Document:

reta-ex102_173.htm

Exhibit 10.2

 

FIRST AMENDMENT TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

THIS FIRST AMENDMENT to Amended and Restated Loan and Security Agreement (this “Amendment”) is entered into as of October 9, 2019, by and among OXFORD FINANCE LLC, a Delaware limited liability company with an office located at 133 North Fairfax Street, Alexandria, Virginia 22314 (“Oxford”), as collateral agent (in such capacity, “Collateral Agent”), the Lenders listed on Schedule 1.1 of the Loan Agreement (as defined below) or otherwise a party thereto from time to time including Oxford in its capacity as a Lender and SILICON VALLEY BANK, a California corporation with an office located at 3003 Tasman Drive, Santa Clara, CA 95054 (“Bank” or “SVB”) (each a “Lender” and collectively, the “Lenders”), and REATA PHARMACEUTICALS, INC., a Delaware corporation with offices located at 2801 Gateway Drive, Suite 150, Irving, TX  75063 (“Borrower”).

Recitals

A.Collateral Agent, Lenders and Borrower have entered into that certain Amended and Restated Loan and Security Agreement dated as of June 14, 2018 (including the Consent Agreement (as defined below), and as otherwise amended, restated, supplemented or otherwise modified from time to time, collectively, the “Loan Agreement”).  Contemporaneously with the execution of this Amendment and the AbbVie License Agreement (as defined below), Collateral Agent, Lenders and the Borrower are entering into that certain Consent Agreement dated as of the date hereof (the “Consent Agreement”) pursuant to which, among other things, Collateral Agent and Lenders consent to the Borrower’s execution of the AbbVie License Agreement and the payments of the AbbVie License Payments (as defined below) as more fully set forth therein.

B.Lenders have extended credit to Borrower for the purposes permitted in the Loan Agreement.  

C.Borrower has requested that Collateral Agent and Lenders (i) provide for additional credit to be extended to Borrower upon the achievement of certain milestones and (ii) make certain other revisions to the Loan Agreement as more fully set forth herein.

D.Collateral Agent and Lenders have agreed to amend certain provisions of the Loan Agreement, but only to the extent and subject to the terms and conditions, and in reliance upon the representations and warranties, set forth below.

Agreement

Now, Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

1.Definitions.  Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.

2.Amendments to Loan Agreement.  

2.1Section 2.2 (Term Loans).  Section 2.2(a)(iii) of the Loan Agreement hereby is amended and restated in its entirety to read as follows:

“(iii)Subject to the terms and conditions of this Agreement, the Lenders agree, severally and not jointly, during the Second Draw Period, to make term loans to Borrower in an aggregate amount equal to Seventy-Five Million Dollars ($75,000,000.00), disbursed in a single advance and according to each Lender’s Term Loan Commitment for Term B Loans as set forth on Schedule 1.1 hereto (such term loans are hereinafter referred to singly as a “Term B Loan”, and collectively as the “Term B Loans”; each Term A Loan or Term B Loan is hereinafter referred to singly as a “Term Loan” and the Term A Loans and the Term B Loans are hereinafter referred to collectively as the “Term Loans”).   If Borrower makes a request for the Term B Loan, such request, 

 

 

in addition to the other requirements set forth in this Agreement, shall be in an amount that is equal to the Term Loan Commitment for the Term B Loan at such time.  After repayment, no Term B Loan may be re‐borrowed.” 

2.2Section 6.14 (Topline Data).  New Section 6.14 hereby is added to the Loan Agreement to read as follows:

	
“6.14
	
Topline Data. No later than November 30, 2019, Borrower shall provide written evidence, in form and substance reasonably acceptable to Collateral Agent and the Lenders, of Borrower’s achievement of positive topline registrational data, sufficient to file one or more NDAs, from the pivotal trials of either (a) Bardoxolone Methyl in CKD caused by Alport Syndrome (the ongoing CARDINAL trial)  or (b) Omaveloxolone in Friedrich’s Ataxia (the ongoing MOXIe trial). If Borrower fails to provide the aforementioned evidence of such sufficient positive topline registration data, then no later than November 30, 2019, Borrower shall immediately pay to Lenders, payable to each Lender in accordance with its respective Pro Rata Share, an amount equal to the sum of: (i) all outstanding principal of the Term Loans plus accrued and unpaid interest thereon, (ii) the Final Payment, (iii) the Prepayment Fee, plus (iv) all other Obligations that are due and payable, including Lenders’ Expenses and interest at the Default Rate with respect to any past due amounts.”
	
 

2.3Section 7.1 (Dispositions).  Section 7.1 of the Loan Agreement is hereby amended by adding the following sentence at the end of such Section to read in full as follows:

“Notwithstanding the foregoing, and for the avoidance of doubt, this Section 7.1 shall not prohibit the making of any interest payments with respect to any Permitted Convertible Indebtedness to the extent permitted pursuant to the definition thereof.”

