EXHIBIT 10.1



 


Exhibit 10.1


 


DIGITAL ALLY, INC.


2013 STOCK OPTION
AND RESTRICTED STOCK PLAN


 


1. PURPOSES.


 


(a) Background.
This 2013 Stock Option and Restricted Stock Plan was adopted on March 22, 2013 by the Board of Directors, subject to the approval
of the Company’s stockholders. Options granted under the Plan prior to the stockholders’ approval will be effective
upon approval of the stockholders as of their respective dates of grant.


 


(b) Eligible Award
Recipients. The persons eligible to receive Awards are the Employees and Directors of the Company and its Affiliates.


 


(c) Available Awards.
The purpose of the Plan is to provide a means by which eligible recipients may be given an opportunity to benefit from increases
in value of the Common Stock through the granting of the following: (i) Incentive Stock Options, (ii) Nonqualified Stock Options,
(iii) rights to acquire restricted stock, and (iv) stock appreciation rights.


 


(d) General Purpose.
The Company, by means of the Plan, seeks to retain the services of the group of persons eligible to receive Awards, to secure and
retain the services of new members of this group and to provide incentives for such persons to exert maximum efforts for the success
of the Company and its Affiliates.


 


2. DEFINITIONS. 


 


(a) “Affiliate”
means any entity that controls, is controlled by, or is under common control with the Company.


 


(b) “Award”
means any right granted under the Plan, including an Option, a right to acquire restricted Common Stock, and a stock appreciation
right.


 


(c) “Award
Agreement” means a written agreement between the Company and a holder of an Award (other than an Option) evidencing
the terms and conditions of an individual Award grant.


 


(d) “Board”
means the board of directors of the Company.


 


(e) “Code”
means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.


 


(f) “Committee”
means a pre-existing or newly formed committee of members of the Board appointed by the Board in accordance with subsection 3(c).


 


(g) “Common
Stock” means the shares of the Company’s common stock par value $0.001 and other rights with respect to such
shares.


 



    	 



    	 



    

 


(h) “Company”
means Digital Ally, Inc., a Nevada corporation.


 


(i) “Continuous
Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee or Director
is not interrupted or terminated. Unless otherwise provided in an Award Agreement or Option Agreement, as applicable, the Participant’s
Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders
service to the Company or an Affiliate as an Employee or Director or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the Participant’s service to the Company or an Affiliate
as an Employee or Director. The Board, in its sole discretion, may determine whether Continuous Service shall be considered interrupted
in the case of any leave of absence, including sick leave, military leave or any other personal leave.


 


(j) “Covered
Employee” means the Company’s chief executive officer and the four (4) other highest compensated officers of
the Company for whom total compensation is required to be reported to stockholders under the Exchange Act, as determined for purposes
of Section 162(m) of the Code.


 


(k) “Director”
means a member of the Board of the Company.


 


(l) “Disability”
means the Participant’s inability, due to illness, accident, injury, physical or mental incapacity or other disability, to
carry out effectively the duties and obligations to the Company and its Affiliates performed by such person immediately prior to
such disability for a period of at least six (6) months, as determined in the good faith judgment of the Board.


 


(m) “Dollars”
or “$” means United States dollars.


 


(n) “Employee”
means any person employed by the Company or an Affiliate. Service as a Director or payment of a director’s fee by the Company
or an Affiliate alone shall not be sufficient to constitute “employment” by the Company or an Affiliate.


 


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


 


(p) “Fair
Market Value” means, as of any date, the value of the Common Stock determined as follows:


 


(i) If the Common
Stock is listed on any established stock exchange, or traded on the Nasdaq Global Market, the Nasdaq Capital Market or the Nasdaq
OTC Bulletin Board, the Fair Market Value of the Common Stock shall be the closing sales price for such stock (or the closing bid,
if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading
in Common Stock if such stock is traded on more than one such exchange or market) on the last market trading day prior to the day
of determination, as reported by such exchange or market or such other source as the Board reasonably deems reliable.


