Document:

akom_ex101.htm

EXHIBIT 10.1

 

AERKOMM INC.

 

COMMON STOCK SUBSCRIPTION AGREEMENT

 

This Common Stock Subscription Agreement (the “Agreement”) is made as of ______________, 2017, by and among Aerkomm Inc., a Nevada corporation (the “Company”), and the persons and entities named on the Schedule of Subscribers attached hereto as Exhibit A (individually, a “Subscriber” and collectively, the “Subscribers”).

 

RECITALS

 

To provide the Company with additional resources to conduct its business and for the other uses of proceeds specified in this Agreement, the Company is offering and selling to the Subscribers (the “Offering”) and the Subscribers are willing to purchase, in the aggregate, up to 1,000,000 shares (each a “Share” and, collectively, the “Shares”) of the Company’s Common Stock, $0.001 par value per share (“Common Stock”), for an aggregate purchase price of up to $5,000,000, subject to the conditions specified herein. The Shares are being sold at a purchase price per Share of $5.00 (the “Per Share Price”).

 

The Shares being subscribed for pursuant to this Agreement have not been registered under the Securities Act of 1933, as amended (the “Securities Act”). The Offering is being made exclusively to a select few “accredited investors,” as defined in Regulation D under the Securities Act, known to the Company.

 

Agreement

 

Now, Therefore, in consideration of the foregoing, and the representations, warranties, covenants and conditions set forth below, the Company and each Subscriber, intending to be legally bound, hereby agree as follows:

 

1. Subscription. Each undersigned Subscriber hereby subscribes to purchase the number of shares of Common Stock equal to the Investment Amount set forth on its respective signature page attached hereto divided by the Per Share Price, subject to the terms and conditions of this Agreement and based on the representations, warranties, covenants and agreements contained herein. The Company may accept subscriptions and deposit funds in its corporate account in one or several closings (each a “Closing”) that will occur on or before August 31, 2017. No minimum amount must be raised for the Company to have a Closing and Subscriber funds will be deposited directly into the Company’s operating bank account as no escrow account is being used for this Offering.

 

2. Representations and Warranties of the Company. The Company hereby represents and warrants to each Subscriber the following: 

 

a. Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. The Company has the requisite corporate power to own and operate its properties and assets and to carry on its business as now conducted and as proposed to be conducted. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.

 

	 
	1
	

 
	 

 

b. Corporate Power. The Company has all requisite corporate power to execute and deliver this Agreement and all related agreements (the “Subscription Documents”) and to carry out and perform its obligations under the terms of the Subscription Documents. 

 

c. Authorization. All corporate action on the part of the Company, its directors and its stockholders necessary for the authorization of the Subscription Documents and the execution, delivery and performance of all obligations of the Company under the Subscription Documents, including the issuance and delivery of the shares of Common Stock being subscribed for under this Agreement (the “Shares”) has been taken or will be taken prior to the issuance of the Shares. The Subscription Documents, when executed and delivered by the Company, shall constitute valid and binding obligations of the Company enforceable in accordance with their terms, subject to laws of general application relating to bankruptcy, insolvency, the relief of debtors and, with respect to rights to indemnity, subject to federal and state securities laws. The Shares, when issued in compliance with the provisions of the Subscription Documents will be validly issued, fully paid and nonassessable and free of any liens or encumbrances and issued in compliance with all applicable federal and securities laws.

 

d. Governmental Consents. All consents, approvals, orders, or authorizations of, or registrations, qualifications, designations, declarations, or filings with, any governmental authority, required on the part of the Company in connection with the valid execution and delivery of this Agreement, the offer, sale or issuance of the Shares or the consummation of any other transaction contemplated hereby shall have been obtained and will be effective when required by such governmental authority. 

 

e. Compliance with Laws. To its knowledge, the Company is not in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties, which violation would materially and adversely affect the business, assets, liabilities, financial condition or operations of the Company. 

 

f. Compliance with Other Instruments. The Company is not in violation or default of any term of its certificate of incorporation or bylaws, or of any provision of any mortgage, indenture or contract to which it is a party and by which it is bound or of any judgment, decree, order or writ, other than such violations that would not individually or in the aggregate have a material adverse effect on the Company. The execution, delivery and performance of the Subscription Documents, and the consummation of the transactions contemplated by the Subscription Documents will not result in any such violation or be in conflict with, or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, decree, order or writ or an event that results in the creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties. The sale of the Shares is not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with.

 
	 
	2
	

 
	 

 

g. Offering. Assuming the accuracy of the representations and warranties of the Subscribers contained in Section 3 hereof, the offer, issue, and sale of the Shares is exempt from the registration and prospectus delivery requirements of the Securities Act, and has been registered or qualified (or is exempt from registration and qualification) under the registration, permit, or qualification requirements of all applicable state securities laws.

 

h. Use of Proceeds. The Company shall use the proceeds of sale and issuance of the Shares for the development and operation of its business and for general corporate and working capital purposes. 

 

3. Representations and Warranties of the Subscriber. Each Subscriber represents and warrants to the Company the following: 

 

a. Purchase for Own Account. Each Subscriber represents that it is acquiring the Shares solely for its own account and beneficial interest for investment and not for sale or with a view to distribution of the Shares or any part thereof, has no present intention of selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the same, and does not presently have reason to anticipate a change in such intention.

