Document:

f8k042111ex10i_ecoready.htm

 

Exhibit 10.1

 

 

FORM OF SUBSCRIPTION AGREEMENT AND INVESTOR QUESTIONNAIRE

ECOREADY CORPORATION

REGULATION D UNIT OFFERING

Common Stock and Warrants

EcoReady Corporation

555 Winderley Place, Suite 300

Orlando, FL 32751

Ladies and Gentlemen:

YOU SHOULD MAKE YOUR OWN DECISION WHETHER THIS OFFERING MEETS YOUR INVESTMENT OBJECTIVES AND RISK TOLERANCE LEVEL. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION APPROVED, DISAPPROVED, ENDORSED, OR RECOMMENDED THIS OFFERING, OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS SUBSCRIPTION AGREEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. NO STATE ADMINISTRATOR IN ANY JURISDICTION HAS REVIEWED THE DISCLOSURE IN THIS DOCUMENT.  ECOREADY CORPORATION IS RELYING ON AN EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OFFERING THE SECURITIES. NO INDEPENDENT PERSON HAS CONFIRMED THE ACCURACY OR TRUTHFULNESS OF THIS DISCLOSURE, NOR WHETHER IT IS COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS ILLEGAL.

THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. SUBSCRIBERS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

THIS SUBSCRIPTION AGREEMENT (this “Subscription Agreement”) is made as of this ____ day of April, 2011, between EcoReady Corporation, a corporation organized under the laws of the State of Florida (the “Company”), and _____________________________________, the subscriber (“Subscriber”), as set forth on the execution pages hereof.

  

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RECITALS

The Subscriber has offered to purchase the Units (as defined below) from the Company and the Company desires to accept the Subscriber’s offer to purchase the Units based solely upon the representations made by the Subscriber set forth herein.

The Company and the Subscriber are executing and delivering this Subscription Agreement in reliance upon the exemptions from securities registration under the Securities Act of 1933, as amended (the “Securities Act”).

The Company desires to sell, and the Subscriber desires to purchase, upon the terms and conditions stated in this Subscription Agreement, up to 15 units at the price of Fifteen Thousand Dollars ($15,000.00) each. Each unit consists of (i) fifty thousand (50,000) shares of common stock (the “Common Stock”) and (ii) a three-year common stock purchase warrant to purchase up to an additional fifty thousand (50,000) shares of Common Stock, at an exercise price of $0.45 per share of Common Stock (the “Warrants” and together with the Common Stock, the “Units”). The minimum subscription per Subscriber is one (1) Unit; however, in the Company’s sole discretion it may accept subscriptions for a lesser number of Units.  The shares of common stock issuable upon exercise of the Warrants are referred to herein as the “Warrant Shares.” The Units, the Common Stock, the Warrants and the Warrant Shares are collectively referred to herein as the “Securities” and each of them may individually be referred to herein as a “Security”.

The Company reserves the right to increase the amount of this offering by up to 5 Units without notice or approval from prior subscribers in the offering and it reserves the right to terminate or withdraw the offering at any time. The Units are offered solely to Accredited Investors (as hereinafter defined) by our Placement Agents on a “best-efforts” basis.

The Subscriber understands and acknowledges that the Company is relying upon the representations and warranties of the Subscriber set forth in this Subscription Agreement without limitation.

NOW, THEREFORE, the Company and the Subscriber hereby agree as follows:

1. Recitals.  The above recitals are true and correct and constitute the terms of this Subscription Agreement where applicable.

2. Subscription.  Subject to the terms and conditions of this Subscription Agreement, the Subscriber hereby irrevocably subscribes for and agrees to purchase the number of Units set forth on the signature page hereto and, as full payment therefore, agrees to pay to the Company, concurrently with the Subscriber’s execution and delivery of this Subscription Agreement, the sum of $15,000.00 in cash for each Unit purchased.

This offering may be modified by the Company’s management at its sole discretion without approval from, or notice to Subscriber, including but not limited to, increases or reductions in the Unit price, offering terms, and number and type of Securities contained within the Unit. At the sole discretion of the Company’s management, the Company may conduct other offerings of its securities while it is conducting this offering with terms that may not be similar or comparable to this offering.

 

  

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3. Subscriber’s Representations and Warranties. As a material inducement for the Company to enter into this Subscription Agreement, the Subscriber represents and warrants to the Company as follows:

3.1 Purchase for Subscriber’s Own Account. The Subscriber is purchasing the Securities for the Subscriber’s own account and not with a view towards the public sale or distribution thereof, except pursuant to sales that are exempt from the registration requirements of the Securities Act and/or sales registered under the Securities Act. The Subscriber understands that Subscriber must bear the economic risk of this investment indefinitely, unless the Securities are registered pursuant to the Securities Act and any applicable state securities or blue sky laws or an exemption from such registration is available, and that the Company has no present intention of registering the resale of any such Securities.

3.2 Investment Intention of Subscriber. The Subscriber understands that the Securities have not been registered under the Securities Act by reason of a claimed exemption under the provisions of the Securities Act that depends, in part, upon the Subscriber’s investment intention. In connection with this, the Subscriber understands that it is the position of the U.S. Securities and Exchange Commission (“SEC”) that the statutory basis for such exemption would not be present if the Subscriber’s representation merely meant that its present intention was to hold such securities for a short period, such as the capital gains period of tax statutes, for a deferred sale, for a market rise, assuming that a market develops, or for any other fixed period. The Subscriber realizes that, in the view of the SEC, a purchase now with an intent to resell would represent a purchase with an intent inconsistent with its representation to the Company, and the SEC might regard such a sale or disposition as a deferred sale to which such exemptions are not available.

3.3 Reliance on Exemptions from Registration. The Subscriber understands that the Securities are being offered and sold in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Subscriber’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Subscriber set forth herein without limitation in order to determine the availability of such exemptions and the eligibility of the Subscriber to acquire the Securities.

3.4 Lack of Governmental Approval or Review. The Subscriber understands that the Securities have not been approved or disapproved by the SEC or any State Securities Commission or any foreign governmental authority of any country nor has the SEC or any State Securities Commission or foreign governmental authority of any jurisdiction passed upon the accuracy of any information provided to the Subscriber or passed upon, or made any recommendation or endorsement of the securities or made any finding or determination as to the fairness of the offering. The Subscriber will furnish evidence satisfactory to the Company of compliance with the laws of any jurisdiction that, in the opinion of the Company, may be applicable, and the Company shall be entitled to require and rely upon an opinion of counsel at the expense of Subscriber which must be satisfactory to the Company with respect to compliance with laws of any jurisdiction deemed applicable by the Company.

 

 

  

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3.5 Accredited Investor Status, and Suitability. The Subscriber has read and understands Rule 501(a) of Regulation D of the Securities Act and represents that he is an “Accredited Investor” as that term is defined by Rule 501(a). The Subscriber further represents that he is knowledgeable, sophisticated and experienced in making, and is qualified to make decisions with respect to a variety of sophisticated and complex investments that present investment decisions like those involved in the purchase of the Securities. The Subscriber, in reaching a decision to subscribe, has such knowledge and experience in financial and business matters that the Subscriber is capable of reading, interpreting and understanding financial statements and evaluating the merits and risks of an investment in the Securities and has the net worth to undertake such risks. Subscriber has invested in securities offered by the Company and/or investments in the securities of companies comparable to the Company that involve non-trading, and/or thinly traded securities and penny stocks, unregistered securities, restricted securities, high risk investments, operating losses and securities which are not listed or quoted on any national securities exchange. The Subscriber represents that in addition to its own ability to evaluate the investment, it has employed the services of an investment advisor, attorney or accountant to read all of the documents furnished or made available by the Company to it to evaluate the merits and risks of such an investment on its behalf, and that he recognizes the highly speculative nature of an investment in the Securities. The Subscriber is familiar with the business operations and financial affairs of the Company.

