Document:

exhibit1018-employeestockopt.htm - Generated by SEC Publisher for SEC Filing

 

ESOP

 

EMPLOYEE STOCK OPTION PLAN

 

 

 

 

 

 

STOCK
OPTION PLAN OF

ROTH
KLINE, INC

OCTOBER
1, 2010

 

{00189295. }                                                                                 

 

 

Table of Contents

ARTICLE
1 GENERAL.. 1

1.1       Purpose of Plan. 1

1.2       Definitions. 1

ARTICLE 2
ADMINISTRATION OF THE PLAN.. 4

2.1       Administration. 4

2.2       Absolute Discretion. 5

2.3       No Liability for Good Faith Determinations. 5

2.4       No Liability of Company. 5

ARTICLE 3
ELIGIBILITY OF PARTICIPANTS. 5

3.1       Participants. 5

3.2       Factors in Determination. 5

ARTICLE 4 SHARES
SUBJECT TO PLAN.. 6

4.1       Shares. 6

4.2       Expiration or Cancellation of Options; Tendered
Shares. 6

4.3       Description of Shares. 6

ARTICLE 5 GRANT
OF OPTIONS. 6

5.1       Decision of Committee. 6

5.2       Date of Grant 6

5.3       Acceptance of Grant 6

5.4       Limitation of Time of Grant 7

5.5       Limitation on Incentive Stock Options. 7

5.6       Limitation on Recipients of Grant 7

ARTICLE 6 TERMS
AND CONDITIONS OF OPTIONS. 7

6.1       Option Agreement 7

6.2       Number of Shares. 7

6.3       Exercise Price. 7

6.4       Payment of Exercise Price. 7

6.5       Vesting. 8

6.6       Modification, Extension, and Renewal of Options. 8

6.7       Exercise of Options Generally. 8

6.8       Certain Conditions to Exercise and Delivery of Stock. 9

6.9       Additional Restrictions on Exercise. 9

6.10     Nontransferability of Options. 9

6.11     No Fractional Shares. 9

6.12     Delivery of Certificates of Stock. 10

6.13     Legends. 10

6.14     Restrictions on Transfer of Shares; Rights to
Acquire from Participant 10

6.15     No Rights as Shareholder 10

ARTICLE 7
TERMINATION OF OPTIONS. 10

{00189295. }                                             

Roth Kline, Inc  Employee Stock Option

Plan                                                                            Confidential

10-31-10

1

 

 

7.1       Term of Options. 10

7.2       Termination Before Option Becomes Exercisable. 10

7.3       Discharge or Resignation. 11

7.4       Death. 12

7.5       Disability. 12

7.6       Limitations on Exercise. 12

7.7       Forfeiture. 12

ARTICLE 8
CERTAIN TAX MATTERS. 13

8.1       Withholding. 13

8.2       Disqualifying Disposition. 13

ARTICLE 9
MISCELLANEOUS. 13

9.1       Effective Date. 13

9.2       Termination of Plan. 13

9.3       Furnish Information. 14

9.4       Remedies. 14

9.5       Information Confidential 14

9.6       Changes in Capital Structure. 14

9.7       Dissolution, Liquidation, or Reorganization. 14

9.8       Adjustments for Pooling of Interests Accounting. 15

9.9       Amendment 15

9.10     Automatic Amendment for Requirements of and Changes
in Code. 15

9.11     Nonguarantee of Employment 15

9.12     Severability. 15

9.13     Rule 16b-3. 16

9.14     Expenses. 16

9.15     Construction. 16

9.16     Notice. 16

9.17     Calculation of Time. 16

9.18     Successors. 17

 

{00189295. }                                             

Roth Kline, Inc  Employee Stock Option

Plan                                                                            Confidential

10-31-10

2

 

 

ROTH KLINE, INC

2010 STOCK OPTION PLAN

 

GENERAL

Purpose
of Plan

. 
The Roth Kline, Inc (“ROTH”) 2010 Stock Option Plan is intended to encourage
ownership of Shares of ROTH. by certain employees of the Company or of its
Parents or Subsidiaries and certain other Persons, to provide additional
incentive for them to remain in the employ of the Company or its Parents or
Subsidiaries, and to promote the growth and success of the Company and such
Parents and Subsidiaries.  It is intended that the Options issued pursuant to
the Plan shall constitute either incentive stock options within the meaning of
Section 422 of the Code and the regulations thereunder or non-incentive stock
options.

1.1             
Definitions

. 
Whenever used herein, the following terms shall have the following meanings
unless the context clearly indicates another meaning:

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

“Business
Day” - any day other than a Saturday, a Sunday, or a day on which banking
institutions in the State of Nevada are authorized or obligated by law or
executive order to remain closed. 

“Code”
- the Internal Revenue Code of 1986, as amended.

“Committee”
- the Board or, at the option of the Board, a committee designated by the
Board, which committee shall consist of not less than one member of the Board
who shall be appointed by and serve at the pleasure of the Board.  Members of
the Committee who are Eligible Individuals shall be eligible for grants of
Options; provided that any such grant is approved by a majority of the
other members of the Committee.  During any period of time in which the Company
is subject to the reporting requirements of the Exchange Act, the Committee
shall be comprised solely of not less than two members, each of whom shall be
(i) a “non-employee director” within the meaning of Rule 16b-3 promulgated
under the Exchange Act, as amended, and (ii) unless otherwise determined by the
Board, an “outside director” within the meaning of Treasury Regulation Section
1.162-27(e)(3) and Section 162(m) of the Code.

“Company”
– Roth Kline, Inc a Delaware corporation.

“Corporate
Parent” - with respect to any Option, any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at
the time such Option is granted, each of the corporations other than the
Company owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one or more of the other
corporations in such chain.

{00189295. }                                   1

 

 

“Corporate
Subsidiary” - with respect to any Option, any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if, at
the time such Option is granted, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one or more of the other
corporations in such chain.

“Date
of Grant” - with respect to any Option, the date on which such Option is
deemed granted pursuant to Section 5.2.

“Disability”
- permanent and total disability as defined in the employment agreement (or any
successor agreement).

“Eligible
Individual” - (i) a Key Employee or (ii) any other Person that the
Committee designates as eligible to receive a Non-incentive Stock Option (or,
to the extent Incentive Stock Options may be granted to such Persons, an
Incentive Stock Option) because such other Person performs services for the
Company or any of Its Parents or Subsidiaries (other than services in
connection with the offer or sale of securities in a capital-raising
transaction) and the Committee determines that the Person has a direct and
significant effect on the financial development of the Company or any of its
Parents or Subsidiaries, but excluding, under (i) and/or (ii), any Person that
the Board may from time to time specify as ineligible.

“Eligible
Employer” - the Company.

“Employee-Participant”
- a Participant who is, at the Date of Grant of the relevant Option, an employee
of an Eligible Employer.

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

“Fair
Market Value” – (a) if Shares are listed on a national securities exchange,
the last reported sales price, regular way, on the composite tape of the principal
national securities exchange on which the Shares are so listed on the most
recent Business Day prior to the date in question for which such price is
available; (b) if clause (a) does not apply but the Shares are admitted to
trading in the NASDAQ-National Market System (or a similar system then in use),
the last reported sales price, regular way, on the NASDAQ-National Market
System (or such similar system) on the most recent Business Day prior to the
date in question for which such price is available; (c) if neither clause (a)
or (b) applies but the Shares are traded in the over-the-counter market and bid
and asked prices are reported by NASDAQ or any comparable system, the average
of the closing bid and asked prices of Shares in the over-the-counter market as
reported by NASDAQ or any comparable system on the most recent Business Day
prior to the date in question for which such prices are available; (d) if none
of clauses (a), (b), or (c) applies but bid and asked prices for the Shares are
furnished by members of the FINRA, the average of the closing bid and asked
prices as furnished by two members of the FINRA (selected from time to time by
the Committee for that purpose) on the most recent Business Day prior to the
date in question for which such prices are available; and (e) if none of
clauses (a), (b), (c), or (d) applies, the fair market value of the Share as
determined by the Committee from time to time.

{00189295. }                                    2

 

 

“Incentive
Stock Option” - an option to purchase Shares granted pursuant to the Plan
that is an “incentive stock option” within the meaning of Section 422 of the
Code.

“Initial
Public Offering” - the consummation of a sale of Shares (by the Company or
shareholders or a combination thereof) that is registered on a registration
statement (other than a registration statement on Form S-8 or its equivalent)
filed with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, pursuant to which the Company receives at least $10 million.

“Issuable
Number” - at any time, the Maximum Number less the number of Shares
theretofore issued or delivered under the Plan (appropriately adjusted to give
effect to any changes in capitalization or Reorganization).

“Key
Employee” - any employee of an Eligible Employer who the Committee
determines is key to the operations of an Eligible Employer.

“Maximum
Number” - the maximum number of Shares that may be issued or delivered
under the Plan, which is 3,000,000 (subject to adjustment as set forth in
Sections 9.6 and 9.7 hereof).

“FINRA”
– Financial Industry Regulatory Authority.

“NASDAQ”
- NASD Automated Quotation System.

“Non-Incentive
Stock Option” - an option to purchase Shares granted pursuant to the Plan
that is not an Incentive Stock Option.

“Option”
- an option to purchase Shares granted pursuant to the Plan that is an
Incentive Stock Option or a Non-Incentive Stock Option.

“Option
Agreement” - the agreement, substantially in the form attached hereto as Exhibit
B (or such other form as may be approved by the Committee for use under the
Plan pursuant to Section 2.1 hereof), between the Company and a Participant
evidencing the grant of an Option under the Plan and containing the terms and
conditions, not inconsistent with the Plan, that are applicable to such Option.

“Parent”
- any Person (other than the Company) in an unbroken chain of Persons ending
with the Company if, at the time such Option is granted, each of the Persons
other than the Company owns stock (or other equity interests) possessing 50% or
more of the total combined voting power of all classes of stock (or other
equity interests) in one or more of the other Persons in such chain.

“Participant”
- an Eligible Individual to whom an Option is granted under the Plan.

“Person”
- any natural person, corporation, partnership, limited partnership, limited
liability company, joint venture, or other entity.

“Plan”
– the ROTH 2010 Stock Option Plan, as set forth herein and as it may be amended
from time to time.

{00189295. }                                    3

 

 

“Reorganization”
- any merger or consolidation in which the Company is not the surviving Person
(other than a merger of the Company into a wholly-owned subsidiary of the
Company) or in which the holders of Shares receive cash, shares of another
Person, a different class of shares of the Company, or other property; the sale
of all or substantially all of the assets of the Company; or the sale, pursuant
to an agreement with the Company, of Shares of the Company pursuant to which
another Person acquires Shares that, after consummation of such sale, are 50%
or more of the outstanding Shares of the Company.

“Securities
Act” – the Securities Act of 1933, as amended.

“Share”
- a share of the Company’s present Common Stock, par value $.001 per share, and
any share or shares of capital stock or other securities of the Company
hereafter issued or delivered or issuable or deliverable upon, in respect of,
in substitution of, or in exchange for each present share.

“Shareholders’
Agreement” - that certain Shareholders’ Agreement executed as of October
31, 2010, by the Company, Joseph Michael Redmond,____________, and, possibly
others, as the same may be amended at the relevant time, a copy of the current
version of which is attached as Exhibit A hereto.

“Subsidiary”
- any Person (other than the Company) in any unbroken chain of Persons
beginning with the Company if, at the time of granting of the Option, each of
the Persons (other than the last Person in the unbroken chain) owns stock (or
other equity interests) possessing 50% or more of the total combined voting
power of all classes of stock (or other equity interests) in one of the other
Persons in such chain.

“Treasury
Regulations” - the regulations promulgated by the United States Department
of the Treasury pursuant to and in respect of provisions of the Code.  All
references herein to sections of the Treasury Regulations shall include any
corresponding provisions of succeeding, similar, substitute, proposed,
temporary, or final Treasury Regulations.

“Vesting
Schedule” - a schedule on which an Option becomes exercisable as to a
specific number of Shares subject to such Option.

ADMINISTRATION OF THE PLAN

1.2             
Administration

. 
The Plan shall be administered by the Committee.  Subject to the provisions of
the Plan, the Committee is authorized to take the following action, in addition
to each other action that the Committee is expressly authorized to take
pursuant to the Plan:

(a)               
determine
who is an Eligible Individual and determine the Eligible Individuals to whom
Options are to be granted;

(b)              
determine
the number of Shares to be covered by each of the Options, the time or times at
which Options shall be granted and exercisable and terminate, the exercise price for Shares subject to the Options, whether
such Options shall be Incentive Stock Options or Non-Incentive Stock Options,
and the other terms and provisions of each Option Agreement (which need not be
the identical);

{00189295. }                                    4

 

 

(c)               
interpret
the Plan provisions;

(d)              
terminate
the Plan;

(e)               
adopt,
amend, and rescind rules and regulations relating to the Plan and the
functioning of the Committee;

(f)               
determine
the Fair Market Value of Shares;

(g)              
accelerate
the vesting of Options;

(h)              
rely
on the employees of the Company for such clerical and record-keeping duties as
may be necessary or desirable in connection with the administration of the
Plan; and

(i)                
make
all other determinations and take all other actions necessary or advisable for
the administration of the Plan.

