Document:

cleb-2083007ex106.htm

    Exhibit
      10.6

    FIVE
      SIGMA LTD

    

    Consulting
      Fee Agreement

    

    

    This
      Consulting Fee Agreement is made as of the 17th day of April,
      2007   by

    

    BETWEEN:

    

    Alternative
      Ethanol Technologies, Inc.

    

    (Hereinafter
      referred to as the Company)

    

    OF
      THE
      FIRST PART;

    

    And
      –

    

    Five
      Sigma Ltd.

    

    (Hereinafter
      called the Consultant)

    

    OF
      THE
      SECOND PART

    

    

    WHEREAS
      the Company is desirous of engaging the services of the Consultant to provide
      services in accordance with the terms of this Agreement.

    

    NOW
      THEREFORE in consideration of the mutual covenants herein contained and other
      good and valuable consideration,

    

    

    
      	
              ARTICLE
                1.00 -

            	
              INTERPRETATION

            
	 	 
	
              1.01

            	
              The
                division of this Agreement into Articles, sections and subsections
                and the
                insertion of headings are for convenience of reference only and shall
                not
                affect the interpretation of construction of this
                Agreement.

            
	 	 
	
              1.02

            	
              In
                this Agreement, the use of the singular number shall include the
                plural
                and vice versa.  The use of gender shall include the masculine,
                feminine and neuter genders and the word "person" shall include an
                individual, a trust, a partnership, a body corporate or politic,
                an
                association or any other form of incorporated or unincorporated
                organization or entity.

            
	 	 
	
              1.03

            	
              When
                calculating the period of time within which or following which any
                act is
                to be done or step taken pursuant to this Agreement, the date which
                is the
                reference date in calculating such period shall be excluded.  If
                the last day of such period is not a business day, the period in
                question
                shall end of the next business day.

            
	 	 
	
              1.04

            	
              Any
                references herein to any law, by-law, rule, regulation, order or
                act of
                any government, governmental body or other regulatory body shall
                be
                construed as a reference thereto as amended or re-enacted from time
                to
                time or as a reference to any successor thereto.

            
	 	 
	
              ARTICLE
                2.00 -

            	
              DUTIES
                AND RESPONSIBILITIES

            
	 	 
	
              2.01

            	
              The
                Consultant agrees that it will generally provide the following specified
                consulting services during the term specified in Sec.
                3.1;

            
	 	 
	
              2.02

            	
              Advise
                and assist the Company in developing and implementing appropriate
                plans
                and materials for presenting the Company and its business plans,
                strategy
                and personnel to the financial community, establishing an image for
                the
                Company in the financial community and creating the foundation for
                subsequent financial public relations efforts; and

            
	 	 
	
              2.03

            	
              Assist
                and advise the Company with respect to its stockholder and investor
                relations, relations with brokers, dealers, analysts and other investment
                professionals, and financial public relations generally;
                and

            
	 	 
	
              2.04

            	
              At
                the Company’s request, review business plans, strategies, mission
                statements, budgets, proposed transactions and other plans for the
                purpose
                of advising the Company of the investment community implications
                thereof;
                and

            
	 	 
	
              2.05

            	
              Otherwise
                perform as the Company’s financial relations and public relations
                consultant.

            
	 	 
	
              2.06

            	
              It
                is further understood that the Company shall be responsible for complying
                with all applicable laws and regulations.

            
	 	 
	
              2.07

            	
              The
                Company agrees to indemnify and hold the Consultant harmless from
                any loss
                or expense, including reasonable attorneys' fees incurred by the
                Consultant as a result of any failure by the Company, to comply with
                its
                responsibilities as described in this Agreement.

            
	 	 
	
              2.08

            	
              The
                Company further agrees not to attempt to circumvent this agreement
                in any
                form or attempt to deprive the Consultant of any fees or other forms
                of
                remuneration due under this Agreement.  To that end, this
                document shall apply to all corporations of the Company, divisions,
                subsidiaries, employees, consultants, principals, agents, associates,
                assignees and/or other associated persons.

            
	 	 
	
              2.09

            	
              The
                Company acknowledges that this agreement may be modified to reflect
                a
                legal name change to the name utilized for funding.

            
	 	 
	
              ARTICLE
                3.00

            	
              TERMS
                AND TERMINATION

            
	 	 
	
              3.01

            	
              This
                Agreement shall continue for a term of twelve (12) months from the
                date of
                its execution and shall be exclusive to the Consultant for the initial
                four (4) months of the term unless otherwise terminated by either
                party by
                written notice thereof.  Termination shall not affect
                obligations of the Company, arising prior to
                termination.  During the initial four (4) months of this
                Agreement, the Company therein agrees not to enter into an agreement
                for
                similar or like type services as provided under this
                Agreement.

