KonaRed Corp (Form: 8-K, Received: 01/10/2014 14:04:01)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) December 12, 2013

KONARED CORPORATION

(Exact name of registrant as specified in its charter)

Nevada	333-176429	99-0366971
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

2829 Ala Kalani Kaumaka St., Suite F-133, Koloa, HI 96756

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code 808.212.1553

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))

Item 1.01 Entry into a Material Definitive Agreement.

The disclosure under this item is included under item 5.02 and is incorporated by reference.

Item 3.02. Unregistered Sales of Equity Securities.

The disclosure under this item is included under item 5.02 and is incorporated by reference.

Item 5.02, Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers;

Effective December 12, 2013 our board of directors adopted and approved the 2013 Stock Incentive Plan. The purpose of the option plan is to enhance the long-term stockholder value of our company by offering opportunities to our directors, officers, key employees, independent contractors and consultants to acquire and maintain stock ownership in our company in order to give these persons the opportunity to participate in our company’s growth and success, and to encourage them to remain in the service of our company. A total of 11,000,000 shares of our common stock are available for issuance under the stock option plan.

For the full text of the stock option plan, please see Exhibit 99.1 to this current report on Form 8-K.

Pursuant to existing employment agreements, we agreed to grant stock options pursuant to our 2013 Stock Option Plan to our Chief Executive Officer and one of our directors for the option to purchase an aggregate of 2,000,000 shares of our common stock at an exercise price of $0.45 per share, exercisable until December 12, 2013. The options will vest immediately.

Effective December 12, 2013, we agreed to grant stock options pursuant to our 2013 Stock Option Plan to our Chief Financial Officer and director for the option to purchase an aggregate of 1,000,000 shares of our common stock at an exercise price of $0.74 per share, exercisable until December 12, 2013. The options will vest immediately.

In January, 2014, we agreed to grant stock options pursuant to our 2013 Stock Option Plan to one of our directors for the option to purchase an aggregate of 750,000 shares of our common stock at the market price on the date of issuance. The options will vest immediately.

We issued securities to three U.S. persons, each of whom was an accredited investor (as that term is defined in Rule 501 of Regulation D, promulgated by the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended , and in issuing these units to this investor we relied on the registration exemption provided for in Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended .

We issued securities to one non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933 (the “1933 Act”)) in offshore transactions relying on Regulation S and/or Section 4(a)(2) of the 1933 Act.

Item 9.01	Financial Statements and Exhibits.
10.1	Form of Stock Option Agreement (US persons)
10.2	Form of Stock Option Agreement (non-US persons)
99.1	2013 Stock Option Plan

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

KONARED CORPORATION

/s/ Shaun Roberts

Shaun Roberts

President, Chief Executive Officer and Director

January 10, 2014

THE OPTIONS REPRESENTED BY THIS AGREEMENT ARE NOT TRANSFERABLE. NEITHER THE OPTIONS NOR THE OPTIONED SHARES THAT MAY BE ISSUED UPON EXERCISE OF THE OPTIONS HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE AND HAVE BEEN OR WILL BE ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

STOCK OPTION AGREEMENT

(U.S. PERSONS)

This AGREEMENT is entered into as of the ________ day of __________________, 20__.

BETWEEN:

KONARED CORPORATION , a company incorporated pursuant to the laws of the state of Nevada with an office at .

(the “ Corporation ”)

AND:

, a businessperson with an address at

(the “ Optionee ”)

WHEREAS:

A. The Corporation’s board of directors (the “ Board ”) has approved and adopted a 2013 Stock Option Plan (the “ Plan ”), whereby the Board is authorized to grant stock options to purchase shares of common stock of the Corporation to the directors, officers, employees, independent contractors, and consultants of the Corporation or any Parent or Subsidiary of the Corporation (as defined herein);

B. The Optionee is a director, officer, employee, independent contractor or consultant of the Corporation, Parent or Subsidiary;

C. The Corporation wishes to grant stock options to purchase a total of __________ Optioned Shares (as defined herein) to the Optionee, as follows:

	Incentive Stock Options (as defined herein)
	Non-Qualified Stock Options (as defined herein)

D. The Plan was approved by the Corporation’s shareholders on _______________.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.	DEFINITIONS

1.1	In this Agreement, the following terms shall have the following meanings:

(a)	“ 1933 Act ” means the Securities Act of 1933, as amended;

(b)	“ Accredited Investor Questionnaire ” means a questionnaire substantially in the form of the Accredited Investor Questionnaire attached to this Agreement as Schedule B ;

(c)	“ Board ” has the meaning ascribed thereto in Recital A of this Agreement;

(d)	“ Code ” means the Internal Revenue Code of 1986;

(e)	“ Common Stock ” means the shares of common stock of the Corporation;

(f)	“ Corporation Information ” has the meaning ascribed thereto in Section 5(c) of this Agreement;

(g)	“ Exercise Price ” means $ per share;

(h)	“ Expiry Date ” means , 20;

(i)	“ Incentive Stock Options ” means any Options that meet all the requirements under Section 422 of the Code;

(j)	“ Non-Qualified Stock Options ” means any Options that do not qualify as Incentive Stock Options and, thus, do not meet the requirements under section 422 of the Code;

(k)

“ Notice of Exercise ” means a notice in writing addressed to the Corporation at its address first recited hereto (or such other address of which the Corporation may from time to time notify the Optionee in writing), substantially in the form attached as Schedule “D” hereto, which notice shall specify therein the number of Optioned Shares in respect of which the Options are being exercised and which notice shall be accompanied by an executed copy of (i) an Accredited Investor Questionnaire if the Optionee is at the time of exercise an accredited investor or, (ii) if the Optionee is not an accredited investor at the time of exercise, a Prospective Investor Suitability Questionnaire showing that the Optionee qualifies for an exemption from the registration requirements imposed by the 1933 Act;

(l)	“ Options ” means the right and option to purchase, from time to time, all, or any part of the Optioned Shares granted to the Optionee by the Corporation pursuant to Section 2.1 of this Agreement;

(m)	“ Optioned Shares ” means the shares of Common Stock that are issued pursuant to the exercise of the Options;

(n)	“ Parent ” means a company or other entity that owns at least 50% of the outstanding voting stock or voting power of the Corporation;

(o)	“ Plan ” has the meaning ascribed thereto in Recital A of this Agreement;

(p)	“ Prospective Investor Suitability Questionnaire ” means a questionnaire substantially in the form of the Prospective Investor Suitability Questionnaire attached to this Agreement as Schedule C ;

(q)	“ SEC ” means the United States Securities and Exchange Commission;

(r)	“ Securities ” means, collectively, the Options and the Optioned Shares;

(s)	“ Shareholders ” means holders of record of the shares of Common Stock;

(t)	“ Subsidiary ” means a company or other entity, at least 50% of the outstanding voting stock or voting power of which is beneficially owned, directly or indirectly, by the Corporation;

(u)	“ U.S. Person ” shall have the meaning ascribed thereto in Regulation S under the 1933 Act, and for the purpose of the Agreement includes any person in the United States; and

(v)	“ Vested Options ” means the Options that have vested in accordance with Section 2.2 of this Agreement.

1.2	Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Plan.

2.	THE OPTIONS

2.1	The Corporation hereby grants to the Optionee, on the terms and conditions set out in this Agreement and in the Plan, Options to purchase a total of Optioned Shares at the Exercise Price.

2.2	The Options will vest in accordance with Schedule “A” to this Agreement. The Options may be exercised immediately after vesting.

2.3	The Options shall, at 5:00 p.m. (Hawaii-Aleutian Standard Time) on the Expiry Date, expire and be of no further force or effect whatsoever.

2.4

The Corporation shall not be obligated to cause the issuance, transfer or delivery of a certificate or certificates representing Optioned Shares to the Optionee, until provision has been made by the Optionee, to the satisfaction of the Corporation, for the payment of the aggregate Exercise Price for all Optioned Shares for which the Options shall have been exercised, and for satisfaction of any tax withholding obligations associated with such exercise.

2.5

The Optionee shall have no rights whatsoever as a shareholder in respect of any of the Optioned Shares (including any right to receive dividends or other distribution therefrom or thereon) except in respect of which the Options have been properly exercised in accordance with the terms of this Agreement.

2.6	The Options will terminate in accordance with the provisions of the Plan.

2.7

Subject to the provisions of this Agreement and the Plan and subject to compliance with any applicable securities laws, the Options shall be exercisable, in full or in part, at any time after vesting, until termination. If less than all of the shares included in the vested portion of any Options are purchased, the remainder may be purchased at any subsequent time prior to the Expiry Date. Only whole shares may be issued pursuant to the exercise of any Options, and to the extent that any Option covers less than one share, it is not exercisable.

2.8	Each exercise of the Options shall be by means of delivery of a Notice of Exercise (which may be in the form attached hereto as Schedule D ) to the President of the Corporation at its principal executive office, specifying the number of Optioned Shares to be purchased and accompanied by:

(a)	payment in cash or by certified check or cashier’s check in the amount of the full Exercise Price for the Common Stock to be purchased, and

(b)	an executed copy of:

(i)	an Accredited Investor Questionnaire attached as Schedule B , dated the same date as the Notice of Exercise (if the Optionee is at the time of exercise an accredited investor); or

(ii)

a Prospective Investor Suitability Questionnaire , attached as Schedule C , dated the same date as the Notice of Exercise (if the Optionee is not an accredited investor at the time of exercise) showing that at the time of exercise the Optionee has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment in the Optioned Shares.

2.9	In addition to payment in cash or by certified check or cashier’s check and if agreed to in advance by the Corporation, the Optionee or transferee of the Options may pay for all or any portion of the aggregate Exercise Price by complying with one or more of the following alternatives:

(a)

by delivering to the Corporation shares of Common Stock previously held by the Optionee, or by the Corporation withholding shares of Common Stock otherwise deliverable pursuant to the exercise of the Options, which shares of Common Stock received or withheld shall have a fair market value at the date of exercise (as determined by the Board) equal to the aggregate exercise price to be paid by the Optionee upon such exercise; or

(b)	by complying with any other payment mechanism approved by the Board at the time of exercise.

2.10	It is a condition precedent to the exercise of any Options and the issuance of any Optioned Shares that the Optionee execute and/or deliver to the Corporation all documents and withholding taxes required in accordance with applicable laws, as determined by the Corporation in its sole discretion.

2.11	Nothing in this Agreement shall obligate the Optionee to purchase any Optioned Shares except those Optioned Shares in respect of which the Optionee shall have exercised the Options in the manner provided in this Agreement or the Plan.

