Document:

Exhibit

EXHIBIT 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement, by and between Peter C. Alexander (“Executive”) and BMC Stock Holdings, Inc., a Delaware corporation (the “Company”), is effective as of April 1, 2016 (the “Effective Date”), and amends and restates in its entirety that certain Employment Agreement, dated as of August 4, 2010, by and between Executive and Building Materials Holding Corporation, a Delaware corporation (“BMC”), as amended by that certain Addendum No. 2 to Employment Agreement, dated as of April 2, 2012 (the “Original Agreement” and as amended and restated hereby, the “Agreement”).
WITNESSETH
A.    WHEREAS, on December 1, 2015, the Company (then called Stock Building Supply Holdings, Inc.) and BMC completed their merger, and pursuant to the terms and conditions of the Agreement and Plan of Merger, dated as of June 2, 2015 (the “Merger Agreement”), between the Company and BMC, BMC merged with and into the Company (the “Merger”), with the Company surviving the Merger. As of the effective time of the Merger, the Company was renamed “BMC Stock Holdings, Inc.”
B.    WHEREAS, in accordance with the Merger Agreement, Executive, who had served as the chief executive officer of BMC prior to the Merger, was appointed President and Chief Executive Officer of the Company as of the effective time of the Merger, and, by virtue of the Merger, the Company assumed the Original Agreement.
C.    WHEREAS, Executive and the Company now wish to amend and restate the Original Agreement to provide for the continued terms and conditions on which Executive shall be employed by the Company as President and Chief Executive Officer as set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, Executive and the Company hereby agree as follows:
1.Term
This Agreement shall become effective as of the Effective Date.  Executive’s term of employment hereunder shall commence on April 1, 2016 and shall continue in effect for a term expiring on July 31, 2016 (the “Employment Term”).  The Employment Term shall automatically renew on each August 1 for successive twelve-month periods unless the Company or Executive elects not to renew the Employment Term by notice to the other delivered not later than May 1 of the then-current Employment Term.  In the event of such notice not to renew, the Employment Term shall expire on July 31 following notice not to renew.
2.    Employment
2.1    Engagement.  The Company hereby employs Executive and Executive hereby agrees to be employed by the Company, subject to the terms and conditions herein set forth.  During the Employment Term, Executive shall be employed as President and Chief Executive 

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Officer of the Company, and shall be responsible for the operations and financial performance of the Company and such duties normally and customarily attendant to such offices.  Executive shall report to the Board of Directors of the Company (the “Board”).  Executive shall render such other services and duties of an executive nature consistent with the duties of a senior executive officer of the Company as may from time to time be designated by the Board.
2.2    Exclusive Employment.  During the Employment Term, Executive shall devote his full business time to his duties and responsibilities set forth in Section 2.1.  Without limiting the generality of the foregoing, Executive shall not, without the prior written approval of the Board, during the Employment Term, render services of a business, professional or otherwise, except that Executive may continue to serve as Director of the Company and Executive may engage in civic, philanthropic and community service activities so long as such activities do not materially interfere with Executive’s ability to comply with this Agreement and are not otherwise in conflict with the policies or interest of the Company.  Notwithstanding the foregoing, Executive may not serve on the board of directors of any other company or organization without the prior approval of the Company’s Board of Directors.
3.    Compensation and General Benefits
3.1    Base Salary.  During the Employment Term, the Company shall pay Executive a base salary in an annualized amount equal to Seven Hundred  Fifty Thousand Dollars ($750,000) (“Base Salary”) payable pro rata on the Company’s regular payday, and subject to adjustment as hereinafter provided in Section 3.2.
3.2    Salary Reviews.  Executive’s Base Salary shall be reviewed annually by the Compensation Committee of the Company for the purpose of considering increases thereof.  In conducting this review, the following factors shall be considered: Executive’s performance, the Company’s financial condition and compensation afforded to senior executives of comparable corporations and such other factors that the Compensation Committee of the Company deems appropriate.  The Base Salary shall not be decreased without the written consent of Executive.
3.3    Executive Bonus.  During the Employment Term, in addition to the Base Salary provided by Section 3.1, Executive shall be entitled to receive an annual bonus tied to Company performance for the year as provided in an executive bonus incentive plan (however denominated) adopted by the Company for the relevant year (“Executive Bonus Plan” shall mean and refer to the executive bonus incentive plan adopted for each such year).
3.4    Vacation.  Executive shall be entitled to paid vacation in any fiscal year during the Employment Term in an amount that Executive deems appropriate consistent with his duties.  Vacation time shall be planned and taken consistent with Executive’s duties and obligations hereunder.
3.5    Other Benefits.  During the Employment Term, Executive (and his spouse and dependents) shall be entitled to participate in the Company’s executive perquisite plan, supplemental retirement plan, liability insurance, life insurance, disability insurance, dental insurance, hospitalization insurance, medical, accident, and other employee benefit plans from time 

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to time adopted by the Company in a manner and to an extent consistent with other senior executive officers of the Company.  The Company shall have the right to change insurance carriers and benefit plans as may be appropriate in light of future market conditions and shall have the right to purchase individual policies covering Executive if necessary.  To the extent not provided in the foregoing benefits plans, the Company shall provide the following to Executive during the Employment Term:
3.5.1    automobile perquisite under the Company’s executive fleet vehicle program or a comparable automobile allowance, as the parties may agree; 
3.5.2    reimbursement to Executive of up to $15,000 per year for the premium cost of a term life insurance policy providing coverage in the amount of $3,000,000;
3.5.3    provision of laptop computer;
3.5.4    cellular telephone and reasonable usage reimbursement; and
3.5.5    reimbursement for the cost of an annual health physical exam. 
Reimbursement of the foregoing will be made no later than the last day of the calendar year following the calendar year in which the expense is incurred.
3.6    Long Term Incentive Plans.  Executive shall also be entitled to participate in any long term equity incentive plans from time to time adopted by the Company including but not limited to the Stock Building Supply Holdings, Inc. 2013 Incentive Compensation Plan (each, an “Equity Plan”) in a manner and to an extent consistent with other senior executive officers of the Company.
3.7    Reimbursement of Expenses.  Upon submission of appropriate documentation in accordance with Company policy, the Company will promptly reimburse Executive for all reasonable business expenses incurred by Executive in pursuing the business of the Company, including, without limitation, expenditures for entertainment and travel.  Reimbursement of such expenses will be made no later than the last day of the calendar year following the calendar year in which the expense is incurred.
4.    Confidential Information
During the Employment Term and forever thereafter, Executive agrees to keep confidential all information provided by the Company, excepting any such information as is already known to the public, and including any such information and material relating to any customer, vendor, licensor, licensee, or other party transacting business with the Company, and not to release, use, or disclose the same, except with the prior written permission of the Company (collectively, “Confidential Information”).  Executive further covenants and agrees that every document, computer disk, computer software program, notation, record, diary, memorandum, development, investigation, or the like, and any method or manner of doing business, of the Company (or containing any Confidential Information) made or acquired by Executive during his employment, is and shall be the sole and exclusive property of the Company.  Notwithstanding the foregoing, Executive shall have the right to retain a copy of any document, computer disk, notation, record, 

