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COMSTOCK MINING INC. 2020 EQUITY INCENTIVE PLAN
1.    Purpose; Eligibility.
1.1    General Purpose. The name of this plan is the Comstock Mining Inc. 2020 Equity Incentive Plan (the “Plan”). The purposes of the Plan are to (a) enable Comstock Mining Inc., a Nevada corporation (the “Company”), and any Affiliate to incent specific performance over the next three to five years, attract and retain the types of Employees, Consultants and Directors who will contribute to the Company’s long range success; (b) provide incentives that align the interests of Employees, Consultants and Directors with those of the shareholders of the Company; and (c) promote the success of the Company’s business.
1.2    Eligible Award Recipients. The persons eligible to receive Awards are the Employees, Consultants and Directors of the Company and its Affiliates and such other individuals designated by the Committee who are reasonably expected to become Employees, Consultants and Directors after the receipt of Awards.
1.3    Available Awards. Awards that may be granted under the Plan include: (a) Incentive Stock Options, (b) Non-qualified Stock Options, (c) Stock Appreciation Rights, (d) Restricted Awards, (e) Performance Share Awards, (f) Cash Awards, and (g) Other Equity-Based Awards.
2.    Definitions.
“Affiliate” means a corporation or other entity that, directly or through one or more intermediaries, controls, is controlled by or is under common control with, the Company.
“Applicable Laws” means the requirements related to or implicated by the administration of the Plan under applicable state corporate law, United States federal and state securities laws, the Code, any stock exchange or quotation system on which the shares of Common Stock are listed or quoted, and the applicable laws of any foreign country or jurisdiction where Awards are granted under the Plan.
“Award” means any right granted under the Plan, including an Incentive Stock Option, a Non-qualified Stock Option, a Stock Appreciation Right, a Restricted Award, a Performance Share Award, a Cash Award or an Other Equity-Based Award.
“Award Agreement” means a written agreement, contract, certificate or other instrument or document evidencing the terms and conditions of an individual Award granted under the Plan which may, in the discretion of the Company, be transmitted electronically to any Participant. Each Award Agreement shall be subject to the terms and conditions of the Plan.
“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular Person, such Person shall be deemed to have beneficial ownership of all securities that such Person has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.
“Board” means the Board of Directors of the Company, as constituted at any time.
“Cash Award” means an Award denominated in cash that is granted under Section 10 of the Plan.
“Cause” means:
    With respect to any Participant, unless the applicable Award Agreement states otherwise:
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(a) If the Participant is a party to an employment or service agreement with the Company or its Affiliates and such agreement provides for a definition of Cause, the definition contained therein; or
(b) If no such agreement exists, or if such agreement does not define Cause: (i) the commission of, or plea of guilty or no contest to, a felony or a crime involving moral turpitude or the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company or an Affiliate; (ii) conduct that brings or is reasonably likely to bring the Company or an Affiliate negative publicity or into public disgrace, embarrassment, or disrepute; (iii) gross negligence or willful misconduct with respect to the Company or an Affiliate; (iv) material violation of state or federal securities laws; or (v) material violation of the Company’s written policies or codes of conduct, including written policies related to discrimination, harassment, performance of illegal or unethical activities, and ethical misconduct.
The Committee, in its absolute discretion, shall determine the effect of all matters and questions relating to whether an Employee has been discharged for Cause.
“Change in Control”
    (a) The direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its subsidiaries, taken as a whole, to any Person that is not a subsidiary of the Company;
(b) The Incumbent Directors cease for any reason to constitute at least a majority of the Board;
(c) The date which is 10 business days prior to the consummation of a complete liquidation or dissolution of the Company;
(d) The acquisition by any Person of Beneficial Ownership of 20% or more (on a fully diluted basis) of either (i) the then outstanding shares of Common Stock of the Company, taking into account as outstanding for this purpose such Common Stock issuable upon the exercise of options or warrants, the conversion of convertible stock or debt, and the exercise of any similar right to acquire such Common Stock (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this Plan, the following acquisitions shall not constitute a Change in Control: (A) any acquisition by the Company, (B) any acquisition by any employee benefit plan sponsored or maintained by the Company or any subsidiary, or (C) any acquisition which complies with clauses, (i), (ii) and (iii) of subsection (e) of this definition; or
(e) The consummation of a reorganization, merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company that requires the approval of the Company’s shareholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination: (i) more than 50% of the total voting power of (A) the entity resulting from such Business Combination (the “Surviving Company”), or (B) if applicable, the ultimate parent entity that directly or indirectly has beneficial ownership of sufficient voting securities eligible to elect a majority of the members of the board of directors (or the analogous governing body) of the Surviving Company (the “Parent Company”), is represented by the Outstanding Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which the Outstanding Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of the Outstanding Company 
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Voting Securities among the holders thereof immediately prior to the Business Combination; (ii) no Person (other than any employee benefit plan sponsored or maintained by the Surviving Company or the Parent Company) is or becomes the Beneficial Owner, directly or indirectly, of 50% or more of the total voting power of the outstanding voting securities eligible to elect members of the board of directors of the Parent Company (or the analogous governing body) (or, if there is no Parent Company, the Surviving Company); and (iii) at least a majority of the members of the board of directors (or the analogous governing body) of the Parent Company (or, if there is no Parent Company, the Surviving Company) following the consummation of the Business Combination were Board members at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination.
“Code” means the Internal Revenue Code of 1986, as it may be amended from time to time. Any reference to a section of the Code shall be deemed to include a reference to any regulations promulgated thereunder.
“Committee” means the Compensation Committee of the Board, or if such committee does not exist, a committee of one or more members of the Board appointed by the Board to administer the Plan in accordance with Section 3.3 and Section 3.4.
“Common Stock” means the common stock, $0.000666 par value per share, of the Company, or such other securities of the Company as may be designated by the Committee from time to time in substitution thereof.
“Company” means Comstock Mining Inc., a Nevada corporation, and any successor thereto.
“Consultant” means any individual or entity which performs bona fide services to the Company or an Affiliate, other than as an Employee or Director, and who may be offered securities registerable pursuant to a registration statement on Form S-8 under the Securities Act.
“Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee, Consultant or Director, is not interrupted or terminated. The Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s Continuous Service; provided further that if any Award is subject to Section 409A of the Code, this sentence shall only be given effect to the extent consistent with Section 409A of the Code. For example, a change in status from an Employee of the Company to a Director of an Affiliate will not constitute an interruption of Continuous Service. The Committee or its delegate, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal or family leave of absence. The Committee or its delegate, in its sole discretion, may determine whether a Company transaction, such as a sale or spin-off of a division or subsidiary that employs a Participant, shall be deemed to result in a termination of Continuous Service for purposes of affected Awards, and such decision shall be final, conclusive and binding.
“Deferred Stock Units (DSUs)” has the meaning set forth in Section 8.1(b) hereof.
“Director” means a member of the Board.
“Disability” means, unless the applicable Award Agreement says otherwise, that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment; provided, however, for purposes of determining the term of an Incentive Stock Option 
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pursuant to Section 6.10 hereof, the term Disability shall have the meaning ascribed to it under Section 22(e)(3) of the Code. The determination of whether an individual has a Disability shall be determined under procedures established by the Committee. Except in situations where the Committee is determining Disability for purposes of the term of an Incentive Stock Option pursuant to Section 6.10 hereof within the meaning of Section 22(e)(3) of the Code, the Committee may rely on any determination that a Participant is disabled for purposes of benefits under any long-term disability plan maintained by the Company or any Affiliate in which a Participant participates.
“Disqualifying Disposition” has the meaning set forth in Section 17.11.
“Effective Date” shall mean the date that the Company’s shareholders approve this Plan.
“Employee” means any person, including an Officer or Director, employed by the Company or an Affiliate; provided, that, for purposes of determining eligibility to receive Incentive Stock Options, an Employee shall mean an employee of the Company or a parent or subsidiary corporation within the meaning of Section 424 of the Code. Mere service as a Director or payment of a director’s fee by the Company or an Affiliate shall not be sufficient to constitute “employment” by the Company or an Affiliate.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Fair Market Value” means, as of any date, the value of the Common Stock as determined below. If the Common Stock is listed on any established stock exchange or a national market system, including without limitation, the NYSE American LLC, New York Stock Exchange or the Nasdaq Stock Market, the Fair Market Value shall be the closing price of a share of Common Stock (or if no sales were reported the closing price on the date immediately preceding such date) as quoted on such exchange or system on the day of determination, as reported. In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Committee and such determination shall be conclusive and binding on all persons.
“Fiscal Year” means the Company’s fiscal year.
“Good Reason” means, unless the applicable Award Agreement states otherwise:
    (a) If an Employee or Consultant is a party to an employment or service agreement with the Company or its Affiliates and such agreement provides for a definition of Good Reason, the definition contained therein; or
(b) If no such agreement exists or if such agreement does not define Good Reason, the occurrence of one or more of the following without the Participant’s express written consent, which circumstances are not remedied by the Company within thirty (30) days of its receipt of a written notice from the Participant describing the applicable circumstances (which notice must be provided by the Participant within ninety (90) days of the Participant’s knowledge of the applicable circumstances): (i) any material, adverse change in the Participant’s duties, responsibilities, authority, title, status or reporting structure; (ii) a material reduction in the Participant’s base salary or bonus opportunity; or (iii) a geographical relocation of the Participant’s principal office location by more than fifty (50) miles.
“Grant Date” means the date on which the Committee adopts a resolution, or takes other appropriate action, expressly granting an Award to a Participant that specifies the key terms and conditions of the Award or, if a later date is set forth in such resolution, then such date as is set forth in such resolution.
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“Incentive Stock Option” means an Option that is designated by the Committee as an incentive stock option within the meaning of Section 422 of the Code and that meets the requirements set out in the Plan.
“Incumbent Directors” means individuals who, on the Effective Date, constitute the Board, provided that any individual becoming a Director subsequent to the Effective Date whose election or nomination for election to the Board was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for Director without objection to such nomination) shall be an Incumbent Director. No individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to Directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board shall be an Incumbent Director.
“Non-Employee Director” means a Director who is a “non-employee director” within the meaning of Rule 16b-3.
“Non-qualified Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.
“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
“Option” means an Incentive Stock Option or a Non-qualified Stock Option granted pursuant to the Plan.
“Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Option.
“Option Exercise Price” means the price at which a share of Common Stock may be purchased upon the exercise of an Option.
“Other Equity-Based Award” means an Award that is not an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, or Performance Share Award that is granted under Section 10 and is payable by delivery of Common Stock and/or which is measured by reference to the value of Common Stock.
“Participant” means an eligible person to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award.
“Performance Goals” means, for a Performance Period, the vesting or exercisability of any award is, in part, contingent on the achievement of the following performance objectives over the next three years and, in part, on the targeted growth in the Company’s valuation, per share. Our Committee has reviewed the strategic plans and evaluated the major intermediate objectives associated with achieving the goal of delivering $500 million in shareholder equity value, (representing at least $12 per share), by:
1.Establishing the Dayton Resource areas maiden, stand-alone gold and silver resource estimate corroborated by an SK-1300 compliant technical report;
2.Expanding the Dayton and Spring Valley with higher gold and silver resources estimates, and publishing an expanded third party, SK-1300 compliant report;
3.Developing the expanded Dayton Complex with a preliminary economic feasibility (PEA) assessment, and publishing an SK-1300 compliant report;
4.Developing the expanded Dayton Complex toward full economic feasibility, with preliminary net present valuations and publishing an SK-1300 compliant report;
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5.Establishing efficacy of the Comstock commercial pilot mercury remediation system, proving the effectiveness of removing mercury and the efficiency or extracting gold from the mercury amalgam;
6.Deploying the first international mercury remediation project with the Company’s second and third mercury remediation systems, into the Philippines, cleaning the soils and producing sand, gravel and gold revenues, and establishing cash flows that fully recoup the Company’s investment and continue producing cash flow thereafter;
7.Deploying the third mercury remediation project, recouping the investment continue producing cash flow thereafter;
8.Deploying the fourth mercury remediation project, recouping the investment continue producing cash flow thereafter;
9.Establish the Comstock Royalty portfolio (Lucerne, Occidental, Gold Hill, Eclipse, et al) with supporting resource estimates and technical reports and estimated values;
10.Monetize the third-party junior mining securities (that is, the Tonogold Note receivable and Eclipse equities) responsibly, for at least $15 million;
11.Support and expand the value of our Opportunity Zone properties and investments;
12.Monetize the non-mining assets for at least $12.75 million, excluding Gold Hill Hotel;
13.Expand the institutional and ESG-keen shareholder base; and
14.Develop a system organization, that is project and goal driven, capable of handling complexity, maintaining liquidity, growing revenue and sustained positive cash flow with transparent, timely, well-controlled financial reporting to all stakeholders.

