2010 STOCK OPTION PLAN OF

Xzeres Wind Corp., Inc.

A Nevada Corporation
(Third Amended and Restated)

July 8, 2010

 

 

 
 

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

 
 
STOCK OPTION PLAN OF
Xzeres Wind Corp., Inc.

TABLE OF CONTENTS

 
Page No.
PURPOSE OF THE PLAN
2
TYPES OF STOCK OPTIONS
2
DEFINITIONS
2
ADMINISTRATION OF THE PLAN
4
GRANT OF OPTIONS
4
STOCK SUBJECT TO PLAN
5
TERMS AND CONDITIONS OF OPTIONS
5
TERMINATION OR AMENDMENT OF THE PLAN
8
INDEMNIFICATION
8
EFFECTIVE DATE AND TERM OF THE PLAN
8

 
 
1

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

 
 
STOCK OPTION PLAN OF
Xzeres Wind Corp., Inc.

A Nevada Corporation
(Third Amended and Restated)

1.  
PURPOSE OF THE PLAN

The purpose of this Third Amended and Restated Stock Option Plan of Xzeres Wind
Corp. (the “Plan”) is to strengthen Xzeres Wind Corp., a Nevada Corporation
(hereinafter the “Company”) by providing incentive stock options as a means to
attract, retain and motivate key corporate personnel, through ownership of stock
of the Company, and to attract individuals of outstanding ability to render
services to and enter the employment of the Company or its subsidiaries.

2.  
TYPES OF STOCK OPTIONS

 
There shall be two types of Stock Options (referred to herein as "Options"
without distinction between such different types) that may be granted under this
Plan: (1) Options intended to qualify as Incentive Stock Options under Section
422 of the Internal Revenue Code (“Qualified Stock Options”), and (2) Options
not specifically authorized or qualified for favorable income tax treatment
under the Internal Revenue Code (“Non-Qualified Stock Options”).

3.  
DEFINITIONS

The following definitions are applicable to the Plan:

(1)  
Board.  The Board of Directors of the Company.

(2)  
Code.  The Internal Revenue Code of 1986, as amended from time to time.

(3)  
Common Stock. The shares of Common Stock of the Company.

(4)  
Company. Xzeres Wind Corp., Inc., a Nevada corporation.

(5)  
Consultant. An individual or entity that renders professional services to the
Company as an independent contractor and is not an employee or under the direct
supervision and control of the Company.

(6)  
Disabled or Disability.  For the purposes of Section 7, a disability of the type
defined in Section 22(e)(3) of the Code. The determination of whether an
individual is Disabled or has a Disability is determined under procedures
established by the Plan Administrator for purposes of the Plan.

 
 
2

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

 
 
(7)  
Fair Market Value. For purposes of the Plan, the “fair market value" per share
of Common Stock of the Company at any date shall be: (a) if the Common Stock is
listed on an established stock exchange or exchanges or the NASDAQ National
Market, the closing price per share on the last trading day immediately
preceding such date on the principal exchange on which it is traded or as
reported by NASDAQ; or (b) if the Common Stock is not then listed on an exchange
or the NASDAQ National Market, but is quoted on the NASDAQ Small Cap Market, the
NASDAQ electronic bulletin board or the National Quotation Bureau pink sheets
with a daily trading volume over each of the twenty days preceding such date of
not less than 250,000 shares, the average of the closing bid and asked prices
per share for the Common Stock as quoted by NASDAQ or the National Quotation
Bureau, as the case may be, on the twenty trading days immediately preceding
such date; or (c) if the Common Stock is not then listed on an exchange or the
NASDAQ National Market, or quoted by NASDAQ or the National Quotation Bureau
with sufficient volume, an amount determined in good faith by the Plan
Administrator.  In making this determination the Plan Administrator may, but is
not required to, seek and rely upon such expert opinions as the Plan
Administrator deems advisable.

(8)  
Incentive Stock Option. Any Stock Option intended to be and designated as an
"incentive stock option" within the meaning of Section 422 of the Code.

(9)  
Non-Qualified Stock Option. Any Stock Option that is not an Incentive Stock
Option.

(10)  
Optionee. The recipient of a Stock Option.

(11)  
Plan Administrator. The board or the Committee designated by the Board pursuant
to Section 4 to administer and interpret the terms of the Plan.

(12)  
Stock Option. Any option to purchase shares of Common Stock granted pursuant to
Section 7.

