**2010 STOCK OPTION PLAN OF**

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**  **Xzeres Corp.**
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**A Nevada Corporation**

(Fourth Amended and Restated)

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**May 25, 2011**
  
**STOCK OPTION PLAN OF**

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**Xzeres Corp.**

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**TABLE OF CONTENTS**

  
 Page No. P URPOSE OF THE PLAN1TYPES OF STOCK OPTIONS1DEFINITIONS1ADMINISTRATION OF THE PLAN2GRANT OF OPTIONS3STOCK SUBJECT TO PLAN3TERMS AND CONDITIONS OF OPTIONS3TERMINATION OR AMENDMENT OF THE PLAN8INDEMNIFICATION8EFFECTIVE DATE AND TERM OF THE PLAN9
 
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**STOCK OPTION PLAN OF**

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**Xzeres Corp.**

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**A Nevada Corporation**

(Fourth Amended and Restated)

 

1.                  PURPOSE OF THE PLAN

 

The purpose of this Fourth Amended and RestatedStock Option Plan of Xzeres Corp. (the “Plan”) is to strengthen Xzeres 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 theemployment of the Company or its subsidiaries.

 

2.                  TYPES OF STOCK OPTIONS

 

There shall be two types of Stock Options (referredto herein as "Options" without distinction between such different types) that may be granted under this Plan: (1) Optionsintended 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-QualifiedStock Options”).

 

3.                  DEFINITIONS

 

The following definitions are applicable tothe 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 Corp., a Nevada corporation.

 

(5)                Consultant. An individual or entity that renders professional services to the Company as anindependent 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 inSection 22(e)(3) of the Code. The determination of whether an individual is Disabled or has a Disability is determined under proceduresestablished by the Plan Administrator for purposes of the Plan.

 

(7)                Fair Market Value. For purposes of the Plan, the “fair market value" per shareof Common Stock of the Company at any date shall be: (a) if the Common Stock is listed on an established stock exchange or exchangesor the NASDAQ National Market, the closing price per share on the last trading day immediately preceding such date on the principalexchange 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 NASDAQNational Market, but is quoted on the NASDAQ Small Cap Market, the NASDAQ electronic bulletin board or the National Quotation Bureaupink sheets with a daily trading volume over each of the twenty days preceding such date of not less than 250,000 shares, the averageof the closing bid and asked prices per share for the Common Stock as quoted by NASDAQ or the National Quotation Bureau, as thecase may be, on the twenty trading days immediately preceding such date; or (c) if the Common Stock is not then listed on an exchangeor the NASDAQ National Market, or quoted by NASDAQ or the National Quotation Bureau with sufficient volume, an amount determinedin good faith by the Plan Administrator. In making this determination the Plan Administrator may, but is not required to, seekand 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 "incentivestock option" within the meaning of Section 422 of the Code. 
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(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 Section4 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.

 

4.                  ADMINISTRATION OF THE PLAN

 

This Plan shall be administered by the Boardof Directors or by a Compensation Committee (hereinafter the “Committee”) composed of members selected by, and servingat the pleasure of, the Board of Directors (the “Plan Administrator”). Subject to the provisions of the Plan, the PlanAdministrator shall have authority to construe and interpret the Plan, to promulgate, amend, and rescind rules and regulationsrelating to its administration, to select, from time to time, among the eligible employees and non-employee consultants (as determinedpursuant 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 otherterms covered by the Stock Options, to determine the duration and purpose of leaves of absence which may be granted to Stock Optionholders without constituting termination of their employment for purposes of the Plan, and to make all of the determinations necessaryor advisable for administration of the Plan. The interpretation and construction by the Plan Administrator of any provision ofthe Plan, or of any agreement issued and executed under the Plan, shall be final and binding upon all parties. No member of theCommittee or Board shall be liable for any action or determination undertaken or made in good faith with respect to the Plan orany agreement executed pursuant to the Plan.

 

If a Committee is established, all of the membersof 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 mayincrease or decrease the size of the Committee, and add additional members to, or remove members from, the Committee. The Committeeshall act pursuant to a majority vote, or the written consent of a majority of its members, and minutes shall be kept of all ofits meetings and copies thereof shall be provided to the Board. Subject to the provisions of the Plan and the directions of theBoard, 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 Boardof Directors of the Company may act as the Plan Administrator during such periods of time as all members of the Board are “outsidedirectors” as defined in Treas. Regs. §1.162-27(e)(3), except that this requirement shall not apply during any periodof time prior to the date the Company's Common Stock becomes registered pursuant to Section 12 of the Securities Exchange Act of1934, as amended.

 

5.                  GRANT OF OPTIONS

 

The Company is hereby authorized to grant IncentiveStock 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 thetotal combined voting power of all classes of stock of the Company, or any of its parent or subsidiary corporations, shall be eligibleto receive an Incentive Stock Option under the Plan unless at the time such Incentive Stock Option is granted the Option priceis at least 110% of the fair market value of the shares subject to the Option, and such Option by its terms is not exercisableafter the expiration of five years from the date such Option is granted.