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diary, memorandum, development, investigation, or the like, subject to the non-disclosure provisions of this Section and approval by the Company of specific items retained by Executive, which approval will not be unreasonably withheld by the Company.  This Section 4 shall survive termination of this Agreement and the Employment Term.
5.    Covenants of Executive.
5.1    Non-Compete.  Executive agrees that, during the Employment Term, he will not, directly or indirectly, engage in any business or activity competitive with the business activities of the Company.  The foregoing shall not apply to passive investments by Executive of up to 5% of the outstanding stock of any publicly traded company or to service by Executive on boards of directors of companies as permitted under this Agreement, regardless of whether such company competes with the Company.
5.2    Solicitation of Employees.  During the Employment Term and for a period of one year following a termination of employment for any reason (i) he shall not, directly or indirectly, individually, or together through any other person, firm, corporation or entity, solicit, recruit or encourage any employee of the Company to leave his or her employment with the Company and/or accept a position with another company, provided, however, that general solicitations not targeted to Company employees shall not be deemed to violate this Section 5.2.  This Section 5.2 shall survive termination of this Agreement and the Employment Term.
5.3    Solicitation of Customers and Suppliers.  Executive agrees that, during the Employment Term and for a period of one year following a termination of employment for any reason, he shall not, directly or indirectly, individually, or together through any other person, firm, corporation or entity, (a) use the Company’s Confidential Information to solicit the business of any customers of or suppliers to the Company, or (b) discourage any person or entity which is a customer of the Company from continuing its existing business or contractual relationship with the Company.  This Section 5.3 shall survive termination of this Agreement and the Employment Term.
5.4    Compliance with Company Policies.  Executive agrees that, during the Employment Term, he shall comply with the Company’s employee manual and other policies and procedures reasonably established by the Company from time to time concerning matters such as management, supervision, recruiting, diversity, and sexual harassment.
5.5    Cooperation.  For a period of one year following his termination of employment for any reason under this Agreement, Executive shall, upon Company’s reasonable request and in good faith and with his best efforts, subject to his reasonable availability, cooperate and assist Company in any dispute, controversy, or litigation in which Company may be involved and with respect to which Executive obtained knowledge while employed by the Company or any of its subsidiaries, affiliates, successors, or assigns, including, but not limited to, his participation in any court or arbitration proceedings, giving of testimony, signing of affidavits, or such other personal cooperation as counsel for the Company shall request.  Any such activities shall be scheduled, to the extent reasonably possible, to accommodate Executive’s business and personal obligations at the time.  The Company shall pay Executive an hourly fee (calculated by dividing Executive’s Base Salary hereunder by 2,000 hours) for all time spent by Executive in cooperating 

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or assisting the Company, reasonable travel and incidental out-of-pocket expenses incurred by Executive in connection with any such cooperation, as well as the reasonable costs of an attorney Executive engages to advise him in connection with the foregoing.  This Section 5.5 shall survive termination of this Agreement and the Employment Term.
5.6    Return of Business Records and Equipment.  Upon termination of Executive’s employment hereunder, Executive shall promptly return to the Company: (a) all documents, records, procedures, books, notebooks, and any other documentation in any form whatsoever, including but not limited to written, audio, video or electronic, containing any information pertaining to the Company which includes Confidential Information, including any and all copies of such documentation then in Executive’s possession or control regardless of whether such documentation was prepared or compiled by Executive, Company, other employees of the Company, representatives, agents, or independent contractors (subject to the provisions of Section 4), and (b) all equipment or tangible personal property entrusted to Executive by the Company.  Executive acknowledges that all such documentation, copies of such documentation, equipment, and tangible personal property are and shall at all times remain the sole and exclusive property of the Company.
6.    Covenants of the Company
6.1    Indemnification.  In the event Executive is made, or threatened to be made, a party to any legal action or proceeding, by reason of the fact that Executive is or was an employee, director or officer of the Company or serves or served any other entity in any capacity at the Company’s request, Executive shall be indemnified by the Company, and the Company shall pay Executive’s related expenses when and as incurred, including but not limited to attorney fees, all to the fullest extent permitted by law.  This Section 6.1 shall survive termination of this Agreement and the Employment Term.
6.2    Change in Control.  In the event of a Change in Control (as defined below), if the Company or any of its successors or assignees consolidates with or merges into any other person or entity and is not the continuing or surviving corporation or entity of such consolidation or merger, then to the extent necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to Section 6.1.
7.    Compensation and Benefits Upon Expiration of the Employment Term or Termination of Executive’s Employment During an Employment Term.
7.1    All Terminations Other Than by the Company Without Cause.  If Executive’s employment terminates for any reason during the Employment Term other than by the Company without Cause (as defined below), Executive shall receive payment for all earned but unpaid Base Salary, and benefits Executive is then entitled to receive under benefit plans of the Company, if any, less standard withholdings for tax and social security purposes, through the Date of Termination.  No other compensation of any kind or severance or other payment of any kind shall be payable by the Company to Executive after such Date of Termination.

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Notwithstanding anything to the contrary herein, any change in Executive’s title, reporting or expected residence, or diminution in any of Executive’s duties, compensation or benefits without Executive’s prior written consent shall constitute a Termination by the Company Without Cause, and will be subject to the provisions of Section 7.2.
7.2    Termination by the Company Without Cause.  The Company may, at any time and without prior written notice, terminate Executive without Cause.  In the event that Executive’s employment with the Company is terminated by the Company without Cause, Executive shall receive payment for all earned but unpaid Base Salary, and benefits Executive is then entitled to receive under benefit plans of the Company, if any, less standard withholdings for tax and social security purposes, through the Date of Termination.  In addition, provided that Executive executes a release of claims against the Company in a form reasonably satisfactory to the Company (but which release shall expressly exclude (a) any claims that cannot be waived or released as a matter of law by private agreement, (b) any statutory or other indemnity rights of Executive whether arising under contract, statute, insurance policy or corporate governance documents (such as articles of incorporation or bylaws), or (c) any claims to all or any portion of any payments owed or owing to Executive under this Agreement), and provided that such release becomes effective, Executive shall receive (i) within 75 days, severance payment in a lump sum of an amount equal to two (2) times Executive’s then-current Base Salary, subject to tax withholding requirements; (ii) the Company shall continue Executive’s benefits under Section 3.5.1 for a period of thirty (30) days following the Date of Termination and reimbursement for Executive’s life insurance premium benefit under Section 3.5.3 shall be pro-rated from the date of the annual renewal immediately preceding the Date of Termination to that date that is thirty (30) days following the Date of Termination, each subject to tax withholding requirements; (iii) payment of a prorated portion (based on the number of days Executive was actually employed in the relevant year) of the amount of all bonuses that Executive would be eligible to receive under the Executive Bonus Plan pursuant to Section 3.3, if any, for the year in which the termination occurs, as and when payments become payable under such Plan; and (iv) payment on Executive’s behalf of monthly continuation premiums for health insurance under Federal or State COBRA, or private insurance once COBRA coverage becomes unavailable (but capped, on a monthly basis, at the monthly premium paid by the Company for COBRA coverage as of the end of the relevant period of actual COBRA coverage), for a period of 24 months following the Date of Termination, as and when such premiums become due and payable (it being acknowledged and agreed that the parties hereto will reasonably cooperate to substitute other consideration in lieu of this clause (iv) in the event that the parties mutually determine that any such payment likely would cause a violation of Section 105(h) of the Code or other applicable law).  Subject to Section 7.3, no other compensation of any kind or severance or other payment of any kind shall be payable by the Company to Executive after such Date of Termination; provided, however, that nothing in this Agreement shall be construed as a release of (1) any claims that cannot be waived or released as a matter of law by private agreement, (2) any statutory or other indemnity rights of Executive whether arising under contract, statute, insurance policy or corporate governance documents (such as articles of incorporation or bylaws), or (3) any claims to all or any portion of any payments owed or owing to Executive under this Agreement.
7.3    Termination in Connection With a Change in Control.  If the employment of Executive is terminated without Cause in connection with a Change in Control, Executive shall, in 

