Document:

getg_ex102.htm

Exhibit 10.2

 

EXECUTION COPY

 

FORM OF REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of March __, 2011, by and between GREEN EARTH TECHNOLOGIES, INC., a Delaware corporation, (the "Company"), and LINCOLN PARK CAPITAL FUND, LLC, an Illinois limited liability company (the “Buyer”).  Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement by and between the parties hereto, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the "Purchase Agreement").

WHEREAS:

The Company has agreed, upon the terms and subject to the conditions of the Purchase Agreement, to issue to the Buyer up to Fifteen Million Dollars ($15,000,000) of Purchase Shares and to induce the Buyer to enter into the Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the "Securities Act"), and applicable state securities laws.

NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Buyer hereby agree as follows:

1.           DEFINITIONS.

As used in this Agreement, the following terms shall have the following meanings:

a.           "Investor" means the Buyer.

b.           "Person" means any person or entity including but not limited to any corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency.

c.           "Register," "registered," and "registration" refer to a registration effected by preparing and filing one or more registration statements of the Company in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any successor rule providing for offering securities on a continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such registration statement(s) by the United States Securities and Exchange Commission (the "SEC").

d.           "Registrable Securities" means the Purchase Shares which have been, or which may from time to time be, issued or issuable to the Investor upon purchases of the Available Amount under the Purchase Agreement (without regard to any limitation or restriction on purchases, and including without limitation the Initial Purchase Shares) and the Commitment Shares issued or issuable to the Investor and any shares of capital stock issued or issuable with respect to the Purchase Shares and the Commitment Shares as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, without regard to any limitation on purchases under the Purchase Agreement.

e.           "Registration Statement" means the registration statement of the Company covering only the sale of the Registrable Securities.

 

  

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2.           REGISTRATION.

a.           Mandatory Registration.  The Company shall within thirty (30) Business Days from the date hereof file with the SEC the Registration Statement.  The Registration Statement shall register only the Registrable Securities and no other securities of the Company.  The Investor and its counsel shall have a reasonable opportunity to review and comment upon such registration statement or amendment to such registration statement and any related prospectus prior to its filing with the SEC.  Investor shall furnish all information reasonably requested by the Company for inclusion therein.  The Company shall use its best efforts to have the Registration Statement or amendment declared effective by the SEC at the earliest possible date.  The Company shall use reasonable best efforts to keep the Registration Statement effective pursuant to Rule 415 promulgated under the Securities Act and available for sales of all of the Registrable Securities at all times until the earlier of (i) the date as of which the Investor may sell all of the Registrable Securities without restriction pursuant to the last sentence of Rule 144(b)(1)(i) promulgated under the Securities Act (or successor thereto) or (ii) the date on which (A) the Investor shall have sold all the Registrable Securities and no Available Amount remains under the Purchase Agreement (the "Registration Period").  The Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading.

b.           Rule 424 Prospectus.  The Company shall, as required by applicable securities regulations, from time to time file with the SEC, pursuant to Rule 424 promulgated under the Securities Act, the prospectus and prospectus supplements, if any, to be used in connection with sales of the Registrable Securities under the Registration Statement.  The Investor and its counsel shall have a reasonable opportunity to review and comment upon such prospectus prior to its filing with the SEC.  The Investor shall use its reasonable best efforts to comment upon such prospectus within one (1) Business Day from the date the Investor receives the final version of such prospectus.

c.           Sufficient Number of Shares Registered.  In the event the number of shares available under the Registration Statement is insufficient to cover all of the Registrable Securities, the Company shall amend the Registration Statement or file a new registration statement (a ”New Registration Statement”), so as to cover all of such Registrable Securities as soon as practicable, but in any event not later than twenty (20) Business Days after the necessity therefor arises.  The Company shall use it reasonable best efforts to cause such amendment and/or New Registration Statement to become effective as soon as practicable following the filing thereof.

3.           RELATED OBLIGATIONS.

With respect to the Registration Statement and whenever any Registrable Securities are to be registered pursuant to Section 2(b) including on any New Registration Statement, the Company shall use its reasonable best efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:

a.           The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to any registration statement and the prospectus used in connection with such registration statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may be necessary to keep the Registration Statement or any New Registration Statement effective at all times during the Registration Period, and, during such period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement or any New Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such registration statement.

 

  

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b.           The Company shall permit the Investor to review and comment upon the Registration Statement or any New Registration Statement and all amendments and supplements thereto at least two (2) Business Days prior to their filing with the SEC, and not file any document in a form to which Investor reasonably objects.  The Investor shall use its reasonable best efforts to comment upon the Registration Statement or any New Registration Statement and any amendments or supplements thereto within two (2) Business Days from the date the Investor receives the final version  thereof.  The Company shall furnish to the Investor, without charge any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to the Registration Statement or any New Registration Statement.

c.           Upon request of the Investor, the Company shall furnish to the Investor, (i) promptly after the same is prepared and filed with the SEC, at least one copy of such registration statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits, (ii) upon the effectiveness of any registration statement, a copy of the prospectus included in such registration statement and all amendments and supplements thereto (or such other number of copies as the Investor may reasonably request) and (iii) such other documents, including copies of any preliminary or final prospectus, as the Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by the Investor.

d.           The Company shall use reasonable best efforts to (i) register and qualify the Registrable Securities covered by a registration statement under such other securities or "blue sky" laws of such jurisdictions in the United States as the Investor reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction.  The Company shall promptly notify the Investor who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or "blue sky" laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

e.           As promptly as practicable after becoming aware of such event or facts, the Company shall notify the Investor in writing of the happening of any event or existence of such facts as a result of which the prospectus included in any registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and promptly prepare a supplement or amendment to such registration statement to correct such untrue statement or omission, and deliver a copy of such supplement or amendment to the Investor (or such other number of copies as the Investor may reasonably request).  The Company shall also promptly notify the Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when a registration statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to the Investor by facsimile on the same day of such effectiveness and by overnight mail), (ii) of any request by the SEC for amendments or supplements to any registration statement or related prospectus or related information, and (iii) of the Company's reasonable determination that a post-effective amendment to a registration statement would be appropriate.