 

b. Information and Sophistication. Without lessening or obviating the representations and warranties of the Company set forth in Section 2, each Subscriber hereby: (i) acknowledges that it has received all the information it has requested from the Company and it considers necessary or appropriate for deciding whether to acquire the Shares, (ii) represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Shares and to obtain any additional information necessary to verify the accuracy of the information given the Subscriber, (iii) further represents that it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risk of this investment, and (iv) acknowledges that it has carefully reviewed the risk factors associated with an investment in the Company, which may be found in the section captioned “Risk Factors” of the Company’s Current Report on Form 8-K, which was filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 14, 2017 and available at (https://www.sec.gov/Archives/edgar/data/1590496/000147793217000737/maple_8k.htm) or by searching under the Company’s name on www.sec.gov.

 

c. Ability to Bear Economic Risk. Each Subscriber acknowledges that investment in the Securities involves a high degree of risk, and represents that it is able, without materially impairing its financial condition, to hold the Securities for an indefinite period of time and to suffer a complete loss of its investment.

 
	 
	3
	

 
	 

 

d. Further Limitations on Disposition. Without in any way limiting the representations set forth above, each Subscriber further agrees not to make any disposition of all or any portion of the Securities unless and until:

 

	
 
	i.	There is then in effect a Registration Statement under the Securities Act or a qualified offering statement under Regulation A (“Regulation A”) of the Securities Act covering such proposed disposition and such disposition is made in accordance with such Registration Statement or qualified offering statement; or
	
 
	
 
	
 

	
 
	ii.	The Subscriber shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, such Subscriber shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration under the Securities Act or any applicable state securities laws, provided that no such opinion shall be required for dispositions in compliance with Rule 144, except in unusual circumstances.
	
 
	
 
	
 

	
 
	iii.	Notwithstanding the provisions of paragraphs (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by such Subscriber to a partner (or retired partner) or member (or retired member) of such Subscriber in accordance with partnership or limited liability company interests, or transfers by gift, will or intestate succession to any spouse or lineal descendants or ancestors, if all transferees agree in writing to be subject to the terms hereof to the same extent as if they were Subscribers hereunder.

 

e. Accredited Investor Status. Each Subscriber is an “accredited investor” as such term is defined in Rule 501 under the Act.

 

4. Further Agreements

 

a. Registration Rights. The Company hereby grants the following registration rights to each Subscriber.

 

	
 
	i.	Registration Statement. The Company shall file with the SEC not later than ninety (90) days after the date of the final Closing a registration statement on an appropriate form (the “Registration Statement”) covering the resale of the Shares and shall use its commercially reasonable efforts to cause the Registration Statement to be declared effective within one hundred eighty (180) days following the final Closing. Notwithstanding anything to the contrary herein, at any time, the Company may delay the disclosure of material, non-public information concerning the Company the disclosure of which at the time is not, in the good faith opinion of the Board of Directors of the Company, in the best interest of the Company and otherwise required (a “Grace Period”); provided, that the Company shall promptly: (i) notify the Subscribers in writing of the existence of material, non-public information giving rise to a Grace Period (provided that in each notice the Company will not disclose the content of such material, non-public information to the Subscribers) and the date on which the Grace Period will begin, and (ii) use commercially reasonable efforts to resolve any issue that makes disclosure of the material, non-public information not in the best interests of the Company.

 

	 
	4
	

 
	 

 

	
 
	ii.	Registration Procedures. In connection with the Registration Statement, the Company will:

 

	
 
	1.	Prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective with respect to the Subscriber until all the Shares owned by such Subscriber may be resold without restriction under the Securities Act; and
	
 
	
 
	
 

	
 
	2.	Immediately notify the Subscribers when the prospectus included in the Registration Statement is required to be delivered under the Securities Act, of the happening of any event of which the Company has knowledge as a result of which the prospectus contained in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. If the Company notifies the Subscribers to suspend the use of any prospectus until the requisite changes to such prospectus have been made, then the Subscribers shall suspend use of such prospectus. In such event, the Company will use its commercially reasonable efforts to update such prospectus as promptly as is practicable.

  

	
 
	iii.	Provision of Documents etc. In connection with the Registration Statement, the Subscriber will furnish to the Company in writing such information and representation letters with respect to itself and the proposed distribution by it as reasonably shall be necessary in order to assure compliance with federal and applicable state securities laws. The Company may require the Subscriber, upon five business days’ notice, to furnish to the Company a certified statement as to, among other things, the number of Shares and the number of other shares of the Company’s Common Stock beneficially owned by such Subscriber and the person that has voting and dispositive control over such shares. The Subscriber covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act, if applicable, in connection with sales of Shares pursuant to the Registration Statement.

 

	 
	5
	

 
	 

 

	
 
	iv.	Expenses. All expenses incurred by the Company in complying with this section, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees of transfer agents and registrars are called “Registration Expenses.” All underwriting discounts and selling commissions applicable to the sale of the Shares, including any fees and disbursements of any counsel to the Subscriber, are called “Selling Expenses.” The Company will pay all Registration Expenses in connection with the Registration Statement. Selling Expenses in connection with the Registration Statement shall be borne by the applicable Subscriber.
	
 
	
 
	
 

	
 
	v.	Indemnification and Contribution.

