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Unassociated Document

    Exhibit
      4.3

    

    

    CTI
      INDUSTRIES CORPORATION

    

    2007
      STOCK INCENTIVE PLAN

    

    

    SECTION
      1

    

    General
      Purpose of the Plan; Definitions

    

    The
      name
      of the plan is the CTI Industries Corporation 2007 Stock Incentive Plan (the
      “Plan”). The purpose of the Plan is to encourage and enable officers and
      employees of, and other persons providing services to, CTI Industries
      Corporation (the “Company”) and its Affiliates to acquire a proprietary interest
      in the Company. It is anticipated that providing such persons with a direct
      stake in the Company’s welfare will assure a closer identification of their
      interests with those of the Company and its shareholders, thereby stimulating
      their efforts on the Company’s behalf and strengthening their desire to remain
      with the Company. 

     

    The
      following terms shall be defined as set forth below: 

     

    “Affiliate”
      means a
      parent corporation, if any, and each subsidiary corporation of the Company,
      as
      those terms are defined in Section 424 of the Code. 

     

    “Award”
      or“Awards”,
      except
      where referring to a particular category of grant under the Plan, shall include
      Incentive Stock Options, Non-Statutory Stock Options, Restricted Stock Awards,
      and Unrestricted Stock Awards. Awards shall be evidenced by a written agreement
      (which may be in electronic form and may be electronically acknowledged and
      accepted by the recipient) containing such terms and conditions not inconsistent
      with the provisions of this Plan as the Committee shall determine. 

     

    “Board”
      means
      the Board of Directors of the Company. 

     

    “Cause”
      shall
      mean, with respect to any Award holder, a determination by the Company
      (including the Board) or any Affiliate that the Holder’s employment or other
      relationship with the Company or any such Affiliate should be terminated as
      a
      result of (i) a material breach by the Award holder of any agreement to
      which the Award holder and the Company (or any such Affiliate) are parties,
      (ii) any act (other than retirement) or omission to act by the Award holder
      that may have a material and adverse effect on the business of the Company,
      such
      Affiliate or any other Affiliate or on the Award holder’s ability to perform
      services for the Company or any such Affiliate, including, without limitation,
      the proven or admitted commission of any crime (other than an ordinary traffic
      violation), or (iii) any material misconduct or material neglect of duties
      by the Award holder in connection with the business or affairs of the Company
      or
      any such Affiliate. 

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    

    “Change
      of Control”
      shall
      have the meaning set forth in Section 13. 

     

    “Code”
      means
      the Internal Revenue Code of 1986, as amended, and any successor Code, and
      related rules, regulations and interpretations. 

     

    “Committee”
      shall
      have the meaning set forth in Section 2. 

     

    “Disability”
      means
      disability as set forth in Section 22(e)(3) of the Code. 

     

    “Effective
      Date”
      means
      the date on which the Plan is approved by the Board of Directors as set forth
      in
      Section 15. 

     

    “Eligible
      Person”
      shall
      have the meaning set forth in Section 4. 

     

    “Exchange
      Act”
      shall
      mean the Securities Exchange Act of 1934, as amended. 

     

    “Fair
      Market Value”
      on any
      given date means the closing price per share of the Stock on such date as
      reported by such registered national securities exchange on which the Stock
      is
      listed, or, if the Stock is not listed on such an exchange, as quoted on NASDAQ;
      provided, that, if there is no trading on such date, Fair Market Value shall
      be
      deemed to be the closing price per share on the last preceding date on which
      the
      Stock was traded. If the Stock is not listed on any registered national
      securities exchange or quoted on NASDAQ, the Fair Market Value of the Stock
      shall be determined in good faith by the Committee. 

     

    “Incentive
      Stock Option”
      means
      any Stock Option designated and qualified as an “incentive stock option” as
      defined in Section 422 of the Code. 

     

    “Independent
      Director”
      means
      any director who meets the independence requirement of NASDAQ Marketplace
      Rule 4200(a)(15). 

     

    “Non-Employee
      Director”
      means
      any director who: (i) is not currently an officer of the Company or an
      Affiliate, or otherwise currently employed by the Company or an Affiliate,
      (ii) does not receive compensation, either directly or indirectly, from the
      Company or an Affiliate, for services rendered as a consultant or in any
      capacity other than as a director, except for an amount that does not exceed
      the
      dollar amount for which disclosure would be required pursuant to
      Rule 404(a) of Regulation S-K promulgated by the SEC, (iii) does
      not possess an interest in any other transaction for which disclosure would
      be
      required pursuant to Rule 404(a) of Regulation S-K, and (iv) is
      not engaged in a business relationship for which disclosure would be required
      pursuant to Rule 404(b) of Regulation S-K. 

     

    “Non-Statutory
      Stock Option”
      means
      any Stock Option that is not an Incentive Stock Option. 

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

     

    “Normal
      Retirement”
      means
      retirement in good standing from active employment with the Company and its
      Affiliates in accordance with the retirement policies of the Company and its
      Affiliates then in effect. 