            
	 	 
	
              3.02(a)

            	
              Notwithstanding
                anything set forth herein, the Company shall have the right to terminate
                this Agreement for any reason at any time within the terms of this
                Agreement.  In the event of such termination, this Agreement
                shall terminate and be effective on the date set forth in the Notice
                of
                Termination and when full and final payment of fees and expenses
                due, have
                been made to the Consultant.  Any amount of the Retainer Fee not
                applied to monthly fees hereunder or expenses incurred prior to the
                date
                of such termination shall be returned to the Company.

            
	 	 
	
              3.02(b)

            	
              This
                Agreement may be terminated by the Consultant at any time.  Upon
                such termination, the Consultant shall be entitled to receive from
                the
                Company in no less than three (3) business days, an amount equal
                to all
                non paid fees and non-reimbursed expenses incurred by the Consultant
                as of
                the date of termination.

            
	 	 
	
              ARTICLE
                4.00 -

            	
              FEES
                AND INDEMNITY

            
	 	 
	
              4.01

            	
              In
                return for the Consulting Services rendered hereunder, the Company
                agrees
                to compensate the Consultant with a Retainer Fee in the amount of
                $200,000
                due in line with the execution of this Agreement.  The Retainer
                Fee shall be applied monthly against the fee charged by Consultant
                in the
                amount of  $16,666.66 per month for each month during the term
                of this Agreement.

            
	 	 
	
              4.02

            	
              The
                Company agrees to reimburse the Consultant for expenses incurred
                by the
                Consultant while traveling either on Company business or while traveling
                to or from the Company and the Consultant’s
                office.   Reimbursable expenses incurred by the Consultant
                shall include but shall not be limited to air fare, hotel/motel lodging,
                meals, car rentals, parking and telephone and/or communication expenses
                incurred in the representation of the Company.  A mileage
                expense will be charged at a rate $.62 a mile when the Consultant
                is
                traveling utilizing his own vehicle on behalf of the
                Company.  Expenses incurred by the Consultant shall be paid by
                the Company upon presentation of an appropriate invoice for the expenses
                incurred.  Upon presentation of said invoice by the Consultant,
                the Company will take immediate steps to pay the Consultant’s in a time
                frame not to exceed three (3) business days from date of
                presentation.

            
	 	 
	
              4.02

            	
              It
                is expressly agreed, represented and understood that the Consultant
                is not
                a broker-dealer, underwriter, employee, agent or servant of the Company
                and the parties hereto have entered into an arms length independent
                contract for the rendering of consulting services.  Furthermore,
                this Agreement shall not be deemed to constitute or create a partnership,
                joint venture, master-servant, employer-employee, principal-agent
                or any
                other relationship apart from that of an independent contractor and
                contractee relationship.

            
	 	 
	
              4.03

            	
              Should
                the Company at any time require “additional” services from the Consultant,
                the Consultant will therein provide a “quotation,” either verbal or in
                writing, at the Consultant’s then current billing rate.

            
	 	 
	
              4.04

            	
              The
                Company agrees to indemnify the Consultant against any liabilities,
                costs,
                claims, actions or legal expenses incurred as a result of this
                engagement.

            
	 	 
	
              ARTICLE
                5.00 -

            	
              GENERAL
                CONTRACT PROVISIONS

            
	 	 
	
              5.01

            	
              In
                the event, that any provision herein or part thereof, shall be deemed
                void
                or invalid by a court of competent jurisdiction, the remaining provisions
                or parts thereof shall be and remain in full force and
                effect.   If, in any judicial proceeding, any provision of
                this Agreement is found to be so broad as to be unenforceable, it
                is
                hereby agreed that such provision shall be interpreted to be only
                so broad
                as to be enforceable.

            
	 	 
	
              5.02

            	
              This
                Agreement binds the Company and its successors and assigns
                hereafter.

            
	 	 
	
              5.03

            	
              The
                Consultant and the Company are independent business entities. Wherein,
                neither party has the right or authority to and shall not assume
                or create
                any obligation of any nature whatsoever on behalf of the other party
                or
                bind the other party in any respect.

            
	 	 
	
              5.04

            	
              Unless
                otherwise indicated to the contrary, all monetary amounts referred
                to in
                this Agreement referencing actions meriting a Consulting Fee and/or
                reimbursement of expenses due to the Consultant shall be in United
                States
                dollars.

