Document:

Exhibit 4.5

 

PARTNER COMMUNICATIONS COMPANY LTD.

AMENDED AND RESTATED 2004 EQUITY INCENTIVE PLAN

As last adopted by the Compensation Committee on March 9, 2016

and by the Board of Directors on March 13, 2016

	1.	
Purpose

 

This Partner Communications Company Ltd. 2004 Equity Incentive Plan (formerly known as the Partner Communications Company Ltd. 2004 Share Option Plan), as amended from time to time, (the “Plan”) is intended to promote the interests of Partner Communications Company Ltd. (the “Company”) and its shareholders by providing employees, directors and officers, and advisors of the Company or any Affiliate with appropriate incentives and rewards to encourage them to enter into and continue in the employ of, or service to, the Company or any Affiliate and to acquire a proprietary interest in the long-term success of the Company. The Plan is designed to enable employees, directors and officers of the Company or any Affiliate to benefit from the provisions of Section 102 of the Israeli Income Tax Ordinance [New Version], 1961, as amended, and any regulations, rules, orders or procedures promulgated thereunder.

 

	2.	
Definitions

 

As used in the Plan, the following definitions shall apply to the terms indicated below:

		“Affiliate”	
means any entity (a) with respect to which the Company is an “employing company” within the meaning of Section 102(a) of the Ordinance; and (b) is approved by the Committee as an Affiliate to which the terms of this Plan apply.

“Approved

		 102 Grant”	
means a Grant granted pursuant to Section 102(b) of the Ordinance and held in trust by a Trustee for the benefit of the Participant.

 

“Capital Gain

		Grant (CGG)”	
means an Approved 102 Grant elected and designated by the Company to qualify under the capital gain tax treatment in accordance with the provisions of Section 102(b)(2) of the Ordinance.

 “Cashless

		 Formula”	
means the following formula:

 

			
(A x B) - (A x C)

            B

  

A = the number of vested Options the Participant requests to exercise as written in the Notice of Exercise;

B = the closing sale price of an Ordinary Share on the Tel Aviv Stock Exchange, on the last trading day before the Notice Date (as defined in Section 8.3), as such closing sale price is published by the Tel Aviv Stock Exchange;

C= the Option Exercise Price.

“Cashless

		 Options”	
shall have the meaning set forth in Section 8.3 (i)(y) or (ii).

 

		“Cause”	
when used in connection with the termination of a Participant's employment or service by the Company or any Affiliate, shall mean (a) the willful and continued failure by the Participant to perform his duties (including the duty of care and the fiduciary duty as set forth in the Companies Law) and obligations to the Company or any Affiliate (other than any such failure resulting from Retirement or Disability, as hereinafter defined or any such failure approved by the Company, subject to applicable law); or (b) the willful engaging by the Participant in misconduct which is injurious to the Company or any Affiliate, provided, however, that in relation to employees or officers of the Company or any Affiliate, in each case the actions or omissions of the Participant are sufficient to deny the Participant severance payment under the Severance Payment Law, 1963.

“Commencement

		Date”	
with respect to the vesting schedule of an Option or an RSU or the earning schedule of a Restricted Share, shall be the Grant Date, unless another date for the commencement of the vesting or earning schedule with respect to such Option, RSU or Restricted Share has been set by the Committee and written in the Grant Instrument.

		“Committee”	
shall mean the Compensation Committee of the Company's Board of Directors (as may be re-named by the Board of Directors) or any committee that will replace it by law.

“Companies

		Law”	
shall mean the Israeli Companies Law, 1999, as may be amended from time to time.

		“Company”	
shall mean Partner Communications Company Ltd., a company incorporated under the laws of the State of Israel.

“Compensation

		Policy”	
The Compensation Policy, if any, as adopted or amended from time to time by the Company, pursuant to Section 267A of the Companies Law.

		“Controlling	
shall have the meaning ascribed to such term in Section 32(9)(a) of the Ordinance.

Shareholder”

“Designated

		Beneficiary”	
of a Participant, shall mean the beneficiary designated by such Participant or deemed as such Participant's Designated Beneficiary pursuant to Section 26 hereto, upon the death of the Participant.

		“Disability”	
shall mean any physical or mental condition, which is recognized as a disability pursuant to the employment practices adopted by the Company (or, if approved by the Committee, the Affiliate employing the Participant) and prevents the Participant from continuing to work in his position or in a comparable one in the Company or the employing Affiliate (as the case may be) or prevents the Participant from continuing to provide services to the Company or such Affiliate. Determination of a Disability shall be made in consultation with a physician selected by the Committee and shall be finally and conclusively determined by the Committee at its absolute discretion.

“Effective

		Date”	
means July 12, 2004, the date on which the Board of Directors first approved the Plan.

		“Employee”	
means a person who is employed by the Company or any of its Affiliates, including an individual who is serving as a director or an office holder all as defined in Section 102, who is not a Controlling Shareholder.

“Exercise

		Date”	
shall have the meaning set forth in Section 11 below.

“Exercise

		Period”	
shall have the meaning set forth in Section 8.1.3 and 8.3.3, as the case may be, below, unless extended pursuant to Section 21 below or shortened pursuant to Sections 6.2 and/or 9 below.

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		“Grant”	
means the grant hereunder of any Granted Security, granted to a Participant pursuant to this Plan, whether granted singly, in combination or in tandem (each, individually referred to as a ”Grant”).

		“Grant Date”	
of a Granted Security means the date on which the Committee resolves to grant such Granted Security, unless another future date is specified by the Committee; provided, that, if further approvals are required for the granting of a Granted Security, the Grant Date shall mean the date that the last required approval for the grant of such Granted Security shall have been obtained, unless specified otherwise in the Grant Instrument.

“Grant

		Instrument”	
shall have the meaning set forth in Section 7.2 below.

 

“Granted

		Security”	
Any Option, Restricted Share, RSU or any other security granted to a Participant pursuant to this Plan, whether granted singly, in combination or in tandem.

		“ITA”	
means the Israeli Tax Authorities.

“Maximum

		Trust Period”	
The maximum period set in the Grant Instrument of a Granted Security granted on or after 18 June, 2014 as may be extended by the Committee, from time to time, at its sole and absolute discretion.

		“Net Income”	
means the amount in New Israeli Shekels specified as "Net Income" of the Company for the relevant period in the unaudited or audited, as the case may be, Financial Statements of the Company for such period as approved by the Board of Directors of the Company at the relevant time.

 

“Non-

		Employee”	
means a person who is not an Employee of the Company or its Affiliates.

		“Option”	
shall mean an option to purchase one or more Ordinary Shares granted pursuant to this Plan.

“Option

Exercise

		Price”	
shall have the meaning set forth in Section 8.1.1 and as may be adjusted from time to time in accordance with Sections 3.2 or 8.1.1 below.

“Ordinary Income

		 Grant (OIG)”	
means an Approved 102 Grant elected and designated by the Company to qualify under the ordinary income tax treatment in accordance with the provisions of Section 102(b)(1) of the Ordinance.

		“102 Grant”	
means any Grant granted to Employees pursuant to Section 102 of the Ordinance.

		“3(i) Grant”	
means a Grant granted pursuant to Section 3(i) of the Ordinance to any person who is a Non-Employee.

“Ordinary

		Shares”	
shall mean ordinary shares of the Company, par value NIS 0.01 each.

		“Participant”	
shall mean an Employee or a Non-Employee to whom a Grant is granted pursuant to the Plan, and, upon his death or legal incapacity, his successors, heirs, executors and administrators, as the case may be.

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		“Plan”	
shall mean this Partner Communications Company Ltd. 2004 Equity Incentive Plan (formerly known as the Partner Communications Company Ltd. 2004 Share Option Plan), as amended from time to time.

"Restricted

		Share”	
means an Ordinary Share issued or transferred to a Participant pursuant to Section 8.2 of this Plan, which is subject to restrictions or limitations set forth in this Plan and in the related Grant Instrument.

		"RSU"	
means a right to receive one Ordinary Share granted to a Participant pursuant to Section 8.3 of this Plan, which is subject to restrictions or limitations set forth in this Plan and in the related Grant Instrument.

		“Restriction	
shall have the meaning set forth in Section 8.2.2 below.

Period”

		“Retirement”	
shall mean the termination of a Participant's employment with or service to the Company or the Affiliate employing him as a result of his reaching the earlier of (a) the legal age for retirement and (b) the age for retirement identified in his employment or service agreement.

		“Section 3(i)”	
means Section 3(i) of the Ordinance and any regulations, rules, orders or procedures promulgated thereunder as now in effect or as hereafter amended.

		“Section 102”	
means Section 102 of the Ordinance and any regulations, rules, orders or procedures promulgated thereunder as now in effect or as hereafter amended.

“Section 102

		 Rules”	
means the Income Tax Rules (Tax Relief for Issuance of Shares to Employees), 2003 as now in effect or as hereafter amended.

“Tax

Ordinance”

		or “Ordinance”	
shall mean the Israeli Income Tax Ordinance [New Version], 1961, as amended, and any regulations, rules, orders or procedures promulgated thereunder.

		“Trustee”	
means any individual appointed by the Company to serve as a trustee and approved by the ITA, all in accordance with the provisions of Section 102(a) of the Ordinance.

“Termination

		Date”	
means close of business of the Company on the date which falls twenty (20) years after the Effective Date.

 “Unapproved

		 102 Grant”	
means a Grant granted pursuant to Section 102(c) of the Ordinance and not held in trust by a Trustee.

 

Reference to the male person is done for convenience purposes only and also applies to the female person.

	3.	
Shares Subject to the Plan

 

		3.1.	
Shares Available for Grants.  As of December 27, 2017, the aggregate number of Ordinary Shares reserved for issuance under this Plan is 2,798,842 Ordinary Shares, representing approximately 1.63% of the total issued share capital of the Company as of such date.

 

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The total number of Ordinary Shares reserved for issuance under the Plan shall be subject to adjustment as required for the implementation of the provisions of the Plan, in accordance with Section 3.2 below. In the event (i) an Option granted to any Participant has expired, canceled, forfeited or otherwise terminated in whole or in part, for any reason; (ii) any Ordinary Share has, after issuance or transfer as Restricted Share, returned to the Company due to a Participant’s failure to comply with the terms and conditions of a Grant or for any reason hereunder; (iii) an RSU granted to any Participant was canceled, forfeited or otherwise terminated due to a Participant’s failure to comply with the terms and conditions of a Grant or for any reason hereunder; or (iv) an Option has been exercised pursuant to the Cashless Formula, and therefore, shares reserved for issuance upon the exercise of such Option were not issued thereunder; such shares reserved for issuance of such expired, cancelled, forfeited or terminated Option or RSU, such Restricted Shares returned to the Company or such remaining unissued shares following a Cashless Formula exercise shall become available for issuance or transfer under any Grant which the Company may grant under the Plan.

 

		3.2.	Adjustments.          	Upon the occurrence of any of the following events, a Participant’s rights under any Grant granted hereunder shall be adjusted as hereinafter provided:

 

		3.2.1.	
Recapitalization.

 

In the event the Ordinary Shares shall be subdivided or combined into a greater or smaller number of shares, or in the event of any other corporate capitalization event of a significantly similar nature, each Participant shall be entitled, upon exercising a vested Option or a vested RSU and subject to the conditions herein stated, to be issued in respect of the Option or the RSU, such number of Ordinary Shares which such Participant would have been entitled to purchase had such event or events not occurred, and appropriate adjustments shall be made in the exercise price per share (if any) to reflect such subdivision or combination, so that Participants are not materially better or worse off as a result of the relevant event, and provided that any such adjustment shall give the Participant the same proportion of the issued share capital of the Company for which such Participant would have been entitled to subscribe had he exercised all the Options or RSUs held by him immediately prior to such adjustment and that such adjustment shall be made on the basis that the aggregate exercise price per share payable by the Participant on the full exercise of any Option or RSU shall remain as nearly as possible the same (but not greater than) as it was before such event.

 

		3.2.2.	
Bonus Shares.

 

In the event the Company distributes bonus shares, each Participant upon exercising such Option or RSU shall be issued by the Company (for the exercise price payable upon such exercise, if any), the Ordinary Shares as to which he is exercising his Option or RSU and, in addition thereto (at no additional cost), such number of shares of the class or classes in which such bonus shares were distributed which he would have received if he had been the holder of the Ordinary Shares as to which he is exercising his Option or RSU at all times between the date of issuance of such Option or RSU on behalf of a Participant in the name of the Trustee and the date of its exercise. In such event, the Exerice Price per Option or RSU (if any) will be reduced by the ratio of the bonus shares distribution (i.e., the number of bonus shares distributed divided by the total number of Ordinary Shares immediately following the said distribution of bonus shares).