     

    “Option”
      or
“Stock
      Option”
      means
      any option to purchase shares of Stock granted pursuant to Section 5.

     

    “Outside
      Director”
      means
      any director who (i) is not an employee of the Company or of any
“affiliated group,” as such term is defined in Section 1504(a) of the Code,
      which includes the Company (an “Affiliated Group Member”), (ii) is not a
      former employee of the Company or any Affiliated Group Member who is receiving
      compensation for prior services (other than benefits under a tax-qualified
      retirement plan) during the Company’s or any Affiliated Group Member’s taxable
      year, (iii) has not been an officer of the Company or any Affiliated Group
      Member and (iv) does not receive remuneration from the Company or any
      Affiliated Group Member, either directly or indirectly, in any capacity other
      than as a director. “Outside Director” shall be determined in accordance with
      Section 162(m) of the Code and the Treasury regulations issued thereunder.

     

    “Restricted
      Stock Award”
      means an
      Award granted pursuant to Section 6. 

     

    “SEC”
      means
      the Securities and Exchange Commission or any successor authority. 

     

    “Stock”
      means
      the common stock, no par value per share, of the Company. 

     

    “Unrestricted
      Stock Award”
      means
      Awards granted pursuant to Section 7. 

    

    SECTION
      2

    

    Administration
      of Plan; Committee Authority to

    Select
      Participants and Determine Awards

     

    (a) Committee.  The
      Plan shall be administered by a compensation committee of the Board (the
“Committee”) consisting of not less than two (2) persons each of whom
      qualifies as an Independent Director, an Outside Director or a Non-Employee
      Director, but the authority and validity of any act taken or not taken by the
      Committee shall not be affected if any person administering the Plan is not
      an
      Independent Director, an Outside Director or a Non-Employee Director. Except
      as
      specifically reserved to the Board under the terms of the Plan, the Committee
      shall have full and final authority to operate, manage and administer the Plan
      on behalf of the Company. 

    

    (b) Powers
      of Committee.  The
      Committee shall have the power and authority to grant and modify Awards
      consistent with the terms of the Plan, including the power and authority:

     

    (i) to
      select the persons to whom Awards may from time to time be granted;

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

     

    (ii) to
      determine the time or times of grant, and the extent, if any, of Incentive
      Stock
      Options, Non-Statutory Stock Options, Restricted Stock, and Unrestricted Stock,
      or any combination of the foregoing, granted to any one or more participants;
      

     

    (iii) to
      determine the number of shares to be covered by any Award; 

     

    (iv) to
      determine and modify the terms and conditions, including restrictions not
      inconsistent with the terms of the Plan, of any Award, which terms and
      conditions may differ among individual Awards and participants, and to approve
      the form of written instruments evidencing the Awards; provided, however, that
      no such action shall adversely affect rights under any outstanding Award without
      the participant’s consent; 

     

    (v) to
      accelerate the exercisability or vesting of all or any portion of any Award;
      

     

    (vi) to
      extend the period in which any outstanding Stock Option may be
      exercised; and 

     

    (vii) to
      adopt, alter and repeal such rules, guidelines and practices for administration
      of the Plan and for its own acts and proceedings as it shall deem advisable;
      to
      interpret the terms and provisions of the Plan and any Award (including related
      written instruments); to make all determinations it deems advisable for the
      administration of the Plan; to decide all disputes arising in connection with
      the Plan; and to otherwise supervise the administration of the Plan.

     

    All
      decisions and interpretations of the Committee shall be binding on all persons,
      including the Company and Plan participants. No member or former member of
      the
      Committee or the Board shall be liable for any action or determination made
      in
      good faith with respect to this Plan. 

     

    SECTION
      3

    

    Shares
      Issuable under the Plan;

    Mergers;
      Substitution

    

    (a) Shares Issuable.  The
      maximum number of shares of Stock which may be issued in respect of Awards
      granted under the Plan, subject to adjustment upon changes in capitalization
      of
      the Company as provided in this Section 3, shall be 150,000 shares.
      For purposes of this limitation, the shares of Stock underlying any Awards
      which
      are forfeited, cancelled, reacquired by the Company or otherwise terminated
      (other than by exercise) shares that are tendered in payment of the exercise
      price of any Award and shares that are tendered or withheld for tax withholding
      obligations shall be added back to the shares of Stock with respect to which
      Awards may be granted under the Plan. Shares issued under the Plan may be
      authorized but unissued shares or shares reacquired by the Company.