 

	
 
	1.	The Company will, to the extent permitted by law, indemnify and hold harmless each Subscriber, and, as applicable, each officer of each Subscriber, each director of each Subscriber, and each other person, if any, who controls each Subscriber within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such Subscriber or such other person (a “controlling person”) may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) (“Claims”) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement at the time of its effectiveness, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances when made, and will, subject to the limitations herein, reimburse such Subscriber and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the Company shall not be liable to a Subscriber to the extent that any Claim arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in conformity with information furnished by such Subscriber or any such controlling person in writing specifically for use in the Registration Statement or related prospectus, as amended or supplemented.

 

	 
	6
	

 
	 

 

	
 
	2.	Each Subscriber severally but not jointly will, to the extent permitted by law, indemnify and hold harmless the Company, and each person, if any, who controls the Company within the meaning of the Securities Act, each underwriter, each officer of the Company who signs the Registration Statement and each director of the Company against all Claims to which the Company or such officer, director, underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such Claims arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and each such officer, director, underwriter and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, provided, however, that such Subscriber will be liable hereunder in any such case if and only to the extent that any such Claim arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information pertaining to such Subscriber, as such, furnished in writing to the Company by such Subscriber specifically for use in the Registration Statement or related prospectus, as amended or supplemented.
	
 
	
 
	
 

	
 
	3.	Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified party other than under this section and shall only relieve it from any liability which it may have to such indemnified party under this section except and only if and to the extent the indemnifying party is materially prejudiced by such omission. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this section for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the indemnifying party or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified parties, as a group, shall have the right to select one separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred. The indemnifying party shall not be liable for any settlement of any such proceeding affected without its written consent, which consent shall not be unreasonably withheld.

 

	 
	7
	

 
	 

 

	
 
	4.	In order to provide for just and equitable contribution in the event of joint liability under the Securities Act in any case in which either (i) a Subscriber, or any controlling person of a Subscriber, makes a claim for indemnification pursuant to this section but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this section provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of the Subscriber or controlling person of the Subscriber in circumstances for which indemnification is not provided under this section, then, and in each such case, the Company and the Subscriber will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in a manner that reflects, as near as practicable, the economic effect of the foregoing provisions of this section. Notwithstanding the foregoing, no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

 

	
 
	vi.	Delivery of Unlegended Shares.

 

	
 
	1.	Within three business days (such business day, the “Unlegended Shares Delivery Date”) after the business day on which the Company has received (i) a notice that Shares have been sold either pursuant to, and in compliance with, the Registration Statement or Rule 144 under the Securities Act and (ii) in the case of sales under Rule 144, customary representation letters of the Subscriber and Subscriber’s broker regarding compliance with the requirements of Rule 144, the Company at its expense, (A) shall deliver the Shares so sold without any restrictive legends relating to the Securities Act (the “Unlegended Shares”); and (B) shall cause the transmission of the certificates representing the Unlegended Shares together with a legended certificate representing the balance of the unsold Shares, if any, to the Subscriber at the address specified in the notice of sale, via express courier, by electronic transfer or otherwise on or before the Unlegended Shares Delivery Date. Transfer fees shall be the responsibility of the Subscriber.

 

	 
	8
	

 
	 

 

	
 
	2.	In lieu of delivering physical certificates representing the Unlegended Shares, if the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer program, upon request of a Subscriber, so long as the certificates therefor do not bear a legend and the Subscriber is not obligated to return such certificate for the placement of a legend thereon, the Company shall use its best efforts to cause its transfer agent to electronically transmit the Unlegended Shares by crediting the account of Subscriber’s broker with DTC through its Deposit/Withdrawal at Custodian system. Such delivery must be made on or before the Unlegended Shares Delivery Date but is subject to the cooperation of the Subscriber’s broker (the so-called DTC participant).
	
 
	
 
	
 

	
 
	3.	The Subscriber, severally and not jointly, agrees that the removal of the restrictive legend from certificates representing the Shares as set forth in this section is predicated upon the Company’s reliance that the Subscriber will sell any Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom.

 

b. “Market Stand-Off” Agreement. Each Subscriber agrees that such Subscriber shall not sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any Common Stock (or other securities) of the Company held by such Subscriber (other than those included in the registration) during the 180-day period following the effective date of the Company’s first firm commitment underwritten public offering of its Common Stock registered under the Securities Act (or such longer period as the underwriters or the Company shall request in order to facilitate compliance with FINRA Rule 2711 or NYSE Member Rule 472 or any successor or similar rule or regulation), provided that all officers and directors of the Company are bound by and have entered into similar agreements. Each Subscriber agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters that are consistent with the Subscriber’s obligations under Section 4(b) or that are necessary to give further effect to this Section 4(b). In addition, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, each Subscriber shall provide, within 10 days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company’s securities pursuant to a registration statement filed under the Act. The obligations described in this Section 4(b) shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a transaction on Form S-4 or similar forms that may be promulgated in the future.

 

	 
	9
	

 
	 

 

c. Further Assurances. Each Subscriber agrees and covenants that at any time and from time to time it will promptly execute and deliver to the Company such further instruments and documents and take such further action as the Company may reasonably require to carry out the full intent and purpose of this Agreement and to comply with state or federal securities laws or other regulatory approvals.

 

5. Miscellaneous

 

a. Binding Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, expressed or implied, is intended to confer upon any third party any rights, remedies, obligations, or liabilities under or because of this Agreement, except as expressly provided in this Agreement.

