Banker's Note

THE BANKER'S NOTE, INC. 1997 INCENTIVE STOCK OPTION PLAN

STOCK OPTIONS § 18.103

EXHIBIT “A”

THE BANKER'S NOTE, INC.
1997 INCENTIVE STOCK OPTION PLAN

1. Purpose. The purpose of this 1997 Incentive Stock Option Plan of The Banker's Note, Inc. (the “Plan”) is to advance the interest of The Banker's Note, Inc., a Texas corporation (the “Company”) and its Affiliates (as hereinafter defined) by encouraging and enabling the acquisition of a financial interest in the Company by certain Key Employees (as hereafter provided) of the Company and its Affiliates. In addition, the Plan is intended to aid the Company and its Affiliates in attracting and retaining such Key Employees, to stimulate their efforts on behalf of the Company and its Affiliates and to strengthen their desire to remain in the employ of the Company and its Affiliates. “Affiliates” shall mean any present or future parent corporation or subsidiary corporation of The Banker's Note, Inc. as defined in Sections 425(e) and 425(f) of the Internal Revenue Code of 1986, as amended (the “Code”).

The Company may grant stock options which constitute “incentive stock options” (“ISOs”) within the meaning of section 422A of the Code and may grant stock appreciation rights (“Rights”) for use in connection with Options granted by the Company.

2. Stock. The Stock to be issued, transferred and/or sold under the Plan shall be shares of Common Stock, $.01 par value, of the Company (the “Stock”). Subject to adjustment as provided in Section 4(b) hereof, the total number of shares of Stock that may be issued under the Plan pursuant to Options or Rights granted thereunder shall not exceed 500,000 shares of the authorized but unissued Stock, provided that the number of shares that may be granted to any employee under the Plan shall be reasonable in relation to the purpose of the Plan and the needs of the Company. Shares that, by reason of the expiration of an Option or Right or otherwise, are no longer subject to purchase pursuant to an Option or Right granted under the Plan may be reoptioned under the Plan. The Company shall not be required upon the exercise of any Option or Right to issue or deliver any shares of Stock prior to the completion of such registration or other qualification of such shares under any state or Federal law, rule or regulation as the Company shall determine to be necessary or desirable.

3. Participants. Persons eligible to be granted Options or Rights under the Plan shall be limited to such key employees of the Company (including officers who are also directors of the Company, but not including directors who are not also officers) who have substantial responsibility in the direction and management of the Company, as indicated by the action of the Committee (as that term is defined in Section 5) in granting an Option or Right to such employee (the “Participants”).

4. Terms and Conditions of Options. Options granted pursuant to the Plan shall be evidenced by agreements in such form, not inconsistent with this Plan, as the Committee shall from time to time approve, provided that the substance of the following terms and conditions be included therein, subject to adjustment only as provided in Section 4(h).

(a) Option Price. The option price shall not be less than the fair market value of the Stock on the date the Option is granted; however, notwithstanding the foregoing, the option price for Options granted to any employee owning Stock (using the attribution of stock ownership rules of Section 425(d) of the Code) possessing more than 10% of the total combined voting power of all classes of Stock of the Company or any of its Affiliates (“Shareholder Employee”) on the date such Option is granted, shall be at least 110% of the fair market value of the Stock on the date the Option is granted. The Committee shall, in good faith, determine the fair market value of the Stock on the date the Option is granted, and the fair market value may be more or less than the book value of the Stock; provided, however, that such fair market value shall not be less than the closing bid price of the Stock on the date of grant.

(b) Duration of Options. The duration of Options shall be determined by the Committee, but in no event shall the duration of an Option exceed ten (10) years from the date of its grant. The duration of an Option granted to a Shareholder Employee shall not exceed five (5) years from the date of its grant.

(c) Vesting Schedules. The Committee may, in its discretion, grant Options the exercise of which may be conditioned upon the Participant's continued employment with the Company. Each Option may contain provisions, not inconsistent with the provisions of this Plan, which vest the Participant with the right to exercise a portion of the Option granted at certain specified intervals of time. Such vesting schedules shall be determined by the Committee in its discretion and need not be the same for each Option or each Participant.