3.6 Financial Suitability. Subscriber understands that Subscriber may be unable to liquidate the Securities and any transfer of the Securities is limited. The Subscriber’s overall commitment to investments which are not readily marketable is not disproportionate to Subscriber’s net worth, and the investment in the Securities will not cause the Subscriber’s overall investment in illiquid high-risk investments to become excessive in proportion to Subscriber’s assets, liabilities and living standards. The Subscriber can bear the economic risk of an investment for an indefinite period of time and can bear a loss of the entire investment in the Securities without financial hardship or a change in its living conditions.

3.7 Company Information. The Subscriber hereby acknowledges that:

(a) No offering memorandum or similar disclosure document has been prepared in connection with the sale of the Units. The Subscriber has read this Subscription Agreement and is familiar with the terms of the Securities.

(b) In making the decision to purchase the Securities, the Subscriber and the Subscriber’s advisors have, prior to any sale to the Subscriber, been given access and the opportunity to examine all books and records of the Company, all contracts and documents relating to the Company, and all filings made by the Company with the U.S. Securities and Exchange Commission, and an opportunity to ask questions of, and to receive answers from, the Company and to obtain any additional information necessary to verify the accuracy of the information provided to the Subscriber. The Subscriber and the Subscriber’s advisors have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities that have been requested.

 

 

  

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(c) The only representations and warranties being given to the Subscriber by the Company are as contained in this Subscription Agreement.

(d) The Subscriber understands that this offering has not been registered under the Securities Act and is being made in reliance upon exemptions therefrom. Subscriber must rely upon the Subscriber’s own access to information about the Company and the offering. The Subscriber has requested, received, reviewed, understands and considered all information it deems relevant in making an informed decision to purchase the Securities, including but not limited to the Company’s financial information, and the Subscriber has conducted independent due diligence in matters involving the Company. Subscriber has consulted with Subscriber’s legal, tax, and investment advisors regarding its investment in the Securities and has received their approval to invest in the Securities. The Subscriber hereby represents that, in Subscriber’s opinion, it has received information equivalent to that which would be provided to an Investor in a registration statement filed under the Securities Act. The Subscriber understands that the Subscriber or the Subscriber’s representatives have been and will continue to be provided with access to the Company’s financial records through its public filings with the SEC. The Subscriber has furnished the Subscriber’s legal, tax and financial advisors with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities, and the Subscriber has advised the Company that the offering, according to its terms, will, in the opinion of the Subscriber, be made in compliance with applicable state and federal securities laws.

3.8 Representations of Income or Profit. The Subscriber is not investing in the Securities based upon any representation, oral or written, by any person with respect to the future value of, if any, or the income from, if any, the Securities. Neither the Company, the Placement Agent, nor any of their respective officers, directors, stockholders, partners, employees or agents, or any other persons have represented, guaranteed or warranted, whether expressly or by implication, that: (i) the Company or the Subscriber will realize any given percentage of profits and/or amount or type of consideration, profit or loss as a result of the Company’s activities or the Subscriber’s investment in the Company; or (ii) the past performance or experience of the Company’s management, or of any other person, will in any way indicate predictable results regarding the ownership of the Company’s securities, the future value of the Company’s securities, or of the Company’s activities.

3.9 Use of Proceeds. Subscriber acknowledges that the Company’s management has the sole discretion over the use of proceeds of the offering and there are no assurances that the Company will use the proceeds as the Company currently intends. As a result, the Company’s management may spend the proceeds on a broad variety of items including, without limitation, operating expenses, loans, salaries, joint ventures, partnerships, or other business arrangements formed now or to be formed in the future, any or all of which may never be successful. Subscriber acknowledges that it will have no control or ability to influence or participate in the determination of how the proceeds from this offering will be utilized and the use of the proceeds by management cannot currently be predicted with any accuracy.

 

 

  

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3.10 Limited Public Market. The Company’s shares are not quoted and not traded on any national stock exchange, but rather on the OTCQB, and Subscriber understands and acknowledges that there is no guaranty that the Company’s shares will ever be quoted or traded on a national stock exchange or Nasdaq.

3.11 Transfer, Resale and/or Pledge. The Subscriber understands that the offer and sale of the Securities have not been and are not being registered under the Securities Act or any state securities laws, and the Securities may not be transferred unless:

(a) the transfer is made pursuant to and as set forth in an effective registration statement under the Securities Act covering the Securities; or

(b) the Subscriber shall have delivered to the Company at the Subscriber’s expense an opinion of counsel (which opinion shall be in form, substance, scope and law firm acceptable to the Company) to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration; or

(c) sold under and in compliance with Rule 144 promulgated under the Securities Act (or a successor rule) (“Rule 144”); or

(d) sold or transferred in accordance with applicable securities laws to an affiliate of the Subscriber who agrees to sell or otherwise transfer the Securities only in accordance with the provisions of this Section and who is an Accredited Investor; and neither the Company nor any other person is under any obligation to register such Securities under the Securities Act or any state securities laws.

Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities may not be pledged as collateral in connection with a bona fide margin account or other lending arrangement, unless such pledge is consistent with applicable laws, rules and regulations and at the Company’s option, the pledgor provides the Company with a legal opinion (which opinion shall be in form, substance, scope and law firm acceptable to the Company) that the pledge or other lending agreement is in compliance with applicable state and federal securities laws.

3.12 Rule 144 Resales. The Subscriber has read and understands that Rule 144 promulgated under the Securities Act requires, among other conditions, a six (6) month holding period prior to the resale of securities acquired in a non-public offering without having to satisfy the registration requirements under the Securities Act. The Subscriber understands that the Company makes no representation or warranty regarding its fulfillment in the future of any reporting requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or its dissemination to the public of any current financial or other information concerning the Company, as is required by Rule 144 as one of the conditions of its availability. The Subscriber is aware that the safe harbor provided by Rule 144 of the Securities Act is not now available for Subscriber’s resale of the Securities and Rule 144 may never become available for Subscriber’s resale of the Securities or any portion thereof.

 

 

  

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(a) Deposit and Resale of Securities. Subscriber understands that, in addition to the restricted stock requirements of Rule 144 set forth in Section 3.12, above, clearing brokers may decline to deposit into Subscriber’s account a stock certificate for a security that (1) has a closing price below one cent ($0.01) and/or (2) has stale or incomplete filings with the SEC or with Canada’s System for Electronic Document Analysis and Retrieval (SEDAR).  Moreover, in the event that Company files with Pink Sheets, clearing brokers may decline to even consider depositing Company’s securities. In addition to these conditions and limitations, Subscriber understands that clearing brokers may subject Company’s securities to additional review before accepting such securities for deposit.

This review process may (1) take up to two weeks or longer and (2) may include research into Company and/or Subscriber. Subscriber understands that the characteristics triggering additional review include but may not be limited to: (1) low price of the security or securities under review; (2) large number of shares being deposited with clearing broker into Subscriber’s account; (3) the securities in question are non-exchange traded; (4) the stock certificates are recently issued; (5) recent merger activity of underlying Company; and/or (6) change of name of the underlying Company issuing these stock certificates. Clearing brokers may also charge a fee to Subscriber’s account for this review. Finally, Subscriber understands that all of the aforementioned conditions, limitations, and characteristics triggering review may apply to Subscriber’s Deposit/Withdrawal At Custodian (DWAC) requests, Automated Customer Account Transfer Account Service (ACATS) requests, and Depository Trust Company (DTC) receipts for deposit requests.

3.13 Certificate Legends. The Subscriber understands that the certificates representing the Units, the Common Stock, the Warrants and/or the Warrant Shares shall bear a restrictive legend, until such time as the securities are subject to an effective registration statement or otherwise may be sold by the Subscriber under Rule 144(k), in substantially the following form:

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, or the securities laws of any state of the United States or in any other jurisdiction. The securities represented hereby may not be offered, sold or transferred in the absence of an effective registration statement for the securities under applicable securities laws unless offered, sold or transferred pursuant to an available exemption from the registration requirements of those laws.”

