and Four shall apply to all equity programs under the Plan and shall govern the interests of all persons under the Plan.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>III.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>ADMINISTRATION OF THE PLAN</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>A.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Plan shall be administered by the Board or an Plan Committee appointed by the Board. Should administration of the Plan be vested in an Plan Committee, any discretionary option grants or stock issuances to members of the Plan Committee must be authorized and approved by a disinterested majority of the Board.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>B.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Members of the Plan Committee shall serve for such period of time as the Board may determine and may be removed by the Board at any time.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>C.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Each Plan Administrator shall, within the scope of its administrative functions under the Plan, 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 Discretionary Option Grant and Stock Issuance Programs and to make such determinations under, and issue such interpretations of, the provisions of such programs and any outstanding options or stock issuances thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator within the scope of its administrative functions under the Plan shall be final and binding on all parties who have an interest in the Discretionary Option Grant and Stock Issuance Programs under its jurisdiction or any option or stock issuance thereunder.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>D.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Service on the Plan Committee shall constitute service as a Board member, and members of such committee shall accordingly be entitled to full indemnification and reimbursement as Board members for their service on such committee. No member of the Plan Committee shall be liable for any act or omission made in good faith with respect to the Plan or any option grants or stock issuances under the Plan.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>IV.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>ELIGIBILITY</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>A.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The persons eligible to participate in the Discretionary Option Grant and Stock Issuance Programs are as follows:</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(i)</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P>Employees,</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(ii)</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Officers, members of the Board or the board of directors of any Parent or Subsidiary, and</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(iii)</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P>consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>B.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Each Plan Administrator shall, within the scope of its administrative jurisdiction under the Plan, have full authority to determine: (i) with respect to the option grants or stock appreciation rights under the Discretionary Option Grant Program, which eligible persons are to receive grants, the time or times when such grants are to be made, the number of shares to be covered by each such grant, the status of a granted option as either an Incentive Option or a Non-Statutory Options, the time or times when 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 for such shares.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>C.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Plan Administrator shall have the absolute discretion either to grant options or stock appreciation rights in accordance with the Discretionary Option Grant Program or to effect stock issuances or grant share right awards in accordance with the Stock Issuance Program.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>V.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>STOCK SUBJECT TO THE PLAN</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>A.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Corporation on the open market. The maximum number of shares of Common Stock initially reserved for issuance over the term of the Plan shall not exceed thirty-eight million, four hundred thousand (38,400,000) share</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>B.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Shares of Common Stock subject to outstanding options shall be available for subsequent issuance under the Plan to the extent (i) those options expire or terminate for any reason prior to exercise in full or (ii) the options are canceled in accordance with the cancellation-regrant provisions of Article Two. Unvested shares issued under the Plan and subsequently canceled or repurchased by the Corporation at the original exercise or issue 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. In addition, should the exercise price of an option under the Plan be paid with shares of Common Stock or should shares of Common Stock otherwise issuable under the Plan be withheld by the Corporation in satisfaction of the withholding taxes incurred in connection with the exercise of an option or the vesting of a stock issuance under the Plan, then the number of shares of Common Stock available for issuance under the Plan shall be reduced only by the net number of shares of Common Stock issued to the holder of such option or stock issuance, and not by the gross number of shares for which the option is exercised or which vest under the stock issuance. However, shares of Common Stock underlying one or more stock appreciation rights exercised under Section V of Article Two of the Plan shall not be available for subsequent issuance under the Plan.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>C.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">If any change is 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 under the Plan. Such adjustments to the outstanding options are to be effected in a manner which shall preclude the enlargement or dilution of rights and benefits under such options. The adjustments determined by the Plan Administrator shall be final, binding and conclusive.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<B><FONT SIZE=2><P ALIGN="CENTER">ARTICLE TWO</P>
<P ALIGN="CENTER">DISCRETIONARY OPTION GRANT PROGRAM</P></B></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>I.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>OPTION TERMS</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="91%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>A.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">EXERCISE PRICE.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>1.</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The exercise price per share shall be fixed by the Plan Administrator, but in the case of Incentive Options, shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date, except that the exercise price 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 in the case of an employee who owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation or its parent or subsidiary corporations.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>2.</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The exercise price shall become immediately due upon exercise of the option and may, subject to the provisions of Section I of Article Four and the documents evidencing the option, be payable in one or more of the forms specified below:</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=568>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(i)</FONT></TD>
<TD WIDTH="67%" VALIGN="TOP">
<FONT SIZE=2><P>cash or check made payable to the Corporation, or</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=568>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(ii)</FONT></TD>
<TD WIDTH="67%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=568>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(iii)</FONT></TD>
<TD WIDTH="67%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">to the extent the sale complies with all applicable laws relating to the regulation and sale of securities, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable written instructions to: (a) 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 (b) the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale, or</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=568>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(iv)</FONT></TD>
<TD WIDTH="67%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">subject to such additional terms and conditions as the plan administrator shall determine, to have the number of shares deliverable to the option holder as a result of the exercise reduced by a number of shares sufficient to pay the amount the Corporation determines to be necessary to withhold for federal, state, local and other taxes as a result of the exercise of the option and, as long as no additional accounting expenses would result to the Corporation, to pay the exercise price of the option.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="91%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>B.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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. However, no option shall have a term in excess of ten (10) years measured from the option grant date.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>C.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">EFFECT OF TERMINATION OF SERVICE.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>1.</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death:</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=568>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(i)</FONT></TD>
<TD WIDTH="67%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Subject to subparagraph (iv) below, any option outstanding at the time of the Optionee's cessation of Service for any reason shall remain exercisable foruch period of time thereafter as shall be determined by the Plan Administrator and set forth in the documents evidencing the option.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=568>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(ii)</FONT></TD>
<TD WIDTH="67%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Any option held by the Optionee at the time of death and exercisable in whole or in part at that time may be subsequently exercised by the personal representative of the Optionee's estate or by the person or persons to whom the option is transferred pursuant to the Optionee's will or in accordance with the laws of descent and distribution or by the Optionee's designated beneficiary or beneficiaries of that option.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=568>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(iii)</FONT></TD>
<TD WIDTH="67%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Except as otherwise determined in the discretion of the Plan Administrator either at the time the option is granted or at any time the option remains outstanding, should the Optionee's Service be terminated for Misconduct or should the Optionee otherwise engage in Misconduct while one or more options granted to the Optionee under this Article Two are outstanding, then all those options shall terminate immediately and cease to be outstanding.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=568>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(iv)</FONT></TD>
<TD WIDTH="67%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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 to the extent the option is not otherwise at that time exercisable for vested shares.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>2.</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Plan Administrator shall have complete discretion, either at the time an option is granted or at any time while the option remains outstanding, to:</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=568>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(i)</FONT></TD>
<TD WIDTH="67%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">extend the period of time for which the option is to remain exercisable following the Optionee's cessation of Service from the limited exercise 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</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=568>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(ii)</FONT></TD>