 


(ii) In the absence
of such markets for the Common Stock, the Fair Market Value shall be determined in good faith by the Board.


 






    	 



    	 



    

 


(q) “Incentive
Stock Option” means an option designated as an incentive stock option in an Option Agreement and that is granted
in accordance with the requirements of, and that conforms to the applicable provisions of, Section 422 of the Code.


 


(r) “Independent
Director” means (i) a Director who satisfies the definition of Independent Director or similar definition under the
applicable stock exchange or Nasdaq rules and regulations upon which the Common Stock is traded from time to time and (ii) a Director
who either (A) is not a current employee of the Company or an “affiliated corporation” (within the meaning of Treasury
Regulations promulgated under Section 162(m) of the Code), is not a former employee of the Company or an “affiliated corporation”
receiving compensation for prior services (other than benefits under a tax qualified pension plan), was not an officer of the Company
or an “affiliated corporation” at any time and is not currently receiving direct or indirect remuneration from the
Company or an “affiliated corporation” for services in any capacity other than as a Director or (B) is otherwise considered
an “outside director” for purposes of Section 162(m) of the Code.


 


(s) “Nonqualified
Stock Option” means an option that is not designated in an Option Agreement as an Incentive Stock Option or was not
granted in accordance with the requirements of, and does not conform to the applicable provisions of, Section 422 of the Code.


 


(t) “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.


 


(u) “Option”
means an Incentive Stock Option or a Nonqualified Stock Option granted pursuant to the Plan.


 


(v) “Option
Agreement” means a written agreement between the Company and an Option holder evidencing the terms and conditions
of an individual Option grant.


 


(w) “Option
holder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who
holds an outstanding Option.


 


(x) “Participant”
means a person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award.


 


(y) “Plan”
means this Digital Ally, Inc. 2011 Stock Option and Restricted Stock Plan.


 


(z) “Rule
16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time
to time.


 


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


 


(bb) “Ten
Percent Stockholder” means a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing
more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any parent corporation
or any subsidiary corporation, both as defined in Section 424 of the Code.


 



    	 



    	 



    

 


3. ADMINISTRATION.


 


(a) Administration
by Board. The Board shall administer the Plan unless and until the Board delegates administration to a Committee, as provided
in subsection 3(c). The Board may, at any time and for any reason in its sole discretion, rescind some or all of such delegation.


 


(b) Powers of Board.
The Board shall have the power, subject to, and within the limitations of, the express provisions of the Plan:


 


(i) To determine
from time to time which of the persons eligible under the Plan shall be granted Awards; when and how each Award shall be granted;
what type or combination of types of Award shall be granted; the provisions of each Award granted (which need not be identical),
including the time or times when a person shall be permitted to receive Common Stock pursuant to an Award; and the number of shares
of Common Stock with respect to which an Award shall be granted to each such person.


 


(ii) To construe
and interpret the Plan, Awards granted under it, Option Agreements and Award Agreements, and to establish, amend and revoke rules
and regulations for their administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency
in the Plan or in any Option Agreement or Award Agreement, in a manner and to the extent it shall deem necessary or expedient to
make the Plan fully effective.


 


(iii) To amend
the Plan, an Award, an Award Agreement or an Option Agreement as provided in Section 12, provided that the Board shall not
amend the exercise price of an option, the Fair Market Value of an Award or extend the term of an Option or Award without obtaining
the approval of the stockholders if required by the rules of any stock exchange upon which the Common Stock is listed.


 


(iv) Generally,
to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.


 


(c) Delegation to
Committee. 


 


(i) General. The
Board may delegate administration of the Plan and its powers and duties thereunder to a Committee or Committees, and the term “Committee”
shall apply to any person or persons to whom such authority has been delegated. Upon such delegation, the Committee shall have
the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers
the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be deemed to include the Committee
or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from
time to time by the Board. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights
and duties of the Committee under this Plan, except respecting matters under Rule 16b-3 of the Exchange Act or Section 162(m) of
the Code, or any rules or regulations issued thereunder, which are required to be determined in the sole discretion of the Committee.