Absolute
Discretion

. 
All questions of interpretation and application of the Plan or any Option
Agreement or pertaining to any Option granted hereunder shall be subject to the
determination by a majority of the members of the Committee acting with
absolute discretion.

No
Liability for Good Faith Determinations

. 
No member of the Committee shall be liable for any act, omission, or
determination taken or made in good faith with respect to the Plan or any
Option, and members of the Committee shall be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss, damage, or expense
(including attorneys’ fees, and the costs of settling any suit if such
settlement is approved by independent legal counsel selected by the Company),
and amounts paid in satisfaction of a judgment (except a judgment based on a
finding of bad faith) arising therefrom to the full extent permitted by law and
under any directors and officers liability or similar insurance coverage that
may from time to time be in effect.  This right to indemnification shall be in
addition to, and not a limitation on, any other indemnification rights any
member of the Committee may have.

No
Liability of Company

. 
The Company assumes no obligation or responsibility to any Participant for any
act of, or failure to act on the part of, the Committee.

{00189295. }                                    5

 

 

ELIGIBILITY OF PARTICIPANTS

Participants

. 
An Option may be granted pursuant to the Plan only to a Person who is an Eligible
Individual at the Date of Grant of such Option.

Factors
in Determination

. 
In making any determination as to whether a Person is an Eligible Individual,
as to whether an Eligible Individual will be granted an Option, and as to the
number of Shares to be covered by such Option, the Committee shall take into
account the duties of such Person, the present and potential contributions of
such Person to the growth and success of the Company and its Parents or
Subsidiaries, and such other factors as the Committee shall deem relevant in
connection with accomplishing the purposes of the Plan.  The Committee shall
not be precluded from approving the grant of an Option to any Eligible
Individual solely because such Person may previously have been granted an Option
under the Plan.

SHARES SUBJECT TO PLAN

Shares

. 
At no time shall the number of Shares subject to outstanding Options be greater
than the Issuable Number.  The Company shall cause the Issuable Number of
Shares to be reserved for issuance or delivery under the Plan at all times the
Plan is in effect.

Expiration
or Cancellation of Options; Tendered Shares

. 
Should any Option expire or be canceled without being fully exercised, the
number of Shares with respect to which such Option shall not have been exercised
prior to its expiration or cancellation will again be available for the
granting of Options pursuant to the provisions hereof.  Furthermore, if the
exercise price of any Option granted under the Plan is satisfied by tendering
Shares (by either actual delivery or by attestation), only the number of Shares
issued net of the Shares tendered shall be deemed delivered for purposes of
determining the Issuable Number; provided, however, that any increase in
the Issuable Number resulting from the application of this sentence shall be
reserved for issuance of Shares in satisfaction of Non-Incentive Stock Options
only.

Description
of Shares

. 
The Shares to be delivered under the Plan shall be made available from (a)
authorized but unissued Shares, (b) Shares held in the treasury of the Company,
or (c) previously issued Shares reacquired by the Company, including Shares
purchased on the open market, as the Board or the Committee may, in each
situation, determine from time to time in its sole discretion.

{00189295. }                                    6

 

 

GRANT OF OPTIONS

Decision
of Committee

. 
From time to time the Committee shall, in its sole discretion but subject to
all of the provisions of the Plan, determine which Eligible Individuals will be
granted Options, the number of Shares subject to Options, and the terms and
conditions of the Options, including whether the Options will be Incentive
Stock Options or Non-Incentive Stock Options.  The terms and conditions of an
Option need not be the same for any other Option.

Date
of Grant

. 
The date of the Agreement shall be the date on which the Option is deemed
granted.  In no event shall a Participant gain any rights in addition to those
specified by the Committee in its grant, regardless of the time that may pass
between the grant of the Option and the actual acceptance of the offer of the
Option and execution of the Option Agreement by the Company and the
Participant.

Acceptance
of Grant

. 
Each Eligible Individual granted an Option pursuant to Section 5.1 shall have
an opportunity to accept or reject the grant of the Option.  Execution and
delivery of an Option Agreement relating to an Option shall qualify as such
written acceptance.  Each Eligible Individual who indicates a desire to accept
the grant of the Option offered to him or her must enter into an Option
Agreement pursuant to Section 6.1 hereof as a condition to such acceptance.

Limitation
of Time of Grant

. 
In no event shall any Incentive Stock Option be granted hereunder after the
date that is ten years after the earlier of (a) the date the Plan is adopted by
the Board and (b) the date the Plan is approved by the shareholders of the
Company pursuant to Section 9.1.

Limitation
on Incentive Stock Options

. 
Notwithstanding any other provision contained herein to the contrary, no
Incentive Stock Option shall be granted to an Eligible Individual under the
Plan to the extent it, together with all other incentive stock options granted
by the Company or any of its Parents or Subsidiaries to such Eligible
Individual, would relate to Shares that, in the calendar year they first become
purchasable, have a Fair Market Value, at the Date of the Grant, in excess of
$100,000.  Notwithstanding the above, to the extent that the $100,000 limit is
exceeded, the Option shall automatically be deemed to be a Non-Incentive Stock
Option.

Limitation
on Recipients of Grant

. 
Notwithstanding any other provision contained herein to the contrary, in no
event shall any Eligible Individual owning directly or indirectly (pursuant to
Code Section 424) more than 10% of the total combined voting power of the
Company or any Corporate Subsidiary (a “10% Holder”)
be granted an Incentive Stock Option hereunder unless (a) the exercise price is
at least 110% of the Fair Market Value of the Shares at the Date of Grant of
the Option and (b) the term of the Option does not exceed five years from the
Date of Grant.  Notwithstanding any other provision contained herein to the
contrary, in no event shall any Incentive Stock Option (or an incentive stock
option under any other plan of the Company or a Subsidiary) be granted to any
Eligible Individual unless such Eligible Individual is a Key Employee of the
Company or a Corporate Parent or Corporate Subsidiary of the Company.

{00189295. }                                    7

 

 

TERMS AND CONDITIONS OF OPTIONS

Option
Agreement

. 
Each Option granted under the Plan shall be evidenced by an Option Agreement,
in such form as the Committee may prescribe, setting forth the tens and
conditions of the Options, consistent with the provisions of the Plan.  The
Option Agreement shall identify the Option granted as either an Incentive Stock
Option or a Non-Incentive Stock Option.

Number
of Shares

. 
Each Option Agreement shall specify the number of Shares subject to each
Option.

Exercise
Price

. 
The exercise price for each Share purchased under any Option shall be specified
in the Option Agreement relating to such Option, which shall not be less than
the par value of a Share and, in the case of an Incentive Stock Option, shall
also not be less than 100% of the Fair Market Value of a Share on the Date of
Grant.

Payment
of Exercise Price

. 
Payment of the exercise price for Shares purchased under the Plan shall be made
upon the exercise of an Option and may be paid to the Company:

in cash
(including check, bank draft, or money order); or

at the
discretion of the Committee, or if the Option Agreement so provides, by the
delivery of Shares of the Company owned by the Participant (including Shares
received upon exercise of such Option) that have a Fair Market Value on the
date of exercise equal to the aggregate exercise price;

at the
discretion of the Committee, or if the Option Agreement so provides, by the
delivery of a promissory note in the principal amount of the aggregate exercise
price and having such other terms as are determined by the Committee or
provided in the Option Agreement; or

at the
discretion of the Committee, or if the Option Agreement so provides, by a
combination of the foregoing.

{00189295. }                                    8

 

 

Vesting

. 
If the relevant Option Agreement does not specify a Vesting Schedule but
(assuming no event of the type described in Article VII that would shorten or
extend such term occurs during such term) has a term of at least five years
from the Date of Grant, the Option shall become exercisable with respect to
cumulative quantities of 20% of the Shares subject thereto on the first,
second, third, fourth, and fifth anniversary dates of the Date of Grant
(subject to adjustment as contemplated by Article VII).

Modification,
Extension, and Renewal of Options

. 
Subject to the terms and conditions of and within the limitations of the Plan
and any consent required by the last two sentences of this Section, the
Committee may (a) modify, extend, or renew outstanding Options, (b) accept the
surrender of outstanding Options (to the extent not previously exercised) and authorize
the granting of new Options (including those with a higher or lower exercise
price) in substitution for outstanding Options (to the extent not previously
exercised), and (c) amend the terms of an Incentive Stock Option at any time to
include provisions that have the effect of changing the Incentive Stock Option
to a Non-incentive Stock Option.  Nevertheless, without the consent of the
Participant, the Committee may not modify any outstanding Option so as to
specify a higher or lower exercise price or accept the surrender of outstanding
Incentive Stock Options and authorize the granting of new Options in
substitution therefor specifying a higher or lower exercise price.  In
addition, no modification of an Option shall, without the consent of the Participant,
alter or impair any rights or obligations under any Option theretofore granted
hereunder to such Participant except, with respect to Incentive Stock Options,
as may be necessary to satisfy the requirements of Section 422 of the Code.

Exercise
of Options Generally

. 
An Option may be exercised only by written notice of exercise delivered to the
Company during the term of the Option, which notice shall (a) state the number
of Shares with respect to which the Option is being exercised, (b) be signed by
the Participant (or, if the Participant is dead or Disabled, by the Person, if
any, authorized to exercise the Option pursuant to the Plan and, if signed by a
Person other than the Participant, be accompanied by or contain satisfactory
evidence of such Person’s right to exercise the Option), (c) be accompanied by
payment of the appropriate exercise price and by payment in full of all the
applicable taxes required to be withheld with respect to such exercise, (d)
state the Social Security number of the Participant or other Person exercising
the Option as contemplated by clause (b) above, and (e) include or be
accompanied by such other information, instruments, agreements, and documents
required to satisfy any other condition to exercise specified in the Plan (including
but not limited to those contained in Section 6.9, 6.10, and 6.15) or the
Option Agreement.  Unless otherwise consented to by the Committee, an Option
shall not be deemed exercised until the requirements of this Section are
completely fulfilled.

Certain
Conditions to Exercise and Delivery of Stock

. 
Nothing herein or in any Option or any Option Agreement shall require the
Company to issue or deliver any Shares if that issuance or delivery would, in
the opinion of counsel for the Company, constitute a
violation of the Securities Act or any similar or superseding statute or
statutes, any other applicable statute or regulation, or the rules of any
applicable securities exchange or securities association, in each case, as then
in effect.  The Company may, as a condition precedent to the exercise of an
Option, require from the Participant (or in the event of the death or
Disability of the Participant, the Participant’s legal representatives, heirs,
legatees, or distributees) such written representations, if any, concerning the
Participant’s (or such other Person’s) intentions with regard to the retention
or disposition of the Shares being acquired and such written covenants and
agreements, if any, as to the manner of disposal of such Shares as, in the opinion
of counsel to the Company, may be necessary to ensure that any disposition by
that Participant (or in the event of the death or Disability of the
Participant, the Participant’s legal representatives, heirs, legatees, or
distributees), will not involve a violation of the Securities Act or any
similar or superseding statute or statutes, any other applicable state or
federal statute or regulation, or any rule of any applicable securities
exchange or securities association, in each case, as then in effect. 

{00189295. }                                    9

 

 

Additional
Restrictions on Exercise

. 
The exercise of each Option granted under the Plan shall be subject to the
condition that if at any time the Company or the Committee shall determine, in
its sole discretion, that (a) the satisfaction of withholding taxes or other
withholding liabilities, (b) the listing, registration, or qualification of any
Shares otherwise deliverable upon such exercise on any securities exchange or
under any state or federal law, or (c) the consent or approval of any regulatory
body is necessary or desirable as a condition of, or in connection with, such
exercise or the delivery or purchase of Shares thereunder, then in any such
event such exercise shall not be effective unless such withholding, listing,
registration, qualification, consent, or approval shall have been effected or
obtained without any conditions not acceptable to the Company.

Nontransferability
of Options

. 
Unless the relevant Option Agreement with respect to a Non-Incentive Stock
Option expressly provides greater or lesser rights to the Participant or the
relevant Option Agreement with respect to an Incentive Stock Option expressly
provides lesser rights to the Participant, no Option shall be transferable by a
Participant other than by will or the laws of descent and distribution or, in
the case of a Non-Incentive Stock Option, a qualified domestic relations order;
provided, however, that the Board of Directors or the Committee, as
applicable, in its discretion, may allow for transferability of non-qualified
stock options by the Participant.  Following any such transfer, any such
options shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer.

No
Fractional Shares

. 
The Company shall not in any case be required to sell, issue, or deliver a
fractional Share with respect to any Option.  In lieu of the sale, issuance, or
delivery of any fractional Share, the Company shall pay to the Participant an
amount in cash equal to the same fraction (as the fractional Share) of the Fair
Market Value of a Share determined as of the date such Option was exercised.

{00189295. }                                    10

 

 

Delivery of Certificates of Stock

. 
The Company shall promptly issue and deliver a certificate representing the
number of Shares as to which an Option has been duly exercised.  The value of
the Shares issuable or deliverable upon exercise of an Option shall not bear
any interest owing to the passage of time, except as may be otherwise provided
in an Option Agreement or approved in writing by the Committee.