<TD WIDTH="67%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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 had the Optionee continued in Service.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>D.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">STOCKHOLDER RIGHTS. The holder of an option shall have no stockholder 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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>E.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">REPURCHASE RIGHTS. The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock. Should the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase, at the purchase price paid per share, any or all of those unvested 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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>F.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, the options 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, <I><U>provided however</I></U>, that an option may be assigned in whole or in part during Optionee's lifetime to one or more members of the Optionee's Immediate Family or to a trust established for the exclusive benefit of Optionee or one or more members of the Optionee's Immediate Family or to the Optionee's former spouse, to the extent such assignment is in connection with Optionee's estate plan or pursuant to a domestic relations order. The assigned portion shall be exercisable only by the person or persons who acquire a proprietary interest in the option pursuant to such assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate. Notwithstanding the foregoing, the Optionee may also designate one or more persons as the beneficiary or beneficiaries of his or her outstanding options under this Article Two, and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee's death while holding those options. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation) the limited time period during which the option may be exercised following the Optionee's death.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>II.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>INCENTIVE OPTIONS</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="91%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of Articles One, Two and Four shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options when issued under the Plan shall NOT be subject to the terms of this Section II.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>A.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">ELIGIBILITY. Incentive Options may only be granted to Employees.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>B.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>C.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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 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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>D.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">FAILURE TO QUALIFY AS INCENTIVE OPTION. To the extent that any option governed by this Plan does not qualify as an Incentive Option by reason of the dollar limitation described in Section II.C of Article Two or for any other reason, such option shall be exercisable as a Non-Statutory Option under the Federal tax laws.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>E.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">10% STOCKHOLDER. If any Employee to whom an Incentive Option is granted is a 10% Stockholder, 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, and the option term shall not exceed five (5) years measured from the option grant date.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>III.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>CANCELLATION AND REGRANT OF OPTIONS</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="91%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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 Discretionary Option Grant Program and to grant in substitution 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 grant date.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>IV.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>CHANGE IN CONTROL/HOSTILE TAKE-OVER</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>A.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">No option outstanding at the time of a Change in Control shall become exercisable on an accelerated basis if and to the extent: (i) that option is, in connection with the Change in Control, assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction, (ii) such option is replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Change in Control on the shares of Common Stock for which the option is not otherwise at that time exercisable and provides for subsequent payout in accordance with the same exercise/vesting schedule applicable to those option shares or (iii) the acceleration of such option is subject to other limitations imposed by the Plan Administrator at the time of the option grant. However, if none of the foregoing conditions are satisfied, then each option outstanding at the time of the Change in Control but not otherwise exercisable for all the shares of Common Stock at that time subject to such option shall automatically accelerate so that each such option shall, immediately prior to the effective date of the Change in Control, become exercisable for all the shares of Common Stock at the time subject to such option and may be exercised for any or all of those shares as fully vested shares of Common Stock.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>B.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">All of the Corporation's outstanding repurchase rights under the Discretionary Option Grant Program shall also terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Change in Control, except to the extent: (i) those repurchase rights are assigned to the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>C.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Each option which is assumed in connection with a Change in Control or otherwise continued in effect shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Change in Control had the option been exercised immediately prior to such Change in Control. Appropriate adjustments to reflect such Change in Control shall also be made to: (i) the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same; (ii) the maximum number and/or class of securities available for issuance over the remaining term of the Plan; and (iii) the maximum number and/or class of securities for which any one person may be granted options, direct stock issuances and share right awards under the Plan per calendar year. To the extent the actual holders of the Corporation's outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control transaction, the successor corporation may, in connection with the assumption of the outstanding options under the Discretionary Option Grant Program, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control transaction.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>D.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Plan Administrator shall have the discretionary authority to structure one or more outstanding options under the Discretionary Option Grant Program so that those options shall, immediately prior to the effective date of a Change in Control, become exercisable for all the shares of Common Stock at that time subject to such options on an accelerated basis and may be exercised for any or all of such shares as fully vested shares of Common Stock, whether or not those options are to be assumed or otherwise continued in full force and effect or replaced with a cash incentive program pursuant to the express terms of the Change in Control transaction. In addition, the Plan Administrator shall have the discretionary authority to structure one or more of the Corporation's repurchase rights under the Discretionary Option Grant Program so that those rights shall immediately terminate at the time of such Change in Control and shall not be assignable to the successor corporation (or parent thereof), and the shares subject to those terminated rights shall accordingly vest in full at the time of such Change in Control.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>E.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Plan Administrator shall have full power and authority to structure one or more outstanding options under the Discretionary Option Grant Program so that those options shall vest and become exercisable for all the shares of Common Stock at that time subject to such options on an accelerated basis in the event the Optionee's Service is subsequently terminated by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Change in Control in which those options do not otherwise accelerate. Any options so accelerated shall remain exercisable for fully vested shares of Common Stock until the expiration or sooner termination of the option term. In addition, the Plan Administrator may structure one or more of the Corporation's repurchase rights under the Discretionary Option Grant Program so that those rights shall immediately terminate with respect to any shares of Common Stock held by the Optionee at the time of his or her Involuntary Termination, and the shares subject to those terminated repurchase rights shall accordingly vest in full at that time.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>F.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Plan Administrator shall have the discretionary authority to structure one or more outstanding options under the Discretionary Option Grant Program so that those options shall, immediately prior to the effective date of a Hostile Take-Over, vest and become exercisable for all the shares of Common Stock at that time subject to such options on an accelerated basis and may be exercised for any or all of such shares as fully vested shares of Common Stock. In addition, the Plan Administrator shall have the discretionary authority to structure one or more of the Corporation's repurchase rights under the Discretionary Option Grant Program so that those rights shall terminate automatically upon the consummation of such Hostile Take-Over, and the shares subject to those terminated rights shall thereupon immediately vest in full. Alternatively, the Plan Administrator may condition the automatic acceleration of one or more outstanding options under the Discretionary Option Grant Program and the termination of one or more of the Corporation's outstanding repurchase rights under such program upon the Involuntary Termination of the Optionee's Service within a designated period (not to exceed eighteen (18) months) following the effective date of such Hostile Take-Over. Each option so accelerated shall remain exercisable for fully vested shares of Common Stock until the expiration or sooner termination of the option term.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>G.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The portion of any Incentive Option accelerated in connection with a Change in Control or Hostile Take-Over 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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=2><P ALIGN="JUSTIFY">&#9;</P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>H.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The grant of options under the Discretionary Option Grant Program 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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>V.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>STOCK APPRECIATION RIGHTS</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="91%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Plan Administrator may, subject to such conditions as it may determine, grant to selected Optionees stock appreciation rights which will allow the holders of those rights to elect between the exercise of the underlying option for shares of Common Stock and the surrender of that option in exchange for a distribution from the Corporation in an amount equal to the excess of: (A) the Option Surrender Value of the number of shares for which the option is surrendered; over (B) the aggregate exercise price payable for such shares. The distribution may be made in shares of Common Stock valued at Fair Market Value on the option surrender date, in cash, or partly in shares and partly in cash, as the Plan Administrator shall in its sole discretion deem appropriate.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<B><FONT SIZE=2><P ALIGN="CENTER">ARTICLE THREE</P>
<P ALIGN="CENTER">STOCK ISSUANCE PROGRAM</P></B></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>I.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>STOCK ISSUANCES</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="91%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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. Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to share right awards which entitle the recipients to receive those shares upon the attainment of designated performance goals.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>II.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>STOCK ISSUANCE TERMS</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>A.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">PURCHASE PRICE.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>1.</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The purchase price per share shall be fixed by the Plan Administrator.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>2.</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Subject to the provisions of Section I of Article Four, 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:</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=568>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(i)</FONT></TD>
<TD WIDTH="67%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">cash or check made payable to the Corporation, or</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=568>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(ii)</FONT></TD>
<TD WIDTH="67%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">services rendered or to be rendered to the Corporation (or any Parent or Subsidiary).</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>B.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">VESTING PROVISIONS.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>1.</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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. The elements of the vesting schedule applicable to any unvested shares of Common Stock issued under the Stock Issuance Program shall be determined by the Plan Administrator and incorporated into the Stock Issuance Agreement. Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to share right awards which entitle the recipients to receive those shares upon the attainment of designated performance goals. Upon the attainment of such performance goals, fully vested shares of Common Stock shall be issued upon satisfaction of those share right awards.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>2.</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>3.</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Participant shall have full stockholder 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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>4.</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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 stockholder 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 but not including services rendered by the Participant), 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 the surrendered shares.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>5.</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock which would otherwise occur upon the cessation of the Participant's Service or the non-attainment of the performance objectives applicable to those shares. Such waiver shall result in the immediate vesting of the Participant's interest in the shares 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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>6.</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Outstanding share right awards under the Stock Issuance Program shall automatically terminate, and no shares of Common Stock shall actually be issued in satisfaction of those awards, if the performance goals or Service requirements established for such awards are not attained. The Plan Administrator, however, shall have the discretionary authority to issue shares of Common Stock under one or more outstanding share right awards as to which the designated performance goals or Service requirements have not been attained.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>III.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>CHANGE IN CONTROL/HOSTILE TAKE-OVER</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>A.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">All of the Corporation's outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and all the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Change in Control, except to the extent (i) those repurchase rights are assigned to the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the express terms of the Change in Control transaction or (ii) such accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>B.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Plan Administrator shall have the discretionary authority to structure one or more of the Corporation's repurchase rights under the Stock Issuance Program so that those rights shall automatically terminate in whole or in part upon the occurrence of a Change in Control and shall not be assignable to the successor corporation (or parent thereof), and the shares of Common Stock subject to those terminated rights shall immediately vest in full at the time of such Change in Control.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>C.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Plan Administrator shall also have the discretionary authority to structure one or more of the Corporation's repurchase rights under the Stock Issuance Program so that those rights shall automatically terminate in whole or in part, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, upon the Involuntary Termination of the Participant's Service within a designated period (not to exceed eighteen (18) months) following the effective date of any Change in Control in which those repurchase rights do not otherwise terminate.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>D.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Plan Administrator shall also have the discretionary authority to structure one or more of the Corporation's repurchase rights under the Stock Issuance Program so that those rights shall automatically terminate in whole or in part upon the occurrence of a Hostile Take-Over, and the shares of Common Stock subject to those terminated rights shall immediately vest in full at the time of such Hostile Take-Over.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<B><FONT SIZE=2><P ALIGN="CENTER">ARTICLE FOUR</P>
