Document:

ljpc-ex1013_883.htm

Exhibit 10.13

 

SUBLEASE

THIS SUBLEASE (this “Sublease”) is made and entered into this 21st day of December, 2020, by and between COTIVITI, INC., a Delaware corporation (“Sublandlord”) and LA JOLLA PHARMACEUTICAL COMPANY, a California corporation (“Subtenant”).

1.Basic Lease Provisions.

	
 
	
1.1.
	
Property/Building Address: 201 Jones Road, Waltham, MA 02451 (the “Property”)

	
 
	
1.2.
	
Subtenant’s Address: 4747 Executive Drive, Suite 240, San Diego, CA 92121

	
 
	
1.3.
	
Sublandlord’s Address: One Glenlake Parkway, Suite 1400, Atlanta, GA 30328

	
 
	
1.4.
	
Prime Landlord: Stony Brook Associates LLC

	
 
	
1.5.
	
Prime Landlord’s Address (for notices): c/o Boston Properties Limited Partnership, Prudential Center, 800 Boylston Street, Suite 1900, Boston, MA 02199

	
 
	
1.6.
	
Identification of Prime Lease and all amendments thereto: Lease dated June 10, 2011, by and between Prime Landlord, as landlord, and Verisk Health Inc., predecessor to Sublandlord, as tenant, as amended by: (i) First Amendment to Lease dated December 26, 2012, by and between Prime Landlord and Verisk Health Inc., predecessor to Sublandlord, and (ii) Second Amendment to Lease dated January 2, 2018, by and between Prime Landlord and Verscend Technologies, Inc., predecessor to Sublandlord (collectively, the “Prime Lease”). A copy of the Prime Lease is attached hereto as Exhibit C.

	
 
	
1.7.
	
Sublease Term: Two (2) years, eleven (11) months, or such shorter period of time between the Commencement Date and Expiration Date, if the Commencement Date is after January 1, 2021

	
 
	
1.8.
	
Commencement Date: Upon the latter of (i) full execution of this Sublease and consent thereto by Prime Landlord, or (ii) January 1, 2021 (the “Commencement Date”)

	
 
	
1.9.
	
Expiration Date: November 30, 2023 (the “Expiration Date”)

	
 
	
1.10.
	
Basic Rent: Twenty-four dollars and fifty cents ($24.50) per rentable square foot (RSF), net of tenant electric. Notwithstanding any other language within the Sublease, the Basic Rent includes Subtenant’s pro rata share of all base year 2021 Real Estate Taxes and Operating Expenses for the Premises. The term “Operating Expenses” shall have the same meaning as “Landlord’s Operating Expenses” under the Prime Lease, and the term “Real Estate Taxes” shall have the same 

 

 

	
 
		
meaning as is set forth in the Prime Lease. The first rent payment shall be due upon execution of the Sublease and will be applied as the first installment of Basic Rent.

 

	
Time Period
	
Rentable 
Square Feet
	
Per 
Square 
Foot Rate
	
Monthly 
Installment of 
Basic Rent
	
Annualized 
Rent

	
Commencement Date – December 31, 2021
	
7,388
	
$24.50
	
$15,083.83*
	
$181,006.00

	
January 1, 2022 – December 31, 2022
	
7,388
	
$24.50
	
$15,083.83
	
$181,006.00

	
January 1, 2023-November 30, 2023
	
7,388
	
$24.50
	
$15,083.83
	
$165,922.17

 

* The Basic Rent for the first month will be prorated if the Commencement Date is not January 1, 2020.

	
 
	
1.11.
	
Electricity:  Pro-rata share (29.1%) of the actual electrical charges for the total Sublandlord premises (7,388 RSF subtenant premises / 25,425 RSF total sublandlord premises). Electricity shall be deemed to be “Additional Rent” (further described in Section 8 hereto).

	
 
	
1.12.
	
Description of Premises:  Approximately 7,388 rentable square feet located on the fourth (4th) floor of the Building, as depicted on Exhibit A attached hereto (the “Premises”).

	
 
	
1.13.
	
Security Deposit:  $15,083.83

	
 
	
1.14.
	
Tenant’s Use:  General office use or any use permitted under the Prime Lease.

	
 
	
1.15.
	
Brokers:  CBRE Group, Inc. (representing Subtenant) and Cushman & Wakefield U.S., Inc (representing Sublandlord)

	
 
	
1.16.
	
Subtenant E-mail Address:  lajollacontracts@ljpc.com; ledwards@ljpc.com; prusu@ljpc.com

	
 
	
1.17.
	
Sublandlord E-mail Address:  legal@cotiviti.com (with copy to Mike.Kasmin@cotiviti.com)

2.Prime Lease.  Sublandlord is the tenant under the Prime Lease, as amended, with the Prime Landlord identified in Section 1.4, bearing the date specified in Section 1.6. Sublandlord represents and warrants to Subtenant that (a) Sublandlord has delivered to Subtenant a redacted version of the complete Prime Lease and there are no other agreements between Prime Landlord and Sublandlord relating to the leasing, use, and occupancy of the Premises other than the Prime Lease, (b) the Prime Lease is, as of the date hereof, in full force and effect, and (c) no event of default by Sublandlord and/or Prime Landlord has occurred under the Prime Lease and no event has occurred and is continuing which would constitute an event of default by Sublandlord or, to Sublandlord’s knowledge, Prime Landlord but for the requirement of giving notice and/or the expiration of the period of time to cure.

3.Sublease.

3.1.Premises.  Sublandlord, for and in consideration of the rents herein reserved and of the covenants and agreements herein contained on the part of the Subtenant to be performed, hereby 

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subleases to the Subtenant, and the Subtenant accepts from Sublandlord, the Premises and located in the building (the “Building”), situated on the Property.

4.Term.  Subject to Section 5 hereof, the term of this Sublease (hereinafter “Term”) shall commence on the Commencement Date. The Term shall expire on the Expiration Date, unless sooner terminated as otherwise provided elsewhere in this Sublease.

5.Possession, Furniture.  Sublandlord agrees to deliver possession of the Premises, together with certain pieces of Sublandlord’s furniture & fixtures identified on Exhibit B attached hereto (the “Existing FF&E”). The parties acknowledge and agree that, as of the date hereof all rights, title and ownership in and to the Existing FF&E shall be conveyed to and vest in Subtenant. Sublandlord makes no representation or warranty as to the condition, fitness or suitability of such Existing FF&E for Subtenant’s purposes. Sublandlord shall have no obligation for the maintenance, repair or replacement of any such Existing FF&E. Subtenant shall be required to remove all Existing FF&E and any additional FF&E installed by Subtenant prior to the Expiration Date, unless Subtenant and Sublandlord reach an agreement to remain in the Premises. Upon execution of this Sublease and Prime Landlord’s consent, Subtenant shall have immediate access to the Premises. The Sublandlord shall deliver the Premises to Subtenant “as is” with reasonable wear and tear expected, and any alterations shall be subject to the provisions of the Prime Lease.

6.Tenant’s Use.  The Premises shall be used and occupied only for the Subtenant’s Use set forth in Section 1.14. Tenant shall have access to the Premises twenty-four (24) hours a day, seven (7) days a week. As provided by the Prime Landlord, the current hours of operation are Monday through Friday, 7:00 a.m. to 5:00 p.m. After hours HVAC Rates are $59.00 per hour for cooling and $31.20 per hour for heating. Subtenant shall pay Sublandlord for any after-hours HVAC fees, costs, charges or expenses that Sublandlord incurs as a result of Subtenant’s after- hours use of the Premises.

7.Rent.  Beginning on the first (1st) day of the Term (the “Rent Commencement Date”), subject to any rent abatement, Subtenant agrees to pay the Basic Rent set forth in Section 1.10 to Sublandlord at the address specified in Section 1.3, or to such other payee or at such other address as may be designated by notice in writing form from Sublandlord to Subtenant, without prior demand therefor and without any deduction whatsoever except as otherwise set forth in this Sublease. Basic Rent shall be paid in equal monthly installments shown in the Basic Rent chart in Section 1.10 in advance commencing on the Rent Commencement Date, subject to any rent abatement, and thereafter on the first (1st) day of each month of the Term, except that the first installment of Basic Rent shall be paid by Subtenant to Sublandlord upon execution of this Sublease by Subtenant and Sublandlord. Basic Rent shall be pro-rated for partial months at the beginning and end of the Term, if applicable. All charges, costs and sums required to be paid by Subtenant to Sublandlord under this Sublease in addition to Basic Rent shall be deemed “Additional Rent,” and Basic Rent and Additional Rent shall hereinafter collectively be referred to as “Rent.” Subtenant’s covenant to pay Rent shall be independent of every other covenant in this Lease. If any payment or installment of Rent (the “Outstanding Amount”) is not paid when due (the “Due Date”), and such failure continues five (5) business days after receipt of written notice from Sublandlord, Subtenant shall pay a late charge equal to the sum of (a) 5% of the Outstanding Amount for administration and bookkeeping costs associated with the late payment and (b) interest on the Outstanding Amount from the Due Date through and including the date such payment or installment is received by Sublandlord, at a rate equal to the lesser of (i) the rate announced by Bank of America, N.A. (or its successor) from time to time as its prime or base rate (or if such rate is no longer available, a comparable rate reasonably selected by Prime Landlord), plus two percent (2%), or (ii) the maximum applicable legal rate, if any.

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8.Additional Rent.

8.1.Subtenant shall be responsible for its pro-rata share of the total actual electricity charges for the total Sublandlord premises (being 25,425 rentable square feet). Such pro- rata share of electricity charges will be deemed to be “Additional Rent”. Commencing on the Commencement Date and continuing thereafter throughout the Term, Subtenant shall pay Sublandlord its pro-rata share of the total electricity charged to the Sublandlord by the Prime Landlord under the Prime Lease. Subtenant’s pro-rata share of the electricity charges is agreed to be 29.1%, being the quotient of the total rentable square feet of the sublet Premises (7,388 RSF) divided by the total rentable square feet of the Sublandlord premises (25,425 RSF). The method of calculating Sublandlord’s electricity payment is set forth in Section 2.8 of the Prime Lease.

Subtenant shall pay Sublandlord its pro-rata share of the total actual electricity charges for the total Sublandlord premises on a monthly basis, on the first (1st) day of each month of the Term, in accordance with Section 7, above. Such monthly electricity payments shall be the estimated monthly pro-rata share of Sublandlord’s total electricity payment for the total Sublandlord Premises, as reasonably estimated by the Sublandlord. Sublandlord will provide Subtenant with such estimated monthly electricity charges prior to the Commencement Date.  No later than one- hundred and twenty (120) day after the end of each calendar year falling within the Term, Sublandlord shall render Subtenant a statement in reasonable detail showing the actual total pro- rated electricity charges for the sublet Premises for the preceding calendar year. Said statement shall also show for such period the amounts already paid by Subtenant on account of the estimated monthly payments and the total amount remaining due from, or overpaid by, Subtenant for the period covered by such statement. If such statement shows a remaining balance due to the Sublandlord, Subtenant shall pay the same to Sublandlord before the thirtieth (30th) day following receipt by Tenant of said statement. For any amounts overpaid by Subtenant, such amounts will be credited against the Annualized Rent (set forth in Section 1.10 hereof) next due, or refunded to Subtenant if the Term has then expired and Subtenant has no further obligation to the Sublandlord.

8.2.Sublandlord shall remain responsible for the payment of any additional rent as outlined in the Prime Lease and notwithstanding anything to the contrary in this Sublease or the Prime Lease, Subtenant shall not be required to make any payment of the additional rent as outlined in the Prime Lease, it being understood that Subtenant’s payment of the Basic Rent includes all taxes, operating expenses, utilities (except electricity), cleaning and other costs for services that may be payable under the Prime Lease for the Premises that are not specifically payable by Subtenant to Sublandlord as provided herein, and, accordingly, shall not be passed through to Subtenant. Real Estate Taxes and Operating Expenses shall be those exclusions applicable to Sublandlord for Payment of Operating Expenses and Real Estate Taxes under the Prime Lease.

8.3.Intentionally Deleted.

9.Subtenant’s Obligations.  Subtenant, at Subtenant’s expense, shall be responsible for all maintenance, repairs and replacements to the Premises, to the extent Sublandlord is obligated to perform the same to the Premises under the Prime Lease. Sublandlord represents that the Premises do not share any systems, utilities or other services with any other space in the Building that would require maintenance, repair and or payment for use thereof by Subtenant.

10.Quiet Enjoyment.  So long as Subtenant is not in default in the performance of its covenants and agreements in this Sublease, Subtenant’s quiet peaceable enjoyment of the Premises shall not be disturbed or interfered with by Sublandlord, or by any person claiming by, through, or under Sublandlord.

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11.Subtenant’s Insurance.  Subtenant shall procure and maintain, at its own cost and expense, such liability insurance as is required to be carried by Sublandlord under the Prime Lease, naming Sublandlord, as well as Prime Landlord, in the manner required therein, and such property insurance as is required to be carried by Sublandlord under the Prime Lease to the extent such property insurance pertains to the Premises; provided, however that notwithstanding anything in the Sublease or the Prime Lease to the contrary, Subtenant’s insurance may be provided through a combination of primary and excess coverage. If the Prime Lease requires Sublandlord to insure leasehold improvements or alterations, then Subtenant shall insure such leasehold improvements which are located in the Premises, as well as alterations in the Premises made by Subtenant. Subtenant shall furnish to Sublandlord a certificate of Subtenant’s insurance required hereunder no later than five (5) days prior to Subtenant’s taking possession of the Premises. Each party hereby waives claims against the other for property damage provided such waiver shall not invalidate the waiving party’s property insurance; each party shall attempt to obtain from its insurance carrier a waiver of its right of subrogation. Subtenant hereby waives claims against Prime Landlord and Sublandlord for property damage to the Premises or its contents if and to the extent that Sublandlord waives such claims against Prime Landlord under the Prime Lease. Subtenant agrees to obtain, for the benefit of Prime Landlord and Sublandlord, such waiver of subrogation rights from its insurer as are required of Sublandlord under the Prime Lease.

12.Assignment or Subletting.