 

  

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f.           The Company shall use its reasonable best efforts to prevent the issuance of any stop order or other suspension of effectiveness of any registration statement, or the suspension of the qualification of any Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and to notify the Investor of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

g.           The Company shall (i) cause all the Registrable Securities to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (ii) secure designation and quotation of all the Registrable Securities on the Principal Market.  The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section.

h.           The Company shall cooperate with the Investor to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to any registration statement and enable such certificates to be in such denominations or amounts as the Investor may reasonably request and registered in such names as the Investor may request.

i.           The Company shall at all times provide a transfer agent and registrar with respect to its Common Stock.

j.           If reasonably requested by the Investor, the Company shall (i) immediately incorporate in a prospectus supplement or post-effective amendment such information as the Investor believes should be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities; (ii) make all required filings of such prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any registration statement.

k.           The Company shall use its reasonable best efforts to cause the Registrable Securities covered by any registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.

l.           Within one (1) Business Day after any registration statement which includes the Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to the Investor) confirmation that such registration statement has been declared effective by the SEC in the form attached hereto as Exhibit A.  Thereafter, if requested by the Buyer at any time, the Company shall require its counsel to deliver to the Buyer a written confirmation whether or not the effectiveness of such registration statement has lapsed at any time for any reason (including, without limitation, the issuance of a stop order) and whether or not the registration statement is current and available to the Buyer for sale of all of the Registrable Securities.

m.           The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investor of Registrable Securities pursuant to any registration statement.

 

  

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4.           OBLIGATIONS OF THE INVESTOR.

a.           The Company shall notify the Investor in writing of the information the Company reasonably requires from the Investor in connection with any registration statement hereunder.  The Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.

b.           The Investor agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any registration statement hereunder.

c.           The Investor agrees that, upon receipt of any notice from the Company of the happening of any event or existence of facts of the kind described in Section 3(f) or the first sentence of 3(e), the Investor will immediately discontinue disposition of Registrable Securities pursuant to any registration statement(s) covering such Registrable Securities until the Investor's receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(f) or the first sentence of 3(e).  Notwithstanding anything to the contrary, the Company shall cause its transfer agent to promptly deliver shares of Common Stock without any restrictive legend in accordance with the terms of the Purchase Agreement in connection with any sale of Registrable Securities with respect to which an Investor has entered into a contract for sale prior to the Investor's receipt of a notice from the Company of the happening of any event of the kind described in Section 3(f) or the first sentence of Section 3(e) and for which the Investor has not yet settled.

5.           EXPENSES OF REGISTRATION.

All reasonable expenses, other than sales or brokerage commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements of counsel for the Company, shall be paid by the Company.

 

  

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6.           INDEMNIFICATION.

a.           To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend the Investor, each Person, if any, who controls the Investor and the members, directors, officers, partners, employees, agents, representatives of each Person who controls the Investor, or the Investor, within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act") (each, an "Indemnified Person"), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, attorneys' fees, amounts paid in settlement or expenses, joint or several, (collectively, "Claims") incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto ("Indemnified Damages"), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in the Registration Statement, any New Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other "blue sky" laws of any jurisdiction in which Registrable Securities are offered ("Blue Sky Filing"), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to the Registration Statement or any New Registration Statement  or (iv) any material violation by the Company of this Agreement (the matters in the foregoing clauses (i) through (iv) being, collectively, "Violations").  The Company shall reimburse each Indemnified Person promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim.  Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information about the Investor furnished in writing or electronically to the Company by such Indemnified Person expressly for use in connection with the preparation of the Registration Statement, any New Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(c) or Section 3(e); (ii) with respect to any superceded prospectus, shall not inure to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to the benefit of any person controlling such person) if the untrue statement or omission of material fact contained in the superceded prospectus was corrected in the revised prospectus, as then amended or supplemented, if such revised prospectus was timely made available by the Company pursuant to Section 3(c) or Section 3(e), and the Indemnified Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a violation and such Indemnified Person, notwithstanding such advice, used it; (iii) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause to be delivered the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section 3(c) or Section 3(e); and (iv) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investor pursuant to Section 9.

 

  

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b.           In connection with the Registration Statement or any New Registration Statement, the Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement or any New Registration Statement, each Person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (collectively and together with an Indemnified Person, an "Indemnified Party"), against any Claim or Indemnified Damages to which any of them may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information about the Investor set forth on Exhibit B attached hereto and furnished to the Company by the Investor expressly for use in connection with such registration statement; and, subject to Section 6(d), the Investor will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Investor, which consent shall not be unreasonably withheld; provided, further, however, that the Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to the Investor as a result of the sale of Registrable Securities pursuant to such registration statement.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investor pursuant to Section 9.

c.           Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding  The Indemnified Party or Indemnified Person shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or claim.  The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times as to the status of the defense or any settlement negotiations with respect thereto.  No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such claim or litigation.  Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

 

  

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d.           The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.

e.           The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

7.           CONTRIBUTION.

To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.