2.4Section 7.7 (Distributions; Investments). Section 7.7 of the Loan Agreement is hereby amended and restated in its entirety to read in full as follows: 

“7.7Distributions; Investments. (a) Pay any dividends (other than dividends payable solely in capital stock) or make any distribution or payment in respect of or redeem, retire or purchase any capital stock (a “Restricted Payment”) (other than (i) the net exercise of stock options and the payments related thereto and repurchases pursuant to the terms of employee stock purchase plans, employee restricted stock agreements, stockholder rights plans, director or consultant stock option plans, or similar plans, provided such repurchases do not exceed Two Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate per fiscal year and (ii) the Borrower and each Subsidiary may declare and make Restricted Payments to the Borrower or another Subsidiary ratably according to their respective holdings of the capital stock in respect of which such Restricted Payment is being made), or (b) directly or indirectly make any Investment other than Permitted Investments, or permit any of its Subsidiaries to do so. 

Notwithstanding the foregoing, and for the avoidance of doubt, this Section 7.7 shall not prohibit (x) the conversion by holders of any Permitted Convertible Indebtedness, in accordance with the terms of the indenture or other definitive documentation governing such Permitted Convertible Indebtedness or (y) the making of any interest payments with respect to any Permitted Convertible Indebtedness to the extent permitted pursuant to the definition thereof.”

2.5Section 7.12 (Foreign Subsidiary Assets). Section 7.12 of the Loan Agreement is hereby amended and restated in its entirety to read in full as follows: 

	
“7.12
	
Foreign Subsidiary Assets. Permit the aggregate value of cash, Cash Equivalents and other assets held by Borrower’s Foreign Subsidiaries to exceed Two Million Dollars ($2,000,000.00) (or equivalent) at any time.”
	
 

 

 

2.6Section 8.2 (Covenant Default). Section 8.2(a) of the Loan Agreement hereby is amended and restated in its entirety to read as follows:

“(a)Borrower or any of its Subsidiaries fails or neglects to perform any obligation in Sections 6.2 (Financial Statements, Reports, Certificates), 6.4 (Taxes), 6.5 (Insurance), 6.6 (Operating Accounts), 6.7 (Protection of Intellectual Property Rights) (solely with respect to the first sentence thereof), 6.9 (Notice of Litigation and Default), 6.10 (Minimum Cash), 6.11 (Landlord Waivers; Bailee Waivers), 6.12 (Creation/Acquisition of Subsidiaries), 6.13 (Further Assurances) or 6.14 (Topline Data) or Borrower violates any covenant in Section 7; or”

2.7Section 8.6 (Other Agreements). Section 8.6 of the Loan Agreement hereby is amended and restated in its entirety to read as follows:

“8.6Other Agreements.  There is a default (a) in the indenture or other definitive documentation governing any Permitted Convertible Indebtedness, or (b) in any agreement to which Borrower or any of its Subsidiaries is a party with a third party or parties resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness, in each case of the foregoing clauses (a) and (b), in an amount in excess of Two Hundred Fifty Thousand Dollars ($250,000.00) or that could reasonably be expected to have a Material Adverse Change; provided, however, in each case, that the Event of Default under this Section 8.6 caused by the occurrence of a breach or default under such other agreement shall be cured or waived for purposes of this Agreement upon Collateral Agent receiving written notice from the party asserting such breach or default of such cure or waiver of the breach or default under such other agreement, if at the time of such cure or waiver under such other agreement (x) Collateral Agent or any Lender has not declared an Event of Default under this Agreement and/or exercised any rights with respect thereto; (y) any such cure or waiver does not result in an Event of Default under any other provision of this Agreement or any Loan Document; and (z) in connection with any such cure or waiver under such other agreement, the terms of any agreement with such third party are not modified or amended in any manner which could in the good faith business judgment of Collateral Agent or Lenders to be materially less advantageous to Borrower;

2.8Section 13.1 (Definitions).  The following terms and their respective definitions hereby are added or amended and restated in their entirety, as applicable, to Section 13.1 of the Loan Agreement as follows:

“AbbVie License Agreement” means that certain Amended and Restated License Agreement by and between Borrower and AbbVie Ltd., a Bermuda corporation, as successor in interest to Abbott Pharmaceuticals PR Ltd., dated as of the First Amendment Effective Date.

“AbbVie License Payments” means, collectively, any and all payments by the Borrower to AbbVie Ltd., a Bermuda corporation, pursuant to the AbbVie License Agreement in effect as of the First Amendment Effective Date, including, without limitation, the Aggregate Consideration (as such term is defined in the AbbVie License Agreement) and any royalty payments thereunder.

“Final Payment Percentage” is (i) with respect to the Term A Loans, six and one-half percent (6.50%) and (ii) with respect to the Term B Loans, two percent (2.00%).

“First Amendment Effective Date” means October 9, 2019.

