DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 Filed by the Registrant |X|

 Filed by a Party other than the Registrant |_|

 Check the appropriate box:

 |_|Preliminary Proxy Statement

 |_|Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 |X|Definitive Proxy Statement

 |_|Definitive Additional Materials

 |_|Soliciting Material Pursuant to Rule 14a-11(c) or

 Rule 14a-12

IELEMENT CORPORATION

(Name of Registrant as Specified In Its Charter)

 Payment of Filing Fee (Check the appropriate box):

 |X| No fee required

 |_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 (1)  Title of each class of securities to which transaction applies:

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(2)  Aggregate number of securities to which transaction applies:

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 (3)  Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11

 (set forth the amount on which the filing fee is calculated andstate how it was determined):

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 (4)  Proposed maximum aggregate value of transaction:

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 (5)              Total fee paid:

 |_|   Fee previously paid with preliminary materials

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 |_|  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

 (1)  Amount Previously Paid:

 (2)  Form, Schedule or Registration Statement No.:

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 (4)  Date Filed:

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

to be held on December 15, 2006

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TO OUR STOCKHOLDERS:

PLEASE TAKE NOTICE that the annual meeting of stockholders (the "Annual Meeting") of IElement Corporation (the "Company"), will be held at the Company office at 13714 Gamma Road, Suite 120, Dallas, Texas 75244 on December 15, 2006 at 11:30 AM local time, for the following purposes:

1.To elect three (3) directors to hold office for the term specified in the proxy statement or until their successors are elected and qualified;

2.To consider and vote upon a proposal to approve and adopt our 2005 Stock Plan

3.To consider and vote upon a proposal to approve and adopt our 2006 Stock Plan;

4.To approve the Board of Directors' appointment of Bagell, Josephs, Levine & Company, L.L.C. as our independent auditors for the fiscal year ending March 31, 2007; and

5.To transact such other business as may properly come before the Annual Meeting or any adjournment.

Under the General Corporation Law of the State of Nevada, the affirmative vote of the holders of a majority of the shares of IElement’s Common Stock present and/or represented and voted at the Annual Meeting (provided that a quorum is established) is required to elect directors, to approve the 2005 and 2006 Stock Plans and to ratify IElement's independent auditors.

The Board of Directors has fixed the close of business on October 20, 2006 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting and at any adjournment. A proxy statement, which describes the foregoing proposals, and a form of proxy accompany this notice.

Your vote is important, regardless of the number of shares you own and regardless of whether you plan to attend the Annual Meeting. I encourage you to read the enclosed proxy statement carefully and sign and return your enclosed proxy card as promptly as possible because a failure to do so could cause a delay in the Annual Meeting and additional expense to the Company. This will not prevent you from voting in person, but it will assure that your vote will be counted if you are unable to attend the Annual Meeting. If you do decide to attend the Annual Meeting and feel for whatever reason that you want to change your vote at that time, you will be able to do so.

Order of the Board of Directors

/s/ Ivan Zweig

-----------------------------------

Chairman

Dated: October 31, 2006

IELEMENT CORPORATION

-----------------------------------

PROXY STATEMENT

Annual Meeting of Stockholders

to be held on December 15, 2006

---------------------------------

SOLICITATION OF PROXY

The accompanying proxy is solicited on behalf of the Board of Directors of IElement Corporation (the "Company"), for use at the annual meeting of stockholders of the Company (the "Annual Meeting") to be held at 13714 Gamma Road, Dallas, Texas 75244 on December 15, 2006 at 11:30 AM local time, and at any adjournment.

In addition to mail, proxies may be solicited by personal interview, telephone, telecopier or email by our officers, directors and other employees, without additional compensation. We will bear the cost of solicitation of proxies, which are expected to be nominal. The Board of Directors has set October 20 2006 as the record date (the "Record Date") to determine those holders of record of common stock, par value $.001 ("Common Stock") who are entitled to notice of, and to vote at the Annual Meeting. On or about November 1, 2006, this Proxy Statement and the proxy card (the "Proxy Card" or "Proxy") are being mailed to stockholders of record as of the Record Date.

If a stockholder specifies how the proxy is to be voted with respect to any of the proposals for which a choice is provided, the proxy will be voted in accordance with such instructions. If a stockholder fails to so specify with respect to such proposals, the proxy will be voted "FOR" Proposals No. 1, No. 2., No. 3 and No. 4.

Outstanding Voting Securities

Only stockholders of record at the close of business on the Record Date are entitled to vote at the Annual Meeting. As of the close of business on the Record Date, there were 177,723,657 shares of Common Stock outstanding.

If a quorum is present, in person or by proxy, all elections for Directors shall be decided by a plurality of the votes cast in respect thereof. If no voting direction is indicated on

the proxy cards, the shares will be considered votes for all nominees.

Abstentions may be specified on all proposals submitted to a stockholder vote other than the election of Directors. Abstentions will be counted as present for purposes of determining the existence of a quorum regarding the proposal on which the abstention is noted. Abstentions on the Company's proposal to approve the appointment of the independent auditors will not have any effect for or against such proposal.

Brokers holding shares of the Company's Common Stock in street name who do not receive instructions are entitled to vote on the election of Directors and the approval of the appointment of the independent auditors. Broker non-votes will have no effect on matters being considered at the Annual Meeting.

How You Can Vote

You may vote your shares by signing the enclosed proxy card and returning it in a timely manner. Please mark the appropriate boxes on the card and sign, date and return the card promptly. A postage-paid return envelope is enclosed for your convenience.

Execution of the accompanying proxy card will not affect a stockholder's right to attend the Annual Meeting and vote in person. Any stockholder giving a proxy has the right to revoke it by giving written notice of revocation to the Secretary of the Company at any time before the proxy is voted or by attendance at the Annual Meeting and electing to vote in person.

SECURITY OWNERSHIP TABLE

The following table sets forth information with respect to the beneficial ownership of shares of common stock as of October 20, 2006 of each person or entity who is known by the Company to beneficially own five percent or more of the Common Stock; each director and executive officer of the Company; and all directors and executive officers of the Company as a group:

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Number of

Name of Beneficial Owner        Shares(2)       Percentage Ownership

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Ivan Zweig(1)                          19,299,576(1)                    10.86%

Lance K. Stovall*                         381,276                          0.21%

Ken A. Willey*                             187,500                          0.11%

Barry Brault(3)                            9,982,682                          5.62%

Gerd Weger(3)                          15,000,000                          8.44%

Alex Ponnath                              2,229,374                          1.25%

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All Directors and

Executive Officers as a            47,080,408                        26.49%

Group (4 persons)

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* Less than one percent.

⁽¹⁾ An officer and director. Comprised of 85,000 shares of common stock owned by Mr. Zweig individually; 18,685,966 shares of common stock owned by Kramerica Corporation, an entity in which Mr. Zweig is the sole shareholder, officer and director; and 528,610 shares of common stock owned by Mr. Zweig's spouse.

⁽²⁾ Unless otherwise noted, the Company believes that all persons named in the table have sole voting and investment power with respect to all shares of the Common Stock beneficially owned by them. A person is deemed to be the beneficial owner of securities which may be acquired by such person within 60 days from the date indicated above upon the exercise of options, warrants or convertible securities. Each beneficial owner's percentage of ownership is determined by assuming that options, warrants or convertible securities that are held by such person (not those held by any other person) and which are exercisable within 60 days of the date indicated above, have been exercised.

⁽³⁾ A beneficial owner of more than 5% of outstanding common shares

Directors and Executive Officers of the Company

Set forth below are the names of the directors, executive officers and key employees of the Company as of October 30, 2006.

Name                                  Age                                     Position

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Ivan Zweig                          34                Chairman and Chief Executive Officer

Lance K. Stovall                 38                                       Director

Ken A. Willey                     31                                       Director

Alex Ponnath                      39                       Chief Technology Officer(1)

(1)Although Mr. Ponnath is referred to as Chief Technology Officer, he is an independent contractor and not an employee of IElement.

IVAN ZWEIG. Mr. Zweig has been our Chairman and Chief Executive Officer since January 2005, and has been interim Chief Financial Officer since August 2005. Mr. Zweig is also the Chief Executive Officer, director and sole shareholder of Kramerica, a personnel services corporation. Since December 1998, Mr. Zweig has served as the Chief Executive Officer and director of Integrated Communications Consultants Corp. ("ICCC"), a nationwide data carrier specializing in high speed Internet access and secure data transaction. From February 1998 until March 1999, Mr. Zweig was the Western Region Dedicated Sales Manager of NET-tel Communications. He was responsible for Internet sales for 52 reps in the Western Region. Previously he employed by MidCom Communications, where he was a Sales Manager after being an Account Executive for a short time. Despite his association with ICCC Mr. Zweig devotes a minimum of forty hours per week to IElement.

MidCom was purchased by Winstar whereupon all of the management team migrated over to NET-tel. Before Midcom, Mr. Zweig helped form a joint venture of five individuals who invested over $500,000 to fund a health food and nutrition franchise called Smoothie King. He purchased the rights to build 18 stores in the San Francisco Bay Area and sold his interest after building the first two. Additionally, in 1995 he started a city magazine called Dallas/Ft.Worth Lifestyles. This was Mr. Zweig's first employment venture after college and a brief stint of playing professional baseball. He attended Tulane University and was a member of Team USA in 1991, which played in Cuba for the Pan American Games. He was also a two-time All-American pitcher while at Tulane. Mr. Zweig left Tulane before earning a degree.

Additionally, Ivan Zweig, our current Chairman of the Board and Chief Executive Officer, has accepted our appointment as the Chief Financial Officer until such time as a new Chief Financial Officer is appointed.

On March 4, 2006 Mr. Zweig, then our sole board member, appointed Lance K. Stovall and Ken A. Willey to the Board of Directors to serve until the next annual election of directors by shareholders in accordance with Article III, Section 3 of our By-laws.

   LANCE K. STOVALL. Mr. Stovall attended Texas Christian

University from 1987 to 1991 where he earned a B.S. in Neuroscience. From September 2005 to the present Mr. Stovall has been the President of Lone Star Valet in Dallas, Texas. From October 2003 through September 2005, Mr. Stovall was Vice President of Business Development of IElement. Mr. Stovall left his employ with IElement for personal reasons and not as a result of any disagreement with the Company. From October 1999 through September 2003, Mr. Stovall worked for and was a co-founder of Zone Communications in Los Angeles, California. In 1998 and 1999 Mr. Stovall was Director of Operations of Lone Star Valet in Dallas, Texas. From 1993 to 1998 Mr. Stovall was founder and Vice President of Operations for Excel Student Services in Arlington, Texas.