12.1.Subject to the terms of this Sublease and the Prime Lease: (i) Subtenant shall have the right to sublet all or a portion of the Premises without Sublandlord’s approval to any successor of Subtenant resulting from a merger or consolidation of Subtenant or to any other entity under the common control or an affiliate of Subtenant or any successor to Subtenant due to the sale of its business; (ii) Subtenant shall have the right to sublet the Premises or assign the Sublease to a reputable tenant, with Sublandlord’s prior written consent, which shall not be unreasonably withheld, conditioned, or delayed in accordance with Section 5.6 of the Prime Lease. Additionally, Subtenant may share occupancy of the Premises with Subtenant’s contractors, customers, partners or business team for which purposes hereof shall not be considered an assignment or subletting.

12.2.No permitted assignment shall be effective and no permitted sublease shall commence unless and until any default by Subtenant hereunder shall have been cured. No permitted assignment or subletting shall relieve Subtenant from Subtenant’s obligations and agreements hereunder and Subtenant shall continue to be liable as principal and not as guarantor or surety to the same extent as through no assignment or subletting had been made.

13.Rules.  Subtenant agrees to comply with all rules and regulations that Prime Landlord has made or may make hereafter from time to time make for the Building. Sublandlord shall not be liable in any way for damage caused by the non-observance by any other tenants of such similar covenants in their leases or of such rules and regulations.

14.Repairs and Compliance.  Subtenant shall promptly pay for the repairs set forth in Section 9 hereof and Subtenant shall, at Subtenant’s own expense, comply with all laws and ordinances, and all order, rules and regulations of all governmental authorities and of all insurance bodies and their fire prevention engineers at any time in force, applicable to the Premises or to the Subtenant’s particular use or manner of use thereof, except that Subtenant shall not hereby be under any obligation to comply with any law, ordinance, rule or regulation requiring any structural alteration of or in connection with the Premises, unless such alteration is required by reason of Subtenant’s particular use or manner of use of the Premises, or a condition which has been created by or at the sufferance of Tenant, or is required by reason of a breach of any of Subtenant’s covenants and agreements hereunder. Sublandlord represents and warrants to Subtenant 

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that, to Sublandlord’s knowledge the Premises is in compliance with all laws and ordinances in effect as of the date of this Sublease.

15.Fire or Casualty or Eminent Domain.  In the event of a fire or other casualty affecting the Building or the Premises, or of a taking of all or a part of the Building or Premises under the power of eminent domain, Sublandlord shall not exercise any right which may have the effect of terminating the Prime Lease without first obtaining the prior written consent of Subtenant which shall not be unreasonably withheld, conditioned or delayed. In the event that Sublandlord has the right to terminate the Prime Lease due to a fire or other casualty affecting the Premises, or of a taking of all or a part of the Building or Premises under the power of eminent domain, Subtenant shall have the same right as Sublandlord under the Prime Lease to terminate this Sublease. Further, in the event Sublandlord is entitled, under the Prime Lease, to a rent abatement as a result of a fire or other casualty or as a result of a taking under the power of eminent domain, then Subtenant shall be entitled to the same rent abatement applicable to the Premises (i.e., if 50% of Sublandlord’s Rent payable to Prime Landlord with respect to the Premises is abated, then 50% of Subtenant’s Rent payable under this Sublease shall be abated; provided, however, if a greater portion of the Premises is taken as compared to the Property, then such percentage shall be increased in proportion to the amount of the Premises taken). If the Prime Lease imposes on Sublandlord the obligation to repair or restore leasehold improvements or alterations, Subtenant shall be responsible for repair or restoration of leasehold improvements or alteration. Subtenant shall make any insurance proceeds resulting from a loss which Sublandlord is obligated to repair or restore available to Sublandlord and shall permit Sublandlord to enter the Premises to perform the same, subject to such conditions as Subtenant may reasonably impose.

16.Alterations; Signage; Parking.

16.1.Subtenant shall not make any alterations in or additions to the Premises (“Alterations”) if to do so would constitute a default under the Prime Lease. If Subtenant’s proposed Alterations would not constitute a default under the Prime Lease, Sublandlord’s consent thereto shall nonetheless be required, but Sublandlord’s consent to such Alteration shall not be unreasonably withheld, conditioned or delayed, it being understood, however, that Sublandlord’s consent shall not be required for any Alterations that do not require Prime Landlord’s consent under the Prime Lease, and if Sublandlord consents thereto, Sublandlord shall use reasonable efforts to obtain the consent of Prime Landlord. Subtenant’s request for Sublandlord’s consent to any proposed Alterations shall include reasonable plans and specifications describing the proposed Alteration to the extent that same are required for consent under the Prime Lease. If Alterations by Subtenant are permitted or consented to as aforesaid, Subtenant shall make such Alterations at its sole cost and expense in accordance with the plans approved by Sublandlord and Prime Landlord (as applicable) and Subtenant shall comply with all of the covenants of Sublandlord contained in the Prime Lease pertaining to the performance of such Alterations.

16.2.Sublandlord shall provide Subtenant with building standard signage in the Building and elevator lobby directories at Sublandlord’s sole cost.

16.3.Subtenant shall have the right to use thirty (30) parking spaces, subject to Section 2.2.1 of the Primary Lease.

17.Surrender.  Upon the expiration of this Sublease, or upon the termination of the Sublease or of the Subtenant’s right to possession of the Premises, Subtenant will at once surrender and deliver up the Premises, together with all improvements thereon, to Sublandlord in the condition as existed upon the delivery of the Premises to Subtenant hereunder, reasonable wear and tear excepted; conditions existing because of Subtenant’s failure to perform maintenance, repairs or replacements as required of Subtenant under this Sublease shall not be deemed “reasonable wear and tear.” Such improvements shall include all 

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plumbing, lighting, electrical, heating, cooling and ventilating fixtures and equipment and other articles of personal property used in the operation of the Premises (as distinguished from Subtenant’s Personal Property (as defined in Section 18)). Subtenant shall surrender to Sublandlord all keys to the Premises and make known to Sublandlord the combination of all combination locks which Subtenant is permitted to leave on the Premises. All Alterations in or upon the Premises made by Subtenant shall become a part of and shall remain upon the Premises upon such termination without compensation, allowance or credit to Subtenant; provided, however, that Sublandlord shall have the right to require Subtenant to remove any Alterations made by Subtenant, or portion thereof if and only to the extent that such Alterations are required to be removed pursuant to the terms of the Prime Lease or Sublandlord advised Subtenant at the time Sublandlord consented to such Alteration that Subtenant must remove same at the end of the Term. Such right shall be exercisable by Sublandlord’s giving written notice thereof to Subtenant on or before thirty (30) days prior to such expiration or on or before twenty (20) days after such termination. Subtenant shall also remove any Alterations made by Subtenant, or portion thereof, which Prime Landlord may require Sublandlord to remove, pursuant to the terms of the Prime Lease. In any such event, Subtenant shall restore the Premises to their condition prior to the making of such Alteration, repairing any damage occasioned by such removal or restoration. If Sublandlord or Prime Landlord requires removal of any Alteration made by Subtenant, or a portion thereof, and Subtenant does not make such removal in accordance with this Section, Sublandlord may remove the same (and repair any damage occasioned thereby), and dispose thereof, or at its election, deliver same to any other place of business of Subtenant, or warehouse same. Subtenant shall pay the costs of such removal, repair, delivery and warehousing on demand. Notwithstanding anything to the contrary in this Sublease, Subtenant shall not be required to remove any alterations performed by Sublandlord or existing in the Premises prior to the Commencement Date. If, however, the term of the Sublease expires at or about the date of the expiration of the Prime Lease, and if Sublandlord is required under or pursuant to the terms of the Prime Lease to remove any Alterations performed prior to the Commencement Date, Subtenant shall permit Sublandlord to enter Premises for a reasonable period of time prior to the expiration of the Sublease, subject to such conditions as Subtenant may reasonably impose, for the purpose of removing its Alteration and restoring the Premises as required.

18.Removal of Subtenant’s Personal Property.  Upon the expiration of this Sublease, Subtenant shall remove Subtenant’s articles of personal property incident to Subtenant’s business (“Personal Property”); provided, however, that Subtenant shall repair any injury or damage to the Premises which may result from such removal, and shall restore the Premises to the same condition as prior to the removal thereof. If Subtenant does not remove Subtenant’s Personal Property from the Premises upon the expiration or earlier termination of the Term, Sublandlord may, at its option, remove same and repair any damage occasioned thereby and restore the Premises as aforesaid and dispose thereof or deliver the same to any other place of business of Subtenant, or warehouse same, and Subtenant shall pay the cost of such removal, repair, restoration, delivery or warehousing to Sublandlord on demand, or Sublandlord may treat said Personal Property as having been conveyed to Sublandlord with this Sublease, without further payment or credit by Sublandlord to Subtenant.

19.Holding Over.  Subtenant shall have no right to occupy the Premises or any portion thereof after the expiration of this Sublease or after termination of this Sublease or of Subtenant’s right to possession in consequence of an Event of Default hereunder. In the event Subtenant or any party claiming by, through or under Subtenant holds over, Sublandlord may exercise any and all remedies available to it at labor in equity to recover possession of the Premises, and to recover damages, including without limitation, damages payable by Sublandlord to Prime Landlord by any reason of such holdover. For each and every month or partial month that Subtenant or any party claiming by, through or under Subtenant remains in occupancy of all or any portion of the Premises after the expiration of this Sublease or after termination of this Sublease or Subtenant’s right to possession, Subtenant shall pay, as minimum damages and not as penalty, monthly rental at a rate equal to one hundred fifty percent (150%) the rate of Basic Rent payable by Subtenant hereunder immediately prior to the expiration or other termination of this Sublease 

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or of Subtenant’s right to possession. The acceptance by Sublandlord of any lesser sum shall be construed as payment on account and not in satisfaction of damages for such holding over.

20.Encumbering Title.  Neither Sublandlord nor Subtenant shall do any act which shall in any way encumber the title of Prime Landlord in and to the Building or the Property, nor shall the interest or estate of Prime Landlord or Sublandlord be in any way subject to any claim by way of lien or encumbrance, whether by operation of law by virtue of any express or implied contract by Subtenant, or by reason of any other act or omission of Subtenant. Any claim to, or lien upon, the Premises, the Building or the Property arising from any act or omission of Subtenant shall accrue only against the subleasehold estate of Subtenant and shall be subject and subordinate to the paramount title and rights of Prime Sublandlord in and to the Building and the Property and the interest of Sublandlord in the premises leased pursuant to the Prime Lease. Without limiting the generality of the foregoing, Subtenant shall not permit the Premises, the Building or the Property to become subject to any mechanics’, laborers’ or materialmen’s lien on account of labor or material furnished to Subtenant or claimed to have been furnished to Subtenant in connection with work of any character performed or claimed to have been performed on the Premises by, or at the direction or sufferance of, Subtenant.

21.Indemnity.  Subtenant agrees to indemnify and defend Sublandlord and hold Sublandlord harmless from all losses, damages, liabilities and expenses (collectively, “Losses”) which Sublandlord may incur, or for which Sublandlord may be liable to Prime Landlord, arising from (i) acts or omissions of Subtenant Parties (as hereinafter defined) to the same extent that Sublandlord would have to indemnify Prime Landlord under the Prime Lease had Sublandlord performed such acts or omissions, or (ii) arising from Subtenant Parties’ (as hereinafter defined) use of the Premises unless such loss, damage, liability, expense arising out of the use of the Premises is due to the gross negligence or willful misconduct of Sublandlord Parties (as hereinafter defined) or a breach of Sublandlord’s obligations or representations under this Sublease (except to the extent such breach is caused or contributed to by Subtenant Parties) or from Losses for which Sublandlord is not responsible for under the Prime Lease. Sublandlord agrees to indemnify and defend Subtenant and hold Subtenant harmless from all losses, damages, liabilities and expenses which Subtenant may incur, or for which Subtenant may be liable to Prime Landlord, arising from (i) acts or omissions of Sublandlord Parties to the same extent that Sublandlord would have to indemnify Prime Landlord under the Prime Lease had Sublandlord performed such acts or omissions, or (ii) a material breach of this Sublease by Sublandlord. As used herein, the term “Subtenant Parties” shall mean the Subtenant, any subsidiary or affiliate of Subtenant, any permitted subtenant, assignee, or any other Subtenant permitted occupant of the Premises, and each of their respective partners, officers, shareholders, directors, members, employees, contractors, agents, licensees, invitees or representatives. As used herein, the term “Sublandlord Parties” shall mean the Sublandlord, any subsidiary or affiliate of Sublandlord, or any other Sublandlord permitted occupant of the Premises, and each of their respective partners, officers, shareholders, directors, members, employees, contractors, agents, licensees, invitees or representatives.

22.Sublandlord’s Reserved Rights.  Sublandlord reserves the right, upon reasonable prior written notice at least one (1) day in advance to Subtenant, to inspect the Premises, or to exhibit the Premises to persons having legitimate interest at any time during the Term, but Sublandlord shall minimize interference with Subtenant’s use of the Premises and shall comply with Subtenant’s security requirements.

23.Defaults.

23.1.Subtenant agrees that any one or more of the following events shall be considered an Event of Default as said term is used herein, that is to say, if:

23.1.1.Subtenant (or if Subtenant is a partnership, then any partner of Subtenant) shall institute any proceedings for relief of Subtenant under any bankruptcy or insolvency laws or any laws 

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relating to the relief of debtors, or shall file a petition in bankruptcy or take or consent to any other action seeking any such judicial decree or shall make any assignment for the benefit of its creditors or shall admit in writing its inability to pay its debts generally as they become due, or if any court of competent jurisdiction shall enter a decree or order adjudicating it bankrupt or insolvent, or if any trustee or receiver for Subtenant or for any substantial part of its property be appointed, or if any person shall file a petition for involuntary bankruptcy against Subtenant and such appointment or petition shall not be stayed or vacated within sixty (60) days of entry hereof; or officer; or

23.1.2.The Premises are levied on by any revenue officer or similar

23.1.3.Subtenant shall abandon the Premises during the Term hereof. For the purposes of this Sublease, abandonment shall have occurred if (i) Sublandlord reasonably believes that Subtenant has abandoned the premises with no intention of returning, (ii) Sublandlord notifies Subtenant of such belief, and (iii) Subtenant does not respond to Sublandlord’s notification within thirty (30) days confirming that it has not abandoned the Premises; or

23.1.4.Subtenant shall default in any payment of Rent required to be made by Subtenant hereunder when due as herein provided and such default shall continue for five (5) days after notice thereof in writing to Subtenant; or

23.1.5.Subtenant shall default in securing insurance or in providing evidence of insurance as set forth in Section 11 of this Sublease or shall default with respect to lien claims as set forth in Section 20 of this Sublease and either such default shall continue for thirty (30) days after notice thereof in writing to Subtenant; or

23.1.6.Subtenant shall, by its act or omission to act, cause a default under the Prime Lease and such default shall continue for the same period of time for such default to be cured under the Prime Lease after notice thereof in writing to Subtenant; or

23.1.7.Subtenant shall default in any of the other covenants and agreements herein contained to be kept, observed and performed by Subtenant, and such default shall continue for thirty (30) days after notice thereof in writing to Subtenant, provided, however, if such default is not capable of being cured within such thirty (30) day period, then such period shall be extended for an additional fifteen (15) days as long as Subtenant commenced the cure during such thirty (30) day period and thereafter continues to diligently prosecute such cure to completion.