Legends

.  Certificates
for Shares issued or delivered upon exercise of an Option, when delivered, may
bear such legends or statements as the Committee or the Company determines to
be appropriate or advisable.

Restrictions
on Transfer of Shares; Rights to Acquire from Participant

. 
Each Option Agreement may provide for (a) restrictions on the transferability
of Shares acquired pursuant to an Option or otherwise and (b) options and
rights of first refusal with respect to any or all of such Shares in favor of
the Company and/or any or all of its shareholders that, in each instance, the
Committee in its sole and absolute discretion may deem proper or advisable. 
Unless otherwise provided in an Option Agreement, the provisions of the
Shareholders’ Agreement in effect at the date of exercise of an Option are
fully applicable to all Shares issued pursuant to that Option.  To the extent
that Participant (or other Person exercising the Option) has not already done
so, the Participant (or other Person exercising the Option) will be deemed to
have executed a counterpart thereof as of the date of exercise.  The Committee
may require, as a condition to the exercise of an Option, the Participant and
his or her spouse (or other Person exercising the Option) to execute and
deliver an agreement confirming the existence and enforceability of any such
restrictions on the transferability of the Shares to be acquired upon exercise
of such Option and otherwise evidencing their express agreement to be bound
thereby.  The failure to obtain any such confirmation and agreement shall not
have any effect on the existence or enforceability of the restrictions on
transferability applicable to such Shares.

No
Rights as Shareholder

. 
The holder of an Option shall not have any of the rights of a shareholder of
the Company with respect to the Shares covered by the Option unless and until,
and except to the extent that, one or more certificates for such Shares shall
have been delivered to such holder or such holder has been determined to be a
shareholder of record by the Company or its transfer agent upon due exercise of
the Option.

TERMINATION OF OPTIONS

Term
of Options

. 
Unless the relevant Option Agreement expressly provides a different term, the
term of each Option shall be from the Date of Grant until the date that is five
years after such Date of Grant; provided, however, that no Option
Agreement relating to an Incentive Stock Option shall permit such Incentive Stock Option to be exercisable later than
ten years (five years in the case of a 10% Holder) from the Date of Grant.

{00189295. }                                   11

 

 

Termination
Before Option Becomes Exercisable.

Unless the
relevant Option Agreement with respect to a Non-Incentive Stock Option
expressly provides greater or lesser rights to the Employee-Participant or the
relevant Option Agreement with respect to an Incentive Stock Option expressly
provides lesser rights to the Employee-Participant, if an Employee-Participant
ceases to be an employee of an Eligible Employer for any reason whatsoever
before the date that an Option shall first have become exercisable by the
Employee-Participant and such Employee-Participant is not then an employee of
any other Eligible Employer, the Option and all rights of the
Employee-Participant to exercise the Option shall terminate, lapse, and be
forfeited at the time of such termination of employment.

Unless the
relevant Option Agreement with respect to a Non-Incentive Stock Option
expressly provides greater or lesser rights to the Participant (other than an
Employee-Participant) or the relevant Option Agreement with respect to an
Incentive Stock Option expressly provides lesser rights to the Participant
(other than an Employee-Participant), if the Participant ceases to serve an
Eligible Employer in the capacity in which the Participant was serving at the
time the Option was granted for any reason whatsoever before the date an Option
shall first have become exercisable by the Participant and such Participant is
not then serving any other Eligible Employer, the Option and all rights of the
Participant to exercise the Option shall terminate, lapse, and be forfeited at
the time the Participant ceases to so serve the Eligible Employer.

Discharge
or Resignation.

Unless the
relevant Option Agreement with respect to a Non-Incentive Stock Option
expressly provides greater or lesser rights to the Employee-Participant or the
relevant Option Agreement with respect to an Incentive Stock Option expressly
provides lesser rights to the Employee-Participant, if an Employee-Participant
ceases to be an employee of an Eligible Employer for any reason other than
death or Disability and such Employee-Participant is not then an employee of
any other Eligible Employer, the Employee-Participant shall have the right to
exercise an Option, but only to the extent exercisable on the date of such
cessation of employment, at any time within three months after such cessation
of employment; provided, however, that if the Employee-Participant shall die
within three months after such date of cessation of employment without having
exercised the Option, the personal representatives, heirs, legatees, or
distributees of the Employee-Participant, as appropriate, shall have the right,
up to one year from such date of cessation of employment (or such lesser period
as is contemplated by Section 7.6 or 7.7, if applicable), to exercise any such
Option to the extent that the Option was exercisable prior to the
Employee-Participant’s death and had not been so exercised.  The Option and all
rights of the Employee-Participant to exercise the Option shall terminate,
lapse, and be forfeited on the date of such cessation of employment to the
extent the Option is not exercisable on such date.

{00189295. }                                   12

 

 

Unless
the relevant Option Agreement with respect to a Non-Incentive Stock Option
expressly provides greater or lesser rights to the Participant (other than an
Employee-Participant) or the relevant Option Agreement with respect to an
Incentive Stock Option expressly provides lesser rights to the Participant
(other than an Employee-Participant), if the Participant ceases to serve an
Eligible Employer in the capacity in which the Participant was serving at the
time the Option was granted for any reason other than death and such
Participant is not then serving any other Eligible Employer, the Participant
shall have the right to exercise an Option, but only to the extent exercisable
on the date of such cessation, at any time within three months after such
cessation; provided, however, that if the Participant shall die within
three months after such date of cessation without having exercised the Option,
the personal representatives, heirs, legatees, or distributees of the
Participant, as appropriate, shall have the right, up to one year from such
date of cessation (or such lesser period as is contemplated by Section 7.6 or
7.7, if applicable), to exercise any such Option to the extent that the Option
was exercisable prior to the Participant’s death and had not been so
exercised.  The Option and all rights of the Participant to exercise the Option
shall terminate, lapse, and be forfeited on the date of such cessation to the
extent the Option is not exercisable on such date.

Death

. 
Unless the relevant Option Agreement with respect to a Non-Incentive Stock
Option expressly provides greater or lesser rights to the Participant or the
relevant Option Agreement with respect to an Incentive Stock Option expressly
provides lesser rights to the Participant, upon the death of a Participant, the
personal representatives, heirs, legatees, or distributees of the Participant,
as appropriate, shall have the right up to one year from the date of the
Participant’s death (or such lesser period as is contemplated by Section 7.6 or
7.7, if applicable) to exercise any Option, but only to the extent that the
Option was exercisable at the date of the Participant’s death and had not been
so exercised.  The Option and all rights of the Participant to exercise the
Option shall terminate, lapse, and be forfeited on the date of such death to
the extent the Option is not exercisable on such date.

Disability

. 
Unless the relevant Option Agreement with respect to a Non-Incentive Stock
Option expressly provides greater or lesser rights to the Employee-Participant
or the relevant Option Agreement with respect to an Incentive Stock Option
expressly provides lesser rights to the Employee-Participant, if an
Employee-Participant ceases to be an employee of the Eligible Employers due to
such Employee-Participant’s Disability, as determined solely and exclusively by
the Committee, the Employee-Participant shall have the right to exercise an
Option, but only to the extent exercisable on the date of termination of
employment, at any time within one year after such termination of employment
(or such lesser period as is contemplated by Section 7.6 or 7.7, if
applicable).  The Option and all rights of the Participant to exercise the
Option shall terminate, lapse, and be forfeited on the date of such termination
of employment to the extent the Option is not exercisable on such date.

Limitations
on Exercise

{00189295. }                                   13

 

 

.  Despite the provisions of Sections 7.4 and 7.5, no
Incentive Stock Option shall be exercisable under any condition after the
expiration of ten years (five years in the case of a 10% Holder) from the Date
of Grant.  In addition, the provisions of Sections 7.4 and 7.5, shall be
subject to the provisions of Sections 9.6 and 9.7.

Forfeiture

. 
Each Option Agreement may contain or otherwise provide for conditions giving
rise to the forfeiture of the Shares acquired pursuant to an Option or
otherwise.  The conditions giving rise to forfeiture may include, but need not
be limited to, the requirement that the Participant render substantial services
to the Company or its Parents or Subsidiaries for a specified period of time.

CERTAIN TAX MATTERS

Withholding

. 
The amount, as determined by the Committee, of any federal, state, or local tax
required to be withheld by the Company (or Subsidiary that is the employer of
the Participant) due to the exercise of a Non-Incentive Stock Option shall be
satisfied (a) by payment by the Participant to the Company (or Subsidiary that
is the employer of the Participant) of the amount of such withholding
obligation in cash, (b) through the retention by the Company of a number of
Shares out of the Shares being purchased through the exercise of the Option
having, at the date of withholding, a Fair Market Value equal to the amount of
the withholding obligation, (c) through delivery by the Participant of Shares
that have Fair Market Value at the date of withholding equal to the amount of
the withholding, or (d) any combination of the foregoing.  The Committee shall
determine the time and must consent to the manner in which a Participant shall
satisfy a withholding obligation.  The cash payment or cash equal to the Fair
Market Value of the Shares so withheld, as the case may be, shall be remitted
by the Company (or Subsidiary that is the employer of the Participant) to the
appropriate taxing authorities.

Disqualifying
Disposition

. 
A Participant who makes a disqualifying disposition (within the meaning of
Section 422 of the Code) of Shares acquired through the exercise of an
Incentive Stock Option shall notify the Company of such disposition and the
amount realized upon such disposition.  The Company shall have the right to
require payment from the Participant to cover any federal, state, or local tax
required to be withheld by the Company in the event of the disqualifying disposition
of such Shares.  If a Participant fails to give the Company notice of the
disqualifying disposition and/or fails to make a payment of the applicable
withholding taxes and the Company incurs any penalties or becomes liable for
any interest under the Code for failure to withhold on wages, the Participant
shall immediately reimburse the Company for the amount of such penalties and
interest and shall pay the Company reasonable attorneys’ fees if the Company
resorts to legal action to enforce its rights under this sentence.

{00189295. }                                   14

 

 

MISCELLANEOUS

Effective
Date

. 
The Plan shall be effective as of October 30, 2010 provided, however,
that if the Plan is not approved by the holders of a majority of the
outstanding shares of voting stock of the Company prior to November 10, 2010,
all Incentive Stock Options granted under the Plan shall automatically become
Non-Incentive Stock Options.

Termination
of Plan

. 
The Board or the Committee may terminate the Plan at any time.  However,
termination of the Plan shall not affect any Options previously granted
hereunder; such Options shall remain in effect until they have been terminated
or exercised, all in accordance with their terms.

Furnish
Information

. 
Each Participant shall furnish to the Company all information requested by the
Company to enable it to comply with any reporting or other requirement imposed
upon the Company by or under any applicable statute or regulation.

Remedies

. 
The Company shall be entitled to recover from a Participant reasonable
attorneys’ fees incurred in connection with the enforcement of the terms and
provisions of the Plan and any Option Agreement whether by an action to enforce
specific performance or for damages for its breach or otherwise.

Information
Confidential

. 
As partial consideration for the granting of each Option hereunder, the
Participant agrees with the Company to keep confidential all information and
knowledge that the Participant has relating to the manner and amount of the
Participant’s participation in the Plan; provided, however, that such
information may be disclosed as required by law and may be given in confidence
to the Participant’s spouse, tax and financial advisors, or to a financial
institution to the extent that such information is necessary to secure a loan. 
In the event any breach of this promise comes to the attention of the
Committee, it shall take into consideration that breach in determining whether
to recommend the grant of any future Option to that Person as a factor
militating against the advisability of granting any such future Option to that
Person.

Changes
in Capital Structure

. 
If there is any change in the capital structure of the Company through a
Reorganization or otherwise, or if there shall be any dividend on the Shares,
payable in Shares, or if there shall be a stock split or combination of Shares,
the maximum aggregate number of Shares with respect to which Options may be
exercised hereunder and the number and the exercise price of the Shares with
respect to which an Option has been granted hereunder shall be proportionately
adjusted by the Committee as it deems equitable, in
its absolute discretion, to prevent dilution or enlargement of the rights of
Participants.  The issuance or delivery of stock for consideration shall not be
considered a change in the Company’s capital structure.  No adjustment provided
for in this Section shall require the issuance or delivery of any fractional
Share.  The provisions of this Section shall not override the provisions of
Section 9.7.

{00189295. }                                   15

 

 

Dissolution,
Liquidation, or Reorganization

. 
In the event of the dissolution or liquidation of the Company, the Committee in
its sole discretion, may (a) declare any or all outstanding Options to be
immediately exercisable, (b) pay cash to any or all Participants in exchange
for the cancellation of their Options at a price determined by the Committee to
be the fair value thereof, or (c) permit the Participant to elect the manner in
which the Option shall be treated upon the liquidation or dissolution of the
Company.  In the event of a Reorganization of the Company, the Committee in its
sole discretion, may (a) declare any or all outstanding Options to be
immediately exercisable, (b) pay cash to any or all Participants in exchange
for the cancellation of their Options at a price determined by the Committee to
be the fair value thereof, (c) grant new Options, (d) substitute new Options
for any or all Options awarded hereunder, (e) permit any or all of the Options
to continue in accordance with their terms but with respect to the securities that
would be issued in respect of the Shares subject to such Options in connection
with such Reorganization, (f) make other adjustments to the Plan or any or all
Options, or (g) permit the Participant to elect the manner in which the Option
shall be treated upon the Reorganization of the Company.