<P ALIGN="CENTER">MISCELLANEOUS</P></B></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>I.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>FINANCING</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="91%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Plan Administrator may permit any Optionee or Participant to pay the option exercise price under the Discretionary Option Grant Program or the purchase price of shares issued under the Stock Issuance Program by delivering a full-recourse, interest bearing promissory note payable in one or more installments. The terms of any such promissory note (including the interest rate and the terms of repayment) shall be established by the Plan Administrator in its sole discretion. In no event may 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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>II.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>SHARE ESCROW/LEGENDS</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="91%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Unvested shares issued under the Plan 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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>III.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>TAX WITHHOLDING</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>A.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Corporation's obligation to deliver shares of Common Stock upon the exercise of options or the issuance or vesting of such shares under the Plan shall be subject to the satisfaction of all applicable Federal, state and local income and employment tax withholding requirements.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>B.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Plan Administrator may, in its discretion, provide any or all holders of options or unvested shares of Common Stock under the Plan with the right to use shares of Common Stock in satisfaction of all or part of the Taxes incurred by such holders in connection with the exercise of their options or the vesting of their shares. Such right may be provided to any such holder in either or both of the following formats:</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>1.</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Stock Withholding: The election to have the Corporation withhold, from the shares of Common Stock otherwise issuable upon the exercise of such option or the vesting of such shares, a portion of those shares with an aggregate Fair Market Value equal to the amount of the Taxes (not to exceed one hundred percent (100%) of such Taxes) to be satisfied in such manner as designated by the holder in writing; or</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=570>
<TR><TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>2.</FONT></TD>
<TD WIDTH="76%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Stock Delivery: The election to deliver to the Corporation, at the time the option is exercised or the shares vest, one or more shares of Common Stock previously acquired by such holder (other than in connection with the option exercise or share vesting triggering the Taxes) with an aggregate Fair Market Value equal to the amount of the Taxes (not to exceed one hundred percent (100%) of such Taxes) to be satisfied in such manner as designated by the holder in writing.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>IV.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>EFFECTIVE DATE AND TERM OF THE PLAN</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>A.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Plan shall become effective immediately upon the Plan Effective Date. Options may be granted under the Discretionary Option Grant at any time on or after the Plan Effective Date.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>B.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The Plan shall terminate upon the EARLIEST of (i) the tenth anniversary of the Plan Effective Date, (ii) the date on which all shares available for issuance under the Plan shall have been issued as fully-vested shares or (iii) the termination of all outstanding options in connection with a Change in Control. Upon such plan termination, all outstanding option grants and unvested stock issuances shall thereafter continue to have force and effect in accordance with the provisions of the documents evidencing such grants or issuances.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>V.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>AMENDMENT OF THE PLAN</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>A.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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 stock 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 stockholder approval pursuant to applicable laws or regulations.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>B.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Options to purchase shares of Common Stock may be granted under the Discretionary Option Grant Program and shares of Common Stock may be issued under the Stock Issuance Program that are in each instance in excess of the number of shares 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 any required approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such 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 canceled and cease to be outstanding.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>VI.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>USE OF PROCEEDS</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="91%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>VII.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>REGULATORY APPROVALS</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>A.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The implementation of the Plan, the granting of any stock option under the Plan and the issuance of any shares of Common Stock (i) upon the exercise of any granted 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 stock options granted under it and the shares of Common Stock issued pursuant to it.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>B.</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">No shares of Common Stock or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of Federal and state securities laws, including the filing and effectiveness of the Form S-8 registration statement for the shares of Common Stock issuable under the Plan, and all applicable listing requirements of the stock exchange or automated quotation system, as applicable, on which Common Stock is then quoted for trading.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<B><FONT SIZE=2><P>VIII.</B></FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>NO EMPLOYMENT/SERVICE RIGHTS</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="91%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<B><FONT SIZE=2><P ALIGN="CENTER">APPENDIX</P></B></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">The following definitions shall be in effect under the Plan:</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>A.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>BOARD</B> shall mean the Corporation's Board of Directors.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>B.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">CHANGE IN CONTROL</B> shall mean a change in ownership or control of the Corporation effected through any of the following transactions:</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(i)</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">a stockholder-approved 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;</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(ii)</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">a sale, transfer or other disposition of all or substantially all of the Corporation's assets; or</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(iii)</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">the acquisition, directly or indirectly by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders which the Board recommends such stockholders accept.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>C.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>CODE </B>shall mean the Internal Revenue Code of 1986, as amended.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>D.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P>COMMON STOCK</B> shall mean the Corporation's common stock.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>E.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">CORPORATION</B> shall mean China Media Group Corporation, a Texas corporation, and its successors.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>F.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">DISCRETIONARY OPTION GRANT PROGRAM </B>shall mean the discretionary option grant program in effect under the Plan.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>G.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">EMPLOYEE </B>shall mean an "employee" of the Corporation (or any Parent or Subsidiary) within the meaning of Section 3041(c) of the Code and the regulation thereunder.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>H.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">EXERCISE DATE </B>shall mean the date on which the Corporation shall have received written notice of the option exercise.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>I.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">FAIR MARKET VALUE </B>per share of Common Stock on any relevant date shall be determined by the Plan Administrator in its sole, reasonable discretion. In determining the Fair Market Value, the Plan Administrator may consider the following:</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="17%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">(i)</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">the closing selling price per share of common stock on the date of grant. </FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=572>
<TR><TD WIDTH="17%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">This closing selling price shall be determined as follows:</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="25%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">a.</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">If the Common Stock is at the time listed on the Nasdaq Stock Market, then the closing selling price per share of Common Stock on the date in question shall be used, as such price is reported by the National Association of Securities Dealers on the Nasdaq Stock Market and published in <I>The Wall Street Journal</I>. If there is no closing selling price for the Common Stock on the date in question, then the closing selling price on the last preceding date for which such quotation exists shall be used;</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="25%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">b.</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">If the Common Stock is at the time listed on any stock exchange, then 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 shall be used, as such price is officially quoted in the composite tape of transactions on such exchange and published in <I>The Wall Street Journal</I>. If there is no closing selling price for the Common Stock on the date in question, then the closing selling price on the last preceding date for which such quotation exists shall be used; or</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="25%" VALIGN="TOP" COLSPAN=2>
<P>&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">c.</FONT></TD>
<TD WIDTH="71%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the mean between the high bid and low asked prices for the Common Stock on the date of determination shall be used, as published in <I>The Wall Street Journal</I> or such other source as the Plan Administrator deems reliable.</FONT></TD>
</TR>
<TR><TD WIDTH="17%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">(ii)</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP" COLSPAN=2>
