Document:

Exhibit 10.4

 

December 4,
2008

 

VIA
FIRST CLASS MAIL:

 

Ms. Elaine Flud
Rodriguez

11469 Cromwell Court

Dallas, Texas 75229

 

Re:                               Amendment to Employment Agreement

 

Dear Ms. Rodriguez:

 

You and EF Johnson
Technologies, Inc. (formerly known as EFJ, Inc.) (the “Company”) are
parties to an Employment Agreement dated March 17, 2008 (the “Agreement”).  The purpose of this letter is to obtain your
consent to an amendment of the Agreement, which is required in order to comply
with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

 

The Agreement provides
that, under certain circumstances, you are entitled to benefits in the event of
your involuntary termination of employment. 
In order to comply with Section 409A of the Code, the Agreement should
be amended to state that payments which are subject to the delay requirements
of Section 409A cannot be paid sooner than six months following your
termination of employment.  There are
exceptions from the 6-month delay requirements for certain payments upon an “involuntary
termination” or termination for “good reason” as defined under Section 409A,
so long as those payments do not exceed the monetary limit, which for 2008 is
$460,000.  These exceptions should apply
to some, if not most, of the payments to which you are entitled.  In addition, in order to comply with Section 409A
of the Code, the Agreement should be amended to state that such payments will
be paid on the 60th day following your termination of employment
provided that a release agreement has been executed and not revoked by that
date.

 

To this end, the Agreement is amended, effective December 4,
2008, to add the following new Section 21 at the end of the Agreement:

 

Section 21.           Delay in Payment of
Benefits.  If Employee
is a “specified employee,” as defined in § 1.409A-1(i) of the Final
Regulations under Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), and Employee is entitled to a payment under the terms of
this Agreement, and such payment would otherwise be paid (the “Original Payment
Date”) before a date

 

EF Johnson Corporate Headquarters 1440 Corporate Drive, Irving, TX
75038-2401 800.328.3911 972.819.0700 fax 972.819.0639 www.efji.com

 

 

which is at least six (6) months
following the date of Employee’s termination of employment that constitutes a “separation
from service,” as defined in Code Section 409A and the Final Regulations
issued thereunder (“Separation from Service”), then all or part of such payment
shall be paid on the date which is six (6) months following the date of
Employee’s Separation from Service (or, if earlier, the date of death of
Employee), provided such six (6) month delay is required for all or such
part of the payment by Code Section 409A.

 

Subject to the previous
paragraph, benefits to be paid in cash shall be paid or commence on the 60th
day following Employee’s termination of employment provided that any release
agreement provided for hereunder has been executed and not revoked by such
date.

 

Please acknowledge your
consent to the foregoing amendment to the Agreement by executing a copy of this
letter in the space provided below and returning it to me within 10 days from
the date of this letter, via facsimile (972-819-0201), with the original being
sent via regular mail.  You may also want
to consult your own independent counsel to assist you in reviewing this letter,
and we urge you to do so if you are so inclined.

 

If you have any questions
or if you need additional information, please do not hesitate to contact Sandi
Knight at 972-819-2368.

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  EF Johnson Technologies, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Michael E.
  Jalbert

  
	
   

  	
   

  	
    Michael
  E. Jalbert

  
	
   

  	
   

  	
    Chairman
  and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACCEPTED AND AGREED BY

  	
   

  
	
  EXECUTIVE

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Elaine Flud
  Rodriguez

  	
   

  	
   

  
	
  Elaine Flud Rodriguez

  	
   

  
				

 

2Exhibit 10.1

 

CLST HOLDINGS, INC.

2008

LONG TERM INCENTIVE PLAN

 

CLST Holdings, Inc.,
a Delaware corporation, sets forth herein the terms of its 2008 Long Term Incentive
Plan (the “Plan”)
as follows:

 

1.                                       Purpose
and Eligibility

 

The purpose of
the Plan is to provide stock options and other equity interests in the Company
(each an “Award”) to employees, officers, directors, consultants, and advisors
of the Company and its subsidiaries, all of whom are eligible to receive Awards
under the Plan.  Any person to whom an
Award has been granted under the Plan is referred to herein as a “Participant.”  Additional definitions are set forth in Section 8(a).

