Document:

EXHIBIT 10.1

 

CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT

 

Convertible Promissory Note Purchase Agreement (this “Agreement”), effective as of May 13, 2015 is entered into by and among Kingfish Holding Corporation, a Delaware corporation (the “Company”), and James K. Toomey, an individual with his business address at 6425 28th Avenue East, Bradenton, Florida 34208 (the “Investor”). Certain capitalized terms used in this Agreement are defined in Section 5.1 of this Agreement.

 

RECITALS

 

WHEREAS, the Company generally is in need of additional financial sources in order to conduct its business and, more specifically, to finance the costs and expenses associated with certain professional services (“Professional Services”);

 

WHEREAS, the Investor was willing to loan the necessary funds to the Company, subject to the conditions specified herein, to conduct its business and pay the costs and expenses of such Professional Services; and

 

WHEREAS, in connection with its cash requirements for such purposes, the Company has previously borrowed funds in March 2015 on two separate occasions totaling an aggregate of $60,000 from the Investor and the parties now are desirous of formalizing these loan advances.

 

NOW, THEREFORE, in consideration of the foregoing, and of the mutual representations, warranties, covenants and agreements contained in this Agreement and other valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

 

1.       Amount and Terms of Loans. 

 

1.1     The Loans. The Company acknowledges receipt of loan advances in aggregate principal amount of Sixty Thousand Dollars ($60,000) in such principal amounts and on or about such dates as set forth in Exhibit A hereto (each such advance, a “Loan” and collectively the “Loans”). Each Loan shall be evidenced by a convertible promissory notes in the principal amount of such Loan issued to the Investor in substantially the form attached hereto as Exhibit B (each, a “Convertible Note” and collectively the, “Convertible Notes”), which Convertible Notes for all such Loans shall be issued and delivered by Company concurrently with the execution of this Agreement.

 

1.2     Loans Fully Funded. The Company acknowledges that the Investor has fully funded the Loans on or about March 5, 2015 and March 16, 2015 and the Company received the all of the proceeds therefrom on or about such dates.

 

1.3     Terms and Conditions of the Loans. Each of the Loans individually and all of the Loans in the aggregate were made by the Investor to the Company on the basis of the representations, warranties, covenants and agreements contained in this Agreement, and subject to the terms and conditions set forth of this Agreement.

 

2.      Representations, Warranties, and Covenants of the Company. The Company hereby represents and warrants to the Investor as follows:

 

2.1     Organization, Standing, and Power. The Company is a corporation duly incorporated, validly existing, and, as of the date of this Agreement, in good standing under the Laws of the State of Delaware, and has the requisite corporate power and authority to own, lease, operate and otherwise hold its properties and assets and to carry on its business as it is now being conducted.

 

	 
	
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2.2     Authority; Due Execution. 

 

(a) The Company had, at the time that each Loan was funded, and currently has all of the requisite corporate power and authority to execute and deliver this Agreement and each of the Convertible Notes (the Agreement and all of the Convertible Notes are referred to collectively as the “Loan Documents”), and to carry out and perform its obligations under the Loan Documents, and to consummate the transactions contemplated thereby. The execution, delivery, and performance by the Company of the Loan Documents, including the delivery of each of the Convertible Notes and the reservation of Common Stock issuable upon conversion of the Convertible Notes (the “Conversion Shares”), and the consummation of the transactions contemplated thereby. The Loan Documents have been duly executed and delivered by the Company and, assuming due and valid authorization, execution and delivery by the Investor, of each of the Loan Documents will constitute legal, valid, and binding obligations of the Company, enforceable against it in accordance with their respective terms (except to the extent enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratoriums, or similar Laws affecting creditors’ rights and remedies generally and except that the availability of the equitable remedy of specific performance and injunctive relief is subject to the discretion of the court before which any proceedings may be brought (the “Bankruptcy and Equity Exceptions”).

 

(b) The Board of Directors of the Company (the “Board of Directors” or the “Board”) has determined that this Agreement, the Loan transactions which are the subject of this Agreement, and the Convertible Notes are fair to and in the best interests of the Company and its stockholders and have approved and adopted this Agreement, the Loan transactions, and each of the Convertible Notes.

 

2.3     No Conflict or Required Approvals.

 

(a) Neither the execution and delivery of this Agreement or any of the Convertible Notes, nor the consummation by the Company of the transactions contemplated hereby or thereby, or compliance with any of the terms or provisions herein or any of the Convertible Notes by the Company will (i) conflict with or violate any provision of the certificate of incorporation or bylaws of the Company, (ii) violate, conflict with, constitute or result in a breach of any term, condition, or provision of, or constitute a default (with or without notice or the lapse of time, or both) under, or give rise to any right of termination, cancellation, or acceleration of any obligation or the loss of any material benefit under, or require a Consent pursuant to, or result in the creation of any material Lien upon any material assets or properties of the Company pursuant to any of the terms, provisions, or conditions of any material loan or credit agreement, note, bond, mortgage, indenture, deed of trust, license, agreement, contract, lease, Permit, concession, franchise, plan, or other instrument or obligation to which the Company is a party or by which any of its material assets or properties may be bound or affected, or (iii) conflict with or violate any judgment, order, writ, injunction, decree of any court, governmental, regulatory or administrative agency, commission, authority, instrumentality, or other public body, domestic or foreign (a “Governmental Entity”), or material Law applicable to the Company or any of its assets or properties; except in the case of clauses (ii) and (iii) of this Section 2.3(a), as would not have a material adverse effect on the Company or its ability to consummate and perform the terms of this Agreement.

 

(b) Neither the execution and delivery of each of the Loan Documents, nor the consummation of the transaction contemplated by the Loan Documents will require notice to, registration, declaration, or filing by the Company with, or the order, authorization, or Permit of, or exception or waiver by, or Consent of, or any action by, any Governmental Entity other than in connection or compliance with the provisions of applicable state corporate and securities Laws, and the United States federal securities Laws.

 

	 
	
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2.4    Capitalization. 

 

(a) The authorized capital stock of the Company, prior to giving effect to the conversion of the Convertible Notes and the Outstanding Notes hereby, consists of (i) 200,000,000 shares of Common Stock, of which 116,712,987 shares are issued and outstanding, and (ii) 20,000,000 of preferred stock, par value $0.0001 per share (the “Preferred Stock”), none of which are issued and outstanding.

 

(b) All issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and nonassessable.

 

(c) No stockholder of the Company or any other person is entitled to any preemptive rights with respect to the purchase, sale, or issuance of securities by the Company. Except for the convertible promissory notes issued to the Investor pursuant the Outstanding Notes and as required pursuant to the terms of the Loan Documents: (i) there is no outstanding or authorized subscription, warrant, option, or other right, commitment or arrangement (written or oral, or contingent or otherwise) to which the Company is a party or by which it is bound, to purchase or acquire any shares of, or any security directly or indirectly convertible in or exchangeable or exercisable for, any capital stock of the Company (“Options”), (ii) the Company has no obligation (contingent or otherwise) to issue any Options or to issue or distribute to holders of any shares of its capital stock, any evidences of indebtedness, or assets of the Company, (iii) the Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any shares of its capital stock or any interest therein or to pay any dividend or make any other distribution in respect thereof, and (iv) there are no voting agreements or similar arrangements among the Company or any of its stockholders.

 

2.5     Issuance of Conversion Shares.

 

(a) The issuance, sale, and delivery of the Conversion Shares to the Investor upon conversion of the Convertible Notes has been duly authorized by all necessary corporate action on the part of the Company and the Conversion Shares, when issued, sold, and delivered in compliance with the provisions of the Loan Documents, will be duly and validly issued, fully paid, and nonassessable, and shall be free and clear of any Liens, or preemptive or other similar rights and will be issued in compliance with all applicable federal and securities laws.

 

(b) Assuming the accuracy of the representations and warranties of the Investor contained in Section 3 hereof, the offer, issue, and sale of the Convertible Notes and the Conversion Shares (collectively, the “Securities”) are and will be exempt from the registration under the Securities Act of 1933, as amended (the “Securities Act”), and are exempt from registration and qualification the securities laws of all other applicable jurisdictions.

 

2.6     Compliance with Laws; No Violations.

 

(a) The Company holds all Permits necessary for it to own, lease, and operate its assets and properties and to lawfully carry on its business as now conducted except as would not have a material adverse effect on the Company. All material Permits are in full force and effect, and the Company is in substantial compliance with all conditions and requirements of such Permits and all rules and regulations relating thereto.

 

	 
	
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(b) The Company is not in conflict with, or in default under, or in violation of: (i) its certificate of incorporation or bylaws, or (ii) except as would not have a material adverse effect on the Company, any Law, Permit, order, judgment, writ, injunction, or decree applicable to the Company or by which the material assets or properties of the Company are bound or affected, and no claim is pending or, to the Knowledge of any of the Company, threatened with respect to such matters.

 

2.7    No Sales or Liquidation Contemplated. The Company is not in discussions or negotiations with any third party regarding the sale of the business of the Company, whether structured as a merger, reverse merger, share exchange, sale of a controlling interest of its stock, the sale of all or substantially all of the assets of the business of the Company, or otherwise contemplating a liquidation of the Company.

 

2.8     No Broker or Finder. Neither the Company or any of its officers, directors, have retained or used the services of any broker, finder, investment banker, or other financial intermediary, nor has the Company paid or agreed to pay any brokerage, finder’s, or other fee or commission in connection with any of the transactions contemplated by this Agreement.

 

2.9     Accuracy of Representations and Warranties. The Company confirms that the representations and warranties of the Company made to the Investor pursuant to this Agreement were true and correct as of the date that each Loan was funded by the Investor (“Loan Date”) and are true and correct as of the date of this Agreement.

 

3.      Representations, Warranties, and Covenants of the Investor. The Investor hereby represents and warrants to the Company as follows:

 

3.1     Authority; No Conflict or Required Consents. 

 

(a) The Investor is an individual who has full legal capacity to execute and deliver this Agreement, to perform his obligations hereunder and thereunder, and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Investor and, assuming valid authorization, execution and delivery hereof by the Company, constitutes a legal, valid and binding obligation of the Investor enforceable against him in accordance with its terms (subject to the Bankruptcy and Equity Exceptions).

 

(b) Neither the execution, delivery or performance of this Agreement by the Investor, nor the consummation by the Investor of the transactions hereby, or compliance by the Investor with any of the terms or provisions herein will conflict with or violate any order, writ, Injunction, decree, or Law applicable to the Investor, or any of his properties or assets that will materially impair the ability of the Investor to perform his obligations under this Agreement.

 

(c) Neither the execution or delivery of this Agreement by such Investor, nor the consummation of the transactions contemplated hereby, will require notice to, registration, declaration, or filing by the Investor with, or Permit or Consent of, or any action by any Governmental Entity.

 

3.2     Investment Representations.

 

(a) The Investor affirms that he has been advised and understands that (i) the Securities have not been registered under the Securities Act or registered or qualified under the securities Laws of any other jurisdiction and are being sold in reliance upon an exemption from registration under such Laws, (ii) he may not transfer the Securities unless they are subsequently registered and qualified under such Laws or, in the opinion of counsel reasonably satisfactory to the Company, an exemption from such registration and qualification is available, and (iii) any Transfer that is permitted must satisfy certain legal, procedural and other requirements.

 

	 
	
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(b) The Investor: (i) is the sole and true party in interest, and is acquiring the Securities solely for his own account, not as a nominee or agent, for investment purposes only, and not with an intent or a view to the sale or distribution of any part thereof within the meaning of Section 2(a)(11) of the Securities Act, (ii) does not have any present intent of making a Transfer of, granting a participation in, or otherwise distributing the Securities in a manner contrary to the Securities Act or the securities Laws of any other applicable jurisdiction, nor does the Investor have any contract, undertaking, agreement, or arrangement with any person to Transfer, grant any participation in, or otherwise distribute any of the Securities to such person, and (iii) does not presently have any reason to anticipate any change in circumstances or other particular occasion or event which would cause the Investor to need to sell the Securities, except in accordance with the terms of this Agreement and in compliance with all applicable federal and state securities Laws.

 

(c) The Investor understands and acknowledges that only the Company can register the Securities under applicable securities Laws; the Company does not have any present intention to register the Securities under the Securities Act or the securities Laws of any other jurisdiction; there is a limited public market for the Common Stock; and, as a result an investment in the Securities may not be liquid and that the Investor must bear the economic risk of the investment indefinitely. In this regard, the Investor further represents that it has adequate means of providing for his current needs and possible personal contingencies, it can afford to bear the economic risk of holding the Conversion Shares for an indefinite period of time, it has no need for liquidity in its investment in the Conversion Shares, and it has the net worth sufficient to bear the risks of and to sustain a complete loss of such Investor’s entire investment in the Company.

 

(d) The Investor confirms that it is aware and understands that no federal or state agency has made any finding or determination as to the fairness of this offering nor has made any recommendation or endorsement of the Securities.

 

(e) Such Investor recognizes that an investment in the Securities and the Company involves certain risks, and such Investor has taken full cognizance of, understands, and is willing to bear the risks related to the purchase of the Securities.

 

3.3     Knowledge and Experience. The Investor has sufficient knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment contemplated by this Agreement and the Investor is able to bear the economic risk of its investment in the Securities and the Company.

 

3.4     Accredited Investor; Not a Bad Actor. The Investor is (a) an “accredited investor” as such term is defined in Rule 501(a) promulgated under the Securities Act and (b) is not subject to any “bad actor” disqualification set forth in Rule 506(d) of Regulation D or any similar disqualification provision that could adversely affect the Company’s reliance on any federal or state securities registration exemption or that could otherwise adversely affect the offering of the Securities.

 

3.5      Information Provided. The Investor represents, acknowledges and confirms that:

 

(a) prior to the sale of the Securities to him pursuant to this Agreement, the Investor: (i) has been given access to all material books and records of the Company and all material contracts and documents relating to the sale of the Securities pursuant to this Agreement, (ii) has been given an the opportunity to ask questions of, and receive answers from, representatives of the Company concerning Company and the terms and conditions of the sale of the Securities by the Company to the Investor, and (iii) confirms that he has been furnished with all such requested information and all questions asked by such Investor have been answered to his full satisfaction.

 

	 
	
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(b) the Investor is acquiring the Securities without being furnished any offering literature or prospectus other than any documents or answers to questions so furnished to him by the Company.

 

(c) in addition to the representations set forth in Section 3.5(a) hereof, the Investor, because of his relationship with the Company as a director thereof, is in possession of or has complete and unrestricted access to, all material information concerning the Company, its business, operations, and financial condition and, as a result thereof, is thoroughly familiar with the speculative nature and risks of an investment in the Securities and is willing to bear the risks related to the purchase of the Securities. The Investor has been given access to all material information concerning the Company which is available or known to the Company.