Adjustments
for Pooling of Interests Accounting

. 
Notwithstanding any other provision of the Plan or any Option Agreement, if the
Company enters into a transaction that is intended to be accounted for using
the pooling of interests method of accounting, but it is determined by the
Board that any Option or any aspect thereof could reasonably be expected to
preclude such treatment, then the Board may modify (to the minimum extent
required) or revoke (if necessary) the Option or any of the provisions thereof
to the extent that the Board determines that such modification or revocation is
necessary to enable the transaction to be subject to the pooling of interests
method of accounting.

Amendment

. 
The Board may, by resolution, amend the Plan at any time; provided, however,
that, subject to the provisions of Section 9.6, 9.7, and 9.8 the Board may not,
without approval by the holders of a majority of the outstanding Shares, (a)
increase the Maximum Number, (b) reduce the exercise price with respect to an
Option granted hereunder, contrary to the provisions of the Plan as hereinabove
set forth, (c) change the class of employees eligible to participate in the
Plan, or (d) otherwise materially increase the benefits accruing to
Participants under the Plan or materially modify the requirements with respect
to eligibility for participation in the Plan.  The Board may not, without the
consent of the holder of an Option, alter or impair any Option previously
granted under the Plan except as authorized herein.

Automatic
Amendment for Requirements of and Changes in Code

{00189295. }                                   16

 

 

.  The Plan, to the extent it relates to Incentive
Stock Options, and each Option Agreement that relates to Incentive Stock
Options shall automatically be amended to contain any and all of the
restrictions and limitations required, by Section 422 of the Code and the
regulations promulgated thereunder, to be contained in the Plan and/or such
Option Agreement, as appropriate.  The Plan and each Option Agreement that relates
to Incentive Stock Options shall automatically be amended to eliminate any and
all of the restrictions and limitations set forth in the Plan or any Option
Agreement with respect to Incentive Stock Options if and to the extent that
Section 422 of the Code and the regulations promulgated thereunder do not
require such restrictions and limitations and either permit or do not prohibit
such automatic amendments.

Nonguarantee
of Employment

. 
Nothing in the Plan shall confer upon a Participant any right to continue in
the employ of, or to continue to perform services for, any or all Eligible
Employers or interfere in any way with the right of any or all Eligible
Employers to terminate the Participant’s employment or other relationship with
any or all Eligible Employers at any time.

Severability

. 
If any provision of the Plan is held to be illegal, invalid, or unenforceable
under present or future laws effective during the term hereof, such provision
shall be fully severable and the Plan shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised a part of
the Plan; the remaining provisions of the Plan shall remain in full force and
effect and shall not be affected by the illegal, invalid, or unenforceable provision
or by its severance from the Plan.  Furthermore, in lieu of each such illegal,
invalid, or unenforceable provision, there shall be added automatically as a
part of the Plan a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid, and
enforceable.  With respect to Incentive Stock Options, if the Plan does not
contain any provision required to be included herein under Section 422 of the
Code, that provision shall be deemed to be incorporated herein with the same
force and effect as if that provision had been set out at length herein; provided,
however, that, to the extent any Option that is intended to qualify as an
Incentive Stock Option cannot so qualify, that Option (to that extent) shall be
deemed a Non-Incentive Stock Option for all purposes of the Plan.

Rule
16b-3

. 
With respect to Participants subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 promulgated thereunder, and with respect to such
Participants all transactions shall be subject to such conditions regardless of
whether they are expressly set forth in the Plan or any Option Agreement.  To
the extent any provision of the Plan fails to so comply, the Plan shall
automatically be amended to contain any and all of the restrictions and
limitations required by Rule 16b-3.  To the extent any action by the Committee
fails to so comply, such action shall be deemed null and void to the extent
permitted by law and deemed advisable by the Committee.

Expenses

. 
Any expenses of administering the Plan shall be borne by the Eligible
Employers.

{00189295. }                                   17

 

 

Construction

. 
Words used in the masculine shall apply to the feminine where applicable, and
wherever the context of the Plan dictates, the plural shall be read as the
singular and the singular as the plural.  The section headings contained in the
Plan are for reference purposes only and shall not in any way affect the
meaning or interpretation of the Plan.

Notice

.  All
notices, requests, demands, and other communications hereunder shall be in
writing and shall be personally delivered, delivered by facsimile or courier
service, or mailed, certified with first class postage prepaid to the address
specified by the person who is to receive the same in the relevant Option
Agreement.

Unless
otherwise provided in an Option Agreement, each such notice, request, demand,
or other communication hereunder shall be deemed to have been given (whether
actually received or not) on the date of actual delivery thereof, if personally
delivered or delivered by facsimile transmission (if receipt is confirmed at
the time of such transmission by telephone or facsimile-machine-generated
confirmation), or on the third day following the date of mailing, if mailed in
accordance with this Section, or on the day specified for delivery to the
courier service (if such day is one on which the courier service will give
normal assurances that such specified delivery will be made).  Unless otherwise
provided in an Option Agreement, any notice, request, demand, or other
communication given otherwise than in accordance with this Section shall be
deemed to have been given on the date actually received.  Unless otherwise
provided in an Option Agreement, any party may change its address for purposes
of this Section by giving written notice of such change to all other persons
who may be required or permitted to give any notice, request, demand, or other
communication hereunder in the manner hereinabove provided.  Any Person
entitled to any notice, request, demand, or other communication hereunder may
waive the notice, request, demand, or other communication.

Calculation
of Time

. 
In determining the time within which an event or action is to take place for
purposes of the Plan, no fraction of a day shall be considered, and any act,
the performance of which would fall on a day that is not a Business Day, may be
performed on the following Business Day.

Successors

. 
The Plan shall be binding upon and shall inure to the benefit of the Company
and its successors and assigns and on the Participants and their respective
heirs, executors, administrators, and legal representatives to the extent set
forth in the Plan.

[THIS
SPACE LEFT BLANK INTENTIONALLY.]

{00189295. }                                   18

 

 

IN WITNESS WHEREOF, the Company has
executed the Plan on ______________, 20____, to be effective as set forth in
Section 9.1 above.

 

                                                            

 

By:                                                      

Name: _____________________________

Title: _________________________________

ATTEST:

 

                                                

Secretary

 

{00189295. }                                   19exhibit1019-employeestockopt.htm - Generated by SEC Publisher for SEC Filing

 

 

 

 

 

 

 

ESOP

 

EMPLOYEE STOCK OPTION
PLAN

 

 

 

 

 

 

STOCK OPTION PLAN OF

ROTH KLINE, INC

OCTOBER 1, 2010

 

{00188172. }                                                                                 

 

 

Table of Contents

ARTICLE 1 GENERAL.. 1

1.1       Purpose of Plan. 1

1.2       Definitions. 1

ARTICLE 2 ADMINISTRATION OF THE PLAN.. 4

2.1       Administration. 4

2.2       Absolute Discretion. 5

2.3       No Liability for Good Faith Determinations. 5

2.4       No Liability of Company. 5

ARTICLE 3 ELIGIBILITY OF PARTICIPANTS. 5

3.1       Participants. 5

3.2       Factors in Determination. 5

ARTICLE 4 SHARES SUBJECT TO PLAN.. 6

4.1       Shares. 6

4.2       Expiration or Cancellation of Options;
Tendered Shares. 6

4.3       Description of Shares. 6

ARTICLE 5 GRANT OF OPTIONS. 6

5.1       Decision of Committee. 6

5.2       Date of Grant 6

5.3       Acceptance of Grant 6

5.4       Limitation of Time of Grant 7

5.5       Limitation on Incentive Stock Options. 7

5.6       Limitation on Recipients of Grant 7

ARTICLE 6 TERMS AND CONDITIONS OF
OPTIONS. 7

6.1       Option Agreement 7

6.2       Number of Shares. 7

6.3       Exercise Price. 7

6.4       Payment of Exercise Price. 7

6.5       Vesting. 8

6.6       Modification, Extension, and Renewal of
Options. 8

6.7       Exercise of Options Generally. 8

6.8       Certain Conditions to Exercise and Delivery
of Stock. 9

6.9       Additional Restrictions on Exercise. 9

6.10     Nontransferability of Options. 9

6.11     No Fractional Shares. 9

6.12     Delivery of Certificates of Stock. 10

6.13     Legends. 10

6.14     Restrictions on Transfer of Shares; Rights to
Acquire from Participant 10

6.15     No Rights as Shareholder 10

ARTICLE 7 TERMINATION OF OPTIONS. 10

{00188172. }                                             

Roth Kline, Inc  Employee Stock Option

Plan                                                                            Confidential

10-31-10

1

 

 

7.1       Term of Options. 10

7.2       Termination Before Option Becomes
Exercisable. 10

7.3       Discharge or Resignation. 11

7.4       Death. 12

7.5       Disability. 12

7.6       Limitations on Exercise. 12

7.7       Forfeiture. 12

ARTICLE 8 CERTAIN TAX MATTERS. 13

8.1       Withholding. 13

8.2       Disqualifying Disposition. 13

ARTICLE 9 MISCELLANEOUS. 13

9.1       Effective Date. 13

9.2       Termination of Plan. 13

9.3       Furnish Information. 14

9.4       Remedies. 14

9.5       Information Confidential 14

9.6       Changes in Capital Structure. 14

9.7       Dissolution, Liquidation, or Reorganization. 14

9.8       Adjustments for Pooling of Interests
Accounting. 15

9.9       Amendment 15

9.10     Automatic Amendment for Requirements of and
Changes in Code. 15

9.11     Nonguarantee of Employment 15

9.12     Severability. 15

9.13     Rule 16b-3. 16

9.14     Expenses. 16

9.15     Construction. 16

9.16     Notice. 16

9.17     Calculation of Time. 16

9.18     Successors. 17

 

{00188172. }                                             

Roth Kline, Inc  Employee Stock Option

Plan                                                                            Confidential

10-31-10

2

 

 

ROTH KLINE, INC

2010 STOCK OPTION PLAN

 

ARTICLE 1 

GENERAL

1.1             
Purpose of Plan

.  The Roth Kline, Inc (“ROTH”) 2010 Stock Option Plan is
intended to encourage ownership of Shares of ROTH, Inc. by certain employees of
the Company or of its Parents or Subsidiaries and certain other Persons, to
provide additional incentive for them to remain in the employ of the Company or
its Parents or Subsidiaries, and to promote the growth and success of the
Company and such Parents and Subsidiaries.  It is intended that the Options
issued pursuant to the Plan shall constitute either incentive stock options
within the meaning of Section 422 of the Code and the regulations thereunder or
non-incentive stock options.

1.2             
Definitions

.  Whenever used herein, the following terms shall have
the following meanings unless the context clearly indicates another meaning:

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

“Business Day” - any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of Nevada are
authorized or obligated by law or executive order to remain closed. 

“Code” - the Internal Revenue Code of 1986, as
amended.

“Committee” - the Board or, at the option of the
Board, a committee designated by the Board, which committee shall consist of
not less than one member of the Board who shall be appointed by and serve at
the pleasure of the Board.  Members of the Committee who are Eligible
Individuals shall be eligible for grants of Options; provided that any
such grant is approved by a majority of the other members of the Committee. 
During any period of time in which the Company is subject to the reporting
requirements of the Exchange Act, the Committee shall be comprised solely of
not less than two members, each of whom shall be (i) a “non-employee director”
within the meaning of Rule 16b-3 promulgated under the Exchange Act, as
amended, and (ii) unless otherwise determined by the Board, an “outside
director” within the meaning of Treasury Regulation Section 1.162-27(e)(3) and
Section 162(m) of the Code.

“Company” – Ecologic Transportation, Inc a Nevada corporation.

“Corporate Parent” - with respect to any Option,
any corporation (other than the Company) in an unbroken chain of corporations
ending with the Company if, at the time such Option is granted, each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one or more of the other
corporations in such chain.

{00188172. }                                   1

 

 

“Corporate Subsidiary” -
with respect to any Option, any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time such
Option is granted, each of the corporations other than the last corporation in
the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one or more of the other corporations
in such chain.

“Date of Grant” - with respect to any Option, the
date on which such Option is deemed granted pursuant to Section 5.2.

“Disability” - permanent and total disability as
defined in the employment agreement (or any successor agreement).

“Eligible Individual” - (i) a Key Employee or (ii)
any other Person that the Committee designates as eligible to receive a
Non-incentive Stock Option (or, to the extent Incentive Stock Options may be
granted to such Persons, an Incentive Stock Option) because such other Person
performs services for the Company or any of Its Parents or Subsidiaries (other
than services in connection with the offer or sale of securities in a
capital-raising transaction) and the Committee determines that the Person has a
direct and significant effect on the financial development of the Company or
any of its Parents or Subsidiaries, but excluding, under (i) and/or (ii), any
Person that the Board may from time to time specify as ineligible.

“Eligible Employer” - the Company.

“Employee-Participant” - a Participant who is, at
the Date of Grant of the relevant Option, an employee of an Eligible Employer.