Mr. Stovall entered into a Directors Agreement with IElement whereby he agreed to maintain the confidentiality of our trade secrets and proprietary information and to refrain from soliciting our employees or customers for a period of two years following the term of the Director's Agreement. We agreed to hold Mr. Stovall harmless and indemnify him in his position as a Director, where he has acted in good faith in the performance of his duties. Finally, we agreed to compensate Mr. Stovall with 250,000 stock options exercisable at $.01 per share and vesting 62,500 each on June 4, 2006, September 4, 2006, December 4, 2006 and March 4, 2007.

   KEN A. WILLEY. From 2005 through the present, Mr. Willey has been employed with Noble Royalties, Inc. From 2004 through 2005 Mr. Willey was regional director of McLeod USA. From 2000 through 2004 Mr. Willey was District Sales Manager at Logix. From 1997 through 2000 Mr. Willey was District Sales Manager for Verizon and from 1992 through 1997 Mr. Willey worked in various capacities at Circuit City.

Mr. Willey entered into a Directors Agreement with IElement whereby he agreed to maintain the confidentiality of our trade secrets and proprietary information and to refrain from soliciting our employees or customers for a period of two years following the term of the Director's Agreement. We agreed to hold Mr. Stovall harmless and indemnify him in his position as a Director, where he has acted in good faith in the performance of his duties. Finally we agreed to compensate Mr. Willey with 250,000 stock options exercisable at $.01 per share and vesting 62,500 each on June 4, 2006, September 4, 2006, December 4, 2006 and March 4, 2007.

   ALEX PONNATH. Mr. Ponnath attended the University of Munich in Munich, Germany where he earned a degree in Communications, then moved to the United States in 1993. In 1990 Mr. Ponnath was a founding partner of Outdoor Advertising and Sports Marketing Firm, which later he sold to Germany's largest outdoor advertiser. He moved to the United States in 1993. From 1996 through 1999 he worked for the Los Angeles based interconnect firm Nextcom and assumed the roll of Senior Network Engineer. From 1999 through 2000 Mr. Ponnath was a shareholder and Chief Technology Officer for NKOB Networks, a Los Angeles ISP. Mr. Ponnath has worked for ICCC, a related party of IElement as Chief Technology Officer since February 2000, and then IElement, as Chief Technology Officer since January 2005. Mr. Ponnath is an independent contractor.

There are no family relationships between any director or executive officer and any other director or executive officer.

The Board of Directors of the Corporation recommends a vote FOR the slate of director nominees. The vote of a plurality of shares, present in person or represented by proxy at the Annual Meeting and entitled to vote, is required to elect each of the Directors.

Resignations. On August 3, 2005 we accepted the resignations of Timothy Dean-Smith and Susan Walton from their positions on the Board of Directors. Mr. Dean-Smith also resigned from his position as Chief Financial Officer of the Company. The resignations of Mr. Dean-Smith and Ms. Walton are consistent with the expectations of the parties pursuant to the consummation of the merger between IElement, Inc. and Mailkey Corporation (the merged entity currently known as IElement Corporation) on January 19, 2005.

BOARD OF DIRECTORS.

Our Board of Directors serves until the next annual meeting of shareholders or until their respective successor is duly elected and qualified. Directors are elected at the annual meeting of shareholders or by written consent of the shareholders, and each Director holds office until his successor is duly elected and qualified or he resigns, unless sooner removed. Officers are elected annually by our Board of Directors and serve at the discretion of the Board.

During the fiscal year ended March 31, 2006, the Board of Directors held one meeting. One action of the Board of Directors was taken by written consent, which action approved the merger between Mailkey and IElement Corporation.

NOMINATING COMMITTEE

The Board of Directors does not have a standing Nominating Committee because the Board of Directors determined that the Board of Directors could satisfactorily perform the actions of the Nominating committee. The Board of Directors has adopted resolutions with respect to the nomination process. The Board of Directors accepts director nominations made by members of the Board of Directors of the Company.

The Board of Directors may consider those factors it deems appropriate in evaluating director nominees, including judgment, skill, diversity, strength of character, experience with businesses and organizations comparable in size or scope to the Company, experience and skill relative to other members of the Board of Directors, and specialized knowledge or experience. Depending upon the current needs of the Board of Directors, certain factors may be weighed more or less heavily. In considering candidates for the Board of Directors, they evaluate the entirety of each candidate's credentials and do not have any specific minimum qualifications that must be met by a nominee. They will consider candidates from any reasonable source, including current members of the Board of Directors, stockholders, professional search firms or other persons. The Board of Directors will not evaluate candidates differently based on who has made the recommendation.

AUDIT COMMITTEE AND AUDIT COMMITTEE FINANCIAL EXPERT

Our Board of Directors has not created a standing audit committee of the Board. Instead, our full Board of Directors acts as our audit committee. The Board of Directors determined that our internal controls are adequate to insure that financial information is recorded, processed, summarized and reported in a timely and accurate manner in accordance with applicable rules and regulations of the Securities and Exchange Commission. Accordingly, our Board of Directors concluded that the benefits of retaining an individual who qualifies as an "audit committee financial expert," as that term is defined in Item 401(e) of Regulation S-B promulgated under the Securities Act, would be outweighed by the costs of retaining such a person. As a result, no member of our Board of Directors is an "audit committee financial expert."

SHAREHOLDER COMMUNICATIONS

In light of the limited operations we conduct and the limited number of record and beneficial shareholders that we have, we have not implemented any formal procedures for shareholder communication with our Board of Directors. Any matter intended for the Board, or for any individual member or members of the Board, should be directed to our corporate secretary at 17194 Preston Rd., Suite 102 PMB 341, Dallas, TX 75248. In general, all shareholder communication delivered to the corporate secretary for forwarding to the Board or specified Board members will be forwarded in accordance with the shareholder's instructions. However, the corporate secretary reserves the right to not forward to Board members any abusive, threatening or otherwise inappropriate materials.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

On July 21, 2005 and August 1, 2005, the Company filed an Information Statement on Schedule 14C in preliminary form and in definitive form, respectively, disclosing that, among other items, it had obtained the requisite shareholder approval to change the Company's name to IElement Corporation. As of August 21, 2005, Mailkey Corporation formally changed its name to IElement Corporation. Subsequently, IElement has undertaken steps to present itself as IElement to its customer base and target market and will continue to take steps to notify, inform and/or promote the name of IElement. We now aim to grow the business of IElement and establish it as a leading regional added-value carrier.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own 10% or more of our common stock, to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% stockholders are required to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of the copies of such forms received by us or written representations from such persons that no other reports were required for such persons, we believe that during the fiscal year ended March 31, 2006, the Section 16(a) filing requirements applicable to our officers, directors and ten percent (10%) stockholders were not satisfied in a timely fashion. In particular, Mr. Zweig did not timely meet the Section 16(a) filing requirements. However, as of the date hereof, the filing requirements of Mr. Zweig have been satisfied. In addition, Mr. Barry Brault received 2,258,013 shares of common stock in the merger with IElement on January 19, 2005, and on the same date received 8,784,669 shares of common stock in exchange for debt for a total of 11,042,682 which at the time represented in excess of 10% of the outstanding common shares. Mr. Brault filed a Form 5 on February 6, 2006 reflecting his ownership. As of the date hereof, Mr. Brault owns less than 10% of the outstanding common shares.

CODE OF BUSINESS CONDUCT AND ETHICS

We have adopted a Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Our Code of Business Conduct and Ethics is designed to deter wrongdoing and promote: (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (ii) full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in our other public communications; (iii) compliance with applicable governmental laws, rules and regulations; (iv) the prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and (v) accountability for adherence to the Code of Ethics.

SUMMARY COMPENSATION TABLE

The following table sets forth the compensation paid to the Company’s Chief Executive Officer and the four other most highly compensated executive officers with compensation in excess of $100,000 for the fiscal years ended March 31, 2006, 2005 and 2004, respectively.

	Annual Compensation						Long Term Compensation Awards
Name and Principal Postion		Year	Salary ($	)	Bonus ($	)		Restricted Stock Award(s	)	Securities Underlying Options/ Warrants	All other compensation ($	)
Ivan Zweig, CEO*		2006	300,000		0			0
		2005	300,000		45,000			85,000
		2004	75,000		15,000			0
		2003	180,000		0			0
Alex Ponnath, CTO**		2006	132,000		0			0
		2005	132,000		6,333			0
		2004	33,000		0			0
Timothy Dean-Smith***		2006	0		0			0
		2005	137,448		0			0
		2004	136,500		0			0
		2003	14,606		0			0

* Includes payments made to Kramerica, Inc.

** All payments were made to Mr. Ponnath's corporate entity Obelix, Inc.

***On August 8, 2005 Timothy Dean-Smith resigned as Chief Financial Officer. Mr.

Dean-Smith was a former officer and director of MailKey.

