Document:

ex_109252.htm

 

EXHIBIT 10.38

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the "Agreement") is made and entered into as of this 1st day of December, 2017, by and between Jeffrey Hyland (the "Executive") and CTI Industries Corporation, an Illinois corporation (the "Company").

 

WHEREAS, the Company desires to employ the Executive on the terms and conditions set forth herein; and

 

WHEREAS, the Executive desires to be employed by the Company on such terms and conditions.

 

NOW, THEREFORE, in consideration of the mutual covenants, promises and obligations set forth herein, the parties agree as follows:

 

1.     Term. The Executive's employment hereunder shall be effective as of December 1, 2017, (the "Effective Date") and shall continue until the third anniversary thereof, unless terminated earlier pursuant to Section 5 of this Agreement; provided that, on such third anniversary of the Effective Date and each annual anniversary thereafter (such date and each annual anniversary thereof, a "Renewal Date"), the Agreement shall be deemed to be automatically extended, upon the same terms and conditions, for successive periods of one year, unless either party provides written notice of its intention not to extend the term of the Agreement at least 90 days' prior to the applicable Renewal Date. The period during which the Company employs the Executive hereunder is hereinafter referred to as the "Employment Term".

 

2.     Position and Duties.

 

2.1     Position. During the Employment Term, the Executive shall serve as the President, reporting to the Board of Directors of the Company (“Board”). In such position, the Executive shall have such duties, authority and responsibility as shall be determined from time to time by the Board, which duties, authority and responsibility shall be consistent with the Executive's position. Any change in the title, duties or reporting of Executive and any action not to renew or extend the Employment Term or to terminate the employment of Executive hereunder, other than by Executive, shall be taken by action of the Board. During the Employment Term, the Company agrees to nominate Executive for Board membership on each such occasion that nominations are accepted and/or put before the Shareholders for approval. 

 

1

 

 

2.2     Duties. The Company recognizes that Executive has several outside, non-competitive business interests, which shall not be prohibited by this Agreement. During the Employment Term, however, the Executive shall devote substantially all of his business time and attention to the performance of the Executive's duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise that would conflict or materially interfere with the performance of such services, either directly or indirectly, without the prior written consent of the Board.

 

3.     Place of Performance. The principal place of Executive's employment shall be the Company's principal executive office currently located at 22160 N. Pepper Road, Lake Barrington, Illinois; provided that, the Executive may be required to travel on Company business during the Employment Term.

 

4.     Compensation.

 

4.1     Base Salary. The Company shall pay the Executive an annual rate of base salary of $243,000 in periodic installments in accordance with the Company's customary payroll practices, but no less frequently than monthly. The Board shall review Executive's base salary at least annually and the Board may, but shall not be required to, increase the base salary during the Employment Term. The Executive's annual base salary, as in effect from time to time, is hereinafter referred to as "Base Salary".

 

4.2     Signing Bonus. The Company shall pay the Executive a signing bonus of $75,000, less applicable withholdings, in 2018, but in no event later than February 28, 2018, whether in periodic installments in an amount to be determined by the Company in its discretion or in one lump sum.

 

4.3     Incentive Compensation.  

 

(a)     The Company presently has in effect an Incentive Compensation Plan for certain executives of the Company. The Executive shall be a participant in the Company’s Incentive Compensation Plan during the Employment Term in Pool I.

 

(b)     The amount of any incentive compensation payable under the Incentive Compensation Plan, if any, for any period during the Employment Term and the level or amount of Executive’s participation in the Incentive Compensation Plan shall be determined by the Board or the Compensation Committee of the Board in their sole discretion. The initial Award Amount shall be a high award level of Pool I.

 

4.4     Equity Awards. 

 

(a)     Pursuant to the Company’s 2009 Equity Incentive Plan (the “Plan”) or any successor plan, the Company shall award the Executive, concurrently with the Effective Date:

 

	 	
			(i)

				
			25,000 shares of Restricted Stock (“RS”), subject to the following conditions:

			

 

	 	
			(A)

				
			5,000 shares of RS will vest immediately upon the Award Date;

			

 

2

 

 

	 	
			(B)

				
			an additional 5,000 shares of RS will vest one years after the Award Date, provided that Executive is then employed by the Company;

			

 

	 	
			(C)

				
			an additional 5,000 shares of RS will vest two years after the Award Date, provided that Executive is then employed by the Company;

			

 

	 	
			(D)

				
			an additional 5,000 shares of RS will vest three years after the Award Date, provided that Executive is then employed by the Company;

			

 

	 	
			(E)

				
			An additional 5,000 shares of RS will vest four years after the Award Date, provided that Executive is then employed by the Company.

			

 

	 	
			(F)

				
			notwithstanding the foregoing, upon the occurrence of a (1) Change in Control as defined by Section 13 of the Plan (2) Termination Without Cause as defined below in paragraph 5, or (3) Death or Disability as defined below in paragraph 5, any and all unvested shares of RS awarded hereunder shall immediately vest. 

			

 

	 	
			(ii)

				
			the option to purchase 65,000 shares of the authorized and unissued Common Stock of the Company, Incentive Stock Options as that term is defined in the Plan, subject to the following conditions:

			

 

	 	
			(A)

				
			Executive must, subject to subparagraph 4.4(a)(ii)(D) below, be employed full-time by the Company as of the Vesting Dates set forth below and the entirety of the period before, if any, to vest in said Incentive Stock Options; 

			

 

	 	
			(B)

				
			during the term of such Options (as fixed by the Committee identified in Section 2 of the Plan) the Executive shall have the right to exercise only those Incentive Stock Options deemed vested according to the following schedule:

			

 

3

 

 

Vesting Date          Vesting Amount                                     

 

5/1/2018                   10,834 shares    

5/1/2019                   10,834 shares                    

5/1/2020                   10,834 shares                    

5/1/2021                   10,834 shares                    

5/1/2022                   10,834 shares                    

12/1/2022                 10,830 shares                     

 

 

	 	(C) 	such Options, once vested, shall not be forfeitable; and
	 	 	 
	 	
			(D)

				
			notwithstanding the foregoing, upon the occurrence of a (1) Change in Control as defined by Section 13 of the Plan (2) Termination Without Cause as defined below in paragraph 5, or (3) Death or Disability as defined below in paragraph 5, any and all unvested Options awarded hereunder shall immediately vest.

			

 

(b)     as an additional inducement for the Executive to enter its employ, the Company shall also award the Executive, concurrently with the Effective Date and outside of the Plan, the option to obtain an additional 260,000 shares of Company stock, for investment purposes only and not for re-sale (the “Non-Qualified Stock Options”). The Non-Qualified Stock Options shall be exercisable when vested in accordance with the following schedule:                                   

 

Vesting Date                    Vesting Amount

5/1/2018                             43,342 shares

5/1/2019                             43,342 shares

5/1/2020                             43,342 shares

5/1/2021                             43,342 shares

5/1/2022                             43,342 shares

12/1/2022                           43,290 shares

 

	 	
			(i)

				
			The Non-Qualified Stock Options shall be subject to the same non-forfeiture and acceleration/immediate vesting terms set forth for the Restricted Stock and Incentive Stock Options referenced above in subsections 4.4 (a)(ii)(C) and (D). 

			

 

4

 

 

(c)     The Company shall issue any such additional documentation (e.g. award or grant agreements) required by the Plan and consistent with the terms of subparagraph 4.4(a). 

 

4.5     Fringe Benefits and Perquisites. During the Employment Term, the Executive shall be entitled to health insurance, as well as such additional fringe benefits and perquisites provided by the Company to other similarly situated executives of the Company. 

 

4.6     Employee Benefits. During the Employment Term, the Executive shall be entitled to participate in all employee benefit plans, practices and programs maintained by the Company, as in effect from time to time (collectively, "Employee Benefit Plans"), on a basis which is no less favorable than is provided to other similarly situated executives of the Company, to the extent consistent with applicable law and the terms of the applicable Employee Benefit Plans. The Company reserves the right to amend or cancel any Employee Benefit Plans at any time in its sole discretion, subject to the terms of such Employee Benefit Plan and applicable law.

 

4.7     Vacation; Paid Time-off. During the Employment Term, the Executive shall be entitled to 21 paid vacation days per calendar year (prorated for partial years) in accordance with the Company's vacation policies, as in effect from time to time. The Executive shall receive other paid time-off in accordance with the Company's policies for executive officers as such policies may exist from time to time.

 

4.8     Business Expenses. The Executive shall be entitled to reimbursement for all reasonable and necessary out-of-pocket business, entertainment and travel expenses incurred by the Executive in connection with the performance of the Executive's duties hereunder in accordance with the Company's expense reimbursement policies and procedures.

 

4.9     Indemnification.  

 

(a)     In the event that the Executive is made a party or threatened to be made a party to any action, suit, or proceeding, whether civil, criminal, administrative or investigative (a "Proceeding"), other than any Proceeding initiated by the Executive or the Company related to any contest or dispute between the Executive and the Company or any of its affiliates with respect to this Agreement or the Executive's employment hereunder, by reason of the fact that the Executive is or was a director, officer, employee or agent of the Company, or any affiliate of the Company, or is or was serving at the request of the Company as a director, officer, member, employee or agent of another corporation or a partnership, joint venture, trust or other enterprise, at any time between September 1, 2017 and the end of the Employment Term, the Executive shall be indemnified and held harmless by the Company to the fullest extent applicable to any other officer or director of the Company/to the maximum extent permitted under applicable law and the Company's bylaws from and against any liabilities, costs, claims and expenses, including all costs and expenses incurred in defense of any Proceeding (including attorneys' fees). Costs and expenses incurred by the Executive in defense of such Proceeding (including attorneys' fees) shall be paid by the Company in advance of the final disposition of such litigation upon receipt by the Company of: (i) a written request for payment; (ii) appropriate documentation evidencing the incurrence, amount and nature of the costs and expenses for which payment is being sought; and (iii) an undertaking adequate under applicable law made by or on behalf of the Executive to repay the amounts so paid if it shall ultimately be determined that the Executive is not entitled to be indemnified by the Company under this Agreement. 

 

5

 

 

(b)     During the Employment Term and for a period of six (6) years thereafter, the Company or any successor to the Company shall purchase and maintain, at its own expense, directors' and officers' liability insurance providing coverage to the Executive on terms that are no less favorable than the coverage provided to other directors and similarly situated executives of the Company.

 

5.     Termination of Employment. The Employment Term and the Executive's employment hereunder may be terminated by either the Company or the Executive at any time and for any reason; provided that, unless otherwise provided herein, either party shall be required to give the other party at least sixty (60) days advance written notice of any termination of the Executive's employment. Upon termination of the Executive's employment during the Employment Term, the Executive shall be entitled to the compensation and benefits described in this Section 5 and shall have no further rights to any compensation or any other benefits from the Company or any of its affiliates. 

