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Unassociated Document

    EXHIBIT
      10.1

     

    CODA
      OCTOPUS GROUP, INC.

    2008
      INCENTIVE STOCK OPTION PLAN

    

    SECTION
      1. PURPOSE OF THE PLAN.

    The
      purpose of the Coda Octopus Group, Inc. 2008 Employees, Directors and Officers
      Consultants Stock Option and Stock Award Plan (“Plan”) is to maintain the
      ability of Coda Octopus Group, Inc., a Delaware corporation (the “Company”), and
      its subsidiaries to attract and retain highly qualified and experienced
      directors, officers, employees and consultants and to give directors, officers,
      employees and consultants a continued proprietary interest in the success of
      the
      Company and its subsidiaries. In addition, the Plan is intended to encourage
      ownership of common stock, $.001 par value (“Common Stock”), of the Company by
      the employees, directors, officers, and consultants of the Company and of its
      Affiliates (as defined below) and to provide increased incentive for such
      persons to render services and to exert maximum effort for the success of the
      Company business. The Plan provides eligible employees, directors, officers,
      consultants and affiliates the opportunity to participate in the enhancement
      of
      shareholder value by the grants of options, stock appreciation rights, awards
      of
      restricted stock, bonuses and/or fees payable in unrestricted stock, or any
      combination thereof. In addition, the Company expects that the Plan will further
      strengthen the identification of the directors, officers, employees and
      consultants with the stockholders. Certain options to be granted under this
      Plan
      are intended to qualify as Incentive Stock Options (“ISOs”) pursuant to Section
      422 of the Internal Revenue Code of 1986, as amended (“Code”), while other
      options granted under this Plan will be nonqualified options which are not
      intended to qualify as ISOs (“Nonqualified Options”), either or both as provided
      in the agreements evidencing the options as provided in Section 6 hereof.
      Employees, consultants and directors who participate or become eligible to
      participate in this Plan from time to time are referred to collectively herein
      as “Participants.” As used in this Plan, the term “Affiliates” means any “parent
      corporation” of the Company and any “subsidiary corporation” of the Company
      within the meaning of Code Sections 424(e) and (f), respectively.

    

    SECTION
      2. ADMINISTRATION OF THE PLAN.

    (a)
      Composition
      of Committee.

    The
      Plan
      shall be administered by the Board of Directors of the Company (the “Board”) or
      a committee of the Board. When acting in such capacity the Board is herein
      referred to as the “Committee,” which shall also designate the Chairman of the
      Committee. If the Company is governed by Rule 16b-3 promulgated by the
      Securities and Exchange Commission (“Commission”) pursuant to the Securities
      Exchange Act of 1934, as amended (“Exchange Act”), no director shall serve as a
      member of the Committee unless he or she is a “disinterested person” within the
      meaning of such Rule 16b-3.

    

    (b)
      Committee
      Action. 

    The
      Committee shall hold its meetings at such times and places as it may determine.
      A majority of its members shall constitute a quorum, and all determinations
      of
      the Committee shall be made by not less than a majority of its members. Any
      decision or determination reduced to writing and signed by a majority of the
      members shall be fully as effective as if it had been made by a majority vote
      of
      its members at a meeting duly called and held. The Committee may designate
      the
      Secretary of the Company or other Company employees to assist the Committee
      in
      the administration of the Plan, and may grant authority to such persons to
      execute award agreements or other documents on behalf of the Committee and
      the
      Company. Any duly constituted committee of the Board satisfying the
      qualifications of this Section 2 may be appointed as the Committee.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)
      Committee
      Expenses.

    All
      expenses and liabilities incurred by the Committee in the administration of
      the
      Plan shall be borne by the Company. The Committee may employ attorneys,
      consultants, accountants or other persons.

    

    SECTION
      3. STOCK RESERVED FOR THE PLAN.

    Subject
      to adjustment as provided in Section 6(m) hereof, the aggregate number of Shares
      that may be optioned or issued under the Plan is 2,500,000. The Shares subject
      to the Plan shall consist of authorized but unissued Shares and such number
      of
      shares shall be and is hereby reserved for sale for such purpose. Any of such
      Shares which may remain unsold and which are not subject to outstanding options
      at the termination of the Plan shall cease to be reserved for the purpose of
      the
      Plan, but until termination of the Plan or the termination of the last of the
      options granted under the Plan, whichever last occurs, the Company shall at
      all
      times reserve a sufficient number of shares to meet the requirements of the
      Plan. Should any option expire or be canceled prior to its exercise in full,
      the
      Shares theretofore subject to such option may again be made subject to an option
      under the Plan.

    Immediately
      upon the grant of any option or award, the number of Shares that may be issued
      or optioned under the Plan will be increased. The increase shall be an amount
      such that immediately after such increase the total number of Shares issuable
      under the Plan and reserved for issuance upon exercise of outstanding options
      will equal not more than 20% of the total number of issued and outstanding
      Shares. Such increase in the number of Shares subject to the Plan shall occur
      without the necessity of any further corporate action of any kind or
      character.

    

    SECTION
      4. ELIGIBILITY.

    The
      Participants shall include directors, employees, including officers, of the
      Company and its divisions and subsidiaries, and consultants and attorneys who
      provide bona
      fide
      services
      to the Company. Participants are eligible to be granted options, restricted
      stock, unrestricted stock and other awards under this Plan and to have their
      bonuses and/or consulting fees payable in restricted stock, unrestricted stock
      and other awards. A Participant who has been granted an option hereunder may
      be
      granted an additional option or options, if the Committee shall so
      determine.

    

    SECTION
      5. GRANT OF OPTIONS.

    (a)
      Discretion.

    The
      Committee shall have sole and absolute discretionary authority (i) to determine,
      authorize, and designate those persons pursuant to this Plan who are to receive
      options, restricted Shares or non-restricted Shares under the Plan, (ii) to
      determine the number of Shares to be covered by such grant or such options
      and
      the terms thereof, (iii) to determine the type of Shares granted: restricted
      Shares, unrestricted Shares or a combination of both, and (iv) to determine
      the
      type of option granted: ISO, nonqualified option or a combination of both
      determinations as evidenced by a written option agreement. Subject to the
      express provisions of the Plan, the Committee shall have discretionary authority
      to prescribe, amend and rescind rules and regulations relating to the Plan,
      to
      interpret the Plan, to prescribe and amend the terms of the option agreements
      (which need not be identical) and to make all other determinations deemed
      necessary or advisable for the administration of the Plan.

    

    (b)
      Stockholder
      Approval.