**** Former Chief Executive Officer and Secretary of MailKey

OPTION GRANTS DURING 2006

EXERCISE OR BASE			PERCENT OF TOTAL
NAME		NUMBER OF SECURITIES	OPTIONS GRANTED
PRICE ($/SH)	EXPIRATION DATE	UNDERLYING OPTIONS	TO EMPLOYEES IN FISCAL YEAR
Calder Capital Inc.		250,000
$0.10	12/30/2007
Christiane Loeberba		125,000
$0.10	12/30/2007
Clarence V. Keck Jr		75,000
$0.10	12/30/2007
Film and Music
Entertainment, Inc.		500,000
$0.10	12/30/2007
Frank A. Davis		100,000
$0.10	12/30/2007
Fred J. Matulka		250,000
$0.10	12/30/2007
Fred Schmitz		2,500,000
$0.10	12/30/2007
General Research GM		250,000
$0.10	12/30/2007
Gerd Weger		5,000,000
$0.10	12/30/2007
Glenn L. Jensen		1,500,000
$0.10	12/30/2007

Global Equity Tradi
Finance LTD.		250,000
$0.10	12/30/2007
Global Equity Tradi
Finance LTD.		1,000,000
$0.10	12/30/2007
Hendrik Paulus		250,000
$0.10	12/30/2007
Holger Pfeiffer		125,000
$0.10	12/30/2007
Jerome Niedfelt		150,000
$0.10	12/30/2007
John Niedfelt		100,000
$0.10	12/30/2007
Jonathan Lowenthal		250,000
$0.10	12/30/2007
Jorn Follmer		250,000
$0.10	12/30/2007
Jurgen Popp		750,000
$0.10	12/30/2007
Kenneth J. Meyer		500,000
$0.10	12/30/2007
Laurence B. Straus		150,000
$0.10	12/30/2007
Marianne Issels		125,000
$0.10	12/30/2007
Matthias Graeve		125,000
$0.10	12/30/2007
Michael Bloch		1,000,000
$0.10	12/30/2007
Michael D. Melson		250,000
$0.10	12/30/2007
Oscar Greene Jr.		250,000
$0.10	12/30/2007
Raymond R. Dunwoodie		250,000

$0.10	12/30/2007
Red Giant Productions,
Inc.		250,000
$0.10	12/30/2007
Richard R. Crose		250,000
$0.10	12/30/2007
Robert A. Flaster		100,000
$0.10	12/30/2007
Robert A. Smith		150,000
$0.10	12/30/2007
Robert H. Gillman		250,000
$0.10	12/30/2007
Robert R. Rowley		250,000
$0.10	12/30/2007
Ryan Cornelius		750,000
$0.10	12/30/2007
Sat Paul Dewan		150,000
$0.10	12/30/2007
Stefan Muller		250,000
$0.10	12/30/2007
Thomas Allen Piscula		250,000
$0.10	12/30/2007
Thomas W. Barrett		100,000
$0.10	12/30/2007
Thomas Weiss Dr.		125,000
$0.10	12/30/2007
Timothy M. Broder		250,000
$0.10	12/30/2007
Trey Investments, LLP		75,000
$0.10	12/30/2007
Ulrich Nusser		125,000
$0.10	12/30/2007
Veronica Kristi Prenn		750,000
$0.10	12/30/2007
Wayne P. Schoenmakers		50,000

$0.10	12/30/2007
William G. Cail		12,500
$0.10	12/30/2007
William Harner		75,000
$0.10	12/30/2007
William M. Goatley
Revocable Trust FBO
William M Goatley DTD
05/09/1989		125,000
$0.10	12/30/2007
Vista Capital		2,617,188
$0.10	09/12/2010
Vista Capital		1,046,874
$0.13	09/12/2010
Vista Capital		261,719
$0.10	09/12/2010
Rockwell Capital		4,000,000
$0.10	12/31/2008
Stefan Muller		100,000
$0.01	03/06/2016
Fred Schmitz		100,000
$0.01	03/06/2016
Ivan Zweig		250,000
$0.01	03/04/2016
Lance Stovall		250,000
$0.01	03/04/2016
Ken Willey		250,000
$0.01	03/04/2016
Debra Chase		50,000	17.54%
$0.01	09/08/2015
Brett Jensen		30,000	10.53%
$0.01	09/08/2015
Albert Marerro		50,000	17.54%
$0.01	09/08/2015
Eric Mason		5,000	1.75%
$0.01	09/08/2015
Mark Mooney		20,000	7.02%

$0.01	09/08/2015
Alex Nelson		40,000	14.04%
$0.01	09/08/2015
Heather Walther		40,000	14.04%
$0.01	09/08/2015
Peter Walther		50,000	17.54%
$0.01	09/08/2015
		31,723,281	100.00%

AGGREGATED OPTIONS EXERCISES IN LAST FISCAL YEAR

AND FY-END OPTION VALUES

NAME	SHARES ACQUIRED ON EXERCISE	VALUE REALIZED	NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS AT FY-END (#)	VALUE OF UNEXERCISED IN THE MONEY OPTIONS
			EXERCISABLE  UNEXERCISABLE	EXERCISABLE UNEXERCISABLE
none

EMPLOYMENT CONTRACTS

On January 18, 2005 we entered into an Employment Agreement with Mr. Zweig in the form of a Binding Letter of Intent. Pursuant to the Agreement Mr. Zweig is the Chief Executive Officer of the Company. The terms of the agreement are as follows. Mr. Zweig's base salary in the amount of $25,000.00 per month is to be paid to Kramerica Capital Corporation, a company for which Mr. Zweig is the sole shareholder, officer and director. Mr. Zweig receives benefits offered to other employees of the Company and is to receive 4 weeks of vacation per year. Mr. Zweig's reasonable expenses are to be reimbursed. Upon termination without cause, all Notes due and owing to Mr. Zweig or his entities are to be paid in full, all outstanding options are to accelerate and fully vest and be paid in full, all earned performance bonuses must be paid in full, and all accrued vacation pay and other outstanding benefits are to be paid in full. If Mr. Zweig is terminated for cause, all Notes and other obligations are to be paid within 60 days. In addition, the Agreement provides for bonus payments following the end of the 12th month as follows: for months 13 through 24, a $1,000,000 bonus calculated on the closing average revenue number and EDITDA for months 22 through 24 which revenue number must be $1,250,000 ($15,000,000 annualized) per month and EBITDA of 15%; for months 25-36 a $2,000,000 bonus if actual revenue during months 25-36 reaches $22,500,000 and EBITDA of 18%; and for months 37-48 a $3,000,000 bonus if actual revenue during months 37-48 reaches $30,000,000 and EBITDA of 21%. Bonuses are payable in promissory notes. The term of the Agreement is 48 months, provided however, that the Agreement may be immediately terminated if the Notes due to Mr. Zweig are declared in default. Although the Notes are 6 months behind, Mr. Zweig has not declared a default or terminated the employment agreement. Clause 10 to the employment contract inadvertently stated "intentionally omitted" rather than "reserved for future use".

We do not have an employment contract with any other executive officer. We may in the future create retirement, pension, profit sharing and medical reimbursement plans covering our Executive Officers and Directors.

DIRECTORS COMPENSATION

Our former Director Susan Walton received compensation of $30,000 during the fiscal year end March 31, 2005 and $20,000 during the fiscal year end March, 2006 for serving on the Board of Directors of the Company.

We agreed to compensate Mr. Stovall with 250,000 stock options exercisable at $.01 per share and vesting 62,500 each on June 4, 2006, September 4, 2006, December 4, 2006 and March 4, 2007. In addition, we agreed to compensate Mr. Willey with 250,000 stock options exercisable at $.01 per share and vesting 62,500 each on June 4, 2006, September 4, 2006, December 4, 2006 and March 4, 2007.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None of our directors or executive officers or their respective immediate family members or affiliates is indebted to us. As of the date hereof, there is no material proceeding to which any of our directors, executive officers or affiliates is a party or has a material interest adverse to us.

Mr. Zweig is also the Chief Executive Officer, director and sole shareholder of Kramerica, a personnel services corporation. ince December 1998, Mr. Zweig has served as the Chief Executive Officer and director of Integrated Communications Consultants Corp. ("ICCC"), a nationwide voice and data carrier specializing in high speed Internet access and secure data transaction. ICCC provides IElement with resold telecom services and IElement pays ICCC approximately $100,000 on a monthly basis for such services. On October 1, 2004, ICCC filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court, Northern District of Texas, Dallas Division. ICCC's plan of reorganization was approved by the Bankruptcy Court on April 26, 2006.

On January 19, 2005, IElement issued promissory notes to, Kramerica, certain members of Mr. Zweig's immediate family and others in the aggregate amount of $376,956.16 (the "Notes") with no interest. Upon issuance, the Notes were payable in 36 monthly installments with the first payment commencing six months after the closing of the merger and were secured by substantially all of the assets of IElement. IElement did not make any payments on the Notes.

On March 25, 2006 each of the Notes were cancelled and IElement issued new convertible promissory notes to the same individuals in the same principal amount of $376,956.16, again with no interest thereon. In particular, both the January 19, 2005 Notes and the amended March 25, 2006 convertible promissory notes were issued to: Heather Walther, Mr. Zweig's wife ($20,000); Kramerica, Inc., Mr. Zweig's personal use corporation ($120,000); Mary Francis Trait Trust, Mr. Zweig's deceased grandmother's trust for which Mr. Zweig's mother, Heather Zweig serves as trustee ($55,611.15); Peter Walther, Mr. Zweig's brother in law ($30,000); Richard Zweig and Richard Zweig IRA, Mr. Zweig's father (aggregate of $47,500); and Strait Grandchildren Trust, Mr. Zweig's deceased grandmother's trust for which Mr. Zweig's mother, Heather Zweig serves as trustee ($103,845.01). The first payment on each of the new convertible promissory notes was due in September 2006 with a total of 36 monthly installments through August 2009, but in October 2006 each of the parties signed extension agreements that moved the first payment date to April 2007. The Lender has the right to convert all or a portion of the outstanding balance, at any time until the notes are paid in full, into IElement's common stock at a conversion price of $0.035 per share. Any past due balance on the old Notes was forgiven at the time of cancellation of the old Notes and issuance of the new convertible promissory notes. The new convertible promissory notes are secured by substantially all the assets of IElement as were the original Notes.

ELECTION OF DIRECTORS

The Board of Directors has nominated the three persons named below for election as directors at the meeting to serve until our 2007 annual meeting of stockholders or until their elected successors are qualified.

The Company’s Articles of Incorporation does not specify the number of Directors, but indicates that the Board of Directors shall be governed by the Bylaws and Nevada state law.

The Company’s bylaws provide that the Board of Directors must consist of not less three. At the present time, our board consists of three persons. All of the nominees below are presently serving as members of the Board of Directors. Each nominee has consented to have his name appear as a nominee in this proxy statement and to serve as a director if elected. Should any nominee become unable to serve as a director, shares of common stock represented at the meeting by valid proxies may be voted for the election of a substitute nominee or nominees as may be designated by the Board of Directors. The Board of Directors has no reason to believe that any nominee will be unable to serve as a director. It is our policy that all directors should attend our annual meeting. Each of our directors will be present at our annual meeting. The following information is provided concerning the nominees for election as our directors:

Proposal No. 1.