2.12	Reference is made to the Plan for particulars of the rights and obligations of the Optionee and the Corporation in respect of:

(a)	the terms and conditions on which the Options are granted except to the extent set forth herein; and,

(b)	a consolidation or subdivision of the Corporation’s share capital or a corporate reorganization;

all to the same effect as if the provisions of the Plan were set out in this Agreement and to all of which the Optionee assents. A copy of the Plan is available to Optionee at no charge, at the Corporation’s principal executive office. Any provision of this Agreement that is inconsistent with the Plan shall be considered void and replaced with the applicable provision of the Plan. The Corporation may modify, extend or renew this Agreement or the Options represented hereby or accept the surrender thereof (to the extent not previously exercised) and authorize the granting of a new option in substitution therefore (to the extent not previously exercised), subject at all times to the Plan, the applicable rules of any applicable regulatory authority or stock exchange, and any applicable laws. Notwithstanding the foregoing provisions of this Section 2.12 , the Corporation shall not have the right to make any modification which would materially alter the terms of the Options to the Optionee’s detriment or materially impair any rights of the Optionee hereunder without the consent of the Optionee.

2.13

By accepting the Options, the Optionee represents and agrees that none of the Optioned Shares purchased upon exercise of the Options will be distributed in violation of applicable federal and state laws and regulations. The Optionee further represents and agrees to provide the Corporation with any other document reasonably requested by the Corporation or the Corporation’s Counsel.

3.	DOCUMENTS REQUIRED FROM OPTIONEE

3.1	The Optionee must complete, sign and return to the Corporation:

(a)	an executed copy of this Agreement; and

(b)	one of the two questionnaires in the forms attached hereto as Schedule B and Schedule C , whichever applies.

3.2	The Optionee shall complete, sign and return to the Corporation as soon as possible, on request by the Corporation, any documents, questionnaires, notices and undertakings as may be required by regulatory authorities, and applicable law.

4.	SUBJECT TO STOCK OPTION PLAN

The terms of the Options will be subject to the Plan, as may from time to time be amended, and any inconsistencies between this Agreement and the Plan, as the same may be from time to time amended, shall be governed by the provisions of the Plan. A copy of the Plan will be delivered to the Optionee, and will be available for inspection at the principal offices of the Corporation.

5.	ACKNOWLEDGEMENTS OF THE OPTIONEE

The Optionee acknowledges and agrees that:

(a)

the Securities have not been registered under the 1933 Act or under any state securities or “blue sky” laws of any state of the United States, and are being offered only in a transaction not involving any public offering within the meaning of the 1933 Act, and, unless so registered, may not be offered or sold in the United States or to U.S. Persons, except pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act, and in each case only in accordance with applicable state securities laws;

(b)

the Corporation will refuse to register any transfer of the Securities not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act;

(c)

the decision to execute this Agreement and acquire the Securities hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Corporation and such decision is based solely upon a review of publicly available information regarding the Corporation that is available on the website of the SEC at www.sec.gov (the “Corporation Information” );

(d)	there are risks associated with an investment in the Securities;

(e)

the Optionee and the Optionee’s advisor(s) (if applicable) have had a reasonable opportunity to ask questions of and receive answers from the Corporation in connection with the distribution of the Securities hereunder, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information about the Corporation;

(f)

the books and records of the Corporation were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by the Optionee during reasonable business hours at its principal place of business, and all documents, records and books in connection with the distribution of the Securities hereunder have been made available for inspection by the Optionee, the Optionee’s attorney and/or advisor(s) (if applicable);

(g)

the Corporation, its officers, directors, counsel and agents are entitled to rely upon the truth and accuracy of the acknowledgements, representations, warranties, statements, answers, covenants and agreements contained in this Agreement and agrees that if any of such acknowledgements, representations, warranties, statements, answers, covenants, and agreements should become, by the passage of time after the date of this Agreement, no longer accurate or should be breached, the Optionee shall promptly notify the Corporation, and the Optionee will hold harmless the Corporation from any loss or damage it may suffer as a result of the Optionee’s failure to correctly complete or comply with the terms of this Agreement;

(h)

the Optionee has been advised to consult its own legal, tax and other advisors with respect to the merits and risks regarding the exercise of the Options and the issuance of the Optioned Shares and with respect to applicable resale restrictions and it is solely responsible (and the Corporation is in not any way responsible) for compliance with applicable resale restrictions;

(i)

the Optionee acknowledges that if the Options qualify as Incentive Stock Options, there may be no regular federal income tax liability upon the exercise of the Options, although the excess, if any, of the fair market value of such Optioned Shares on the date of exercise over the Exercise Price may be treated as a tax preference item for federal alternative minimum tax purposes and may subject the Optionee to the alternative minimum tax in the year of exercise;

(j)

the Optionee will indemnify and hold harmless the Corporation and, where applicable, its directors, officers, employees, agents, advisors and shareholders, from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of the Optionee contained herein or in any document furnished by the Optionee to the Corporation in connection herewith being untrue in any material respect or any breach or failure by the Optionee to comply with any covenant or agreement made by the Optionee to the Corporation in connection therewith;

(k)

the Securities are not listed on any stock exchange or automated dealer quotation system and no representation has been made to the Optionee that any of the Securities will become listed on any stock exchange or automated dealer quotation system, except that currently certain market makers make market in the shares of the Corporation’s common stock on the OTCQB operated by the OTC Markets Group;

(l)	neither the SEC nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of the Securities;

(m)	no documents in connection with this Agreement have been reviewed by the SEC or any state securities administrators;

(n)	there is no government or other insurance covering any of the Securities; and

(o)	this Agreement is not enforceable by the Optionee unless it has been accepted by the Corporation.

6.	REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OPTIONEE

The Optionee hereby represents and warrants to and covenants with the Corporation (which representations, warranties and covenants shall survive the closing) that:

(a)	the Optinee is a bona fide director, officer, employee, independent contractor or consultant of the Corporation, Parent or Subsidiary;

(b)	the Optionee is a U.S. Person;

(c)	the Optionee has received and carefully read this Agreement and the Corporation Information;

(d)	the Optionee has received a brief description of the Securities and the Optionee understands that the proceeds from the exercise of the Options will be used by the Corporation as working capital for general corporate purposes;

(e)	the Optionee has duly executed and delivered this Agreement and it constitutes a valid and binding agreement of the Optionee enforceable against the Optionee in accordance with its terms;

(f)	the Optionee has concurrently executed and delivered the questionnaire in the form attached as Schedule B or Schedule C and the representations and warranties contained in such questionnaire are true and correct;

(g)

the Optionee has the legal capacity and competence to enter into and execute this Agreement and to take all actions required pursuant hereto and, if the Optionee is a corporation, it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Agreement on behalf of the Optionee;

(h)	the Optionee:

(i)	has adequate net worth and means of providing for its current financial needs and possible personal contingencies,

(ii)	has no need for liquidity in this investment, and

(iii)

is able to bear the economic risks of an investment in the Securities for an indefinite period of time, and can afford the complete loss of such investment;

(i)

the Optionee has the requisite knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Securities and the Corporation, and the Optionee is providing evidence of such knowledge and experience in these matters through the information requested in this Agreement;

(j)

the Optionee is aware that an investment in the Corporation is speculative and involves certain risks, including the possible loss of the investment, and the Optionee has carefully read and considered the matters set forth under the caption “Risk Factors” appearing in the Corporation’s various disclosure documents, filed with the SEC;

(k)

the entering into of this Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to, or, if applicable, the constating documents of, the Optionee, or of any agreement, written or oral, to which the Optionee may be a party or by which the Optionee is or may be bound;

(l)

the Optionee is purchasing the Securities for its own account for investment purposes only and not for the account of any other person and not for distribution, assignment or resale to others, and no other person has a direct or indirect beneficial interest is such Securities, and the Optionee has not subdivided his interest in the Securities with any other person;

(m)	the Optionee is not an underwriter of, or dealer in, the shares of the Corporation’s common stock, nor is the Optionee participating, pursuant to a contractual agreement or otherwise, in the distribution of the Securities;

(n)

the Optionee understands and agrees that the Corporation and others will rely upon the truth and accuracy of the acknowledgements, representations, statements, answers and agreements contained in this Agreement, and agrees that if any of such acknowledgements, representations, statements, answers and agreements are no longer accurate or have been breached, the Optionee shall promptly notify the Corporation;

(o)

the Optionee has made an independent examination and investigation of an investment in the Securities and the Corporation and has depended on the advice of its legal and financial advisors and agrees that the Corporation will not be responsible in anyway whatsoever for the Optionee’s decision to acquire the Securities;

(p)

the Optionee is not aware of any advertisement of any of the Securities and is not acquiring the Securities as a result of any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; and,

(q)	no person has made to the Optionee any written or oral representations:

(i)	that any person will resell or repurchase any of the Securities,

(ii)	that any person will refund the purchase price of any of the Securities,

(iii)

as to the future price or value of any of the Securities, or

(iv)

that any of the Securities will be listed and posted for trading on any stock exchange or automated dealer quotation system or that application has been made to list and post any of the Securities of the Corporation on any stock exchange or automated dealer quotation system, except that currently certain market makers make market in the shares of the Corporation’s common stock on the OTCQB operated by the OTC Markets Group.

7.	ACKNOWLEDGEMENT AND WAIVER

The Optionee hereby waives, to the fullest extent permitted by law, any rights of withdrawal, rescission or compensation for damages to which the Optionee might be entitled in connection with the distribution of any of the Securities.

8.	PROFESSIONAL ADVICE

The acceptance of the Options and the sale of Common Stock issued pursuant to the exercise of Options may have consequences under federal and state tax and securities laws which may vary depending upon the individual circumstances of the Optionee. Accordingly, the Optionee acknowledges that he or she has been advised to consult his or her personal legal and tax advisor in connection with this Agreement and his or her dealings with respect to Options. Without limiting other matters to be considered with the assistance of the Optionee’s professional advisors, the Optionee should consider:

(a)	whether upon the exercise of Options, the Optionee will file an election with the Internal Revenue Service pursuant to Section 83(b) of the Code and the implications of alternative minimum tax pursuant to the Code;

(b)	the merits and risks of an investment in the underlying Optioned Shares; and

(c)	any resale restrictions that might apply under applicable securities laws.

9.	LEGENDING OF SUBJECT SECURITIES

9.1	The Optionee hereby acknowledges that that upon the issuance thereof, and until such time as the same is no longer required under the applicable securities laws and regulations, the certificates representing any of the Optioned Shares will bear a legend in substantially the following form:

NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

9.2	The Optionee hereby acknowledges and agrees to the Corporation making a notation on its records or giving instructions to the registrar and transfer agent of the Corporation in order to implement the restrictions on transfer set forth and described in this Agreement.