 

5.1     Expiration of the Term, for Cause or Without Good Reason.  

 

(a)     The Executive's employment hereunder may be terminated upon either party's failure to renew the Agreement in accordance with Section 1, by the Company for Cause or by the Executive without Good Reason. If the Executive's employment is terminated upon either party's failure to renew the Agreement, by the Company for Cause or by the Executive without Good Reason, the Executive shall be entitled to receive:

 

	 	
			(i)

				
			any accrued but unpaid Base Salary and accrued but unused vacation time, both of which shall be paid on the Termination Date in accordance with the Company's customary payroll procedures;

			

 

	 	
			(ii)

				
			any earned but unpaid Incentive Compensation with respect to any completed fiscal year immediately preceding the Termination Date, which shall be paid on the otherwise applicable payment date;

			

 

6

 

 

	 	
			(iii)

				
			reimbursement for unreimbursed business expenses properly incurred by the Executive, which shall be subject to and paid in accordance with the Company's expense reimbursement policy; and

			

 

	 	
			(iv)

				
			such employee benefits (including equity compensation), if any, to which the Executive may be entitled under the Company's employee benefit plans as of the Termination Date; provided that, in no event shall the Executive be entitled to any payments in the nature of severance or termination payments except as specifically provided herein.

			

 

Items 5.1(a)(i) through 5.1(a)(iv) are referred to herein collectively as the "Accrued Amounts".

 

(b)     For purposes of this Agreement, "Cause" shall mean:

 

	 	
			(i)

				
			the Executive's failure to perform his duties (other than any such failure resulting from incapacity due to physical or mental illness);

			

 

	 	
			(ii)

				
			the Executive's failure to comply with any valid and legal directive of the person to whom the Executive reports hereunder;

			

 

	 	
			(iii)

				
			the Executive's engagement in dishonesty, illegal conduct or gross misconduct, which is, in each case, injurious to the Company or its affiliates;

			

 

	 	
			(iv)

				
			the Executive's embezzlement, misappropriation or fraud, whether or not related to the Executive's employment with the Company;

			

 

	 	
			(v)

				
			the Executive's conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent) or a crime that constitutes a misdemeanor involving moral turpitude;

			

 

	 	
			(vi)

				
			the Executive's willful unauthorized disclosure of Confidential Information (as defined below);

			

 

	 	
			(vii)

				
			the Executive's material breach of any material obligation under this Agreement or any other written agreement between the Executive and the Company; or

			

 

	 	
			(viii)

				
			any material failure by the Executive to comply with the Company's written policies or rules, as they may be in effect from time to time during the Employment Term.

			

 

7

 

 

Except for acts falling within the ambit of subsections 5.1(b)(iv) and (v), the Executive shall have thirty (30) days from the delivery of written notice by the Company within which to cure any acts constituting Cause; provided however, that, if the Company reasonably expects irreparable injury from a delay of thirty (30) days, the Company may give the Executive notice of such shorter period within which to cure as is reasonable under the circumstances. The Company may place the Executive on paid leave for up to 60 days while it is determining whether there is a basis to terminate the Executive's employment for Cause. This will not constitute Good Reason.

 

(c)     For purposes of this Agreement, "Good Reason" shall mean the occurrence of any of the following, in each case during the Employment Term without the Executive's written consent:

 

	 	
			(i)

				
			a material reduction in the Executive's Base Salary other than a general reduction in Base Salary that affects all similarly situated executives in substantially the same proportions;

			

 

	 	
			(ii)

				
			a relocation of the Executive's principal place of employment by more than 50 miles;

			

 

	 	
			(iii)

				
			any material breach by the Company of any material provision of this Agreement or any material provision of any other agreement between the Executive and the Company;

			

 

	 	
			(iv)

				
			the Company's failure to obtain an agreement from any successor to the Company to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no succession had taken place, except where such assumption occurs by operation of law;

			

 

	 	
			(v)

				
			a material, adverse change in the Executive's title, authority, duties or responsibilities (other than temporarily while the Executive is physically or mentally incapacitated or as required by applicable law) taking into account the Company's size, status as a public company and capitalization as of the date of this Agreement; or

			

 

	 	
			(vi)

				
			a material adverse change in the reporting structure applicable to the Executive.

			

 

The Executive cannot terminate his employment for Good Reason unless he has provided written notice to the Company of the existence of the circumstances providing grounds for termination for Good Reason within 30 days of the initial existence of such grounds and the Company has had at least 30 days from the date on which such notice is provided to cure such circumstances. If the Executive does not terminate his employment for Good Reason within 60 days after the first occurrence of the applicable grounds, then the Executive will be deemed to have waived his right to terminate for Good Reason with respect to such grounds.

 

8

 

 

Notwithstanding the foregoing, in the event that a Change in Control (as defined below) occurs during the Employment Term, the Executive may terminate his employment for any reason during the 60-day period following the Change in Control and such termination shall be deemed to be for Good Reason.

 

5.2     Non-renewal by the Company, Without Cause or for Good Reason. The Employment Term and the Executive's employment hereunder may be terminated by the Executive for Good Reason or by the Company without Cause or on account of the Company's failure to renew the Agreement in accordance with Section 1. In the event of such termination, the Executive shall be entitled to receive the Accrued Amounts and, subject to the Executive's compliance with Section 6, Section 7, Section 8 and Section 9 of this Agreement and his execution of a release of claims in favor of the Company, its affiliates and their respective officers and directors in a form provided by the Company (the "Release") and such Release becoming effective within 30 days following the Termination Date (such 30-day period, the "Release Execution Period"), the following additional payments: 

 

(a)      severance payment equal to the Executive’s Base Salary for the year in which the Termination Date occurs (the “Severance Payments”). The Severance Payments shall be paid in equal installments consistent with the Company's normal payroll practices, but no less frequently than monthly, and shall begin within 30 days following the Termination Date;

 

(b)     If the Executive timely and properly elects health continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), the Company shall reimburse the Executive for the monthly COBRA premium paid by the Executive for himself and his dependents. Such reimbursement shall be paid to the Executive on the 10th of the month immediately following the month in which the Executive pays the premium payment. The Executive shall be eligible to receive such reimbursement until the earliest of: (i) the eighteen-month anniversary of the Termination Date; (ii) the date the Executive is no longer eligible to receive COBRA continuation coverage; and (iii) the date on which the Executive receives substantially similar coverage from another employer or other source. 

 

5.3     Death or Disability.  

 

(a)     The Executive's employment hereunder shall terminate automatically upon the Executive's death during the Employment Term, and the Company may terminate the Executive's employment on account of the Executive's Disability.

 

9

 

 

(b)     If the Executive's employment is terminated during the Employment Term on account of the Executive's death or Disability, the Executive (or the Executive's estate and/or beneficiaries, as the case may be) shall be entitled to receive the Accrued Amounts and the Severance Payments; and

 

(c)     For purposes of this Agreement, Disability shall mean the Executive's inability, due to physical or mental incapacity, to substantially perform his duties and responsibilities under this Agreement for one hundred eighty (180) days out of any three hundred sixty-five (365) day period, after taking into consideration any reasonable accommodation that may be required by the Americans with Disabilities Act and/or the Illinois Human Rights Act. Any question as to the existence of the Executive's Disability as to which the Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Executive and the Company. If the Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Executive shall be final and conclusive for all purposes of this Agreement.

 

5.4     Change in Control Termination.  

 

(a)     Notwithstanding any other provision contained herein, if the Executive's employment hereunder is terminated by the Executive for Good Reason or by the Company on account of its failure to renew the Agreement in accordance with Section 1 or without Cause (other than on account of the Executive's death or Disability), in each case within twelve (12) months following a Change in Control, the Executive shall be entitled to receive the Accrued Amounts and, subject to the Executive's compliance with Section 6, Section 7, Section 8 and Section 9 of this Agreement and his execution of a Release which becomes effective within the Release Execution Period, severance payments equal to the Executive’s Base salary for the year in which the Termination Date occurs (or if greater, the year immediately preceding the year in which the Change in Control occurs). Such severance payments shall be paid in a single lump sum within 60 days following the Termination Date;

 

(b)     If the Executive timely and properly elects health continuation coverage under COBRA, the Company shall reimburse the Executive for the monthly COBRA premium paid by the Executive for himself and his dependents. Such reimbursement shall be paid to the Executive on the 10th of the month immediately following the month in which the Executive pays the premium payment. The Executive shall be eligible to receive such reimbursement until the earliest of: (i) the eighteen-month anniversary of the Termination Date; (ii) the date the Executive is no longer eligible to receive COBRA continuation coverage; and (iii) the date on which the Executive receives substantially similar coverage from another employer or other source.

 

10

 

 

(c)     For purposes of this Agreement, "Change in Control" shall mean the occurrence of any of the following after the Effective Date:

 

	 	
			(i)

				
			one person (or more than one person acting as a group) acquires ownership of stock of the Company that, together with the stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of such corporation; provided that, a Change in Control shall not occur if any person (or more than one person acting as a group) owns more than 35% of the total fair market value or total voting power of the Company's stock and acquires additional stock;

			

 

	 	
			(ii)

				
			one person (or more than one person acting as a group) acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition) ownership of the Company's stock possessing 35% or more of the total voting power of the stock of such corporation; provided that, a Change in Control shall not occur if any person (or more than one person acting as a group) owns more than 35% of the total fair market value or total voting power of the Company's stock and acquires additional stock;

			

 

	 	
			(iii)

				
			a majority of the members of the Board are replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the Board before the date of appointment or election; or

			

 

	 	
			(iv)

				
			the sale of all or substantially all of the Company's assets, or a merger or consolidation in which the Company is a party.

			

 

Notwithstanding the foregoing, a Change in Control shall not occur unless such transaction constitutes a change in the ownership of the Company, a change in effective control of the Company, or a change in the ownership of a substantial portion of the Company's assets under Section 409A.

 

5.5     Notice of Termination. Any termination of the Executive's employment hereunder by the Company or by the Executive during the Employment Term (other than termination pursuant to Section 5.3(a) on account of the Executive's death) shall be communicated by written notice of termination ("Notice of Termination") to the other party hereto in accordance with Section 23. The Notice of Termination shall specify: 

 

(a)     The termination provision of this Agreement relied upon;

 

(b)     To the extent applicable, the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated; and

 

11

 

 

(c)     The applicable Termination Date.

 

5.6     Termination Date. The Executive's "Termination Date" shall be: 

 

(a)     If the Executive's employment hereunder terminates on account of the Executive's death, the date of the Executive's death;

 

(b)     If the Executive's employment hereunder is terminated on account of the Executive's Disability, the date that it is determined that the Executive has a Disability;

 

(c)     If the Company terminates the Executive's employment hereunder for Cause, the date the Notice of Termination is delivered to the Executive, but in no event shall the Notice of Termination be delivered prior to the expiration of any applicable cure period set forth in Section 5.1(b) above;

 

(d)     If the Company terminates the Executive's employment hereunder without Cause, the effective date of termination specified in the Notice of Termination, which shall be no less than 30 days following the date on which the Notice of Termination is delivered;

 

(e)     If the Executive terminates his employment hereunder with or without Good Reason, the effective date of termination specified in the Executive's Notice of Termination, which shall be no less than 30 days following the date on which the Notice of Termination is delivered; and

 

(f)     If the Executive's employment hereunder terminates because either party provides notice of non-renewal pursuant to Section 1, the Renewal Date immediately following the date on which the applicable party delivers notice of non-renewal. 