Election of Directors

Three (3) directors will be elected at the Annual Meeting to serve for a term of one year, until the next Annual Meeting or until their successors have been duly elected and have qualified. If any nominee is unable to serve, which the Board of Directors has no reason to expect, the persons named in the accompanying proxy intend to vote for the balance of those named and, if they deem it advisable, for a substitute nominee. The three nominees for election as directors to serve until the next Annual Meeting are:

IVAN ZWEIG. Mr. Zweig has been our Chairman and Chief Executive Officer since January 2005, and has been interim Chief Financial Officer since August 2005. Mr. Zweig is also the Chief Executive Officer, director and sole shareholder of Kramerica, a personnel services corporation. Since December 1998, Mr. Zweig has served as the Chief Executive Officer and director of Integrated Communications Consultants Corp. ("ICCC"), a nationwide data carrier specializing in high speed Internet access and secure data transaction. From February 1998 until March 1999, Mr. Zweig was the Western Region Dedicated Sales Manager of NET-tel Communications. He was responsible for Internet sales for 52 reps in the Western Region. Previously he employed by MidCom Communications, where he was a Sales Manager after being an Account Executive for a short time. Despite his association with ICCC Mr. Zweig devotes a minimum of forty hours per week to IElement.

MidCom was purchased by Winstar whereupon all of the management team migrated over to NET-tel. Before Midcom, Mr. Zweig helped form a joint venture of five individuals who invested over $500,000 to fund a health food and nutrition franchise called Smoothie King. He purchased the rights to build 18 stores in the San Francisco Bay Area and sold his interest after building the first two. Additionally, in 1995 he started a city magazine called Dallas/Ft.Worth Lifestyles. This was Mr. Zweig's first employment venture after college and a brief stint of playing professional baseball. He attended Tulane University and was a member of Team USA in 1991, which played in Cuba for the Pan American Games. He was also a two-time All-American pitcher while at Tulane. Mr. Zweig left Tulane before earning a degree.

Additionally, Ivan Zweig, our current Chairman of the Board and Chief Executive Officer, has accepted our appointment as the Chief Financial Officer until such time as a new Chief Financial Officer is appointed.

On March 4, 2006 Mr. Zweig, then our sole board member, appointed Lance K. Stovall and Ken A. Willey to the Board of Directors to serve until the next annual election of directors by shareholders in accordance with Article III, Section 3 of our Bylaws.

LANCE K. STOVALL. Mr. Stovall attended Texas Christian University from 1987 to 1991, where he earned a B.S. in Neuroscience. From September 2005 to the present Mr. Stovall has been the President of Lone Star Valet in Dallas, Texas. From October 2003 through September 2005, Mr. Stovall was Vice President of Business Development of IElement. Mr. Stovall left his employ with IElement for personal reasons and not as a result of any disagreement with the Company. From October 1999 through September 2003, Mr. Stovall worked for and was a co-founder of Zone Communications in Los Angeles, California. In 1998 and 1999 Mr. Stovall was Director of Operations of Lone Star Valet in Dallas, Texas. From 1993 to 1998 Mr. Stovall was founder and Vice President of Operations for Excel Student Services in Arlington, Texas.

Mr. Stovall entered into a Directors Agreement with IElement whereby he agreed to maintain the confidentiality of our trade secrets and proprietary information and to refrain from soliciting our employees or customers for a period of two years following the term of the Director's Agreement. We agreed to hold Mr. Stovall harmless and indemnify him in his position as a Director, where he has acted in good faith in the performance of his duties. Finally, we agreed to compensate Mr. Stovall with 250,000 stock options exercisable at $.01 per share and vesting 62,500 each on June 4, 2006, September 4, 2006, December 4, 2006 and March 4, 2007.

KEN A. WILLEY. From 2005 through the present, Mr. Willey has been employed with Noble Royalties, Inc. From 2004 through 2005 Mr. Willey was regional director of McLeod USA. From 2000 through 2004 Mr. Willey was District Sales Manager at Logix. From 1997 through 2000 Mr. Willey was District Sales Manager for Verizon and from 1992 through 1997 Mr. Willey worked in various capacities at Circuit City.

Mr. Willey entered into a Directors Agreement with IElement whereby he agreed to maintain the confidentiality of our trade secrets and proprietary information and to refrain from soliciting our employees or customers for a period of two years following the term of the Director's Agreement. We agreed to hold Mr. Stovall harmless and indemnify him in his position as a Director, where he has acted in good faith in the performance of his duties. Finally we agreed to compensate Mr. Willey with 250,000 stock options exercisable at $.01 per share and vesting 62,500 each on June 4, 2006, September 4, 2006, December 4, 2006 and March 4, 2007.

Our Board of Directors unanimously recommends that stockholders vote FOR all of the above listed nominees

Proposal No. 2.

Approval of the 2005 Stock Plan

The Board of Directors has determined that it is in the best interests of the Company and its stockholders to adopt the 2005 Stock Plan. In September 2005, the Board of Directors adopted the 2005 Stock Plan and reserved Common Stock for issuance thereunder subject to stockholder approval in the amount of 5,000,000 shares. As of October 31 2006, there have been 285,000 options granted pursuant to the 2005 Stock Plan.

For a copy of the 2005 Stock Plan, see "Exhibit 4.1—2005 Stock Plan."

 The approval of the 2005 Stock Plan requires the affirmative vote of a majority of the shares present and entitled to vote on the proposal at the 2006 Annual Meeting.

 Our Board of Directors unanimously recommends that stockholders vote FOR the adoption of the 2005 Stock Plan and the number of shares reserved for issuance thereunder.

Proposal No. 3.

Approval of the 2006 Stock Plan

The Board of Directors has determined that it is in the best interests of the Company and its stockholders to adopt the 2006 Stock Plan. In August 2006, the Board of Directors adopted the 2006 Stock Plan and reserved Common Stock for issuance thereunder subject to stockholder approval in the amount of 41,000,000 shares, plus (a) any shares which have been reserved but not issued under the 2001 Employee Stock Compensation Plan as of the date of stockholder approval of the 2006 Stock Plan, and (b) any shares returned to the 2001 Employee Stock Compensation Plan as a result of termination of options or repurchase of shares issued under said Plan. As of October 31 2006, there have been 17,200,000 options granted pursuant to the 2006 Stock Plan. As of October 31, 2006, approximately 136,328 shares have been reserved but not issued under the 2001 Employee Stock Compensation Plan.

For a copy of the 2006 Stock Plan, see "Exhibit 4.2—2006 Stock Plan."

 The approval of the 2006 Stock Plan requires the affirmative vote of a majority of the shares present and entitled to vote on the proposal at the 2006 Annual Meeting.

 Our Board of Directors unanimously recommends that stockholders vote FOR the adoption of the 2006 Stock Plan and the number of shares reserved for issuance thereunder.

Proposal No. 4.

Ratification of the Appointment of our

Independent Registered Public Accounting Firm For 2007.

Subject to shareholder ratification, our Board of Directors has appointed Bagell, Josephs, Levine & Company, L.L.C. to serve as our independent registered public accounting firm for the year ending March 31, 2007. Selection of our independent registered public accounting firm is not required to be submitted to a vote of the shareholders for ratification. However, we are submitting this matter to the shareholders as a matter of good corporate governance. Even if the appointment is ratified, the Board of Directors may, in its discretion, appoint different independent registered public accounting firm at any time during the year if they determine that such a change would be in our best interests.

Representatives of Bagell, Josephs Levine & Company, L.L.C. are expected to be present at the Annual Meeting. They will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.

Our Board of Directors unanimously recommends that stockholders vote FOR ratification of the selection of Bagell, Josephs, Levine & Company, L.L.C. as our independent public accountants.

Principal Accountant Fees and Services

Audit Fees

We were billed $47,750 for the fiscal year ended March 31, 2006 and $19,500 for the fiscal year ended March 31, 2005, for professional services rendered by our independent registered public accounting firm for the audit of the our annual financial statements, the review of our quarterly financial statements, and other services performed in connection with our statutory and regulatory filings.

Audit Related Fees

There were $12,000 audit related fees for the fiscal years ended March 31, 2006 and 2005. Audit related fees include fees for assurance and related services rendered by our independent registered public accounting firm related to the audit or review of our financial statements, not included in the foregoing paragraph.

Tax Fees

There were tax fees of $700 for the fiscal year ended March 31, 2006. Tax fees include fees for professional services rendered by our independent registered public accounting firm for tax compliance, tax advice and tax planning.

All Other Fees

There were no other professional services rendered by our independent registered public accounting firm during the last two fiscal years that were not included in the above paragraphs.

Our Board of Directors reviews and approves audit and permissible non-audit services performed by our independent registered public accounting firm, as well as the fees charged for such services. In its review of non-audit service fees and its appointment of Bagell, Josephs, Levine & Company, L.L.C. as our independent registered public accounting firm, the Board of Directors considered whether the provision of such services is compatible with maintaining independence. All of the services provided and fees charged by Bagell, Josephs Levine & Company, L.L.C. in 2006 were approved by the Board of Directors.

Annual Report

Our annual report to stockholders concerning our operations during the fiscal year ended March 31, 2006, including audited financial statements, has been filed on the EDGAR system. The annual report is not incorporated in the proxy statement and is not to be considered a part of the soliciting material.

UPON WRITTEN REQUEST, WE WILL PROVIDE, WITHOUT CHARGE, A COPY OF OUR ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED MARCH 31, 2006, TO EACH STOCKHOLDER OF RECORD OR TO EACH STOCKHOLDER WHO OWNED OUR COMMON STOCK LISTED IN THE NAME OF A BANK OR BROKER, AS NOMINEE, AT THE CLOSE OF BUSINESS ON OCTOBER 20, 2006. ALSO, ELETRONIC COPIES ARE AVAILABLE VIA WEB AT http://www.ielement.com/investor.htm AND http://www.sec.gov/Archives/edgar/data/1043105/000104310506000041/0001043105-06-000041-index.htm

Other Business

Our management is not aware of any other matters which are to be presented at the meeting, nor have we been advised that other persons will present any such matters. However, if other matters properly come before the meeting, the individual named in the accompanying proxy shall vote on such matters in accordance with his best judgment.

STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING

Any shareholder who wishes to present a proposal to be considered at the 2007 Annual Meeting of the shareholders of IElement Corporation and who wishes to have such proposal presented in IElement’s Proxy Statement for such meeting must deliver such proposal in writing to us no later than June 1, 2007.

STOCKHOLDERS SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE THEIR SHARES AT THE ANNUAL MEETING. NO ONE HAS BEEN AUTHORIZED TO PROVIDE ANY INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED OCTOBER 13, 2006. STOCKHOLDERS SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE.

The above notice and proxy statement are sent by order of the Board of Directors.

