Document:

exv10w13

Exhibit 10.13

REGISTRATION RIGHTS AGREEMENT

     REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of August 29, 2008, by and
between COLORADO GOLDFIELDS INC., a Nevada corporation (the “Company”), and YA GLOBAL
INVESTMENTS, L.P., (the “Investor”).

     WHEREAS:

     A. In connection with the Standby Equity Distribution Agreement by and between the parties
hereto of even date herewith (the “Standby Equity Distribution Agreement”), the Company has
agreed, upon the terms and subject to the conditions of the Standby Equity Distribution Agreement,
to issue and sell to the Investor shares of the Company’s common stock, par value $0.001 per share
(the “Common Stock”), which can be purchased pursuant to the terms of the Standby Equity
Distribution Agreement. Capitalized terms not defined herein shall have the meaning ascribed to
them in the Standby Equity Distribution Agreement.

     B. To induce the Investor to execute and deliver the Standby Equity Distribution Agreement,
the Company has agreed to provide certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any similar successor statute (collectively,
the “Securities Act”), and applicable state securities laws.

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

     1. DEFINITIONS.

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

          a. “Person” means a corporation, a limited liability company, an association, a
partnership, an organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.

          b. “Register,” “registered,” and “registration” refer to a
registration effected by preparing and filing one or more Registration Statements (as defined
below) in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or
any successor rule providing for offering securities on a continuous or delayed basis (“Rule
415”), and the declaration or ordering of effectiveness of such Registration Statement(s) by
the United States Securities and Exchange Commission (the “SEC”).

          c. “Registrable Securities” means the Investor’s Shares, as defined in the Standby
Equity Distribution Agreement, and shares of Common Stock issuable to Investors pursuant to the
Standby Equity Distribution Agreement.

          d. “Registration Statement” means a registration statement under the Securities Act
which covers the Registrable Securities.

 

 

     2. REGISTRATION.

          a. Filing of a Registration Statement. The Company shall prepare and file with the
SEC a Registration Statement on Form S-1 or on such other form as is available. The Company shall
cause such Registration Statement to be declared effective by the SEC prior to the first sale to
the Investor of the Company’s Common Stock pursuant to the Standby Equity Distribution Agreement.
After a Registration Statement is declared effective, the Company shall insure that the
Registration Statement and any subsequent Registration Statements remain in effect until all of the
Registrable Securities have been sold, or may be sold without restriction pursuant to Rule 144.

          b. Sufficient Number of Shares Registered. In the event the number of shares
available under a Registration Statement filed pursuant to Section 2(a) is insufficient to cover
all of the Registrable Securities the Company shall amend the Registration Statement, or file a new
Registration Statement, or both, so as to cover all of such Registrable Securities as soon as
practicable, but in any event not later than fifteen (15) days after the necessity therefore
arises. The Company shall use it best efforts to cause such amendment and/or new Registration
Statement to become effective as soon as practicable following the filing thereof. For purposes of
the foregoing provision, the number of shares available under a Registration Statement shall be
deemed “insufficient to cover all of the Registrable Securities” if at any time the number of
Registrable Securities issuable on an Advance Notice Date is greater than the number of shares
available for resale under such Registration Statement.

     3. RELATED OBLIGATIONS.

          a. The Company shall prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the prospectus used in connection with
such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under
the Securities Act, as may be necessary to keep such Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities of the Company covered
by such Registration Statement until such time as all of such Registrable Securities shall have
been disposed of in accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in such Registration Statement. In the case of amendments and supplements to
a Registration Statement which are required to be filed pursuant to this Agreement (including
pursuant to this Section 3(b)) by reason of the Company’s filing a report on Form 10-K, Form 10-Q
or Form 8-K or any analogous report under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), the Company shall have incorporated such report by reference into the
Registration Statement, if applicable, or shall file such amendments or supplements with the SEC on
the same day on which the Exchange Act report is filed which created the requirement for the
Company to amend or supplement the Registration Statement.

          b. The Company shall furnish to the Investor without charge, (i) at least one copy of such
Registration Statement as declared effective by the SEC and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by reference, all exhibits
and each preliminary prospectus, (ii) ten (10) copies of the final prospectus

 

 

included in such Registration Statement and all amendments and supplements thereto (or such
other number of copies as such Investor may reasonably request) and (iii) such other documents as
such Investor may reasonably request from time to time in order to facilitate the disposition of
the Registrable Securities owned by such Investor.

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

          d. As promptly as practicable after becoming aware of such event or development, the Company
shall notify the Investor in writing of the happening of any event as a result of which the
prospectus included in a Registration Statement, as then in effect, includes an untrue statement of
a material fact or omission to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were made, not
misleading (provided that in no event shall such notice contain any material, nonpublic
information), and promptly prepare a supplement or amendment to such Registration Statement to
correct such untrue statement or omission, and deliver ten (10) copies of such supplement or
amendment to each Investor. The Company shall also promptly notify the Investor in writing (i)
when a prospectus or any prospectus supplement or post-effective amendment has been filed, and when
a Registration Statement or any post-effective amendment has become effective (notification of such
effectiveness shall be delivered to the Investor by facsimile on the same day of such
effectiveness), (ii) of any request by the SEC for amendments or supplements to a Registration
Statement or related prospectus or related information, and (iii) of the Company’s reasonable
determination that a post-effective amendment to a Registration Statement would be appropriate.