3.14 Authorization; Enforcement. This Subscription Agreement has been duly and validly authorized, executed and delivered on behalf of the Subscriber and is a valid and binding agreement of such Subscriber enforceable against the Subscriber in accordance with its terms. If the Subscriber is a corporation, the corporation is duly incorporated or organized and validly existing in the jurisdiction of its incorporation or organization and has all requisite power and authority to purchase and hold the Securities. The decision to invest and the execution and delivery of this Subscription Agreement by a corporate Subscriber, the performance of the obligations hereunder and the consummation of the transactions contemplated hereby have been duly authorized and require no other proceedings on the part of the Subscriber. The individual signing this Subscription Agreement has all right, power and authority to execute and deliver this Subscription Agreement on behalf of the corporate Subscriber.

 

  

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3.15 Inconsistent Information. No oral or written representations have been made other than as stated in this Subscription Agreement, and no oral or written information furnished to the Subscriber or the Subscriber’s advisor(s) in connection with this offering were in any way inconsistent with the information stated in this Subscription Agreement.

3.16 Residency. The Subscriber is a resident of the jurisdiction set forth under the Subscriber’s name on the Execution Page hereto executed by such Subscriber.

3.17 Affirmation. The Subscriber affirms that all information that the Subscriber has provided to the Company, either directly or indirectly, concerning the Subscriber, the Subscriber’s financial position and the Subscriber’s knowledge of financial and business matters is accurate and complete as of the date of this Subscription Agreement. The Subscriber understands that the Company’s determination that exemptions from the registration and qualification provisions of the Securities Act and applicable state securities laws exist for the offer and sale of the Securities is based, in part, upon the representations, warranties, agreements and statements made by the Subscriber herein.

3.18 Remuneration and Commissions. The Subscriber is not aware of any remuneration or commission that is to be paid to any person, directly or indirectly, in connection with the offer, sale or purchase of the Securities other than fees payable to the Placement Agent, who will receive 10% of the gross proceeds from this offering and Placement Agent Warrants to purchase up to 10% of the shares of Common Stock offered in this offering.

3.19 Survival of Representations. The Subscriber acknowledges that the representations, warranties and agreements made by the Subscriber herein shall survive the execution and delivery of this Subscription Agreement, the purchase of the Units and the exercise of the Warrants.

3.20 Acceptance by Company. The Subscriber understands that the Company reserves the unrestricted right within 48 hours of acceptance of the signed subscription agreement, to reject or limit any subscription at its sole discretion, even if the Subscriber is an Accredited Investor and meets all of the requirements and made all required representations.

3.21 Address. The Subscriber hereby represents that the address of Subscriber furnished by it at the end of this Subscription Agreement is the Subscriber’s principal residence if he/she is an individual or its principal business address if it is a corporation or other entity and that the Company is relying upon this information to ensure compliance with applicable federal securities and state Blue Sky Laws.

3.22 FINRA Subscribers. The Subscriber acknowledges that if he or she is a Registered Representative of a Financial Industry Regulatory Authority (“FINRA”) member firm, he or she must give such firm the notice required by the FINRA’s Rules of Fair Practice, receipt of which must be acknowledged by such firm on the signature page hereof.

 

 

  

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3.23 Applicability of State Securities Laws. The Subscriber acknowledges that at such time, if ever, as the Securities or any portion thereof are registered, sales of such Securities will be subject to state securities laws, including those of states which may require any shares sold therein to be sold through a registered broker-dealer or in reliance upon an exemption from registration.

3.24 Foreign Subscribers. If Subscriber is not a U.S. Person (as defined herein), such Subscriber hereby represents that such Subscriber is satisfied as to full observance of the laws of such Subscriber’s jurisdiction in connection with any invitation to subscribe for the Securities or any use of this Subscription Agreement, including: (i) the legal requirements of such Subscriber’s jurisdiction for the purchase of the Securities, (ii) any foreign exchange restrictions applicable to such purpose, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, which may be relevant to the purchase, holding, redemption, sale, or transfer of the Securities. Such Subscriber’s subscription and payment for, and such Subscriber’s continued beneficial ownership of, the Securities will not violate any applicable securities or other laws of such Subscriber’s jurisdiction. The term “U.S. Person” as used herein shall mean any person who is a citizen or resident of the United States or Canada, or any state, territory or possession thereof, including but not limited to any estate of any such person, or any corporation, partnership, trust or other entity created or existing under the laws thereof, or any entity controlled or owned by any of the foregoing.

3.25 No General Solicitation or Advertisement. The Subscriber is not purchasing the Securities as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, posted on the Internet, or presented at any seminar or meeting, or any solicitation of a Subscription by a person other than a representative of the Company with which the subscriber had a pre-existing relationship in connection with investments in securities generally.

3.26 No Escrow and Refundability. Subscriber acknowledges that all subscriptions for the Units are non-refundable except where prohibited by law. The minimum amount that the Company will accept from any Subscriber is Fifteen Thousand Dollars ($15,000) for one Unit, subject to its right to accept Subscriptions a lesser number of Units in its sole discretion. The Subscriber understands that there is no minimum offering amount that the Company must receive from the sale of the Units prior to utilizing this offering’s proceeds and no offering funds will be held in escrow. As a result, all proceeds of the offering will be deposited into the operating account of the Company and utilized by the Company upon receipt, at its discretion.

3.27 Nominee. The Subscriber represents that it is not a nominee for any other person. No one other than Subscriber has any interest in or any right to acquire the Securities subscribed for by Subscriber. Subscriber understands and acknowledges that the Company will have no obligation to recognize the ownership, beneficial or otherwise, of such Securities by anyone but Subscriber. Subscriber is purchasing the Units from funds legally obtained and belonging to Subscriber and has not borrowed or otherwise received the funds used to purchase the Securities, or any portion thereof from any third party.

 

 

  

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3.28 Binding Agreement; Assignment. Subscriber acknowledges that this Subscription Agreement is irrevocable and may not be withdrawn, except as required by applicable law, and upon the signing of this Subscription Agreement, the Subscriber is obligated to purchase the Securities for the amount of consideration set forth above. The Subscriber understands it may not assign this Subscription Agreement or any of the Subscriber’s rights or delegate any of the Subscriber’s obligations under this Subscription Agreement without the prior written consent of the Company.

3.29 Due Diligence. The Subscriber understands and acknowledges that the Company may be subject to unforeseen and other material risks and, as such, Subscriber must rely upon its own independent due diligence investigation of the Company in making an investment in the Units.

3.30 Risk Factors. The Subscriber understands that the Securities are a highly speculative investment involving a high degree of risk and are suitable only for persons or entities of substantial means who have no need for liquidity with respect to their investment in the Securities and who can afford a total loss of their entire investment without hardship or any change in living conditions.

4. Indemnification. Subscriber will indemnify and hold harmless the Company, the Placement Agent, and each of their respective directors, officers, employees, agents, counsels and controlling persons from and against, and will reimburse the Company, the Placement Agent, and each of its respective directors, officers, employees, agents, counsels and controlling persons with respect to, any and all loss, damage, liability, cost or expense to which the Company, the Placement Agent or any such person may become subject under the Securities Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any untrue statement or alleged untrue statement of any fact made by Subscriber, or which arises therefrom or which is based upon the omission or alleged omission to state therein a fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in reliance upon information furnished by or on behalf of the Subscriber.

The Subscriber shall indemnify and hold harmless the Company, the Placement Agent, and each of their respective directors, officers, stockholders, employees, counsel, agents, successors and assigns from and against all losses, damages, liabilities or expenses (including, without limitation, attorneys’ fees), as and when incurred, due to or arising out of, in whole or in part, any breach of any representation or warranty made by the Subscriber set forth herein or in any other agreement or document furnished by the Subscriber to any of the foregoing in connection with this Subscription Agreement, arising out of the resale or distribution by the Subscriber of the Securities or any portion thereof in violation of the Securities Act or any applicable state securities laws.