/s/ Ivan Zweig

-------------------------

Ivan Zweig

Chairman of the Board

Dated: October 31, 2006

PROXY

IELEMENT CORPORATION

ANNUAL MEETING OF STOCKHOLDERS

This Proxy is Solicited on Behalf of the Board of Directors

The undersigned hereby appoints Ivan Zweig as proxy to represent the undersigned at the Annual Meeting of Stockholders to be held at 17194 Preston Road, Dallas, Texas 75248 on December 15, 2006 at 11:30 a.m. local time, and at any adjournments thereof, and to vote the shares of Common Stock the undersigned would be entitled to vote if personally present, as indicated below.

1. Election of Directors

 FOR all nominees listed below |_|  WITHHOLDING AUTHORITY |_|

 (except as marked to the to vote for all nominees contrary below) listed below

  IVAN ZWEIG

  LANCE K. STOVALL

 KEN A WILLEY 

    (INSTRUCTION: To withhold authority to vote for any individual nominee, print that nominee's name on the line provided below.)

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2. Approve of the 2005 Stock Option Plan

  FOR |_| AGAINST |_| ABSTAIN |_|

The shares of Common Stock represented by this proxy will be voted as directed; however, if no direction is given, the shares of Common Stock will be voted FOR the approval of the 2005 Stock Option Plan

3. Approve of the 2006 Stock Option Plan

  FOR |_| AGAINST |_| ABSTAIN |_|

The shares of Common Stock represented by this proxy will be voted as directed; however, if no direction is given, the shares of Common Stock will be voted FOR the approval of the 2006 Stock Option Plan

4.Approval of the appointment of Bagell, Josephs, Levine & Company, L.L.C. as independent auditors.

 FOR |_| AGAINST |_| ABSTAIN |_|

The shares of Common Stock represented by this proxy will be voted as directed; however, if no direction is given, the shares of Common Stock will be voted FOR the election of the nominees and FOR the approval of the appointment of Bagell, Josephs, Levine & Company, L.L.C. as the independent auditors of the Company.

If any other business is presented at the meeting, this proxy will be voted by those named in this proxy in their best judgment. At the present time, the Board of Directors knows of no other business to be presented at the meeting.

DATED: October 31, 2006

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Signature

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Signature if held jointly

(Please date, sign as name appears at the left, and return promptly. If the shares are registered in the names of two or more persons, each person should sign. When signing as Corporate Officer, Partner, Executor, Administrator, Trustee or Guardian, please give full title. Please note any changes in your address alongside the address as it appears in the proxy.)

EX-4.1

IELEMENT CORPORATION

2005 Stock Option Plan

1.Purpose. The purpose of this Plan is to provide additional incentives to key employees, officers, directors and independent contractors of IElement Corporation, and any Parent or Subsidiary it may at any time have, thereby helping to attract and retain the best available personnel for positions of responsibility with those entities and otherwise promoting the success of the business activities of such entities. It is intended that Options issued under this Plan constitute either incentive stock options or nonqualified stock options.

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

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

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

 (c)   “Change of Control Event” shall mean the occurrence of any of the following events: (i) the acquisition at any time (excluding any acquisition in connection with any public offering of equity securities of the Company pursuant to a registration statement filed under the Securities Act or any acquisition by management personnel, directly or indirectly) by a “person” or “group” (as used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (excluding, for this purpose, the Company or any Subsidiary or any employee benefit plan of the Company or any Subsidiary) of the beneficial ownership (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities representing fifty percent (50%) or more of the combined voting power of the then-outstanding securities of the Company, (ii) the acquisition at any time (excluding any acquisition in connection with any public offering of equity securities of the Company pursuant to a registration statement filed under the Securities Act or any acquisition by management personnel, directly or indirectly) by a “person” or “group” (as used in Sections 13(d) and 14(d)(2) of the Exchange Act) of equity securities that have the voting authority to appoint a majority of the persons on the Company’s Board of Directors, (iii) the Company consolidates with, or merges with or into, another entity (other than a Parent or Subsidiary in a transaction which is not otherwise a Change of Control Event), or sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets to any person or entity, or any entity consolidates with, or merges with or into the Company, in any such event pursuant to a transaction in which the outstanding voting stock of the Company is converted into or exchanged for cash, securities or other property, and as a result of which immediately following such transaction the shareholders of the Company shall not hold, directly or indirectly, a majority of the voting power of the then-outstanding securities of the surviving entity, (iv) during any consecu-tive two-year period commencing on or after June 1, 2006, individuals who at the beginning of such period consti-tuted the Board of Directors of the Company (together with any new directors whose election by such Board or whose nomination for election by the shareholders of the Company, was approved by a vote of 66-2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office, or (v) a liquidation or dissolution of the Company (other than a liquidation into a parent or Subsidiary that is not otherwise a Change of Control Event).

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

 (e)       “Common Stock” means the Company’s common stock.

 (f)        “Committee” means the Board or the Committee appointed by the Board in accordance with Section 4(a).

 (g)“Company” means IElement Corporation, a Nevada corporation and its successors.

 (h)“Continuous Relationship with the Company” means (i) with respect to an employee of the Company, the absence of any interruption or termination of such person’s employment with the Company, its Parent or Subsidiary, or (ii) with respect to an Independent Contractor, the absence of any interruption or termination of such person’s service as an Independent Contractor to the Company; Continuous Relationship with the Company will not be considered interrupted in the case of sick leave, military leave, or any other approved leave of absence.

 (i)“Date of Grant” shall mean the day and year written in the Stock Option Agreement relating to such Option. The Date of Grant for an Option granted to an Employee may be any date on or after the Employee’s first day of employment with the Company, even if such date is prior to the effective date of this Plan. The Date of Grant for an Option granted to an Independent Contractor may be any date on or after the date the Independent Contractor began performing services for the Company, even if such date is prior to the effective date of this Plan.

 (j)“Employee” means any person employed by or serving as an employee, officer of the Company or any Subsidiary or Parent of the Company (as such terms are defined in Section 424 of the Code) that is hereafter organized or acquired by the Company.

 (k)“Incentive Stock Option” has the meaning set forth in Section 422(b) of the Code.

 (l)“Independent Contractor” shall mean any person performing services for the Company or for any “Subsidiary” or “Parent” of the Company other than as an Employee, including, but not limited to, persons acting as a Non-Employee Director or acting on any board of advisors to the Company; and references to performing services for the Company shall be deemed to include the Company and/or any Subsidiary or Parent of the Company, as the context may require.

 (m)“Non-Employee Director” has the meaning set forth in Rule 16b-3 under the 1934 Act.

 (n)“Non-qualified Stock Option” shall mean an option which is not an Incentive Stock Option.

 (o)“Option” means a stock option granted under the Plan.

 (p)“Optioned Stock” means the Common Stock subject to an Option.

 (q)“Optionee” means any person who receives an Option.

 (r)“Parent” means a “Parent Corporation” as defined in Section 424 of the Code.

 (s)“Plan” means this 2005 Stock Option Plan and any additional amendments.

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

 (u)“Stock Option Agreement” means an agreement executed by an officer of the Company and an Employee or Independent Contractor, as appropriate, evidencing the grant of an Option.

 (v)“Subsidiary” means a “Subsidiary Corporation” as defined in Section 424 of the Code.

 Where appropriate, words used in the Plan in the singular may mean the plural, the plural may mean the singular and the masculine may mean the feminine.

3.Stock Subject to Options.

 (a)Number of Shares Reserved. The maximum number of shares that may be optioned and sold under the Plan is the greater of (i) five million (5,000,000) shares of Common Stock of the Company, subject to adjustment as provided in Section 6(j), or (ii) twenty percent (20%) of the total number of shares of Common Stock that would be outstanding if each class of the Company’s stock (including each class of preferred stock) were converted into shares of Common Stock. During the term of this Plan, the Company shall at all times reserve and keep available a sufficient number of authorized but unissued shares of its Common Stock to satisfy the requirements of the Plan. Notwithstanding the foregoing, in no event shall the number of shares of Common Stock which may be issued upon the exercise of Incentive Stock Options exceed five million (5,000,000) shares, subject to the adjustment provided in Section 6(j).

 (b)Expired Options. If any outstanding Option expires or becomes unexercisable for any reason without having been exercised in full, the shares of Common Stock allocable to the unexercised portion of such Option will again become available for other Option grants.

4.Administration of the Plan.

 (a)The Committee. The Plan is administered by the Board directly, acting as a Committee of the whole, or if the Board elects, by a separate Committee appointed by the Board for that purpose and consisting of at least two Board members, all of who shall be Non-Employee Directors. All references in the Plan to the “Committee” are to such separate Committee, if any is established, or if none is then in existence, then to the Board as a whole. Once appointed, any such Committee shall continue to serve until otherwise directed by the Board. From time to time the Board may increase the size of the Committee and appoint additional members thereto, remove members (with or without cause), appoint new members in substitution therefor, and fill vacancies (however caused). At all times, the Board has the power to remove all members of the Committee and thereafter to directly administer the Plan as a Committee of the whole.

 (b)Meetings; Reports. The Committee shall select one of its members as chairman, and hold meetings at such times and places as the chairman or a majority of the Com-mittee may determine. All actions of the Committee shall be either by:

  (1)a majority vote of the members of the full Committee at a meeting of the Committee, or

  (2)by unanimous written consent of all members of the full Committee without a meeting.

At least annually, the Committee shall present a written report to the Board indicating the persons to whom Options have been granted since the date of the last such report, and in each case the date or dates of Options granted, the number of shares optioned, and the Option price per share.

 (c)Powers of the Committee. Subject to all provisions and limitations of the Plan, the Committee has the authority and discretion to:

  (1)Determine the persons to whom Options are to be granted, the times of grant, the number of shares to be represented by each Option, and the vesting schedule of the Options;

  (2)Interpret the Plan (but only to the extent not contrary to the express provisions of the Plan);

  (3)Authorize any person or persons to execute and deliver Stock Option Agreements or to take any other actions deemed by the Committee to be necessary or appropriate to effectuate the grant of Options by the Committee; and

  (4)Make all other determinations and take all other actions that the Committee deems necessary or appropriate to administer the Plan in accordance with its terms and conditions.

 (d)Final Authority; Limitation of Liability. The Committee’s decisions, determinations and interpretations are final and binding on all persons, including all Optionees and any other holders or persons interested in any Options, unless otherwise expressly determined by a vote of the majority of the entire Board. No member of the Committee or of the Board may be held liable for any action or determination made in good faith with respect to the Plan or any Option.