(d) Manner of Exercise. An Option may be exercised either partially or in full in the discretion of the Participant. Shares of Stock purchased upon exercise of an Option shall at the time of purchase be paid for in full with (i) cash, (ii) the equivalent fair market value of shares of Stock, properly endorsed, or (iii) any combination of (i) and (ii). To the extent that the right to purchase shares has accrued hereunder, Options may be exercised from time to time by written notice to the Company stating the number of shares with respect to which the Option is being exercised and the time of delivery thereof, which shall be not earlier than fifteen (15) days after the giving of such notice unless an earlier date shall have been mutually agreed upon, accompanied by payment in full by certified or official bank check or the equivalent thereof acceptable to the Company. At the time of delivery, the Company shall, without transfer or issue tax to the optionee, deliver to the participant at the principal office of the Company, or such other place as shall be mutually agreed upon, a certificate or certificates for such shares; provided, however, that the time of delivery may be postponed by the Company for such period as may be required for it with reasonable diligence to comply with any requirements of law. In the event the Stock issuable upon exercise is not registered under the Securities Act of 1933 (the “Act”), then the Company at the time of exercise will require in addition that the registered owner deliver an investment representation in form acceptable to the Company and its counsel and the Company will place an appropriate legend on the certificate for such Stock restricting the transfer of same. There shall be no obligation or duty for the Company to register under the Act at any time the Stock issuable upon exercise of the Options. If the Participant fails to accept delivery of all or any part of the number of shares specified in such notice upon tender of delivery thereof, the right to exercise the Option with respect to such shares that Participant fails to accept shall be terminated and the consideration given for such shares shall be returned.

(e) Limitation on Amount. The aggregate fair market value (determined as of the time an option is granted) of Common Stock with respect to which incentive stock options are exercisable for the first time by an employee during any calendar year (under the Plan and all other plans of the Company and its parent and subsidiary corporations) shall not exceed $100,000.

(f) Non-Assignability of Option Rights. No Option shall be assignable or transferable otherwise than by will or by the laws of descent and distribution. During the lifetime of a Participant, the option is exercisable only by him.

(g) Termination of Employment. In the event that a Participant's employment by the Company shall terminate, the Participant shall have the right, subject to Section 4(b) hereof, to exercise his Option at any time within thirty (30) days after such termination to the extent that he was entitled to exercise the same immediately prior to termination. However, if a Participant's employment is terminated by the Company for cause, the Committee may, in its discretion, terminate any outstanding Options held by such Participant.

(h) Adjustment of Options on Recapitalization or Reorganization. The aggregate number of shares of Stock for which Options may be granted to Participants under the Plan, the number of shares covered by each outstanding Option, and the exercise price per share for each such Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Stock resulting from the subdivision or consolidation of shares, or the payment of a stock dividend after the effective date of this Plan, or other increase or decrease in such shares effected without receipt of consideration by the Company; provided, however, that any Options to purchase fractional shares resulting from any such adjustment shall be eliminated.

If the Company shall at any time merge or consolidate with or into another corporation, the holder of each Option will thereafter receive, upon the exercise thereof, the securities or property to which a holder of the number of shares of Stock then deliverable upon the exercise of such Option would have been entitled upon such merger or consolidation, and the Company shall take such steps in connection with such merger or consolidation as may be necessary to assure that the provisions of this Plan shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or property thereafter deliverable upon the exercise of such Option. A sale of all or substantially all the assets of the Company for a consideration (apart from the assumption of obligations) consisting primarily of securities shall be deemed a merger or consolidation for the foregoing purposes.

(i) Rights as a Shareholder. The Participant shall have no rights as a shareholder with respect to any shares of Stock held under Option until the date of issuance of the Stock certificates to him for such shares. Except as provided in Section 4(h), no adjustment shall be made for dividends or other rights for which the record date is prior to the date of such issuance.

5. Terms and Conditions of Stock Appreciation Rights. The Committee may, at any time and in its discretion, grant a Right to any Participant who is awarded or who holds an outstanding Option. Such Rights shall be evidenced by agreements in such form as the Committee shall from time to time approve. Such agreements shall comply with, and be subject to, the following terms and conditions:

(a) Grant. Each Right shall relate to a specific Option under the Plan. The number of shares of Stock subject to such Right shall be equal to the number of shares of Stock that the Participant is entitled to receive pursuant to the related Option. The number of shares of Stock subject to a Right held by a Participant shall be reduced by:

(i) the number of shares of Stock designated by the Participant in Section 5(b) as being the amount with respect to which the Right is being exercised, and

(ii) the number of shares of Stock purchased by such Participant pursuant to the related Option.

(b) Manner of Exercise. A Participant shall exercise a Right by giving written notice of such exercise to the Company. The date upon which such written notice is received by the Company shall be the exercise date for the Right, The Participant shall designate in such written notice, the number of shares of Stock with respect to which such Right is being exercised.

(c) Appreciation Available. A Right shall entitle a Participant to the amount which the fair market value of the Stock subject to the Right exceeds the option price per share of Stock of the related Option. The total amount of appreciation available to a Participant upon the exercise of a Right shall be equal to the number of shares of Stock with respect to which the Right is being exercised, multiplied by the amount of appreciation per Right determined under this Section 5(c).

