Document:

isc_8k-ex1002.htm

    Exhibit
10.2

    

    CERTIFICATE
OF DESIGNATION OF

    RIGHTS,
PREFERENCES, PRIVILEGES AND RESTRICTIONS OF

    SERIES
C PREFERRED STOCK OF

    INTERNATIONAL
STEM CELL CORPORATION

     

    The Board
of Directors of International Stem Cell Corporation (the “Company”) hereby
provides for the issuance of a series of preferred stock of the Company and does
hereby fix and determine the rights, preferences, privileges, restrictions and
other matters related to said series of preferred stock as follows:

    

    Section
1 Designation and
Amount.  The shares of such series shall be designated as
“Series C Preferred Stock” and the number of shares constituting such series
shall be Three Million (3,000,000).

    

    Section
2 Dividends.  The
Series C Preferred Stock shall not be entitled to receive any dividends
whatsoever, except as follows: If the Company declares and pays any dividends on
the Common Stock (other than a dividend payable in shares of Common Stock),
then, in that event, holders of shares of Series C Preferred Stock shall be
entitled to share in such dividends on a pro rata basis, as if their shares had
been converted into shares of Common Stock pursuant to Section 5(a) below
(“Common Share Equivalents”) immediately prior to the record date for
determining the shareholders of the Company eligible to receive such
dividends.

    

    Section
3 Liquidation
Preference.

    

    (a) Preference.  In
the event of any liquidation, dissolution or winding up of the Company, either
voluntary or involuntary, subject to the rights of any holders of any debt of
the Company, the holders of Series C Preferred Stock shall be entitled to
receive, prior and in preference to any distribution of any of the assets of the
Company to the holders of Common Stock by reason of their ownership thereof, but
only after payment in full of the liquidation preferences payable to holders of
any shares of Series A Preferred Stock or shares of Series B Preferred Stock
then outstanding, an amount per share equal to the sum of (i) One Dollar ($1.00
for each outstanding share of Series C Preferred Stock (the “Original Series C
Issue Price”) (subject to adjustment of such fixed dollar amount for any stock
splits, stock dividends, combinations, recapitalizations or the like) plus (ii)
one percent (1%) of the Original Series C Issue Price for every full two (2)
calendar months from August 1, 2008 to the date of such liquidation, dissolution
or winding up of the Company.  If, upon the occurrence of such event,
the assets and funds thus distributed among the holders of the Series C
Preferred Stock shall be insufficient to permit the payment to such holders of
the full aforesaid preferential amounts, then, subject to the rights of any debt
holders of the Company and the rights of any other series of Preferred Stock
that may from time to time come into existence, the entire assets and funds of
the Company legally available for distribution shall be distributed ratably
among the holders of the Series C Preferred Stock in proportion to the amount of
such stock owned by each such holder.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b) Remaining
Assets.  Upon completion of the distribution required by
subsection (a) of this Section 3 and any other distribution that may be required
with respect to any other series of Preferred Stock that may from time to time
come in to existence, holders of the Series C Preferred Stock shall not
participate in any distribution of such remaining assets.

    

    (c) Mergers and
Consolidations.  A merger or consolidation of the Company with
any other corporation shall not be deemed a liquidation, dissolution or winding
up of the Company within the meaning of this Section 3.

    

    (d) Sale or Other Transfer of
All or Substantially All Assets. For purposes of this Section 3, a
liquidation, dissolution or winding up of the Company shall be deemed to include
a sale, lease, transfer or other disposition of all or substantially all of the
assets of the Company, other than to a wholly-owned subsidiary of the
Company.

    

    Section
4     Redemption.  The
Series C Preferred Stock shall not be entitled to any rights of redemption
whatsoever.

    

    Section
5     Conversion.  The
holders of the Series C Preferred Stock shall have conversion rights as follows
(the “Conversion Rights”):

    

    (a)  Right to
Convert.  Subject to Sections 5(b) and 5(c), each share of
Series C Preferred Stock shall be convertible, at the option of the holder
thereof, at any time after the date of issuance of such share, at the office of
the Company or any transfer agent for such stock, into such number of fully paid
and nonassessable shares of Common Stock (“Shares”) as is determined by dividing
the Original Series C Issue Price by the Conversion Rate (defined below)
applicable to such share, determined as hereafter provided, in effect on the
date the certificate is surrendered for conversion.  The initial
Conversion Rate per share for shares of Series C Preferred Stock shall be
Twenty-Five Cents ($0.25) and shall thereafter be subject to adjustment as set
forth in Section 6 below (the “Conversion Rate”).