 



    	 



    	 



    

 


(ii) Committee Composition.
A Committee shall consist solely of two or more Independent Directors. Within the scope of its authority, the Board or the Committee
may (1) delegate to a committee of one or more members of the Board who are not Independent Directors the authority to grant Awards
to eligible persons who are either (a) not then Covered Employees and are not expected to be Covered Employees at the time of recognition
of income resulting from such Award or (b) not persons with respect to whom the Company wishes to comply with Section 162(m) of
the Code, and/or (2) delegate to a committee of one or more members of the Board who are not Independent Directors or to the Company’s
Chief Executive Officer the authority to grant Awards to eligible persons who are not then subject to Section 16 of the Exchange
Act.


 


(d) Effect of Board’s
Decision; No Liability. All determinations, interpretations and constructions made by the Board in good faith shall not be
subject to review by any person and shall be final, binding and conclusive on all persons. No member of the Board or the Committee
or any person to whom duties hereunder have been delegated shall be liable for any action, interpretation or determination made
in good faith, and such persons shall be entitled to full indemnification and reimbursement consistent with applicable law and
in the manner provided in the Company’s Articles of Incorporation and Bylaws, as the same may be amended from time to time,
or as otherwise provided in any agreement between any such member and the Company.


 


4. STOCK SUBJECT TO THE PLAN. 


 


(a) Stock Reserve.
Subject to the provisions of Section 11 relating to adjustments upon changes in Common Stock, the shares of Common Stock that may
be issued pursuant to Awards shall not exceed in the aggregate five hundred thousand (500,000) shares of Common Stock.


 


(b) Reversion of
Stock to the Stock Reserve. If any Award shall for any reason expire or otherwise terminate, in whole or in part, without having
been exercised in full, the shares of Common Stock not acquired under such Award shall revert to and again become available for
issuance under the Plan.


 


(c) Source of Stock.
The Common Stock subject to the Plan may be unissued stock or reacquired stock, bought on the market or otherwise.


 


5. ELIGIBILITY. 


 


(a) Eligibility for
Specific Awards. Incentive Stock Options may be granted only to Employees. Awards other than Incentive Stock Options may be
granted to Employees and Directors.


 


(b) Ten Percent Stockholders.
A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the exercise price of such Option is at least one
hundred ten percent (110%) of the Fair Market Value of the Common Stock at the date of grant and the Option is not exercisable
after the expiration of five (5) years from the date of grant.


 




    	 



    	 



    


 


6. OPTION PROVISIONS. 


 


Each Option Agreement shall
be subject to the terms and conditions of this Plan. Each Option and Option Agreement shall be in such form and shall contain such
terms and conditions as the Board shall deem appropriate. All Options shall be separately designated Incentive Stock Options or
Nonqualified Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be
issued for the shares of Common Stock purchased on exercise of each type of Option. The provisions of separate Options need not
be identical.


 


(a) Provisions Applicable
to All Options. 


 


(i) Consideration.
The purchase price of the shares of Common Stock acquired pursuant to an Option shall be paid as follows: (a) in cash or by certified
or official bank check, payable to the order of the Company, in the amount (the “Purchase Price”) equal to the exercise
price of the Option multiplied by the number of shares plus payment of all taxes applicable upon such exercise; (b) with shares
owned by the Option holder having a Fair Market Value at the time the Option is exercised equal to the Purchase Price plus payment
in cash of all taxes applicable upon such exercise, with the prior approval of the Board; (c) by surrendering to the Company the
right to acquire a number of shares having an aggregate value such that the amount by which the Fair Market Value of such shares
exceeds the aggregate exercise price is equal to the Purchase Price plus payment in cash of all taxes applicable upon such exercise,
with the prior approval of the Board; (d) any combination of the foregoing; or (e) a manner acceptable to the Board.


 


(ii) Vesting Generally.
An Option may (A) vest, and therefore become exercisable, in periodic installments that may, but need not, be equal, or (B) be
fully vested at the time of grant. The Option may be subject to such other terms and conditions on the time or times when it may
be exercised (which may be based on performance or other criteria) as the Board may deem appropriate. The vesting provisions, if
any, of individual Options may vary. The provisions of this subsection 6(a)(ii) are subject to any Option Agreement provisions
governing the minimum number of Common Stock as to which an Option may be exercised.