Promptly after receipt by the Company and/or Placement Agent of notice of the commencement of any action involving the subject matter of the indemnity provisions of this Subscription Agreement, the receiving party will notify the Subscriber of the commencement thereof; but the omission to so notify the Subscriber will not relieve it from any liability that it may have to the Company and/or Placement Agent otherwise than hereunder. In case such action is brought against the Company and/or Placement Agent and it/they notifies the Subscriber of the commencement thereof, the Subscriber shall retain counsel selected by the Company and pay all fees associated therewith including retainers securing the payment of future legal fees.

 

 

  

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5. Miscellaneous.

5.1 Counterparts. This Subscription Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. This Subscription Agreement, once executed by a party, may be delivered to the other parties hereto by facsimile transmission of a copy of this Subscription Agreement bearing the signature of the party so delivering this Subscription Agreement. In the event any signature is delivered by facsimile transmission, the party using such means of delivery shall cause the manually executed Execution Page(s) hereof to be physically delivered to the other party within five (5) days of the execution hereof, provided that the failure to so deliver any manually executed Execution Page shall not affect the validity or enforceability of this Subscription Agreement.

5.2 Headings. The headings of this Subscription Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Subscription Agreement.

5.3 Severability. If any provision of this Subscription Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Subscription Agreement or the validity or enforceability of this Subscription Agreement in any other jurisdiction.

5.4 Entire Agreement; Amendments. This Subscription Agreement and the instruments referenced herein contain the entire understanding of Subscriber and the Company, their affiliates and persons acting on their behalf with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Subscriber makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Subscription Agreement may be waived other than by an instrument in writing signed by the party to be charged with enforcement and no provision of this Subscription Agreement may be amended other than by an instrument in writing signed by the Company and Subscriber.

5.5 Notices. Any notices required or permitted to be given under the terms of this Subscription Agreement shall be sent by certified or registered mail (return receipt requested) or delivered personally, by responsible overnight carrier or by confirmed facsimile, and shall be effective five (5) days after being placed in the mail, if mailed, or upon receipt or refusal of receipt, if delivered personally or by responsible overnight carrier or confirmed facsimile, in each case addressed to a party. The addresses for such communications shall be:

 

 

  

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If to the Company, to:

EcoReady Corporation

555 Winderley Place, Suite 300

Orlando, FL 32751

Facsimile:

If to the Subscriber, to:

Such address set forth under the Subscriber’s name on the Execution Page hereto executed by the Subscriber

5.6 Successors and Assigns. This Subscription Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Except as provided herein or therein, the Subscriber may not assign this Subscription Agreement or any rights or obligations hereunder.

5.7 Third Party Beneficiaries. This Subscription Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

5.8 Publicity. The Company shall have the right to approve, before issuance, any press releases, SEC statements, or any other public statements, with respect to the transactions contemplated hereby; the Company shall be entitled, without the prior approval of the Subscriber, to make any press release or SEC or FINRA filings with respect to such transactions as is required by applicable law and regulations.

5.9 Further Assurances. The Subscriber shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other Subscription Agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Subscription Agreement and the consummation of the transactions contemplated hereby.

5.10 Additional Acknowledgement. The Subscriber acknowledges that it has independently evaluated the merits of the transactions contemplated by this Subscription Agreement, reviewed and understood the terms of this Subscription Agreement, and the Subscriber Questionnaire. Subscriber represents that it has independently made a decision to enter into the transactions contemplated by the foregoing documents and agreements and it is not relying on any advice from or evaluation by any other person including other Subscribers, and is not acting In concert with any other person in making its purchase of Securities hereunder.

 

 

  

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5.11 Law and Arbitration. This Subscription Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts executed and performed in such State, without giving effect to conflict of law principles. All controversies, claims and matters of difference arising between the parties under this Subscription Agreement shall be submitted to binding arbitration in New York County, New York under the Commercial Arbitration Rules of the American Arbitration Association (lithe AAA”) from time to time in force (to the extent not in conflict with the provisions set forth herein). The agreement to arbitrate shall be specifically enforceable under applicable law in any court of competent jurisdiction. Notice of the demand for arbitration shall be filed in writing with the other parties to this Subscription Agreement and with the AAA. Once the arbitral tribunal has been constituted in full, a hearing shall be held and an award rendered as soon as practicable. The demand for arbitration shall be made within a reasonable time after the claim, dispute or other matter in question has arisen, and the parties are not making progress toward a resolution. In no event shall it be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter would be barred by the applicable contractual or other statutes of limitations. 7.11 Law and Arbitration. This Subscription Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts executed and performed in such State, without giving effect to conflict of law principles. All controversies, claims and matters of difference arising between the parties under this Subscription Agreement shall be submitted to binding arbitration in New York County, New York under the Commercial Arbitration Rules of the American Arbitration Association (lithe AAA”) from time to time in force (to the extent not in conflict with the provisions set forth herein). The agreement to arbitrate shall be specifically enforceable under applicable law in any court of competent jurisdiction. Notice of the demand for arbitration shall be filed in writing with the other parties to this Subscription Agreement and with the AAA. Once the arbitral tribunal has been constituted in full, a hearing shall be held and an award rendered as soon as practicable. The demand for arbitration shall be made within a reasonable time after the claim, dispute or other matter in question has arisen, and the parties are not making progress toward a resolution. In no event shall it be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter would be barred by the applicable contractual or other statutes of limitations.

The parties shall have reasonable discovery rights as determined by the arbitration. The award rendered by the arbitrators shall be final and judgment may be entered in accordance with applicable law and in any court having jurisdiction thereof. The decision of the arbitrators shall be rendered in writing and shall state the manner in which the fees and expenses of the arbitrators shall be borne.

5.12 Waivers. No delay on the part of any party in exercising any right, power, or privilege hereunder shall operate as a waiver thereof. Nor shall any waiver on the part of any party of any such right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege. The rights and remedies of any party based upon, arising out of or otherwise in respect of any inaccuracy in or breach by any other party of any representation, warranty, covenant or agreement contained in this Subscription Agreement shall in no way be limited by the fact that the act, omission, occurrence or other state of facts upon which any claim of any such inaccuracy or breach is based may also be the subject matter of any other representation, warranty, covenant or agreement contained in this Subscription Agreement (or in any other agreement between the parties) as to which there is no inaccuracy or breach.

 

 

  

13

  

 

5.13 Variations in Pronouns. Wherever the context shall so require, all words herein in the male gender shall be deemed to include the female or neuter gender and vice versa, all singular words shall include the plural, and all plural words shall include the singular. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require.

5.14 Presumption Against Scrivener. Each party waives the presumption that this Subscription Agreement is presumed to be in favor of the party which did not prepare it, in case of a dispute as to interpretation.

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14

  

BLUE SKY LEGENDS

NASAA LEGEND

IN MAKING AN INVESTMENT DECISION, SUBSCRIBERS MUST RELY ON THEIR OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

NOTICE TO RESIDENTS OF ALL STATES

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF CERTAIN STATES AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT IN VARIOUS STATES TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS CONFIDENTIAL TERM SHEET. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

IN WITNESS WHEREOF, the Subscriber and the Company have caused this Subscription Agreement to be duly executed as of the date first above written.