8.           REPORTS AND DISCLOSURE UNDER THE SECURITIES ACTS.

With a view to making available to the Investor the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the Investor to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees, at the Company’s sole expense, to:

a.           make and keep public information available, as those terms are understood and defined in Rule 144;

b.           file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

c.           furnish to the Investor so long as the Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting and or disclosure provisions of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without registration.

d.           deliver all such legal opinions, consents, certificates, resolutions and instructions to the Company’s Transfer Agent as may be requested from time to time by the Investor and otherwise fully cooperate with Investor and Investor’s broker to effect such sale of securities pursuant to Rule 144.

The Company agrees that damages may be an inadequate remedy for any breach of the terms and provisions of this Section 8 and that Investor shall, whether or not it is pursuing any remedies at law, be entitled to equitable relief in the form of a preliminary or permanent injunctions, without having to post any bond or other security, upon any breach or threatened breach of any such terms or provisions.

9.          ASSIGNMENT OF REGISTRATION RIGHTS.

The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor.  The Investor may not assign its rights under this Agreement.

 

  

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10.        AMENDMENT OF REGISTRATION RIGHTS.

Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Investor.

11.        MISCELLANEOUS.

a.           A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities.  If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities.

b.           Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

If to the Company:

GREEN EARTH TECHNOLOGIES, INC.

 

10 Bank Street, Suite 680

White Plains, NY 10606

Telephone:    877-438-4761

Facsimile:       877-438-3293

Attention:      Greg Adams

With a copy to:

 

Morse, Zelnick, Rose &Lander, LLP

405 Park Avenue, Suite 1401

New York, NY 10022

Telephone:    877-438-4761

Facsimile:       877-438-3293

Attention:      Joel J. Goldschmidt, Esq.

If to the Investor:

 

Lincoln Park Capital Fund, LLC

440 N. Wells, Suite 620

Chicago, IL 60654

Telephone:    312-822-9300

Facsimile:       312-822-9301

Attention:      Josh Scheinfeld/Jonathan Cope

 

  

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or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change.  Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

c.           Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.

d.           The corporate laws of the State of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders.  All other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Illinois.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting the City of Chicago, 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 mailing 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.  If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.  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.

e.           This Agreement, and the Purchase  Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein.  This Agreement and the Purchase Agreement supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof.

f.           Subject to the requirements of Section 9, this Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto.

g.           The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

h.           This Agreement may be executed in identical counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement.  This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission or by e-mail in a “.pdf” format data file of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

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

 

j.           The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.

k.           This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of day and year first above written.

 

	 	THE COMPANY:	 
	 	 	 
	 	GREEN EARTH TECHNOLOGIES, INC.	 
	 	 	 
	 	 By:	 /s/	 
	 	 	Name: 

Title: 

	 
	 	 	 	 
	 	BUYER:	 
	 	 	 
	 	
LINCOLN PARK CAPITAL FUND, LLC 

BY: LINCOLN PARK CAPITAL, LLC 

BY: ROCKLEDGE CAPITAL CORPORATION

	 
	 	 	 	 
	 	 By:	 /s/	 
	 	 	Name: Josh Scheinfeld 

Title: President

	 

 

 

 

11EXHIBIT  4.1

                             HIGH PLAINS GAS, INC.
               2011 EMPLOYEES' AND CONSULTANTS STOCK OPTION PLAN

1.     Purpose  of  the  2011  Stock  Option  Plan.

     The  purpose  of  the  Plan is to enable the Company to attract, retain and
motivate  its employees and qualified consultants by providing for or increasing
the  proprietary  interests  of  such employees in the Company through increased
stock  ownership.

     The  Plan  provides for options which either (i) qualify as incentive stock
options  ("Incentive Options") within the meaning of that term in Section 422 of
the  Internal  Revenue Code of 1986, as amended, or (ii) do not so qualify under
Section  422 of the Code ("Nonstatutory Options") (collectively "Options").  Any
Option  granted  under this Plan will be clearly identified at the time of grant
as  to whether it is intended to be either an Incentive Option or a Nonstatutory
Option.

2.     Definitions.

     The following terms, when appearing in the text of this Plan in capitalized
form,  will  have  the  meanings  set  out  below:

     (a)      "Board"  means  the  Board  of  Directors  of  the  Company.

     (b     "Code"  means  the  Internal  Revenue Code of 1986, as heretofore or
hereafter  amended.

     (c)     "Committee"  means the committee appointed by the Board pursuant to
Section  3  below.

     (d)     "Company"  means High Plains Gas, Inc. or any parent or "subsidiary
corporation,"  as  that  term is defined by Section 424(f) of the Code, thereof,
unless  the  context  requires  it  to  be  limited  to  High  Plains  Gas, Inc

     (e)     "Consultants"  means the class of persons consisting of individuals
engaged  by  the  Company  by  contract  or otherwise to provide services to the
Company  as  the  Committee  shall  so  determine.

     (f)     "Disabled  Grantee"  means  a  Grantee  who  is disabled within the
meaning  of  Section  422(c)(6)  of  the  Code.

     (g)     "Employees"  means the class of employees consisting of individuals
regularly  employed  by  the  Company  on  a  full-time  salaried  basis who are
identified  as  key employees, or such other employees as the Committee shall so
determine.