These performance objectives relate specifically to the Company’s three-year strategic plan, its goal, and the intermediate objectives leading to creating and delivering at least $500 million of value to shareholders, representing at least $12 per share. The criteria extends to one or more of its subsidiaries, joint ventures, investees and/or one or more of its affiliates, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, all as our Compensation Committee shall determine.
“Performance Period” means the one or more periods of time, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance Share Award or a Cash Award.
“Performance Share Award” means any Award granted pursuant to Section 9 hereof.
“Performance Share” means the grant of a right to receive a number of actual shares of Common Stock or share units based upon the performance of the Company during a Performance Period, as determined by the Committee.
“Permitted Transferee” means: (a) a member of the Optionholder’s immediate family (child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships), any person sharing the Optionholder’s household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or the Optionholder) control the management of assets, and any other entity in which these persons (or the Optionholder) own more than 50% of the voting interests; (b) third parties designated by the Committee in connection with a program established and approved by the Committee pursuant to which Participants may receive a cash payment or other consideration in consideration for the transfer of a Non-qualified Stock Option; and (c) such other transferees as may be permitted by the Committee in its sole discretion.
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“Person” means a person as defined in Section 13(d)(3) of the Exchange Act.
“Plan” means this Comstock Mining Inc. 2020 Equity Incentive Plan, as amended and/or amended and restated from time to time.
“Restricted Award” means any Award granted pursuant to Section 8.
“Restricted Period” has the meaning set forth in Section 8.
“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time.
“Securities Act” means the Securities Act of 1933, as amended.
“Stock Appreciation Right” means the right pursuant to an Award granted under Section 7 to receive, upon exercise, an amount payable in cash or shares equal to the number of shares subject to the Stock Appreciation Right that is being exercised multiplied by the excess of (a) the Fair Market Value of a share of Common Stock on the date the Award is exercised, over (b) the exercise price specified in the Stock Appreciation Right Award Agreement.
“Stock for Stock Exchange” has the meaning set forth in Section 6.4.
“Substitute Award” has the meaning set forth in Section 4.5.
“Ten Percent Shareholder” means a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any of its Affiliates.
“Total Share Reserve” has the meaning set forth in Section 4.1.
3.    Administration.
3.1    Authority of Committee. The Plan shall be administered by the Committee. Subject to the terms of the Plan, the Committee’s charter and Applicable Laws, and in addition to other express powers and authorization conferred by the Plan, the Committee shall have the authority:
(a)    to construe and interpret the Plan and apply its provisions;
(b)    to promulgate, amend, and rescind rules and regulations relating to the administration of the Plan;
(c)    to authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;
(d)    to delegate its authority to one or more Officers of the Company with respect to Awards that do not involve “insiders” within the meaning of Section 16 of the Exchange Act;
(e)    to determine when Awards are to be granted under the Plan and the applicable Grant Date;
(f)    from time to time to select, subject to the limitations set forth in this Plan, those eligible Award recipients to whom Awards shall be granted;
(g)    to determine the number of shares of Common Stock to be made subject to each Award;
(h)    to determine whether each Option is to be an Incentive Stock Option or a Non-qualified Stock Option;
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(i)    to prescribe the terms and conditions of each Award, including, without limitation, the exercise price and medium of payment and vesting provisions, and to specify the provisions of the Award Agreement relating to such grant;
(j)    to determine the target number of Performance Shares to be granted pursuant to a Performance Share Award, the performance measures that will be used to establish the Performance Goals, the Performance Period(s) and the number of Performance Shares earned by a Participant;
(k)    to amend any outstanding Awards, including for the purpose of modifying the time or manner of vesting, or the term of any outstanding Award; provided, however, that if any such amendment impairs a Participant’s rights or increases a Participant’s obligations under his or her Award or creates or increases a Participant’s federal income tax liability with respect to an Award, such amendment shall also be subject to the Participant’s consent;
(l)    to determine the duration and purpose of leaves of absences which may be granted to a Participant without constituting termination of their employment for purposes of the Plan, which periods shall be no shorter than the periods generally applicable to Employees under the Company’s employment policies;
(m)    to make decisions with respect to outstanding Awards that may become necessary upon a change in corporate control or an event that triggers anti-dilution adjustments;
(n)    to interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan and any instrument or agreement relating to, or Award granted under, the Plan; and
(o)    to exercise discretion to make any and all other determinations which it determines to be necessary or advisable for the administration of the Plan.
The Committee also may modify the purchase price or the exercise price of any outstanding Award, provided that if the modification effects a repricing, shareholder approval shall be required before the repricing is effective.
3.2    Committee Decisions Final. All decisions made by the Committee pursuant to the provisions of the Plan shall be final and binding on the Company and the Participants, unless such decisions are determined by a court having jurisdiction to be arbitrary and capricious.
3.3    Delegation. The Committee or the Board may delegate administration of the Plan to a committee or committees of one or more members of the Board, and the term “Committee” shall apply to any person or persons to whom such authority has been delegated. The Committee shall have the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Committee shall thereafter be to the subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish the Committee at any time and reconstitute the Committee by a majority vote of the Board. The members of the Committee shall be appointed by and serve at the pleasure of the Board. From time to time, the Board may increase or decrease the size of the Committee, add additional members to, remove members (with or without cause) from, appoint new members in substitution therefor, and fill vacancies, however caused, in the Committee. The Committee shall act pursuant to a vote of the majority of its members or, in the case of a Committee comprised of only two members, the unanimous consent of its members, whether present or not, or by the written consent of the majority of its members and minutes shall be kept of all of its meetings and copies thereof shall be provided to the Board. Subject to the limitations prescribed by the Plan and the 
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Board, the Committee may establish and follow such rules and regulations for the conduct of its business as it may determine to be advisable.
3.4    Committee Composition. Except as otherwise determined by the Board, the Committee shall consist solely of two or more Non-Employee Directors. The Board shall have discretion to determine whether or not it intends to comply with the exemption requirements of Rule 16b-3. However, if the Board intends to satisfy such exemption requirements, with respect to any insider subject to Section 16 of the Exchange Act, the Committee shall be a compensation committee of the Board that at all times consists solely of two or more Non-Employee Directors. Within the scope of such authority, the Board or the Committee may delegate to a committee of one or more members of the Board who are not Non-Employee Directors the authority to grant Awards to eligible persons who are not then subject to Section 16 of the Exchange Act. Nothing herein shall create an inference that an Award is not validly granted under the Plan in the event Awards are granted under the Plan by a compensation committee of the Board that does not at all times consist solely of two or more Non-Employee Directors.
3.5    Indemnification. In addition to such other rights of indemnification as they may have as Directors or members of the Committee, and to the extent allowed by Applicable Laws, the Committee shall be indemnified by the Company against the reasonable expenses, including attorney’s fees, actually incurred in connection with any action, suit or proceeding or in connection with any appeal therein, to which the Committee may be party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted under the Plan, and against all amounts paid by the Committee in settlement thereof (provided, however, that the settlement has been approved by the Company, which approval shall not be unreasonably withheld) or paid by the Committee in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Committee did not act in good faith and in a manner which such person reasonably believed to be in the best interests of the Company, or in the case of a criminal proceeding, had no reason to believe that the conduct complained of was unlawful; provided, however, that within 60 days after the institution of any such action, suit or proceeding, such Committee shall, in writing, offer the Company the opportunity at its own expense to handle and defend such action, suit or proceeding.
4.    Shares Subject to the Plan.
4.1    Subject to adjustment in accordance with Section 14, no more than 1,800,000 shares of Common Stock shall be available for the grant of Awards under the Plan (the “Total Share Reserve”). Any shares of Common Stock granted in connection with Options and Stock Appreciation Rights shall be counted against this limit as one (1) share for everyone (1) Option or Stock Appreciation Right awarded. Any shares of Common Stock granted in connection with Awards other than Options and Stock Appreciation Rights shall be counted against this limit as two (2) shares of Common Stock for everyone (1) share of Common Stock granted in connection with such Award. During the terms of the Awards, the Company shall keep available at all times the number of shares of Common Stock required to satisfy such Awards.
4.2    Shares of Common Stock available for distribution under the Plan may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares reacquired by the Company in any manner.
4.3    The maximum number of shares of Common Stock subject to Awards vesting during any single Fiscal Year to any Director shall not exceed a total value of $100,000 (calculating the value of any Awards based on the grant date fair value for financial reporting purposes).
4.4    Any shares of Common Stock subject to an Award that expires or is canceled, forfeited, or terminated without issuance of the full number of shares of Common Stock to which the Award related will again be available for issuance under the Plan. Any shares of Common Stock that again become 
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available for future grants pursuant to this Section 4.4 shall be added back as one (1) share if such shares were subject to Options or Stock Appreciation Rights and as two (2) shares if such shares were subject to other Awards. Notwithstanding anything to the contrary contained herein: shares subject to an Award under the Plan shall not again be made available for issuance or delivery under the Plan if such shares are (a) shares tendered in payment of an Option, (b) shares delivered or withheld by the Company to satisfy any tax withholding obligation, or (c) shares covered by a stock-settled Stock Appreciation Right or other Awards that were not issued upon the settlement of the Award.