10.	RESALE RESTRICTIONS

This Agreement and the Options represented hereby are not transferable. Optioned Shares received upon exercise of any Options will be subject to resale restrictions contained in the securities legislation applicable to the Corporation and the Optionee. The Optionee acknowledges and agrees that the Optionee is solely responsible (and the Corporation is not in any way responsible) for compliance with applicable resale restrictions.

11.	NO EMPLOYMENT RELATIONSHIP

The grant of an Option shall in no way constitute any form of agreement or understanding binding on the Corporation or any related company, express or implied, that the Corporation or any related company will employ or contract with an Optionee, for any length of time, nor shall it interfere in any way with the Corporation’s or, where applicable, a related company’s right to terminate Optionee’s employment at any time, which right is hereby reserved.

12.	GOVERNING LAW

This Agreement is governed by the laws of the State of Delaware and the federal laws of the United States of America as applicable therein. The Optionee irrevocably attorns to the jurisdiction of the courts of the State of Washington.

13.

COSTS

The Optionee acknowledges and agrees that all costs and expenses incurred by the Optionee (including any fees and disbursements of any special counsel retained by the Optionee) relating to the acquisition of the Securities shall be borne by the Optionee.

14.

SURVIVAL

This Agreement, including without limitation the representations, warranties and covenants contained herein, shall survive and continue in full force and effect and be binding upon the parties hereto notwithstanding the completion of the purchase of the shares underlying the Options by the Optionee pursuant hereto.

15.	ASSIGNMENT

This Agreement is not transferable or assignable.

16.

CURRENCY

Unless explicitly stated otherwise, all funds in this Agreement are stated in United States dollars.

17.	SEVERABILITY

The invalidity or unenforceability of any particular provision of this Agreement shall not affect or limit the validity or enforceability of the remaining provisions of this Agreement.

18.	COUNTERPARTS AND ELECTRONIC MEANS

This Agreement may be executed in several counterparts, each of which will be deemed to be an original and all of which will together constitute one and the same instrument. Delivery of an executed copy of this Agreement by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery of this Agreement as of the date first above written.

19.	ENTIRE AGREEMENT

This Agreement is the only agreement between the Optionee and the Corporation with respect to the Options, and this Agreement and the Plan, once approved, supersede all prior and contemporaneous oral and written statements and representations and contain the entire agreement between the parties with respect to the Options.

IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of the date first above written.

KONARED CORPORATION

Per:

Authorized Signatory

WITNESSED BY:	)
	)
	)
Name	)
	)
Address	)	[NAME OF OPTIONEE]
	)
	)
Occupation	)

SCHEDULE A

VESTING SCHEDULE

Incentive Stock Options

Date	Number of Options to Vest

Non-Qualified Stock Options

Date	Number of Options to Vest

SCHEDULE B

ACCREDITED INVESTOR QUESTIONNAIRE

All capitalized terms herein, unless otherwise defined, have the meanings ascribed thereto in the Stock Option Agreement.

1. The Optionee covenants, represents and warrants to the Corporation that he or she satisfies one or more of the categories of “Accredited Investors”, as defined by Regulation D promulgated under the Securities Act of 1933 (the “Securities Act”), as indicated below: (Please initial in the space provide those categories, if any, of an “Accredited Investor” which the Optionee satisfies)

	Category 1	An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Securities, with total assets in excess of $5,000,000;
	Category 2	A natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000. For purposes of this Category 2, "net worth" means the excess of total assets at fair market value (including personal and real property, but excluding the estimated fair market value of a person's primary home) over total liabilities. Total liabilities excludes any mortgage on the primary home in an amount of up to the home's estimated fair market value as long as the mortgage was incurred more than 60 days before the Securities are acquired, but includes (i) any mortgage amount in excess of the home's fair market value and (ii) any mortgage amount that was borrowed during the 60-day period before the date of the acquisition of Securities for the purpose of investing in the Securities;
	Category 3	A natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
	Category 4	A “bank” as defined under Section (3)(a)(2) of the Securities Act or savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 (United States); an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Corporation Act of 1940 (United States) or a business development company as defined in Section 2(a)(48) of such Act; a Small Business Investment Corporation licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958 (United States); a plan with total assets in excess of $5,000,000 established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (United States) whose investment decisions are made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors;
	Category 5	A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940 (United States);
	Category 6	A director or executive officer of the Corporation;

B-1

	Category 7	A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the Securities Act;
	Category 8	An entity in which all of the equity owners satisfy the requirements of one or more of the foregoing categories;

2. Note that the Optionee claiming to satisfy one of the above categories of Accredited Investor may be required to supply the Corporation with a balance sheet, prior years’ federal income tax returns or other appropriate documentation to verify and substantiate the Optionee’s status as an Accredited Investor.

3. If the Optionee is an entity which initialled the last category in reliance upon the Accredited Investor categories above, state the name, address, total personal income from all sources for the previous calendar year, and the net worth (exclusive of home, home furnishings and personal automobiles) for each equity owner of the said entity:

4. All information contained in this Questionnaire will be treated as confidential. However, by signing and returning this Questionnaire, the Optionee agrees that, if necessary, this Questionnaire may be presented to such parties as the Corporation deems appropriate to establish the availability, under the Securities Act or applicable state securities law, of exemption from registration in connection with the issuance of the Securities hereunder.

5. The Optionee hereby certifies that the information contained in this Questionnaire is complete and accurate and the Optionee will notify the Corporation promptly of any change in any such information.

IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the _______ day of __________________, 20__.

Signature

Print or Type Name

Social Security/Tax I.D. No.

B-2

SCHEDULE C

PROSPECTIVE INVESTOR SUITABILITY QUESTIONNAIRE

All capitalized terms herein, unless otherwise defined, have the meanings ascribed thereto in the Stock Option Agreement.

The purpose of this Questionnaire is to assure the Corporation that the Optionee will meet the standards imposed by the Securities Act of 1933 (the “Securities Act”) and the appropriate exemptions of applicable state securities laws. The Corporation will rely on the information contained in this Questionnaire for the purposes of such determination. The Option and the Optioned Shares (together, the “Securities”) will not be registered under the Securities Act and has been issued in reliance upon the exemption from registration afforded by Section 3(b) and/or Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. This Questionnaire is not an offer of any securities of the Corporation in any state other than those specifically authorized by the Corporation.

Please attach additional pages if necessary to answer any question fully.

REPRESENTATIONS OF OPTIONEE

This item is presented in alternative form. Please initial in the space provided the applicable alternative.

_____	ALTERNATIVE ONE:	The Optionee covenants, represents and warrants to the Corporation that he or she has such knowledge and experience in financial and business matters that he or she is capable of evaluating the relative merits and risks of an investment in the Securities and Corporation and is not utilizing a purchaser representative in connection with evaluating such merits and risks. The Optionee is providing evidence of its knowledge and experience in these matters through the information requested below in this Questionnaire.
_____	ALTERNATIVE TWO:	The Optionee covenants, represents and warrants to the Corporation that he or she has chosen to use the services of a purchaser representative acceptable to the Optionee in connection with the Optionee’s acquisition of the Securities. The Optionee hereby acknowledges that the person named below is his or her purchaser representative who will assist and advise the Optionee in evaluating the merits and risks of an investment in the Securities and the Corporation and affirms that such purchaser representative has previously disclosed in writing any material relationship that exists between the purchaser representative (or its affiliates) and the Corporation (or its affiliates) that is mutually understood to be contemplated, or that has existed at any time during the previous two years, and any compensation received or to be received as a result of such relationship.

(name of Purchaser Representative)

(address of Purchaser Representative)

If the Optionee utilizes a purchaser representative, this Questionnaire must be accompanied by a completed and signed purchaser representative Questionnaire, a copy of which can be obtained from the Corporation upon request.

FOR INDIVIDUAL INVESTORS

1.	Name:
2.	Residential Address &
	Telephone Number:
3.	Length of Residence in State of Residence:
4.	U.S. Citizen:	[ ] Yes [ ] No
5.	Social Security Number:
6.	Business Address &
	Telephone Number:
7.	Preferred Mailing Address:	[ ] Residence [ ] Business
8.	Email and fax number:
9.	Date of Birth:
10.	Employer and Position:
11.	Name of Business:

12.	Business or Professional Education and Degrees:

School	Degree	Year Received

13.	Prior Employment (last 5 years):

Employer	Nature of Duties	Dates of Employment

C-1

FOR SUBSCRIBERS THAT ARE CORPORATIONS, PARTNERSHIPS, TRUSTS OR OTHER ENTITIES

1.	Name:
2.	Address of Principal Office:
3.	Telephone:
4.	Date and State of Incorporation or Organization:
5.	Taxpayer Identification Number:
6.	Nature of Business:
7.	Individual Authorized to Execute this Questionnaire
	(indicate name and office):

FOR ALL SUBSCRIBERS

Relationship to the Company, if any:

1.	Is the Subscriber an officer or director of a publicly-held company? [ ]Yes [ ]No

If yes, specify company:

2.	Does the Subscriber beneficially own 10% or more of the voting securities of a publicly-held company?

[ ]Yes [ ]No

If yes, specify company:

3.	Within the last five years, has the Subscriber personally invested in investments sold by means of private placements in reliance on exemptions from registration under the 1933 Act and State securities laws?

[ ]Yes [ ]No

C-2

4.	Prior investments by Subscriber which were purchased in reliance on exemptions from registration under the 1933 Act and State securities laws (initial the highest number applicable):

Amount (Cumulative)

Real Estate
None	Up to $50,000	$50,000 to $250,000	Over $250,000

Securities
None	Up to $50,000	$50,000 to $250,000	Over $250,000
Other
None	Up to $50,000	$50,000 to $250,000	Over $250,000

5.	Does the Subscriber consider itself to be an experienced and sophisticated investor? [ ]Yes [ ]No

If so, please provide information of investment sophistication and/or experience:

Does the Subscriber, or any person authorized to execute this Questionnaire, consider itself to have such knowledge of the Company and its business and such experience in financial and business matters to enable it to evaluate the merits and risks of an investment in the Shares and the Company, should the Subscriber be given an opportunity to so invest? [ ]Yes [ ]No

7.	If the Subscriber is an individual, please indicate the Subscriber’s and his/her spouse’s combined gross income during the preceding two years (initial the highest number applicable):

	2013			2012
	Less than $75,000			Less than $75,000
	$75,001 to $100,000			$75,001 to $100,000
	$100,001 to $200,000			$100,001 to $200,000
	$200,001 to $300,000			$200,001 to $300,000
	Over $300,000			Over $300,000

If the Subscriber is an individual, please indicate the Subscriber’s and his/her spouse’s combined estimated net worth (exclusive of home, home furnishings and personal automobiles) (initial the highest number applicable):

	Less than $100,000			$300,0001 to $500,000
	$100,001 to $200,000			$500,001 to $1,000,000
	$200,001 to $300,000			Over $1,000,000

8.	Regardless of the amount of the proposed investment, will the Subscriber be able to bear the economic risk of its investment in this transaction? [ ]Yes [ ]No

C-3

9.	Please provide answers to the following questions:

(a)	State total assets of the Subscriber, including cash, stocks and bonds, automobiles, real estate, and any other assets:
	$
(b)	State total liabilities of the Subscriber including real estate indebtedness, accounts payable, taxes payable and any other liabilities:
	$
(c)	State annual income of the Subscriber including salary, securities income, rental income and any other income:
	$
(d)	State annual expenses of the Subscriber, excluding ordinary living expenses, including real estate payments, rent, property taxes and other expenses:
	$
(e)	Does the Subscriber expect the amount of its assets, liabilities, income and expenses, as stated above, to be subject to significant change in the future: [ ]Yes [ ]No

If yes, explain:

10.