     (h)     "Executive Officer" means those individuals who, on the last day of
the  taxable year at issue:  (i) served as the Company's chief executive officer
or  was acting in a similar capacity, regardless of compensation level; and (ii)
the  four  most  highly  compensated  executive  officers  (other than the chief
executive  officer)  all  as  determined  pursuant  to  Treasury  Regulation
1.162-27(c)(2).

     (i)     "Fair  Market Value" means, with respect to the common stock of the
Company,  the  price  at which the stock would change hands between an informed,
able  and  willing  buyer  and seller, neither of which is under a compulsion to
enter  into the transaction.  Fair Market Value will be determined in good faith
by  the Committee in accordance with a valuation method which is consistent with
the  guidelines  set  forth  in  Treasury  Regulation  1.421-7  (e)  (2)  or any
applicable  regulations  issued  pursuant  to  Section  422(a)  of  the

<PAGE>
Code.  Fair  Market  Value  will be determined without regard to any restriction
other  than  a  restriction  which,  by  its  terms,  will  never  lapse.

     (j)     "Grantee"  means an eligible Employee or Consultant under this Plan
who  has  been  granted  an  Option.

     (k)     "Incentive  Option"  means an Option that qualifies for the benefit
described  in  Section  421  of  the  Code,  by  virtue  of  compliance with the
provisions  of  Section  422  of  the  Code.

     (l)     "Nonstatutory  Option"  means  an  Option  that is not an Incentive
Option.

     (m)     "Option"  means either an Incentive Option or a Nonstatutory Option
granted  under  this  Plan.

     (n)     "Option  Agreement"  means  the  agreement entered into between the
Company and an individual Grantee and specifying the terms and conditions of the
Option  granted  to  the  Grantee,  which  terms  and  conditions will recite or
incorporate by reference:  (i) the provisions of this Plan which are not subject
to  variation; and (ii) the variable terms and conditions of each Option granted
hereunder  which  will  apply  to  that  Grantee.

     (o)     "Optionee"  means  a  Grantee,  and,  under  the  appropriate
circumstances, his guardian,          representative, heir, distributee, legatee
or  successor  in  interest,  including  any  transferee.

     (p)     "Plan"  means  this  2011  Employees' and Consultants' Stock Option
Plan,  as  the  same  may  from  time  to  time  be  amended.

     (q)     "Stock"  means  the  Company's  common  stock.

3.   Administration  of  the  Plan.

     (a)     Committee  Membership.  The  Plan  shall  be  administered  by  a
committee appointed by the Board, to be known as the Compensation Committee (the
"Committee").  The  Committee  shall  be  not  less  than two members and to the
extent  possible shall be comprised solely of Non-employee Directors, as defined
by  Rule  16b-3(b)(3)(i) of the Securities Exchange Act of 1934 ("1934 Act"), or
any  successor definition adopted by the Securities and Exchange Commission, and
who  shall  each  also  qualify  as  an Outside Director for purposes of Section
162(m)  of  the  Code.  Any  vacancy occurring on the Committee may be filled by
appointment  by  the  Board.  The  Board at its discretion may from time to time
appoint  members  to  the  Committee  in  substitution  of  members  previously
appointed,  may  remove members of the Committee and may fill vacancies, however
caused,  in  the Committee.  Given the current makeup of the Board of Directors,
the  Committee  shall  initially  consist  of  Mark Hettinger and Joe Hettinger.

      (b)     Committee  Procedures.  The  Committee  shall  select  one  of its
members  as  chairman and shall hold meetings at such times and places as it may
determine.  A  quorum  of  the  Committee  shall  consist  of  a majority of its
members,  and the Committee may act by vote of a majority of its members present
at a meeting at which there is a quorum, or without a meeting by written consent
signed  by  all  members  of  the  Committee.  If  any  powers  of the Committee
hereunder  are  limited or denied by the Board or under applicable law, the same
powers  may  be  exercised  by  the  Board.

     (c)     Committee  Powers  and  Responsibilities.  The  Committee  will
interpret  the  Plan,  prescribe,  amend  and  rescind  any rules or regulations
necessary or appropriate for the administration of the Plan, and make such other
determinations  and  take  such  other  actions it deems necessary or advisable,
except  as  otherwise  expressly  reserved  for  the  Board.  Subject  to  the
limitations  imposed  by  the Board or under applicable law and the terms of the
Plan,  the  Committee  may  periodically  determine  which  Employees  and/or

<PAGE>
Consultants  should receive Options under the Plan, whether the options shall be
Incentive  Options or Nonstatutory Options, the number of shares covered by such
Options,  the  per  share purchase price for such shares, and the terms thereof,
including  but  not  limited  to transferability of such Options, and shall have
full  power  to grant such Options.  In making its determinations, the Committee
shall  consider,  among  other relevant factors, the importance of the duties of
the  Grantee  to the Company, his or her experience with the Company, and his or
her  future  value  to  the  Company.  All  decisions, interpretations and other
actions  of  the Committee shall be final and binding on all Grantees, Optionees
and  all persons deriving their rights from a Grantee or Optionee.  No member of
the  Board or the Committee shall be liable for any action taken or failed to be
taken  in  good  faith  or  for  any  determination  made  pursuant to the Plan.