SUBSCRIBER:

By: _______________________________ (signature)

Name: _____________________________ (print name)

Title: ______________________________

 

 

 

  

15

  

 

SUBSCRIPTION AMOUNT

	
SUBSCRIBER

	
NO. OF UNITS

	
SUBSCRIPTION AMOUNT

	
 

 

Name: ______________________________

 

 

Address: ____________________________

 

____________________________________

 

____________________________________

 

____________________________________

 

 

Tax ID # ____________________________

 

 

____________________________________

(Signature)

 

 

	
________

	
$______________

Accepted by ECOREADY CORPORATION

By: _________________________________

Name: Boris Rubizhevsky

Title: Chief Executive Officer

  

16

  

 

SUBSCRIBER QUESTIONNAIRE AND STATEMENT

ECOREADY CORPORATION

Questionnaire

Before any sale of securities in EcoReady Corporation (the “Company”) can be made to you, this Subscriber Questionnaire and Statement (the “Questionnaire”) must be completed by you. The purpose of this Questionnaire is to determine whether you are an “accredited investor” as defined in Rule 501 of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”).

1. Name:

2. Address:

Home: __________________________________________________

Telephone: _____________________

Business:

Telephone: _____________________

3.  Social Security Number or Taxpayer ID Number: ___________________

4.  Occupation: ___________________________________________________

5.  Age: _______

6.  The following information is required to ascertain whether you would be deemed an “accredited investor” as defined in Rule 501 of Regulation D under the Securities Act. Please check whether you are any of the following:

(a) A bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3 (a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; any insurance company as defined in Section 2(13) of the Securities Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

Yes ___ No ___

 

 

  

17

  

 

(b) A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.

Yes ___ No ___

(c) An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.

Yes ___ No  ___

(d) A director or executive officer of the Company.

Yes ___ No ___

(e) A natural person whose individual net worth, or joint net worth with your spouse, at the time of your purchase exceeds $1,000,000.

Yes ___ No ___

(f) A natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with your spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

Yes ___ No ___

(g) A trust, with total assets in excess of $5,000,000 not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) (i.e., directed by a person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment).

Yes ___ No ___

(h) An entity in which all of the equity owners are accredited investors.

Yes ___ No ___

7. Please indicate the amount of the current net worth, which relates to your home, furnishings and automobiles. $_________

 

 

  

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8. Investment, business, and educational experience:

(a) Educational background: _________________________

(b) Principal employment positions held during last five years: _____________________

(c) Frequency of prior investments (check one in each column):

	  	
Stocks and/or Bonds

	
Venture Capital Investments

	
Frequently

	  	  
	
Occasionally

	  	  
	
Never

	  	  

9. If you do not require the assistance or advice of a Subscriber representative, please indicate below whether you believe you have sufficient knowledge and experience in financial and business matters generally to be capable of evaluating the merits and risks of this investment and, if so, please sign the Subscriber Statement below:

Yes ___ No ___

Subscriber Statement

I represent that the foregoing information is true and correct, and that I will notify the Company immediately if any material change in any of such information, which occurs prior to the closing of the purchase of the Company’s securities by me. I agree to furnish to the Company additional information requested by it in connection with its determination of whether an offer and sale of the Company securities may be made to me.

In connection with the proposed purchase of securities, the undersigned represents that he has sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of this proposed investment.

The undersigned has considered that he might have to hold the proposed investment for an indefinite period of time, and might have to bear a complete economic loss. The undersigned represents that the information contained in the Questionnaire, which has been completed by the undersigned and delivered to the Company, is true and correct.

The purchase of the securities of the Company by the undersigned will be solely for the account of the undersigned and not for the account of any other person and will not be made with a view to any resale or distribution thereof.

The undersigned recognizes that the proposed investment is being offered in a manner that is intended to comply with the requirements of Regulation D under the Securities Act of 1933, as amended, and that any acceptance of the undersigned’s Subscription Agreement by the Company will have been induced by the reliance of the Company on the correctness of the representations contained therein and herein.

 

 

  

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The undersigned understands that, in addition to the restricted stock requirements of Rule 144, clearing brokers may decline to deposit into undersigned’s account any stock certificate for a security that (1) has a closing price below one cent ($0.01) and/or (2) has stale or incomplete filings with the U.S. Securities and Exchange Commission (SEC) or with Canada’s System for Electronic Document Analysis and Retrieval (SEDAR). Moreover, in the event that Company files with Pink Sheets, clearing brokers may decline to even consider depositing Company’s securities. In addition to these conditions and limitations, the undersigned understands that clearing brokers may subject Company’s securities to additional review before accepting such securities for deposit. This review process may (1) take up to two weeks or longer and (2) may include research into Company and/or the undersigned. The undersigned also understands that certain characteristics triggering additional review include but may not be limited to: (1) low price of the security or securities under review; (2) large number of shares being deposited with clearing broker into the undersigned’s account; (3) the securities in question are non-exchange traded; (4) the stock certificates are recently issued; (5) recent merger activity of the underlying Company; and/or (6) change of name of the underlying Company issuing these stock certificates. Clearing brokers may also charge a fee to Subscriber’s account for this review. Finally, the undersigned understands that all of the aforementioned conditions, limitations, and characteristics triggering review may apply to the undersigned’s Deposit/Withdrawal At Custodian (DWAC) requests, Automated Customer Account Transfer Account Service (ACATS) requests, and Depository Trust Company (DTC) receipts for deposit requests.

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The undersigned acknowledges his, her or its understanding of the contents of the Subscription Agreement.

EXECUTION BY AN INDIVIDUAL (Not applicable to entities)

I represent that the foregoing information is true and correct.

Dated: April _______, 2011

_______________________________

(Name of Investor -Please Print)

_______________________________

(Signature)

_______________________________

(Name of Co-Investor -Please Print)

_______________________________

(Signature of Co-Investor)

EXECUTION BY AN ENTITY (Not applicable to individuals) I represent that the foregoing information is true and correct.

Dated: April _______, 2011

_______________________________

(Print Name of Company/Partnership)

 

By: ____________________________

 

 

Name: _________________________

Title: __________________________POTASH - 2011 Stock Option Plan (W0086126).DOC

POTASH AMERICA, INC.

2011 STOCK OPTION PLAN

This 2011 Stock Option Plan (the “Plan”) provides for the grant of options to acquire common shares (the “Common Shares”) in the capital of Potash America, Inc., a corporation formed under the laws of the State of Nevada (the “Corporation”).  Stock options granted under this Plan that qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) are referred to in this Plan as “Incentive Stock Options” and stock options that do not qualify under Section 422 of the Code are referred to as “Non-Qualified Stock Options”.  Incentive Stock Options and Non-Qualified Stock Options granted under this Plan are collectively referred to as “Options”.

1.

PURPOSE

1.1

The purpose of this Plan is to retain the services of valued key employees and consultants of the Corporation and such other persons as the Plan Administrator shall select in accordance with Section 3 below, and to encourage such persons to acquire a greater proprietary interest in the Corporation, thereby strengthening their incentive to achieve the objectives of the shareholders of the Corporation, and to serve as an aid and inducement in the hiring of new employees and to provide an equity incentive to consultants and other persons selected by the Plan Administrator.

1.2

This Plan shall at all times be subject to all legal requirements relating to the administration of stock option plans, if any, under applicable corporate laws, applicable United States federal and state securities laws, the Code, the rules of any applicable stock exchange or stock quotation system, and the rules of any foreign jurisdiction applicable to Options granted to residents therein (collectively, the “Applicable Laws”).

2.

ADMINISTRATION

2.1

This Plan shall be administered initially by the Board of Directors of the Corporation (the “Board”), except that the Board may, in its discretion, establish a committee composed of two (2) or more members of the Board or two (2) or more other persons to administer the Plan, which committee (the “Committee”) may be an executive, compensation or other committee, including a separate committee especially created for this purpose.  The Board or, if applicable, the Committee is referred to herein as the “Plan Administrator”.

2.2

If and so long as the Common Stock is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Corporation wishes to grant Incentive Stock Options, then the Board shall consider in selecting the Plan Administrator and the membership of any Committee, with respect to any persons subject or likely to become subject to Section 16 of the Exchange Act, the provisions regarding (a) “outside directors” as contemplated by Section 162(m) of the Code, and (b) “Non-Employee Directors” as contemplated by Rule 16b-3 under the Exchange Act.