 

For illustration purposes only, in the event the Company allocated 100 Options to a Participant at an Exercise Price of NIS 55 per Option, and following that the Company distributed bonus shares at a 1:1 ratio while the price of an Ordinary Share on the TASE prior to the distribution of the bonus shares was NIS 80 and immediately following such distribution of bonus shares was NIS 40, then upon the exerice of such Options immediately following the distribution of bonus shares, the number of Exercise Shares issued to the Participant would be 62 Ordinary Shares pursuant to the following calculation:

 

[200 x (40-27.5)/40] = 62.5

 

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The number of Exercise Shares resulting as of the said distribution shall be 62 Ordinary Shares only as no fractional shares will be issued.

 

		3.2.3.	
Rights Offering.

 

Options and RSUs

 

In the event of a rights offering conducted by the Company, the number of Ordinary Shares issued as a result of the exercise of Options or RSUs shall be adjusted to the benefit component in the  rights offering as reflected in the ratio between the closing price of an Ordinary Share on the TASE on the last trading prior to the ex-day and the basis price of an Ordinary Share on the TASE ex-rights.For the avoidance of doubt, the Exercise Price shall not be reduced in any event to less than the nominal value of an Ordinary Shares.

 

Restricted Shares

 

In the event of a rights offering conducted by the Company to its shareholders, the Trustee will sell on the Rights Trading Day on the TASE (as such term is defined in the rights offering document) all the rights received for all Restricted Shares that have not vested by the record date determined for such rights offering (including). The consideration received by the Trustee from such sale (the "Consideration") will be allocated among all said unvested Restricted Shares pro rata. Upon release of any Restricted Shares from the Trustee to a Participant in accordance with the terms of this Plan, the Trustee will transfer to the Participant also such portion of the Consideation allocated for such released Restricted Shares. Consideration for Restricted Shares that were returned to the Company pursuant to the terms of this Plan will be transferred to the Company together with such Restricted Shares.  For the avoidance of doubt, Participants who were granted Restricted Shares which have vested prior to or on the record date and are held by the trustee may participate in the righs offering as any other shareholder of the Company and may instruct the Trustee to act accordingly.

 

		3.2.4.	
Dividend

 

Options

 

(a )          Options granted on or after February 23, 2009, but prior to May 8, 2012

 

With respect to Options granted on or after February 23, 2009 but prior to May 8, 2012, at any time after the grant of such Options that the Company distributes cash dividends in the ordinary course, with respect to all of its issued and outstanding Ordinary Shares, in an amount in excess of 40% (forty percent), or of another percent resolved by the Board of Directors, of the Company's Net Income for the relevant period (the "Excess Dividend"), and the record date for determining the right to receive such dividends is earlier than the Exercise Date of such Options, then the Option Exercise Price (as adjusted from time to time) for each Ordinary Share underlying an Option (granted on or after February 23, 2009 and whether vested or not as at the relevant record date), not exercised prior to such record date, shall be reduced, ipso facto, as at such record date, by an amount equal to the gross amount of the Excess Dividend per Ordinary Share.

 

(b)          Options granted on or after May 8, 2012, but prior to March 13, 2016

 

Only with respect to Options granted on or after May 8, 2012 (or granted earlier but become subject to this provision thereafter) but prior to March 13, 2016, at any time after the grant of such Options that the Company distributes cash dividends in the ordinary course, with respect to all of its issued and outstanding Ordinary Shares, and the record date for determining the right to receive such dividends is earlier than the Exercise Date of such Options, then the Option Exercise Price (as adjusted from time to time) for each Ordinary Share underlying such Option (whether vested or not as at the relevant record date), not exercised prior to such record date, shall be reduced, ipso facto, as at such record date, by the gross dividend amount so distributed (the "Full Dividend") per Ordinary Share (and not the Excess Dividend).

 

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The Excess Dividend (with respect to Options granted on or after February 23, 2009) or the Full Dividend (with respect to Options granted on or after May 8, 2012 (or granted earlier but become subject to this provision thereafter)) (as the case may be) per Ordinary Share will be determined on a quarterly basis with an annual adjustment on the fourth quarter of each financial year as follows:

 

		(a)	
In respect of the first three quarters of each financial year, the Excess Dividend or the Full Dividend (as the case may be) per Ordinary Share for each quarter will be determined on the basis of the cash dividends distributed and the Net Income for such quarter and the number of Ordinary Shares on the relevant record date; and

 

		(b)	
In respect of the fourth quarter of each financial year, the Excess Dividend or the Full Dividend (as the case may be) per Ordinary Share for the said quarter will be determined on the basis of the total cash dividends distributed and the Net Income for the full financial year and the number of Ordinary Shares on the relevant record date and the deduction of the aggregate Excess Dividend or Full Dividend (as the case may be) per Ordinary Share for the preceding three quarters. For the avoidance of doubt, the downward adjustments to Option Exercise Price made in the preceding three quarters pursuant to sub-paragraph (a) above shall be final and binding and shall not be reversed in the fourth quarter of a financial year.

 

At any time that the Company distributes cash dividend other than in the ordinary course, with respect to all of its issued and outstanding Ordinary Shares, and the record date for determining the right to receive such dividends is earlier than the Exercise Date of Options, then the Option Exercise Price (as adjusted from time to time) for each Ordinary Share underlying an Option (whether vested or not), not exercised prior to such record date, shall be reduced, as at such record date, by the gross dividend amount so distributed per Ordinary Share; provided, that any adjustment provided for in this paragraph shall be cumulative to any other adjustments contemplated under the immediately preceding paragraph or approved by the shareholders of the Company in general meeting.

 

(c)          Options granted on or after March 13, 2016

 

In the event the Company distributes cash dividends, then the Option Exercise Price for each Ordinary Share underlying such Option (whether vested or not as at the relevant record date), not exercised prior to such record date, shall be reduced, ipso facto, as at the record date determining the right to receive such dividend, by the gross dividend amount so distributed per Ordinary Share.

 

In any event, the Option Exercise Price shall not be reduced to less than the par value of an Ordinary Share.

 

Restricted Shares

 

In the event the Company distributes cash dividends, the Trustee will hold such dividend amounts with respect to any Restricted Shares held by the Trustee on the record date for such dividend distribution. Upon release of any Restricted Shares from the Trustee to a Participant in accordance with the terms of this Plan, the Trustee will transfer to the Participant also the dividends accumulated for such Restricted Shares (at a nominal value). In the event Restricted Shares are returned to the Company pursuant to the terms of this Plan, the Trsutee will also transfer to the Company the dividend amount accumulated for such Restricted Shares  (at a nominal value) together with such Restricted Shares.

 

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RSUs

 

In the event the Company distributes cash dividends, the number of Ordinary Shares issued as a result of the exercise of RSUs shall be adjusted to the benefit component in the dividend as reflected in the ratio between the closing price of an Ordinary Share on the TASE on the last trading prior to the ex-day and the basis price of an Ordinary Share on the TASE ex-dividend.

 

		3.2.5.	
Winding Up.

 

In the event of an effective resolution being proposed for the voluntary winding-up of the Company, any Participant may, subject to the provisions of all applicable laws, by notice in writing to the Company at any time prior to the date on which such resolution is passed, exercise his vested Options or vested RSUs (to the extent not already exercised) either to its full extent or to the extent specified in such Notice of Exercise in accordance with the provisions of Section 8.1.5 or Section 8.3.4 (as the case may be) and shall accordingly be entitled, in respect of the Ordinary Shares to be issued upon the exercise of his or her vested Option or vested RSUs, to participate in the distribution of the assets of the Company available in liquidation pari passu with the holders of the Ordinary Shares in issue on the date prior to the date of such resolution. Restricted Shares earned at the time the voluntary winding-up resolution is passed, would be automatically treated in the same manner as all other Ordinary Shares of the Company (including, without limitation, under Section 10.5 of this Plan).

 

		3.2.6.	
Merger; Consolidation; Reorgranization.

 

If upon a upon a merger, consolidation, reorganization, recapitalization or similar event or transaction the Ordinary Shares shall be exchanged for other securities of the Company and/or for securities of another corporation (a "Successor Entity") and/or for a cash amount and/or for any other type of consideration, then, each Granted Security shall, at the sole and absolute discretion of the Board of Directors, either solely or in any combination: (i) be substituted for a similar granted security to purchase shares of the Successor Entity, and appropriate adjustments shall be made in the exercise (or other) price per share to reflect such exchange; (ii) be assumed by the Successor Entity such that the Participant may exercise the Granted Securities for such number of shares of the Successor Entity or amount of other securities thereof, and appropriate adjustments shall be made in the purchase (or other) price per share (if any) to reflect such exchange; or (iii) be substituted for “phantom” similar granted securities of the Company or the Successor Entity, and represent only a financial right to receive the cash amount of the fair market value (determined from time to time but at least annually by a financial expert appointed by the Committee or by another method determined by the Board of Directors) of the Ordinary Share underlying the Granted Security minus the exercise (or other) price of such Granted Security (“Phantom Granted Securities”) (if any).

 

		3.3.	
Upon the occurrence of any of the events detailed in Section 3.2, the class and aggregate number of shares issuable pursuant to the Plan (as set forth in Section 3.1 hereof), in respect of which Options or RSUs have not yet been granted, shall also be appropriately adjusted, to the extent necessary, to reflect the events specified in Section 3.2. Similarly, appropriate adjustments shall be made in the number and other pertinent elements of any outstanding Restricted Shares or RSUs, with respect to which restrictions have not yet lapsed prior to any such change.

 

		3.4.	
If there has been any alteration in the capital structure of the Company as referred to in Section 3.2, the Company shall, upon receipt of a Notice of Exercise (pursuant to Section 8.1.5 below) inform the Participant of such alteration and shall inform the Participant of the adjustment to be made.

 

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		3.5.	
The Committee shall determine the specific adjustments to be made in accordance with Section 3 and with the rules and regulations of any stock exchange applicable from time to time to the Company, by reason of their applicability to its shareholders or otherwise. A determination made in accordance with this Section 3 shall be conclusive and binding on the Participants.

 

	4.	
Granting of Granted Securities

 

		4.1.	
The persons eligible for participation in the Plan as Participants shall include any Employees or Non-Employees of the Company or of any Affiliate; provided, however, that (i) Employees may only be granted 102 Grants and (ii) Non-Employees may only be granted 3(i) Grants.

 

		4.2.	
The Company may designate Grants granted to Employees pursuant to Section 102 as Unapproved 102 Grants or Approved 102 Grants.

 

		4.3.	
The grant of Approved 102 Grants shall be made under this Plan adopted by the Board, and shall be conditioned upon the approval of this Plan by the ITA.

 

		4.4.	
Approved 102 Grants may either be classified as Capital Gain Grants (“CGGs”) or Ordinary Income Grants (“OIGs”).

 

		4.5.	
No Approved 102 Grants may be granted under this Plan to any eligible Employee, unless and until the Company’s election of the type of Approved 102 Grants as CGG or OIG granted to Employees (the “Election”), is appropriately filed with the ITA. Such Election shall become effective beginning on the first Grant Date of an Approved 102 Grant under this Plan and shall remain in effect at least until the end of the year following the year during which the Company first granted Approved 102 Grants (under this Plan or previous plans). The Election shall obligate the Company to grant only the type of Approved 102 Grant it has elected, and shall apply to all Participants who were granted Approved 102 Grants during the period indicated herein, all in accordance with the provisions of Section 102(g) of the Ordinance. For the avoidance of doubt, such Election shall not prevent the Company from granting Unapproved 102 Grants simultaneously.

 

		4.6.	
All Approved 102 Grants must be held in trust by a Trustee, as described in Section 10 below.

 

For the avoidance of doubt, the designation of Unapproved 102 Grants and Approved 102 Grants shall be subject to the terms and conditions set forth in Section 102.

 

	5.	
Administration of the Plan

 

		5.1.	
Committee.  The Plan shall be administered by the Committee, which has been appointed by and serves at the direction of the Board of Directors of the Company. The Board of Directors may from time to time remove members from, or add members to, the Committee, and may fill vacancies in the Committee however caused.