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

“Fair Market Value” – (a) if Shares are listed on a
national securities exchange, the last reported sales price, regular way, on
the composite tape of the principal national securities exchange on which the
Shares are so listed on the most recent Business Day prior to the date in
question for which such price is available; (b) if clause (a) does not apply
but the Shares are admitted to trading in the NASDAQ-National Market System (or
a similar system then in use), the last reported sales price, regular way, on
the NASDAQ-National Market System (or such similar system) on the most recent
Business Day prior to the date in question for which such price is available;
(c) if neither clause (a) or (b) applies but the Shares are traded in the
over-the-counter market and bid and asked prices are reported by NASDAQ or any
comparable system, the average of the closing bid and asked prices of Shares in
the over-the-counter market as reported by NASDAQ or any comparable system on
the most recent Business Day prior to the date in question for which such
prices are available; (d) if none of clauses (a), (b), or (c) applies but bid
and asked prices for the Shares are furnished by members of the FINRA, the
average of the closing bid and asked prices as furnished by two members of the
FINRA (selected from time to time by the Committee for that purpose) on the
most recent Business Day prior to the date in question for which such prices
are available; and (e) if none of clauses (a), (b), (c), or (d) applies, the
fair market value of the Share as determined by the Committee from time to
time.

“Incentive Stock Option” - an option to purchase
Shares granted pursuant to the Plan that is an “incentive stock option” within
the meaning of Section 422 of the Code.

{00188172. }                                    2

 

 

“Initial Public Offering” -
the consummation of a sale of Shares (by the Company or shareholders or a combination
thereof) that is registered on a registration statement (other than a
registration statement on Form S-8 or its equivalent) filed with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, pursuant to
which the Company receives at least $10 million.

“Issuable Number” - at any time, the Maximum Number
less the number of Shares theretofore issued or delivered under the Plan
(appropriately adjusted to give effect to any changes in capitalization or
Reorganization).

“Key Employee” - any employee of an Eligible
Employer who the Committee determines is key to the operations of an Eligible
Employer.

“Maximum Number” - the maximum number of Shares
that may be issued or delivered under the Plan, which is 3,000,000 (subject to adjustment
as set forth in Sections 9.6 and 9.7 hereof).

“FINRA” – Financial Industry Regulatory Authority.

“NASDAQ” - NASD Automated Quotation System.

“Non-Incentive Stock Option” - an option to
purchase Shares granted pursuant to the Plan that is not an Incentive Stock
Option.

“Option” - an option to purchase Shares granted
pursuant to the Plan that is an Incentive Stock Option or a Non-Incentive Stock
Option.

“Option Agreement” - the agreement, substantially
in the form attached hereto as Exhibit B (or such other form as may be
approved by the Committee for use under the Plan pursuant to Section 2.1
hereof), between the Company and a Participant evidencing the grant of an
Option under the Plan and containing the terms and conditions, not inconsistent
with the Plan, that are applicable to such Option.

“Parent” - any Person (other than the Company) in
an unbroken chain of Persons ending with the Company if, at the time such
Option is granted, each of the Persons other than the Company owns stock (or
other equity interests) possessing 50% or more of the total combined voting
power of all classes of stock (or other equity interests) in one or more of the
other Persons in such chain.

“Participant” - an Eligible Individual to whom an
Option is granted under the Plan.

“Person” - any natural person, corporation,
partnership, limited partnership, limited liability company, joint venture, or
other entity.

“Plan” – the ROTH 2010 Stock Option Plan, as set
forth herein and as it may be amended from time to time.

“Reorganization” - any merger or consolidation in
which the Company is not the surviving Person (other than a merger of the
Company into a wholly-owned subsidiary of the Company) or in
which the holders of Shares receive cash, shares of another Person, a different
class of shares of the Company, or other property; the sale of all or
substantially all of the assets of the Company; or the sale, pursuant to an
agreement with the Company, of Shares of the Company pursuant to which another
Person acquires Shares that, after consummation of such sale, are 50% or more
of the outstanding Shares of the Company.

{00188172. }                                    3

 

 

“Securities Act” – the Securities Act of 1933, as
amended.

“Share” - a share of the Company’s present Common
Stock, par value $.001 per share, and any share or shares of capital stock or
other securities of the Company hereafter issued or delivered or issuable or
deliverable upon, in respect of, in substitution of, or in exchange for each
present share.

“Shareholders’ Agreement” - that certain
Shareholders’ Agreement executed as of October 31, 2010, by the Company, Joseph
Michael Redmond,____________, and, possibly others, as the same may be amended
at the relevant time, a copy of the current version of which is attached as Exhibit
A hereto.

“Subsidiary” - any Person (other than the Company)
in any unbroken chain of Persons beginning with the Company if, at the time of
granting of the Option, each of the Persons (other than the last Person in the
unbroken chain) owns stock (or other equity interests) possessing 50% or more
of the total combined voting power of all classes of stock (or other equity
interests) in one of the other Persons in such chain.

“Treasury Regulations” - the regulations
promulgated by the United States Department of the Treasury pursuant to and in
respect of provisions of the Code.  All references herein to sections of the
Treasury Regulations shall include any corresponding provisions of succeeding,
similar, substitute, proposed, temporary, or final Treasury Regulations.

“Vesting Schedule” - a schedule on which an Option
becomes exercisable as to a specific number of Shares subject to such Option.

ARTICLE 2 

ADMINISTRATION OF THE PLAN

2.1             
Administration

.  The Plan shall be administered by the Committee.  Subject
to the provisions of the Plan, the Committee is authorized to take the
following action, in addition to each other action that the Committee is
expressly authorized to take pursuant to the Plan:

(a)               
determine who is an Eligible Individual and determine the Eligible
Individuals to whom Options are to be granted;

(b)              
determine the number of Shares to be covered by each of the Options, the
time or times at which Options shall be granted and exercisable and terminate,
the exercise price for Shares subject to the Options, whether such Options
shall be Incentive Stock Options or Non-Incentive Stock Options, and the other
terms and provisions of each Option Agreement (which need not be the
identical);

{00188172. }                                    4

 

 

(c)               
interpret the Plan provisions;

(d)              
terminate the Plan;

(e)               
adopt, amend, and rescind rules and regulations relating to the Plan and
the functioning of the Committee;

(f)               
determine the Fair Market Value of Shares;

(g)              
accelerate the vesting of Options;

(h)              
rely on the employees of the Company for such clerical and
record-keeping duties as may be necessary or desirable in connection with the administration
of the Plan; and

(i)                
make all other determinations and take all other actions necessary or
advisable for the administration of the Plan.

2.2             
Absolute Discretion

.  All questions of interpretation and application of the
Plan or any Option Agreement or pertaining to any Option granted hereunder
shall be subject to the determination by a majority of the members of the
Committee acting with absolute discretion.

2.3             
No Liability for Good Faith Determinations

.  No member of the Committee shall be liable for any act,
omission, or determination taken or made in good faith with respect to the Plan
or any Option, and members of the Committee shall be entitled to
indemnification and reimbursement by the Company in respect of any claim, loss,
damage, or expense (including attorneys’ fees, and the costs of settling any
suit if such settlement is approved by independent legal counsel selected by
the Company), and amounts paid in satisfaction of a judgment (except a judgment
based on a finding of bad faith) arising therefrom to the full extent permitted
by law and under any directors and officers liability or similar insurance
coverage that may from time to time be in effect.  This right to
indemnification shall be in addition to, and not a limitation on, any other
indemnification rights any member of the Committee may have.

2.4             
No Liability of Company

.  The Company assumes no obligation or responsibility to
any Participant for any act of, or failure to act on the part of, the
Committee.

ARTICLE 3 

ELIGIBILITY OF PARTICIPANTS

3.1             
Participants

.  An Option may be granted pursuant to the Plan only to a
Person who is an Eligible Individual at the Date of Grant of such Option.

3.2             
Factors in Determination

.  In making any determination as to whether a Person is
an Eligible Individual, as to whether an Eligible Individual will be granted an
Option, and as to the number of Shares to be covered by such Option, the
Committee shall take into account the duties of such Person, the present and
potential contributions of such Person to the growth and success of the Company
and its Parents or Subsidiaries, and such other factors as the Committee shall
deem relevant in connection with accomplishing the purposes of the Plan.  The
Committee shall not be precluded from approving the
grant of an Option to any Eligible Individual solely because such Person may
previously have been granted an Option under the Plan.

{00188172. }                                    5

 

 

ARTICLE 4 

SHARES SUBJECT TO PLAN

4.1             
Shares

.  At no time shall the number of Shares subject to
outstanding Options be greater than the Issuable Number.  The Company shall
cause the Issuable Number of Shares to be reserved for issuance or delivery
under the Plan at all times the Plan is in effect.

4.2             
Expiration or Cancellation of Options; Tendered Shares

.  Should any Option expire or be canceled without being
fully exercised, the number of Shares with respect to which such Option shall
not have been exercised prior to its expiration or cancellation will again be
available for the granting of Options pursuant to the provisions hereof.  Furthermore,
if the exercise price of any Option granted under the Plan is satisfied by
tendering Shares (by either actual delivery or by attestation), only the number
of Shares issued net of the Shares tendered shall be deemed delivered for
purposes of determining the Issuable Number; provided, however, that any
increase in the Issuable Number resulting from the application of this sentence
shall be reserved for issuance of Shares in satisfaction of Non-Incentive Stock
Options only.

4.3             
Description of Shares

.  The Shares to be delivered under the Plan shall be made
available from (a) authorized but unissued Shares, (b) Shares held in the
treasury of the Company, or (c) previously issued Shares reacquired by the
Company, including Shares purchased on the open market, as the Board or the
Committee may, in each situation, determine from time to time in its sole
discretion.

ARTICLE 5 

GRANT OF OPTIONS

5.1             
Decision of Committee

.  From time to time the Committee shall, in its sole
discretion but subject to all of the provisions of the Plan, determine which
Eligible Individuals will be granted Options, the number of Shares subject to
Options, and the terms and conditions of the Options, including whether the
Options will be Incentive Stock Options or Non-Incentive Stock Options.  The
terms and conditions of an Option need not be the same for any other Option.

5.2             
Date of Grant

.  The date of the Agreement shall be the date on which
the Option is deemed granted.  In no event shall a Participant gain any rights
in addition to those specified by the Committee in its grant, regardless of the
time that may pass between the grant of the Option and the actual acceptance of
the offer of the Option and execution of the Option Agreement by the Company
and the Participant.

5.3             
Acceptance of Grant

.  Each Eligible Individual granted an Option pursuant to
Section 5.1 shall have an opportunity to accept or reject the grant of the
Option.  Execution and delivery of an Option Agreement relating to an Option
shall qualify as such written acceptance.  Each Eligible Individual who
indicates a desire to accept the grant of the Option offered to him or her must
enter into an Option Agreement pursuant to Section 6.1 hereof as a condition to
such acceptance.

{00188172. }                                    6

 

 

5.4             
Limitation of Time of Grant

.  In no event shall any Incentive Stock Option be granted
hereunder after the date that is ten years after the earlier of (a) the date
the Plan is adopted by the Board and (b) the date the Plan is approved by the
shareholders of the Company pursuant to Section 9.1.

5.5             
Limitation on Incentive Stock Options

.  Notwithstanding any other provision contained herein to
the contrary, no Incentive Stock Option shall be granted to an Eligible
Individual under the Plan to the extent it, together with all other incentive
stock options granted by the Company or any of its Parents or Subsidiaries to
such Eligible Individual, would relate to Shares that, in the calendar year
they first become purchasable, have a Fair Market Value, at the Date of the
Grant, in excess of $100,000.  Notwithstanding the above, to the extent that
the $100,000 limit is exceeded, the Option shall automatically be deemed to be
a Non-Incentive Stock Option.

5.6             
Limitation on Recipients of Grant

.  Notwithstanding any other provision contained herein to
the contrary, in no event shall any Eligible Individual owning directly or
indirectly (pursuant to Code Section 424) more than 10% of the total combined
voting power of the Company or any Corporate Subsidiary (a “10% Holder”) be
granted an Incentive Stock Option hereunder unless (a) the exercise price is at
least 110% of the Fair Market Value of the Shares at the Date of Grant of the
Option and (b) the term of the Option does not exceed five years from the Date
of Grant.  Notwithstanding any other provision contained herein to the contrary,
in no event shall any Incentive Stock Option (or an incentive stock option
under any other plan of the Company or a Subsidiary) be granted to any Eligible
Individual unless such Eligible Individual is a Key Employee of the Company or
a Corporate Parent or Corporate Subsidiary of the Company.

ARTICLE 6 

TERMS AND CONDITIONS OF OPTIONS

6.1             
Option Agreement

.  Each Option granted under the Plan shall be evidenced
by an Option Agreement, in such form as the Committee may prescribe, setting
forth the tens and conditions of the Options, consistent with the provisions of
the Plan.  The Option Agreement shall identify the Option granted as either an
Incentive Stock Option or a Non-Incentive Stock Option.

6.2             
Number of Shares

.  Each Option Agreement shall specify the number of
Shares subject to each Option.

6.3             
Exercise Price

.  The exercise price for each Share purchased under any
Option shall be specified in the Option Agreement relating to such Option,
which shall not be less than the par value of a Share and, in the case of an
Incentive Stock Option, shall also not be less than 100% of the Fair Market
Value of a Share on the Date of Grant.