The Undersigned further acknowledges being furnished with the following specified information a reasonable time prior to purchase of the securities: a brief description of the securities being offered, the use of proceeds from the offering, and any material changes in the Company’s affairs that are not disclosed in the documents furnished; and that at a reasonable time prior to the purchase of the securities, it has been afforded the opportunity to ask questions and receive answers concerning the terms and conditions of the offering and to obtain any additional information which the Company possesses or can acquire without unreasonable effort or expense that is necessary to verify the accuracy of the information furnished.

14.

C-4

The Undersigned agrees that the securities purchased will be subject to resale restrictions under the laws of the United States and that a restrictive legend will be placed on certificates representing such securities.

The Subscriber hereby certifies that the information contained in this Questionnaire is complete and accurate and the Subscriber will notify the Company promptly of any change in any such information. If this Questionnaire is being completed on behalf of a corporation, partnership, trust or estate, the person executing on behalf of the Subscriber represents that it has the authority to execute and deliver this Questionnaire on behalf of such entity.

IN WITNESS WHEREOF, the undersigned has executed this Questionnaire as of the ________ day of __________________, 201__.

If a Corporation, Partnership or Other Entity:		If an Individual:

Print of Type Name of Entity		Signature

Signature of Authorized Signatory		Print or Type Name

Type of Entity		Social Security/Tax I.D. No.

C-5

SCHEDULE D

NOTICE OF EXERCISE

TO: KonaRed Corporation

2829 Ala Kalani Kaumaka St., Suite F-133

KOLOA, HI 96756

This Notice of Exercise shall constitute a proper Notice of Exercise pursuant to section 2.8 of the Stock Option Agreement dated , 20 (the “Agreement” ), between KonaRed Corporation (the “Corporation” ) and the undersigned. The undersigned hereby elects to exercise the Optionee’s options to purchase ____________________ shares of the common stock of the Corporation at a price of $ per share, for aggregate consideration of $____________, on the terms and conditions set forth in the Agreement. Such aggregate consideration, in the form specified in section 2.8 of the Agreement, accompanies this notice.

The Optionee hereby represents and warrants to the Corporation that all representations and warranties set out in the Agreement are true as of the date of the exercise of the options under the Agreement.

The Optionee hereby further represents and warrants to the Corporation that the shares are being purchased only for investment and without intention to sell or distribute such shares.

The Optionee hereby directs the Corporation to issue, register and deliver the certificates representing the shares as follows:

Registration Information:		Delivery Instructions:

Name to appear on certificates		Name

Address		Address

City, State, and Zip Code

		Telephone Number

DATED at _____________________________, the _______ day of______________, _______.

Signature

(Name and, if applicable, Office)

(Address)

(City, State, and Zip Code)

Fax Number or E-mail Address

Social Security/Tax I.D. No.

THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

STOCK OPTION AGREEMENT

(NON U.S. PERSONS)

THIS AGREEMENT is entered into as of the ________ day of __________________, 2013.

BETWEEN:

KONARED CORPORATION , a company incorporated pursuant to the laws of the state of Nevada with an office at 2829 Ala Kalani Kaumaka St., Suite F-133, KOLOA, HI 96756.

(the “ Corporation ”)

AND:

___________, a businessperson with an address at _______________

(the “ Optionee ”)

WHEREAS:

B. The Optionee is a director, officer, employee, independent contractor or consultant of the Corporation, Parent or Subsidiary;

C. The Corporation wishes to grant stock options to purchase a total of __________ Optioned Shares (as defined herein) to the Optionee, as follows:

	Incentive Stock Options (as defined herein)
	Non-Qualified Stock Options (as defined herein)

D. The Plan was approved by the Corporation’s shareholders on , 2013.

1. DEFINITIONS

1.1 In this Agreement, the following terms shall have the following meanings:

(a)	“ Common Stock ” means the shares of common stock of the Corporation;

(b)	“ Exercise Price ” means $ per share;

(c)	“ Expiry Date ” means ;

(d)

(e)	“ Options ” means the irrevocable right and option to purchase, from time to time, all, or any part of the Optioned Shares granted to the Optionee by the Corporation pursuant to Section 2.1 of this Agreement;

(f)	“ Optioned Shares ” means the shares of Common Stock that are issued pursuant to the exercise of the Options;

(g)	“ Securities ” means, collectively, the Options and the Optioned Shares;

(h)	“ Shareholders ” means holders of record of the shares of Common Stock;

(i)	“ U.S. Person ” shall have the meaning ascribed thereto in Regulation S under the 1933 Act, and for the purpose of the Agreement includes any person in the United States; and

(j)	“ Vested Options ” means the Options that have vested in accordance with Section 2.2 of this Agreement.

1.2 Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Plan.

2. THE OPTIONS

2.1	The Corporation hereby grants to the Optionee, on the terms and conditions set out in this Agreement and in the Plan, Options to purchase a total of __________ Optioned Shares at the Exercise Price.

2.2	The Options vest in accordance with Schedule A to this Agreement. The Options may be exercised immediately after vesting.

2.3	The Options shall, at 5:00 p.m. (Hawaii-Aleutian Standard Time) on the Expiry Date, expire and be of no further force or effect whatsoever.

2.4

2.5

2.6	The Options will terminate in accordance with the provisions of the Plan.

2.7

Subject to the provisions of this Agreement and the Plan and subject to compliance with any applicable securities laws, the Options shall be exercisable, in full or in part, at any time after vesting, until termination; provided, however, that if the Optionee is subject to the reporting and liability provisions of Section 16 of the Securities Exchange Act of 1934 , as amended , with respect to the Common Stock, the Optionee shall be precluded from selling, transferring or otherwise disposing of any Common Stock underlying any of the Options during the six months immediately following the grant of the Options. If less than all of the shares included in the vested portion of any Options are purchased, the remainder may be purchased at any subsequent time prior to the Expiry Date. Only whole shares may be issued pursuant to the exercise of any Options, and to the extent that any Option covers less than one share, it is not exercisable.

2.8

Each exercise of the Options shall be by means of delivery of a Notice of Exercise (which may be in the form attached hereto as Schedule B ) to the President of the Corporation at its principal executive office, specifying the number of Optioned Shares to be purchased and accompanied by payment in cash or by certified check or cashier’s check in the amount of the full Exercise Price for the Common Stock to be purchased. In addition to payment in cash or by certified check or cashier’s check and if agreed to in advance by the Corporation, the Optionee or transferee of the Options may pay for all or any portion of the aggregate Exercise Price by complying with one or more of the following alternatives:

(a)

(b)	by complying with any other payment mechanism approved by the Board at the time of exercise.

2.9	It is a condition precedent to the issuance of Optioned Shares that the Optionee execute and/or deliver to the Corporation all documents and withholding taxes required in accordance with applicable laws.

2.10	Nothing in this Agreement shall obligate the Optionee to purchase any Optioned Shares except those Optioned Shares in respect of which the Optionee shall have exercised the Options in the manner provided in this Agreement or the Plan.

2.11	Reference is made to the Plan for particulars of the rights and obligations of the Optionee and the Corporation in respect of:

(a)	the terms and conditions on which the Options are granted; and,

(b)	a consolidation or subdivision of the Corporation’s share capital or an amalgamation or merger;

all to the same effect as if the provisions of the Plan were set out in this Agreement and to all of which the Optionee assents.

2.12

3. DOCUMENTS REQUIRED FROM OPTIONEE

3.1	The Optionee must complete, sign and return an executed copy of this Agreement to the Corporation, including a duly signed Canadian Accredited Investor Certificate attached hereto as Schedule C .

3.2	The Optionee shall complete, sign and return to the Corporation as soon as possible, on request by the Corporation, any documents, questionnaires, notices and undertakings as may be required by regulatory authorities, and applicable law.

4. SUBJECT TO STOCK OPTION PLAN

5. ACKNOWLEDGEMENTS OF THE OPTIONEE

The Optionee acknowledges and agrees that:

(a)

none of the Options or the Optioned Shares have been registered under the 1933 Act or under any state securities or “blue sky” laws of any state of the United States, and, unless so registered, may not be offered or sold in the United States or, directly or indirectly, to U.S. Persons, except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case only in accordance with applicable state securities laws;

(b)	the Corporation has not undertaken, and will have no obligation, to register any of the Securities under the 1933 Act;

(c)

the decision to execute this Agreement and acquire the Securities hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Corporation and such decision is based solely upon a review of publicly available information regarding the Corporation that is available on the website of the United States Securities and Exchange Commission (the “ SEC ”) at www.sec.gov (the “ Company Information ”);

(d)	no securities commission or similar regulatory authority has reviewed or passed on the merits of the Securities;

(e)	there is no government or other insurance covering the Securities;

(f)	there are risks associated with an investment in the Securities;

(g)

(h)

(i)

the Corporation and others are entitled to rely upon the truth and accuracy of the acknowledgements, representations, warranties, statements, covenants and agreements contained in this Agreement and agrees that if any of such acknowledgements, representations, warranties, statements, covenants, and agreements are no longer accurate or have been breached, the Optionee shall promptly notify the Corporation, and the Optionee will hold harmless the Corporation from any loss or damage it may suffer as a result of the Optionee’s failure to correctly complete this Agreement;

(j)

the Corporation has advised the Optionee that the Corporation is relying on an exemption from the registration and prospectus requirements of applicable securities laws and, as a consequence of acquiring the Securities pursuant to this exemption, certain protections, rights and remedies provided by the applicable securities laws, including statutory rights of rescission or damages, will not be available to the Optionee;

(k)

(l)

none of the Securities are listed on any stock exchange or automated dealer quotation system and no representation has been made to the Optionee that any of the Securities will become listed on any stock exchange or automated dealer quotation system; except that currently certain market makers make market in the Common Stock on the OTC Bulletin Board;

(m)

in addition to resale restrictions imposed under U.S. securities laws, there are additional restrictions on the Optionee’s ability to resell the Securities under Canadian securities laws and National Instrument 45-106 Prospectus and Registration Exemptions as adopted by the Canadian Securities Administrators;

(n)

the Corporation will refuse to register any transfer of the Securities not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from the registration requirements of the 1933 Act and in accordance with applicable state and provincial securities laws;

(o)

the statutory and regulatory basis for the exemption claimed for the offer of the Securities, although in technical compliance with Regulation S, would not be available if the offering is part of a plan or scheme to evade the registration provisions of the 1933 Act or any applicable state and provincial securities laws;

(p)

the Optionee has been advised to consult the Optionee’s own legal, tax and other advisors with respect to the merits and risks of an investment in the Securities and with respect to applicable resale restrictions, and it is solely responsible (and the Corporation is not in any way responsible) for compliance with:

(i)	any applicable laws of the jurisdiction in which the Optionee is resident in connection with the distribution of the Securities hereunder, and

(ii)	applicable resale restrictions; and

(q)	this Agreement is not enforceable by the Optionee unless it has been accepted by the Corporation.