 

		5.2.	
Committee Actions.  The Committee has selected one of its members as its Chairman and holds its meetings at such times and places, as it determines. Actions at a meeting of the Committee at which a majority of its members are present, or acts reduced to or approved in writing by all members of the Committee, are the valid acts of the Committee. The Committee keeps records of its meetings and makes such rules and regulations for the conduct of its business, as it deems advisable.

 

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		5.3.	
Authority of Committee.  The Committee has the authority, at its sole discretion, subject to the approval of the Board of Directors - if such approval is required under the Companies Law - and subject to any applicable law and regulations and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan including, without limitation, the authority at its discretion to (A) with respect to Options - determine the persons to whom Options are granted, the number of shares covered by each Option, the time or times at which Options are granted, the Commencement Date and the Option Exercise Price, and any other term to be included in the Grant Instrument which is permitted by the Plan; and (B) with respect to Restricted Shares and RSUs - determine the persons to whom Restricted Shares or RSUs are granted, the number of Restricted Shares or RSUs awarded, the Commencement Date, the price (if any) to be paid by the Participant for such Restricted Share or for the exercise of the RSUs (unless specified otherwise in the Grant Instrument, the price will be zero), and any other term to be included in the Grant Instrument which is permitted by the Plan. The Committee has also the discretion to determine the performance targets of the Company and any of its Affiliates, or any other criteria, if any, which the Committee determines must be met to remove any restriction (including vesting or earning period) on such Grant, the Maximum Trust Period and any other term, limitation, restriction, and condition of the Options, Restricted Shares or RSUs, which shall be consistent with this Plan. The provisions of Options, Restricted Shares or RSUs need not be the same with respect to each Participant.

 

The Committee also has the power and authority to determine whether, to what extent, and under what circumstances an Option, an RSU or a Restricted Share may be settled, canceled, forfeited, exchanged, surrendered or returned to the Company; to construe and interpret the Plan and any Grant Instrument and Granted Security; and to make all other determinations deemed necessary or advisable for the administration of the Plan.

 

		5.4.	
Interpretation and Construction.  The interpretation and construction by the Committee of any provision of the Plan or of any Grant Instrument or Granted Securities thereunder shall be final and conclusive, unless otherwise determined by the Board of Directors of the Company.

 

		5.5.	
Acceleration and Other Amendments.  Save and except for the occurrence of events specified in Section 6 whereupon the Committee shall comply with the provisions therein, the Committee may, at its sole and absolute discretion, accelerate the date on which any Granted Security granted or earned under the Plan becomes exercisable or earned, accelerate any Restriction Period, waive or amend the operation of Plan provisions respecting exercise (or earning) after termination of employment, re-price the Option Exercise Price or the price (if any) payable for Restricted Shares or RSUs, make the Granted Securities subject to the Plan in its form at the time of such waiver or amendment, or otherwise amend any of the terms of any Grant Instrument or Granted Securities, subject to the provisions of the Tax Ordinance, provided, however, that no such waiver or amendment shall adversely affect any Participant's rights under any outstanding Grant Instrument or Granted Security under the Plan without the consent of such Participant.

 

	6.	
Acceleration upon Change in Control Event

 

		6.1.	
Without derogating from the provisions of Section 3 above, in the event that within six months after a Change in Control of the Company, a Participant’s employment with or service to the Company or the Affiliate employing him to which he provides services is terminated for any reason (other than termination for Cause), or if a notice of such termination was provided to the Participant during the said six months period (even where the actual termination of employment occurs following such six-month period), then the Granted Securities granted to such Participant which are not vested or earned shall be automatically and immediately accelerated and vested or earned (as the case may be), so that all such Granted Securities shall become vested and exercisable or earned (as the case may be) and all restrictions or restriction periods applicable to any Granted Security (including, without limitation, the Restriction Period and/or the satisfaction of the threshold condition for grant) shall automatically expire.

 

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		6.2.	
In the event the vesting of Options and/or of RSUs was accelerated in accordance with Section 6.1 above, the Participant will be entitled to exercise such Options and/or RSUs during a period of 90 days as of the date of termination of employment or service of such Participant – in the event the termination of employment or service of the Participant was made voluntarily by the Participant, or during a period of one year as of the date of termination of employment or service of such Participant - in the event the termination of employment or service of the Participant was made by the Company or an Affiliate. All outstanding Options and RSUs so accelerated and vested in the manner as aforesaid which are not exercised within the 90-day perior or the one year period  after the date of termination of employment or service (as the case may be) shall automatically terminate and cease to be outstanding upon the expiry of the aforesaid relevant period. Restricted Shares so earned (as well as Ordinary Shares issued pursuant to the exercise of Options and/or RSUs) will be treated in the same manner as all other Ordinary Shares of the Company (including, without limitation, under Section 10.5 of this Plan).  The Committee has the power to extend such 90-day or one-year period at its discretion if it deems it to be appropriate under special circumstances.

 

		6.3.	
For the purpose of this Section 6, “Change in Control” shall mean the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

		(i)	
the acquisition which results in holding, directly or indirectly, of (a) the power to control at least 50% of the Company’s share capital; or (b) the power (exercisable alone or together in concert with others) to direct or cause the direction of the management and policies of the Company, whether through the ownership of Ordinary Shares, by law, contract or otherwise; or (c) the power (exercisable alone or together in concert with others) to elect or appoint at least 50% of the Board of Directors of the Company;

 

		(ii)	
a merger, consolidation or similar transaction (including an arrangement) of the Company following which the Company is not a surviving corporation;

 

		(iii)	
a merger, consolidation or similar transaction (including an arrangement) following which the holders of voting securities of that other company holding, in aggregate, 50% or more of all outstanding Ordinary Shares of the Company (including a merged or successor company) resulting from such merger, consolidation or similar transaction; or

 

		(iv)	
the sale, lease or exchange of all or substantially all of the property of the Company, other than in the ordinary course of business of the Company or to its subsidiary;

 

Provided that any event or transaction contemplated in sub-paragraph (i), (ii) or (iii) shall not constitute a Change in Control for purposes of this Plan if following such event or transaction, 50% or more of voting securities of the Company remain held directly or indirectly by the ultimate shareholder prior to such event or transaction (the “Ultimate Shareholder”) or any company or other person controlled directly or indirectly in any manner what so ever whether through the ownership of voting securities or otherwise in fact by the Ultimate Shareholder.

 

	7.	
Grants under the Plan; Grant Instrument

 

		7.1.	
Eligible Grantees.  Granted Securities may be granted to any Employee or Non- Employee of the Company or any Affiliate selected by the Committee provided, however, that no Granted Security may be granted by the Committee to any person serving as a member of the Committee at the time of the grant. The grant of a Granted Security to a Participant shall neither entitle such Participant to, nor disqualify him from, receiving any other grants of Granted Securities pursuant to the Plan or participating in any other share option plan or other incentive plan. Any grant of Granted Securities under the Plan shall be in compliance with the requirements under applicable laws and regulations (including any stock exchange rules), including by reason of their applicability to the Company’s shareholders or otherwise.

 

		7.2.	
Grant Instrument. Each Granted Security granted under the Plan shall be evidenced by a written instrument signed by the Company and accepted in writing by the Participant which shall be accompanied by a copy of this Plan and shall contain such provisions as the Committee, at its sole discretion, may deem necessary or desirable (the "Grant Instrument"). By accepting a Granted Security, a Participant thereby agrees that the Granted Security shall be subject to all the terms and provisions of this Plan and the applicable Grant Instrument. Unless otherwise determined by the Committee, no payment is required to be made by a Participant on acceptance of an Option. Unless otherwise determined by the Committee in the Grant Instrument, no payment is required to be made by the Participant upon acceptance of Restricted Shares or RSUs.  The Grant Instrument shall also state the type of Granted Security granted thereunder (whether an Option, Restricted Share or RSU and whether a CGG, OIG, Unapproved 102 Grant or a 3(i) Grant).

 

11

 

		7.3.	
Cancelled Options and RSUs. Where the Company cancels any Option or any RSU granted to a Participant but not exercised and issues new Granted Security to the same Participant, the issue of such new Granted Security may only be made within the limit of this Plan under Section 3.1.

 

		7.4.	
Returned Restricted Shares. Where Restricted Shares are returned to the Company, new Granted Securities may be granted to the same Participant; provided, that the new issuance of the Granted Securities (following the return of the formerly issued Restricted Shares) is within the limits of this Plan under Section 3.1.

 

	8.	
Granted Securities

 

		8.1.	
 

Options

 

		8.1.1.	
Exercise Price.  The Committee shall determine the exercise price per Ordinary Share ("Option Exercise Price"), subject to applicable law, regulations and guidelines. Unless otherwise provided in the Grant Instrument, the Option Exercise Price shall be paid in NIS.

 

With respect to Cashless Options, the Option Exercise Price per share set forth in the Grant Instrument (as adjusted from time to time) will not represent the actual amount to be paid by the Participant to the Company for said Cashless Options, but will only be used for the purpose of calculating and determining the number of Ordinary Shares to be issued to the Participant as the result of the exercise of a Cashless Option pursuant to the Cashless Formula.

 

		8.1.2.	
Vesting Schedule.  The vesting schedule of Options will be determined by the Committee and the Board of Directors at their sole discretion and will be detailed in the Grant Instrument.

 

The vesting schedule shall commence on the Grant Date and, subject to Section 6 of the Plan, shall elapse upon satisfaction of the conditions set forth in the Grant Instrument. Such conditions may provide for vesting based on (i) length of continuous service, (ii) achievement of specific business targets, (iii) increases in specified indices, (iv) attainment of specified growth rates, or (v) other performance targets, as may be determined by the Committee at its sole discretion.

 

		8.1.3.	
Exercise Period.  The exercise period during which an option may be exercised will be determined by the Committee and will not exceed ten years from the Grant Date or such shorter period set forth in the Grant Instrument, unless shortened pursuant to the terms of this Plan.  At the end of an Exercise Period, all Options granted which were not exercised will expire and be cancelled.

 

		8.1.4.	
Minimum Exercise.  No exercise of Options by a Participant, shall be for an aggregate exercise price of less than $1,000 unless such exercise is for all shares of the Company purchasable upon exercise of the Options held by a Participant (or by the Trustee on his behalf) which have vested as of such date. The partial exercise of an Option shall not cause the expiration, termination or cancellation of the remaining unexercised portion of such Option.

 

		8.1.5.	
Method of Exercise.  An Option, or any part thereof, shall be exercised by (i) the Participant’s signing and delivering to the Company at its principal office, to the attention of its Secretary (or to the Trustee, if the Option is held in trust), an exercise notice (“Notice of Exercise”) in such form and substance as may be prescribed by the Committee from time to time, and (ii) full payment for the Ordinary Shares purchased upon the exercise of an Option. Payment shall be made on the date of delivery of the Notice of Exercise or on a later date, if so determined by the Committee, by the following means: (x) in cash, by certified check, bank cashier's check or wire transfer, or (y) subject to the approval of the Committee, by such other method of payment as the Committee may from time to time authorize.

 

12

 

		8.1.6.	
Cashless Exercise. Notwithstanding the provisions of section 8.1.5, the Board of Directors of the Company may, at its discretion, resolve from time to time to allow Participants to exercise their vested Options during a fixed period either (x) in cash; or (y) through a cashless exercise procedure, pursuant to which each vested Option will entitle its holder to the right to purchase Ordinary Shares (subject to the adjustments described in Section 3.2 or 8.1.1 above), in accordance with the Cashless Formula (“Cashless Options”).

 

During the period when Cashless Exercise is allowed, the Participant may exercise vested Cashless Options by signing and delivering to the Company at its principal office, to the attention of its Secretary (or to the Trustee, if the Option is held in trust), a Notice of Exercise in such form and substance as may be prescribed by the Committee and act in accordance with the provisions of Section 29.

 

The Committee or someone designated by it and/or the Trustee will make all applicable calculations with respect to the Option Exercise Price and determine the amount of Ordinary Shares issued or to be issued upon exercise of the vested Options, all in accordance with the Plan on the date on which the Notice of Exercise has been delivered (as specified in Section 8.1.5, and if such date is not a business day, the first business day following such date) ("Notice Date") including the applicable exchange rate in effect on the Notice Date and such calculation will be binding on the Participants.

 

		8.1.7.	
Exercise Shares. Except for any applicable provisions of the Tax Ordinance or relevant securities laws or the relevant stock exchange rules or specific provisions of this plan, the Ordinary Shares and any other securities issued to a Participant (or the Trustee on his behalf) upon Option exercise and payment of the Option Exercise Price shall be subject to the articles of association of the Company from time to time in force (including, without limitation, provisions relating to voting and dividend) and shall be free and clear of any transfer restrictions; pledges, encumbrances or liens; and other third party rights of any kind.