24.Remedies.  Upon the occurrence of any one or more Events of Default, Sublandlord may exercise any remedy against Subtenant which Prime Landlord may exercise for default by Sublandlord under the Prime Lease.

25.Waiver of Jury Trial.  SUBLANDLORD AND SUBTENANT HEREBY JOINTLY AND SEVERALLY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY SUBLANDLORD OR SUBTENANT ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS SUBLEASE, THE RELATIONSHIP OF SUBLANDLORD AND SUBTENANT, SUBTENANT'S USE OR OCCUPANCY OF THE PREMISES AND/OR ANY CLAIM OF INJURY OR DAMAGE. THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES OTHER THAN SUBLANDLORD OR SUBTENANT. If the foregoing waiver of jury trial is not permitted by applicable law, then Sublandlord and Subtenant agree that, other than an action by Sublandlord to obtain possession of the Premises or any action which seeks relief which can only be obtained by court proceeding, then any action or proceeding 

9

 

by either of them against the other arising out of or in connection with this Sublease, Subtenant's use or occupancy of the Premises, or any claim of injury or damage occurring in or about the Premises shall, upon the motion of either party, be submitted to arbitration.

26.Security Deposit.  To secure the faithful performance by Subtenant of all covenants, conditions and agreements in this Sublease set forth and contained on part of Subtenant to be fulfilled, kept, observed and performed including, but not by way of limitation, such covenants and agreements in this Sublease which become applicable upon the termination of the same by re-entry or otherwise, Subtenant has deposited with Sublandlord the Security Deposit as specified in Section 1.13 on the understanding that: (a) the Security Deposit or any portion thereof not previously applied, or from time to time, such one or more portions thereof, may be applied in accordance with applicable law to the curing of any default beyond notice and cure periods that may exist, without prejudice to any other remedy or remedies which Sublandlord may have on account thereof, and upon such application Subtenant shall pay Sublandlord on demand the amount so applied which shall be added to the Security Deposit so the same may be restored to its original amount; (b) should the Sublease be assigned by Sublandlord, the Security Deposit or any portion thereof not previously applied may be turned over to Sublandlord’s assignee and if the same be turned over as aforesaid and upon assumption of the Security Deposit and Sublandlord’s obligations hereunder by such assignee, Subtenant hereby releases Sublandlord from any and all liability with respect to the Security Deposit and/or its application or return; (c) if permitted by law, Sublandlord or its successor shall not be obligated to hold the Security Deposit as a separate fund, but on the contrary may commingle the same with its other funds; (d) if Subtenant shall faithfully fulfill, keep, perform and observe all of the covenants, conditions and agreements in this Sublease set forth and contained on the part of Subtenant to be fulfilled, kept, performed and observed, the sum deposited or the portion thereof not previously applied, shall be returned to Subtenant without interest no later than thirty (30) days after the expiration of the Term of this Sublease or any renewal or extension thereof, provided Subtenant has vacated the Premises and surrender possession thereof to Sublandlord at the expiration of the Term or any extension or renewal thereof as provided herein; (e) in the event that Sublandlord terminates this Sublease or Subtenant’s right to possession by reason of an Event of Default by Subtenant, Sublandlord may apply the Security Deposit against damages suffered to the date of such termination and/or may retain the Security Deposit to apply against such damages as may be suffered or shall accrue thereafter by reason of Subtenant’s default; (f) in the event of bankruptcy, insolvency, reorganization or other creditor-debtor proceedings shall be instituted by or against Subtenant, or its successors or assigns, the Security Deposit shall be deemed to be applied first to the payment of any Rent due Sublandlord for all periods prior to the institution of such proceedings, and the balance, if any, of the Security Deposit may be retained or paid to Sublandlord in partial liquidation of Sublandlord’s damages.

27.Notices and Consents.  All notices, demands, requests, consents or approvals which may or are required to be given by either party to the other shall be in writing and shall be deemed given when (i) received or refused if sent by United States registered or certified mail, post prepaid, return receipt requested, or (ii) if sent by overnight commercial courier service (a) if to Subtenant, addressed to Subtenant at the addresses specified in Section 1.2 or at such other place as Subtenant may from time to time designate by notice in writing to Sublandlord or (b) if for Sublandlord, addressed to Sublandlord at the address specified in Section 1.3 or at such other place as Sublandlord may from time to time designate by notice in writing to Subtenant, or (iii) if sent by electronic mail, upon receipt if during normal business hours or, if received after normal business hours, the next business day. Any notice sent by electronic mail shall be sent (a) if to Subtenant, addressed to Subtenant at the e-mail address specified in Section 1.16 or at such other e-mail address Subtenant provides to Sublandlord, and (b) if to Sublandlord, addressed to Sublandlord at the e-mail addresses specified in Section 1.17 or at such other e-mail addresses Sublandlord provides to Subtenant, and shall also be accompanied by notice sent via United States registered or certified mail, or overnight commercial courier. Each party agrees promptly to deliver a copy of each notice, demand, request, consent or approval from such party to Prime Landlord and promptly to deliver to the other party 

10

 

a copy of any notice, demand, request, consent or approval received from Prime Landlord. Such copies shall be delivered by overnight commercial courier or electronic mail.

28.Provisions Regarding Sublease.  This Sublease and all the rights of parties hereunder are subject and subordinate to the Prime Lease. Each party agrees that it will not, by its act or omission to act, cause a default under the Prime Lease. In furtherance of the foregoing, the parties hereby confirm, each to the other, that it is not practical in this Sublease agreement to enumerate all of the rights and obligations of the various parties under the Prime Lease and specifically to allocate those rights and obligations in this Sublease agreement. Accordingly, in order to afford to Subtenant the benefits of this Sublease and of those provisions of the Prime Lease which by their nature are intended to benefit the party in possession of the Premises, and in order to protect Sublandlord against a default by Subtenant which might cause a default or event by Sublandlord under the Prime Lease:

28.1.Intentionally omitted.

28.2.Except as otherwise expressly provided herein, Sublandlord shall perform its covenants and obligations under the Prime Lease which do not require for their performance and possession of the Premises and which are not otherwise to be performed hereunder by Subtenant on behalf of Sublandlord.

28.3.Except as otherwise expressly provided herein, Subtenant shall perform all affirmative covenants and shall refrain from performing any act which is prohibited by the negative covenants of the Prime Lease, where the obligation to perform or refrain from performing is by its nature imposed upon the party in possession of the Premises. If practicable, Subtenant shall perform affirmative covenants which are also covenants of Sublandlord under the Prime Lease with respect to the Premises at least five (5) days prior to the date when Sublandlord’s performance is required under the Prime Lease. Sublandlord shall have the right to enter the Premises to cure any default by Subtenant under this Section if not cured by Subtenant within thirty (30) days after receipt of written notice from Sublandlord (or within such shorter time period if required by the Prime Lease).

28.4.Sublandlord hereby grants Subtenant the right to receive all of the services and benefits with respect to the Premises which are to be provided by Prime Landlord under the Prime Lease. Sublandlord shall have no duty to perform any obligations of Prime Landlord which are, by their nature, the obligation of an owner or manager of real property. For example, Sublandlord shall not be required to provide the services or repairs which Prime Landlord is required to provide under the Prime Lease. Sublandlord shall have no responsibility for or be liable to Subtenant for any default, failure or delay on the part of Prime Landlord in the performance or observance by Prime Landlord of any of its obligations under the Prime Lease, nor shall such default by Prime Landlord affect this Sublease or waive or defer the performance of any of Subtenant’s obligations hereunder except to the extent that such default by Prime Landlord excuses performance by Sublandlord under the Prime Lease. Notwithstanding the foregoing, the parties contemplate that Prime Landlord shall, in fact, perform its obligations under the Prime Lease and in the event of any default or failure of such performance by Prime Landlord, Sublandlord agrees that it will, upon notice from Subtenant, make demand upon Prime Landlord to perform its obligations under the Prime Lease and, if requested by Subtenant, pursue all remedies at law or in equity to compel Landlord’s performance provided Subtenant pays for any costs incurred therefor.

28.5.Sublandlord agrees to perform, according to the terms of the Prime Lease, the obligations of Sublandlord under the Prime Lease that have not been assumed by Subtenant with respect to the Premises, including without limitation the prompt and timely payment of all Rent and Additional Rent owed under the Prime Lease. Sublandlord further agrees that Sublandlord shall not enter into any agreement with Prime Landlord to modify or terminate the Prime Lease in a manner which would affect the Premises 

11

 

or Sublease, or to exercise any right to terminate the Prime Lease in a manner which would affect the Premises or Sublease without obtaining Subtenant's prior written consent in each instance, not to be unreasonably withheld, but only as it pertains to any modification or termination which would affect the Premises or Sublease. Sublandlord agrees to promptly provide Subtenant with copies of all notices received from Prime Landlord with respect to the Premises or Sublease and all notices of default received from Prime Landlord under the Prime Lease.

28.6.Sublandlord agrees to exercise commercially reasonable efforts in good faith to cause Prime Landlord to perform its obligations under the Prime Lease with respect to the Premises including, without limitation, the furnishing of any services or utilities to the Premises and the maintenance, repair or restoration of the Premises and the Building. If Prime Landlord shall default in the performance of any of its covenants or obligations under the Prime Lease which affects the Premises and Sublandlord has not caused Prime Landlord to cure such default within thirty (30) days after written notice from Subtenant, Subtenant shall have the right, at Subtenant's expense, to make any demand or institute any action or proceeding at law or in equity or otherwise against Prime Landlord permitted under the Prime Lease for the enforcement of Prime Landlord's obligations or covenants under the Prime Lease.

29.Additional Services.  Sublandlord shall cooperate with Subtenant to cause Prime Landlord to provide services required by Subtenant in addition to those otherwise required to be provided by Prime Landlord under the Prime Lease. Subtenant shall pay Prime Landlord’s charge for such services promptly after having been billed therefor by Prime Landlord or by Sublandlord.

30.Prime Landlord’s Consent.  This Sublease and the obligations of the parties hereunder are expressly conditioned upon Sublandlord’s obtaining prior written consent hereto by Prime Landlord in a form reasonably acceptable to Subtenant, which shall include the terms set forth in the Prime Landlord consent attached hereto as Exhibit D and which Sublandlord, at its sole cost and expense, shall use commercially reasonable efforts to obtain. Subtenant shall promptly deliver to Sublandlord any information reasonably requested by Prime Landlord (in connection with Prime Landlord’s approval of this Sublease) with respect to the nature and operation of Subtenant’s business and/or financial condition of Subtenant. Sublandlord and Subtenant hereby agree, for the benefit of Prime Landlord, that this Sublease and Prime Landlord’s consent hereto shall not (a) create privity of contract between Prime Landlord and Subtenant; (b) be deemed to have amended the Prime Lease in any regard (unless Prime Landlord shall have expressly agreed in writing to such amendment); or (c) construed as a waiver of Prime Landlord’s right under the Prime Lease to consent to any assignment of the Prime Lease by Sublandlord, or as a waiver of Prime Landlord’s right to consent to any assignment by Subtenant of this Sublease or any sub- subletting of the Premises or any part thereof. If Prime Landlord fails to consent to this Sublease within fifteen (15) business days after the date of full execution and delivery of this Sublease, either party shall have the right to terminate this Sublease by giving written notice thereof to the other at any time thereafter, but before Prime Landlord grants such consent. In connection with the consent to this Sublease, Prime Landlord and Sublandlord shall acknowledge and agree in writing that the Prime Lease is valid and binding.

31.Brokerage.  Each party warrants to the other that it has had no dealing with any broker or agent in connection with this Sublease other than the Brokers specified in Section 1.15, whose commission shall be paid by Sublandlord, and covenants to pay, hold harmless and indemnify the other party from and against any and all costs (including reasonable attorneys’ fees), expense or liability for any compensation, commissions and charges claimed by any other broker or other agent with respect to this Sublease or the negotiation thereof on behalf of such party.

32.Force Majeure.  Sublandlord and Subtenant shall not be deemed in default with respect to any of the terms, covenants and conditions of this Sublease on either party’s part to be performed, if such failure to timely perform same is due in whole or in part to any strike, lockout, labor trouble (whether legal or 

12

 

illegal), civil disorder, failure of power, restrictive governmental laws and regulations, riots, insurrections, war, shortages, accidents, casualties, acts of God, or any other cause beyond the reasonable control of such party, it being understood that the failure to pay money shall not be excused by Force Majeure.

33.Miscellaneous.

33.1.Binding Effect.  This Sublease shall inure to the benefit of and be a burden upon Sublandlord, Subtenant, and Prime Landlord and their respective transferees, successors and permitted assigns, subject, in the case of Subtenant, to the provisions of Section 12 hereof.

33.2.Governing Law.  This Sublease shall be governed by and interpreted in accordance with the laws of the Commonwealth of Massachusetts.

33.3.Counterparts.  This Sublease may be executed in one or more counterparts, each of which will constitute an original and all of which together shall comprise the entire Sublease and may be executed by PDF or scanned signatures which shall be treated as original signatures.

33.4.Authority.  Each party hereto hereby represents and warrants that this Sublease has been duly authorized, executed and delivered by all necessary action on behalf of such party, constitutes the valid and binding agreement of such party and is enforceable in accordance with its terms.

33.5.Survival.  Notwithstanding any provision to the contrary contained in this Sublease, the indemnification obligations of the parties hereunder shall survive the expiration of the Term hereof or any earlier termination of this Sublease.

