Document:

Exhibit 10.3 

BACKSTOP COMMITMENT AGREEMENT 

This BACKSTOP COMMITMENT AGREEMENT (this “Agreement”), dated as of April 11, 2018, is by and between NextDecade Corporation, a Delaware corporation (“NextDecade” or the “Company”), and Halcyon Capital Management LP, severally on behalf of certain funds or accounts advised by it or its affiliates (the “Backstopper”).  Each of NextDecade and the Backstopper are referred to herein as a “Party” and collectively as the “Parties.” 

RECITALS: 

WHEREAS, the Company has commenced a convertible preferred equity and warrant offering (the “Convertible Preferred Equity Offering”), pursuant to which Offering Participants shall subscribe to purchase shares of convertible preferred stock (the “Convertible Preferred Stock”), which include associated Warrants (as defined herein), issued by the Company substantially on the terms and conditions set forth in the Certificate of Designations of the Series A Convertible Preferred Stock attached to this Agreement as Exhibit C (the “Certificate of Designations”) at the Purchase Price, with targeted aggregate gross proceeds to the Company of $35,000,000 (the “Offering Proceeds”); and 

WHEREAS, to facilitate consummation of the Convertible Preferred Equity Offering, subject to the terms herein, the Company is willing to sell at its election, and the Backstopper is willing to commit to purchase the Backstop Amount in accordance with the terms of this Agreement. 

NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: 

Section 1.        DEFINITIONS.  As used in this Agreement, the following terms shall have the following meanings: 

“Addendum” has the meaning assigned to it in Section 10.10. 

“Affiliate” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person. 

“Agreement” has the meaning assigned to it in the preamble hereto; it includes the Exhibits hereto. 

“Assumption Agreement” has the meaning assigned to it in Section 10.10. 

“Backstop Amount” means $3,845,030. 

“Backstopper Default” means the failure by the Backstopper to deliver and pay all amounts required to be paid pursuant to this Agreement. 

 

“Backstop Fee” means the Backstop Amount times a percentage, where such percentage is: (a) 3.0%, if the Closing occurs within thirty (30) days of the date of this Agreement; (b) 3.5%, if the Closing occurs more than thirty (30) but less than sixty-one (61) days after the date of this Agreement; (c) 4.0%, if the Closing occurs more than sixty (60 but less than ninety-one (91) days after the date of this Agreement and (d) 4.5%, if the Closing has not occurred before ninety-one (91) days after the date of this Agreement, in each case, payable in Common Stock valued at the volume weighted average trading price of the Common Stock during the thirty trading day period ending on (and including) the last trading day immediately prior to the announcement of this Agreement (and the transactions contemplated hereby) through Company press release or filing on a Form 8-K with the U.S. Securities and Exchange Commission. 

“Backstopper Material Adverse Effect” means any event, circumstance, development, change or effect that, individually or in the aggregate with all other events, circumstances, developments, changes or effects, has or would reasonably be expected to prevent, materially delay or materially impair the ability of the Backstopper to consummate the transactions contemplated hereby. 

“Backstopper Termination” means the termination of this Agreement by the Backstopper. 

“Backstopper Termination Event” has the meaning assigned to it in Section 8(a). 

“Backstop Percentage” means 10.9858%. 

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in the City of New York. 

“Closing” has the meaning assigned to it in Section 2.6. 

“Closing Date” has the meaning assigned to it in Section 2.6. 

“Commitment” has the meaning assigned to it in Section 2.1. 

“Commitment Outside Date” means one hundred and twenty (120) days from the date hereof. 

“Common Stock” means the common stock of the Company, $0.0001 par value. 

“Company” has the meaning assigned to it in the preamble hereto. 

“Control” (including the terms “control” “controlled by” and “under common control with”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly or as trustee, personal representative or executor, of the power to direct or cause the direction of the affairs, policies or management of a Person, whether through the ownership of voting securities, as trustee, personal representative or executor, by contract, credit arrangement or otherwise. 

“Convertible Preferred Equity Offering” has the meaning assigned to it in the Recitals hereto. 

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“Convertible Preferred Stock” has the meaning assigned to it in the Recitals hereto. 

“Definitive Documentation” means this Agreement and any other documents or exhibits related to or contemplated in the foregoing. 

“Draw Fee” means 2.75% multiplied by the amount funded by the Backstopper pursuant to Section 2.3 of this Agreement, payable in shares of Common Stock valued at the volume weighted average trading price of the Common Stock during the thirty trading day period ending on (and including) the last trading day immediately prior to the announcement of this Agreement (and the transactions contemplated hereby) through Company press release or filing of a Form 8-K with the U.S. Securities and Exchange Commission. 

 “Encumbrance” means any security interest, pledge, mortgage, lien, claim, option, charge or encumbrance. 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder, or any successor statute. 

“Governmental Authority” means any federal, national, supranational, foreign, state, provincial, local, county, municipal or other government, any governmental, regulatory or administrative authority, agency, department, bureau, board, commission or official or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority, or any court, tribunal, judicial or arbitral body, or any Self-Regulatory Organization. 

“Indemnified Party” means the Backstopper and each of its Affiliates and each of their  respective directors, managers, officers, principals, partners, members, equity holders (regardless of whether such interests are held directly or indirectly), trustees, controlling persons, predecessors, successors and assigns, subsidiaries, employees, agents, advisors, attorneys and representatives. 

“Law” means any federal, national, supranational, foreign, state, provincial, local, county, municipal or similar statute, law, common law, writ, injunction, decree, guideline, policy, ordinance, regulation, rule, code, Order, constitution, treaty, requirement, judgment or judicial or administrative doctrines enacted, promulgated, issued, enforced or entered by any Governmental Authority. 

“Legal Proceedings” means any legal, governmental, administrative, judicial or regulatory investigations, audits, actions, suits, claims, arbitrations, demands, demand letters, claims, notices of noncompliance or violations, or proceedings. 

“Material Adverse Effect”  means any effect, change, event, occurrence, development, or state of facts that, individually or in the aggregate with all other such effects, changes, events, occurrences, developments, or states of fact, (A) has had, or would reasonably be expected to have, a material adverse effect on the business, assets, liabilities, condition (financial or otherwise), or results of operations of the Company and its subsidiaries, taken as a whole or (B) would, or would reasonably be expected to, prevent or materially impair the ability of the Company to consummate the transactions contemplated by this Agreement, but expressly excluding in each case any such 

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effect, change, event, occurrence, development, or state of facts, either alone or in combination, to the extent arising out of or resulting from: 

(a)            the execution or delivery of this Agreement, the consummation of the transactions contemplated by this Agreement or the public announcement or other publicity with respect to any of the foregoing; 

(b)            general economic conditions (or changes in such conditions) in the United States or conditions in the global economy generally that do not affect the Company and its subsidiaries, taken as a whole, disproportionately when considered in the context of the liquefied natural gas export industry generally (in which case only such disproportionate impact shall be considered); 

(c)            changes in the trading price or trading volume of the Common Stock. 

(d)            conditions (or changes in such conditions) generally affecting the liquefied natural gas export industry that do not affect the Company and its subsidiaries, taken as a whole, disproportionately (in which case only such disproportionate impact shall be considered); 

(e)            conditions (or changes in such conditions) in the financial markets, credit markets or capital markets in the United States or any other country or region, including (i) changes in interest rates in the United States or any other country and changes in exchange rates for the currencies of any countries or (ii) any suspension of trading in securities (whether equity, debt, derivative or hybrid securities) generally (other than a suspension of the trading of the Company’s Common Stock for more than five (5) trading days, which constitutes a Material Adverse Effect, provided such suspension is not part of a broader suspension of securities) on any securities exchange or over-the-counter market operating in the United States or any other country or region in each case, that do not affect the Company as a whole disproportionately when considered in the context of the oil and gas exploration and production industry generally (in which case only such disproportionate impact shall be considered); 

(f)            any actions taken or omitted to be taken at the written request or with the written consent of the Backstopper (for the avoidance of doubt, actions taken or omitted upon the decision of the Company’s board of directors shall not be considered to be at the written request or with the written consent of the Required Backstop Parties unless such a written request or consent is separately provided to the Company by the Backstopper); or 

(g)            any changes in any Laws or any accounting regulations or principles that do not affect the Company, taken as a whole, disproportionately when considered in the context of the oil and gas exploration and production industry generally (in which case only such disproportionate impact shall be considered). 

“Non-Backstopper Participant” means an Offering Participant that is not a Backstopper. 

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“Offering Documents” means, collectively, all related agreements, documents, or instruments in connection with the Convertible Preferred Equity Offering, including this Agreement. 

“Offering Participants” means those Persons that are entitled, pursuant to the Offering Documents, to purchase Convertible Preferred Stock and Warrants in the Convertible Preferred Equity Offering. 

“Offering Proceeds” has the meaning assigned to it in the Recitals hereto. 

“Order” means any order, writ, judgment, injunction, decree, rule, ruling, directive, stipulation, determination or award made, issued or entered by or with any Governmental Authority, whether preliminary, interlocutory or final. 

“Origination Fee” means shares of Convertible Preferred Stock (but excluding the associated Warrants) issued by the Company to the Backstopper, at the Closing, with principal amount equal to two percent (2%) of Purchase Price multiplied by the number of shares of Convertible Preferred Stock purchased by the Backstopper pursuant to Section 2.3. 

“Party” has the meaning assigned to it in the preamble hereto. 

“Person” means any individual, partnership, firm, corporation, limited liability company, association, joint venture, trust, Governmental Authority, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Exchange Act. 

 “Purchase Price” means $1,000 per share of Convertible Preferred Stock. 

 “Required Backstop Amount” means, the Offering Proceeds less investment contributions for the Convertible Preferred Equity Offering from Non-Backstopper Participants, provided that the Required Backstop Amount cannot be less than zero ($0). 

“Required Backstop Parties” means the holders of a majority of the outstanding Convertible Preferred Stock issued in respect of this Backstop Agreement and any similar agreement dated of even date herewith. 

“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder, or any successor statute. 

“Self-Regulatory Organization” means any securities exchange, futures exchange, contract market, any other exchange or corporation or similar self-regulatory body or organization applicable to a Party to this Agreement. 

“Warrants” means the detached warrants, in a form reasonably acceptable to the Backstopper, representing the right to acquire a number of shares of Common Stock of the Company equal to (a) the Backstop Percentage multiplied by (b)(i) 0.50% multiplied by (ii) the number of shares of Common Stock of the Company outstanding on the exercise date, on a fully diluted basis, at an exercise price of $0.01 per share. 

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Section 2.        BACKSTOP COMMITMENT. 

2.1   Backstop.  Subject to and in accordance with the terms and conditions set forth herein, upon Company’s exercise of its right to call the Backstop Amount set forth in Section 2.3, the Backstopper irrevocably commits to purchase, at the Closing, up to a number of shares of Convertible Preferred Stock (and accompanying Warrants) determined by dividing (i) the Backstop Amount by (ii) the Purchase Price (the “Commitment”). 

2.2   Backstop Fee.  The Company agrees to issue the Backstop Fee to the Backstopper, or its designated Affiliate, on the Closing Date regardless of the number of shares of Convertible Preferred Stock that the Company caused to be purchased by the Backstopper.  If the Closing has not occurred by the Commitment Outside Date, then the Backstop Fee shall be issued on the Commitment Outside Date unless (i) a Backstopper Default has occurred and has not been remedied; (ii) any of the conditions set forth in Section 7 hereof are not satisfied as of the Commitment Outside Date; or (iii) the Agreement has been terminated in accordance with Sections 8(a)(iii), 8(b)(B)(i) or 8(b)(B)(ii). 

2.3   Call Option.  The Company shall have the right, exercisable in its sole discretion, to require the Backstopper or an Affiliate thereof, if designated by the Backstopper, to deliver to the Company at Closing an amount equal to the Backstop Percentage multiplied by the Required Backstop Amount, by delivering written notice of the decision to exercise such right to the Backstopper no less than three (3) Business Days prior to the Closing. 

2.4   Draw Fee.  If the Company elects to exercise its call rights under Section 2.3, then the Company agrees to issue the Draw Fee to the Backstopper, or its designated Affiliate, on the Closing Date. 

2.5   Additional Equity.  For the avoidance of doubt, to the extent the Company exercises its call rights under Section 2.3, the Company shall also issue to the Backstopper, at the Closing, the Origination Fee and the Warrants. 

2.6   Closing Date.  The closing of the transactions contemplated hereby (the “Closing”) will occur on or before the Commitment Outside Date, unless extended by the mutual consent of the Parties (the “Closing Date”). 

2.7   Rounding of Shares.  The number of shares of Convertible Preferred Stock and Common Stock issued to the Backstopper pursuant to the terms of this Agreement shall be rounded to avoid fractional shares. 

2.8   Transfer Taxes.  All of the Convertible Preferred Stock issued to the Backstopper pursuant to this Agreement will be delivered with any and all issue, stamp, transfer or similar taxes or duties payable in connection with such delivery duly paid by the Company. 

2.9   Registration Rights.  Prior to the earlier of (a) the Closing and (b) the Commitment Outside Date, the Company shall enter into a registration rights agreement, in customary form reasonably acceptable to the Backstopper  (the “Registration Rights Agreement”) providing the Backstopper with registration rights in respect of all shares of Common Stock issuable to the Backstopper in respect of (i) the conversion of any Convertible Preferred Stock received by the 

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Backstopper in accordance with this Agreement, (ii) the Backstop Fee and (iii) the Draw Fee.  The Registration Rights Agreement shall include two demand registration rights, exercisable following a reasonable time after the Closing (with no more than one demand right exercisable within any 180-day period).  If the Company is eligible to use Form S-3, the Company will prepare, and use its commercially reasonable efforts to maintain the effectiveness of, a resale shelf registration statement on Form S-3.  In addition, the Registration Rights Agreement shall include unlimited customary “piggyback” registration rights. 

Section 3.        REPRESENTATIONS AND WARRANTIES OF NEXTDECADE.  The Company hereby represents and warrants to the Backstopper as of the date hereof and as of the Closing Date (except for representations and warranties that are made as of a specific date, which are made only as of such date), on behalf of itself and not any other Party, as follows: 

3.1   Organization and Qualification; Subsidiaries.  NextDecade has been duly organized and is validly existing and, except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, is in good standing under the laws of its jurisdictions of organization, with the requisite power and authority to own its properties and conduct its business as currently conducted. 