    

    (b)  Minimum
Conversion.  A holder of Series C Preferred Stock may not
convert, at any time, less than ten thousand shares of Series C Preferred Stock
or all shares of Series C Preferred Stock then owned by such holder, whichever
amount is less.

    

    (c)  Mechanics of
Conversion.  Before any holder of shares of Series C Preferred
Stock shall be entitled to convert the same into Shares, such holder shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the Company or of any transfer agent for the Series C Preferred Stock and
shall give written notice to the Company at its principal corporate office, of
the election to convert the same and shall state therein the number of shares of
Series C Preferred Stock to be converted and the name or names in which the
certificate or certificates for Shares are to be issued.  The Company
shall, as soon as practicable thereafter, issue and deliver at such office to
such holder of the Series C Preferred Stock, or to the nominee or nominees of
such holder, a certificate or certificates for the number of fully paid and
nonassessable shares of Common Stock to which such holder shall be entitled as
aforesaid together with a cash adjustment in respect of any fraction of a share
to which the holder shall be entitled as provided in Section 5(d), and, if less
than the entire number of shares of Series C Preferred Stock represented by the
certificate or certificates surrendered is to be converted, a new certificate
for the number of shares of Series C Preferred Stock not so
converted.  For purposes of a conversion pursuant to Section 5(a),
such conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares of the Series C
Preferred Stock to be converted, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock as
of such date.

    
      
         

      

      
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    (d)  No Fractional
Shares.  No fractional shares of Common Stock or scrip
representing fractional shares of Common Stock shall be issued upon any
conversion of any shares of Series C Preferred Stock.  All Shares
(including fractions thereof) issuable upon conversion of more than one share of
Series C Preferred Stock by a holder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of any
fractional share.  If, after the aforementioned aggregation, the
conversion would result in the issuance of any fractional share, the Company
shall, in lieu of issuing any fractional share, pay cash equal to the product of
such fraction multiplied by the fair market value per share (as determined in
good faith by the Board of Directors) of the Common Stock on the date of
conversion.

    

    (e)  Automatic
Conversion.  At any time (following the date on which shares of
Series C Preferred Stock are first issued) that there are less than a total of
two hundred thousand (200,000) shares of Series C Preferred Stock outstanding,
then each remaining share of Series C Preferred Stock shall automatically be
converted into such number of fully and nonassessable shares of Common Stock as
is determined by dividing the Original Series C Issue Price by the then
applicable Conversion Rate.  The Company will not be required to issue
the certificate(s) for the shares of Common Stock issued on conversion until the
certificates for the shares of Series C Preferred Stock so converted are
surrendered at the office of the Company.

    

    Section
6     Adjustments. The
Shares into which a share of Series C Preferred Stock is convertible and the
Conversion Rate shall be subject to adjustment as follows:

    

    (a)           In
case the Company shall (i) pay a dividend in shares of Common Stock or make a
distribution to all holders of shares of Common Stock in shares of Common Stock,
(ii) subdivide its outstanding shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock or (iv) issue by reclassification of its shares of Common Stock other
securities of the Company, the number of Shares issuable upon exercise of each
share of Series C Preferred Stock immediately prior thereto shall be adjusted so
that the Holder of each share of Series C Preferred Stock shall be entitled to
receive the kind and number of Shares or other securities of the Company which
he would have owned or would have been entitled to receive after the happening
of any of the events described above, had such share of Series C Preferred Stock
been converted immediately prior to the happening of such event or any record
date with respect thereto.  An adjustment made pursuant to this
paragraph (a) shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.

    

    (b)           In
case the Company shall issue rights, options or warrants to all holders of its
shares of Common Stock, without any charge to such holders, entitling them to
subscribe for or purchase shares of Common Stock at a price per share which is
lower on the date of issuance thereof than the then current market price per
share of Common Stock (as defined in paragraph 5(d) above), the number of Shares
thereafter issuable upon the conversion of each share of Series C Preferred
Stock shall be determined by multiplying the number of Shares theretofore
issuable upon conversion of each share of Series C Preferred Stock by a
fraction, of which the numerator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights, options or warrants plus the
number of additional shares of Common Stock offered for subscription or
purchase, and of which the denominator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights, options or warrants
plus the number of shares which the aggregate offering price of the total number
of shares of Common Stock so offered would purchase at the such then current
market price per share of Common Stock.  Such adjustment shall become
effective immediately after the date such rights, options or warrants are
issued, retroactive to the record date for the determination of stockholders
entitled to receive such rights, options or warrants.