 
 
3

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

 
 
4.  
ADMINISTRATION OF THE PLAN

This Plan shall be administered by the Board of Directors or by a Compensation
Committee (hereinafter the “Committee”) composed of members selected by, and
serving at the pleasure of, the Board of Directors (the “Plan Administrator”).
Subject to the provisions of the Plan, the Plan Administrator shall have
authority to construe and interpret the Plan, to promulgate, amend, and rescind
rules and regulations relating to its administration, to select, from time to
time, among the eligible employees and non-employee consultants (as determined
pursuant to Section 5) of the Company and its subsidiaries those employees and
consultants to whom Stock Options will be granted, to determine the duration and
manner of the grant of the Options, to determine the exercise price, the number
of shares and other terms covered by the Stock Options, to determine the
duration and purpose of leaves of absence which may be granted to Stock Option
holders without constituting termination of their employment for purposes of the
Plan, and to make all of the determinations necessary or advisable for
administration of the Plan. The interpretation and construction by the Plan
Administrator of any provision of the Plan, or of any agreement issued and
executed under the Plan, shall be final and binding upon all parties. No member
of the Committee or Board shall be liable for any action or determination
undertaken or made in good faith with respect to the Plan or any agreement
executed pursuant to the Plan.

If a Committee is established, all of the members of the Committee shall be
persons who, in the opinion of counsel to the Company, are outside directors and
"non-employee directors" within the meaning of Rule 16b-3(b)(3)(i) promulgated
by the Securities and Exchange Commission.  ­From time to time, the Board may
increase or decrease the size of the Committee, and add additional members to,
or remove members from, the Committee. The Committee shall act pursuant to a
majority vote, or the written consent of a majority of its members, and minutes
shall be kept of all of its meetings and copies thereof shall be provided to the
Board. Subject to the provisions of the Plan and the directions of the Board,
the Committee may establish and follow such rules and regulations for the
conduct of its business as it may deem advisable.

At the option of the Board, the entire Board of Directors of the Company may act
as the Plan Administrator during such periods of time as all members of the
Board are “outside directors” as defined in Treas. Regs. §1.162-27(e)(3), except
that this requirement shall not apply during any period of time prior to the
date the Company's Common Stock becomes registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended.

5.  
GRANT OF OPTIONS

The Company is hereby authorized to grant Incentive Stock Options as defined in
section 422 of the Code to any employee or director (including any officer or
director who is an employee) of the Company, or of any of its subsidiaries;
provided, however, that no person who owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company, or any of
its parent or subsidiary corporations, shall be eligible to receive an Incentive
Stock Option under the Plan unless at the time such Incentive Stock Option is
granted the Option price is at least 110% of the fair market value of the shares
subject to the Option, and such Option by its terms is not exercisable after the
expiration of five years from the date such Option is granted.

An employee may receive more than one Option under the Plan. Non-Employee
Directors shall be eligible to receive Non-­Qualified Stock Options in the
discretion of the Plan Administrator.  In addition, Non­-Qualified Stock Options
may be granted to employees, officers, directors and consultants who are
selected by the Plan Administrator.
 
 
4

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

 
 
6.  
STOCK SUBJECT TO PLAN

The stock available for grant of Options under the Plan shall be shares of the
Company's authorized but unissued, or reacquired, Common Stock. The maximum
aggregate number of shares of the Company’s common stock that may be optioned
and sold under the Plan is fifteen percent (15%) of the issued and outstanding
shares of the Company’s Common Stock as of July 1, 2010, the date this plan was
adopted. As of July 1, 2010, there are 13,280,255 shares issued and outstanding.

The maximum number of shares for which an Option may be granted to any Optionee
during any calendar year shall not exceed five percent (5%) of the issued and
outstanding common shares of the Company.  In the event that any outstanding
Option under the Plan for any reason expires or is terminated, the shares of
Common Stock allocable to the unexercised portion of the Option shall again be
available for Options under the Plan as if no Option had been granted with
regard to such shares.
 
7.  
TERMS AND CONDITIONS OF OPTIONS

Options granted under the Plan shall be evidenced by agreements (which need not
be identical) in such form and containing such provisions that are consistent
with the Plan as the Plan Administrator shall from time to time approve. Such
agreements may incorporate all or any of the terms hereof by reference and shall
comply with and be subject to the following terms and conditions:

(1)  
Number of Shares. Each Option agreement shall specify the number of shares
subject to the Option.