 

		8.2.	
Restricted Shares

 

		8.2.1	
Restricted Shares Legend on Shares.  Each Participant who is awarded Restricted Shares shall be issued the number of Ordinary Shares specified in the Grant Instrument for such Restricted Shares, and such Ordinary Shares shall be recorded in the Shareholder Registry of the Company and ownership of such Ordinary Shares shall be evidenced by a share certificate of the Company. Such Ordinary Shares shall be registered in the name of the Trustee and held for the benefit of the Participant and shall bear or be subject to an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Shares. The share certificates or other evidence of ownership of the Restricted Shares be held in custody by the Trustee until the restrictions thereon shall have lapsed. The Participant shall deliver to the Committee a share power or share powers, irrevocably endorsed to the Trustee, relating to the Restricted Shares. It is expected that as long as Restricted Shares are held by the Trustee, the Trustee shall not exercise the voting rights of the underlying Ordinary Shares unless requested to do so by the Company. In such event, the Trustee shall vote the underlying Ordinary shares proportionally as the Shareholders vote and if the vote of public shareholders is counted separately, proportionally to the public shareholders vote. Notwithstanding the foregoing, the Company reserves the right, upon recommendation of legal counsel, to request the Participant to exercise his or her voting rights.

 

13

 

		8.2.2	
Restrictions and Conditions.  Restricted Shares shall be subject to the following restrictions and conditions:

 

		(i)	
Subject to the other provisions of this Plan and the terms of the Participant’s Grant Instrument, during such period as may be determined by the Committee commencing on the Grant Date (the “Restriction Period”), the Participant shall not be permitted to sell, transfer, pledge or assign Restricted Shares.

 

		(ii)	
Except as provided in subparagraph (i) above and subject to the terms of this Plan and the Participant’s Grant Instrument, the Participant shall have, with respect to his or her Restricted Shares, all of the rights of a shareholder of the Company, including the right to vote the Ordinary Shares (endorsed to the Trustee as long as the Restricted Shares are held by the Trustee), and the equity rights attached to the Restricted Shares (subject to the provisons of Section 3.2). Subject to the terms of a Participant’s Grant Instrument, certificates or evidence of ownership of Ordinary Shares free of restriction under this Plan shall be delivered to the Participant after, and only after, (i) the Restriction Period for such Restricted Shares shall elapse without return of such Restricted Shares to the Company, or (ii) request by the Participant to the Trustee to do so together with evidence of tax payment with respect to the Restricted Shares. Certificates for the Ordinary Shares forfeited under the provisions of the Plan shall be promptly returned to the Company by the Trustee. Each Participant, by his or her acceptance of Restricted Shares, shall irrevocably grant to the Company a power of attorney to transfer and return any Ordinary Share so forfeited to the Company and agrees to execute any document requested by the Company in connection with such forfeiture and transfer.

 

		(iii)	
The Restriction Period of Restricted Shares shall commence on the Grant Date and, subject to Section 6 of the Plan, shall elapse upon satisfaction of the conditions set forth in the Grant Instrument; such conditions may provide for vesting based on (i) length of continuous service, (ii) achievement of specific business targets, (iii) increases in specified indices, (iv) attainment of specified growth rates, or (v) other performance targets, as may be determined by the Committee at its sole discretion.

 

		8.3.	
Restricted Share Units (“RSUs”)

 

		8.3.1	
Exercise Price.  The Committee shall determine the exercise price per Ordinary Share ("RSU Exercise Price"), subject to applicable law, regulations and guidelines, but unless otherwise determined the RSU Exercise Price shall be zero.

 

		8.3.2	
Vesting Schedule.  The vesting schedule of RSUs will be determined by the Committee and Board at their sole discretion and will be detailed in the Grant Instrument. RSUs may also vest upon satisfaction of performance criteria based on one or more Performance Factors as determined by the Committee and as set forth in the Grant Istrument governing such RSUs.

 

The vesting schedule shall commence on the Grant Date and, subject to Section 6 of the Plan, shall elapse upon satisfaction of the conditions set forth in the Grant Instrument; such conditions may provide for vesting based on (i) length of continuous service, (ii) achievement of specific business targets, (iii) increases in specified indices, (iv) attainment of specified growth rates, or (v) other performance targets, as may be determined by the Committee at its sole discretion.

 

		8.3.3	
Exercise Period.  The exercise period during which an RSU may be exercised will be determined by the Committee (considering, if applicable, inter alia, the provisions of the Compensation Policy) and will not exceed ten years from the Grant Date or such shorter period set forth in the Grant Instrument, unless shortened pursuant to the terms of this Plan. At the end of an Exercise Period, all RSUs granted which were not exercised will expire and be cancelled.

 

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		8.3.4	
Method of Exercise.  An RSU, or any part thereof, shall be exercised by (i) the Participant’s signing and delivering to the Company at its principal office, to the attention of its Secretary (or to the Trustee, if the RSU is held in trust), an exercise notice (“Notice of Exercise”) in such form and substance as may be prescribed by the Committee from time to time, and (ii) full payment for the Ordinary Shares purchased upon the exercise of an RSU. Payment shall be made on the date of delivery of the Notice of Exercise or on a later date, if so determined by the Committee, by the following means: (x) in cash, by certified check, bank cashier's check or wire transfer, or (y) subject to the approval of the Committee, by such other method of payment as the Committee may from time to time authorize.

 

		8.3.5	
Restriction on Transfer and Sale. The Board may determine that the Shares covered by an RSU shall be restricted as to transferability and sale. If so restricted, such Shares shall not be sold, transferred, or disposed of in any manner, and such Shares shall not be pledged or otherwise hypothecated until the restriction expires by its terms. The circumstances under which any such restriction shall expire and any applicable sanction shall be determined by the Board.

 

		8.3.6	
Shareholder Rights. Unless otherwise specified in a Grant instrument, a Participant shall not be entitled to receive dividends, exercise voting rights, or exercise any other rights of a shareholder with respect to RSUs (except that the RSUs will be subject to the adjustment specified in Section 3.2 above) until the RSUs have vested and the Shares in question have been issued by the Company.

 

		8.4.	
Notwithstanding any provisions of this Plan, the Participant may not exercise any Option and/or RSU allocated under this Plan on the record date of any one of the following events: (i) distribution of bonus shares; (ii) rights offering; (iii) distribution of dividend; (iv) consolidation of share capital; (v) split of share capital; (vi) reduction of capital (each of the above will be referred to below as a "Company Event"). In addition, in the event the ex-day (as defined in the TASE's regulations) of a Company Event precedes the record date of such Company Event, the Options and RSUs allocated under this Plan may not be exercised on such ex-day.

 

		8.5.	
Waiver of Grant Rights.  At any time prior to the expiration of any Option or RSU, or, the elapsing of the Restriction Period of any Restricted Share as applicable, a Participant may waive all rights attributable to such Granted Security by delivering a written notice to the Company's principal office, to the attention of its Secretary. Such notice shall be accompanied by the applicable Grant Instrument, shall specify the number of Ordinary Shares subject to or underlying the Granted Security with respect to which the Participant waives his rights and shall be signed by the Participant. Upon receipt by the Company of the notice of waiver with respect to any Granted Security, such Granted Securities shall expire or returned to the Company (as the case may be) with respect to the number of Ordinary Shares specified therein, and an amended Grant Instrument will be issued with respect to any Granted Security (or portion thereof) covered by the Grant Instrument as to which rights attributable thereto were not waived.

 

		8.6.	
Notices.   All notices delivered by a Participant hereunder shall be signed by the Participant and notarized or certified by an attorney, or signed in the presence of (and countersigned by) the Company’s General Counsel or Corporate secretary. Any notice if sent by the Participant shall be irrevocable and shall not be effective until actually received by the Company.

 

	9.	
Termination of Employment or Service

 

		9.1.	
Voluntary Termination by Participant. In the event that a Participant's employment with or service to the Company or any Affiliate (as the case may be) is terminated by the Participant voluntarily for any reason other than Retirement, Disability or death: (i) Options or RSUs granted to such Participant, to the extent vested at the time of termination of employment or service, shall be exercisable for a period of 90 days following either termination or the date upon which the Participant may freely sell Ordinary Shares acquired upon Option or RSU exercise, the later date of the two; (ii) Restricted Shares granted to such Participant, to the extent earned at the time of termination of employment or service, shall be owned by the Participant following termination; and (iii) Granted Securities granted to such Participant, to the extent that they were not vested or earned at the time of termination of employment or service, shall expire at the time of termination (in the case of Options and RSUs) or returned to the Company (in the case of Restricted Shares).

 

15

 

		9.2.	
Termination by the Company or an Affiliate Other Than For Cause.  In the event that a Participant's employment with or service to the Company or any Affiliate (as the case may be) is terminated by the Company or such Affiliate for any reason other than for Cause: (i) Granted Securities granted to such Participant, to the extent vested or earned at the time of termination of employment or service, shall be exercisable for a period of one year following termination or the date upon which the Participant may freely sell Ordinary Shares acquired upon Option or RSU exercise, the later date of the two (in the case of Options and RSU) or be owned by Participant at the time of termination of employment (in the case of Restricted Shares), and (ii) Granted Securities granted to such Participant, to the extent that they were not vested or earned at the time of termination of employment or service, shall expire at such time (in the case of Options and RSUs) or returned to the Company (in the case of Restricted Shares). In the event that the Company decides to terminate the employment or service of a Participant prior to the end of his advanced notice period (if given) and/or his adjustment period (if given), then for the purposes of this plan and with regard to the vesting and earning schedule of the Participant's Granted Securities, the date of termination of employment or service shall remain the end of the advanced noticed period and/or the adjustment period, whichever is relevant. Section 9.2 shall not apply upon occurrence of the events specified in Section 6, whereupon the provisions therein shall govern.

 

		9.3.	
Termination By Reason of Retirement, Death or Disability.  In the event that a Participant's employment with or service to the Company or any Affiliate (as the case may be) terminates by reason of the Retirement, Disability or death of the Participant: (i) Granted Securities granted to such Participant, to the extent vested or earned at the time of termination of employment or service, shall be exercisable during the remainder of their exercise period (in the case of Options or RSUs) or be owned by Participant at the time of termination of employment (in the case of Restricted Shares), and (ii) Granted Securities granted to such Participant, to the extent that they were not vested or earned at the time of termination of employment or service, shall expire at such time (in the case of Options and RSUs) or returned to the Company (in the case of Restricted Shares); provided, however, that a pro rata portion of the Granted Securities that would have become vested or earned on the next anniversary of the Commencement Date (but for such termination of employment or service) shall become vested or earned on the date of such termination of employment or service and shall be exercisable during the remainder of their Exercise Period (in the case of Options and RSUs) or owned by the Participant on the date of such (in the case of Restricted Shares). Such pro rata portion shall be determined by multiplying the number of unvested or unearned Granted Securities scheduled to vest on the next anniversary of the Commencement Date by a fraction, the numerator of which is the number of full and partial months which the Participant has been employed with or gave services to the Company or any Affiliate since the most recent anniversary of the Commencement Date (or, if less than one year has elapsed since the Commencement Date, since the Commencement Date) and the denominator of which is twelve, rounded down to the nearest whole number.

 

		9.4.	
Termination for Cause.  In the event a Participant's employment with or service to the Company or any Affiliate (as the case may be) is terminated for Cause, all outstanding Options and RSUs granted to such Participant (i.e., whether vested or not) shall expire upon the termination of employment or service and all Restricted Shares (i.e., whether earned or not) (unless any of the above was released for the Trustee to the Participant) shall be returned to the Company. A Participant shall be entitled to challenge the Committee’s determination that a termination is for Cause, in which case, the final determination shall be made by a court of competent jurisdiction.

 

		9.5.	
Expiration of Term.  Notwithstanding anything to the contrary in this Section 9, no Option shall be exercisable after the expiration of its Exercise Period.

 

16

 

		9.6.	
Continuation of Employment or Service. Notwithstanding anything to the contrary in this Plan, for the purpose of this Plan, employment by or service to the Company and any Affiliate shall be deemed continuous employment or service, and the move of a Participant as an employee or service provider between the Company and any Affiliate (or among the Affiliates) shall not be deemed termination of employment or service under this Plan.