“Permitted Convertible Indebtedness” means convertible unsecured notes issued by the Borrower, on terms and conditions that are acceptable to Collateral Agent and the Lenders in their sole but reasonable discretion, that are convertible into shares of common stock of the Borrower, cash or any combination thereof and cash in lieu of fractional shares of common stock of the Borrower; provided that the Indebtedness thereunder must satisfy each of the following conditions (and any agreements providing for such Permitted Convertible Indebtedness may only be amended, restated, supplemented or modified from time to time if each of the following conditions remains satisfied): (i) both immediately prior to and after giving effect (including pro forma effect) thereto, no Default or Event of Default shall exist or result therefrom, (ii) such Permitted Convertible 

 

 

Indebtedness matures after the date that is six (6) months after the Maturity Date in effect at the time of incurrence or issuance of Permitted Convertible Indebtedness and prior to that date does not provide for or require any payments of principal or any other payments with the exception of (A) interest payments to be made (1) solely with capital stock or (2) in cash which  shall be subject to a cap as agreed to in writing by Borrower, Collateral Agent and the Lenders , (iii) Borrower’s total Indebtedness (inclusive of all Indebtedness outstanding under this Agreement) is, both immediately prior to and after giving effect (including pro forma effect) thereto, in an aggregate principal amount of not more than Five Hundred Million Dollars ($500,000,000.00), (iv) such Permitted Convertible Indebtedness shall be unsecured at all times, and (v) such Permitted Convertible Indebtedness is not guaranteed by any Subsidiary of the Borrower that is not a Guarantor or Borrower. 

“Prepayment Fee” is, 

(a)with respect to any Term A Loan subject to prepayment prior to the Maturity Date, whether by mandatory or voluntary prepayment, acceleration or otherwise, an additional fee payable to the Lenders in amount equal to:

(i)for a prepayment made on or after the Funding Date of such Term A Loan through and including the first anniversary of the Funding Date of such Term A Loan, an amount equal to the aggregate amount of interest that Borrower would have paid to the Lenders in respect of such Term A Loan through and including June 1, 2023 in accordance with the payment schedule set forth in the amortization table attached to the Disbursement Letter for such Term A Loan and assuming that the outstanding principal amount outstanding under such Term A Loan accrued interest from the date of prepayment until June 1, 2023 at a fixed rate per annum equal to the Basic Rate as determined on the date of prepayment;

(ii)for a prepayment made after the date which is after the first anniversary of the Funding Date of such Term A Loan through and including the second anniversary of the Funding Date of such Term A Loan, four percent (4.00%) of the principal amount of the Term A Loans prepaid;

(iii)for a prepayment made after the date which is after the second anniversary of the Funding Date of such Term A Loan through and including the third anniversary of the Funding Date of such Term A Loan, three percent (3.00%) of the principal amount of the Term A Loans prepaid;

(iv)for a prepayment made after the date which is after the third anniversary of the Funding Date of such Term A Loan through and including the fourth anniversary of the Funding Date of such Term A Loan, one and one half percent (1.50%) of the principal amount of the Term A Loans prepaid; and 

(v)for a prepayment made after the date which is after the fourth anniversary of the Funding Date of such Term A Loan and prior to the Maturity Date, zero percent (0.00%) of the principal amount of the Term A Loans prepaid.

(b)with respect to any Term B Loan subject to prepayment prior to the Maturity Date, whether by mandatory or voluntary prepayment, acceleration or otherwise, an additional fee payable to the Lenders in amount equal to:

(i)for a prepayment made on or after the Funding Date of such Term B Loan through and including the first anniversary of the Funding Date of such Term B Loan, four percent (4.00%) of the principal amount of the Term B Loans prepaid;

(ii)for a prepayment made after the date which is after the first anniversary of the Funding Date of such Term B Loan through and including the second anniversary of the Funding Date of such Term B Loan, three percent (3.00%) of the principal amount of the Term B Loans prepaid;

 

 

(iii)for a prepayment made after the date which is after the second anniversary of the Funding Date of such Term B Loan through and including the third anniversary of the Funding Date of such Term B Loan, one and one half percent (1.50%) of the principal amount of the Term B Loans prepaid; and

(iv)for a prepayment made after the date which is after the third anniversary of the Funding Date of such Term B Loan and prior to the Maturity Date, zero percent (0.00%) of the principal amount of the Term B Loans prepaid.

“Second Draw Period” is the period commencing on the date of the occurrence of the Trial Milestone Date and ending on (and including) the earliest of (i) sixty (60) days after the Trial Milestone Date, (ii) December 31, 2019 and (iii) the occurrence of an Event of Default.   

2.9Section 13.1 (Definitions).  The defined term “Indebtedness” in Section 13.1 of the Loan Agreement is hereby amended by adding the following sentence at the end of such definition:

“Notwithstanding the foregoing, no AbbVie License Payment (or the obligation of the Borrower to make such payment) shall constitute as “Indebtedness”.

2.10Section 13.1 (Definitions).  The defined term “Investment” in Section 13.1 of the Loan Agreement is hereby amended by adding the following sentence at the end of such definition:

“Notwithstanding the foregoing, the making of any AbbVie License Payment shall not constitute as an “Investment”.

2.11Section 13.1 (Definitions).  The defined term “Permitted Indebtedness” in Section 13.1 of the Loan Agreement is hereby amended by (a) deleting the word “and” at the end of clause (i) therein and (b) replacing clause (j) therein with the following:

	
“(j)
	
Permitted Convertible Indebtedness; and
	
 

	
  (k) 
	
extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (f) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose materially more burdensome terms upon Borrower, or its Subsidiary, as the case may be.” 
	