 (e) Approval of Grants to Committee Composed of Non-Employee Directors. Any grant of Options to a member of a Committee composed of Non-Employee Directors shall be approved of by the full Board of Directors. The full Board of Directors shall then be construed as the Committee for purposes of administering the Plan with respect to such Options.

5.Eligibility; Limitation of Rights. The grant of Options under the Plan is entirely discretionary with the Committee, and the adoption of the Plan does not confer upon any person any right to receive any Option or Options unless and until granted by the Committee, in its sole discretion. Neither the adoption of the Plan nor the grant of any Options to any person or Optionee will confer any right to continued employment, nor shall the same interfere in any way with that person’s right or that of the Company (or any Parent or Subsidiary) to terminate the person’s employment at any time.

6.Option Terms; Conditions. All Option grants under the Plan shall be (i) approved by the Committee, and (ii) documented by a Stock Option Agreement in such form as the Committee approves from time to time. All Stock Option Agreements shall comply with, and are subject to the following terms and conditions:

 (a)Number of Shares. Each Stock Option Agreement shall state the number of shares subject to Option. Any number of Options may be granted to a single eligible person at any time and from time to time, subject to the maximum number of Options available for granting pursuant to this Plan.

 (b)Exercise Price. The exercise price (“Exercise Price”) of the Option shall be determined by the Committee subject to its own discretion, it being understood that the price so determined by the Committee may vary from one Eligible Participant to another. The Stock Option Agreement shall state the price per share of Common Stock at which the Option is exercisable. The Exercise Price shall be fixed by the Committee at what ever price the Committee may determine in the exercise of its sole discretion, provided that:

  (1)The per share Exercise Price for any Option granted to an Optionee shall not be less than the fair market value per share of the Common Stock on the Date of Grant thereof as reasonably determined by the Committee;

  (2)With respect to Incentive Stock Options granted to greater-than-ten-percent shareholders of the Company or the Parent of the Company, the exercise price per share shall not be less than one hundred ten percent (110%) of the fair market value per share of the Common Stock on the Date of Grant thereof as reasonably determined by the Committee;

  (3)The Options granted in substitution for outstanding options of another corporation in connection with the merger, consolidation, acquisition of property or stock or other reorganization involving such other corporation and the Company or any subsidiary of the Company may be granted with an Exercise Price equal to the exercise price for the substituted option of the other corporation, subject to any adjustment consistent with the terms of the transaction pursuant to which the substituted option is to be issued; and

  (4)The Incentive Stock Options granted to the Employee to the extent that the fair market value of the Shares which are exercisable for the first time by any Optionee during any calendar year exceeds $100,000, such Options shall be treated as Options which are not Incentive Stock Options.

 (c)Consideration; Manner of Exercise. The Exercise Price shall be payable either (i) in U.S. dollars, or (ii) if approved by the Board, in other consideration, including, without limitation, Common Stock of the Company or other property. An Option is deemed to be exercised when written notice of exercise has been given to the Company in accordance with the terms of the Option by the person entitled to exercise the Option, together with full payment of the Exercise Price for the shares of Optioned Stock subject to said notice.

 (d)Term of Option. Under no circumstances may an Option granted under the Plan be exercisable after the expiration of ten (10) years from the date on which such Option is granted. The term in which each Option may be exercised (“Exercise Period”) shall be determined by the Committee in its discretion, and set forth in the Stock Option Agreement.

 (e)Date of Grant; Vesting; Holdings Period. The Date of Grant of an Option, for all purposes, is the date the Committee makes the determination granting the Option or such future date as may be set forth in the Stock Option Agreement. Shares of Common Stock obtained upon the exercise of any Option may not be sold by any Optionee that is subject to Section 16 of the 1934 Act until six (6) months have elapsed since the Date of Grant of the Option. The vesting schedule for all Options shall be determined by the Committee in its discretion and shall be stated in the Stock Option Agreement.

 (f)Death of Optionee. Unless otherwise stated in the Stock Option Agreement, in the event of the death during the Exercise Period of an Optionee who was then an Employee or Independent Contractor, the unvested portion of the Option held by such Optionee shall terminate on the date of the Optionee’s death. The unexercised and vested portion of the Option that is an Incentive Stock Option may be exercised by the Optionee’s estate within one (1) year of the death of the Optionee, whereafter, the remaining unexercised portion of such Option shall terminate. The unexercised and vested portion of the deceased Optionee’s Option that is a Non-Qualified Option may be exercised until the last day of the fifteenth (15^th) calendar month following the month in which death of the Optionee occurs, whereafter, the remaining unexercised portion of such Option shall terminate. Under these circumstances, the Option will be exercisable by the Optionee’s estate, or by such person or persons who have acquired the right to exercise the Option by bequest or by inheritance or by reason of the Optionee’s death. Any Optioned Stock subject to the unvested portion of an Option shall revert back into the pool of Common Stock available for issuance under the Plan and shall be available for grant pursuant to a new Option.

 (g)Disability of Optionee. Unless otherwise stated in the Stock Option Agreement, if an Optionee’s status as an Employee or Independent Contractor is terminated at any time during the Exercise Period by reason of the disability of the Optionee within the meaning of Section 22(e)(3) of the Code, the unvested portion of the Option held by such Optionee shall terminate on the date of termination of the Optionee’s employment or status as an Independent Contractor (such date being the “Date of Disability”). The unexercised and vested portion of the Option that is an Incentive Stock Option may be exercised by the Optionee within one (1) year of the Date of Disability, whereafter, the remaining unexercised portion of such Option shall terminate. The unexercised and vested portion of the Option that is a Non-Qualified Stock Option may be exercised by the Optionee until the last day of the fifteenth (15^th) calendar month following the month in which the Date of Disability occurs, whereafter, the remaining unexercised portion of such Option shall terminate. Any Optioned Stock subject to the unvested portion of an Option shall revert back into the pool of Common Stock available for issuance under the Plan and shall be available for grant pursuant to a new Option.

 (h)Termination of Status as an Employee or Independent Contractor.

  (1)Unless otherwise stated in the Stock Option Agreement, if an Optionee’s status as an Employee or Independent Contractor is terminated by the Optionee at any time after the Date of Grant for any reason other than death or disability, as provided in Sections 6(f) and 6(g) hereof, then the unexercised and vested portion of an Option shall terminate ninety (90) days following the date on which Optionee’s termination of status as an Employee or Independent Contractor occurs, as applicable. Any Optioned Stock subject to the unvested portion of an Option shall revert back into the pool of Common Stock available for issuance under the Plan and shall be available for grant pursuant to a new Option.

  (2) Unless otherwise stated in the Stock Option Agreement, if an Optionee’s status as an Employee or Independent Contractor is terminated by the Company, and such termination is for “cause” (such termination being referred to as a “Termination for Cause”) at any time after the grant of an Option by the Company, then all Options (both vested and unvested) shall terminate on the date of termination of Optionee’s status as an Employee or Independent Contractor, as applicable, and any Optioned Stock subject to such Options shall revert back into the pool of Common Stock available for issuance under the Plan and shall be available for grant pursuant to a new Option. An Optionee’s status as an Employee or Independent Contractor shall be deemed to have been terminated for “cause” if such termination is determined, in the sole discretion of the Committee, to have resulted from any of the following: (i) an act or omission by the Optionee constituting active and deliberate dishonesty, as established by a final judgment or actual receipt of an improper benefit or profit in money, property or services; (ii) the Optionee’s continuous failure or the Optionee’s refusal to perform his, her or its duties assigned to such Optionee by the Company (or to perform according to the reasonable expectations and standards set by the Committee and/or management consistent with Optionee’s title and position) after receipt of notice of such failure from the Company specifying how the Optionee has so failed to perform and the provision of a reasonable opportunity to cure such performance as determined by the Committee in its sole discretion; (iii) material dishonesty related to such person’s employment or services as an Employee or Independent Contractor to the Company; (iv) commission of a felony or other act involving moral turpitude; or (v) misappropriation of a material business opportunity of the Company. An Optionee’s attempted resignation to avoid a Termination for Cause shall not be effective, if the conduct that ultimately results in the Termination for Cause occurred prior to the attempted resignation.

 (i)Nontransferability of Options. Except as authorized by the Committee in writing, no Option granted under the Plan may be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee.

 (j)Adjustments Upon Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding Option, the number of shares of Common Stock available for grant of additional Options, and the price per share of Common Stock specified in each outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from any stock split or other subdivision or consolidation of shares, the payment of any stock dividend (but only on the Common Stock) or any other increase or decrease in the number of such shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company will not be deemed to have been “effected without receipt of consideration.”

 Any adjustments as a result of a change in the Company’s capitalization will be made by the Committee, whose determination in that respect is final, binding and conclusive. Except as otherwise expressly provided in this Section 6(j), no Optionee shall have any rights by reason of any stock split or the payment of any stock dividend or any other increase or decrease in the number of shares of Common Stock. Except as otherwise expressly provided in this Section 6(j), any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect the number of shares or price of Common Stock subject to any Options, and no adjustments in Options shall be made by reason thereof. The grant of an Option under the Plan does not in any way affect the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure.

 (k)Conditions Upon Issuance of Shares. Shares of Common Stock may not be issued with respect to an Option granted under the Plan unless the exercise of the Option and the issuance and delivery of such shares pursuant thereto complies with all applicable provisions of law, including, applicable federal and state securities laws.

 As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of exercise that the shares of Common Stock are being purchased only for investment and without any present intention to sell or distribute such Common Stock if, in the opinion of counsel for the Company, such a representation is required by any relevant provisions of law.