 

Notwithstanding anything contained herein, the Termination Date shall not occur until the date on which the Executive incurs a "separation from service" within the meaning of Section 409A.

 

5.7     Resignation of All Other Positions. Upon termination of the Executive's employment hereunder for any reason, the Executive shall be deemed to have resigned from all positions that the Executive holds as an officer or member of the Board (or a committee thereof) of the Company or any of its affiliates.

 

6.     Cooperation. The parties agree that certain matters in which the Executive will be involved during the Employment Term may necessitate the Executive's cooperation in the future. Accordingly, following the termination of the Executive's employment for any reason, to the extent reasonably requested by the Board, the Executive shall cooperate with the Company in connection with matters arising out of the Executive's service to the Company; provided that, the Company shall make reasonable efforts to minimize disruption of the Executive's other activities. The Company shall reimburse the Executive for reasonable expenses incurred in connection with such cooperation and, to the extent that the Executive is required to spend substantial time on such matters, the Company shall compensate the Executive at an hourly rate.

 

12

 

 

7.     Confidential Information. The Executive understands and acknowledges that during the Employment Term, he will have access to and learn about Confidential Information, as defined below.

 

7.1     Confidential Information Defined.  

 

(a)     Definition.

 

For purposes of this Agreement, "Confidential Information" includes, but is not limited to, all information not generally known to the public, in spoken, printed, electronic or any other form or medium, relating directly or indirectly to: business processes, practices, methods, policies, plans, publications, documents, research, operations, services, strategies, techniques, agreements, contracts, terms of agreements, transactions, potential transactions, negotiations, pending negotiations, know-how, trade secrets, computer programs, computer software, applications, operating systems, software design, web design, work-in-process, databases, manuals, records, articles, systems, material, sources of material, supplier information, vendor information, financial information, results, accounting information, accounting records, legal information, marketing information, advertising information, pricing information, credit information, design information, payroll information, staffing information, personnel information, employee lists, supplier lists, vendor lists, developments, reports, internal controls, security procedures, graphics, drawings, sketches, market studies, sales information, revenue, costs, formulae, notes, communications, algorithms, product plans, designs, styles, models, ideas, audiovisual programs, inventions, unpublished patent applications, original works of authorship, discoveries, experimental processes, experimental results, specifications, customer information, customer lists, client information, client lists, manufacturing information, factory lists, distributor lists, and buyer lists of the Company or its businesses or any existing or prospective customer, supplier, investor or other associated third party, or of any other person or entity that has entrusted information to the Company in confidence. 

 

The Executive understands that the above list is not exhaustive, and that Confidential Information also includes other information that is marked or otherwise identified as confidential or proprietary, or that would otherwise appear to a reasonable person to be confidential or proprietary in the context and circumstances in which the information is known or used.

 

The Executive understands and agrees that Confidential Information includes information developed by him in the course of his employment by the Company as if the Company furnished the same Confidential Information to the Executive in the first instance. Confidential Information shall not include information that is generally available to and known by the public at the time of disclosure to the Executive; provided that, such disclosure is through no direct or indirect fault of the Executive or person(s) acting on the Executive's behalf. Furthermore, Confidential Information shall not be deemed to include information that previously was or hereafter is lawfully and in good faith obtained by Executive from an independent third party without obligations of confidentiality.

 

13

 

 

(b)     Company Creation and Use of Confidential Information.

 

The Executive understands and acknowledges that the Company has invested, and continues to invest, substantial time, money and specialized knowledge into developing its resources, creating a customer base, generating customer and potential customer lists, training its employees, and improving its offerings in the fields of foil and latex balloons, vacuum sealing systems, commercial films and home organization and container products (“Company Fields”). The Executive understands and acknowledges that as a result of these efforts, the Company has created, and continues to use and create Confidential Information. This Confidential Information provides the Company with a competitive advantage over others in the marketplace.

 

(c)     Disclosure and Use Restrictions.

 

The Executive agrees and covenants: (i) to treat all Confidential Information as strictly confidential; (ii) not to directly or indirectly disclose, publish, communicate or make available Confidential Information, or allow it to be disclosed, published, communicated or made available, in whole or part, to any entity or person whatsoever (including other employees of the Company) not having a need to know and authority to know and use the Confidential Information in connection with the business of the Company and, in any event, not to anyone outside of the direct employ of the Company except as required in the performance of the Executive's authorized employment duties to the Company or with the prior consent of the Board acting on behalf of the Company in each instance (and then, such disclosure shall be made only within the limits and to the extent of such duties or consent); and (iii) not to access or use any Confidential Information, and not to copy any documents, records, files, media or other resources containing any Confidential Information, or remove any such documents, records, files, media or other resources from the premises or control of the Company, except as required in the performance of the Executive's authorized employment duties to the Company or with the prior consent of the Board acting on behalf of the Company in each instance (and then, such disclosure shall be made only within the limits and to the extent of such duties or consent). Nothing herein shall be construed to prevent disclosure of Confidential Information as may be required by applicable law or regulation, or pursuant to the valid order of a court of competent jurisdiction or an authorized government agency, provided that the disclosure does not exceed the extent of disclosure required by such law, regulation or order. The Executive shall promptly provide written notice of any such order to the Board.

 

14

 

 

The Executive understands and acknowledges that his obligations under this Agreement with regard to any particular Confidential Information shall commence immediately upon the Executive first having access to such Confidential Information (whether before or after he begins employment by the Company) and shall continue during and after his employment by the Company until such time as such Confidential Information has become public knowledge other than as a result of the Executive's breach of this Agreement or breach by those acting in concert with the Executive or on the Executive's behalf.

 

8.     Restrictive Covenants.

 

8.1     Acknowledgement. The Executive understands that the nature of the Executive's position gives his access to and knowledge of Confidential Information and places him in a position of trust and confidence with the Company. The Executive understands and acknowledges that the services he provides to the Company are unique, special and extraordinary.

 

The Executive further understands and acknowledges that the Company's ability to reserve these for the exclusive knowledge and use of the Company is of great competitive importance and commercial value to the Company, and that improper use or disclosure by the Executive is likely to result in unfair or unlawful competitive activity.

 

8.2     Non-competition. Because of the Company's legitimate business interest as described herein and the good and valuable consideration offered to the Executive, during the Employment Term and for the period of 24 months, to run consecutively, beginning on the last day of the Executive's employment with the Company (the “Restricted Period”), the Executive agrees and covenants not to engage in Prohibited Activity within the United States with respect to Company Fields.

 

For purposes of this Section 8, "Prohibited Activity" is activity in which the Executive contributes his knowledge, directly or indirectly, in whole or in part, as an employee, employer, owner, operator, manager, advisor, consultant, agent, employee, partner, director, stockholder, officer, volunteer, intern or any other similar capacity to an entity engaged in the business of the Company Fields. Prohibited Activity also includes activity that may require or inevitably requires disclosure of trade secrets, proprietary information or Confidential Information.

 

Nothing herein shall prohibit the Executive from purchasing or owning less than five percent (5%) of the publicly traded securities of any corporation engaged in the business of the Company Fields, provided that such ownership represents a passive investment and that the Executive is not a controlling person of, or a member of a group that controls, such corporation.

 

15

 

 

This Section 8 does not, in any way, restrict or impede the Executive from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation or order. The Executive shall promptly provide written notice of any such order to the Board.

 

8.3     Non-solicitation of Employees. The Executive agrees and covenants not to directly or indirectly solicit, hire, recruit, attempt to hire or recruit, or induce the termination of employment of any employee of the Company during the Restricted Period. 

 

8.4     Non-solicitation of Customers. The Executive understands and acknowledges that because of the Executive's experience with and relationship to the Company, he will have access to and learn about much or all of the Company's customer information. "Customer Information" includes, but is not limited to, names, phone numbers, addresses, e-mail addresses, order history, order preferences, chain of command, pricing information and other information identifying facts and circumstances specific to the customer and relevant to sales. 

 

The Executive understands and acknowledges that loss of its customer relationships and/or goodwill will cause the Company significant and irreparable harm.

 

The Executive therefore agrees and covenants, during the Restricted Period, not to directly or indirectly solicit, contact (including but not limited to e-mail, regular mail, express mail, telephone, fax, and instant message), attempt to contact or meet with the Company's current, former or prospective customers for purposes of offering or accepting goods or services similar to or competitive with the Company Fields.

 

9.     Non-Disparagement. The Executive agrees and covenants that he will not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments or statements concerning the Company or its businesses, products, services, officers, directors, investors or affiliate companies. 

 

This Section 9 does not, in any way, restrict or impede the Executive from giving truthful testimony in court or administrative proceedings or exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation or order. The Executive shall promptly provide written notice of any such order to the Board.

 

16

 

 

10.     Acknowledgement. The Executive acknowledges and agrees that the services to be rendered by him to the Company are of a special and unique character; that the Executive will obtain knowledge and skill relevant to the Company Fields, methods of doing business and marketing strategies by virtue of the Executive's employment; and that the restrictive covenants and other terms and conditions of this Agreement are reasonable and reasonably necessary to protect the legitimate business interest of the Company. 

 

The Executive further acknowledges that the amount of his compensation reflects, in part, his obligations and the Company's rights under Section 7, Section 8 and Section 9 of this Agreement; that he has no expectation of any additional compensation, royalties or other payment of any kind not otherwise referenced herein in connection herewith; that he will not be subject to undue hardship by reason of his full compliance with the terms and conditions of Section 7, Section 8 and Section 9 of this Agreement or the Company's enforcement thereof.

 

11.     Remedies. In the event of a breach or threatened breach by the Executive of Section 7, Section 8 or Section 9 of this Agreement, the Executive hereby consents and agrees that the Company shall be entitled to seek, in addition to other available remedies, a temporary or permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned equitable relief shall be in addition to, not in lieu of, legal remedies, monetary damages or other available forms of relief.