 

2.                                       Administration

 

a.             Administration by Board of
Directors.  The Plan will be
administered by the Board of Directors of the Company (the “Board”)
unless and until the Board delegates administration to a committee of the
Board, as provided in Section 2(b). 
The Board, in its sole discretion, shall have the authority to grant and
amend Awards, to adopt, amend, and repeal rules relating to the Plan, and
to interpret and correct the provisions of the Plan and any Award.  All decisions by the Board shall be final and
binding on all interested persons. Neither the Company nor any member of the
Board shall be liable for any action or determination relating to the Plan.

 

b.             Appointment of Committees.  To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board. 
All references in the Plan to the Board shall mean such committee or the
Board.  The provisions of this paragraph
shall not amend or limit the applicability of any agreement to which the
Company may be subject pursuant to which it has agreed to limit the grant of
Awards, or subject the grant of Awards to the approval of persons other than
the Board.

 

c.             Delegation to Executive Officers.  To the extent permitted by applicable law,
the Board may delegate to one or more executive officers of the Company the
power to grant Awards and exercise such other powers under the Plan as the
Board may determine, provided that
the Board shall fix the maximum number of Awards to be granted and the maximum
number of shares issuable to any one Participant pursuant to Awards granted by
such executive officers.

 

3.                                       Stock
Available for Awards

 

a.             Number of Shares.  Subject to adjustment under Section 3(b),
the aggregate number of shares of Common Stock of the Company (the “Common
Stock”) that may be issued pursuant to the Plan is 20,000,000 shares.  If any Award expires, or is terminated,
surrendered or forfeited, in whole or in part, the unissued Common Stock
covered by such Award shall again be available for the grant of Awards under
the Plan.  If shares of Common Stock
issued pursuant to the Plan are repurchased by, or are surrendered to, the
Company at no more than cost, such shares of Common Stock shall again be
available for the grant of Awards under the Plan;

 

 

provided, however, that the cumulative number
of such shares that may be so reissued under the Plan will not exceed
20,000,000, subject to adjustment under Section 3(b). Shares issued
under the Plan may consist in whole or in part of authorized but unissued
shares or treasury shares.

 

b.             Adjustment to Common Stock.  In the event of any stock split, stock
dividend, extraordinary cash dividend, recapitalization, reorganization,
merger, consolidation, combination, exchange of shares, liquidation, spin-off,
split-up, or other similar change in capitalization or event, (i) the
number and class of securities available for Awards under the Plan and any per-Participant
share limit, (ii) the number and class of securities, vesting schedule and
exercise price per share of Common Stock subject to each outstanding Award, (iii) the
repurchase price per security subject to repurchase; and (iv) the terms of
each other outstanding stock-based Award shall be adjusted by the Board (or
substituted Awards may be made) in an equitable manner; provided, however, that
any fractional shares resulting from any such adjustment shall be eliminated.  If Section 7(e)(i) applies
for any event, this Section 3(b) shall not be applicable.

 

4.                                       Stock
Options

 

a.             General.  The Board may grant options to purchase
Common Stock (each, an “Option”) and determine the number of shares of
Common Stock to be covered by each Option, the exercise price of each Option,
and the conditions and limitations applicable to the exercise of each Option
and the Common Stock issued upon the exercise of each Option, including vesting
provisions, repurchase provisions and restrictions relating to applicable
federal or state securities laws, as it considers advisable.  Without limiting the generality of the
foregoing, the Board may make the exercise of any option subject to an agreement
by the holder thereof to be a party to any other agreement, including an
agreement not to engage in competition with the Company following the Date of
Termination.

 

b.             Incentive Stock Options.  An Option that the Board intends to be an “incentive
stock option” as defined in Section 422 of the Code (an “Incentive
Stock Option”) shall be granted only to employees of the Company and shall
be subject to and shall be construed consistently with the requirements of Section 422
of the Code.  The Board and the Company
shall have no liability if an Option or any part thereof that is intended to be
an Incentive Stock Option does not qualify as such. An Option or any part
thereof that does not qualify as an Incentive Stock Option is referred to
herein as a “Nonstatutory Stock Option.” If an Option is designated as
an Incentive Stock Option, to the extent that such Option (together with all
Incentive Stock Options granted to the Option holder under the Plan and all
other stock option plans of the Company and its parent and subsidiaries)
becomes exercisable for the first time during any calendar year for shares
having a Fair Market Value greater than $100,000, the portion of each such
Incentive Stock Option that exceeds such amount will be treated as a
Nonstatutory Stock Option.