    
      
         

      

      
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    (c)           In
case the Company shall distribute to all holders of its shares of Common Stock
evidence of its indebtedness or assets (excluding regular and ordinary cash
dividends) or rights, options or warrants or convertible securities containing
the right to subscribe for or purchase shares of Common Stock (excluding those
referred to in paragraph (b) above), then in each case the Conversion Rate shall
be adjusted to a price determined by multiplying the Conversion Rate in effect
immediately prior to such distribution by a fraction, of which the numerator
shall be the then current market price per share of Common Stock (as defined in
paragraph 5(d) above) on the date of such distribution, less the then fair value
(as determined in good faith by the Board of Directors of the Company) of the
portion of the assets or evidence of indebtedness so distributed or of such
rights, options, warrants or convertible securities applicable to one share of
Common Stock, and of which the denominator shall be such then current market
price per share of Common Stock.  Such adjustment shall be made
whenever any such distribution is made, and shall become effective on the date
of distribution retroactive to the record date for the determination of
stockholders entitled to receive such distribution.

    

    (d)           No
adjustment in the number of Shares issuable hereunder shall be required unless
such adjustment would require an increase or decrease of at least one percent
(1%) in the number of Shares issuable upon the conversion of all Series C
Preferred Stock then outstanding; provided, however, that any adjustments which
by reason of this paragraph (d) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.

    

    (e)           Whenever
the number of Shares issuable upon the conversion of each share of Series C
Preferred Stock is adjusted, as herein provided, the Conversion Rate per share
of Series C Preferred Stock payable upon conversion of each share of Series C
Preferred Stock shall be adjusted (to the nearest cent) by multiplying such
Conversion Rate immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Shares issuable upon the conversion of each
share of Series C Preferred Stock immediately prior to such adjustment, and of
which the denominator shall be the number of Shares so issuable immediately
thereafter.

    

    (f)           
If the Company shall issue, after the date upon which any shares of Series C
Preferred Stock were first issued (the “Issue Date”), (i) not less than two
hundred fifty thousand (250,000) shares of Common Stock for a purchase price per
share less than the Conversion Rate in effect immediately prior to such issuance
(other than pursuant to the exercise or conversion or options, warrants or
rights outstanding as of the Issue Date), or (ii) options, warrants or rights to
purchase shares of Common Stock, or convertible securities convertible into or
exchangeable for shares of Common Stock (such options, warrants, rights and
convertible securities are hereinafter referred to collectively as “Common Stock
Rights”), which Common Stock Rights are exercisable for or convertible into not
less than two hundred fifty thousand (250,000) shares of Common Stock at an
exercise price or conversion rate per share that is less than the Conversion
Rate in effect immediately prior to such issuance, then, in either such event,
the Conversion Rate shall automatically be adjusted to equal the purchase price
of such shares or the exercise price or conversion rate of the Common Stock
Rights, as applicable.

    
      
         

      

      
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    (g)           Whenever
the number of Shares issuable upon the conversion of each share of Series C
Preferred Stock or the Conversion Rate is adjusted, as herein provided, the
Company shall promptly mail by first class mail, postage prepaid, to each
Holder, notice of such adjustment or adjustments setting forth the number of
Shares issuable upon the conversion of each share of Series C Preferred Stock
and the Conversion Rate after such adjustment, a brief statement of the facts
requiring such adjustment, and the computation by which such adjustment was
made.

    

    (h)           For
the purpose of this Section 6, the term “shares of Common Stock” shall mean (i)
the class of stock designated as the Common Stock of the Company as of the Issue
Date, or (ii) any other class of stock resulting from successive changes or
reclassifications of such shares consisting solely of changes in par value, or
from par value to no par value, or from no par value to par value.  In
the event that at any time, as a result of an adjustment made pursuant to
paragraph (a) above, the Holders shall become entitled to purchase any shares of
the Company other than shares of Common Stock, thereafter the number of such
other shares so issuable upon conversion of each share of Series C Preferred
Stock and the Conversion Rate of such shares shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions relating to the Shares contained in paragraphs (a) through (f),
inclusive, above, and the provisions of Section 7 relating to the Shares shall
apply.