(2)  
Option Price. The purchase price for the shares subject to any Option shall be
determined by the Plan Administrator at the time of the grant, but shall not be
less than 85% of Fair Market Value per share. Anything to the contrary
notwithstanding, the purchase price for the shares subject to any Incentive
Stock Option shall not be less than 100% of the Fair Market Value of the shares
of Common Stock of the Company on the date the Stock Option is granted. In the
case of any Incentive Stock Option granted to an employee who owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, or any of its parent or subsidiary corporations, the
Option price shall not be less than 110% of the Fair Market Value per share of
the Common Stock of the Company on the date the Option is granted.  For purposes
of determining the stock ownership of an employee, the attribution rules of
Section 424(d) of the Code shall apply.

(3)  
Notice and Payment. Any exercisable portion of a Stock Option may be exercised
only by: (a) delivery of a written notice to the Company prior to the time when
such Stock Option becomes unexercisable herein, stating the number of shares
bring purchased and complying with all applicable rules established by the Plan
Administrator; (b) payment in full of the exercise price of such Option by, as
applicable, delivery of: (i) cash or check for an amount equal to the aggregate
Stock Option exercise price for the number of shares being purchased, (ii) in
the discretion of the Plan Administrator, upon such terms as the Plan
Administrator shall approve, a copy of instructions to a broker directing such
broker to sell the Common Stock for which such Option is exercised, and to remit
to the Company the aggregate exercise price of such Stock Option (a “cashless
exercise”), or (iii) in the discretion of the Plan Administrator, upon such
terms as the Plan Administrator shall approve, shares of the Company's Common
Stock owned by the Optionee, duly endorsed for transfer to the Company, with a
Fair Market Value on the date of delivery equal to the aggregate purchase price
of the shares with respect to which such Stock Option or portion is thereby
exercised (a "stock-for-stock exercise"); (c) payment of the amount of tax
required to be withheld (if any) by the Company, or any parent or subsidiary
corporation as a result of the exercise of a Stock Option.  At the discretion of
the Plan Administrator, upon such terms as the Plan Administrator shall approve,
the Optionee may pay all or a portion of the tax withholding by: (i) cash or
check payable to the Company, (ii) a cashless exercise, (iii) a stock-for-stock
exercise, or (iv) a combination of one or more of the foregoing payment methods;
and (d) delivery of a written notice to the Company requesting that the Company
direct the transfer agent to issue to the Optionee (or his designee) a
certificate for the number of shares of Common Stock for which the Option was
exercised or, in the case of a cashless exercise, for any shares that were not
sold in the cashless exercise. Notwithstanding the foregoing, the Company, in
its sole discretion, may extend and maintain, or arrange for the extension and
maintenance of credit to any Optionee to finance the Optionee's purchase of
shares pursuant to the exercise of any Stock Option, on such terms as may be
approved by the Plan Administrator, subject to applicable regulations of the
Federal Reserve Board and any other laws or regulations in effect at the time
such credit is extended.

 
 
 
5

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

 

 
(4)  
Terms of Option. No Option shall be exercisable after the expiration of the
earliest of: (a) ten years after the date the Option is granted, (b) three
months after the date the Optionee's employment with the Company and its
subsidiaries terminates, or a Non-Employee Director or Consultant ceases to
provide services to the Company, if such termination or cessation is for any
reason other than Disability or death, (c) one year after the date the
Optionee's employment with the Company, and its subsidiaries, terminates, or a
Non­-Employee Director or Consultant ceases to provide services to the Company,
if such termination or cessation is a result of death or Disability; provided,
however, that the Option agreement for any Option may provide for shorter
periods in each of the foregoing instances. In the case of an Incentive Stock
Option granted to an employee who owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company, or any of
its parent or subsidiary corporations, the term set forth in (a) above shall not
be more than five years after the date the Option is granted.

(5)  
Exercise of an Option. No Option shall be exercisable during the lifetime of an
Optionee by any person other than the Optionee. Subject to the foregoing, the
Plan Administrator shall have the power to set the time or times within which
each Option shall vest or be exercisable and to accelerate the time or times of
vesting and exercise; provided, however each Option shall provide the right to
exercise at the rate of at least 20% per year over five years from the date the
Option is granted.  Unless otherwise provided by the Plan Administrator, each
Option will not be subject to any vesting requirements. To the extent that an
Optionee has the right to exercise an Option and purchase shares pursuant
hereto, the Option may be exercised from time to time by written notice to the
Company, stating the number of shares being purchased and accompanied by payment
in full of the exercise price for such shares.