<FONT SIZE=2><P ALIGN="JUSTIFY">the average trading volume of the Common Stock and the trading volume on the date of the grant;</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="17%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">(iii)</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">the closing selling price per share of Common Stock on recent dates;</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="17%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">(iv)</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">the spread between the "bid" and "ask" prices on the date of grant and on recent dates;</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="17%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">(v)</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">the price of the Corporation's securities in recently closed private offerings; </FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="17%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">(vi)</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">appropriate volume discounts based on the number of shares subject to the option grant; and</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 WIDTH=574>
<TR><TD WIDTH="17%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">(vii)</FONT></TD>
<TD WIDTH="75%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">any other information the plan administrator determines is applicable in determining the fair market value.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>J.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">HOSTILE TAKE-OVER </B>shall mean:</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(i)</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">the acquisition, directly or indirectly, by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders which the Board does not recommend such stockholders to accept; or</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(ii)</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either: (a) have been Board members continuously since the beginning of such period; or (b) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (a) who were still in office at the time the Board approved such election or nomination.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>K.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">IMMEDIATE FAMILY </B>shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive relationships.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>L.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">INCENTIVE OPTION </B>shall mean an option which satisfies the requirements of Code Section 422.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>M.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">INVOLUNTARY TERMINATION </B>shall mean the termination of the Service of any individual which occurs by reason of:</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(i)</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">such individual's involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>&#9;</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=2><P>(ii)</FONT></TD>
<TD WIDTH="83%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">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 participation in 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 by the Corporation without the individual's consent.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>N.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">MISCONDUCT </B>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).</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>O.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">1934 ACT</B> shall mean the Securities Exchange Act of 1934, as amended.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>P.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">NON-STATUTORY OPTION </B>shall mean an option not intended to satisfy the requirements of Code Section 422.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>Q.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">OFFICER </B>shall mean any person serving as the president, chief executive officer, chief financial officer, chief operating officer, treasure, secretary or in any other managerial or administrative capacity for the Corporation or a Parent or Subsidiary of the Corporation, as determined in the Administrator's discretion.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>R.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">OPTIONEE</B> shall mean any person to whom an option is granted under the Discretionary Option Grant Program.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>S.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">OPTION SURRENDER VALUE </B>shall mean the Fair Market Value per share of Common Stock on the date the option is surrendered to the Corporation or, in the event of a Hostile Take-Over, effected through a tender offer, the highest reported price per share of Common Stock paid by the tender offer or in effecting such Hostile Take-Over, if greater. However, if the surrendered option is an Incentive Option, the Option Surrender Value shall not exceed the Fair Market Value per share.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>T.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">PARENT</B> 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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>U.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">PARTICIPANT </B>shall mean any person who is issued shares of Common Stock under the Stock Issuance Program.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>V.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">PLAN </B>shall mean the Corporation's 2007 Stock Incentive Plan, as set forth in this document.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>W.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">PLAN ADMINISTRATOR </B>shall mean the particular entity, whether the Plan Committee or the Board, which is authorized to administer the Discretionary Option Grant and Stock Issuance Programs with respect to one or more classes of eligible persons, to the extent such entity is carrying out its administrative functions under those programs with respect to the persons under its jurisdiction.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>X.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">PLAN COMMITTEE </B>shall mean the committee of two (2) or more independent Board members appointed by the Board to administer the Discretionary Option Grant and Stock Issuance Programs.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>Y.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">PLAN EFFECTIVE DATE </B>shall mean the date on which the Plan was adopted by the Board.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>Z.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">SECTION 16 INSIDER </B>shall mean an officer or director of the Corporation subject to the short-swing profit liabilities of Section 16 of the 1934 Act.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>AA.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">SERVICE </B>shall mean the performance of services for the Corporation (or any Parent or Subsidiary) by a person in the capacity of an Employee, Officer, 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 or stock issuance.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>BB.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">SHORT TERM FEDERAL RATE</B> shall mean the federal short-term rate in effect under Section 1274(d) of the Code for the period the shares were held in escrow.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>CC.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">STOCK ISSUANCE AGREEMENT</B> 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.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>DD.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">STOCK ISSUANCE PROGRAM </B>shall mean the stock issuance program in effect under the Plan.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>EE.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">SUBSIDIARY</B> shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>FF.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">TAXES </B>shall mean the Federal, state and local income and employment tax liabilities incurred by the holder of options or unvested shares of Common Stock in connection with the exercise of those options or the vesting of those shares.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=2><P>GG.</FONT></TD>
<TD WIDTH="91%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">10% STOCKHOLDER</B> 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).</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="79%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">EXHIBIT 5</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<B><U><FONT SIZE=2><P ALIGN="CENTER">OPINION OF RICHARDSON &amp; PATEL LLP </P>
<P ALIGN="CENTER">regarding legality of the Common Stock being registered</P></B></U></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">RICHARDSON &amp; PATREL LLP</P>
<P ALIGN="CENTER">10900 Wilshire Boulevard</P>
<P ALIGN="CENTER">Suite 500</P>
<P ALIGN="CENTER">Los Angeles, Calfornia 90024</P>
<P ALIGN="CENTER">Telephone (310) 208-1182</P>
<P ALIGN="CENTER">Facsimile (310) 208-1154</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="CENTER">February 22, 2007</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">Via Facsimile (852) 2149-7094</P>
<P ALIGN="JUSTIFY">and First Class Mail&#9;</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Board of Directors</P>
<P ALIGN="JUSTIFY">China Media Group Corporation</P>
<P ALIGN="JUSTIFY">9901 I.H. 10 West, Suite 800</P>
<P ALIGN="JUSTIFY">San Antonio, Texas 78230</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<U><FONT SIZE=2><P ALIGN="JUSTIFY">Re: 2007 Stock Incentive Plan (the "Plan")</U></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Gentlemen:</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">We have acted as counsel to China Media Group Corporation, a Texas corporation (the "Company") in connection with the preparation and filing with the Securities and Exchange Commission under the Securities Act of 1933 of the Company's Registration Statement on Form S-8 relating to 38,400,000 shares of the Company's common stock, with no par value (the "Shares").</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">In connection with that registration, we have reviewed the proceedings of the Board of Directors of the Company relating to the registration and proposed issuance of the Shares, the Articles of Incorporation of the Company and all amendments thereto, the Bylaws of the Company and all amendments thereto, and such other documents and matters as we have deemed necessary to the rendering of the following opinion.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">Based upon that review, it is our opinion that the Shares, when issued in conformance with the terms and conditions of the Plan and assuming adequate consideration has been received by the Company, will be legally issued, fully paid, and non-assessable. We do not find it necessary for the purposes of this opinion to cover, and accordingly we express no opinion as to, the application of the securities or blue-sky laws of the various states as to the issuance and sale of the Shares.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">We consent to the use of this opinion in the registration statement filed with the Securities and Exchange Commission in connection with the registration of the Shares and to the reference to our firm under the heading "Interests of Named Experts and Counsel" in the registration statement.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=578>
<TR><TD WIDTH="50%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="50%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="JUSTIFY">RICHARDSON &amp; PATEL, LLP</B></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="50%" VALIGN="TOP">
<P>&nbsp;</TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="50%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">/s/ Richardson &amp; Patel, LLP</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="50%" VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">__________________________________________</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="79%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">EXHIBIT 23.1</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<B><U><FONT SIZE=2><P ALIGN="CENTER">CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</P></B></U></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">We hereby consent to the use in this Form S-8 Registration Statement of China Media Group Corporation of our report dated February 14, 2007, relating to the financial statements of China Media Group Corporation as of December 31, 2006 which is incorporated by reference into such Form S-8.</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=579>
<TR><TD VALIGN="TOP">
<FONT SIZE=2><P ALIGN="JUSTIFY">/s/ Kabani &amp; Company, Inc.</P>
<U><P ALIGN="JUSTIFY">________________________________________</P>
</U><P ALIGN="JUSTIFY">By: Kabani &amp; Company, Inc.</P>
<P ALIGN="JUSTIFY">Los Angeles, California</P>
<P ALIGN="JUSTIFY">Dated: March 5, 2007</FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<P ALIGN="CENTER"></P>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=1 WIDTH=573>
<TR><TD WIDTH="79%" VALIGN="TOP">
<P>&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">
<B><FONT SIZE=2><P ALIGN="CENTER">EXHIBIT 23.3</B></FONT></TD>
</TR>
</TABLE>
</CENTER></P>

<B><U><FONT SIZE=2><P ALIGN="CENTER">CONSENT OF RICHARDSON &amp; PATEL LLP</P>
</B></U><P ALIGN="CENTER">(included in Exhibit 5)</P></FONT></BODY>
</HTML>
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{"company-data": {"conformed-name": "China Media Group CORP", "cik": "0001211211", "assigned-sic": "7359", "irs-number": "320034926", "state-of-incorporation": "TX", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-141129", "film-number": "07679313"}, "business-address": {"street1": "9901 I.H. 10 WEST", "street2": "SUITE 800", "city": "SAN ANTONIO", "state": "TX", "zip": "78230", "phone": "01186755 61657704"}, "mail-address": {"street1": "9901 I.H. 10 WEST", "street2": "SUITE 800", "city": "SAN ANTONIO", "state": "TX", "zip": "78230"}, "former-company": {"former-conformed-name": "DELIGHTFULLY FROZEN CORP", "date-changed": "20021219"}}
SECURITIES AND EXCHANGE COMMISSION
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
============================================
_____________________________________________________________________________
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
CHINA MEDIA GROUP CORPORATION
(Exact name of registrant as specified in its charter)
Texas
33-0034926
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
1803 Chinachem Tower
34-37 Connaught Road, Central, Hong Kong
n/a
(Address of principal executive offices)
(Zip Code)
2007 Stock Incentive Plan
(Full title of the plan)
Con Unerkov, President
China Media Group Corporation
9901 I.H. 10 West, Suite, 800
San Antonio, Texas 78230
(Name and address of agent for service)
+011 852 3171 1208 (ext.222)
(Telephone number, including area code, of agent for service)
copies to:
Kevin Leung, Esq.