            
	 	 
	
              5.05

            	
              The
                Company agrees to reimburse the Consultant for any cost and expense
                (including reasonable attorney’s fees, court costs and disbursements)
                incurred by the Consultant in collection of the fees and/or expenses
                due
                under this Agreement.

            
	 	 
	
              5.10

            	
              This
                Agreement constitutes the entire Agreement between the parties in
                connection therewith and there are no warranties, representations
                or other
                Agreements between the parties in connection with the subject matter
                hereof except as specifically set forth herein.  The parties
                herein agree that the execution of this Agreement has not been induced
                by,
                nor do either of the parties regard as material, any representation
                not
                made expressly herein.   No modification, variation, waiver
                or termination of this Agreement shall be binding unless executed
                in
                writing by both parties and clearly expressed to be a modification,
                variation waiver or termination, as the case may
                be.

            

    

     

    IN
      WITNESS WHEREOF, the Company has executed this Agreement as of the date first
      written below.

    

    ACCEPTED
      AND AGREED TO

    THIS
      DATE,

    

    Alternative
      Ethanol Technologies, Inc.

    

    

    
      	 	 	 
	
              Ed
                Hennessey, President

            	 	
              Datecleb-2083007ex107.htm

    Exhibit
      10.7

    

    

    

    

    

    CLEANTECH
      BIOFUELS, INC.

    (f/k/a
      SRS Energy, Inc.)

    

    

    

    

    2007
      STOCK OPTION PLAN

    

    (As
      Adopted Effective April 16, 2007)

     

     

     

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    CLEANTECH
      BIOFUELS, INC.

    

    2007
      STOCK OPTION PLAN

    

    ARTICLE
      1.  INTRODUCTION.

    

    The
      Plan
      was adopted by the Board effective April 16, 2007. The purpose of the Plan
      is to
      promote the long-term success of the Company and the creation of stockholder
      value by (a) encouraging Employees, Outside Directors and Consultants to focus
      on critical long-range objectives, (b) encouraging the attraction and retention
      of Employees, Outside Directors and Consultants with exceptional qualifications
      and (c) linking Employees, Outside Directors and Consultants directly to
      stockholder interests through increased stock ownership. The Plan seeks to
      achieve this purpose by providing for Awards in the form of Options to purchase
      shares of the Company’s Common Stock (which may constitute incentive stock
      options or nonstatutory stock options).

    

    The
      Plan
      shall be governed by, and construed in accordance with, the laws of the State
      of
      Delaware (except their choice-of-law provisions).

    

    ARTICLE
      2.  ADMINISTRATION.

    

    2.1           Committee
      Composition. The Plan shall be administered by the The Committee. The
      Committee shall consist exclusively of two or more directors of the Company,
      who
      shall be appointed by the Board. In addition, the composition of the Committee
      shall satisfy:

    

    (a)
      Such
      requirements as the Securities and Exchange Commission may establish for
      administrators acting under plans intended to qualify for exemption under Rule
      16b-3 (or its successor) under the Exchange Act; and

    

    (b)
      Such
      requirements as the Internal Revenue Service may establish for outside directors
      acting under plans intended to qualify for exemption under Section 162(m)(4)(C)
      of the Code.

    

    2.2           Committee
      Responsibilities. The Committee or Board of Directors, as appropriate,
      shall (a) select the Employees, Outside Directors and Consultants who are to
      receive Awards under the Plan, (b) determine the type, number, vesting
      requirements and other features and conditions of such Awards, (c) interpret
      the
      Plan and (d) make all other decisions relating to the operation of the Plan.
      The
      Committee and/or Board of Directors may adopt such rules or guidelines as it
      deems appropriate to implement the Plan. The Committee’s and or Board of
      Directors’ determinations under the Plan shall be final and binding on all
      persons.

    

    2.3           Committee
      for Non-Officer Grants. The Board may also appoint a secondary
      committee of the Board, which shall be composed of one or more directors of
      the
      Company who need not satisfy the requirements of Section 2.1. Such secondary
      committee may administer the Plan with respect to Employees and Consultants
      who
      are not considered officers or directors of the Company under Section 16 of
      the
      Exchange Act, may grant Awards under the Plan to such Employees and Consultants
      and may determine all features and conditions of such Awards. Within the
      limitations of this Section 2.3, any reference in the Plan to the Committee
      shall include such secondary committee.

    

    ARTICLE
      3.  SHARES AVAILABLE FOR GRANTS.