4.5    Awards may, in the sole discretion of the Committee, be granted under the Plan in assumption of, or in substitution for, outstanding awards previously granted by an entity acquired by the Company or with which the Company combines (“Substitute Awards”). Substitute Awards shall not be counted against the Total Share Reserve. Subject to applicable stock exchange requirements, available shares under a shareholder-approved plan of an entity directly or indirectly acquired by the Company or with which the Company combines (as appropriately adjusted to reflect such acquisition or transaction) may be used for Awards under the Plan and shall not count toward the Total Share Limit.
5.    Eligibility.
5.1    Eligibility for Specific Awards. Incentive Stock Options may be granted only to Employees. Awards other than Incentive Stock Options may be granted to Employees, Consultants and Directors and those individuals whom the Committee determines are reasonably expected to become Employees, Consultants and Directors following the Grant Date.
5.2    Ten Percent Shareholders. A Ten Percent Shareholder shall not be granted an Incentive Stock Option unless the Option Exercise Price is at least 110% of the Fair Market Value of the Common Stock on the Grant Date and the Option is not exercisable after the expiration of five years from the Grant Date.
6.    Option Provisions. Each Option granted under the Plan shall be evidenced by an Award Agreement. Each Option so granted shall be subject to the conditions set forth in this Section 6, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. All Options shall be separately designated Incentive Stock Options or Non-qualified Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased on exercise of each type of Option. Notwithstanding the foregoing, the Company shall have no liability to any Participant or any other person if an Option designated as an Incentive Stock Option fails to qualify as such at any time or if an Option is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the terms of such Option do not satisfy the requirements of Section 409A of the Code. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions:
6.1    Term. Subject to the provisions of Section 5.2 regarding Ten Percent Shareholders, no Incentive Stock Option shall be exercisable after the expiration of up to 10 years from the Grant Date. The term of a Non-qualified Stock Option granted under the Plan shall be determined by the Committee; provided, however, no Non-qualified Stock Option shall be exercisable after the expiration of 10 years from the Grant Date.
6.2    Exercise Price of an Incentive Stock Option. Subject to the provisions of Section 5.2 regarding Ten Percent Shareholders, the Option Exercise Price of each Incentive Stock Option shall be not less than 100% of the Fair Market Value of the Common Stock subject to the Option on the Grant Date. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an Option Exercise Price 
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lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code.
6.3    Exercise Price of a Non-qualified Stock Option. The Option Exercise Price of each Non-qualified Stock Option shall be not less than 100% of the Fair Market Value of the Common Stock subject to the Option on the Grant Date. Notwithstanding the foregoing, a Non-qualified Stock Option may be granted with an Option Exercise Price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 409A of the Code.
6.4    Consideration. The Option Exercise Price of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (a) in cash or by certified or bank check at the time the Option is exercised or (b) in the discretion of the Committee, upon such terms as the Committee shall approve, the Option Exercise Price may be paid: (i) by delivery to the Company of other Common Stock, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the Option Exercise Price (or portion thereof) due for the number of shares being acquired, or by means of attestation whereby the Participant identifies for delivery specific shares of Common Stock that have an aggregate Fair Market Value on the date of attestation equal to the Option Exercise Price (or portion thereof) and receives a number of shares of Common Stock equal to the difference between the number of shares thereby purchased and the number of identified attestation shares of Common Stock (a “Stock for Stock Exchange”); (ii) a “cashless” exercise program established with a broker; (iii) by reduction in the number of shares of Common Stock otherwise deliverable upon exercise of such Option with a Fair Market Value equal to the aggregate Option Exercise Price at the time of exercise; (iv) by any combination of the foregoing methods; or (v) in any other form of legal consideration that may be acceptable to the Committee. Unless otherwise specifically provided in the Option, the exercise price of Common Stock acquired pursuant to an Option that is paid by delivery (or attestation) to the Company of other Common Stock acquired, directly or indirectly from the Company, shall be paid only by shares of the Common Stock of the Company that have been held for more than six months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes). Notwithstanding the foregoing, during any period for which the Common Stock is publicly traded (i.e., the Common Stock is listed on any established stock exchange or a national market system) an exercise by a Director or Officer that involves or may involve a direct or indirect extension of credit or arrangement of an extension of credit by the Company, directly or indirectly, in violation of Section 402(a) of the Sarbanes-Oxley Act of 2002 shall be prohibited with respect to any Award under this Plan.
6.5    Transferability of an Incentive Stock Option. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.
6.6    Transferability of a Non-qualified Stock Option. A Non-qualified Stock Option may, in the sole discretion of the Committee, be transferable to a Permitted Transferee, upon written approval by the Committee to the extent provided in the Award Agreement. If the Non-qualified Stock Option does not provide for transferability, then the Non-qualified Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.
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6.7    Vesting of Options. Each Option may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Committee may deem appropriate. The vesting provisions of individual Options may vary. No Option may be exercised for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration of vesting and exercisability in the terms of any Award Agreement upon the occurrence of a specified event.
6.8    Termination of Continuous Service. Unless otherwise provided in an Award Agreement or in an employment agreement the terms of which have been approved by the Committee, in the event an Optionholder’s Continuous Service terminates (other than upon the Optionholder’s death or Disability), the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination) but only within such period of time ending on the earlier of (a) the date three months following the termination of the Optionholder’s Continuous Service or (b) the expiration of the term of the Option as set forth in the Award Agreement; provided that, if the termination of Continuous Service is by the Company for Cause, all outstanding Options (whether or not vested) shall immediately terminate and cease to be exercisable. If, after termination, the Optionholder does not exercise his or her Option within the time specified in the Award Agreement, the Option shall terminate.
6.9    Extension of Termination Date. An Optionholder’s Award Agreement may also provide that if the exercise of the Option following the termination of the Optionholder’s Continuous Service for any reason would be prohibited at any time because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act or any other state or federal securities law or the rules of any securities exchange or interdealer quotation system, then the Option shall terminate on the earlier of (a) the expiration of the term of the Option in accordance with Section 6.1 or (b) the expiration of a period after termination of the Participant’s Continuous Service that is three months after the end of the period during which the exercise of the Option would be in violation of such registration or other securities law requirements.
6.10    Disability of Optionholder. Unless otherwise provided in an Award Agreement, in the event that an Optionholder’s Continuous Service terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination), but only within such period of time ending on the earlier of (a) the date 12 months following such termination or (b) the expiration of the term of the Option as set forth in the Award Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified herein or in the Award Agreement, the Option shall terminate.
6.11    Death of Optionholder. Unless otherwise provided in an Award Agreement, in the event an Optionholder’s Continuous Service terminates as a result of the Optionholder’s death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the Option upon the Optionholder’s death, but only within the period ending on the earlier of (a) the date 12 months following the date of death or (b) the expiration of the term of such Option as set forth in the Award Agreement. If, after the Optionholder’s death, the Option is not exercised within the time specified herein or in the Award Agreement, the Option shall terminate.
6.12    Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the 
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Company and its Affiliates) exceeds $100,000, the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Non-qualified Stock Options.
7.    Stock Appreciation Rights. Each Stock Appreciation Right granted under the Plan shall be evidenced by an Award Agreement. Each Stock Appreciation Right so granted shall be subject to the conditions set forth in this Section 7, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement.
7.1    Term The term of a Stock Appreciation Right granted under the Plan shall be determined by the Committee; provided, however, no Stock Appreciation Right shall be exercisable later than the tenth anniversary of the Grant Date.
7.2    Vesting
Each Stock Appreciation Right may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. The Stock Appreciation Right may be subject to such other terms and conditions on the time or times when it may be exercised as the Committee may deem appropriate. The vesting provisions of individual Stock Appreciation Rights may vary. No Stock Appreciation Right may be exercised for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration of vesting and exercisability in the terms of any Stock Appreciation Right upon the occurrence of a specified event.
8.    Restricted Awards A Restricted Award is an Award of actual shares of Common Stock (“Restricted Stock”) or hypothetical Common Stock units (“Restricted Stock Units”) having a value equal to the Fair Market Value of an identical number of shares of Common Stock, which may, but need not, provide that such Restricted Award may not be sold, assigned, transferred or otherwise disposed of, pledged or hypothecated as collateral for a loan or as security for the performance of any obligation or for any other purpose for such period (the “Restricted Period”) as the Committee shall determine. Each Restricted Award granted under the Plan shall be evidenced by an Award Agreement. Each Restricted Award so granted shall be subject to the conditions set forth in this Section 8, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement.
8.1    Restricted Stock and Restricted Stock Units
(a)    Each Participant granted Restricted Stock shall execute and deliver to the Company an Award Agreement with respect to the Restricted Stock setting forth the restrictions and other terms and conditions applicable to such Restricted Stock. If the Committee determines that the Restricted Stock shall be held by the Company or in escrow rather than delivered to the Participant pending the release of the applicable restrictions, the Committee may require the Participant to additionally execute and deliver to the Company (A) an escrow agreement satisfactory to the Committee, if applicable and (B) the appropriate blank stock power with respect to the Restricted Stock covered by such agreement. If a Participant fails to execute an agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and stock power, the Award shall be null and void. Subject to the restrictions set forth in the Award, the Participant generally shall have the rights and privileges of a shareholder as to such Restricted Stock, including the right to vote such Restricted Stock and the right to receive dividends; provided that, any cash dividends and stock dividends with respect to the Restricted Stock shall be withheld by the Company for the Participant’s account, and interest may be credited on the amount of the cash dividends withheld at a rate and subject to such terms as determined by the Committee. The cash dividends or stock dividends so withheld by the Committee and attributable to any particular share of Restricted Stock (and earnings thereon, if applicable) shall be distributed to the Participant in cash or, at the discretion of the Committee, in shares of Common Stock having a Fair 