6.4             
Payment of Exercise Price

.  Payment of the exercise price for Shares purchased
under the Plan shall be made upon the exercise of an Option and may be paid to
the Company:

(a)               
in cash (including check, bank draft, or money order); or

{00188172. }                                    7

 

 

(b)              
at the discretion of the Committee, or if the Option Agreement so
provides, by the delivery of Shares of the Company owned by the Participant
(including Shares received upon exercise of such Option) that have a Fair Market
Value on the date of exercise equal to the aggregate exercise price;

(c)               
at the discretion of the Committee, or if the Option Agreement so
provides, by the delivery of a promissory note in the principal amount of the
aggregate exercise price and having such other terms as are determined by the
Committee or provided in the Option Agreement; or

(d)              
at the discretion of the Committee, or if the Option Agreement so
provides, by a combination of the foregoing.

6.5             
Vesting

.  If the relevant Option Agreement does not specify a
Vesting Schedule but (assuming no event of the type described in Article VII that would shorten or extend such term occurs during such term) has a term of at least five
years from the Date of Grant, the Option shall become exercisable with respect
to cumulative quantities of 20% of the Shares subject thereto on the first,
second, third, fourth, and fifth anniversary dates of the Date of Grant
(subject to adjustment as contemplated by Article VII).

6.6             
Modification, Extension, and Renewal of Options

.  Subject to the terms and conditions of and within the
limitations of the Plan and any consent required by the last two sentences of
this Section, the Committee may (a) modify, extend, or renew outstanding
Options, (b) accept the surrender of outstanding Options (to the extent not
previously exercised) and authorize the granting of new Options (including
those with a higher or lower exercise price) in substitution for outstanding
Options (to the extent not previously exercised), and (c) amend the terms of an
Incentive Stock Option at any time to include provisions that have the effect
of changing the Incentive Stock Option to a Non-incentive Stock Option.  Nevertheless,
without the consent of the Participant, the Committee may not modify any
outstanding Option so as to specify a higher or lower exercise price or accept
the surrender of outstanding Incentive Stock Options and authorize the granting
of new Options in substitution therefor specifying a higher or lower exercise
price.  In addition, no modification of an Option shall, without the consent of
the Participant, alter or impair any rights or obligations under any Option
theretofore granted hereunder to such Participant except, with respect to
Incentive Stock Options, as may be necessary to satisfy the requirements of
Section 422 of the Code.

6.7             
Exercise of Options Generally

.  An Option may be exercised only by written notice of
exercise delivered to the Company during the term of the Option, which notice
shall (a) state the number of Shares with respect to which the Option is being
exercised, (b) be signed by the Participant (or, if the Participant is dead or
Disabled, by the Person, if any, authorized to exercise the Option pursuant to
the Plan and, if signed by a Person other than the Participant, be accompanied
by or contain satisfactory evidence of such Person’s right to exercise the
Option), (c) be accompanied by payment of the appropriate exercise price and by
payment in full of all the applicable taxes required to be withheld with
respect to such exercise, (d) state the Social Security number of the
Participant or other Person exercising the Option as contemplated by clause (b)
above, and (e) include or be accompanied by such other information,
instruments, agreements, and documents required to satisfy any other condition
to exercise specified in the Plan (including but not
limited to those contained in Section 6.9, 6.10, and 6.15) or the Option
Agreement.  Unless otherwise consented to by the Committee, an Option shall not
be deemed exercised until the requirements of this Section are completely
fulfilled.

{00188172. }                                    8

 

 

6.8             
Certain Conditions to Exercise and Delivery of Stock

.  Nothing herein or in any Option or any Option Agreement
shall require the Company to issue or deliver any Shares if that issuance or
delivery would, in the opinion of counsel for the Company, constitute a
violation of the Securities Act or any similar or superseding statute or
statutes, any other applicable statute or regulation, or the rules of any
applicable securities exchange or securities association, in each case, as then
in effect.  The Company may, as a condition precedent to the exercise of an
Option, require from the Participant (or in the event of the death or
Disability of the Participant, the Participant’s legal representatives, heirs,
legatees, or distributees) such written representations, if any, concerning the
Participant’s (or such other Person’s) intentions with regard to the retention
or disposition of the Shares being acquired and such written covenants and
agreements, if any, as to the manner of disposal of such Shares as, in the
opinion of counsel to the Company, may be necessary to ensure that any
disposition by that Participant (or in the event of the death or Disability of
the Participant, the Participant’s legal representatives, heirs, legatees, or
distributees), will not involve a violation of the Securities Act or any
similar or superseding statute or statutes, any other applicable state or
federal statute or regulation, or any rule of any applicable securities
exchange or securities association, in each case, as then in effect. 

6.9             
Additional Restrictions on Exercise

.  The exercise of each Option granted under the Plan
shall be subject to the condition that if at any time the Company or the
Committee shall determine, in its sole discretion, that (a) the satisfaction of
withholding taxes or other withholding liabilities, (b) the listing,
registration, or qualification of any Shares otherwise deliverable upon such
exercise on any securities exchange or under any state or federal law, or (c)
the consent or approval of any regulatory body is necessary or desirable as a
condition of, or in connection with, such exercise or the delivery or purchase
of Shares thereunder, then in any such event such exercise shall not be
effective unless such withholding, listing, registration, qualification,
consent, or approval shall have been effected or obtained without any
conditions not acceptable to the Company.

6.10         
Nontransferability of Options

.  Unless the relevant Option Agreement with respect to a
Non-Incentive Stock Option expressly provides greater or lesser rights to the
Participant or the relevant Option Agreement with respect to an Incentive Stock
Option expressly provides lesser rights to the Participant, no Option shall be
transferable by a Participant other than by will or the laws of descent and
distribution or, in the case of a Non-Incentive Stock Option, a qualified
domestic relations order; provided, however, that the Board of Directors
or the Committee, as applicable, in its discretion, may allow for
transferability of non-qualified stock options by the Participant.  Following
any such transfer, any such options shall continue to be subject to the same
terms and conditions as were applicable immediately prior to transfer.

6.11         
No Fractional Shares

.  The Company shall not in any case be required to sell,
issue, or deliver a fractional Share with respect to any Option.  In lieu of
the sale, issuance, or delivery of any fractional Share, the Company shall pay
to the Participant an amount in cash equal to the same fraction (as the
fractional Share) of the Fair Market Value of a Share determined as of the date
such Option was exercised.

{00188172. }                                    9

 

 

6.12         
Delivery of Certificates of Stock

.  The Company shall promptly issue and deliver a
certificate representing the number of Shares as to which an Option has been
duly exercised.  The value of the Shares issuable or deliverable upon exercise
of an Option shall not bear any interest owing to the passage of time, except
as may be otherwise provided in an Option Agreement or approved in writing by
the Committee.

6.13         
Legends

.  Certificates for Shares issued or delivered upon
exercise of an Option, when delivered, may bear such legends or statements as
the Committee or the Company determines to be appropriate or advisable.

6.14         
Restrictions on Transfer of Shares; Rights to Acquire from
Participant

.  Each Option Agreement may provide for (a) restrictions
on the transferability of Shares acquired pursuant to an Option or otherwise
and (b) options and rights of first refusal with respect to any or all of such
Shares in favor of the Company and/or any or all of its shareholders that, in
each instance, the Committee in its sole and absolute discretion may deem
proper or advisable.  Unless otherwise provided in an Option Agreement, the
provisions of the Shareholders’ Agreement in effect at the date of exercise of
an Option are fully applicable to all Shares issued pursuant to that Option.  To
the extent that Participant (or other Person exercising the Option) has not
already done so, the Participant (or other Person exercising the Option) will
be deemed to have executed a counterpart thereof as of the date of exercise.  The
Committee may require, as a condition to the exercise of an Option, the
Participant and his or her spouse (or other Person exercising the Option) to
execute and deliver an agreement confirming the existence and enforceability of
any such restrictions on the transferability of the Shares to be acquired upon
exercise of such Option and otherwise evidencing their express agreement to be
bound thereby.  The failure to obtain any such confirmation and agreement shall
not have any effect on the existence or enforceability of the restrictions on
transferability applicable to such Shares.

6.15         
No Rights as Shareholder

.  The holder of an Option shall not have any of the
rights of a shareholder of the Company with respect to the Shares covered by
the Option unless and until, and except to the extent that, one or more
certificates for such Shares shall have been delivered to such holder or such
holder has been determined to be a shareholder of record by the Company or its
transfer agent upon due exercise of the Option.

ARTICLE 7 

TERMINATION OF OPTIONS

7.1             
Term of Options

.  Unless the relevant Option Agreement expressly provides
a different term, the term of each Option shall be from the Date of Grant until
the date that is five years after such Date of Grant; provided, however,
that no Option Agreement relating to an Incentive Stock Option shall permit
such Incentive Stock Option to be exercisable later than ten years (five years
in the case of a 10% Holder) from the Date of Grant.

7.2             
Termination Before Option Becomes Exercisable.

(a)               
Unless the relevant Option Agreement with respect to a Non-Incentive
Stock Option expressly provides greater or lesser rights to the
Employee-Participant or the relevant Option Agreement with respect to an
Incentive Stock Option expressly 

{00188172. }                                    10

 

 

provides lesser
rights to the Employee-Participant, if an Employee-Participant ceases to be an
employee of an Eligible Employer for any reason whatsoever before the date that
an Option shall first have become exercisable by the Employee-Participant and
such Employee-Participant is not then an employee of any other Eligible
Employer, the Option and all rights of the Employee-Participant to exercise the
Option shall terminate, lapse, and be forfeited at the time of such termination
of employment.

(b)              
Unless the relevant Option Agreement with respect to a Non-Incentive
Stock Option expressly provides greater or lesser rights to the Participant
(other than an Employee-Participant) or the relevant Option Agreement with
respect to an Incentive Stock Option expressly provides lesser rights to the
Participant (other than an Employee-Participant), if the Participant ceases to
serve an Eligible Employer in the capacity in which the Participant was serving
at the time the Option was granted for any reason whatsoever before the date an
Option shall first have become exercisable by the Participant and such
Participant is not then serving any other Eligible Employer, the Option and all
rights of the Participant to exercise the Option shall terminate, lapse, and be
forfeited at the time the Participant ceases to so serve the Eligible Employer.

7.3             
Discharge or Resignation.

(a)               
Unless the relevant Option Agreement with respect to a Non-Incentive
Stock Option expressly provides greater or lesser rights to the
Employee-Participant or the relevant Option Agreement with respect to an
Incentive Stock Option expressly provides lesser rights to the
Employee-Participant, if an Employee-Participant ceases to be an employee of an
Eligible Employer for any reason other than death or Disability and such
Employee-Participant is not then an employee of any other Eligible Employer,
the Employee-Participant shall have the right to exercise an Option, but only
to the extent exercisable on the date of such cessation of employment, at any
time within three months after such cessation of employment; provided, however,
that if the Employee-Participant shall die within three months after such date of
cessation of employment without having exercised the Option, the personal
representatives, heirs, legatees, or distributees of the Employee-Participant,
as appropriate, shall have the right, up to one year from such date of
cessation of employment (or such lesser period as is contemplated by Section
7.6 or 7.7, if applicable), to exercise any such Option to the extent that the
Option was exercisable prior to the Employee-Participant’s death and had not
been so exercised.  The Option and all rights of the Employee-Participant to
exercise the Option shall terminate, lapse, and be forfeited on the date of
such cessation of employment to the extent the Option is not exercisable on
such date.

(b)              
Unless the relevant Option Agreement with respect to a Non-Incentive
Stock Option expressly provides greater or lesser rights to the Participant
(other than an Employee-Participant) or the relevant Option Agreement with
respect to an Incentive Stock Option expressly provides lesser rights to the
Participant (other than an Employee-Participant), if the Participant ceases to
serve an Eligible Employer in the capacity in which the Participant was serving
at the time the Option was granted for any reason other than death and such
Participant is not then serving any other Eligible Employer, the Participant
shall have the right to exercise an Option, but only to the extent exercisable
on 

{00188172. }                                   11

 

 

the date of such cessation, at any time within
three months after such cessation; provided, however, that if the
Participant shall die within three months after such date of cessation without
having exercised the Option, the personal representatives, heirs, legatees, or
distributees of the Participant, as appropriate, shall have the right, up to
one year from such date of cessation (or such lesser period as is contemplated
by Section 7.6 or 7.7, if applicable), to exercise any such Option to the
extent that the Option was exercisable prior to the Participant’s death and had
not been so exercised.  The Option and all rights of the Participant to
exercise the Option shall terminate, lapse, and be forfeited on the date of
such cessation to the extent the Option is not exercisable on such date.

7.4             
Death

.  Unless the relevant Option Agreement with respect to a
Non-Incentive Stock Option expressly provides greater or lesser rights to the
Participant or the relevant Option Agreement with respect to an Incentive Stock
Option expressly provides lesser rights to the Participant, upon the death of a
Participant, the personal representatives, heirs, legatees, or distributees of
the Participant, as appropriate, shall have the right up to one year from the
date of the Participant’s death (or such lesser period as is contemplated by
Section 7.6 or 7.7, if applicable) to exercise any Option, but only to the
extent that the Option was exercisable at the date of the Participant’s death
and had not been so exercised.  The Option and all rights of the Participant to
exercise the Option shall terminate, lapse, and be forfeited on the date of
such death to the extent the Option is not exercisable on such date.