 

	10.	
Trust Arrangement

 

		10.1.	
Notwithstanding anything to the contrary in this Plan, Approved 102 Grants  which shall be granted under this Plan and any Ordinary Shares allocated or issued upon exercise or earning of such Approved 102 Grants and other rights, including without limitation underlying securities of a rights offering, bonus shares and dividends, shall be allocated or issued to the Trustee and held for the benefit of the Participants for such period of time as required by Section 102 or any regulations, rules or orders or procedures promulgated thereunder (the “Holding Period”).

 

		10.2.	
With respect to any Approved 102 Grant, subject to Section 102 and the Rules, Participants shall not be able to receive from the Trustee, nor shall they be able to sell or dispose of Ordinary Shares or any rights, including bonus shares, before the end of the applicable Holding Period. If a Participant sells or removes the Shares from the Trustee before the end of the applicable Holding Period (“Breach”), the Participant shall pay all applicable taxes imposed on such Breach by Section 7 of the Rules.

 

		10.3.	
Until all taxes have been paid in accordance with Section 7 of the 102 Rules, Granted Securities and Ordinary Shares may neither be transferred to the Participant, nor be sold, transferred, assigned, pledged, encumbered, or otherwise willfully hypothecated or disposed of, and no power of attorney or deed of transfer, whether for immediate or future use may be validly given by the Participant. Notwithstanding the foregoing, the Granted Securities and Ordinary Shares may be validly transferred in a transfer made by will or laws of descent, provided that the transferee thereof shall be subject to the provisions of Section 102 and the Section 102 Rules as would have been applicable to the deceased Participant were he or she to have survived.

 

		10.4.	
Upon receipt of Approved 102 Grant, the Participant will sign an undertaking to release the Trustee from any liability in respect of any action or decision duly taken and bona fide executed in relation with this Plan, or any Approved 102 Grant or Ordinary Share granted to him thereunder.

 

		10.5.	
Notwithstanding anything to the contrary in this Plan, no later than seven days prior to the expiration of the Maximum Trust Period, the Participant shall either (i) instruct the Trustee to sell the Restricted Shares (or a sufficient amount thereof to cover the tax liability relating to the Restricted Shares) and transfer the consideration (minus tax paid) plus remaining Restricted Shares (if any) to the Participant, or (ii) provide the Trustee with evidence of payment of tax relating to the Restricted Shares and instruct the Trustee to transfer the Restricted Shares plus accumulated dividends (if any) and share certificates (if any) to the Participant. In the event that the Trustee does not receive any such notice from the Participant, the Trustee shall follow the process under clause (i) of this paragraph. The foregoing does not prevent the Participant from entering into a separate trust agreement with the Trustee, which will not bind the Company or affect it in any way.

 

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	11.	
Rights as a Shareholder

 

No Participant shall have any rights as a shareholder with respect to any Ordinary Shares or other securities of the Company covered by or relating to any Option or RSU, whether or not exercisable, until the due issuance of such shares by the Company.  Ordinary Shares to be issued under the Plan will be subject to all provisions of the Articles of Association of the Company for the time being in force and, with respect to Restricted Shares, also subject to the terms and conditions of this Plan and the Grant Instrument, and will, subject to the completion of registration (as referenced below), rank pari passu in all respects with the then existing fully paid Ordinary Shares in issue on the date in which the Option or the RSU is duly exercised or, if that date falls on a day when the register of members of the Company is closed, the first day of re-opening of the register of members ("Exercise Date") (with respect to Options and RSUs) or the date of issuance of Restricted Shares (with respect to Restricted Shares) and accordingly will entitle the holders thereof to participate in all dividends or other distributions paid or made on or after the Exercise Date (or, subject to earning of the underlying Restricted Shares, the issuance date thereof) other than any dividend or other distribution previously declared or recommended or resolved to be paid if the record date therefor shall be before the Exercise Date (or issuance date, as the case may be). An Ordinary Share issued upon the exercise of an Option or an RSU shall not carry voting rights until the Participant has been duly entered in the register of members of the Company as the holder thereof. Notwithstanding the foregoing, a Participant awarded Restricted Shares shall (i) endorse the voting rights of the underlying Ordinary Shares to the Trustee, as set in Section 8.2.1 above; and (ii) receive dividends with respect to such shares (which shall be held in trust by the Trustee as long as the respective underlying Restricted Shares are held by the Trustee and subject to release of the underlying shares to the Participant).

 

	12.	
No Special Employment or Service Rights; No Right to Granted Securities

 

Nothing contained in this Plan or any Grant Instrument shall confer upon any Participant any right with respect to the continuation of employment by or service to the Company or any Affiliate or interfere in any way with the right of the Company or any Affiliate, subject to the terms of any separate employment or service agreement, at any time to terminate such employment or service, or to increase or decrease the compensation of or payment to the Participant. The Plan shall not form part of any contract of employment. No person shall have any claim or right to receive any shares hereunder except in accordance with the express terms of this Plan and a Grant Instrument issued to such person.

 

	13.	
Tax Matters

 

		13.1.	
This Plan shall be governed by, and shall be conformed with and interpreted so as to comply with, the requirements of Section 3(i) or Section 102 of the Tax Ordinance (as the case may be) and any regulations, rules, orders, or procedures promulgated thereunder.

 

		13.2.	
Any tax consequences arising from the grant or exercise of any Grant, from the payment for Ordinary Shares covered thereby or from any other event or act (of the Company, and/or its Affiliates, and the Trustee – if applicable - or the Participant), hereunder, shall be borne solely by the Participant. The Company and/or its Affiliates, and/or the Trustee shall withhold taxes according to the requirements under the applicable laws, rules, and regulations, including withholding taxes at source. Furthermore, the Participant shall agree to indemnify the Company and/or its Affiliates and/or the Trustee and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Participant.

 

		13.3.	
The Company and/or, when applicable, the Trustee shall not be required to release any share certificate to a Participant until all required payments have been fully made.

 

		13.4.	
With respect to Unapproved 102 Grants, if the Participant ceases to be employed by the Company or any Affiliate, the Participant shall extend to the Company and/or its Affiliate a security or guarantee for the payment of tax due at the time of sale of Shares, all in accordance with the provisions of Section 102 and the rules, regulation or orders promulgated thereunder.

 

	14.	
Withholding Taxes

 

Whenever cash is to be paid pursuant to a Grant, the Company shall have the right to deduct from such payment an amount sufficient to satisfy any applicable withholding tax requirements related thereto. Whenever Ordinary Shares or any other non-cash assets are to be delivered pursuant to a Grant, the Company shall have the right to require the Participant to remit to the Company in cash an amount sufficient to satisfy any applicable withholding tax requirements related thereto, and if such amount of cash is not timely remitted, to withhold such Ordinary Shares or any other non-cash assets pending payment by the Participant of such amounts.

 

18

 

	15.	
Transfers upon Death; Non-Assignability; Market Stand-Off; Non-Public Information

 

		15.1.	
Death.  Upon the death of a Participant, outstanding Options and RSUs granted to such Participant may be exercised and Restricted Shares may be taken only by a person who shall have acquired the right to the Granted Securities by will or by the laws of descent and distribution. No transfer of a  Granted Security by will or by the laws of descent and distribution shall be effective to bind the Company, unless the Company shall have been furnished with: (a) written notice thereof and with a copy of the relevant section of the will relating to the bequest of the Granted Security, certified by a notary and/or such other evidence as the Committee may deem necessary to establish the validity of the transfer and (b) a written consent by the transferee to pay the Option or RSU Exercise Price upon exercise of the Option or the RSU, if any, and otherwise abide by the terms set forth in this Plan and in the relevant Grant Instrument.

 

		15.2.	
Non-Assignability.

 

		15.2.1.	
Notwithstanding any other provision of the Plan, no Granted Security or any right with respect thereto, purchasable hereunder, whether fully paid or not, shall be assignable, transferable or given as collateral or any right with respect to them given to any third party whatsoever, and during the lifetime of the Participant each and all of such Participant's rights to purchase Ordinary Shares hereunder shall be exercisable or taken only by the Participant. Any such action made directly or indirectly, for an immediate validation or for a future one, shall be void and shall entitle the Company to cancel any Granted Security granted to such Participant to the extent not already exercised or earned (as the case may be).

 

		15.2.2.	
As long as Options, RSUs or Ordinary Shares purchased pursuant thereto or Restricted Shares are held by the Trustee on behalf of the Participant, all rights of the Participant over the shares are personal, cannot be transferred, assigned, pledged or mortgaged, other than by will or laws of descent and distribution.

 

		15.3.	
Market Stand-Off; Non-Public Information.

In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under any applicable law in any jurisdiction, the Participant shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any Granted Securities or other contract for the purchase of, purchase any or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Ordinary Shares acquired under this Plan without the prior written consent of the Company or its underwriters. Such restriction (the “Market Stand-Off”) shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such underwriters. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Granted Securities and/or Ordinary Shares acquired under this Plan shall immediately be subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Ordinary Shares acquired under this Plan until the end of the applicable stand-off period. The Company’s underwriters shall be beneficiaries of the agreement set forth in this Subsection. Furthermore, the Participant’s right to sell Ordinary Shares is subject to Applicable Laws, including in connection with limitation relating to the use of non-public information, if and when applicable.

 

	16.	
Expenses and Receipts

 

The expenses incurred in connection with the administration and implementation of the Plan (excluding any taxes and other liabilities to which the Participant is subject as a result of his or her participation in the Plan) shall be paid by the Company. Any proceeds received by the Company in connection with the exercise or earning of any Granted Security may be used for general corporate purposes.

 

19

	17.	
Term and Termination

 

		17.1.	
Term of Plan.  Granted Securities may be granted at any time after (i) the Effective Date (ii) (for CGG or OIG Options) the Trustee has been approved by the Israeli Income Tax Authorities pursuant to the requirements of the Tax Ordinance, and (iii) any other approvals or consents required by law have been received, until the Termination Date after which period no further Granted Securities may be issued but the provisions of the Plan shall remain in full force and effect to the extent necessary to give effect to the exercise of any Option or RSU granted or exercised prior thereto, to the earning of any Restricted Share granted prior thereto or otherwise as may be required in accordance with the provisions of the Plan.

 

		17.2.	
The Board of Directors of the Company may, at any time and from time to time, terminate the Plan in any respect, subject to any applicable approvals or consents that may be otherwise required by law, regulation or agreement, including by reason of their applicability to its shareholders or otherwise, and provided that no termination of the Plan shall adversely affect the terms of any Granted Security which has already been granted. Upon such termination, no further Granted Securities will be offered under the Plan, but in all other respects the provisions of the Plan shall remain in force to the extent necessary to give effect to the exercise or earnings of any Granted Security (to the extent not already exercised or earned) granted prior thereto or otherwise as may be required in accordance with provisions of the Plan and Granted Securities (to the extent not already exercised or earned) granted prior to such termination shall continue to be valid and exercisable or earnable in accordance with the Plan.

 

	18.	
Amendment of the Plan

 

		18.1.	
Subject to other sections of the Plan, applicable law and the rules and regulations of any stock exchange applicable from time to time to the Company, by reason of their applicability to its shareholders or otherwise, the Plan may be altered or amended in any respect by a resolution of the Board of Directors of the Company.

 

		18.2.	
The terms of the Plan and/or any Granted Security amended pursuant to this section 18 must comply with the applicable rules and/or regulations of any stock exchange applicable from time to time to the Company, by reason of their applicability to its shareholders or otherwise.

 

	19.	
Failure to Comply

 

In addition to the remedies of the Company elsewhere provided for herein, failure by a Participant to comply with any of the terms and conditions of the Plan or the applicable Grant Instrument shall be grounds for the cancellation and forfeiture of such Option or RSUs or the return to the Company of such unearned Restricted Share, in whole or in part, as the Committee, at its absolute discretion, may determine, provided however, that such failure is not remedied by such Participant within ten days after notice by the Company of such failure.

 

	20.	
Required Approvals and Restrictions under the Company's Licenses

 

		20.1.	
The Plan is subject to the receipt, and the terms, of all approvals and permits required under any applicable law or by regulatory authorities having jurisdiction over the Plan the Granted Securities, or the Ordinary Shares issued upon exercise of Options or RSUs or as Restricted Shares, including by reason of their applicability to the Company's shareholders or otherwise.

 

Notwithstanding anything to the contrary in this Plan, if any of the approvals or permits required for the Grant of the Granted Securities or for their exercise or receipt, will not be obtained for any reason, the Participant will not be entitled to exercise or receive said Granted Securities. In addition, the Company (including its office holders, controlling shareholders or related third parties on their behalf) will not be liable towards the Participant and the Participant will not have any claim or allegation for not obtaining said approvals and permits.