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Market Value equal to the amount of such dividends, if applicable, upon the release of restrictions on such share and, if such share is forfeited, the Participant shall have no right to such dividends.
(b)    The terms and conditions of a grant of Restricted Stock Units shall be reflected in an Award Agreement. No shares of Common Stock shall be issued at the time a Restricted Stock Unit is granted, and the Company will not be required to set aside funds for the payment of any such Award. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder. The Committee may also grant Restricted Stock Units with a deferral feature, whereby settlement is deferred beyond the vesting date until the occurrence of a future payment date or event set forth in an Award Agreement (“Deferred Stock Units”). At the discretion of the Committee, each Restricted Stock Unit or Deferred Stock Unit (representing one share of Common Stock) may be credited with an amount equal to the cash and stock dividends paid by the Company in respect of one share of Common Stock (“Dividend Equivalents”). Dividend Equivalents credited to a Participant’s account and attributable to any particular Restricted Stock Unit or Deferred Stock Unit (and earnings thereon, if applicable) shall be distributed in cash or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to the amount of such Dividend Equivalents and earnings, if applicable, to the Participant upon settlement of such Restricted Stock Unit or Deferred Stock Unit and, if such Restricted Stock Unit or Deferred Stock Unit is forfeited, the Participant shall have no right to such Dividend Equivalents.
8.2    Restrictions
(a)    Restricted Stock awarded to a Participant shall be subject to the following restrictions until the expiration of the Restricted Period, and to such other terms and conditions as may be set forth in the applicable Award Agreement: (A) if an escrow arrangement is used, the Participant shall not be entitled to delivery of the stock certificate; (B) the shares shall be subject to the restrictions on transferability set forth in the Award Agreement; (C) the shares shall be subject to forfeiture to the extent provided in the applicable Award Agreement; and (D) to the extent such shares are forfeited, the stock certificates shall be returned to the Company, and all rights of the Participant to such shares and as a shareholder with respect to such shares shall terminate without further obligation on the part of the Company.
(b)    Restricted Stock Units and Deferred Stock Units awarded to any Participant shall be subject to (A) forfeiture until the expiration of the Restricted Period, and satisfaction of any applicable Performance Goals during such period, to the extent provided in the applicable Award Agreement, and to the extent such Restricted Stock Units or Deferred Stock Units are forfeited, all rights of the Participant to such Restricted Stock Units or Deferred Stock Units shall terminate without further obligation on the part of the Company and (B) such other terms and conditions as may be set forth in the applicable Award Agreement.
(c)    The Committee shall have the authority to remove any or all of the restrictions on the Restricted Stock, Restricted Stock Units and Deferred Stock Units whenever it may determine that, by reason of changes in Applicable Laws or other changes in circumstances arising after the date the Restricted Stock or Restricted Stock Units or Deferred Stock Units are granted, such action is appropriate.
8.3    Restricted Period. With respect to Restricted Awards, the Restricted Period shall commence on the Grant Date and end at the time or times set forth on a schedule established by the Committee in the applicable Award Agreement. No Restricted Award may be granted or settled for a fraction of a share of Common Stock. The Committee may, but shall not be required to, provide for an acceleration of vesting in the terms of any Award Agreement upon the occurrence of a specified event.
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8.4    Delivery of Restricted Stock and Settlement of Restricted Stock Units Upon the expiration of the Restricted Period with respect to any shares of Restricted Stock, the restrictions set forth in Section 8.2 and the applicable Award Agreement shall be of no further force or effect with respect to such shares, except as set forth in the applicable Award Agreement. If an escrow arrangement is used, upon such expiration, the Company shall deliver to the Participant, or his or her beneficiary, without charge, the stock certificate evidencing the shares of Restricted Stock which have not then been forfeited and with respect to which the Restricted Period has expired (to the nearest full share) and any cash dividends or stock dividends credited to the Participant’s account with respect to such Restricted Stock and the interest thereon, if any. Upon the expiration of the Restricted Period with respect to any outstanding Restricted Stock Units, or at the expiration of the deferral period with respect to any outstanding Deferred Stock Units, the Company shall deliver to the Participant, or his or her beneficiary, without charge, one share of Common Stock for each such outstanding vested Restricted Stock Unit or Deferred Stock Unit (“Vested Unit”) and cash equal to any Dividend Equivalents credited with respect to each such Vested Unit in accordance with Section 8.1(b) hereof and the interest thereon or, at the discretion of the Committee, in shares of Common Stock having a Fair Market Value equal to such Dividend Equivalents and the interest thereon, if any; provided, however, that, if explicitly provided in the applicable Award Agreement, the Committee may, in its sole discretion, elect to pay cash or part cash and part Common Stock in lieu of delivering only shares of Common Stock for Vested Units. If a cash payment is made in lieu of delivering shares of Common Stock, the amount of such payment shall be equal to the Fair Market Value of the Common Stock as of the date on which the Restricted Period lapsed in the case of Restricted Stock Units, or the delivery date in the case of Deferred Stock Units, with respect to each Vested Unit.
8.5    Stock Restrictions Each certificate representing Restricted Stock awarded under the Plan shall bear a legend in such form as the Company deems appropriate.
9.    Performance Share Awards Each Performance Share Award granted under the Plan shall be evidenced by an Award Agreement. Each Performance Share Award so granted shall be subject to the conditions set forth in this Section 9, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. The Committee shall have the discretion to determine: (i) the number of shares of Common Stock or stock-denominated units subject to a Performance Share Award granted to any Participant; (ii) the Performance Period applicable to any Award; (iii) the conditions that must be satisfied for a Participant to earn an Award; and (iv) the other terms, conditions and restrictions of the Award set forth in the Award Agreement.
9.1    Earning Performance Share Awards The number of Performance Shares earned by a Participant will depend on the extent to which the performance goals established by the Committee are attained within the applicable Performance Period, as determined by the Committee.
10.    Other Equity-Based Awards and Cash Awards. The Committee may grant Other Equity-Based Awards, either alone or in tandem with other Awards, in such amounts and subject to such conditions as the Committee shall determine in its sole discretion. Each Other Equity-Based Award shall be evidenced by an Award Agreement and shall be subject to such conditions, not inconsistent with the Plan, as may be reflected in the applicable Award Agreement. The Committee may grant Cash Awards in such amounts and subject to such Performance Goals, other vesting conditions, and such other terms as the Committee determines in its discretion. Cash Awards shall be evidenced in such form as the Committee may determine.
11.    Securities Law Compliance. Each Award Agreement shall provide that no shares of Common Stock shall be purchased or sold thereunder unless and until (a) any then applicable requirements of state or federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company 
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and its counsel and (b) if required to do so by the Company, the Participant has executed and delivered to the Company a letter of investment intent in such form and containing such provisions as the Committee may require. The Company shall use reasonable efforts to seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Awards and to issue and sell shares of Common Stock upon exercise of the Awards; provided, however, that this undertaking shall not require the Company to register under the Securities Act the Plan, any Award or any Common Stock issued or issuable pursuant to any such Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Awards unless and until such authority is obtained.
12.    Use of Proceeds from Stock. Proceeds from the sale of Common Stock pursuant to Awards, or upon exercise thereof, shall constitute general funds of the Company.
13.    Miscellaneous.
13.1    Acceleration of Exercisability and Vesting. The Committee shall have the power to accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Award stating the time at which it may first be exercised or the time during which it will vest.
13.2    Shareholder Rights. Except as provided in the Plan or an Award Agreement, no Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to such Award unless and until such Participant has satisfied all requirements for exercise of the Award pursuant to its terms and no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions of other rights for which the record date is prior to the date such Common Stock certificate is issued, except as provided in Section 14 hereof.
13.3    No Employment or Other Service Rights. Nothing in the Plan or any instrument executed or Award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or shall affect the right of the Company or an Affiliate to terminate (a) the employment of an Employee with or without notice and with or without Cause or (b) the service of a Director pursuant to the By-laws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be.
13.4    Transfer; Approved Leave of Absence. For purposes of the Plan, no termination of employment by an Employee shall be deemed to result from either (a) a transfer of employment to the Company from an Affiliate or from the Company to an Affiliate, or from one Affiliate to another, or (b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the Employee’s right to reemployment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Committee otherwise so provides in writing, in either case, except to the extent inconsistent with Section 409A of the Code if the applicable Award is subject thereto.
13.5    Withholding Obligations. To the extent provided by the terms of an Award Agreement and subject to the discretion of the Committee, the Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock under an Award by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (a) tendering a cash payment; (b) 
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authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Award, provided, however, that no shares of Common Stock are withheld with a value exceeding the maximum amount of tax required to be withheld by law; or (c) delivering to the Company previously owned and unencumbered shares of Common Stock of the Company.