     

    (b) Stock
      Dividends, Mergers, etc.  In
      the event that, after approval of the Plan by the stockholders of the Company
      in
      accordance with Section 15, the Company effects a stock dividend, stock
      split or similar change in capitalization affecting the Stock, the Committee
      shall make appropriate adjustments in (i) the number and kind of shares of
      stock or securities with respect to which Awards may thereafter be granted
      (including without limitation the limitations set forth in Sections 3(a)
      and (b) above), (ii) the number and kind of shares remaining subject
      to outstanding Awards, and (iii) the option or purchase price in respect of
      such shares. In the event of any merger, consolidation, dissolution or
      liquidation of the Company, the Committee in its sole discretion may, as to
      any
      outstanding Awards, make such substitution or adjustment in the aggregate number
      of shares reserved for issuance under the Plan and in the number and purchase
      price (if any) of shares subject to such Awards as it may determine and as
      may
      be permitted by the terms of such transaction, or accelerate, amend or terminate
      such Awards upon such terms and conditions as it shall provide (which, in the
      case of the termination of the vested portion of any Award, shall require
      payment or other consideration which the Committee deems equitable in the
      circumstances), subject, however, to the provisions of Section 13.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

     

    (c) Substitute
      Awards.  The
      Committee may grant Awards under the Plan in substitution for stock and stock
      based awards held by employees of another corporation who concurrently become
      employees of the Company or an Affiliate as the result of a merger or
      consolidation of the employing corporation with the Company or an Affiliate
      or
      the acquisition by the Company or an Affiliate of property or stock of the
      employing corporation. The Committee may direct that the substitute awards
      be
      granted on such terms and conditions as the Committee considers appropriate
      in
      the circumstances. 

     

    SECTION
      4

    

    Eligibility

     

    Awards
      may be granted to officers, directors and employees of, and consultants and
      advisers to, the Company or its Affiliates (“Eligible Persons”). 

     

    SECTION
      5

    

    Stock
      Options

    

    The
      Committee may grant to Eligible Persons options to purchase stock. 

     

    Any
      Stock
      Option granted under the Plan shall be in such form as the Committee may from
      time to time approve. 

     

    Stock
      Options granted under the Plan may be either Incentive Stock Options (subject
      to
      compliance with applicable law) or Non-Statutory Stock Options. Unless otherwise
      so designated, an Option shall be a Non-Statutory Stock Option. To the extent
      that any option does not qualify as an Incentive Stock Option, it shall
      constitute a Non-Statutory Stock Option. 

     

    No
      Incentive Stock Option shall be granted under the Plan after the tenth
      anniversary of the date of adoption of the Plan by the Board. 

    
      
        
        

      

      
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    The
      Committee may also grant additional Non-Statutory Stock Options to purchase
      a
      number of shares to be determined by the Committee in recognition of services
      provided by a Non-Employee Director in his or her capacity as a director,
      provided that such grants are in compliance with the requirements of
      Rule 16b-3, as promulgated under the Securities Exchange Act of 1934, as
      amended from time to time (“Rule 16b-3”). 

    

    The
      Committee in its discretion may determine the effective date of Stock Options,
      provided, however, that grants of Incentive Stock Options shall be made only
      to
      persons who are, on the effective date of the grant, officers or employees
      of
      the Company or an Affiliate. Stock Options granted pursuant to this
      Section 5 shall contain such additional terms and conditions, not
      inconsistent with the terms of the Plan, as the Committee shall deem desirable.
      

     

    (a) Exercise
      Price.  The
      exercise price per share for the Stock covered by a Stock Option granted
      pursuant to this Section 5 shall be determined by the Committee at the time
      of grant but shall be not less than one hundred percent (100%) of Fair Market
      Value on the date of grant. If an employee owns or is deemed to own (by reason
      of the attribution rules applicable under Section 424(d) of the Code) more
      than ten percent (10%) of the combined voting power of all classes of stock
      of
      the Company or any subsidiary or parent corporation and an Incentive Stock
      Option is granted to such employee, the option price shall be not less than
      one
      hundred ten percent (110%) of Fair Market Value on the date of grant.

     

    (b) Option
      Term.  The
      term of each Stock Option shall be fixed by the Committee, but no Incentive
      Stock Option shall be exercisable more than ten (10) years after the date
      the option is granted. If an employee owns or is deemed to own (by reason of
      the
      attribution rules of Section 424(d) of the Code) more than ten percent
      (10%) of the combined voting power of all classes of stock of the Company or
      any
      subsidiary or parent corporation and an Incentive Stock Option is granted to
      such employee, the term of such option shall be no more than five (5) years
      from the date of grant. 

     

    (c) Exercisability;
      Rights of a Shareholder.  Stock
      Options shall become vested and exercisable at such time or times, whether
      or
      not in installments, as shall be determined by the Committee. The Committee,
      in
      its discretion, may accelerate the exercisability of all or any portion of
      any
      Stock Option only in circumstances involving (i) a Change of Control of the
      Company, (ii) undue hardship, including, but not limited to, death or
      disability of the option holder, and (iii) a severance arrangement with a
      departing option holder. An optionee shall have the rights of a shareholder
      only
      as to shares acquired upon the exercise of a Stock Option and not as to
      unexercised Stock Options. 