    All
      ISOs
      granted under this Plan are subject to, and may not be exercised before, the
      approval of this Plan by the stockholders prior to the first anniversary date
      of
      the Board meeting held to approve the Plan, by the affirmative vote of the
      holders of a majority of the outstanding shares of the Company present, or
      represented by proxy, and entitled to vote thereat, or by written consent in
      accordance with the laws of the State of Delaware, provided that if such
      approval by the stockholders of the Company is not forthcoming, all options
      and
      stock awards previously granted under this Plan other than ISOs shall be valid
      in all respects.

     

    
      
        
        

      

      
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    (c)
      Limitation
      on Incentive Stock Options.

    The
      aggregate fair market value (determined in accordance with Section 6(b) of
      this
      Plan at the time the option is granted) of the Common Stock with respect to
      which ISOs may be exercisable for the first time by any Participant during
      any
      calendar year under all such plans of the Company and its Affiliates shall
      not
      exceed $1,000,000.

    

    SECTION
      6. TERMS AND CONDITIONS.

    Each
      option granted under the Plan shall be evidenced by an agreement, in a form
      approved by the Committee, which shall be subject to the following express
      terms
      and conditions and to such other terms and conditions as the Committee may
      deem
      appropriate.

    

    (a)
      Option
      Period.

    The
      Committee shall promptly notify the Participant of the option grant and a
      written agreement shall promptly be executed and delivered by and on behalf
      of
      the Company and the Participant, provided that the option grant shall expire
      if
      a written agreement is not signed by said Participant (or his agent or attorney)
      and returned to the Company within 60 days from date of receipt by the
      Participant of such agreement. The date of grant shall be the date the option
      is
      actually granted by the Committee, even though the written agreement may be
      executed and delivered by the Company and the Participant after that date.
      Each
      option agreement shall specify the period for which the option thereunder is
      granted (which in no event shall exceed ten years from the date of grant) and
      shall provide that the option shall expire at the end of such period. If the
      original term of an option is less than ten years from the date of grant, the
      option may be amended prior to its expiration, with the approval of the
      Committee and the Participant, to extend the term so that the term as amended
      is
      not more than ten years from the date of grant. However, in the case of an
      ISO
      granted to an individual who, at the time of grant, owns stock possessing more
      than 10 percent of the total combined voting power of all classes of stock
      of
      the Company or its Affiliate (“Ten Percent Stockholder”), such period shall not
      exceed five years from the date of grant.

    

    (b)
      Option
      Price.

    The
      purchase price of each Share subject to each option granted pursuant to the
      Plan
      shall be determined by the Committee at the time the option is granted and,
      in
      the case of ISOs, shall not be less than 100% of the fair market value of a
      Share on the date the option is granted, as determined by the Committee. In
      the
      case of an ISO granted to a Ten Percent Stockholder, the option price shall
      not
      be less than 110% of the fair market value of a Share on the date the option
      is
      granted. The purchase price of each Share subject to a Nonqualified Option
      under
      this Plan shall be determined by the Committee prior to granting the option.
      The
      Committee shall set the purchase price for each Share subject to a Nonqualified
      Option at either the fair market value of each Share on the date the option
      is
      granted, or at such other price as the Committee in its sole discretion shall
      determine.

    

    At
      the
      time a determination of the fair market value of a Share is required to be
      made
      hereunder, the determination of its fair market value shall be made by the
      Committee in such manner as it deems appropriate.

     

    (c)
      Exercise
      Period.

    The
      Committee may provide in the option agreement that an option may be exercised
      in
      whole, immediately, or is to be exercisable in increments. In addition, the
      Committee may provide that the exercise of all or part of an option is subject
      to specified performance by the Participant. However, no portion of any option
      may be exercisable by a Participant prior to the approval of the Plan by the
      stockholders of the Company.

     

    
      
        
        

      

      
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    (d)
      Procedure
      for Exercise.

    Options
      shall be exercised by the delivery of written notice to the Secretary of the
      Company setting forth the number of shares with respect to which the option
      is
      being exercised. Such notice shall be accompanied by cash or cashier’s check,
      bank draft, postal or express money order payable to the order of the Company,
      or at the option of the Committee, in Common Stock theretofore owned by such
      Participant (or any combination of cash and Common Stock). Notice may also
      be
      delivered by fax or telecopy provided that the purchase price of such shares
      is
      delivered to the Company via wire transfer on the same day the fax is received
      by the Company. The notice shall specify the address to which the certificates
      for such shares are to be mailed. A Participant shall be deemed to be a
      stockholder with respect to Shares covered by an option on the date the Company
      receives such written notice and such option payment. As promptly as practicable
      after receipt of such written notification and payment, the Company shall
      deliver to the Participant certificates for the number of shares with respect
      to
      which such option has been so exercised, issued in the Participant’s name or
      such other name as Participant directs; provided, however, that such delivery
      shall be deemed effected for all purposes when a stock transfer agent of the
      Company shall have deposited such certificates in the United States mail,
      addressed to the Participant at the address specified pursuant to this Section
      6(d).

    

    (e)
      Termination
      of Employment.

    If
      an
      executive officer to whom an option is granted ceases to be employed by the
      Company for any reason other than death or disability, any option which is
      exercisable on the date of such termination of employment may be exercised
      during a period beginning on such date and ending at the time set forth in
      the
      option agreement; provided, however, that if a Participant’s employment is
      terminated because of the Participant’s theft or embezzlement from the Company,
      disclosure of trade secrets of the Company or the commission of a willful,
      felonious act while in the employment of the Company (such reasons shall
      hereinafter be collectively referred to as “for cause”), then any option or
      unexercised portion thereof granted to said Participant shall expire upon such
      termination of employment. Notwithstanding the foregoing, no ISO may be
      exercised later than three months after an employee’s termination of employment
      for any reason other than death or disability.

    

    (f)
      Disability
      or Death of Participant
      .

    In
      the
      event of the determination of disability or death of a Participant under the
      Plan while he or she is employed by the Company, the options previously granted
      to him may be exercised (to the extent he or she would have been entitled to
      do
      so at the date of the determination of disability or death) at any time and
      from
      time to time, within a period beginning on the date of such determination of
      disability or death and ending at the time set forth in the option agreement,
      by
      the former employee, the guardian of his estate, the executor or administrator
      of his estate or by the person or persons to whom his rights under the option
      shall pass by will or the laws of descent and distribution, but in no event
      may
      the option be exercised after its expiration under the terms of the option
      agreement. Notwithstanding the foregoing, no ISO may be exercised later than
      one
      year after the determination of disability or death. A Participant shall be
      deemed to be disabled if, in the opinion of a physician selected by the
      Committee, he or she is incapable of performing services for the Company of
      the
      kind he or she was performing at the time the disability occurred by reason
      of
      any medically determinable physical or mental impairment which can be expected
      to result in death or to be of long, continued and indefinite duration. The
      date
      of determination of disability for purposes hereof shall be the date of such
      determination by such physician.

    

    (g)
      Assignability.