 


(iii) Termination of
Continuous Service. Unless otherwise provided in the Option Agreement, in the event an Option holder’s Continuous Service
terminates (other than upon the Option holder’s death, Disability, retirement or as a result of a Change of Control), all
Options held by the Option holder shall immediately terminate; provided, however, that an Option Agreement may provide
that if an Option holder’s Continuous Service is terminated for reasons other than for cause, all vested Options held by
such person shall continue to be exercisable until the earlier of the expiration date of such Option or ninety (90) days after
the date of such termination. All such vested Options not exercised within the period described in the preceding sentence shall
terminate.


 


(iv) Disability or
Death of Option holder. Unless otherwise provided in the Option Agreement, in the event of an Option holder’s Disability
or death, all unvested Options shall immediately terminate, and all vested Options held by such person shall continue to be exercisable
for twelve months after the date of such Disability or death. All such vested Options not exercised within such twelve-month period
shall terminate.


 



    	 



    	 



    

 


(v) Retirement.
Unless otherwise provided in the Option Agreement, in the event of the Option holder’s retirement, all unvested Options shall
automatically vest on the date of such retirement and all Options shall be exercisable for the earlier of twelve (12) months after
such retirement date or the expiration date of such Options. All such Options not exercised within the period described in the
preceding sentence shall terminate.


 


(b) Provisions Applicable
to Incentive Stock Options.


 


(i) Term. Subject
to the provisions of subsection 5(b) regarding Ten Percent Stockholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it was granted. Further, no grant of an Incentive Stock Option shall be made under this
Plan more than ten (10) years after the date the Plan is approved by the stockholders of the Company.


 


(ii) Exercise Price
of an Incentive Stock Option. Subject to the provisions of subsection 5(b) regarding Ten Percent Stockholders, the exercise
price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock
subject to the Option on the date the Option is granted.


 


(iii) Transferability
of an Incentive Stock Option. An Incentive Stock Option shall not be transferable except by will or by the laws of descent
and distribution and shall be exercisable during the lifetime of the Option holder only by the Option holder.


 


(iv) Incentive Stock
Option $100,000 Limitation. Notwithstanding any other provision of the Plan or an Option Agreement, the aggregate Fair Market
Value of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an Option holder
in any calendar year, under the Plan or any other option plan of the Company or its Affiliates, shall not exceed One Hundred Thousand
Dollars ($100,000). For this purpose, the Fair Market Value of the Common Stock shall be determined as of the time an Option is
granted. The Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated
as Nonqualified Stock Options.


 


(c) Provisions Applicable
to Nonqualified Stock Options.


 


(i) Exercise Price
of a Nonqualified Stock Option. The exercise price of each Nonqualified Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted.


 


(ii) Transferability
of a Nonqualified Stock Option. A Nonqualified Stock Option shall be transferable, if at all, to the extent provided in the
Option Agreement. If the Option Agreement does not provide for transferability, then the Nonqualified Stock Option shall not be
transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Option
holder only by the Option holder.


 




    	 



    	 



    


 


7. PROVISIONS OF AWARDS OTHER THAN OPTIONS.



 


(a) Restricted Stock
Awards. Each restricted stock Award agreement shall be in such form and shall contain such restrictions, terms and conditions,
if any, as the Board shall deem appropriate and shall be subject to the terms and conditions of this Plan. The terms and conditions
of restricted stock Award Agreements may change from time to time, and the terms and conditions of separate restricted stock Award
Agreements need not be identical, but each restricted stock Award Agreement shall include (through incorporation of provisions
hereof by reference in the agreement or otherwise) the substance of each of the following provisions:


 


(i) Consideration.
A restricted stock Award may be awarded in consideration for past services actually rendered, or for future services to be rendered,
to the Company or an Affiliate for its benefit.


