Document:

EXHIBIT 10.1

	 

PRE-FORMATION AGREEMENT AND SUBSCRIPTION

  This Pre-Formation Agreement and Subscription is made and entered as of the 7th day of
March, 2008, by and between ALL Fuels & Energy Company, a Delaware corporation (“AFSE”),
and JBTL Partners, LLC, a Wisconsin limited liability company (“JBTL”), which parties may be
referred to individually as a “Party” or jointly as the “Parties”.

WHEREAS, the parties desire to form a new Florida limited liability company, for the purpose of
participating in the development and subsequent commercialization of the Chloroplast
Transformation Technology (the “CTT”) developed by Dr. Henry Daniell at the University of
Central Florida;

WHEREAS, the parties desire to determine and establish the rights, duties, powers, disabilities,
benefits and liabilities between and among them and with respect to the new Florida limited
liability company; and

  WITNESSETH, therefore, the agreement of the parties, the promises of each being
consideration for the promises of the other:

I. DEFINITIONS

  The terms listed below shall, for the purposes of this Agreement, have the meanings ascribed to
them, as follows:

  A.  “AFSE” means ALL Fuels & Energy Company, a Delaware corporation.

  B.  “Agreement” means this Pre-Formation Agreement and Subscription, including all
schedules and exhibits hereto.

  C. “JBTL” means JBTL Partners, LLC, a Wisconsin limited liability company.

  D.  “Project LLC” means AFSE Enzyme, LLC, a to-be-formed Florida limited liability
company.

II. AGREEMENT TO FORM BUSINESS STRUCTURE

  The parties hereto agree to take all steps necessary to cause the formation of Project LLC, in
conformity with the following:

  A.  Formation of Project LLC. The Parties agree to cause the formation of Project LLC as soon
as is practicable following the mutual execution of this Agreement.  The Parties further agree that
Eric Newlan, Esquire, will be the organizer of Project LLC in effecting the proposed formation
of such entity, on behalf of the Parties.

  B.  Agreement to Organize Project LLC.  The Parties agree to take all steps necessary to cause
the organization of Project LLC, in conformity with the diagram set forth below and the other
pertinent provisions of this Agreement.

	 

	AFSE Enzyme, LLC

(a Florida limited liability company)

	 

	 

	 

	 

	 

	 

	50% owned by AFSE *

	 

	50% owned by JBTL *

	 

	 *

	ownership upon organization,
prior to contemplated future
membership interest issuances.

	 

  It is agreed by the parties that they contemplate the issuance of additional membership interests
in the future, including, without limitation, issuances to Dr. Henry Daniell at the University of
Central Florida, the University of Central Florida or one of its established research foundations
and one or more investors in the Project LLC.  It is further agreed by the parties that they will
incur equal dilution of their ownership percentages as additional membership interests are issued
in the future.

III. CHARACTERISTICS OF PROJECT LLC

  Project LLC is to have certain characteristics set forth in the Certificate of Formation of Project
LLC (the “Project LLC Certificate”), which shall be in the form of Exhibit III-1 attached hereto
and made a part hereof, and in its Limited Liability Company Operating Agreement, which shall
be in the form of Exhibit III-2 attached hereto and made a part hereof.

IV. SUBSCRIPTION FOR MEMBERSHIP INTERESTS OF PROJECT LLC

  AFSE and JBTL hereby subscribe for the initial membership interests to be issued by Project
LLC, as follows:

	 

	

Subscriber

	 

	Membership

Interests

Subscribed

	 

	

Consideration

	 

	AFSE

	 

	10,000

	 

	$1,000 in cash

	 

	JBTL

	 

	10,000

	 

	$1,000 in cash

V.  BUSINESS OF PROJECT LLC

  It is the intention of the parties that Project LLC enter into a letter of intent with the University
of Florida Research Foundation and Dr. Henry Daniell, with respect to Project LLC’s
participating in the development and subsequent commercialization of the CTT.  The parties
agree that the plan of action attributed to the “JBTL” entity in the form of letter of intent attached
hereto as Exhibit V-1 and made a part hereof accurately reflects the intended plan of business of
Project LLC.