Richardson & Patel LLP
10900 Wilshire Blvd. Suite 500
Los Angeles, CA 90024
310-208-1182
CALCULATION OF REGISTRATION FEE
Title of Securities to
be registered
Amount to be
registered
(1)
Proposed maximum
offering price per
share
(2)
Proposed maximum
aggregate offering
price
(2)
Amount of
registration fee
Common Stock
38,400,000
$.05
$1,920,000
$58.94
(1) Includes an indeterminate number of additional shares that may be issued to adjust the number of shares issued pursuant to the stock plan described herein as the result of any future stock split, stock dividend or similar adjustment of the registrant's outstanding common stock.
(2) Estimated pursuant to Rule 457(h) solely for purposes of calculating amount of registration fee, based upon the average of the high and low prices reported on March 2, 2007, as reported on the OTC Electronic Bulletin Board.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3.
Incorporation of Documents by Reference.
China Media Group Corporation (the "Company") hereby incorporates by reference into this registration statement the following documents previously filed with the Securities and Exchange Commission (the "Commission"):
(a)
The Annual Report for the fiscal year ended December 31, 2006, filed by the Company with the Commission on Form 10KSB on February 15, 2007, which contains audited consolidated financial statements for the Company's most recent annual report for which such statements have been filed.
(b)
The description of the Company's common stock included in the registration statement on Form SB-2, file no. 333-104555, filed with the Commission on April 15, 2003, including any amendments or reports filed for the purpose of updating that description.
(c)
In addition, all documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference into this registration statement and to be a part hereof from the date of filing of such documents.
Item 4.
Description of Securities.
Not applicable. The class of securities to be offered is registered under Section 12 of the Exchange Act.
Item 5.
Interests of Named Experts and Counsel.
Richardson & Patel LLP has given an opinion on the validity of the securities being registered hereunder. Erick Richardson and Nimish Patel, partners of the law firm, are eligible to receive shares of the Company's common stock pursuant to this Form S-8 registration statement.
Item 6.
Indemnification of Directors and Officers.
The Texas Business Corporation Act ("TBCA") permits, and in some cases requires, corporations to indemnify directors and officers who are or have been a party or are threatened to be made a party to litigation against judgments, penalties (including excise and similar taxes), fines, settlements, and reasonable expenses under certain circumstances. As authorized by Article 2.02-1 of the TBCA, each director and officer of the Company may be indemnified by the Company against expenses (including attorney's fees, judgments, fines and amounts paid in settlement) actually and reasonably incurred in connection with the defense or settlement of any threatened, pending or completed legal proceedings in which he is involved by reason of the fact that he is or was a director or officer of the Company if he acted in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, if he had no reasonable cause to believe that his conduct was unlawful. In each case, such indemnity shall be to the fullest extent authorized by the TBCA. If the director or officer is found liable for willful or intentional misconduct in the performance of his duty to the Company, then indemnification will not be made.
Article V of the Company's Bylaws provides that the Company "shall indemnify any and all of its Directors and Officers, and its former Directors and Officers, or any person who may have served at the corporation's request as a Director or Officer of another corporation in which it owns shares of capital stock or of which it is a creditor, against expenses actually and necessarily incurred by them in connection with the defense of any action, suit or proceeding in which they, or any of them, are made parties, or a party, by reason of being or having been Director(s) or Officer(s) of the corporation, or of such other corporation, except, in relation to matters as to which any such Director or Officer or former Director or Officer or person shall be adjudged in such action, suit or proceeding to be liable for negligence or misconduct in the performance of duty. Such indemnification shall not be deemed exclusive of any other rights to which those indemnified may be entitled, under By-Law, agreement, vote of shareholders or otherwise."
The Company has been advised that it is the position of the Commission that insofar as the provision in the Company's Bylaws may be invoked for liabilities arising under the Securities Act, the provision is against public policy and is therefore unenforceable.
Item 7.
Exemption from Registration Claimed.
Not applicable.
Item 8.
Exhibits.
Exhibit No.
Description
4
2007 Stock Incentive Plan
5
Opinion of Richardson & Patel LLP regarding legality of the Common Stock being registered
23.1
Consent of Kabani & Company, Inc.
23.3
Consent of Richardson & Patel LLP (included in Exhibit 5)
Item 9.
Undertakings.
The undersigned Registrant hereby undertakes:
(a)
The undersigned registrant hereby undertakes to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement (1) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2) that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(b)
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c)
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the.
CHINA MEDIA GROUP CORPORATION,
a Texas corporation
(Registrant)
By:
/s/Con Unerkov
___________________________________
Con Unerkov
President
Pursuant to the requirements of the Securities Act of 1933, this Form S-8 registration statement has been signed by the following persons in the capacities and on the dates indicated:
Name
_________________
______________
Title
______________
_____
Date
_____
/s/ Con Unerkov
_____________________
Con Unerkov
President and Director
March 8, 2007
/s/ Alex Ho
_____________________
Alex Ho Te Heng
Treasurer, Secretary and Director
March 8, 2007
EXHIBIT 4
CHINA MEDIA GROUP CORPORATION
2007 STOCK INCENTIVE PLAN
Adopted as of February 19, 2007
ARTICLE ONE
GENERAL PROVISIONS
I.
PURPOSE OF THE PLAN
This 2007 Stock Incentive Plan (the "Plan") is intended to promote the interests of China Media Group Corporation (the "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 shall have the meanings assigned to such terms in the attached Appendix.
II.
STRUCTURE OF THE PLAN
A.
The Plan shall be divided into two separate equity programs:
1.
the Discretionary 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 stock appreciation rights; and
2.
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).
B.
The provisions of Articles One and Four shall apply to all equity programs under the Plan and shall govern the interests of all persons under the Plan.
III.
ADMINISTRATION OF THE PLAN
A.
The Plan shall be administered by the Board or an Plan Committee appointed by the Board. Should administration of the Plan be vested in an Plan Committee, any discretionary option grants or stock issuances to members of the Plan Committee must be authorized and approved by a disinterested majority of the Board.
B.
Members of the Plan Committee shall serve for such period of time as the Board may determine and may be removed by the Board at any time.
C.
Each Plan Administrator shall, within the scope of its administrative functions under the Plan, 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 Discretionary Option Grant and Stock Issuance Programs and to make such determinations under, and issue such interpretations of, the provisions of such programs and any outstanding options or stock issuances thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator within the scope of its administrative functions under the Plan shall be final and binding on all parties who have an interest in the Discretionary Option Grant and Stock Issuance Programs under its jurisdiction or any option or stock issuance thereunder.
D.
Service on the Plan Committee shall constitute service as a Board member, and members of such committee shall accordingly be entitled to full indemnification and reimbursement as Board members for their service on such committee. No member of the Plan Committee shall be liable for any act or omission made in good faith with respect to the Plan or any option grants or stock issuances under the Plan.
IV.
ELIGIBILITY
A.
The persons eligible to participate in the Discretionary Option Grant and Stock Issuance Programs are as follows:
(i)
Employees,
(ii)
Officers, members of the Board or the board of directors of any Parent or Subsidiary, and
(iii)
consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).
B.
Each Plan Administrator shall, within the scope of its administrative jurisdiction under the Plan, have full authority to determine: (i) with respect to the option grants or stock appreciation rights under the Discretionary Option Grant Program, which eligible persons are to receive grants, the time or times when such grants are to be made, the number of shares to be covered by each such grant, the status of a granted option as either an Incentive Option or a Non-Statutory Options, the time or times when 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 for such shares.
C.
The Plan Administrator shall have the absolute discretion either to grant options or stock appreciation rights in accordance with the Discretionary Option Grant Program or to effect stock issuances or grant share right awards in accordance with the Stock Issuance Program.
V.
STOCK SUBJECT TO THE PLAN
A.