     

    (d) Method
      of Exercise.  Stock
      Options may be exercised in whole or in part, by delivering written notice
      of
      exercise to the Company, specifying the number of shares to be purchased.
      Payment of the purchase price may be made by delivery of cash or bank check
      or
      other instrument acceptable to the Committee in an amount equal to the exercise
      price of such Options, or, to the extent provided in the applicable Option
      Agreement, by one or more of the following methods: 

    
      
        
        

      

      
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    (i) by
      delivery to the Company of shares of Common Stock of the Company that either
      have been purchased by the optionee on the open market, or have been
      beneficially owned by the optionee for a period of at least six months and
      are
      not then subject to restriction under any Company plan (“mature shares”); such
      surrendered shares shall have a fair market value equal in amount to the
      exercise price of the Options being exercised; or 

     

    (ii) a
      personal recourse note issued by the optionee to the Company in a principal
      amount equal to such aggregate exercise price and with such other terms,
      including interest rate and maturity, as the Company may determine in its
      discretion; provided,
      however,
      that
      the interest rate borne by such note shall not be less than the lowest
      applicable federal rate, as defined in Section 1274(d) of the Code; or

     

    (iii) if
      the class of Common Stock is registered under the Securities Exchange Act of
      1934 at such time, by delivery to the Company of a properly executed exercise
      notice along with irrevocable instructions to a broker to deliver promptly
      to
      the Company cash or a check payable and acceptable to the Company for the
      purchase price; provided that in the event that the optionee chooses to pay
      the
      purchase price as so provided, the optionee and the broker shall comply with
      such procedures and enter into such agreements of indemnity and other agreements
      as the Committee shall prescribe as a condition of such payment procedure
      (including, in the case of an optionee who is an executive officer of the
      Company, such procedures and agreements as the Committee deems appropriate
      in
      order to avoid any extension of credit in the form of a personal loan to such
      officer). The Company need not act upon such exercise notice until the Company
      receives full payment of the exercise price; or 

    

    (iv) by
      reducing the number of Option shares otherwise issuable to the optionee upon
      exercise of the Option by a number of shares of Common Stock having a fair
      market value equal to such aggregate exercise price; provided, however, that
      the
      optionee otherwise holds an equal number of mature shares; or 

     

    (v) by
      any combination of such methods of payment. 

     

    The
      delivery of certificates representing shares of Stock to be purchased pursuant
      to the exercise of a Stock Option will be contingent upon receipt from the
      Optionee (or a purchaser acting in his stead in accordance with the provisions
      of the Stock Option) by the Company of the full purchase price for such shares
      and the fulfillment of any other requirements contained in the Stock Option
      or
      imposed by applicable law. 

     

    (e) Non-transferability
      of Options.  Except
      as the Committee may provide with respect to a Non-Statutory Stock Option,
      no
      Stock Option shall be transferable other than by will or by the laws of descent
      and distribution and all Stock Options shall be exercisable, during the
      optionee’s lifetime, only by the optionee. 

     

    (f) Annual
      Limit on Incentive Stock Options.  To
      the extent required for “incentive stock option” treatment under
      Section 422 of the Code, the aggregate Fair Market Value (determined as of
      the time of grant) of the Stock with respect to which Incentive Stock Options
      granted under this Plan and any other plan of the Company or its Affiliates
      become exercisable for the first time by an optionee during any calendar year
      shall not exceed $100,000. 

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

     

    (g) Lockup
      Agreement.  Each
      Option shall provide that the optionee shall agree for a period of time (not
      to
      exceed 180 days) from the effective date of any registration of securities
      of the Company (upon request of the Company or the underwriters managing any
      underwritten offering of the Company’s securities) not to sell, make any short
      sale of, loan, grant any option for the purchase of, or otherwise dispose of,
      any shares issued pursuant to the exercise of such Option, without the prior
      written consent of the Company or such underwriters, as the case may be.

     

    SECTION
      6

    

    Restricted
      Stock Awards

    

    (a) Nature
      of Restricted Stock Award.  The
      Committee in its discretion may grant Restricted Stock Awards to any Eligible
      Person, entitling the recipient to acquire, for such purchase price, if any,
      as
      may be determined by the Committee, shares of Stock subject to such restrictions
      and conditions as the Committee may determine at the time of grant (“Restricted
      Stock”), including continued employment and/or achievement of pre-established
      performance goals and objectives. 

     

    (b) Acceptance
      of Award.  A
      participant who is granted a Restricted Stock Award shall have no rights with
      respect to such Award unless the participant shall have accepted the Award
      within sixty (60) days (or such shorter date as the Committee may specify)
      following the award date by making payment to the Company of the specified
      purchase price, if any, of the shares covered by the Award and by executing
      and
      delivering to the Company a written instrument that sets forth the terms and
      conditions applicable to the Restricted Stock in such form as the Committee
      shall determine. 

     

    (c) Rights
      as a Shareholder.  Upon
      complying with Section 6(b) above, a participant shall have all the rights
      of a shareholder with respect to the Restricted Stock, including voting and
      dividend rights, subject to non-transferability restrictions and Company
      repurchase or forfeiture rights described in this Section 6 and subject to
      such other conditions contained in the written instrument evidencing the
      Restricted Award. Unless the Committee shall otherwise determine, certificates
      evidencing shares of Restricted Stock shall remain in the possession of the
      Company until such shares are vested as provided in Section 6(e) below.