  It is also the agreement of the parties that the initial phase of the Project LLC’s activities will
include the identification of at least ten enzymes that are to be cloned by Dr. Daniell and the
University of Central Florida, including one of its research foundations, and that JBTL shall
identify the first ten enzymes to be cloned within ten (10) days of the formation of the Sponsored
Research Agreement.  The parties anticipate that the phase-one cost of developing the enzymes
will be approximately $125,000 each.  In addition, the parties agree that the budget proposal
attached hereto as Exhibit V-2 and made a part hereof shall form the basis of the actual phase-one operating budget of the proposed office only and shall not include the development costs
associated with the Sponsored Research Agreement, Production Stage or License Agreement.

VI.  AGREEMENT WITH RESPECT TO MEMBERSHIP INTERESTS OF PROJECT LLC

  All of the membership interests of Project LLC to be issued to AFSE and JBTL hereunder shall
be subject to the terms and conditions of this paragraph VI.  Any additional membership
interests, or other equity securities, of Project LLC acquired by AFSE and JBTL, either by
purchase, dividend or otherwise, shall be subject to the terms and conditions of this paragraph
VI.  AFSE and JBTL further agree that the issuance of any additional membership interests or
other equity securities of Project LLC shall be ratified by each of them, and that any such
additional membership interests or other equity securities shall, upon issuance, be subject to the
terms and conditions of this paragraph VI.

  A.  Restrictions on Transfer of Membership Interests.  Neither AFSE nor JBTL may assign,
transfer, give, encumber, pledge, hypothecate or otherwise dispose of any membership interests
of Project LLC acquired by them, other than as permitted under this paragraph VI.  Subject to the
terms of this paragraph VI, AFSE and JBTL may exercise all other rights of membership with
respect to their membership interests of Project LLC.  Project LLC shall not be required to
recognize any such transfer or other disposition on its membership interest records, until Project
LLC has determined that such transfer or other disposition is in compliance with the terms and
conditions of this paragraph VI.

  B.  Endorsement of Membership Interest Certificates.  Each certificate representing membership
interests of Project LLC to be issued pursuant to this Agreement, or issued thereafter, to AFSE
and/or JBTL shall bear the following legend conspicuously printed or typewritten on its face:

      “SEE TRANSFER RESTRICTIONS ON REVERSE SIDE.”

    The reverse side of each such certificate shall bear the following, or substantially similar,
legends conspicuously printed or typewritten thereon:

    “THE MEMBERSHIP INTERESTS REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE TERMS OF A PRE-FORMATION AGREEMENT AND SUBSCRIPTION,
DATED AS OF MARCH 7, 2008, BY AND BETWEEN ALL FUELS & ENERGY COMPANY
AND JBTL PARTNERS, LLC.”

    “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),
AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.”

  C.  Voting Agreement.

    1.  Elections of Directors.  For so long as this Agreement shall remain in effect, each of AFSE
and JBTL shall, at each meeting of membership interest owners of Project LLC, vote for the
persons listed below for director thereof:

      (a)  Dean E. Sukowatey;

      (b) James R. Broghammer;

      (c)  Dr. Henry Daniell;

      (d)  John C. Walker;

      (e)  Robert B. Sather;

      (f)  Terri D. Williams; and

      (g)  Glen Roberts.

  The parties hereby agree that two directorships of the Project LLC shall be reserved for persons
named by ALL Fuels & Energy Company and one directorship of the Project LLC shall be
reserved for a person named by JBTL Partners, LLC.  Such persons shall be mutually acceptable
to AFSE and JBTL.

    2.  Elections of Officers.  The officers of the Company shall be chosen by the Board of
Directors as sited in Article VIII, Section 8.01, Officers Generally as sited in the Operating
Agreement of AFSE Enzyme, LLC.

    3.  Should one of the persons listed in subparagraphs 1 and 2 above resign or otherwise
become unable to serve in the capacity or capacities listed in such paragraphs, then the remaining
persons shall be permitted to vote for any person to fill any such vacancy, in their sole discretion.
Seats specifically held by either AFSE or JBTL shall be filled by each respective Party at its sole
discretion.

  D.  Sales of Membership Interests - Rights of First Refusal.  If, at any time while this
Agreement is in force, one of the Parties hereto (the “Selling Party”) desires to sell any or all of
his membership interests in Project LLC pursuant to a bona fide offer from a third party (the
“Third Party Offer”), it shall deliver to the other Party a written notice (the “Notice”) of such
Third Party Offer.  The Notice shall constitute an offer to sell the membership interests made the
subject of the Third Party Offer, upon the terms and conditions described in the Notice.  The
Notice shall specify (1) the name of the proposed transferee pursuant to the Third Party Offer, (2)
a summary of all material terms of such proposed sale, including, without limitation, the number
of membership interests subject to the Third Party Offer, the price per membership interest
offered, the method of payment and the form of consideration, and (3) evidence of the proposed
transferee’s ability to pay for the membership interests.