    

    (i)            Upon
the expiration of any rights, options, warrants or conversion privileges, if any
thereof shall not have been exercised, the Conversion Rate and the number of
shares of Common Stock issuable upon the conversion of a share of Series C
Preferred Stock shall, upon such expiration, be readjusted and shall thereafter
be such as it would have been had it been originally adjusted (or had the
original adjustment not been required, as the case may be) on the basis of (A)
the only shares of Common Stock so issued were the shares of Common Stock, if
any, actually issued or sold upon the conversion of such rights, options,
warrants or conversion rights and (B) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon such
conversion plus the consideration, if any, actually received by the Company for
the issuance, sale or grant of all such rights, options, warrants or conversion
rights whether or not exercised, provided, further, that no such readjustment
shall have the effect of increasing the Conversion Rate by an amount in excess
of the amount of the adjustment initially made in respect of the issuance, sale
or grant of such rights, options, warrants or conversion rights.

    

    (j)            In
case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale or conveyance to another entity of
the property of the Company as an entirety or substantially as an entirety, the
Company or such successor or purchasing entity, as the case may be, shall be
obligated to issue to a Holder, upon conversion thereof, the same consideration
as such Holder would have owned or would have been entitled to receive after the
happening of such consolidation, merger, sale or conveyance had such Series C
Preferred Stock been converted immediately prior to such action.  If
the action involves two or more transactions involving different consideration
to holders of Common Stock, each Holder may elect which consideration to receive
pursuant to this paragraph (j).

    
      
         

      

      
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    Section
7     Payment of
Taxes.  The issuance of a stock certificate or certificates on
conversion of the Series C Preferred Stock shall be made without charge to the
converting Holder for any tax in respect of the issue thereof.  The
Holder shall be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of stock in any name other than
that of the Holder.

    

    Section
8     Reservation of Shares;
Shares to be Fully Paid.  The Company shall reserve for
issuance out of its authorized but unissued shares of Common Stock, sufficient
shares to provide for the conversion of the Series C Preferred Stock from time
to time as shares of Series C Preferred Stock are presented for
conversion.  All shares of Common Stock which may be issued upon
conversion of the Series C Preferred Stock will, upon issue, be fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.

    

    Section
9     Voting
Rights.  The holders of Series C Preferred Stock shall have no
voting rights or powers except as provided in this Section 9.

    

    (a)      
Except as
to matters specified in Section 9(b) below, each holder of Series C Preferred
Stock shall be entitled to vote on each matter on which holders of shares of
Common Stock are entitled to vote.  For such purposes, each share of
Series C Preferred Stock shall represent as many votes as the number of shares
of Common Stock into which it is then convertible.  Except as
otherwise expressly provided in this Section 9 or as required by law, the
holders of shares of Series C Preferred Stock and the Common Stock shall vote
together as a single class on all matters submitted to a vote of
stockholders.

    

    (b)      
Each
share of Series C Preferred Stock shall be entitled to one vote on any matter
relating to an adverse change in the rights of the Series C Preferred Stock or
the rights of the Holders of the Series C Preferred Stock and on any matter as
to which the approval of the holders of the Series C Preferred Stock as a class
is required by law, including, but not limited to, any increase in the number of
Series C Preferred Stock issuable by the Company.  Holders of Series C
Preferred Stock shall vote separately as a class on any such matter. The
approval of Holders of more than a majority of the then outstanding shares of
Series C Preferred Stock shall be required for any amendment to the rights of
the Series C Preferred Stock, including a material adverse change in the rights
of the Series C Preferred Stock or the rights of the Holders of the Series C
Preferred Stock.

    

    (c)       So
long as not less than 25% of the maximum number of issued shares of Series C
Preferred Stock remain outstanding, the holders of a majority of the shares of
Series C Preferred Stock, exclusively and as a separate class, shall be entitled
to nominate and elect one (1) director to serve on the Board of Directors of the
Company.  Any director elected by holders of the Series C Preferred
Stock may be removed without cause by, and only by, the affirmative vote of a
majority of the holders of the Series C Preferred Stock, given either at a
special meeting of such stockholders duly called for that purpose or pursuant to
a written consent of such stockholders.  At any meeting held for the
purpose of electing a director, the presence in person or by proxy of the
holders of a majority of the outstanding shares of Series C Preferred Stock
shall constitute a quorum for the purpose of electing such
director.  A vacancy in any directorship filled by the holders of the
Series C Preferred Stock shall be filled only by vote or written consent in lieu
of a meeting of the holders of not less than a majority of the outstanding
shares of Series C Preferred Stock.