6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OPTIONEE

The Optionee hereby represents and warrants to and covenants with the Corporation (which representations, warranties and covenants shall survive the closing) that:

(a)	the Optionee is a director, officer, employee or consultant of the Corporation or subsidiary of the Corporation;

(b)	if an employee or consultant of the Corporation or subsidiary of the Corporation, the Optionee is a bona fide employee or consultant of the Corporation or subsidiary of the Corporation;

(c)	the Optionee has the legal capacity and competence to enter into and execute this Agreement and to take all actions required pursuant hereto;

(d)	the Optionee has received and carefully read this Agreement and the Company Information;

(e)	the Optionee has duly executed and delivered this Agreement and it constitutes a valid and binding agreement of the Optionee enforceable against the Optionee in accordance with its terms;

(f)	the Optionee is not acquiring the Securities for the account or benefit of, directly or indirectly, any U.S. Person;

(g)	the Optionee is not a U.S. Person;

(h)	the Optionee is resident in the jurisdiction set out on page 1 of this Agreement;

(i)	the Optionee:

(i)	is knowledgeable of, or has been independently advised as to, the applicable securities laws of the securities regulators having application in the jurisdiction in which the Optionee is resident (the “International Jurisdiction”) which would apply to the granting of the Option;

(ii)

the Optionee is acquiring the Option pursuant to exemptions from prospectus or equivalent requirements under applicable securities laws or, if such is not applicable, the Optionee is permitted to acquiring the Option under the applicable securities laws of the securities regulators in the International Jurisdiction without the need to rely on any exemptions;

(iii)

the applicable securities laws of the authorities in the International Jurisdiction do not require the Corporation to make any filings or seek any approvals of any kind whatsoever from any securities regulator of any kind whatsoever in the International Jurisdiction in connection with the granting of the Option; and

(iv)	the granting of the Option by the Corporation does not trigger:

I.	any obligation to prepare and file a prospectus or similar document, or any other report with respect to such purchase in the International Jurisdiction; or

II.	any continuous disclosure reporting obligation of the Optionee or the Corporation in the International Jurisdiction; and

(v)

the Optionee will, if requested by the Corporation, deliver to the Corporation a certificate or opinion of local counsel from the International Jurisdiction which will confirm the matters referred to in subparagraphs (ii), (iii) and (iv) above to the satisfaction of the Corporation, acting reasonably;

(j)	the acquisition of the Securities by the Optionee as contemplated in this Agreement complies with or is exempt from the applicable securities legislation of the jurisdiction of residence of the Optionee;

(k)

the Optionee has not acquired the Securities as a result of, and will not itself engage in, any “directed selling efforts” (as defined in Regulation S under the 1933 Act) in the United States in respect of the Securities which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of the Securities; provided, however, that the Optionee may sell or otherwise dispose of the Securities pursuant to registration thereof under the 1933 Act and any applicable state and provincial securities laws or under an exemption from such registration requirements;

(l)

the Optionee is outside the United States when receiving and executing this Agreement and is acquiring the Securities as principal for the Optionee’s own account, for investment purposes only, and not with a view to, or for, resale, distribution or fractionalisation thereof, in whole or in part, and, in particular, it has no intention to distribute either directly or indirectly any of the Securities in the United States or to U.S. Persons, and no other person has a direct or indirect beneficial interest in such Securities;

(m)	the Optionee is not an underwriter of, or dealer in, the Common Stock, nor is the Optionee participating, pursuant to a contractual agreement or otherwise, in the distribution of the Securities;

(n)	the Optionee:

(i)	has adequate net worth and means of providing for his/her/its current financial needs and possible personal contingencies;

(ii)	has no need for liquidity in this investment; and

(iii)

is able to bear the economic risks of an investment in the Securities for an indefinite period of time, and can afford the complete loss of such investment;

(o)

(p)	the Optionee has the requisite knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Securities and the Corporation;

(q)

the Optionee understands and agrees that the Corporation and others will rely upon the truth and accuracy of the acknowledgements, representations and agreements contained in this Agreement, and agrees that if any of such acknowledgements, representations and agreements are no longer accurate or have been breached, the Optionee shall promptly notify the Corporation;

(r)

(s)

the Optionee understands and agrees that none of the Options or the Optioned Shares have been or will be registered under the 1933 Act, or under any state securities or “blue sky” laws of any state of the United States, and, unless so registered, may not be offered or sold except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case only in accordance with applicable state securities laws;

(t)

the Optionee understands and agrees that the Corporation will refuse to register any transfer of the Optioned Shares not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act;

(a)

(u)

(v)	no person has made to the Optionee any written or oral representations:

(i)	that any person will resell or repurchase any of the Securities;

(ii)	that any person will refund the purchase price of any of the Securities; or

(iii)

as to the future price or value of any of the Securities; and

(w)

if the Optionee is a consultant of the Corporation, the Optionee has entered into a written consulting agreement with the Corporation or a related entity of the Corporation and spends or will spend a significant amount of time and attention on the affairs and business of the Corporation or such related entity.

7. ACKNOWLEDGEMENT AND WAIVER

The Optionee has acknowledged that the decision to purchase the Securities was solely made on the basis of publicly available information contained in the Company Information. The Optionee hereby waives, to the fullest extent permitted by law, any rights of withdrawal, rescission or compensation for damages to which the Optionee might be entitled in connection with the distribution of any of the Securities.

8. PROFESSIONAL ADVICE

The acceptance of the Options and the sale of Common Stock issued pursuant to the exercise of Options may have consequences under federal, state and foreign tax and securities laws which may vary depending upon the individual circumstances of the Optionee. Accordingly, the Optionee acknowledges that he or she has been advised to consult his or her personal legal and tax advisor in connection with this Agreement and his or her dealings with respect to Options. Without limiting other matters to be considered with the assistance of the Optionee’s professional advisors, the Optionee should consider: (a) the merits and risks of an investment in the underlying Optioned Shares; and (b) any resale restrictions that might apply under applicable securities laws.

9. LEGENDING OF SUBJECT SECURITIES

9.1

The Optionee hereby acknowledges that that upon the issuance thereof, and until such time as the same is no longer required under the applicable securities laws and regulations, the certificates representing any of the Securities will bear any legends required under applicable Canadian securities laws and regulations and a legend in substantially the following form:

NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

9.2	The Optionee hereby acknowledges and agrees to the Corporation making a notation on its records or giving instructions to the registrar and transfer agent of the Corporation in order to implement the restrictions on transfer set forth and described in this Agreement.

10. GENERAL RESALE RESTRICTIONS

10.1

The Optionee acknowledges that any resale of any of the Optioned Shares will be subject to resale restrictions contained in the securities legislation applicable to the Optionee or proposed transferee. The Optionee acknowledges that none of the Optioned Shares have been registered under the 1933 Act or the securities laws of any state of the United States. The Optioned Shares may not be offered or sold in the United States unless registered in accordance with federal securities laws and all applicable state securities laws or exemptions from such registration requirements are available.

10.2	The Optionee acknowledges and agrees that the Optionee is solely responsible (and the Corporation is not in any way responsible) for compliance with applicable resale restrictions.

10.3	The Optionee acknowledges that the Optioned Shares are subject to resale restrictions in Canada and may not be traded in Canada except as permitted by the applicable provincial securities laws and the rules made thereunder.

11. NO EMPLOYMENT RELATIONSHIP

12. GOVERNING LAW

This Agreement is governed by the laws of the State of Nevada and the federal laws of the United States of America as applicable therein.

13. COSTS

14. SURVIVAL

15. ASSIGNMENT

This Agreement is not transferable or assignable.

16. CURRENCY

Unless explicitly stated otherwise, all funds in this Agreement are stated in United States dollars.

17. SEVERABILITY

The invalidity or unenforceability of any particular provision of this Agreement shall not affect or limit the validity or enforceability of the remaining provisions of this Agreement.

18. COUNTERPARTS AND ELECTRONIC MEANS

19. ENTIRE AGREEMENT

IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of the date first above written.

KONARED CORPORATION

Per:

Authorized Signatory

WITNESSED BY:	)
	)
	)
Name	)
	)
Address	)	[NAME OF OPTIONEE]
	)
	)
Occupation	)

SCHEDULE A

VESTING SCHEDULE

Incentive Stock Options

Date	Number of Options to Vest

Non-Qualified Stock Options

Date	Number of Options to Vest

SCHEDULE B

NOTICE OF EXERCISE

TO: KonaRed Corporation

2829 Ala Kalani Kaumaka St., Suite F-133

KOLOA, HI 96756

This Notice of Exercise shall constitute a proper Notice of Exercise pursuant to section 2.8 of the Stock Option Agreement dated _____________________, 2013 (the “ Agreement ”), between KonaRed Corporation (the “ Corporation ”) and the undersigned. The undersigned hereby elects to exercise the Optionee’s options to purchase ____________________ shares of the common stock of the Corporation at a price of US $ per share, for aggregate consideration of US $____________, on the terms and conditions set forth in the Agreement. Such aggregate consideration, in the form specified in section 2.8 of the Agreement, accompanies this notice.