(6)  
No Transfer of Option. No Option shall be transferable by an Optionee otherwise
than by will or the laws of descent and distribution.

(7)  
Limit on Incentive Stock Option. The aggregate Fair Market Value (determined at
the time the Option is granted) of the stock with respect to which an Incentive
Stock Option is granted and exercisable for the first time by an Optionee during
any calendar year (under all Incentive Stock Option plans of the Company and its
subsidiaries) shall not exceed $100,000.  To the extent the aggregate Fair
Market Value (determined at the time the Stock Option is granted) of the Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by an Optionee during any calendar year (under all Incentive Stock
Option plans of the Company and any parent or subsidiary corporations) exceeds
$100,000, such Stock Options shall be treated as Non­-Qualified Stock
Options.  The determination of which Stock Options shall be treated as
Non-­Qualified Stock Options shall be made by taking Stock Options into account
in the Order in which they were granted.

(8)  
Restriction on Issuance of Shares.  The issuance of Options and shares shall be
subject to compliance with all of the applicable requirements of law with
respect to the issuance and sale of securities, including, without limitation,
any required qualification under state securities laws.  If an Optionee acquires
shares of Common Stock pursuant to the exercise of an Option, the Plan
Administrator, in its sole discretion, may require as a condition of issuance of
shares covered by the Option that the shares of Common Stock be subject to
restrictions on transfer. The Company may place a legend on the share
certificates reflecting the fact that they are subject to restrictions on
transfer pursuant to the terms of this Section.  In addition, the Optionee may
be required to execute a buy-sell agreement in favor of the Company or its
designee with respect to all or any of the shares so acquired. In such event,
the terms of any such agreement shall apply to the optioned shares.

(9)  
Investment Representation. Any Optionee may be required, as a condition of
issuance of shares covered by his or her Option, to represent that the shares to
be acquired pursuant to exercise will be acquired for investment and without a
view toward distribution thereof, and in such case, the Company may place a
legend on the share certificate(s) evidencing the fact that they were acquired
for investment and cannot be sold or transferred unless registered under the
Securities Act of 1933, as amended, or unless counsel for the Company is
satisfied that the circumstances of the proposed transfer do not require such
registration.

(10)  
Rights as a Shareholder or Employee.  An Optionee or transferee of an Option
shall have no right as a stockholder of the Company with respect to any shares
covered by any Option until the date of the issuance of a share certificate for
such shares.  No adjustment shall be made for dividends (Ordinary or
extraordinary, whether cash, securities, or other property), or distributions or
other rights for which the record date is prior to the date such share
certificate is issued, except as provided in paragraph (13) below. Nothing in
the Plan or in any Option agreement shall confer upon any employee any right to
continue in the employ of the Company or any of its subsidiaries or interfere in
any way with any right of the Company or any subsidiary to terminate the
Optionee's employment at any time.

 
 
6

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

 
 
(11)  
No Fractional Shares. In no event shall the Company be required to issue
fractional shares upon the exercise of an Option.

(12)  
Exercise in the Event of Death. In the event of the death of the Optionee, any
Option or unexercised portion thereof granted to the Optionee, to the extent
exercisable by him or her on the date of death, may be exercised by the
Optionee's personal representatives, heirs, or legatees subject to the
provisions of paragraph (4) above.

(13)  
Recapitalization or Reorganization of the Company.  Except as otherwise provided
herein, appropriate and proportionate adjustments shall be made (1) in the
number and class of shares subject to the Plan, (2) to the Option rights granted
under the Plan, and (3) in the exercise price of such Option rights, in the
event that the number of shares of Common Stock of the Company are increased or
decreased as a result of a stock dividend (but only on Common Stock), stock
split, reverse stock split, recapitalization, reorganization, merger,
consolidation, separation, or like change in the corporate or capital structure
of the Company. In the event there shall be any other change in the number or
kind of the outstanding shares of Common Stock of the Company, or any stock or
other securities into which such common stock shall have been changed, or for
which it shall have been exchanged, whether by reason of a complete liquidation
of the Company or a merger, reorganization, or consolidation with any other
corporation in which the Company is not the surviving corporation, or the
Company becomes a wholly-owned subsidiary of another corporation, then if the
Plan Administrator shall, in its sole discretion, determine that such change
equitably requires an adjustment to shares of Common Stock currently subject to
Options under the Plan, or to prices or terms of outstanding Options, such
adjustment shall be made in accordance with such determination.