    

    3.1           Basic
      Limitation. Common Shares issued pursuant to the Plan may be authorized
      but unissued shares or treasury
      shares.  The aggregate number of Options awarded under the Plan shall
      not exceed 7,000,000 Common Shares. The limitation of this Section 3.1 shall
      be
      subject to adjustment pursuant to Article 9.

    

    3.2           Additional
      Shares. If Options are forfeited or terminate for any other reason
      before being exercised, then the corresponding Common Shares shall again become
      available for the grant of Options under the Plan, if Common Shares issued
      upon
      the exercise of Options are forfeited, then such Common Shares shall again
      become available for the grant under the Plan. The aggregate number of Common
      Shares that may be issued under the Plan upon the exercise of ISOs shall not
      be
      increased when Common Shares are forfeited.

    

    ARTICLE
      4.  ELIGIBILITY.

    

    4.1           Nonstatutory
      Stock Options. Only Employees, Outside Directors and Consultants shall
      be eligible for the grant of NSOs.

    

    4.2           Incentive
      Stock Options. Only Employees who are common-law employees of the
      Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs.
      In
      addition, an Employee who owns more than 10% of the total combined voting power
      of all classes of outstanding stock of the Company or any of its Parents or
      Subsidiaries shall not be eligible for the grant of an ISO unless the
      requirements set forth in Section 422(c)(6) of the Code are
      satisfied.

    

    ARTICLE
      5.  OPTIONS.

    

    5.1           Stock
      Option Agreement. Each grant of an Option under the Plan shall be
      evidenced by a Stock Option Agreement between the Optionee and the Company.
      Such
      Option shall be subject to all applicable terms of the Plan and may be subject
      to any other terms that are not inconsistent with the Plan. The provisions
      of
      the various Stock Option Agreements entered into under the Plan need not be
      identical. Options may be granted in consideration of a reduction in the.
      Optionee’s other compensation.

    

    5.2           Number
      of Shares. Each Stock Option Agreement shall specify the number of
      Common Shares subject to the Option and shall provide for the adjustment of
      such
      number in accordance with Article 9.  The limitations set forth in the
      preceding sentence shall be subject to adjustment in accordance with Article
      9.

    

    5.3           Exercise
      Price. Each Stock Option Agreement shall specify the Exercise Price;
      provided that the Exercise Price under an ISO shall in no event be less than
      100% of the Fair Market Value of a Common Share on the date of grant and the
      Exercise Price under an NSO shall in no event be less than 85% of the Fair
      Market Value of a Common Share on the date of grant. In the case of an NSO,
      a
      Stock Option Agreement may specify an Exercise Price that varies in accordance
      with a predetermined formula while the NSO is outstanding.

    

    5.4           Exercisability
      and Term. Each Stock Option Agreement shall specify the date or event
      when all or any installment of the Option is to become exercisable. The Stock
      Option Agreement shall also specify the term of the Option; provided that the
      term of an ISO shall in no event exceed 10 years from the date of grant. A
      Stock
      Option Agreement may provide for accelerated exercisability in the event of
      the
      Optionee’s death, disability or retirement or other events and may provide for
      expiration prior to the end of its term in the event of the termination of
      the
      Optionee’s service.

    

    5.5           Effect
      of Change in Control. The Committee and/or the Board of Directors may
      determine, at the time of granting an Option or thereafter, that such Option
      shall become exercisable as to all or part of the Common Shares subject to
      such
      Option in the event that a Change in Control occurs with respect to the Company,
      subject to the following limitations:

    

    (a)
      In
      the case of an ISO, the acceleration of exercise ability shall not occur without
      the Optionee’s written consent.

    

    (b)
      If
      the Company and the other party to the transaction constituting a Change in
      Control agree that such transaction is to be treated as a “pooling of interests”
for financial reporting purposes, and if such transaction in fact is so treated,
      then the acceleration of exercisability shall not occur to the extent that
      the
      Company’s independent accountants and such other party’s independent accountants
      each determine in good faith that such acceleration would preclude the use
      of
“pooling of interests” accounting.

    

    5.6           Modification
      or Assumption of Options. Within the limitations of the Plan,
      the Committee and/or the Board of Directors may modify, extend or assume
      outstanding options or may accept the cancellation of outstanding options
      (whether granted by the Company or by another issuer) in return for the grant
      of
      new options for the same or a different number of shares and at the same or
      a
      different exercise price.  The foregoing notwithstanding, no
      modification of an Option shall, without the consent of the Optionee, alter
      or
      impair his or her rights or obligations under such Option.