{signatures appear on following page}

13

 

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

 

	
SUBLANDLORD:

	
Cotiviti, Inc., a Delaware corporation

	
By:
	
 
	
/s/ Peter Csapo

	
Name:
	
 
	
Peter Csapo

	
Title:
	
 
	
CFO, CAO, Treasurer and EVP

	
Date:
	
 
	
12/21/2020

	
SUBTENANT:

	
La Jolla Pharmaceutical Company, a California corporation

	
By:
	
 
	
/s/ Larry Edwards

	
Name:
	
 
	
Larry Edwards

	
Title:
	
 
	
CEO

	
Date:
	
 
	
12/21/2020

 

14

 

Exhibit A

Premises

15

 

Exhibit B

Furniture

 

	
ITEMS
	
#

	
Cubicles/Workstations in main area nearest reception
	
16

	
Board room table
	
1

	
Board room credenza
	
1

	
Board room chairs
	
16

	
Conference room table
	
1

	
Conference room credenza
	
1

	
Conference room chairs
	
9

	
Conference room LCD
	
1

	
Reception desk
	
1

	
Reception guest chairs
	
2

	
Reception table
	
1

	
LCDs (3 offices)
	
3

	
Desk chairs
	
52

	
Guest chairs
	
22

	
Refrigerators
	
4

	
Phone Room workstations
	
2

	
Tables w/ casters
	
4

	
Shelving units
	
8

	
Metal storage cabinet (IT Room)
	
1

	
2-Post Communication Racks (IT Room)
	
2

	
DSX Access Control Hardware System
	
1

 

16

 

Exhibit C

The Prime Lease

17

 

Exhibit D

Landlord Consent

18phx-ex101_7.htm

Exhibit 10.1

PHX MINERALS INC. 

2021 LONG-TERM INCENTIVE PLAN 

 

Table of Contents 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
1 
	
 
	
ESTABLISHMENT OF PLAN
	
 
	
 
	
1
	
 

	
2
	
 
	
PURPOSES
	
 
	
 
	
1
	
 

	
3
	
 
	
DEFINITIONS
	
 
	
 
	
1
	
 

	
4
	
 
	
INCENTIVE AWARDS AVAILABLE UNDER THE PLAN
	
 
	
 
	
5
	
 

	
5
	
 
	
SHARES SUBJECT TO PLAN
	
 
	
 
	
6
	
 

	
6
	
 
	
ELIGIBILITY
	
 
	
 
	
6
	
 

	
7
	
 
	
OPTIONS
	
 
	
 
	
6
	
 

	
8
	
 
	
BONUS STOCK AWARDS
	
 
	
 
	
9
	
 

	
9 
	
 
	
STOCK APPRECIATION RIGHTS
	
 
	
 
	
9
	
 

	
10
	
 
	
PHANTOM STOCK AWARDS
	
 
	
 
	
10
	
 

	
11
	
 
	
RESTRICTED STOCK AWARDS AND RESTRICTED STOCK UNIT AWARDS
	
 
	
 
	
10
	
 

	
12
	
 
	
CASH AWARDS AND PERFORMANCE AWARDS
	
 
	
 
	
11
	
 

	
13
	
 
	
OTHER STOCK OR PERFORMANCE-BASED AWARDS
	
 
	
 
	
13
	
 

	
14
	
 
	
ADJUSTMENT UPON CHANGES IN CAPITALIZATION AND CORPORATE EVENTS
	
 
	
 
	
13
	
 

	
15
	
 
	
GENERAL PROVISIONS APPLICABLE TO ALL AWARDS
	
 
	
 
	
14
	
 

	
16
	
 
	
WITHHOLDING FOR TAXES
	
 
	
 
	
17
	
 

	
17
	
 
	
MISCELLANEOUS
	
 
	
 
	
17
	
 

 

 

PHX MINERALS INC.

2021 LONG-TERM INCENTIVE PLAN

	
1.
	
ESTABLISHMENT OF PLAN. PHX Minerals Inc. (the “Company”) hereby establishes the “PHX Minerals Inc. 2021 Long-Term Incentive Plan”, which was adopted by the Board on January 5, 2021, subject to the approval of the Company’s shareholders. The Plan shall become effective on the date on which the Company’s shareholders approve the Plan (the “Effective Date”). The Plan replaces the Company’s 2010 Restricted Stock Plan (as amended, the “Prior Plan”) for Awards granted on or after the Effective Date. Awards may not be granted under the Prior Plan beginning on the Effective Date, but this Plan shall not affect the terms or conditions of any award granted under the Prior Plan prior to the Effective Date.

	
2.
	
PURPOSES. The purposes of the Plan are as follows: (i) to offer selected Employees (including, without limitation, Executive Officers), Consultants and Non-Employee Directors of the Company or its Affiliates an opportunity to participate in the growth and financial success of the Company, (ii) to provide the Company an opportunity to attract and retain the best available personnel for positions of substantial responsibility, (iii) to provide performance-related incentives to certain of such Employees and Consultants to achieve established Performance Goals and (iv) to promote the growth and success of the Company’s business by aligning the financial interests of such Employees, Consultants and Non-Employee Directors with that of the shareholders of the Company. Toward these objectives, this Plan provides for the grant of performance-based and non-performance-based equity Awards and performance-based Cash Awards.

	
3.
	
DEFINITIONS. As used herein, unless the context requires otherwise, the following terms have the meanings indicated below. 

	
 
	
(a)
	
 “Affiliate” means (i) any entity in which the Company, directly or indirectly, owns 10% or more of the combined voting power, as determined by the Committee, (ii) any “parent corporation” of the Company 

 

 

	
 
		
(as defined in Section 424(e) of the Code), (iii) any “subsidiary corporation” of any such parent corporation (as defined in Section 424(f) of the Code) of the Company or (iv) any trades or businesses, whether or not incorporated which are members of a controlled group or are under common control (as defined in Sections 414(b) or (c) of the Code) with the Company; provided, however, with respect to Awards of Options and Stock Appreciation Rights that are intended to be excluded from the application of Section 409A of the Code, the term “Affiliate” will be applied in a manner to ensure that the Common Stock covered by such Awards would be “service recipient stock” with respect to the Participants to whom the Awards are granted; and provided further, however, with respect to Awards of Options that are intended to be Incentive Stock Options, “Affiliate “means an entity described in clauses (ii) and (iii) of this Section 3(a) and any other entity as may be permitted from time to time by the Code or by the Internal Revenue Service to be an employer of Employees to whom Incentive Stock Options may be granted. 

	
 
	
(b)
	
“Award” means any right granted under the Plan, including an Option, a Restricted Stock Award, a Restricted Stock Unit Award, a Stock Appreciation Right, Bonus Stock, a Cash Award, a Performance Award, a Phantom Stock Award or an Other Stock or Performance-Based Award, whether granted singly or in combination, to a Participant pursuant to the terms, conditions and limitations that the Committee may establish in order to fulfill the objectives of the Plan. 

	
 
	
(c)
	
“Award Agreement” means any written agreement, notice, program and/or similar document evidencing the terms of an Award granted under the Plan. 

	
 
	
(d)
	
“Board” means the Board of Directors of the Company. 

	
 
	
(e)
	
“Bonus Stock” means an Award granted under Section 8 of the Plan of shares of Common Stock issued to the Participant for such consideration, if any, as established by the Committee. 

	
 
	
(f)
	
“Cash Award” means an Award granted pursuant to Section 12 of the Plan. 

	
 
	
(g)
	
“Cause” means, except in the context of a Change in Control, the following: 

	
 
	
(i)
	
in the case of a Director, the commission of an act of fraud or intentional misrepresentation or an act of embezzlement, misappropriation or conversion of assets or opportunities of the Company or any Affiliate; 

	
 
	
(ii)
	
in the case of a Participant whose employment with the Company or an Affiliate is subject to the terms of a written employment agreement between such Participant and the Company or Affiliate, which employment agreement includes a definition of “Cause,” the term “Cause” as used in the Plan or any agreement establishing an Award shall have the meaning set forth in such employment agreement during the period that such employment agreement remains in effect; 

	
 
	
(iii)
	
in the case of a Participant who is eligible for benefits under a severance plan sponsored by the Company or one of its Affiliates, the term “Cause” as used in the Plan or any agreement establishing an Award shall have the meaning set forth in such severance plan during the period that the Participant remains eligible for benefits under that plan; and 

	
 
	
(iv)
	
in all other cases, as determined in the discretion of the Board, the following: 

	
 
	
(A)
	
the willful commission by the Participant of a crime or other act of misconduct that causes or is likely to cause substantial economic damage to the Company or an Affiliate or substantial injury to the business reputation of the Company or an Affiliate; 

	
 
	
(B)
	
the commission by the Participant of an act of fraud in the performance of the Participant’s duties on behalf of the Company or an Affiliate; 

	
 
	
(C)
	
the willful and material violation by the Participant of the Company’s Code of Ethics & Business Practices; or 

	
 
	
(D)
	
the continuing and repeated failure of the Participant to perform his or her duties to the Company or an Affiliate, including by reason of the Participant’s habitual absenteeism (other than such failure resulting from the Participant’s incapacity due to physical or mental illness), which, with respect to Executive Officers, has continued for a period of at least thirty (30) days following delivery of a written demand for substantial performance to the Participant by the Board (or its designee) which specifically identifies the manner in which the Board (or its designee) believes that the Participant has not performed his or her duties. 

2

 

For purposes of the Plan, no act, or failure to act, on the Participant’s part shall be considered “willful” unless done or omitted to be done by the Participant not in good faith and without reasonable belief that the Participant’s action or omission was in the best interest of the Company or an Affiliate, as the case may be. The determination of whether Cause exists with respect to an Executive Officer shall be made by the Board (or its designee) in its sole discretion and with respect to all other Participants, the existence of Cause shall be determined by the Company’s Chief Executive Officer or, if the Chief Executive Officer is the subject of such determination, the most senior human resources officer, in such applicable person’s sole discretion and in consultation with the Company’s regular outside legal counsel. 

	
 
	
(h)
	
“Change in Control” means the occurrence during the term hereof of any of the following events: 

	
 
	
(i)
	
any “person” (as defined in Section 3(a)(9) of the Exchange Act, and as modified in Section 13(d) and 14(d) of the Exchange Act) (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by (A) shares of the Company’s Common Stock and (B) any other securities of the Company that vote generally in the election of directors (“Voting Securities”), then outstanding; 

	
 
	
(ii)
	
during any period of two (2) consecutive years, individuals who at the beginning of such period constitute the Board, and any new director, whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; 

	
 
	
(iii)
	
the shareholders of the Company approve a merger or consolidation of the Company with any other corporation and such merger or consolidation of the Company with such other corporation is consummated, other than a merger or consolidation that would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least eighty percent (80%) of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or 

	
 
	
(iv)
	
the involuntary dissolution of the Company. 

Notwithstanding the foregoing, a Change in Control shall not occur or be deemed to occur if any event set forth in subsections (i)–(iv) above, which would otherwise constitute a Change in Control, occurs as a direct result of the consummation of a transaction solely between the Company and one or more of its controlled Affiliates. 

Notwithstanding the foregoing, however, in any circumstance or transaction in which compensation payable pursuant to the Plan would be subject to the income tax under the Section 409A Rules if the foregoing definition of “Change in Control” were to apply, but would not be so subject if the term “Change in Control” were defined herein to mean a “change in the ownership or effective control of a corporation or a change in the ownership of a substantial portion of the assets of a corporation” within the meaning of Treasury Regulation § 1.409A-3(i)(5), then “Change in Control” means, but only to the extent necessary to prevent such compensation from becoming subject to the income tax under the Section 409A Rules, a transaction or circumstance that satisfies the requirements of both (1) a Change in Control under the applicable clause (i) through (iv) above, and (2) a change in control event under Treasury Regulation Section § 1.409A-3(i)(5).

	
 
	
(i)
	
“Code” means the Internal Revenue Code of 1986, as amended, and any successor statute. Reference in the Plan to any section of the Code shall be deemed to include any amendments or successor provisions to such section and any Treasury regulations promulgated under such section. 

	
 
	
(j)
	
“Committee” means the Compensation Committee, as constituted from time to time, of the Board that is appointed by the Board to administer the Plan, or if no such committee is appointed (or no such committee shall be in existence at any relevant time), the term “Compensation Committee” for purposes of the Plan shall mean the Board; provided, however, that as necessary in each case to satisfy the requirements of Rule 16b-3 with respect to Awards granted under the Plan, while the Common Stock is publicly traded, the Committee shall be a committee of the Board consisting solely of two or more Non-Employee Directors, in accordance with Rule 16b-3.

3

 

	
 
	
(k)
	
“Common Stock” means the Class A common stock of the Company, $0.01666 par value per share, or the common stock that the Company may in the future be authorized to issue. 

	
 
	
(l)
	
“Company” means PHX Minerals Inc., an Oklahoma corporation, and any successor corporation. 

	
 
	
(m)
	
 “Consultant” means any person (other than an Employee or a Director, solely with respect to rendering services in such person’s capacity as a Director) who is engaged by the Company or any Affiliate to render consulting or advisory services to the Company or such Affiliate and who is a “consultant or advisor” within the meaning of Rule 701 promulgated under the Securities Act or Form S-8 promulgated under the Securities Act. 

	
 
	
(n)
	
“Continuous Service” means the provision of services to the Company or an Affiliate, or any successor, as an Employee, Director or Consultant, which is not interrupted or terminated. Except as otherwise provided in a particular Award Agreement, service shall not be considered interrupted or terminated for this purpose in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Affiliate or any successor, in any capacity of Employee, Director or Consultant, or (iii) any change in status as long as the individual remains in the service of the Company or an Affiliate, or any successor, as an Employee, Director or Consultant. An approved leave of absence shall include sick leave, military leave or any other authorized personal leave. For purposes of each Incentive Stock Option, if such leave exceeds ninety (90) days, and re-employment upon expiration of such leave is not guaranteed by statute or contract, then the Incentive Stock Option shall be treated as a Non-Qualified Stock Option on the day that is three (3) months and one (1) day following the expiration of such ninety (90)-day period. 

	
 
	
(o)
	
“Director” means a member of the Board or the board of directors of an Affiliate. 

	
 
	
(p)
	
“Disability” means the “disability” of a person as defined in a then-effective long-term disability plan maintained by the Company that covers such person or, if such a plan does not exist at any relevant time, the permanent and total disability of a person within the meaning of Section 22(e)(3) of the Code. For purposes of determining the time during which an Incentive Stock Option may be exercised under the terms of an Award, “Disability” means the permanent and total disability of a person within the meaning of Section 22(e)(3) of the Code. Section 22(e)(3) of the Code provides that an individual is totally and permanently disabled if he or she is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months. 