 

b. Governing Law; Consent to Jurisdiction. This Agreement shall be governed by and construed under the laws of the State of California as applied to agreements among California residents, made and to be performed entirely within the State of California, without giving effect to conflicts of laws principles. Each party to this Agreement hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the city of San Francisco for the adjudication of any dispute hereunder or in connection with any transaction contemplated hereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof (certified or registered mail, return receipt requested) to such party at the address in effect for notices to it under this agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

 

c. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

d. Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

	 
	10
	

 
	 

 

e. Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Company at the address on the signature page below, and to Subscriber at the addresses set forth on the Schedule of Subscribers attached hereto or at such other addresses as the Company or Subscriber may designate by 10 days advance written notice to the other parties hereto.

 

f. Modification; Waiver. No modification or waiver of any provision of this Agreement or consent to departure therefrom shall be effective only upon the written consent of the Company and the holders of a majority of the Shares being sold under this Agreement.

 

g. Expenses. The Company and each Subscriber shall each bear its respective expenses and legal fees incurred with respect to this Agreement and the transactions contemplated herein.

 

h. Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to each Subscriber, upon any breach or default of the Company under the Subscription Documents shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character by Subscriber of any breach or default under this Agreement, or any waiver by any Subscriber of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in writing and that all remedies, either under this Agreement, or by law or otherwise afforded to the Subscriber, shall be cumulative and not alternative.

 

i. Entire Agreement. This Agreement and the exhibits and schedules hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other party in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein.

 

[Signature pages follow]

 

	 
	11
	

 
	 

 

In Witness Whereof, the parties have executed this Subscription Agreement as of the date first written above.

 

SUBSCRIBER:

 

 

 

 

 

	
Signature block for individuals:
	
 
	
 

	
 
	
Printed Name of Individual
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
Signature of Individual
	
 

	
 
	
 
	
 

	
Signature block for entities:
	
 
	
 

	
 
	
Printed Name of Entity
	
 

	
 
	
 
	
 
	
 

	
 
	
 By:
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
 Name:
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
 Title:
	
 
	
 

	
 
	
 
	
 
	
 

 

Investment Amount: $____________________________ 

 

Address:

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

__________________________________________________________________________________________________________

 

Phone Number: ______________________________________________________________________________________________ 

 

	 
	12
	

 
	 

 

EXHIBIT A

 

Schedule of Subscribers

(Subscribers)

 

	
Name
	
 
	
Address
	
 
	
 
	
Number of Shares of Common Stock Purchased
	
 
	
 
	
Aggregate Common Purchase Price
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
		
 
	
 
	
 
		
 
	
 
	
 
		
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
TOTAL
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

 

 

	13Exhibit 4.1

 

OurPet’s Company

2017 Stock Option Plan

 

Section
1.             General Purpose of the Plan; Definitions.

 

The name of the plan
is the OurPet’s 2017 Stock Option Plan (the “Plan”) and is effective as of the Effective Date. The purpose of
the Plan is to encourage and enable the officers, directors, key employees and consultants of OurPet’s Company (the “Company”)
upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company’s welfare
will assure a closer identification of their interests with those of the Company, thereby stimulating their efforts on the Company’s
behalf and strengthening their desire to remain with the Company. This Plan and any Awards granted hereunder are intended to be
exempt from the requirements of Section 409A, and shall be interpreted and administered in a manner consistent with those intentions.

 

The following terms shall be defined as
set forth below:

 

“Administrator” is defined in
Section 2.

 

“Affiliate”
means a corporation or other entity that, directly or through one or more intermediaries, controls, is controlled by or is under
common control with, the Company.

 

“Award”
or “Awards,” except where referring to a particular category of grant under the Plan, shall include, but not be limited
to, Options and Restricted Stock Awards.

 

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

 

“Cause”
means, and shall be limited to, a vote of the Board to the effect that the participant should be dismissed as a result of (i) any
material breach by the participant of any agreement to which the participant and the Company are parties, (ii) any act (other than
retirement, death or disability) or omission to act by the participant, including without limitation, the commission of any crime,
which may have a material and adverse effect on the business of the Company or on the participant’s ability to perform services
for the Company, or (iii) any material misconduct or neglect of duties by the participant in connection with the business or affairs
of the Company.

 

“Change of Control”
is defined in Section 11.

 

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

 

“Committee”
means the Compensation Committee of the Board referred to in Section 2.

 

“Director”
means a member of the Board.

 

     

     

    

 

“Effective Date”
means June 5, 2017.

 

“Exercise Date”
means the date on the close of business on the day on which the Options shall have been exercised as provided in Section 5.

 

“Exercise Price” is defined
in Section 5.

 

“Fair Market
Value” means the fair market value of a Share as determined in good faith by the Administrator as follows: (i) if the Shares
are listed on a national securities exchange, the Nasdaq National Market or another nationally recognized exchange or trading system
as of the relevant date, the Fair Market Value per Share shall be deemed to be the closing market price on the date of grant of
the Option or, if no such price is reported on such date, such price on the next preceding business day; or, (ii) if the Shares
are not listed on a national securities exchange, the Nasdaq National Market or another nationally recognized exchange or trading
system as of the Exercise Date, the Fair Market Value per Share shall be deemed to be the amount most recently determined by the
Board to represent the fair market value per Share (including without limitation a determination for purposes of granting Options
or issuing Shares under an employee benefit plan of the Company).

 

"Grant Date"
means, with respect to an Award, the date such Award is granted to a Participant. The Grant Date of an Award shall not be earlier
than the date the Award is approved by the Committee.