 (l)Occurrence of Change of Control Event. Unless otherwise stated in the Stock Option Agreement or as otherwise determined by the Committee, upon the occurrence of a Change of Control Event, the Optionee shall be vested as to that portion of an Option that has previously vested and /or that would have become vested to the Optionee within the twelve (12) month period after the occurrence of the Change of Control Event had such Change of Control Event not occurred (assuming the Optionee had maintained a Continuous Relationship with the Company during such period). The non-vested portion of the Option (after taking into account the provisions of the immediately preceding sentence) shall terminate upon the occurrence of the Change of Control Event. With respect to a Change of Control Event, the Committee may, in its sole discretion, adopt a resolution terminating the Options granted by the Company as of a date fixed by the Committee (“Change of Control Termination Date”) and that provides each Optionee the right to exercise the vested portion of his, her or its Option (including that portion of an Option which vests as a result of the occurrence of the Change of Control Event) on or before the Change of Control Termination Date. In the event the Committee adopts such a resolution terminating the Options as provided in the preceding sentence, the Company shall notify all Optionees of such termination of the Options and provide such Optionee a period of time, as determined by the Committee, to so exercise the vested portion of his, her or its Option on or prior to the Change of Control Termination Date. With respect to any Optionee that so exercises the vested portion of his, her or its Option on or prior to the Change of Control Termination Date, the Company may, in lieu of the issuance of Optioned Stock to the Optionee, pay such Optionee the excess of the amount received or to be received for the Optioned Stock over the amount that is to be paid to the Company by the Optionee upon the exercise of the vested portion of the Option, reduced by the amount of any applicable withholding taxes.

 (m)Substitute Stock Options. In connection with the acquisition or proposed acquisition by the Company or any Subsidiary or Parent of the Company (whether by merger, acquisition of stock or assets, or other reorganization transaction) of a business that has granted stock options to any of its employees, the Committee is authorized to issue, in substitution of any such unexercised stock options, a new Option under this Plan or any successor plan (whether created by the Company or its acquirer) which confers upon the Optionee substantially the same benefits as the old option.

 (n)Tax Compliance. The Company, in its sole discretion, may take any actions that it reasonably believes to be required in order to comply with any local, state, or federal tax laws relating to the reporting or withholdings of taxes attributable to the grant or exercise of any Option or the disposition of any shares of Optioned Stock issued upon exercise of an Option, including, but not limited to: (i) withholding from any Optionee exercising an Option all or any portion of the Optioned Stock issuable to such Optionee upon the exercise of such Option, until such time as the Optionee reimburses the Company for the amount required to be withheld under applicable tax laws with respect to such exercise of the Option; (ii) withholding and canceling that number of shares of Optioned Stock issuable to the Optionee upon the exercise of an Option having a fair market value equal to the amount necessary to reimburse Company for the tax required to be withheld by the Company under applicable tax laws; and (iii) withholdings from any form of compensation or other amount due to an Optionee or holder of shares of Optioned Stock issued upon exercise of an Option any amount required to be withheld by Company under applicable tax laws. Withholdings or reporting is considered required for purposes of this Section 6(n), if any tax deduction or other favorable tax treatment available to Company is conditioned upon such reporting or withholdings.

 (o)Incentive Stock Options. If any provision of this Plan or any Option designated by the Committee as an Incentive Stock Option shall be held not to comply with requirements necessary to entitle such Option to such tax treatment, then (i) such provision shall be deemed to have contained from the outset such language as shall be necessary to entitle the Option to the tax treatment afforded under Section 422 of the Code, and (ii) all other provisions of this Plan and the Stock Option Agreement shall remain in full force and effect. If any agreement covering an Option designated by the Committee to be an Incentive Stock Option under this Plan shall not explicitly include any terms required to entitle such Incentive Stock Option to the tax treatment afforded by Section 422 of the Code, all such terms shall be deemed implicit in the designation of such Option and the Option shall be deemed to have been granted subject to all such terms.

 (p)Other Provisions. Stock Option Agreements executed under the Plan may contain such other provisions as the Committee deems advisable, provided that they are not inconsistent with any of the other terms and conditions of the Plan or applicable laws.

7.Securities Law Restrictions. The Company shall not be obligated to issue any stock certificates evidencing a transfer of Optioned Stock upon the exercise of an Option until, in the opinion of the Company and its counsel, such transfer and issuance of stock certificates will not involve any violation of applicable federal and state securities laws, the rules and regulations promulgated thereunder and the requirements of any stock exchange upon which the Company’s Common Stock may then be listed. Acceptance of an Option by an Optionee shall constitute the Optionee’s agreement (binding on any person who succeeds to the Optionee’s rights and obligations under the Stock Option Agreement by reason of the Optionee’s death) that any Optioned Stock purchased pursuant to the exercise of the Option shall be acquired for the Optionee’s own account and not with a view to distribution and that each notice of the exercise of any portion of the Option shall be accompanied by a written representation and covenant signed by the Optionee, in such form as may be specified by the Company, confirming such agreement and containing such other provisions as may be prescribed by the Company. The Committee may, at its election, release an Optionee from the Optionee’s agreement to take for the Optionee’s own account and not with a view to distribution of the shares of Optioned Stock purchased upon exercise of an Option if, in the opinion of the Committee, such covenant ceases to be necessary for compliance with the applicable federal and state securities laws (including the rules and regulations promulgated thereunder).

If the Optioned Stock purchased upon exercise of an Option are not covered by an effective registration statement under the Securities Act, the Company may place the following legend (or a legend which is substantially similar to the following legend) upon, and issue appropriate stock transfer instructions with respect to, the certificate or certificates representing the Optioned Stock issued pursuant to an exercise of the Option:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS (THE STATE LAWS”), AND SUCH SHARES MAY NOT BE TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE LAWS COVERING SUCH TRANSFER IS THEN IN EFFECT; OR (B) AN OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION, HAS BEEN FURNISHED STATING THAT SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE LAWS.”

8.Listing or Registration of Stock. Each Option is subject to the requirement that, if at any time the Board shall determine, in its sole discretion, that the listing, registration or qualification of the Optioned Stock upon any securities exchange or under any state or federal law, or the consent or approval of any government regulatory body, is necessary or desirable as a condition of, or in connection with, the granting or exercise of the Option or the issuance or purchase of the Optioned Stock pursuant to the Option, the Option may not be exercised in whole or in part until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board. The Company shall be under no obligation to effect or obtain any such listing, registration, qualification, consent or approval, if the Board shall determine, in its discretion, that such action would not be in the best interests of the Company. The Company shall not be liable for damages due to a delay in the delivery or issuance of any stock certificates for any reason whatsoever, including, but not limited to, a delay caused by listing, registration or qualification of the shares of Common Stock subject to an Option under any securities exchange or under any federal or state law, or by the effecting or obtaining of any consent or approval of any governmental body with respect to the granting or exercise of the Option or the issuance or purchase of Optioned Stock pursuant to an Option.

9.Modification of Options. At any time, and from time to time, the Board may provide for the modification, extension or renewal of any outstanding Option, provided that no such modification, extension or renewal shall impair the Option in any respect without the consent of the holder of the Option.

10.Term of the Plan. The Plan is effective on the date of adoption of the Plan by the Board. Unless sooner terminated as provided in Section 11, the Plan will terminate on the tenth (10th) anniversary of its effective date. Options may be granted at any time after the effective date and prior to the date of termination of the Plan.

11.Amendment; Early Termination. The Board may terminate or amend the Plan at any time and in such respects as it deems advisable, although no amendment or termination would affect any previously-granted Options, which would remain in full force and effect notwithstanding any amendment or termination of the Plan. Shareholder approval of any amendments to the Plan shall be obtained whenever required by applicable law(s) or stock market regulations.

12.Inability to Obtain Authority. The inability of the Company to obtain authority to issue and sell shares under the Plan from any regulatory body having jurisdiction, which authority is considered by the Company’s counsel to be necessary to the lawful issuance and sale of the shares under the Plan, will relieve the Company of any liability in respect of the failure to issue or sell those shares.

13.Shareholder Ratification.The adoption of the Plan shall be subject to ratification by the affirmative vote of the holders of a majority of the shares of Common Stock represented in person or by proxy at a duly convened meeting of the shareholders of the Company, which ratification shall occur within twelve (12) months before or after the date of adoption of the Plan by the Board.

14Notices. Every direction, revocation or notice authorized or required by the Plan shall be deemed delivered to the Company (i) on the date it is personally delivered to the Secretary of the Company at its principal executive offices, (ii) three (3) business days after it is sent by registered or certified mail, postage prepaid, addressed to the Secretary at such offices, or (iii) one (1) business day after it is sent by a reputable overnight courier service, addressed to the Secretary at such office, and shall be deemed delivered to an Optionee (i) on the date it is personally delivered to him or her, (ii) on the date of mailing if it is sent by registered or certified mail, postage prepaid, addressed to him or her at the last address shown for him or her on the records of the Company, or (iii) one (1) business day after it is sent by reputable overnight courier service, addressed to him or her at the last address shown for him or her on the records of the Company. If the effective date as provided above is not a business day, the effective date shall be the next regular business day. The Company or an Optionee may, at any time, notify the other as provided above of a new address for service of notice upon the party.

15.Applicable Law. All questions pertaining to the validity, construction and administration of the Plan and Stock Options granted hereunder shall be determined in conformity with the laws of the State of Illinois.

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* * * *

CERTIFICATE OF ADOPTION

I certify that the foregoing plan was adopted by the Board of Directors of IElement Corporation on September 8, 2005.

_________________________________

Ivan Zweig, CEO

EX-4.2

IELEMENT CORPORATION

2006 STOCK PLAN

1.Purposes of the Plan. The purposes of this 2006 Stock Plan are:

a.to attract and retain the best available personnel for positions of substantial responsibility,

b.to provide additional incentive to Employees, Directors and Consultants, and

c.to promote the success of the Company’s business

Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant. Stock Purchase Rights may also be granted under the Plan.

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

a.“Administrator” means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4 of the Plan.

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

c.“Board” means the Board of Directors of the Company.

d.“Change in Control” means the occurrence of any of the following events:

i.Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; or

ii.The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets;

iii.A change in the composition of the Board occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent   Directors.  “Incumbent Directors” means directors who either (A) are Directors as of the effective date of the Plan, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company); or

iv.The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

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

f.“Committee” means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan.

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

h.“Company” means IElement Corporation, a Nevada corporation.

i.“Consultant” means any natural person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

j.“Director” means a member of the Board.

k.“Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

l.“Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the 91st day of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Non-statutory Stock Option. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

m.“Exchange Act” means the Securities Exchange Act of 1934, as amended.

n.“Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

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

ii.If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the day of deter-mination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

iii.In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator.

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

p.“Inside Director” means a Director who is an Employee.

q.“Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

r.“Notice of Grant” means a written or electronic notice evidencing certain terms and conditions of an individual Option or Stock Purchase Right grant. The Notice of Grant is part of the Option Agreement.

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

t.“Option” means a stock option granted pursuant to the Plan.