	
 
	
(q)
	
“Employee” means any person, including an Executive Officer or Director, who is employed by the Company or an Affiliate. The payment of compensation by the Company or an Affiliate to a Director or Consultant solely with respect to such individual rendering services in the capacity of a Director or Consultant, however, shall not be sufficient to constitute “employment” by the Company or that Affiliate. 

	
 
	
(r)
	
“Executive Officer” means a person who is an “officer” of the Company or any Affiliate within the meaning of Section 16 of the Exchange Act (whether or not the Company is subject to the requirements of the Exchange Act). 

	
 
	
(s)
	
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor statute. Reference in the Plan to any section of the Exchange Act shall be deemed to include any amendments or successor provisions to such section and any rules and regulations relating to such section. 

	
 
	
(t)
	
“Fair Market Value” means, as of any date, the value of the Common Stock determined as follows: 

	
 
	
(i)
	
If the Common Stock has an established market by virtue of being listed or quoted on any registered stock exchange, the Fair Market Value of a share of Common Stock shall be the closing sales price for such a share of Common Stock (or the closing bid price, if applicable) on such exchange (or, if the Common Stock is listed or traded on more than one registered exchange, on the exchange with the greatest volume of trading in the Common Stock) on the day of determination (or if no such price is reported on that day, on the last market trading day prior to the day of determination), as reported in The Wall Street Journal or such other source as the Committee deems reliable. 

	
 
	
(ii)
	
In the absence of any listing or quotation of the Common Stock on any such registered exchange, the Fair Market Value shall be determined in good faith by the Committee. 

	
 
	
(u)
	
“Incentive Stock Option” means any Option that satisfies the requirements of Section 422 of the Code and is granted pursuant to Section 7 of the Plan. 

4

 

	
 
	
(v)
	
“Non-Employee Director” means a Director of the Company who either (i) is not an Employee or Officer, does not receive compensation (directly or indirectly) from the Company or an Affiliate in any capacity other than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K), does not possess an interest in any other transaction as to which disclosure would be required under Item 404(a) of Regulation S-K and is not engaged in a business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K or (ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3.

	
 
	
(w)
	
“Non-Qualified Stock Option” means an Option granted under Section 7 of the Plan that is not intended to be an Incentive Stock Option. 

	
 
	
(x)
	
“Option” means an Award granted pursuant to Section 7 of the Plan to purchase a specified number of shares of Common Stock during the Option period for a specified exercise price, whether granted as an Incentive Stock Option or as a Non-Qualified Stock Option. 

	
 
	
(y)
	
“Other Stock or Performance-Based Award” means an award granted pursuant to Section 13 of the Plan that is not otherwise specifically provided for in the Plan, the value of which is based in whole or in part upon the value of a share of Common Stock. 

	
 
	
(z)
	
“Participant” means any Employee, Non-Employee Director or Consultant to whom an Award has been granted under the Plan. 

	
 
	
(aa)
	
“Performance Award” means an Award granted pursuant to Section 12 of the Plan to a Participant that is subject to the attainment of one or more Performance Goals. 

	
 
	
(bb)
	
“Performance Goal” means a standard established by the Committee based on one or more business criteria described in Section 12 to determine in whole or in part whether a Performance Award shall be earned. 

	
 
	
(cc)
	
“Performance Period” shall mean that period of not less than one fiscal quarter in duration established by the Committee at the time any Performance Award is granted or at any time thereafter, during which any Performance Goals specified by the Committee with respect to such Award are to be measured. 

	
 
	
(dd)
	
“Phantom Stock Award” means an Award granted pursuant to Section 10 of the Plan. 

	
 
	
(ee)
	
“Plan” means this PHX Minerals Inc. 2020 Long-Term Incentive Plan, as set forth herein and as it may be amended from time to time. 

	
 
	
(ff)
	
“Regulation S-K” means Regulation S-K promulgated under the Securities Act, as it may be amended from time to time, and any successor to Regulation S-K. Reference in the Plan to any item of Regulation S-K shall be deemed to include any amendments or successor provisions to such item. 

	
 
	
(gg)
	
“Restricted Stock Award” means an Award granted under Section 11(a) of the Plan of shares of Common Stock issued to the Participant for such consideration, if any, and subject to such restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions and other terms and conditions, as are established by the Committee. 

	
 
	
(hh)
	
“Restricted Stock Unit Award” means an Award granted under Section 11(b) of the Plan. 

	
 
	
(ii)
	
“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, as it may be amended from time to time, and any successor to Rule 16b-3.

	
 
	
(jj)
	
“Section” means a section of the Plan unless otherwise stated or the context otherwise requires. 

	
 
	
(kk)
	
“Securities Act” means the Securities Act of 1933, as amended, and any successor statute. Reference in the Plan to any section of the Securities Act shall be deemed to include any amendments or successor provisions to such section and any rules and regulations relating to such section. 

	
 
	
(ll)
	
“Stock Appreciation Rights” means an Award granted under Section 9 of the Plan. 

	
 
	
(mm)
	
“Ten Percent Shareholder” means a person who owns (or is deemed to own pursuant to Section  424(d) of the Code) at the time an Option is granted stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates. 

4.INCENTIVE AWARDS AVAILABLE UNDER THE PLAN. Awards granted under this Plan may be (a) Incentive Stock Options; (b) Non-Qualified Stock Options; (c) Restricted Stock Awards; (d) Stock Appreciation 

5

 

Rights; (e) Bonus Stock; (f) Cash Awards; (g) Performance Awards; (h) Phantom Stock Awards; (i) Restricted Stock Unit Awards; and (j) Other Stock or Performance-Based Awards. 

5.SHARES SUBJECT TO PLAN. Subject to adjustment pursuant to Section 14(a) hereof, the aggregate number of shares of Common Stock that may be issued with respect to Awards granted under the Plan shall not exceed 2,500,000, including such aggregate number of shares that have been reserved for issuance and are subject to unvested Awards under the Prior Plan (the “Share Pool Limit”). At all times during the term of the Plan, the Company shall allocate and keep available such number of shares of Common Stock as will be required to satisfy the requirements of outstanding Awards under the Plan. Except for shares of Common Stock issued with respect to Awards that are assumed or substituted as a result of the Company’s acquisition of another company (including by way of merger, combination or similar transaction), the number of shares reserved for issuance under the Plan shall be reduced by the number of shares of Common Stock issued in connection with the exercise or settlement of an Award or used to determine the amount of cash paid in connection with the exercise of Stock Appreciation Rights and the settlement of Phantom Stock Awards. Any shares of Common Stock (x) covered by an Award (or a portion of an Award) that is forfeited or canceled or that expires or (y) except as provided below, that otherwise would be issued but are withheld in respect of taxes (up to the maximum statutory rate), shall be deemed not to have been issued for purposes of determining the maximum aggregate number of shares of Common Stock which may be issued under the Share Pool Limit and shall remain available for Awards under the Plan; provided that the following shall not remain available for Awards under the Plan and shall count against the Share Pool Limit: (i) any shares tendered or withheld to pay the exercise price of, or tax withholding obligations related to, Awards, (ii) any shares repurchased by the Company from a Participant with the proceeds from the exercise of Options and (iii) any shares reserved for issuance under a Stock Appreciation Right Award that exceed the number of shares actually issued upon exercise. The shares to be delivered under the Plan shall be made available from (a) authorized but unissued shares of Common Stock, (b) Common Stock held in the treasury of the Company or (c) previously issued shares of Common Stock reacquired by the Company, including shares purchased on the open market, in each case as the Committee may determine from time to time in its sole discretion. Subject to adjustment in accordance with Section 14(a), no more than 1,750,000 shares of Common Stock may be issued in the aggregate pursuant to the exercise of Incentive Stock Options.

	
6.
	
ELIGIBILITY. 

	
 
	
(a)
	
Awards other than Incentive Stock Options may be granted to Employees (including, without limitation, Executive Officers), Directors and Consultants. Incentive Stock Options may be granted only to Employees. Except as provided in this Section 6, the Committee in its sole discretion shall select the recipients of Awards. 

	
 
	
(b)
	
The Committee shall have the authority to grant equity-based awards, including Options, Restricted Stock Awards and Restricted Stock Unit Awards, subject to the terms of the Plan, including specifically the limitations contained in this Section 6 and any additional limitations as may be contained in resolutions adopted by the Board from time to time, to selected Employees and Consultants who are not then (A) Executive Officers or (B) Non-Employee Directors. The Board may determine, or may cause the Committee to determine, (i) the maximum aggregate number of shares of Common Stock subject to Options granted by the Committee in any one calendar year; (ii) the maximum aggregate number of shares of Common Stock covered by Restricted Stock Awards and Restricted Stock Unit Awards in the aggregate granted by the Committee in any one calendar year; (iii) the aggregate number of shares of Common Stock that may be awarded to any individual under Options granted by the Committee; and/or (iv) the aggregate number of shares of Common Stock that may be awarded to any individual under Restricted Stock Awards and Restricted Stock Unit Awards in the aggregate granted by the Committee. 

	
 
	
(c)
	
A Participant may be granted more than one Award under the Plan, and Awards may be granted at any time or times during the term of the Plan. The grant of an Award to an Employee, Director or Consultant shall not be deemed either to entitle that individual to, or to disqualify that individual from, participation in any other grant of Awards under the Plan. 

	
7.
	
OPTIONS. 

	
 
	
(a)
	
Terms and Conditions of Options. The Committee shall determine whether an Option shall be granted as an Incentive Stock Option or a Non-Qualified Stock Option. The Committee shall determine the provisions, terms and conditions of each Option including, but not limited to, the vesting schedule, the number of shares of Common Stock subject to the Option, the exercise price of the Option, the period during which the Option may be exercised, repurchase provisions, forfeiture provisions, methods of 

6

 

	
 
		
payment and all other terms and conditions of the Option, subject to the requirements of Section 15 and the following:  

	
 
	
(i)
	
Exercise Price. The exercise price of an Option shall be not less than the Fair Market Value of the shares of Common Stock on the date of grant of the Option. In addition, the exercise price of any Incentive Stock Option granted to a Ten Percent Shareholder shall not be less than 110% of the Fair Market Value of the shares of Common Stock on the date of grant of the Option. The exercise price for each Option granted under this Section 7 shall be subject to adjustment pursuant to Section 14(a). 

	
 
	
(ii)
	
Exercise Period. Options shall be exercisable within the time or times or upon the event or events determined by the Committee and set forth in the Award Agreement; provided, however, that no Option shall be exercisable later than the expiration of ten (10) years from the date of grant of the Option, and provided further, that no Incentive Stock Option granted to a Ten Percent Shareholder shall be exercisable after the expiration of five (5) years from the date of grant of the Option. 

	
 
	
(iii)
	
Limitations on Incentive Stock Options. The aggregate Fair Market Value (determined as of the date of grant of an Option) of Common Stock which any Employee is first eligible to purchase during any calendar year by exercise of Incentive Stock Options granted under the Plan and by exercise of incentive stock options (within the meaning of Section 422 of the Code) granted under any other incentive stock option plan of the Company or an Affiliate shall not exceed $100,000. If the Fair Market Value of stock with respect to which all incentive stock options described in the preceding sentence held by any one Participant are exercisable for the first time by such Participant during any calendar year exceeds $100,000, the Options (that are intended to be Incentive Stock Options on the date of grant thereof) for the first $100,000 worth of shares of Common Stock to become exercisable in such year shall be deemed to constitute incentive stock options within the meaning of Section 422 of the Code and the Options (that are intended to be Incentive Stock Options on the date of grant thereof) for the shares of Common Stock in the amount in excess of $100,000 that become exercisable in that calendar year shall be treated as Non-Qualified Stock Options. If the Code is amended after the Effective Date to provide for a different limit than the one described in this Section 7(a)(iii), such different limit shall be incorporated herein and shall apply to any Options granted after the effective date of such amendment. 

	
 
	
(b)
	
Transferability of Options. Options granted under the Plan, and any interest therein, shall not be transferable or assignable by the Participant, and may not be made subject to execution, attachment or similar process, other than by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of the Participant only by the Participant; provided, however, that the Participant may designate persons who or which may exercise his or her Options following his or her death. Notwithstanding the preceding sentence, Non-Qualified Stock Options may be transferred to such family members, family member trusts, family limited partnerships and other family member entities as the Committee, in its sole discretion, may provide for in the Participant’s Award Agreement and approve prior to any such transfer. No such transfer will be approved by the Committee if the Common Stock issuable under such transferred Option would not be eligible to be registered on Form S-8 promulgated under the Securities Act. 

	
 
	
(c)
	
Manner of Exercise. Options may be exercised in such manner as approved by the Company from time to time, including by delivery to the Company of a written exercise notice or by an exercise election made by a Participant through an electronic procedure authorized by the Company (which method or procedure need not be the same for each Participant), stating the number of shares of Common Stock being purchased, the method of payment and such other matters as may be deemed appropriate by the Company in connection with the issuance of shares of Common Stock upon exercise of the Option, together with payment in full of the exercise price for the number of shares of Common Stock being purchased and satisfaction of the tax withholding provisions described in Section 16. 

	
 
	
(d)
	
Payment of Exercise Price. Payment of the aggregate exercise price for the shares of Common Stock to be purchased upon exercise of an Option may be made in cash (by check) or, if elected by the Participant, in any of the following methods: (i) if a public market for the Common Stock exists, upon the Participant’s written request, the Company may deliver certificates for the shares of Common Stock for which the Option is being exercised to a broker for sale on behalf of the Participant, provided that the Participant has irrevocably instructed such broker to remit from the proceeds of such sale directly to the Company on the Participant’s behalf the full amount of the exercise price plus any taxes the Company is required to withhold; (ii) by surrender to the Company for cancellation of shares of Common Stock 

7

 

	
 
		
owned by the Participant having an aggregate Fair Market Value on the date of exercise equal to (or, to avoid the cancellation of fractional shares of Common Stock, less than) the aggregate exercise price of the shares of Common Stock being purchased upon such exercise; provided that such surrendered shares are not subject to any pledge or other security interest and have or meet such other requirements, if any, as the Committee may determine necessary in order to avoid an accounting earnings charge in respect of the Option being exercised; (iii) by a “net exercise” method whereby the Company withholds from the delivery of shares of Common Stock subject to the Option (or the portion thereof that is being exercised) that number of whole shares having an aggregate Fair Market Value on the date of exercise equal to (or, to avoid the issuance of fractional shares of Common Stock, less than) the aggregate exercise price of the shares of Common Stock being purchased upon such exercise; or (iv) by any combination of the foregoing, including a cash payment. No shares of Common Stock may be issued until full payment of the purchase price thereof has been made. 