 

2.12Schedule 1.1 of the Loan Agreement hereby is replaced in its entirety with Schedule 1.1 attached hereto.

3.Limitation of Amendment.

3.1The amendments set forth in Section 2 are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Collateral Agent or any Lender may now have or may have in the future under or in connection with any Loan Document.

3.2This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.

 

 

4.Representations and Warranties.  To induce Collateral Agent and Lenders to enter into this Amendment, Borrower hereby represents and warrants to Collateral Agent and Lenders as follows:

4.1Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct in all material respects as of such date), and (b) no Event of Default has occurred and is continuing;

4.2Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;

4.3The organizational documents of Borrower delivered to Collateral Agent and Lenders on the Effective Date, or subsequent thereto, remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;

4.4The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized;

4.5The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;

4.6The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on Borrower; and

4.7This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

5.Counterparts.  This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery by electronic transmission (e.g. “.pdf”) of an executed counterpart of this Amendment shall be effective as a manually executed counterpart signature thereof.

6.Effectiveness.  This Amendment shall be deemed effective upon the due execution and delivery to Collateral Agent and Lenders of (i) this Amendment by each party hereto, (ii) the due execution and delivery to Collateral Agent of the Corporate Borrowing Certificate attached hereto, and (iii) Borrower’s payment of all Lenders’ Expenses incurred through the date of this Amendment.

[Balance of Page Intentionally Left Blank]

 

 

 

 

In Witness Whereof, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.

	
COLLATERAL AGENT AND LENDER:

 

OXFORD FINANCE LLC 

 

 

By: /s/ Joshua Friedman

Name:Joshua Friedman

Title:Chief Financial Officer

 
	
 

	
 

LENDER:

 

SILICON VALLEY BANK 

 

By: /s/ Igor DaCruz

Name:Igor DaCruz

Title:Director

 
	
 

	
 

BORROWER:

 

REATA PHARMACEUTICALS, INC.

 

By: /s/ Manmeet S. Soni

Name:Manmeet S. Soni

Title:Chief Financial Officer

 

 
	
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to First Amendment to Amended And Restated Loan and Security Agreement]

 

 

SCHEDULE 1.1 

Lenders and Commitments

	
 
	
Term A Loans
	
 

	
Lender
	
Term Loan Commitment
	
Commitment Percentage

	
OXFORD FINANCE LLC
	
$67,200,000.00
	
84.00%

	
SILICON VALLEY BANK
	
$12,800,000.00
	
16.00%

	
TOTAL
	
$80,000,000.00
	
100.00%

 

	
 
	
Term B Loans
	
 

	
Lender
	
Term Loan Commitment
	
Commitment Percentage

	
OXFORD FINANCE LLC
	
$67,800,000.00
	
90.40%

	
SILICON VALLEY BANK
	
$7,200,000.00
	
9.60%

	
TOTAL
	
$75,000,000.00
	
100.00%

 

	
 
	
Aggregate (all Term Loans)
	
 

	
Lender
	
Term Loan Commitment
	
Commitment Percentage

	
OXFORD FINANCE LLC
	
$135,000,000.00
	
87.09677419%

	
SILICON VALLEY BANK
	
$20,000,000.00
	
12.90322581%

	
TOTAL
	
$155,000,000.00
	
100.00%

 

 

 

CORPORATE BORROWING CERTIFICATE

	
Borrower:
	
REATA PHARMACEUTICALS, INC.
	
Date: October 9, 2019

	
Lenders
	
OXFORD FINANCE LLC, as Collateral Agent and Lender
	
 

	
 
	
SILICON VALLEY BANK, as Lender
	
 

	
 
	
 
	
 

I hereby certify, in my capacity as an officer of Borrower and not in any individual capacity, as follows, as of the date set forth above:

	
1.
	
I am the Secretary, Assistant Secretary or other officer of Borrower.  My title is as set forth below.

	
2.
	
Borrower’s exact legal name is set forth above.  Borrower is a corporation existing under the laws of the State of Delaware.

	
3.
	
Attached hereto as Exhibit A and Exhibit B, respectively, are true, correct and complete copies of (i) Borrower’s Certificate of Incorporation (including amendments), as filed with the Secretary of State of the state in which Borrower is incorporated as set forth in paragraph 2 above; and (ii) Borrower’s Bylaws.  Neither such Certificate of Incorporation nor such Bylaws have been amended, annulled, rescinded, revoked or supplemented, and such Certificate of Incorporation and such Bylaws remain in full force and effect as of the date hereof.  

	
4.
	
The resolutions attached hereto as Exhibit C were duly and validly adopted by Borrower’s Board of Directors at a duly held meeting of such directors (or pursuant to a unanimous written consent or other authorized corporate action).  Such resolutions are in full force and effect as of the date hereof and have not been in any way modified, repealed, rescinded, amended or revoked, and the Lenders may rely on them until each Lender receives written notice of revocation from Borrower.

	
5.
	
The persons listed below are Borrower’s officers or employees with their titles and signatures shown next to their names.