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addition to the payments and benefits set forth in Section 7.2 (except that in lieu of clause (iii) of Section 7.2, the following clause (iii) shall be substituted: “(iii) payment of a prorated portion (based on the number of days Executive was actually employed in the relevant year) of the amount of target bonus that Executive would have been eligible to receive under the Executive Bonus Plan for the year in which the termination occurs”), be entitled to full acceleration of all awards outstanding under any Equity Plans of the Company.  For purposes of this Section 7.3, “in connection with a Change in Control” shall be deemed to include, but shall not be limited to, a termination that occurs within the period between two (2) months prior to the signing of a definitive agreement with respect to such Change in Control until six (6) months following the consummation of such Change in Control.
7.4    All Benefits Cease.  Except as specifically provided in Sections 7.1 to 7.3 and except as required by law, all benefits provided by the Company to Executive under this Agreement or otherwise shall cease as of the Date of Termination.
7.5    Certain Definitions.  For purposes of this Agreement, the following terms shall have the meanings set forth below.
(a)    “Cause” shall mean that Executive shall: (i) commit an act of fraud, embezzlement or misappropriation involving the Company; (ii) be convicted by a court of competent jurisdiction of, or enter a plea of guilty of no contest to, any felony involving moral turpitude or dishonesty; (iii) commit an act, or fail to commit an act, involving the Company that amounts to, or with the passage of time would amount to, willful misconduct, gross negligence or a willful breach of this Agreement and that results or will result in material and demonstrable harm to the Company, if such act is not corrected within 30 days following receipt written notice thereof from the Company; or (iv) willfully fail to perform the responsibilities and duties specified herein for a period of 30 days following receipt of written notice from the Company that specifically describes past instances of willful failure of performance; provided that in the case of (iv) above, during the 30-day period following receipt of such notice, Executive shall be given the opportunity to take reasonable steps to cure any such claimed past failure of performance.
(b)    “Date of Termination” shall mean the date on which a written notice of termination, specifying in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment is given; provided that, in the case of a termination for Cause, Executive shall not have cured, if subject to a cure period, the matter or matters stated in the notice of termination within the 30-day notice period provided in Section 7.5(a) above.
(c)    “Change in Control” shall mean the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events: (i) the sale, exchange, lease or other disposition, in one or a series of related transactions, of all or substantially all, of the assets of the Company to any “person” or “group” (as such terms are defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as amended); (ii) any such “person” or “group” (as defined above) is or becomes the beneficial owner, directly or indirectly, of more than 50% of the total voting power of the voting stock of the Company (or any entity that controls the Company or that is a successor to all or substantially all of the assets of the Company), including 

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by way of stock acquisition, reorganization, merger, consolidation, tender or exchange offer or otherwise; or (iii) either a merger or consolidation in which the direct or indirect beneficial owners of the Company immediately prior to the merger or consolidation fail to possess direct or indirect beneficial ownership of more than fifty percent (50%) of the voting power of the securities of the surviving corporation (or if the surviving corporation is a subsidiary of another entity, then the required beneficial ownership shall be determined with respect to the securities of that entity that controls the surviving corporation and is not itself a subsidiary of any other entity) immediately following such transaction.
7.6    Section 409A.  Notwithstanding anything herein to the contrary, to the extent that the Board determines, in its sole discretion, that (a) at the time of the Executive’s termination of employment with the Company, he is a “specified employee” as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and (b) any payment or benefit to be provided under Section 7 to or for the benefit of Executive would be subject to the additional tax imposed under Section 409A(a)(1)(B) of the Code or a successor or comparable provision if paid at the time such payments and benefits are otherwise required under this Agreement, then the commencement of such payments and/or benefits shall be delayed until the earlier of (i) the date that is six months following the Date of Termination or (ii) the date of Executive’s death; provided, however, that an amount equal to the lesser of two times (x) annual Base Salary or (y) the limit under Internal Revenue Code Section 401(a)(17) shall not be subject to the delay described in the previous clause and instead shall be paid out as otherwise scheduled.
8.    Section 280G Matters
If payment of any amounts, or provision of any benefits, under this Agreement, or otherwise to Executive, would constitute a “parachute payment” within the meaning of Section 280G of the Code and, but for this Section 8, would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Executive will elect, at least thirty (30) days prior to closing of the relevant change in ownership or control that defines the parachute payment, by written notice to the Company, one of the following two options (if Executive does not make such a written election then Executive will be deemed to have elected the first option):
(a)    Such payments or benefits will be reduced to the least extent possible so that no portion of such payments and benefits would be subject to the Excise Tax, such amount to be computed by the Company’s accountants, subject to the approval of Executive not to be unreasonably withheld.  Relative to this first option, the Company will reduce such payments and/or benefits in such manner as reasonably requested by Executive if Executive proposes a particular plan for such reduction as part of his notice; or
(b)    The Company will submit to the vote of the shareholders of the Company, consistent with Section 280G(b)(5)(B) of the Code, approval of the relevant payments and benefits.  This option will be available to Executive only if the Company is eligible to take advantage of Section 280G(b)(5)(B) of the Code.  Executive acknowledges and agrees that if such approval is not obtained as required by such Section of the Code, then Executive will not be entitled to receive the relevant payments and benefits.

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9.    Warranties and Representations.  
Executive hereby represents and warrants to the Company that he is not now under any obligation of a contractual or quasi-contractual nature known to him that is inconsistent or in conflict with this Agreement or that would prevent, limit or impair the performance by Executive of his obligations hereunder; and has been or has had the opportunity to be represented by legal counsel in the preparation, negotiation, execution and delivery of this Agreement and understands fully the terms and provisions hereof.
10.    Notices
All notices required or permitted to be given by either party hereunder shall be in writing and shall be deemed sufficiently given if mailed by registered or certified mail, or personally delivered to the party entitled thereto at the address stated below, or to such changed address as the addressee may have given by a similar notice:
To the Company:    BMC Stock Holdings, Inc.
Two Lakeside Commons
980 Hammond Drive NE, Suite 500
Atlanta, Georgia 30328
Attn:  Chairman of the Compensation 
Committee

With a Copy to:     BMC Stock Holdings, Inc.
Two Lakeside Commons
980 Hammond Drive NE, Suite 500
Atlanta, Georgia 30328
Attn:  Chairman of the Board of Directors

To Executive:     Peter C. Alexander
At the last known residence address on the payroll records of the Company
11.    General Provisions
11.1    Waiver.  No waiver by any party hereto of any failure of any other party to keep or perform any covenant or condition of this Agreement shall be deemed to be a waiver of any preceding or succeeding breach of the same, or any other covenant or condition.
11.2    Amendments.  No provision of this Agreement may be amended, modified or waived unless such amendment, modification or waiver shall be agreed to in writing and signed by Executive and a duly authorized officer of the Company.