To the extent that the foregoing adjustments relate to stock or securities of
the Company, such adjustment shall be made by the Plan Administrator, the
determination of which in that respect shall be final, binding, and conclusive.
No right to purchase fractional shares shall result from any adjustment of
Options pursuant to this Section. In case of any such adjustment, the shares
subject to the Option shall he rounded down to the nearest whole share. Notice
of any adjustment shall be given by the Company to each Optionee whose Options
shall have been so adjusted and such adjustment (whether or not notice is given)
shall be effective and binding for all purposes of the Plan.

In the event of a complete liquidation of the Company or a merger,
reorganization, or consolidation of the Company with any other corporation in
which the Company is not the surviving corporation, or the Company becomes a
wholly-owned subsidiary of another corporation, any unexercised Options granted
under the Plan shall be deemed cancelled unless the surviving corporation in any
such merger, reorganization, or consolidation elects to assume the Options under
the Plan or to issue substitute Options in place thereof; provided, however,
that notwithstanding the foregoing, if such Options would be cancelled in
accordance with the foregoing, the Optionee shall have the right exercisable
during a ten-day period ending on the fifth day prior to such liquidation,
merger, or consolidation to exercise such Option in whole or in part without
regard to any installment exercise provisions in the Option agreement.

(14)  
Modification, Extension and Renewal of Options.  Subject to the terms and
conditions and within the limitations of the Plan, the Plan Administrator may
modify, extend or renew outstanding options granted under the Plan and accept
the surrender of outstanding Options (to the extent not theretofore
exercised).  The Plan Administrator shall not, however, without the approval of
the Board, modify any outstanding Incentive Stock Option in any manner that
would cause the Option not to qualify as an Incentive Stock Option within the
meaning of Section 422 of the Code. Notwithstanding the foregoing, no
modification of an Option shall, without the consent of the Optionee, alter or
impair any rights of the Optionee under the Option.

 
(15)
Other Provisions. Each Option may contain such other terms, provisions, and
conditions not inconsistent with the Plan as may be determined by the Plan
Administrator.

 
 
7

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

 
 
8.  
TERMINATION OR AMENDMENT OF THE PLAN

The Board may at any time terminate or amend the Plan; provided that, without
approval of the holders of a majority of the shares of Common Stock of the
Company represented and voting at a duly held meeting at which a quorum is
present or the written consent of a majority of the outstanding shares of Common
Stock, there shall be (except by operation of the provisions of sections (6) or
(7)(13) above) no increase in the total number of shares covered by the Plan, no
change in the class of persons eligible to receive options granted under the
Plan, no reduction in the limits for determination of the minimum exercise price
of Options granted under the Plan, and no extension of the limits for
determination of the latest date upon which Options may be exercised; and
provided further that, without the consent of the Optionee, no amendment may
adversely affect any then outstanding Option or any unexercised portion thereof.

9.  
INDEMNIFICATION

In addition to such other rights of indemnification as they may have as members
of the Board Committee that administers the Plan, the members of the Plan
Administrator shall be indemnified by the Company against reasonable expense,
including attorney's fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein to which they, or any of them, may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted thereunder, and against any and all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal counsel
selected by the Company).  In addition, such members shall be indemnified by the
Company for any amount paid by them in satisfaction of a judgment in any action,
suit, or proceeding, except in relation to matters as to which it shall have
been adjudged that such member is liable for negligence or misconduct in the
performance of his or her duties, provided however that within sixty (60) days
after institution of any such action, suit, or proceeding, the member shall in
writing offer the Company the opportunity, at its own expense, to handle and
defend the same.
 
10.  
EFFECTIVE DATE AND TERM OF THE PLAN

This Plan shall become effective on the date of adoption by the Company’s Board
of Directors. Unless sooner terminated by the Board in its sole discretion, this
Plan will expire five calendar years from the date of its adoption.
 
 
8

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

 
 
11.  
MISCELLANEOUS

Any dispute arising out of this Plan or any provision hereof, or of any
agreement issued or executed under the Plan shall be resolved by the Plan
Administrator, and the decision of the Plan Administrator shall be final and
binding upon all parties.

IN WITNESS WHEREOF, the Company by its duly authorized officer, has caused this
Plan to be executed as of the 8 day of July, 2010.

Xzeres Wind Corp., Inc.

/s/ S. Clayton Wood
By:
S. Clayton Wood

Its:
President