 

c.             Exercise Price.  The Board shall establish the exercise price
(or determine the method by which the exercise price shall be determined) at
the time each Option is granted and specify it in the applicable option
agreement; provided that, the per
share exercise price shall not be less than the per share Fair Market Value of
the Common Stock on the date the Option is 

 

2

 

granted (or
110% of Fair Market Value on the date of grant in the case of an Incentive
Stock Option granted to an employee who is a 10% stockholder).

 

d.             Duration of Options.  Each Option shall be exercisable at such
times and subject to such terms and conditions as the Board may specify in the
applicable option agreement, provided
that, in the case of an Incentive Stock Option, the Option shall not be
exercisable following the tenth anniversary of the date of grant of such Option
(or the fifth anniversary of the date of grant in the case of an Incentive
Stock Option granted to an employee who is a 10% stockholder).

 

e.             Exercise of Option.  Options may be exercised only by delivery to
the Company of a written notice of exercise signed by the proper person
together with payment in full as specified in Section 4(f) for
the number of shares for which the Option is exercised.

 

f.              Payment Upon Exercise.  Common Stock purchased upon the exercise of
an Option shall be paid for by one or any combination of the following forms of
payment:

 

(i)            by check payable to the order of the
Company;

 

(ii)           except as otherwise explicitly
provided in the applicable option agreement, and only if the Common Stock is
then publicly traded, delivery of an irrevocable and unconditional undertaking
by a creditworthy broker to deliver promptly to the Company sufficient funds to
pay the exercise price, or delivery by the Participant to the Company of a copy
of irrevocable and unconditional instructions to a creditworthy broker to
deliver promptly to the Company cash or a check sufficient to pay the exercise
price; or

 

(iii)          to the extent explicitly provided in
the applicable option agreement, by (x) subject to pre-approval of the
Board for any officer, director of 10% shareholder, delivery of shares of
Common Stock owned by the Participant valued at Fair Market Value, (y) delivery
of a promissory note of the Participant to the Company (and delivery to the
Company by the Participant of a check in an amount equal to the par value of
the shares purchased), provided that
the foregoing is not prohibited pursuant to Section 13(k) of the
Securities Exchange Act of 1934, as amended, or (z) payment of such other
lawful consideration as the Board may determine, provided
that such form of payment does constitute a deferral of compensation within the
meaning of Section 409A or otherwise cause the Option to be subject to the
requirements of Section 409A.

 

5.                                       Restricted
Stock

 

a.             Grants.  The Board may grant Awards entitling
recipients to acquire shares of Common Stock, subject to delivery to the
Company by the Participant of cash or other lawful consideration in an amount
at least equal to the par value of the shares purchased (each, a “Restricted
Stock Award”).

 

b.             Terms and Conditions. The
Board shall determine the terms and conditions of any such Restricted Stock
Award.  Any stock certificates issued in
respect of a Restricted Stock Award shall be registered in the name of the
Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the 

 

3

 

Company (or
its designee).  After the expiration of
the applicable restriction periods, the Company (or such designee) shall
deliver the certificates no longer subject to such restrictions to the
Participant or, if the Participant has died, to the beneficiary designated by a
Participant to receive amounts due or exercise rights of the Participant in the
event of the Participant’s death (the “Designated Beneficiary”).  In the absence of an effective designation by
a Participant, Designated Beneficiary shall mean the Participant’s estate.

 

6.                                       Other
Stock-Based Awards

 

The Board
shall have the right to grant other Awards based upon the Common Stock having
such terms and conditions as the Board may determine, including, without limitation,
the grant of shares based upon certain conditions, the grant of securities
convertible into Common Stock and the grant of stock appreciation rights,
phantom stock awards or stock units.

 

7.                                       General
Provisions Applicable to Awards

 

a.             Transferability of Awards.  Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred,
pledged or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable
only by the Participant.  References to a
Participant, to the extent relevant in the context, shall include references to
authorized transferees.

 

b.             Forfeiture of Awards. Unless
otherwise determined by the Board, upon termination of a Participant’s
employment or director or consulting arrangement between Participant and the
Company, such Participant may exercise any Award within such period of time
ending on the earlier of (1) the date three months following the Date of Termination
(or such other period as may be specified by the Board in an Award Agreement),
but only to the extent such Award was exercisable immediately prior to such
termination or (2) the expiration of the term of the Award.  Notwithstanding the foregoing, if the Participant’s
employment or director or consulting arrangement with the Company is terminated
voluntarily by Participant or if terminated by the Company for Cause, all Awards
held by the Participant shall terminate as of the Date of Termination (whether
or not vested) unless otherwise determined by the Board.