3.2   Authorization; Enforcement; Validity.  NextDecade has all necessary corporate power and authority to enter into this Agreement and to carry out its obligations hereunder including, the issuance of (a)  the Convertible Preferred Stock and the Warrants (and the Common Stock issuable upon the conversion and/or exercise of the Convertible Preferred Stock and Warrants, as applicable), (b) the Common Stock pursuant to the Backstop Fee and the Draw Fee, and (c) the Convertible Preferred Stock pursuant to the Origination Fee.  The execution and delivery by NextDecade of this Agreement, the performance by NextDecade of its obligations hereunder, have been duly authorized by all requisite action on the part of NextDecade, and no other action on the part of NextDecade is necessary to authorize the execution and delivery by NextDecade of this Agreement or the consummation of the transactions contemplated by this Agreement.  This Agreement has been duly executed and delivered by NextDecade, and assuming due authorization, execution and delivery by the other Parties, this Agreement constitutes the legal, valid and binding obligation of NextDecade, enforceable against NextDecade in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium or similar Laws now or hereafter in effect relating to creditors’ rights generally and subject to general principles of equity. 

3.3   No Conflicts.  Assuming that all consents, approvals, authorizations and other actions described in Section 3.4 have been obtained, and except as may result from any facts or circumstances relating solely to the Backstopper, the execution, delivery and performance by NextDecade of this Agreement and the consummation of the transactions contemplated hereby do not and will not: (a) violate, conflict with or result in the breach of the certificate of incorporation, articles of incorporation, bylaws, certificate of formation, operating agreement, limited liability company agreement or similar formation or organizational documents of NextDecade or any of its subsidiaries; (b) conflict with or violate any Law or Order applicable to NextDecade or any of its respective assets or properties; or (c) violate, conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights 

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of termination, amendment, acceleration, suspension, revocation or cancellation of, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which NextDecade or any of its subsidiaries is a party or to which any of their respective assets or properties are subject, or result in the creation of any Encumbrance on any of their respective assets or properties, except, in the case of clauses (b) and (c), for any such conflict, violation, breach or default that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. 

3.4   Consents and Approvals.  The execution, delivery and performance by NextDecade of this Agreement do not require any consent, approval, authorization or other Order of, action by, filing with or notification to, any Governmental Authority or any other Person under any of the terms, conditions or provisions of any Law or Order applicable to NextDecade or by which any of its assets or properties may be bound, any contract to which NextDecade is a party or by which NextDecade may be bound, except for (a) any consent, approval, authorization or other Order of, action by, filing with or notification to, any Governmental Authority or any other Person under any of the terms, conditions or provisions of any Law or Order applicable to NextDecade that, if not made or obtained, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. 

Section 4.       REPRESENTATIONS AND WARRANTIES OF THE BACKSTOPPER.  The Backstopper represents and warrants to NextDecade as of the date hereof and as of the Closing Date (except for representations and warranties that are made as of a specific date, which are made only as of such date), as follows: 

4.1   Organization and Qualification; Subsidiaries.  The Backstopper has been duly organized and is validly existing and, except as would not reasonably be expected to have, individually or in the aggregate, a Backstopper Material Adverse Effect, is in good standing under the laws of its jurisdiction of organization, with the requisite power and authority to own its properties and conduct its business as currently conducted. 

4.2   Authorization; Enforcement; Validity.  The Backstopper has all necessary corporate, limited liability company or equivalent power and authority to enter into this Agreement and to carry out, or cause to be carried out, its obligations hereunder in accordance with the terms hereof.  The execution and delivery by the Backstopper of this Agreement and the performance by the Backstopper of its obligations hereunder have been duly authorized by all requisite action on the part of the Backstopper, and no other action on the part of the Backstopper is necessary to authorize the execution and delivery by the Backstopper of this Agreement or the consummation of the transactions contemplated by this Agreement.  This Agreement has been duly executed and delivered by the Backstopper, and assuming due authorization, execution and delivery by the Company, this Agreement constitutes the legal, valid and binding obligation of the Backstopper, enforceable against the Backstopper in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium or similar Laws now or hereafter in effect relating to creditors’ rights generally and subject to general principles of equity. 

4.3   No Conflicts.  The execution, delivery, and performance by the Backstopper of this Agreement do not and will not (a) violate any provision of the organizational documents of the 

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Backstopper; (b) conflict with or violate any Law or Order applicable to the Backstopper or any of its respective assets or properties; or (c) violate, conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Backstopper is a party or to which any of its assets or properties are subject, or result in the creation of any Encumbrance on any of its assets or properties, except, in the case of clauses (b) and (c), for any such conflict, violation, breach or default that would not reasonably be expected to have, individually or in the aggregate, a Backstopper Material Adverse Effect. 

4.4   Consents and Approvals.  The execution, delivery and performance by the Backstopper of this Agreement do not require the Backstopper to obtain any  consent, approval, authorization or other Order of, action by, filing with or notification to, any Governmental Authority or any other Person under any of the terms, conditions or provisions of any Law or Order applicable to the Backstopper or by which any of its assets or properties may be bound, any contract to which the Backstopper is a party or by which the Backstopper may be bound, except for any consent, approval, authorization or other Order of, action by, filing with or notification to, any Governmental Authority or any other Person under any of the terms, conditions or provisions of any Law or Order applicable to the Backstopper that, if not made or obtained, would not reasonably be expected to have, individually or in the aggregate, a Backstopper Material Adverse Effect with respect to the Backstopper. 

4.5   Investor Representation.  (i) It is either (A) a qualified institutional buyer as defined in Rule 144A of the Securities Act, (B) an accredited investor as defined in Rule 501(a)(1), (2), (3), or (7) under the Securities Act, (C) a non‐U.S. person under Regulation S under the Securities Act, or (D) the foreign equivalent of (A) or (B) above, and (ii) any securities of the Company acquired by the Backstopper under this Agreement will have been acquired for investment and not with a view to distribution or resale in violation of the Securities Act. 

4.6   Sufficient Funds.  The Backstopper has sufficient assets and the financial capacity to perform all of its obligations under this Agreement, including the ability to fully fund the Commitment. 

Section 5.        ADDITIONAL COVENANTS. 

5.1   Commercially Reasonable Efforts.  Each of the Company and the Backstopper hereby agrees to use its commercially reasonable efforts to timely satisfy (if applicable) each of the conditions applicable to such Party under Sections 6 and 7, respectively, of this Agreement. 

5.2   Further Assurances.  Each Party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other Party may reasonably request to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 

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5.3       Use of Proceeds. The Company shall use the Offering Proceeds from the transactions contemplated hereby solely as provided for in Exhibit D to this Agreement. 

5.4       Expenses.  The Company shall bear all of its own expenses in connection with the execution, delivery and performance of this Agreement and the transactions contemplated hereby, including without limitation all fees and expenses of its agents, representatives, counsel and accountants.  At Closing the Company shall reimburse such expenses for the Backstopper, provided that such reimbursement shall be capped at the lesser of (i) $75,000 and (ii) one-half percent (0.5%) of the Backstopper’s investment pursuant to Section 2.1(b) above. 

5.5   Conduct of the Business of Company.  From the date hereof until the Closing Date, except (a) as expressly permitted by this Agreement, (b) as required by Law, or (c) with the written consent of the Backstopper (such consent not to be unreasonably withheld, conditioned or delayed), the Company shall conduct its business and operations in the ordinary course of business consistent with past practice and use commercially reasonable efforts to (i) preserve intact its present business organization; (ii)  maintain good relationships with its vendors, suppliers, and others having material business relationships with it; and (iii) manage its working capital in the ordinary course of business consistent with past practice. 

Section 6.        CONDITIONS TO THE BACKSTOPPER’S OBLIGATIONS.  The obligations of the Backstopper to consummate the transactions contemplated hereby pursuant to this Agreement on the Closing Date shall be subject to the satisfaction at or prior to the Closing Date of each of the following conditions, any one or more of which may be waived in writing by the Backstopper except as provided below for Section 6.3: 

6.1   Representations and Warranties.  (a) All of the representations and warranties made by the Company in this Agreement shall be true and correct in all material respects as of the Closing Date as though made at and as of the Closing Date (except to the extent such representations and warranties expressly speak as of an earlier date, which shall be true and correct as of such date); and (b) the Company shall have performed and complied in all material respects with all agreements and covenants required by this Agreement to be performed by the Company on or prior to the Closing Date or such earlier date as may be applicable. 

6.2   Material Adverse Effect.  Since the date of this Agreement, there shall not have occurred, and there shall not exist, any event that constitutes, individually or in the aggregate, a Material Adverse Effect. 

6.3   Independent Committee. The transactions contemplated hereby and by the Convertible Preferred Equity Offering have been approved by an independent committee of the Company’s board of directors that has been advised by independent counsel. 

6.4   No Legal Impediment to Issuance. No Law or Order shall have become effective or been enacted, adopted or issued by any Governmental Authority that prohibits the implementation of this Agreement or the transactions contemplated herein. 

6.5   Registration Rights.  The Company shall have delivered an executed Registration Rights Agreement to the Backstopper. 

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Section 7.       CONDITIONS TO THE COMPANY’S OBLIGATIONS.  The obligations of the Company to issue and sell to the Backstopper the Convertible Preferred Stock, the Warrants, and the Backstop Fee pursuant to this Agreement shall be subject to the satisfaction at or prior to the Closing Date of each of the following conditions, any one or more of which may be waived in writing by the Company: 

7.1   Representations and Warranties.  (a) All of the representations and warranties made by the Backstopper in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing Date as though made at and as of the Closing Date (except to the extent such representations and warranties expressly speak as of an earlier date, which shall be true and correct as of such date) and (b) the Backstopper shall have performed and complied in all material respects with all agreements and covenants required by this Agreement to be performed by the Backstopper on or prior to the Closing Date. 

7.2   No Legal Impediment to Issuance. No Law or Order shall have become effective or been enacted, adopted or issued by any Governmental Authority that prohibits the implementation of the Plan or the transactions contemplated by this Agreement. 

Section 8.        TERMINATION. 

(a)            Termination by the Backstopper.  This Agreement may be terminated at any time by the Backstopper following the occurrence of any of the following events (each a “Backstopper Termination Event”) immediately upon delivery of written notice to the Company; provided,  however that the Backstopper shall not be permitted to terminate this Agreement if at the time of such termination the Backstopper is in breach of any representation, warranty or covenant applicable to it in any material respect under this Agreement: 

(i)              the Closing does not occur on or before the Commitment Outside Date; 

(ii)             in the event of a breach by the Company of any representation, warranty, covenant or other agreement contained in this Agreement which would give rise to the failure of any of the conditions set forth in Section 6 hereof to be satisfied, which failure cannot be cured or is not cured before the earlier of (A) fifteen (15) Business Days after receipt of written notice thereof by the Company from the Backstopper and (B) the Commitment Outside Date; or 

(iii)            any Governmental Authority of competent jurisdiction, enters a Final Order declaring this Agreement or any material portion hereof to be unenforceable. 

(b)            Termination by the Company.  This Agreement may be terminated by the Company: (A) at any time; provided, however, that the Company shall be obligated to pay the Backstopper the Backstop Fee within ten (10) Business Days of notifying the Backstopper of such termination; (B)  following the occurrence of any of the following events immediately upon delivery of written notice to the Parties except as set forth below; provided,  however that the Company shall not be permitted to terminate this Agreement if, at the time of such termination, the Company is in breach of any representation, warranty or covenant applicable to it in any material respect under this Agreement: 

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(i)              in the event that a breach by the Backstopper of any representation, warranty, covenant or other agreement contained in this Agreement which would give rise to the failure of any of the conditions set forth in Section 7 hereof to be satisfied, which failure cannot be cured or is not cured before the earlier of (A) fifteen (15) Business Days after receipt of written notice thereof by the Backstopper from the Company and (B) the Commitment Outside Date; or 

(ii)             any Governmental Authority of competent jurisdiction, enters a Final Order declaring this Agreement or any material portion hereof to be unenforceable. 

(c)            The Backstopper agrees that, in the event of a Backstopper Default, the Backstopper will be liable to the Company for the consequences to the Company of the Backstopper Default and that the Company can enforce rights of damages and/or specific performance pursuant to Section 10.18. 

(d)            Mutual Termination.  This Agreement may be terminated by the mutual written consent of the Company and the Backstopper; provided, however that the Parties may agree that in this instance, no Backstop Fee is payable by the Company. 

(e)            Effect of Backstopper Termination.  Upon a termination of this Agreement in accordance with Section 8(a), the Backstopper shall have no continuing liability or obligation to any other Party hereunder and the provisions of this Agreement shall have no further force or effect with respect to the Backstopper, except for the provisions in this Section 8 and Sections 2.2 (as applicable),  9, and 10, each of which shall survive termination of this Agreement; provided,  however, that no such termination shall relieve the Backstopper from liability for its breach or non-performance of its obligations hereunder prior to the date of such termination and the rights of the Company as it relates to such breach or non-performance by the Backstopper shall be preserved in the event of the occurrence of such breach or non-performance and no such termination shall impact the liability of the Company for payment of the Backstop Fee. 

(f)             Effect of Company or Mutual Termination.  Upon a termination of this Agreement in accordance with Sections 8(b) or 8(d), neither Party shall have any continuing liability or obligation to the other Party hereunder and the provisions of this Agreement shall have no further force or effect except for the provisions in this Section 8 and Sections 2.2 (as applicable), 9, and 10, each of which shall survive termination of this Agreement; provided that no such termination shall relieve either Party from liability for its breach or non-performance of its obligations hereunder prior to the date of such termination and the rights of the other Party as it relates to such breach or non-performance by the Party shall be preserved in the event of the occurrence of such breach or non-performance. 