    
      
         

      

      
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    IN
WITNESS WHEREOF, the Company has caused this Certificate to be executed by
William B. Adams, its Chief Financial Officer, on this 18th day of August,
2008.

    

     

    
      	 	By:  /s/William B.
      Adams                           
	 	       
      William B. Adams
	Attest:  /s/ Jacqueline A.
      Adams                       
      	 
	              Jacqueline
      A. AdamsFiled by sedaredgar.com - Wordlogic Corporation - Exhibit 10.1

WORDLOGIC CORPORATION

	2008 STOCK
      COMPENSATION PLAN 

SECTION 1 
INTRODUCTION 

1.1        Establishment.
Wordlogic Corporation (the “Company”), a Nevada corporation, hereby
establishes the 2008 Stock Compensation Plan (the “Plan”) for employees,
consultants, directors, and other persons associated with the Company and any of
the Company’s subsidiaries, whom the board of directors of the Company wishes to
compensate for services.

1.2        Purposes.
The purposes of this Plan are to (i) attract and retain the best available
personnel for positions of responsibility within the Company (ii) provide
incentives to employees, officers, and management of the Company, (iii) provide
Directors, Consultants and Advisors of the Company with an opportunity to
acquire a proprietary interest in the Company to encourage their continued
provision of services to the Company, and to provide such persons with
incentives and rewards for superior performance more directly linked to the
profitability of the Company's business and increases in shareholder value, and
(iv) generally to promote the success of the Company's business and the
interests of the Company and all of its stockholders, through the issuance of
shares of the Company's Common Stock.

                    
Incentive benefits granted hereunder may be shares. The amount of shares
issued shall be determined by the board or the Compensation Committee and
reflected in the terms of written agreements. 

SECTION 2 
DEFINITIONS 

2.1        Definitions.
The following terms will have the meanings set forth below: 

“Affiliated Corporation” means any corporation or other
entity (including, but not limited to, a partnership) that is affiliated with
the Company through stock ownership or otherwise, and includes subsidiaries of
the Company. 

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

“Code” means the Internal Revenue Code of the USA or the
Income Tax Act of Canada, as it may be amended form time to time, and as
appropriate to the context and as applies to the Eligible Participant.

“Effective Date” means the effective date of the Plan,
which will be upon approval of the Board of Directors of the Company. 

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“Eligible Participants” means any employees (including,
without limitation, all officers), directors, consultants and any other persons
whom the Board wishes to incite to contribute to the fortunes of the Company and
permitted by law or policy to receive Shares. 

“Non-Statutory Share” means a Share issued under this
Plan in accordance with the requirements of the Code, as amended from time to
time. 

“Plan Limit” shall have the meaning set forth in section
4.1. 

“Share” or “Shares” shall mean the Company's
Common Shares, $.001 par value per share, or, in the event that the outstanding
Common Shares are hereafter changed into or exchanged for different shares of
securities of the Company, such other shares or securities. 

“Share Agreement” shall mean an agreement that will be
entered into by the Company and the Eligible Participant to whom the Shares are
issued and will contain terms and conditions governing the issuance of Shares

“Stockholder” means an Eligible Participant designated
by the Share Issuance Committee from time to time during the term of the Plan to
receive one or more Shares under the Plan. 

“Share Issuance Committee” means the Compensation
Committee of the Company, unless the Board strikes a separate committee, and in
the absence of an empowered committee shall mean the Board. 

“Stock” means the common stock of the Company. 

2.2        Gender and Number.
  Except where otherwise indicated by the context, the masculine gender also
  will include the feminine gender, and the definition of any term herein in the
  singular also will include the plural.