     

    (d) Restrictions.  Shares
      of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise
      encumbered or disposed of except as specifically provided herein. In the event
      of termination of employment by the Company and its Affiliates for any reason
      (including death, Disability, Normal Retirement and for Cause), the Company
      shall have the right, at the discretion of the Committee, to repurchase shares
      of Restricted Stock which have not then vested at their purchase price, or
      to
      require forfeiture of such shares to the Company if acquired at no cost, from
      the participant or the participant’s legal representative. The Company must
      exercise such right of repurchase or forfeiture within ninety (90) days
      following such termination of employment (unless otherwise specified in the
      written instrument evidencing the Restricted Stock Award). 

    
      
        
        

      

      
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    (e) Vesting
      of Restricted Stock.  The
      Committee at the time of grant shall specify the date or dates and/or the
      attainment of pre-established performance goals, objectives and other conditions
      on which the non-transferability of the Restricted Stock and the Company’s right
      of repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or
      the attainment of such pre-established performance goals, objectives and other
      conditions, the shares on which all restrictions have lapsed shall no longer
      be
      Restricted Stock and shall be deemed “vested.” Subject to Section 11, the
      Committee, in its discretion, may accelerate the exercisability of all or any
      portion of any Restricted Stock Award only in circumstances involving (i) a
      Change of Control of the Company, (ii) undue hardship, including, but not
      limited to, death or disability of the Restricted Stock Award holder, and
      (iii) a severance arrangement with a departing Restricted Stock Award
      holder. 

     

    (f) Waiver,
      Deferral and Reinvestment of Dividends.  The
      written instrument evidencing the Restricted Stock Award may require or permit
      the immediate payment, waiver, deferral or investment of dividends paid on
      the
      Restricted Stock. 

     

    SECTION
      7

    

    Unrestricted
      Stock Awards

     

    (a) Grant
      or Sale of Unrestricted Stock.  The
      Committee in its discretion may grant or sell to any Eligible Person shares
      of
      Stock free of any restrictions under the Plan (“Unrestricted Stock”) at a
      purchase price determined by the Committee. Shares of Unrestricted Stock may
      be
      granted or sold as described in the preceding sentence in respect of past
      services or other valid consideration. 

     

    (b) Restrictions
      on Transfers.  The
      right to receive unrestricted Stock may not be sold, assigned, transferred,
      pledged or otherwise encumbered, other than by will or the laws of descent
      and
      distribution. 

     

    SECTION
      8

    

    Termination
      of Stock Options

    

    (a) Incentive
      Stock Options: 

     

    (i) Termination
      by Death.  If
      any participant’s employment by the Company and its Affiliates terminates by
      reason of death, any Incentive Stock Option owned by such participant may
      thereafter be exercised to the extent exercisable at the date of death, by
      the
      legal representative or legatee of the participant, for a period of one hundred
      eighty (180) days (or such longer period as the Committee shall specify at
      any time) from the date of death, or until the expiration of the stated term
      of
      the Incentive Stock Option, if earlier. 

    
      
        
        

      

      
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    (ii) Termination
      by Reason of Disability or Normal Retirement. 

     

    (A) Any
      Incentive Stock Option held by a participant whose employment by the Company
      and
      its Affiliates has terminated by reason of Disability may thereafter be
      exercised, to the extent it was exercisable at the time of such termination,
      for
      a period of ninety (90) days (or such longer period as the Committee shall
      specify at any time) from the date of such termination of employment, or until
      the expiration of the stated term of the Option, if earlier. 

     

    (B) Any
      Incentive Stock Option held by a participant whose employment by the Company
      and
      its Affiliates has terminated by reason of Normal Retirement may thereafter
      be
      exercised, to the extent it was exercisable at the time of such termination,
      for
      a period of ninety (90) days (or such longer period as the Committee shall
      specify at any time) from the date of such termination of employment, or until
      the expiration of the stated term of the Option, if earlier. 

     

    (C) The
      Committee shall have sole authority and discretion to determine whether a
      participant’s employment has been terminated by reason of Disability or Normal
      Retirement. 

     

    (iii) Termination
      for Cause.  If
      any participant’s employment by the Company and its Affiliates has been
      terminated for Cause, any Incentive Stock Option held by such participant shall
      immediately terminate and be of no further force and effect; provided, however,
      that the Committee may, in its sole discretion, provide that such Option can
      be
      exercised for a period of up to thirty (30) days from the date of
      termination of employment or until the expiration of the stated term of the
      Option, if earlier. 