 

An employee may receive more than one Optionunder 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 thePlan Administrator.
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6.                  STOCK SUBJECT TO PLAN

 

The stock available for grant of Options underthe Plan shall be shares of the Company's authorized but unissued, or reacquired, Common Stock. The maximum aggregate number ofshares of the Company’s common stock that may be optioned and sold under the Plan is fifteen percent (15%) of the issuedand outstanding shares of the Company’s Common Stock as of May 25, 2011, the date this plan was adopted, as amended. As ofMay 25, 2011, there are 18,821,327 shares issued and outstanding.

 

The maximum number of shares for which an Optionmay be granted to any Optionee during any calendar year shall not exceed five percent (5%) of the issued and outstanding commonshares of the Company. In the event that any outstanding Option under the Plan for any reason expires or is terminated, the sharesof Common Stock allocable to the unexercised portion of the Option shall again be available for Options under the Plan as if noOption had been granted with regard to such shares.

 

7.                  TERMS AND CONDITIONS OF OPTIONS

 

Options granted under the Plan shall be evidencedby agreements (which need not be identical) in such form and containing such provisions that are consistent with the Plan as thePlan Administrator shall from time to time approve. Such agreements may incorporate all or any of the terms hereof by referenceand 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 theOption.

 

(2)                Option Price. The purchase price for the shares subject to any Option shall be determinedby the Plan Administrator at the time of the grant, but shall not be less than 85% of Fair Market Value per share. Anything tothe 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 anyIncentive Stock Option granted to an employee who owns stock possessing more than 10% of the total combined voting power of allclasses 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 determiningthe 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 thenumber of shares bring purchased and complying with all applicable rules established by the Plan Administrator; (b) payment infull of the exercise price of such Option by, as applicable, delivery of: (i) cash or check for an amount equal to the aggregateStock Option exercise price for the number of shares being purchased, (ii) in the discretion of the Plan Administrator, upon suchterms as the Plan Administrator shall approve, a copy of instructions to a broker directing such broker to sell the Common Stockfor which such Option is exercised, and to remit to the Company the aggregate exercise price of such Stock Option (a “cashlessexercise”), 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 Valueon the date of delivery equal to the aggregate purchase price of the shares with respect to which such Stock Option or portionis 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 thePlan Administrator, upon such terms as the Plan Administrator shall approve, the Optionee may pay all or a portion of the tax withholdingby: (i) cash or check payable to the Company, (ii) a cashless exercise, (iii) a stock-for-stock exercise, or (iv) a combinationof one or more of the foregoing payment methods; and (d) delivery of a written notice to the Company requesting that the Companydirect the transfer agent to issue to the Optionee (or his designee) a certificate for the number of shares of Common Stock forwhich 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 maintenanceof credit to any Optionee to finance the Optionee's purchase of shares pursuant to the exercise of any Stock Option, on such termsas may be approved by the Plan Administrator, subject to applicable regulations of the Federal Reserve Board and any other lawsor regulations in effect at the time such credit is extended.
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(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 andits subsidiaries terminates, or a Non-Employee Director or Consultant ceases to provide services to the Company, if such terminationor 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 terminationor cessation is a result of death or Disability; provided, however, that the Option agreement for any Option may provide for shorterperiods in each of the foregoing instances. In the case of an Incentive Stock Option granted to an employee who owns stock possessingmore 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. 

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

 

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

 

(7)                Limit on Incentive Stock Option. The aggregate Fair Market Value (determined at the time theOption is granted) of the stock with respect to which an Incentive Stock Option is granted and exercisable for the first time byan 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 Stockwith respect to which Incentive Stock Options are exercisable for the first time by an Optionee during any calendar year (underall Incentive Stock Option plans of the Company and any parent or subsidiary corporations) exceeds $100,000, such Stock Optionsshall be treated as Non-Qualified Stock Options. The determination of which Stock Options shall be treated as Non-Qualified StockOptions 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 tocompliance with all of the applicable requirements of law with respect to the issuance and sale of securities, including, withoutlimitation, any required qualification under state securities laws. If an Optionee acquires shares of Common Stock pursuant tothe exercise of an Option, the Plan Administrator, in its sole discretion, may require as a condition of issuance of shares coveredby the Option that the shares of Common Stock be subject to restrictions on transfer. The Company may place a legend on the sharecertificates 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 anyof 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 sharescovered by his or her Option, to represent that the shares to be acquired pursuant to exercise will be acquired for investmentand without a view toward distribution thereof, and in such case, the Company may place a legend on the share certificate(s) evidencingthe fact that they were acquired for investment and cannot be sold or transferred unless registered under the Securities Act of1933, as amended, or unless counsel for the Company is satisfied that the circumstances of the proposed transfer do not requiresuch registration.
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(10)            Rights as a Shareholder or Employee. An Optionee or transferee of an Option shall have noright as a stockholder of the Company with respect to any shares covered by any Option until the date of the issuance of a sharecertificate for such shares. No adjustment shall be made for dividends (Ordinary or extraordinary, whether cash, securities, orother 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 rightto continue in the employ of the Company or any of its subsidiaries or interfere in any way with any right of the Company or anysubsidiary to terminate the Optionee's employment at any time.