 

12.     Proprietary Rights.

 

12.1     Work Product. The Executive acknowledges and agrees that all right, title and interest in and to all writings, works of authorship, technology, inventions, discoveries, processes, techniques, methods, ideas, concepts, research, proposals, materials and all other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, amended, conceived or reduced to practice by the Executive individually or jointly with others during the period of his employment by the Company and relate in any way to the business or contemplated business, products, activities, research or development of the Company or result from any work performed by the Executive for the Company (in each case, regardless of when or where prepared or whose equipment or other resources is used in preparing the same) all rights and claims related to the foregoing, and all printed, physical and electronic copies, and other tangible embodiments thereof (collectively, "Work Product"), as well as any and all rights in and to US and foreign (a) patents, patent disclosures and inventions (whether patentable or not), (b) trademarks, service marks, trade dress, trade names, logos, corporate names and domain names, and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing, (c) copyrights and copyrightable works (including computer programs), [mask works,] and rights in data and databases, (d) trade secrets, know-how and other confidential information, and (e) all other intellectual property rights, in each case whether registered or unregistered and including all registrations and applications for, and renewals and extensions of, such rights, all improvements thereto and all similar or equivalent rights or forms of protection in any part of the world (collectively, "Intellectual Property Rights"), shall be the sole and exclusive property of the Company.

 

17

 

 

For purposes of this Agreement, Work Product includes, but is not limited to, Company information, including plans, publications, research, strategies, techniques, agreements, documents, contracts, terms of agreements, negotiations, know-how, computer programs, computer applications, software design, web design, work in process, databases, manuals, results, developments, reports, graphics, drawings, sketches, market studies, formulae, notes, communications, algorithms, product plans, product designs, styles, models, audiovisual programs, inventions, unpublished patent applications, original works of authorship, discoveries, experimental processes, experimental results, specifications, customer information, client information, customer lists, client lists, manufacturing information, marketing information, advertising information, and sales information.

 

12.2     Work Made for Hire; Assignment. The Executive acknowledges that, by reason of being employed by the Company at the relevant times, to the extent permitted by law, all of the Work Product consisting of copyrightable subject matter is "work made for hire" as defined in 17 U.S.C. § 101 and such copyrights are therefore owned by the Company. To the extent that the foregoing does not apply, the Executive hereby irrevocably assigns to the Company, for no additional consideration, the Executive's entire right, title and interest in and to all Work Product and Intellectual Property Rights therein, including the right to sue, counterclaim and recover for all past, present and future infringement, misappropriation or dilution thereof, and all rights corresponding thereto throughout the world. Nothing contained in this Agreement shall be construed to reduce or limit the Company's rights, title or interest in any Work Product or Intellectual Property Rights so as to be less in any respect than that the Company would have had in the absence of this Agreement. 

 

12.3     Further Assurances; Power of Attorney. During and after his employment, the Executive agrees to reasonably cooperate with the Company to (a) apply for, obtain, perfect and transfer to the Company the Work Product as well as any and all Intellectual Property Rights in the Work Product in any jurisdiction in the world; and (b) maintain, protect and enforce the same, including, without limitation, giving testimony and executing and delivering to the Company any and all applications, oaths, declarations, affidavits, waivers, assignments and other documents and instruments as shall be requested by the Company. The Executive hereby irrevocably grants the Company power of attorney to execute and deliver any such documents on the Executive's behalf in his name and to do all other lawfully permitted acts to transfer the Work Product to the Company and further the transfer, prosecution, issuance and maintenance of all Intellectual Property Rights therein, to the full extent permitted by law, if the Executive does not promptly cooperate with the Company's request (without limiting the rights the Company shall have in such circumstances by operation of law). The power of attorney is coupled with an interest and shall not be effected by the Executive's subsequent incapacity.

 

18

 

 

12.4     No License. The Executive understands that this Agreement does not, and shall not be construed to grant the Executive any license or right of any nature with respect to any Work Product or Intellectual Property Rights or any Confidential Information, materials, software or other tools made available to him by the Company, other than the right to use such information during the Term for the Company’s business purposes.

 

13.     Security.

 

13.1     Security and Access. The Executive agrees and covenants (a) to comply with all Company security policies and procedures as in force from time to time including without limitation those regarding computer equipment, telephone systems, voicemail systems, facilities access, monitoring, key cards, access codes, Company intranet, internet, social media and instant messaging systems, computer systems, e-mail systems, computer networks, document storage systems, software, data security, encryption, firewalls, passwords and any and all other Company facilities, IT resources and communication technologies ("Facilities and Information Technology Resources"); (b) not to access or use any Facilities and Information Technology Resources except as authorized by the Company; and (iii) not to access or use any Facilities and Information Technology Resources in any manner after the termination of the Executive's employment by the Company, whether termination is voluntary or involuntary. The Executive agrees to notify the Company promptly in the event he learns of any violation of the foregoing by others, or of any other misappropriation or unauthorized access, use, reproduction or reverse engineering of, or tampering with any Facilities and Information Technology Resources or other Company property or materials by others. 

 

13.2     Exit Obligations. Upon (a) voluntary or involuntary termination of the Executive's employment or (b) the Company's request at any time during the Executive's employment, the Executive shall (i) provide or return to the Company any and all Company property, including keys, key cards, access cards, identification cards, security devices, employer credit cards, network access devices, computers, cell phones, smartphones, PDAs, pagers, fax machines, equipment, speakers, webcams, manuals, reports, files, books, compilations, work product, e-mail messages, recordings, tapes, disks, thumb drives or other removable information storage devices, hard drives, negatives and data and all Company documents and materials belonging to the Company and stored in any fashion, including but not limited to those that constitute or contain any Confidential Information or Work Product, that are in the possession or control of the Executive, whether they were provided to the Executive by the Company or any of its business associates or created by the Executive in connection with his employment by the Company; and (ii) delete or destroy all copies of any such documents and materials not returned to the Company that remain in the Executive's possession or control, including those stored on any non-Company devices, networks, storage locations and media in the Executive's possession or control.

 

19

 

 

14.     Publicity. The Executive hereby irrevocably consents to any and all uses and displays, by the Company and its agents, representatives and licensees, of the Executive's name, voice, likeness, image, appearance and biographical information in, on or in connection with any pictures, photographs, audio and video recordings, digital images, websites, television programs and advertising, other advertising and publicity, sales and marketing brochures, books, magazines, other publications, CDs, DVDs, tapes and all other printed and electronic forms and media throughout the world, at any time during the period of his employment by the Company and any period in which he is receiving Severance Payments, for all legitimate commercial and business purposes of the Company ("Permitted Uses") without further consent from or royalty, payment or other compensation to the Executive. The Executive hereby forever waives and releases the Company and its directors, officers, employees and agents from any and all claims, actions, damages, losses, costs, expenses and liability of any kind, arising under any legal or equitable theory whatsoever at any time during or after the period of his employment by the Company, arising directly or indirectly from the Company's and its agents', representatives' and licensees' exercise of their rights in connection with any Permitted Uses.

 

15.     Governing Law: Jurisdiction and Venue. This Agreement, for all purposes, shall be construed in accordance with the laws of Illinois without regard to conflicts of law principles. Any action or proceeding by either of the parties to enforce this Agreement shall be brought only in a state or federal court located in the state of Illinois, counties of Cook or Lake. The parties hereby irrevocably submit to the exclusive jurisdiction of such courts and waive the defense of inconvenient forum to the maintenance of any such action or proceeding in such venue.

 

16.     Entire Agreement. Unless specifically provided herein, this Agreement contains all of the understandings and representations between the Executive and the Company pertaining to the subject matter hereof and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter. The parties mutually agree that the Agreement can be specifically enforced in court and can be cited as evidence in legal proceedings alleging breach of the Agreement. 

 

17.     Modification and Waiver. No provision of this Agreement may be amended or modified unless such amendment or modification is agreed to in writing and signed by the Executive and by the Company. No waiver by either of the parties of any breach by the other party hereto of any condition or provision of this Agreement to be performed by the other party hereto shall be deemed a waiver of any similar or dissimilar provision or condition at the same or any prior or subsequent time, nor shall the failure of or delay by either of the parties in exercising any right, power or privilege hereunder operate as a waiver thereof to preclude any other or further exercise thereof or the exercise of any other such right, power or privilege.

 

20

 

 

18.     Severability. Should any provision of this Agreement be held by a court of competent jurisdiction to be enforceable only if modified, or if any portion of this Agreement shall be held as unenforceable and thus stricken, such holding shall not affect the validity of the remainder of this Agreement, the balance of which shall continue to be binding upon the parties with any such modification to become a part hereof and treated as though originally set forth in this Agreement. 

 

The parties further agree that any such court is expressly authorized to modify any such unenforceable provision of this Agreement in lieu of severing such unenforceable provision from this Agreement in its entirety, whether by rewriting the offending provision, deleting any or all of the offending provision, adding additional language to this Agreement or by making such other modifications as it deems warranted to carry out the intent and agreement of the parties as embodied herein to the maximum extent permitted by law.

 

The parties expressly agree that this Agreement as so modified by the court shall be binding upon and enforceable against each of them. In any event, should one or more of the provisions of this Agreement be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions hereof, and if such provision or provisions are not modified as provided above, this Agreement shall be construed as if such invalid, illegal or unenforceable provisions had not been set forth herein.

 

19.     Captions. Captions and headings of the sections and paragraphs of this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the caption or heading of any section or paragraph.

 

20.     Counterparts. This Agreement may be executed in separate counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

 

21

 

 

21.     Section 409A.

 

21.1     General Compliance. This Agreement is intended to comply with Section 409A or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be exempt from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. To the extent that a payment under this Agreement to be made upon a termination of employment constitutes “nonqualified deferred compensation” within the meaning of Section 409A, such payment shall only be made upon a "separation from service" under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.

 

21.2     Specified Employees. Notwithstanding any other provision of this Agreement, if any payment or benefit provided to the Executive in connection with his termination of employment is determined to constitute "nonqualified deferred compensation" within the meaning of Section 409A and the Executive is determined to be a "specified employee" as defined in Section 409A(a)(2)(b)(i), then such payment or benefit shall not be paid until the first payroll date to occur following the six-month anniversary of the Termination Date or, if earlier, on the Executive's death (the "Specified Employee Payment Date") . The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date shall be paid to the Executive in a lump sum on the Specified Employee Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule.

 

21.3     Reimbursements. To the extent required by Section 409A, each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following:

 

(a)     the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year;

 

(b)     any reimbursement of an eligible expense shall be paid to the Executive on or before the last day of the calendar year following the calendar year in which the expense was incurred; and

 

(c)     any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit.

 

22.      Successors and Assigns. This Agreement is personal to the Executive and shall not be assigned by the Executive. Any purported assignment by the Executive shall be null and void from the initial date of the purported assignment. The Company may assign this Agreement to any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company. This Agreement shall inure to the benefit of the Company and permitted successors and assigns.

 

22

 

 

23.     Notices. Notices and all other communications provided for in this Agreement shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, or by overnight carrier to the parties at the addresses set forth below (or such other addresses as specified by the parties by like notice):

 

If to the Company:

 

CTI Industries Corporation

22160 N. Pepper Road

Lake Barrington, Illinois 60010

Attn: Chief Executive Officer

If to the Executive:

 

To the Executive at Executive’s address on the records of the Company.