 

(d) the Investor has not relied on any statement or representation of the Company or of any of its Affiliates, attorneys, agents, or other representatives, except as specifically set forth or referenced in this Agreement or provided in accordance with Section 3.5(a) of this Agreement.

 

(e) the Investor acknowledges and understands that the representations, warranties, and covenants contained in this Section 3 of the Agreement are being furnished, in part, and will be relied on by the Company in determining whether this offering of the Securities (and particularly, the Conversion Shares) is exempt from registration under the Securities Act and the securities laws of all other applicable jurisdictions and, accordingly, confirms that all such statements contained herein are true, complete, and accurate as of the date hereof, and shall be true, accurate, and complete as of the date that this Agreement is executed and delivered, and shall survive the execution and delivery of this Agreement. If any events occur or circumstances exist prior to the issuance of the Conversion Shares to the Investor which would make any of the representations, warranties, agreements, or other information of the Investor set forth herein untrue or inaccurate, the Investor agrees to immediately notify the Company in writing of such fact specifying which representations, warranties, or covenants are not true, correct, or accurate, and the reasons therefor.

 

3.6     No Broker or Finder. Such Investor has not retained or used the services of any broker, finder, investment banker, or other intermediary, nor has any Investor paid or agreed to pay any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement.

 

3.7     Accuracy of Representations and Warranties. The Investor confirms that the representations and warranties of the Investor made to the Company pursuant to this Agreement were true and correct as of the Loan Date and are true and correct as of the date of this Agreement.

 

4.       Additional Agreements.

 

4.1     Agreement Not to Transfer Securities.The Investor hereby agrees that he will not, directly or indirectly Transfer, or offer to Transfer any of the Securities (or solicit any offers to buy, purchase, or otherwise acquire or take a pledge of any the Securities), except in compliance with this Agreement, the Securities Act and the securities Laws of all other applicable jurisdictions, as well as the rules and regulations promulgated thereunder.

 

	 
	
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4.2.    Investor’s Indemnification Agreement. The Investor acknowledges that understands the meaning and legal consequences of the representations, warranties and covenants contained in Section 3 of this Agreement, especially as it relates to the reliance referenced in Section 3.5(e) hereof, and agrees to indemnify and hold harmless the Company and its agents, employees, and representatives from and against any and all losses (including reasonable attorney’s fees), damage or liabilities due to or arising out of any misrepresentations, misstatements, or omissions with respect to any of the representations or warranties, or a breach of any of the covenants or agreements, contained in this Agreement by the Investor.

 

4.3     Reservation of Convertible Shares. The Company hereby agrees that:

 

(a) it will at all times have authorized and will reserve and keep available, solely for issuance and delivery to the Holder, that number of shares of its Common Stock (or other securities and property) that may be required from time to time for issuance and delivery of the Conversion Shares to the Investor upon conversion of the Convertible Notes.

 

(b) it shall take all necessary steps to ensure that the Conversion Shares, when issued in accordance with this Agreement and each of the Convertible Notes, shall be duly and validly issued, shall be fully paid and nonassessable, free and clear of any claim, lien, encumbrance, or security interest of any kind whatsoever, and free from all preemptive rights of any security holders of the Company.

 

(c) it shall take all action as may be necessary to assure that such Conversion Shares (and any other securities and property) may be issued and delivered as provided herein and as set forth in the associated Convertible Note without violation of any applicable law or regulation, or of any requirements, of any domestic securities exchange or inter dealer quotation system upon which the Common Stock may be listed; provided, however, that the Company shall not be required to effect a registration under federal or state securities laws.

 

4.4    Convertible Notes. The Investor agrees that by acceptance of the Convertible Notes pursuant to the terms of this Agreement, he will be bound by the terms of Convertible Notes.

 

4.5     Amendment of Prior Note Agreements. The Company and the Investor hereby agree that the October 2014 Note Agreement and the February 2015 Note Agreement are amended by deleting Section 4.3 of each such agreement and, in lieu thereof, replacing it with the following provision:

 

“4.3 Reservation of Convertible Shares. The Company hereby agrees that:

 

(a) it will at all times have authorized and will reserve and keep available, solely for issuance and delivery to the Holder, that number of shares of its Common Stock (or other securities and property) that may be required from time to time for issuance and delivery of the Conversion Shares to the Investor upon conversion of the Convertible Notes.

 

(b) it shall take all necessary steps to ensure that the Conversion Shares, when issued in accordance with this Agreement and each of the Convertible Notes, shall be duly and validly issued, shall be fully paid and nonassessable, free and clear of any claim, lien, encumbrance, or security interest of any kind whatsoever, and free from all preemptive rights of any security holders of the Company.

 

	 
	
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(c) it shall take all action as may be necessary to assure that such Conversion Shares (and any other securities and property) may be issued and delivered as provided herein and as set forth in the associated Convertible Note without violation of any applicable law or regulation, or of any requirements, of any domestic securities exchange or inter dealer quotation system upon which the Common Stock may be listed; provided, however, that the Company shall not be required to effect a registration under federal or state securities laws.”

 

4.6   Documentary Stamp Taxes. The Company agrees to pay all documentary stamp taxes required to be paid in connection with the issuance and delivery of the Convertible Notes to the Investor.

 

4.7   Further Assurances. On or after the date of this Agreement, each of the parties shall execute and deliver, or cause to be executed and delivered, such further documents, certificates, and instruments reasonably required to issue and distribute the Securities to the Investor, and to perform such further acts as may be reasonably requested in order to convey the Securities to the Investor, all on terms contained herein, and otherwise to comply with the terms of this Agreement and consummate the transactions herein provided.

 

5.      General Provisions.

 

Section 5.1 Definitions.

 

(a) Except as otherwise provided herein, the capitalized terms set forth below shall have the following meanings:

 

“Affiliate” shall mean, as to any Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Person. For purposes of this definition, (i) the term “control” (including the term “controlling,” “controlled by” and “under common control,” or correlative terms) means the possession, direct or indirect, of the power to direct the management and policies of a Person, whether as an officer or director, through the ownership of voting securities, by contract or otherwise.

 

“Business Day” shall mean any day other than a Saturday, Sunday, or other day on which commercial banks in the State of Florida are authorized or required by Law or executive order to close.

 

“Common Stock” shall mean the shares of common stock, par value $0.0001 per share, of the Company.

 

“Consent” shall mean any consent, order, approval, authorization, clearance, exemption, waiver, ratification, or similar affirmation by any Person.

 

“Entity” shall mean any general partnership, limited partnership, corporation, joint venture, trust, limited liability company, limited liability partnership, unincorporated organization, business trust, cooperative or association.

 

“February 2015 Convertible Note” shall mean the convertible promissory note of the Company issued pursuant to the February 2015 Note Agreement.

 

“February 2015 Note Agreement”shall mean the Convertible Promissory Note Agreement, effective as of February 10, 2015, by and between the Company and the Investor.

 

	 
	
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“Law” means any code, law, ordinance, regulation, reporting or licensing requirement, rule, or statute applicable to a Person or its assets, properties, liabilities, or business, including those promulgated, interpreted, or enforced by any Governmental Entity.

 

“Liens” shall mean all liens, encumbrances, charges, pledges, claims, security interests, equities, options, warrants, rights to purchase or acquire, and other defects in title.

 

“Outstanding Notes” shall mean the October 2014 Convertible Notes and the February 2015, Convertible Note.

 

“October 2014 Convertible Note” shall mean the amended promissory Notes of the Company issued pursuant to the October 2014 Note Agreement.

 

“October 2014 Note Agreement” shall mean the Convertible Promissory Note agreement, effective as of October 24, 2014, as amended pursuant to the First Amendment to Convertible Promissory Note Purchase Agreement, effective January 12, 2015, by and between the Company and the Investor.

 

“Permits” shall mean all permits, licenses, variances, certificates, filings, franchises, notices, rights, and Consents of and from all Governmental Entities.

 

“Person” shall mean an individual or an Entity.

 

“Transfer” shall be construed broadly and shall include to mean, in the context of a transfer of any of the Securities, any sale, assignment, participation, gift, bequest, distribution, exchange, pledge, hypothecation, placement of a lien thereon or a grant of a security interest therein or other encumbrances thereon, judicial attachment, contribution to a trust or other Entity, or other transfer or disposition (voluntarily or involuntarily, by operation of law or otherwise, and whether as security or otherwise) by a Holder of all or a portion of its Securities or any right or interest therein. For purposes of this definition, a “Transfer” shall include the sale, assignment, participation, gift, bequest, distribution, exchange, pledge, hypothecation, placement of a lien thereon or a grant of a security interest therein or other encumbrances thereon, judicial attachment, contribution to a trust or other Entity, or other transfer or disposition (voluntarily or involuntarily, by operation of law or otherwise, and whether as security or otherwise) of a controlling equity interest in any Person which owns of record any of the Securities.

 

(b) The following terms shall have the meanings ascribed thereto in the Section set forth opposite such term:

 

	
Term

	Section
	 	 
	
Agreement

	
Preamble

	
Bankruptcy and Equity Exceptions

	
2.2(a)

	
Board of Directors (or Board)

	
2.2(b)

	
Company

	
Preamble

	
Conversion Shares

	
2.2(a)

	
Convertible Note(s)

	
1.1

	
Governmental Entity

	
2.3(a)

	
Investor

	
Preamble

	
Loan(s)

	1.1
	
Loan Date

	
2.9

	
Loan Documents

	
2.2(a)

  

	 
	
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(c) Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include,” “includes,” or “including” are used in this Agreement, they shall be deemed followed by the words “without limitation.”

 

5.2    Expenses. Except as otherwise provided in this Agreement, whether or not the transactions contemplated herein are consummated, each party hereto shall bear and pay its own fees, costs and expenses incident to preparing, entering into and carrying out this Agreement and to consummating the transactions contemplated hereby.

 

5.3    Entire Agreement. Except as otherwise expressly provided herein, this Agreement and the other documents, agreements, and instruments, executed and delivered pursuant to or in connection with this Agreement, including the Convertible Notes, contains the entire agreement among the parties hereto with respect the subject matter hereof, and such Agreement supersedes all prior arrangements or understandings with respect to the subject matter hereof, both written and oral.

 

5.4    Amendment and Modification. Except as otherwise expressly set forth in this Agreement, any term of this Agreement may be amended or terminated and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), with the written consent of the Company and the Investor. No waivers of or exceptions to any term, condition or provision of this Agreement, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

 

5.5     Survival of Representations. The representations and warranties in this Agreement and in any certificate delivered pursuant hereto shall survive the Closing.

 

5.6     No Assignment. None of the parties hereto may assign any of its rights or delegate any of its obligations under this Agreement to any other Person, and any such purported assignment or delegation that is made without the prior written consent of the other parties to this Agreement shall be void and of no effect.

 

5.7     Notices. All notices or other communications given or made pursuant to this Agreement shall be in writing and shall be (a) delivered by registered or certified mail, return receipt requested, postage prepaid, (b) by expedited mail or package delivery service guaranteeing next Business Day delivery, (or, for international deliveries, the earliest Business Day that such delivery service can guarantee delivery if so requested and paid for), or (c) delivered personally, by hand, to the persons at the addresses set forth below (or at such other address as may be provided hereunder):

 

If to Company:

 

Ted Sparling, President & CEO

Kingfish Holding Corporation

2641 49th Street

Sarasota, FL 34234

 

with a copy to:

 

Carlton Fields Jorden Burt, P.A.

Corporate Center Three at International Plaza

4221 West Boy Scout Blvd., Ste. 1000

Tampa, FL 33607-5780

Attn: Richard A. Denmon

Telephone: 813-229-4219

Facsimile: 813-229-4133

 

If to an Investor: At the address shown in the stockholder records of the Company.

 

	 
	
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Any notice or other communications to be given or that may be given pursuant to this Agreement shall be deemed to have been given: (x) three calendar days after the deposit of such notice or communication in the United States Mail, registered or certified, return receipt requested, with proper postage affixed thereto; (y) on the first Business Day after depositing such notice of communication with Federal Express, Express Mail, or other expedited mail or package delivery service guaranteeing delivery no later than the next Business Day if next Business Day delivery service has been requested and paid for (or on such Business Day as such delivery service has been requested, guaranteed, and paid for); or (z) upon delivery if hand delivered or telecopied to the appropriate address and person as provided hereinabove or to the person to whose attention the notice is to be given to the other parties in the manner hereinabove provided.

 

5.8    Governing Law; Jurisdiction. 

 

(a) This Agreement shall in all respects be governed by and construed in accordance with the Laws of the State of Florida, without giving effect to the principles of conflict of Laws thereof.

 

(b) Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereunder shall be brought solely in the courts of the State of Florida located in Hillsborough County, Florida, or, if it has or can acquire jurisdiction, in the United States District Court for the Middle District of Florida (Orlando or Tampa Division), and each of the parties hereto hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and waives any objection to the venue or the convenience of forum of any such courts. 

 

5.9    Specific Performance. Each party hereto agrees that irreparable damage would occur in the event that any of the provisions of this Agreement was not performed in accordance with its specific terms or was otherwise breached, and it is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States of any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.

 

	 
	
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5.10   Waiver of Jury Trial. EACH PARTY HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.10.

 

5.11   Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provisions shall be interpreted to be only so broad as is enforceable.

 

5.12    Attorney Fees. A party in breach of this Agreement shall, on demand, indemnify and hold harmless the other party or parties for and against all reasonable out-of-pocket expenses, including legal fees, incurred by such other party or parties by reason of enforcement and protection of its or their rights under this Agreement. The payment of such expenses is in addition to any other relief to which such other party may be entitled.

 

5.13    Counterparts. This Agreement may be executed in one or more separate counterparts, each of which, when so executed and delivered, shall be deemed to constitute an original, but all of which together shall constitute one and the same instrument.

 

5.14    Captions. The captions contained in this Agreement are for reference purposes only and are not part of this Agreement.

 

[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]

 

	 
	
12

	

 

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf all as of the date first written above.

 

 

	 	COMPANY:	 
			
		
Kingfish Holding Corporation,

a Delaware corporation

	
	 	 	 	 
	Date	By:	/s/ Ted Sparling	 
	 	 	Ted Sparling, President & CEO	 

 

INVESTOR:

 

/s/ James K. Toomey                       

James K. Toomey

 

[SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE PURCHASE AGREEMENT (MAY 13, 2015)]

 

	 
	
13

	

 

EXHIBIT A

 

Loan Advances

 

	
Date of Loan Advance

	 	Principal Amount of Loan Advance	 
	 	 		 
	
March 5, 2015

	 	
$

	
20,000

	 
	
March 16, 2015

	 	
$

	
40,000

	 
	
Aggregate Loan Amount

	 	
$

	
60,000

	 

 

	 
	
A-1

	

 

EXHIBIT B

 

 

 

 

 

 

	 
	

	

 

Exhibit B-1

 

THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED, NOR WILL ANY ASSIGNEE, VENDEE, TRANSFEREE, OR ENDORSEE THEREOF BE RECOGNIZED AS HAVING ACQUIRED ANY SUCH UNITS BY THE ISSUER FOR ANY PURPOSES, EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND THE SECURITIES LAWS OF ALL OTHER APPLICABLE JURISDICTIONS OR (2) THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION SHALL BE ESTABLISHED TO THE REASONABLE SATISFACTION OF THE ISSUER. 