    

    5.7           Buyout
      Provisions. The Committee and/or the Board of Directors may at any time
      (a) offer to buy out for a payment in cash or cash equivalents an Option
      previously granted or (b) authorize an Optionee to elect to cash out an Option
      previously granted, in either case at such time and based upon such terms and
      conditions as the Committee and/or the Board of Directors shall
      establish.

    

    ARTICLE
      6.  PAYMENT FOR OPTION SHARES.

    

    6.1           General
      Rule. The entire Exercise Price of Common Shares issued upon exercise
      of Options shall be payable in cash or cash equivalents at the time when such
      Common Shares are purchased, except  that the Committee and/or Board
      of Directors may at any time accept payment in any form(s) described in this
      Article 6.

    

    6.2           Surrender
      of Stock.  To the extent that this Section 6.2 is applicable,
      all or any part of the Exercise Price may be paid by surrendering, or attesting
      to the ownership of, Common Shares that are already owned by the
      Optionee.  Such Common Shares shall be valued at their Fair Market
      Value on the date when the new Common Shares are purchased under the Plan.
      The
      Optionee shall not surrender, or attest to the ownership of, Common Shares
      in
      payment of the Exercise Price if such action would cause the Company to
      recognize compensation expense (or additional compensation expense) with respect
      to the Option for financial reporting purposes.

    

    6.3           Exercise/Sale.
      To the extent that this Section 6.3 is applicable, all or any part of the
      Exercise Price and any withholding taxes may be paid by delivering (on a form
      prescribed by the Company) an irrevocable direction to a securities broker
      approved by the Company to sell all or part of the Common Shares being purchased
      under the Plan and to deliver all or part of the sales proceeds to the
      Company.

    

    6.4           Exercise/Pledge.
      To the extent that this Section 6.4 is applicable, all or any part of the
      Exercise Price and any withholding taxes may be paid by delivering (on a form
      prescribed by the Company) an irrevocable direction to pledge all or part of
      the
      Common Shares being purchased under the Plan to a securities broker or lender
      approved by the Company, as security for a loan, and to deliver all or part
      of
      the loan proceeds to the Company.

    

    6.5           Promissory
      Note. To the extent that this Section 6.5 is applicable, all or any
      part of the Exercise Price and any withholding taxes may be paid by delivering
      (on a form prescribed by the Company) a full-recourse promissory note. However,
      the par value of the Common Shares being purchased under the Plan, if newly
      issued, shall be paid in cash or cash equivalents.

    

    6.6           Other
      Forms of Payment. To the extent that this Section 6.6 is applicable,
      all or any part of the Exercise Price and any withholding taxes may be paid
      in
      any other form that is consistent with applicable laws, regulations and
      rules.

    

    ARTICLE
      7.  AUTOMATIC OPTION GRANTS TO OUTSIDE
      DIRECTORS.

    

    7.1           Initial
      Grants. Each Outside Director who first becomes a member of the Board
      after the date of the Company’s initial public offering shall receive a one-time
      grant of an NSO covering ______ Common Shares (subject to adjustment under
      Article 9). Such NSO shall be granted on the date when such Outside Director
      first joins the Board and shall become exercisable in _____ equal installments
      at ________ intervals over the ________-month period commencing on the date
      of
      grant.

    

    7.2           Annual
      Grant. Upon the conclusion of each regular annual meeting of the
      Company’s stockholders held in the year 199_ or thereafter, each Outside
      Director who will continue serving as a member of the Board thereafter shall
      receive an NSO covering ____ Common Shares (subject to adjustment under Article
      9), except that such NSO shall not be granted in
      the calendar year in which the same Outside Director received the NSO described
      in Section 7.l.  NSOs granted under this Section 7.2 shall become
      exercisable in full on the first anniversary of the date
      of grant.

    

    7.3           Accelerated
      Exercisability. All NSOs granted to an Outside Director under this
      Article 7 shall also become exercisable in full
      in the event of:

    

    (a)           The
      termination of such Outside Director’s service because of death, total and
      permanent disability or retirement at or after age 65; or

    

    (b)           A
      Change in Control with respect to the Company, except as provided in the next
      following sentence.

    

    If
      the
      Company and the other party to the transaction
      constituting a Change in Control agree that such transaction is to be treated
      as
      a “pooling of interests” for financial reporting purposes, and if such
      transaction in fact is so treated, then the acceleration of exerciseability
      shall not occur to the extent that the Company’s independent accountants and
      such other party’s independent accountants each determine
      in good faith that such acceleration would preclude the
      use of “pooling of interests” accounting.