 

20

 

		20.2.	
According to licenses granted to the Company for the provision of telecommunications services, a breach thereunder may occur in the event that the holdings of Company's controlling shareholder or the Israeli entities (as defined in said licenses) are lower than the required minimum holdings set in said licenses. Therefore, issuance of Ordinary Shares upon exercise of Options or RSU granted on or after June 18, 2014, may be delayed by the Company until the aforementioned prohibition under said licenses becomes irrelevant.

 

	21.	
Automatic Extension of Exercise Period

 

In the event the Exercise Period ends during a period which was determined by the Company as a lock up period, among other things, because of the existence or potential existence of inside information or the determination of a Market Stand-Off (the "Blackout Period"), then subject to the satisfaction of all other terms of this Plan, the Exercise Period shall be automatically extended, without the need to receive additional decisions of the Committee or the Board of Directors, by such number of days included in the Blackout Period.

 

	22.	
Cash Compensation in lieu of Equity Compensation

 

Notwithstanding any provision of this Plan, in the event the Company is unable at any time (i) to issue Shares resulting from the exercise of any Option or RSU; or (ii) to release any Restricted Share from the Trustee to a Participant, all due to the need to receive any approval or permit required under any applicable law or by any regulatory authority or due to a breach of any approval or permit required by the Company (including a breach of the Company's licenses for the provision of telecommunications services), the Committee and Board of Directors may decide, at their sole discretion, to pay the Participant the financial benefit embedded in his equity compensation in cash (in lieu of exercising the Options or RSUs or release of Restricted Shares to a Participant) pursuant to a calculation decided upon in good faith by the Committee and Board of Directors to reflect the benefit to the Participant granted to him as equity compensation.

 

	23.	
Applicable Law

 

The Plan and all instruments issued thereunder or in connection therewith, shall be governed by, and construed and administered in accordance with the laws of the State of Israel.

 

	24.	
No Rights against the Company or an Affiliate

 

This Plan shall not confer on any person any legal or equitable rights (other than those constituting the Granted Securities themselves) against the Company or any Affiliate directly or indirectly or give rise to any cause of action at law or in equity against the Company or any Affiliate.

 

	25.	
Treatment of Participants

 

There is no obligation for uniformity of treatment of Participants.

 

	26.	
Unfunded Status of Awards

 

The Plan is intended to constitute an "unfunded" plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant pursuant to a Granted Security, nothing contained in the Plan or any Grant Instrument shall give any such Participant any rights that are greater than those of a general unsecured creditor of the Company.

 

	27.	
No Fractional Shares

 

Notwithstanding any provision of this Plan, no fractional shares shall be issued or delivered upon exercise of an Option or an RSU or granted as a Restricted Share and the number of Oridnary Shares granted or issued under this Plan to any Participant shall be rounded down to the nearest whole number.

 

21

 

	28.	
Integration of Section 102 and Tax Assessing Officer’s Permit

 

		28.1.	
With regards to Approved 102 Grants, the provisions of the Plan and/or the Grant Instrument shall be subject to the provisions of Section 102 and the Tax Assessing Officer’s permit, and the said provisions and permit shall be deemed an integral part of the Plan and of the Grant Instrument.

 

		28.2.	
Any provision of Section 102 and/or the said permit which is necessary in order to receive and/or to keep any tax benefit pursuant to Section 102, which is not expressly specified in the Plan or the Grant Instrument, shall be considered binding upon the Company and the Participants.

 

	29.	
Issuance of Ordinary Shares for no Consideration

 

To the extent the Company is required to issue Ordinary Shares under this Plan (whether as a direct issuance or as a result of exercise of Options or RSUs) for no consideration, the Company at its sole and absolution discretion (by way of a resolution of the Committee) may obligate the Participant to pay the nominal value of the Ordinary Shares issued and in such event the Ordinary Shares will not be issued (and the Options and RSUs will not be exercised) prior to the payment of such nominal value.

 

	30.	
Confidentiality

 

The Participant shall not divulge the details of the Plan and/or his holdings to any person except with the prior written permission of the Company, unless so required to do under any statutes or regulations applicable to such Participant.

 

22

 

Annex A

LIST OF AMENDMENTS

Adoption – July 12, 2004

1st Amendment - Board of Directors' approval: March 26, 2008; Shareholders' approval: June 25, 2008

2nd Amendment: Board of Directors' approval: February 23, 2009; Shareholders' approval:  April 22, 2009

3rd Amendment - Board of Directors' approval: effective as of April 14, 2011

4th Amendment - Board of Directors' approval: March 21, 2012; Shareholders' approval: May 8, 2012

5th Amendment - Board of Directors' approval: effective as of June 18, 2014

6th Amendment – Board of Direcotrs' approval: effective as of March 13, 2016

 

23Exhibit
10.1

 

NEITHER
THIS NOTE NOR THE SECURITIES THAT MAY BE ISSUED BY THE COMPANY UPON CONVERSION HEREOF (COLLECTIVELY, THE “SECURITIES”)
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION. NEITHER THE SECURITIES NOR ANY INTEREST OR PARTICIPATION THEREIN MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED: (I) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT, OR APPLICABLE STATE
SECURITIES LAWS; OR (II) IN THE ABSENCE OF AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE ISSUER, THAT REGISTRATION IS NOT
REQUIRED UNDER THE 1933 ACT OR; (III) UNLESS SOLD, TRANSFERRED OR ASSIGNED PURSUANT TO RULE 144 UNDER THE 1933 ACT.

 

12%
CONVERTIBLE PROMISSORY NOTE

 

MATURITY
DATE OF December 20, 2018 *THE “MATURITY DATE”

 

$50,000
December 20, 2017 *THE “ISSUANCE DATE”

 

FOR
VALUE RECEIVED, Liberty Star Uranium & Metals Corp., a Nevada Corporation (the “Company”) doing business in Tucson,
AZ, hereby promises to pay to the order of JSJ Investments Inc., an accredited investor and Texas Corporation, or its assigns
(the “Holder”), the principal amount of Fifty Thousand Dollars ($50,000) (“Note”), on demand of the Holder
at any time on or after December 20, 2018 (the “Maturity Date”), and to pay interest on the unpaid principal balance
hereof at the rate of Twelve Percent (12%) per annum (the “Interest Rate”) commencing on the date hereof (the “Issuance
Date”).

 

	1. 	Payments of Principal and Interest.

 

	 	a.  	Pre-Payment
    and Payment of Principal and Interest. The Company may pay this Note in full, together with any and all accrued and unpaid
    interest, plus any applicable pre-payment premium set forth herein and subject to the terms of this Section 1.a, at any time
    on or prior to the date which occurs 180 days after the Issuance Date hereof (the “Prepayment Date”). In the event
    the Note is not prepaid in full on or before the Prepayment Date, it shall be deemed a “Pre-Payment Default” hereunder.
    Until the Ninetieth (90th) day after the Issuance Date the Company may pay the principal at a cash redemption premium of 135%,
    in addition to outstanding interest, without the Holder’s consent; from the 91st day to the One Hundred and Twentieth
    (120th) day after the Issuance Date, the Company may pay the principal at a cash redemption premium of 140%, in addition to
    outstanding interest, without the Holder’s consent; from the 121st day to the Prepayment Date, the Company may pay the
    principal at a cash redemption premium of 145%, in addition to outstanding interest, without the Holder’s consent. After
    the Prepayment Date up to the Maturity Date this Note shall have a cash redemption premium of 150% of the then outstanding
    principal amount of the Note, plus accrued interest and Default Interest, if any, which may only be paid by the Company upon
    Holder’s prior written consent. At any time on or after the Maturity Date, the Company may repay the then
	 	 	outstanding
    principal plus accrued interest and Default Interest (defined below), if any, to the Holder.
	 	 	 
	 	b.  	Demand
    of Repayment. The principal and interest balance of this Note shall be paid to the Holder hereof on demand by the Holder at
    any time on or after the Maturity Date. The Default Amount (defined herein), if applicable, shall be paid to Holder hereof
    on demand by the Holder at any time such Default Amount becomes due and payable to Holder.
	 	 	 
	 	c.  	Interest.
    This Note shall bear interest (“Interest”) at the rate of Twelve Percent (12%) per annum from the Issuance Date
    until the same is paid, or otherwise converted in accordance with Section 2 below, in full and the Holder, at the Holder’s
    sole discretion, may include any accrued but unpaid Interest in the Conversion Amount. Interest shall commence accruing on
    the Issuance Date, shall be computed on the basis of a 365-day year and the actual number of days elapsed and shall accrue
    daily and, after the Maturity Date, compound quarterly. Upon an Event of Default, as defined in Section 10 below, the Interest
    Rate shall increase to Fifteen Percent (15 %) per annum for so long as the Event of Default is continuing (“Default
    Interest”).
	 	 	 
	 	d.  	General
    Payment Provisions. This Note shall be paid in lawful money of the United States of America by check or wire transfer to such
    account as the Holder may from time to time designate by written notice to the Company in accordance with the provisions of
    this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day
    (as defined below), the same shall instead be due on the next succeeding day which is a Business Day and, in the case of any
    interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall
    not be taken into account for purposes of determining the amount of interest due on such date. For purposes of this Note,
    “Business Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the State
    of Texas are authorized or required by law or executive order to remain closed.

 

    	1

    	 

    

 

	2.
    	Conversion
    of Note. At any time after the Pre-payment date, which is also the Rule 144 restriction date of 180 days from date of execution
    of this note the Conversion Amount (see Paragraph 2(a)(i)) of this Note shall be convertible into shares of the Company’s
    common stock (the “Common Stock”) according to the terms and conditions set forth in this Paragraph 2.
	 	 	 	 
	 	a.	Certain
    Defined Terms. For purposes of this Note, the following terms shall have the following meanings:
	 	 	 	 
	 	 	i.  	“Conversion
    Amount” means the sum of (a) the principal amount of this Note to be converted with respect to which this determination
    is being made, (b) Interest; and (c) Default Interest, if any, if so included at the Holder’s sole discretion.
	 	 	 	 
	 	 	ii.  	“Conversion
    Price” means a 45% discount to the lowest VWAP (Volume Weighted Average Price) during the previous twenty (20) trading
    days to the date of Conversion.
	 	 	 	 
	 	 	iii.  	“Person”
    means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated
    organization and a government or any department or agency thereof.
	 	 	 	 
	 	 	iv.  	“Shares”
    means the Shares of the Common Stock of the Company into which any balance on this Note may be converted upon submission of
    a “Conversion Notice” to the Company substantially in the form attached hereto as Exhibit 1.
	 	 	 	 
	 	b.	Holder’s
    Conversion Rights. At any time after the180 day required by the SEC,, the Holder shall be entitled to convert all of the outstanding
    and unpaid principal and accrued interest of this Note into fully paid and non- assessable shares of Common Stock in accordance
    with the stated Conversion Price. The Holder shall not be entitled to convert on a Conversion Date that amount of the Note
    in connection with that number of shares of Common Stock which would be in excess of the sum of the number of shares of Common
    Stock issuable upon the conversion of the Note with respect to which the determination of this provision is being made on
    a Conversion Date, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding
    shares of Common Stock of the Company on such Conversion Date. For the purposes of the provision to the immediately preceding
    sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934,
    as amended, and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to aggregate conversions
    of 4.99% (“Conversion Limitation 1”). The Holder shall have the authority to determine whether the restriction
    contained in this Section 2(b) will limit any conversion hereunder, and accordingly, the Holder may waive the conversion
    limitation described in this Section 2(b), in whole or in part, upon and effective after 61 days prior written notice
    to the Company to increase or decrease such percentage to any other amount as determined by Holder in its sole discretion
    up to 9.99%. (“Conversion Limitation 2”).
	 	 	 	 
	 	c.  	Fractional
    Shares. The Company shall not issue any fraction of a share of Common Stock upon any conversion; if such issuance would result
    in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock
    up to the nearest whole share except in the event that rounding up would violate the conversion limitation set forth in section
    2(b) above.
	 	 	 	 
	 	d.  	Conversion
    Amount. The Conversion Amount shall be converted pursuant to Rule 144(b)(1)(ii) and Rule 144(d)(1)(ii) as promulgated by the
    Securities and Exchange Commission under the Securities Act of 1933, as amended, into unrestricted shares at the Conversion
    Price.
	 	 	 	 
	 	e.  	Mechanics
    of Conversion. The conversion of this Note shall be conducted in the following manner:
	 	 	 	 
	 	 	i.  	Holder’s
    Conversion Requirements. To convert this Note into shares of Common Stock on any date set forth in the Conversion Notice by
    the Holder (the “Conversion Date”), the Holder shall transmit by email, facsimile or otherwise deliver, for receipt
    on or prior to 11:59 p.m., Eastern Time, on such date or on the next business day, a copy of a fully executed notice of conversion
    in the form attached hereto as Exhibit 1 to the Company.
	 	 	 	 
	 	 	ii.  	Company’s
    Response. Upon receipt by the Company of a copy of a Conversion Notice, the Company shall as soon as practicable, but in no
    event later than one (1) Business Day after receipt of such Conversion Notice, send, via email, facsimile or overnight courier,
    a confirmation of receipt of such Conversion Notice to such Holder indicating that the Company will process such Conversion
    Notice in accordance with the terms herein. Within two (2) Business Days after the date the Conversion Notice is delivered,
    the Company shall have issued and electronically transferred the shares to the Broker indicated in the Conversion Notice;
    should the Company be unable to transfer the shares electronically, it shall, within two (2) Business Days after the date
    the Conversion Notice was delivered, have surrendered to an overnight courier for delivery the next day to the address as
    specified in the Conversion Notice, a certificate, registered in the name of the Holder, for the number of shares of Common
    Stock to which the Holder shall be entitled.
	 	 	 	 
	 	 	iii.  	Record
    Holder. The person or persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall
    be treated for all purposes as the record holder or holders of such shares of Common Stock on the Conversion Date.