     

    (iv) Other
      Termination.  Unless
      otherwise determined by the Committee, if a participant’s employment by the
      Company and its Affiliates terminates for any reason other than death,
      Disability, Normal Retirement or for Cause, any Incentive Stock Option held
      by
      such participant may thereafter be exercised, to the extent it was exercisable
      on the date of termination of employment, for thirty (30) days (or such
      other period as the Committee shall specify) from the date of termination of
      employment or until the expiration of the stated term of the Option, if earlier.
      

     

    (b) Non-Statutory
      Stock Options.  Any
      Non-Statutory Stock Option granted under the Plan shall contain such terms
      and
      conditions with respect to its termination as the Committee, in its discretion,
      may from time to time determine. 

     

    
      
        
        

      

      
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    SECTION
      9

    

    Tax
      Withholding

     

    (a) Payment
      by Participant.  Each
      participant shall, no later than the date as of which the value of an Award
      or
      of any Stock or other amounts received thereunder first becomes includable
      in
      the gross income of the participant for Federal income tax purposes, pay to
      the
      Company, or make arrangements satisfactory to the Committee regarding payment
      of
      any Federal, state, local and/or payroll taxes of any kind required by law
      to be
      withheld with respect to such income. The Company and its Affiliates shall,
      to
      the extent permitted by law, have the right to deduct any such taxes from any
      payment of any kind otherwise due to the participant. 

     

    (b) Payment
      in Shares.  A
      Participant may elect, with the consent of the Committee, to have such tax
      withholding obligation satisfied, in whole or in part, by (i) authorizing
      the Company to withhold from shares of Stock to be issued pursuant to an Award
      a
      number of shares with an aggregate Fair Market Value (as of the date the
      withholding is effected) that would satisfy the minimum withholding amount
      due
      with respect to such Award, or (ii) delivering to the Company a number of
      mature shares of Stock with an aggregate Fair Market Value (as of the date
      the
      withholding is effected) that would satisfy the minimum withholding amount
      due.

    

    (c) Notice
      of Disqualifying Disposition.  Each
      holder of an Incentive Option shall agree to notify the Company in writing
      immediately after making a disqualifying disposition (as defined in
      Section 421(b) of the Code) of any Stock purchased upon exercise of an
      Incentive Stock Option. 

     

    SECTION
      10

    

    Transfer
      and Leave of Absence

     

    For
      purposes of the Plan, the following events shall not be deemed a termination
      of
      employment: 

     

    (a) a
      transfer to the employment of the Company from an Affiliate or from the Company
      to an Affiliate, or from one Affiliate to another; 

     

    (b) an
      approved leave of absence for military service or sickness, or for any other
      purpose approved by the Company, if the employee’s right to re-employment is
      guaranteed either by a statute or by contract or under the policy pursuant
      to
      which the leave of absence was granted or if the Committee otherwise so provides
      in writing. 

     

    SECTION
      11

    

    Amendments
      and Termination

     

    The
      Board
      may at any time amend or discontinue the Plan and the Committee may at any
      time
      amend or cancel any outstanding Award (or provide substitute Awards at the
      same
      or reduced exercise or purchase price or with no exercise or purchase price,
      but
      such price, if any, must satisfy the requirements which would apply to the
      substitute or amended Award if it were then initially granted under this Plan)
      for the purpose of satisfying changes in law or for any other lawful purpose,
      but no such action shall adversely affect rights under any outstanding Award
      without the holder’s consent. 

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

     

    This
      Plan
      shall terminate as of the tenth anniversary of its effective date. The Board
      may
      terminate this Plan at any earlier time for any reason. No Award may be granted
      after the Plan has been terminated. No Award granted while this Plan is in
      effect shall be altered or impaired by termination of this Plan, except upon
      the
      consent of the holder of such Award. The power of the Committee to construe
      and
      interpret this Plan and the Awards granted prior to the termination of this
      Plan
      shall continue after such termination. 

     

    SECTION
      12

    

    Status
      of Plan

    

    With
      respect to the portion of any Award which has not been exercised and any
      payments in cash, Stock or other consideration not received by a participant,
      a
      participant shall have no rights greater than those of a general creditor of
      the
      Company unless the Committee shall otherwise expressly determine in connection
      with any Award or Awards. In its sole discretion, the Committee may authorize
      the creation of trusts or other arrangements to meet the Company’s obligations
      to deliver Stock or make payments with respect to Awards hereunder, provided
      that the existence of such trusts or other arrangements is consistent with
      the
      provision of the foregoing sentence. 