    

    7.4           Exercise
      Price. The Exercise Price under all NSOs granted to an Outside Director
      under this Article 7 shall be equal to 100% of the Fair Market Value of a Common
      Share on the date of grant, payable in one of the forms described in Sections
      6.1, 6.2, 6.3 and 6.4.

    

    7.5           Term.
      All NSOs granted to an Outside Director under this Article 7 shall terminate
      on
      the earliest of (a) the 10th anniversary of the date of grant, (b) the date_____
      months after the termination of such Outside Director’s service for any reason
      other than death or total and permanent disability or (c) the date ____ months
      after the termination of such Outside Director’s service because of death or
      total and permanent disability.

    

    7.6           Affiliates
      of Outside Directors. The Committee and/or the Board of Directors may
      provide that the NSOs that otherwise would be granted to an Outside Director
      under this Article 7 shall Instead be granted to an affiliate of such Outside
      Director. Such affiliate shall then be deemed to be an Outside Director for
      purposes of the Plan, provided that the service- related vesting and termination
      provisions pertaining to the NSOs shall be applied with regard to the service
      of
      the Outside Director.

    

    ARTICLE
      8.  PROTECTION AGAINST DILUTION.

    

    8.1           Adjustments.
      In the event of a subdivision of the outstanding Common Shares, a declaration
      of
      a dividend payable in Common Shares, a declaration of a dividend payable in
      a
      form other than Common Shares in an amount that has a material effect on the
      price of Common Shares, a combination or consolidation of the outstanding Common
      Shares (by reclassification or otherwise) into a lesser number of Common Shares,
      a recapitalization, a spin-off or a similar occurrence, the Committee and/or
      the
      Board of Directors shall make such adjustments as it, in its sole discretion,
      deems appropriate in one or more of:

    

    (a)           The
      number of Options available for future Awards under Article 3;

    

    (b)           The
      limitations set forth in Section 5.2;

    

    (c)           The
      number of NSOs to be granted to Outside Directors under Article 7;

    

    (d)           The
      number of Common Shares covered by each outstanding Option; or

    

    (e)           The
      Exercise Price under each outstanding Option.

    

    Except
      as
      provided in this Article 9, a Participant shall have no rights by reason of
      any
      issue by the Company of stock of any class or securities convertible into stock
      of any class, any subdivision or consolidation of shares of stock of any class,
      the payment of any stock dividend or any other increase or decrease in the
      number of shares of stock of any class.

    

    8.2           Dissolution
      or Liquidation. To the extent not previously exercised, Options shall
      terminate immediately prior to the dissolution or liquidation of the
      Company.

    

    8.3           Reorganizations.
      In the event that the Company is a party to a merger or other reorganization,
      outstanding Options shall be subject to the agreement of merger or
      reorganization. Such agreement shall provide for:

    

    (a)           The
      continuation of the outstanding Awards by the Company, if the Company is a
      surviving corporation;

    

    (b)           The
      assumption of the outstanding Awards by the surviving corporation or its parent
      or subsidiary;

    

    (c)           The
      substitution by the surviving corporation or its parent or subsidiary of its
      own
      awards for the outstanding Awards;

    

    (d)           Full
      exercisability or vesting and accelerated expiration of the outstanding Awards;
      or

    

    (e)           Settlement
      of the full value of the outstanding Awards in cash or cash equivalents followed
      by cancellation of such Awards.

    

    ARTICLE
      9.  DEFERRAL OF DELIVERY OF SHARES.

    

    The
      Committee and/or the Board of Directors (in its sole discretion) may permit
      or
      require an Optionee to have Common Shares that otherwise would be delivered
      to
      such Optionee as a result of the exercise of an Option converted into amounts
      credited to a deferred compensation account established for such Optionee by
      the
      Committee and/or the Board of Directors as an entry on the Company’s books. Such
      amounts shall be determined by reference to the Fair Market Value of such Common
      Shares as of the date when they otherwise would have been delivered to such
      Optionee. A deferred compensation account established under this Article 9
      may
      be credited with interest or other forms of investment return, as determined
      by
      the Committee and/or the Board of Directors. An Optionee for whom such an
      account is established shall have no rights other than those of a general
      creditor of the Company. Such an account shall represent an unfunded and
      unsecured obligation of the Company and shall be subject to the terms and
      conditions of the applicable agreement between such Optionee and the Company.
      If
      the conversion of Options is permitted or required, the Committee and/or the
      Board of Directors (in its sole discretion) may establish rules, procedures
      and
      forms pertaining to such conversion, including (without limitation) the
      settlement of deferred compensation accounts established under this Article
      9.