The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Corporation on the open market. The maximum number of shares of Common Stock initially reserved for issuance over the term of the Plan shall not exceed thirty-eight million, four hundred thousand (38,400,000) share
B.
Shares of Common Stock subject to outstanding options shall be available for subsequent issuance under the Plan to the extent (i) those options expire or terminate for any reason prior to exercise in full or (ii) the options are canceled in accordance with the cancellation-regrant provisions of Article Two. Unvested shares issued under the Plan and subsequently canceled or repurchased by the Corporation at the original exercise or issue 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. In addition, should the exercise price of an option under the Plan be paid with shares of Common Stock or should shares of Common Stock otherwise issuable under the Plan be withheld by the Corporation in satisfaction of the withholding taxes incurred in connection with the exercise of an option or the vesting of a stock issuance under the Plan, then the number of shares of Common Stock available for issuance under the Plan shall be reduced only by the net number of shares of Common Stock issued to the holder of such option or stock issuance, and not by the gross number of shares for which the option is exercised or which vest under the stock issuance. However, shares of Common Stock underlying one or more stock appreciation rights exercised under Section V of Article Two of the Plan shall not be available for subsequent issuance under the Plan.
C.
If any change is 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 under the Plan. Such adjustments to the outstanding options are to be effected in a manner which shall preclude the enlargement or dilution of rights and benefits under such options. The adjustments determined by the Plan Administrator shall be final, binding and conclusive.
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I.
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.
A.
EXERCISE PRICE.
1.
The exercise price per share shall be fixed by the Plan Administrator, but in the case of Incentive Options, shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date, except that the exercise price 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 in the case of an employee who owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation or its parent or subsidiary corporations.
2.
The exercise price shall become immediately due upon exercise of the option and may, subject to the provisions of Section I of Article Four and the documents evidencing the option, be payable in one or more of the forms specified below:
(i)
cash or check made payable to the Corporation, or
(ii)
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
(iii)
to the extent the sale complies with all applicable laws relating to the regulation and sale of securities, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable written instructions to: (a) 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 (b) the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale, or
(iv)
subject to such additional terms and conditions as the plan administrator shall determine, to have the number of shares deliverable to the option holder as a result of the exercise reduced by a number of shares sufficient to pay the amount the Corporation determines to be necessary to withhold for federal, state, local and other taxes as a result of the exercise of the option and, as long as no additional accounting expenses would result to the Corporation, to pay the exercise price of the option.
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.
B.
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. However, no option shall have a term in excess of ten (10) years measured from the option grant date.
C.
EFFECT OF TERMINATION OF SERVICE.
1.
The following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death:
(i)
Subject to subparagraph (iv) below, any option outstanding at the time of the Optionee's cessation of Service for any reason shall remain exercisable foruch period of time thereafter as shall be determined by the Plan Administrator and set forth in the documents evidencing the option.
(ii)
Any option held by the Optionee at the time of death and exercisable in whole or in part at that time may be subsequently exercised by the personal representative of the Optionee's estate or by the person or persons to whom the option is transferred pursuant to the Optionee's will or in accordance with the laws of descent and distribution or by the Optionee's designated beneficiary or beneficiaries of that option.
(iii)
Except as otherwise determined in the discretion of the Plan Administrator either at the time the option is granted or at any time the option remains outstanding, should the Optionee's Service be terminated for Misconduct or should the Optionee otherwise engage in Misconduct while one or more options granted to the Optionee under this Article Two are outstanding, then all those options shall terminate immediately and cease to be outstanding.
(iv)
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 to the extent the option is not otherwise at that time exercisable for vested shares.
2.
The Plan Administrator shall have complete discretion, 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 the Optionee's cessation of Service from the limited exercise 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 had the Optionee continued in Service.
D.
STOCKHOLDER RIGHTS. The holder of an option shall have no stockholder 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.
E.
REPURCHASE RIGHTS. The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock. Should the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase, at the purchase price paid per share, any or all of those unvested 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.
F.
LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, the options 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,
provided however
, that an option may be assigned in whole or in part during Optionee's lifetime to one or more members of the Optionee's Immediate Family or to a trust established for the exclusive benefit of Optionee or one or more members of the Optionee's Immediate Family or to the Optionee's former spouse, to the extent such assignment is in connection with Optionee's estate plan or pursuant to a domestic relations order. The assigned portion shall be exercisable only by the person or persons who acquire a proprietary interest in the option pursuant to such assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate. Notwithstanding the foregoing, the Optionee may also designate one or more persons as the beneficiary or beneficiaries of his or her outstanding options under this Article Two, and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee's death while holding those options. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation) the limited time period during which the option may be exercised following the Optionee's death.
II.
INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of Articles One, Two and Four shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options when issued under the Plan shall NOT be subject to the terms of this Section II.
A.
ELIGIBILITY. Incentive Options may only be granted to Employees.
B.
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.
C.
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 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.
D.
FAILURE TO QUALIFY AS INCENTIVE OPTION. To the extent that any option governed by this Plan does not qualify as an Incentive Option by reason of the dollar limitation described in Section II.C of Article Two or for any other reason, such option shall be exercisable as a Non-Statutory Option under the Federal tax laws.
E.
10% STOCKHOLDER. If any Employee to whom an Incentive Option is granted is a 10% Stockholder, 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, and the option term shall not exceed five (5) years measured from the option grant date.
III.
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 Discretionary Option Grant Program and to grant in substitution 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 grant date.
IV.
CHANGE IN CONTROL/HOSTILE TAKE-OVER
A.
No option outstanding at the time of a Change in Control shall become exercisable on an accelerated basis if and to the extent: (i) that option is, in connection with the Change in Control, assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction, (ii) such option is replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Change in Control on the shares of Common Stock for which the option is not otherwise at that time exercisable and provides for subsequent payout in accordance with the same exercise/vesting schedule applicable to those option shares or (iii) the acceleration of such option is subject to other limitations imposed by the Plan Administrator at the time of the option grant. However, if none of the foregoing conditions are satisfied, then each option outstanding at the time of the Change in Control but not otherwise exercisable for all the shares of Common Stock at that time subject to such option shall automatically accelerate so that each such option shall, immediately prior to the effective date of the Change in Control, become exercisable for all the shares of Common Stock at the time subject to such option and may be exercised for any or all of those shares as fully vested shares of Common Stock.
B.
All of the Corporation's outstanding repurchase rights under the Discretionary Option Grant Program shall also terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Change in Control, except to the extent: (i) those repurchase rights are assigned to the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.
C.
Each option which is assumed in connection with a Change in Control or otherwise continued in effect shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Change in Control had the option been exercised immediately prior to such Change in Control. Appropriate adjustments to reflect such Change in Control shall also be made to: (i) the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same; (ii) the maximum number and/or class of securities available for issuance over the remaining term of the Plan; and (iii) the maximum number and/or class of securities for which any one person may be granted options, direct stock issuances and share right awards under the Plan per calendar year. To the extent the actual holders of the Corporation's outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control transaction, the successor corporation may, in connection with the assumption of the outstanding options under the Discretionary Option Grant Program, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control transaction.
D.
The Plan Administrator shall have the discretionary authority to structure one or more outstanding options under the Discretionary Option Grant Program so that those options shall, immediately prior to the effective date of a Change in Control, become exercisable for all the shares of Common Stock at that time subject to such options on an accelerated basis and may be exercised for any or all of such shares as fully vested shares of Common Stock, whether or not those options are to be assumed or otherwise continued in full force and effect or replaced with a cash incentive program pursuant to the express terms of the Change in Control transaction. In addition, the Plan Administrator shall have the discretionary authority to structure one or more of the Corporation's repurchase rights under the Discretionary Option Grant Program so that those rights shall immediately terminate at the time of such Change in Control and shall not be assignable to the successor corporation (or parent thereof), and the shares subject to those terminated rights shall accordingly vest in full at the time of such Change in Control.
E.
The Plan Administrator shall have full power and authority to structure one or more outstanding options under the Discretionary Option Grant Program so that those options shall vest and become exercisable for all the shares of Common Stock at that time subject to such options on an accelerated basis in the event the Optionee's Service is subsequently terminated by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Change in Control in which those options do not otherwise accelerate. Any options so accelerated shall remain exercisable for fully vested shares of Common Stock until the expiration or sooner termination of the option term. In addition, the Plan Administrator may structure one or more of the Corporation's repurchase rights under the Discretionary Option Grant Program so that those rights shall immediately terminate with respect to any shares of Common Stock held by the Optionee at the time of his or her Involuntary Termination, and the shares subject to those terminated repurchase rights shall accordingly vest in full at that time.