14.    Adjustments Upon Changes in Stock. In the event of changes in the outstanding Common Stock or in the capital structure of the Company by reason of any stock or extraordinary cash dividend, stock split, reverse stock split, an extraordinary corporate transaction such as any recapitalization, reorganization, merger, consolidation, combination, exchange, or other relevant change in capitalization occurring after the Grant Date of any Award, Awards granted under the Plan and any Award Agreements, the exercise price of Options and Stock Appreciation Rights, the Performance Goals to which Performance Share Awards and Cash Awards are subject, the maximum number of shares of Common Stock subject to all Awards stated in Section 4 will be equitably adjusted or substituted, as to the number, price or kind of a share of Common Stock or other consideration subject to such Awards to the extent necessary to preserve the economic intent of such Award. In the case of adjustments made pursuant to this Section 14, unless the Committee specifically determines that such adjustment is in the best interests of the Company or its Affiliates, the Committee shall, in the case of Incentive Stock Options, ensure that any adjustments under this Section 14 will not constitute a modification, extension or renewal of the Incentive Stock Options within the meaning of Section 424(h)(3) of the Code and in the case of Non-qualified Stock Options, ensure that any adjustments under this Section 14 will not constitute a modification of such Non-qualified Stock Options within the meaning of Section 409A of the Code. Any adjustments made under this Section 14 shall be made in a manner which does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act. The Company or the Committee shall give each Participant notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.
15.    Effect of Change in Control.
15.1    Unless otherwise provided in an Award Agreement, notwithstanding any provision of the Plan to the contrary:
(a)    In the event of a Participant’s termination of Continuous Service without Cause or for Good Reason during the 24-month period following a Change in Control, notwithstanding any provision of the Plan or any applicable Award Agreement to the contrary, all outstanding Options and Stock Appreciation Rights shall become immediately exercisable with respect to 100% of the shares subject to such Options or Stock Appreciation Rights, and/or the Restricted Period shall expire immediately with respect to 100% of the outstanding shares of Restricted Stock or Restricted Stock Units as of the date of the Participant’s termination of Continuous Service.
(b)    With respect to Performance Share Awards and Cash Awards, in the event of a Participant’s termination of Continuous Service without Cause or for Good Reason, in either case, within 24 months following a Change in Control, all Performance Goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions will be deemed met as of the date of the Participant’s termination of Continuous Service.
To the extent practicable, any actions taken by the Committee under the immediately preceding clauses (a) and (b) shall occur in a manner and at a time which allows affected Participants the ability to participate in the Change in Control with respect to the shares of Common Stock subject to their Awards.
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15.2    In addition, in the event of a Change in Control, the Committee may in its discretion and upon at least 10 days’ advance notice to the affected persons, cancel any outstanding Awards and pay to the holders thereof, in cash or stock, or any combination thereof, the value of such Awards based upon the price per share of Common Stock received or to be received by other shareholders of the Company in the event. In the case of any Option or Stock Appreciation Right with an exercise price (or SAR Exercise Price in the case of a Stock Appreciation Right) that equals or exceeds the price paid for a share of Common Stock in connection with the Change in Control, the Committee may cancel the Option or Stock Appreciation Right without the payment of consideration therefor.
15.3    The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to all or substantially all of the assets and business of the Company and its Affiliates, taken as a whole.
16.    Amendment of the Plan and Awards.
16.1    Amendment of Plan. The Board at any time, and from time to time, may amend or terminate the Plan. However, except as provided in Section 14 relating to adjustments upon changes in Common Stock and Section 16.3, no amendment shall be effective unless approved by the shareholders of the Company to the extent shareholder approval is necessary to satisfy any Applicable Laws. At the time of such amendment, the Board shall determine, upon advice from counsel, whether such amendment will be contingent on shareholder approval.
16.2    Shareholder Approval. The Board may, in its sole discretion, submit any other amendment to the Plan for shareholder approval.
16.3    Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible Employees, Consultants and Directors with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options or to the nonqualified deferred compensation provisions of Section 409A of the Code and/or to bring the Plan and/or Awards granted under it into compliance therewith.
16.4    No Impairment of Rights. Rights under any Award granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.
16.5    Amendment of Awards. The Committee at any time, and from time to time, may amend the terms of any one or more Awards; provided, however, that the Committee may not affect any amendment which would otherwise constitute an impairment of the rights under any Award unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing.
17.    General Provisions.
17.1    Forfeiture Events. The Committee may specify in an Award Agreement that the Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain events, in addition to applicable vesting conditions of an Award. Such events may include, without limitation, breach of non-competition, non-solicitation, confidentiality, or other restrictive covenants that are contained in the Award Agreement or otherwise applicable to the Participant, a termination of the Participant’s Continuous Service for Cause, or other conduct by the Participant that is detrimental to the business or reputation of the Company and/or its Affiliates.
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17.2    Clawback. Notwithstanding any other provisions in this Plan, the Company may cancel any Award, require reimbursement of any Award by a Participant, and effect any other right of recoupment of equity or other compensation provided under the Plan in accordance with any Company policies that may be adopted and/or modified from time to time (“Clawback Policy”). In addition, a Participant may be required to repay to the Company previously paid compensation, whether provided pursuant to the Plan or an Award Agreement, in accordance with the Clawback Policy. By accepting an Award, the Participant is agreeing to be bound by the Clawback Policy, as in effect or as may be adopted and/or modified from time to time by the Company in its discretion (including, without limitation, to comply with applicable law or stock exchange listing requirements).
17.3    Other Compensation Arrangements. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.
17.4    Sub-Plans. The Committee may from time to time establish sub-plans under the Plan for purposes of satisfying securities, tax or other laws of various jurisdictions in which the Company intends to grant Awards. Any sub-plans shall contain such limitations and other terms and conditions as the Committee determines are necessary or desirable. All sub-plans shall be deemed a part of the Plan, but each sub-plan shall apply only to the Participants in the jurisdiction for which the sub-plan was designed.
17.5    Deferral of Awards. The Committee may establish one or more programs under the Plan to permit selected Participants the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event that absent the election would entitle the Participant to payment or receipt of shares of Common Stock or other consideration under an Award. The Committee may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts, shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the Committee deems advisable for the administration of any such deferral program.
17.6    Unfunded Plan. The Plan shall be unfunded. Neither the Company, the Board nor the Committee shall be required to establish any special or separate fund or to segregate any assets to assure the performance of its obligations under the Plan.
17.7    Delivery. Upon exercise of a right granted under this Plan, the Company shall issue Common Stock or pay any amounts due within a reasonable period of time thereafter. Subject to any statutory or regulatory obligations the Company may otherwise have, for purposes of this Plan, 30 days shall be considered a reasonable period of time.
17.8    No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan. The Committee shall determine whether cash, additional Awards or other securities or property shall be issued or paid in lieu of fractional shares of Common Stock or whether any fractional shares should be rounded, forfeited or otherwise eliminated.
17.9    Other Provisions. The Award Agreements authorized under the Plan may contain such other provisions not inconsistent with this Plan, including, without limitation, restrictions upon the exercise of Awards, as the Committee may deem advisable.
17.10    Section 409A. The Plan is intended to comply with Section 409A of the Code to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted and administered to be in compliance therewith. Any payments described in the Plan that are due within the “short-term deferral period” as defined in Section 409A of the Code shall not be treated as deferred 
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compensation unless Applicable Laws require otherwise. Notwithstanding anything to the contrary in the Plan, to the extent required to avoid accelerated taxation and tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six (6) month period immediately following the Participant’s termination of Continuous Service shall instead be paid on the first payroll date after the six-month anniversary of the Participant’s separation from service (or the Participant’s death, if earlier). Notwithstanding the foregoing, neither the Company nor the Committee shall have any obligation to take any action to prevent the assessment of any additional tax or penalty on any Participant under Section 409A of the Code and neither the Company nor the Committee will have any liability to any Participant for such tax or penalty.
17.11    Disqualifying Dispositions. Any Participant who shall make a “disposition” (as defined in Section 424 of the Code) of all or any portion of shares of Common Stock acquired upon exercise of an Incentive Stock Option within two years from the Grant Date of such Incentive Stock Option or within one year after the issuance of the shares of Common Stock acquired upon exercise of such Incentive Stock Option (a “Disqualifying Disposition”) shall be required to immediately advise the Company in writing as to the occurrence of the sale and the price realized upon the sale of such shares of Common Stock.
17.12    Section 16. It is the intent of the Company that the Plan satisfy, and be interpreted in a manner that satisfies, the applicable requirements of Rule 16b-3 as promulgated under Section 16 of the Exchange Act so that Participants will be entitled to the benefit of Rule 16b-3, or any other rule promulgated under Section 16 of the Exchange Act, and will not be subject to short-swing liability under Section 16 of the Exchange Act. Accordingly, if the operation of any provision of the Plan would conflict with the intent expressed in this Section 17.12, such provision to the extent possible shall be interpreted and/or deemed amended so as to avoid such conflict.
17.13    Beneficiary Designation. Each Participant under the Plan may from time to time name any beneficiary or beneficiaries by whom any right under the Plan is to be exercised in case of such Participant’s death. Each designation will revoke all prior designations by the same Participant, shall be in a form reasonably prescribed by the Committee and shall be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime.
17.14    Expenses. The costs of administering the Plan shall be paid by the Company.
17.15    Severability. If any of the provisions of the Plan or any Award Agreement is held to be invalid, illegal or unenforceable, whether in whole or in part, such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions shall not be affected thereby.
17.16    Plan Headings. The headings in the Plan are for purposes of convenience only and are not intended to define or limit the construction of the provisions hereof.
17.17    Non-Uniform Treatment. The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons who are eligible to receive, or actually receive, Awards. Without limiting the generality of the foregoing, the Committee shall be entitled to make non-uniform and selective determinations, amendments and adjustments, and to enter into non-uniform and selective Award Agreements.
18.    Effective Date of Plan. The Plan shall become effective as of the Effective Date.
19.    Termination or Suspension of the Plan. The Plan shall terminate automatically on the tenth (10th) anniversary date of the Effective Date. No Award shall be granted pursuant to the Plan after such date, 
4842-3929-3129.4