2.3

The Committee shall have the powers and authority vested in the Board hereunder (including the power and authority to interpret any provision of the Plan or of any Option).  The members of any such Committee shall serve at the pleasure of the Board.  A majority of the 

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members of the Committee shall constitute a quorum, and all actions of the Committee shall be taken by a majority of the members present.  Any action may be taken by a written instrument signed by all of the members of the Committee and any action so taken shall be fully effective as if it had been taken at a meeting.

2.4

Subject to the provisions of this Plan and any Applicable Laws, and with a view to effecting the purpose of the Plan, the Plan Administrator shall have sole authority, in its absolute discretion, to:

(a)

construe and interpret this Plan;

(b)

define the terms used in the Plan;

(c)

prescribe, amend and rescind the rules and regulations relating to this Plan;

(d)

correct any defect, supply any omission or reconcile any inconsistency in this Plan;

(e)

grant Options under this Plan;

(f)

determine the individuals to whom Options shall be granted under this Plan and whether the Option is granted as an Incentive Stock Option or a Non-Qualified Stock Option;

(g)

determine the time or times at which Options shall be granted under this Plan;

(h)

determine the number of Common Shares subject to each Option, the exercise price of each Option, the duration of each Option and the times at which each Option shall become exercisable;

(i)

determine all other terms and conditions of the Options; and

(j)

make all other determinations and interpretations necessary and advisable for the administration of the Plan.

2.5

All decisions, determinations and interpretations made by the Plan Administrator shall be binding and conclusive on all participants in the Plan and on their legal representatives, heirs and beneficiaries.

3.

ELIGIBILITY

3.1

Incentive Stock Options may be granted to any individual who, at the time the Option is granted, is an employee of the Corporation or any Related Corporation (as defined below) (“Employees”).  

3.2

Non-Qualified Stock Options may be granted to Employees and to such other persons who are not Employees as the Plan Administrator shall select, subject to any Applicable Laws.  

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3.3

Options may be granted in substitution for outstanding Options of another corporation in connection with the merger, consolidation, acquisition of property or stock or other reorganization between such other corporation and the Corporation or any subsidiary of the Corporation.  Options also may be granted in exchange for outstanding Options. 

3.4

Any person to whom an Option is granted under this Plan is referred to as an “Optionee”.  Any person who is the owner of an Option is referred to as a “Holder”.

3.5

As used in this Plan, the term “Related Corporation” shall mean any corporation (other than the Corporation) that is a “Parent Corporation” of the Corporation or “Subsidiary Corporation” of the Corporation, as those terms are defined in Sections 424(e) and 424(f), respectively, of the Code (or any successor provisions) and the regulations thereunder (as amended from time to time).

4.

STOCK

4.1

The Plan Administrator is authorized to grant Options to acquire up to a total of 3,000,000 Common Shares.  The number of Common Shares with respect to which Options may be granted hereunder is subject to adjustment as set forth in Section 5.1(m) hereof.  In the event that any outstanding Option expires or is terminated for any reason, the Common Shares allocable to the unexercised portion of such Option may again be subject to an Option granted to the same Optionee or to a different person eligible under Section 3 of this Plan; provided however, that any cancelled Options will be counted against the maximum number of shares with respect to which Options may be granted to any particular person as set forth in Section 3 hereof.

5.

TERMS AND CONDITIONS OF OPTIONS

5.1

Each Option granted under this Plan shall be evidenced by a written agreement approved by the Plan Administrator (each, an “Agreement”).  Agreements may contain such provisions, not inconsistent with this Plan or any Applicable Laws, as the Plan Administrator in its discretion may deem advisable.  All Options also shall comply with the following requirements:

(a)

Number of Shares and Type of Option

Each Agreement shall state the number of Common Shares to which it pertains and whether the Option is intended to be an Incentive Stock Option or a Non-Qualified Stock Option; provided that:

(i)

the number of Common Shares that may be reserved pursuant to the exercise of Options granted to any person shall not exceed 5% of the issued and outstanding Common Shares of the Corporation;

(ii)

in the absence of action to the contrary by the Plan Administrator in connection with the grant of an Option, all Options shall be Non-Qualified Stock Options;

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(iii)

the aggregate fair market value (determined at the Date of Grant, as defined below) of the Common Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (granted under this Plan and all other Incentive Stock Option plans of the Corporation, a Related Corporation or a predecessor corporation) shall not exceed U.S.$100,000, or such other limit as may be prescribed by the Code as it may be amended from time to time (the “Annual Limit”); and

(iv)

any portion of an Option which exceeds the Annual Limit shall not be void but rather shall be a Non-Qualified Stock Option.

(b)

Date of Grant

Each Agreement shall state the date the Plan Administrator has deemed to be the effective date of the Option for purposes of this Plan (the “Date of Grant”).

(c)

Option Price

Each Agreement shall state the price per Common Share at which it is exercisable.  The Plan Administrator shall act in good faith to establish the exercise price in accordance with Applicable Laws; provided that:

(i)

the per share exercise price for an Incentive Stock Option or any Option granted to a “covered employee” as such term is defined for purposes of Section 162(m) of the Code shall not be less than the fair market value per Common Share at the Date of Grant as determined by the Plan Administrator in good faith; 

(ii)

with respect to Incentive Stock Options granted to greater-than-ten percent (>10%) shareholders of the Corporation (as determined with reference to Section 424(d) of the Code), the exercise price per share shall not be less than one hundred ten percent (110%) of the fair market value per Common Share at the Date of Grant as determined by the Plan Administrator in good faith; and

(iii)

Options granted in substitution for outstanding options of another corporation in connection with the merger, consolidation, acquisition of property or stock or other reorganization involving such other corporation and the Corporation or any subsidiary of the Corporation may be granted with an exercise price equal to the exercise price for the substituted option of the other corporation, subject to any adjustment consistent with the terms of the transaction pursuant to which the substitution is to occur.

(d)

Duration of Options

At the time of the grant of the Option, the Plan Administrator shall designate, subject to Section 5.1(g) below, the expiration date of the Option, which date shall not be 

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later than five (5) years from the Date of Grant; provided, that the expiration date of any Incentive Stock Option granted to a greater-than-ten percent (>10%) shareholder of the Corporation (as determined with reference to Section 424(d) of the Code) shall not be later than five (5) years from the Date of Grant.  In the absence of action to the contrary by the Plan Administrator in connection with the grant of a particular Option, and except in the case of Incentive Stock Options as described above, all Options granted under this Section 5 shall expire five (5) years from the Date of Grant.

(e)

Vesting Schedule

No Option shall be exercisable until it has vested.  The vesting schedule for each Option shall be specified by the Plan Administrator at the time of grant of the Option prior to the provision of services with respect to which such Option is granted.

The Plan Administrator may specify a vesting schedule for all or any portion of an Option based on the achievement of performance objectives established in advance of the commencement by the Optionee of services related to the achievement of the performance objectives.  Performance objectives shall be expressed in terms of objective criteria, including but not limited to, one or more of the following:  return on equity, return on assets, share price, market share, sales, earnings per share, costs, net earnings, net worth, inventories, cash and cash equivalents, gross margin or the Corporation’s performance relative to its internal business plan.  Performance objectives may be in respect of the performance of the Corporation as a whole (whether on a consolidated or unconsolidated basis), a Related Corporation, or a subdivision, operating unit, product or product line of either of the foregoing.  Performance objectives may be absolute or relative and may be expressed in terms of a progression or a range.  An Option that is exercisable (in full or in part) upon the achievement of one or more performance objectives may be exercised only following written notice to the Optionee and the Corporation by the Plan Administrator that the performance objective has been achieved.

(f)

Acceleration of Vesting

The vesting of one or more outstanding Options may be accelerated by the Plan Administrator at such times and in such amounts as it shall determine in its sole discretion.