 

CONVERTIBLE PROMISSORY NOTE

 

	
Note No. 11

	
 May 13, 2015

	
U.S. $20,000.00

	
 Tampa, Florida

 

 

FOR VALUE RECEIVED, the undersigned Kingfish Holding Corporation, a Delaware corporation (the “Company”), promises to pay to the order of James K. Toomey (“Payee”, and Payee and any subsequent permitted holder(s) of this Note being referred to collectively as “Holder”), at Holder’s address set forth below (or by wire transfer to Holder’s wire address set forth below) or at such other place as Holder may designate in writing pursuant to the notice provisions below, the principal sum of TWENTY THOUSAND DOLLARS ($20,000.00) (the “Principal Amount”), together with accrued and unpaid interest thereon, said principal and interest to be due and payable as stated below.

 

This convertible promissory note (the “Note”) is issued pursuant to the terms of that certain Convertible Promissory Note Purchase Agreement (as amended, the “Purchase Agreement”) dated as of May 13, 2015 by and between the Company and the Payee. Capitalized terms used herein without definition shall have the meanings given to such terms in the Purchase Agreement.

 

1.      Interest Rate. The Company promises to pay simple interest on the outstanding principal amount of this Note from March 5, 2015 (the date that the underlying loan was originally made by the Holder to the Company) until paid in full at the fixed rate of three and one-half percent (3.5%) per annum. Interest shall be calculated on a 365-day year basis and shall be due and payable as set forth below.

 

2.      Maturity. Unless this Note has been previously converted in accordance with the terms of Section 5 hereof, all outstanding principal and accrued and unpaid interest on this Note, plus all fees, costs and expenses then due under this Note, become fully due and payable upon demand by the Holder (the “Maturity Date”); provided, however, that no demand for payment shall be made prior to June 1, 2015.

 

	 
	
B1-1

	

 

3.     Payments. No principal amount of this Note or any accrued interest on the principal balance of this Note is due or payable until the Maturity Date.

 

4.     Prepayment. The Company may not prepay this Note prior to the Maturity Date without the consent of the Holder. Following the Maturity Date, the Company may prepay any part or all of any amount payable under this Note, including principal or interest or both, at any time or times without any premium or penalty whatsoever. Any and all prepayments shall be applied first to reimbursement of Holder for any costs or expenses incurred by Holder to enforce or collect amounts owed hereunder, then to repayment of any accrued and unpaid interest hereunder, and then to principal outstanding hereunder.

 

5.      Optional Conversion of Note. 

 

(a)    Optional Conversion Rights. The outstanding principal balance of this Note shall be convertible, in whole or in part, at the option of the Holder at any time prior to the Maturity Date, into shares of common stock, par value $0.0001 per share, of the Company (“Common Stock”), at the then-Conversion Price (as defined in Section 5(d) below) (the “Optional Conversion Right”), commencing upon the earliest of any of the following:

 

(i) the date that the Company takes all corporate action necessary to increase the number of authorized shares of Common Stock in an amount sufficient to issue those shares of Common Stock issuable upon the exercise of the Optional Conversion Right, in whole or in part, by the Holder (the “Authorization Actions”),

 

(ii) Sale of the Company (as defined in Section 5(d) below), or

 

(iii) immediately prior to the closing of any equity financing or issuance of debt securities by the Company in a transaction or a series of related transactions resulting in aggregate proceeds of at least One Hundred Thousand Dollars ($100,000).

 

The date that the Optional Conversion Right first becomes available to the Holder is referred to herein as “Determination Date.” To the extent that the Holder decides to exercise his or her Optional Conversion Right, then any unpaid interest on this Note shall be converted into Common Stock on the same terms as the principal of the Note.

 

(b)    Covenants of Company. The Company shall take all action as may be necessary to assure that such shares of Common Stock (and any other securities and property) may be issued and delivered as provided herein without violation of any applicable law or regulation, or of any requirements, of any domestic securities exchange or inter-dealer quotation system upon which the Common Stock may be listed.

 

(c)     Exercise of Optional Conversion Right. The Optional Conversion Right may be exercised by the Holder, in whole but not in part, at any time, and from time to time after the Determination Date and prior to the Maturity Date, by the surrender and presentment of this Note accompanied by a duly executed Notice of Exercise in the form attached hereto (the “Exercise Notice”), presented to the Company, at its principal office or at such other place as the Company may designate by notice in writing to the Holder.

 

	 
	
B1-2

	

 

(d)     Definitions. For purposes of this Note:

 

(i) The term “Conversion Price” shall be $0.01 per share of Common Stock, subject to adjustment as provided in Section 5(e) hereof.

 

(ii) The term “Conversion Shares” shall be those shares of Common Stock issued upon Conversion of this Note.

 

(iii) The term “Sale of the Company” shall mean (A) any consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, other than any such consolidation, merger or reorganization in which the shareholders of the Company immediately prior to such consolidation, merger or reorganization, continue to hold at least a majority of the voting power of the surviving entity in substantially the same proportions (or, if the surviving entity is a wholly owned subsidiary, its parent) immediately after such consolidation, merger or reorganization; (B) any transaction or series of related transactions to which the Company is a party in which in excess of 50% of the Company’s voting power is transferred; provided, however, that a Sale of the Company shall not include any transaction or series of transactions principally for bona fide equity financing purposes in which cash is received by the Company or any successor or indebtedness of the Company is cancelled or converted or a combination thereof; or (C) a sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Company. 

 

(e)     Anti-Dilution Provisions. The number and kind of securities and other property that may be acquired upon the conversion of this Note and the Conversion Price shall be subject to adjustment, from time to time, upon the happening of any of the following events:

 

(i) In the event that the Company shall declare, pay, or make any dividend upon its outstanding shares of Common Stock payable in Common Stock or shall effect a subdivision of the outstanding Common Stock into a greater number of shares of Common Stock, then the number of Conversion Shares that may thereafter be purchased upon the exercise of the rights represented hereby shall be increased in proportion to the increase in the number of outstanding shares of Common Stock through such dividend or subdivision, and the Conversion Price shall be decreased in such proportion. In case the Company shall at any time combine the outstanding shares of Common Stock into a smaller number of shares of Common Stock, the number of Conversion Shares that may thereafter be acquired upon the exercise of the rights represented hereby shall be decreased in proportion to the decrease through such combination and the Conversion Price shall be increased in such proportion.

 

(ii) In the event that the Company declares, pays, or makes any dividend or other distribution upon its outstanding shares of Common Stock payable in securities or other property (excluding cash dividends and dividends payable in shares of Common Stock, but including, without limitation, shares of any other class of the Company’s stock or stock or other securities convertible into or exchangeable for shares of Common Stock or any other class of the Company’s stock or other interests in the Company or its assets), a proportionate part of those securities or that other property shall be set aside by the Company and delivered to the Holder in the event that the Holder exercises his Optional Conversion Right with respect to this Note. The securities and other property then deliverable to the Holder upon the conversion of this Note shall be in the same ratio to the total securities and property set aside for the Holder as the number of Conversion Shares with respect to which this Note is then converted is to the total number of Conversion Shares that may be acquired pursuant to this Note at the time the securities or property were set aside for the Holder.

 

	 
	
B1-3

	

 

(f)     Conversion Price Adjustments. Except as otherwise provided in this Section 5, upon any adjustment of the Conversion Price, the Holder shall be entitled to purchase, based upon the new Conversion Price, the number of shares of Common Stock, calculated to the nearest full share, obtained by: (i) multiplying the (A) number of Conversion Shares that may be acquired pursuant to this Note immediately prior to the adjustment of the Conversion Price by (B) the Conversion Price in effect immediately prior to its adjustment, and (ii) dividing the product so obtained in clause (i) by the new Conversion Price.

 

(g)     Prior Notice of a Sale of the Company. Notwithstanding any provision of this Note to the contrary, in the event that the Company consummates a Sale of the Company prior to the conversion or repayment in full of this Note, the Company will give the Holder at least five days prior written notice of the anticipated closing date of such Sale of the Company.

 

6.      Expenses. In the event of any failure of the Company to pay all amounts due upon a demand made pursuant to Section 2 of this Note, the Company shall pay all reasonable attorneys’ fees and court costs incurred by Holder in enforcing and collecting this Note.

 

7.      Waiver. The Company hereby waives demand, notice, presentment, protest and notice of dishonor.

 

8.      Notices. Any notice or other communications to be given or that may be given pursuant to this Note shall be deemed to have been given: (x) three (3) calendar days after the deposit of such notice or communication in the United States Mail, registered or certified, return receipt requested, with proper postage affixed thereto; (y) on the first Business Day after depositing such notice of communication with Federal Express, Express Mail, or other expedited mail or package delivery service guaranteeing delivery no later than the next Business Day if next Business Day delivery service has been requested and paid for (or on such subsequent Business Day as such delivery service has been requested, guaranteed and paid for); or (z) upon delivery if hand delivered or telecopied to the appropriate address and person as provided hereinabove or to the person to whose attention the notice is to be given to the other parties in the manner hereinabove provided; provided, however, that any notice changing Holder’s address or wire address shall be effective only upon receipt by the Company.

 

9.      Governing Law. 

 

(a) This Note shall in all respects be governed by and construed in accordance with the laws of the State of Florida, without giving effect to the principles of conflict of laws thereof. 

 

(b) Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereunder shall be brought solely in the courts of the State of Florida located in Hillsborough County, Florida, or, if it has or can acquire jurisdiction, in the United States District Court for the Middle District of Florida (Orlando or Tampa Division), and each of the parties hereto hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and waives any objection to the venue or the convenience of forum of any such courts. 

 

	 
	
B1-4

	

 

10.     Modification; Waiver. No term of this Note may be amended or waived without the prior written consent of the Company and the Holder.

 

11.     Assignment. Neither the Company nor the Holder may assign or transfer this Note without the prior written consent of the other party (not to be unreasonably withheld) provided that, in no event shall this Note or any interest herein be transferable, in whole or in part, to any person or entity under circumstances that would be reasonably likely to violate or trigger a consent or other approval requirement under applicable laws, including but not limited to U.S. securities laws, the Foreign Corrupt Practices Act, FINSA, laws restricting money transfers and payments to persons or entities located in certain restricted countries, foreign nationals identified on any restricted list, and associated regulations as in existence at the time, and the laws and regulations of any other country. Any such written notice shall set forth in reasonable detail the identity of the new Holder(s) and the terms of transfer of this Note (including a release by the applicable Holder of any right to receive any payments hereunder) and the Company shall be obligated to register the transfer of this Note and make payments to any Holder hereunder only if the Company determines such transfer or payment is not restricted or prohibited by any such laws (and the due date of any such payment shall be extended by the length of time that any such legal restriction or prohibition exists). This Note shall inure to the benefit of Holder, its successors and assigns, and to any person to whom Holder may grant an interest in any of the indebtedness evidenced hereby in compliance with the foregoing restrictions, and shall be binding upon the Company and its successors and assigns. No person or entity not a direct party hereto shall be entitled to enforce any rights or obligations hereunder as a third party beneficiary or otherwise.

 

12.     Waiver of Jury Trial. EACH PARTY HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 15.

 

	 
	
B1-5

	

 

13.      Time of Essence. Time is of the essence of the payment and performance of this Note.

 

14.     Miscellaneous. The Company and Holder have participated jointly in the negotiation and drafting of this Note. In the event an ambiguity or question of intent or interpretation arises, this Note shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Note. No delay by Holder in enforcing its rights hereunder or otherwise, shall prejudice Holder’s rights to enforce this Note. Neither Party to this Note will be liable to the other for any failure or delay in performance under this Note due to circumstances beyond its reasonable control including, without limitation, Acts of God, labor disruption, war, terrorist threat or government action, or lack of availability of wire transfer systems or other international or national systems; provided, that if either party is unable to perform its obligations under this Note for one of these reasons it shall give prompt written notice thereof to the other party and the time for performance, if any, shall be deemed to be extended for a period equal to the duration of the conditions preventing performance.

 

15.     Agreement by Holder. By its acceptance of this Note, Holder agrees to be bound by the terms hereof.

 

16.     Documentary Stamp Taxes. All required Florida documentary stamp taxes due in connection with this Note have been paid.

 

[Signature Page Follows]

 

	 
	
B1-6

	

 

	 	Kingfish Holding Corporation,
a Delaware corporation

	 
	 		 	
		By:		 
		 	 	 
	 	Name:		
	 			
	 	Title:		

 

HOLDER:

 

___________________________

James K. Toomey

 

 

[SIGNATURE PAGE TO CONVERTIBLE PROMISSORY NOTE NO. 11 OF KINGFISH HOLDING CORPORATION]

 

	 
	
B1-7

	

 

 

NOTICE OF EXERCISE

 

(To be executed by the Holder desiring to exercise the right to convert this Note into Units of KINGFISH HOLDING CORPORATION, a Delaware corporation)

 

The undersigned Holder of a Convertible Promissory Note (Note No. 11) hereby elects to exercise his or her Optional Conversion Right, pursuant to the provisions of the Note dated May 13, 2015 issued to the Holder by Kingfish Holding Corporation, a Delaware corporation, to receive that number of shares of Common Stock into which the outstanding principal amount of, and accrued and unpaid interest on, this Note is convertible at the Conversion Price at the address set forth below.

 

Dated:                       , _______

 

	 	Printed Name:		
				
	 	Signature:		
	 			
	 	Address:		
				
				

 

(Signature must conform in all respects to the name of holder as specified on the face of this Note.)

 

	 
	
B1-8

	

 

Exhibit B-2

 

THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED, NOR WILL ANY ASSIGNEE, VENDEE, TRANSFEREE, OR ENDORSEE THEREOF BE RECOGNIZED AS HAVING ACQUIRED ANY SUCH UNITS BY THE ISSUER FOR ANY PURPOSES, EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND THE SECURITIES LAWS OF ALL OTHER APPLICABLE JURISDICTIONS OR (2) THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION SHALL BE ESTABLISHED TO THE REASONABLE SATISFACTION OF THE ISSUER. 