Section 9.        INDEMNIFICATION; EXCULPATION.  The Company agrees to indemnify and hold harmless the Indemnified Parties from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, fees and disbursements of counsel), that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or relating to this Agreement, the Definitive Documentation, or the transactions contemplated hereby or thereby, solely to the extent such 

12 

 

Definitive Documentation or transactions contemplated thereby relate to this Agreement and the Convertible Preferred Equity Offering, any use made or proposed to be made with the proceeds of the Commitments, or any claim, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any Indemnified Party is a party thereto, and the Company shall reimburse each Indemnified Party upon demand for reasonable fees and expenses of counsel (which, so long as there are no conflicts among such Indemnified Parties, shall be limited to one law firm serving as counsel for the Indemnified Parties) and other expenses incurred by it in connection with investigating, preparing to defend or defending, or providing evidence in or preparing to serve or serving as a witness with respect to, any lawsuit, investigation, claim or other proceeding relating to any of the foregoing, irrespective of whether the transactions contemplated hereby are consummated, except to the extent such claim, damage, loss, liability, or expense is found in a final, non-appealable order of a court of competent jurisdiction to have resulted from such Indemnified Party’s bad faith, actual fraud, gross negligence, or willful misconduct.  No Indemnified Party shall have any liability (whether direct or indirect, in contract, tort or otherwise) to the Company for or in connection with the transactions contemplated hereby, except to the extent such liability is found in a final, non-appealable order of a court of competent jurisdiction to have resulted from such Indemnified Party’s bad faith, actual fraud, gross negligence or willful misconduct.  In no event, however, shall the Company or any Indemnified Party be liable on any theory of liability for any special, indirect, consequential or punitive damages.  Without the prior written consent of the Indemnified Parties, the Company agrees that it will not enter into any settlement of any lawsuit, claim or other proceeding arising out of this Agreement, the Definitive Documentation, or the transactions contemplated hereby or thereby, solely to the extent such Definitive Documentation or transactions contemplated thereby relate to this Agreement and the Convertible Preferred Equity Offering, unless such settlement (i) includes an explicit and unconditional release from the party bringing such lawsuit, claim or other proceeding of all Indemnified Parties and (ii) does not include a statement as to or an admission of fault, culpability, or a failure to act by or on behalf of any Indemnified Party.  No Indemnified Party shall be liable for any damages arising from the use by unauthorized persons of any information made available to the Indemnified Parties by the Company or any of its representatives through electronic, telecommunications or other information transmission systems that is intercepted by such persons.  No Indemnified Party shall settle any lawsuit, claim, or other proceeding arising out of this Agreement, the Definitive Documentation, or the transactions contemplated hereby or thereby without the prior written consent of the Company (such consent not to be unreasonably withheld or delayed).  Notwithstanding the foregoing, an Indemnified Party shall be entitled to no indemnification by the Company for any claim, damage, loss, liability, or expense incurred by or asserted or awarded against such Indemnified Party for any violation of Law by such Indemnified Party. 

Section 10.      MISCELLANEOUS. 

10.1 Payments.  All payments made by or on behalf of the Company or any of their Affiliates to the Backstopper or its assigns, successors or designees pursuant to this Agreement shall be without withholding, set-off, counterclaim or deduction of any kind. 

10.2 Arm’s Length Transaction.  The Company acknowledges and agrees that (i) the Commitments, the Convertible Preferred Equity Offering and any other transactions described in this Agreement are an arm’s-length commercial transaction between the Parties and (ii) the 

13 

 

Backstopper has not assumed nor will it assume an advisory or fiduciary responsibility in the Company’s favor with respect to any of the transactions contemplated hereby or the process leading thereto, and the Backstopper has no obligation to the Company with respect to the transactions contemplated hereby except those obligations expressly set forth in this Agreement or the Offering Documents to which it is a party. 

10.3 Confidentiality.  The Parties agree that this Agreement shall not be disclosed to any Person other than (i) the Company and the Backstopper and their respective applicable officers, directors, employees, Affiliates, members partners, attorneys, accountants, agents and advisors, (ii) Persons that have entered into non-disclosure or similar agreements with a Party agreeing not to disclose information related to this Agreement or the transactions contemplated by this Agreement, and (iii) in any legal, judicial or administrative proceeding or as otherwise required by law or regulation or as requested by a governmental authority (in which case the Company and the Backstopper agree, to the extent permitted by law, to inform each other promptly in advance thereof (other than in connection with any audit or examination by bank accountants or any governmental, regulatory or self-regulatory authority exercising examination or regulatory authority over a Party)). 

10.4 Survival.  The representations and warranties made in this Agreement will not survive the Closing and shall expire and be of no further force and effect simultaneously therewith. 

10.5 No Waiver of Rights.  All waivers hereunder must be made in writing, and the failure of any Party at any time to require another Party’s performance of any obligation under this Agreement shall not affect the right subsequently to require performance of that obligation.  Any waiver of any breach of any provision of this Agreement shall not be construed as a waiver of any continuing or succeeding breach of such provision or a waiver or modification of any other provision. 

10.6 Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by email or registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for any Party as shall be specified by such Party in a notice given in accordance with this Section). 

(a)        If to the Company, to: 

NextDecade Corporation 

3 Waterway Square Place, Suite 400 

The Woodlands, Texas 77380 

Attention:        Krysta De Lima, General Counsel 

krysta@next-decade.com 

14 

 

With a copy (which shall not constitute notice to the Company) to: 

King & Spalding LLP 

1100 Louisiana Street 

Houston, Texas 77002 

Fax: (713) 751-3290 

Attention: Jeffery K. Malonson 

(b)        If to the Backstopper, to: 

Halcyon Capital Management LP 

477 Madison Avenue, 8th Floor 

New York, NY 10022 

Attention:        Avinash Kripalani 

akripalani@halcyonllc.com 

with a copy (which shall not constitute notice to the Backstopper) to: 

Weil, Gotshal & Manges LLP 

767 5th Avenue 

New York, NY 10153 

Attention:        Jaclyn L. Cohen 

jackie.cohen@weil.com 

Any of the foregoing addresses may be changed by giving notice of such change in the foregoing manner, except that notices for changes of address shall be effective only upon receipt. 

10.7 Headings.  The section and subsection headings in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. 

10.8 Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect for so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible. 

10.9 Entire Agreement.  This Agreement and the agreements and documents referenced herein constitute the entire agreement of the Parties with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, between the Parties with respect to the subject matter hereof. 

10.10  Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.  Except as set forth 

15 

 

below, neither this Agreement nor any of the rights, interests or obligations under this Agreement will be assigned by either Party (whether by operation of law or otherwise) without the prior written consent of the other Party.  Notwithstanding the foregoing, the rights, obligations and interests hereunder may be assigned, delegated or transferred, in whole or in part, by the Backstopper to Affiliates and/or one or more third-parties satisfactory to the Company; provided,  however, that such transferee, as a condition precedent to such transfer, becomes a Party to this Agreement and assumes the obligations of the Backstopper under this Agreement by executing an addendum substantially in the form set forth in Exhibit A (the ”Addendum”) and  an assumption in substantially the form set forth in Exhibit B hereto (the “Assumption Agreement”) and deliver the same to the Company in accordance with Section 10.6, and provided,  further, that (a), with respect to a transfer to an Affiliate of a Backstopper, the Backstopper either (i) shall have provided an adequate equity support letter or a guarantee of such Affiliate-transferee’s Commitment, in form and substance reasonably acceptable to the Company or (ii) shall remain fully obligated to fund such Commitment and (b), with respect to a transfer to a third party, the Company, acting in good faith, shall have consented in writing to such transfer (which consent shall not be unreasonably withheld, conditioned or delayed) and shall have determined, in its reasonable discretion, after due inquiry and investigation, that such transferee is reasonably capable of fulfilling such obligations, or, absent such a determination, the proposed transferee shall have deposited with an agent of the Company or into an escrow account under arrangements satisfactory to the Company funds sufficient, in the reasonable determination of the Company, to satisfy such proposed transferee’s Commitment.  Any transfer that is made in violation of the immediately preceding sentence shall be null and void ab initio, and the Company shall have the right to enforce the voiding of such transfer. 

10.11  No Third-Party Beneficiaries.  This Agreement shall be binding upon and inure solely to the benefit of the Parties and their respective successors and permitted assigns and, except as expressly set forth in Section 9, nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever. 

10.12  Amendment.  This Agreement may not be altered, amended, or modified except by a written instrument executed by or on behalf of the Company and the Backstopper. 

10.13  Governing Law.  This Agreement shall be interpreted, construed and enforced in accordance with the laws of the State of New York, without regard to the conflicts of law principles thereof. 

10.14  Consent to Jurisdiction.  Each of the Parties (a) irrevocably and unconditionally agrees that any actions, suits or proceedings, at Law or equity, arising out of or relating to this Agreement or any agreements or transactions contemplated hereby shall be heard and determined within the State of Texas; (b) irrevocably submits to the jurisdiction of such court in any such action, suit or proceeding; (c) consents that any such action, suit or proceeding may be brought in such courts and waives any objection that such Party may now or hereafter have to the venue or jurisdiction or that such action or proceeding was brought in an inconvenient court; and (d) agrees that service of process in any such action, suit or proceeding may be effected by providing a copy thereof by any of the methods of delivery permitted by 

16 

 

Section 10.6 to such Party at its address as provided in Section 10.6 (provided that nothing herein shall affect the right to effect service of process in any other manner permitted by Law). 

10.15  Waiver of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY).  EACH OF THE PARTIES HERETO HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.15. 

10.16  Currency.  Unless otherwise specified in this Agreement, all references to currency, monetary values and dollars set forth herein shall mean United States (U.S.) dollars and all payments hereunder shall be made in United States dollars. 

10.17  Counterparts.  This Agreement may be executed and delivered (including by facsimile or electronic transmission) in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. 

10.18  Specific Performance.  Each Party acknowledges that, in view of the uniqueness of the securities referenced herein and the transactions contemplated by this Agreement, the other Party would not have an adequate remedy at law for money damages in the event that this Agreement has not been performed in accordance with its terms, and therefore agrees that the other Party shall be entitled to specific performance and injunctive or other equitable relief as the sole and exclusive remedy of any such breach, without the necessity of proving the inadequacy of monetary damages as a remedy. 

10.19  Rules of Construction.  The Parties and their respective legal counsel participated in the preparation of this Agreement, and therefore, this Agreement shall be construed neither against nor in favor of any of the Parties, but rather in accordance with the fair meaning thereof. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the term “including” is not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.  Section, subsection, clause, schedule, annex and exhibit references are to this Agreement unless otherwise specified.  Any reference to this Agreement shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, 

17 

 

substitutions, and supplements thereto and thereof, as applicable.  Whenever the context may require, any pronoun includes the corresponding masculine, feminine and neuter forms. 

[No further text appears; signature pages follow] 

18 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day and year first above written. 

	

	

	

	

	
 

	
    

	
NEXTDECADE CORPORATION

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ Matthew K. Schatzman

	
 

	
 

	
Name: Matthew K. Schatzman

	
 

	
 

	
Title: President and Chief Executive Officer

	
 

	
 

	
 

[Backstop Commitment Agreement] 

 

	

	

	

	

	
 

	
    

	
Halcyon Capital Management LP, severally on behalf of certain funds or accounts advised by it

	
 

	
 

	
or its affiliates 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
/s/ John Freese

	
 

	
 

	
Name: John Freese

	
 

	
 

	
Title: Authorized Signatory

	
 

	
 

	
 

	
 

	
 

	
By: /s/ Suzanne McDermott

	
 

	
 

	
Name: Suzanne McDermott

	
 

	
 

	
Title: Chief Legal Officer and

	
 

	
 

	
Chief Compliance Officer

[Backstop Commitment Agreement] 

 

Exhibit A 

ADDENDUM 

Reference is made to that certain Backstop Commitment Agreement (as amended, modified or supplemented from time to time, the “Agreement”) by and between NextDecade Corporation, a Delaware corporation (“NextDecade”), and Halcyon Capital Management LP, severally on behalf of certain funds or accounts advised by it or its affiliates, or a successor thereof.  Each capitalized term used but not defined herein shall have the meaning given to it in the Agreement. 

Upon execution and delivery of this Addendum by the undersigned, as provided in Section 10.10 of the Agreement, the undersigned hereby becomes the Backstopper, as applicable thereunder and bound thereby effective as of the date of the Agreement. 

By executing and delivering this Addendum, the undersigned represents and warrants, for itself and for the benefit of the Company, that: 

(a)       as of the date of this Addendum, the undersigned has executed and delivered an Assumption and Joinder Agreement therefor (a copy of which is attached to this Addendum); 

(b)       as of the date of this Addendum, with respect to each transferee that (i) is an individual, such transferee has all requisite authority to enter into this Addendum and to carry out the transactions contemplated by, and perform its respective obligation under, the Agreement and (ii) is not an individual, such transferee is duly organized, validly existing, and in good standing under the laws of the state of its organization, and has all requisite corporate, partnership, or limited liability company power and authority to enter into this Addendum and to carry out the transactions contemplated by, and perform its respective obligations under, the Agreement; 

(c)       assuming the due execution and delivery of the Agreement by NextDecade, the Addendum and the Agreement are legally valid and binding obligations of it, enforceable against it in accordance with its terms, except as may be limited by bankruptcy, insolvency or similar laws, or by equitable principles relating to or limiting creditors’ rights generally; and 

(d)       as of the date of this Addendum, it is not aware of any event that, due to any fiduciary or other duty to any other person, would prevent it from taking any action required of it under the Agreement and this Addendum. 

By executing and delivering this Addendum to NextDecade, the undersigned agrees to be bound by all the terms of the Agreement. 

The undersigned acknowledges and agrees that once delivered to NextDecade, it may not revoke, withdraw, amend, change or modify this Addendum unless the Agreement has been terminated. 

 

THIS ADDENDUM SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. 

This Addendum may be executed in one or more counterparts, each of which, when so executed, shall constitute the same instrument and the counterparts may be delivered by facsimile transmission or by electronic mail in portable document format (.pdf). 

[Signature on Following Page] 

 

IN WITNESS WHEREOF, the Parties have caused this Addendum to be duly executed and delivered by their proper and duly authorized officers as of this [__] day of [___]. 

	
 

	
    

	
TRANSFEREE WHO BECOMES A 

	
 

	
 

	
BACKSTOPPER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
[NAME]

	
 

	
 

	
 

	
 

	
 

	
as a Backstopper

	
 

	
 

	
Name:

 

Exhibit B 

ASSUMPTION AND JOINDER AGREEMENT 

Reference is made to (i) that certain Backstop Commitment Agreement (as amended, modified or supplemented from time to time, the “Agreement”), dated as of April 11, 2018, by and between NextDecade Corporation, a Delaware corporation (“NextDecade”), and Halcyon Capital Management LP, severally on behalf of certain funds or accounts advised by it or its affiliates, or a successor thereof, and (ii) that certain Addendum, dated as of [__], [__] (the “Transferor Addendum”) submitted by                     , as transferor (the “Transferor”).  Each capitalized term used but not defined herein shall have the meaning given to it in the Agreement. 