				
	
Name
	
Title
	
Signature
	
Authorized to Add or Remove Signatories

	
J. Warren Huff
	
Chief Executive Officer
	
/s/ J. Warren Huff
	
□

	
Manmeet S. Soni
	
Chief Financial Officer
	
/s/ Manmeet S. Soni
	
□

	
 
	
 
	
 
	
□

	
 
	
 
	
 
	
□

 

 

 

 

 

 

[Balance of Page Intentionally Left Blank]

 

1

 

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the date first written above.

			
	
 
	
 
	
By: /s/ Manmeet S. Soni

	
 
	
 
	
Name: Manmeet S. Soni

	
 
	
 
	
Title: Chief Financial Officer

 

*** If the Secretary, Assistant Secretary or other certifying officer executing above is designated by the resolutions set forth in paragraph 4 as one of the authorized signing officers, this Certificate must also be signed by a second authorized officer or director of Borrower.

I, the _Chief Executive Officer__________ of Borrower, hereby certify as to paragraphs 1 through 5 above, as 

          [print title]

of the date set forth above.

			
	
 
	
 
	
By: /s/ J. Warren Huff

	
 
	
 
	
Name: J. Warren Huff

	
 
	
 
	
Title: Chief Executive OfficerExhibit
4.1

 

SUNSTOCK,
INC.

EMPLOYEES,
OFFICERS, DIRECTORS, AND CONSULTANTS STOCK PLAN FOR THE YEAR 2019

 

1.
Introduction. This Plan shall be known as the “Sunstock, Inc. Employees, Officers, Directors, and Consultants Stock
Plan for the Year 2019” and is hereinafter referred to as the “Plan.” The purposes of this Plan are to enable
Sunstock, Inc., a Delaware corporation (the “Company”), to promote the interests of the Company and its stockholders
by attracting and retaining Employees, Directors, and Consultants capable of furthering the future success of the Company and
by aligning their economic interests more closely with those of the Company’s stockholders, by paying their retainer or
fees in the form of shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”).

 

2.
Definitions. The following terms shall have the meanings set forth below:

 

“Board”
means the Board of Directors of the Company.

 

“Change
of Control” has the meaning set forth in Paragraph 12(d) hereof.

 

“Code”
means the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder. References to any provision of
the Code or rule or regulation thereunder shall be deemed to include any amended or successor provision, rule or regulation.

 

“Committee”
means the committee that administers this Plan, as more fully defined in Paragraph 13 hereof.

 

“Common
Stock” has the meaning set forth in Paragraph 1 hereof.

 

“Company”
has the meaning set forth in Paragraph 1 hereof.

 

“Consultants”
means the Company’s consultants and advisors only if: (i) they are natural persons; (ii) they provide bona fide services
to the Company; and (iii) the services are not in connection with the offer or sale of securities in a capital-raising transaction,
and do not directly or indirectly promote or maintain a market for the Company’s securities.

 

“Deferral
Election” has the meaning set forth in Paragraph 6 hereof.

 

“Deferred
Stock Account” means a bookkeeping account maintained by the Company for a Participant representing the Participant’s
interest in the shares credited to such Deferred Stock Account pursuant to Paragraph 7 hereof.

 

“Delivery
Date” has the meaning set forth in Paragraph 6 hereof.

 

“Director”
means an individual who is a member of the Board of Directors of the Company.

 

“Dividend
Equivalent” for a given dividend or other distribution means a number of shares of the Common Stock having a Fair Market
Value, as of the record date for such dividend or distribution, equal to the amount of cash, plus the Fair Market Value on the
date of distribution of any property, that is distributed with respect to one share of the Common Stock pursuant to such dividend
or distribution; such Fair Market Value to be determined by the Committee in good faith.

 

“Effective
Date” has the meaning set forth in Paragraph 3 hereof.

 

“Employee”
means any officer or employee of the Company.

 

“Exchange
Act” has the meaning set forth in Paragraph 12(d) hereof.

 

    	 	1	 

     

    

 

“Fair
Market Value” means the mean between the highest and lowest reported sales prices of the Common Stock on the New York Stock
Exchange Composite Tape or, if not listed on such exchange, on any other national securities exchange on which the Common Stock
is listed or on The Nasdaq Stock Market, or, if not so listed on any other national securities exchange or The Nasdaq Stock Market,
then the average of the bid price of the Common Stock during the last five trading days on the OTC Bulletin Board or the OTC Markets
Group Inc. immediately preceding the last trading day prior to the date with respect to which the Fair Market Value is to be determined.
If the Common Stock is not then publicly traded, then the Fair Market Value of the Common Stock shall be the book value of the
Company per share as determined on the last day of March, June, September, or December in any year closest to the date when the
determination is to be made. For the purpose of determining book value hereunder, book value shall be determined by adding as
of the applicable date called for herein the capital, surplus, and undivided profits of the Company, and after having deducted
any reserves theretofore established; the sum of these items shall be divided by the number of shares of the Common Stock outstanding
as of said date, and the quotient thus obtained shall represent the book value of each share of the Common Stock of the Company.

 

“Participant”
has the meaning set forth in Paragraph 4 hereof.