F.
The Plan Administrator shall have the discretionary authority to structure one or more outstanding options under the Discretionary Option Grant Program so that those options shall, immediately prior to the effective date of a Hostile Take-Over, vest and become exercisable for all the shares of Common Stock at that time subject to such options on an accelerated basis and may be exercised for any or all of such shares as fully vested shares of Common Stock. In addition, the Plan Administrator shall have the discretionary authority to structure one or more of the Corporation's repurchase rights under the Discretionary Option Grant Program so that those rights shall terminate automatically upon the consummation of such Hostile Take-Over, and the shares subject to those terminated rights shall thereupon immediately vest in full. Alternatively, the Plan Administrator may condition the automatic acceleration of one or more outstanding options under the Discretionary Option Grant Program and the termination of one or more of the Corporation's outstanding repurchase rights under such program upon the Involuntary Termination of the Optionee's Service within a designated period (not to exceed eighteen (18) months) following the effective date of such Hostile Take-Over. Each option so accelerated shall remain exercisable for fully vested shares of Common Stock until the expiration or sooner termination of the option term.
G.
The portion of any Incentive Option accelerated in connection with a Change in Control or Hostile Take-Over 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.
H.
The grant of options under the Discretionary Option Grant Program 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.
V.
STOCK APPRECIATION RIGHTS
The Plan Administrator may, subject to such conditions as it may determine, grant to selected Optionees stock appreciation rights which will allow the holders of those rights to elect between the exercise of the underlying option for shares of Common Stock and the surrender of that option in exchange for a distribution from the Corporation in an amount equal to the excess of: (A) the Option Surrender Value of the number of shares for which the option is surrendered; over (B) the aggregate exercise price payable for such shares. The distribution may be made in shares of Common Stock valued at Fair Market Value on the option surrender date, in cash, or partly in shares and partly in cash, as the Plan Administrator shall in its sole discretion deem appropriate.
ARTICLE THREE
STOCK ISSUANCE PROGRAM
I.
STOCK ISSUANCES
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. Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to share right awards which entitle the recipients to receive those shares upon the attainment of designated performance goals.
II.
STOCK ISSUANCE TERMS
A.
PURCHASE PRICE.
1.
The purchase price per share shall be fixed by the Plan Administrator.
2.
Subject to the provisions of Section I of Article Four, 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)
services rendered or to be rendered to the Corporation (or any Parent or Subsidiary).
B.
VESTING PROVISIONS.
1.
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. The elements of the vesting schedule applicable to any unvested shares of Common Stock issued under the Stock Issuance Program shall be determined by the Plan Administrator and incorporated into the Stock Issuance Agreement. Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to share right awards which entitle the recipients to receive those shares upon the attainment of designated performance goals. Upon the attainment of such performance goals, fully vested shares of Common Stock shall be issued upon satisfaction of those share right awards.
2.
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.
3.
The Participant shall have full stockholder 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.
4.
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 stockholder 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 but not including services rendered by the Participant), 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 the surrendered shares.
5.
The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock which would otherwise occur upon the cessation of the Participant's Service or the non-attainment of the performance objectives applicable to those shares. Such waiver shall result in the immediate vesting of the Participant's interest in the shares 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.
6.
Outstanding share right awards under the Stock Issuance Program shall automatically terminate, and no shares of Common Stock shall actually be issued in satisfaction of those awards, if the performance goals or Service requirements established for such awards are not attained. The Plan Administrator, however, shall have the discretionary authority to issue shares of Common Stock under one or more outstanding share right awards as to which the designated performance goals or Service requirements have not been attained.
III.
CHANGE IN CONTROL/HOSTILE TAKE-OVER
A.
All of the Corporation's outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and all the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Change in Control, except to the extent (i) those repurchase rights are assigned to the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the express terms of the Change in Control transaction or (ii) such accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement.
B.
The Plan Administrator shall have the discretionary authority to structure one or more of the Corporation's repurchase rights under the Stock Issuance Program so that those rights shall automatically terminate in whole or in part upon the occurrence of a Change in Control and shall not be assignable to the successor corporation (or parent thereof), and the shares of Common Stock subject to those terminated rights shall immediately vest in full at the time of such Change in Control.
C.
The Plan Administrator shall also have the discretionary authority to structure one or more of the Corporation's repurchase rights under the Stock Issuance Program so that those rights shall automatically terminate in whole or in part, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, upon the Involuntary Termination of the Participant's Service within a designated period (not to exceed eighteen (18) months) following the effective date of any Change in Control in which those repurchase rights do not otherwise terminate.
D.
The Plan Administrator shall also have the discretionary authority to structure one or more of the Corporation's repurchase rights under the Stock Issuance Program so that those rights shall automatically terminate in whole or in part upon the occurrence of a Hostile Take-Over, and the shares of Common Stock subject to those terminated rights shall immediately vest in full at the time of such Hostile Take-Over.
ARTICLE FOUR
MISCELLANEOUS
I.
FINANCING
The Plan Administrator may permit any Optionee or Participant to pay the option exercise price under the Discretionary Option Grant Program or the purchase price of shares issued under the Stock Issuance Program by delivering a full-recourse, interest bearing promissory note payable in one or more installments. The terms of any such promissory note (including the interest rate and the terms of repayment) shall be established by the Plan Administrator in its sole discretion. In no event may 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.
II.
SHARE ESCROW/LEGENDS
Unvested shares issued under the Plan 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.
III.
TAX WITHHOLDING
A.
The Corporation's obligation to deliver shares of Common Stock upon the exercise of options or the issuance or vesting of such shares under the Plan shall be subject to the satisfaction of all applicable Federal, state and local income and employment tax withholding requirements.
B.
The Plan Administrator may, in its discretion, provide any or all holders of options or unvested shares of Common Stock under the Plan with the right to use shares of Common Stock in satisfaction of all or part of the Taxes incurred by such holders in connection with the exercise of their options or the vesting of their shares. Such right may be provided to any such holder in either or both of the following formats:
1.
Stock Withholding: The election to have the Corporation withhold, from the shares of Common Stock otherwise issuable upon the exercise of such option or the vesting of such shares, a portion of those shares with an aggregate Fair Market Value equal to the amount of the Taxes (not to exceed one hundred percent (100%) of such Taxes) to be satisfied in such manner as designated by the holder in writing; or
2.
Stock Delivery: The election to deliver to the Corporation, at the time the option is exercised or the shares vest, one or more shares of Common Stock previously acquired by such holder (other than in connection with the option exercise or share vesting triggering the Taxes) with an aggregate Fair Market Value equal to the amount of the Taxes (not to exceed one hundred percent (100%) of such Taxes) to be satisfied in such manner as designated by the holder in writing.
IV.
EFFECTIVE DATE AND TERM OF THE PLAN
A.
The Plan shall become effective immediately upon the Plan Effective Date. Options may be granted under the Discretionary Option Grant at any time on or after the Plan Effective Date.
B.
The Plan shall terminate upon the EARLIEST of (i) the tenth anniversary of the Plan Effective Date, (ii) the date on which all shares available for issuance under the Plan shall have been issued as fully-vested shares or (iii) the termination of all outstanding options in connection with a Change in Control. Upon such plan termination, all outstanding option grants and unvested stock issuances shall thereafter continue to have force and effect in accordance with the provisions of the documents evidencing such grants or issuances.
V.
AMENDMENT OF THE PLAN
A.
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 stock 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 stockholder approval pursuant to applicable laws or regulations.
B.
Options to purchase shares of Common Stock may be granted under the Discretionary Option Grant Program and shares of Common Stock may be issued under the Stock Issuance Program that are in each instance in excess of the number of shares 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 any required approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such 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 canceled and cease to be outstanding.
VI.
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.
VII.
REGULATORY APPROVALS
A.
The implementation of the Plan, the granting of any stock option under the Plan and the issuance of any shares of Common Stock (i) upon the exercise of any granted 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 stock options granted under it and the shares of Common Stock issued pursuant to it.
B.
No shares of Common Stock or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of Federal and state securities laws, including the filing and effectiveness of the Form S-8 registration statement for the shares of Common Stock issuable under the Plan, and all applicable listing requirements of the stock exchange or automated quotation system, as applicable, on which Common Stock is then quoted for trading.
VIII.