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11.3    Severability.  The provisions of this Agreement are severable and in the event that a court of competent jurisdiction determines that any provision of this Agreement is in violation of any law or public policy, in whole or in part, only the portions of this Agreement that violate such law or public policy shall be stricken.  All portions of this Agreement that do not violate any statute or public policy shall not be affected thereby and shall continue in full force and effect.  Further, any court order striking any portion of this Agreement shall modify the stricken terms as narrowly as possible to give as much effect as possible to the intentions of the parties under this Agreement.
11.4    Assignment.  No right to or interest in any payments shall be assignable by either party; provided, however, that this provision shall not preclude Executive from designating one or more beneficiaries to receive any amount that may be payable after his death and shall not preclude his executor or administrator from assigning any right hereunder to the person or persons entitled hereto.  Further, the Company may assign this Agreement: (a) to an affiliate so long as such affiliate assumes the Company’s obligations hereunder, or (b) in connection with a merger or consolidation involving the Company or a sale of substantially all its assets or shares to the surviving corporation or purchaser as the case may be so long as such assignee assumes the Company’s obligations hereunder.
11.5    Successors and Assigns.  This Agreement and the obligations of the Company and Executive hereunder shall be binding upon and shall be assumed by their respective successors including, without limitation, any corporation or corporations acquiring the Company, whether by merger, consolidation, sale or otherwise.
11.6    Governing Law.  The validity, interpretation, performance, and enforcement of this Agreement shall be governed by the laws of the State of Georgia without regard to the principles of conflict of laws thereof.
11.7    No Representation.  No officer, employee or representative of the Company has any authority to make any representation or promise in connection with this Agreement or the subject matter hereto which is not contained herein, and Executive agrees that he has not executed this Agreement in reliance upon any such representation or promise.
11.8    Interpretation of Agreement.  Each of the parties has been represented by counsel or had the opportunity to be represented by counsel in the negotiation and preparation of this Agreement.  The parties agree that this Agreement is to be construed as jointly drafted.  Accordingly, this Agreement will be construed according to the fair meaning of its language, and the rule of construction that ambiguities are to be resolved against the drafting party will not be employed in the interpretation of this Agreement.
11.9    Headings.  The headings of sections and subsections are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.
11.10    Entire Agreement.  This document and the documents referenced herein constitute the entire understanding and Agreement of the parties with respect to the subject matter 

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of this Agreement, and any and all prior agreements, understandings and representations are hereby terminated and cancelled in their entirety and are of no further force or effect; provided, however, that (a) any claims that cannot be waived or released as a matter of law by private agreement, (b) any statutory or other indemnity rights of Executive whether arising under contract, statute, insurance policy or corporate governance documents (such as articles of incorporation or bylaws), (c) any claims to all or any portion of any payments owed or owing to Executive under this Agreement, (d) any post-petition claims of Executive in the Reorganization Proceedings, or (e) any prepetition claims of Executive in the Reorganization Proceedings relating to rejection of the Employment Agreement or to the Company’s SERP and deferred compensation plans, any unpaid bonus or severance and any perquisites under any employee benefit plan of the Company, including without limitation, any sick leave, medical benefits and health and club allowances, are hereby expressly reserved.
11.11    Counterparts.  This Agreement may be executed in two or more counterparts with the same effect as if the signatures to all such counterparts were upon the same instrument, and all such counterparts shall constitute but one instrument.
11.12    No Mitigation of Damages.  Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by Executive as a result of employment by another employer or by retirement benefits after the Date of Termination, except as specifically provided hereunder.  The provisions of this Agreement, and any payment provided for hereunder, shall not reduce any amounts otherwise payable, or in any way diminish Executive’s then existing rights, or rights which would accrue solely as a result of the passage of time, under any Company benefit plan or other contract, plan or arrangement.
11.13    Dispute Resolution and Binding Arbitration.
11.13.1    Mediation.  Any controversy, dispute or claim arising out of or relating to this Agreement or breach thereof shall first be settled through good faith negotiation.  If the dispute cannot be settled through negotiation, the parties agree to attempt in good faith to settle the dispute by mediation with a mutually acceptable mediator in Atlanta, Georgia using mutually acceptable mediation procedures.  If the parties fail to agree on a mutually acceptable mediator in Atlanta, Georgia or the procedures for the conduct of the mediation, then the mediation shall be administered by Judicial Arbitration and Mediation Services (“JAMS”) through the JAMS Atlanta, GA office.  The parties will cooperate with JAMS and with one another in selecting a mediator from JAMS panel of neutrals, and in scheduling the mediation proceedings.  The parties covenant that they will participate in the mediation in good faith, and that they will share equally in its costs.  All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the parties, their agents, employees, experts and attorneys, and by the mediator and any JAMS employees, are confidential, privileged and inadmissible for any purpose, including impeachment, in any litigation or other proceeding involving the parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or 

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non-discoverable as a result of its use in the mediation.  Either party may seek equitable relief prior to the mediation to preserve the status quo pending the completion of that process.
11.13.2    Binding Arbitration.  If the parties are unsuccessful at resolving the dispute through mediation, the parties agree to binding arbitration administered by JAMS pursuant to its Employment Arbitration Rules & Procedures, by a single impartial arbitrator experienced in employment law selected as follows: if the Company and Executive are unable to agree upon an impartial arbitrator within ten days of a request for arbitration, the parties shall request a panel of employment arbitrators from JAMS and alternatively strike names until a single arbitrator remains.  The arbitration shall take place through the JAMS Atlanta, GA office, and both Executive and the Company agree to submit to the jurisdiction of the arbitrator selected in accordance with JAMS’ rules and procedures.  Executive and the Company further agree that arbitration as provided for in this section will be the exclusive and binding remedy for any such dispute and will be used instead of any court action, which is hereby expressly waived, except for any request by either party hereto for temporary or preliminary injunctive relief pending arbitration in accordance with applicable law, or an administrative claim with an administrative agency.  The parties further agree that the award of the arbitrator shall be final and binding on both parties.  The arbitrator shall have discretion to award monetary and other damages, or no damages, and to fashion such other relief as the arbitrator deems appropriate.  The Company will be responsible for paying any filing fees and costs of the arbitration proceeding itself (for example, arbitrators’ fees, conference room, transcripts), but each party shall be responsible for its own attorneys’ fees.  Judgment on the award may be entered in the Superior Court in and for the County of Fulton, State of Georgia or any other court having jurisdiction.  THE COMPANY AND EXECUTIVE ACKNOWLEDGE AND AGREE THAT BY AGREEING TO ARBITRATE, THEY ARE WAIVING ANY RIGHT TO BRING AN ACTION AGAINST THE OTHER IN A COURT OF LAW, EITHER STATE OR FEDERAL, AND ARE WAIVING THE RIGHT TO HAVE CLAIMS AND DAMAGES, IF ANY, DETERMINED BY A JURY.
11.13.3    Enforcement of Obligations to Mediate or Arbitrate and Mediated Settlement or Arbitral Award.  If any action at law or in equity is necessary to enforce the terms of this Agreement requiring mediation and arbitration, or the terms of any mediated settlement or arbitral award under this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs, and necessary disbursements in addition to any other relief to which that party may be entitled.  This provision shall be construed as applicable to the entire contract.

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IN WITNESS WHEREOF, the parties have executed this Amended and Restated Employment Agreement as of the day and year first above written.
	