    An
      option
      shall not be assignable or otherwise transferable except by will or by the
      laws
      of descent and distribution or pursuant to a qualified domestic relations order
      as defined in the Code or Title I of the Employee Retirement Income Security
      Act, as amended, or the rules thereunder. During the lifetime of a Participant,
      an option shall be exercisable only by the Participant.

    

    (h)
        Incentive
      Stock Options. 

    Each
      option agreement may contain such terms and provisions as the Committee may
      determine to be necessary or desirable in order to qualify an option designated
      as an incentive stock option.

     

    
      
        
        

      

      
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    (i)
        Restricted
      Stock Awards. 

    Awards
      of
      restricted stock under this Plan shall be subject to all the applicable
      provisions of this Plan, including the following terms and conditions, and
      to
      such other terms and conditions not inconsistent therewith, as the Committee
      shall determine:

    

    (A)
        Awards of restricted stock may be in addition to or in lieu of option
      grants. Awards may be conditioned on the attainment of particular performance
      goals based on criteria established by the Committee at the time of each award
      of restricted stock. During a period set forth in the agreement (the
“Restriction Period”), the recipient shall not be permitted to sell, transfer,
      pledge, or otherwise encumber the shares of restricted stock; except that such
      shares may be used, if the agreement permits, to pay the option price pursuant
      to any option granted under this Plan, provided an equal number of shares
      delivered to the Participant shall carry the same restrictions as the shares
      so
      used. Shares of restricted stock shall become free of all restrictions if during
      the Restriction Period, (i) the recipient dies, (ii) the recipient’s
      directorship, employment, or consultancy terminates by reason of permanent
      disability, as determined by the Committee, (iii) the recipient retires after
      attaining both 59 1/2 years of age and five years of continuous service with
      the
      Company and/or a division or subsidiary, or (iv) if provided in the agreement,
      there is a “change in control” of the Company (as defined in such agreement).
      The Committee may require medical evidence of permanent disability, including
      medical examinations by physicians selected by it. Unless and to the extent
      otherwise provided in the agreement, shares of restricted stock shall be
      forfeited and revert to the Company upon the recipient’s termination of
      directorship, employment or consultancy during the Restriction Period for any
      reason other than death, permanent disability, as determined by the Committee,
      retirement after attaining both 59 1/2 years of age and five years of continuous
      service with the Company and/or a subsidiary or division, or, to the extent
      provided in the agreement, a “change in control” of the Company (as defined in
      such agreement), except to the extent the Committee, in its sole discretion,
      finds that such forfeiture might not be in the best interests of the Company
      and, therefore, waives all or part of the application of this provision to
      the
      restricted stock held by such recipient. Certificates for restricted stock
      shall
      be registered in the name of the recipient but shall be imprinted with the
      appropriate legend and returned to the Company by the recipient, together with
      a
      stock power endorsed in blank by the recipient. The recipient shall be entitled
      to vote shares of restricted stock and shall be entitled to all dividends paid
      thereon, except that dividends paid in Common Stock or other property shall
      also
      be subject to the same restrictions.

    

    (B)
        Restricted Stock shall become free of the foregoing restrictions upon
      expiration of the applicable Restriction Period and the Company shall then
      deliver to the recipient Common Stock certificates evidencing such stock.
      Restricted stock and any Common Stock received upon the expiration of the
      restriction period shall be subject to such other transfer restrictions and/or
      legend requirements as are specified in the applicable agreement.

    

    (j)
            Bonuses and Past Salaries and Fees Payable in
      Unrestricted Stock.

    

    (A)
        In lieu of cash bonuses otherwise payable under the Company’s or
      applicable division’s or subsidiary’s compensation practices to employees and
      consultants eligible to participate in this Plan, the Committee, in its sole
      discretion, may determine that such bonuses shall be payable in restricted
      or
      unrestricted Common Stock or partly in Common Stock and partly in cash. Such
      bonuses shall be in consideration of services previously performed and as an
      incentive toward future services and shall consist of shares of unrestricted
      Common Stock subject to such terms as the Committee may determine in its sole
      discretion. The number of shares of unrestricted Common Stock payable in lieu
      of
      a bonus otherwise payable shall be determined by dividing such bonus amount
      by
      the fair market value of one share of Common Stock on the date the bonus is
      payable, with fair market value determined as of such date in accordance with
      Section 6(b). In the event restricted Common Stock is issued in lieu of a bonus,
      a discount to fair market value may be taken at the discretion of the
      Committee.

     

    
      
        
        

      

      
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    (B)
        In lieu of salaries and fees otherwise payable by the Company’s to
      employees, attorneys and consultants eligible to participate in this Plan that
      were incurred for services rendered during 2004, the Committee, in its sole
      discretion, may determine that such unpaid salaries and fees shall be payable
      in
      restricted or unrestricted Common Stock or partly in Common Stock and partly
      in
      cash. Such awards shall be in consideration of services previously performed
      and
      as an incentive toward future services and shall consist of shares of
      unrestricted Common Stock subject to such terms as the Committee may determine
      in its sole discretion. The number of shares of unrestricted Common Stock
      payable in lieu of salaries and fees otherwise payable shall be determined
      by
      dividing each calendar month’s of unpaid salary or fee amount by the average
      trading value of the Common Stock for the calendar month during which the
      subject services were provided. In the event restricted Common Stock is issued
      in lieu of salary, a discount to fair market value may be taken at the
      discretion of the Committee.

    

    (k)
        No
      Rights as Stockholder. 

    No
      Participant shall have any rights as a stockholder with respect to shares
      covered by an option until the option is exercised by the written notice and
      accompanied by payment as provided in clause (d) above.

    

    (l)
        Extraordinary
      Corporate Transactions. 

    The
      existence of outstanding options shall not affect in any way the right or power
      of the Company or its stockholders to make or authorize any or all adjustments,
      recapitalizations, reorganizations, exchanges, or other changes in the Company’s
      capital structure or its business, or any merger or consolidation of the
      Company, or any issuance of Common Stock or other securities or subscription
      rights thereto, or any issuance of bonds, debentures, preferred or prior
      preference stock ahead of or affecting the Common Stock or the rights thereof,
      or the dissolution or liquidation of the Company, or any sale or transfer of
      all
      or any part of its assets or business, or any other corporate act or proceeding,
      whether of a similar character or otherwise. If the Company recapitalizes or
      otherwise changes its capital structure, or merges, consolidates, sells all
      of
      its assets or dissolves (each of the foregoing a “Fundamental Change”), then
      thereafter upon any exercise of an option theretofore granted the Participant
      shall be entitled to purchase under such option, in lieu of the number of Shares
      as to which option shall then be exercisable, the number and class of Shares
      and
      other securities to which the Participant would have been entitled pursuant
      to
      the terms of the Fundamental Change if, immediately prior to such Fundamental
      Change, the Participant had been the holder of record of the number of Shares
      as
      to which such option is then exercisable. If (i) the Company shall not be the
      surviving entity in any merger or consolidation (or survives only as a
      subsidiary of another entity), (ii) the Company sells all or substantially
      all
      of its assets to any other person or entity (other than a wholly-owned
      subsidiary), (iii) any person or entity (including a “group” as contemplated by
      Section 13(d)(3) of the Exchange Act) acquires or gains ownership or control
      of
      (including, without limitation, power to vote) more than 50% of the outstanding
      Shares, (iv) the Company is to be dissolved and liquidated, or (v) as a result
      of or in connection with a contested election of directors, the persons who
      were
      directors of the Company before such election shall cease to constitute a
      majority of the Board (each such event in clauses (i) through (v) above is
      referred to herein as a “Corporate Change”), the Committee, in its sole
      discretion, may accelerate the time at which all or a portion of a Participant’s
      options may be exercised for a limited period of time before or after a
      specified date.