 

24.     Representations of the Executive. The Executive represents and warrants to the Company that:

 

24.1     The Executive's acceptance of employment with the Company and the performance of his duties hereunder will not conflict with or result in a violation of, a breach of, or a default under any contract, agreement or understanding to which he is a party or is otherwise bound.

 

24.2     The Executive's acceptance of employment with the Company and the performance of his duties hereunder will not violate any non-solicitation, non-competition or other similar covenant or agreement of a prior employer.

 

25.     Withholding. The Company shall have the right to withhold from any amount payable hereunder any Federal, state and local taxes in order for the Company to satisfy any withholding tax obligation it may have under any applicable law or regulation.

 

26.     Survival. Upon the expiration or other termination of this Agreement, the respective rights and obligations of the parties hereto shall survive such expiration or other termination to the extent necessary to carry out the intentions of the parties under this Agreement.

 

27.     Acknowledgement of Full Understanding. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS AGREEMENT. 

 

23

 

 

[SIGNATURE PAGE FOLLOWS]

 

24

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	 	
			CTI INDUSTRIES CORPORATION

			
	 	 
	 	
			By: /s/ Stephen M. Merrick

			 

			Name: Stephen M. Merrick

			Title: Chief Executive Officer

			

 

	 	
			EXECUTIVE

			
	 	 
	 	
			Signature: /s/ Jeffrey S. Hyland

			 

			Print Name: Jeffrey S. Hyland

			

 

 

25Exhibit 10.11

 

Sito mobile,
LTD. 2017 EQUITY INCENTIVE PLAN

 

Section
1.Successor To and Continuation of Prior Plan.

 

(a) Sito
Mobile, Ltd. 2017 Equity Incentive Plan (the “Plan”) is the successor to and continuation of the 2008 Stock
Option Plan (the “Prior Plan”). From and after the Effective Date, no additional awards will be granted under
the Prior Plan. All awards granted on or after the Effective Date will be granted under this Plan. All awards granted under the
Prior Plan will remain subject to the terms of the Prior Plan.

 

(b) All
shares that are available for issuance under the Prior Plan as of the Effective Date, and all shares that become available for
issuance under the Prior Plan following the Effective Date in accordance with the terms of the Prior Plan (collectively, the “Additional
Shares”) may be issued to Participants pursuant to the terms of this Plan. The Plan Limit described in Section 4(a) herein
shall be increased by such number of Additional Shares.

 

Section
2.Purpose; Definitions. The purposes of the Plan are to: (a) enable SITO Mobile, Ltd. (the “Company”)
and its affiliated companies to recruit and retain highly qualified employees, directors and consultants; (b) provide those employees,
directors and consultants with an incentive for productivity; and (c) provide those employees, directors and consultants with an
opportunity to share in the growth and value of the Company.

 

For purposes of the Plan, the following terms
will have the meanings defined below, unless the context clearly requires a different meaning:

 

(a) “Affiliate”
means, with respect to a Person, a Person that directly or indirectly controls, is controlled by, or is under common control with
such Person.

 

(b) “Applicable
Law” means the legal requirements relating to the administration of and issuance of securities under stock incentive
plans, including, without limitation, the requirements of state corporations law, federal, state and foreign securities law, federal,
state and foreign tax law, federal and state banking law, and the requirements of any stock exchange or quotation system upon which
the Shares may then be listed or quoted.

 

(c) “Award”
means an award of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Cash Awards or Performance Awards
made under this Plan.

 

(d) “Award
Agreement” means, with respect to any particular Award, the written document that sets forth the terms of that particular
Award.

 

(e) “Board”
means the Board of Directors of the Company, as constituted from time to time.

 

(f) “Cash
Award” means an award that is granted under Section 11.

  

     

     

    

 

(g) “Cause”
means (i) Participant’s refusal to comply with any lawful directive or policy of the Company which refusal is not cured by
the Participant within ten (10) days of such written notice from the Company; (ii) the Company’s determination that Participant
has committed any act of dishonesty, embezzlement, unauthorized use or disclosure of confidential information or other intellectual
property or trade secrets, common law fraud or other fraud against the Company or any Subsidiary or Affiliate; (iii) a material
breach by the Participant of any written agreement with or any fiduciary duty owed to any Company or any Subsidiary or Affiliate;
(iv) Participant’s conviction (or the entry of a plea of a nolo contendere or equivalent plea) in a court of competent jurisdiction
of a felony or any misdemeanor involving material dishonesty or moral turpitude; or (v) Participant’s habitual or repeated
misuse of, or habitual or repeated performance of Participant’s duties under the influence of, alcohol, illegally obtained
prescription controlled substances or non-prescription controlled substances. Notwithstanding the foregoing, if a Participant and
the Company (or any of its Affiliates) have entered into an employment agreement, consulting agreement or other similar agreement
that specifically defines “cause,” then with respect to such Participant, “Cause” shall have the meaning
defined in such other agreement.

 

(h) “Change
in Control” shall mean the occurrence of any of the following events: (i) any “person” (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total power to vote for
the election of directors of the Company; (ii) during any twelve month period, individuals who at the beginning of such period
constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with
the Company to effect a transaction described in Section 2(h)(i), Section 2(h)(iii), Section 2(h)(iv) or Section
2(h)(v) hereof) whose election by the Board or nomination for election by the Company’s stockholders was approved by
a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period of
whose election or nomination for election was previously approved, cease for any reason to constitute a majority thereof; (iii)
the merger or consolidation of the Company with another corporation where the stockholders of the Company, immediately prior to
the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling such stockholders
to 50% or more of all votes to which all stockholders of the surviving corporation would be entitled in the election of directors
(without consideration of the rights of any class of stock to elect directors by a separate class vote); (iv) the sale or other
disposition of all or substantially all of the assets of the Company; (v) a liquidation or dissolution of the Company or (vi) acceptance
by shareholders of the Company of shares in a share exchange if the shareholders of the Company immediately before such share exchange
do not or will not own directly or indirectly immediately following such share exchange more than fifty percent (50%) of the combined
voting power of the outstanding voting securities of the entity resulting from or surviving such share exchange in substantially
the same proportion as their ownership of the voting securities outstanding immediately before such share exchange.

 

Notwithstanding anything in the Plan or an
Award Agreement to the contrary, if an Award is subject to Section 409A of the Code, no event that, but for the application of
this paragraph, would be a Change in Control as defined in the Plan or the Award Agreement, as applicable, shall be a Change in
Control unless such event is also a “change in control event” as defined in Section 409A of the Code.

  

    	 	-2-	 

     

    

 

(i) “Code”
means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.

 

(j) “Committee”
means the committee designated by the Board to administer the Plan under Section 3. To the extent required under Applicable
Law, the Committee shall have at least two members and each member of the Committee shall be a Non-Employee Director and an Outside
Director.

 

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

 

(l) “Disability”
means a condition rendering a Participant Disabled.

 

(m) “Disabled”
will have the same meaning as set forth in Section 22(e)(3) of the Code.

 

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

 

(o) “Fair
Market Value” means, as of any date, the value of a Share determined as follows: (i) if the Shares are listed on
any established stock exchange or a national market system, including, without limitation, the Nasdaq Capital Market, the Fair
Market Value of a Share will be the closing sales price for such stock as quoted on that system or exchange (or the system or exchange
with the greatest volume of trading in Shares) at the close of regular hours trading on the day of determination; (ii) if
the Shares are regularly quoted by recognized securities dealers but selling prices are not reported, the Fair Market Value of
a Share will be the mean between the high bid and low asked prices for Shares at the close of regular hours trading on the day
of determination; or (iii) if Shares are not traded as set forth above, the Fair Market Value will be determined in good faith
by the Committee taking into consideration such factors as the Committee considers appropriate, such determination by the Committee
to be final, conclusive and binding. Notwithstanding the foregoing, in connection with a Change in Control, Fair Market Value shall
be determined in good faith by the Committee, such determination by the Committee to be final conclusive and binding.

 

(p) “Incentive
Stock Option” means any Option intended to be an “Incentive Stock Option” within the meaning of Section 422
of the Code.

 

(q) “Non-Employee
Director” will have the meaning set forth in Rule 16b-3(b)(3)(i) promulgated by the Securities and Exchange Commission
under the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission.

 

(r) “Non-Qualified
Stock Option” means any Option that is not an Incentive Stock Option.

 

(s) “Option”
means any option to purchase Shares (including an option to purchase Restricted Stock, if the Committee so determines) granted
pursuant to Section 6 hereof.

 

(t) “Outside
Director” means a member of the Board who meets the definition of an “outside director” under Section 162(m)
of the Code.

  

    	 	-3-	 

     

    

 

(u) “Parent”
means, in respect of the Company, a “parent corporation” as defined in Section 424(e) of the Code.

 

(v) “Participant”
means an employee, consultant, Director, or other service provider of or to the Company or any of its respective Affiliates to
whom an Award is granted.

 

(w) “Performance
Award” means any Award that, pursuant to Section 12, is granted, vested and/or settled upon the achievement of
specified performance conditions.

 

(x) “Performance
Goal” means a goal that must be met by the end of a period specified by the Committee (but that is substantially uncertain
of being met before the grant of the Award) based upon: sales; net sales; return on sales; revenue, net revenue, product revenue
or system-wide revenue (including growth of such revenue measures); operating income (before or after taxes); pre- or after-tax
income or loss (before or after allocation of corporate overhead and bonus); earnings or loss per share; net income or loss (before
or after taxes); return on equity; total stockholder return; return on assets or net assets; appreciation in and/or maintenance
of the price of the Shares or any other publicly-traded securities of the Company; market share; gross profits; gross or net profit
margin; gross profit growth; net operating profit (before or after taxes); operating earnings; earnings or losses or net earnings
or losses (including earnings or losses before taxes, before interest and taxes, or before interest, taxes, depreciation and amortization);
economic value-added models or equivalent metrics; comparisons with various stock market indices; reductions in costs; cash flow
(including operating cash flow and free cash flow) or cash flow per share (before or after dividends); return on capital (including
return on total capital or return on invested capital); cash flow return on investment; cash flow return on capital; improvement
in or attainment of expense levels or working capital levels, including cash, inventory and accounts receivable; general and administrative
expense savings; inventory control; operating margin; gross margin; year-end cash; cash margin; debt reduction; stockholders equity;
operating efficiencies; cost reductions or savings; customer satisfaction; customer growth; productivity or productivity ratios;
regulatory achievements; strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property;
establishing relationships with commercial entities with respect to the marketing, distribution and sale of the Company’s
products; supply chain achievements (including establishing relationships with manufacturers or suppliers of component materials
and manufacturers of the Company’s products); co-development, co-marketing, profit sharing, joint venture or other similar
arrangements); financial ratios, including those measuring liquidity, activity, profitability or leverage; cost of capital or assets
under management; financing and other capital raising transactions (including sales of the Company’s equity or debt securities);
debt level year-end cash position; book value; competitive market metrics; timely completion of new product roll-outs; sales or
licenses of the Company’s assets; royalty income; implementation, completion or attainment of measurable objectives with
respect to research, development, manufacturing, commercialization, products or projects, production volume levels, acquisitions
and divestitures, succession and hiring projects, reorganization and other corporate transactions, expansions of specific business
operations and meeting divisional or project budgets; and recruiting and maintaining personnel. The Committee shall have discretion
to determine the specific targets with respect to each of these categories of Performance Goals and may apply them to the Company
as a whole or to any Subsidiary, division or other unit of the Company.