 

CONVERTIBLE PROMISSORY NOTE

 

	
Note No. 12

	
 May 13, 2015

	
U.S. $40,000.00

	
 Tampa, Florida

 

 

FOR VALUE RECEIVED, the undersigned Kingfish Holding Corporation, a Delaware corporation (the “Company”), promises to pay to the order of James K. Toomey (“Payee”, and Payee and any subsequent permitted holder(s) of this Note being referred to collectively as “Holder”), at Holder’s address set forth below (or by wire transfer to Holder’s wire address set forth below) or at such other place as Holder may designate in writing pursuant to the notice provisions below, the principal sum of FORTY THOUSAND DOLLARS ($40,000.00) (the “Principal Amount”), together with accrued and unpaid interest thereon, said principal and interest to be due and payable as stated below.

 

This convertible promissory note (the “Note”) is issued pursuant to the terms of that certain Convertible Promissory Note Purchase Agreement (as amended, the “Purchase Agreement”) dated as of May 13, 2015 by and between the Company and the Payee. Capitalized terms used herein without definition shall have the meanings given to such terms in the Purchase Agreement.

 

1.     Interest Rate. The Company promises to pay simple interest on the outstanding principal amount of this Note from March 16, 2015 (the date that the underlying loan was originally made by the Holder to the Company) until paid in full at the fixed rate of three and one-half percent (3.5%) per annum. Interest shall be calculated on a 365-day year basis and shall be due and payable as set forth below.

 

2.     Maturity. Unless this Note has been previously converted in accordance with the terms of Section 5 hereof, all outstanding principal and accrued and unpaid interest on this Note, plus all fees, costs and expenses then due under this Note, become fully due and payable upon demand by the Holder (the “Maturity Date”); provided, however, that no demand for payment shall be made prior to June 1, 2015.

 

	 
	
B2-1

	

 

3.     Payments. No principal amount of this Note or any accrued interest on the principal balance of this Note is due or payable until the Maturity Date.

 

4.     Prepayment. The Company may not prepay this Note prior to the Maturity Date without the consent of the Holder. Following the Maturity Date, the Company may prepay any part or all of any amount payable under this Note, including principal or interest or both, at any time or times without any premium or penalty whatsoever. Any and all prepayments shall be applied first to reimbursement of Holder for any costs or expenses incurred by Holder to enforce or collect amounts owed hereunder, then to repayment of any accrued and unpaid interest hereunder, and then to principal outstanding hereunder.

 

5.      Optional Conversion of Note. 

 

(a)    Optional Conversion Rights. The outstanding principal balance of this Note shall be convertible, in whole or in part, at the option of the Holder at any time prior to the Maturity Date, into shares of common stock, par value $0.0001 per share, of the Company (“Common Stock”), at the then-Conversion Price (as defined in Section 5(d) below) (the “Optional Conversion Right”), commencing upon the earliest of any of the following:

 

(i) the date that the Company takes all corporate action necessary to increase the number of authorized shares of Common Stock in an amount sufficient to issue those shares of Common Stock issuable upon the exercise of the Optional Conversion Right, in whole or in part, by the Holder (the “Authorization Actions”),

 

(ii) Sale of the Company (as defined in Section 5(d) below), or

 

(iii) immediately prior to the closing of any equity financing or issuance of debt securities by the Company in a transaction or a series of related transactions resulting in aggregate proceeds of at least One Hundred Thousand Dollars ($100,000).

 

The date that the Optional Conversion Right first becomes available to the Holder is referred to herein as “Determination Date.” To the extent that the Holder decides to exercise his or her Optional Conversion Right, then any unpaid interest on this Note shall be converted into Common Stock on the same terms as the principal of the Note.

 

(b)    Covenants of Company. The Company shall take all action as may be necessary to assure that such shares of Common Stock (and any other securities and property) may be issued and delivered as provided herein without violation of any applicable law or regulation, or of any requirements, of any domestic securities exchange or inter-dealer quotation system upon which the Common Stock may be listed.

 

(c)     Exercise of Optional Conversion Right. The Optional Conversion Right may be exercised by the Holder, in whole but not in part, at any time, and from time to time after the Determination Date and prior to the Maturity Date, by the surrender and presentment of this Note accompanied by a duly executed Notice of Exercise in the form attached hereto (the “Exercise Notice”), presented to the Company, at its principal office or at such other place as the Company may designate by notice in writing to the Holder.

 

	 
	
B2-2

	

 

(d)     Definitions. For purposes of this Note:

 

(i) The term “Conversion Price” shall be $0.01 per share of Common Stock, subject to adjustment as provided in Section 5(e) hereof.

 

(ii) The term “Conversion Shares” shall be those shares of Common Stock issued upon Conversion of this Note.

 

(iii) The term “Sale of the Company” shall mean (A) any consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, other than any such consolidation, merger or reorganization in which the shareholders of the Company immediately prior to such consolidation, merger or reorganization, continue to hold at least a majority of the voting power of the surviving entity in substantially the same proportions (or, if the surviving entity is a wholly owned subsidiary, its parent) immediately after such consolidation, merger or reorganization; (B) any transaction or series of related transactions to which the Company is a party in which in excess of 50% of the Company’s voting power is transferred; provided, however, that a Sale of the Company shall not include any transaction or series of transactions principally for bona fide equity financing purposes in which cash is received by the Company or any successor or indebtedness of the Company is cancelled or converted or a combination thereof; or (C) a sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Company. 

 

(e)     Anti-Dilution Provisions. The number and kind of securities and other property that may be acquired upon the conversion of this Note and the Conversion Price shall be subject to adjustment, from time to time, upon the happening of any of the following events:

 

(i) In the event that the Company shall declare, pay, or make any dividend upon its outstanding shares of Common Stock payable in Common Stock or shall effect a subdivision of the outstanding Common Stock into a greater number of shares of Common Stock, then the number of Conversion Shares that may thereafter be purchased upon the exercise of the rights represented hereby shall be increased in proportion to the increase in the number of outstanding shares of Common Stock through such dividend or subdivision, and the Conversion Price shall be decreased in such proportion. In case the Company shall at any time combine the outstanding shares of Common Stock into a smaller number of shares of Common Stock, the number of Conversion Shares that may thereafter be acquired upon the exercise of the rights represented hereby shall be decreased in proportion to the decrease through such combination and the Conversion Price shall be increased in such proportion.

 

(ii) In the event that the Company declares, pays, or makes any dividend or other distribution upon its outstanding shares of Common Stock payable in securities or other property (excluding cash dividends and dividends payable in shares of Common Stock, but including, without limitation, shares of any other class of the Company’s stock or stock or other securities convertible into or exchangeable for shares of Common Stock or any other class of the Company’s stock or other interests in the Company or its assets), a proportionate part of those securities or that other property shall be set aside by the Company and delivered to the Holder in the event that the Holder exercises his Optional Conversion Right with respect to this Note. The securities and other property then deliverable to the Holder upon the conversion of this Note shall be in the same ratio to the total securities and property set aside for the Holder as the number of Conversion Shares with respect to which this Note is then converted is to the total number of Conversion Shares that may be acquired pursuant to this Note at the time the securities or property were set aside for the Holder.

 

	 
	
B2-3

	

 

(f)     Conversion Price Adjustments. Except as otherwise provided in this Section 5, upon any adjustment of the Conversion Price, the Holder shall be entitled to purchase, based upon the new Conversion Price, the number of shares of Common Stock, calculated to the nearest full share, obtained by: (i) multiplying the (A) number of Conversion Shares that may be acquired pursuant to this Note immediately prior to the adjustment of the Conversion Price by (B) the Conversion Price in effect immediately prior to its adjustment, and (ii) dividing the product so obtained in clause (i) by the new Conversion Price.

 

(g)     Prior Notice of a Sale of the Company. Notwithstanding any provision of this Note to the contrary, in the event that the Company consummates a Sale of the Company prior to the conversion or repayment in full of this Note, the Company will give the Holder at least five days prior written notice of the anticipated closing date of such Sale of the Company.

 

6.      Expenses. In the event of any failure of the Company to pay all amounts due upon a demand made pursuant to Section 2 of this Note, the Company shall pay all reasonable attorneys’ fees and court costs incurred by Holder in enforcing and collecting this Note.

 

7.      Waiver. The Company hereby waives demand, notice, presentment, protest and notice of dishonor.

 

8.      Notices. Any notice or other communications to be given or that may be given pursuant to this Note shall be deemed to have been given: (x) three (3) calendar days after the deposit of such notice or communication in the United States Mail, registered or certified, return receipt requested, with proper postage affixed thereto; (y) on the first Business Day after depositing such notice of communication with Federal Express, Express Mail, or other expedited mail or package delivery service guaranteeing delivery no later than the next Business Day if next Business Day delivery service has been requested and paid for (or on such subsequent Business Day as such delivery service has been requested, guaranteed and paid for); or (z) upon delivery if hand delivered or telecopied to the appropriate address and person as provided hereinabove or to the person to whose attention the notice is to be given to the other parties in the manner hereinabove provided; provided, however, that any notice changing Holder’s address or wire address shall be effective only upon receipt by the Company.

 

9.      Governing Law. 

 

(a)      This Note shall in all respects be governed by and construed in accordance with the laws of the State of Florida, without giving effect to the principles of conflict of laws thereof. 

 

(b)      Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereunder shall be brought solely in the courts of the State of Florida located in Hillsborough County, Florida, or, if it has or can acquire jurisdiction, in the United States District Court for the Middle District of Florida (Orlando or Tampa Division), and each of the parties hereto hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and waives any objection to the venue or the convenience of forum of any such courts. 

 

	 
	
B2-4

	

 

10.     Modification; Waiver. No term of this Note may be amended or waived without the prior written consent of the Company and the Holder.

 

11.     Assignment. Neither the Company nor the Holder may assign or transfer this Note without the prior written consent of the other party (not to be unreasonably withheld) provided that, in no event shall this Note or any interest herein be transferable, in whole or in part, to any person or entity under circumstances that would be reasonably likely to violate or trigger a consent or other approval requirement under applicable laws, including but not limited to U.S. securities laws, the Foreign Corrupt Practices Act, FINSA, laws restricting money transfers and payments to persons or entities located in certain restricted countries, foreign nationals identified on any restricted list, and associated regulations as in existence at the time, and the laws and regulations of any other country. Any such written notice shall set forth in reasonable detail the identity of the new Holder(s) and the terms of transfer of this Note (including a release by the applicable Holder of any right to receive any payments hereunder) and the Company shall be obligated to register the transfer of this Note and make payments to any Holder hereunder only if the Company determines such transfer or payment is not restricted or prohibited by any such laws (and the due date of any such payment shall be extended by the length of time that any such legal restriction or prohibition exists). This Note shall inure to the benefit of Holder, its successors and assigns, and to any person to whom Holder may grant an interest in any of the indebtedness evidenced hereby in compliance with the foregoing restrictions, and shall be binding upon the Company and its successors and assigns. No person or entity not a direct party hereto shall be entitled to enforce any rights or obligations hereunder as a third party beneficiary or otherwise.

 

12.     Waiver of Jury Trial. EACH PARTY HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 15.

 

	 
	
B2-5

	

 

13.     Time of Essence. Time is of the essence of the payment and performance of this Note.

 

14.     Miscellaneous. The Company and Holder have participated jointly in the negotiation and drafting of this Note. In the event an ambiguity or question of intent or interpretation arises, this Note shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Note. No delay by Holder in enforcing its rights hereunder or otherwise, shall prejudice Holder’s rights to enforce this Note. Neither Party to this Note will be liable to the other for any failure or delay in performance under this Note due to circumstances beyond its reasonable control including, without limitation, Acts of God, labor disruption, war, terrorist threat or government action, or lack of availability of wire transfer systems or other international or national systems; provided, that if either party is unable to perform its obligations under this Note for one of these reasons it shall give prompt written notice thereof to the other party and the time for performance, if any, shall be deemed to be extended for a period equal to the duration of the conditions preventing performance.

 

15.     Agreement by Holder. By its acceptance of this Note, Holder agrees to be bound by the terms hereof.

 

16.     Documentary Stamp Taxes. All required Florida documentary stamp taxes due in connection with this Note have been paid.

 

[Signature Page Follows]

 

	 
	
B2-6

	

 

 

	 	Kingfish Holding Corporation,
a Delaware corporation

	 	 	 	
		By:		 
		 	 	 
	 	Name:		
				
	 	Title:		

 

HOLDER:

 

______________________________

James K. Toomey

 

[Signature page to Convertible Promissory Note No. 12 of Kingfish Holding Corporation]

 

	 
	
B2-7

	

 

NOTICE OF EXERCISE

 

(To be executed by the Holder desiring to exercise the right to convert this Note into Units of KINGFISH HOLDING CORPORATION, a Delaware corporation)

 

The undersigned Holder of a Convertible Promissory Note (Note No. 12) hereby elects to exercise his or her Optional Conversion Right, pursuant to the provisions of the Note dated May 13, 2015 issued to the Holder by Kingfish Holding Corporation, a Delaware corporation, to receive that number of shares of Common Stock into which the outstanding principal amount of, and accrued and unpaid interest on, this Note is convertible at the Conversion Price at the address set forth below.

 

Dated:                             ,

 

	 	Printed Name:		
			 	
	 	Signature:		
	 	 	 	
	 	Address:		

 

(Signature must conform in all respects to the name of holder as specified on the face of this Note.)

 

 

B2-8EX-10.1

 EXHIBIT 10.1 

ADTRAN, INC. 
 2015
EMPLOYEE STOCK INCENTIVE PLAN 
 ARTICLE I 

PLAN INFORMATION 
  

	1.1	Background. ADTRAN, Inc. (the “Company”) hereby adopts this new equity incentive plan for the benefit of its employees to replace certain Prior Plans that have expired, or will soon expire. This
new plan shall be known as the ADTRAN, Inc. 2015 Employee Stock Incentive Plan (the “Plan”). 

  

	1.2	General Purpose. The purpose of the Plan is to further the growth and development of the Company by offering employees of the Company and its Affiliates the opportunity to own a proprietary interest in the
Company. The Company intends that the Plan will provide such employees with an added incentive to continue in the employ, promote the growth, efficiency and profitability, and help to attract outstanding employees to the service, of the Company and
its Affiliates. 

  

	1.3	Types of Awards Available Under the Plan. The Plan permits Awards of Stock Options, Stock Appreciation Rights (“SARs”), Restricted Stock and Restricted Stock Units (“RSUs”). The
types of Stock Options permitted under the Plan are incentive stock options (“ISOs”) and nonqualified stock options (“NQSOs”). 

  

	1.4	Intended Tax Effects of Awards. The Company intends that ISOs granted under the Plan qualify as incentive stock options under Code Section 422. Restricted Stock Awards are subject to taxation under Code
Section 83. Nonqualified Stock Options and Stock Appreciation Rights are subject to taxation when the Nonqualified Stock Option or Stock Appreciation Right is exercised. Restricted Stock Units are subject to taxation when the underlying shares
of Common Stock are issued to the Participant. It is intended that some Awards under the Plan will qualify as “performance-based compensation” under Code Section 162(m). 