 

“Incentive Stock
Options” shall mean incentive stock options as defined in Section Section 422 of the Code.

 

“Incumbent Director”
is defined in Section 11.

 

“Non-Employee
Director” shall mean a Director who: (i) is not an officer or employee of the Company or any Subsidiary; (ii) does not (A)
receive compensation, directly or indirectly, from the Company or any Subsidiary for services rendered as a consultant or in any
other capacity other than as a Director, except for an amount that does not exceed the dollar amount for which disclosure would
be required under Item 404(a) of Regulation S-K, 17 C.F.R. Section 229.404(a), or (B) possess an interest in any transaction for
which disclosure would be required under Item 404(a) of Regulation S-K, 17 C.F.R. Section 229.404(a); and (iii) is not engaged
in a business relationship for which disclosure would be required under Item 404(b) of Regulation S-K, 17 C.F.R. Section 229.404(b).

 

“Non-Statutory
Stock Options” shall mean Options which are not Incentive Stock Options.

 

“Option”
or “Stock Option” (when capitalized) shall mean any option granted under this Plan.

 

“Option Agreement”
is defined in Section 5.

 

    	 	2	 

     

    

 

“Optionee”
shall mean a person to whom a Stock Option is granted under this Plan or any person who succeeds to the rights of such person under
this Plan by reason of the death of such person.

 

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

 

“Section 409A”
means Section 409A of the Code and the U.S. Department of Treasury regulations and other interpretive guidance issued thereunder.

 

“Share”
means a share of common stock (or other comparable equity interest) of the Company, subject to adjustment pursuant to Section 3.

 

“Shareholder”
means the holder of a Share.

 

“Subsidiary”
means a “subsidiary corporation” as defined in Section 424(f) of the Code.

 

“Ten Percent
Stockholder” means a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Affiliate.

 

Section 2.             Administration
of Plan; Authority to Select Participants and Determine Awards.

 

(a)          Administration
of Plan. The Plan shall be administered by the Board or, at the discretion of the Board, the Compensation Committee of the
Board (the “Committee”). The Board or the Committee, as applicable, shall be referred to herein as the “Administrator.”
The Committee shall have all of the powers of the Board with respect to this Plan.

 

(b)          Authority
to Select Participants and Determine Awards. The Administrator shall have the power and authority, subject to and within the
limitations of the express provisions of the Plan and Section 409A, to grant Awards consistent with the terms of the Plan, including
the power and authority:

 

(i)          to
select the officers, key employees, Directors and consultants of the Company to whom Awards may from time to time be granted;

 

(ii)         to
determine the time or times of grant, and the extent, if any, of Options and Restricted Stock, or any combination of the foregoing,
granted to any officer, key employee, Director or consultant;

 

(iii)        to
determine the number of Shares to be covered by any Award granted to an officer, key employee, Director or consultant;

 

    	 	3	 

     

    

 

(iv)        to
determine and modify the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award
granted to an officer, key employee, Director or consultant which terms and conditions may differ among individual Awards and participants,
and to approve the form of written instruments evidencing the Awards;

 

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

 

(vi)        to
extend the period in which Options granted may be exercised;

 

(vii)       to
determine whether, to what extent and under what circumstances Shares and other amounts payable with respect to an Award granted
to a participant shall be deferred either automatically or at the election of the participant and whether and to what extent the
Company shall pay or credit amounts equal to interest (at rates determined by the Administrator) or dividends or deemed dividends
on such deferrals; and

 

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

 

All decisions, interpretations and constructions
made by the Administrator in good faith shall not be subject to review by any person and shall be final, binding and conclusive
on all persons, including the Company and Plan participants.

 

(c)          Section
409A. Notwithstanding the foregoing, to ensure compliance with Section 409A each of the following limitations shall apply to
the power and authority of the Administrator under Section 2(b) above:

 

(i)          No
modification shall be made under Section 2(b)(iv) above which will result in an Award becoming subject to the terms and conditions
of Section 409A or otherwise constitute an impermissible acceleration, unless agreed upon by the Administrator and the participant.

 

(ii)         Any
acceleration of the exercisability or vesting of all or any portion of any Award is subject to the limitations of Section 409A
and, unless otherwise determined by the Administrator, any acceleration of the exercisability or vesting of the Award under Section
2(b)(v) above shall comply with Section 409A.

 

(iii)       With
respect to extensions that were not included in the original terms of an Option but were provided by the Administrator after the
date of grant, if at the time of any such extension, the Exercise Price per Share of the Option is less than the Fair Market Value
of a Share, the extension shall, unless otherwise determined by the Administrator, be limited to the earlier of (A) the maximum
term of the Option as set by its original terms or (B) ten (10) years from the Grant Date. Unless otherwise determined by the Administrator,
any extension of the term of an Option under Section 2(b)(vi) above shall comply with Section 409A to the extent applicable.

 

    	 	4	 

     

    

 

(iv)        No
Share or other amount payable with respect to an Award granted to a participant shall be deferred if such deferral constitutes
a “deferral of compensation” within the meaning of Section 409A or otherwise causes the Share or other amount payable
with respect to an Award to be subject to the requirements of Section 409A.

 

Section
3.             Shares Issuable under the Plan; Mergers; Substitution.