 

c.             Documentation.  Each Award under the Plan shall be evidenced
by a written instrument in such form as the Board shall determine or as
executed by an officer of the Company pursuant to authority delegated by the
Board.  Each Award may contain terms and
conditions in addition to those set forth in the Plan provided that such terms and conditions do
not contravene the provisions of the Plan.

 

d.             Board Discretion.  The terms of each type of Award need not be
identical, and the Board need not treat Participants uniformly.

 

e.             Acquisition of the Company.

 

(i)            Consequences of an Acquisition.
Upon the consummation of an Acquisition, the Board or the board of directors of
the surviving or acquiring entity (as used in this Section 7(e)(i),
also the “Board”), shall, as to outstanding Awards (on the 

 

4

 

same basis or on different bases as the Board
shall specify), make appropriate provision for the continuation of such
Awards by the Company or the assumption of such Awards by the surviving or
acquiring entity and by substituting on an equitable basis for the shares then
subject to such Awards either (a) the consideration payable with respect
to the outstanding shares of Common Stock in connection with the Acquisition, (b) shares
of stock of the surviving or acquiring corporation or (c) such other
securities or other consideration as the Board deems appropriate, the Fair
Market Value of which shall not materially differ from the Fair Market Value of
the shares of Common Stock subject to such Awards immediately preceding the
Acquisition. In addition to or in lieu of
the foregoing, with respect to outstanding Options, the Board may, on
the same basis or on different bases as the Board shall specify, upon written notice to the affected
Participants, provide that one or more Options then outstanding must be
exercised, in whole or in part, within a specified number of days of the date
of such notice, at the end of which period such Options shall terminate, or
provide that one or more Options then outstanding, in whole or in part, shall
be terminated in exchange for a cash payment equal to the excess of the Fair Market
Value for the shares subject to such Options over the exercise price thereof; provided, however, that before terminating any portion of an
Option that is not vested or exercisable (other than in exchange for a cash
payment), the Board must first accelerate in full the exercisability of the
portion that is to be terminated.  Unless
otherwise determined by the Board (on the same basis or on different
bases as the Board shall specify), any repurchase rights or other rights
of the Company that relate to an Option or other Award shall continue to apply
to consideration, including cash, that has been substituted, assumed or amended
for an Option or other Award pursuant to this paragraph. The Company may hold in escrow all or any portion of any such
consideration in order to effectuate any continuing restrictions.

 

(ii)           Assumption of Options Upon Certain
Events.  In connection with a merger
or consolidation of an entity with the Company or the acquisition by the
Company of property or stock of an entity, the Board may grant Awards under the
Plan in substitution for stock and stock-based awards issued by such entity or
an affiliate thereof.  The substitute
Awards shall be granted on such terms and conditions as the Board considers
appropriate in the circumstances.

 

f.              Amendment of Awards.  The Board may amend, modify or terminate any
outstanding Award including, but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that (1) the
Participant’s consent to such action shall be required unless the Board
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant and (2) such action does
not cause an Award to be subject to Section 409A that was not previously
subject to Section 409A or otherwise constitute an impermissible
acceleration or change in time and form of payment under Section 409A.

 

g.             Section 83(b) Election.  The Board may provide in an Award that the
Award is conditioned upon the Participant making or refraining from making an
election with respect to the Award under Section 83(b) of the Code.
If a Participant makes an election pursuant to 

 

5

 

Section 83(b) of
the Code concerning an Award, the Participant shall be required to file
promptly a copy of such election with the Company.

 

h.             Adjustment of Awards upon the
Occurrence of Certain Unusual or Non-recurring Events.  The Board may make adjustments in the terms
and conditions of, and the criteria included in, Awards in recognition of
unusual or nonrecurring events (including, without limitation, the events
described in Section 3(b) hereof) affecting the Company or the
financial statements of the Company or of changes in applicable laws,
regulations or accounting principles, whenever the Board determines that such
adjustments are appropriate in order to prevent unintended dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, provided that
such action does not cause an Award to be subject to Section 409A that was
not previously subject to Section 409A or otherwise constitute an
impermissible acceleration or change in time and form of payment under Section 409A.  The determination of the Board as to the
foregoing adjustments, if any, shall be conclusive and binding on Participants
under the Plan.