		
	

/s/ Peter C. Alexander            
Peter C. Alexander
	BMC STOCK HOLDINGS, INC. 

/s/ David W. Bullock            
By: David W. Bullock
Chairman of the Board of Directors

[Signature Page to Amended and Restated Employment Agreement]Lucas Energy, Inc. 8-K

 

Exhibit 4.1

 

Form of Debenture

 

NEITHER THIS SECURITY NOR THE SECURITIES
FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH WILL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE
OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

LUCAS
ENERGY, INC.

 

REDEEMABLE CONVERTIBLE
SUBORDINATED DEBENTURE

 

	$530,000.00	Issuance Date: April 6, 2016

 

FOR
VALUE RECEIVED, Lucas Energy, Inc., a Nevada corporation (“Company”), promises
to pay to the order of ____________________ (“Investor”), the principal sum of US $530,000.00 (“Face
Value”), together with interest thereon, as follows:

 

I.            Terms
of Debenture.

 

A.          Debenture.
This Redeemable Convertible Subordinated Debenture (“Debenture”) is issued pursuant to that certain Securities
Purchase Agreement (“Agreement”) of even date herewith. Capitalized terms not otherwise defined herein will
have the meanings defined in the Agreement.

 

B.          Ranking
and Voting. 

 

1.          Ranking.
The Debenture will, with respect to rights upon liquidation, winding-up or dissolution, rank: (a) senior to the Company’s
Common Stock, $0.001 par value per share (“Common Stock”), (b) senior to all existing and future series of
the Company’s Preferred Stock, $0.001 par value per share (“Preferred Stock”); and (c) junior to all
existing and future indebtedness of the Company. 

 

    	 

    	 

    

 

2.          No
Voting. Except as required by applicable law, the holders of this Debenture will have no right to vote on any matters,
questions or proceedings of this Company including, without limitation, the election of directors.

 

C.          Interest.

 

1.          Commencing
on the date of the issuance of this Debenture (“Issuance Date”), this Debenture will accrue interest (“Interest”),
at a rate equal to 6.0% per annum, subject to adjustment as provided in this Debenture (“Interest Rate”), of
the Face Value. Interest will be payable with respect to any part of this Debenture upon any of the following: (a) upon redemption
of such part in accordance with Section I.F; and (b) upon conversion of such part in accordance with Section I.G.

 

2.          Interest,
as well as any applicable Conversion Premium payable hereunder, will be paid: (a) in the Company’s sole and absolute discretion,
immediately in cash; or (b) if Company notifies Investor it will not pay all or any portion in cash, or to the extent cash is
not paid and received as soon as practicable, and in any event within 1 Trading Day after the Notice Time, for any reason whatsoever,
in shares of Common Stock valued at (i) if there has never been a Trigger Event, (A) 95.0% of the average of the 5 lowest individual
daily volume weighted average prices of the Common Stock on the Trading Market during the applicable Measurement Period, which
may be non-consecutive, less $0.05 per share of Common Stock, not to exceed (B) 100% of the lowest sales price on the last day
of such Measurement Period less $0.05 per share of Common Stock (ii) following any Trigger Event, (A) 85.0% of the lowest daily
volume weighted average price during any Measurement Period for any conversion by Investor, less $0.10 per share of Common Stock,
not to exceed (B) 85.0% of the lowest sales price on the last day of any Measurement Period, less $0.10 per share of Common Stock.
In no event will the value of Common Stock pursuant to the foregoing be below the par value per share. All amounts that are required
or permitted to be paid in cash pursuant to this Debenture will be paid by wire transfer of immediately available funds to an
account designated by Investor.

 

D.          Protective
Provision.

 

1.          A
“Deemed Liquidation Event” will mean: (a) a merger or consolidation in which the Company is a constituent party
or a subsidiary of the Company is a constituent party and the Company issues shares of its capital stock pursuant to such merger
or consolidation, except (i) any such merger or consolidation involving the Company or a subsidiary in which the Company is the
surviving or resulting corporation, (ii) any merger effected exclusively to change the domicile of the Company, (iii) any transaction
or series of transactions in which the holders of the voting securities of the Company outstanding immediately prior to such transaction
continue to retain more than 50% of the total voting power of such surviving entity, or (iv) the Acquisition; (b) Company issues
convertible or equity securities that are senior to the Debenture in any respect, (c) Investor does not receive the number of
Conversion Shares stated in a Delivery Notice with 5 Trading Days of the Notice Time; (d) trading of the Common Stock is halted
or suspended by the Trading Market or any U.S. governmental agency for 10 or more consecutive trading days; (e) the sale, lease,
transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or
any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, or
the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the
assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale,
lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Company.

 

    	2

    	 

    

 

3.          The
Company will not have the power to close or effect a voluntary Deemed Liquidation Event unless the agreement or plan of merger
or consolidation for such transaction provides that no consideration will be payable to the stockholders of the Company until
after payment to Investor in accordance with Section I.E, and the required amount is paid to Investor prior to or upon
closing, effectuation or occurrence of the Deemed Liquidation Event.

 

E.          Liquidation.
Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, after payment or provision for
payment of debts and other liabilities of the Company, prior to any distribution or payment made to the holders of Common Stock
or Preferred Stock by reason of their ownership thereof, Investor will be entitled to be paid out of the assets of the Company
available for distribution an amount with respect to this Debenture equal to the outstanding Face Value balance, plus an amount
equal to any accrued but unpaid Interest thereon (collectively with the outstanding
Face Value balance, the “Liquidation Value”).

 

F.          Redemption.

 

1.           Company’s
Redemption Option.  On the Interest Maturity Date, the Company may redeem all or any part of this Debenture by paying
Investor in cash an amount per share equal to 100% of the Liquidation Value for the portion redeemed.

 

2.           Early
Redemption. Prior to the Interest Maturity Date, provided that no Trigger Event has occurred, the Company will have the
right at any time upon 30 Trading Days’ prior written notice, in its sole and absolute discretion, to redeem all or any
portion of this Debenture then outstanding by paying Investor in cash an amount per portion of Debenture (the “Early
Redemption Price”) equal to the sum of the following: (a) 100% of the Face Value of the portion redeemed, plus (b) the
Conversion Premium for the portion redeemed, minus (c) any Interest that has been paid, for the portion of the Debenture redeemed.

 

3.           Credit
Risk Adjustment.

 

a.          The
Interest Rate will adjust downward by an amount equal to the Spread Adjustment for each amount, if any, equal to the Adjustment
Factor that the Measuring Metric rises above the Maximum Triggering Level, down to a minimum of 0.0%.

 

b.          The
Interest Rate will adjust upward by an amount equal to the Spread Adjustment for each amount, if any, equal to the Adjustment
Factor that the Measuring Metric falls below the Minimum Triggering Level, up to a maximum of 24.95%. In addition, the Interest
Rate will adjust upward by 10.0% following the occurrence of any Trigger Event.

 

    	3

    	 

    

 

c.          The
adjusted Interest Rate used for calculation of the Liquidation Value, Conversion Premium, Early Redemption Price and Interest,
as applicable, and the amount of Interest owed will be calculated and determined based upon the Measuring Metric at close of the
Trading Market immediately prior to the Notice Time.