4.     Stock  Subject  to  Plan.

     This  Plan authorizes the Committee to grant Options to Employees up to the
aggregate  amount  of 12,000,000 shares of Stock, subject to eligibility and any
limitations  specified  herein.  Adjustment  in  the  shares subject to the Plan
shall  be made as provided in Section 9.  Any shares covered by an Option which,
for  any  reason, expires, terminates or is canceled may be reoptioned under the
Plan.

5.     Eligibility

     (a)     General Rule. All Employees and Consultants defined in Section 2(e)
and  2(g)  shall  be  eligible.

     (b)     Ten  Percent Stockholders.  An Employee or Consultant who owns more
than  ten  percent  (10%)  of  the total combined voting power of all classes of
outstanding  Stock  shall  not  be  eligible  for designation as a Grantee of an
Incentive  Option  unless (i) the exercise price for each share of Stock subject
to  such Incentive Option is at least one hundred ten percent (110%) of the Fair
Market  Value  of a share of Stock on the date of grant, and (ii) such Incentive
Option,  by its terms, is not exercisable after the expiration of five (5) years
from  the  date  of  grant.

     (c)     Attribution  Rules.  For  purposes  of  Subsection  (b)  above,  in
determining  stock  ownership,  an Employee or Consultant shall be deemed to own
the  Stock  owned,  directly  or  indirectly,  by  or  for his brothers, sisters
(whether  by  whole  or  half  blood), spouse, ancestors and lineal descendants.
Stock  owned,  directly  or  indirectly,  by  or for a corporation, partnership,
estate  or  trust  shall  be  deemed  to  be owned proportionately by or for its
stockholders,  partners  or  beneficiaries.

     (d)     Outstanding  Stock.  For  purposes  of  Subsection  (b)  above,
"Outstanding  Stock"  shall  include  all  Stock actually issued and outstanding
immediately  after  the  grant.  "Outstanding  Stock"  shall  not include shares
authorized for issuance under outstanding options held by the Employee or by any
other  person.

     (e)     Individual  Limits of Executive Officers. Subject to the provisions
of Section 9 hereof, the number of option shares granted in a fiscal year to any
Executive  Officer  shall  not exceed 1,000,000 shares for the first fiscal year
during  which  such  person  becomes  an  Executive Officer and shall not exceed
2,000,000  shares for any subsequent fiscal year during which such person serves
as  an  Executive  Officer.

     (f)     Incentive  Option  Limitation.  The  aggregate Fair Market Value of
the  stock  for  which Incentive Options granted to any one eligible Employee or
Consultant  under  this  Plan  and under all incentive stock option plans of the
Company,  its  parent(s)  and  subsidiaries,  may  by  their  terms first become
exercisable during any calendar year shall not exceed $100,000, determining Fair
Market  Value  of  the stock subject to any Option as of the time that Option is
granted.  If  the  date  on  which  one or more Incentive Options could be first
exercised  would  be  accelerated pursuant to any other provision of the Plan or
any Stock Option Agreement referred to in Section 6(a), or an amendment thereto,
and  the  acceleration  of such exercise date would result in a violation of the
restriction  set  forth  in  the  preceding  sentence,  then notwithstanding any

<PAGE>
such  other  provision  the  exercise  date  of  such Incentive Options shall be
accelerated  only  to the extent, if any, that is permitted under Section 422 of
the  Code  and the exercise date of the Incentive Options with the lowest option
prices  shall  be  accelerated  first.  Any  exercise  date  which  cannot  be
accelerated  without  violating  the  $100,000 restriction of this section shall
nevertheless  be accelerated, and the portion of the Option becoming exercisable
thereby  shall  be  treated  as  a  Nonstatutory  Option.

6.     Terms  and  Conditions  of  All  Options  Under  the  Plan.

     (a)     Option  Agreement.  All  Options  granted  under  the Plan shall be
evidenced  by  a written Option Agreement and shall be subject to all applicable
terms  and  conditions  of  the  Plan  and may be subject to any other terms and
conditions  which  are  not  inconsistent  with the Plan and which the Committee
deems  appropriate  for  inclusion  in  an  Option  Agreement.

     (b)     Number  of  Shares.  Each Option Agreement shall specify the number
of  shares  of  the  Stock  each such Employee or Consultant will be entitled to
purchase  pursuant  to  the  Option and shall provide for the adjustment of such
number  in  accordance  with  Section  9.  Each Option Agreement shall state the
minimum  number  of  shares  which  must  be  exercised  at  any  time,  if any.

     (c)     Nature of Option.  Each Option Agreement shall specify the intended
nature  of the Option as an Incentive Option, a Nonstatutory Option or partly of
each  type.

     (d)     Exercise  Price.  Each  Option Agreement shall specify the exercise
price.  The  exercise  price  of either the Incentive Option or the Nonstatutory
Option  shall  not  be  less  than one hundred percent (100%) of the Fair Market
Value  of  a  share of Stock on the date of grant. Subject to the foregoing, the
exercise price under any Option shall be determined by the Committee in its sole
discretion.  The  exercise  price  shall  be  payable  in  the form described in
Section  7.

     (e)     Term of Option.  The Option Agreement shall specify the term of the
Option.  The  term  of  any  Option  granted  under  this  Plan  is  subject  to
expiration,  termination,  and  cancellation  as  set  forth  within  this Plan.