 

i.              Taxes.  Each Participant shall pay to the Company, or
make provisions satisfactory to the Company for payment of, any taxes required
by law to be withheld in connection with Awards to such Participant no later
than the date of the event creating the tax liability.  The Board may allow Participants to satisfy
such tax obligations in whole or in part by transferring shares of Common
Stock, including shares retained from the Award creating the tax obligation,
valued at their Fair Market Value. The Company is authorized to withhold from
any Award granted or to be settled, any delivery of Common Stock in connection
with an Award, any other payment relating to an Award or any payroll or other
payment to a Participant amounts of withholding and other taxes due or
potentially payable in connection with any transaction involving an Award, and
to take such other action as the Board may deem advisable to enable the Company
and Participants to satisfy obligations for the payment of withholding taxes
and other tax obligations relating to any Award.  This authority shall include authority to
withhold or receive Common Stock or other property and to make cash payments in
respect thereof in satisfaction of a Participant’s tax obligations.

 

j.              Conditions on Delivery of Stock.  The Company will not be obligated to deliver
any shares of Common Stock pursuant to the Plan or to remove restrictions from
shares previously delivered under the Plan until (i) all conditions of the
Award have been met or removed to the satisfaction of the Company, (ii) in
the opinion of the Company’s counsel, all other legal matters in connection
with the issuance and delivery of such shares have been satisfied, including
any applicable securities laws and any applicable stock exchange or stock
market rules and regulations, (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules or
regulations, and (iv) if the Company shall have more than twenty record
stockholders, until such time as the Common Stock shall be listed for trading
on the New York Stock Exchange or the NASDAQ Stock Exchange or a successor
thereto.

 

k.             Restrictive Legends.  In order to reflect the restrictions on
transfer of Common Stock issued pursuant to any Award, the stock certificates
for Common Stock will be endorsed with the following legend:

 

6

 

THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE FEDERAL SECURITIES LAWS OR THE SECURITIES LAWS OF ANY STATE.  SUCH SECURITIES MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT
UPON SUCH REGISTRATION OR UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER
AND/OR SUBMISSION TO THE COMPANY OF SUCH EVIDENCE AS MAY BE SATISFACTORY
TO THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION
OF THE SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE STATE SECURITIES LAWS AND
ANY RULES OR REGULATIONS PROMULGATED THEREUNDER.  ADDITIONALLY, THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO, AND SUCH SECURITIES MAY BE SOLD, TRANSFERRED,
OR OTHERWISE DISPOSED OF ONLY IN COMPLIANCE WITH, THE TERMS AND PROVISIONS OF
THE COMPANY’S 2008 LONG TERM INCENTIVE PLAN, AND IN THE ASSOCIATED AWARD
AGREEMENT. A COPY OF THE PLAN AND SUCH AWARD AGREEMENT MAY BE OBTAINED
FROM THE COMPANY.

 

l.              Acceleration.  The Board may at any time provide that any
Options shall become immediately exercisable in full or in part, that any
Restricted Stock Awards shall be free of some or all restrictions, or that any
other stock-based Awards may become exercisable in full or in part or free of
some or all restrictions or conditions, or otherwise realizable in full or in
part, as the case may be, despite the fact that the foregoing actions may (i) cause
the application of Sections 280G and 4999 of the Code if a change in control of
the Company occurs, or (ii) disqualify all or part of the Option as an
Incentive Stock Option; provided,
however, that no such
acceleration shall cause an Award to be subject to Section 409A that was
not previously subject to Section 409A or otherwise constitute an
impermissible acceleration or change in time and form of payment under Section 409A.  In the
event of the acceleration of the exercisability of one or more outstanding
Options, including pursuant to Section 7(e)(i), the Board may
provide, as a condition of full exercisability of any or all such Options, that
the Common Stock or other substituted consideration, including cash, as to
which exercisability has been accelerated shall be restricted and subject to
forfeiture back to the Company at the option of the Company at the cost thereof
upon termination of employment or other relationship, with the timing and other
terms of the vesting of such restricted stock or other consideration being
equivalent to the timing and other terms of the superseded exercise schedule of
the related Option.

 

8.                                       Miscellaneous.

 

a.             Definitions.

 

(i)            “Acquisition” means:  (x) the sale of the Company by merger in
which the stockholders of the Company in their capacity as such no longer own a
majority of the outstanding equity securities of the Company (or its
successor); (y) any sale of all or substantially all of the assets or
capital stock of the Company (other than in a spin-off or similar transaction);
or (z) any other acquisition of the business of the Company, as determined
by the Board.