 

4.           Mandatory
Redemption.  If the Company determines to liquidate, dissolve or wind-up its business and affairs, or upon closing or
occurrence of any Deemed Liquidation Event, the Company will prior to or concurrently with the closing, effectuation or occurrence
any such action, redeem this entire Debenture for cash, by wire transfer of immediately available funds to an account designated
by Investor, at the Early Redemption Price set forth in Section I.F.2 if the event is prior to the Interest Maturity Date,
or at the Liquidation Value if the event is on or after the Interest Maturity Date.

 

5.           Mechanics
of Redemption. In order to redeem all or any portion of the Debenture then outstanding, the Company must deliver written
notice (each, a “Redemption Notice”) to Investor setting forth (a) the portion of this Debenture that the Company
is redeeming, (b) the applicable Interest Rate, Liquidation Value and Early Redemption Price, and (c) the calculation of the amount
paid. In connection with a mandatory redemption, the notice will be delivered as soon as the number of shares can be determined,
and in all other instances at least 30 Trading Days prior to payment. For the avoidance of doubt, the delivery of a Redemption
Notice will not affect Investor’s rights under Section I.G until after receipt of cash payment by Investor at the
required time.

 

G.          Conversion.

 

1.            Mechanics
of Conversion.

 

a.          All
or any portion of this Debenture may be converted into shares of Common Stock, at any time or times after the Issuance Date, in
the sole and absolute discretion of Investor or, subject to the terms and conditions hereof, the Company; (i) if at the option
of Investor, by delivery of one or more written notices to the Company or its transfer agent (each, a “Investor Conversion
Notice”), of the Investor’s election to convert any or all of this Debenture; or (ii) if at the option of the
Company, if the Equity Conditions are met, delivery of written notice to Investor (each, a “Company Conversion Notice,”
with the Investor Conversion Notice, each a “Conversion Notice,” and with the Redemption Notice, each an “Initial
Notice”), of the Company’s election to convert any or all of this Debenture.

 

b.          Each
Delivery Notice will set forth the amount of Debenture being converted, the minimum number of Conversion Shares and the amount
of Interest and any applicable Conversion Premium due as of the time the Delivery Notice is given (the “Notice Time”),
and the calculation thereof.

 

b.          If
the Company notifies Investor by 10:00 a.m. Eastern time on the Trading Day after the Notice Time that it is paying all or any
portion of Interest or Conversion Premium, and actually pays in cash by the next Trading Day, time being of the essence, the full
amount of Interest and Conversion Premium stated in the Delivery Notice, no further amount will be due with respect thereto.

 

    	4

    	 

    

 

c.          As
soon as practicable, and in any event within 1 Trading Day of the Notice Time, time being of the essence, the Company will do
all of the following: (i) transmit the Delivery Notice by facsimile or electronic mail to the Investor, and to the Company’s
transfer agent (the “Transfer Agent”) with instructions to comply with the Delivery Notice; (ii) either (A)
if the Company is approved through The Depository Trust Company (“DTC”), authorize and instruct the credit
by the Transfer Agent the aggregate number of Conversion Shares set forth in the Delivery Notice, to Investor’s or its designee’s
balance account with the DTC Fast Automated Securities Transfer (FAST) Program, through its Deposit/Withdrawal at Custodian (DWAC)
system, or (B) only if the Company is not approved through DTC, issue and surrender to a common carrier for overnight delivery
to the address as specified in the Delivery Notice a certificate registered in the name of Investor or its designee, for the number
of Conversion Shares set forth in the Delivery Notice, bearing no restrictive legend unless a registration statement covering
the Conversion Shares is not effective and neither Company nor Investor provides an opinion of counsel to the effect that Conversion
Shares may be issued without restrictive legend; and (iii) if it contends that the Delivery Notice is in any way incorrect, a
through explanation of why and its own calculation, or the Delivery Notice will conclusively be deemed correct for all purposes.
The Company will at all times diligently take or cause to be taken all actions reasonably necessary to cause the Conversion Shares
to be issued as soon as practicable.

 

d.          If
during the Measurement Period the Investor is entitled to receive additional Conversion Shares with regard to an Initial Notice,
Investor may at any time deliver one or more additional written notices to the Company or its transfer agent (each, an “Additional
Notice” and with the Initial Notice, each a “Delivery Notice”) setting forth the additional number
of Conversion Shares to be delivered, and the calculation thereof.

 

e.          If
the Company for any reason does not issue or cause to be issued to the Investor within 3 Trading Days after the date of a Delivery
Notice, the number of Conversion Shares stated in the Delivery Notice, then, in addition to all other remedies available to the
Investor, as liquidated damages and not as a penalty, the Company will pay in cash to the Investor on each day after such 3rd
Trading Day that the issuance of such Conversion Shares is not timely effected an amount equal to 2% of the product of (i) the
aggregate number of Conversion Shares not issued to the Investor on a timely basis and to which the Investor is entitled and (ii)
the highest Closing Price of the Common Stock between the date on which the Company should have issued such shares to the Investor
and the actual date of receipt of Conversion Shares by Investor. It is intended that the foregoing will serve to reasonably compensate
Investor for any delay in delivery of Conversion Shares, and not as punishment for any breach by the Company. The Company acknowledges
that the actual damages likely to result from delay in delivery are difficult to estimate and would be difficult for Investor
to prove.

 

f.          Notwithstanding
any other provision: all of the requirements of Section I.F and this Section I.G are each independent covenants;
the Company’s obligations to issue and deliver Conversion Shares upon any Delivery Notice are absolute, unconditional and
irrevocable; any breach or alleged breach of any representation or agreement, or any violation or alleged violation of any law
or regulation, by any party or any other person will not excuse full and timely performance of any of the Company’s obligations
under these sections; and under no circumstances may the Company seek or obtain any temporary, interim or preliminary injunctive
or equitable relief to prevent or interfere with any issuance of Conversion Shares to Investor.

 

    	5

    	 

    

 

g.          If
for any reason whatsoever Investor does not timely receive the number of Conversion Shares stated in any Delivery Notice, Investor
will be entitled to a compulsory remedy of immediate specific performance, temporary, interim and, preliminary and final injunctive
relief requiring Company and its transfer agent, attorneys, officers and directors to immediately issue and deliver the number
of Conversion Shares stated by Investor, which requirement will not be stayed for any reason, without the necessity of posting
any bond, and which Company may not seek to stay or appeal.

 

h.          No
fractional shares of Common Stock are to be issued upon conversion of this Debenture, but rather the Company will issue to Investor
scrip or warrants registered on the books of the Company (certificated or uncertificated) which will entitle Investor to receive
a full share upon the surrender of such scrip or warrants aggregating a full share. The Investor will not be required to
deliver the original Debenture in order to effect a conversion hereunder. The Company will pay any and all taxes which may be
payable with respect to the issuance and delivery of any Conversion Shares.

 

2.           Investor
Conversion. In the event of a conversion of any portion of Debenture pursuant to an Investor Conversion Notice, the Company
will (a) satisfy the payment of Interest and Conversion Premium with respect to the portion converted as provided in Section
I.C.2, and (b) issue to Investor a number of Conversion Shares equal to (i) the Face Value of the portion converted divided
by (ii) the applicable Conversion Price with respect to such portion of the Debenture; all in accordance with the procedures set
forth in Section I.G.1.