	
 
	
(e)
	
Exercise of Option Following Termination of Continuous Service. 

	
 
	
(i)
	
Subject to the other provisions of this Section 7(e), (A) a Participant may exercise an Incentive Stock Option for a period of three (3) months following the date the Participant’s Continuous Service terminates and (B) a Participant may exercise a Non-Qualified Stock Option for a period of six (6) months following the date the Participant’s Continuous Service terminates, but in each case, only to the extent the Participant was otherwise entitled to exercise the Option on the date the Participant’s Continuous Service terminates. 

	
 
	
(ii)
	
If the Participant’s Continuous Service is terminated by the Company or an Affiliate for Cause, the Participant’s right to exercise the Option shall immediately terminate. 

	
 
	
(iii)
	
If the Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant may exercise the Option for a period of one (1) year following the date the Participant’s Continuous Service terminates. 

	
 
	
(iv)
	
In the event of the termination of the Participant’s Continuous Service as a result of the Participant’s death, the Participant’s estate, or a person who acquired the right to exercise the Option by bequest or inheritance, may exercise the Option for a period of one (1) year following the Participant’s date of death. 

	
 
	
(v)
	
An Option shall terminate to the extent not exercised on the last day of the specified post- termination exercise periods set forth above or the last day of the original term of the Option, whichever occurs first. 

	
 
	
(vi)
	
The Committee shall have discretion to determine whether the Continuous Service of a Participant has terminated, the effective date on which such Continuous Service terminates and whether the Participant’s Continuous Service terminated as a result of the Disability of the Participant. 

	
 
	
(f)
	
Limitations on Exercise. 

	
 
	
(i)
	
The Committee may specify a reasonable minimum number of shares of Common Stock or a percentage of the shares subject to an Option that may be purchased on any exercise of an Option; provided that such minimum number will not prevent Participant from exercising the full number of shares of Common Stock as to which the Option is then exercisable. 

	
 
	
(ii)
	
The obligation of the Company to issue any shares of Common Stock pursuant to the exercise of any Option shall be subject to the condition that such exercise and the issuance and delivery of such shares pursuant thereto comply with the Securities Act, all applicable state securities laws and the requirements of any stock exchange or market-quotation system upon which the shares of Common Stock may then be listed or quoted, as in effect on the date of exercise. The Company shall be under no obligation to register the shares of Common Stock with the Securities and Exchange Commission or to effect compliance with the registration, qualification or listing requirements of any state securities laws or stock exchange or market-quotation system, and the Company shall have no liability for any inability or failure to do so. 

	
 
	
(iii)
	
As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the shares of Common Stock are being purchased only for investment and without any present intention to sell or distribute such shares of Common Stock if, in the opinion of counsel for the Company, such a representation is required by any securities or other applicable laws. 

8

 

	
 
	
(g)
	
Modification, Extension and Renewal of Options. The Committee shall have the power to modify, cancel, extend (subject to the provisions of Section 7(a)(ii) hereof) or renew outstanding Options and to authorize the grant of new Options and/or Restricted Stock Awards in substitution therefor; provided, however, that (i) except as permitted by Section 14(a) of the Plan, any such action may not reprice any outstanding Option to reduce the exercise price thereof, directly or indirectly, without the approval of the shareholders of the Company and, (ii) without the written consent of any affected Participant, (A) impair any rights under any Option previously granted to such Participant or (B) cause the Option or the Plan to become subject to Section 409A of the Code. 

Furthermore, notwithstanding anything to the contrary contained in this Section 7(g), other than permitted pursuant to Section 14, the Committee shall not without the approval of the Company’s shareholders (x) cancel an Option or Stock Appreciation Right when the exercise price per Share exceeds the Fair Market Value of one Share in exchange for cash or another Award (other than in connection with a Change in Control as defined in Section 14(c)) or (y) take any other action with respect to an Option or Stock Appreciation Right that would be treated as a repricing under the rules and regulations of the principal U.S. national securities exchange on which the shares are then listed. Any outstanding Incentive Stock Option that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code. 

	
 
	
(h)
	
Acquisitions and Other Transactions. The Committee may, from time to time, assume outstanding options granted by another entity, whether in connection with an acquisition of such other entity or otherwise, by either (i) granting an Option under the Plan in replacement of or in substitution for the option assumed by the Company, or (ii) treating the assumed option as if it had been granted under the Plan if the terms of such assumed option could be applied to an Option granted under the Plan. Such assumption shall be permissible if the holder of the assumed option would have been eligible to be granted an Option hereunder if the other entity had applied the rules of the Plan to such grant. The Committee also may grant Options under the Plan in settlement of or substitution for outstanding options or obligations to grant future options in connection with the Company or an Affiliate acquiring another entity, an interest in another entity or an additional interest in an Affiliate, whether by merger, stock purchase, asset purchase or other form of transaction. Notwithstanding the foregoing provisions of this Section 7, in the case of an Option issued or assumed pursuant to this Section 7(h), the exercise price for the Option shall be determined in accordance with the principles of Sections 424(a) and 409A of the Code as applicable. 

	
8.
	
BONUS STOCK AWARDS. 

	
 
	
(a)
	
Bonus Stock Awards. The Committee may, from time to time and subject to the provisions of the Plan, grant shares of Common Stock for such consideration, if any, as established by the Committee and that are not subject to forfeiture provisions (a “Bonus Stock Award”). 

	
 
	
(b)
	
Rights as Shareholder. Shares of Common Stock awarded pursuant to a Bonus Stock Award shall be represented by a stock certificate registered in the name of and delivered to, or held in a book entry account by the Company’s transfer agent established on behalf of, the Participant to whom such Bonus Stock Award is granted. 

	
 
	
(c)
	
Payment for Bonus Stock. The Committee shall determine the amount and form of any payment for shares of Common Stock received by a Participant pursuant to a Bonus Stock Award. In the absence of such a determination, the Participant shall not be required to make any payment for shares of Common Stock received pursuant to a Bonus Stock Award, except to the extent otherwise required by law. 

9.STOCK APPRECIATION RIGHTS. The Committee may grant Stock Appreciation Rights to Employees, Consultants or Non-Employee Directors. The terms and conditions of Stock Appreciation Rights, including the vesting and exercise provisions, shall be set forth in an Award Agreement. A Stock Appreciation Right may be granted (i) if unrelated to an Option, at any time, or (ii) if related to an Option, either at the time of grant or at any time thereafter during the term of the Option. The exercise price of any Stock Appreciation Right shall be not less than the Fair Market Value of the Common Stock on the grant date of the Award. 

	
 
	
(a)
	
Payment of Stock Appreciation Rights. A Stock Appreciation Right is a right to receive, upon exercise of the right, shares of Common Stock or their cash equivalent in an amount equal to the increase, if any, in Fair Market Value of the Common Stock between the grant and exercise dates. The Committee may specifically designate in the Award Agreement that such Award will be settled (i) only in cash, (ii) only in shares of Common Stock or (iii) in such combination of such forms and, if not so provided in the Award 

9

 

	
 
		
Agreement, the Award will be settled in shares of Common Stock unless the Committee determines, at the time of exercise of the Award, that the Award will be settled in cash or a combination of shares of Common Stock and cash. 

	
 
	
(b)
	
Tandem Rights. Stock Appreciation Rights may be granted in connection with the grant of an Option, in which case (i) the Stock Appreciation Rights shall be exercisable at such time or times and only to the extent that the related Option is exercisable, (ii) the exercise of Stock Appreciation Rights will result in the surrender of the right to purchase the shares under the Option as to which the Stock Appreciation Rights were exercised and (iii) the Stock Appreciation Rights will not be transferable (other than by will or the laws of descent and distribution) except to the extent the related Option is transferable. Upon the exercise of an Option granted in connection with Stock Appreciation Rights, the Stock Appreciation Rights shall be cancelled to the extent of the number of shares of Common Stock as to which the Option is exercised or surrendered. 

	
 
	
(c)
	
Stock Appreciation Rights Unrelated to an Option. Stock Appreciation Rights unrelated to Options shall contain such terms and conditions as to exercisability, vesting and duration as the Committee shall determine, but in no event shall they have a term greater than ten (10) years. Each such Stock Appreciation Right that is unrelated to an Option may be exercised by the Participant for a period of six (6) months following the date the Participant’s Continuous Service terminates, but only to the extent the Participant was otherwise entitled to exercise the Stock Appreciation Right on the date the Participant’s Continuous Service terminates (and in no event later than the expiration date of the Award); provided, however, that if the Participant’s Continuous Service terminates for Cause, the Participant’s right to exercise the Stock Appreciation Right shall immediately terminate. 

10.PHANTOM STOCK AWARDS. The Committee may, from time to time and subject to the terms of the Plan, grant Phantom Stock Awards to Employees, Consultants and Non-Employee Directors. 

	
 
	
(a)
	
Payment of Phantom Stock Awards. A Phantom Stock Award is a right to receive a specified number of shares of Common Stock or cash equal to the Fair Market Value of a specified number of shares of Common Stock issued or paid at the end of a vesting period or the last day of a specified deferral period. 

	
 
	
(i)
	
Award and Restrictions. Satisfaction of a Phantom Stock Award shall occur upon expiration of the deferral period or a vesting period specified for such Phantom Stock Award by the Committee (which may include a risk of forfeiture), if any, as the Committee may impose. Such risk of forfeiture may lapse at the expiration of the deferral period or at earlier specified times (including based on achievement of performance goals and/or future service requirements), separately or in combination, installments or otherwise, as the Committee may determine. 

	
 
	
(ii)
	
Award Period; Forfeiture. The Committee shall establish, at the time of grant of each Phantom Stock Award, a period over which (or the conditions with respect to which) the Award shall vest with respect to the Participant and the time at which the Award will be settled and paid. 

	
11.
	
RESTRICTED STOCK AWARDS AND RESTRICTED STOCK UNIT AWARDS. 

	
 
	
(a)
	
Restricted Stock Awards. The Committee may, from time to time and subject to the terms of the Plan, grant Restricted Stock Awards to Employees, Consultants and Non-Employee Directors. 

	
 
	
(i)
	
Forfeiture Restrictions. Shares of Common Stock that are the subject of a Restricted Stock Award shall be subject to restrictions on disposition by the Participant and to an obligation of the Participant to forfeit and surrender the shares to the Company under certain circumstances (the “Forfeiture Restrictions”). The Forfeiture Restrictions and the vesting period shall be determined by the Committee in its sole discretion, and the Committee may provide that the Forfeiture Restrictions and the vesting period shall lapse on the passage of time, the attainment of one or more Performance Goals, established by the Committee or the occurrence of such other event or events determined to be appropriate by the Committee. The Forfeiture Restrictions applicable to a particular Restricted Stock Award shall be stated in the Award Agreement and vesting of such Restricted Stock Award shall occur upon the lapse of the Forfeiture Restrictions applicable to such Restricted Stock Award.  

	
 
	
(ii)
	
Rights as Shareholder. Shares of Common Stock awarded pursuant to a Restricted Stock Award shall be represented by a stock certificate registered in the name of the Participant of such Restricted Stock Award or by a book entry account with the Company’s transfer agent. The Participant shall have the right to vote the shares of Common Stock subject thereto and to enjoy all other shareholder rights with respect to the shares of Common Stock subject thereto, except that, 

10

 

	
 
		
unless provided otherwise in the Award, (i) the Participant shall not be entitled to delivery of the stock certificates evidencing the shares of Common Stock or release of transfer restrictions on shares of Common Stock held in a book entry account with the Company’s transfer agent until the Forfeiture Restrictions have expired, (ii) the Company or an escrow agent shall retain custody of the stock certificates evidencing the shares of Common Stock (or such shares shall be held in a book entry account with the Company’s transfer agent) until the Forfeiture Restrictions expire and (iii) the Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the shares of Common Stock until the Forfeiture Restrictions expire. During the period of restriction, all dividends (whether ordinary or extraordinary and whether paid in cash, additional shares or other property) or other distributions paid upon any Restricted Stock Award will be retained by the Company for the account of the Participant. Such dividends or other distributions will revert back to the Company if for any reason the Restricted Stock Award reverts back to the Company. Upon the expiration of the Forfeiture Restrictions, all dividends or other distributions made on such Restricted Stock Award and retained by the Company will be paid, without interest, to the Participant. 

	
 
	
(iii)
	
Release of Common Stock. One or more stock certificates representing shares of Common Stock, free of Forfeiture Restrictions, shall be delivered to the Participant (or the transfer restrictions on shares of Common Stock held in a book entry account for the Participant will be released) promptly after, and only after, the Forfeiture Restrictions expire and Participant has satisfied all applicable federal, state and local income and employment tax withholding requirements. The Participant, by his or her acceptance of the Restricted Stock Award, shall irrevocably grant to the Company a power of attorney to transfer any shares so forfeited to the Company and agrees to execute any documents requested by the Company in connection with such forfeiture and transfer, and such provisions regarding transfers of forfeited shares of Common Stock shall be specifically performable by the Company in a court of equity or law. 

	
 
	
(iv)
	
Payment for Restricted Stock. The Committee shall determine the amount and form of any payment for shares of Common Stock received pursuant to a Restricted Stock Award; provided that in the absence of such a determination, the Participant shall not be required to make any payment for shares of Common Stock received pursuant to a Restricted Stock Award, except to the extent otherwise required by law. 

	
 
	
(b)
	
Restricted Stock Unit Awards. The Committee may, from time to time and subject to the terms of the Plan, grant Restricted Stock Unit Awards to Employees, Consultants and Non-Employee Directors. 

	
 
	
(i)
	
Settlement of Restricted Stock Unit Awards. A Restricted Stock Unit Award is a right to receive a specified number of shares of Common Stock or cash equal to the Fair Market Value of a specified number of shares of Common Stock issued or paid at the end of a vesting period or the last day of a specified deferral period. 

	
 
	
(A)
	
Award and Restrictions. Settlement of a Restricted Stock Unit Award shall occur upon expiration of the deferral period or a vesting period specified for such Restricted Stock Unit Award by the Committee (which may include a risk of forfeiture), if any, as the Committee may impose. Such restrictions may lapse at the expiration of the deferral period or at earlier specified times (including based on achievement of performance goals and/or future service requirements), separately or in combination, installments or otherwise, as the Committee may determine. 