    

    (m)
        Changes
      in Company’s Capital Structure.

    If
      the
      outstanding Shares or other securities of the Company, or both, for which the
      option is then exercisable shall at any time be changed or exchanged by
      declaration of a stock dividend, stock split, combination of shares,
      recapitalization, or reorganization, the number and kind of Shares or other
      securities which are subject to the Plan or subject to any options theretofore
      granted, and the option prices, shall be appropriately and equitably adjusted
      so
      as to maintain the proportionate number of shares or other securities without
      changing the aggregate option price.

     

    
      
        
        

      

      
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    (n)
        Acceleration
      of Options.

    Except
      as
      hereinbefore expressly provided, (i) the issuance by the Company of Shares
      or
      any class of securities convertible into Shares of any class, for cash,
      property, labor or services, upon direct sale, upon the exercise of rights
      or
      warrants to subscribe therefor, or upon conversion of shares or obligations
      of
      the Company convertible into such shares or other securities, (ii) the payment
      of a dividend in property other than Common Stock or (iii) the occurrence of
      any
      similar transaction, and in any case whether or not for fair value, shall not
      affect, and no adjustment by reason thereof shall be made with respect to,
      the
      number of Shares subject to options theretofore granted or the purchase price
      per share, unless the Committee shall determine, in its sole discretion, that
      an
      adjustment is necessary to provide equitable treatment to Participant.
      Notwithstanding anything to the contrary contained in this Plan, the Committee
      may, in its sole discretion, accelerate the time at which any option may be
      exercised, including, but not limited to, upon the occurrence of the events
      specified in this Section 6, and is authorized at any time (with the consent
      of
      the Participant) to purchase options pursuant to Section 7.

    

    SECTION
      7. RELINQUISHMENT OF OPTIONS.

    (a)
        The Committee, in granting options hereunder, shall have discretion to
      determine whether or not options shall include a right of relinquishment as
      hereinafter provided by this Section 7. The Committee shall also have discretion
      to determine whether an option agreement evidencing an option initially granted
      by the Committee without a right of relinquishment shall be amended or
      supplemented to include such a right of relinquishment. Neither the Committee
      nor the Company shall be under any obligation or incur any liability to any
      person by reason of the Committee’s refusal to grant or include a right of
      relinquishment in any option granted hereunder or in any option agreement
      evidencing the same. Subject to the Committee’s determination in any case that
      the grant by it of a right of relinquishment is consistent with Section 1
      hereof, any option granted under this Plan, and the option agreement evidencing
      such option, may provide:

    

    (i)
        That the Participant, or his or her heirs or other legal representatives
      to the extent entitled to exercise the option under the terms thereof, in lieu
      of purchasing the entire number of shares subject to purchase thereunder, shall
      have the right to relinquish all or any part of the then unexercised portion
      of
      the option (to the extent then exercisable) for a number of Shares to be
      determined in accordance with the following provisions of this clause
      (i):

    

    (A)
        The written notice of exercise of such right of relinquishment shall
      state the percentage of the total number of Shares issuable pursuant to such
      relinquishment (as defined below) that the Participant elects to
      receive;

    

    (B)
        The number of Shares, if any, issuable pursuant to such relinquishment
      shall be the number of such shares, rounded to the next greater number of full
      shares, as shall be equal to the quotient obtained by dividing (i) the
      Appreciated Value by (ii) the purchase price for each of the Shares specified
      in
      such option; (x) the total current market value of the Shares covered by the
      option or the portion thereof to be relinquished over (y) the total purchase
      price for such shares specified in such option;

    

    (ii)
        That such right of relinquishment may be exercised only upon receipt by
      the Company of a written notice of such relinquishment which shall be dated
      the
      date of election to make such relinquishment; and that, for the purposes of
      this
      Plan, such date of election shall be deemed to be the date when such notice
      is
      sent by registered or certified mail, or when receipt is acknowledged by the
      Company, if mailed by other than registered or certified mail or if delivered
      by
      hand or by any telegraphic communications equipment of the sender or otherwise
      delivered, provided, that, in the event the method just described for
      determining such date of election shall not be or remain consistent with the
      provisions of Section 16(b) of the Exchange Act or the rules and regulations
      adopted by the Commission thereunder, as presently existing or as may be
      hereafter amended, which regulations exempt from the operation of Section 16(b)
      of the Exchange Act in whole or in part any such relinquishment transaction,
      then such date of election shall be determined by such other method consistent
      with Section 16(b) of the Exchange Act or the rules and regulations thereunder
      as the Committee shall in its discretion select and apply;

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (iii)
        That the “current market value” of a share of Common Stock on a
      particular date shall be deemed to be its fair market value on that date as
      determined in accordance with Paragraph 6(b); and

    

    (iv)
        That the option, or any portion thereof, may be relinquished only to the
      extent that (A) it is exercisable on the date written notice of relinquishment
      is received by the Company, and

    (B)
      the
      holder of such option pays, or makes provision satisfactory to the Company
      for
      the payment of, any taxes which the Company is obligated to collect with respect
      to such relinquishment.

    

    (b)
        The Committee shall have sole discretion to consent to or disapprove, and
      neither the Committee nor the Company shall be under any liability by reason
      of
      the Committee’s disapproval of, any election by a holder of an option to
      relinquish such option in whole or in part as provided in Paragraph 7(a), except
      that no such consent to or approval of a relinquishment shall be required under
      the following circumstances. Each Participant who is subject to the short-swing
      profits recapture provisions of Section 16(b) of the Exchange Act (“Covered
      Participant”) shall not be entitled to receive Shares when options are
      relinquished during any window period commencing on the third business day
      following the Company’s release of a quarterly or annual summary statement of
      sales and earnings and ending on the twelfth business day following such release
      (“Window Period”). A Covered Participant shall be entitled to receive Shares
      upon the relinquishment of options outside a Window Period.