 

3.           Company
Conversion. Company will have the right to send Investor a Company Conversion Notice at any time in its sole and absolute
discretion, if the Equity Conditions are met as of the time such Company Conversion Notice is given.  Upon any conversion
of any portion of this Debenture pursuant to a Company Conversion Notice, Company will on the date of such notice (a) satisfy
the payment of Interest and Conversion Premium with respect to the portion converted as provided in Section I.C.2, and
(b) issue to Investor a number of Conversion Shares equal to (i) the Face Value of the portion converted divided by (ii) the applicable
Conversion Price with respect to such portion of the Debenture; all in accordance with the procedures set forth in Section
I.G.1.

 

4.           Stock
Splits. If the Company at any time on or after the filing of this Debenture subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares,
the applicable Conversion Price, Adjustment Factor, Maximum Triggering Level, Minimum Triggering Level, and other share based
metrics in effect immediately prior to such subdivision will be proportionately reduced and the number of shares of Common Stock
issuable will be proportionately increased. If the Company at any time on or after such Issuance Date combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares,
the applicable Conversion Price, Adjustment Factor, Maximum Triggering Level, Minimum Triggering Level, and other share based
metrics in effect immediately prior to such combination will be proportionately increased and the number of Conversion Shares
will be proportionately decreased. Any adjustment under this Section will become effective at the close of business on the date
the subdivision or combination becomes effective.

 

    	6

    	 

    

 

5.           Notices. The
holders of shares of Debenture are entitled to the same rights as the holders of Common Stock with respect to rights to
receive notices, reports and audited accounts from the Company and with respect to attending stockholder meetings.

 

6.           Definitions.
 The following terms will have the following meanings:

 

a.          “Adjustment
Factor” means $0.10 per share of Common Stock.

 

b.          “Acquisition”
means the closing of the acquisition of assets contemplated by that certain Asset Purchase Agreement dated December 30, 2015
between Company and the sellers named therein, as disclosed in the current report on Form 8-K filed with the Securities &
Exchange Commission on December 31, 2015.

 

c.          “Closing
Price” means, for any security as of any date, the last closing bid price for such security on the Trading Market, or,
if the Trading Market begins to operate on an extended hours basis and does not designate the closing bid price, then the last
bid price of such security prior to 4:00 p.m., Eastern time, or, if the Trading Market is not the principal securities exchange
or trading market for such security, the last closing bid price of such security on the principal securities exchange or trading
market where such security is listed or traded, or if the foregoing do not apply, the last closing bid price of such security
in the over-the-counter market on the electronic bulletin board for such security, or, if no closing bid price is reported for
such security, the average of the bid prices of any market makers for such security as reported in the “pink sheets”
by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).

 

d.          “Conversion
Premium” for each portion of Debenture means the Face Value, multiplied by the product of (i) the applicable Interest
Rate, and (ii) the number of whole years between the Issuance Date and the Interest Maturity Date.

 

e.          “Conversion
Price” means a price per share of Common Stock equal to $3.25 per share of Common Stock, subject to adjustment as otherwise
provided herein.

 

f.          “Conversion
Shares” means all shares of Common Stock that are required to be or may be issued upon conversion of Debenture.

 

g.          “Equity
Conditions” means on each day during the Measurement Period, (i) the Common Stock is not under chill or freeze from
DTC, the Common Stock is designated for trading on OTCQB or higher market and will not have been suspended from trading on such
market, and delisting or suspension by the Trading Market has not been threatened or pending, either in writing by such market
or because Company has fallen below the then effective minimum listing maintenance requirements of such market; (ii) the Company
has delivered Conversion Shares upon all conversions or redemptions of the Debenture in accordance with their terms to the Investor
on a timely basis; (iii) the Company will have no knowledge of any fact that would cause both of the following (A) a registration
statement not to be effective and available for the resale of all Conversion Shares, and (B) Section 3(a)(9) under the Securities
Act of 1933, as amended, not to be available for the issuance of all Conversion Shares, or Regulation S or Securities Act Rule
144 not to be available for the resale of all the Conversion Shares underlying the Debenture without restriction; (iv) there has
been a minimum of $5 million in aggregate trading volume over the last 20 consecutive Trading Days; (v) all shares of Common Stock
to which Investor is entitled have been timely received into Investor’s designated account in electronic form fully cleared
for trading; (vi) the Company otherwise will have been in compliance with and will not have breached any provision, covenant,
representation or warranty of any Transaction Document; (vii) the Measuring Metric is at least $1.50; and (viii) no Trigger Event
will have occurred.

 

    	7

    	 

    

 

h.          “Interest
Maturity Date” means the date that is 7 years after the Issuance Date.

 

i.          
“Measurement Period” means the period beginning, if no Trigger Event has occurred 30 Trading Days, and
if a Trigger Event has occurred 60 Trading Days, before the Notice Date, and ending, if no Trigger Event has occurred 30 Trading
Days, and if a Trigger Event has occurred 60 Trading Days, after the number of Conversion Shares stated in the initial Notice
have actually been received into Investor’s designated brokerage account in electronic form and fully cleared for trading;
provided that for each day during the Measurement Period on which less than all of the conditions set forth in Section I.G.6.h
exist, 1 Trading Day will be added to what otherwise would have been the end of the Measurement Period.

 

j.          
“Measuring Metric” means the volume weighted average price of the Common Stock on any Trading Day following
the Issuance Date of the Debenture.

 

k.          “Maximum
Triggering Level” means $3.75 per share of Common Stock.

 

l.          “Minimum
Triggering Level” means $2.75 per share of Common Stock.

 

m.          “Spread
Adjustment” means 100 basis points.

 

n.         
“Securities Purchase Agreement” means the Securities Purchase Agreement or other agreement pursuant to
which the Debenture is issued, including all exhibits thereto and all related Transaction Documents as defined therein.

 

o.          “Trading
Day” means any day on which the Common Stock is traded on the Trading Market.

 

p.          “Trading
Market” means the NYSE MKT or whatever is at the applicable time, the principal U.S. trading exchange or market for
the Common Stock. All Trading Market data will be measured as provided by the appropriate function of the Bloomberg Professional
service of Bloomberg Financial Markets or its successor performing similar functions.

 

    	8

    	 

    

 

7.           Issuance
Limitations.

 

a.          Beneficial
Ownership.  Notwithstanding any other provision, at no time may the Company issue shares of Common Stock to Investor which,
when aggregated with all other shares of Common Stock then deemed beneficially owned by Investor, would result in Investor owning
more than 4.99% of all Common Stock outstanding immediately after giving effect to such issuance, as determined in accordance
with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder; provided, however, that Investor
may increase such amount to 9.99% upon not less than 61 days’ prior notice to the Company. To the extent that any conversion
would otherwise result in exceeding the beneficial ownership limitation set forth in the preceding sentence, the Delivery Notice
will specify the number of shares that may be delivered without exceeding the limitation, and any issuance beyond such extent
will be held in abeyance until such time as it would not result in Investor exceeding the beneficial ownership limitation. No
provision of this paragraph may be waived by Investor or the Company.

 

b.          Principal
Market Regulation. Company will not issue any Conversion Shares under this Debenture, the Warrant issued to Holder on
the Issuance Date, the Stock Purchase Agreement with Investor dated the Issuance Date, the Series B Preferred Stock or the Common
Stock Purchase Warrant issued to Investor pursuant thereto, if the issuance would exceed the aggregate number of shares of Common
Stock the Company may issue without breaching Company’s obligations under NYSE MKT rules, except that such limitation will
not apply following stockholder approval in accordance with the requirements of NYSE MKT rules or a waiver from NYSE MKT (“Approval”).