As a condition precedent to becoming the Backstopper, the undersigned (the “Transferee”) hereby agrees to become bound by all the terms, conditions and obligations set forth in the Agreement and the Transferor Addendum copies of which are attached hereto as Annex I.  This Assumption and Joinder Agreement shall take effect and shall become an integral part of the Agreement and the Transferor Addendum immediately upon its execution, and the Transferee shall be deemed to be bound by all of the terms, conditions and obligations of the Agreement and the Transferor Addendum as of the date thereof.  The Transferee shall hereafter be deemed to be the “Backstopper” and a “Party” for all purposes under the Agreement. 

[Signatures on Following Page] 

 

IN WITNESS WHEREOF, this Assumption and Joinder Agreement has been duly executed by each of the undersigned as of the date specified below. 

	
Date:  [___]

	
    

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Name of Transferor

	
 

	
Name of Transferee

	
 

	
 

	
 

	
 

	
 

	
 

	
Authorized Signatory of Transferor

	
 

	
Authorized Signatory of Transferee

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
(Type or Print Name and Title of Authorized Signatory)

	
 

	
(Type or Print Name and Title of Authorized Signatory)

	
 

	
 

	
 

	
 

	
 

	
Address of Transferee:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Attn:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Tel:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Fax:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
E-mail:

	
 

	
 

	
 

	
 

	
 

	
 

25 

 

Exhibit C 

CERTIFICATE OF DESIGNATIONS 

OF 

SERIES A CONVERTIBLE PREFERRED STOCK 

26 

 

Exhibit D 

USE OF PROCEEDS 

Proceeds from the Convertible Preferred Equity Offering shall be used by the Company for development activities related to the liquefaction of natural gas and the sale of liquefied natural gas (“LNG”) in international markets, including: 

    Development activities related to the Rio Grande LNG terminal facility at the Port of Brownsville in southern Texas and an associated 137-mile Rio Bravo pipeline to supply gas to the terminal, in each case, including activities and businesses reasonably complementary or ancillary thereto and reasonable extensions thereof; 

    Development activities related to an approximate 1,000-acre site near Texas City, Texas for a second potential LNG terminal, including activities and businesses reasonably complementary or ancillary thereto and reasonable extensions thereof; and 

    Development activities conducted in overseas locations (including, but not limited to China and Singapore) in direct support of the Company’s businesses as set forth above. 

27Exhibit 4.1

 

SYSOREX, INC.

 

2018 EQUITY INCENTIVE PLAN 

 

Adopted by Board: July 30, 2018

Approved by Stockholders: July 30, 2018

Termination Date: July 30, 2028

 

 

	I.	INTRODUCTION 

 

1.1 Purpose. The purpose of the Sysorex, Inc.
2018 Equity Incentive Plan, effective July 30, 2018, as set forth herein (this “Plan”) is (i) to align the interests
of the Company’s stockholders and the recipients of awards under this Plan by increasing the proprietary interest of such
recipients in the Company’s growth and success, (ii) to advance the interests of the Company by attracting and retaining
directors, officers, employees and other service providers and (iii) to motivate such persons to act in the long-term best interests
of the Company and its stockholders.

 

1.2
Certain Definitions. 

 

“Agreement” shall mean an electronic
or written agreement evidencing an award hereunder between the Company and the recipient of such award.

 

“Assumed” means that pursuant to a
Change in Control, either (i) the award is expressly affirmed by the Company or (ii) the contractual obligations represented by
the award are expressly assumed (and not simply by operation of law) by the successor entity or its parent in connection with the
Change in Control with appropriate adjustments to the number and type of securities of the successor entity or its parent subject
to the award and the exercise or purchase price thereof which at least preserves the compensation element of the award existing
at the time of the Change in Control as determined in accordance with the instruments evidencing the agreement to assume the award.

 

“Board” shall mean the Board of Directors
of the Company.

 

“Bonus Shares” shall mean Shares which
are not subject to a Restriction Period or Performance Measures.

 

“Bonus Share Award” shall mean an
award of Bonus Shares under this Plan.

 

“Cash-Based Award” shall mean an award
denominated in cash that may be settled in cash and/or Shares, which may be subject to restrictions, as established by the Committee.

 

“Change in Control” shall have the
meaning set forth in Section 6.8(b).

 

“Code” shall mean the Internal Revenue
Code of 1986, as amended.

 

“Committee” shall mean the Committee
designated by the Board, or a subcommittee thereof, consisting of two or more members of the Board, each of whom is intended to
be (A) a “Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act and (B) “independent”
within the meaning of the rules of the Nasdaq Capital Market or any other stock exchange on which Shares are then traded; provided,
however, that the term Committee will refer to the Board during such times as no Committee is designated by the Board.

 

“Common Stock” shall mean the common
stock of the Company.

 

“Company” shall mean Sysorex, Inc.,
a Nevada corporation, or any successor thereto.

 

“Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended.

 

“Fair Market Value” shall mean the
closing transaction price of a Share as reported on the Nasdaq Capital Market on the date as of which such value is being determined
or, if Shares are not listed on the Nasdaq Capital Market, the closing transaction price of a Share on the principal national
stock exchange on which Shares are traded on the date as of which such value is being determined or, if there shall be no reported
transactions for such date, on the next preceding date for which transactions were reported; provided, however, that
if Shares are not listed on a national stock exchange or if Fair Market Value for any date cannot be so determined, Fair Market
Value shall be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion,
shall at such time deem appropriate and in compliance with Section 409A of the Code.

 

     

     

    

 

“Free-Standing SAR” shall mean an
SAR which is not granted in tandem with, or by reference to, an option, which entitles the holder thereof to receive, upon exercise,
Shares (which may be Restricted Shares) or, to the extent provided in the applicable Agreement, cash or a combination thereof,
with an aggregate value equal to the excess of the Fair Market Value of one Share on the date of exercise over the base price of
such SAR, multiplied by the number of such SARs which are exercised.

 

“Incentive Stock Option” shall mean
an option to purchase Shares that meets the requirements of Section 422 of the Code, or any successor provision, which is intended
by the Committee to constitute an Incentive Stock Option.

 

“Incumbent Director” shall have the
meaning set forth in Section 6.8(b)(iii).

 

“Non-Employee Director” shall mean
any director of the Company who is not an officer or employee of the Company or any Subsidiary.

 

“Nonqualified Option” shall mean an
option to purchase Shares which is not an Incentive Stock Option.

 

“Performance Measures” shall mean
the criteria and objectives, established by the Committee in its sole discretion, which shall be satisfied or met (i) as a condition
to the grant or exercisability of all or a portion of an option or SAR or (ii) during the applicable Restriction Period or Performance
Period as a condition to the vesting of the holder’s interest, in the case of a Restricted Share Award, of the Shares subject
to such award, or, in the case of a Restricted Share Unit Award, Performance Unit Award or Cash-Based Award, to the holder’s
receipt of the Shares subject to such award or of payment with respect to such award. The performance goals may consist of any
objective or subjective corporate- wide or subsidiary, division, operating unit or individual measures, whether or not listed herein.
The applicable performance measures may be applied on a pre- or post-tax basis and may be adjusted as determined by the Committee
to include or exclude objectively determinable components of any performance measure, including, without limitation, special charges
such as restructuring or impairment charges, debt refinancing costs, extraordinary or noncash items, unusual, nonrecurring or one-time
events affecting the Company or its financial statements or changes in law or accounting principles (“Adjustment Events”).
In the sole discretion of the Committee, the Committee may amend or adjust the Performance Measures or other terms and conditions
of an outstanding award in recognition of any Adjustment Events. Performance goals shall be subject to such other special rules
and conditions as the Committee may establish at any time.

 

“Performance Period” shall mean any
period designated by the Committee during which (i) the Performance Measures applicable to an award shall be measured and (ii)
the conditions to vesting applicable to an award shall remain in effect.

 

“Performance Unit” shall mean a right
to receive, contingent upon the attainment of specified Performance Measures within a specified Performance Period, a specified
cash amount or, in lieu thereof and to the extent set forth in the applicable award Agreement, Shares having a Fair Market Value
equal to such cash amount.

 

“Performance Unit Award” shall mean
an award of Performance Units under this Plan.

 

“Replaced” means that pursuant to
a Change in Control the award is replaced with a comparable stock award or a cash incentive award or program of the Company, the
successor entity (if applicable) or parent of either of them which preserves the compensation element of such award existing at
the time of the Change in Control and provides for subsequent payout in accordance with the same (or, for the participant, a more
favorable) vesting schedule applicable to such award. The determination of award comparability shall be made by the Committee and
its determination shall be final, binding and conclusive.

 

“Restricted Shares” shall mean Shares
which are subject to a Restriction Period and which may, in addition thereto, be subject to the attainment of specified Performance
Measures within a specified Performance Period.

 

“Restricted Share Award” shall mean
an award of Restricted Shares under this Plan.

 

“Restricted Share Unit” shall mean
a right to receive one Share or, in lieu thereof and to the extent set forth in the applicable award Agreement, the Fair Market
Value of such Share in cash, which shall be contingent upon the expiration of a specified Restriction Period and which may, in
addition thereto, be contingent upon the attainment of specified Performance Measures within a specified Performance Period.

 

“Restricted Share Unit Award” shall
mean an award of Restricted Share Units under this Plan.

 

“Restriction Period” shall mean any
period designated by the Committee during which (i) the Shares subject to a Restricted Share Award may not be sold, transferred,
assigned, pledged, hypothecated or otherwise encumbered or disposed of, except as provided in this Plan or the Agreement relating
to such award, or (ii) the conditions to vesting applicable to a Restricted Share Unit Award shall remain in effect.

 

    2

     

    

 

“SAR” shall mean a share appreciation
right which may be a Free-Standing SAR or a Tandem SAR.

 

“Share” shall mean a share of the
Common Stock, $0.00001 par value per share, of the Company, and all rights appurtenant thereto.

 

 

 

“Share Award” shall mean a Bonus Share
Award, Restricted Share Award or Restricted Share Unit Award.

 

“Subsidiary” shall mean any corporation,
limited liability company, partnership, joint venture or similar entity in which the Company owns, directly or indirectly, an equity
interest possessing more than 50% of the combined voting power of the total outstanding equity interests of such entity.

 

“Substitute Award” shall mean an award
granted under this Plan upon the assumption of, or in substitution for, outstanding equity awards previously granted by a company
or other entity in connection with a corporate transaction, including a merger, combination, consolidation or acquisition of property
or stock; provided, however, that in no event shall the term “Substitute Award” be construed to refer
to an award made in connection with the cancellation and repricing of an option or SAR.

 

“Tandem SAR” shall mean an SAR which
is granted in tandem with, or by reference to, an option (including a Nonqualified Option granted prior to the date of grant of
the SAR), which entitles the holder thereof to receive, upon exercise of such SAR and surrender for cancellation of all or a portion
of such option, Shares (which may be Restricted Shares) or, to the extent provided in the applicable Agreement, cash or a combination
thereof, with an aggregate value equal to the excess of the Fair Market Value of one Share on the date of exercise over the base
price of such SAR, multiplied by the number of Shares subject to such option, or portion thereof, which is surrendered.

 

“Tax Date” shall have the meaning
set forth in Section 6.5.

 

“Ten Percent Holder” shall have the
meaning set forth in Section 2.1(a).

 

1.3 Administration. This Plan shall be administered
by the Committee. Any one or a combination of the following awards may be made under this Plan to eligible persons: (i) options
to purchase Shares in the form of Incentive Stock Options or Nonqualified Options, (ii) SARs in the form of Tandem SARs or Free-Standing
SARs, (iii) Share Awards in the form of Bonus Shares, Restricted Shares or Restricted Share Units, (iv) Performance Units and (v)
Cash-Based Awards. The Committee shall, subject to the terms of this Plan, select eligible persons for participation in this Plan
and determine the form, amount and timing of each award to such persons and, if applicable, the number of Shares, the number of
SARs, the number of Restricted Share Units, the value of Cash-Based Awards and the number of Performance Units subject to such
an award, the exercise price or base price associated with the award, the time and conditions of exercise or settlement of the
award and all other terms and conditions of the award, including, without limitation, the form of the Agreement evidencing the
award. The Committee may, in its sole discretion and for any reason at any time, take action such that (i) any or all outstanding
options and SARs shall become exercisable in part or in full, (ii) all or a portion of the Restriction Period applicable to any
outstanding Restricted Shares or Restricted Share Units shall lapse, (iii) all or a portion of the Performance Period applicable
to any outstanding award shall lapse and (iv) the Performance Measures (if any) applicable to any outstanding award shall be deemed
to be satisfied at the target or any other level. The Committee shall, subject to the terms of this Plan, interpret this Plan and
the application thereof, establish rules and regulations it deems necessary or desirable for the administration of this Plan and
may impose, incidental to the grant of an award, conditions with respect to the award. All such interpretations, rules, regulations
and conditions shall be conclusive and binding on all parties.

 

The Committee may delegate some or all of its power and authority
hereunder to the Board or, subject to applicable law, to the Chief Executive Officer and President or such other executive officer
as the Committee deems appropriate; provided, however, that the Committee may not delegate its power and authority
to the President and Chief Executive Officer or other executive officer of the Company with regard to the selection for participation
in this Plan of an officer, director or other person subject to Section 16 of the Exchange Act or decisions concerning the timing,
pricing or amount of an award to such an officer, director or other person.

 

No member of the Board or Committee, and neither the Chief Executive
Officer and President or any other executive officer to whom the Committee delegates any of its power and authority hereunder,
shall be liable for any act, omission, interpretation, construction or determination made in connection with this Plan in good
faith, and the members of the Board and the Committee and the Chief Executive Officer and President and any other executive officer
shall be entitled to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including
attorneys’ fees) arising therefrom to the full extent permitted by law (except as otherwise may be provided in the Company’s
Articles of Incorporation or By-Laws, each as may be amended from time to time) and under any directors’ and officers’
liability insurance that may be in effect from time to time.

 

    3

     

    

 

A majority of the Committee shall constitute a quorum. The acts
of the Committee shall be either (i) acts of a majority of the members of the Committee present at any meeting at which a quorum
is present or (ii) acts approved in writing by all of the members of the Committee without a meeting.