	
 
	
(B)
	
Award Period. The Committee shall establish, at the time of grant of each Restricted Stock Unit Award, a period over which (or the conditions with respect to which) the Award shall vest with respect to the Participant and the time at which the Award will be settled and paid. Except as otherwise determined by the Committee or as may be set forth in any Restricted Stock Unit Award Agreement, employment or other agreement or plan pertaining to a Restricted Stock Unit Award, upon termination of the Participant’s Continuous Service during the applicable deferral period or vesting period (including any applicable Performance Period) or portion thereof to which forfeiture conditions apply, all Restricted Stock Unit Awards that are at that time subject to deferral period or a vesting period shall be forfeited. 

	
12.
	
CASH AWARDS AND PERFORMANCE AWARDS. 

	
 
	
(a)
	
Cash Awards. The Committee shall, subject to the limitations of the Plan, have authority to grant Cash Awards. Each Cash Award shall be subject to such terms and conditions, restrictions and contingencies as the Committee shall determine. Restrictions and contingencies limiting the right to receive a cash 

11

 

	
 
		
payment pursuant to a Cash Award shall be based upon the achievement of single or multiple Performance Goals over a Performance Period established by the Committee. The determinations made by the Committee pursuant to this Section 12(a) shall be specified in the applicable Award Agreement or other document or documents established by the Committee pursuant to which the Cash Award is granted. 

	
 
	
(b)
	
Designation as a Performance Award. The Committee shall have the right to designate any Award of Options, Stock Appreciation Rights, Phantom Stock Awards, Restricted Stock Awards, Restricted Stock Unit Awards and Other Stock or Performance-Based Awards as a Performance Award. All Cash Awards shall be designated as Performance Awards. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions, and may exercise its discretion to increase the amounts payable under any Award subject to performance conditions. The grant and/or settlement of a Performance Award shall be subject to the terms and conditions set forth in this Section 12. The Committee may also grant performance-based Awards pursuant to Section 13 that are not intended to satisfy the provisions of this Section 12. 

	
 
	
(c)
	
Performance Goals. The grant or vesting of a Performance Award shall be subject to the achievement of Performance Goals over a Performance Period established by the Committee based upon one or more business criteria, which may include those described in Section 12(c)(ii). 

	
 
	
(i)
	
General. The Performance Goals for Performance Awards shall consist of one or more criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by the Committee. Performance Goals may differ among Performance Awards granted to any one Participant or for Performance Awards granted to different Participants. 

	
 
	
(ii)
	
Business Criteria. One or more of the following business criteria may be used by the Committee, without limitation, in establishing Performance Goals for Performance Awards granted to a Participant: (A) earnings per share; (B) revenue (including increased revenues); (C) profit measures (including gross profit, operating profit, economic profit, net profit before taxes and adjusted pre-tax profit); (D) cash flow measures (including cash flow return on capital, cash flow return on tangible capital, net cash flow, distributable cash flow and distributable cash flow per share and net cash flow before financing activities); (E) return measures (including return on equity, return on assets, return on capital, risk-adjusted return on capital, return on investors’ capital and return on average equity); (F) economic value added; (G) gross margin; (H) net income measures (including income after capital costs and income before or after taxes); (I) earnings; (J) pretax earnings; (K) earnings before interest, taxes, depreciation and amortization (“EBITDA”) or adjusted EBITDA; (L) earnings before taxes and depreciation (“EBTD”); (M) earnings before interest and taxes (“EBIT”); (N) pretax operating earnings after interest expense and before incentives, service fees and extraordinary or special items; (O) operating measures (including operating income, funds from operations, cash from operations, after-tax operating income, sales volumes, production volumes and production efficiency); (P) stock price measures (including growth measures and total shareholder return); (Q) debt reduction; (R) price per share of Common Stock; (S) market share; (T) earnings per share or adjusted earnings per share (actual or growth in); (U) economic value added (or an equivalent metric); (V) market value added; (W) debt to equity ratio; (X) expense measures (including overhead cost and general and administrative expense); (Y) changes in working capital; (Z) margins; (AA) shareholder value; (BB) proceeds from dispositions; (CC) total market value; (DD) customer satisfaction or growth; and (EE) implementation, completion or attainment of measurable objectives with respect to the acquisition, development and/or productivity of assets. Any goals may be determined on the absolute or relative basis or as compared to the performance of a published or special index deemed applicable by the Committee including, but not limited to, the Standard & Poor’s 500 Stock Index or a group of comparable companies. The Committee may determine that certain items, events or occurrences, including unusual or nonrecurring items, changes in accounting standards or tax laws or other adjustments, shall be added to or excluded from the calculation of any of the business criteria. 

	
 
	
(iii)
	
Performance Period. Achievement of performance goals in respect of Performance Awards may be measured based on performance over a Performance Period, as specified by the Committee, or may be determined based on whether or not the performance goals are satisfied at any time prior to the expiration of a Performance Period. 

12

 

	
13.
	
OTHER STOCK OR PERFORMANCE-BASED AWARDS. 

The Committee is hereby authorized to grant to Employees, Consultants and Non-Employee Directors, Other Stock or Performance-Based Awards, which shall consist of a right that (i) is not an Award described in any other Section of the Plan and (ii) is denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of Common Stock (including, without limitation, securities convertible into shares of Common Stock) as are deemed by the Committee to be consistent with the purposes of the Plan. Subject to the terms of the Plan, the Committee shall determine the terms and conditions of any such Other Stock or Performance-Based Award. The term of an Award granted under this Section shall in no event exceed a period of ten (10) years (or if the Award is intended to satisfy the provisions of Section 12, such shorter period provided for in Section 12). 

	
14.
	
ADJUSTMENT UPON CHANGES IN CAPITALIZATION AND CORPORATE EVENTS. 

	
 
	
(a)
	
Capital Adjustments. The number of shares of Common Stock (i) covered by each outstanding Award granted under the Plan, the exercise or purchase price of such outstanding Award and any other terms of the Award that the Committee determines requires adjustment and (ii) available for issuance under Section 5 shall be proportionately adjusted or an equitable substitution shall be made with respect to such shares to reflect, as determined by the Committee, any increase or decrease in the number of shares of Common Stock resulting from a stock dividend, stock split, reverse stock split, extraordinary cash dividend resulting from a nonrecurring event that is not a payment of normal corporate earnings, combination, reclassification or similar change in the capital structure of the Company without receipt of consideration, subject to any required action by the Board or the shareholders of the Company and compliance with applicable securities laws or other applicable laws; provided, however, that a fractional share will not be issued upon exercise of any Award, and either (x) the value of any fraction of a share of Common Stock that would have resulted will be cashed out at Fair Market Value or (y) the number of shares of Common Stock issuable under the Award will be rounded down to the nearest whole number, as determined by the Committee. Except as the Committee determines, no issuance by the Company of shares of capital stock of any class, or securities convertible into shares of capital stock of any class, shall affect, and no adjustment by reason hereof shall be made with respect to, the number or price of shares of Common Stock subject to an Award. Notwithstanding the foregoing provisions of this Section 14, no adjustment may be made by the Committee with respect to an outstanding Award that would cause such Award and/or the Plan to become subject to Section 409A of the Code. 

	
 
	
(b)
	
Dissolution or Liquidation. The Committee shall notify the Participant at least twenty (20) days prior to any proposed dissolution or liquidation of the Company. Unless provided otherwise in an individual Award Agreement, to the extent that an Award has not been previously exercised or settled, or the vesting conditions have not lapsed, any such Award other than a Restricted Stock Award shall expire and any such Award that is a Restricted Stock Award shall be forfeited and the shares of Common Stock subject to such Restricted Stock Award shall be returned to the Company, in each case, immediately prior to consummation of such dissolution or liquidation, and such Award shall terminate immediately prior to consummation of such dissolution or liquidation. A “dissolution or liquidation of the Company” shall not be deemed to include, or to be occasioned by, any merger or consolidation of the Company with any other corporation or other entity or any sale of all or substantially all of the assets of the Company (unless that sale is effected as part of a plan of liquidation of the Company in which the Company’s business and affairs are wound up and the corporate existence of the Company is terminated). 

	
 
	
(c)
	
Change in Control. Unless specifically provided otherwise with respect to Change in Control events in an individual Award Agreement or in a then-effective written employment agreement between the Participant and the Company, if, during the effectiveness of the Plan, a Change in Control occurs, each Option and Stock Appreciation Right which is at the time outstanding under the Plan shall (i) automatically become fully vested and exercisable, immediately prior to the specified effective date of such Change in Control, for all of the shares of Common Stock at the time represented by such Option or Stock Appreciation Right and (ii) expire twenty (20) days after the Committee gives written notice to the Participant specifying the terms and conditions of the acceleration of the Participant’s Options or Stock Appreciation Rights, or if earlier, the date by which the Option or Stock Appreciation Right otherwise would expire. To the extent that a Participant exercises his or her Option before or on the effective date of the Change in Control, the Company shall issue all Common Stock purchased by exercise of that Option (subject to the Participant’s satisfaction of the requirements of Section 16), and those shares of Common Stock shall be treated as issued and outstanding for purposes of the Change 

13

 

	
 
		
in Control. If a Participant does not exercise his or her Option within the twenty (20) day period described above, or if earlier, the date by which the Option or Stock Appreciation Right otherwise would expire, the Option or Stock Appreciation Right shall immediately be forfeited and the Participant shall have no further rights to exercise the Option or Stock Appreciation Right. Notwithstanding the foregoing provisions, in the event of any Change in Control, all of the Company’s obligations regarding Options and Stock Appreciation Rights that were granted hereunder and that are outstanding and vested on the date of such event (taking into consideration any acceleration of vesting in connection with such transaction) may, on such terms as may be approved by the Committee prior to such event, be (x) assumed by the surviving or continuing corporation (or substituted options of equal value may be issued by such corporation) or (y) canceled in exchange for cash, securities of the acquiror or other property in an amount equal to the amount that would have been payable to a Participant pursuant to the Change in Control event if the Participant’s vested Options and Stock Appreciation Rights had been fully exercised immediately prior to the Change in Control event; provided, however, that if the amount that would have been payable to a Participant pursuant to such transaction if such Participant’s vested Options and Stock Appreciation Rights had been fully exercised immediately prior thereto would be equal to or less than the aggregate exercise price that would have been payable therefor, the Committee may, in its discretion, cancel any or all such Options for no consideration or payment of any kind. 

Unless specifically provided otherwise with respect to Change in Control events in an individual Award Agreement or in a then-effective written employment agreement between the Participant and the Company, if, during the effectiveness of the Plan, a Change in Control occurs, the Restricted Period applicable to outstanding Restricted Stock Awards, Restricted Stock Unit Awards and all other outstanding Awards subject to forfeiture provisions (other than Awards consisting of Options or Stock Appreciation Rights) shall lapse and such Awards shall become fully vested and settled (subject, in each case, to satisfaction by the affected Participant of the requirements of Section 16). 

Unless specifically provided otherwise with respect to Change in Control events in an individual Award Agreement or in a then-effective written employment agreement between the Participant and the Company, with respect to Performance Awards, all incomplete Performance Periods in respect of any such Award in effect on the date the termination occurs shall end on the date of such termination and the Committee shall (i) determine the extent to which the Performance Goals with respect to each such Performance Period have been met based upon such audited or unaudited financial information then available as it deems relevant and (ii) cause to be paid to the applicable Participant partial or full Awards with respect to the Performance Goals for each such Performance Period based upon the Committee’s determination of the degree of attainment of the Performance Goals or, if not determinable, assuming that the applicable “target” levels of performance have been attained, or on such other basis determined by the Committee. To the extent practicable, any actions taken by the Committee under this paragraph shall occur in a manner and at a time that allows affected Participants the ability to participate in the Change in Control with respect to the shares of Common Stock subject to their Awards.

	
15.
	
GENERAL PROVISIONS APPLICABLE TO ALL AWARDS. 

	
 
	
(a)
	
General. In addition to the other terms and conditions of the Plan pursuant to which Awards may be granted, the Committee may impose on any Award or the exercise thereof, such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture of Awards in the event of termination of Continuous Service by the Participant and, to the extent permissible under Section 409A of the Code, terms permitting a Participant to make elections relating to his or her Award. The Committee shall retain full power and discretion to accelerate or waive, at any time, any term or condition of an Award that is not mandatory under the Plan; provided, however, that the Committee shall not have any discretion to accelerate or waive any term or condition of an Award that would cause the Participant to incur additional taxes under Section 409A of the Code. Except in cases in which the Committee is authorized to require other forms of consideration under the Plan, or to the extent other forms of consideration must be paid to satisfy the requirements of the Oklahoma General Corporation Act, no consideration other than services may be required for the grant of any Award. 

	
 
	
(b)
	
Form of Award. Each Award granted under the Plan shall be evidenced by an Award Agreement in such form (which need not be the same for each Participant) as the Committee from time to time approves, but which is not inconsistent with the Plan, including any provisions that may be necessary to assure that Awards satisfy the requirements of Section 409A of the Code (or with an exception with respect to Code Section 409A) to avoid the imposition of excise taxes thereunder and any Option that is intended 

14

 

	
 
		
to be an Incentive Stock Option will comply with Section 422 of the Code. The Award Agreement shall be delivered to the Participant, with a copy of the Plan and other relevant documents, within a reasonable time after the date of grant. Notwithstanding any other provision of the Plan relating to Award Agreements, an Award and related documents, including the Plan and any prospectus for the Plan, may be delivered to a Participant in electronic format pursuant to such policies and procedures as adopted from time to time by the Company. If an Award or related documents are delivered in an electronic format and the Participant consents to participate in the electronic Award procedures established by the Company to access the Award documents, such action by the Participant shall constitute the Participant’s electronic signature and acceptance of the terms and conditions of the Award. 

	
 
	
(c)
	
Date of Grant. The date of grant of an Award shall be the date on which the Committee adopts a resolution, or takes other appropriate action, expressly granting an Award to a Participant that specifies the key terms and conditions of the Award or, if a later date is set forth in such resolution, then such date as is set forth in such resolution. 