 

	1.5	Effective Date of the Plan. The Plan shall be effective on May 13, 2015 (the “Effective Date”), the date of the Company’s annual meeting of shareholders and provided that the Plan is
approved at such meeting by the Company’s shareholders in accordance with applicable law (including, without limitation, approvals required under Rule 16b-3, Code Section 162(m) and Code Section 422) and any registration or stock
exchange rule. Notwithstanding the above, any Stock Option that is designated as an Incentive Stock Option shall automatically be treated as a Nonqualified Stock Option if the Plan is not approved by the shareholders of the Company within twelve
(12) months after the Effective Date of the Plan; no Award that is intended to qualify as “performance-based compensation” within the meaning of Code Section 162(m) that is granted to a Covered Employee shall be effective unless
and until the Plan is approved by the Company’s shareholders; and no Restricted Stock Award shall be granted prior to approval by the Company’s shareholders. 

	1.6	Term. Unless earlier terminated by the Board pursuant to the provisions of Section 10 hereof, the Plan shall remain in effect until the tenth anniversary of January 20, 2015, the date the Plan was
adopted by the Board; provided, however, that no Award that is intended to be “performance-based compensation” under Code Section 162(m) that is granted to a Covered Employee (other than an Stock Option or Stock
Appreciation Right) shall be granted on or after the five (5) year anniversary of the shareholder approval of the Plan unless the Performance Measures have been reapproved (or other designated business criteria has been approved) by the
Company’s shareholders within the previous five (5) years as required by the “performance-based compensation” exemption under Code Section 162(m). Notwithstanding its termination, the Plan shall remain in effect with respect
to outstanding Awards as long as any Awards are outstanding. 

  

	1.7	Operation, Administration and Definitions. The operation and administration of the Plan are subject to the provisions of this Plan document. Capitalized terms used in the Plan are defined in Article II below or
may be defined within the Plan. 

  

	1.8	Legal Compliance. The Plan is intended to comply with (A) the requirements for ISOs under Code Section 422, (B) Code Section 409A, to the extent any Awards are treated as nonqualified deferred
compensation under Code Section 409A, (C) the exemption of Awards under the provisions of Rule 16b-3 and (D) Code Section 162(m), to the extent any Awards are intended to be “performance-based compensation” under Code
Section 162(m). 

 ARTICLE II 

PLAN DEFINITIONS 
 For
purposes of the Plan, the terms listed below are defined as follows: 
  

	2.1	162(m) Performance Award means any Award that is intended to meet the exemption for “performance-based compensation” as defined under Code Section 162(m). 

 

	2.2	Affiliate means an entity that, directly or indirectly, controls, is controlled by, or is under common control with the Company, within the meaning of Rule 12b-2 of the Exchange Act. 

 

	2.3	Award means any award or benefit granted to Participant under the Plan, including, without limitation, the grant of Stock Options, Stock Appreciation Rights, Restricted Stock and/or Restricted Stock Units.

  

	2.4	Award Agreement means the written (or electronic) agreement issued by the Company to the Participant that sets forth the terms and provisions of the Award granted under the Plan. 

 

	2.5	Base Value means the per share base price of a Stock Appreciation Right. 

  

	2.6	Board or Board of Directors means the Board of Directors of the Company. 

	2.7	Cause means, as defined in such Participant’s employment, severance or similar agreement (if any) with the Company or an Affiliate if such an agreement exists as of the Participant’s Separation from
Service and contains a definition of cause (or a like term) or, if no such agreement exists or such agreement does not contain a definition of cause (or a like term), then Cause means: 

 

	 	(A)	willful and continued failure to substantially perform his duties with the Company within ten (10) business days after a written demand for substantial performance is delivered to the Participant which identifies
the manner in which the Company believes that the Participant has not substantially performed his duties; 

  

	 	(B)	unlawful or willful misconduct which is economically injurious to the Company or to any Affiliate; 

  

	 	(C)	commission of, or a plea of guilty or nolo contendere to, a felony charge (other than a traffic violation); 

  

	 	(D)	habitual drug or alcohol abuse that impairs the Participant’s ability to perform the essential duties of his position; 

  

	 	(E)	an act of embezzlement or fraud; 

  

	 	(F)	competition with the business of the Company or an Affiliate, either directly or indirectly; or 

  

	 	(G)	a breach of any provision of any employment, confidentiality, intellectual property or non-competition agreement with the Company or an Affiliate, and to the extent curable, such breach is not cured by the Participant
within ten (10) business days after a written notice is delivered to the Participant. 

  

	2.8	Change of Control means the occurrence of any of the following events on or after the Effective Date of this Plan: 

  

	 	(A)	Change in Ownership. A change in the ownership of the Company occurs on the date that any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with
stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company. However, if any one person or more than one person acting as a group, is considered
to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the
Company or to cause a change in the effective control of the Company (within the meaning of subsection (B) below). An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in
which the Company acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this Section. This applies only when there is a transfer of stock of the Company (or issuance of stock of the Company) and stock
in the Company remains outstanding after the transaction. 

	 	(B)	Change in Effective Control. A change in the effective control of the Company occurs on the date that either: (1) any one person, or more than one person acting as a group, acquires (or has acquired during
the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing thirty-five percent (35%) or more of the total voting power of the stock of the Company; or (2) a
majority of members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. A change in effective
control may occur in any transaction in which either of the two corporations involved in the transaction has a Change of Control; or 

  

	 	(C)	Change in Ownership of a Substantial Portion of Assets. A change in the ownership of a substantial portion of the Company’s assets shall occur on the date that any one person, or more than one person acting
as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than forty percent
(40%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the
assets being disposed of, determined without regard to any liabilities associated with such assets. 

 Notwithstanding the
foregoing, if it is determined that an Award hereunder is subject to Code Section 409A, the Company will not be deemed to have undergone a Change of Control unless the Company is deemed to have undergone a “change in ownership,” a
“change in effective control” or a “change in the ownership of a substantial portion of the assets” within the meaning of Code Section 409A. 
  

	2.9	Code means the Internal Revenue Code of 1986, as amended. A reference to any provision of the Code includes any regulations and formal guidance issued thereunder and any reference to any successor provision of
the Code. 

  

	2.10	Committee means the committee appointed by the Board pursuant to Section 3.2 hereof to administer and interpret the Plan in accordance with Article III. The Committee shall (A) consist of two or more
individuals each of whom shall be, to the extent required by Rule 16b-3, a “non-employee director” as defined in Rule 16b-3, and to the extent required by Code Section 162(m), an Outside Director and (B) satisfy the applicable
requirements of any stock exchange or national market system on which the Common Stock may then be listed. 

  

	2.11	Common Stock means the common stock of the Company, par value $0.01 per share. 

  

	2.12	Company means ADTRAN, Inc., a Delaware corporation, and any successor thereto. 

  

	2.13	Covered Employee means a Participant who is a “covered employee” within the meaning of Code Section 162(m)(3). 

	2.14	Disability means a Participant is unable to engage in any substantial gainful activity by reason of any medically-determinable physical or mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than twelve (12) months. A Participant shall be considered disabled only if he furnishes such proof of Disability as the Committee may reasonably require from time to time.

  

	2.15	Effective Date means the effective date of this Plan, which is May 13, 2015, subject to shareholder approval as provided in Section 1.5. 

 

	2.16	Employee means any common law employee of the Company or an Affiliate who is actively employed at the time the Award is made. As required by law, only Employees of the Company and any Parent or Subsidiary are
eligible to receive ISOs. 

  

	2.17	Exchange Act means the Securities Exchange Act of 1934, as amended. 

  

	2.18	Exercise Price means the purchase price of the shares of Common Stock underlying a Stock Option. 

  

	2.19	Fair Market Value of a share of Common Stock as of a date of determination means the following: 

  

	 	(A)	Stock Listed and Shares Traded. If the Common Stock is listed and traded on a national securities exchange (as such term is defined by the Exchange Act) or on the NASDAQ National Market System on the date of
determination, the Fair Market Value per share shall be the closing price of a share of the Common Stock on said national securities exchange or NASDAQ National Market System on the business day immediately preceding the date of determination. If
the Common Stock is traded in the over-the-counter market, the Fair Market Value per share shall be the average of the closing bid and asked prices of a share on the business day immediately preceding the date of determination. 

 

	 	(B)	Stock Listed But No Shares Traded. If the Common Stock is listed on a national securities exchange or on the NASDAQ National Market System but no shares of the Common Stock are traded on the date of determination
but there were shares traded on dates within a reasonable period before the date of determination, the Fair Market Value shall be the closing price of a share of the Common Stock on the most recent date before the date of determination. If the
Common Stock is regularly traded in the over-the-counter market but no shares of the Common Stock are traded on the date of determination (or if records of such trades are unavailable or burdensome to obtain) but there were shares traded on dates
within a reasonable period before the date of determination, the Fair Market Value shall be the average of the closing bid and asked prices of a share of the Common Stock on the most recent date before the date of determination on which trading
occurred. 

	 	(C)	Stock Not Listed. If the Common Stock is not listed on a national securities exchange or on the NASDAQ National Market System and is not regularly traded in the over-the-counter market, then the Committee shall
determine the Fair Market Value of the Common Stock in a manner consistent with the requirements of Code Section 409A, and in the case of an ISO, in compliance with Code Section 422. 

The Committee’s determination of Fair Market Value, which shall be made pursuant to the foregoing provisions, shall be final and binding
for all purposes of this Plan. 
  

	2.20	Family Member means a person who is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother,
sister, brother-in-law, or sister-in-law, including adoptive relationships, of the Participant, any person sharing the Participant’s household (other than a tenant or employee), a trust in which any one or more of these persons have more than
fifty percent (50%) of the beneficial interest, a foundation in which any one or more of these persons (or the Participant) control the management of assets, and any other entity in which one or more of these persons (or the Participant) own
more than fifty percent (50%) of the voting interests. 

  

	2.21	Incentive Stock Option or ISO means an option to purchase shares of Common Stock that is granted under Article VII hereof, designated as an incentive stock option, and intended to meet the requirements of
Code Section 422. 

  

	2.22	Nonqualified Stock Option or NQSO means an option to purchase shares of Common Stock that is granted under Article VII hereof and not an incentive stock option within the meaning of Code Section 422.

  

	2.23	Officer means “officer” as defined in Rule 16a-1(f) under Section 16(a) of the Exchange Act. 

  

	2.24	Outside Director means a member of the Board who qualifies as an “outside director,” as that term is defined in Code Section 162(m). 

 

	2.25	Parent means any “parent corporation” of the Company within the meaning of Code Section 424(e). 

  

	2.26	Participant means an individual who has been selected to receive an Award, or with respect to whom an Award is outstanding, under the Plan. 

 

	2.27	Performance Measures means any one or more of the criteria or measurements by which specific performance goals may be established and performance may be measured, as determined by the Committee, in its
discretion, pursuant to the provisions of Article V. 

  

	2.28	Plan means this ADTRAN, Inc. 2015 Employee Stock Incentive Plan. 

	2.29	Prior Plans means the: 

  

	 	(A)	ADTRAN, Inc. 1986 Employee Incentive Stock Option Plan (expired on February 14, 1996); 

  

	 	(B)	ADTRAN, Inc. 1996 Employees Incentive Stock Option Plan (expired on February 14, 2006); and 

  

	 	(C)	ADTRAN, Inc. 2006 Employee Stock Incentive Plan (expires on January 23, 2016). 

  

	2.30	Restricted Stock means an Award of Common Stock that is subject to such conditions, restrictions and contingencies as the Committee determines, including the satisfaction of specified Performance Measures.

  

	2.31	Restricted Stock Unit or RSU means an Award of a unit representing one share of Common Stock that upon satisfaction of certain conditions, restrictions and contingencies as the Committee determines,
including the satisfaction of specified Performance Measures shall result in the issuance of one share of Common Stock. 

  

	2.32	Retirement means the date of a Participant’s Separation from Service with the Company and all of its Affiliates at any time after (A) attaining age 65 or (B) completing twenty-five (25) years
of service for the Company, any Affiliate and any predecessor of the Company or Affiliate. 

  

	2.33	Rule 16b-3 means Rule 16b-3 under Section 16(b) of the Exchange Act, as then in effect or any successor provision. 

  

	2.34	Securities Act means the Securities Act of 1933, as amended. 

  

	2.35	Separation from Service means a termination of employment or service by a Participant with the Company and its Affiliates; provided, that if any Award that is treated as nonqualified deferred compensation
(within the meaning of Code Section 409A), or any dividend or dividend credit thereon, is to be paid or distributed upon a Separation from Service, then a Separation from Service shall not occur unless it qualifies as a “separation from
service” within the meaning of Code Section 409A. Unless otherwise stated in the applicable Award Agreement, a Participant’s change in position, duties or status (e.g., from employee to consultant, consultant to director,
employee to director) shall not result in interrupted or terminated employment or service, so long as such Participant continues to provide services to the Company or an Affiliate and a “separation from service” under Code
Section 409A is not deemed to have occurred. The determination of whether an authorized leave of absence or absence for military or government service or for any other reason shall constitute a Separation from Service for purposes of any Award
granted under the Plan shall be determined by the Committee and, if applicable, in accordance with Code Section 409A, which determination shall be final and conclusive. 

 

	2.36	Stock Appreciation Right or SAR means an Award representing a Participant’s right to receive payment in the form of cash or Common Stock in an amount equal to the excess of the Fair Market Value of
the exercised shares of Common Stock subject to such SAR (or portion thereof) over their Base Value. 

	2.37	Stock Option means an ISO or NQSO, as applicable, granted to an Employee under the Plan. 

  

	2.38	Subsidiary means any “subsidiary corporation” of the Company within the meaning of Code Section 424(f). 

  

	2.39	Ten Percent Shareholder means an individual who owns more than ten percent (10%) of the total combined voting power of all classes of outstanding stock of the Company, its Parent, or any of its Subsidiaries.
In determining stock ownership, the attribution rules of Code Section 424(d) shall apply. 

 ARTICLE III 

PLAN ADMINISTRATION 
  

	3.1	General Administration. The Plan shall be administered and interpreted by the Committee (as designated pursuant to Section 3.2). Subject to the express provisions of the Plan, the Committee shall have
authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, to determine the terms and provisions of the Award Agreements by which Awards shall be evidenced (which shall not be inconsistent with the
terms of the Plan), and to make all other determinations necessary or advisable for the administration of the Plan, all of which determinations shall be final, binding and conclusive on all persons. 

 

	3.2	Appointment of Committee. The Board shall appoint the Committee from among its non-employee members to serve at the pleasure of the Board. The Board from time to time may remove members from, or add members to,
the Committee and shall fill all vacancies thereon. 

  

	3.3	Organization. The Committee may select one of its members as its chairman and shall hold its meetings at such times and at such places as it shall deem advisable. A majority of the Committee shall constitute a
quorum, and such majority shall determine its actions. The Committee shall keep minutes of its proceedings and shall report the same to the Board at least annually. 