but Awards theretofore granted may be exercised in accordance with their terms beyond that date. The Board may suspend or terminate the Plan at any earlier date pursuant to Section 16.1 hereof. No Awards may be granted under the Plan while the Plan is suspended or after it is terminated.
20.    Choice of Law. The law of the State of Nevada shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to such state’s conflict of law rules.

4842-3929-3129.4Exhibit 10.43

 

Equity Acquisition Agreement

 

This Agreement is signed by below parties
on December 22, 2020 in Xi’an.

 

Party
A:Shanghai TCH Energy Technology Co., Ltd. (“Party
A”)

 

Legal Representative: Geyun Wang

 

Address: No. 88 Century Avenue, Pudong New
District, Shanghai

 

Party
B1:Zheng Feng.

 

ID No: 610123197110124035

 

Party
B2:Yinhua Zhang

 

ID No: 612103197602040547

 

Party
B3:Weidong Xu

 

ID No: 612601196510270329

 

Party B1, Party B2 and Party B3 are collectively
referred to as "Party B" in this Agreement.

 

Party
C:Xi’an Taiying Energy Saving Technology Co., Ltd.

 

Legal Representative: Zheng Feng

 

Address: Floor 3, Building 10,
West Cloud Valley, Fengxi New City, Xi Xian New

 

District, Shaanxi Province

 

Whereas:

 

(1) Party A is a legally
established and validly existing domestic limited liability company. Party A is a wholly-owned subsidiary of China Recycling Energy
Corporation, a Nasdaq listed company (trading symbol: CREG). Party A has the authority to sign this agreement and perform its obligations
hereunder.

 

     

     

    

 

(2)
Party B consists of three individual shareholders of the target company. As of the date of the agreement, Party B1, B2 and B3 hold
the 42%、40%、18%
equity ownership of Xi’an Taiying Energy Saving Technology Co., Ltd. (the “target company”). Party B has the
authority to sign this agreement and perform its obligations hereunder. 

 

(3) Party C is the
target company, Xi’an Taiing Energy Saving Technology Co., Ltd. Established in December 2017 with RMB 20 million of registered
capital, Party C is a legally established and validly existing domestic limited liability company. Party C has the authority to
sign this agreement and perform its obligations hereunder.

 

(4) Party A shall acquire
100% equity ownership of the target company from Party B to become the wholly owned controlling shareholder of Xi’an Yineng
Zhihui Technology Co., Ltd.

 

According to the “Company
Law of the People's Republic of China”, the “Contract Law of the People's Republic of China”, the “Regulations
of Administration Measures for Material Assets Reorganization of Non-listed Public Company”, after friendly negotiation,
the parties reached the following agreement to confirm each party’s rights and obligations:

 

1. Definition

 

Unless otherwise provided
in this Agreement, the following words and expressions shall have the following definite meanings:

 

	the Agreement	Refers	The 《Equity Acquisition Agreement》, including the appendix and supplemental agreement (if any)
	Transferred Asset	Refers	100% equity ownership of Xi’an Taiying Energy Saving Technology Co., Ltd. owned by Party B 
	Target Company 	Refers	Xi’an Taiying Energy Saving Technology Co., Ltd.
	the Issuance	Refers	The issuance of new shares by CREG for the acquisition of Transferred Asset by Party A 
	Completion Date of Share Issuance	Refers	The completion date for the payment of consideration for the Transferred Asset, i.e. the completion of the Issuance to Party B.  
	the Transaction 	Refers	Party A pays cash and CREG issues shares to Party B to acquire 100% ownership of the target company according to the Agreement. 

 

    2

     

    

 

	Transaction Price	Refers	Price for acquiring the Transferred Asset by Party A
	Share Payment	Refers	Shares issued by CREG to Party B for Party A’s acquisition of the Transferred Asset
	CREG	Refers	Party A’s parent company which owns 100% of Party A, China Recycling Energy Corporation, a U.S. NASDAQ listed company with trading symbol:CREG
	Common Stock 	Refers	Common stock of CREG listed on NASDAQ Capital Market
	Preferred Shares	Refers	Series A convertible preferred stock of CREG
	Closing Date 	Refers	The date of the completion of the material alteration of controller 
	Transition Period 	Refers	Period from Appraisal Base Day (excluding) to the Closing Date (including)
	Incorporation Documents	Refers	The articles of association, business license, approval certificate, shareholder agreement, or equivalent management or organizational documents of each party.  
	Applicable Laws	Refers	
        Applicable laws, regulations, decisions, orders, local regulations,
        autonomous regulations and separate regulations, the state council administrative rules and local government rules and regulations,
        and other forms of legally effective normative documents which are enforceable upon the either party for the purpose of the agreement.

         

	SEC	Refers	Securities and Exchange Commission of the United States
	Securities Regulations 	Refers	U.S. securities laws and related laws and regulations 
	Business Day 	Refers	The days other than holidays and Saturdays & Sundays 
	Yuan 	Refers	RMB

 

2. Transferred Asset,
Transaction Price and Payment Method

 

2.1 The Transferred Asset of
the transaction is the 100% equity ownership of the target company owned by Party B.

 

2.2. After negotiation, the parties eventually
determined the total value of the target company is RMB 1.95 billion and accordingly determined the Transaction Price of Transferred
Asset is RMB 1.95 billion.