	
 
	
(d)
	
Awards Criteria; Minimum Vesting. In determining the amount and value of Awards to be granted, the Committee may take into account the responsibility level, performance, potential, other Awards and such other considerations with respect to a Participant as it deems appropriate. Notwithstanding any other provision of the Plan to the contrary, all Awards under the Plan shall be subject to a minimum vesting schedule of at least twelve (12) months following the date of grant of the Award, provided, however, that up to five percent (5%) of the shares underlying Awards granted after the Effective Date (including all Bonus Stock Awards) may be subject to vesting schedules of less than twelve (12) months. Awards under the Plan granted to Non-Employee Directors in respect of regular annual fees shall be deemed to satisfy the minimum vesting schedule set forth in the preceding sentence regardless of whether the Company’s subsequent regular annual meeting of shareholders is at least twelve (12) months following the date of grant of the Award. 

	
 
	
(e)
	
Form and Timing of Payment Under Awards. Subject to the terms of the Plan and any applicable Award, payments to be made upon the exercise or settlement of an Award shall be made as soon as administratively practicable following the date on which the amount is payable. The settlement of any Award may, subject to any specific provisions or limitations set forth in the Award, be paid in the form of cash, Common Stock or a combination thereof, as determined by the Committee in connection with such settlement; provided, however, that no Award other than a Cash Award may be paid in cash in lieu of shares of Common Stock if the Committee determines that such action would cause the Participant to be subject to an additional tax under Section 409A of the Code. 

	
 
	
(f)
	
Termination of Continuous Service. 

	
 
	
(i)
	
Termination for Cause. In the event a Participant’s Continuous Service is terminated for Cause, all outstanding Awards that have then not been settled (whether vested or unvested) shall be forfeited immediately and any shares of Restricted Stock for which the vesting period had not lapsed as of the Participant’s termination of Continuous Service shall be transferred immediately out of the Participant’s name. 

	
 
	
(ii)
	
Death; Disability. Except as otherwise provided in an Award Agreement or an employment or other agreement or plan, any Award granted hereunder which is not otherwise vested shall vest in full (with any performance conditions deemed earned at the target level) upon the death or Disability of the Participant.

	
 
	
(iii)
	
Involuntary Termination. Except as otherwise provided in an Award Agreement or an employment or other agreement or plan, in the event that a Participant’s Continuous Service is terminated involuntarily without Cause and subject to the Participant’s execution of a release of claims in the form provided by the Company, (A) any unvested Awards that are only subject to time-vesting conditions and not subject to performance-vesting conditions and that were granted prior to the date of termination shall vest immediately in full on the date of such Participant’s termination and (B) any unvested Awards with performance-vesting conditions that were granted prior to the date of termination shall be retained by the Participant, even after such Participant’s Continuous Service has been terminated, and shall continue to be subject to any performance-vesting conditions.

	
 
	
(iv)
	
Other Termination. Except as otherwise provided in an Award Agreement or an employment or other agreement or plan, or as otherwise determined by the Committee, in the event that a Participant’s Continuous Service terminates in circumstances not otherwise set forth in this Section 15(f), any 

15

 

	
 
		
unvested Award granted hereunder shall be forfeited immediately and any shares of Restricted Stock for which the vesting period had not lapsed as of the Participant’s termination of Continuous Service shall be transferred immediately out of the Participant’s name. 

	
 
	
(g)
	
Transferability of Awards. Except as provided in Section 7(b) with respect to Non-Qualified Stock Options, Awards granted under the Plan, and any interest therein, shall not be transferable or assignable by the Participant, and may not be made subject to execution, attachment or similar process, other than by will or by the laws of descent and distribution, and shall be exercisable or payable during the lifetime of the Participant only by the Participant; provided that the Participant may designate persons who or which may exercise or receive his or her Awards following his or her death. 

	
 
	
(h)
	
Privileges of Stock Ownership. Except as provided in the Plan with respect to Bonus Stock Awards and as provided in Section 11(a)(ii) with respect to Restricted Stock Awards, no Participant will have any of the rights of a shareholder with respect to any shares of Common Stock subject to an Award until such Award is properly exercised or settled and the purchased or awarded shares are issued and delivered to the Participant, as evidenced by an appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company. No adjustment shall be made for dividends or distributions or other rights for which the record date is prior to such date of issuance and delivery, except as provided otherwise in the Plan. No Award (or portion thereof) may provide for the payment of dividends or dividend equivalents before the date on which the Award (or portion thereof) vests. With respect to any Award that provides an entitlement to dividends or dividend equivalents, such dividends or dividend equivalents will be retained by the Company for the account of the Participant during the vesting period and will revert back to the Company if for any reason the Award is forfeited or reverts back to the Company prior to vesting. Upon vesting, all dividends or dividend equivalents retained by the Company in respect of such Award will be paid, without interest, to the Participant. In no event shall dividends or dividend equivalents be paid with respect to Options or Stock Appreciation Rights.

	
 
	
(i)
	
Clawback. Awards under the Plan shall be subject to the clawback or recapture policy, if any, that the Company may adopt from time to time or any clawback or recapture provisions set forth in an Award Agreement or program to the extent provided in such policy, program or agreement and, in accordance with such policy, program or agreement, may be subject to the requirement that the Awards be repaid to the Company after they have been distributed or paid to the Participant. 

	
 
	
(j)
	
Section 409A. 

	
 
	
(i)
	
Separation from Service. Notwithstanding any provision contained in the Plan to the contrary, no amount shall be paid pursuant to the Plan that is treated as a “nonqualified deferred compensation plan” as described in Section 409A(a)(1) of the Code relating to a Participant’s termination of Continuous Service with the Company or an Affiliate unless such termination of Continuous Service constitutes a “separation from service” as such term is defined under Treasury Regulation Section 1.409A-1(h) and any successor provision thereto (“Separation from Service”). 

	
 
	
(ii)
	
Deferred Payments for Certain Key Employees. Notwithstanding any other provision contained in the Plan or a related Award document to the contrary, if the Company determines that (i) at the time of the Participant’s Separation from Service the Participant is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code and (ii) any payments to be provided to the Participant under the Plan are or may become subject to the additional tax under Section 409A(a)(1)(B) of the Code or any other taxes or penalties imposed under Section 409A of the Code (“409A Taxes”) if paid at the time such payments are otherwise required under the Plan or a related Award document, then such payments shall be delayed until the earlier of (A) the date that is six (6) months after the date of the Participant’s Separation from Service or (B) the Participant’s death. If the amounts delayed are payable in installments, the delayed payments will be paid on the first day of the seventh month following the date of the Participant’s Separation from Service (or earlier death). The provisions of this Section 15(j)(ii) shall only apply to the minimum extent required to avoid the Participant’s incurrence of any 409A Taxes. 

	
 
	
(iii)
	
Section 409A Compliance; Separate Payments. The Plan is intended to be written, administered, interpreted and construed in a manner such that no payment or benefits provided under the Plan or a related Award document become subject to (A) the gross income inclusion set forth within Section 409A(a)(1)(A) of the Code or (B) the interest and additional tax set forth within Section 409A(a)(1)(B) of the Code (collectively, “Section 409A Penalties”), including, where appropriate, the construction of defined terms to have meanings that would not cause the imposition of Section 409A Penalties. 

16

 

	
 
		
Notwithstanding the foregoing, neither the Company nor the Committee shall have any obligation to take any action to prevent the assessment of any additional tax or penalty on any Participant under Section 409A of the Code and neither the Company nor the Committee will have any liability to any Participant for such tax or penalty. For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), each payment that a Participant may be eligible to receive under the Plan or a related Award document shall be treated as a separate and distinct payment and shall not collectively be treated as a single payment. 

	
16.
	
WITHHOLDING FOR TAXES. 

Any issuance of Common Stock pursuant to the exercise of an Option or payment of any other Award under the Plan shall not be made until appropriate arrangements satisfactory to the Company have been made for the payment of any income and employment tax amounts (federal, state, local or other) that may be required to be withheld or paid by the Company with respect thereto. In addition, on the occurrence of an event with respect to an Award that requires the Company to withhold taxes, the Participant shall make arrangements satisfactory to the Company whereby such taxes may be paid. Such arrangements may, at the discretion of the Committee, include allowing the person to tender to the Company shares of Common Stock owned by the person, or to request the Company to withhold shares of Common Stock that otherwise would have been acquired pursuant to the Award, whether through the exercise of an Option or as a distribution pursuant to the Award, together with payment of any remaining portion of such tax amounts in cash or by check payable and acceptable to the Company. 

Notwithstanding the foregoing, if on the date of an event giving rise to a tax withholding obligation on the part of the Company the person is an Executive Officer or individual subject to Rule 16b-3, such person may direct that such tax withholding be effectuated by the Company withholding the necessary number of shares of Common Stock (at the tax rate required by the Code) that otherwise would have been issued in connection with such Award payment or exercise. 

	
17.
	
MISCELLANEOUS. 

	
 
	
(a)
	
No Rights to Awards. No Participant or other person shall have any claim to be granted any Award, there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards, and the terms and conditions of Awards need not be the same with respect to each recipient. 

	
 
	
(b)
	
Governing Law. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with applicable federal law and the laws of the State of Oklahoma, without regard to any principles of conflicts of law. 

	
 
	
(c)
	
Other Laws. The Committee may refuse to issue or transfer any shares of Common Stock or other consideration under an Award if, acting in its sole discretion, it determines that the issuance of transfer or such shares or such other consideration might violate any applicable law. 

	
 
	
(d)
	
Administration. The Plan shall be administered by the Committee. The Committee shall interpret the Plan and any Awards granted pursuant to the Plan and shall prescribe such rules and regulations in connection with the operation of the Plan as it determines to be advisable for the administration of the Plan. The Committee may rescind and amend its rules and regulations from time to time. The interpretation by the Committee of any of the provisions of the Plan or any Award granted under the Plan shall be final, binding and conclusive upon the Company and all persons having an interest in any Award or any shares of Common Stock acquired pursuant to an Award. Notwithstanding the authority hereby delegated to the Committee to grant Awards to Employees, Directors and Consultants under the Plan, the Board shall have full authority, subject to the express provisions of the Plan, to grant Awards to Employees, Directors and Consultants under the Plan, to interpret the Plan, to provide, modify and rescind rules and regulations relating to the Plan, to determine the terms and provision of Awards granted to Employees, Consultants and Directors under the Plan and to make all other determinations and perform such actions as the Board deems necessary or advisable to administer the Plan. The Board or Committee may delegate any of its powers under the Plan to a subcommittee of the Committee or one of their respective members, or to one or more officers of the Company designated by the Board or Committee from time to time, in each case subject to applicable laws and the requirements of any stock exchange or market-quotation system upon which the shares of Common Stock may then be listed or quoted. No member of the Committee or the Board (or their designees) shall be liable for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award granted hereunder.

17

 

	
 
	
(e)
	
Effect of Plan. Neither the adoption of the Plan nor any action of the Board or the Committee shall be deemed to give any Employee, Director or Consultant any right to be granted an Award or any other rights except as may be evidenced by the Award, or any amendment thereto, duly authorized by the Committee and executed on behalf of the Company, and then only to the extent and on the terms and conditions expressly set forth therein. The existence of the Plan and the Awards granted hereunder shall not affect in any way the right of the Board, the Committee or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation or other transaction involving the Company, any issue of bonds, debentures or shares of preferred stock ahead of or affecting the Common Stock or the rights thereof, the dissolution or liquidation of the Company or any sale or transfer of all or any part of the Company’s assets or business or any other corporate act or proceeding by or for the Company. Nothing contained in the Plan or in any Award, or in other related documents, shall confer upon any Employee, Director or Consultant any right with respect to such person’s Continuous Service or interfere or affect in any way with the right of the Company or an Affiliate to terminate such person’s Continuous Service at any time, with or without Cause. 

	
 
	
(f)
	
No Effect on Retirement and Other Benefit Plans. Except as specifically provided in a retirement or other benefit plan of the Company or an Affiliate, Awards shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or an Affiliate, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of compensation. The Plan is not a “Retirement Plan” or “Welfare Plan” under the Employee Retirement Income Security Act of 1974, as amended. 

	
 
	
(g)
	
Amendment or Termination of Plan. The Board in its discretion may, at any time or from time to time after the date of adoption of the Plan, terminate or amend the Plan in any respect, including amendment of any form of Award, exercise agreement or instrument to be executed pursuant to the Plan; provided, however, to the extent necessary to comply with the Code, including Section 422 of the Code, other applicable laws, or the applicable requirements of any stock exchange or national market system, the Company shall obtain shareholder approval of any Plan amendment in such manner and to such a degree as required. No Award may be granted after termination of the Plan. Any amendment or termination of the Plan shall not affect Awards previously granted, and such Awards shall remain in full force and effect as if the Plan had not been amended or terminated, unless mutually agreed otherwise in a writing (including an amendment to the terms of an Award) signed by the Participant and the Company. Notwithstanding the preceding sentence, the Board unilaterally may amend the Plan to the extent necessary or appropriate to prevent the Plan or an Award from being subject to the provisions of Section 409A of the Code; provided that any such amendment is permitted by Section 409A of the Code, Treasury regulations issued thereunder or other guidance issued by the Internal Revenue Service. 

	
 
	
(h)
	
Effective Date; Term of Plan. The Plan shall become effective on the date on which the Company’s shareholders approve the Plan. If the Plan is not so approved by the Company’s shareholders, then the Plan will be null and void in its entirety and the Prior Plan will remain in full force and effect. Unless sooner terminated by action of the Board, the Plan shall terminate on the earlier of (i) the tenth (10th) anniversary of the Effective Date or (ii) the date on which no shares of Common Stock subject to the Plan remain available to be granted as Awards under the Plan according to its provisions. 

	
 
	
(i)
	
Severability and Reformation. The Company intends all provisions of the Plan to be enforced to the fullest extent permitted by law. Accordingly, should a court of competent jurisdiction determine that the scope of any provision of the Plan is too broad to be enforced as written, the court should reform the provision to such narrower scope as it determines to be enforceable. If, however, any provision of the Plan is held to be wholly illegal, invalid or unenforceable under present or future law, such provision shall be fully severable and severed, and the Plan shall be construed and enforced as if such illegal, invalid or unenforceable provision were never a part hereof, and the remaining provisions of the Plan shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance. 

	
 
	
(j)
	
Interpretive Matters. Whenever required by the context, pronouns and any variation thereof shall be deemed to refer to the masculine, feminine or neuter, and the singular shall include the plural, and visa versa. The term “include” or “including” does not denote or imply any limitation. The captions and headings used in the Plan are inserted for convenience and shall not be deemed a part of the Plan for construction or interpretation. 

18

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