 

(a)          Shares
Issuable. Subject to the provisions of Sections 3(b) and (c), the maximum number of Shares reserved and available for issuance
under the Plan shall be one million seven hundred fifty thousand (1,750,000). For purposes of this limitation, the Shares underlying
any Awards that are forfeited, canceled, reacquired by the Company, satisfied without the issuance of Shares or otherwise terminated
(other than by exercise) shall be added back to the Shares available for issuance under the Plan so long as the participants to
whom such Awards had been previously granted receive no benefits of ownership of the underlying Shares to which the Award related.
Shares issued under the Plan may be authorized but unissued Shares or Shares reacquired by the Company.

 

(b)          Stock
Dividends, Mergers, etc. In the event of any recapitalization, reclassification, split-up or consolidation of Shares, separation
(including a spin-off), dividend on Shares payable in Shares, or other similar change in capitalization of the Company or a merger
or consolidation of the Company or sale by the Company of all or a portion of its assets or other similar event, the Administrator
shall make such appropriate adjustments in the Exercise Prices of Awards, including Awards then outstanding, in the number and
kind of securities, cash or other property which may be issued pursuant to Awards under the Plan, including Awards then outstanding,
and in the number of Shares with respect to which Awards may be granted (in the aggregate and to individual participants) as the
Administrator deems equitable with a view toward maintaining the proportionate interest of the participant and preserving the value
of the Awards. Notwithstanding the foregoing, no adjustment shall be made which will result in an Award becoming subject to the
terms and conditions of Section 409A or otherwise constitute an impermissible acceleration, unless agreed upon by the Administrator
and the participant.

 

(c)          Substitute
Awards. The Administrator may grant Awards under the Plan in substitution for Share and Share-based awards held by key employees
of another corporation who concurrently become employees of the Company as the result of a merger or consolidation of the employing
corporation with the Company or the acquisition by the Company of property or shares of the employing corporation. The Administrator
may direct that the substitute awards be granted on such terms and conditions, subject to and in accordance with the requirements
of Section 409A, as the Administrator considers appropriate in the circumstances.

 

    	 	5	 

     

    

 

Section
4.             Eligibility.

 

Participants in the
Plan will be Directors and such full or part-time officers and other key employees and consultants of the Company and of its Subsidiaries
who are responsible for or contribute to the management, growth or profitability of the Company and who are selected from time
to time by the Administrator, in its sole discretion.

 

(a)          Eligibility
for Specific Options. Incentive Stock Options may be granted only to employees of the Company or a “parent corporation”
or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and (f) of the Code). Non-statutory
Stock Options may be granted to employees, Directors and consultants; provided, however, Non-statutory Stock Options may not be
granted to Employees, Directors and Consultants who are providing Continuous Service only to any “parent” of the Company,
as such term is defined in Rule 405, unless the stock underlying such Option is treated as “service recipient stock”
under Section 409A of the Code because the Options are granted pursuant to a corporate transaction (such as a spin off transaction)
or unless such Options comply with the distribution requirements of Section 409A of the Code.

 

(b)          Ten
Percent Stockholders. A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the exercise price of
such Option is at least one hundred ten percent (110%) of the Fair Market Value on the date of grant and the Option is not exercisable
after the expiration of five (5) years from the date of grant.

 

Section
5.             Options.

 

An Option granted hereunder
shall be either an Incentive Stock Option or a Non-Statutory Stock Option as determined by the Administrator at the time of grant
of such Option and shall clearly state whether it is an Incentive Stock Option or Non-Statutory Stock Option. Subject to the provisions
of Section 4(b) regarding Ten Percent Stockholders, all Incentive Stock Options shall be granted within ten years from the date
this Plan is adopted by the Board or the date this Plan is approved by the Shareholders of the Company, whichever is earlier.

 

The Administrator in
its discretion may grant Options to officers, key employees, Directors or consultants of the Company. Options granted to
officers, key employees, Directors or consultants pursuant to this Section 5 shall be subject to the following terms and conditions
and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall
deem desirable:

 

(a)          Exercise
Price. The per Share Exercise Price of an Option granted pursuant to this Section 5 shall be determined by the Administrator
at the time of grant. Notwithstanding the foregoing and subject to the provisions of Section 4(b) regarding Ten Percent Stockholders,
in no event shall the per Share Exercise Price of any Option granted under this Plan be less than one hundred percent (100%) of
the Fair Market Value of a Share on the Grant Date.

 

    	 	6	 

     

    

 

(b)          Option
Term. The Administrator shall fix the term of each Option, which term shall in no event exceed ten years from the date of grant.

 

(c)          Exercisability;
Rights of a Shareholder. Options shall become exercisable at such time or times, whether or not in installments, upon the happening
of certain events, upon the passage of a specified period of time, upon the fulfillment of certain conditions or upon the achievement
by the Company of certain performance goals, as shall be determined by the Administrator at or after the grant date. The Administrator
may at any time accelerate the exercisability of all or any portion of any Option; provided, however, that any acceleration of
the exercisability or vesting of all or any portion of any Award is subject to the limitations of Section 409A and, unless otherwise
determined by the Administrator, any acceleration of the exercisability or vesting of the Award under this Section 5(c) shall comply
with Section 409A. An Optionee shall have the rights of a Shareholder only as to Shares acquired upon the exercise of an Option
and not as to unexercised Options.

 

(d)          Method
of Exercise. Options may be exercised in whole or in part, by giving written notice of exercise to the Company, specifying
the number of Shares to be purchased. Payment of the purchase price may be made by one or more of the following methods:

 

(i)          In
cash, by certified or bank check or other instrument acceptable to the Administrator;

 

(ii)         In
the form of Shares that are not then subject to restrictions under any Company plan, if permitted by the Administrator in its discretion.
Such surrendered Shares shall be valued at Fair Market Value on the Exercise Date.