 

    	 	-4-	 

     

    

 

(y) “Person”
means an individual, partnership, corporation, limited liability company, trust, joint venture, unincorporated association, or
other entity or association.

 

(z)
“Restricted Stock” means Shares that are subject to restrictions pursuant to Section 9 hereof.

 

(aa)“Restricted Stock Unit”
means a right granted under and subject to restrictions pursuant to Section 10 hereof.

 

(bb)“Shares” means
shares of the Company’s common stock, subject to substitution or adjustment as provided in Section 4(c) hereof.

 

(cc)“Stock Appreciation Right”
means a right granted under and subject to Section 7 hereof.

 

(dd)“Subsidiary” means,
in respect of the Company, a subsidiary company as defined in Sections 424(f) and (g) of the Code.

 

Section
3.Administration. The Plan shall be administered by the Committee. Any action of the Committee in
administering the Plan shall be final, conclusive and binding on all persons, including the Company, its Subsidiaries, Affiliates,
their respective employees, the Participants, persons claiming rights from or through Participants and stockholders of the Company.

 

The Committee will have full authority to
grant Awards under this Plan and determine the terms of such Awards. Such authority will include the right to:

 

(a) select
the individuals to whom Awards are granted (consistent with the eligibility conditions set forth in Section 5);

 

(b) determine
the type of Award to be granted;

 

(c) determine
the number of Shares, if any, to be covered by each Award;

 

(d) establish
the terms and conditions of each Award;

 

(e) subject
to Section 12, establish the performance conditions relevant to any Award and certify whether such performance conditions
have been satisfied;

 

(f) approve
forms of agreements (including Award Agreements) for use under the Plan;

 

(g) determine
whether and under what circumstances an Option may be exercised without a payment of cash under Section 6(d);

 

(h) accelerate
the vesting or exercisability of an Award and to modify or amend each Award, subject to Section 13; and

  

    	 	-5-	 

     

    

 

(i) extend
the period of time for which an Option or Stock Appreciation Right is to remain exercisable following a Participant’s termination
of service to the Company from the limited period otherwise in effect for that Option or Stock Appreciation Right to such greater
period of time as the Committee deems appropriate, but in no event beyond the expiration of the term of the Option or Stock Appreciation
Right.

 

The Committee will have the authority to adopt,
alter and repeal such administrative rules, guidelines and practices governing the Plan as it, from time to time, deems advisable;
to establish the terms and form of each Award Agreement; to interpret the terms and provisions of the Plan and any Award issued
under the Plan (and any Award Agreement); and to otherwise supervise the administration of the Plan. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award Agreement in the manner and to the extent
it deems necessary to carry out the intent of the Plan.

 

The Committee, in its discretion, may refer
any matter arising hereunder to the Board or other committee designated by the Board, together with its report and recommendation,
unless such matter is required to be approved by a compensation committee comprised solely of independent directors under Applicable
Law, regulation or listing standards.

 

The Committee may delegate to one or more
officers of the Company the authority to grant Awards to Participants who are not subject to the requirements of Section 16 of
the Exchange Act or Section 162(m) of the Code and the rules and regulations thereunder, provided that the Committee shall have
fixed the total number of Shares subject to such delegation. Any such delegation shall be subject to the applicable corporate laws
of the State of Delaware. The Committee may revoke any such allocation or delegation at any time for any reason with or without
prior notice.

 

No Director will be liable for any good faith
determination, act or omission in connection with the Plan or any Award.

 

Section
4.Shares Subject to the Plan.

 

(a) Shares
Subject to the Plan. Subject to adjustment as provided in Section 4(c) of the Plan, the maximum number of Shares that
may be issued in respect of Awards under the Plan is 2,000,000 Shares (the “Plan Limit”), all of which Shares
may be issued in respect of Incentive Stock Options. Any shares issued hereunder may consist, in whole or in part, of authorized
and unissued shares or treasury shares. Any shares issued by the Company through the assumption or substitution of outstanding
grants in connection with the acquisition of another entity shall not reduce the maximum number of shares available for delivery
under the Plan.

 

(i) In
accordance with the requirements under Section 162(m) of the Code, the maximum number of Shares underlying Awards (including Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock Units and Performance Awards) that may be granted during a calendar
year to any individual Participant shall be fifty percent (50%) of the Plan Limit.

 

(ii) The
maximum total grant date fair value of Awards (as measured by the Company for financial accounting purposes) granted to any Participant
in his or her capacity as a Non-Employee Director in any single calendar year shall not exceed $250,000.

  

    	 	-6-	 

     

    

 

(b) Effect
of the Expiration or Termination of Awards. If and to the extent that an Option or Stock Appreciation Right expires, terminates
or is canceled or forfeited for any reason without having been exercised in full, the Shares associated with that Award will again
become available for grant under the Plan. Similarly, if and to the extent an Award of Restricted Stock or Restricted Stock Units
is canceled or forfeited for any reason, the Shares subject to that Award will again become available for grant under the Plan.
Shares withheld in settlement of a tax withholding obligation associated with an Award, or in satisfaction of the exercise price
payable upon exercise of an Option, will not become available for grant under the Plan.

 

(c) Other
Adjustment. In the event of any corporate event or transaction such as a merger, consolidation, reorganization, recapitalization,
stock split, reverse stock split, split up, spin-off, combination of shares, exchange of shares, stock dividend, dividend in kind,
or other like change in capital structure (other than ordinary cash dividends) to shareholders of the Company, or other similar
corporate event or transaction affecting the Shares, the Committee, to prevent dilution or enlargement of Participants’ rights
under the Plan, shall, in such manner as it may deem equitable, substitute or adjust, in its sole discretion, the number and kind
of shares that may be issued under the Plan or under any outstanding Awards, the number and kind of shares subject to outstanding
Awards, the exercise price, grant price or purchase price applicable to outstanding Awards, and/or any other affected terms and
conditions of this Plan or outstanding Awards. The Committee shall not make any adjustment that would adversely affect the status
of any Award that is “performance-based compensation” under Section 162(m) of the Code.

 

(d) Change
in Control. Notwithstanding anything to the contrary set forth in the Plan, upon any Change in Control, the Committee may,
in its sole and absolute discretion and without the need for the consent of any Participant, take one or more of the following
actions contingent upon the occurrence of that Change in Control:

 

(i) cause
any or all outstanding Awards to become vested and immediately exercisable (as applicable), in whole or in part;

 

(ii) cause
any outstanding Option or Stock Appreciation Right to become fully vested and immediately exercisable for a reasonable period in
advance of the Change in Control and, to the extent not exercised prior to that Change in Control, cancel that Option or Stock
Appreciation Right upon closing of the Change in Control;

 

(iii) cancel
any unvested Award or unvested portion thereof, with or without consideration;

 

(iv) cancel
any Award in exchange for a substitute award;

 

(v) redeem
any Restricted Stock or Restricted Stock Unit for cash and/or other substitute consideration with value equal to the Fair Market
Value of an unrestricted Share on the date of the Change in Control;

  

    	 	-7-	 

     

    

 

(vi) cancel
any Option or Stock Appreciation Right in exchange for cash and/or other substitute consideration with a value equal to: (A) the
number of Shares subject to that Option or Stock Appreciation Right, multiplied by (B) the difference, if any, between the
Fair Market Value per Share on the date of the Change in Control and the exercise price of that Option or Stock Appreciation Right
; provided, that if the Fair Market Value per Share on the date of the Change in Control does not exceed the exercise price
of any such Option or Stock Appreciation Right, the Committee may cancel that Option or Stock Appreciation Right without any payment
of consideration therefor; and/or

 

(vii) take
such other action as the Committee shall determine to be reasonable under the circumstances.

 

Notwithstanding any provision of this Section
4(d), in the case of any Award subject to Section 409A of the Code, such Award shall vest and be distributed only in accordance
with the terms of the applicable Award Agreement and the Committee shall only be permitted to use discretion to the extent that
such discretion would be permitted under Section 409A of the Code.

 

In the discretion of the Committee, any cash
or substitute consideration payable upon cancellation of an Award may be subjected to (i) vesting terms substantially identical
to those that applied to the cancelled Award immediately prior to the Change in Control, or (ii) earn-out, escrow, holdback
or similar arrangements, to the extent such arrangements are applicable to any consideration paid to stockholders in connection
with the Change in Control.

 

Section
5.Eligibility. Employees, Directors, consultants, and other individuals who provide services to the
Company or its Affiliates are eligible to be granted Awards under the Plan; provided, however, that only employees of the
Company, any Parent or a Subsidiary are eligible to be granted Incentive Stock Options.

 

Section
6.Options. Options granted under the Plan may be of two types: (i) Incentive Stock Options or
(ii) Non-Qualified Stock Options. The Award Agreement shall state whether such grant is an Incentive Stock Option or a Non-Qualified
Stock Option. Any Option granted under the Plan will be in such form as the Committee may at the time of such grant approve.

 

The Award Agreement evidencing any Option
will incorporate the following terms and conditions and will contain such additional terms and conditions, not inconsistent with
the terms of the Plan, as the Committee deems appropriate in its sole and absolute discretion:

 

(a) Option
Price. The exercise price per Share under an Option will be determined by the Committee and will not be less than 100% of the
Fair Market Value of a Share on the date of the grant. However, any Incentive Stock Option granted to any Participant who, at the
time the Option is granted, owns, either directly and/or within the meaning of the attribution rules contained in Section 424(d)
of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, will have
an exercise price per Share of not less than 110% of Fair Market Value per Share on the date of the grant.

  

    	 	-8-	 

     

    

 

(b) Option
Term. The term of each Option will be fixed by the Committee, but no Option will be exercisable more than 10 years after the
date the Option is granted. However, any Incentive Stock Option granted to any Participant who, at the time such Option is granted,
owns, either directly and/or within the meaning of the attribution rules contained in Section 424(d) of the Code, stock possessing
more than 10% of the total combined voting power of all classes of stock of the Company, may not have a term of more than 5 years.
No Option may be exercised by any Person after expiration of the term of the Option.

 

(c) Exercisability.
Options will vest and be exercisable at such time or times and subject to such terms and conditions as determined by the Committee.