 

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

 

(12)            Exercise in the Event of Death. In the event of the death of the Optionee, any Option or unexercisedportion thereof granted to the Optionee, to the extent exercisable by him or her on the date of death, may be exercised by theOptionee'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, appropriateand proportionate adjustments shall be made (1) in the number and class of shares subject to the Plan, (2) to the Option rightsgranted under the Plan, and (3) in the exercise price of such Option rights, in the event that the number of shares of Common Stockof the Company are increased or decreased as a result of a stock dividend (but only on Common Stock), stock split, reverse stocksplit, recapitalization, reorganization, merger, consolidation, separation, or like change in the corporate or capital structureof the Company. In the event there shall be any other change in the number or kind of the outstanding shares of Common Stock ofthe Company, or any stock or other securities into which such common stock shall have been changed, or for which it shall havebeen exchanged, whether by reason of a complete liquidation of the Company or a merger, reorganization, or consolidation with anyother corporation in which the Company is not the surviving corporation, or the Company becomes a wholly-owned subsidiary of anothercorporation, then if the Plan Administrator shall, in its sole discretion, determine that such change equitably requires an adjustmentto shares of Common Stock currently subject to Options under the Plan, or to prices or terms of outstanding Options, such adjustmentshall be made in accordance with such determination.

 

To the extent that the foregoing adjustmentsrelate to stock or securities of the Company, such adjustment shall be made by the Plan Administrator, the determination of whichin that respect shall be final, binding, and conclusive. No right to purchase fractional shares shall result from any adjustmentof Options pursuant to this Section. In case of any such adjustment, the shares subject to the Option shall he rounded down tothe nearest whole share. Notice of any adjustment shall be given by the Company to each Optionee whose Options shall have beenso 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 liquidationof the Company or a merger, reorganization, or consolidation of the Company with any other corporation in which the Company isnot the surviving corporation, or the Company becomes a wholly-owned subsidiary of another corporation, any unexercised Optionsgranted under the Plan shall be deemed cancelled unless the surviving corporation in any such merger, reorganization, or consolidationelects to assume the Options under the Plan or to issue substitute Options in place thereof; provided, however, that notwithstandingthe foregoing, if such Options would be cancelled in accordance with the foregoing, the Optionee shall have the right exercisableduring a ten-day period ending on the fifth day prior to such liquidation, merger, or consolidation to exercise such Option inwhole or in part without regard to any installment exercise provisions in the Option agreement.
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(14)            Modification, Extension and Renewal of Options. Subject to the terms and conditions and withinthe limitations of the Plan, the Plan Administrator may modify, extend or renew outstanding options granted under the Plan andaccept 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 notto qualify as an Incentive Stock Option within the meaning of Section 422 of the Code. Notwithstanding the foregoing, no modificationof an Option shall, without the consent of the Optionee, alter or impair any rights of the Optionee under the Option.

 

(15)	OtherProvisions. Each Option may contain such other terms, provisions, and conditions not inconsistent with the Plan as may be determinedby the Plan Administrator.

 

8.                  TERMINATION OR AMENDMENT OF THE PLAN

 

The Board may at any time terminate or amendthe Plan; provided that, without approval of the holders of a majority of the shares of Common Stock of the Company representedand voting at a duly held meeting at which a quorum is present or the written consent of a majority of the outstanding shares ofCommon Stock, there shall be (except by operation of the provisions of sections (6) or (7)(13) above) no increase in the totalnumber of shares covered by the Plan, no change in the class of persons eligible to receive options granted under the Plan, noreduction in the limits for determination of the minimum exercise price of Options granted under the Plan, and no extension ofthe limits for determination of the latest date upon which Options may be exercised; and provided further that, without the consentof 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 indemnificationas they may have as members of the Board Committee that administers the Plan, the members of the Plan Administrator shall be indemnifiedby the Company against reasonable expense, including attorney's fees, actually and necessarily incurred in connection with thedefense of any action, suit or proceeding, or in connection with any appeal therein to which they, or any of them, may be a partyby reason of any action taken or failure to act under or in connection with the Plan or any Option granted thereunder, and againstany and all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selectedby the Company). In addition, such members shall be indemnified by the Company for any amount paid by them in satisfaction of ajudgment in any action, suit, or proceeding, except in relation to matters as to which it shall have been adjudged that such memberis liable for negligence or misconduct in the performance of his or her duties, provided however that within sixty (60) days afterinstitution of any such action, suit, or proceeding, the member shall in writing offer the Company the opportunity, at its ownexpense, to handle and defend the same.
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10.               EFFECTIVE DATE AND TERM OF THE PLAN

 

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

 

11.               MISCELLANEOUS

 

Any dispute arising out ofthis 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 itsduly authorized officer, has caused this Plan to be executed as of May 25, 2011.

 

**Xzeres Corp.**

 

/s/ Frank Greco

By: 	FrankGreco

Its:	CEO/ President
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