(d) Payment of Appreciation. In the discretion of the Committee, the total appreciation available to a Participant from the exercise of a Right may be paid to the Participant either in Stock or in cash, or both. If paid in cash the amount thereof shall be the amount of the appreciation determined under Section 5(c) above. If paid in Stock, the number of shares of Stock that shall be issued pursuant to the exercise of a Right shall be determined by dividing the amount of appreciation determined in Section 5(c) by the fair market value of the Stock on the exercise date of the Right; provided, however, that no fractional shares shall be issued upon the exercise of a Right.

(e) Limitations Upon Exercise of Rights. A Participant may exercise a Right with respect to a share of Stock only in conjunction with the reduction of the number of shares of stock subject to the Option to which the Right relates. Rights may be exercised only at such times and by such persons as may exercise Options under the Plan. Adjustment to the number of shares in the Plan and the price per share pursuant to Section 4(h) shall also be made to any Rights held by each Participant. Any termination, amendment, or revision of the Plan pursuant to Sections 7 and 8 shall be deemed a termination, amendment, or revision of Rights to the same extent.

(f) Other Terms and Conditions. Notwithstanding any provision in the Plan to the contrary, any Right granted pursuant to the Plan must meet the following requirements:

(i) the Right must expire no later than the underlying Option;

(ii) the Right may entitle its holder to no more than 100% of the difference between the exercise price of a share of Stock subject to the underlying Option and the fair market value of the Stock subject to the underlying Option at the time the Right is exercised.

(iii) the Right must be transferable only when the underlying Option is transferable, and under the same conditions;

(iv) the Right may be exercised only when, and to the extent, the underlying Option is eligible to be exercised; and

(v) the Right may be exercised only when the fair market value of the Stock exceeds the exercise price of a share of Stock subject to the underlying Option.

6. Administration.

(a) The Plan shall be administered by a stock option committee (the “Committee”) consisting of not less than three (3) directors of the Company to be appointed by the board of directors of the Company (“Board of Directors”). In lieu of appointing the Committee, the entire Board of Directors may collectively act as the Committee until such time as the Committee is appointed. The Board of Directors may, from time to time, remove members from or add members to the Committee. Vacancies in the Committee, however caused, shall be filled by the Board of Directors. The Committee shall select one of its members as chairman and shall hold meetings at such times and places as it may determine. The Committee may appoint a secretary and, subject to the provisions of the Plan and to policies determined by the Board of Directors, may make such rules and regulations for the conduct of its business as it shall deem advisable. A majority of the Committee shall constitute a quorum. All action of the Committee shall be taken by a majority of its members. Any action may be taken by a written instrument signed by a majority of the members, and action so taken shall be fully as effective as if it had been taken by a vote of the majority of the members at a meeting duly called and held.

(b) Subject to the express terms and conditions of the Plan, the Committee shall have full power to grant Options and Rights under the Plan, to construe or interpret the Plan, to prescribe, amend and rescind rules and regulations relating to and to make all other determinations necessary or advisable for its administration.

(c) Subject to the provisions of Sections 3 and 4 hereof, the Committee may, from time to time, determine which Participants shall be granted Options and Rights under the Plan, the number of shares of Stock subject to each Option and Right, the time or times at which Options and Rights shall be granted, and grant such Options and Rights under the Plan.

(d) The Committee shall report to the Board of Directors the names of Participants granted Options and Rights, the number of shares subject to, and the terms and conditions of, each Option and Right.

(e) No member of the Board of Directors or of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or to any Option or Right.

7. Effective Date and Termination.

(a) The effective date of the Plan is April 21, 1997.

(b) The Plan shall terminate on April 20, 2007 but the Board of Directors may terminate the Plan at any time prior to ten years from the effective date of the Plan. Termination of the Plan shall not alter or impair, without the consent of the Participant, any of the rights or obligations and any Option or Right theretofore granted under the Plan.

8. Amendments. The Board of Directors or the Committee may, from time to time, alter, amend, suspend, or Plan, or alter or amend any and all Option or Rights granted thereunder; provided, however, that no such action of the Directors or the Committee may alter the provisions of the Plan so as to:

(a) Permit the grant of Options at less than the fair market value permitted pursuant to Section 4(a) hereof;

(b) Extend the term of the Plan beyond ten (10) years or the maximum term of the Options or Rights granted beyond ten (10) years;

(c) Alter any outstanding Option or Rights Agreement to the detriment of the Participant without his consent; or

(d) Decrease, directly or indirectly (by cancellation and substitution of Options or otherwise), the option price applicable to any Option granted under this Plan.

9. Qualifications. Options granted pursuant to this Plan are intended to qualify as Incentive Stock Options within the meaning of Section 422A of the Code, and shall be so construed; provided, however, that nothing in this Plan shall be interpreted as a representation, guarantee or other undertaking on the part of the Company that the Options granted pursuant to this Plan are, or will be, determined to be Incentive Stock Options, within that section of the Code.

10. Use of Proceeds. The proceeds from the sale of Stock pursuant to the exercise of Options will be used for the general corporate purposes of the Company.