    

    (c)
        The Committee, in granting options hereunder, shall have discretion to
      determine the terms upon which such options shall be relinquishable, subject
      to
      the applicable provisions of this Plan, and including such provisions as are
      deemed advisable to permit the exemption from the operation from Section 16(b)
      of the Exchange Act of any such relinquishment transaction, and options
      outstanding, and option agreements evidencing such options, may be amended,
      if
      necessary, to permit such exemption. If an option is relinquished, such option
      shall be deemed to have been exercised to the extent of the number of Shares
      covered by the option or part thereof which is relinquished, and no further
      options may be granted covering such Shares.

    

    (d)
        Neither any option nor any right to relinquish the same to the Company as
      contemplated by this Paragraph 7 shall be assignable or otherwise transferable
      except by will or the laws of descent and distribution or pursuant to a
      qualified domestic relations order as defined in the Code or Title I of the
      Employee Retirement Income Security Act, as amended, or the rules
      thereunder.

    

    (e)
        Except as provided in Section 7(f) below, no right of relinquishment may
      be exercised within the first six months after the initial award of any Option
      containing, or the amendment or supplementation of any existing option agreement
      adding, the right relinquishment.

    

    (f)
        No right of relinquishment may be exercised after the initial award of
      any option containing, or the amendment or supplementation of any existing
      option agreement adding the right of relinquishment, unless such right of
      relinquishment is effective upon the Participant’s death, disability or
      termination of his relationship with the Company for a reason other than “for
      cause.”

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    SECTION
      8. AMENDMENTS OR TERMINATION.

    The
      Board
      may amend, alter or discontinue the Plan, but no amendment or alteration shall
      be made which would impair the rights of any Participant, without his consent,
      under any option theretofore granted, or which, without the approval of the
      stockholders, would: (i) except as is provided in Section 6(k) of the Plan,
      increase the total number of shares reserved for the purposes of the Plan
      (except pursuant to Section 3 of the Plan), (ii) change the class of persons
      eligible to participate in the Plan as provided in Section 4 of the Plan, (iii)
      extend the applicable maximum option period provided for in Section 6(a) of
      the
      Plan, (iv) extend the expiration date of this Plan set forth in Section 15
      of
      the Plan, (v) except as provided in Section 6(k) of the Plan, decrease the
      option price of any option granted under the Plan or (vi) withdraw the
      administration of the Plan from the Committee.

    

    SECTION
      9. COMPLIANCE WITH OTHER LAWS AND REGULATIONS.

    The
      Plan,
      the grant and exercise of options thereunder, and the obligation of the Company
      to sell and deliver shares under such options, shall be subject to all
      applicable federal and state laws, rules and regulations and to such approvals
      by any governmental or regulatory agency as may be required. The Company shall
      not be required to issue or deliver any certificates for Shares prior to the
      completion of any registration or qualification of such shares under any federal
      or state law or issuance of any ruling or regulation of any government body
      which the Company shall, in its sole discretion, determine to be necessary
      or
      advisable. Any adjustments provided for in subparagraphs 6(j), (k) and (i)
      shall
      be subject to any shareholder action required by Delaware corporate
      law.

    

    SECTION
      10. PURCHASE FOR INVESTMENT.

    Unless
      the options and Shares covered by this Plan have been registered under the
      Securities Act of 1933, as amended, and the Company has determined that such
      registration is unnecessary, each person acquiring or exercising an option
      under
      this Plan may be required by the Company to give a representation in writing
      that he or she is acquiring such option or such shares for his own account
      for
      investment and not with a view to, or for sale in connection with, the
      distribution of any part thereof.

    

    SECTION
      11. TAXES.

    (a)
        The Company may, but is not obligated to, make such provisions as it may
      deem appropriate for the withholding of any taxes which it determines is
      required in connection with any options granted under this Plan.

    

    (b)
        Notwithstanding the terms of Paragraph 11 (a), any Participant may pay
      all or any portion of the taxes required to be withheld by the Company or paid
      by him or her in connection with the exercise of a Nonqualified Option by
      electing to have the Company withhold Shares, or by delivering previously owned
      Shares, having a fair market value, determined in accordance with Paragraph
      6(b), equal to the amount required to be withheld or paid. A Participant must
      make the foregoing election on or before the date that the amount of tax to
      be
      withheld is determined (“Tax Date”). All such elections are irrevocable and
      subject to disapproval by the Committee. Elections by Covered Participants
      are
      subject to the following additional restrictions: (i) such election may not
      be
      made within six months of the grant of an option, provided that this limitation
      shall not apply in the event of death or disability, and (ii) such election
      must
      be made either six months or more prior to the Tax Date or in a Window Period.
      Where the Tax Date in respect of an option is deferred until six months after
      exercise and the Covered Participant elects share withholding, the full amount
      of Shares will be issued or transferred to him upon exercise of the option,
      but
      he or she shall be unconditionally obligated to tender back to the Company
      the
      number of shares necessary to discharge the Company’s withholding obligation or
      his estimated tax obligation on the Tax Date.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    SECTION
      12. REPLACEMENT OF OPTIONS.

    The
      Committee from time to time may permit a Participant under the Plan to surrender
      for cancellation any unexercised outstanding option and receive from the Company
      in exchange an option for such number of Shares as may be designated by the
      Committee. The Committee may, with the consent of the person entitled to
      exercise any outstanding option, amend such option, including reducing the
      exercise price of any option to not less than the fair market value of the
      Common Stock at the time of the amendment and extending the term
      thereof.

    

    SECTION
      13. NO RIGHT TO COMPANY EMPLOYMENT.

    Nothing
      in this Plan or as a result of any option granted pursuant to this Plan shall
      confer on any Participant any right to continue in the employ of the Company
      or
      interfere in any way with the right of the Company to terminate any
      Participant's employment at any time. The option agreements may, but is not
      obligated, contain such provisions as the Committee may approve with reference
      to the effect of approved leaves of absence.

    

    SECTION
      14. LIABILITY OF COMPANY.

    The
      Company and any Affiliate which is in existence or hereafter comes into
      existence shall not be liable to a Participant or other persons as
      to:

    

    (a)
      The
      Non-Issuance of Shares.

    The
      non-issuance or sale of Shares as to which the Company has been unable to obtain
      from any regulatory body having jurisdiction the authority deemed by the
      Company’s counsel to be necessary to the lawful issuance of any Shares
      hereunder; and

    

    (b)
      Tax
      Consequences
      .

    Any
      tax
      consequence expected, but not realized, by any Participant or other person
      due
      to the exercise of any option granted hereunder.

    

    SECTION
      15. EFFECTIVENESS AND EXPIRATION OF PLAN.