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

v.“Option Exchange Program” means a program whereby outstanding Options are surrendered in exchange for Options with a lower exercise price.

w.“Optioned Stock” means the Common Stock subject to an Option or Stock Purchase Right.

x.“Optionee” means the holder of an outstanding Option or Stock Purchase Right granted under the Plan.

y.“Outside Director” means a Director who is not an Employee.

z.“Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

aa.“Plan” means this 2006 Stock Plan.

bb.“Restricted Stock” means shares of Common Stock acquired pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan.

cc.“Restricted Stock Purchase Agreement” means a written agreement between the Company and the Optionee evidencing the terms and restrictions applying to stock purchased under a Stock Purchase Right. The Restricted Stock Purchase Agreement is subject to the terms and conditions of the Plan and the Notice of Grant.

dd.“Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

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

ff.“Service Provider” means an Employee, Director or Consultant.

gg.“Share” means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan.

hh.“Stock Purchase Right” means the right to purchase Common Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.

ii.“Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing, as defined in Section 424(f) of the Code.

3.Stock Subject to the Plan. Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares that may be optioned and sold under the Plan is 41,000,000 Shares plus (a) any Shares which have been reserved but not issued under the Company’s 2001 Employee Stock Compensation Plan (the “2001 Plan”) as of the date of stockholder approval of this Plan, and (b) any Shares returned to the 2001 Plan as a result of termination of options or repurchase of Shares issued under the 2001 Plan.

If an Option or Stock Purchase Right expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated); provided, however, that Shares that have actually been issued under the Plan, whether upon exercise of an Option or Right, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of Restricted Stock are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan.

4.Administration of the Plan.

a.Procedure.

i.Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.

ii.Section 162(m). To the extent that the Administrator determines it to be desirable to qualify Options granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more “outside directors” within the meaning of Section 162(m) of the Code.

iii.Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder shall bestructured to satisfy the requirements for exemption under Rule 16b-3.

iv.Other Administration. Other than as provided above, the Plan shall be administered by (A) the Board or (B) a Committee, which committee shall beconstituted to satisfy Applicable Laws.

b.Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to suchCommittee, the Administrator shall have the authority, in its discretion:

i.to determine the Fair Market Value;

ii.to select the Service Providers to whom Options and Stock Purchase Rights may be granted hereunder;

iii.to determine the number of shares of Common Stock to be covered by each Option and Stock Purchase Right granted hereunder;

iv.to approve forms of agreement for use under the Plan;

v.to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Option or Stock Purchase Right granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options or Stock Purchase Rights may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or Stock Purchase Right or the shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

vi.to reduce the exercise price of any Option or Stock Purchase Right to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option or Stock Purchase Right shall have declined since the date the Option or Stock Purchase Right was granted;

vii.to institute an Option Exchange Program;

viii.to construe and interpret the terms of the Plan and awards granted pursuant to the Plan;

ix.to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to subplans established for the purpose of satisfying applicable foreign laws;

x.to modify or amend each Option or Stock Purchase Right (subject to Section 16(c) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Options longer than is otherwise provided for in the Plan;

xi.to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or Stock Purchase Right that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by an Optionee to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;

xii.to authorize any person to execute on behalf of the Company any instru-ment required to effect the grant of an Option or Stock Purchase Right previously granted by the Administrator;

xiii.to make all other determinations deemed necessary or advisable for administering the Plan.

c.Effect of Administrator’s Decision. The Administrator’s decisions, determina-tions and interpretations shall be final and binding on all Optionees and any other holders of Options or Stock Purchase Rights.

5.Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

6.Limitations.

a.Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designa-tion, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

b.Neither the Plan nor any Option or Stock Purchase Right shall confer upon an Optionee any right with respect to continuing the Optionee’s relationship as a Service Provider with the Company, nor shall they interfere in any way with the Optionee’s right or the Company’s right to terminate such relationship at any time, with or without cause.

7.Term of Plan. Subject to Section 20 of the Plan, the Plan shall become effective upon its adoption by the Board. It shall continue in effect for a term of ten (10) years unless terminated earlier under Section 16 of the Plan.

8.Term of Option. The term of each Option shall be stated in the Option Agreement. In the case of an Incentive Stock Option, the term shall be ten (10) years from the date of grant or such shorter term as may be provided in the Option Agreement. Moreover, in the case of an Incentive Stock Option granted to an Optionee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.

9.Option Exercise Price and Consideration.

a.Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator.

b.Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions that must be satisfied before the Option may be exercised.

c.Form of Consideration. The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of:

i.cash;

ii.check;

iii.promissory note;

iv.other Shares which, in the case of Shares acquired directly or indirectly from the Company, (A) have been owned by the Optionee for more than six (6) months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised;

v.consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan;

vi.a reduction in the amount of any Company liability to the Optionee, including any liability attributable to the Optionee’s participation in any Company-sponsored deferred compensation program or arrangement;

vii.any combination of the foregoing methods of payment; or

viii.such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.

10.Exercise of Option.

a.Procedure for Exercise; Rights as a Stockholder. Any Option granted here-under shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. Unless the Administrator provides otherwise, vesting of Options granted hereunder shall be suspended during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share.

 An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan.

 Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

b.Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, other than upon the Optionee’s death or Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

c.Disability of Optionee. If an Optionee ceases to be a Service Provider as a result of the Optionee’s Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

d.Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised following the Optionee’s death within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Option Agreement), by the Optionee’s designated beneficiary, provided such beneficiary has been designated prior to Optionee’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Optionee, then such Option may be exercised by the personal representative of the Optionee’s estate or by the person(s) to whom the Option is transferred pursuant to the Optionee’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following Optionee’s death. If, at the time of death, Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

11.Stock Purchase Rights.

a.Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing or electronically, by means of a Notice of Grant, of the terms, conditions and restrictions related to the offer, including the number of Shares that the offeree shall be entitled to purchase, the price to be paid, and the time within which the offeree must accept such offer. The offer shall be accepted by execution of a Restricted Stock Purchase Agreement in the form determined by the Administrator.

b.Repurchase Option. Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser’s service with the Company for any reason (including death or Disability). The purchase price for Shares repurchased pursuant to the Restricted Stock Purchase Agreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at a rate determined by the Administrator.

c.Other Provisions. The Restricted Stock Purchase Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion.

d.Rights as a Stockholder. Once the Stock Purchase Right is exercised, the purchaser shall have the rights equivalent to those of a stockholder, and shall be a stockholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 14 of the Plan.

12.Transferability of Options and Stock Purchase Rights. Unless determined otherwise by the Administrator, an Option or Stock Purchase Right may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. If the Administrator makes an Option or Stock Purchase Right transferable, such Option or Stock Purchase Right shall contain such additional terms and conditions as the Administrator deems appropriate.

13.Formula Option Grants to Outside Directors. All grants of Options to Outside Directors pursuant to this Section shall be automatic and nondiscretionary and shall be made strictly in accordance with the following provisions:

a.All Options granted pursuant to this Section shall be Nonstatutory Stock Options and, except as otherwise provided herein, shall be subject to the other terms and conditions of the Plan.

b.No person shall have any discretion to select which Outside Directors shall be granted Options under this Section or to determine the number of Shares to be covered by such Options.

c.Each person who first becomes an Outside Director following the effective date of this Plan, as determined in accordance with Section 7 hereof, shall be automatically granted an Option to purchase an amount of stock as determined by the Compensation Committee of the Directors from time to time (the “First Option”) or the date on which such person first becomes an Outside Director, whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy; provided, however, that an Inside Director who ceases to be an Inside Director but who remains a Director shall not receive a First Option.

d.Notwithstanding the provisions of subsections (c) and (d) hereof, any exercise of an Option granted before the Company has obtained stockholder approval of the Plan in accordance with Section 20 hereof shall be conditioned upon obtaining such stockholder approval of the Plan in accordance with Section 20 hereof.

e.The terms of each Option granted pursuant to this Section shall be as follows:

i.the term of the Option shall be ten (10) years.

ii.subject to Section 14 hereof, the First Option shall vest and become exercisable immediately.

iii.subject to Section 14 hereof, the Subsequent Option shall vest and become exercisable immediately.

14.Adjustments Upon Changes in Capitalization, Merger or Change in Control.

a.Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of shares of Common Stock that have been authorized for issuance under the Plan but as to which no Options or Stock Purchase Rights have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase Right, the number of Shares that may be added annually to the Plan pursuant to Section 3(i), the number of shares which may be granted pursuant to the automatic grant provisions of Section 13 and the number of shares of Common Stock as well as the price per share of Common Stock covered by each such outstanding Option or Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjust-ment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option or Stock Purchase Right.

b.Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until ten (10) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option or Stock Purchase Right will terminate immediately prior to the consummation of such proposed action.

c.Merger or Change in Control. In the event of a merger of the Company with or into another corporation, or a Change in Control, each outstanding Option and Stock Purchase Right shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. With respect to Options granted to an Outside Director pursuant to Section 13 that are assumed or substituted for, if following such assumption or substitution the Optionee’s status as a Director or a director of the successor corporation, as applicable, is terminated other than upon a voluntary resignation by the Optionee, then the Optionee shall fully vest in and have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable.

 In the event that the successor corporation refuses to assume or substitute for the Option or Stock Purchase Right, the Optionee shall fully vest in and have the right to exercise the Option or Stock Purchase Right as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option or Stock Purchase Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify the Optionee in writing or electronically that the Option or Stock Purchase Right shall be fully vested and exercisable for a period of fifteen (15) days from the date of such notice, and the Option or Stock Purchase Right shall terminate upon the expiration of such period.

 For the purposes of this subsection (c), the Option or Stock Purchase Right shall be considered assumed if, following the merger or Change in Control, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option or Stock Purchase Right immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock subject to the Option or Stock Purchase Right, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or Change in Control.

15.Date of Grant. The date of grant of an Option or Stock Purchase Right shall be, for all purposes, the date on which the Administrator makes the determination granting such Option or Stock Purchase Right, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Optionee within a reasonable time after the date of such grant.

16.Amendment and Termination of the Plan.

a.Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

b.Stockholder Approval. The Company shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

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

17.Conditions Upon Issuance of Shares.

a.Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option or Stock Purchase Right unless the exercise of such Option or Stock Purchase Right and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

b.Investment Representations. As a condition to the exercise of an Option or Stock Purchase Right, the Company may require the person exercising such Option or Stock Purchase Right to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

18.Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

19.Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

20.Stockholder Approval. The Plan shall be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval shall be obtained in the manner and to the degree required under Applicable Laws.