(g)

Term of Option

(i)

Vested Options shall terminate, to the extent not previously exercised, upon the occurrence of the first of the following events:

A.

the expiration of the Option, as designated by the Plan Administrator in accordance with Section 5.1(d) above;

B.

the date of an Optionee’s termination of employment or contractual relationship with the Corporation or any Related 

- 6 -

Corporation for cause (as determined by the Plan Administrator, acting reasonably);

C.

the expiration of three (3) months from the date of an Optionee’s termination of employment or contractual relationship with the Corporation or any Related Corporation for any reason whatsoever other than cause, death or Disability (as defined below) unless, in the case of a Non-Qualified Stock Option, the exercise period is extended by the Plan Administrator until a date not later than the expiration date of the Option; or

D.

the expiration of one year (1) from termination of an Optionee’s employment or contractual relationship by reason of death or Disability (as defined below) unless, in the case of a Non-Qualified Stock Option, the exercise period is extended by the Plan Administrator until a date not later than the expiration date of the Option.

(ii)

Notwithstanding Section 5.1(g)(i) above, any vested Options which have been granted to the Optionee in the Optionee’s capacity as a director of the Corporation or any Related Corporation shall terminate upon the occurrence of the first of the following events:

A.

the event specified in Section 5.1(g)(i)A above;

B.

the event specified in Section 5.1(g)(i)D above; and

C.

the expiration of three (3) months from the date the Optionee ceases to serve as a director of the Corporation or Related Corporation, as the case may be unless, in the case of a Non-Qualified Stock Option, the exercise period is extended by the Plan Administrator until a date not later than the expiration date of the Option.

(iii)

Upon the death of an Optionee, any vested Options held by the Optionee shall be exercisable only by the person or persons to whom such Optionee’s rights under such Option shall pass by the Optionee’s will or by the laws of descent and distribution of the Optionee’s domicile at the time of death and only until such Options terminate as provided above.  

(iv)

For purposes of the Plan, unless otherwise defined in the Agreement, “Disability” shall mean medically determinable physical or mental impairment which has lasted or can be expected to last for a continuous period of not less than twelve (12) months or that can be expected to result in death.  The Plan Administrator shall determine whether an Optionee has incurred a Disability on the basis of medical evidence acceptable to the Plan Administrator.  Upon making a determination of Disability, the Plan 

- 7 -

Administrator shall, for purposes of the Plan, determine the date of an Optionee’s termination of employment or contractual relationship.

(v)

Unless accelerated in accordance with Section 5.1(f) above, unvested Options shall terminate immediately upon termination of employment of the Optionee by the Corporation for any reason whatsoever, including death or Disability.  

(vi)

For purposes of this Plan, transfer of employment between or among the Corporation and/or any Related Corporation shall not be deemed to constitute a termination of employment with the Corporation or any Related Corporation.  Employment shall be deemed to continue while the Optionee is on military leave, sick leave or other bona fide leave of absence (as determined by the Plan Administrator).  The foregoing notwithstanding, employment shall not be deemed to continue beyond the first ninety (90) days of such leave, unless the Optionee’s re-employment rights are guaranteed by statute or by contract.

(h)

Exercise of Options

(i)

Options shall be exercisable, in full or in part, at any time after vesting, until termination.  If less than all of the Common Shares included in the vested portion of any Option are purchased, the remainder may be purchased at any subsequent time prior to the expiration of the Option term. Only whole Common Shares may be issued pursuant to an Option, and to the extent that an Option covers less than one (1) share, it is unexercisable.

(ii)

Options or portions thereof may be exercised by giving written notice to the Corporation, which notice shall specify the number of Common Shares to be purchased, and be accompanied by payment in the amount of the aggregate exercise price for the Common Shares so purchased, which payment shall be in the form specified in Section 5.1(i) below.  The Corporation shall not be obligated to issue, transfer or deliver a certificate representing Common Shares to the Holder of any Option, until provision has been made by the Holder, to the satisfaction of the Corporation, for the payment of the aggregate exercise price for all Common Shares for which the Option shall have been exercised and for satisfaction of any tax withholding obligations associated with such exercise.  During the lifetime of an Optionee, Options are exercisable only by the Optionee.

(i)

Payment upon Exercise of Option

Upon the exercise of any Option, the aggregate exercise price shall be paid to the Corporation in cash or by certified or cashier’s check.  In addition, if pre-approved in writing by the Plan Administrator who may arbitrarily withhold consent, the Holder 

- 8 -

may pay for all or any portion of the aggregate exercise price by complying with one or more of the following alternatives:

(i)

by delivering a properly executed exercise notice together with irrevocable instructions to a broker promptly to sell or margin a sufficient portion of the Common Shares and deliver directly to the Corporation the amount of sale or margin loan proceeds to pay the exercise price; or

(ii)

by complying with any other payment mechanism approved by the Plan Administrator at the time of exercise.

(j)

No Rights as a Shareholder

A Holder shall have no rights as a shareholder of the Corporation with respect to any Common Shares covered by an Option until such Holder becomes a record holder of such Common Shares, irrespective of whether such Holder has given notice of exercise.  Subject to the provisions of Section 5.1(m) hereof, no rights shall accrue to a Holder and no adjustments shall be made on account of dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights declared on, or created in, the Common Shares for which the record date is prior to the date the Holder becomes a record holder of the Common Shares covered by the Option, irrespective of whether such Holder has given notice of exercise.

(k)

Non-transferability of Options

Options granted under this Plan and the rights and privileges conferred by this Plan may not be transferred, assigned, pledged or hypothecated in any manner (whether by operation of law or otherwise) other than by will, by applicable laws of descent and distribution, and shall not be subject to execution, attachment or similar process.  Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of any Option or of any right or privilege conferred by this Plan contrary to the provisions hereof, or upon the sale, levy or any attachment or similar process upon the rights and privileges conferred by this Plan, such Option shall thereupon terminate and become null and void.

(l)

Securities Regulation and Tax Withholding

(i)

Common Shares shall not be issued with respect to an Option unless the exercise of such Option and the issuance and delivery of such Common Shares shall comply with all Applicable Laws, and such issuance shall be further subject to the approval of counsel for the Corporation with respect to such compliance, including the availability of an exemption from prospectus and registration requirements for the issuance and sale of such Common Shares.  The inability of the Corporation to obtain from any regulatory body the authority deemed by the Corporation to be necessary for the lawful issuance and sale of any Common Shares under this Plan, or the unavailability of an exemption from prospectus and registration requirements for the issuance and sale of any Common Shares under this 

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Plan, shall relieve the Corporation of any liability with respect to the non-issuance or sale of such Common Shares.

(ii)

As a condition to the exercise of an Option, the Plan Administrator may require the Holder to represent and warrant in writing at the time of such exercise that the Common Shares are being purchased only for investment and without any then-present intention to sell or distribute such Common Shares.  If necessary under Applicable Laws, the Plan Administrator may cause a stop-transfer order against such Common Shares to be placed on the stock books and records of the Corporation, and a legend indicating that the Common Shares may not be pledged, sold or otherwise transferred unless an opinion of counsel is provided stating that such transfer is not in violation of any Applicable Laws, may be stamped on the certificates representing such Common Shares in order to assure an exemption from registration.  The Plan Administrator also may require such other documentation as may from time to time be necessary to comply with applicable securities laws.  THE CORPORATION HAS NO OBLIGATION TO UNDERTAKE REGISTRATION OF OPTIONS OR THE COMMON SHARES ISSUABLE UPON THE EXERCISE OF OPTIONS.