    The
      Plan
      shall be effective on the date the Board adopts the Plan. If the stockholders
      of
      the Company fail to approve the Plan within twelve months of the date the Board
      approved the Plan, the Plan shall terminate and all options previously granted
      under the Plan shall become void and of no effect. The Plan shall expire ten
      years after the date the Board approves the Plan and thereafter no option shall
      be granted pursuant to the Plan.

    

    SECTION
      16. NON-EXCLUSIVITY OF THE PLAN.

    Neither
      the adoption by the Board nor the submission of the Plan to the stockholders
      of
      the Company for approval shall be construed as creating any limitations on
      the
      power of the Board to adopt such other incentive arrangements as it may deem
      desirable, including without limitation, the granting of restricted stock or
      stock options otherwise than under the Plan, and such arrangements may be either
      generally applicable or applicable only in specific cases.

    

    SECTION
      17. GOVERNING LAW.

    This
      Plan
      and any agreements hereunder shall be interpreted and construed in accordance
      with the internal laws of the State of Delaware without reference to choice
      of
      law principals and applicable federal law.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    SECTION
      18. CASHLESS EXERCISE.

    The
      Committee also may allow cashless exercises as permitted under Federal Reserve
      Board’s Regulation T, subject to applicable securities law restrictions or by
      any other means which the Committee determines to be consistent with the Plan’s
      purpose and applicable law.

    

    SECTION
      19. PROCEEDS FROM EXERCISE

    The
      proceeds from such exercise of options under the Plan shall be added to the
      general funds of the Company and shall be used for general corporate
      purposes.

    

    IN
      WITNESS WHEREOF, and as conclusive evidence of the adoption of the foregoing
      by
      directors of the Company, Coda Octopus Group, Inc., has caused these presents
      to
      be duly executed in its name and behalf by its proper officers thereunto duly
      authorized as of this [ ] 2008.

     

    CODA
      OCTOPUS GROUP, INC.

    

     

    By:
      _________________________     Jason Reid

    

    Its:
      President

    

    

    By:
      _________________________    
      Richard
      Lewis

    

    Its:
      Secretary

     

    
      
        
        

      

      
        11EXHIBIT
      10.2

     

    CODA
      OCTOPUS GROUP, INC.

     

    2008
      STOCK PURCHASE PLAN

     

    The
      purpose of the 2008 Stock Purchase Plan (the “Plan”) is to provide eligible
      employees of and consultants to Coda Octopus Group, Inc. (the “Company”) and
      certain of its subsidiaries with opportunities to purchase shares of the
      Company’s common stock, $0.001 par value (the “Common Stock”). Two million
      (2,000,000) shares of Common Stock in the aggregate have been approved for
      this
      purpose. 

     

    1. Administration.
      The
      Plan will be administered by the Company’s Board of Directors (the “Board”) or
      by one or more committees or subcommittees appointed by the Board (a
“Committee”). The Board or a Committee (in either case, the “Administrator”) may
      delegate to one or more individuals the day-to-day administration of the Plan.
      The Administrator shall have full power and authority to promulgate any rules
      and regulations which it deems necessary or advisable for the proper
      administration of the Plan, to interpret the provisions and supervise the
      administration of the Plan, to make factual determinations relevant to Plan
      entitlements, and to take all action in connection with the administration
      of
      the Plan as it deems necessary or advisable, consistent with any delegation
      from
      the Board; provided, however, the administration of the Plan shall be consistent
      with Rule 16b-3 (“Rule 16b-3”) under the Securities Exchange Act of 1934. The
      administration, interpretation or application of the Plan by the Administrator
      shall be final and binding upon all employees and participating consultants.
      The
      Company shall pay all expenses incurred in connection with the administration
      of
      the Plan. No Board or Committee member shall be liable for any action or
      determination except for such person’s own willful misconduct or as provided by
      law with respect to the Plan or any Option (as defined in Section 10) granted
      hereunder.

     

    2. Eligibility.
      All
      employees of the Company, including Directors who are employees, all employees
      of any subsidiary of the Company (as defined in Section 424(f) of the Code)
      designated by the Board or a Committee from time to time (a “Designated
      Subsidiary”), and all consultants to the Company or any subsidiary of the
      Company, as determined by the Administrator in its sole discretion, are eligible
      to participate in the Plan, provided that they are employees of or consultants
      to the Company or a Designated Subsidiary on the first day of the applicable
      Offering Period (as defined below).

     

    An
      employee or consultant will not be eligible to participate in the Plan if he
      or
      she owns 5% or more of the total combined voting power or value of the
      stock of the Company. For purposes of the preceding sentence, all stock
      which the employee or consultant has a contractual right to purchase through
      either this or other Company plans shall be treated as stock owned by the
      employee or consultant.

     

    3. Offerings.
      At the
      discretion of the Board, the Company will make “Offerings” to employees and
      participating consultants to purchase stock under this Plan. Offerings will
      begin each June 1, September 1, December 1, and March 1, or the first business
      day thereafter (the “Offering Commencement Date”). Each Offering Commencement
      Date will begin a three-month period (the “Offering Period”) during which
      payroll deductions will be made and held for the purchase, in the open market,
      of Common Stock at the end of the Offering Period. The Board or a Committee
      may,
      at its discretion, choose a different Offering Period of twelve (12) months
      or less for Offerings. Notwithstanding anything to the contrary, the first
      Offering Period shall begin on June 1, 2008 and end on August 31,
      2008.

     

    4. Participation
      of Employees or Consultants.
      An
      employee eligible on the Offering Commencement Date of any Offering may
      participate in such Offering by completing and forwarding a payroll deduction
      authorization form, or other such notice as deemed acceptable by the
      Administrator, to the Coda Octopus Group, Inc. corporate headquarters in New
      York. The form will authorize regular payroll deductions from the
      Compensation received by the employee during the Offering Period. Unless an
      employee files a new form or withdraws from the Plan, his or her deductions
      will
      continue at the same rate for future Offerings under the Plan as long as the
      Plan remains in effect. As used herein, the term “Compensation” means the
      employee’s base salary, any bonuses or incentives, any commissions and any cash
      allowances paid during the Offering Period but specifically excludes any
      reimbursement of travel and entertainment expenses and any gain from exercise
      of
      a Company stock option or vesting in restricted stock occurring during the
      Offering Period. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    A
      consultant eligible on the Offering Commencement Date of any Offering Period
      may
      participate in such Offering Period by completing and forwarding an
      authorization form, or other such notice as deemed acceptable by the
      Administrator, to the Coda Octopus Group, Inc. corporate headquarters in New
      York.