    The Non-Selling Party shall have 60 days from receipt of the Notice to notify the Selling Party
of its intentions to purchase the Selling Party’s membership interests on the terms and conditions
set forth in the Third Party Offer.  Should the Non-Selling Party elect to purchase the Selling
Party’s membership interests under the terms and conditions of the Third Party Offer, then the
Non-Selling Party shall have 30 days in which to purchase the Selling Party’s membership
interests.  Should the Non-Selling Party elect not to purchase the Selling Party’s membership
interests under the terms and conditions of the Third Party Offer, then the Selling Party may sell
his membership interests of Project LLC, as the case may be, to the offering party under the
Third Party Offer; provided, however, that the Selling Party shall consummate the sale of his
membership interests within 30 days from the date the Non-Selling Party elects not to purchase
the Selling Party’s membership interests and only upon the terms and conditions contained in the
Third Party Offer.  Should any such sale not be consummated within the 30-day period, Project
LLC shall not recognize such transfer as effective.  It is specifically agreed that the transferee
under the Third Party Offer shall take the Selling Party’s membership interests subject to this
paragraph VI.

  E.  Specific Performance.  It is agreed that, in view of the inability to assess monetary value of
damages to either of the parties hereto arising hereunder as a result of a breach of the provisions
of this paragraph VI, the non-breaching party may seek specific performance by the breaching
party, and the breaching party shall pay attorney’s fees incurred by the non-breaching party in
enforcing the provisions of this paragraph VI.

VII.  REPRESENTATIONS AND WARRANTIES

  A.  The execution, delivery and performance by AFSE of this Agreement and the other
transactions contemplated hereby have been duly authorized by all necessary board of directors’
action on the part of AFSE.

  B.  The execution, delivery and performance by JBTL of this Agreement and the other
transactions contemplated hereby have been duly authorized by all necessary action of its
governing body on the part of JBTL.

VIII.  TERMINATION

  This Agreement shall remain in effect until such time as the Parties hereto shall enter into a
written agreement to so terminate this Agreement.

IX.  MISCELLANEOUS

  A.  Governing Law.  This Agreement shall be deemed to be a contract made under, governed by
and construed in accordance with the substantive laws of the State of Florida.

  B. Dispute Resolution.

    1.  Negotiation.  If a dispute arises out of or relates to this Agreement or the breach thereof,
within twenty (20) days of receipt of written notice of a dispute, the Parties shall attempt in good
faith to resolve such dispute by negotiation.

    2.  Mediation.  If the dispute cannot be settled through such negotiations, the Parties agree to
try in good faith to settle the dispute by mediation within 20 days immediately following the 20-day period set forth in paragraph IX(B)(1), in Minneapolis, Minnesota, under the Commercial
Mediation Rules of the American Arbitration Association (“AAA”).

    3.  Arbitration.  If the dispute cannot be settled by mediation as set forth in paragraph
IX(B)(2), the Parties agree to submit the dispute to binding arbitration in Minneapolis,
Minnesota, under applicable Florida and Federal law.  Such demand shall set forth the names of
the other Party or Parties. The arbitration provided for in this paragraph IX(B)(3) shall be
conducted under the auspices of the AAA, utilizing the AAA’s applicable rules for arbitration of
commercial disputes, and shall be decided by one arbitrator. Except as otherwise provided
herein, the Arbitrators shall have the authority to award any remedy or relief a state or Federal
court of the State of Minnesota could order or grant, including, without limitation, specific
performance, the awarding of compensatory damages, the issuance of an injunction and other
equitable relief, but specifically excluding punitive damages. If the remedy sought is a monetary
award, each party shall simultaneously, on the twentieth business day following the
commencement of the arbitration, submit to the Arbitrators the amount that party believes should
be awarded, and with respect to compensatory damages, the Arbitrators shall make an award in
whichever of the two amounts they deem most reasonable. The Arbitrators’ decision shall be
issued with findings of fact and conclusions of law and shall be non-appealable. Notwithstanding
anything in this paragraph IX(B)(3) to the contrary, the losing party in a dispute hereunder shall
pay all reasonable legal fees and expenses incurred by the prevailing party in connection with the
arbitration.