 

    3

     

    

 

2.3. Payment Method

 

2.3.1 Party A purchases
the Transferred Asset by paying in cash and issuing CREG shares to Party B, including:

 

Cash payment: RMB 1,617,867,026;

 

Shares payment: RMB
332,132,974;

 

CREG will issue 619,525
common shares and 60,000,000 shares of Series A convertible preferred stock of CREG to Party B at a price of $4.37 per share in
accordance with Clause 2.3.2 hereof;

 

The exchange rate between
U.S. dollars and RMB is 1:6.55;

 

2.3.2. The issuance
of CREG shares as provided in section 2.3.1 shall be subject to the approval by the Board of Directors and/or Shareholder Meeting
of CREG as well as NASDAQ for issuance of these preferred stock pursuant to the Agreement. The shares of CREG stipulated in section
2.3.1 shall be issued within 15 business days after the approval by CREG Board of Directors and/or Shareholder Meeting as well
as NASDAQ.

 

2.4. Payment Schedule

 

2.4.1. Cash Payment
Schedule

 

2.4.1.1 Party A will
pay RMB 390 million to Party B’s designated account in the following manner within 10 working days after the agreement comes
into force;

 

	Payee	First Cash Installment (RMB)
	Zheng Feng	163,800,000 
	Yinhua Zhang	156,000,000 
	Weidong Xu	70,200,000 
	Total	390,000,000 

 

2.4.1.2 Party A will
pay RMB 300 million to Party B’s designated account in the following manner by March 31, 2021;

 

	Payee	Second Cash Installment (RMB)
	Zheng Feng	126,000,000 
	Yinhua Zhang	120,000,000 
	Weidong Xu	54,000,000 
	Total	300,000,000 

 

    4

     

    

 

2.4.1.3 Party A will
pay RMB 927,867,026 to Party B’s designated account in the following manner within 10 working days after the completion of
the administration registration of the change in shareholders of Party C.

 

	Payee	Third Cash Installment (RMB)
	Zheng Feng	389,704,151 
	Yinhua Zhang	371,146,810 
	Weidong Xu	167,016,065 
	Total	927,867,026 

 

2.4.2. CREG shall issue
the shares according to the section 2.3.2 of the Agreement within 15 business days after obtaining all indispensable approvals.

 

3. Shares Issuance and
Subscription

 

3.1. Shares Issuance
and Receiving Party

 

Party A’s parent
company, CREG, shall issue the common stock and Series A convertible preferred shares of CREG to Party B in a non-public offering.

 

3.2. The Type of Shares,
Par Value and Issuance Price of the Shares

 

Common stock of CREG,
par value of $0.001, at issuance price of $4.37 per share.

 

Series A convertible
preferred shares of CREG, par value of $0.001, conversion price of $8.00 per share

 

    5

     

    

 

3.3. Number of Shares
to Be Issued

 

The
total shares to be issued to Party B is 6,619,525 shares including 619,525 shares of common stock and 6,000,000 shares of the Series
A convertible preferred stock of CREG in the following manner:

 

	Shareholders	Common Stock	Preferred Stock
	Zheng Feng	260,000	2,520,000 
	Yinhua Zhang	260,000	2,400,000 
	Weidong Xu	99,525	1,080,000 
	Total	619,525	6,000,000 

 

3.4. Arrangement for
the Preferred Shares

 

3.4.1 The series A preferred
shares shall receive a 15% premium on a per share basis for any dividends declared and paid by CREG on its common stock if CREG
has distributable profits and the Board of Directors of CREG approves the dividend distribution. The Board of Directors of CREG
has the sole discretion to decide whether CREG will pay any dividends or reserve its profits for the company’s future development.
The specific dividend distribution plan and related matters shall be determined by the Board.

 

3.4.2 The series A preferred
shares have no voting rights prior to conversion into common stock and will have the same voting rights as common stock upon conversion;

 

3.4.3 In event of liquidation
or dissolution/cancellation of CREG, the preferred shares shall have the priority over common stock.

 

3.4.4 The number of
the outstanding series A preferred shares and their conversion price will be adjusted accordingly in the event of the stock split
or reverse split of CREG.

 

3.4.5 The convertible
mechanism of the series A preferred shares: when the closing price of the common stock is higher than the conversion price of the
series A preferred shares for five consecutive trading days, 1) the preferred shares can be converted to common stock on an 1:1
basis. However, the conversion rights can only be exercised to the extent that, after giving effect to the issuance of common stock
after such conversion, the Party B would beneficially own less than Mr. Guohua Ku, the largest shareholder of Party A, (including
their common stock and preferred stock to be converted into common stock); 2) If the pre-conversion of series A preferred stock
will cause the holders of the series A preferred stock to hold more common shares than the largest shareholder of Party A, the
largest shareholder of Party A shall have the preemptive right to purchase 51% of the excess portion at the conversion price, after
which the preferred stock may still be converted into common stock at A ratio of 1:1.

 

    6

     

    

 

3.4.6 Party B shall
cooperate with Party A to timely disclose their shareholding positions and share changes in accordance with the rules and regulations
of the SEC.

 

4. Lock-up of the Shares

 

4.1. Upon completion
of the Insurance pursuant to the Agreement, the shares acquired by Party B should in compliance with following lock-up requirements:

 

4.2 Lock-ups required
by the laws, regulations, rules related to share lock-ups and related requirements by the U.S. Securities Regulations.

 

4.3 The shares may not
be transferred before the lock-up period expires. Any transfers after the lock-up period shall be conducted according to valid
laws and regulations and rules of NASDAQ Stock Exchange.

 

4.4 Party A and Party
B shall timely cooperate to handle relevant legal procedures for share lock up and unlock according to laws and regulations.

 

5. Corporate Governance

 

5.1 After the completion of this transaction,
Party C shall be a controlling subsidiary of Party A, and Party A shall manage Party C in accordance with the requirements of the
Securities and Exchange Commission of the United States of America and Party A's articles of association, related transaction management
measures, controlling subsidiary management measures and other relevant systems.

 

5.2 Upon completion of the issuance of preferred
shares by CREG, Party B shall, within 30 working days, complete the business registration and other necessary procedures for Party
A to hold the 100% equity ownership of Party C. All parties further agree that upon completion of the administration registration,
Party A shall have 100% wholly owned controlling interest in Party C

 

5.3 Upon execution of this agreement, the
Board of Directors of Party C shall be composed of 3 directors and Party A shall have the right to nominate 3 directors, and all
directors are appointed by the Shareholder Meeting.

 

    7

     

    

 

5.4 Upon execution of this agreement, , the
Board of Supervisors of Party C shall be composed of 3 supervisors. Party A shall have the right to nominate 3 supervisors, and
all supervisors are appointed or replaced by the Shareholder Meeting.

 

5.5 After this agreement
is signed, the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Chief Marketing Officer,
Chief Sales Officer, the Chief Technical Officer of Party C shall be recommended, nominated by Party A and appointed by the Board
of Directors of Party C.

 

5.6 After this agreement
is signed, any principal executives of Party C shall sign the Non-compete Agreement for a period of 3 years since departure in
the event of leaving the company.

 

6. Implementation and
Completion of the Transaction

 

6.1. Party A and Party
B shall complete the transaction within 60 working days after the Agreement comes into effect or upon the approval by the Board
of Directors and/or the shareholders of CREG in section 2.3, which ever come later. The specific effective conditions shall be
subject to provisions of section 14 hereof.

 

6.2. Party B and Party
C shall cooperate with Party A to complete the relevant procedures for the registration changes with the industrial and commercial
administrative department after the closing of the Transferred Asset.

 

6.3. After this Agreement
is signed, Party B and Party C shall cooperate with Party A and CREG's auditors to complete the relevant auditing and reporting
procedures and assist Party A and CREG to fulfill the disclosure requirements of the U.S. listed company.

 

6.4. Party A and CREG
shall be responsible for completing all the relevant listing procedures of the shares issued to Party B on the NASDAQ stock exchange.
The shares shall be registered under Party B's names. Party B shall cooperate with Party A to complete the listing procedures at
the stock exchanges and provide necessary documents.

 

7. Arrangement of Profit
and Loss During Transition Period

 

7.1. During the Transition
Period, Party B shall urge the Target Company to conduct its business and operation as usual.

 

    8

     

    

 

7.2. During the Transition
Period, within his shareholder's rights, Party B shall object to the decision of the Target Company which will have material adverse
effect on its continuous operation.

 

7.3.
During the Transition Period, if the Target Company intends to carry out major asset disposal, Party B shall solicit written opinions
from Party A before exercising its rights of shareholders. If Party A does not agree, Party B shall object to such matters within
his shareholder’s rights that he may exercise.

 

7.4. During the Transition
Period, if the Target Company intends to make profit distribution, Party B shall solicit written opinions from Party A before exercising
his rights of shareholders. If Party A does not agree, Party B shall object to such matters within his shareholder's rights that
it may exercise. If the Target Company makes profit distribution in cash during the Transition Period, both parties agree to adjust
the Transaction Price accordingly.

 

7.5. Party A may request
an audit of the Target Company in suitable time to determine the profit and loss of the Transferred Asset for the period between
the Base Date of Appraisal and the Closing Date. From Base Date of Appraisal to the Closing Date, if the Target Company generates
profits or its net assets increase due to other reasons, such profits/increases shall belong to Party A; If the Target Company
suffers a loss or reduces its net assets due to other reasons, Party B shall pay Party A in cash to make up for such loss or reduces
of net assets in proportion to the percentage of equity ownership of Party B in the Target Company before the Closing Date, within
10 working days after the issuance of the audit report. 

 

8. Credit and Debt and
Personnel

 

8.1. This transaction
is to acquire equity interest of the Target Company owned by Party B, which does not involve the settlement of debt and credit.
The debt and credit that are owned and assumed by the Target Company shall still be owned and assumed by the Target Company after
the Closing Date.