     

    5. Deductions
      and Consultant Payments.
      The
      Company will maintain accounts for all participating employees and consultants.
      With respect to any Offering made under this Plan, an employee may authorize
      a
      payroll deduction in any amount he or she receives during the Offering Period
      or
      such shorter period during which deductions from payroll are made. Payroll
      deductions will be in 1% increments at the rate of not lower than 1% of
      Compensation with any change in compensation during the Offering Period to
      result in a corresponding change in the dollar amount withheld. A participating
      consultant may make a payment in any whole dollar amount in a form acceptable
      to
      the Company, such payment to be received at the Coda Octopus Group, Inc.
      corporate headquarters in New York at least fifteen (15) days prior to the
      end
      of the applicable Offering Period. In the event such payment is not received
      by
      that date, the consultant shall no longer be a participant in that Offering
      Period. The Company shall be under no obligation to notify a participating
      consultant of non-receipt of payment, and the Company in no way will be
      responsible for non-receipt of payment by the above deadline.

     

    6. Employee
      Deduction Changes.
      An
      employee may increase, decrease or discontinue his or her payroll deduction
      during any Offering Period by filing a new payroll deduction authorization
      form. If an employee elects to discontinue his or her payroll deductions during
      an Offering Period, but does not elect to withdraw his or her funds pursuant
      to
      Section 8 hereof, funds deducted prior to such employee’s election to
      discontinue will be applied to the purchase of Common Stock during the Exercise
      Period (as defined below). The Administrator may (i) establish rules limiting
      the frequency with which employees may change, discontinue and resume payroll
      deductions under the Plan and may impose a waiting period on employees wishing
      to resume payroll deductions following discontinuance, and (ii) change the
      rules
      regarding discontinuance of participation or changes in participation in the
      Plan.

     

    7. Interest.
      Interest will not be paid on any employee or participating consultant accounts,
      except to the extent that the Board or a Committee, in its sole discretion,
      elects to credit employee or participating consultant accounts with interest
      at
      such per annum rate as it may from time to time determine.

     

    8. Withdrawal
      of Employee Funds.
      An
      employee may at any time prior to the close of business on the last business
      day
      in an Offering Period and for any reason permanently draw out the balance
      accumulated in the employee’s account and thereby withdraw from participation in
      an Offering. Partial withdrawals are not permitted. The employee may not begin
      participation again during the remainder of the Offering Period. 

     

    9. Purchase
      of Shares.
      Each
      employee who continues to be a participant in the Plan through the end of the
      Offering Period or participating consultant who makes payment as provided in
      Section 5 above shall be deemed to have authorized the Company to purchase,
      in
      the open market, within five (5) business days (“the Exercise Period”) following
      the end of such Offering Period, the largest number of whole shares of Common
      Stock of the Company as does not exceed the amount of funds available in the
      participant’s account. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    The
      purchase price of the shares of Common Stock shall be the average of all shares
      acquired using best efforts during the Exercise Period but shall not be greater
      than 115% of the then existing market price, defined as the volume-weighted
      average of the closing prices of the Company’s shares for the last five (5) days
      on which the shares have traded including the last business day of the Offering
      Period. If the Company cannot purchase during the Exercise Period the maximum
      number of shares to which the employees and consultants in aggregate have
      subscribed, then shares will be apportioned ratably to each participant, based
      on that participant’s contribution relative to total contributions available for
      the purchase.

     

    If
      during
      the Exercise Period, the Company is unable to purchase on behalf of a
      participant the maximum number of shares for which he or she is eligible, then
      the participant will be so notified within five (5) business days of the end
      of
      the Exercise Period. The participant may then elect within five (5) business
      days in writing, using a notice as approved by the Administrator, to have
      contributed and unused funds applied to the then current Offering Period. If
      such notice is not received, then the participant shall be deemed to have
      elected to have contributed and unused funds to be returned to him or her,
      and
      the Company will refund such contributions as soon as reasonably practical.
      Notwithstanding the above, the employee’s contributions at the then specified
      rate will continue for the current Offering Period.

     

    Any
      balance remaining in a participant’s account at the end of an Offering Period
      will be automatically refunded, except that any balance which the employee
      or
      participating consultant elects to have carried forward above or is less than
      the purchase price of one share of Common Stock will be carried forward into
      the
      participant’s account for the following Offering Period, unless the participant
      elects not to participate in the following Offering Period under the Plan,
      in
      which case the balance in the participant’s account shall be
      refunded.

     

    Shares
      purchased under this Plan will vest immediately on issue to the participant.
      

     

    10. Matching
      Option.
      For
      each purchase for Offering Periods ending on or prior to November 30, 2008,
      the
      Company will grant a stock option (“150% Matching Option”) to the participant,
      evidenced by a written stock option agreement, as to one and one-half (1.5)
      times the number of shares acquired by the participant for the applicable
      Offering Period. The substantive terms of the option, in addition to the number
      of shares to be granted under said option, are as follows:

     

    (a) the
      option grant date is the last day of the applicable Offering
      Period;

     

    (b) the
      option grant price will be the greater of $1.30 or the closing price of the
      Common Stock on the last trading day on or immediately prior to the last day
      of
      the Offering Period;

     

    (c) the
      option term will be five years, except that optioned shares will be
      cancelled in the ratio of one and one-half (1.5) times the number of Common
      Shares acquired in the applicable Offering Period if the participant sells
      or
      transfers the purchased shares from the applicable Offering within one year
      of
      the last day of the Offering Period;

     

    (d) the
      option will vest as to 100% of the optioned shares on the one year anniversary
      of the grant date; 

     

    (e) unvested
      options will be forfeited in their entirety if the employee ceases to be
      employed by the Company or certain of its subsidiaries or a participating
      consultant is no longer a consultant as determined by the Administrator;
      and

     

    (f) vested
      options shall, at the discretion of the employee, either be exercised or
      forfeited in their entirety if the employee ceases to be employed by the Company
      or certain of its subsidiaries or a participating consultant is no longer a
      consultant as determined by the Administrator. A terminating employee or a
      participating consultant who is no longer a consultant as determined by the
      Administrator must notify the Company in writing of his or her intention to
      exercise all or part of a vested stock option within ten (10) days of his or
      her
      ceasing to be an employee of the Company or certain of its subsidiaries or
      for a
      participating consultant within ten (10) days of no longer serving as a
      consultant as determined by the Administrator. The terminating employee will
      have 30 days of ceasing to be employed by the Company or certain of its
      subsidiaries in which to exercise the option. Such exercise will not be complete
      until the employee has provided in full for payment of option cost and any
      taxes
      then owing on the exercise. A participating consultant who is no longer a
      consultant as determined by the Administrator will have 30 days of ceasing
      to
      act as a consultant to the Company or certain of its subsidiaries in which
      to
      exercise the option. Such exercise will not be complete until the participating
      consultant has provided in full for payment of option cost.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    Other
      option terms will be as set forth in the option agreement.