The Optionee represents and warrants to the Corporation that all representations and warranties set out in the Agreement are true as of the date of the exercise of the options under the Agreement.

The Optionee hereby directs the Corporation to issue, register and deliver the certificates representing the shares as follows:

Registration Information:		Delivery Instructions:

Name to appear on certificates		Name

Address		Address

City, State, and Zip Code

		Telephone Number

DATED at _____________________________, the _______ day of______________, _______.

Signature

(Name and, if applicable, Office)

(Address)

(City, State, and Zip Code)

Fax Number or E-mail Address

Social Security/Insurance No.:

SCHEDULE C

CANADIAN ACCREDITED INVESTOR CERTIFICATE

In connection with the grant of the Options in accordance with the Stock Option Agreement dated _____________________, 2013 between KonaRed Corporation and the undersigned, the undersigned represents and warrants to KonaRed Corporation that the undersigned satisfies one or more of the categories indicated below (please place an “X” on the appropriate lines):

______Category 1	a Canadian financial institution, or a Schedule III bank
______Category 2	the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada)
______Category 3	a subsidiary of any person referred to in Category 1 or 2, if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary
______Category 4	a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a person registered solely as a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador)
______Category 5	an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in Category 4
______Category 6	the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada
______Category 7	a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l’ile de Montreal or an intermunicipal management board in Québec
______Category 8	any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government
______Category 9	a pension fund that is regulated by the Office of the Superintendent of Financial Institutions (Canada) a pension commission or similar regulatory authority of a jurisdiction of Canada
_____Category 10	an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000
_____Category 11	an individual whose net income before taxes exceeded $200,000 in each of the two (2) most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two (2) most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year
_____Category 12	an individual who, either alone or with a spouse, has net assets of at least $5,000,000
_____Category 13	a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements
_____Category 14	an investment fund that distributes or has distributed its securities only to
	(a) a person that is or was an accredited investor at the time of the distribution;
	(b) a person that acquires or acquired securities in the circumstances referred to in sections 2.10 of National Instrument 45-106 [ Minimum amount investment ] or 2.19 of National Instrument 45-106 [ Additional investment in investment funds ]; or
	(c) a person described in paragraph (a) or (b) that acquires or acquired securities under section 2.18 of National Instrument 45-106 [ Investment fund reinvestment ]
_____Category 15	an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Quebec, the securities regulatory authority, has issued a receipt
_____Category 16	a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be
_____Category 17	a person acting on behalf of a fully managed account managed by that person, if that person
	(a) is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction; and
	(b) in Ontario, is purchasing a security that is not a security of an investment fund
_____Category 18	a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded
_____Category 19	an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in Categories 1 to 4 or Category 9 in form and function
_____Category 20	a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors
_____Category 21	an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser
_____Category 22	a person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as an accredited investor.

Dated _____________________, 2013.

If an Individual:

Signature

Print Name

Jurisdiction of Residence

For the purposes hereof:

(a)

“accredited investor” means a person who meets the criteria in any of the above categories;

(b)

“Canadian financial institution” means:

(i)

an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act; or

(ii)

a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;

(c)

“eligibility adviser” means

(i)

a person that is registered as an investment dealer and authorized to give advice with respect to the type of security being distributed; and

(ii)

in Saskatchewan or Manitoba, also means a lawyer who is a practicing member in good standing with a law society of a jurisdiction of Canada or a public accountant who is a member in good standing of an institute or association of chartered accountants, certified general accountants or certified management accountants in a jurisdiction of Canada provided that the lawyer or public accountant must not:

(A)

have a professional, business or personal relationship with the issuer, or any of its directors, executive officers, founders or control persons, and

(B)

have acted for or been retained personally or otherwise as an employee, executive officer, director, associate or partner of a person that has acted for or been retained by the issuer or any of its directors, executive officers, founders or control persons within the previous 12 months;

(d)

“financial assets” means

(i)

cash,

(ii)

securities, or

(iii)

a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation;

(e)

“fully managed account” means an account of a client for which a person makes the investment decisions if that person has full discretion to trade in securities for the account without requiring the client’s express consent to a transaction;

(f)

“investment fund” means a mutual fund or a non-redeemable investment fund, and, for great certainty in British Columbia, includes an employee venture capital corporation and a venture capital corporation as such terms are defined in National Instrument 81-106 Investment Fund Continuous Disclosure ;

(g)

“non-redeemable investment fund” means an issuer:

(i)

whose primary purpose is to invest money provided by its securityholders;

(ii)

that does not invest

(A)

for the purpose of exercising or seeking to exercise control of an issuer, other than an issuer that is a mutual fund or a non-redeemable investment fund, or

(B)

for the purpose of being actively involved in the management of any issuer in which it invests, other than an issuer that is a mutual fund or a non-redeemable investment fund, and

(iii)

that is not a mutual fund;

(h)

“person” includes

(i)

an individual;

(ii)

a corporation;

(iii)

a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not; and

(iv)

an individual or other person in that person’s capacity as a trustee, executor, administrator or personal or other legal representative;

(i)

“related liabilities” means

(i)

liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or

(ii)

liabilities that are secured by financial assets;

(j)

“Schedule III bank” means an authorized foreign bank named in Schedule III of the Bank Act (Canada);

(k)

“spouse” means, an individual who,

(i)

is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual,

(ii)

is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender, or

(iii)

in Alberta, is an individual referred to in paragraph (i) or (ii), or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta); and

(l)

“subsidiary” means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary.

C-2

KONARED CORPORATION

2013 STOCK OPTION PLAN

This 2013 Stock Option Plan (the “ Plan ”) provides for the grant of options to acquire shares of common stock, US $0.001 par value (the “ Common Stock ”), of KonaRed Corporation, a Nevada corporation (the ” Company ”). For the purposes of Eligible Employees (as defined below) who are subject to tax in the United States, stock options granted under this Plan that qualify under Section 422 of the United States Internal Revenue Code of 1986, as amended (the “ Code ”), are referred to in this Plan as “ Incentive Stock Options ”. Incentive Stock Options and stock options that do not qualify under Section 422 of the Code (“ Non-Qualified Stock Options ”) and stock options granted to non-United States residents under this Plan are referred to collectively as “ Options ”.

1. PURPOSE

1.1

The purpose of this Plan is to retain the services of valued key employees and consultants of the Company and such other persons as the Plan Administrator shall select in accordance with Section 3 below, and to encourage such persons to acquire a greater proprietary interest in the Company, thereby strengthening their incentive to achieve the objectives of the shareholders of the Company, and to serve as an aid and inducement in the hiring of new employees and to provide an equity incentive to consultants and other persons selected by the Plan Administrator.

1.2

This Plan shall at all times be subject to all legal requirements relating to the administration of stock option plans, if any, under applicable United States federal and state securities laws, the Code, the rules of any applicable stock exchange or stock quotation system, and the rules of any foreign jurisdiction applicable to Options granted to residents therein (collectively, the “ Applicable Laws ”).

2. ADMINISTRATION

2.1

This Plan shall be administered initially by the Board of Directors of the Company (the “ Board ”), except that the Board may, in its discretion, establish a committee composed of two or more members of the Board to administer the Plan, which committee (the “ Committee ”) may be an executive, compensation or other committee, including a separate committee especially created for this purpose. The Board or, if applicable, the Committee is referred to herein as the “ Plan Administrator ”.

2.2

If and so long as the Common Stock is registered under Section 12(b) or 12(g) of the United States Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), the Board shall consider in selecting the Plan Administrator and the membership of any Committee, with respect to any persons subject or likely to become subject to Section 16 of the Exchange Act, the provisions regarding (a) “outside directors” as contemplated by Section 162(m) of the Code, and (b) “Non-Employee Directors” as contemplated by Rule 16b-3 under the Exchange Act.

2.3

The Committee shall have the powers and authority vested in the Board hereunder (including the power and authority to interpret any provision of the Plan or of any Option). The members of any such Committee shall serve at the pleasure of the Board. A majority of the members of the Committee shall constitute a quorum, and all actions of the Committee shall be taken by a majority of the members present. Any action may be taken by a written instrument signed by all of the members of the Committee and any action so taken shall be fully effective as if it had been taken at a meeting.

2.4	The Board may at any time amend, suspend or terminate the Plan, subject to such shareholder approval as may be required by Applicable Laws, including the rules of an applicable stock exchange or other national market system, provided that:

(a)	no Options may be granted during any suspension of the Plan or after termination of the Plan; and

(b)

any amendment, suspension or termination of the Plan will not affect Options already granted, and such Options will remain in full force and effect as if the Plan had not been amended, suspended or terminated, unless mutually agreed otherwise between the Optionee (as defined below) and the Plan Administrator, which agreement will have to be in writing and signed by the Optionee and the Company.

2.5	Subject to the provisions of this Plan, and with a view to effecting its purpose, the Plan Administrator shall have sole authority, in its absolute discretion, to:

(a)	construe and interpret this Plan;

(b)	define the terms used in the Plan;

(c)	prescribe, amend and rescind the rules and regulations relating to this Plan;

(d)	correct any defect, supply any omission or reconcile any inconsistency in this Plan;

(e)	grant Options under this Plan;

(f)	determine the individuals to whom Options shall be granted under this Plan and whether the Option is an Incentive Stock Option or a Non-Qualified Stock Option, or otherwise;

(g)	determine the time or times at which Options shall be granted under this Plan;

(h)	determine the number of shares of Common Stock subject to each Option, the exercise price of each Option, the duration of each Option and the times at which each Option shall become exercisable;

(i)	determine all other terms and conditions of the Options; and

(j)	make all other determinations and interpretations necessary and advisable for the administration of the Plan.

2.6	All decisions, determinations and interpretations made by the Plan Administrator shall be binding and conclusive on all participants in the Plan and on their legal representatives, heirs and beneficiaries, subject to any contrary determination by the Board.

3. ELIGIBILITY

3.1	Incentive Stock Options may be granted to any individual who, at the time the Option is granted, is an employee of the Company or any Related Company (as defined below) (“ Eligible Employees ”) subject to tax in the United States.

3.2	Non-Qualified Stock Options may be granted to Eligible Employees, Consultants, and to such other persons who are not Eligible Employees as the Plan Administrator shall select, subject to any Applicable Laws.

3.3

Options may be granted in substitution for outstanding options of another company in connection with the merger, consolidation, acquisition of property or stock or other reorganization between such other company and the Company or any subsidiary of the Company. Options also may be granted in exchange for outstanding Options.

3.4	Any person to whom an Option is granted under this Plan is referred to as an “ Optionee ”. Any person who is the owner of an Option is referred to as a “ Holder ”.