 

“Payment
Time” means the time when a Stock Award is payable to a Participant pursuant to Paragraph 5 hereof (without regard to the
effect of any Deferral Election).

 

“Stock
Award” has the meaning set forth in Paragraph 5 hereof.

 

“Third
Anniversary” has the meaning set forth in Paragraph 6 hereof.

 

3.
Effective Date of the Plan. This Plan was adopted by the Board effective October 1, 2019 (the “Effective Date”).

 

4.
Eligibility. Each individual who is an Employee, Director, or Consultant on the Effective Date and each individual who
becomes an Employee, Director, or Consultant thereafter during the term of this Plan shall be a participant (the “Participant”)
in this Plan, in each case during such period as such individual remains an Employee, Director, or Consultant of the Company or
any of its subsidiaries. Each credit of shares of the Common Stock pursuant to this Plan shall be evidenced by a written agreement
duly executed and delivered by or on behalf of the Company and a Participant, if such an agreement is required by the Company
to assure compliance with all applicable laws and regulations.

 

5.
Grants of Shares. Commencing on the Effective Date, the amount of compensation or bonus for service to the Participants
shall be payable in shares of the Common Stock (the “Stock Award”) pursuant to this Plan. The deemed issuance price
of shares of the Common Stock subject to each Stock Award shall not be less than 85 percent of the Fair Market Value of the Common
Stock on the date of the grant. In the case of any person who owns securities possessing more than ten percent of the combined
voting power of all classes of securities of the issuer or its parent or subsidiaries possessing voting power, the deemed issuance
price of shares of the Common Stock subject to each Stock Award shall be at least 100 percent of the Fair Market Value of the
Common Stock on the date of the grant.

 

6.
Deferral Option. From and after the Effective Date, a Participant may make an election (a “Deferral Election”)
on an annual basis to defer delivery of the Stock Award specifying which one of the following ways the Stock Award is to be delivered
(a) on the date which is three years after the Effective Date for which it was originally payable (the “Third Anniversary”),
(b) on the date upon which the Participant ceases to be a Participant for any reason (the “Departure Date”) or (c)
in five equal annual installments commencing on the Departure Date (the “Third Anniversary” and “Departure Date”
each being referred to herein as a “Delivery Date”). Such Deferral Election shall remain in effect for each Subsequent
Year unless changed, provided that, any Deferral Election with respect to a particular Year may not be changed less than six months
prior to the beginning of such Year, and provided, further, that no more than one Deferral Election or change thereof may be made
in any Year.

 

Any
Deferral Election and any change or revocation thereof shall be made by delivering written notice thereof to the Committee no
later than six months prior to the beginning of the Year in which it is to be effected; provided that, with respect to the Year
beginning on the Effective Date, any Deferral Election or revocation thereof must be delivered no later than the close of business
on the 30th day after the Effective Date.

 

    	 	2	 

     

    

 

7.
Deferred Stock Accounts. The Company shall maintain a Deferred Stock Account for each Participant who makes a Deferral
Election to which shall be credited, as of the applicable Payment Time, the number of shares of the Common Stock payable pursuant
to the Stock Award to which the Deferral Election relates. So long as any amounts in such Deferred Stock Account have not been
delivered to the Participant under Paragraph 8 hereof, each Deferred Stock Account shall be credited as of the payment date for
any dividend paid or other distribution made with respect to the Common Stock, with a number of shares of the Common Stock equal
to (a) the number of shares of the Common Stock shown in such Deferred Stock Account on the record date for such dividend or distribution
multiplied by (b) the Dividend Equivalent for such dividend or distribution.

 

8.
Delivery of Shares.

 

(a)
The shares of the Common Stock in a Participant’s Deferred Stock Account with respect to any Stock Award for which a Deferral
Election has been made (together with dividends attributable to such shares credited to such Deferred Stock Account) shall be
delivered in accordance with this Paragraph 8 as soon as practicable after the applicable Delivery Date. Except with respect to
a Deferral Election pursuant to Paragraph 6 hereof, or other agreement between the parties, such shares shall be delivered at
one time; provided that, if the number of shares so delivered includes a fractional share, such number shall be rounded to the
nearest whole number of shares. If the Participant has in effect a Deferral Election pursuant to Paragraph 6 hereof, then such
shares shall be delivered in five equal annual installments (together with dividends attributable to such shares credited to such
Deferred Stock Account), with the first such installment being delivered on the first anniversary of the Delivery Date; provided
that, if in order to equalize such installments, fractional shares would have to be delivered, such installments shall be adjusted
by rounding to the nearest whole share. If any such shares are to be delivered after the Participant has died or become legally
incompetent, they shall be delivered to the Participant’s estate or legal guardian, as the case may be, in accordance with
the foregoing; provided that, if the Participant dies with a Deferral Election pursuant to Paragraph 6 hereof in effect, the Committee
shall deliver all remaining undelivered shares to the Participant’s estate immediately. References to a Participant in this
Plan shall be deemed to refer to the Participant’s estate or legal guardian, where appropriate.