 

(ii)           “Affiliate” of any party
hereto means any person controlling, controlled by or under common control with
such party.

 

7

 

(iii)          “Cause” means (x) as such
term is defined in any written employment, director or consulting agreement
between a Participant and the Company, and (y) if no such agreement is
effective as of the relevant time, (A) Participant’s repeated failure to
substantially perform the principal duties and obligations of Participant’s
position with the Company, as determined by a Disinterested Majority, (B) any
act of personal dishonesty by Participant in connection with his
responsibilities with respect to the Company, as determined by a Disinterested
Majority, (C) conviction of Participant of a felony or a crime of moral
turpitude, or conviction of any other crime that results in an adverse effect
on the Company’s business or business reputation (or a plea of nolo contendere to any of the foregoing), or (D) a
willful act by Participant, whether in connection with his employment or
otherwise, which constitutes misconduct and that can reasonably be expected to
have an adverse effect of the Company business or its business reputation.  “Cause” does not include Disability or death
of a Participant.

 

(iv)          “Code” means the Internal
Revenue Code of 1986, as amended, and any regulations promulgated thereunder.

 

(v)           “Company,” means CLST Holdings, Inc.,
a Delaware corporation, and for purposes of eligibility under the Plan, shall
include any present or future subsidiary corporations of CLST Holdings, Inc.,
as defined in Section 424(f) of the Code, and any present or future
parent corporation of CLST Holdings, Inc., as defined in Section 424(e) of
the Code.  For purposes of Awards other
than Incentive Stock Options, the term “Company” shall include any other
business venture in which the Company has a direct or indirect significant
interest, as determined by the Board in its sole discretion.

 

(vi)          “Date of Termination” means (i) as
such term is defined in any written employment or director or consulting
agreement between Participant and the Company, or (ii) if no such
agreement is effective as of the relevant time, (A) if the Participant’s
employment or director or consulting arrangement is terminated by his death,
the date of his death, (B) if the Participant’s employment or director or
consulting arrangement is terminated by a Disability the date the Disability is
determined or (C) if the Participant’s employment or director or
consulting arrangement is terminated for any other reason by the Participant or
the Company, the date on which a notice of termination is delivered by the
Company or the Participant to the other, or if a later effective date of
termination is set forth therein, the earlier of such stated effective date and
14 days after the date such notice of termination is delivered.

 

(vii)         “Disability” means (i) as
such term is defined in any written employment or director or consulting
agreement between a Participant and the Company, or (ii) if no such
agreement is effective as of the relevant time, the Participant’s inability to
perform the duties and obligations he was employed or engaged to fulfill and
discharge, with or without reasonable accommodation, for a period of 180
consecutive days due to mental or physical incapacity as determined by a
physician selected by the Participant or its insurers and acceptable to the
Participant or the Participant’s legal representative (such agreement as to
acceptability not to be withheld unreasonably).

 

8

 

(viii)        “Disinterested Majority” means a
majority of the Board after excluding a Participant whose actions or conduct is
being reviewed by the Board if such Participant is then a member of the Board,
and any member of such Participant’s family then serving on the Board.

 

(ix)           “employee” for purposes of
eligibility under the Plan (but not for purposes of Section 4(b))
shall include a person to whom an offer of employment has been extended by the
Company.

 

(x)            “Fair Market Value” of a
share of Common Stock on any day shall mean (i) if the Company’s Common
Stock is traded on a national securities exchange or is quoted on a market
established by the National Association of Securities Dealers, Inc.
Automated Quotation (“NASDAQ”), then the closing price; (ii) if the
Company’s Common Stock is not traded on a securities exchange or on a NASDAQ
market, but is traded in the over-the-counter market or on the “pink sheets”,
then the average of the closing bid and ask prices reported for such day; provided,
however, that if clauses (i) and (ii) of this subparagraph are
inapplicable, or if no trades have been made or no quotes are available for
such day, the Fair Market Value of a share of Common Stock shall be determined
by the Board through the reasonable application of a reasonable valuation
method that is consistent with applicable regulations adopted by the Treasury
Department relating to stock options and Section 409A of the Code.

 

(xi)           “Section 409A” means
section 409A of the Code and the regulations promulgated thereunder.