SECTION 3 
PLAN ADMINISTRATION 

3.1        Share
Issuance Committee. The Share Issuance Committee will administer the Plan.
In accordance with the provisions of the Plan, the Share Issuance Committee
will, in accordance with policies ordered by the Board but in the absence of
board direction in its sole discretion, select the Eligible Participants to whom
Shares will be issued, the amount of Shares to be issued, and any other terms
and conditions of each Share as the Share Issuance Committee may deem necessary
and consistent with the terms of the Plan. The Share Issuance Committee will
determine the form or forms of the agreements with Stockholders. The agreements
will evidence the particular provisions, terms, conditions, rights and duties of
the Company and the Stockholders with respect to Shares issued pursuant to the
Plan, which provisions need not be identical except as may be provided herein.
The Share Issuance Committee may from time to time adopt such rules and
regulations for carrying out the purposes of the Plan as it may deem proper and
in the best interests of the Company. The Share Issuance Committee may correct
any defect, supply any omission or reconcile any inconsistency in the Plan or in

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any agreement entered into hereunder in the manner and to the
extent it may deem expedient and it will be the sole and final judge of such
expediency. No member of the Share Issuance Committee will be liable for any
action or determination made in good faith, and all members of the Committee
will, in addition to their rights as directors, be fully protected by the
Company with respect to any such action, determination or interpretation. The
determinations, interpretations and other actions of the Share Issuance
Committee pursuant to the provisions of the Plan will be binding and conclusive
for all purposes and on all persons. 

SECTION 4 
STOCK SUBJECT TO THE PLAN AND EXCEPTIONS 

4.1        Plan
limit. A maximum of 500,000 Shares (“Plan Limit”) are authorized for
issuance under the Plan in accordance with the provisions of the Plan. Shares
that are issued will be deducted from the Plan Limit and such Plan Limit shall
not be increased without approval of the board or, if shareholders of the
Company have so required, without approval of the shareholders of the Company.
While any Shares are outstanding, the Company will retain as authorized and
unissued Stock at least the number of Shares from time to time required under
the provisions of the Plan or otherwise assure itself of its ability to perform
its obligations hereunder. 

4.2        Unused and
Forfeited Stock. Any Shares that are subject to this Plan that are not used
because the terms and conditions of the Share Agreement are not met or any
Shares that are used for full or partial payment of the purchase price of Shares
or any Shares retained by the Company for any purpose of this Plan automatically
will be returned to the Plan Limit and become available for again for use under
the Plan. 

4.3        Adjustments
for Stock Split, Stock Dividend, Etc. If the Company at any time increases
or decreases the number of its outstanding Shares of Stock, or changes in any
way the rights and privileges of such Shares by means of the Payment of a Stock
dividend or any other distribution upon such Shares payable in Stock, or through
a stock split, subdivision, consolidation, combination, reclassification or
recapitalization involving the Stock, then, in relation to the Stock that is
affected by the above events, the provisions of this Section 4.3 will apply. In
such event, the numbers, rights and privileges of the following will be
increased, decreased or changed in like manner as if such shares had been issued
and outstanding, fully paid and non-assessable at the time of such event: 

(i)        adjustment
to the Shares of Stock as to which Shares may be issued under the Plan.

4.4        General
Adjustment Rules. If any adjustment or substitution provided for in this
Section 4 will result in the creation of a fractional Share, the number of
Shares will be rounded to the next higher Share. 

4.5        Determination
by Share Issuance Committee, Etc. Adjustments under this Section 4 will be
made by the Share Issuance Committee, whose determinations with regard thereto
will be final and binding upon all parties. 

4.6        Shares
Exceptional to Plan. With the concurrence of the Board, the Share Issuance
Committee may issue Shares outside the Plan or within the Plan but in excess

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of the Plan Limit, such that the available Plan Limit is not
diminished, for exceptional circumstances or to acquire or retain personnel or
achieve important goals or strategic targets considered important to the Company
but which cannot reasonably be fit into the Plan Limit or the Plan due to
insufficiency of available Plan Shares, legal impediments whereby the recipient
cannot or is best not included in the Plan, or other purposes or reasons
considered appropriate to the Board. 

4.7       
Limitations on Issuance. The Share Issuance Committee shall not, nor does
it have the authority to, issue any stock compensation under this Plan for
service related to investor relations or capital raising activities. 