7.5             
Disability

.  Unless the relevant Option Agreement with respect to a
Non-Incentive Stock Option expressly provides greater or lesser rights to the
Employee-Participant or the relevant Option Agreement with respect to an
Incentive Stock Option expressly provides lesser rights to the
Employee-Participant, if an Employee-Participant ceases to be an employee of
the Eligible Employers due to such Employee-Participant’s Disability, as
determined solely and exclusively by the Committee, the Employee-Participant
shall have the right to exercise an Option, but only to the extent exercisable
on the date of termination of employment, at any time within one year after
such termination of employment (or such lesser period as is contemplated by
Section 7.6 or 7.7, if applicable).  The Option and all rights of the
Participant to exercise the Option shall terminate, lapse, and be forfeited on
the date of such termination of employment to the extent the Option is not
exercisable on such date.

7.6             
Limitations on Exercise

.  Despite the provisions of Sections 7.4 and 7.5, no
Incentive Stock Option shall be exercisable under any condition after the
expiration of ten years (five years in the case of a 10% Holder) from the Date
of Grant.  In addition, the provisions of Sections 7.4 and 7.5, shall be
subject to the provisions of Sections 9.6 and 9.7.

7.7             
Forfeiture

.  Each Option Agreement may contain or otherwise provide
for conditions giving rise to the forfeiture of the Shares acquired pursuant to
an Option or otherwise.  The conditions giving rise to forfeiture may include,
but need not be limited to, the requirement that the Participant render
substantial services to the Company or its Parents or Subsidiaries for a
specified period of time.

{00188172. }                                   12

 

 

ARTICLE 8 

CERTAIN TAX MATTERS

8.1             
Withholding

.  The amount, as determined by the Committee, of any
federal, state, or local tax required to be withheld by the Company (or
Subsidiary that is the employer of the Participant) due to the exercise of a
Non-Incentive Stock Option shall be satisfied (a) by payment by the Participant
to the Company (or Subsidiary that is the employer of the Participant) of the
amount of such withholding obligation in cash, (b) through the retention by the
Company of a number of Shares out of the Shares being purchased through the
exercise of the Option having, at the date of withholding, a Fair Market Value
equal to the amount of the withholding obligation, (c) through delivery by the
Participant of Shares that have Fair Market Value at the date of withholding
equal to the amount of the withholding, or (d) any combination of the foregoing. 
The Committee shall determine the time and must consent to the manner in which
a Participant shall satisfy a withholding obligation.  The cash payment or cash
equal to the Fair Market Value of the Shares so withheld, as the case may be,
shall be remitted by the Company (or Subsidiary that is the employer of the
Participant) to the appropriate taxing authorities.

8.2             
Disqualifying Disposition

.  A Participant who makes a disqualifying disposition
(within the meaning of Section 422 of the Code) of Shares acquired through the
exercise of an Incentive Stock Option shall notify the Company of such
disposition and the amount realized upon such disposition.  The Company shall
have the right to require payment from the Participant to cover any federal,
state, or local tax required to be withheld by the Company in the event of the
disqualifying disposition of such Shares.  If a Participant fails to give the
Company notice of the disqualifying disposition and/or fails to make a payment
of the applicable withholding taxes and the Company incurs any penalties or
becomes liable for any interest under the Code for failure to withhold on
wages, the Participant shall immediately reimburse the Company for the amount
of such penalties and interest and shall pay the Company reasonable attorneys’
fees if the Company resorts to legal action to enforce its rights under this
sentence.

ARTICLE 9 

MISCELLANEOUS

9.1             
Effective Date

.  The Plan shall be effective as of October 30, 2010 provided,
however, that if the Plan is not approved by the holders of a majority of
the outstanding shares of voting stock of the Company prior to November 10, 2010,
all Incentive Stock Options granted under the Plan shall automatically become
Non-Incentive Stock Options.

9.2             
Termination of Plan

.  The Board or the Committee may terminate the Plan at
any time.  However, termination of the Plan shall not affect any Options
previously granted hereunder; such Options shall remain in effect until they
have been terminated or exercised, all in accordance with their terms.

9.3             
Furnish Information

.  Each Participant shall furnish to the Company all
information requested by the Company to enable it to comply with any reporting
or other requirement imposed upon the Company by or under any applicable statute
or regulation.

{00188172. }                                   13

 

 

9.4             
Remedies

.  The Company shall be entitled to recover from a
Participant reasonable attorneys’ fees incurred in connection with the
enforcement of the terms and provisions of the Plan and any Option Agreement
whether by an action to enforce specific performance or for damages for its
breach or otherwise.

9.5             
Information Confidential

.  As partial consideration for the granting of each
Option hereunder, the Participant agrees with the Company to keep confidential
all information and knowledge that the Participant has relating to the manner
and amount of the Participant’s participation in the Plan; provided, however,
that such information may be disclosed as required by law and may be given in
confidence to the Participant’s spouse, tax and financial advisors, or to a
financial institution to the extent that such information is necessary to
secure a loan.  In the event any breach of this promise comes to the attention
of the Committee, it shall take into consideration that breach in determining
whether to recommend the grant of any future Option to that Person as a factor
militating against the advisability of granting any such future Option to that
Person.

9.6             
Changes in Capital Structure

.  If there is any change in the capital structure of the
Company through a Reorganization or otherwise, or if there shall be any
dividend on the Shares, payable in Shares, or if there shall be a stock split
or combination of Shares, the maximum aggregate number of Shares with respect
to which Options may be exercised hereunder and the number and the exercise
price of the Shares with respect to which an Option has been granted hereunder
shall be proportionately adjusted by the Committee as it deems equitable, in
its absolute discretion, to prevent dilution or enlargement of the rights of
Participants.  The issuance or delivery of stock for consideration shall not be
considered a change in the Company’s capital structure.  No adjustment provided
for in this Section shall require the issuance or delivery of any fractional
Share.  The provisions of this Section shall not override the provisions of
Section 9.7.

9.7             
Dissolution, Liquidation, or Reorganization

.  In the event of the dissolution or liquidation of the
Company, the Committee in its sole discretion, may (a) declare any or all
outstanding Options to be immediately exercisable, (b) pay cash to any or all
Participants in exchange for the cancellation of their Options at a price
determined by the Committee to be the fair value thereof, or (c) permit the
Participant to elect the manner in which the Option shall be treated upon the
liquidation or dissolution of the Company.  In the event of a Reorganization of
the Company, the Committee in its sole discretion, may (a) declare any or all
outstanding Options to be immediately exercisable, (b) pay cash to any or all
Participants in exchange for the cancellation of their Options at a price
determined by the Committee to be the fair value thereof, (c) grant new
Options, (d) substitute new Options for any or all Options awarded hereunder,
(e) permit any or all of the Options to continue in accordance with their terms
but with respect to the securities that would be issued in respect of the
Shares subject to such Options in connection with such Reorganization, (f) make
other adjustments to the Plan or any or all Options, or (g) permit the
Participant to elect the manner in which the Option shall be treated upon the
Reorganization of the Company.

9.8             
Adjustments for Pooling of Interests Accounting

.  Notwithstanding any other provision of the Plan or any
Option Agreement, if the Company enters into a transaction that is intended to
be accounted for using the pooling of interests method of accounting, but it is
determined by the Board that any Option or any aspect
thereof could reasonably be expected to preclude such treatment, then the Board
may modify (to the minimum extent required) or revoke (if necessary) the Option
or any of the provisions thereof to the extent that the Board determines that
such modification or revocation is necessary to enable the transaction to be
subject to the pooling of interests method of accounting.

{00188172. }                                   14

 

 

9.9             
Amendment

.  The Board may, by resolution, amend the Plan at any
time; provided, however, that, subject to the provisions of Section 9.6,
9.7, and 9.8 the Board may not, without approval by the holders of a majority
of the outstanding Shares, (a) increase the Maximum Number, (b) reduce the
exercise price with respect to an Option granted hereunder, contrary to the
provisions of the Plan as hereinabove set forth, (c) change the class of
employees eligible to participate in the Plan, or (d) otherwise materially
increase the benefits accruing to Participants under the Plan or materially
modify the requirements with respect to eligibility for participation in the
Plan.  The Board may not, without the consent of the holder of an Option, alter
or impair any Option previously granted under the Plan except as authorized
herein.

9.10         
Automatic Amendment for Requirements of and Changes in Code

.  The Plan, to the extent it relates to Incentive Stock
Options, and each Option Agreement that relates to Incentive Stock Options
shall automatically be amended to contain any and all of the restrictions and
limitations required, by Section 422 of the Code and the regulations
promulgated thereunder, to be contained in the Plan and/or such Option
Agreement, as appropriate.  The Plan and each Option Agreement that relates to
Incentive Stock Options shall automatically be amended to eliminate any and all
of the restrictions and limitations set forth in the Plan or any Option
Agreement with respect to Incentive Stock Options if and to the extent that
Section 422 of the Code and the regulations promulgated thereunder do not
require such restrictions and limitations and either permit or do not prohibit
such automatic amendments.

9.11         
Nonguarantee of Employment

.  Nothing in the Plan shall confer upon a Participant any
right to continue in the employ of, or to continue to perform services for, any
or all Eligible Employers or interfere in any way with the right of any or all
Eligible Employers to terminate the Participant’s employment or other
relationship with any or all Eligible Employers at any time.

9.12         
Severability

.  If any provision of the Plan is held to be illegal,
invalid, or unenforceable under present or future laws effective during the
term hereof, such provision shall be fully severable and the Plan shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part of the Plan; the remaining provisions of the Plan
shall remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance from the Plan.  Furthermore,
in lieu of each such illegal, invalid, or unenforceable provision, there shall
be added automatically as a part of the Plan a provision as similar in terms to
such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid, and enforceable.  With respect to Incentive Stock Options, if the
Plan does not contain any provision required to be included herein under
Section 422 of the Code, that provision shall be deemed to be incorporated
herein with the same force and effect as if that provision had been set out at
length herein; provided, however, that, to the extent any Option that is
intended to qualify as an Incentive Stock Option cannot so qualify, that Option
(to that extent) shall be deemed a Non-Incentive Stock Option for all purposes
of the Plan.

{00188172. }                                   15

 

 

9.13         
Rule 16b-3

.  With respect to Participants subject to Section 16 of
the Exchange Act, transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 promulgated thereunder, and with respect to
such Participants all transactions shall be subject to such conditions
regardless of whether they are expressly set forth in the Plan or any Option
Agreement.  To the extent any provision of the Plan fails to so comply, the
Plan shall automatically be amended to contain any and all of the restrictions
and limitations required by Rule 16b-3.  To the extent any action by the
Committee fails to so comply, such action shall be deemed null and void to the
extent permitted by law and deemed advisable by the Committee.

9.14         
Expenses

.  Any expenses of administering the Plan shall be borne
by the Eligible Employers.

9.15         
Construction

.  Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of the Plan dictates, the plural
shall be read as the singular and the singular as the plural.  The section
headings contained in the Plan are for reference purposes only and shall not in
any way affect the meaning or interpretation of the Plan.

9.16         
Notice

.  All notices, requests, demands, and other
communications hereunder shall be in writing and shall be personally delivered,
delivered by facsimile or courier service, or mailed, certified with first
class postage prepaid to the address specified by the person who is to receive
the same in the relevant Option Agreement.

Unless otherwise provided in an Option
Agreement, each such notice, request, demand, or other communication hereunder
shall be deemed to have been given (whether actually received or not) on the
date of actual delivery thereof, if personally delivered or delivered by
facsimile transmission (if receipt is confirmed at the time of such
transmission by telephone or facsimile-machine-generated confirmation), or on
the third day following the date of mailing, if mailed in accordance with this
Section, or on the day specified for delivery to the courier service (if such
day is one on which the courier service will give normal assurances that such
specified delivery will be made).  Unless otherwise provided in an Option
Agreement, any notice, request, demand, or other communication given otherwise
than in accordance with this Section shall be deemed to have been given on the
date actually received.  Unless otherwise provided in an Option Agreement, any
party may change its address for purposes of this Section by giving written
notice of such change to all other persons who may be required or permitted to
give any notice, request, demand, or other communication hereunder in the
manner hereinabove provided.  Any Person entitled to any notice, request,
demand, or other communication hereunder may waive the notice, request, demand,
or other communication.

9.17         
Calculation of Time

.  In determining the time within which an event or action
is to take place for purposes of the Plan, no fraction of a day shall be
considered, and any act, the performance of which would fall on a day that is
not a Business Day, may be performed on the following Business Day.

9.18         
Successors

.  The Plan shall be binding upon and shall inure to the
benefit of the Company and its successors and assigns and on the Participants
and their respective heirs, executors, administrators, and legal
representatives to the extent set forth in the Plan.

{00188172. }                                   16

 

 

[THIS
SPACE LEFT BLANK INTENTIONALLY.]

{00188172. }                                   17

 

 

IN WITNESS WHEREOF,
the Company has executed the Plan on October 30, 2010, to be effective as set
forth in Section 9.1 above.