    

    ARTICLE
      10.  AWARDS UNDER OTHER PLANS.

    

    The
      Company may grant awards under other plans or programs. Such awards may be
      settled in the form of Options issued under this Plan.

    

    ARTICLE
      11.  LIMITATION ON RIGHTS.

    

    11.1           Retention
      Rights. Neither the Plan nor any Award granted under the Plan shall be
      deemed to give any individual a right to remain an Employee, Outside Director
      or
      Consultant. The Company and its Parents, Subsidiaries and Affiliates reserve
      the
      right to terminate the service of any Employee, Outside Director or Consultant
      at any time, with or without cause, subject to applicable laws, the Company’s
      certificate of incorporation and by-laws and a written employment agreement
      (if
      any).

    

    11.2           Stockholders’
      Rights. A Participant shall have no dividend tights, voting rights or
      other rights as a stockholder with respect to any Common Shares covered by
      his
      or her Award prior to the time when a stock certificate for such Common Shares
      is issued or, in the case of an Option, the time when he or she becomes entitled
      to receive such Common Shares by filing a notice of exercise and paying the
      Exercise Price. No adjustment shall be made for cash dividends or other rights
      for which the record date is prior to such time, except as expressly provided
      in
      the Plan.

    

    11.3           Regulatory
      Requirements. Any other provision of the Plan notwithstanding, the
      obligation of the Company to issue Common Shares under the Plan shall be subject
      to all applicable laws, rules and regulations and such approval by any
      regulatory body as may be required. The Company reserves the right to restrict,
      in whole or in part, the delivery of Common Shares pursuant to any Award prior
      to the satisfaction of all legal requirements relating to the issuance of such
      Common Shares, to their registration, qualification or listing or to an
      exemption from registration, qualification or listing.

    

    ARTICLE
      12.  WITHHOLDING TAXES.

    

    12.1           General.
      To the extent required by applicable federal, state, local or foreign law,
      a
      Participant or his or her successor shall make arrangements satisfactory to
      the
      Company for the satisfaction of any withholding tax obligations that arise
      in
      connection with the Plan. The Company shall not be required to issue any Common
      Shares or make any cash payment under the Plan until such obligations are
      satisfied.

    

    12.2           Share
      Withholding. The Committee and/or the Board of Directors may permit a
      Participant to satisfy all or part of his or her withholding or income tax
      obligations by having the Company withhold all or a portion of any Common Shares
      that otherwise would be issued to him or her or by surrendering all or a portion
      of any Common Shares that he or she previously acquired. Such Common Shares
      shall be valued at their Fair Market Value on the date when taxes otherwise
      would be withheld in cash.

    

    ARTICLE
      13.  FUTURE OF THE PLAN.

    

    13.1           Term
      of the Plan. The Plan, as set forth herein, shall become effective on
      March 27, 2007.  The Plan shall remain in effect until it is
      terminated under Section 13.2, except that no ISOs shall be granted on or after
      the 10th anniversary of the later of (a) the date when the Board adopted the
      Plan or (b) the date when the Board adopted the most recent increase in the
      number of Common Shares available under Article 3 which was approved by the
      Company’s stockholders.

    

    13.2           Amendment
      or Termination. The Board may, at any time and for any reason, amend or
      terminate the Plan. An amendment of the Plan shall be subject to the approval
      of
      the Company’s stockholders only to the extent required by applicable laws,
      regulations or rules.  No Awards shall be granted under the Plan after
      the termination thereof. The termination of the Plan, or any amendment thereof,
      shall not affect any Award previously granted under the Plan.

    

    ARTICLE
      14.  DEFINITIONS.

    

    14.1    “Affiliate”
      means any entity other than a Subsidiary, if the Company and/or one or more
      Subsidiaries own not less than 50% of such entity.

    

    14.2    “Award”
      means any award of an Option under the Plan.

    

    14.3    “Board”
      means the Company’s Board of Directors, as constituted from time to
      time.