SECTION 5 
REORGANIZATION OR LIQUIDATION 

5.1       
Reorganization and Shares. In the event that the Company is merged or
consolidated with another corporation (other than a merger or consolidation in
which the Company is the continuing corporation and that does not result in any
reclassification or change of outstanding Shares), or if all or substantially
all of the assets or control of the outstanding voting stock of the Company is
acquired by any other corporation, business entity or person (other than by a
sale or conveyance in which the Company continues as a holding company of an
entity or entities that conduct the business of businesses formerly conducted by
the Company), or in case of a reorganization (other than a reorganization under
the United States Bankruptcy Code) or liquidation of the Company, the Share
Issuance Committee will have the power and discretion to prescribe the terms and
conditions for the modification of any outstanding Shares issued hereunder. By
way of illustration, and not by way of limitation, the Share Issuance Committee
may provide that such Shares will be exchanged or converted into Shares of the
surviving or acquiring corporation, or may provide for a payment or distribution
in respect of outstanding Shares in cancellation thereof. Any such
determinations by the Share Issuance Committee may be made generally with
respect to all Stockholders, or may be made on a case-by-case base with respect
to particular Stockholders. The provisions of this Section 5 will not apply to
any transaction undertaken for the purpose of reincorporating the Company under
the laws of another jurisdiction, if such transaction does not materially affect
the beneficial ownership of the Company’s capital stock. Any determination by
the Share Issuance Committee hereunder shall not amend the terms of any Share
without the consent of the Stockholder unless, in the opinion of the Committee
acting reasonably, such amendment is necessary to permit the alterations to the
Company to be effected and such is in the interest of shareholders generally.

SECTION 6 
STOCK SHARES 

6.1        Issuance of
Shares. An Eligible Participant may be issued one or more Shares.

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6.2        Share
Agreements. Each Share issued under the Plan will be evidenced by a written
Share Agreement that will be entered into by the Company and the Eligible
Participant to whom the Share is issued (the “Stockholder”), and will be deemed
to contain the following terms and conditions, unless other terms and conditions
inconsistent therewith have been entered into the Share Agreement. In the event
of inconsistency between the provisions of the Plan and any Share Agreement
entered into, the provisions of the Share Agreement will be considered to have
been determined to be exceptional from the below and such Share Agreement shall
govern where not inconsistent with law. However, the provisions of the Plan will
govern where the Share Agreement omits to provide for a matter governed by the
Plan and the Share Agreement will not be incomplete nor unenforceable if it
fails to provide for a matter provided by the terms of this Plan as such shall
be incorporated by reference: 

(a) Number of Shares. Each Share Agreement will state
that it covers a specified number of Shares, as determined by the Share Issuance
Committee and the Share Agreement. If the Share Agreement fails to state the
number then it shall be the number set forth in the minutes of the Share
Issuance Committee. 

(b) Issuance Period. Each Share Agreement will state the
time and the amount of the Shares of the Share which shall be issued. Unless
otherwise provided in the Share Agreement, Shares will vest immediately: 

(c) Date of Issuance. Shares will be considered as
having been issued on the date specified in the issuance resolution of the Share
Issuance Committee. 

6.3        Stockholder
Privileges. Prior to the issuance of the Shares to the Stockholder, the
Stockholder will have no rights as a stockholder with respect to any Shares
issued to such person under this Plan and, until the Stockholder becomes the
holder of the record of such Stock, no adjustments, other than those described
in Section 4, will be made for dividends or other distributions or other rights
to which there is a record date preceding the date such Stockholder becomes the
holder of record of such Stock. 

SECTION 7 
RIGHTS OF EMPLOYEES AND STOCKHOLDERS 

7.1        Employment.
Nothing contained in the Plan or in any Share Agreement will confer upon any
Eligible Participant any right with respect to the continuation of employment by
the Company, or interfere in any way with the right of the Company, subject to
the terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of such
Eligible Participant form the rate in existence at the time of the issuance of
Shares.

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SECTION 8 
GENERAL RESTRICTIONS 

8.1        Investment
representations. The Company may require any person to whom Shares are
issued to give written assurances, in substance and form satisfactory to the
Company and its counsel, to the effect that such person is acquiring the Stock
subject to the Share Agreement for his own account for investment and not with
any present intention of selling and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state
and provincial securities laws. Legends evidencing such restrictions may be
placed on the certificates evidencing the Stock. 