 

(b)
The Company may, but shall not be required to, create a grantor trust or utilize an existing grantor trust (in either case, the
“Trust”) to assist it in accumulating the shares of the Common Stock needed to fulfill its obligations under this
Paragraph 8. However, Participants shall have no beneficial or other interest in the Trust and the assets thereof, and their rights
under this Plan shall be as general creditors of the Company, unaffected by the existence or nonexistence of the Trust, except
that deliveries of Stock Awards to Participants from the Trust shall, to the extent thereof, be treated as satisfying the Company’s
obligations under this Paragraph 8.

 

9.
Share Certificates; Voting and Other Rights. The certificates for shares delivered to a Participant pursuant to Paragraph
8 above shall be issued in the name of the Participant, and from and after the date of such issuance the Participant shall be
entitled to all rights of a stockholder with respect to the Common Stock for all such shares issued in his name, including the
right to vote the shares, and the Participant shall receive all dividends and other distributions paid or made with respect thereto.

 

10.
General Restrictions.

 

(a)
Notwithstanding any other provision of this Plan or agreements made pursuant thereto, the Company shall not be required to issue
or deliver any certificate or certificates for shares of the Common Stock under this Plan prior to fulfillment of all of the following
conditions:

 

(i)
Listing or approval for listing upon official notice of issuance of such shares on the New York Stock Exchange, Inc., or such
other securities exchange as may at the time be a market for the Common Stock;

 

    	 	3	 

     

    

 

(ii)
Any registration or other qualification of such shares under any state or federal law or regulation, or the maintaining in effect
of any such registration or other qualification which the Committee shall, upon the advice of counsel, deem necessary or advisable;
and

 

(iii)
Obtaining any other consent, approval, or permit from any state or federal governmental agency which the Committee shall, after
receiving the advice of counsel, determine to be necessary or advisable.

 

(b)
Nothing contained in this Plan shall prevent the Company from adopting other or additional compensation arrangements for the Participants.

 

11.
Shares Available. Subject to Paragraph 12 below, the maximum number of shares of the Common Stock which may in the aggregate
be paid as Stock Awards pursuant to this Plan is 186,200,000. Shares of the Common Stock issuable under this Plan may be taken
from treasury shares of the Company or purchased on the open market.

 

12.
Adjustments; Change of Control.

 

(a)
In the event that there is, at any time after the Board adopts this Plan, any change in corporate capitalization, such as a stock
split, combination of shares, exchange of shares, warrants or rights offering to purchase the Common Stock at a price below its
Fair Market Value, reclassification, or recapitalization, or a corporate transaction, such as any merger, consolidation, separation,
including a spin-off, stock dividend, or other extraordinary distribution of stock or property of the Company, any reorganization
(whether or not such reorganization comes within the definition of such term in Section 368 of the Code) or any partial or complete
liquidation of the Company (each of the foregoing a “Transaction”), in each case other than any such Transaction which
constitutes a Change of Control (as defined below), (i) the Deferred Stock Accounts shall be credited with the amount and kind
of shares or other property which would have been received by a holder of the number of shares of the Common Stock held in such
Deferred Stock Account had such shares of the Common Stock been outstanding as of the effectiveness of any such Transaction, (ii)
the number and kind of shares or other property subject to this Plan shall likewise be appropriately adjusted to reflect the effectiveness
of any such Transaction, and (iii) the Committee shall appropriately adjust any other relevant provisions of this Plan and any
such modification by the Committee shall be binding and conclusive on all persons.

 

(b)
If the shares of the Common Stock credited to the Deferred Stock Accounts are converted pursuant to Paragraph 12(a) into another
form of property, references in this Plan to the Common Stock shall be deemed, where appropriate, to refer to such other form
of property, with such other modifications as may be required for this Plan to operate in accordance with its purposes. Without
limiting the generality of the foregoing, references to delivery of certificates for shares of the Common Stock shall be deemed
to refer to delivery of cash and the incidents of ownership of any other property held in the Deferred Stock Accounts.

 

(c)
In lieu of the adjustment contemplated by Paragraph 12(a), in the event of a Change of Control, the following shall occur on the
date of the Change of Control (i) the shares of the Common Stock held in each Participant’s Deferred Stock Account shall
be deemed to be issued and outstanding as of the Change of Control; (ii) the Company shall forthwith deliver to each Participant
who has a Deferred Stock Account all of the shares of the Common Stock or any other property held in such Participant’s
Deferred Stock Account; and (iii) this Plan shall be terminated.