NO EMPLOYMENT/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.
APPENDIX
The following definitions shall be in effect under the Plan:
A.
BOARD
shall mean the Corporation's Board of Directors.
B.
CHANGE IN CONTROL
shall mean a change in ownership or control of the Corporation effected through any of the following transactions:
(i)
a stockholder-approved 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;
(ii)
a sale, transfer or other disposition of all or substantially all of the Corporation's assets; or
(iii)
the acquisition, directly or indirectly by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders which the Board recommends such stockholders accept.
C.
CODE
shall mean the Internal Revenue Code of 1986, as amended.
D.
COMMON STOCK
shall mean the Corporation's common stock.
E.
CORPORATION
shall mean China Media Group Corporation, a Texas corporation, and its successors.
F.
DISCRETIONARY OPTION GRANT PROGRAM
shall mean the discretionary option grant program in effect under the Plan.
G.
EMPLOYEE
shall mean an "employee" of the Corporation (or any Parent or Subsidiary) within the meaning of Section 3041(c) of the Code and the regulation thereunder.
H.
EXERCISE DATE
shall mean the date on which the Corporation shall have received written notice of the option exercise.
I.
FAIR MARKET VALUE
per share of Common Stock on any relevant date shall be determined by the Plan Administrator in its sole, reasonable discretion. In determining the Fair Market Value, the Plan Administrator may consider the following:
(i)
the closing selling price per share of common stock on the date of grant.
This closing selling price shall be determined as follows:
a.
If the Common Stock is at the time listed on the Nasdaq Stock Market, then the closing selling price per share of Common Stock on the date in question shall be used, as such price is reported by the National Association of Securities Dealers on the Nasdaq Stock Market and published in
The Wall Street Journal
. If there is no closing selling price for the Common Stock on the date in question, then the closing selling price on the last preceding date for which such quotation exists shall be used;
b.
If the Common Stock is at the time listed on any stock exchange, then 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 shall be used, as such price is officially quoted in the composite tape of transactions on such exchange and published in
The Wall Street Journal
. If there is no closing selling price for the Common Stock on the date in question, then the closing selling price on the last preceding date for which such quotation exists shall be used; or
c.
If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the mean between the high bid and low asked prices for the Common Stock on the date of determination shall be used, as published in
The Wall Street Journal
or such other source as the Plan Administrator deems reliable.
(ii)
the average trading volume of the Common Stock and the trading volume on the date of the grant;
(iii)
the closing selling price per share of Common Stock on recent dates;
(iv)
the spread between the "bid" and "ask" prices on the date of grant and on recent dates;
(v)
the price of the Corporation's securities in recently closed private offerings;
(vi)
appropriate volume discounts based on the number of shares subject to the option grant; and
(vii)
any other information the plan administrator determines is applicable in determining the fair market value.
J.
HOSTILE TAKE-OVER
shall mean:
(i)
the acquisition, directly or indirectly, by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders which the Board does not recommend such stockholders to accept; or
(ii)
a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either: (a) have been Board members continuously since the beginning of such period; or (b) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (a) who were still in office at the time the Board approved such election or nomination.
K.
IMMEDIATE FAMILY
shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive relationships.
L.
INCENTIVE OPTION
shall mean an option which satisfies the requirements of Code Section 422.
M.
INVOLUNTARY TERMINATION
shall mean the termination of the Service of any individual which occurs by reason of:
(i)
such individual's involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or
(ii)
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 participation in 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 by the Corporation without the individual's consent.
N.
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).
O.
1934 ACT
shall mean the Securities Exchange Act of 1934, as amended.
P.
NON-STATUTORY OPTION
shall mean an option not intended to satisfy the requirements of Code Section 422.
Q.
OFFICER
shall mean any person serving as the president, chief executive officer, chief financial officer, chief operating officer, treasure, secretary or in any other managerial or administrative capacity for the Corporation or a Parent or Subsidiary of the Corporation, as determined in the Administrator's discretion.
R.
OPTIONEE
shall mean any person to whom an option is granted under the Discretionary Option Grant Program.
S.
OPTION SURRENDER VALUE
shall mean the Fair Market Value per share of Common Stock on the date the option is surrendered to the Corporation or, in the event of a Hostile Take-Over, effected through a tender offer, the highest reported price per share of Common Stock paid by the tender offer or in effecting such Hostile Take-Over, if greater. However, if the surrendered option is an Incentive Option, the Option Surrender Value shall not exceed the Fair Market Value per share.
T.
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.
U.
PARTICIPANT
shall mean any person who is issued shares of Common Stock under the Stock Issuance Program.
V.
PLAN
shall mean the Corporation's 2007 Stock Incentive Plan, as set forth in this document.
W.
PLAN ADMINISTRATOR
shall mean the particular entity, whether the Plan Committee or the Board, which is authorized to administer the Discretionary Option Grant and Stock Issuance Programs with respect to one or more classes of eligible persons, to the extent such entity is carrying out its administrative functions under those programs with respect to the persons under its jurisdiction.
X.
PLAN COMMITTEE
shall mean the committee of two (2) or more independent Board members appointed by the Board to administer the Discretionary Option Grant and Stock Issuance Programs.
Y.
PLAN EFFECTIVE DATE
shall mean the date on which the Plan was adopted by the Board.
Z.
SECTION 16 INSIDER
shall mean an officer or director of the Corporation subject to the short-swing profit liabilities of Section 16 of the 1934 Act.
AA.
SERVICE
shall mean the performance of services for the Corporation (or any Parent or Subsidiary) by a person in the capacity of an Employee, Officer, 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 or stock issuance.
BB.
SHORT TERM FEDERAL RATE
shall mean the federal short-term rate in effect under Section 1274(d) of the Code for the period the shares were held in escrow.
CC.
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.
DD.
STOCK ISSUANCE PROGRAM
shall mean the stock issuance program in effect under the Plan.
EE.
SUBSIDIARY
shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
FF.
TAXES
shall mean the Federal, state and local income and employment tax liabilities incurred by the holder of options or unvested shares of Common Stock in connection with the exercise of those options or the vesting of those shares.
GG.
10% STOCKHOLDER
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).
EXHIBIT 5
OPINION OF RICHARDSON & PATEL LLP
regarding legality of the Common Stock being registered
RICHARDSON & PATREL LLP
10900 Wilshire Boulevard
Suite 500
Los Angeles, Calfornia 90024
Telephone (310) 208-1182
Facsimile (310) 208-1154
February 22, 2007
Via Facsimile (852) 2149-7094
and First Class Mail
Board of Directors
China Media Group Corporation
9901 I.H. 10 West, Suite 800
San Antonio, Texas 78230
Re: 2007 Stock Incentive Plan (the "Plan")
Gentlemen:
We have acted as counsel to China Media Group Corporation, a Texas corporation (the "Company") in connection with the preparation and filing with the Securities and Exchange Commission under the Securities Act of 1933 of the Company's Registration Statement on Form S-8 relating to 38,400,000 shares of the Company's common stock, with no par value (the "Shares").
In connection with that registration, we have reviewed the proceedings of the Board of Directors of the Company relating to the registration and proposed issuance of the Shares, the Articles of Incorporation of the Company and all amendments thereto, the Bylaws of the Company and all amendments thereto, and such other documents and matters as we have deemed necessary to the rendering of the following opinion.
Based upon that review, it is our opinion that the Shares, when issued in conformance with the terms and conditions of the Plan and assuming adequate consideration has been received by the Company, will be legally issued, fully paid, and non-assessable. We do not find it necessary for the purposes of this opinion to cover, and accordingly we express no opinion as to, the application of the securities or blue-sky laws of the various states as to the issuance and sale of the Shares.
We consent to the use of this opinion in the registration statement filed with the Securities and Exchange Commission in connection with the registration of the Shares and to the reference to our firm under the heading "Interests of Named Experts and Counsel" in the registration statement.
RICHARDSON & PATEL, LLP
/s/ Richardson & Patel, LLP
__________________________________________
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Form S-8 Registration Statement of China Media Group Corporation of our report dated February 14, 2007, relating to the financial statements of China Media Group Corporation as of December 31, 2006 which is incorporated by reference into such Form S-8.
/s/ Kabani & Company, Inc.
________________________________________
By: Kabani & Company, Inc.
Los Angeles, California
Dated: March 5, 2007
EXHIBIT 23.3
CONSENT OF RICHARDSON & PATEL LLP
(included in Exhibit 5)