 


(ii) Vesting.
Common Stock awarded under the restricted stock Award Agreement may (A) be subject to a vesting schedule to be determined by the
Board or (B) be fully vested at the time of grant.


 


(iii) Termination
of Participant’s Continuous Service. Unless otherwise provided in the restricted stock Award Agreement, in the event
a Participant’s Continuous Service terminates prior to a vesting date set forth in the restricted stock Award Agreement,
any unvested restricted stock Award shall be forfeited and automatically transferred to and reacquired by the Company at no cost
to the Company, and neither the Participant nor his or her heirs, executors, administrators or successors shall have any right
or interest in the restricted stock Award. Notwithstanding the foregoing, unless otherwise provided in the restricted stock Award
agreement, in the event a Participant’s Continuous Service terminates as a result of (A) being terminated by the Company
for reasons other than for cause, (B) death, (C) Disability, (D) retirement, or (E) a Change of Control (subject to the provisions
of Section 11(c) hereof), then any unvested restricted stock Award shall vest immediately upon such date.


 


(iv) Transferability.
Rights to acquire Common Stock under the restricted stock Award Agreement shall be transferable by the Participant only upon such
terms and conditions as are set forth in the restricted stock Award Agreement, as the Board shall determine in its discretion,
so long as Common Stock awarded under the restricted stock Award Agreement remain subject to the terms of the restricted stock
Award Agreement.


 


(b) Grant of Stock
Appreciation Rights. Stock appreciation rights to receive in shares of Common Stock the excess of the Fair Market Value of
Common Stock on the date the rights are surrendered over the Fair Market Value of Common Stock on the date of grant may be granted
to any Employee or Director selected by the Board. A stock appreciation right may be granted (i) in connection and simultaneously
with the grant of another Award, (ii) with respect to a previously granted Award, or (iii) independent of another Award. A stock
appreciation right shall be subject to such terms and conditions not inconsistent with this Plan as the Board shall impose and
shall be evidenced by a written stock appreciation right agreement, which shall be executed by the Participant and an authorized
officer of the Company. The Board, in its discretion, may determine whether a stock appreciation right is to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code and stock appreciation right agreements evidencing stock appreciation
rights intended to so qualify shall contain such terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. The Board may, in its discretion and on such terms as it deems appropriate, require as a condition
of the grant of a stock appreciation right that the Participant surrender for cancellation some or all of the Awards previously
granted to such person under this Plan or otherwise. A stock appreciation right, the grant of which is conditioned upon such surrender,
may have an exercise price lower (or higher) than the exercise price of the surrendered Award, may contain such other terms as
the Board deems appropriate, and shall be exercisable in accordance with its terms, without regard to the number of shares, price,
exercise period or any other term or condition of such surrendered Award.


 



    	 



    	 



    

 


8. AVAILABILITY OF STOCK.


 


Subject to the restrictions
set forth in Section 4(a), during the terms of the Awards, the Company shall keep available at all times the number of shares of
Common Stock required to satisfy such Awards.


 


9. USE OF PROCEEDS FROM STOCK. 


 


Proceeds from the sale
of Common Stock pursuant to Awards shall constitute general funds of the Company.


 


10. MISCELLANEOUS. 


 


(a) Exercise of
Awards. Awards shall be exercisable at such times, or upon the occurrence of such event or events as the Board shall determine
at or subsequent to grant. Awards may be exercised in whole or in part. Common Stock purchased upon the exercise of an Award shall
be paid for in full at the time of such purchase.


 


(b) Acceleration
of Exercisability and Vesting. The Board shall have the power to accelerate the time at which an Award may first be exercised
or the time during which an Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in
the Award stating the time at which it may first be exercised or the time during which it will vest.


 


(c) Stockholder
Rights. 


 


(i) Options. Unless
otherwise provided in and upon the terms and conditions in the Option Agreement, no Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any Common Stock subject to an Option unless and until such Participant
has satisfied all requirements for exercise of, and has exercised, the Option pursuant to its terms.