 

1.4 Eligibility. Participants in this Plan shall
consist of such officers, Non-Employee Directors, employees, consultants, agents and independent contractors, and persons expected
to become officers, Non-Employee Directors, employees, consultants, agents, and independent contractors of the Company and its
Subsidiaries as the Committee in its sole discretion may select from time to time. The Committee’s selection of a person
to participate in this Plan at any time shall not require the Committee to select such person to participate in this Plan at any
other time. For purposes of this Plan and except as otherwise provided for in an Agreement, references to employment by the Company
shall also mean employment by a Subsidiary, and references to employment shall include service as a Non-Employee Director or independent
contractor. The Committee shall determine, in its sole discretion, the extent to which a participant shall be considered employed
during any periods during which such participant is on an approved leave of absence.

 

1.5 Shares and Cash Available. Subject to (i)
adjustment as provided in Section 6.7, (ii) as to grants of Incentive Stock Options, adjustment as permitted by Section 422 of
the Code and the Treasury Regulations promulgated thereunder, and (iii) to all other limits set forth in this Section 1.5, 8,000,000
Shares shall be available for awards (including Incentive Stock Options) under this Plan. The number of Shares that remain available
for future grants under the Plan shall be reduced by the sum of the aggregate number of Shares which become subject to outstanding
options, outstanding Free-Standing SARs and outstanding Share Awards and delivered upon the settlement of Performance Units. As
of the first day of each calendar quarter beginning on or after January 1, 2019, the number of Shares available for all awards
under the Plan shall automatically increase by a number equal to the least of (x) 1,000,000 Shares, (y) 10% of the number of Shares
that are issued and outstanding as of such date, or (z) a lesser number of Shares determined by the Committee. To the extent that
Shares subject to an outstanding option, SAR, Share Award or other award granted under the Plan are not issued or delivered by
reason of (i) the expiration, termination, cancellation or forfeiture of such award (excluding Shares subject to an option cancelled
upon settlement in Shares of a related tandem SAR or Shares subject to a tandem SAR cancelled upon exercise of a related option)
or (ii) the settlement of such award in cash, then such Shares shall again be available under this Plan. Subject to adjustment
as provided in Section 6.7, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will equal
the aggregate Share number stated in Section 1.5, plus, to the extent allowable under Section 422 of the Code and the Treasury
Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant this Section 1.5.

 

To the extent not prohibited by the listing requirements of
the Nasdaq Capital Market or any other stock exchange on which Shares are then traded or applicable laws, any Shares covered by
an award which are surrendered (i) in payment of the award exercise or purchase price (including pursuant to the “net exercise”
of an option pursuant to Section 2.1(c), or the “net settlement” or “net exercise” of a Share-settled SAR
pursuant to Section 2.2(c)) or (ii) in satisfaction of tax withholding obligations incident to the grant, exercise, vesting or
settlement of an award shall be deemed not to have been issued for purposes of determining the maximum number of Shares which may
be issued pursuant to all awards under the Plan, unless otherwise determined by the Committee. Notwithstanding anything in this
Section 1.5 to the contrary, Shares subject to an award under this Plan may not be made available for issuance under this Plan
if such shares are shares repurchased on the open market with the proceeds of an option exercise.

 

The number of Shares for awards under this Plan shall not be
reduced by (i) the number of Shares subject to Substitute Awards, so long as the Company registers the Shares subject to the Substitute
Awards on a registration statement filed under the Securities Act of 1933, as amended, or (ii) available shares under a stockholder
approved plan of a company or other entity that was a party to a corporate transaction with the Company (as appropriately adjusted
to reflect such corporate transaction) which become subject to awards granted under this Plan (subject to applicable stock exchange
requirements).

 

Shares to be delivered under this Plan shall be made available
from authorized and unissued Shares, or authorized and issued Shares reacquired and held as treasury shares or otherwise or a combination
thereof.

 

1.6 Per Person Limits. The aggregate grant date
fair value of Shares that may be granted during any fiscal year of the Company to any Non-Employee Director shall not exceed $150,000;
provided, however, that (i) the limit set forth in this sentence shall be $150,000 in the year in which a Non-Employee Director
commences service on the Board and (ii) the limits set forth in this sentence shall not apply to awards made pursuant to an election
to receive the award in lieu of all or a portion of fees received for service on the Board or any committee thereunder.

 

    4

     

    

 

	II.	OPTIONS AND SHARE APPRECIATION RIGHTS 

 

2.1 Options. The Committee may, in its discretion,
grant options to purchase Shares to such eligible persons as may be selected by the Committee. Each option, or portion thereof,
that is not an Incentive Stock Option, shall be a Nonqualified Option. To the extent that the aggregate Fair Market Value (determined
as of the date of grant) of Shares with respect to which options designated as Incentive Stock Options are exercisable for the
first time by a participant during any calendar year (under this Plan or any other plan of the Company, or any parent or Subsidiary)
exceeds the amount (currently $100,000) established by the Code, such options shall constitute Nonqualified Options.

 

Options shall be subject to the following terms and conditions
and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem
advisable:

 

(a) Number of Shares and Purchase Price. The number of
Shares subject to an option and the purchase price per Share purchasable upon exercise of the option shall be determined by the
Committee; provided, however, that the purchase price per Share purchasable upon exercise of an option shall not
be less than 100% of the Fair Market Value of a Share on the date of grant of such option; provided further, that if an
Incentive Stock Option shall be granted to any person who, at the time such option is granted, owns capital stock possessing more
than 10 percent of the total combined voting power of all classes of capital stock of the Company (or of any parent or Subsidiary)
(a “Ten Percent Holder”), the purchase price per Share shall not be less than the price (currently 110% of Fair
Market Value) required by the Code in order to constitute an Incentive Stock Option.

 

Notwithstanding the foregoing, in the case of an option that
is a Substitute Award, the purchase price per Share of the Shares subject to such option may be less than 100% of the Fair Market
Value per Share on the date of grant, provided, that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute
Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate purchase price thereof does not exceed
the excess of: (x) the aggregate Fair Market Value (as of the time immediately preceding the transaction giving rise to the Substitute
Award, such Fair Market Value to be determined by the Committee) of the shares of the predecessor company or other entity that
were subject to the grant assumed or substituted for by the Company, over (y) the aggregate purchase price of such shares.

 

(b) Option Period and Exercisability. The period during
which an option may be exercised shall be determined by the Committee; provided, however, that no option shall be
exercised later than ten years after its date of grant; provided further, that if an Incentive Stock Option shall be granted
to a Ten Percent Holder, such option shall not be exercised later than five years after its date of grant. The Committee may, in
its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an option or to the
exercisability of all or a portion of an option. The Committee shall determine whether an option shall become exercisable in cumulative
or non-cumulative installments and in part or in full at any time. An exercisable option, or portion thereof, may be exercised
only with respect to whole Shares. Prior to the exercise of an option, the holder of such option shall have no rights as a stockholder
of the Company with respect to the Shares subject to such option.

 

(c) Method of Exercise. An option may be exercised (i)
by giving written notice to the Company specifying the number of whole Shares to be purchased and accompanying such notice with
payment therefor in full (or arrangement made for such payment to the Company’s satisfaction) either (A) in cash, (B) by
delivery (either actual delivery or by attestation procedures established by the Company) of Shares having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) authorizing
the Company to withhold whole Shares which would otherwise be delivered having an aggregate Fair Market Value, determined as of
the date of exercise, equal to the amount necessary to satisfy such obligation, (D) in cash by a broker-dealer acceptable to the
Company to whom the optionee has submitted an irrevocable notice of exercise or (E) a combination of (A), (B) and (C), in each
case to the extent set forth in the Agreement relating to the option, (ii) if applicable, by surrendering to the Company any Tandem
SARs which are cancelled by reason of the exercise of the option and (iii) by executing such documents as the Company may reasonably
request. Any fraction of a Share which would be required to pay such purchase price shall be disregarded and the remaining amount
due shall be paid in cash by the optionee. No Shares shall be issued and no certificate representing Shares shall be delivered
until the full purchase price therefor and any withholding taxes thereon, as described in Section 6.5, have been paid (or arrangement
made for such payment to the Company’s satisfaction).

 

2.2 Share Appreciation Rights. The Committee may,
in its discretion, grant SARs to such eligible persons as may be selected by the Committee. The Agreement relating to an SAR shall
specify whether the SAR is a Tandem SAR or a Free-Standing SAR.

 

SARs shall be subject to the following terms and conditions
and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem
advisable:

 

(a) Number of SARs and Base Price. The number of SARs
subject to an award shall be determined by the Committee. Any Tandem SAR related to an Incentive Stock Option shall be granted
at the same time that such Incentive Stock Option is granted. The base price of a Tandem SAR shall be the purchase price per Share
of the related option. The base price of a Free-Standing SAR shall be determined by the Committee; provided, however,
that such base price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such SAR.

 

    5

     

    

 

Notwithstanding the foregoing, in the case of an SAR that is
a Substitute Award, the base price per Share of the Shares subject to such SAR may be less than 100% of the Fair Market Value per
Share on the date of grant, provided, that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award
is granted) of the Shares subject to the Substitute Award, over (b) the aggregate base price thereof does not exceed the excess
of: (x) the aggregate Fair Market Value (as of the time immediately preceding the transaction giving rise to the Substitute Award,
such Fair Market Value to be determined by the Committee) of the shares of the predecessor company or other entity that were subject
to the grant assumed or substituted for by the Company, over (y) the aggregate base price of such shares.

 

(b) Exercise Period and Exercisability. The period for
the exercise of an SAR shall be determined by the Committee; provided, however, that no Tandem SAR shall be exercised
later than the expiration, cancellation, forfeiture or other termination of the related option and no Free-Standing SAR shall be
exercised later than ten years after its date of grant. The Committee may, in its discretion, establish Performance Measures which
shall be satisfied or met as a condition to the grant of an SAR or to the exercisability of all or a portion of an SAR. The Committee
shall determine whether an SAR may be exercised in cumulative or non-cumulative installments and in part or in full at any time.
An exercisable SAR, or portion thereof, may be exercised, in the case of a Tandem SAR, only with respect to whole Shares and, in
the case of a Free-Standing SAR, only with respect to a whole number of SARs. If an SAR is exercised for shares of Restricted Shares,
a certificate or certificates representing such Restricted Shares shall be issued in accordance with Section 3.3(c), or such shares
shall be transferred to the holder in book entry form with restrictions on the Shares duly noted, and the holder of such Restricted
Shares shall have such rights of a stockholder of the Company as determined pursuant to Section 3.3(d). Prior to the exercise of
an SAR, the holder of such SAR shall have no rights as a stockholder of the Company with respect to the Shares subject to such
SAR.

 

(c) Method of Exercise. A Tandem SAR may be exercised
(i) by giving written notice to the Company specifying the number of whole SARs which are being exercised, (ii) by surrendering
to the Company any options which are cancelled by reason of the exercise of the Tandem SAR and (iii) by executing such documents
as the Company may reasonably request. A Free-Standing SAR may be exercised (A) by giving written notice to the Company specifying
the whole number of SARs which are being exercised and (B) by executing such documents as the Company may reasonably request. No
Shares shall be issued and no certificate representing Shares shall be delivered until any withholding taxes thereon, as described
in Section 6.5, have been paid (or arrangement made for such payment to the Company’s satisfaction).

 

2.3 Termination of Employment or Service. All
of the terms relating to the exercise, cancellation or other disposition of an option or SAR (i) upon a termination of employment
with or service to the Company of the holder of such option or SAR, as the case may be, whether by reason of disability, retirement,
death or any other reason, or (ii) during a paid or unpaid leave of absence, shall be determined by the Committee and set forth
in the applicable award Agreement.

 

2.4 Repricing of Options and SARs. The Committee
may reduce, in each case, in its sole discretion and without the approval of the stockholders of the Company, the exercise price
of any option awarded under the Plan and the base appreciation amount of any SAR awarded under the Plan and to cancel, in each
case, without stockholder approval, an option or SAR at a time when its exercise price or base appreciation amount (as applicable)
exceeds the Fair Market Value of the underlying Shares, in exchange for another option, SAR, Restricted Shares, or other award
or for cash.

 

	III.	SHARE AWARDS 

 

3.1 Share Awards. The Committee may, in its discretion,
grant Share Awards to such eligible persons as may be selected by the Committee. The Agreement relating to a Share Award shall
specify whether the Share Award is a Bonus Share Award, Restricted Share Award or Restricted Share Unit Award.

 

3.2 Terms of Bonus Share Awards. The number of
Shares subject to a Bonus Share Award shall be determined by the Committee. Bonus Share Awards shall not be subject to any Restriction
Periods or Performance Measures. Upon the grant of a Bonus Share Award, subject to the Company’s right to require payment
of any taxes in accordance with Section 6.5, a certificate or certificates evidencing ownership of the requisite number of Shares
shall be delivered to the holder of such award.

 

3.3 Terms of Restricted Share Awards. Restricted
Share Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable.

 

(a) Number of Shares and Other Terms. The number of Shares
subject to a Restricted Share Award and the Restriction Period, Performance Period (if any) and Performance Measures (if any) applicable
to a Restricted Share Award shall be determined by the Committee.

 

    6

     

    

 

(b) Vesting and Forfeiture. The Agreement relating to
a Restricted Share Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions
of this Plan, for the vesting of the Shares subject to such award (i) if the holder of such award remains continuously in the employment
or service of the Company during the specified Restriction Period and (ii) if specified Performance Measures (if any) are satisfied
or met during a specified Performance Period, and for the forfeiture of the Shares subject to such award (x) if the holder of such
award does not remain continuously in the employment or service of the Company during the specified Restriction Period or (y) if
specified Performance Measures (if any) are not satisfied or met during a specified Performance Period.

 

(c) Share Issuance. During the Restriction Period, the
Restricted Shares shall be held by a custodian in book entry form with restrictions on such Shares duly noted or, alternatively,
a certificate or certificates representing a Restricted Share Award shall be registered in the holder’s name and may bear
a legend, in addition to any legend which may be required pursuant to Section 6.6, indicating that the ownership of the Shares
represented by such certificate is subject to the restrictions, terms and conditions of this Plan and the Agreement relating to
the Restricted Share Award. All such certificates shall be deposited with the Company, together with stock powers or other instruments
of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate,
which would permit transfer to the Company of all or a portion of the Shares subject to the Restricted Share Award in the event
such award is forfeited in whole or in part. Upon termination of any applicable Restriction Period (and the satisfaction or attainment
of applicable Performance Measures), subject to the Company’s right to require payment of any taxes in accordance with Section
6.5, the restrictions shall be removed from the requisite number of any Shares that are held in book entry form, and all certificates
evidencing ownership of the requisite number of Shares shall be delivered to the holder of such award.