 

Notwithstanding the foregoing, no payment
of the purchase price under this Section 5(d) shall be made if such form of payment constitutes a deferral of compensation within
the meaning of Section 409A or otherwise causes the Option to be subject to the requirements of Section 409A.

 

(e)          Determination
of Purchase Price/Number of Shares Purchased. The Optionee may, at Optionee’s option, elect to pay some or all of the
purchase price payable upon an exercise of Optionee’s Options by canceling a portion of Optionee’s Options exercisable
for such number of Shares as are then issuable determined by dividing (i) the total purchase price payable in respect of the
number of Shares being purchased upon such exercise by (ii) the Fair Market Value per Share as of the Exercise Date. If the
Optionee wishes to exercise the Options pursuant to this method of payment with respect to the maximum number of Shares so purchasable
pursuant to this method, then the number of Shares so purchasable shall be equal to the total number of Shares, minus the product
obtained by multiplying (x) the total number of Shares purchasable by (y) a fraction, the numerator of which shall be
the Exercise Price per share and the denominator of which shall be the Fair Market Value per Share as of the Exercise Date.

 

(f)          Non-transferability
of Options. No Option shall be transferable by the Optionee other than by will or by the laws of descent and distribution and,
during the lifetime of such Optionee may be exercised only by such Optionee.

 

    	 	7	 

     

    

 

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

 

(h)          Written
Agreement. Each Option granted hereunder to an Optionee shall be embodied in a written agreement (an “Option Agreement”)
that shall contain any term deemed necessary or desirable by the Administrator, provided such terms are not inconsistent with this
Plan or any applicable law.

 

(i)           Other
Termination. Unless otherwise determined by the Administrator, if the service of an Optionee holding Incentive Stock Options
terminates for any reason other than for Cause, any Incentive Stock Option held by such Optionee may thereafter be exercised, to
the extent it was exercisable on the date of termination of service, for three (3) months (or such longer period as the Administrator
shall specify at any time) from the date of termination of service or until the expiration of the stated term of the Incentive
Stock Option, if earlier.

 

(j)           Form
of Settlement. Shares issued upon exercise of an Option shall be free of all restrictions under the Plan, except as otherwise
provided in this Plan.

 

Section
6.             Restricted Stock Awards.

 

(a)          Nature
of Restricted Stock Awards. The Administrator may grant Restricted Stock Awards to officers, key employees, Directors and consultants
of the Company and of its Subsidiaries. A Restricted Stock Award is an Award entitling the recipient to acquire, at no cost or
for a purchase price determined by the Administrator, Shares subject to such restrictions and conditions as the Administrator may
determine at the time of grant in accordance with Code Section 83 (“Restricted Stock”). Conditions may be based on
continuing service and/or achievement of pre-established performance goals and objectives. In addition, a Restricted Stock Award
may be granted to an officer, key employee, Director or consultant by the Administrator in lieu of any compensation due to such
officer, key employee, Director, or consultant.

 

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

 

    	 	8	 

     

    

 

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

 

(d)          Restrictions.
Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically
provided herein.

 

(e)          Vesting
of Restricted Stock. The Administrator at the time of grant shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the non-transferability of the Restricted Stock and the Company’s
right of repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or the attainment of such pre-established performance
goals, objectives and other conditions, the Shares on which all restrictions have lapsed shall no longer be Restricted Stock and
shall be deemed “vested.”

 

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

 

Section
7.             Tax Withholding.

 

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

 

(b)          Payment
in Shares. A participant may elect to have such tax withholding obligation satisfied, in whole or in part, by (i) authorizing
the Company to withhold from Shares to be issued pursuant to any Award a number of Shares with an aggregate Fair Market Value (as
of the date the withholding is effected) that would satisfy the withholding amount due, or (ii) transferring to the Company Shares
owned by the participant with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the
withholding amount due.

 

Section
8.             Transfer, Leave of Absence, Etc.

 

For purposes of the
Plan, an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee’s
right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence
was granted or if the Administrator otherwise so provides in writing shall not be deemed a termination of service.

 

    	 	9	 

     

    

 

Section
9.             Amendments and Termination.

 

The Board may at any
time amend or discontinue the Plan and the Administrator may at any time amend or cancel any outstanding Award (or provide substitute
Awards at the same or reduced exercise or purchase price or with no exercise or purchase price, but such price, if any, must satisfy
Section 409A and the requirements which would apply to the substitute or amended Award if it were then initially granted under
this Plan) for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect
rights under any outstanding Award without the holder’s consent.

 

Section
10.           Status of Plan.

 

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

 

Section
11.           Change of Control Provisions.

 

Upon the occurrence of a Change of Control
as defined in this Section 11:

 

(a)          Each
Stock Option shall automatically become fully exercisable unless the Administrator shall otherwise expressly provide at the time
of grant.

 

(b)          Restrictions
and conditions on Awards of Restricted Stock shall automatically be deemed waived, and the recipients of such Awards shall become
entitled to receipt of the maximum amount of Shares subject to such Awards unless the Administrator shall otherwise expressly provide
at the time of grant.