 

8.2. The transaction
is to acquire equity interest of the Target Company owned by Party B, and therefore it does not involve any employee placement
issues.

 

    9

     

    

 

8.3. Party B and Party
C guarantee that within three years after the acquisition, senior executives of Party C shall not leave their jobs without written
consent of Party A. If Party A agrees with their resignation, an Engagement Prohibition Agreement shall be signed with Party A.

 

9. Representations and
Warranties of the Parties

 

9.1. Representation
and Warranties of Party A.

 

9.1.1. Party A is a
legally established and valid existing enterprise, has the legal qualification to sign and perform the obligations under this Agreement,
and has obtained the authorization or approval required at this stage. The shares of CREG, a NASDAQ-listed company will be issued
only after approval by the shareholders of CREG. This Agreement reflects the true intent and desires of Party A.

 

9.1.2. The execution
and performance of this Agreement by Party A will not result in Party A's violation of relevant laws, regulations, rules and Party
A's organizational documents, nor will it conflict to Party A's previously signed agreements or any representations, statements,
promises or guarantees made by Party A to any third parties.

 

9.1.3. Party A has not
committed any major illegal acts in the past three years, nor it has any major litigation, arbitration or administrative penalty
and contingent liabilities, which may hinder or affect the transaction.

 

9.1.4. Party A shall
properly handle with Party B any matters not covered in this Agreement in accordance with relevant laws, regulations and rules
during the execution and performance of this Agreement.

 

9.1.5. After the Agreement
takes effect, Party A shall pay the Transaction Price to Party B pursuant to the section 3 of this Agreement.

 

9.2. Representation
and Warranties of Party B

 

9.2.1. Party B has the
legal qualification to sign and perform the obligations under this Agreement, and has obtained the necessary authorization or approval
at this stage. This Agreement reflects the true intent and desires of Party B.

 

9.2.2. The execution
and performance of this Agreement by Party B will not result in Party B's violation of relevant laws, regulations, rules and Party
B's organizational documents, nor will it conflict to Party B's previously signed agreements or any representations, statements,
promises or guarantees made by Party B to any third parties.

 

    10

     

    

 

9.2.3. Party B has made
his capital contribution to the Target Company according to the organizational documents of the Target Company. Party B warrants
that it has lawful and complete ownership of the Transferred Asset, which does not have any pledge, guarantee, trust or other third
party interests.

 

9.2.4. Party B does
not have any major illegal act, lawsuit, arbitration, administrative penalty or liabilities which may impede or affect the transaction.

 

9.2.5. If any third
party raises any objection or claim on the ownership or right of disposal of the Transferred Asset due to the facts before the
Closing Date, Party B shall assume and be responsible for the claims. If Party A suffers any loss due to any objection or claim,
Party B shall compensate Party A in full amount after determination of such losses according to law.

 

9.2.6. The Target Company
is a company legally established and validly existing in accordance with the laws of China, which has the qualification to engage
in the business as described in its business license and articles of incorporation, and is now in the normal operation.

 

9.2.7. The financial
statements of the Target Company objectively, impartially and truthfully reflect its operating performance and assets and liabilities.
In addition to the liabilities disclosed to Party A before signing this agreement, Target Company does not have any other major
unknown liabilities, contingent liabilities, undisclosed lawsuit or litigation or other issues which may injure shareholders interests
of the Target Company. If there is any such contingent liabilities, Party B shall assume the joint liabilities to Party A in proportion
to his ownership of the Target Company and Transaction Price

 

9.2.8. The Target Company
has paid social security for its employees according to national regulations. If any employee claims to the Target Company due
to existing labor disputes before the Closing Date, Party B shall assume the joint liabilities to Party A in proportion to his
ownership of the Target Company.

 

    11

     

    

 

9.2.9. During the Transition
Period, Party B guarantees that in normal business activities, the Target Company will operate and manage in accordance with the
usual and legal methods.

 

9.2.10. Party B has
provided Party A with true written documents or materials required for signing this Agreement, which are free from any form of
false and misleading statements and material omissions.

 

9.2.11. Party B shall,
in accordance with relevant laws, regulations and rules, properly handle with Party A any matters not covered in this Agreement
during the execution and performance of this Agreement.

 

9.2.12. Party B confirm
that they are Chinese citizens. They understand and confirm that the CREG shares that they shall acquire are not registered with
the SEC but are issued under the relevant exemption as a foreign investor under the securities law, and Party B undertake to hold
and transfer CREG shares in accordance with the Securities Regulations. Party B confirm that they invest in CREG shares for themselves,
not for or on behalf of any third party.

 

9.2.13. Party B confirms
that he has reviewed the report and filings of CREG to the SEC and has the opportunity to review other relevant information and
materials of CREG. Party B confirms that it has voluntarily invested in the shares of CREG and bears the risk of all relevant investment
into such stock.

 

10. Confidentiality

 

Any party shall not
disclose the content of this Agreement to any third party without the consent of the other party and each party should keep the
business information of the other party confidential, unless required for disclosure to comply with Chinese or U.S. laws and regulations,
or disclosed to the respective consultants of each party (such party shall ensure that its consultants will perform the same confidentiality
obligations to the confidential information) or the contents of which have been public knowledge not due to violation of this Agreement.

 

    12

     

    

 

11. Assumption of Taxes
and Fees

 

All costs and expenses
incurred as a result of this Agreement and the transaction (including but not limited to services and expenses of counsel and financial
advisors) shall be borne by the party that incurred them, whether or not the transaction is completed.

 

All taxes arising from
the transaction shall be dealt with in accordance with laws and regulations. In cases that regulation is not clear, the parties
shall assume the tax equally.

 

12. Responsibility for
Breach of the Agreement

 

12.1. The parties shall
voluntarily perform this Agreement in good faith.

 

12.2. Either party shall
indemnify the other party for all losses, claims and expenses incurred by the other party as a result of its breach of this Agreement
or any representations or warranties hereunder.

 

13. Applicable Law and
Dispute Resolution

 

13.1. This Agreement
shall be governed by and construed in accordance with the relevant laws and regulations of the People's Republic of China.

 

13.2. All disputes between
the parties in the performance of this Agreement shall be settled through friendly negotiation. If no agreement can be reached
through negotiation, each party has the right to file a lawsuit with the people's court in the place where the defendant is located.

 

14. Effectiveness and
Termination of the Agreement

 

14.1. This Agreement
shall come into force upon execution by the legal representative or authorized representative of each party, and shall complete
the transaction upon meeting all of the following conditions, and at the same time, Party A shall enjoy all lawful rights and interests
as a shareholder of Party C, including the consolidation of Party C's financial statements in accordance with US GAAP.

 

14.1.1 The shareholder/shareholders'
meeting of the target company agrees to the transfer of the transferred asset;

 

14.1.2. The board of
directors of Party A and the Board and/or Shareholders of CREG approve the transaction in accordance with law;

 

14.1.3. NASDAQ Stock
Exchange has approved the issuance of CREG shares;

 

    13

     

    

 

14.2. This Agreement
shall terminate or be terminated for the following reasons:

 

14.2.1. If any force
majeure, such as government expropriation, requisition, strike, riot, earthquake and other natural disasters, the unforeseeable,
unavoidable and insurmountable objective circumstance, caused the failure of the performance of this Agreement, this agreement
shall be terminated upon written confirmation by the parties.

 

14.2.2. The parties
terminate this Agreement by consensus.

 

14.3
The termination of this Agreement shall not affect the non-breaching party's rights to pursue breaching party’s
liabilities for breach of contract.

 

15. Others

 

15.1. The parties hereto
shall, in strict accordance with the relevant Chinese laws, regulations and rules, perform the relevant information disclosure
obligations hereunder.

 

15.2. Neither party
shall assign this Agreement or any of its rights and obligations hereunder without the prior written consent of the other party.

 

15.3.
If any provision or part of the provisions of this Agreement is deemed to be invalid by the court or arbitration institution or
any institution with jurisdiction, the other provisions and contents of this Agreement are still valid. The parties should still
fulfill the Agreement according to the general principles of this Agreement. Any invalid or without effect terms of the Agreement
may be replaced by effective alternatives which can most reflect the parties’ intentions
when the Agreement is signed by the parties or the parties can sign supplement agreement. 

 

15.4. This Agreement
may be amended or modified in a signed document by the parties.

 

15.5. The term "this
Agreement" shall mean the whole of this Agreement and not any particular clause, annex or other part of this Agreement. The
headings of the terms and annexes are for convenience of reference only and shall not affect or limit the meaning or interpretation
of the terms of this Agreement.

 

15.6. Any reference
to "party" shall mean either party hereto; when referring to "parties", means the each party of this Agreement.

 

    14

     

    

 

15.7. This Agreement
is made in fourteen counterparts, each party shall hold two counterparts, and the remaining copies shall be reserved for the purpose
of reporting the approval and registration authorities related to this transaction, each of which shall have the same legal effect.

 

(No Text Below)

 

Party
A:Shanghai TCH Energy Technology Co., Ltd. 

 

Legal Representative:

 

Party
B1:Zheng Feng 

 

Party
B2:Yinhua Zhang

 

Party
B3:Weidong Xu

 

Party
C:Xi’an Taiying Energy Saving Technology Co., Ltd.

 

Legal Representative:

 

 

15

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