8.2        Compliance
with Securities Laws. Each Share Agreement will be subject to the
requirement that if at any time counsel to the Company determines that the
listing, registration or qualification of the Shares upon any securities
exchange or under any state, provincial or federal law, or the consent or
approval of any governmental or regulatory body, is necessary as a condition of,
or in connection with, the issuance of Shares thereunder, such Shares may not be
issued in whole or in part unless such listing, registration, qualification,
consent or approval will have been effected or obtained on conditions acceptable
to the Share Issuance Committee. Nothing herein will be deemed to require the
Company to apply for or to obtain such listing, registration or qualification.
However, where available to the circumstances of an Stockholder the Company will
include the Share with any other filings that the Company elects, at its sole
discretion, to file under Form S-8 or any other filings with the SEC but the
Company shall not be obliged to make an individual filing for a particular
Share, unless such shall have been required pursuant to the specific Share
Agreement. 

SECTION 9 
OTHER EMPLOYEE BENEFITS 

9.1        Benefits and
Taxes. The amount of any compensation deemed to be received by a Stockholder
as a result of a Share issuance will not constitute “earnings” with respect to
which any other employee benefits of such Stockholder are determined, including,
without limitation, benefits under any pension, profit sharing, life insurance
or salary continuation plan. Any taxable consequences of any Share issuance are
entirely the responsibility of the Stockholder and no contribution shall be
required of the Company and, further, if the Company should suffer liability for
unpaid taxes of a Stockholder then the full amount of such shall be a debt of
the Stockholder to the Company payable immediately and for which the Company may
seek judgment and, before judgment or process, may set-off against any amounts
due to the Stockholder or may recover, again before judgment or process, by
exercise of voiding the Share Issuance at the discretion of the Share Issuance
Committee.

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SECTION 10 
PLAN AMENDMENT, MODIFICATION AND TERMINATION 

10.1      Amendment. The Board
may at any time terminate and, from time to time, may amend or modify the Plan
provided, however, that no amendment or modification may become effective
without approval of the amendment or modification by the stockholders where
stockholder approval is required to enable the Plan to satisfy any applicable
statutory requirements, or if the Company, on the advice of counsel, determines
that stockholder approval otherwise is necessary or desirable. 

              
No amendment, modification or termination of the Plan will in any manner
adversely affect any Shares theretofore issued under the Plan, without the
consent of the Stockholders holding such Shares. 

SECTION 11 
WITHHOLDING 

11.1      Withholding Requirement.
The Company’s obligations to issue Shares will be subject to the
Stockholder’s satisfaction of all applicable federal, state and local income and
other tax withholding requirements and applicable securities requirements. 

11.2      Withholding With Stock.
  At the time Shares are issued the Share Issuance Committee, in its sole
  discretion, may permit the Stockholder to pay all such amounts of tax withholding,
  or any part thereof, that is due upon exercise of the Share by such adjustments
  as the Share Issuance Committee determines.

SECTION 12 
BROKERAGE ARRANGEMENTS 

12.1      Brokerage. The Share
Issuance Committee, in its discretion, may enter into arrangements with one or
more banks, brokers or other financial institutions to facilitate the
disposition of shares acquired upon, including, without limitation, sale of
acquired Shares 

SECTION 13 
NONEXCLUSIVITY OF THE PLAN 

13.1      Other Plans. The
adoption of this Plan by the Board will not be construed as creating any
limitations on the power or authority of the Board to adopt such other or
additional incentive or other compensation arrangements of whatever nature as
the Board may deem necessary or desirable or preclude or limit the continuation
of any other plan, practice or arrangement for the payment of compensation or
fringe benefits to employees generally, or to any class or group of employees,
or any other persons that the Company or any Affiliated Corporation now has
lawfully put into effect, including, without limitation, any retirement,
pension, savings and stock purchase plan, insurance, death and disability
benefits and executive short-term incentive plans. 

8

SECTION 14 
REQUIREMENTS OF LAW 

14.1      Requirements of Law.
The issuance of Stock and the payment of cash pursuant to the Plan will be
subject to all applicable laws, rules and regulations. 

14.2      Governing Law. The
Plan and all agreements hereunder will be construed in accordance with and
governed by the laws of the State of Nevada. 

SECTION 15 
DURATION OF THE PLAN 

15.1      Termination. The Plan
will terminate at such time as may be determined by the Board, and no Shares
will be issued after such termination. If not sooner terminated under the
preceding sentence, the Plan will fully cease and expire on the date that the
Plan Limit has been exhausted and all Shares issued.

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