  C.  Counterparts.  This Agreement may be executed simultaneously in counterparts, each of
which when so executed and delivered shall be taken to be an original; but such counterparts
shall together constitute but one and the same documents.  Facsimile signatures shall be deemed
original signatures.

  D.  Successors and Assigns.  Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors, assigns and
administrators of the Parties hereto.

  E.  Entire Agreement.  This Agreement, the other agreements and the other documents delivered
pursuant hereto and thereto constitute the full and entire understanding and agreement between
the parties with regard to the subjects hereof and thereof.

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

ALL FUELS & ENERGY COMPANY

By: /s/

Dean E. Sukowatey

President

JBTL Partners, LLC

By: /s/

John C. Walker

PresidentEXHIBIT 10.2

	 

AMENDMENT NO. 1 TO CONSULTING AGREEMENT

This constitutes Amendment No. 1 to that certain Consulting Agreement (the “Agreement”),
dated March 31, 2008, by and between ALL Fuels & Energy Company, a Delaware corporation
(the “Company”), and Jeff Harsch (“Consultant”), pursuant to which the Company retained
Consultant.

For good and adequate consideration, the receipt and adequacy of which is hereby acknowledged,
the parties hereby agree, as follows:

 A. Paragraph 2 of Exhibit “B” of the Agreement is hereby deleted in its entirety and replaced
with the following:

  “2. Method and Time of Exercise. The Option may be exercised, on a weekly basis, beginning
on the date of mutual execution of the Agreement, to purchase a number of shares not to exceed
50,000 per week, by written notice delivered to the Company stating the number of Option
Shares with respect to which the Option is then being exercised, together with a check, payable to
the Company, or a wire transfer to the Company in the amount equal to the Exercise Price,
multiplied by the number of Option Shares then being issued pursuant to the written notice of
exercise.  Only whole shares shall be issued upon exercise of the Option.”

In all other aspects, the Agreement is ratified and affirmed.

ALL FUELS & ENERGY COMPANY

By: /s/

Dean E. Sukowatey

President

/s/ JEFF HARSCH

Jeff Harsch

CONSULTING AGREEMENT

  This Consulting Agreement is made as of the _____ day of March, 2008, by and between Jeff
Harsch, a resident of the State of Iowa (“Consultant”), and ALL Fuels & Energy Company, a
Delaware corporation (the “Company”).

WHEREAS, the Company is in need of personnel with experience in corporate planning, strategy
and negotiations with potential strategic business partners and general business development and
planning; and

WHEREAS, Consultant possesses experience in corporate planning, strategy and negotiations
with potential strategic business partners and general business development and planning; and

WHEREAS, the Company is a publicly-held company and files periodic reports pursuant to the
requirements of the Securities Exchange Act of 1934, with its common stock quoted on the OTC
Bulletin Board under the symbol “AFSE”; and

WHEREAS, the Company desires to hire Consultant and Consultant is willing to accept the
Company as a client.

NOW THEREFORE, in consideration of the mutual covenants herein contained, it is agreed:

  1.  The Company hereby engages Consultant, on a non-exclusive basis, to render consulting
services with respect to corporate planning, strategy and negotiations with potential strategic
business partners and general business development and planning.  Consultant hereby accepts
such engagement and agrees to render such consulting services as are listed on Exhibit “A”
attached hereto and made a part hereof, throughout the term of this Agreement.  Consultant
agrees that he shall be responsible for ordinary, day-to-day expenses incurred in his performance
hereunder. All other expenses, such as traveling and accommodation, shall be negotiated on a
case-by-case basis.

    It is further agreed that Consultant shall have no authority to bind the Company to any contract
or obligation or to transact any business in the Company’s name or on behalf of the Company, in
any manner.  The parties intend that Consultant shall perform his services required hereunder as
an independent contractor.

    Notwithstanding anything contained herein to the contrary, it is specifically understood and
agreed by the parties that the aforementioned services to be provided by Consultant shall not, in
any way, either directly or indirectly, engage in any capital raising efforts on behalf of the
Company or promotion of the Company’s securities.

  2.  The term of this Agreement shall commence upon the mutual execution of this Agreement
and shall continue until February 28, 2009.  This Agreement may be terminated by the Company,
without cause, on three (3) days’ written notice.

  3.  In consideration of the services to be performed by Consultant, the Company agrees to pay to
Consultant the compensation set forth on Exhibit “B” attached hereto and made a part hereof.