 

(d) Method
of Exercise. Subject to the terms of the applicable Award Agreement, the exercisability provisions of Section 6(c) and
the termination provisions of Section 8, Options may be exercised in whole or in part from time to time during their term
by the delivery of written notice to the Company specifying the number of Shares to be purchased. Such notice will be accompanied
by payment in full of the purchase price, either by certified or bank check, or such other means as the Committee may accept. The
Committee may, in its sole discretion, permit payment of the exercise price of an Option in the form of previously acquired Shares
based on the Fair Market Value of the Shares on the date the Option is exercised or through means of a “net settlement,”
whereby the Option exercise price will not be due in cash and where the number of Shares issued upon such exercise will be equal
to: (A) the product of (i) the number of Shares as to which the Option is then being exercised, and (ii) the excess,
if any, of (a) the then current Fair Market Value per Share over (b) the Option exercise price, divided by (B) the
then current Fair Market Value per Share.

 

No Shares will be issued upon exercise of
an Option until full payment therefor has been made. A Participant will not have the right to distributions or dividends or any
other rights of a stockholder with respect to Shares subject to the Option until the Participant has given written notice of exercise,
has paid in full for such Shares, if requested, has given the representation described in Section 19(a) hereof and fulfills
such other conditions as may be set forth in the applicable Award Agreement.

 

(e) Incentive
Stock Option Limitations. In the case of an Incentive Stock Option, the aggregate Fair Market Value (determined as of the time
of grant) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during
any calendar year under the Plan and/or any other plan of the Company, its Parent or any Subsidiary will not exceed $100,000. For
purposes of applying the foregoing limitation, Incentive Stock Options will be taken into account in the order granted. To the
extent any Option does not meet such limitation, that Option will be treated for all purposes as a Non-Qualified Stock Option.

 

(f) Termination
of Service. Unless otherwise specified in the applicable Award Agreement or as otherwise provided by the Committee at or after
the time of grant, Options will be subject to the terms of Section 8 with respect to exercise upon or following termination
of employment or other service.

  

    	 	-9-	 

     

    

 

Section
7.Stock Appreciation Right. Subject to the other terms of the Plan, the Committee may grant Stock
Appreciation Rights to eligible individuals. Each Stock Appreciation Right shall represent the right to receive, upon exercise,
an amount equal to the number of Shares subject to the Award that is being exercised multiplied by the excess of (i) the Fair Market
Value of a Share on the date the Award is exercised, over (ii) the exercise price specified in the applicable Award Agreement.
Distributions may be made in cash, Shares, or a combination of both, at the discretion of the Committee. Each Stock Appreciation
Right shall be evidenced by an Award Agreement in a form that is approved by the Committee. Such Award Agreement shall indicate
the price, the term and the vesting schedule for such Award. A Stock Appreciation Right exercise price may never be less than the
Fair Market Value of the underlying common stock of the Company on the date of grant of such Stock Appreciation Right. The term
of each Stock Appreciation Right will be fixed by the Committee, but no Stock Appreciation Right will be exercisable more than
10 years after the date the Stock Appreciation Right is granted. Subject to the terms and conditions of the applicable Award Agreement,
Stock Appreciation Rights may be exercised in whole or in part from time to time during their term by the delivery of written notice
to the Company specifying the number of Shares to be exercised. Unless otherwise specified in the applicable Award Agreement or
as otherwise provided by the Committee at or after the time of grant, Stock Appreciation Rights will be subject to the terms of
Section 8 with respect to exercise upon or following termination of employment or other service.

 

Section
8.Termination of Service. Unless otherwise specified with respect to a particular Option or Stock
Appreciation Right in the applicable Award Agreement or otherwise determined by the Committee, any portion of an Option or Stock
Appreciation Right that is not exercisable upon termination of service will expire immediately and automatically upon such termination
and any portion of an Option or Stock Appreciation Right that is exercisable upon termination of service will expire on the date
it ceases to be exercisable in accordance with this Section 8.

 

(a) Termination
by Reason of Death. If a Participant’s service with the Company or any Affiliate terminates by reason of death, any Option
or Stock Appreciation Right held by such Participant may thereafter be exercised, to the extent it was exercisable at the time
of his or her death or on such accelerated basis as the Committee may determine at or after grant, by the legal representative
of the estate or by the legatee of the Participant, for a period expiring (i) at such time as may be specified by the Committee
at or after grant, or (ii) if not specified by the Committee, then 12 months from the date of death, or (iii) if sooner
than the applicable period specified under (i) or (ii) above, upon the expiration of the stated term of such Option or
Stock Appreciation Right.

 

(b) Termination
by Reason of Disability. If a Participant’s service with the Company or any Affiliate terminates by reason of Disability,
any Option or Stock Appreciation Right held by such Participant may thereafter be exercised by the Participant or his personal
representative, to the extent it was exercisable at the time of termination, or on such accelerated basis as the Committee may
determine at or after grant, for a period expiring (i) at such time as may be specified by the Committee at or after grant,
or (ii) if not specified by the Committee, then 12 months from the date of termination of service, or (iii) if sooner
than the applicable period specified under (i) or (ii) above, upon the expiration of the stated term of such Option or Stock Appreciation
Right.

  

    	 	-10-	 

     

    

 

(c) Cause.
If a Participant’s service with the Company or any Affiliate is terminated for Cause: (i) any Option or Stock Appreciation
Right, or portion thereof, not already exercised will be immediately and automatically forfeited as of the date of such termination,
and (ii) any Shares for which the Company has not yet delivered share certificates will be immediately and automatically forfeited
and the Company will refund to the Participant the Option exercise price paid for such Shares, if any.

 

(d) Other
Termination. If a Participant’s service with the Company or any Affiliate terminates for any reason other than death,
Disability or Cause, any Option or Stock Appreciation Right held by such Participant may thereafter be exercised by the Participant,
to the extent it was exercisable at the time of such termination, or on such accelerated basis as the Committee may determine at
or after grant, for a period expiring (i) at such time as may be specified by the Committee at or after grant, or (ii) if
not specified by the Committee, then 90 days from the date of termination of service, or (iii) if sooner than the applicable
period specified under (i) or (ii) above, upon the expiration of the stated term of such Option or Stock Appreciation Right.

 

Section
9.Restricted Stock.

 

(a) Issuance.
Restricted Stock may be issued either alone or in conjunction with other Awards. The Committee will determine the time or times
within which Restricted Stock may be subject to forfeiture, and all other conditions of such Awards. The purchase price for Restricted
Stock may, but need not, be zero. The prospective recipient of an Award of Restricted Stock will not have any rights with respect
to such Award, unless and until such recipient has delivered to the Company an executed Award Agreement and has otherwise complied
with the applicable terms and conditions of such Award.

 

(b) Certificates.
Upon the Award of Restricted Stock, the Committee may direct that a certificate or certificates representing the number of shares
of common stock subject to such Award be issued to the Participant or placed in a restricted stock account (including an electronic
account) with the transfer agent and in either case designating the Participant as the registered owner. The certificate(s) representing
such shares shall be physically or electronically legended, as applicable, as to sale, transfer, assignment, pledge or other encumbrances
during the Restriction Period and if issued to the Participant, returned to the Company, to be held in escrow during the Restriction
Period. As a condition to any Award of Restricted Stock, the Participant may be required to deliver to the Company a share power,
endorsed in blank, relating to the Shares covered by such Award.

 

(c) Restrictions
and Conditions. The Award Agreement evidencing the grant of any Restricted Stock will incorporate the following terms and conditions
and such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee deems appropriate in its
sole and absolute discretion:

 

(i) During
a period commencing with the date of an Award of Restricted Stock and ending at such time or times as specified by the Committee
(the “Restriction Period”), the Participant will not be permitted to sell, transfer, pledge, assign or otherwise
encumber Restricted Stock awarded under the Plan. The Committee may condition the lapse of restrictions on Restricted Stock upon
the continued employment or service of the recipient, the attainment of specified individual or corporate performance goals, or
such other factors as the Committee may determine, in its sole and absolute discretion.

  

    	 	-11-	 

     

    

 

(ii) While
any Share of Restricted Stock remains subject to restriction, the Participant will have, with respect to the Restricted Stock,
the right to vote the Shares, but will not have the right to receive any cash distributions or dividends prior to the lapse of
the Restriction Period underlying such Shares unless otherwise provided under the applicable Award Agreement or as determined by
the Committee. If any cash distributions or dividends are payable with respect to the Restricted Stock, the Committee, in its sole
discretion, may require the cash distributions or dividends to be subjected to the same Restriction Period as is applicable to
the Restricted Stock with respect to which such amounts are paid, or, if the Committee so determines, reinvested in additional
Restricted Stock to the extent Shares are available under Section 4(a) of the Plan. A Participant shall not be entitled
to interest with respect to any dividends or distributions subjected to the Restriction Period. Any distributions or dividends
paid in the form of securities with respect to Restricted Stock will be subject to the same terms and conditions as the Restricted
Stock with respect to which they were paid, including, without limitation, the same Restriction Period.

 

(iii) Subject
to the provisions of the applicable Award Agreement or as otherwise determined by the Committee, if a Participant’s service
with the Company and its Affiliates terminates prior to the expiration of the applicable Restriction Period, the Participant’s
Restricted Stock that then remains subject to forfeiture will then be forfeited automatically.

 

Section
10.Restricted Stock Units. Subject to the other terms of the Plan, the Committee may grant Restricted
Stock Units to eligible individuals and may, in its sole and absolute discretion, impose conditions on such units as it may deem
appropriate, including, without limitation, (i) continued employment or service of the recipient or (ii) the attainment of specified
individual or corporate performance goals. Each Restricted Stock Unit shall be evidenced by an Award Agreement in the form that
is approved by the Committee and that is not inconsistent with the terms and conditions of the Plan. Each Restricted Stock Unit
will represent a right to receive from the Company, upon fulfillment of any applicable conditions, an amount equal to the Fair
Market Value (at the time of the distribution) of one Share. Distributions may be made in cash, Shares, or a combination of both,
at the discretion of the Committee. All other terms governing Restricted Stock Units, such as vesting, time and form of payment
and termination of units shall be set forth in the applicable Award Agreement. The Participant shall not have any shareholder rights
with respect to the Shares subject to a Restricted Stock Unit Award until that Award vests and the Shares are actually issued thereunder.
Subject to the provisions of the applicable Award Agreement or as otherwise determined by the Committee, if a Participant’s
service with the Company terminates prior to the Restricted Stock Unit Award vesting, the Participant’s Restricted Stock
Units that then remain subject to forfeiture will then be forfeited automatically.

 

    	 	-12-	 

     

    

 

Section
11.Cash Award. Subject to the other terms of the Plan, the Committee may grant Cash Awards. An Award
Agreement for a Cash Award will indicate the applicable performance period, any applicable Performance Goals, any applicable designation
of the Award as a Performance Award, and the vesting schedule of the Award. No Participant may be paid more than $500,000 in any
calendar year in respect of Cash Awards that are designated as Performance Awards. Unless otherwise provided in an Award Agreement,
a Participant must provide services to the Company or its Affiliates through the last day of the performance period applicable
to the Cash Award in order to be eligible to receive payment. Unless otherwise specified in the Award Agreement, payment in respect
of a Cash Award will be made in cash, by the 15th day of the third month following the year in which such Award is earned.