     

    For
      Offering Periods ending after November 30, 2008, the Company will grant a stock
      option (“100% Matching Option”) to the employee, evidenced by a written stock
      option agreement, as to one (1) times the number of shares acquired by the
      employee or participating consultant for the applicable Offering Period. Terms
      of the option, other than number of shares to be granted, will be as provided
      in
      Section 10 (a) - (f) above, except that for a 100% Matching Option, Section
      10
      (c) is applied as follows. 

     

    The
      option term will be five years, except that optioned shares will be
      cancelled in the ratio of one (1.0) times the number of Common Shares acquired
      in the applicable Offering Period if the participant sells or transfers the
      purchased shares from the applicable Offering within one year of the last day
      of
      the Offering Period.

     

    Subject
      to the Administrator providing notice to participants at least two (2) weeks
      prior to the end of an Offering Period, the Board in its sole discretion may
      elect to no longer grant a 150% Matching Option or a 100% Matching Option to
      stock purchased in applicable Offering Periods. 

     

    11. Issuance
      of Shares.
      Shares
      of Common Stock purchased under the Plan may be issued only in the name of
      the
      employee or participating consultant, in the name of the employee or
      participating consultant and another person of legal age as joint tenants with
      rights of survivorship, or (in the Company’s sole discretion) in the name of a
      brokerage firm, bank or other nominee holder designated by the employee or
      participating consultant. The Company may, in its sole discretion and in
      compliance with applicable laws, authorize the use of book entry registration
      of
      shares.

     

    12. Rights
      on Retirement, Death or Termination of Employment.
      In the
      event of a participating employee’s termination of employment prior to the last
      business day of an Offering Period, no payroll deduction shall be taken from
      any
      pay due and owing to an employee and the balance in the employee’s account shall
      be paid to the employee or, in the event of the employee’s death, (a) to a
      beneficiary previously designated in a revocable notice signed by the employee
      (with any spousal consent required under state law) or (b) in the absence
      of such a designated beneficiary, to the executor or administrator of the
      employee’s estate or (c) if no such executor or administrator has been
      appointed to the knowledge of the Company, to such other person(s) as the
      Company may, in its discretion, designate. If, prior to the last business day
      of
      the Offering Period, the Designated Subsidiary by which an employee is employed
      shall cease to be a subsidiary of the Company, or if the employee is transferred
      to a subsidiary of the Company that is not a Designated Subsidiary, the
      employee shall be deemed to have terminated employment for the purposes of
      this Plan.

     

    In
      the
      event of a participating consultant ceasing to act as a consultant prior to
      the
      last business day of an Offering Period, the balance in the participant’s
      account shall be paid to the consultant or, in the event of the consultant’s
      death, (a) to a beneficiary previously designated in a revocable notice
      signed by the consultant (with any spousal consent required under state law)
      or
      (b) in the absence of such a designated beneficiary, to the executor or
      administrator of the consultant’s estate or (c) if no such executor or
      administrator has been appointed to the knowledge of the Company, to such other
      person(s) as the Company may, in its discretion, designate.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    13. Not
      Stockholders.
      The
      deductions from an employee’s pay or payment by a participating consultant shall
      not constitute such participant a stockholder of the shares of Common Stock
      covered under this Plan until such shares have been purchased by and issued
      to
      him or her.

     

    14. Rights
      Not Transferable.
      Rights
      under this Plan are not transferable by a participating employee or
      participating consultant other than by will or the laws of descent and
      distribution, and are exercisable during the employee’s lifetime only by the
      employee.

     

    15. Adjustment
      in Case of Changes Affecting Common Stock.
      In the
      event of a subdivision of outstanding shares of Common Stock, or the payment
      of
      a dividend in Common Stock, the number of shares approved for this Plan, and
      the
      share limitation set forth in Section 9, shall be increased proportionately,
      and
      such other adjustment shall be made as may be deemed equitable by the Board
      or a
      Committee. In the event of any other change affecting the Common Stock, such
      adjustment shall be made as may be deemed equitable by the Board or a Committee
      to give proper effect to such event.

     

    16. Merger.
      If the
      Company shall at any time merge or consolidate with another corporation and
      the
      holders of the capital stock of the Company immediately prior to such merger
      or consolidation continue to hold at least 80% by voting power of the
      capital stock of the surviving corporation (“Continuity of Control”), an
      employee shall be entitled to discontinue all payments and have returned all
      funds currently standing in his or her account. If the employee does not elect
      to discontinue payments, the funds in his or her account will be utilized to
      purchase common stock in the surviving corporation at the end of the Offering
      Period during which the merger or consolidation was effected.

     

    A
      participating consultant at his or her sole election may make further payments
      under an Offering during which the Company shall merge or consolidate with
      another corporation and the holders of the capital stock of the Company
      immediately prior to such merger or consolidation continue to hold at least
      80% by voting power of the capital stock of the surviving corporation.

     

    In
      the
      event of a merger or consolidation of the Company with or into another
      corporation which does not involve Continuity of Control, or of a sale of all
      or
      substantially all of the assets of the Company, within ten (10) business days
      after the effective date of such transaction the funds currently standing in
      the
      participant’s account shall be refunded. 

     

    17. Amendment
      of the Plan.
      The
      Board may at any time, and from time to time, amend this Plan in any
      respect.

     

    18. Insufficient
      Shares.
      In the
      event that the total number of shares of Common Stock specified in elections
      to
      be purchased under any Offering plus the number of shares purchased under
      previous Offerings under this Plan exceeds the maximum number of shares issuable
      under this Plan, the Board or a Committee will allot the shares then available
      on a pro rata basis.

     

    19. Termination
      of the Plan.
      This
      Plan may be terminated at any time by the Board. Upon termination of this Plan
      all amounts in the accounts of participating employees or consultants shall
      be
      promptly refunded.

     

    20. Governmental
      Regulations.
      The
      Company’s obligation to sell and deliver Common Stock under this Plan is
      subject to listing on a national stock exchange or quotation on the Nasdaq
      National Market (to the extent the Common Stock is then so listed or quoted)
      and
      the approval of all governmental authorities required in connection with the
      authorization, issuance or sale of such stock.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    21. Governing
      Law.
      The
      Plan shall be governed by Delaware law except to the extent that such law is
      preempted by federal law.

     

    22. Employee
      Withholding.
      Each
      employee shall, no later than the date of the event creating the tax liability,
      make provision satisfactory to the Administrator for payment of any taxes
      required by law to be withheld in connection with any transaction related to
      shares acquired by such employee pursuant to the Plan. The Company may, to
      the
      extent permitted by law, deduct any such taxes from any payment of any kind
      otherwise due to an employee.

     

    23. Effective
      Date and Approval of Board.
      The
      Plan shall take effect upon the adoption of the Plan by the Board.

     

    
      
        
        

      

      
        6

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