 


(ii) Restricted Stock.
Unless otherwise provided in and upon the terms and conditions in the restricted stock Award Agreement, a Participant shall have
the right to receive all dividends and other distributions paid or made respecting such restricted stock, provided, however, no
unvested restricted stock shall have any voting rights of a stockholder respecting such unvested restricted stock unless and until
such unvested restricted stock become vested.


 



    	 



    	 



    

 


(d) No Employment
or other Service Rights. Nothing in the Plan or any instrument executed or Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was
granted, or any other capacity, or shall affect the right of the Company or an Affiliate to terminate with or without notice and
with or without cause (i) the employment of an Employee or an Affiliate or (ii) the service of a Director of the Company or an
Affiliate.


 


(e) Withholding
Obligations. If the Company has or will have a legal obligation to withhold the taxes related to the grant, vesting or exercise
of the Award, such Award may not be granted, vested or exercised in whole or in part, unless such tax obligation is first satisfied
in a manner satisfactory to the Company. To the extent provided by the terms of an Award Agreement or Option Agreement, the Participant
may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under
an Award by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the
Participant by the Company) or by a combination of such means: (i) tendering a cash payment in Dollars; (ii) authorizing the Company
to withhold Common Stock from the Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition
of Common Stock under the Award, provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum
amount of tax required to be withheld by law; or (iii) delivering to the Company owned and unencumbered Common Stock.


 


(f) Listing and
Qualification of Stock. This Plan and the grant and exercise of Awards hereunder, and the obligation of the Company to sell
and deliver Common Stock under such Awards, shall be subject to all applicable United States federal and state laws, rules and
regulations, and any other laws applicable to the Company, and to such approvals by any government or regulatory agency as may
be required. The Company, in its discretion, may postpone the issuance or delivery of Common Stock upon any exercise of an Award
until completion of any stock exchange listing, or the receipt of any required approval from any stock exchange or other qualification
of such Common Stock under any United States federal or state law rule or regulation as the Company may consider appropriate, and
may require any individual to whom an Award is granted, such individual’s beneficiary or legal representative, as applicable,
to make such representations and furnish such information as the Board may consider necessary, desirable or advisable in connection
with the issuance or delivery of the Common Stock in compliance with applicable laws, rules and regulations.


 


(g) Non-Uniform
Determinations. The Board’s determinations under this Plan (including, without limitation, determinations of the persons
to receive Awards, the form, term, provisions, amount and timing of the grant of such Awards and of the agreements evidencing the
same) need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under
this Plan, whether or not such persons are similarly situated.


 




    	 



    	 



    


 


11. ADJUSTMENTS UPON CHANGES IN STOCK.



 


(a) Capitalization
Adjustments. If any change is made in the Common Stock subject to the Plan, or subject to any Award, without the receipt
of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating dividend, combination of stock, exchange of stock,
change in corporate structure or other transaction), the Plan will be appropriately adjusted in the class(es) and maximum
number of securities subject to the Plan pursuant to subsection 4(a) and the maximum number of securities subject to award to
any person pursuant to subsection 5(c), and the outstanding Awards will be appropriately adjusted in the class(es) and number
of securities and price per stock of Common Stock subject to such outstanding Awards. The Board shall make such adjustments,
and its determination shall be final, binding and conclusive. (The conversion of any convertible securities of the Company
shall not be treated as a transaction “without receipt of consideration” by the Company.)


 


(b) Dissolution
or Liquidation. In the event of a dissolution or liquidation of the Company, then all outstanding Awards shall terminate immediately
prior to such event.