     

    SECTION
      13

    

    Change
      of Control Provisions

    

    (a) Upon
      the occurrence of a Change of Control as defined in this Section 13:

     

    (i) subject
      to the provisions of clause (iii) below, after the effective date of such
      Change of Control, each holder of an outstanding Stock Option, or Restricted
      Stock Award shall be entitled, upon exercise of such Award, to receive, in
      lieu
      of shares of Stock (or consideration based upon the Fair Market Value of Stock),
      shares of such stock or other securities, cash or property (or consideration
      based upon shares of such stock or other securities, cash or property) as the
      holders of shares of Stock received in connection with the Change of Control;
      

     

    (ii) the
      Committee may accelerate, fully or in part, the time for exercise of, and waive
      any or all conditions and restrictions on, each unexercised and unexpired Stock
      Option, and Restricted Stock Award, effective upon a date prior or subsequent
      to
      the effective date of such Change of Control, as specified by the
      Committee; or 

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

     

    (iii) each
      outstanding Stock Option and Restricted Stock Award, may be cancelled by the
      Committee as of the effective date of any such Change of Control provided that
      (x) prior written notice of such cancellation shall be given to each holder
      of such an Award and (y) each holder of such an Award shall have the right
      to exercise such Award to the extent that the same is then exercisable or,
      in
      full, if the Committee shall have accelerated the time for exercise of all
      such
      unexercised and unexpired Awards, during the thirty (30) day period
      preceding the effective date of such Change of Control. 

     

    (b) “Change
      of Control” shall mean the occurrence of any one of the following events:

     

    (i) any
      “person” (as such term is used in Sections 11(d) and 12(d)(2) of the
      Exchange Act) becomes, after the Effective Date of this Plan, a “beneficial
      owner” (as such term is defined in Rule 13d-3 promulgated under the
      Exchange Act) (other than the Company, any trustee or other fiduciary holding
      securities under an employee benefit plan of the Company, or any corporation
      owned, directly or indirectly, by the stockholders of the Company in
      substantially the same proportions as their ownership of stock of the Company),
      directly or indirectly, of securities of the Company representing fifty percent
      (50%) or more of the combined voting power of the Company’s then outstanding
      securities; or 

     

    (ii) the
      stockholders of the Company approve a merger or consolidation of the Company
      with any other corporation or other entity, other than a merger or consolidation
      which would result in the voting securities of the Company outstanding
      immediately prior thereto continuing to represent (either by remaining
      outstanding or by being converted into voting securities of the surviving
      entity) more than fifty percent (50%) of the combined voting power of the voting
      securities of the Company or such surviving entity outstanding immediately
      after
      such merger or consolidation; or 

     

    (iii) the
      stockholders of the Company approve a plan of complete liquidation of the
      Company or an agreement for the sale or disposition by the Company of all or
      substantially all of the Company’s assets. 

     

    SECTION
      14

    

    General
      Provisions

    

    (a) No
      Distribution; Compliance with Legal Requirements.  The
      Committee may require each person acquiring shares pursuant to an Award to
      represent to and agree with the Company in writing that such person is acquiring
      the shares without a view to distribution thereof. 

     

    No
      shares
      of Stock shall be issued pursuant to an Award until all applicable securities
      laws and other legal and stock exchange requirements have been satisfied. The
      Committee may require the placing of such stop orders and restrictive legends
      on
      certificates for Stock and Awards as it deems appropriate. 

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

     

    (b) Delivery
      of Stock Certificates.  Delivery
      of stock certificates to participants under this Plan shall be deemed effected
      for all purposes when the Company or a stock transfer agent of the Company
      shall
      have delivered such certificates in the United States mail, addressed to the
      participant, at the participant’s last known address on file with the Company.

     

    (c) Other
      Compensation Arrangements; No Employment Rights.  Nothing
      contained in this Plan shall prevent the Board from adopting other or additional
      compensation arrangements, including trusts, subject to stockholder approval
      if
      such approval is required; and such arrangements may be either generally
      applicable or applicable only in specific cases. The adoption of the Plan or
      any
      Award under the Plan does not confer upon any employee any right to continued
      employment with the Company or any Affiliate. 

    

    SECTION
      15

    

    Effective
      Date of Plan

    

    This
      Plan
      shall become effective upon its adoption by the Company’s Board of Directors. If
      the Plan shall not be approved by the shareholders of the Company within twelve
      months following its adoption, this Plan shall terminate and be of no further
      force or effect. 

     

    SECTION
      16

    

    Governing
      Law

    

    This
      Plan
      shall be governed by, and construed and enforced in accordance with, the
      substantive laws of the State of Illinois without regard to its principles
      of
      conflicts of laws. 

     

    Approved
      by the Board of Directors April 27, 2007.

    

    Approved
      by the Shareholders June 22, 2007.

    
      
        
        

      

      
        14Amended
      Line of Credit Agreement

    

    
      	
              Five
                Hundred
                Thousand dollars ($500,000)

            	
              August
                1, 2007

            
	 	
              Fort
                Wayne, Indiana

            

    

    

      Whereas,
        the Borrower and Lender entered into a Line of Credit Agreement on April
        27,
        2007 for a maximum amount of three hundred thousand dollars
        ($300,000);

      

      Where
        as
        the Borrower and Lender desire to amend the Line of Credit Agreement to increase
        the maximum amount of the Line of Credit to five hundred thousand dollars
        ($500,000); 

      

      NOW
        THEREFORE, in consideration of the mutual covenants and agreements herein
        contained, and for other good and valuable consideration, the receipt and
        sufficiency of which is hereby acknowledged, and the Borrower and Lender
        intending to be legally bound, do hereby unconditionally agree as
        follows:

       

    

    Freedom
      Financial Holdings, Inc., (“FFH”) a corporation organized and existing under the
      laws of the State of Maryland, having its principal place of business at 6615
      Brotherhood Way, Fort Wayne, Indiana (the "Borrower") promises to pay to the
      order of Robert Carteaux an individual existing under the laws of the State
      of
      Indiana having its principal residence at 7009 Woodcroft Lane, Fort Wayne,
      Indiana 46804 (the "Lender") at the residence of the Lender or such other place
      as the holder hereof shall designate the amount of principal that has been
      borrowed on this agreed line of credit with a maximum amount of five
      hundred thousand dollars ($500,000).