  4.  The Company represents and warrants to Consultant that:

    A.  The Company will cooperate fully and timely with Consultant to enable Consultant to
perform her obligations hereunder.

    B.  The execution and performance of this Agreement by the Company has been duly
authorized by the Board of Directors of the Company.

    C.  The performance by the Company of this Agreement will not violate any applicable court
decree, law or regulation, nor will it violate any provisions of the organizational documents of
the Company or any contractual obligation by which the Company may be bound.

  5.  Consultant represents and warrants to the Company that Consultant is under no legal
disability with respect to entering into, and performing under, this Agreement.

  6.  Until such time as the same may become publicly known, the parties agree that any
information provided to either of them by the other of a confidential nature will not be revealed
or disclosed to any person or entity, except in the performance of this Agreement, and upon
completion of Consultant's services and upon the written request of the Company, any original
documentation provided by the Company will be returned to it.  Consultant, including each of his
affiliates, will not directly or indirectly buy or sell the securities of the Company at any time
when he or they are privy to non-public information.

    Consultant agrees that he will not disseminate any printed matter relating to the Company
without prior written approval of the Company.

    Consultant agrees that he will comply with all applicable securities laws, in performing on
behalf of the Company hereunder.

  7.  All notices hereunder shall be in writing and addressed to the party at the address herein set
forth, or at such other address as to which notice pursuant to this section may be given, and shall
be given by personal delivery, by certified mail (return receipt requested), Express Mail or by
national or international overnight courier.  Notices will be deemed given upon the earlier of
actual receipt of three (3) business days after being mailed or delivered to such courier service.

    Notices shall be addressed to Consultant at:

      Jeff Harsch

      ___________________

      ___________________

      ___________________

    and to the Company at:

      ALL Fuels & Energy Company

      Attention: Dean E. Sukowatey

      6165 N.W. 86th Street

      Johnston, Iowa 50131

  8.  Miscellaneous.

    A.  In the event of a dispute between the parties arising out of this Agreement, both Consultant
and the Company agree to submit such dispute to arbitration before the American Arbitration
Association (the “Association”) at its Minneapolis, Minnesota, offices, in accordance with the
then-current rules of the Association; the award given by the arbitrators shall be binding and a
judgment can be obtained on any such award in any court of competent jurisdiction.  It is
expressly agreed that the arbitrators, as part of their award, can award attorneys fees to the
prevailing party.

    B.  This Agreement is not assignable in whole or in any part, and shall be binding upon the
parties, their heirs, representatives, successors or assigns.

    C.  This Agreement may be executed in multiple counterparts which shall be deemed an
original.  It shall not be necessary that each party execute each counterpart, or that any one
counterpart be executed by more than one party, if each party executes at least one counterpart.

    D.  This Agreement shall be governed by, and construed in accordance with, the laws of the
State of Iowa.

ALL FUELS & ENERGY COMPANY

By: /s/

Dean E. Sukowatey

President

/s/ JEFF HARSCH

Jeff Harsch

Exhibit “A”

Consulting Agreement

Jeff Harsch

SERVICES TO BE PERFORMED BY CONSULTANT ON BEHALF OF THE COMPANY

The consulting services to be provided by Consultant under the Consulting Agreement to which
this Exhibit “A” is attached include, but shall not be limited to:

As requested by the Company, corporate planning, strategy and negotiations with potential
strategic business partners and general business development and planning.

Perform such other tasks may be reasonably requested by the Company.

Consultant shall perform these services with the understanding that the above-referenced services
will be performed principally in the United States.

It is understood that there may be times when the Company does not utilize the services or advice
of Consultant.  Any such failure of the Company to use, or seek in writing, Consultant’s advice
and/or services and/or assistance, as set forth herein, shall not be deemed to be non-performance
hereunder by Consultant.

Exhibit “B”

Consulting Agreement

Jeff Harsch

COMPENSATION TO BE PAID BY THE COMPANY TO CONSULTANT

As full payment for Consultant’s services under the Consulting Agreement (the “Agreement”) to
which this Exhibit “B” relates, Consultant shall receive options to purchase shares of the
Company’s common stock, as follows:

Consultant represents and warrants that he has investigated the Company, its financial condition,
business and prospects, and has had the opportunity to ask questions of, and to receive answers
from, the Company with respect thereto.  Consultant acknowledges that he is aware that the
Company currently lacks adequate capital to pursue its full plan of business.