 

	3.4	Individuals Eligible for Awards. The individuals eligible to receive Awards shall be active Employees of the Company or its Affiliates, including Employees who are also members of the Board. Only Employees of the
Company, its Parent or any Subsidiary shall be eligible to receive ISOs. 

  

	3.5	Powers of Committee. The Committee may make one or more Awards under the Plan. The Committee shall decide which eligible Employees shall receive an Award and when to grant an Award, the type of Award that it
shall grant and the number of shares of Common Stock covered by the Award, subject to the terms of the Plan. The Committee shall also decide the terms, conditions, performance criteria, restrictions and other provisions of the Award. The Committee
shall act by a majority of its then members, at a meeting of the Committee or by unanimous written consent. The Committee shall keep adequate records concerning the Plan and the Committee’s proceedings and acts in such form and detail as the
Committee may decide. 

	3.6	Delegation by Committee. Unless prohibited by applicable law or the applicable rules of a stock exchange, the Committee may allocate all or some of its responsibilities and powers to any one or more of its
members. The Committee also may delegate some or all of it administrative duties and powers to any Employee, including Officers of the Company or any Affiliate. The Committee hereby delegates to the Company’s Chief Executive Officer the
authority to grant Awards under the Plan to Employees who are not Officers of the Company or any Affiliate, provided that any such Award shall be governed by the form of Award Agreement most recently approved by the Committee for use in
making Awards under the Plan and the Chief Executive Officer shall report any such grants to the Committee at its next meeting. The Committee hereby delegates to the Company’s Corporate Secretary the authority to document any and all Awards
made by the Committee and/or the Chief Executive Officer under the Plan by execution of the appropriate Award Agreements. The Committee may revoke any such allocation or delegation at any time. 

 

	3.7	Information to be Furnished to Committee. In order for the Committee to discharge its duties, it may require the Company, its Affiliates, Participants and other persons entitled to benefits under the Plan to
provide it with certain data and information. 

  

	3.8	Deferral Arrangement. The Committee may permit or require the deferral of payment of any Award, subject to such rules and procedures as it may establish and in accordance with Code Section 409A. Unless
otherwise provided in an Award Agreement, any such deferral will not include provisions for the payment or crediting of interest or dividend equivalents. 

  

	3.9	Indemnification. In addition to such other rights of indemnification that apply to them as members of the Board or a committee thereof, the Company shall indemnify the members of the Committee (and any designees
of the Committee, as permitted under Section 3.6), to the extent permitted by applicable law, against reasonable expenses (including, without limitation, attorney’s fees) actually and necessarily incurred in connection with the defense of
any action, suit or proceeding, or in connection with any appeal, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Award awarded hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved to the extent required by and in the manner provided by the Articles of Incorporation or the Bylaws of the Company relating to indemnification of the members of the
Board) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to such matters as to which it is adjudged in such action, suit or proceeding that such Committee member or members (or their designees)
did not act in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Company. 

ARTICLE IV 
 STOCK
SUBJECT TO THE PLAN 
  

	4.1	Common Stock Subject to Awards. Common Stock subject to Awards and other provisions of the Plan shall consist of the following: (A) authorized but unissued shares of Common Stock; (B) authorized and
issued shares of Common Stock held by the Company in its treasury which have been reacquired by the Company; and (C) shares of Common Stock purchased by the Company in the open market. 

	4.2	Authorized Shares. Subject to adjustment in accordance with the provisions of Section 4.3, the maximum number of shares of Common Stock that may be issued under the Plan for Awards shall equal 7,700,000
shares of Common Stock, all of which may be issued as ISOs under the Plan, and adjusted as follows: 

  

	 	(A)	Each Award of Restricted Stock or Restricted Stock Units granted under this Plan will reduce the number of authorized shares available under the Plan by 2.5 shares of Common Stock for each share underlying such Award.

  

	 	(B)	Shares of Common Stock underlying an Award that is cancelled, terminated, expires without exercise, is forfeited, or lapses for any reason shall again be available for issuance pursuant to Awards under this Plan;
provided, however, shares of Common Stock underlying a cancelled, terminated, forfeited or lapsed Award of Restricted Stock or Restricted Stock Units shall again be available for issuance and increase the number of authorized shares
available under the Plan by 2.5 shares of Common Stock for each share that was covered under such cancelled, terminated, forfeited or lapsed Award. 

  

	 	(C)	Notwithstanding anything to the contrary herein, the following shares (or their multiple, as described above) shall not again become available for issuance under the Plan: (1) shares of Common Stock withheld by, or
otherwise remitted to, the Company as full or partial payment of the Exercise Price to the Company upon exercise of Stock Options granted under the Plan; (2) shares of Common Stock reserved for issuance under the Plan upon the grant of SARs to
the extent the number of reserved shares exceeds the number of shares actually issued upon exercise of the SARs; and (3) shares of Common Stock withheld by, or otherwise remitted to, the Company to satisfy a Participant’s tax withholding
obligations upon the lapse of restrictions on Restricted Stock or RSUs or upon the exercise of Stock Options or SARs or upon any other payment or issuance under the Plan. 

The Committee shall establish appropriate methods for determining the number of shares available for issuance under the Plan and the number of
shares that have been actually issued under the Plan at any time. In no event shall fractional shares of Common Stock be issued under the Plan. 

	4.3	Effects on Changes in Capitalization. 

  

	 	(A)	Changes to Common Stock. If the number of outstanding shares of Common Stock is increased or decreased or the shares of Common Stock are changed into or exchanged for a different number or kind of shares or other
securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in
such shares effected without receipt of consideration by the Company occurring after the Effective Date (“Equity Restructuring”), the number and kinds of shares for which Awards may be granted under the Plan, the Exercise Price
and/or the Base Value shall be adjusted proportionately and accordingly by the Committee; provided, that any such adjustment shall comply with Code Sections 409A and 424, if applicable, and with respect to Awards intended to qualify as 162(m)
Performance Awards, such adjustments shall be made only to the extent that the Committee determines that such adjustment may be made without causing the Company to be denied a tax deduction on account of Code Section 162(m). In addition, the
number and kind of shares of Common Stock for which Awards are outstanding shall be adjusted proportionately and accordingly so that the proportionate interest of the Participant immediately following such event shall, to the extent practicable, be
the same as immediately before such event. The conversion of any convertible securities of the Company shall not be treated as an increase in shares effected without receipt of consideration. 

 

	 	(B)	Change of Control and Other Corporate Transactions. In the event of a merger, consolidation, reorganization, extraordinary dividend, tender offer for Common Stock, Change of Control or other change in capital
structure of the Company that is not an Equity Restructuring under subsection (A) above, the Committee may (but is not required to) make such adjustments with respect to Common Stock that may be issued pursuant to Awards and the number and/or
Exercise Price or Base Value of outstanding Awards and take such other action as it deems necessary or appropriate, including, without limitation, and subject to the requirements of Code Sections 409A and 424, if applicable: 

 

	 	(1)	making appropriate provision for the continuation of an Award by substituting on an equitable basis for the shares of Common Stock then subject to such Award either the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Change of Control or securities of any successor or acquiring entity; 

  

	 	(2)	upon reasonable prior written notice to the Participant, providing that: (i) the Stock Options and/or SARs held by such Participant, to the extent then exercisable, must be exercised within a specified number of
days of the date of such notice, at the end of which period the Stock Options and/or SARs shall terminate without payment, and/or (ii) a grant of Restricted Stock and/or RSUs Stock must be accepted (to the extent then subject to acceptance)
within a specified number of days of the date of such notice, at the end of which period the offer of the Restricted Stock and/or RSUs shall terminate; 

	 	(3)	terminating an Award, whether vested or unvested, in exchange for a payment equal to (i) for Restricted Stock and RSUs, the Fair Market Value of the shares of Common Stock subject to the Award or (ii) for
Stock Options and SARs, the excess of the Fair Market Value of the shares of Common Stock subject to the Award over the Exercise Price or Base Value, as applicable; 

 

	 	(4)	providing that an Award shall become (as applicable) fully vested and exercisable and any vesting period or restrictions shall lapse immediately prior to the Change of Control; and/or 

 

	 	(5)	with respect to an Award subject to Performance Measures, providing that any incomplete performance periods shall end on the date of such Change of Control (or other corporate transaction described in this subsection
(B)), and the Committee shall cause the Award to be settled based upon the higher of: (i) the Participant’s actual attainment of performance goals for the performance period through the date of the Change of Control (or other corporate
transaction described in this subsection (B)) or (ii) the performance target award; provided, that if the Award is intended to qualify as a 162(m) Performance Award, settlement shall be made only to the extent it complies with Code
Section 162(m). 

 Notwithstanding anything to the contrary, an Award having an Exercise Price or Base Value equal to or
greater than the Fair Market Value of the consideration to be paid per share of Common Stock in the Change of Control may be canceled without payment of consideration to the applicable Participant. 

 

	 	(C)	Limits on Adjustments. Any issuance by the Company of stock of any class other than the Common Stock, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of the Common Stock subject to any Award, except as specifically provided otherwise in this Plan. The grant of Awards under the Plan shall not affect in any way the right or
authority of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge, consolidate or dissolve, or to liquidate, sell or transfer all or any part of its business or assets. No
fractional shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share with no cash payment due
therefor. If the Company issues any rights to subscribe for additional shares pro rata to holders of outstanding shares of the class or classes of stock then set aside for the Plan, then each Participant shall be entitled to the same rights on the
same basis as holders of outstanding shares with respect to such portion of the Participant’s Award as is exercised on or prior to the record date for determining shareholders entitled to receive or exercise such rights. All adjustments the
Committee makes under this Plan shall be final and conclusive. 

 ARTICLE V 

PERFORMANCE-BASED COMPENSATION 
  

	5.1	Awards of Performance-Based Compensation. The Committee may determine that a Restricted Stock or RSU Award granted to a Participant who is designated by the Committee as likely to be a Covered Employee is
intended to qualify as a 162(m) Performance Award. In such a case, the grant, exercise, vesting and/or settlement of such Award shall be contingent upon achievement of pre-established Performance Measures and other terms set forth in this Article V.
Awards intended to qualify as 162(m) Performance Awards shall be granted by a committee of Outside Directors. Any payment of compensation with respect to an Award that is intended to qualify as a 162(m) Performance Award will be subject to the
written certification of the Committee that the Performance Measures were satisfied prior to the payment of the Award. This written certification may include the approved minutes of the Committee meeting in which the certification is made.

  

	5.2	Establishing Performance Measures. For each 162(m) Performance Award, the Performance Measures shall be established by the Committee in writing no later than 90 days after the commencement of the performance
period or at such other date as may be required or permitted for “performance-based compensation” under Code Section 162(m). The Performance Measures shall consist of one or more of the business criteria set forth in Section 5.3
and a targeted level or levels of performance with respect to each of such Performance Measures, as specified by the Committee consistent with this Article V. Performance Measures shall be objective and shall otherwise meet the requirements of Code
Section 162(m), including the requirement that the level or levels of performance targeted by the Committee result in the achievement of Performance Measures being “substantially uncertain.” Performance Measures may differ for each
162(m) Performance Award granted to any one Participant or to different Participants. 

	5.3	Performance Measures. Performance Measures may include any one or more of the following: (i) earnings before all or any taxes (“EBT”); (ii) earnings before all or any of interest expense,
taxes, depreciation and amortization (“EBITDA”); (iii) earnings before all or any of interest expense, taxes, depreciation, amortization and rent (“EBITDAR”); (iv) earnings before all or any of interest expense and
taxes (“EBIT”); (v) net earnings; (vi) net income; (vii) operating income or margin; (viii) earnings per share; (ix) growth; (x) return on shareholders’ equity; (xi) capital expenditures;
(xii) expenses and expense ratio management; (xiii) return on investment; (xiv) improvements in capital structure; (xv) profitability of an identifiable business unit or product; (xvi) profit margins; (xvii) stock
price; (xviii) market share; (xvix) revenues; (xx) costs; (xxi) cash flow; (xxii) working capital; (xxiii) return on assets; (xxiv) economic value added; (xxv) industry indices; (xxvi) peer group
performance; (xxvii) regulatory ratings; (xxviii) asset quality; (xxix) gross or net profit; (xxx) net sales; (xxxi) total shareholder return; (xxxii) sales (net or gross) measured by product line, territory, customers
or other category; (xxxiii) earnings from continuing operations; (xxxiv) net worth; and (xxxv) levels of expense, cost or liability by category, operating unit or any other delineation. Performance Measures may relate to the Company
and/or one or more of its Affiliates, one or more of its divisions or units or any combination of the foregoing, on a consolidated or nonconsolidated basis, and may be applied on an absolute basis or be relative to one or more peer group companies
or indices, or any combination thereof, all as the Committee determines. In addition, to the extent consistent with the requirements of Code Section 162(m), the Performance Measures may be calculated without regard to extraordinary items.

  

	5.4	Shareholder Approval. For Awards to qualify as 162(m) Performance Awards, the material terms of Performance Measures must be disclosed to and subsequently approved (or reapproved, if applicable) by the
Company’s shareholders. Performance Measures shall not be altered or replaced by any other criteria except to the extent approved by the Company’s shareholders if shareholder approval is needed to preserve the tax deductibility of 162(m)
Performance Awards to the Company. 

  

	5.5	Settlement of Awards. 162(m) Performance Awards shall be settled in Common Stock, cash or other property, in the discretion of the Committee, on a date specified in the Award Agreement. The Committee may, in its
sole discretion, reduce the amount of any payment due to be made on 162(m) Performance Awards, in accordance with Code Section 162(m), but may not increase the amount of any payment due under the Award. No 162(m) Performance Award shall exceed
the maximum annual limit as set forth in Section 6.1. 

 ARTICLE VI 

RULES APPLICABLE TO AWARDS 
  

	6.1	Maximum Annual Limits on Awards. Subject to adjustment as provided in Section 4.3, the number of shares of Common Stock underlying Awards granted to a Participant in any calendar year shall not exceed
250,000 shares of Common Stock. 

	6.2	Transferability. 

  

	 	(A)	Except as provided in subsection (B) below: (1) no Award shall be assignable or transferable by the Participant to whom it is granted, other than by will or the laws of descent and distribution;
(2) Awards shall be exercisable during the Participant’s lifetime only by the Participant (or a legal representative if the Participant becomes incapacitated); and (3) nothing contained in this Section 6.2 shall preclude a
Participant from transferring shares of Restricted Stock that have vested, or shares of Common Stock that are issued in settlement of a Stock Option, SAR or RSUs, subject to the remaining provisions of this Plan and applicable law.