 


(c) Asset Sale, Merger,
Consolidation or Reverse Merger. In the event of a Change of Control (as defined below), any unvested Awards shall vest immediately
prior to the closing of the Change of Control, and the Board shall have the power and discretion to provide for the Participant’s
election alternatives regarding the terms and conditions for the exercise of, or modification of, any outstanding Awards granted
hereunder, provided, however, such alternatives shall not affect the then current exercise provisions without such Participant’s
consent. The Board may provide that Awards granted hereunder must be exercised in connection with the closing of such transaction,
and that if not so exercised such Awards will expire. Any such determinations by the Board may be made generally with respect to
all Participants, or may be made on a case-by-case basis with respect to particular Participants. For the purpose of this Plan,
a “Change of Control” shall have occurred in the event one or more persons acting individually or as a group (i) acquires
sufficient additional stock to constitute more than fifty percent (50%) of (A) the total Fair Market Value of all Common Stock
issued and outstanding or (B) the total voting power of all shares of capital stock authorized to vote for the election of directors;
(ii) acquires, in a twelve (12) month period, thirty-five percent (35%) or more of the voting power of all shares of capital stock
authorized to vote for the election of directors, or alternatively a majority of the members of the board is replaced during any
twelve (12) month period by directors whose appointment was not endorsed by a majority of the members of the board; or (iii) acquires,
during a twelve (12) month period, more than forty percent (40%) of the total gross fair market value of all of the Company’s
assets. Notwithstanding the foregoing, the provisions of this Section 11(c) shall not apply to (i) any transaction involving any
stockholder that individually or as a group owns more than fifty percent (50%) of the outstanding Common Stock on the date this
Plan is approved by the Company’s stockholders, until such time as such stockholder first owns less than forty percent (40%)
of the total outstanding Common Stock, or (ii) any transaction undertaken for the purpose of reincorporating the Company under
the laws of another jurisdiction, if such transaction does not materially affect the beneficial ownership of the Company’s
capital stock.


 




    	 



    	 



    


 


12. AMENDMENT OF THE PLAN AND AWARDS.



 


(a) Amendment of
Plan. The Board at any time, and from time to time, may amend the Plan. However, except as provided in Section 11 relating
to adjustments upon changes in Common Stock, no amendment shall be effective unless approved by the stockholders of the Company
to the extent stockholder approval is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any applicable
Nasdaq or securities exchange listing requirements.


 


(b) Stockholder
Approval. The Board may, in its sole discretion, submit any other amendment to the Plan for stockholder approval, including,
but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations
thereunder regarding the exclusion of performance-based compensation from the limit on corporate deductibility of compensation
paid to certain executive officers.


 


(c) Contemplated
Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable
to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under
it into compliance therewith.


 


(d) No Impairment
of Rights. Rights under any Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless
the Participant consents in writing.


 


(e) Amendment of
Awards. Subject to Section 3(b)(iii), the Board at any time, and from time to time, may amend the terms of any one or more
Awards; provided, however, that the rights under any Award shall not be impaired by any such amendment unless the applicable Participant
consents in writing.


 


13. TERMINATION OR SUSPENSION OF THE
PLAN. 


 


(a) Plan Term.
The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on the day before the
tenth (10th) anniversary of the date the Plan is adopted by the stockholders of the Company. No Awards may be granted under the
Plan while the Plan is suspended or after it is terminated.


 


(b) No Impairment
of Rights. Suspension or termination of the Plan shall not impair rights and obligations under any Award granted while the
Plan is in effect except with the written consent of the Participant.


 


(c) Savings Clause.
This Plan is intended to comply in all aspects with applicable laws and regulations. In case any one or more of the provisions
of this Plan shall be held invalid, illegal or unenforceable in any respect under applicable law or regulation, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or
unenforceable provision shall be deemed null and void; however, to the extent permissible by law, any provision which could be
deemed null and void shall first be construed, interpreted or revised retroactively to permit this Plan to be construed in compliance
with all applicable laws so as to foster the intent of this Plan.


 






    	 



    	 



    

 


14. EFFECTIVE DATE OF PLAN. 


 


The Plan shall become effective
as determined by the Board, but no Award shall be exercised (or, in the case of a restricted stock Award, shall be granted) unless
and until the Plan has been approved by the stockholders of the Company, which approval shall be within twelve (12) months before
or after the date the Plan is adopted by the Board.


 


15. CHOICE OF LAW. 


 


The law of the state of
Nevada shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to such
state’s conflict of laws rules.


 


(The Plan was adopted by the Board of Directors
on March 22, 2013).