     (f)     Exercisability.  Each  Option Agreement shall specify the date when
all  or  any  installment  of  the Option is to become exercisable.  Such Option
shall  not be exercisable after the expiration of such term which shall be fixed
by  the  Committee, but in any event not later than ten years from the date such
Option  is  granted.  Subject  to  the provisions of the Plan, the Committee may
grant  Options which are vested, or which become vested upon the happening of an
event  or  events  as  specified  by  the  Committee.

     (g)     Withholding  Taxes.  Upon  exercise  of any Nonstatutory Option (or
any  Incentive Option which is treated as a Nonstatutory Option because it fails
to  meet  the  requirements  set  forth  in the Code for Incentive Options), the
Optionee  must  tender  full  payment  to the Company for any federal income tax
withholding  required  under  the  Code  in  connection  with  such  exercise
("Withholding  Tax").  If  the  Optionee  fails  to  tender  to  the Company the
Withholding  Tax,  the  Committee,  at  its  discretion, shall withhold from the
Optionee  any and all shares subject to such Option, and accordingly, subject to
Withholding  Tax until such time as either of the following events has occurred:

          (i)     the Employee tenders to the Company payment in cash to pay the
Withholding  Tax;  or

          (ii)     the  Company  withholds  from  the Employee's wages an amount
sufficient  to  pay  the  Withholding  Tax.

     (h)     Termination  and  Acceleration  of  Option.

<PAGE>
          For  Incentive  Options:

          (i)     If  the  employment of a Grantee who is not a Disabled Grantee
is  terminated without cause, or such Grantee voluntarily quits or retires under
any  retirement  plan of the Company, any then outstanding and exercisable stock
option  held  by  such  a  Grantee  shall be exercisable, in accordance with the
provisions  of  the  Option  Agreement, by such Grantee at any time prior to the
expiration  date  of  such  Option  or  within  three  months  after the date of
termination  of  employment  or  service,  whichever  is  the  shorter  period.

          (ii)  If  the  employment  of  a  Grantee who is a Disabled Grantee is
terminated  without  cause,  any then outstanding and exercisable Option held by
such  a  Grantee  shall be exercisable, in accordance with the provisions of the
Option  Agreement, by such a Grantee at any time prior to the expiration date of
such  Option or within one year after the date of such termination of employment
or  service,  whichever  is  the  shorter  period.

          For  all  Options  issued  hereunder:

          (i)     If  the  Company  terminates  the  employment of a Grantee for
cause,  all  outstanding  stock  options held by the Grantee at the time of such
termination  shall  automatically  terminate  unless  the Committee notifies the
Grantee  that  his or her options will not terminate.  A termination "for cause"
shall  be  defined  under each written Option Agreement.  The Company assumes no
responsibility  and  is under no obligation to notify a Permitted Transferee (as
hereafter defined in section 13) of early termination of an Option on account of
a  Grantee's  termination  of  employment.

          (ii)     Whether  termination  of  employment  or  other  service is a
termination  "for  cause"  or  whether  a Grantee is a Disabled Grantee shall be
determined  in  each  case,  in  its  discretion,  by the Committee and any such
determination  by  the  Committee  shall  be  final  and  binding.

          (iii)     Following  the  death  of  a  Grantee during employment, any
outstanding  and  exercisable  Options held by such Grantee at the time of death
shall be exercisable, in accordance with the provisions of the Option Agreement,
by the person or persons entitled to do so under the Will of the Grantee, or, if
the  Grantee  shall fail to make testamentary disposition of the stock option or
shall  die  intestate,  by  the  legal representative of the Grantee at any time
prior to the expiration date of such Option or within one year after the date of
death,  whichever  is  the  shorter  period.

          (iv)     The  Committee may grant Options, or amend Options previously
granted, to provide that such Options continue to be exercisable up to ten years
after  the  date  of  grant  irrespective  of  the  termination of the Grantee's
employment with the Company, and which vest upon grant or become vested upon the
happening  of  an  event  or  events  specified  by  the Committee, although the
exercise of such vested Options in the case of Incentive Options more than three
months  after termination of employment may convert such Options to Nonstatutory
Options  with  respect  to  the  income  tax  consequences  of  such  exercise.

7.     Payment  for  Shares

     (a)     Cash.  Payment  in  full for shares purchased under an Option shall
be  made  in  cash (including check, bank draft or money order) at the time that
the  Option  is  exercised.

     (b)     Stock.  In  lieu  of  cash an Optionee may, with the consent of the
Committee,  make  payment  for  Stock  purchased under an Option, in whole or in
part,  by  tendering  to  the Company in good form for transfer, shares of Stock
valued  at  Fair  Market Value on the date the Option is exercised.  Such shares
will  have  been  owned by the Optionee or the Optionee's representative for the
time  specified  by  the  Committee  but  in  no  case shall the Optionee or his
representative  have  held  a  beneficial interest in such tendered shares for a
period  less  than  six  months  prior  to  the  exercise  of  the  Option.

<PAGE>
     (c)     Cashless  exercise.  the Optionee may elect to receive an amount of
Common  Stock  (the  "Settlement  Stock")  equal  to  "X"  where:

     X  =  [(N  x  D)  -  (N  x  P)]  /  D

N  = the gross number of shares of Common Stock that would have been issuable if
the  Optionee  had  not  elected  Cashless  Exercise
D  =  Daily  Market Price on the third (3rd) Business Day before, and excluding,
the  date  of  the  Notice
P  =  Warrant  Price  with  respect  to  such  notice

8.     Use  of  Proceeds  from  Stock.

     Cash  proceeds from the sale of Stock pursuant to Options granted under the
Plan  shall  constitute  general  funds  of  the  Company.