 

(d)
For purposes of this Plan, Change of Control shall mean any of the following events:

 

(i)
The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 80 percent or more of either (1) the then outstanding shares of the Common
Stock of the Company (the “Outstanding Company Common Stock”), or (2) the combined voting power of then outstanding
voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that the following acquisitions shall not constitute a Change of Control (A) any acquisition
directly from the Company (excluding an acquisition by virtue of the exercise of a conversion privilege unless the security being
so converted was itself acquired directly from the Company), (B) any acquisition by the Company, (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any
acquisition by any corporation pursuant to a reorganization, merger or consolidation, if, following such reorganization, merger
or consolidation, the conditions described in clauses (A), (B) and (C) of paragraph (iii) of this Paragraph 12(d) are satisfied;
or

 

    	 	4	 

     

    

 

(ii)
Individuals who, as of the date hereof, constitute the Board of the Company (as of the date hereof, “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by
a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board; or

 

(iii)
Approval by the stockholders of the Company of a reorganization, merger, binding share exchange or consolidation, unless, following
such reorganization, merger, binding share exchange or consolidation (A) more than 60 percent of, respectively, then outstanding
shares of common stock of the corporation resulting from such reorganization, merger, binding share exchange or consolidation
and the combined voting power of then outstanding voting securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately
prior to such reorganization, merger, binding share exchange or consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger, binding share exchange or consolidation, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding the Company, any employee benefit plan
(or related trust) of the Company or such corporation resulting from such reorganization, merger, binding share exchange or consolidation
and any Person beneficially owning, immediately prior to such reorganization, merger, binding share exchange or consolidation,
directly or indirectly, 20 percent or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as
the case may be) beneficially owns, directly or indirectly, 20 percent or more of, respectively, then outstanding shares of common
stock of the corporation resulting from such reorganization, merger, binding share exchange or consolidation or the combined voting
power of then outstanding voting securities of such corporation entitled to vote generally in the election of directors, and (C)
at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger, binding
share exchange or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement providing
for such reorganization, merger, binding share exchange or consolidation; or

 

(iv)
Approval by the stockholders of the Company of (1) a complete liquidation or dissolution of the Company, or (2) the sale or other
disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following
such sale or other disposition, (A) more than 60 percent of, respectively, then outstanding shares of common stock of such corporation
and the combined voting power of then outstanding voting securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately
prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale
or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B)
no Person (excluding the Company and any employee benefit plan (or related trust) of the Company or such corporation and any Person
beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, 20 percent or more of the Outstanding
Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly,
20 percent or more of, respectively, then outstanding shares of common stock of such corporation and the combined voting power
of then outstanding voting securities of such corporation entitled to vote generally in the election of directors, and (C) at
least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time
of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the
Company.

 

    	 	5	 

     

    

 

13.
Administration; Amendment and Termination.

 

(a)
The Plan shall be administered by the Compensation Committee (the “Committee”) of, or appointed by, the Board of Directors
of the Company (the “Board”). The Committee shall select one of its members as Chairman and shall act by vote of a
majority of a quorum, or by unanimous written consent. A majority of its members shall constitute a quorum. The Committee shall
be governed by the provisions of the Company’s Bylaws and of Delaware law applicable to the Board, except as otherwise provided
herein or determined by the Board. The Committee shall have full and complete authority, in its discretion, but subject to the
express provisions of this Plan to administer all aspects of the Plan. All interpretations and constructions of this Plan by the
Committee, and all of its actions hereunder, shall be binding and conclusive on all persons for all purposes.

 

(b)
The Board may from time to time make such amendments to this Plan, including to preserve or come within any exemption from liability
under Section 16(b) of the Exchange Act, as it may deem proper and in the best interest of the Company without further approval
of the Company’s stockholders, provided that, to the extent required under Delaware law or to qualify transactions under
this Plan for exemption under Rule 16b-3 promulgated under the Exchange Act, no amendment to this Plan shall be adopted without
further approval of the Company’s stockholders and, provided, further, that if and to the extent required for this Plan
to comply with Rule 16b-3 promulgated under the Exchange Act, no amendment to this Plan shall be made more than once in any six
month period that would change the amount, price or timing of the grants of the Common Stock hereunder other than to comport with
changes in the Code, the Employee Retirement Income Security Act of 1974, as amended, or the regulations thereunder. The Board
may terminate this Plan at any time by a vote of a majority of the members thereof.

 

14.
Term of Plan. No shares of the Common Stock shall be issued, unless and until the Directors of the Company have approved
this Plan and all other legal requirements have been met. This Plan was adopted by the Board effective October 3, 2019, and shall
expire on October 3, 2029.

 

15.
Governing Law. This Plan and all actions taken thereunder shall be governed by, and construed in accordance with, the laws
of the State of Delaware.

 

16.
Information to Shareholders. The Company shall furnish to each of its stockholders financial statements of the Company
at least annually.

 

17.
Miscellaneous.

 

(a)
Nothing in this Plan shall be deemed to create any obligation on the part of the Board to nominate any Director for reelection
by the Company’s stockholders or to limit the rights of the stockholders to remove any Director.

 

(b)
The Company shall have the right to require, prior to the issuance or delivery of any shares of the Common Stock pursuant to this
Plan, that a Participant make arrangements satisfactory to the Committee for the withholding of any taxes required by law to be
withheld with respect to the issuance or delivery of such shares, including, without limitation, by the withholding of shares
that would otherwise be so issued or delivered, by withholding from any other payment due to the Participant, or by a cash payment
to the Company by the Participant.

 

    	 	6	 

     

    

 

IN
WITNESS WHEREOF, this Plan has been executed effective as of October 3, 2019.

 

	 	SUNSTOCK,
    INC.
	 	 	 
	 	By	/s/
    Jason C. Chang
	 	 	Jason
    C. Chang, President

 

    	 	7

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