 

(d) Rights with Respect to Restricted Share Awards. Unless
otherwise set forth in the Agreement relating to a Restricted Share Award, and subject to the terms and conditions of a Restricted
Share Award, the holder of such award shall have all rights as a stockholder of the Company, including, but not limited to, voting
rights, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of Shares;
provided, however, that (i) a distribution with respect to Shares, other than a regular cash dividend, and (ii) a
regular cash dividend with respect to Shares that are subject to performance-based vesting conditions, in each case, shall be deposited
with the Company and shall be subject to the same restrictions as the Shares with respect to which such distribution was made.

 

3.4 Terms of Restricted Share Unit Awards. Restricted
Share Unit Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions,
not inconsistent with the terms of this Plan, as the Committee shall deem advisable.

 

(a) Number of Shares and Other Terms. The number of Shares
subject to a Restricted Share Unit Award and the Restriction Period, Performance Period (if any) and Performance Measures (if any)
applicable to a Restricted Share Unit Award shall be determined by the Committee.

 

(b) Vesting and Forfeiture. The Agreement relating to
a Restricted Share Unit Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions
of this Plan, for the vesting of such Restricted Share Unit Award (i) if the holder of such award remains continuously in the employment
or service of the Company during the specified Restriction Period and (ii) if specified Performance Measures (if any) are satisfied
or met during a specified Performance Period, and for the forfeiture of the Shares subject to such award (x) if the holder of such
award does not remain continuously in the employment or service of the Company during the specified Restriction Period or (y) if
specified Performance Measures (if any) are not satisfied or met during a specified Performance Period.

 

(c) Settlement of Vested Restricted Share Unit Awards.
The Agreement relating to a Restricted Share Unit Award shall specify (i) whether such award may be settled in Shares or cash or
a combination thereof and (ii) whether the holder thereof shall be entitled to receive, on a current or deferred basis, dividend
equivalents, and, if determined by the Committee, interest on, or the deemed reinvestment of, any deferred dividend equivalents,
with respect to the number of Shares subject to such award. Any dividend equivalents with respect to Restricted Share Units that
are subject to performance-based vesting conditions shall be subject to the same restrictions as such Restricted Share Units. Prior
to the settlement of a Restricted Share Unit Award, the holder of such award shall have no rights as a stockholder of the Company
with respect to the Shares subject to such award.

 

3.5 Termination of Employment or Service. All
of the terms relating to the satisfaction of Performance Measures and the termination of the Restriction Period or Performance
Period relating to a Share Award, or any forfeiture and cancellation of such award (i) upon a termination of employment or service
with the Company of the holder of such award, whether by reason of disability, retirement, death or any other reason, or (ii) during
a paid or unpaid leave of absence, shall be determined by the Committee and set forth in the applicable award Agreement.

 

    7

     

    

 

	IV.	PERFORMANCE UNIT AWARDS 

 

4.1 Performance Unit Awards. The Committee may,
in its discretion, grant Performance Unit Awards to such eligible persons as may be selected by the Committee.

 

4.2 Terms of Performance Unit Awards. Performance
Unit Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable.

 

(a) Number of Performance Units and Performance Measures.
The number of Performance Units subject to a Performance Unit Award and the Performance Measures and Performance Period applicable
to a Performance Unit Award shall be determined by the Committee.

 

(b) Vesting and Forfeiture. The Agreement relating to
a Performance Unit Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions
of this Plan, for the vesting of such Performance Unit Award if the specified Performance Measures are satisfied or met during
the specified Performance Period and for the forfeiture of such award if the specified Performance Measures are not satisfied or
met during the specified Performance Period.

 

(c) Settlement of Vested Performance Unit Awards. The
Agreement relating to a Performance Unit Award shall specify whether such award may be settled in Shares (including shares of Restricted
Shares) or cash or a combination thereof. If a Performance Unit Award is settled in Restricted Shares, such Restricted Shares shall
be issued to the holder in book entry form or a certificate or certificates representing such Restricted Shares shall be issued
in accordance with Section 3.3(c) and the holder of such Restricted Shares shall have such rights as a stockholder of the Company
as determined pursuant to Section 3.3(d). Any dividends or dividend equivalents with respect to a Performance Unit Award shall
be subject to the same restrictions as such Performance Unit Award. Prior to the settlement of a Performance Unit Award in Shares,
including Restricted Shares, the holder of such award shall have no rights as a stockholder of the Company.

 

4.3 Termination of Employment or Service. All
of the terms relating to the satisfaction of Performance Measures and the termination of the Performance Period relating to a Performance
Unit Award, or any forfeiture and cancellation of such award (i) upon a termination of employment or service with the Company of
the holder of such award, whether by reason of disability, retirement, death or any other reason, or (ii) during a paid or unpaid
leave of absence, shall be determined by the Committee and set forth in the applicable award Agreement.

 

	V.	CASH-BASED AWARDS 

 

5.1 Cash-Based Awards. The Committee may, in its
discretion, grant Cash-Based Awards to such eligible persons as may be selected by the Committee.

 

5.2 Terms of Cash-Based Awards. Cash-Based Awards
shall be subject to the terms and conditions, not inconsistent with the terms of this Plan, determined by the Committee and set
forth in the applicable award Agreement.

 

	VI.	GENERAL 

 

6.1 Effective Date and Term of Plan. This Plan
will become effective upon its adoption by the Board, provided that it must be approved by a majority of the outstanding securities
entitled to vote within 12 months before or after the date of such adoption. Unless terminated earlier by the Board, this Plan
shall terminate on the tenth anniversary of the date it is adopted by the Board or approved by the Company’s stockholders,
whichever is earlier. Termination of this Plan shall not affect the terms or conditions of any award granted prior to termination.
Awards hereunder may be made at any time prior to the termination of this Plan, provided that no award may be made later than ten
(10) years after the effective date of this Plan.

 

6.2 Amendments. The Board may amend this Plan
as it shall deem advisable, subject to any requirement of stockholder approval required by applicable law, rule or regulation,
including any rule of the Nasdaq Capital Market or any other stock exchange on which Shares are then traded; provided, however,
that no amendment may materially impair the rights of a holder of an outstanding award without the consent of such holder.

 

6.3 Agreement. Each award under this Plan shall
be evidenced by an Agreement setting forth the terms and conditions applicable to such award. No award shall be valid until an
Agreement is executed by the Company and, to the extent required by the Company, either executed by the recipient or accepted by
the recipient by electronic means approved by the Company within the time period specified by the Company. Upon such execution
or execution and electronic acceptance, and delivery of the Agreement to the Company, such award shall be effective as of the effective
date set forth in the Agreement.

 

6.4 Non-Transferability. No award shall be transferable
other than by will, the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company
or, to the extent expressly permitted in the Agreement relating to such award, to the holder’s family members, a trust or
entity established by the holder for estate planning purposes or a charitable organization designated by the holder, in each case,
without consideration. Except to the extent permitted by the foregoing sentence or the Agreement relating to an award, each award
may be exercised or settled during the holder’s lifetime only by the holder or the holder’s legal representative or
similar person. Except as permitted by the second preceding sentence, no award may be sold, transferred, assigned, pledged, hypothecated,
encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any award, such award
and all rights thereunder shall immediately become null and void.

 

    8

     

    

 

6.5 Tax Withholding. The Company shall have the
right to require, prior to the issuance or delivery of any Shares or the payment of any cash pursuant to an award made hereunder,
payment by the holder of such award of any federal, state, local or other taxes which may be required to be withheld or paid in
connection with such award. An Agreement may provide that (i) the Company shall withhold whole Shares which would otherwise be
delivered to a holder, having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes
arises in connection with an award (the “Tax Date”), or withhold an amount of cash which would otherwise be
payable to a holder, in the amount necessary to satisfy any such obligation or (ii) the holder may satisfy any such obligation
by any of the following means: (A) a cash payment to the Company, (B) delivery (either actual delivery or by attestation procedures
established by the Company) to the Company of previously owned whole Shares having an aggregate Fair Market Value, determined as
of the Tax Date, equal to the amount necessary to satisfy any such obligation, (C) authorizing the Company to withhold whole Shares
which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount
of cash which would otherwise be payable to a holder, equal to the amount necessary to satisfy any such obligation, (D) in the
case of the exercise of an option and except as may be prohibited by applicable law, a cash payment by a broker-dealer acceptable
to the Company to whom the optionee has submitted an irrevocable notice of exercise or (E) any combination of (A), (B) and (C),
in each case to the extent set forth in the Agreement relating to the award. Shares to be delivered or withheld may not have an
aggregate Fair Market Value in excess of the amount determined by the Committee not to have an adverse accounting impact on the
Company. Any fraction of a Share which would be required to satisfy such an obligation shall be disregarded and the remaining amount
due shall be paid in cash by the holder.

 

6.6 Restrictions on Shares. Each award made hereunder
shall be subject to the requirement that if at any time the Company determines that the listing, registration or qualification
of the Shares subject to such award upon any securities exchange or under any law, or the consent or approval of any governmental
body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the delivery of shares
thereunder, such shares shall not be delivered unless such listing, registration, qualification, consent, approval or other action
shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company may require that certificates
evidencing Shares delivered pursuant to any award made hereunder bear a legend indicating that the sale, transfer or other disposition
thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations
thereunder.

 

6.7 Adjustment. In the event of any equity restructuring
(within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock
Compensation) that causes the per Share value of Shares to change, such as a stock dividend, stock split, spinoff, rights offering
or recapitalization through an extraordinary dividend, the number and class of securities available under this Plan, the terms
of each outstanding option and SAR (including the number and class of securities subject to each outstanding option or SAR and
the purchase price or base price per share), the terms of each outstanding Restricted Stock Award and Restricted Stock Unit Award
(including the number and class of securities subject thereto), and the terms of each outstanding Performance Unit Award shall
be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding options and SARs without an
increase in the aggregate purchase price or base price and in accordance with Section 409A of the Code. In the event of any other
change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the
Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable
by the Committee to prevent dilution or enlargement of rights of participants. In either case, the decision of the Committee regarding
any such adjustment shall be final, binding and conclusive.

 

6.8
Change in Control. 

 

(a) Subject to the terms of the applicable award Agreement,
in the event of a Change in Control, the Board (as constituted prior to such Change in Control) may, in its discretion:

 

	 	(i)	provide that (A) some or all outstanding options and SARs shall become exercisable in full or in part, either immediately or upon a subsequent termination of employment or service, (B) the Restriction Period applicable to some or all outstanding Restricted Share Awards and Restricted Share Unit Awards shall lapse in full or in part, either immediately or upon a subsequent termination of employment or service, (C) the Performance Period applicable to some or all outstanding awards shall lapse in full or in part, and (D) the Performance Measures applicable to some or all outstanding awards shall be deemed to be satisfied at the target or any other level; 

 

    9

     

    

 

	 	(ii)	provide that some or all outstanding awards shall terminate without consideration as of the date of such Change in Control; 

 

	 	(iii)	require that shares of the corporation or other entity resulting from such Change in Control, or a parent thereof, be substituted for some or all of the Shares subject to an outstanding award, with an appropriate and equitable adjustment to such award as shall be determined by the Board in accordance with Section 6.7; and/or 

 

	 	(iv)	require outstanding awards, in whole or in part, to be surrendered to the Company by the holder, and to be immediately cancelled by the Company, and to provide for the holder to receive (A) a cash payment in an amount equal to (i) in the case of an option or an SAR, the number of Shares then subject to the portion of such option or SAR surrendered multiplied by the excess, if any, of the Fair Market Value of a Share as of the date of the Change in Control, over the purchase price or base price per Share subject to such option or SAR, (ii) in the case of a Share Award, the number of Shares then subject to the portion of such award surrendered multiplied by the Fair Market Value of a Share as of the date of the Change in Control, and (iii) in the case of a Performance Unit Award, the value of the Performance Units then subject to the portion of such award surrendered; (B) shares of the corporation or other entity resulting from such Change in Control, or a parent thereof, having a Fair Market Value not less than the amount determined under clause (A) above; or (C) a combination of the payment of cash pursuant to clause (A) above and the issuance of shares pursuant to clause (B) above. 

 

(b) A “Change in Control” of the Company
shall be deemed to have occurred upon the occurrence of any of the following events:

 

(i) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either the then outstanding Shares of the Company or the combined
voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors,
but excluding, for this purpose, any such acquisition by the Company or any of its Subsidiaries, or any employee benefit plan (or
related trust) of the Company or its Subsidiaries, or any corporation with respect to which, following such acquisition, more than
50% of, respectively, the then outstanding Shares of such corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of all or substantially all directors is then beneficially
owned, directly or indirectly, by the individuals and entities who were the beneficial owners, respectively, of Shares and voting
securities of the Company immediately prior to such acquisition in substantially the same proportion as their ownership, immediately
prior to such acquisition, of the then outstanding Shares of the Company or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of directors, as the case may be;

 

(ii) The consummation of a reorganization, merger or consolidation
of the Company, in each case, with respect to which all or substantially all of the individuals and entities who were the respective
beneficial owners of Shares and voting securities of the Company immediately prior to such reorganization, merger or consolidation
do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than 50% of, respectively,
the then outstanding Shares and the combined voting power of the then outstanding voting securities entitled to vote generally
in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation;

 

(iii) During any 24 month period, individuals who, as of the
beginning of such period, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least
a majority of the Board, provided that any person becoming a director subsequent to the beginning of such period whose election
or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board (either by
a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without
written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or
nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or as
a result of any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board shall be
deemed to be an Incumbent Director; or

 

(iv) a complete liquidation or dissolution of the Company or
of the sale or other disposition of all or substantially all of the assets of the Company.

 

In no event shall a Change in Control include any bona fide
primary or secondary public offering, including an initial public offering.