9.     Adjustments.

     Changes  or adjustments in the Option price, number of shares subject to an
Option  or  other specifics as the Committee should decide will be considered or
made  pursuant  to  the  following  rules:

     (a)     Upon  Changes  in  Stock.  If the outstanding Stock is increased or
decreased,  or  is  changed into or exchanged for a different number or kinds of
shares  or  securities,  as  a  result  of  one  or  more  reorganizations,
recapitalization,  stock  splits, reverse stock splits, split-up, combination of
shares,  exchange  of  shares,  change  in  corporate  structure,  or otherwise,
appropriate  adjustments  will  be made in the exercise price and/ or the number
and/or  kind of shares or securities for which Options may thereafter be granted
under  this  Plan  and  for  which  Options then outstanding under this Plan may
thereafter  be  exercised.  The  Committee  will make such adjustments as it may
deem  fair, just and equitable to prevent substantial dilution or enlargement of
the rights granted to or available for Optionees.  No adjustment provided for in
this  Section  9 will require the Company to issue or sell a fraction of a share
or  other  security.  Nothing  in  this Section will be construed to require the
Company  to  make  any  specific  or  formula  adjustment.

     (b)     Prohibited Adjustment.  If any such adjustment provided for in this
Section  9  requires the approval of stockholders in order to enable the Company
to  grant  or  amend  Options,  then no such adjustment will be made without the
required  stockholder approval.  Notwithstanding the foregoing, if the effect of
any such adjustment would be to cause an Incentive Option to fail to continue to
qualify  under  Section 422 of the Code or to cause a modification, extension or
renewal  of such stock option within the meaning described in Section 424 of the
Code,  the Committee may elect that such adjustment not be made but rather shall
use  reasonable efforts to effect such other adjustment of each then outstanding
Option  as the Committee, in its sole discretion, shall deem equitable and which
will  not  result  in  any  disqualification, modification, extension or renewal
(within  the  meaning  of  Section  424  of  the Code) of such Incentive Option.

     (c)     Further  Limitations.  Nothing  in  this  Section  will entitle the
Optionee  to  adjustment  of  his  Option  in  the  following  circumstances:

          (i)     The  issuance  or  sale  of  additional  shares  of the Stock,
through  public  offering  or  otherwise;

          (ii)     The  issuance  or  authorization  of  an  additional class of
capital  stock  of  the  Company;

          (iii)     The conversion of convertible preferred stock or debt of the
Company  into  Stock;  and

<PAGE>
          (iv)     The payment of dividends except as provided in Section 9 (a).

The  grant  of  an  Option shall not affect in any way the right or power of the
Company  to  make  adjustments, reclassifications, reorganizations or changes of
its  capital  or  business  structure,  to  merge or consolidate or to dissolve,
liquidate,  sell  or  transfer  all  or  any  part  of  its  business or assets.

10.     Legal  Requirements:

     (a)     Compliance  with  All  Laws.  The  Company  will not be required to
issue  or  deliver any certificates for shares of Stock prior to (a) the listing
of  any  such Stock to be acquired pursuant to the exercise of any Option on any
stock  exchange  on  which  the Stock may then be listed, and (b) the compliance
with  any  registration  requirements  or qualification of such shares under any
federal  securities  laws,  including  without  limitation the Securities Act of
1933, as amended ("1933 Act"), the rules and regulations promulgated thereunder,
or  state securities laws and regulations, the regulations of any stock exchange
or  interdealer  quotation  system on which the Company's securities may then be
listed,  or  obtaining  any  ruling or waiver from any government body which the
Company  may, in its sole discretion, determine to be necessary or advisable, or
which,  in  the  opinion  of  counsel  to  the  Company,  is otherwise required.

     (b)     Compliance  with Specific Code Provisions.  It is the intent of the
Company  that  the  Plan  and  its  administration  conform  strictly  to  the
requirements  of  Section  422  of  the  Code with respect to Incentive Options.
Therefore, notwithstanding any other provision of this Plan, nothing herein will
contravene  any requirement set forth in Section 422 of the Code with respect to
Incentive  Options  and  if  inconsistent provisions are otherwise found herein,
they  will be deemed void and unenforceable or automatically amended to conform,
as  the  case  may  be.

     (c)     Plan  Subject to Nevada Law.  All questions arising with respect to
the provisions of the Plan will be determined by application of the Code and the
laws  of the state of Nevada except to the extent that Nevada laws are preempted
by  any  federal  law.

11.     Rights  as  a  Stockholder.

     An Optionee shall have no rights as a stockholder with respect to any Stock
covered by his Option until the date of issuance of the stock certificate to him
or  her  after  receipt  of  the  consideration  in full set forth in the Option
Agreement.  Except  as provided in Section 9 hereof, no adjustments will be made
for  dividends,  whether ordinary or extraordinary, whether in cash, securities,
or  other  property,  or for distributions for which the record date is prior to
the  date  on  which  the  Option  is  exercised.