 

                                                            

 

By:                                                      

Name: Joseph Michael Redmond

Title: Chief Executive Officer/Director

ATTEST:

 

                                                

Secretary

{00188172. }                                   18

 

 

EXHIBIT A

CURRENT FORM OF SHAREHOLDERS’ AGREEMENT

{00188172. }                                                                      Roth

Kline, Inc

Confidential

A-1

 

 

EXHIBIT B

 

STOCK OPTION AGREEMENT

This Stock Option Agreement (the “Agreement”) is
made and entered into by and between Roth Kline, Inc., (the “Company”), and Joseph
Michael Redmond (the “Participant”), as of the effective date of this Agreement
specified on Schedule I hereof (the “Date of Grant”), pursuant to the Roth
Kline, Inc. 2010 Stock Option Plan adopted effective October 2010 (as the same
may have been or hereafter be amended from time to time, the “Plan”).  Terms
used herein with their initial letters capitalized that are defined in the Plan
shall have the meaning given them in the Plan unless otherwise defined herein
or the context hereof otherwise requires.

RECITALS:

A.               
The Company has adopted the Plan to strengthen the ability of the
Company to encourage ownership of the Company by certain employees of the
Company and its Subsidiaries, to provide additional incentive for them to
remain in the employ of the Company and its Subsidiaries, and to promote the
growth and success of the Company and its Subsidiaries.

B.                
The Committee that administers the Plan believes that the granting of
the stock option herein described to Participant is consistent with the stated
purposes for which the Plan was adopted.

NOW, THEREFORE, in consideration of the mutual
covenants and conditions hereinafter set forth and for other good and valuable
consideration, the Company and Participant agree as follows:

AGREEMENTS:

1.                 
Plan Controls.  The terms of this Agreement are governed by the
terms of the Plan.  Participant hereby acknowledges receipt of a copy of the
Plan, as amended through the date hereof.  The Company hereby agrees to furnish
to Participant a copy of the Plan, as amended through the date of request
therefor, without charge, on request to the Company at the address to which
notices are to be sent to the Company.  In the case of any inconsistency
between the terms of this Agreement and the terms of the Plan, the terms of the
Plan shall govern.

2.                 
Grant of Option.  The Company hereby grants to Participant the
right and option (the “Option”) to purchase an aggregate number of shares set
forth on Schedule I hereof beside the caption “Number of Optioned Shares” (such
number being subject to adjustment as provided in Section 9.6 of the Plan) of
the Common Stock of the Company (the “Optioned Shares”) on the terms and
conditions herein set forth.  If designated on Schedule I hereof as an
Incentive Stock Option, this Option is intended to qualify as an Incentive
Stock Option as defined in Section 422 of the Code, and this Agreement shall be
interpreted accordingly.  By execution of this Agreement, the Participant
accepts the grant of the Option.

{00188172. }                                  B-1

 

 

3.                 
Exercise Price.  The price at which Participant shall be entitled
to purchase the Optioned Shares shall be the dollar amount per share set forth
on Schedule I hereof beside the caption “Exercise Price” (such exercise price
being subject to adjustment as provided in Section 9.6 of the Plan).  The
exercise price shall be paid with (a) cash (including check, bank draft, or
money order); (b) if the use of shares of Common Stock is permitted according
to Schedule I hereof or otherwise permitted by the Committee in writing, shares
of Common Stock owned by Participant; or (c) any combination of the foregoing.

4.                 
Option Period.  The Option hereby granted shall be and remain in
force and effect during the “Option Period.” The Option Period begins on the
Date of Grant and terminates on the date that is ten years after the Date of
Grant (or, if a different date is shown on Schedule I hereof beside the caption
“Termination Date”, such date); subject, however to earlier termination as
provided by the provisions of Article VII of the Plan and this Agreement (it
being understood that this Agreement contains no express provision that would
provide any of the greater or lesser rights that Article VII of the Plan permits to be provided in an Option Agreement except to the extent any variation
therefrom is specifically set forth in the language beside the caption “Greater
or Lesser Article VII Rights” on Schedule I hereof) (the date of any such
termination being called herein the “Expiration Date”).

5.                 
Vesting Schedule.  The Option may be exercised, in whole or in
part, from and after the following dates and prior to the Expiration Date.  Except
only as specifically provided elsewhere herein or in the Plan, this Option
shall be exercisable in the following cumulative installments:

Up to 343,750 of the Optioned Shares at any
time after the first anniversary of the Date of Grant;

Up to an additional 343,750 of the Optioned
Shares on or after the second anniversary of the Date of Grant;

Up to an additional 343,750 of the Optioned
Shares on or after the third anniversary of the Date of Grant; and

Up to an additional 343,750 of the Optioned
Shares on or after the fourth anniversary of the Date of Grant.

6.                 
Nontransferability of Options.  Transfers of the Option are
restricted as set forth in the Plan except to the extent, if any, transfers are
expressly permitted in the language appearing beside the caption “Expanded
Rights to Transfer Option” on Schedule I hereof.  The Participant agrees to
comply with such restrictions.

7.                 
Nontransferability of, and Right to Acquire, Shares.  Except to
the extent, if any, the language appearing beside the caption “Modifications to
Transfer/Repurchase Provisions” on Schedule I hereof modifies the provisions
thereof, the Stock Transfer/Repurchase Provisions, which are attached to the Plan
as Exhibit A, govern transfers of the Shares acquired upon exercise of the
Option and grant certain Persons the right to buy such Shares under certain
circumstances.  The Participant agrees to comply with the Stock
Transfer/Repurchase Provisions (if and as modified).

{00188172. }                                  B-2

 

 

8.                 
Information Confidential.  As partial consideration for the
granting of the Option, the Participant agrees with the Company to keep
confidential all information and knowledge that the Participant has relating to
the manner and amount of the Participant’s participation in the Plan; provided,
however, that such information may be disclosed as required by law and may be
given in confidence to the Participant’s spouse, the Participant’s tax and
financial advisors, or financial institutions to the extent that such
information is necessary to secure a loan.

9.                 
Administration.  This Agreement is subject to the terms and
conditions of the Plan.  The Plan will be administered by the Committee in
accordance with its terms.  The Committee has sole and complete discretion with
respect to all matters reserved to it by the Plan and decisions of the
Committee with respect to the Plan and to this Agreement shall be final and
binding upon Participant and the Company.  In the event of any conflict between
the terms and conditions of this Agreement and the Plan, the provisions of the
Plan shall control.

10.             
Continuation of Employment.  This Agreement shall not be
construed to confer upon Participant any right to continue in the employ of the
Company or any of its Subsidiaries and shall not limit the right of the Company
or any of its Subsidiaries, in its sole discretion, to terminate the employment
of Participant at any time.

11.             
Notice.  All notices, requests, demands, and other communications
hereunder shall be in writing and shall be personally delivered, delivered by
facsimile or courier service, or mailed, certified with first class postage
prepaid to the address specified by the person who is to receive the same.

Each such notice, request, demand, or other
communication hereunder shall be deemed to have been given (whether actually
received or not) on the date of actual delivery thereof, if personally
delivered or delivered by facsimile transmission (if receipt is confirmed at
the time of such transmission by telephone or facsimile-machine-generated
confirmation), or on the third day following the date of mailing, if mailed in
accordance with this Paragraph, or on the day specified for delivery to the
courier service (if such day is one on which the courier service will give
normal assurances that such specified delivery will be made).  Any notice,
request, demand, or other communication given otherwise than in accordance with
this Paragraph shall be deemed to have been given on the date actually received. 
Either party to this Agreement may change its address for purposes of this
Paragraph by giving written notice of such change to the other party in the
manner herein above provided.  Any person entitled to any notice, request,
demand, or other communication hereunder may waive the notice, request, demand,
or other communication.  Until changed in accordance herewith, the Company and
Participant specify their respective addresses as those set forth below their
signatures at the end of this Agreement.

12.             
Paragraph Headings.  The Paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

13.             
Governing Law and Venue.  THIS AGREEMENT SHALL AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA WITHOUT GIVING EFFECT TO ANY
CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEVADA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION
OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE  OF NEVADA. EACH PARTY
HEREBY IRREVOCABLY SUBMITS TO THE PERSONAL JURISDICTION OF THE COURTS LOCATED
IN THE STATE OF NEVADA AND AGREES THAT ANY LITIGATION BETWEEN THE PARTIES WILL
BE FILED IN COURTS LOCATED IN RENO, NEVADA.

{00188172. }                                  B-3

 

 

14.             
Arbitration.  By execution hereof, the parties hereto expressly
agree that upon the request of any party, whether made before or after the
institution of any legal proceeding, any action, dispute, claim or controversy
of any kind, whether in contract or in tort, statutory or common law, legal or
equitable, arising between the parties in any way arising out of any of the
provisions contained in this Agreement shall be resolved by binding arbitration
administered by the American Arbitration Association (the “AAA”) and in Reno, Nevada.
 Such arbitration shall be conducted in accordance with the Commercial
Arbitration Rules of the AAA and, to the maximum extent applicable, the Federal
Arbitration Act (Title 9 of the United States Code) except as otherwise
specified herein.  Judgment upon the award rendered by the arbitrator may be
entered in any court having competent jurisdiction.  The arbitrator shall
resolve all disputes in accordance with the applicable substantive law.  A
single arbitrator shall be chosen and shall decide the dispute, unless the
amount sought in the dispute exceeds $100,000, in which case a panel of three
arbitrators shall decide the dispute.  In all arbitration proceedings in which
the amount of any award exceeds $100,000, in the aggregate, the arbitrator(s)
shall make specific, written findings of fact and conclusions of law.  In all
arbitration proceedings in which the amount of any award exceeds $100,000, in
the aggregate, the parties shall have, in addition to the limited statutory
right to seek a vacation or modification of an award pursuant to applicable
law, the right to vacation or modification of any award that is based, in whole
or in part, on an incorrect or erroneous ruling of law by appeal to an
appropriate court having jurisdiction; provided, however, that any such
application for a vacation or modification of such an award based on an
incorrect ruling of law must be filed in a court having jurisdiction over the
dispute within 15 days from the date the award is rendered.  The findings of
fact of the arbitrator(s) shall be binding on all parties and shall not be
subject to further review except as otherwise allowed by applicable law.  No
provision of this Agreement nor the exercise of any rights hereunder shall
limit the right of any party, and any party shall have the right during any
dispute, to seek, use, and employ ancillary or preliminary remedies, such as
injunctive relief (including, without limitation, specific performance), from a
court having jurisdiction before, during, or after the pendency of any
arbitration.  The institution and maintenance of any action for judicial relief
or pursuit of provisional or ancillary remedies shall not constitute a waiver
of the right of any party to submit any dispute to arbitration nor render
inapplicable the compulsory arbitration provisions hereof.

15.             
Attorney’s Fees.  If any action is brought to enforce or
interpret the terms of this Agreement (including through arbitration), the
prevailing party shall be entitled to reasonable attorneys’ fees, costs, and
necessary disbursements in addition to any other relief to which such party may
be entitled.

16.             
Counterparts.  This Agreement may be executed in any number of
counterparts and shall be effective when each party hereto has executed at
least one counterpart, with the same effect as if all signing parties had
signed the same document.  All counterparts will be construed together and
evidence only one agreement, which, notwithstanding the actual date of execution of any counterpart, shall be deemed to be dated
the day and year first written above.  In making proof of this Agreement, it
shall not be necessary to account for a counterpart executed by any party other
than the party against whom enforcement is sought or to account for more than
one counterpart executed by the party against whom enforcement is sought.

{00188172. }                                  B-4

 

 

17.             
Execution by Facsimile.  The manual signature of any party hereto
that is transmitted to any other party by facsimile shall be deemed for all
purposes to be an original signature.

[THIS SPACE LEFT
BLANK INTENTIONALLY]

{00188172. }                                  B-5

 

 

Executed on the date
or dates indicated below, to be effective as of                                   ,
2010.

 

                                                                        

 

By:                                                                  

Name:                                                              

Title:                                                                

 

Date:                           , 2010

 

Address:                                                          

                                                                        

 

Participant:

                                                                        

Name: Joseph Michael Redmond

 

Date: October 30, 2010

 

Address:                                                          

                                                                        

{00188172. }                                  B-6

 

 

SCHEDULE I

 

 

	
  DATE OF
  GRANT:

  	
  October
  31, 2010

  
	
  TYPE OF
  OPTION:

  	
  Incentive
  Stock Option           X

  
	
   

  	
  Nonqualified
  Stock Option                

  
	
  NUMBER OF
  OPTIONED SHARES:

  	
  1,375,000

  
	
  EXERCISE
  PRICE:

  	
  $ .10 

  
	
  TERMINATION
  DATE:

  	
               Anniversary
  of Date of Grant (Maximum term of 10 years; 5 years in the case of 10%
  shareholders)

  
	
  PERMISSION
  TO PAY WITH SHARES:

  	
               Granted          Denied
             

  
	
  EXPANDED
  RIGHTS TO TRANSFER OPTION:

  	
               Granted          Denied
             

  
	
  GREATER OR
  LESSER ARTICLE VII RIGHTS:

  	
  None

  

 

{00188172. }                                   I-1

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