 

    10

     

    

 

6.9 Deferrals. The Committee may determine that
the delivery of Shares or the payment of cash, or a combination thereof, upon the exercise or settlement of all or a portion of
any award (other than awards of Incentive Stock Options, Nonqualified Options and SARs) made hereunder shall be deferred, or the
Committee may, in its sole discretion, approve deferral elections made by holders of awards. Deferrals shall be for such periods
and upon such terms as the Committee may determine in its sole discretion, subject to the requirements of Section 409A of the Code.

 

6.10 No Right of Participation, Employment or Service.
Unless otherwise set forth in an employment agreement, no person shall have any right to participate in this Plan. Neither
this Plan nor any award made hereunder shall confer upon any person any right to continued employment by or service with the Company,
any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate
of the Company to terminate the employment or service of any person at any time without liability hereunder.

 

6.11 Rights as Stockholder. No person shall have
any right as a stockholder of the Company with respect to any Shares or other equity security of the Company which is subject to
an award hereunder unless and until such person becomes a stockholder of record with respect to such Shares or equity security.

 

6.12 Designation of Beneficiary. A holder of an
award may file with the Committee a written designation of one or more persons as such holder’s beneficiary or beneficiaries
(both primary and contingent) in the event of the holder’s death or incapacity. To the extent an outstanding option or SAR
granted hereunder is exercisable, such beneficiary or beneficiaries shall be entitled to exercise such option or SAR pursuant to
procedures prescribed by the Committee.

 

Each beneficiary designation shall become effective only when
filed in writing with the Committee during the holder’s lifetime on a form prescribed by the Committee. The spouse of a married
holder domiciled in a community property jurisdiction shall join in any designation of a beneficiary other than such spouse. The
filing with the Committee of a new beneficiary designation shall cancel all previously filed beneficiary designations.

 

If a holder fails to designate a beneficiary, or if all designated
beneficiaries of a holder predecease the holder, then each outstanding option and SAR hereunder held by such holder, to the extent
exercisable, may be exercised by such holder’s executor, administrator, legal representative or similar person.

 

6.13 Compliance With Section 409A of the Code. To
the extent applicable, awards will be designed and operated in such a manner that they are either exempt from the application of,
or comply with, the requirements of Section 409A of the Code. The Plan and each award Agreement are intended to meet the requirements
of Section 409A of the Code and will be construed and interpreted in accordance with such intent, except as otherwise determined
in the Committee’s sole discretion. Notwithstanding the foregoing, the Company makes no representation with respect to the
tax compliance of the Plan or any Award Agreement, including compliance with Section 409A of the Code.

 

6.14 Governing Law. This Plan, each award hereunder
and the related Agreement, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed
by the Code or the laws of the United States, shall be governed by the laws of the State of Virginia and construed in accordance
therewith without giving effect to principles of conflicts of laws.

 

6.15 Non-U.S. Service Providers. Without amending
this Plan, the Committee may grant awards to eligible persons who are foreign nationals on such terms and conditions different
from those specified in this Plan as may in the judgment of the Committee be necessary or desirable to foster and promote achievement
of the purposes of this Plan and, in furtherance of such purposes the Committee may make such modifications, amendments, procedures,
subplans and the like as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in
which the Company or its Subsidiaries operates or has employees or service providers.

 

6.16 Awards Subject to Clawback. The awards granted
under this Plan and any cash payment or Shares delivered pursuant to an award are subject to forfeiture, recovery by the Company
or other action pursuant to the applicable Agreement or any clawback or recoupment policy which the Company may adopt from time
to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street
Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.

 

    11

     

    

 

SYSOREX, INC.

 

2018 EQUITY INCENTIVE PLAN 

 

STOCK OPTION AGREEMENT 

 

This
Stock Option Agreement (this “Agreement”) is made and entered into as of the date set forth on the signature
page hereto by and between Sysorex, Inc., a Nevada corporation (the “Company”), and the undersigned participant
(“Participant”). Unless otherwise defined herein, capitalized terms used herein shall have the same defined
meanings as set forth in the Sysorex, Inc. 2018 Equity Incentive Plan attached hereto as Exhibit A (the
“Plan”). 

 

	I.	NOTICE OF STOCK OPTION GRANT 

 

Participant has been granted an option to purchase Common Stock,
subject to the terms and conditions of the Plan and this Agreement, as follows:

 

	 	 	 
	Participant:	 	 
	Address:	 	 
	 	 	 

 

	 	 	 	 	 	 	 
	Grant Number:	 	 	 	 	 	 
	Grant Date:	 	 	 	 	 	 
	Vesting Commencement Date:	 	 	 	 	 	 
	Exercise Price per Share:	 	 	 	 	 	 
	Number of Shares Subject to Option: 	 	 	 	 	 	 
	Total Exercise Price:	 	 	 	 	 	 
	Type of Option:	 	ISO	 	NSO	 	 
	Term/Expiration Date:	 	 	 	 	 	, or earlier as provided
	 	 	in the Plan or this Agreement	 	 

 

Vesting Schedule; Accelerated Vesting: 

 

This
Option shall become vested and exercisable, in whole or in part, according to the following vesting schedule:   

 

Termination Period: 

 

This Option shall be exercisable for three months after Participant
ceases to be a service provider, unless such termination is due to Participant’s death or disability, in which case this
Option shall be exercisable for 12 months after Participant ceases to be a service provider. Notwithstanding the foregoing sentence,
in no event may this Option be exercised after the Term/Expiration Date as provided above, and this Option may be subject to earlier
termination as provided in the Plan.

 

	II.	AGREEMENT 

 

1. Grant of Option. In consideration of the services
to be rendered by Participant to the Company or any Affiliate and subject to the terms and conditions of the Plan and this Agreement,
the Administrator hereby grants to Participant an option (this “Option”) to purchase the number of Shares
set forth in the Notice of Stock Option Grant in Part I of this Agreement, at the Exercise Price per Share set forth in the Notice
of Stock Option Grant in Part I of this Agreement (the “Exercise Price”).

 

If designated as an ISO in the Notice of Stock Option Grant
in Part I of this Agreement, this Option is intended to qualify as an Incentive Stock Option; provided, however,
that, to the extent that the aggregate Fair Market Value (determined at the time of grant) of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by Participant during any calendar year (under all plans of the Company
and any Affiliate) exceeds $100,000, such Options or portions thereof that exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options. Further, if for any reason this Option (or portion thereof) shall
not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, this Option (or portion thereof) shall
be regarded as a Nonstatutory Stock Option. In no event shall the Administrator, the Company or any Affiliate, or any of their
respective employees or directors, have any liability to Participant (or any other Person) due to the failure of this Option (or
portion thereof) to qualify for any reason as an Incentive Stock Option.

 

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2. Exercise of Option.

 

(a) Right to Exercise. This Option shall be exercisable
during its term in accordance with (i) the Vesting Schedule set out in the Notice of Stock Option Grant in Part I of this Agreement
and (ii) the applicable provisions of the Plan and this Agreement. This Option may not be exercised for a fraction of a Share.

 

(b) Method of Exercise. This Option shall be exercisable
by delivery of an option exercise notice in the form attached hereto as Exhibit B (the “Option Exercise
Notice”) or in a manner and pursuant to such procedures as the Administrator may determine, which shall state the
election to exercise this Option, the whole number of Shares with respect to which this Option is being exercised, and such other
representations and agreements as may be required by the Company. If someone other than Participant exercises this Option, as permitted
by the Plan, then such Person must submit documentation reasonably acceptable to the Company verifying that such Person has the
legal right to exercise this Option. The Option Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all exercised Shares, together with any applicable tax withholding. This Option shall be deemed to be exercised upon receipt
by the Company of such fully executed Option Exercise Notice accompanied by the aggregate Exercise Price, together with any applicable
tax withholding.

 

3. Participant’s Representations. If the
Common Stock has not been registered under the Securities Act at the time this Option is exercised, Participant shall concurrently
with the exercise of all or any portion of this Option, if required by the Company, deliver to the Company Participant’s
Investment Representation Statement in the form attached hereto as Exhibit C.

 

 

 

4. Lock-Up Period. Participant will not, during
the period commencing on the date of the final prospectus relating to the registration by the Company for its own behalf of shares
of its Common Stock or any other equity securities under the Securities Act on a Form S-1 (excluding a registration relating solely
to employee benefit plans on Form S-1) or Form S-3 and ending on the date specified by the Company and the underwriter(s) (such
period not to exceed 180 days in the case of the Company’s initial public offering or 90 days in the case of any registration
other than the Company’s initial public offering, or such other period as may be requested by the Company or the underwriters
to accommodate regulatory restrictions on (i) the publication or other distribution of research reports and (ii) analyst recommendations
and opinions, including the restrictions contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4) (or any successor provisions
or amendments thereto), as applicable), (A) sell, dispose of, make any short sale of, offer, hypothecate, pledge, contract to sell,
grant any option or contract to purchase, purchase any option or contract to sell, grant any right or warrant to purchase, lend
or otherwise transfer or encumber, directly or indirectly, any Shares or other securities convertible into or exercisable or exchangeable
(directly or indirectly) for shares of Common Stock (whether such Shares or other securities are then held by Participant or thereafter
acquired) (such Shares and other securities, the “Lock-Up Shares”) or (B) enter into any swap, hedging
or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Lock-Up
Shares. The foregoing provisions of this Section II.4 shall not prevent the exercise of any repurchase option in favor of the Company
or apply to the sale of any Lock-Up Shares to an underwriter pursuant to an underwriting agreement or to the Transfer (as defined
in Section II.7) of any Lock-Up Shares by Participant to any trust for the direct or indirect benefit of Participant or an Immediate
Family Member (as defined in the Option Exercise Notice) of Participant (provided that the trustee of the trust agrees,
in writing, to be bound by the restrictions set forth herein and provided further that any such Transfer (as defined in
Section II.7) does not involve a disposition for value). Participant shall execute such documents as may be reasonably requested
by the Company or the underwriters in connection with any registered offering described in this Section II.4 and that are consistent
with this Section II.4 or necessary to give further effect thereto.

 

5. Method of Payment. To the extent permitted
by Applicable Laws, payment of the aggregate Exercise Price as to all exercised Shares shall be by any of the following methods,
or a combination thereof, at Participant’s election:

 

(a) cash;

 

(b) check;

 

(c) surrender of other Shares which (i) shall be valued at their
Fair Market Value on the date of exercise and (ii) must be owned by Participant free and clear of any liens, claims, encumbrances
or security interests, if accepting such Shares, in the Administrator’s sole discretion, will not result in any adverse accounting
consequences to the Company; or

 

(d) consideration received by the Company under a cashless exercise
program (whether through a broker or otherwise) implemented by the Company in connection with the Plan.

 

Any fraction of a Share which would be required to pay such
aggregate Exercise Price shall be disregarded, and the remaining amount due shall be paid in cash by Participant.

 

    13

     

    

 

6. Restrictions on Exercise. This Option may not
be exercised unless the issuance of Shares upon such exercise, or the method of payment of consideration for such Shares, complies
with Applicable Laws. Assuming such compliance, Shares shall be considered transferred to Participant, for income tax purposes,
on the date on which this Option is exercised with respect to such Shares.

 

7. Non-Transferability of Option. This Option
(or, prior to exercise, the Shares subject to this Option) may not be sold, pledged, assigned, hypothecated or otherwise transferred
in any manner, including by entering into any short position, any “put equivalent position” or any “call
equivalent position” (as defined in Rule 16a-1(h) and Rule 16a-1(b), respectively, of the Exchange Act), whether
by operation of law or otherwise (“Transfer”), other than by will or by the laws of descent and distribution,
and may be exercised, during the lifetime of Participant, only by Participant. The terms of the Plan and this Agreement shall be
binding upon the executors, administrators, heirs, successors and assigns of Participant.

 

8. Term of Option. This Option may be exercised
only (i) within the term set out in the Notice of Stock Option Grant in Part I of this Agreement and (ii) in accordance with the
terms and conditions of the Plan and this Agreement.

 

9. Tax Obligations.

 

(a) Tax Withholding. Participant agrees to make
appropriate arrangements satisfactory to the Company to pay or provide for the satisfaction of all federal, state, local, foreign
and other taxes (including Participant’s FICA obligation) required to be withheld with respect to the exercise of this Option.
Participant acknowledges and agrees that the Company may refuse to honor the exercise of this Option, and refuse to deliver the
Shares, if such withholding amounts are not delivered by Participant at the time of exercise.

 

(b) Notice of Disqualifying Disposition of ISO Shares.
If this Option is an Incentive Stock Option, and if Participant makes a “disposition” (as defined in Section 424 of
the Code) of all or any portion of the Shares acquired upon exercise of this Option within two years from the Grant Date set out
in the Notice of Stock Option Grant in Part I of this Agreement or within one year after issuance of the Shares acquired upon exercise
of this Option, then Participant shall immediately notify the Company in writing as to the occurrence of, and the price realized
upon, such disposition. Participant agrees that Participant may be subject to income tax withholding by the Company on the compensation
income recognized by Participant.

 

(c) Section 409A of the Code. Under Section 409A
of the Code, an Option that was granted with a per Share exercise price that is determined by the U.S. Internal Revenue Service
(the “IRS”) to be less than the Fair Market Value of a Share on the date of grant (a “discount
option”) may be considered “deferred compensation.” An Option that is a “discount
option” may result in (i) income recognition by Participant prior to the exercise of this Option, (ii) an additional
20% federal income tax, (iii) potential penalty and interest charges, and (iv) additional state income, penalty and interest tax
to Participant (collectively, “409A Penalties”). Participant acknowledges that the Company cannot guarantee,
and has not guaranteed, that the IRS will agree, in a later examination, that the per Share exercise price of this Option equals
or exceeds the Fair Market Value of a Share on the date of grant. Participant agrees that, if the IRS determines that this Option
is a “discount option,” Participant shall be solely responsible for Participant’s costs related
to such a determination, including any 409A Penalties.

 

10. General Provisions.

 

(a) Power and Authority. Participant hereby represents
to the Company that

 

(i) Participant has full power and authority and legal capacity
to enter into, execute and deliver this Agreement and to perform fully Participant’s obligations hereunder, (ii) the execution,
delivery and performance of this Agreement by Participant does not conflict with, constitute a breach of or violate any arrangement,
understanding or agreement to which Participant is a party or by which Participant is bound, and (iii) this Agreement has been
duly and validly executed and delivered by Participant and constitutes the legal, valid and binding obligation of Participant,
enforceable against Participant in accordance with its terms.