 

    	2

    	 

    

 

	 	iv.	 Timely
    Response by Company. Upon receipt by Company of a Conversion Notice, Company shall respond within one business day to Holder
    confirming the details of the Conversion, and provide within two business days the Shares requested in the Conversion Notice.
	 	 	 
	 	v.
    	Liquidated
    Damages for Delinquent Response. If the Company fails to deliver for whatever reason (including any neglect or failure by,
    e.g., the Company, its counsel or the transfer agent) to Holder the Shares as requested in a Conversion Notice within
    five (5)) business days of the Conversion Date, the Company shall be deemed in “Default of Conversion.” Beginning
    on thefifth (5th)) business day after the date of the Conversion Notice, after the Company is deemed in Default of Conversion,
    there shall accrue liquidated damages (the “Conversion Damages”) of $2,000 per day for each day after the Fourth
    business day until delivery of the Shares is made, and such penalty will be added to the Note being converted (under the Company’s
    and Holder’s expectation and understanding that any penalty amounts will tack back to the Issuance Date of the Note).
    The Parties agree that, at the time of drafting of this Note, the Holder’s damages as to the delinquent response are
    incapable or difficult to estimate and that the liquidated damages called for is a reasonable forecast of just compensation.
	 	 	 
	 	vi.	 Liquidated
    Damages for Inability to Issue Shares. If the Company fails to deliver Shares requested by a Conversion Notice due to an exhaustion
    of authorized and issuable common stock such that the Company must increase the number of shares of authorized Common Stock
    before the Shares requested may be issued to the Holder, the discount set forth in the Conversion Price will be increased
    by 5 percentage points (i.e. from 40% to 45%) for the Conversion Notice in question and all future Conversion Notices until
    the outstanding principal and interest of the Note is converted or paid in full. These liquidated damages shall not render
    the penalties prescribed by Paragraph 2(e)(v) void, and shall be applied in conjunction with Paragraph 2(e)(v) unless otherwise
    agreed to in writing by the Holder. The Parties agree that, at the time of drafting of this Note, the Holder’s damages
    as to the inability to issue shares are incapable or difficult to estimate and that the liquidated damages called for is a
    reasonable forecast of just compensation.
	 	 	 
	 	vii.
    	Rescindment
    of Conversion Notice. If: (i) the Company fails to respond to Holder within Two business days from the date of delivery of
    a Conversion Notice confirming the details of the Conversion, (ii) the Company fails to provide the Shares requested in the
    Conversion Notice within three business days from the date of the delivery of the Conversion Notice, (iii) the Holder is unable
    to procure a legal opinion required to have the Shares issued unrestricted and/or deposited to sell for any reason related
    to the Company’s standing with the SEC or FINRA, or any action or inaction by the Company, (iv) the Holder is unable
    to deposit the Shares requested in the Conversion Notice for any reason related to the Company’s standing with the SEC
    or FINRA, or any action or inaction by the Company, (v) if the Holder is informed that the Company does not have the authorized
    and issuable Shares available to satisfy the Conversion, or (vi) if OTC Markets changes the Company’s designation to
    ‘Limited Information’ (Yield), ‘No Information’ (Stop Sign), ‘Caveat Emptor’ (Skull and
    Crossbones), or ‘OTC’, ‘Other OTC’ or ‘Grey Market’ (Exclamation Mark Sign) on the day
    of or any day after the date of the Conversion Notice, the Holder maintains the option and sole discretion to rescind the
    Conversion Notice (“Rescindment”) by delivering a notice of rescindment to the Company in the same manner that
    a Conversion Notice is required to be delivered to the Company pursuant to the terms of this Note.
	 	 	 
	 	viii.
    	Transfer
    Agent Fees and Legal Fees. The issuance of the certificates shall be without charge or expense to the Holder. The Company
    shall pay any and all Transfer Agent fees, legal fees, and advisory fees required for execution of this Note and processing
    of any Notice of Conversion, including but not limited to the cost of obtaining a legal opinion with regard to the Conversion.
    The Holder will deduct $2,000 from the principal payment of the Note solely to cover the cost of obtaining any and all legal
    opinions required to obtain the Shares requested in any given Conversion Notice. These fees do not make provision for or suffice
    to defray any legal fees incurred in collection or enforcement of the Note as described in Paragraph 13.
	 	 	 
	 	ix.
    	Conversion
    Right Unconditional. If the Holder shall provide a Notice of Conversion as provided herein, the Company’s obligations
    to deliver Common Stock shall be absolute and unconditional, irrespective of any claim of setoff, counterclaim, recoupment,
    or alleged breach by the Holder of any obligation to the Company.

 

    	3

    	 

    

 

 

 

	3.
    	Other
Rights of Holder: Reorganization, Reclassification, Consolidation, Merger or Sale. Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company’s assets to another Person or other transaction which
is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities, cash or other assets with respect to or in exchange for Common Stock is referred to herein as “Organic
Change.” Prior to the consummation of any (i) Organic Change or (ii) other Organic Change following which the Company is
not a surviving entity, the Company will secure from the Person purchasing such assets or the successor resulting from such Organic
Change (in each case, the “Acquiring Entity”) a written agreement (in form and substance reasonably satisfactory to
the Holder) to deliver to Holder in exchange for this Note, a security of the Acquiring Entity evidenced by a written instrument
substantially similar in form and substance to this Note, and reasonably satisfactory to the Holder. Prior to the consummation
of any other Organic Change, the Company shall make appropriate provision (in form and substance reasonably satisfactory to the
Holder) to ensure that the Holder will thereafter have the right to acquire and receive in lieu of or in addition to (as the case
may be) the shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of the Note, such shares
of stock, securities, cash or other assets that would have been issued or payable in such Organic Change with respect to or in
exchange for the number of shares of Common Stock which would have been acquirable and receivable upon the conversion of the Note
as of the date of such Organic Change (without taking into account any limitations or restrictions on the convertibility of the
Note set forth in Section 2(b) or otherwise). All provisions of this Note must be included to the satisfaction of Holder in any
new Note created pursuant to this section.

 

	4.
     	Representations
    and Warranties of the Company. In connection with the transactions provided for herein, the Company hereby represents and
    warrants to the Holder the following:
	 	 	 
	 	a.
     	Organization,
    Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under
    the laws of the state of its incorporation and has all requisite corporate power and authority to carry on its business as
    now conducted. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the
    failure to so qualify would have a material adverse effect on its business or properties.
	 	 	 
	 	b.
     	Authorization.
    All corporate action has been taken on the part of the Company, its officers, directors and stockholders necessary for the
    authorization, execution and delivery of this Agreement. The Company has taken all corporate action required to make all of
    the obligations of the Company reflected in the provisions of this Agreement, valid and enforceable obligations. The shares
    of capital stock issuable upon conversion of the Note have been authorized or will be authorized prior to the issuance of
    such shares.
	 	 	 
	 	c.
     	Fiduciary
    Obligations. The Company hereby represents that it intends to use the proceeds of the Note primarily for the operations of
    its business and not for any personal, family, or household purpose. The Company hereby represents that its board of directors,
    in the exercise of its fiduciary duty, has approved the execution of this Agreement based upon a reasonable belief that the
    proceeds of the Note provided for herein is appropriate for the Company after reasonable inquiry concerning its financial
    objectives and financial situation.
	 	 	 
	 	d.
     	Exclusivity.
    Upon the funding of this Convertible Note, the Company shall not sell convertible debt to any other third party for 30 days
    thereafter.
	 	 	 
	 	e.
     	Data
    Request Form. The Company hereby represents and warrants to Holder that all of the information furnished to Holder pursuant
    to the data request form (“DRF”) dated December 20, 2017 is true and correct in all material respects as of the
    date hereof.

 

	5.
    	Reservation
    of Shares. The Company shall at all times, so long as any principal amount of the Note is outstanding, reserve and keep available
    out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Note,
    5.5 times the number of shares of Common Stock as shall at all times be sufficient to effect the conversion of all of the
    principal amount, plus Interest and Default Interest, if any, of the Note then outstanding (“Share Reserve”),
    unless the Holder stipulates otherwise in the “Irrevocable Letter of Instructions to the Transfer Agent.” So long
    as this Note is outstanding, upon written request of the Holder or via telephonic communication, the Company’s Transfer
    Agent shall furnish to the Holder the then-current number of common shares issued and outstanding, the then-current number
    of common shares authorized, the then-current number of unrestricted shares, and the then-current number of shares reserved
    for third parties.
	 	 
	6.
    	Voting
    Rights. The Holder of this Note shall have no voting rights as a note holder, except as required by law, however, upon the
    conversion of any portion of this Note into Common Stock, Holder shall have the same voting rights as all other Common Stock
    holders with respect to such shares of Common Stock then owned by Holder.

 

    	4

    	 

    

 

 

 

	7.
     	Reissuance
    of Note. In the event of a conversion or redemption pursuant to this Note of less than all of the Conversion Amount represented
    by this Note, the Company shall promptly cause to be issued and delivered to the Holder, upon tender by the Holder of the
    Note converted or redeemed, a new note of like tenor representing the remaining principal amount of this Note which has not
    been so converted or redeemed and which is in substantially the same form as this Note, as set forth above.
	 	 