    

    The
      term
      on this line of Credit will be at an interest rate gain of ten percent (10%).
      Said principal and flat ten percent (10%) will be paid in full upon FFH raising
      $1,500,000 in the anticipated Initial Public Offering (“IPO”) of FFH. In the
      event that FFH raises less than $1,500,000 in the IPO, the principal will
      continue to accrue interest at flat rate of 20% per year and will be paid from
      operations, when available. 

    

    All
      loans
      hereunder and all payments on account of principal hereof shall be recorded
      by
      the Lender and, prior to any transfer hereof, endorsed on the grid attached
      which is part of this Line of Credit agreement, the entries on the records
      of
      the Lender (including any appearing on this Line of Credit) shall be prima
      facie
      evidence of amounts outstanding hereunder.

    

    All
      or
      any part of the aforesaid principal sum and interest may be prepaid at any
      time
      and from time to time without penalty. 

    

    Any
      deposits or other sums at any time credited by or due from the holder to the
      Borrower, or to any endorser or guarantor hereof, and any securities or other
      property of the Borrower or any such endorser or guarantor at any time in the
      possession of the holder may at all times be held and treated as collateral
      for
      the payment of this Line of Credit and any and all other liabilities (direct
      or
      indirect, absolute or contingent, sole, joint or several, secured or unsecured,
      due or to become due, now existing or hereafter arising) of the Borrower to
      the
      holder. Regardless of the adequacy of collateral, the holder may apply or set
      off such deposits or other sums against such liabilities at any time in the
      case
      of the Borrower, but only with respect to matured liabilities in the case of
      endorsers and guarantors.

    

    The
      Borrower and every endorser and guarantor of this Line of Credit hereby waive
      presentment, demand, notice protest and all other demands and notices in
      connection with the delivery, acceptance, performance, default or enforcement
      hereof and consent that no indulgence, and no substitution, release or surrender
      collateral, and no discharge or release of any other party primarily or
      secondarily liable hereon, shall discharge or otherwise affect the liability
      of
      the Borrower or any such endorser or guarantor. No delay or omission on the
      part
      of the holder in exercising any right hereunder shall operate as a waiver of
      such right or any other right hereunder, and a waiver of any such right on
      any
      one occasion shall not be construed as a bar to or waiver of any such right
      on
      any future occasion.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Any
      notice to Borrower provided for in this Line of Credit shall be given by mailing
      such notice by certified mail return receipt requested addressed to Borrower
      at
      the address stated below, or to such other address as Borrower may designate
      by
      notice to the Line of Credit holder. Any notice to the Line of Credit holder
      shall be given by mailing such notice by certified mail, return receipt
      requested, to the Line of Credit holder at the address stated above in this
      Line
      of Credit, or at such other address as may have been designated by notice to
      Borrower.

    

    The
      Borrower and every endorser and guarantor hereof agree to pay on demand all
      costs and expenses (including legal costs and attorneys' fees) incurred or
      paid
      by the holder in enforcing this Line of Credit on default.

    

    This
      Line
      of Credit shall take effect as a sealed instrument and shall be governed by
      the
      laws of the State of Indiana.

     

    

    /s/ 

    
      

    

    Brian
      Kistler

    CEO

    Freedom
      Financial Holdings, Inc

     

    

    /s/

    
      

    

    Robert
      W.
      Carteaux

    7009
      Woodcroft Lane

    Fort
      Wayne, In 46804

     

    GRID

    ADVANCES
      AND PAYMENTS OF PRINCIPAL

     

    
      	
              Date

            	 	
              Amount
                of Loan

            	 	
              Outstanding
                Principal Balance

            	 	
              Notation
                Made By

            	 
	 	 	 	 	 	 	 	 
	
              4/27/07

            	 	
              $

            	
              100,000

            	 	
              $

            	
              100,000

            	 	 	
              BK

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
              5/21/07

            	 	
              $

            	
              100,000

            	 	
              $

            	
              200,000

            	 	 	
              BK

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
              6/26/07

            	 	
              $

            	
              100,000

            	 	
              $

            	
              300,000

            	 	 	
              BK

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
              8/01/07

            	 	
              $

            	
              100,000

            	 	
              $

            	
              400,000

            	 	
               

            	
              BK

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