  

	 	(B)	A Participant may transfer not for value any Award other than an ISO to any Family Member of the Participant using such form and subject to such additional administrative procedures as approved by the Committee from
time to time; provided, however, that any such Award shall remain subject to all vesting, forfeiture, and other restrictions provided herein and in the Award Agreement to the same extent as if it had not been transferred. For purposes
of this subsection (B), a “not for value” transfer is a transfer which is (1) a gift, (2) a transfer under a domestic relations order in settlement of marital property rights; or (3) a transfer to an entity in which more
than fifty percent (50%) of the voting interests are owned by Family Members (or the Participant) in exchange for an interest in that entity. Subsequent transfers of transferred Awards are prohibited except to Family Members of the Participant
in accordance with this subsection (B) or by will or the laws of descent and distribution. 

  

	6.3	Accelerated Exercisability and Vesting. The Committee shall always have the discretionary power to accelerate the exercisability or vesting of any Award granted under the Plan. Unless otherwise determined by the
Committee and set forth in the applicable Award Agreement, in the event of one of the following events, any outstanding Awards shall immediately become fully exercisable or vested: (1) the Participant’s death; (2) the
Participant’s Separation from Service due to Disability; or (3) a Change of Control of the Company; provided, however, if an outstanding Award of Restricted Stock or RSUs remains subject to any other type of vesting schedule
or requirement (e.g., a performance-based schedule), then upon one of the above events, a proportion of the shares subject to such Award shall become vested and nonforfeitable, equal to the proportion of the time completed through the date of
the applicable event to the performance measurement period for the Award, with target performance level deemed to be achieved as of the date of the applicable event, and in the event the Restricted Stock or RSU Award was originally scheduled without
a designated target performance level (e.g., a single performance level or minimum and maximum performance levels), then the performance level that, if met, would have resulted in the least number of shares becoming vested shall be treated as
the target level. Except to the extent specifically authorized by the Committee, no acceleration of vesting of an Award intended to qualify as a 162(m) Performance Award shall occur if such accelerated vesting would cause the Award to no longer
qualify as a 162(m) Performance Award. 

  

	6.4	Separation From Service. Unless the Committee decides otherwise, all Awards (or portions thereof) that remain unexercisable or unvested upon the Participant’s Separation from Service for any reason other
than the events listed in Section 6.3 shall be forfeited by the Participant immediately upon the date of such Separation from Service with the Company or its Affiliates. 

	6.5	Waiver of Restrictions. The Committee may elect, in its sole discretion, to waive any or all restrictions with respect to any Award under the Plan. 

 

	6.6	No Repricing of Awards. Except as provided in Section 4.3, the Committee shall not amend any Stock Option or SAR to reduce its Exercise Price or Base Value, and shall not issue to any Participant a new Award
in exchange for the surrender and cancellation of any other Award, if such new Award has an Exercise Price or Base Value (as applicable) lower than that of the Award for which it is exchanged, or take any other action that would have the effect of
reducing the Exercise Price or Base Value of a Stock Option or SAR. 

 ARTICLE VII 

STOCK OPTIONS 
  

	7.1	Grant of Stock Options. The Committee may grant Stock Options for shares of Common Stock in such amounts as it may determine and subject to the provisions of the Plan. A Stock Option shall constitute an ISO only
if the Participant is an employee of the Company, its Parent or a Subsidiary and it is specifically designated as an Incentive Stock Option in the applicable Award Agreement. 

 

	7.2	Award Agreement. An Award of a Stock Option shall be evidenced by an Award Agreement that specifies the following terms and any additional terms and conditions determined by the Committee and not inconsistent
with the Plan: (A) the name of the Participant; (B) the total number of shares of Common Stock to which the Stock Option pertains; (C) the Exercise Price of the Stock Option; (D) the date as of which the Committee granted the
Stock Option; (E) the type of Stock Option granted; (F) the requirements for the Stock Option to become exercisable, such as continuous service, time-based schedule, period and goals for Performance Measures to be satisfied, additional
consideration, etc.; and (G) the expiration date of the Stock Option. 

  

	7.3	Exercise Price. The per share Exercise Price of a Stock Option shall not be less than 100% of the Fair Market Value of a share of Common Stock as of the date of grant (or, in the case of an ISO granted to a Ten
Percent Shareholder, 110% of the Fair Market Value of a share of Common Stock as of the date of grant). 

	7.4	Exercisability. 

  

	 	(A)	General Schedule. Unless the Committee specifies otherwise in the Award Agreement, each Stock Option shall become exercisable according to the following schedule, measured from the date of grant:

  

					
	 Anniversary of the

date of grant:
	  	Vested
percentage:	 
	 One-year anniversary
	  	 	25	% 
	 Two-year anniversary
	  	 	25	% 
	 Three-year anniversary
	  	 	25	% 
	 Four-year anniversary
	  	 	25	% 

 Under the above schedule, before the one-year anniversary of its date of grant, no part of the Stock Option is
exercisable. Once a portion of a Stock Option is exercisable, that portion continues to be exercisable until the Stock Option expires (as described in Section 7.5). Fractional shares shall be disregarded for exercise. 

 

	 	(B)	Other Vesting Requirements. The Committee may impose any other conditions, restrictions and contingencies on awards of Stock Options as it determines, in its sole discretion, including a requirement of continuous
service and/or the satisfaction of specified Performance Measures. The Committee may designate a single goal criterion or multiple goal criteria for performance measurement purposes. 

 

	7.5	Expiration Date. 

  

	 	(A)	Expiration Date. The expiration date of any Stock Option shall be the earliest to occur of the following: 

  

	 	(1)	Maximum Term. The date ten (10) years from the date of grant of the Stock Option (or for an ISO granted to a Ten Percent Shareholder, five (5) years from the date of grant); 

 

	 	(2)	Termination for Cause. The date of the Participant’s Separation from Service for Cause with the Company and all Affiliates; 

 

	 	(3)	Separation from Service due to Death, Disability or Retirement. The one-year anniversary of the Participant’s Separation from Service with the Company and all Affiliates due to death, Disability or
Retirement, or such shorter period as determined by the Committee and set forth in the Award Agreement; and 

  

	 	(4)	Separation from Service. The date that is three (3) months following the date of the Participant’s Separation from Service with the Company and all Affiliates for any reason other than those specified
elsewhere in this Section 7.5(A), or such shorter period as determined by the Committee and set forth in the Award Agreement. 

	 	(5)	Notwithstanding the foregoing, the Committee may, in its discretion, take formal action to amend the Award Agreement to extend the period of exercise in unusual circumstances so long as such extension does not violate
Code Section 409A. 

  

	 	(B)	Expiration Date Following Change of Control. Notwithstanding the provisions of Section 7.5(A) above and unless the Committee specifies otherwise in the Award Agreement, at any time following a Change of
Control of the Company, in the event a Participant incurs a Separation from Service with the Company and its Affiliates for any reason other than: (1) due to death or Disability, (2) for Cause or (3) due to a voluntary resignation,
the term of all Stock Options held by such Participant shall be extended to the maximum term and original expiration date of the Stock Option as described in Section 7.5(A)(1) above. 

 

	7.6	Minimum Exercise Amount. Unless the Committee specifies otherwise in the Award Agreement, a Participant may exercise a Stock Option for less than the full number of shares of Common Stock subject to the Stock
Option. However, each exercise may not be made for less than 100 shares or, if less, the total remaining shares subject to the Stock Option. The Committee may in its discretion specify other Stock Option terms, including restrictions on frequency of
exercise and periods during which Stock Options may not be exercised. 

  

	7.7	Payment of Exercise Price. The Participant must pay the full Exercise Price for shares of Common Stock purchased upon the exercise of any Stock Option, and all applicable withholding taxes, at the time of such
exercise by one of the following forms of payment: (A) cash or cash equivalents acceptable to the Company; (B) delivery (on a form acceptable to the Committee) of an irrevocable direction to a licensed securities broker acceptable to the
Company to sell shares of Common Stock and to deliver all or part of the sales proceeds to the Company in payment of the Exercise Price; (C) delivery of shares of Common Stock already owned by the Participant (and for which the Participant has
good title free and clear of any liens and encumbrances) having a Fair Market Value on the date of surrender equal to the aggregate Exercise Price and taxes due; (D) with the Committee’s approval, having the Company withhold shares of
Common Stock that otherwise would be acquired on exercise having a Fair Market Value equal to the aggregate Exercise Price, or (E) any combination of the above forms or any other form of payment permitted by the Committee. 

 

	7.8	Rights as a Shareholder. A Participant shall first have rights as a shareholder of the Company with respect to shares of Common Stock covered by a Stock Option only when the Participant has paid the Exercise
Price and applicable withholding taxes in full and the shares actually have been issued to the Participant. 

	7.9	Limitations on ISOs. 

  

	 	(A)	An Award shall qualify as an ISO only to the extent that the aggregate Fair Market Value (determined at the time the Stock Option is granted) of the shares of Common Stock with respect to which all ISOs held by such
Participant become exercisable for the first time during any calendar year (under the Plan, the Prior Plans, and all other plans of the Company, its Parent or a Subsidiary) does not exceed $100,000. This $100,000 limitation shall be applied by
taking ISOs into account in the order in which they were granted. Any portion of an ISO in excess of such $100,000 limitation will be treated as a NQSO. 

  

	 	(B)	If any Participant shall make any disposition of shares of Common Stock delivered pursuant to the exercise of an ISO that is a disqualifying disposition, such Participant shall notify the Company of such disposition
within ten (10) business days thereof. A disqualifying disposition is any disposition (including any sale) of Common Stock acquired upon exercise of an ISO before the later of (1) two years after the grant date of the ISO or (2) one
year after the date the Participant acquired the Common Stock by exercising the ISO. 

  

	 	(C)	If all or part of an ISO is not exercised within (1) three months after the date of the Participant’s Separation from Service for any reason except due to death or Disability or (2) within one year
following Separation from Service due to death or Disability, but remains exercisable, the unexercised portion thereof shall automatically be treated as a NQSO for the remainder of the term of the Stock Option. 

ARTICLE VIII 
 STOCK
APPRECIATION RIGHTS 
  

	8.1	Grant of SARs. The Committee may grant Stock Appreciation Rights to Participants in such amounts as it may determine and subject to the provisions of the Plan. 

 

	8.2	SAR Award Agreement. An Award of SARs shall be evidenced by an Award Agreement that specifies the following terms and any additional terms and conditions determined by the Committee and not inconsistent with the
Plan: (A) the name of the Participant; (B) the total number of shares of Common Stock to which the SAR pertains; (C) the Base Value of the SAR; (D) the date as of which the Committee granted the SAR; (E) the type of SAR
granted; (F) the requirements for the SAR to become exercisable, such as continuous service, time-based schedule, period and goals for Performance Measures to be satisfied, additional consideration, etc.; and (G) the expiration date of the
SAR. 

  

	8.3	Base Value. The per share Base Value of each SAR shall not be less than 100% of the Fair Market Value of a share of Common Stock as of the date of grant. 

	8.4	Exercisability. 

  

	 	(A)	General Schedule. Unless the Committee specifies otherwise in the SAR Agreement, each SAR shall become exercisable according to the following schedule, measured from the date of grant: 

 

					
	 Anniversary of the

date of grant:
	  	Vested
percentage:	 
	 One-year anniversary
	  	 	25	% 
	 Two-year anniversary
	  	 	25	% 
	 Three-year anniversary
	  	 	25	% 
	 Four-year anniversary
	  	 	25	% 

 Under the above schedule, before the one-year anniversary of its date of grant, no part of the SAR is
exercisable. Once a portion of a SAR is exercisable, that portion continues to be exercisable until the SAR expires (as described in Section 8.5). Fractional shares shall be disregarded for exercise. 

 

	 	(B)	Other Vesting Requirements. The Committee may impose any other conditions, restrictions and contingencies on awards of SARs as it determines in its sole discretion, including a requirement of continuous service
and/or the satisfaction of specified Performance Measures. The Committee may designate a single goal criterion or multiple goal criteria for performance measurement purposes. 

 

	8.5	Expiration Date. 

  

	 	(A)	Expiration Date. The expiration date of any SAR shall be the earliest to occur of the following: 

  

	 	(1)	Maximum Term. The date ten (10) years from the date of grant of the SAR; 

  

	 	(2)	Separation from Service for Cause. The date of the Participant’s Separation from Service for Cause with the Company and all Affiliates; 

 

	 	(3)	Separation from Service due to Death, Disability or Retirement. The one-year anniversary of the Participant’s Separation from Service with the Company and all Affiliates due to death, Disability or
Retirement, or such shorter period as determined by the Committee and set forth in the SAR Agreement; and 

  

	 	(4)	Separation from Service. The date that is ninety (90) days following the date of the Participant’s Separation from Service with the Company and all Affiliates for any reason other than those specified
elsewhere in this Section 8.5(A), or such shorter period as determined by the Committee and set forth in the SAR Agreement. 

	 	(5)	Notwithstanding the foregoing, the Committee may, in its discretion, take formal action to amend the Award Agreement to extend the period of exercise in unusual circumstances so long as such extension does not violate
Code Section 409A. 

  

	 	(B)	Expiration Date Following Change of Control. Notwithstanding the provisions of Section 8.5(A) above and unless the Committee specifies otherwise in the Award Agreement, at any time following a Change of
Control of the Company, in the event a Participant incurs a Separation from Service with the Company and its Affiliates for any reason other than: (1) due to death or Disability, (2) for Cause or (3) due to a voluntary resignation,
the term of all SARs held by such Participant shall be extended to the maximum term and original expiration date of the SAR as described in Section 8.5(A)(1) above. 

 

	8.6	Minimum SAR Exercise Amount. Unless the Committee specifies otherwise in the SAR Agreement, a Participant may exercise a SAR for less than the full number of shares of Common Stock subject to the SAR. However,
each exercise may not be made for less than 100 shares or, if less, the total remaining shares subject to the SAR. The Committee may in its discretion specify other SAR terms, including restrictions on frequency of exercise and periods during which
SARs may not be exercised. 

  

	8.7	Exercise of SARs. SARs may be exercised upon the terms and conditions determined by the Committee, in its sole discretion. 

  

	8.8	Payment of SAR Amount. Upon exercise of an SAR, a Participant shall be entitled to receive payment from the Company equal to an amount determined by multiplying: (A) the difference between the Fair Market
Value of a share of Common Stock on the date of exercise over the Base Value of the applicable SAR; by (B) the number of shares of Common Stock with respect to which the SAR is being exercised. 

The payment for SAR exercise may be made in cash, shares of Common Stock or in some combination thereof at the sole discretion of the
Committee. The form of payment shall be specified in the Award Agreement pertaining to the grant of the SAR. 
  

	8.9	Rights as a Shareholder. To the extent that a Stock Appreciation Right Award is payable (in whole or in part) in the form of shares of Common Stock, a Participant shall first have rights as a shareholder of the
Company with respect to shares of Common Stock covered by the Stock Appreciation Right only when the Participant has exercised the SAR pursuant to the terms and conditions of the Award and the shares actually have been issued to the Participant.