3.5

As used in this Plan, the term “ Related Company ” shall mean any company (other than the Company) that is a “ Parent Company ” of the Company or “ Subsidiary Company ” of the Company, as those terms are defined in Sections 424(e) and 424(f), respectively, of the Code (or any successor provisions) and the regulations thereunder (as amended from time to time).

4. STOCK

The Plan Administrator is authorized to grant Options to acquire up to a total of 11,000,000 shares of the Company’s authorized but unissued, or reacquired, Common Stock. The number of shares with respect to which Options may be granted hereunder is subject to adjustment as set forth in Section 5.13 hereof. In the event that any outstanding Option expires or is terminated for any reason, the shares of Common Stock allocable to the unexercised portion of such Option may again be subject to an Option granted to the same Optionee or to a different person eligible under Section 3 of this Plan.

5. TERMS AND CONDITIONS OF OPTIONS

Each Option granted under this Plan shall be evidenced by a written agreement approved by the Plan Administrator (the “ Agreement ”). Agreements may contain such provisions, not inconsistent with this Plan, as the Plan Administrator in its discretion may deem advisable. All Options also shall comply with the following requirements:

5.1	Number of Shares and Type of Option

Each Agreement shall state the number of shares of Common Stock to which it pertains and, for Optionees subject to tax in the United States, whether the Option is intended to be an Incentive Stock Option or a Non-Qualified Stock Option, provided that:

(a)	in the absence of action to the contrary by the Plan Administrator in connection with the grant of an Option, all Options shall be Non-Qualified Stock Options;

(b)

the aggregate fair market value (determined at the Date of Grant, as defined below) of the stock with respect to which Incentive Stock Options are exercisable for the first time by an Optionee subject to tax in the United States during any calendar year (granted under this Plan and all other Incentive Stock Option plans of the Company, a Related Company or a predecessor company) shall not exceed US $100,000, or such other limit as may be prescribed by the Code as it may be amended from time to time (the “ Annual Limit ”); and

(c)	any portion of an Option which exceeds the Annual Limit shall not be void but rather shall be a Non-Qualified Stock Option.

5.2	Date of Grant

Each Agreement shall state the date the Plan Administrator has deemed to be the effective date of the Option for purposes of this Plan (the “ Date of Grant ”).

5.3	Option Price

Each Agreement shall state the price per share of Common Stock at which it is exercisable. The Plan Administrator shall act in good faith to establish the exercise price in accordance with Applicable Laws; provided that :

(a)

the per share exercise price for an Incentive Stock Option or any Option granted to a “covered employee” as such term is defined for purposes of Section 162(m) of the Code (“ Covered Employee ”) shall not be less than the fair market value per share of the Common Stock at the Date of Grant as determined by the Plan Administrator in good faith;

(b)

with respect to Incentive Stock Options granted to greater-than 10% shareholders of the Company (as determined with reference to Section 424(d) of the Code), the exercise price per share shall not be less than 110% of the fair market value per share of the Common Stock at the Date of Grant as determined by the Plan Administrator in good faith;

(c)

Options granted in substitution for outstanding options of another company in connection with the merger, consolidation, acquisition of property or stock or other reorganization involving such other company and the Company or any subsidiary of the Company may be granted with an exercise price equal to the exercise price for the substituted option of the other company, subject to any adjustment consistent with the terms of the transaction pursuant to which the substitution is to occur; and

(d)	with respect to Non-Qualified Stock Options, the exercise price per share shall be determined by the Plan Administrator at the time the Option is granted.

5.4	Duration of Options

At the time of the grant of the Option, the Plan Administrator shall designate, subject to paragraph 5.7 below, the expiration date of the Option, which date shall not be later than 10 years from the Date of Grant; provided , that the expiration date of any Incentive Stock Option granted to a greater-than 10% shareholder of the Company (as determined with reference to Section 424(d) of the Code) shall not be later than five years from the Date of Grant. In the absence of action to the contrary by the Plan Administrator in connection with the grant of a particular Option, and except in the case of Incentive Stock Options as described above, all Options granted under this Plan shall expire five years from the Date of Grant.

5.5	Vesting Schedule

(a)

No Option shall be exercisable until it has vested. The vesting schedule for each Option shall be specified by the Plan Administrator at the time of grant of the Option prior to the provision of services with respect to which such Option is granted; provided that if no vesting schedule is specified at the time of grant, the Option shall vest as follows:

(i)	on the first anniversary of the Date of Grant, the Option shall vest and shall become exercisable with respect to 25% of the Common Stock to which it pertains;

(ii)	on the second anniversary of the Date of Grant, the Option shall vest and shall become exercisable with respect to an additional 25% of the Common Stock to which it pertains;

(iii)

on the third anniversary of the Date of Grant, the Option shall vest and shall become exercisable with respect to an additional 25% of the Common Stock to which it pertains; and

(iv)	on the fourth anniversary of the Date of Grant, the Option shall vest and shall become exercisable with respect to balance of the Common Stock to which it pertains.

(b)

The Plan Administrator may specify a vesting schedule for all or any portion of an Option based on the achievement of performance objectives established in advance of the commencement by the Optionee of services related to the achievement of the performance objectives. Performance objectives shall be expressed in terms of one or more of the following: return on equity, return on assets, share price, market share, sales, earnings per share, costs, net earnings, net worth, inventories, cash and cash equivalents, gross margin or the Company’s performance relative to its internal business plan, or such other terms as determined and directed by the Board. Performance objectives may be in respect of the performance of the Company as a whole (whether on a consolidated or unconsolidated basis), a Related Company, or a subdivision, operating unit, product or product line of either of the foregoing. Performance objectives may be absolute or relative and may be expressed in terms of a progression or a range. An Option that is exercisable (in full or in part) upon the achievement of one or more performance objectives may be exercised only following written notice to the Optionee and the Company by the Plan Administrator that the performance objective has been achieved.

5.6	Acceleration of Vesting

The vesting of one or more outstanding Options may be accelerated by the Plan Administrator at such times and in such amounts as it shall determine in its sole discretion. The vesting of Options also shall be accelerated under the circumstances described in Section 5.1(m) below.

5.7	Term of Option

(a)	Options that have vested as specified by the Plan Administrator or in accordance with this Plan, shall terminate, to the extent not previously exercised, upon the occurrence of the first of the following events:

(i)	the expiration of the Option, as designated by the Plan Administrator in accordance with Section 5.4 above;

(ii)	the date of an Optionee’s termination of employment or contractual relationship with the Company or any Related Company for cause (as determined in the sole discretion of the Plan Administrator);

(iii)

the expiration of three months from the date of an Optionee’s termination of employment or contractual relationship with the Company or any Related Company for any reason whatsoever other than cause, death or Disability (as defined below); or

(iv)	the expiration of one year from termination of an Optionee’s employment or contractual relationship by reason of death or Disability (as defined below).

(b)

Upon the death of an Optionee, any vested Options held by the Optionee shall be exercisable only by the person or persons to whom such Optionee’s rights under such Option shall pass by the Optionee’s will or by the laws of descent and distribution of the Optionee’s domicile at the time of death and only until such Options terminate as provided above.

(c)

For purposes of the Plan, unless otherwise defined in the Agreement, “Disability” shall mean medically determinable physical or mental impairment which has lasted or can be expected to last for a continuous period of not less than six months or that can be expected to result in death. The Plan Administrator shall determine whether an Optionee has incurred a Disability on the basis of medical evidence acceptable to the Plan Administrator. Upon making a determination of Disability, the Plan Administrator shall, for purposes of the Plan, determine the date of an Optionee’s termination of employment or contractual relationship.

(d)

Unless accelerated in accordance with Section 5.6 above, unvested Options shall terminate immediately upon the Optionee resigning from or the Company terminating the Optionee’s employment or contractual relationship with the Company or any Related Company for any reason whatsoever, including death or Disability.

(e)

For purposes of this Plan, transfer of employment between or among the Company and/or any Related Company shall not be deemed to constitute a termination of employment with the Company or any Related Company. For purposes of this subsection, employment shall be deemed to continue while the Optionee is on military leave, sick leave or other bona fide leave of absence (as determined by the Plan Administrator). The foregoing notwithstanding, employment shall not be deemed to continue beyond the first 90 days of such leave, unless the Optionee’s re-employment rights are guaranteed by statute or by contract.

5.8	Exercise of Options

(a)

Options shall be exercisable, in full or in part, at any time after vesting, until termination. If less than all of the shares included in the vested portion of any Option are purchased, the remainder may be purchased at any subsequent time prior to the expiration of the Option term. No portion of any Option for less than 50 shares (as adjusted pursuant to Section 5.13 below) may be exercised; provided , that if the vested portion of any Option is less than 50 shares, it may be exercised with respect to all shares for which it is vested. Only whole shares may be issued pursuant to an Option, and to the extent that an Option covers less than one share, it is unexercisable.

(b)

Options or portions thereof may be exercised by giving written notice to the Company, which notice shall specify the number of shares to be purchased, and be accompanied by payment in the amount of the aggregate exercise price for the Common Stock so purchased, which payment shall be in the form specified in Section 5.9 below. The Company shall not be obligated to issue, transfer or deliver a certificate of Common Stock to the Holder of any Option, until provision has been made by the Holder, to the satisfaction of the Company, for the payment of the aggregate exercise price for all shares for which the Option shall have been exercised and for satisfaction of any tax withholding obligations associated with such exercise.

(c)	During the lifetime of an Optionee, Options are exercisable only by the Optionee or in the case of a Non-Qualified Stock Option, transferee who takes title to such Option in the manner permitted by subsection 5.11 hereof.

5.9	Payment upon Exercise of Option

Upon the exercise of any Option, the aggregate exercise price shall be paid to the Company in cash or by certified or cashier’s check. In addition, if pre-approved in writing by the Plan Administrator who may arbitrarily withhold consent, the Holder may pay for all or any portion of the aggregate exercise price by complying with one or more of the following alternatives:

(a)

by delivering to the Company shares of Common Stock previously held by such Holder, or by the Company withholding shares of Common Stock otherwise deliverable pursuant to exercise of the Option, which shares of Common Stock received or withheld shall have a fair market value at the date of exercise (as determined by the Plan Administrator) equal to the aggregate exercise price to be paid by the Optionee upon such exercise; or

(b)	by complying with any other payment mechanism approved by the Plan Administrator at the time of exercise.