	8.
     	Default
    and Remedies.

 

	 	a.
     	Event
    of Default. For purposes of this Note, an “Event of Default” shall occur upon:
	 	 	 	 
	 	 	i.	the
    Company’s default in the payment of the outstanding principal, Interest or Default Interest of this Note when due, whether
    at Maturity, acceleration or otherwise;
	 	 	 	 
	 	 	ii.	the
    occurrence of a Default of Conversion as set forth in Section 2(e)(v);
	 	 	 	 
	 	 	iii.	the
    failure by the Company for ten (10) days after notice to it to comply with any material provision of this Note not included
    in this Section 10(a);
	 	 	 	 
	 	 	iv.
    	 the
    Company’s Purposeful breach of any covenants, warranties, or representations made by the Company herein;
	 	 	 	 
	 	 	v.    	 any
    of the information in the DRF is false or misleading in any material respect;
	 	 	 	 
	 	 	vi.
    	 the
    cessation of operations of the Company or a material subsidiary;
	 	 	 	 
	 	 	vii.	 the
    Company pursuant to or within the meaning of any Bankruptcy Law; (a) commences a voluntary case; (b) consents to the entry
    of an order for relief against it in an involuntary case; (c) consents to the appointment of a Custodian of it or for all
    or substantially all of its property; (d) makes a general assignment for the benefit of its creditors; or (e) admits in writing
    that it is generally unable to pay its debts as the same become due;
	 	 	 	 
	 	 	viii.	court
    of competent jurisdiction entering an order or decree under any Bankruptcy Law that: (a) is for relief against the Company
    in an involuntary case; (b) appoints a Custodian of the Company or for all or substantially all of its property; or (c) orders
    the liquidation of the Company or any subsidiary, and the order or decree remains unstayed and in effect for thirty (30) days;
	 	 	 	 
	 	 	ix.	the
    Company files a Form 15 with the SEC;
	 	 	 	 
	 	 	x.	the
    Company’s failure to timely file all reports required to be filed by it with the Securities and Exchange Commission;
	 	 	 	 
	 	 	xi.	the
    Company’s failure to timely file all reports required to be filed by it with OTC Markets to remain a “Current
    Information” designated company;
	 	 	 	 
	 	 	xii.	the
    Company’s Common Stock is reported as “No Inside” by OTC Markets at any time while any principal, Interest
    or Default Interest under the Note remains outstanding;
	 	 	 	 
	 	 	xiii.
    	 the
    Company’s failure to maintain the required Share Reserve pursuant to the terms of the Irrevocable Letter of Instructions
    to the Transfer Agent;
	 	 	 	 
	 	 	xiv.	the
    Company directs its transfer agent not to transfer, or delays, impairs, or hinders its transfer agent in transferring or issuing
    (electronically or in certificated form) any certificate for Shares of Common Stock to be issued to the Holder upon conversion
    of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent
    not to remove or impairs, delays and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw and
    stop transfer instructions) on any certificate for any Shares of Common Stock issued to the Holder upon conversion of or otherwise
    pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does
    not intend to honor its obligations pursuant to a Conversion Notice submitted by the Holder) and any such failure shall continue
    uncured for three (3) Business Days after the Conversion Notice has been delivered to the Company by Holder;
	 	 	 	 
	 	 	xv.
	 the
    Company’s failure to remain current in its billing obligations with its transfer agent and such delinquency causes the
    transfer agent to refuse to issue Shares to Holder pursuant to a Conversion Notice;
	 	 	 	 
	 	 	xvi.    	 the
    Company effectuates a reverse split of its Common Stock and fails to provide twenty (20) days prior written notice to Holder
    of its intention to do so; or
	 	 	 	 
	 	 	xvii.
    	 OTC
    Markets changes the Company’s designation to ‘No Information’ (Stop Sign), ‘Caveat Emptor’ (Skull
    and Crossbones), Market’ (Exclamation Mark Sign).
	 	 	 	 
	 	 	xviii. 	“ 
	 	 	 	 
	 	 	xix.
	Altering
                                         the conversion terms of any notes that are currently outstanding. The Term “Bankruptcy
                                         Law” means Title 11, U.S. Code, or any similar Federal or State Law for the relief
                                         of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator
                                         or similar official under any Bankruptcy Law.

         

 

    	5

    	 

    

 

 

 

	 	b.
	Remedies.
    If an Event of Default occurs, the Holder may in its sole discretion determine to request immediate repayment of all or any
    portion of the Note that remains outstanding; at such time the Company will be required to pay the Holder the Default Amount
    (defined herein) in cash. For purposes hereof, the “Default Amount” shall mean: the product of (A) the then outstanding
    principal amount of the Note, plus accrued Interest and Default Interest, divided by (B) the Conversion Price as determined
    on the Issuance Date, multiplied by (C) the highest price at which the Common Stock traded at any time between the Issuance
    Date and the date of the Event of Default. If the Company fails to pay the Default Amount within five (5) Business Days of
    written notice that such amount is due and payable, then Holder shall have the right at any time, so long as the Company remains
    in default (and so long and to the extent there are a sufficient number of authorized but unissued shares), to require the
    Company, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common Stock of
    the Company equal to the Default Amount divided by the Conversion Price then in effect.

 

	9.
     	Vote
    to Change the Terms of this Note. This Note and any provision hereof may only be amended by an instrument in writing signed
    by the Company and the Holder.
	 	 
	10.
     	Lost
    or Stolen Note. Upon receipt by the Company of evidence satisfactory to the Company of the loss, theft, destruction or mutilation
    of this Note, and, in the case of loss, theft or destruction, of an indemnification undertaking by the Holder to the Company
    in a form reasonably acceptable to the Company and, in the case of mutilation, upon surrender and cancellation of the Note,
    the Company shall execute and deliver a new Note of like tenor and date and in substantially the same form as this Note; provided,
    however, the Company shall not be obligated to re-issue a Note if the Holder contemporaneously requests the Company to convert
    such remaining principal amount, plus accrued Interest and Default Interest, if any, into Common Stock.
	 	 
	11.
     	Payment
    of Collection, Enforcement and Other Costs. If: (i) this Note is placed in the hands of an attorney for collection or enforcement
    or is collected or enforced through any legal proceeding; or (ii) an attorney is retained to represent the Holder of this
    Note in any bankruptcy, reorganization, receivership or other proceedings affecting creditors’ rights and involving
    a claim under this Note, then the Company shall pay to the Holder all reasonable attorneys’ fees, costs and expenses
    incurred in connection therewith, in addition to all other amounts due hereunder.
	 	 
	12.
     	Cancellation.
    After all principal, accrued Interest and Default Interest, if any, at any time owed on this Note has been paid in full or
    otherwise converted in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation
    and shall not be reissued.
	 	 
	13.
     	Waiver
    of Notice. To the extent permitted by law, the Company hereby waives demand, notice, protest and all other demands and notices
    in connection with the delivery, acceptance, performance, default or enforcement of this Note.
	 	 
	14.
     	Governing
    Law. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity,
    interpretation and performance of this Note shall be governed by, the laws of the State of Texas, without giving effect to
    provisions thereof regarding conflict of laws. Each party hereby irrevocably submits to the non-exclusive jurisdiction of
    the state and federal courts sitting in Texas for the adjudication of any dispute hereunder or in connection herewith or with
    any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit,
    action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action
    or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party
    hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding
    by sending, through certified mail or overnight courier, a copy thereof to such party at the address for such notices to it
    under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.
    Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH
    PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
    DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
	 	 
	15.
    	 Remedies,
    Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative
    and in addition to all other remedies available under this Note, at law or in equity (including a decree of specific performance
    and/or other injunctive relief), and no remedy contained herein shall be deemed a waiver of compliance with the provisions
    giving rise to such remedy and nothing herein shall limit the Holder’s right to pursue actual damages for any failure
    by the Company to comply with the terms of this Note. The Company covenants to the Holder that there shall be no characterization
    concerning this instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect
    to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder thereof
    and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance
    thereof).
	 	 
	16.
     	Specific
    Shall Not Limit General; Construction. No specific provision contained in this Note shall limit or modify any more general
    provision contained herein. This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be
    construed against any person as the drafter hereof.

 

    	6

    	 

    

 

 

 

	17.	 Failure
    or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
    shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
    further exercise thereof or of any other right, power or privilege.
	 	 
	18.
    	Partial
    Payment. In the event of partial payment by the Holder, the principal sum due to the Holder shall be prorated based on the
    consideration actually paid by the Holder such that the Company is only required to repay the amount funded and the Company
    is not required to repay any unfunded portion of this Note, with the exception of any OID contemplated herein.
	 	 
	19.
    	Entire
    Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the
    subjects herein. None of the terms of this Agreement can be waived or modified, except by an express agreement signed by all
    Parties hereto.
	 	 
	20.
    	Additional
    Representations and Warranties. The Company expressly acknowledges that the Holder, including but not limited to its officer,
    directors, employees, agents, and affiliates, have not made any representation or warranty to it outside the terms of this
    Agreement. The Company further acknowledges that there have been no representations or warranties about future financing or
    subsequent transactions between the parties.
	 	 
	21.
    	Notices.
    All notices and other communications given or made to the Company pursuant hereto shall be in writing (including facsimile
    or similar electronic transmissions) and shall be deemed effectively given: (i) upon personal delivery, (ii) when sent by
    electronic mail or facsimile, as deemed received by the close of business on the date sent, (iii) five (5) days after having
    been sent by registered or certified mail, return receipt requested, postage prepaid or (iv) one (1) day after deposit with
    a nationally recognized overnight courier, specifying next day delivery. All communications shall be sent either by email,
    or fax, or to the email address or facsimile number set forth on the signature page hereto. The physical address, email address,
    and phone number provided on the signature page hereto shall be considered valid pursuant to the above stipulations; should
    the Company’s contact information change from that listed on the signature page, it is incumbent on the Company to inform
    the Holder.
	 	 
	22.
    	Severability.
    If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded
    from this Agreement and the rest of the Agreement shall be enforceable in accordance with its terms.
	 	 
	23.
    	Usury.
    If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing
    usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest
    permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it will not seek to
    claim or take advantage of any law that would prohibit or forgive the Company from paying all or a portion of the principal,
    Interest or Default Interest on this Note.
	 	 
	24.
    	Successors
    and Assigns. This Agreement shall be binding upon all successors and assigns hereto.

 

—
SIGNATURE PAGE TO FOLLOW —

 

    	7

    	 

    

 

 

 

IN
WITNESS WHEREOF, the Company has caused this Note to be signed by its CEO, on and as of the Issuance Date.

 

COMPANY:
Liberty Star Uranium & Metals Corp.

 

	Signature:	/s/
    James A. Briscoe	 
	By:	James
    A. Briscoe	 
	Title:
     	CEO,
    CFO & Chief Geologist 	 
	Address:
     	5610
    E. Sutler Lane	 
	 	 	 
	 	 	 
	Email:
    	JBriscoe@libertystaruranium.com	 
	Phone:
    	520-907-9492	 

 

LIBERTY
STAR URANIUM & METALS CORP.

 

	JSJ
    Investments Inc.	 
	 	 
	Signature:	 
	 	 
	/s/Sameer
    Hirji	 

 

Sameer
Hirji, President JSJ Investments Inc.

10830
North Central Expressway, Suite 152

Dallas
TX 75231

888-503-2599

 

    	 

    	 

    

 

 

 

Exhibit
1

Conversion
Notice

 

Reference
is made to the 12% Convertible Note issued by Liberty Star Uranium & Metals Corp. (the “Note”), dated December
20, 2017 in the principal amount of $50,000 with 12% interest. This note currently holds a principal balance of $50,000. The features
of conversion stipulate a Conversion Price equal to a 45% discount to the lowest VWAP (Volume Weighted Average Price) during the
previous twenty (20) trading days to the date of Conversion.

 

In
accordance with and pursuant to the Note, the undersigned hereby elects to convert $ of the principal/interest balance
of the Note, indicated below into shares of Common Stock (the “Common Stock”), of the Company, by tendering the Note
specified as of the date specified below.

 

Date
of Conversion: __________

 

Please
confirm the following information:

Conversion Amount: $ ________________

Conversion
Price: $______________(________% discount from $__________________ )

Number
of Common Stock to be issued: ___________________________________________________________

Current
Issued/Outstanding: ___________________________________________________________________

 

If
the Issuer is DWAC eligible, please issue the Common Stock into which the Note is being converted in the name of the Holder of
the Note and transfer the shares electronically to:

 

[BROKER
INFORMATION]

 

	Holder
    

Authorization: JSJ Investments Inc.	 
	10830
    North Central Expressway, Suite 152  	*Do
    not send certificates to this address
	Dallas,
    TX 75231	 
	888-503-2599	 
	Tax
    ID: 20-2122354	 

 

Sameer
Hirji, President

 

[DATE]

 

[CONTINUED
ON NEXT PAGE]

 

    	 

    	 

    

 

 

 

PLEASE
BE ADVISED, pursuant to Section 2(e)(ii) of the Note, “Upon receipt by the Company of a copy of the Conversion Notice, the
Company shall as soon as practicable, but in no event later than one (1) Business Day after receipt of such Conversion Notice,
SEND, VIA EMAIL, FACSIMILE OR OVERNIGHT COURIER, A CONFIRMATION OF RECEIPT OF SUCH CONVERSION NOTICE TO SUCH HOLDER INDICATING
THAT THE COMPANY WILL PROCESS SUCH CONVERSION NOTICE in accordance with the terms herein. Within two (2) Business Days after the
date of the Conversion Confirmation, the Company shall have issued and electronically transferred the shares to the Broker indicated
in the Conversion Notice; should the Company be unable to transfer the shares electronically, they shall, within two (2) Business
Days after the date of the Conversion Confirmation, have surrendered to FedEx for delivery the next day to the address as specified
in the Conversion Notice, a certificate, registered in the name of the Holder, for the number of shares of Common Stock to which
the Holder shall be entitled.”

 

Signature:

 

	 	 
	James
    A. Briscoe	 
	CEO	 
	Liberty
    Star Uranium & Metals Corp.

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