 ARTICLE IX 

RESTRICTED STOCK AND RESTRICTED STOCK UNITS 
  

	9.1	Grants of Restricted Stock and Restricted Stock Units. The Committee may grant shares of Common Stock as Restricted Stock or may grant Restricted Stock Units to Participants in such amounts as it may determine
and subject to the provisions of the Plan. 

	9.2	Restricted Stock and Award Agreement. An Award of Restricted Stock or Restricted Stock Units shall be evidenced by an Award Agreement that specifies the following terms: (A) the name of the Participant;
(B) the total number of shares of Common Stock to which the Award of Restricted Stock or Restricted Stock Units pertain; (C) the date as of which the Committee awarded the Restricted Stock or the Restricted Stock Unit; (D) the manner
in which the Restricted Stock or Restricted Stock Units will become vested, nonforfeitable and transferable and a description of any restrictions applicable to the Restricted Stock or the Restricted Stock Units; and (E) for RSUs, when RSUs will
be settled after they vest. 

  

	9.3	Vesting. 

  

	 	(A)	General Vesting Schedule. Unless the Committee specifies otherwise in the Award Agreement, each Award of Restricted Stock or Restricted Stock Units shall become vested and nonforfeitable according to the
following schedule, measured from the date of grant: 

  

					
	 Anniversary of the
date of grant:
	  	Vested
percentage:	 
	 One-year anniversary
	  	 	25	% 
	 Two-year anniversary
	  	 	25	% 
	 Three-year anniversary
	  	 	25	% 
	 Four-year anniversary
	  	 	25	% 

 Under the above schedule, before the one-year anniversary, no part of the Award is vested or nonforfeitable.

  

	 	(B)	Other Vesting Requirements. The Committee may impose any other conditions, restrictions and contingencies on Awards of Restricted Stock and/or Restricted Stock Units as it determines, in its sole discretion,
including a requirement of continuous service and/or the satisfaction of specified Performance Measures. The Committee may determine, in accordance with Section 5 of the Plan, that such Restricted Stock Award or RSUs are intended to qualify as
162(m) Performance Awards. 

  

	9.4	Delivery of Restricted Stock. 

  

	 	(A)	Issuance. The Company shall issue the shares of Restricted Stock within a reasonable period of time after approval of the Restricted Stock Award; provided, if any law or regulation requires the Company to
take any action (including, but not limited to, the filing of a registration statement under the Securities Act and causing such registration statement to become effective) with respect to such shares before the issuance thereof, then the date of
delivery of the shares shall be extended for the period necessary to take such action. As long as any restrictions apply to the Restricted Stock, the shares of Restricted Stock shall be held by the Committee in uncertificated form in a restricted
account. 

	 	(B)	Legend. Unless the certificate representing shares of the Restricted Stock is deposited with a custodian (as described in subparagraph (C)), each certificate shall bear the following legend (in addition to any
other legend required by law): 

 “The transferability of this certificate and the shares represented hereby are subject
to the restrictions, terms and conditions (including forfeiture and restrictions against transfer) contained in the ADTRAN, Inc. 2015 Employee Stock Incentive Plan and an Award Agreement dated
            ,             , between             and ADTRAN, Inc. The
Plan and the Award Agreement are on file in the office of the Corporate Secretary of ADTRAN, Inc.” 
 Such legend shall be removed or
canceled from any certificate evidencing shares of Restricted Stock as of the date that such shares become nonforfeitable. 
  

	 	(C)	Deposit with Custodian. As an alternative to delivering a stock certificate to the Participant, the Committee may deposit or transfer such shares electronically to a custodian designated by the Committee. The
Committee shall cause the custodian to issue a receipt for the shares to the Participant for any Restricted Stock so deposited. The custodian shall hold the shares and deliver the same to the Participant in whose name the Restricted Stock evidenced
thereby are registered only after such shares become nonforfeitable. 

  

	9.5	Settlement of RSUs. Except as otherwise provided in the Award Agreement and in accordance with Code Section 409A, RSUs shall generally be settled in shares of Common Stock immediately following the date they
vest; provided that the Committee may specify in the applicable Award Agreement that settlement shall be in cash or in a combination of Common Stock and cash. 

 

	9.6	Shareholder Rights for Restricted Stock. Upon issuance of shares of Restricted Stock, the Participant shall have immediate rights of ownership in the shares of Restricted Stock, including the right to vote the
shares and the right to receive dividends with respect to the shares, notwithstanding any outstanding restrictions on the Restricted Stock. With respect to dividends, the Committee may apply any restrictions that it determines, in its sole
discretion, to dividends paid on shares of Common Stock which are still subject to vesting, and such dividends shall be paid to the Participant when the underlying shares of Restricted Stock with respect to such dividends vest. 

 

	9.7	Shareholder Rights for RSUs; Dividend Credits. Unless otherwise designated by the Committee in the Award Agreement, the Participant shall have no shareholder rights with respect to the shares of Common Stock
subject to the RSU, including any voting and dividend rights until actual shares of Common Stock are issued upon vesting of such RSU Award. However the Committee may designate that the unvested portion of an RSU Award is eligible for dividend
credits, in which case such dividend credits shall be paid when such underlying shares of Common Stock subject to the RSU Award are issued to the Participant. 

 ARTICLE X 

AMENDMENT AND TERMINATION OF PLAN AND PLAN AWARDS 
  

	10.1	Amendment and Termination By the Board. Subject to Section 10.2 below, the Board shall have the power at any time to add to, amend, modify or repeal any of the provisions of the Plan, to suspend the
operation of the entire Plan or any of its provisions for any period or to terminate the Plan in whole or in part. In the event of any such action, to the extent it determines necessary to administer the Plan, the Committee shall prepare written
procedures which, when approved by the Board, shall govern the administration of the Plan resulting from such addition, amendment, modification, repeal, suspension or termination. No Award Agreement may be amended to reprice or constructively
reprice any Award. 

  

	10.2	Restrictions on Amendment and Termination. Notwithstanding the provisions of Section 10.1 above, the following restrictions shall apply to the Board’s authority under Section 10.1 above:

  

	 	(A)	Prohibition Against Adverse Affects on Outstanding Awards. No addition, amendment, modification, repeal, suspension or termination shall adversely affect, in any way, the rights of a Participant who has an
outstanding Award without the consent of such Participant. The Committee shall not amend any Award Agreement that it previously has authorized under the Plan that adversely affects the Participant’s rights or benefits under an Award without the
written (or electronic) consent of the Participant holding such Award. 

  

	 	(B)	Shareholder Approval Required for Certain Modifications. No modification or amendment of the Plan may be made without the prior approval of the shareholders of the Company if (1) such modification or
amendment would cause the applicable portions of the Plan to fail to qualify as an ISO plan pursuant to Code Section 422, (2) such modification or amendment would materially increase the benefits accruing to Participants under the Plan,
(3) such modification or amendment would materially increase the number of securities which may be issued under the Plan, or (4) such modification or amendment would materially modify the requirements as to eligibility for participation in
the Plan, or (5) such modification or amendment would modify the material terms of the Plan within the meaning of Treas. Reg. §1.162-27(e)(4). Clauses (2), (3) and (4) of the preceding sentence shall be interpreted in accordance
with the provisions of paragraph (b)(2) of Rule 16b-3. Shareholder approval shall be made by a majority of the votes cast at a duly held meeting at which a quorum representing a majority of all outstanding voting stock is, either in person or by
proxy, present and voting, or by the written consent in lieu of a meeting of the holders of a majority of the outstanding voting stock or such greater number of shares of voting stock as may be required by the Company’s articles or certificate
of incorporation and bylaws and by applicable law; provided, however, that for modifications described in clauses (2), (3) and (4) above, such shareholder approval, whether by vote or by written consent in lieu of a meeting, must be
solicited substantially in accordance with the rules and regulations in effect under Section 14(a) of the Exchange Act as required by paragraph (b)(2) of Rule 16b-3. 

 ARTICLE XI 

PLAN OPERATION 
  

	11.1	Compliance with Other Laws and Regulations. 

  

	 	(A)	The Company shall not be required to sell or issue any shares of Common Stock under any Award if the sale or issuance of such shares would constitute a violation by the Participant or the Company of any provision of any
law or regulation of any governmental authority, including without limitation any federal or state securities laws or regulations. If at any time the Company shall determine, in its discretion, that the listing, registration or qualification of any
shares subject to an Award upon any securities exchange or under any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance or purchase of shares hereunder, no shares of Common Stock may be
issued or sold to the Participant exercising a Stock Option or SAR unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company, and any delay caused
thereby shall in no way affect the date of termination of the Award. 

  

	 	(B)	In connection with the Securities Act, upon the exercise of any Option or SAR or the delivery of any shares of Common Stock underlying an Award, unless a registration statement under the Securities Act is in effect with
respect to the shares of Common Stock covered by such Award, the Company shall not be required to sell or issue such shares unless the Committee has received evidence satisfactory to it that the Participant or any other individual exercising a Stock
Option may acquire such shares pursuant to an exemption from registration under the Securities Act. 

  

	 	(C)	The Company may, but shall in no event be obligated to, register any securities covered hereby pursuant to the Securities Act. The Company shall not be obligated to take any affirmative action in order to cause the
exercise of a Stock Option or the issuance of shares of Common Stock pursuant to the Plan to comply with any law or regulation of any governmental authority. As to any jurisdiction that expressly imposes the requirement that a Stock Option or SAR
shall not be exercisable until the shares of Common Stock covered by such Stock Option or SAR are registered or are exempt from registration, the exercise of such Stock Option or SAR (under circumstances in which the laws of such jurisdiction apply)
shall be deemed conditioned upon the effectiveness of such registration or the availability of such an exemption. 

  

	 	(D)	The Company may require a Participant to submit evidence that the Participant is acquiring shares of Common Stock for investment purposes. 

	11.2	Rule 16b-3. During any time when the Company has a class of equity security registered under Section 12 of the Exchange Act, it is the intent of the Company that Awards and the vesting, exercise and
settlement thereof qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the extent that any provision of the Plan or action by the Board or Committee does not comply with the requirements of Rule 16b-3, it shall be deemed
inoperative to the extent permitted by law and deemed advisable by the Board, and shall not affect the validity of the Plan. In the event that Rule 16b-3 is revised or replaced, the Board may exercise its discretion to modify this Plan in any
respect necessary to satisfy the requirements of, or to take advantage of any features of, the revised exemption or its replacement. 

  

	11.3	Tax Withholding. The Company or Affiliate shall have the power and the right to deduct or withhold from amounts (including withholding any shares of Common Stock that otherwise would be issued on exercise or
following the vesting of an Award) to the Participant by the Company or Affiliate, or require a Participant to remit to the Company or Affiliate as a condition of any Award, an amount (in cash or in kind, subject to the approval of the Company)
sufficient to satisfy the minimum Federal, state and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan. Notwithstanding the above, in the case of Stock
Options and SARs, such tax withholding shall be accomplished as set forth in Sections 7.5 and 8.7. 

  

	11.4	Limitation of Implied Rights. No provision in the Plan or in any Award Agreement shall be construed to confer upon any individual the right to remain in the employ or service of the Company or any Affiliate, or
to interfere in any way with any contractual or other right or authority of the Company or any Affiliate either to increase or decrease the compensation or other payments to any individual at any time, or to terminate any employment or other
relationship between any individual and the Company or any Affiliate. 

  

	11.5	No Trust or Fund Created. Neither a Participant nor any other person shall, by reason of the Plan or any Award, acquire any right in or title to any assets, funds or property, other than the Common Stock of the
Company or an Affiliate, including, without limitation, any specific funds, assets, or other property which the Company or its Affiliates, in its sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have
only a contractual right to the Common Stock underlying Awards granted under the Plan, unsecured by any assets of the Company or an Affiliate. Nothing contained in the Plan shall constitute a guarantee that the assets of the Company or its
Affiliates shall be sufficient to pay any benefits to any person. 

  

	11.6	Nonexclusively of the Plan. Neither the adoption of the Plan nor the submission of the Plan to the Company’s shareholders for approval shall be construed as creating any limitations upon the right and
authority of the Board to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class or classes of individuals or specifically to a particular individual or particular individuals).

  

	11.7	Conditions of Participation in the Plan. When the Committee makes an Award, it shall require a Participant to enter into an Award Agreement in a form specified by the Committee, agreeing to the terms and
conditions of the Award and to such additional terms and conditions, not inconsistent with the terms and conditions of the Plan, as the Committee may, in its sole discretion, prescribe. If there is a conflict between any provision of an Award
Agreement and the Plan, the Plan shall control. 

	11.8 	Evidence. Anyone required to give evidence under the Plan may give such evidence by certificate, affidavit, document or other information which the person acting on the evidence considers pertinent, reliable and
signed, made or presented by the proper party or parties. 

  

	11.9 	Gender and Number; Headings. Words in any gender shall include any other gender, words in the singular shall include the plural and the plural shall include the singular. The headings in this Plan are for
convenience of reference. Headings are not a part of the Plan and shall not be considered in the construction hereof. 

  

	11.10 	Legal References. Any reference in this Plan to a provision of law which is later revised, modified, finalized or redesignated, shall automatically be considered a reference to such revised, modified, finalized
or redesignated provision of law. 

  

	11.11 	Notices. In order for a Participant or other individual to give notice or other communication to the Committee, the notice or other communication shall be in the form specified by the Committee and delivered to
the location designated by the Committee in its sole discretion. 

  

	11.12 	Code Section 409A. Although the Company does not guarantee to a Participant any particular tax treatment of an Award, Awards are intended to comply with, or be exempt from, the requirements of Code
Section 409A, to the extent it applies. The Plan and each Award Agreement will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Committee. In no event whatsoever shall the
Company or any of its Affiliates be liable for any additional tax, interest or penalties that may be imposed on a Participant pursuant to or as a result of Code Section 409A any damages for failing to qualify for an exemption from, or comply
with, Code Section 409A. If the Participant is deemed on a Separation from Service to be a “specified employee” within the meaning of Code Section 409A(a)(2)(B), then with regard to any Award that is considered nonqualified
deferred compensation under Code Section 409A payable on account of a Separation from Service, such Award shall be paid at the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such a
Separation from Service of the Participant, and (B) the date of the Participant’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments delayed pursuant to this Section (whether they would have
otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid to the Participant in a lump sum and any remaining payments due under the Award shall be paid in accordance with the normal payment dates specified
for them in the Plan or the applicable Award Agreement. 

  

	11.13 	International Awards. The Committee may adopt special guidelines and provisions for Awards with respect to Participants who are employed or reside in any country other than the United States in order to comply
with the applicable laws of such other country. 

  

	11.14 	Governing Law. The Plan is governed by and shall be construed in accordance with the laws of the State of Alabama, without regard to any choice of law principles thereof or of any other jurisdiction.

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