5.10	No Rights as a Shareholder

A Holder shall have no rights as a shareholder with respect to any shares covered by an Option until such Holder becomes a record holder of such shares, irrespective of whether such Holder has given notice of exercise. Subject to the provisions of Section 5.13 hereof, no rights shall accrue to a Holder and no adjustments shall be made on account of dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights declared on, or created in, the Common Stock for which the record date is prior to the date the Holder becomes a record holder of the shares of Common Stock covered by the Option, irrespective of whether such Holder has given notice of exercise.

5.11	Transfer of Option

(a)

Options granted under this Plan and the rights and privileges conferred by this Plan may not be transferred, assigned, pledged or hypothecated in any manner (whether by operation of law or otherwise) other than by will or by applicable laws of descent and distribution or pursuant to a qualified domestic relations order, and shall not be subject to execution, attachment or similar process; provided however that, subject to applicable laws:

(i)

for Incentive Stock Options, any Agreement may provide or be amended to provide that an Option to which it relates is transferable without payment of consideration to immediate family members of the Optionee or to trusts or partnerships or limited liability companies established exclusively for the benefit of the Optionee and the Optionee’s immediate family members; or

(ii)	for Non-Qualified Stock Options, the Optionee’s heirs or administrators may exercise any portion of the outstanding Options within one year of the Optionee’s death.

(b)

Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of any Option or of any right or privilege conferred by this Plan contrary to the provisions hereof, or upon the sale, levy or any attachment or similar process upon the rights and privileges conferred by this Plan, such Option shall thereupon terminate and become null and void.

5.12	Securities Regulation and Tax Withholding

(a)

Shares shall not be issued with respect to an Option unless the exercise of such Option and the issuance and delivery of such shares shall comply with all Applicable Laws. The inability of the Company to obtain from any regulatory body the authority deemed by the Company to be necessary for the lawful issuance and sale of any Options or shares under this Plan, or the unavailability of an exemption from registration for the issuance and sale of any shares under this Plan, shall relieve the Company of any liability with respect to the non-issuance or sale of such Options or shares.

(b)

As a condition to the exercise of an Option, the Plan Administrator may require the Holder to represent and warrant in writing at the time of such exercise that the shares are being purchased only for investment and without any then-present intention to sell or distribute such shares. At the option of the Plan Administrator, a stop-transfer order against such shares may be placed on the stock books and records of the Company, and a legend indicating that the stock may not be pledged, sold or otherwise transferred unless an opinion of counsel is provided stating that such transfer is not in violation of any applicable law or regulation, may be stamped on the certificates representing such shares in order to assure an exemption from registration. The Plan Administrator also may require such other documentation as may from time to time be necessary to comply with federal or state securities laws. THE COMPANY HAS NO OBLIGATION TO UNDERTAKE REGISTRATION OF OPTIONS OR THE SHARES OF STOCK ISSUABLE UPON THE EXERCISE OF OPTIONS.

(c)

The Holder shall pay to the Company by wire transfer, certified or cashier’s check, promptly upon exercise of an Option or, if later, the date that the amount of such obligations becomes determinable, all applicable federal, state, local and foreign withholding taxes that the Plan Administrator, in its discretion, determines to result upon exercise of an Option or from a transfer or other disposition of shares of Common Stock acquired upon exercise of an Option or otherwise related to an Option or shares of Common Stock acquired in connection with an Option. Upon approval of the Plan Administrator, a Holder may satisfy such obligation by complying with one or more of the following alternatives selected by the Plan Administrator:

(i)

by delivering to the Company shares of Common Stock previously held by such Holder or by the Company withholding shares of Common Stock otherwise deliverable pursuant to the exercise of the Option, which shares of Common Stock received or withheld shall have a fair market value at the date of exercise (as determined by the Plan Administrator) equal to any withholding tax obligations arising as a result of such exercise, transfer or other disposition; or

(ii)	by complying with any other payment mechanism approved by the Plan Administrator from time to time.

(d)

The issuance, transfer or delivery of certificates of Common Stock pursuant to the exercise of Options may be delayed, at the discretion of the Plan Administrator, until the Plan Administrator is satisfied that the applicable requirements of the federal and state securities laws and the withholding provisions under Applicable Laws have been met and that the Holder has paid or otherwise satisfied any withholding tax obligation as described in paragraph 5.1(l)(iii) above.

5.13	Stock Dividend or Reorganization

(a)

If (i) the Company shall at any time be involved in a transaction described in Section 424(a) of the Code (or any successor provision) or any “corporate transaction” described in the regulations thereunder; (ii) the Company shall declare a dividend payable in, or shall subdivide, reclassify, reorganize, or combine, its Common Stock; or (iii) any other event with substantially the same effect shall occur, the Plan Administrator shall, subject to applicable law, with respect to each outstanding Option, proportionately adjust the number of shares of Common Stock subject to such Option and/or the exercise price per share so as to preserve the rights of the Holder substantially proportionate to the rights of the Holder prior to such event, and to the extent that such action shall include an increase or decrease in the number of shares of Common Stock subject to outstanding Options, the number of shares available under Section 4 of this Plan and the exercise price for such Options shall automatically be increased or decreased, as the case may be, proportionately, without further action on the part of the Plan Administrator, the Company, the Company’s shareholders, or any Holder, so as to preserve the proportional rights of the Holder.

(b)

In the event that the presently authorized capital stock of the Company is changed into the same number of shares with a different par value, or without par value, the stock resulting from any such change shall be deemed to be Common Stock within the meaning of the Plan, and each Option shall apply to the same number of shares of such new stock as it applied to old shares immediately prior to such change.

(c)

If the Company shall at any time declare an extraordinary dividend with respect to the Common Stock, whether payable in cash or other property, the Plan Administrator may, subject to applicable law, in the exercise of its sole discretion and with respect to each outstanding Option, proportionately adjust the number of shares of Common Stock subject to such Option and/or adjust the exercise price per share so as to preserve the rights of the Holder substantially proportionate to the rights of the Holder prior to such event, and to the extent that such action shall include an increase or decrease in the number of shares of Common Stock subject to outstanding Options, the number of shares available under Section 4 of this Plan shall automatically be increased or decreased, as the case may be, proportionately, without further action on the part of the Plan Administrator, the Company, the Company’s shareholders, or any Holder.

(d)	The foregoing adjustments in the shares subject to Options shall be made by the Plan Administrator, or by any successor administrator of this Plan, or by the applicable terms of any assumption or substitution document.

(e)

The grant of an Option shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge, consolidate or dissolve, to liquidate or to sell or transfer all or any part of its business or assets.

6. EFFECTIVE DATE; SHAREHOLDER APPROVAL

6.1	Incentive Stock Options may be granted by the Plan Administrator from time to time on or after the date on which this Plan is adopted (the “ Effective Date ”) through the day immediately preceding the tenth anniversary of the Effective Date.

6.2	Non-Qualified Stock Options may be granted by the Plan Administrator on or after the Effective Date and until this Plan is terminated by the Board in its sole discretion.

6.3	Termination of this Plan shall not terminate any Option granted prior to such termination.

6.4

The approval of Disinterested Shareholders will be obtained for any reduction in the exercise price of Options if the Optionee is an Insider of the Company at the time of the proposed amendment. The terms “Disinterested Shareholder” and “Insider” shall have the meanings as defined for those terms in the Applicable Laws.

6.5

Any Options granted by the Plan Administrator prior to the approval of this Plan by the shareholders of the Company shall be granted subject to ratification of this Plan by the shareholders of the Company within 12 months before or after the Effective Date. If such shareholder ratification is sought and not obtained, all Options granted prior thereto and thereafter shall be considered Non-Qualified Stock Options and any Options granted to Covered Employees will not be eligible for the exclusion set forth in Section 162(m) of the Code with respect to the deductibility by the Company of certain compensation. In addition, any such Options will remain unvested unless and until shareholder approval is obtained.

7. NO OBLIGATIONS TO EXERCISE OPTION

The grant of an Option shall impose no obligation upon the Optionee to exercise such Option.

8. NO RIGHT TO OPTIONS OR TO EMPLOYMENT

8.1	Whether or not any Options are to be granted under this Plan shall be exclusively within the discretion of the Plan Administrator, and nothing contained in this Plan shall be construed as giving any person any right to participate under this Plan.

8.2

The grant of an Option shall in no way constitute any form of agreement or understanding binding on the Company or any Related Company, express or implied, that the Company or any Related Company will employ or contract with an Optionee for any length of time, nor shall it interfere in any way with the Company’s or, where applicable, a Related Company’s right to terminate Optionee’s employment at any time, which right is hereby reserved.

9. APPLICATION OF FUNDS

The proceeds received by the Company from the sale of Common Stock issued upon the exercise of Options shall be used for general corporate purposes, unless otherwise directed by the Board.

10. INDEMNIFICATION OF PLAN ADMINISTRATOR

In addition to all other rights of indemnification they may have as members of the Board, members of the Plan Administrator shall be indemnified by the Company for all reasonable expenses and liabilities of any type or nature, including attorneys’ fees, incurred in connection with any action, suit or proceeding to which they or any of them are a party by reason of, or in connection with, this Plan or any Option granted under this Plan, and against all amounts paid by them in settlement thereof (provided that such settlement is approved by independent legal counsel selected by the Company), except to the extent that such expenses relate to matters for which it is adjudged that such Plan Administrator member is liable for willful misconduct; provided, that within fifteen (15) days after the institution of any such action, suit or proceeding, the Plan Administrator member involved therein shall, in writing, notify the Company of such action, suit or proceeding, so that the Company may have the opportunity to make appropriate arrangements to prosecute or defend the same.

11. AMENDMENT OF PLAN

11.1

The Plan Administrator may, subject to Applicable Laws, at any time, modify, amend or terminate this Plan or modify or amend Options granted under this Plan, including, without limitation, such modifications or amendments as are necessary to maintain compliance with applicable statutes, rules or regulations; provided however that:

(a)	no amendment with respect to an outstanding Option which has the effect of reducing the benefits afforded to the Holder thereof shall be made over the objection of such Holder;

(b)	the events triggering acceleration of vesting of outstanding Options may be modified, expanded or eliminated without the consent of Holders;

(c)

the Plan Administrator may condition the effectiveness of any such amendment on the receipt of shareholder approval at such time and in such manner as the Plan Administrator may consider necessary for the Company to comply with or to avail the Company and/or the Optionees of the benefits of any securities, tax, market listing or other administrative or regulatory requirement; and

(d)	the Plan Administrator may not increase the number of shares available for issuance on the exercise of Incentive Stock Options without shareholder approval.

11.2	Without limiting the generality of Section 11.1 hereof, the Plan Administrator may modify grants to persons who are eligible to receive Options under this Plan who are foreign nationals or employed outside the United States to recognize differences in local law, tax policy or custom.

Effective Date: December 12, 2013