1. Number of Shares; Exercise Price.  Pursuant to action taken by the Company’s board of
directors, the Company hereby grants to Consultant, in consideration of consulting services to be
performed for the benefit of the Company pursuant to the Agreement, an option (“Option”) to
purchase the number of shares of Company common stock (“Option Shares”) set forth below, at
the exercise price set forth below:

Number of Shares: 500,000 shares

    Exercise Price: The average VWAP of the Company’s common stock, as reported by the OTC
Bulletin Board, for the ten trading days immediately preceding the date of exercise.

2. Method and Time of Exercise. The Option may be exercised, on a weekly basis, beginning on
the date of mutual execution of the Agreement, to purchase a number of shares not to exceed
20,000 per week, by written notice delivered to the Company stating the number of Option
Shares with respect to which the Option is then being exercised, together with a check, payable to
the Company, or a wire transfer to the Company in the amount equal to the Exercise Price,
multiplied by the number of Option Shares then being issued pursuant to the written notice of
exercise.  Only whole shares shall be issued upon exercise of the Option.

3. Term. The Option shall expire concurrently with the term of the Agreement.

4. Tax Withholding. As a condition to exercise of the Option, the Company may require
Consultant to pay to the Company all applicable federal, state and local taxes which the
Company is required to withhold with respect to the exercise of the Option.

5. Transferability. The Option and this Agreement may not be assigned or transferred by
Consultant, without the prior written consent of the Company.

6. Consultant Not a Shareholder.  Consultant shall have no right as a shareholder with respect to
the Option Shares issued from time to time upon exercise of the Option until the earlier of:  (A)
the date of issuance of a stock certificate or stock certificates to Consultant applicable to the
Option Shares then issuable to Consultant upon exercise of the Option; and (B) the date on which
Consultant is recorded as owner of such Option Shares on the Company's stock ledger by the
Company's registrar and transfer agent.  Except as set forth in paragraph 10 below, no adjustment
shall be made for dividends or other rights for which the record date is prior to the earlier of the
event described in clauses (A) and (B) of this paragraph.

7. Restrictions on Transfer. Consultant represents and agrees that, upon Consultant’s exercise of
the Option, unless there is in effect at that time under the Securities Act of 1933, as amended, a
registration statement relating to the Option Shares, Consultant shall acquire the Option Shares
for the purpose of investment and not with a view to their resale or further distribution, and that,
upon such exercise hereof, Consultant will furnish to the Company a written statement to such
effect, satisfactory to the Company in form and substance.

8. Shares Qualified for Listing.  The Company represents that its common stock is qualified for
trading or quotation on a nationally recognized securities exchange or stock quotation system,
including, without limitation, the OTC Bulletin Board.

9. Status of Shares Underlying the Option Shares. All Option Shares issuable to Consultant shall
be issued pursuant an effective registration statement under the Securities Act of 1933, as
amended, including a registration statement on Form S-8.

10. Adjustments.  If there is any change in the capitalization of the Company after the date of the
Agreement affecting in any manner the number or kind of outstanding shares of common stock
of the Company, whether by stock dividend, stock splits, reclassification or recapitalization of
such stock, or because the Company has merged or consolidated with one or more other
corporations, then the number and kind of shares then subject to the Option and the exercise
price to be paid for the Option Shares shall be appropriately adjusted by the board of directors of
the Company; provided, however, that in no event shall any such adjustment result in the
Company being required to sell or issue any fractional shares. Any such adjustment shall be
made without change in the aggregate exercise price applicable to the unexercised portion of the
Option, but with an appropriate adjustment to the exercise price of each Option Share or other
unit of security then covered by the Option and the Agreement.

11. Cessation of Corporate Existence. Notwithstanding any other provision of this Agreement, in
the event of the reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation, or the sale of
substantially all of the assets of the Company or of more than fifty percent (50%) of the then
outstanding stock of the Company to another corporation or other entity in a single transaction,
the Option granted hereunder shall terminate; provided, however, that not later than five (5) days
before the effective date of such merger or consolidation or sale of assets in which the Company
is not the surviving corporation, the surviving corporation may, but shall not be so obligated to,
tender to Consultant an option to purchase a number of shares of capital stock of the surviving
corporation equal to the number of Option Shares then issuable upon exercise of the Option, and
such new option or options for shares of the surviving corporation shall contain such terms,
conditions and provisions as shall be required substantially to preserve the rights and benefits of
the Option and this Agreement.

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