 

(b) Survival. The representations, warranties,
covenants and agreements made in or pursuant to this Agreement shall survive the execution and delivery hereof and shall not be
affected by any investigation made by or on behalf of any party hereto.

 

(c) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Virginia without regard to conflict-of-law principles.

 

(d) Entire Agreement. This Agreement, together
with the attached Exhibits, sets forth the entire agreement and understanding between the parties hereto relating to the subject
matter hereof and supersedes all prior and contemporaneous understandings, agreements, discussions, representations and warranties,
both written and oral, between the parties hereto, including any representations made during any interviews or relocation negotiations,
with respect to such subject matter. In the event of a conflict between the terms and conditions of the Plan and this Agreement,
the terms and conditions of the Plan shall prevail.

 

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(e) Notices. All notices or other communications
required or permitted hereunder shall be in writing and shall be deemed given or delivered (i) when delivered personally, (ii)
one business day after being deposited with an overnight courier service (costs prepaid), (iii) when sent by facsimile or e-mail
if sent during normal business hours and on the next business day if sent after normal business hours, in each case with confirmation
of transmission by the transmitting equipment, or (iv) when received or rejected by the addressee, if sent by certified mail, return
receipt requested, postage prepaid, in each case to the addresses, facsimile numbers or e-mail addresses and marked to the attention
of the persons designated (by name or title) on the signature page hereto, as applicable, or to such other address, facsimile number,
e-mail address or person as such party may designate by a notice delivered to the other party hereto.

 

(f) Successors and Assigns; Transfers.
The Company may assign this Agreement, and its rights and obligations hereunder, in whole or in part, to any successor or assign
(whether direct or indirect, by purchase, merger, consolidation, sale of assets or stock or otherwise). Except as set forth herein,
(x) neither this Agreement nor any rights, duties and obligations hereunder shall be assigned, transferred, delegated or sublicensed
by Participant without the Company’s prior written consent and (y) any attempt by Participant to assign, transfer, delegate
or sublicense this Agreement or any rights, duties or obligations hereunder, without the Company’s prior written consent,
shall be void. Subject to any restrictions on transfer set forth herein, this Agreement shall be binding upon, and enforceable
against, (i) the Company and its successors and assigns and (ii) Participant and his or her heirs, executors, successors, assigns,
administrators and other legal representatives. Except as set forth herein, any transfer in violation of any restriction upon transfer
contained in any provision hereof shall be void, unless such restriction is waived in accordance with the terms hereof.

 

(g) Modification and Waiver. This Agreement may
not be amended, modified or supplemented except by a written instrument signed by an authorized representative of each party hereto.
Any term or provision hereof may be waived, or the time for its performance may be extended, by the party or parties entitled to
the benefit thereof. Any such waiver or extension shall be validly and sufficiently authorized for the purposes hereof if, as to
any party, it is authorized in writing by an authorized representative of such party. The failure or delay of any party to enforce
at any time any provision hereof shall not be construed to be a waiver of such provision, nor in any way to affect the validity
of this Agreement or any part hereof or the right of any party thereafter to enforce each and every such provision. No waiver of
any breach hereof shall be held to constitute a waiver of any other or subsequent breach.

 

(h) Further Assurances. Participant shall execute
and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may reasonably
be necessary or desirable in the view of the Company to carry out the purposes or intent hereof, including the applicable Exhibits
attached hereto.

 

(i) Severability. Should any provision
contained herein be held as invalid, illegal or unenforceable, such holding shall not affect the validity of the remainder of this
Agreement, the balance of which shall continue to be binding upon the parties with any such modification to become a part hereof
and treated as though originally set forth herein.

 

(j) Interpretation. For purposes of this Agreement,
(i) the words “include,” “includes” and “including” shall be deemed to be followed by the words
“without limitation,” (ii) the word “or” is not exclusive, (iii) the words “herein,” “hereof,”
“hereby,” “hereto,” “hereunder” and words of similar import refer to this Agreement as a whole,
and (iv) with respect to the determination of any period of time, “from” means “from and including” and
“to” means “to but excluding.” Unless the context otherwise requires, references herein: (A) to a Section
or an Exhibit mean a Section or an Exhibit of, or attached to, this Agreement; (B) to agreements, instruments and other documents
shall be deemed to include all subsequent amendments, supplements and other modifications thereto; (C) to statutes or regulations
are to be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation
referred to; (D) to any Person includes such Person’s successors and assigns, but, if applicable, only if such successors
and assigns are not prohibited by this Agreement; and (E) to any gender includes each other gender. The Exhibits attached hereto
shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.
The titles, captions and headings herein are for convenience of reference only and shall not affect the meaning or interpretation
hereof. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against
the party drafting an instrument or causing any instrument to be drafted.

 

(k) Counterparts. This Agreement may be executed
in counterparts, each of which shall be considered an original, but all of which, when taken together, shall be considered one
and the same agreement, and shall become binding when one or more counterparts have been signed by each party hereto and delivered
to the other party hereto. Delivery of an executed counterpart of a signature page to this Agreement shall be as effective as delivery
of a manually executed counterpart of this Agreement. The exchange of copies of this Agreement and of signature pages hereto by
facsimile transmission or e-mail shall constitute effective execution and delivery of this Agreement and may be used in lieu of
the original Agreement for all purposes. Signatures transmitted by facsimile or e-mail shall be deemed to be original signatures
for all purposes.

 

    15

     

    

 

(l) Service Relationship At Will. Participant
acknowledges and agrees that the vesting of this Option pursuant hereto is earned only by his or her continuing service as a service
provider at will (and not through the act of being hired, being granted this Option or acquiring Shares hereunder). Participant
further acknowledges and agrees that this Agreement, the transactions contemplated hereby and the vesting schedule set forth herein
do not constitute an express or implied promise of continued engagement as a service provider for the vesting period, or for any
period at all, and shall not interfere with the right of either the Company or Participant to terminate Participant’s relationship
as a service provider at any time, with or without cause or notice.

 

(m) Third Party Beneficiary Rights. No provisions
hereof are intended, nor shall be interpreted, to provide or create any third party beneficiary rights or any other rights of any
kind in any client, customer, affiliate, stockholder, partner or employee of any party hereto or any other Person, unless specifically
provided otherwise herein; provided, however, that Section II.4 is intended to benefit the underwriters for any registered
offering described in Section II.4, and such underwriters shall have the right, power and authority to enforce the provisions of
Section II.4 as though they were parties hereto.

 

(n) Adjustments. In the event of any dividend
or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, reincorporation,
stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, reclassification, repurchase
or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the
Shares, the Administrator will appropriately adjust the number, class and price of Shares subject to this Option, with such adjustment
to be made in accordance with Section 409A of the Code.

 

(o) No Impact on Other Benefits. The value
of this Option is not part of Participant’s normal or expected compensation for purposes of calculating any severance, retirement,
welfare, insurance or similar employee benefit.

 

(p) Acceptance. Participant acknowledges
receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof and hereby accepts
this Option subject to all of the terms and provisions of the Plan and this Agreement (including all Exhibits attached hereto).
Participant has reviewed, and fully understands all provisions of, the Plan and this Agreement in their entirety (including all
Exhibits attached hereto) and has had an opportunity to obtain the advice of his or her own legal counsel, tax advisors and other
advisors prior to executing this Agreement. Any questions or disputes regarding the interpretation of the Plan or this Agreement
(including all Exhibits attached hereto), or arising hereunder or thereunder, shall be submitted by the Company or Participant
to the Administrator, and Participant hereby agrees to accept as final, binding and conclusive all decisions, determinations and
interpretations of the Administrator upon any such questions or disputes.

 

(q) Equitable Relief. In the event of a
breach or threatened breach by Participant of any provision hereof, Participant hereby consents and agrees that the Company may
seek, in addition to other available remedies, injunctive or other equitable relief from any court of competent jurisdiction, without
the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity
of posting any bond or other security. Participant understands that any breach or threatened breach of this Agreement will cause
irreparable injury and that money damages will not provide an adequate remedy therefor, and Participant hereby consents to the
issuance of an injunction or other equitable relief. The aforementioned equitable relief shall be in addition to, and not in lieu
of, legal remedies, monetary damages or other available forms of relief.

 

(signature page follows) 

 

    16

     

    

 

IN WITNESS WHEREOF, the undersigned have
executed this Stock Option Agreement as of ________, 20__ .

 

	COMPANY	 
	 	 	 
	Sysorex, Inc.	 
	 	 	 
	By:	                              	 
	Name:	 	 
	Title:	 Chief Executive Officer	 

 

	Notice Address: 	2355 Dulles Corner Boulevard, Suite 600	 
	 	Herndon, Virginia 20171	 

 

Facsimile:

E-mail:

Attention:

 

PARTICIPANT 

 

Notice
Address:

 

Facsimile:

E-mail:

Attention:

 

Exhibits: 

 

A – 2018 Equity Incentive Plan

B – Option Exercise Notice

 

[Signature Page to Stock Option Agreement]

 

    17

     

    

 

EXHIBIT A 

 

SYSOREX, INC.

 

2018 EQUITY INCENTIVE PLAN 

 

     

     

    

 

EXHIBIT B 

 

OPTION EXERCISE NOTICE 

 

Sysorex, Inc.

 

2355 Dulles Corner Boulevard, Suite 600

 

Herndon, Virginia 20171

 

Attention: Secretary

 

1. Exercise of Option. Effective as
of today, [Month, Day and Year] the undersigned (“Participant”) hereby elects to exercise Participant’s
option (the “Option”) to purchase [Number of shares] shares (the “Exercised Shares”)
of the common stock of Sysorex, Inc., a Nevada corporation (the “Company”), under and pursuant to the
Company’s 2018 Equity Incentive Plan (the “Plan”) and that certain Stock Option Agreement made
and entered into as of ________, 20__ by and between the Company and Participant (the “Option Agreement”).

 

2. Delivery of Payment. Participant herewith delivers
to the Company the full exercise price of the Exercised Shares, as set forth in the Option Agreement, and any and all withholding
taxes due in connection with the exercise of the Option.

 

3. Representations of Participant. Participant
acknowledges that Participant has received, read and understood the Plan and the Option Agreement and agrees to abide, and be bound,
by their terms and conditions.

 

4. Rights as Stockholder. Until the issuance of
the Exercised Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent
of the Company), no right to vote or receive dividends or other distributions or any other rights as a stockholder shall exist
with respect to the Exercised Shares, notwithstanding the exercise of the Option. The Exercised Shares shall be issued to Participant
as soon as practicable after the Option is exercised in accordance with the Option Agreement. No adjustment shall be made for a
dividend or distribution or other right for which the record date is prior to the date of issuance, except as provided in Section
6.7 of the Plan.

 

5. Tax Consultation. Participant understands that
Participant may suffer adverse tax consequences as a result of Participant’s purchase or disposition of the Exercised Shares.
Participant represents that Participant has consulted with any tax consultants Participant deems advisable in connection with the
purchase or disposition of the Exercised Shares and that Participant is not relying on the Company for any tax advice.

 

6. Restrictive Legends and Stop-Transfer Orders.

 

(a) Legends. Participant understands and agrees
that the Company shall cause the legends set forth below, or substantially equivalent legends, to be placed upon any certificate(s)
evidencing ownership of the Exercised Shares, together with any other legends that may be required by the Company or by applicable
federal or state securities laws:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER, A RIGHT OF FIRST REFUSAL AND A LOCK-UP PERIOD IN THE EVENT OF A PUBLIC OFFERING AS SET FORTH
IN AGREEMENTS BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SECURITIES, COPIES OF WHICH MAY BE OBTAINED AT THE PRINCIPAL
OFFICE OF THE ISSUER. SUCH RESTRICTIONS ON TRANSFER, RIGHT OF FIRST REFUSAL AND LOCK-UP PERIOD ARE BINDING ON TRANSFEREES OF THESE
SECURITIES.

 

(b) Stop-Transfer Notices. In order to ensure
compliance with the restrictions referred to herein and in the Option Agreement, including the provisions of Section II.4 of the
Option Agreement, the Company may issue appropriate stop-transfer instructions to its transfer agent, if any, and, if the Company
transfers its own securities, it may make appropriate notations to the same effect in its own records.

 

     

     

    

 

(c) Refusal to Transfer. The Company shall not
be required to transfer on its books any Exercised Shares that have been Transferred in violation of any provision hereof or to
treat as owner of such Exercised Shares, or otherwise to accord voting or dividend rights to, any purchaser or other transferee
to whom such Exercised Shares shall have been so Transferred. Any attempt to Transfer Exercised Shares in violation hereof shall
be null and void and shall be disregarded by the Company.

 

7. Consent to Notices by Electronic Transmission.
Upon becoming a stockholder of the Company and without limiting the manner by which notice otherwise may be given effectively to
Participant, Participant hereby consents in accordance with Sections 78.370 and 75.150 of the Nevada Revised Statutes to stockholder
notices given by the Company to Participant by any of the following forms of electronic transmission: (i) by facsimile telecommunications
to the facsimile number set forth on the signature page to the Option Agreement or to such other facsimile number as Participant
may designate by a written notice delivered to the Company; (ii) by electronic mail to the e-mail address set forth on the signature
page to the Option Agreement or to such other e-mail address as Participant may designate by a written notice delivered to the
Company; (iii) by a posting on an electronic network together with separate notice to Participant of such specific posting; and
(iv) by any other form of electronic transmission when directed to Participant.

 

8. Capitalized Terms. Unless otherwise defined
herein, capitalized terms used herein shall have the same defined meanings as set forth in the Plan or, if not defined therein,
in the Option Agreement.

 

9. Governing Law; Severability. This Option Exercise
Notice shall be governed by and construed in accordance with the laws of the State of Virginia without regard to conflict-of-law
principles. Should any provision contained herein be held as invalid, illegal or unenforceable, such holding shall not affect the
validity of the remainder of this Option Exercise Notice, the balance of which shall continue to be binding upon the parties with
any such modification to become a part hereof and treated as though originally set forth herein.

 

	Submitted by:	 	Accepted by:
	 	 	 
	PARTICIPANT	 	COMPANY
	 	 	 
	
	 	 
	Signature	 	By:	

	
	 	Name:	 
	 	 	Title:	Chief Executive Officer
	 	 	 
	 	 	Date Received:

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