 

(c)          Unless
otherwise expressly provided at the time of grant, participants who hold Options shall have the right, in lieu of exercising the
Option, to elect to surrender all or part of such Option to the Company and to receive cash in an amount equal to the excess of
(i) the higher of (x) the Fair Market Value of a Share on the date such right is exercised and (y) the highest price paid for Shares
or, in the case of securities convertible into Shares or carrying a right to acquire Shares, the highest effective price (based
on the prices paid for such securities) at which such securities are convertible into Shares or at which Shares may be acquired,
by any person or group whose acquisition of voting securities has resulted in a Change of Control of the Company over (ii) the
Exercise Price per share under the Option, multiplied by the number of Shares with respect to which such right is exercised.

 

    	 	10	 

     

    

 

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

 

(i)          any
transaction (which shall include a series of transactions occurring within sixty days or occurring pursuant to a plan), that has
the result that Shareholders of the Company immediately before such transaction cease to own at least 51% of the voting stock of
the Company or of any entity that results from the participation of the Company in a reorganization, consolidation, merger, liquidation
or any other form of corporate transaction;

 

(ii)         persons
who, as of the date of this Plan, constitute the Company’s Board of Directors (the “Incumbent Directors”) cease
for any reason, including without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute
at least a majority of the Board, provided that any person becoming a director of the Company subsequent the date of this Plan
whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors shall, for purposes
of this Plan, be considered an Incumbent Director;

 

(iii)        the
Shareholders of the Company approve a plan of merger, consolidation, reorganization, liquidation or dissolution in which the Company
does not survive (unless the approved merger, consolidation, reorganization, liquidation or dissolution is subsequently abandoned);
or

 

(iv)        the
Shareholders of the Company approve a plan for the sale, lease, exchange, transfer, assignment or other disposition of all or substantially
all the property and assets of the Company (unless such plan is subsequently abandoned).

 

Section
12.           General Provisions.

 

(a)          No
Distribution; Compliance with Legal Requirements. The Administrator may require each person acquiring Shares pursuant to an
Award to represent to and agree with the Company in writing that such person is acquiring the Shares without a view to distribution
thereof. No Shares shall be issued pursuant to an Award until all applicable securities laws and other legal and stock exchange
requirements have been satisfied. The Administrator may require the placing of such stop-orders and restrictive legends on certificates
for Shares and Awards as it deems appropriate.

 

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

 

    	 	11	 

     

    

 

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

 

Section 13.           Issuance of Shares.
As a condition of any sale or issuance of Shares upon exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure compliance with any such federal or state securities
or other law or regulation including, but not limited to, the following:

 

(a)          a
representation and warranty by the Optionee to the Company, at the time any Option is exercised, that he is acquiring the Shares
to be issued to him for investment and not with a view to, or for sale in connection with, the distribution of any such Shares;
and

 

(b)          a
representation, warranty and/or agreement to be bound by any legends that are, in the opinion of the Committee, necessary or appropriate
to comply with the provisions of any securities law deemed by the Committee to be applicable to the issuance of the Shares and
are endorsed upon the Share certificates.

 

Section 14.           Interpretation.

 

(a)          The
Plan shall be administered and interpreted so that all Incentive Stock Options granted under this Plan will qualify as Incentive
Stock Options under Section 422 of the Code. If any provision of this Plan should be held invalid for the granting of Incentive
Stock Options or illegal for any reason, such determination shall not affect the remaining provisions hereof, but instead this
Plan shall be construed and enforced as if such provision had never been included in this Plan.

 

(b)          Headings
contained in this Plan are for convenience only and shall in no manner be construed as part of this Plan.

 

(c)          Any
reference to the masculine, feminine, or neuter gender shall be a reference to such other gender as is appropriate.

 

Section
14.           Governing Law.

 

This plan shall be
governed by Ohio law except to the extent such law is preempted by federal law.

 

    	 	12	 

     

    

 

Section
15.           Section 409A.

 

The Plan is intended
to comply with the requirements of Section 409A, without triggering the imposition of any tax penalty thereunder. To the extent
necessary or advisable, the Board may amend the Plan or any Award to delete any conflicting provisions and to add any such other
provisions as are required to fully comply with the applicable provisions of Section 409A applicable to the Plan. The Administrator
shall comply with Section 409A in establishing the rules and procedures applicable to the Plan. Notwithstanding any provision of
this Plan or any Award to the contrary, if all or any portion of the payments and/or benefits under this Plan or any Award are
determined to be “nonqualified deferred compensation” subject to Section 409A and the participant is a “specified
employee” (within the meaning of Treasury Regulation Section 1.409A-1(i)), as determined by the Administrator in accordance
with Section 409A, as of the date of the participant’s separation from service (within the meaning of Treasury Regulation
Section 1.409A-1(h)), and the delayed payment or distribution of all or any portion of such amounts to which the participant is
entitled under this Plan and/or any Award is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i)
of the Code, then such portion deferred under this Section 15 shall be paid or distributed to the participant in a lump sum on
the earlier of (a) the date that is six (6) months following termination of the participant’s employment, (b) a date that
is no later than thirty (30) days after the date of the participant’s death or (c) the earliest date as is permitted under
Section 409A. For purposes of clarity, the six (6) month delay shall not apply in the case of severance pay contemplated by Treasury
Regulation Section 1.409A-1(b)(9)(iii) to the extent of the limits set forth therein. Any remaining payments due under this Plan
and any Award shall be paid as otherwise provided therein.

 

    	 	13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00272-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00272-of-00352.parquet"}]]