    

    14.4    “Change
      in
      Control” means:

    

    (a)           The
      consummation of a merger or consolidation of the Company with or into another
      entity or any other corporate reorganization, if more than 50% of the combined
      voting power of the continuing or surviving entity’s securities outstanding
      immediately after such merger, consolidation or other reorganization is owned
      by
      persons who were not stockholders of the Company immediately prior to such
      merger, consolidation or other reorganization;

    

    (b)           The
      sale, transfer or other disposition of all or substantially all of the Company’s
      assets;

    

    (c)           A
      change in the composition of the Board, as a result of which fewer than 50%
      of
      the incumbent directors are directors who either (i) had been directors of
      the
      Company on the date 24 months prior to the date of the event that may constitute
      a Change in Control (the “original directors”) or (ii) were elected, or
      nominated for election, to the Board with the affirmative votes of at least
      a
      majority of the aggregate of the original directors who were still in office
      at
      the time of the election or nomination and the directors whose election or
      nomination was previously so approved; or

    

    (d)           Any
      transaction as a result of which any person is the “beneficial owner” (as
      defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
      securities of the Company representing at least 50% of the total voting power
      represented by the Company’s then outstanding voting securities. For purposes of
      this Subsection (d), the term “person” shall have the same meaning as when used
      in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee
      or other fiduciary holding securities under an employee benefit plan of the
      Company or of a Parent or Subsidiary and (ii) a corporation owned directly
      or
      indirectly by the stockholders of the Company in substantially the same
      proportions as their ownership of the common stock of the Company.

    

    A
      transaction shall not constitute a Change in Control if its sole purpose is
      to
      change the state of the Company’s incorporation or to create a holding company
      that will be owned in substantially the same proportions by the persons who
      held
      the Company’s securities immediately before such transaction.

    

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

    

    14.6    “Committee”
      means a committee of the Board, as described in Article 2.

    

    14.7    “Common
      Share” means one share of the common stock, $0.001 par value per share,
      of the Company.

    

    14.8    “Company”
      means SRS Energy, Inc., a Delaware corporation.

    

    14.9    “Consultant”
      means a consultant or adviser who provides bona fide services to the Company,
      a
      Parent, a Subsidiary or an Affiliate as an independent contractor. Service
      as a
      Consultant shall be considered employment for all purposes of the Plan, except
      as provided in Section 4.2.

    

    14.10    “Employee”
      means a common-law employee of the Company, a Parent, a Subsidiary or an
      Affiliate.

    

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

    

    14.12    “Exercise
      Price” means the amount for which one Common Share may be purchased
      upon exercise of such Option, as specified in the applicable Stock Option
      Agreement.

    

    14.13    “Fair
      Market Value” means the market price of Common Shares, determined by
      the Committee and/or the Board of Directors in good faith on such basis as
      it
      deems appropriate. Whenever possible, the determination of Fair Market Value
      by
      the Committee and/or the Board of Directors shall be based on the prices
      reported in the Wall Street Journal. Such determination shall be
      conclusive and binding on all persons.

    

    14.14    “ISO”
      means an incentive stock option described in Section 422(b) of the
      Code.

    

    14.15    “NSO”
      means a stock option not described in Sections 422 or 423 of the
      Code.

    

    14.16    “Option”
      means an ISO or NSO granted under the Plan and entitling the holder to purchase
      Common Shares.

    

    14.17    “Optionee”
      means an individual or estate who holds an Option.

    

    14.18    “Outside
      Director” means a member of the Board who is not an Employee. Service
      as an Outside Director shall be considered employment for all purposes of the
      Plan, except as provided in Section 4.2.

    

    14.19    “Parent”
      means any corporation (other than the Company) in an unbroken chain of
      corporations ending with the Company, if each of the corporations other than
      the
      Company owns stock possessing 50% or more of the total combined voting power
      of
      all classes of stock in one of the other corporations in such chain. A
      corporation that attains the status of a Parent on a date after the adoption
      of
      the Plan shall be considered a Parent commencing as of such date.

    

    14.20    “Participant”
      means an individual or estate who holds an Award.

    

    14.21    “Plan”
      means this SRS Energy, Inc. 2007 Stock Option Plan, as amended from
      time to time.

    

    14.22    “Stock
      Option
      Agreement” means the agreement between the Company and an Optionee that
      contains the terms, conditions and restrictions pertaining to his or her
      Option.

    

    14.23     “Subsidiary”
      means any corporation (other than the Company) in an unbroken chain of
      corporations beginning with the Company, if each of the corporations other
      than
      the last corporation In the unbroken chain owns stock possessing 50% or more
      of
      the total combined voting power of all classes of stock in one of the other
      corporations in such chain. A corporation that attains the status of a
      Subsidiary on a date after the adoption of the Plan shall be considered a
      Subsidiary commencing as of such date.

    

    ARTICLE
      15.  EXECUTION.

    

    To
      record
      the adoption of the Plan by the Board, the Company has caused its duly
      authorized officer to execute this document in the name of the
      Company.

    

    
      	 	
              SRS
                ENERGY, INC.

            
	 	 
	 	 
	 	
              By:

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