 

8.           Automatic
Conversion. On the earlier of (a) the Interest Maturity Date, or (b) the last to occur of (i) the Acquisition and (ii)
the date on which all Equity Conditions (without regard to any Measurement Period) are met, the entire remaining outstanding Debenture
will automatically be converted into shares of Common Stock.

 

H.          Trigger
Event.

 

1.           Any
occurrence of any one or more of the following will constitute a “Trigger Event”:

 

(a)         Investor
does not timely receive the number of Conversion Shares stated in any Conversion Notice under this Warrant or any other agreement
with Investor for any reason whatsoever, time being of the essence, including without limitation the issuance of restricted shares
if counsel for Company or Investor provides a legal opinion that shares may be issued without restrictive legend;

 

(b)         Any
violation of or failure to timely perform any covenant or provision of this Debenture, the Securities Purchase Agreement, any
Transaction Document or any other agreement with Investor, related to payment of cash, registration or delivery of Conversion
Shares, time being of the essence;

 

(c)         Any
violation of or failure to perform any covenant or provision of this Debenture, the Securities Purchase Agreement, any Transaction
Document or any other agreement with Investor, which in the case of a default that is curable, is not related to payment of cash,
registration or delivery of Conversion Shares, and has not occurred before, is not cured within 5 Trading Days of written notice
thereof;

 

    	9

    	 

    

 

(d)         Any
representation or warranty made in the Securities Purchase Agreement, any Transaction Document or any other agreement with Investor
will be untrue, incorrect, or misleading in any material respect as of the date when made or deemed made;

 

(e)         The
occurrence of any default or event of default under any material agreement, lease, document or instrument to which the Company
or any subsidiary other than CATI Operating LLC, a Texas limited liability company (“CATI”) is obligated, including
without limitation of an aggregate of at least $500,000 of indebtedness;

 

(f)          While
any Registration Statement is required to be maintained effective, the effectiveness of the Registration Statement lapses for
any reason, including, without limitation, the issuance of a stop order, or the Registration Statement, or the prospectus contained
therein, is unavailable to Investor sale of all Conversion Shares for any 5 or more Trading Days, which may be non-consecutive;

 

(g)         The
suspension from trading or the failure of the Common Stock to be trading or listed on the Trading Market;

 

(h)        
The Company notifies Investor, including without limitation, by way of public announcement or through any of its attorneys, agents
or representatives, of its intention not to comply, as required, with a Conversion Notice under this Warrant or any other agreement
with Investor, at any time, including without limitation any objection or instruction to its transfer agent not to comply with
any notice from Investor;

 

(i)          Bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors will be instituted by or
against the Company or any subsidiary other than CATI and, if instituted against the Company or any subsidiary other than CATI
by a third party, an order for relief is entered or the proceedings are not dismissed within 30 days of their initiation;

 

(j)          The
appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, or other similar official of the
Company or any subsidiary other than CATI or of any substantial part of its property, or the making by it of an assignment for
the benefit of creditors, or the execution of a composition of debts, or the occurrence of any other similar federal, state or
foreign proceeding, or the admission by it in writing of its inability to pay its debts generally as they become due, the taking
of corporate action by the Company or any subsidiary other than CATI in furtherance of any such action or the taking of any action
by any person to commence a foreclosure sale or any other similar action under any applicable law;

 

(k)         A
final judgment or judgments for the payment of money aggregating in excess of $500,000 are rendered against the Company or any
of its subsidiaries other than CATI and are not stayed or satisfied within 30 days of entry;

 

(l)          The
Company does not for any reason timely comply with the reporting requirements of the Securities Exchange Act of 1934, as amended,
and the regulations promulgated thereunder, including without limitation timely filing when first due all periodic reports;

 

    	10

    	 

    

 

(m)        Any
regulatory, administrative or enforcement proceeding is initiated against Company or any subsidiary (except to the extent an adverse
determination would not have a material adverse effect on the Company’s business, properties, assets, financial condition
or results of operations or prevent the performance by the Company of any material obligation under the Transaction Documents);
or

 

(n)         Any
material provision of this Debenture will at any time for any reason, other than pursuant to the express terms thereof, cease
to be valid and binding on or enforceable against the parties thereto, or the validity or enforceability thereof will be contested
by any party thereto, or a proceeding will be commenced by the Company or any subsidiary or any governmental authority having
jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof, or the Company or any subsidiary
denies that it has any liability or obligation purported to be created under this Debenture.

 

2.           It
is intended that all adjustments made following a Trigger Event will serve to reasonably compensate Investor for the consequences
and increased risk following a Trigger Event, and not as a penalty or punishment for any breach by the Company. The Company acknowledges
that the actual damages likely to result from a Trigger Event are difficult to estimate and would be difficult for Investor to
prove.

 

II.          General.

 

A.          Notices.
Any and all notices to the Company will be addressed to the Company’s
Chief Executive Officer at the Company’s principal place of business on
file with the Secretary of State of the State of Nevada. Any and all notices
or other communications or deliveries to be provided by the Company to any Investor hereunder will be in writing and delivered
personally, by electronic mail or facsimile, sent by a nationally recognized overnight courier service addressed to each Investor
at the electronic mail, facsimile telephone number or address of such Investor appearing on the books of the Company, or if no
such electronic mail, facsimile telephone number or address appears, at the principal place of business of the Investor. Any notice
or other communication or deliveries hereunder will be deemed given and effective on the earliest of (1) the date of transmission,
if such notice or communication is delivered via facsimile or electronic mail prior to 5:30 p.m. Eastern time, (2) the date after
the date of transmission, if such notice or communication is delivered via facsimile or electronic mail later than 5:30 p.m. but
prior to 11:59 p.m. Eastern time on such date, (3) the second business day following the date of mailing, if sent by nationally
recognized overnight courier service, or (4) upon actual receipt by the party to whom such notice is required to be given, regardless
of how sent.

 

B.          Lost
or Mutilated Debenture. Upon receipt of evidence reasonably satisfactory to the Company (an affidavit of Investor will
be satisfactory) of the ownership and the loss, theft, destruction or mutilation of this Debenture, and in the case of any such
loss, theft or destruction upon receipt of indemnity reasonably satisfactory to Company (provided
that if Investor is a financial institution or institutional investor its own agreement will be satisfactory) or in the
case of any such mutilation upon surrender of such certificate, Company will, at its expense, execute and deliver in lieu of such
certificate a new certificate of like kind representing the number of shares of such class represented by such lost, stolen, destroyed
or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate.

 

    	11

    	 

    

 

C.          Headings.
The headings contained herein are for convenience only, do not constitute a part of this Debenture and will not be deemed
to limit or affect any of the provisions hereof.

 

D.          Choice
of Law. This Debenture will be governed by the laws of the State of Nevada.

 

E.          No
Transfer of Debenture. This Debenture is non-transferable and may not be sold, transferred or assigned by Investor

 

IN
WITNESS WHEREOF, the undersigned have executed this Debenture as of the date
first set forth above.

	 	 	 	 
	Signed:	 	 
	Name:	 	 
	Title: 	Chief Executive Officer	 
	 	 	 	 
	Signed:	 	 
	Name:	 	 
	Title: 	Chief Financial Officer	 

 

    	12

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