(iii)

The Holder shall pay to the Corporation by certified or cashier’s check, promptly upon exercise of an Option or, if later, the date that the amount of such obligations becomes determinable, all applicable federal, state, local and foreign withholding taxes that the Plan Administrator, in its discretion, determines to result upon exercise of an Option or from a transfer or other disposition of Common Shares acquired upon exercise of an Option or otherwise related to an Option or Common Shares acquired in connection with an Option.  Upon approval of the Plan Administrator, a Holder may satisfy such obligation by complying with one or more of the following alternatives selected by the Plan Administrator:

A.

by delivering to the Corporation Common Shares previously held by such Holder or by the Corporation withholding Common Shares otherwise deliverable pursuant to the exercise of the Option, which Common Shares received or withheld shall have a fair market value at the date of exercise (as determined by the Plan Administrator) equal to any withholding tax obligations arising as a result of such exercise, transfer or other disposition; or

B.

by complying with any other payment mechanism approved by the Plan Administrator from time to time.

(iv)

The issuance, transfer or delivery of certificates representing Common Shares pursuant to the exercise of Options may be delayed, at the discretion of the Plan Administrator, until the Plan Administrator is satisfied that the applicable requirements of all Applicable Laws and the 

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withholding provisions of the Code have been met and that the Holder has paid or otherwise satisfied any withholding tax obligation as described in Section 5.1(l)(iii) above.

(m)

Adjustments Upon Changes In Capitalization

(i)

The aggregate number and class of shares for which Options may be granted under this Plan, the number and class of shares covered by each outstanding Option, and the exercise price per share thereof (but not the total price), and each such Option, shall all be proportionately adjusted for any increase or decrease in the number of issued Common Shares of the Corporation resulting from:

A.

a subdivision or consolidation of Common Shares or any like capital adjustment, or

B.

the issuance of any Common Shares, or securities exchangeable for or convertible into Common Shares, to the holders of all or substantially all of the outstanding Common Shares by way of a stock dividend (other than the issue of Common Shares, or securities exchangeable for or convertible into Common Shares, to holders of Common Shares pursuant to their exercise of options to receive dividends in the form of Common Shares, or securities convertible into Common Shares, in lieu of dividends paid in the ordinary course on the Common Shares).

(ii)

Except as provided in Section 5.1(m)(iii) hereof, upon a merger (other than a merger of the Corporation in which the holders of Common Shares immediately prior to the merger have the same proportionate ownership of common shares in the surviving corporation immediately after the merger), consolidation, acquisition of property or stock, separation, reorganization (other than a mere re-incorporation or the creation of a holding Corporation) or liquidation of the Corporation, as a result of which the shareholders of the Corporation, receive cash, shares or other property in exchange for or in connection with their Common Shares, any Option granted hereunder shall terminate, but the Holder shall have the right to exercise such Holder’s Option immediately prior to any such merger, consolidation, acquisition of property or shares, separation, reorganization or liquidation, and to be treated as a shareholder of record for the purposes thereof, to the extent the vesting requirements set forth in the Option agreement have been satisfied.

(iii)

If the shareholders of the Corporation receive shares in the capital of another corporation ("Exchange Shares") in exchange for their Common Shares in any transaction involving a merger (other than a merger of the Corporation in which the holders of Common Shares immediately prior to the merger have the same proportionate ownership of Common Shares in 

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the surviving corporation immediately after the merger), consolidation, acquisition of property or shares, separation or reorganization (other than a mere re-incorporation or the creation of a holding Corporation), all Options granted hereunder shall be converted into options to purchase Exchange Shares unless the Corporation and the corporation issuing the Exchange Shares, in their sole discretion, determine that any or all such Options granted hereunder shall not be converted into options to purchase Exchange Shares but instead shall terminate in accordance with, and subject to the Holder’s right to exercise the Holder’s Options pursuant to, the provisions of Section 5.1(m)(ii).  The amount and price of converted options shall be determined by adjusting the amount and price of the Options granted hereunder in the same proportion as used for determining the number of Exchange Shares the holders of the Common Shares receive in such merger, consolidation, acquisition or property or stock, separation or reorganization.  Unless accelerated by the Board, the vesting schedule set forth in the option agreement shall continue to apply to the options granted for the Exchange Shares.

(iv)

In the event of any adjustment in the number of Common Shares covered by any Option, any fractional shares resulting from such adjustment shall be disregarded and each such Option shall cover only the number of full shares resulting from such adjustment.

(v)

All adjustments pursuant to Section 5.1(m) shall be made by the Plan Administrator, and its determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive.  

(vi)

The grant of an Option shall not affect in any way the right or power of the Corporation to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge, consolidate or dissolve, to liquidate or to sell or transfer all or any part of its business or assets.

6.

EFFECTIVE DATE; AMENDMENT; SHAREHOLDER APPROVAL

6.1

Options may be granted by the Plan Administrator from time to time on or after the date on which this Plan is adopted by the Board (the “Effective Date”).

6.2

Unless sooner terminated by the Board, this Plan shall terminate on the tenth anniversary of the Effective Date.  No Option may be granted after such termination or during any suspension of this Plan.

6.3

Any Incentive Stock Options granted by the Plan Administrator prior to the ratification of this Plan by the shareholders of the Corporation shall be granted subject to approval of this Plan by the holders of a majority of the Corporation's outstanding voting shares, passed without meeting pursuant to Section 78.320 of the Nevada Revised Statutes or by voting either in person or by proxy at a duly held shareholders' meeting within twelve (12) months 

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before or after the Effective Date.  If such shareholder approval is sought and not obtained, all Incentive Stock Options granted prior thereto and thereafter shall be considered Non-Qualified Stock Options and any Options granted to Covered Employees will not be eligible for the exclusion set forth in Section 162(m) of the Code with respect to the deductibility by the Corporation of certain compensation.

7.

NO OBLIGATIONS TO EXERCISE OPTION

7.1

The grant of an Option shall impose no obligation upon the Optionee to exercise such Option.

8.

NO RIGHT TO OPTIONS OR TO EMPLOYMENT

8.1

Whether or not any Options are to be granted under this Plan shall be exclusively within the discretion of the Plan Administrator, and nothing contained in this Plan shall be construed as giving any person any right to participate under this Plan.  The grant of an Option shall in no way constitute any form of agreement or understanding binding on the Corporation or any Related Corporation, express or implied, that the Corporation or any Related Corporation will employ or contract with an Optionee for any length of time, nor shall it interfere in any way with the Corporation’s or, where applicable, a Related Corporation’s right to terminate Optionee’s employment at any time, which right is hereby reserved.

9.

APPLICATION OF FUNDS

9.1

The proceeds received by the Corporation from the sale of Common Shares issued upon the exercise of Options shall be used for general corporate purposes, unless otherwise directed by the Board.

10.

INDEMNIFICATION OF PLAN ADMINISTRATOR

10.1

In addition to all other rights of indemnification they may have as members of the Board, members of the Plan Administrator shall be indemnified by the Corporation for all reasonable expenses and liabilities of any type or nature, including attorneys’ fees, incurred in connection with any action, suit or proceeding to which they or any of them are a party by reason of, or in connection with, this Plan or any Option granted under this Plan, and against all amounts paid by them in settlement thereof (provided that such settlement is approved by independent legal counsel selected by the Corporation), except to the extent that such expenses relate to matters for which it is adjudged that such Plan Administrator member is liable for willful misconduct; provided, that within fifteen (15) days after the institution of any such action, suit or proceeding, the Plan Administrator member involved therein shall, in writing, notify the Corporation of such action, suit or proceeding, so that the Corporation may have the opportunity to make appropriate arrangements to prosecute or defend the same.

11.

AMENDMENT OF PLAN

11.1

The Plan Administrator may, at any time, modify, amend or terminate this Plan or modify or amend Options granted under this Plan, including, without limitation, such modifications or amendments as are necessary to maintain compliance with the Applicable 

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Laws.  The Plan Administrator may condition the effectiveness of any such amendment on the receipt of shareholder approval at such time and in such manner as the Plan Administrator may consider necessary for the Corporation to comply with or to avail the Corporation and/or the Optionees of the benefits of any securities, tax, market listing or other administrative or regulatory requirements.

Effective Date: April 21, 2011

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