 

b.             Compliance With Laws and
Obligations.  The Company shall not
be obligated to issue or deliver Common Stock in connection with any Award or
take any other action under the Plan in a transaction subject to the
restriction requirements of the Securities Act of 1933, as amended, or any
other federal or state securities law, any requirement under any listing
agreement between the Company and any national securities exchange or automated
quotation system or any other law, regulation or contractual obligation of the
Company until the Company is satisfied that such laws, regulations, and other
obligations of the Company have been complied with in full.  Certificates representing shares of Common Stock
issued under the Plan will be subject to such stop-transfer orders and other
restrictions as may be applicable under such laws, regulations and other
obligations of the Company, including any requirement that a legend or legends
be placed thereon.

 

c.             Inability to Obtain Authority.
The inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such shares as to which such requisite authority shall not have been obtained.

 

d.             Investment Representations.
The Board may require any person receiving Awards pursuant to this Plan to
represent and warrant in writing that the person is acquiring the shares for
investment and without any present intention to sell or distribute such shares.

 

9

 

e.             No Right to Employment or Other
Status.  No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment, engagement
or any other relationship with the Company. 
The Company expressly reserves the right at any time to dismiss or
otherwise terminate its relationship with a Participant free from any liability
or claim under the Plan.

 

f.              No Rights as Stockholder.  Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder thereof.

 

g.             Ratification of Actions. By
accepting any Award or other benefit under the Plan, each Participant and each
person claiming under or through each Participant shall be conclusively deemed
to have indicated his or her acceptance and ratification of, and consent to,
any action taken under the Plan by the Board.

 

h.             Effective Date and Term of Plan.  The Plan shall become effective on the date
on which it is adopted by the Board.  No
Awards shall be granted under the Plan after the completion of ten years from
the date on which the Plan was adopted by the Board, but Awards previously
granted may extend beyond that date.

 

i.              Amendment of Plan.  The Board may amend, suspend, or terminate
the Plan or any portion thereof at any time,
provided that (1) such action does not cause an Award to be
subject to Section 409A that was not previously subject to Section 409A
or otherwise constitute an impermissible acceleration or change in time and
form of payment under Section 409A and (2) no amendment shall be
effective unless approved by the stockholders of the Company to the extent
stockholder approval is necessary to satisfy any applicable law or any
securities exchange listing requirements. 
At the time of such amendment, the Board shall determine, upon advice
from counsel, whether such amendment will be contingent on stockholder
approval..

 

j.              Nonexclusivity of the Plan.  Neither the adoption of the Plan by the Board
nor its submission to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board to adopt such
other compensatory arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific cases.

 

k.             No Fractional Shares.  No fractional shares of Common Stock shall be
issued or delivered pursuant to the Plan or any Award.  The Board shall determine whether cash, other
Awards, or other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.

 

l.              Code Section 409A.  The Plan is intended to comply with the
requirements of Section 409A, without triggering the imposition of any tax
penalty thereunder.  To the extent
necessary or advisable, the Board may amend the Plan or any Award to delete any
conflicting provisions and to add such other provisions as are required to
fully comply with the applicable provisions of Section 409A and any other
legislative or regulatory requirements applicable to the Plan.  Notwithstanding any provision of this Plan or
Award to the contrary, if all or any portion 

 

10

 

of the
payments and/or benefits under this or Award are determined to be “nonqualified
deferred compensation” subject to Section 409A, and the Company determines
that the holder of an Award is a “specified employee” as defined in Section 409A(a)(2)(B)(i) of
the Code and the final regulations promulgated thereunder (the “Treasury
Regulations”) and other guidance issued thereunder, then such payments and/or
benefits (or portion thereof) shall commence no earlier than the first day of
the seventh month following an Award holder’s termination of employment (with
the first such payment being a lump sum equal to the aggregate payments and/or
benefits the Award holder would have received during such six-month period if
no such payment delay had been imposed.) 
For purposes of this Section 8(l), “termination of employment”
shall mean Executive’s “separation from service”, as defined in Section 1.409A-1(h) of
the Treasury Regulations, including the default presumptions thereunder.  Wherever payments to which this paragraph
applies are to be made in installments, each such installment shall be deemed
to be a separate payment for purposes of Section 409A.

 

m.            Governing Law.  The provisions of the Plan and all Awards
made hereunder shall be governed by and interpreted in accordance with the laws
of Delaware, without regard to any applicable conflicts of law.

 

11

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