12.     Restrictions  on  Shares.

     Prior  to  the  issuance  or  delivery of any shares of the Stock under the
Plan,  the  person  exercising  the  Option  may  be  required  to:

     (a)     represent  and  warrant that the shares of the Stock to be acquired
upon exercise of the Option are being acquired for investment for the account of
such  person  and  not  with  a  view  to  resale or other distribution thereof;

     (b)     represent  and  warrant  that  such  person  will  not, directly or
indirectly,  sell, transfer, assign, pledge, hypothecate or otherwise dispose of
any  such shares unless the sale, transfer, assignment, pledge, hypothecation or
other  disposition  of the shares is pursuant to the provisions of this Plan and
effective  registrations  under the 1933 Act and any applicable state or foreign
securities  laws  or  pursuant  to  appropriate  exemptions  from  any  such
registrations;  and

<PAGE>
     (c)     execute such further documents as may reasonably be required by the
Committee  upon  exercise  of  the Option or any part thereof, including but not
limited  to  any  stock  restriction  agreement that the Committee may choose to
require.

     Nothing in this Plan shall assure any Optionee that shares issuable under
this Option are registered on a Form S-8 under the 1933 Act or on any other
Form. The certificate or certificates representing the shares of the Stock to be
issued or delivered upon exercise of an Option may bear a legend evidencing the
foregoing and other legends required by any applicable securities laws.
Furthermore, nothing herein or any Option granted hereunder will require the
Company to issue any Stock upon exercise of any Option if the issuance would, in
the opinion of counsel for the Company, constitute a violation of the 1933 Act,
applicable state securities laws, or any other applicable rule or regulation
then in effect. The Company shall have no liability for failure to issue shares
upon any exercise of Options because of a delay pending the meeting of any such
requirements.

13.     Transferability.

     The  Committee  shall  retain  the  authority  and  discretion  to permit a
Nonstatutory  Option,  but in no case an Incentive Option, to be transferable as
long  as  such  transfers  are made only to one or more of the following: family
members,  limited to children of Grantee, spouse of Grantee, or grandchildren of
Grantee,  or  trusts  for  the  benefit  of  Grantee  and/or such family members
("Permitted  Transferee"),  provided  that such transfer is a bona fide gift and
accordingly,  the  Grantee  receives no consideration for the transfer, and that
the  Options transferred continue to be subject to the same terms and conditions
that  were applicable to the Options immediately prior to the transfer.  Options
are  also  subject  to transfer by will or the laws of descent and distribution.
Options  granted  pursuant  to  this  Plan  shall  not be otherwise transferred,
assigned,  pledged, hypothecated or disposed of in any way, whether by operation
of  law  or  otherwise.  A Permitted Transferee may not subsequently transfer an
Option.  The  designation  of  a  beneficiary  shall  not constitute a transfer.

14.     No  Right  to  Continued  Employment.

     This  Plan  and any Option granted under this Plan will not confer upon any
Optionee  any  right  with  respect to continued employment or engagement by the
Company  nor  shall  they  alter,  modify,  limit or interfere with any right or
privilege  of the Company under any employment agreement heretofore or hereafter
executed  with  any  Optionee,  including  the right to terminate any Optionee's
employment  or engagement at any time for or without cause, to change his or her
level  of  compensation  or  to  change his or her responsibilities or position.

15.     Corporate  Reorganizations.

     Upon  the  dissolution  or  liquidation  of  the  Company,  or  upon  a
reorganization,  merger or consolidation of the Company as a result of which the
outstanding  securities  of  the  class  then  subject  to Options hereunder are
changed  into  or  exchanged  for  cash  or  property  or  securities not of the
Company's issue, or upon a sale of substantially all the property of the Company
to,  or  the acquisition of stock representing more than eighty percent (80%) of
the  voting  power  of  the  stock  of  the  Company then outstanding by another
corporation  or person, the Plan will terminate and all Options will lapse.  The
result  described  above  will  not  occur  if  provision  is made in writing in
connection  with such transaction for the continuance of the Plan and/or for the
assumption  of  Options earlier granted, or the substitution for such Options of
options covering the stock of a successor employer corporation, or a parent or a
subsidiary  thereof,  with  appropriate adjustments as to the number and kind of
shares  and prices, in which event the Plan and Options theretofore granted will
continue  in  the  manner  and  under  the  terms  so provided.  If the Plan and
unexercised  Options  shall  terminate  pursuant  to  the foregoing, all persons
holding  any  unexercised  portions  of  Options then outstanding shall have the
right,  at  such  time  prior to the consummation of the transaction causing the
termination as the Company shall designate, to exercise the unexercised portions
of  their  options,  including  the  portions  thereof  which would but for this
Section  15  not  yet  be  exercisable.

<PAGE>

16.     Modification,  Extension  and  Renewal.

     (a)     Options.  Subject  to  the conditions of and within the limitations
prescribed in the Plan herein, the Committee may modify, extend, cancel or renew
outstanding  Options.  Notwithstanding  the  foregoing,  no  modification  will,
without  the  prior  written consent of the Optionee, alter, impair or waive any
rights or obligations associated with any Option earlier granted under the Plan.

     (b)     Plan.  The  Board  may at any time and from time to time interpret,
amend  or discontinue the Plan, subject to the limitation, however, that, except
as  provided  in  Section  9 (relating to adjustments upon changes in stock), no
amendment  shall  be  made,  except  upon  stockholder  approval,  which  will:

          (i)     Increase  the  number of shares reserved for Options under the
Plan;  or
          (ii)     Reduce  the  Option  price below 100% of Fair Market Value at
the  time  an  Option  is  granted;  or
          (iii)     Change  the  requirements  for eligibility for participation
under  the  Plan.

17.     Plan  Date  and  Duration.

     The Plan shall take effect on the date it is adopted by the Board.  Options
may  not  be  granted  under  this  Plan  after  December  31,  2015.

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