 

Section
12.Performance Based Awards.

 

(a) Performance
Awards Generally. The Committee may grant Performance Awards in accordance with this Section 12. Performance Awards
may be denominated as a number of Shares or specified number of other Awards, which may be earned upon achievement or satisfaction
of such Performance Goals as may be specified by the Committee. In addition, the Committee may specify that any other Award shall
constitute a Performance Award by conditioning the vesting or settlement of the Award upon the achievement or satisfaction of such
Performance Goals as may be specified by the Committee.

 

(b) Adjustments
to Performance Goals. The Committee may provide, at the time Performance Goals are established, that adjustments will be made
to those performance goals to take into account, in any objective manner specified by that Committee, the impact of one or more
of the following: (A) gain or loss from all or certain claims and/or litigation and insurance recoveries, (B) the impairment
of tangible or intangible assets, (C) stock-based compensation expense, (D) restructuring activities reported in the
Company’s public filings, (E) investments, dispositions or acquisitions, (F) loss from the disposal of certain
assets, (G) gain or loss from the early extinguishment, redemption, or repurchase of debt, (H) changes in accounting
principles, or (I) any other item, event or circumstance that would not cause an Award to fail to constitute “qualified
performance-based compensation” under Section 162(m) of the Code (to the extent such Award is intended to be “qualified
performance-based compensation”). An adjustment described in this Section may relate to the Company or to any subsidiary,
division or other operational unit of the Company or its Affiliates, as determined by the Committee at the time the performance
goals are established. Any adjustment shall be determined in accordance with generally accepted accounting principles and standards,
unless such other objective method of measurement is designated by the committee at the time performance objectives are established.
In addition, adjustments will be made as necessary to any performance criteria related to the Company’s stock to reflect
changes in corporate capitalization, including a recapitalization, stock split or combination, stock dividend, spin-off, merger,
reorganization or other similar event or transaction affecting the Company’s equity.

 

(c) Other
Terms of Performance Awards. The Committee may specify other terms pertinent to a Performance Award in the applicable Award
Agreement, including terms relating to the treatment of that Award in the event of a Change in Control prior to the end of the
applicable performance period. The Participant shall not have any shareholder rights with respect to the Shares subject to a Performance
Award until the Shares are actually issued thereunder. Subject to the provisions of the applicable Award Agreement or as otherwise
determined by the Committee, if a Participant’s service with the Company terminates prior to the Performance Award vesting,
the Participant’s Performance Award or portion thereof that then remains subject to forfeiture will then be forfeited automatically.

  

    	 	-13-	 

     

    

 

Section
13.Amendments and Termination. The Board may amend, alter or discontinue the Plan at any time. However,
except as otherwise provided in Section 4, no amendment, alteration or discontinuation will be made which would impair the
rights of a Participant with respect to an Award without that Participant’s consent or which, without the approval of such
amendment within 365 days of its adoption by the Board or by the Company’s stockholders in a manner consistent with Treas.
Reg. § 1.422-3 (or any successor provision), would: (i) increase the total number of Shares reserved for issuance hereunder,
or (ii) change the persons or class of persons eligible to receive Awards.

 

Section
14.Prohibition on Repricing Programs. Neither the Committee nor the Board shall (i) implement
any cancellation/re-grant program pursuant to which outstanding Options or Stock Appreciation Rights under the Plan are cancelled
and new Options or Stock Appreciation Rights are granted in replacement with a lower exercise or base price per share, (ii) cancel
outstanding Options or Stock Appreciation Rights under the Plan with exercise prices or base prices per share in excess of the
then current Fair Market Value per Share for consideration payable in equity securities of the Company or (iii) otherwise
directly reduce the exercise price or base price in effect for outstanding Options or Stock Appreciation Rights under the Plan,
without in each such instance obtaining shareholder approval.

 

Section
15.Conditions Upon Grant of Awards and Issuance of Shares.

 

(a) The
implementation of the Plan, the grant of any Award and the issuance of Shares in connection with the issuance, exercise or vesting
of any Award made under the Plan shall be subject to the Company’s procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the Awards made under the Plan and the Shares issuable pursuant to those Awards.

 

(b) No
Shares or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable
requirements of Applicable Law, including the filing and effectiveness of the Form S-8 registration statement for the Shares
issuable under the Plan, and all applicable listing requirements of any stock exchange on which Shares are then listed for trading.

 

Section
16.Limits on Transferability; Beneficiaries. No Award or other right or interest of a Participant
under the Plan shall be pledged, encumbered, or hypothecated to, or in favor of, or subject to any lien, obligation, or liability
of such Participant to, any party, other than the Company, any Subsidiary or Affiliate, or assigned or transferred by such Participant
other than by will or the laws of descent and distribution, and such Awards and rights shall be exercisable during the lifetime
of the Participant only by the Participant or his or her guardian or legal representative. Notwithstanding the foregoing, the Committee
may, in its discretion, provide that Awards or other rights or interests of a Participant granted pursuant to the Plan (other than
an Incentive Stock Option) be transferable, without consideration, to immediate family members (i.e., children, grandchildren or
spouse), to trusts for the benefit of such immediate family members and to partnerships in which such family members are the only
partners. The Committee may attach to such transferability feature such terms and conditions as it deems advisable. In addition,
a Participant may, in the manner established by the Committee, designate a beneficiary (which may be a person or a trust) to exercise
the rights of the Participant, and to receive any distribution, with respect to any Award upon the death of the Participant. A
beneficiary, guardian, legal representative or other person claiming any rights under the Plan from or through any Participant
shall be subject to all terms and conditions of the Plan and any Award Agreement applicable to such Participant, except as otherwise
determined by the Committee, and to any additional restrictions deemed necessary or appropriate by the Committee.

  

    	 	-14-	 

     

    

 

Section
17.Withholding. No later than the date as of which an amount first becomes includible in the gross
income of the Participant for federal income tax purposes with respect to any Award under the Plan, the Participant will pay to
the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state or local taxes of any
kind required by law to be withheld with respect to such amount. The minimum required withholding obligations may be settled with
Shares, including Shares that are part of the Award that gives rise to the withholding requirement. Notwithstanding the immediately
preceding sentence, the Company, in its discretion, may withhold Shares having a Fair Market Value up to, but not in excess of,
the maximum statutory withholding requirements. The obligations of the Company under the Plan will be conditioned on such payment
or arrangements and the Company will have the right to deduct any such taxes from any payment of any kind otherwise due to the
Participant.

 

Section
18.Liability of Company.

 

(a) Inability
to Obtain Authority. If the Company cannot, by the exercise of commercially reasonable efforts, obtain authority from any regulatory
body having jurisdiction for the sale of any Shares under this Plan, and such authority is deemed by the Company’s counsel
to be necessary to the lawful issuance of those Shares, the Company will be relieved of any liability for failing to issue or sell
those Shares.

 

(b) Grants
Exceeding Allotted Shares. If Shares subject to an Award exceed, as of the date of grant, the number of Shares which may be
issued under the Plan without additional shareholder approval, that Award will be contingent with respect to such excess Shares,
on the effectiveness under Applicable Law of a sufficient increase in the number of Shares subject to this Plan.

 

(c) Rights
of Participants and Beneficiaries. The Company will pay all amounts payable under this Plan only to the applicable Participant,
or beneficiaries entitled thereto pursuant to this Plan. The Company will not be liable for the debts, contracts, or engagements
of any Participant or his or her beneficiaries, and rights to cash payments under this Plan may not be taken in execution by attachment
or garnishment, or by any other legal or equitable proceeding while in the hands of the Company.

  

    	 	-15-	 

     

    

 

Section
19.General Provisions.

 

(a) The
Board may require each Participant to represent to and agree with the Company in writing that the Participant is acquiring securities
of the Company for investment purposes and without a view to distribution thereof and as to such other matters as the Board believes
are appropriate.

 

(b) The
Awards shall be subject to the Company’s recoupment and stock ownership policies, as may be in effect from time to time.

 

(c) All
certificates for Shares or other securities delivered under the Plan will be subject to such share-transfer orders and other restrictions
as the Board may deem advisable under the rules, regulations and other requirements of the Securities Act of 1933, as amended,
the Exchange Act, any stock exchange upon which the Shares are then listed, and any other Applicable Law, and the Board may cause
a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

 

(d) Nothing
contained in the Plan will prevent the Board from adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required.

 

(e) Neither
the adoption of the Plan nor the execution of any document in connection with the Plan will: (i) confer upon any employee
or other service provider of the Company or an Affiliate any right to continued employment or engagement with the Company or such
Affiliate, or (ii) interfere in any way with the right of the Company or such Affiliate to terminate the employment or engagement
of any of its employees or other service providers at any time.

 

(f) Notwithstanding
any other provisions in this Plan, any Award which is subject to recovery under any law, government regulation or stock exchange
listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government
regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation
or stock exchange listing requirement).

 

Section
20.Effective Date of Plan. The Plan became effective on [●] (the “Effective Date”),
upon its approval by the holders of a majority of the voting power of the shares deemed present and entitled to vote at the Meeting
of Stockholders of SITO Mobile, Ltd.

 

Section
21.Term of Plan. Unless the Plan shall theretofore have been terminated in accordance with Section
13, the Plan shall terminate on the 10-year anniversary of the Effective Date, and no Awards under the Plan shall thereafter
be granted.

 

Section
22.Invalid Provisions. In the event that any provision of this Plan is found to be invalid or otherwise
unenforceable under any Applicable Law, such invalidity or unenforceability will not be construed as rendering any other provisions
contained herein as invalid or unenforceable, and all such other provisions will be given full force and effect to the same extent
as though the invalid or unenforceable provision was not contained herein.

 

Section
23.Governing Law. The Plan and all Awards granted hereunder will be governed by and construed in accordance
with the laws and judicial decisions of the State of Delaware, without regard to the application of the principles of conflicts
of laws.

 

Section
24.Notices. Any notice to be given to the Company pursuant to the provisions of this Plan must be
given in writing and addressed, if to the Company, to its principal executive office to the attention of its Chief Financial Officer
(or such other Person as the Company may designate in writing from time to time), and, if to a Participant, to the address contained
in the Company’s personnel files, or at such other address as that Participant may hereafter designate in writing to the
Company. Any such notice will be deemed duly given: if delivered personally or via recognized overnight delivery service, on the
date and at the time so delivered; if sent via telecopier or email, on the date and at the time telecopied or emailed with confirmation
of delivery; or, if mailed, five (5) days after the date of mailing by registered or certified mail.

 

-16-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00281-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00281-of-00352.parquet"}]]