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

 

 

          f. At the reasonable request of the Investor, the Company shall furnish to the Investor, on
the date of the effectiveness of the Registration Statement and thereafter from time to time on
such dates as the Investor may reasonably request (i) a letter, dated such date, from the Company’s
independent certified public accountants in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten public offering, and
(ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily given in an underwritten
public offering, addressed to the Investor.

          g. The Company shall make available to the Investor (and will deliver to Investor’s counsel),
(i) copies of any Registration Statement at least 3 business days prior to filing thereof, and (ii)
subject to restrictions imposed by the United States federal government or any agency or
instrumentality thereof, copies of all public correspondence between the Commission and the Company
concerning the Registration Statement. The Company will make available for inspection by the
Investor and any attorney, accountant or other professional retained by the Investor (collectively,
the “Inspectors”) all pertinent financial and other records, and pertinent corporate
documents and properties of the Company (collectively, the “Records”), as shall be reasonably
necessary to enable them to exercise their due diligence responsibility, and cause the Company’s
officers, directors and employees to supply all information which any Inspector may reasonably
request in connection with the Registration Statement. The Investor agrees that Records obtained
by it as a result of such inspections which is conspicuously marked by the Company as
“Confidential” (subject to the Company’s obligations with respect to material non-public
information set forth in Section 8.1(a) herein) shall be deemed confidential and held in strict
confidence by the Investor, unless (a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement or is otherwise required under the
Securities Act, (b) the release of such Records is ordered pursuant to a final, non-appealable
subpoena or order from a court or government body of competent jurisdiction, or (c) the information
in such Records has been made generally available to the public other than by disclosure in
violation of this or any other agreement of which the Inspector and the Investor has knowledge.
The Investor agrees that it shall, upon learning that disclosure of such Records is sought in or by
a court or governmental body of competent jurisdiction or through other means, give prompt notice
to the Company and allow the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed confidential.

          h. The Company shall hold in confidence and not make any disclosure of information concerning
the Investor provided to the Company unless (i) disclosure of such information is necessary to
comply with federal or state securities laws, (ii) the disclosure of such information is necessary
to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final, non-appealable order from a
court or governmental body of competent jurisdiction, or (iv) such information has been made
generally available to the public other than by disclosure in violation of this Agreement or any
other agreement. The Company agrees that it shall, upon learning that disclosure of such
information concerning the Investor is sought in or by a court or governmental

 

 

body of competent jurisdiction or through other means, give prompt written notice to the
Investor and allow the Investor, at the Investor’s expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such information.

          i. The Company shall use its best efforts either to cause all the Registrable Securities
covered by a Registration Statement (i) to be listed on each securities exchange on which
securities of the same class or series issued by the Company are then listed, if any, if the
listing of such Registrable Securities is then permitted under the rules of such exchange or to
secure the inclusion for quotation on a Primary Market. The Company shall pay all fees and
expenses in connection with satisfying its obligation under this Section 3(j).

          j. The Company shall cooperate with the Investor to the extent applicable, to facilitate the
timely preparation and delivery of certificates (not bearing any restrictive legend) representing
the Registrable Securities to be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the Investor may
reasonably request and registered in such names as the Investor may request.

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

          l. The Company shall make generally available to its security holders as soon as practical,
but not later than ninety (90) days after the close of the period covered thereby, an earnings
statement (in form complying with the provisions of Rule 158 under the Securities Act) covering a
twelve-month period beginning not later than the first day of the Company’s fiscal quarter next
following the effective date of the Registration Statement.

          m. The Company shall otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC in connection with any registration hereunder.

          n. Within two (2) business days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal
counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with
copies to the Investor) confirmation that such Registration Statement has been declared effective
by the SEC in the form attached hereto as Exhibit A.

          o. The Company shall take all other reasonable actions necessary to expedite and facilitate
disposition by the Investor of Registrable Securities pursuant to a Registration Statement.

     4. OBLIGATIONS OF THE INVESTOR.

     The Investor agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 3(d), the Investor will immediately discontinue disposition
of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable
Securities until the Investor’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(d) or receipt of notice that no supplement or amendment is

 

 

required. Notwithstanding anything to the contrary, the Company shall cause its transfer
agent to deliver unlegended certificates for shares of Common Stock to a transferee of the Investor
in accordance with the terms of the Standby Equity Distribution Agreement in connection with any
sale of Registrable Securities with respect to which the Investor has entered into a contract for
sale prior to the Investor’s receipt of a notice from the Company of the happening of any event of
the kind described in Section 3(d) and for which the Investor has not yet settled.

     5. EXPENSES OF REGISTRATION.

     All expenses incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees,
printers, legal and accounting fees shall be paid by the Company.

     6. INDEMNIFICATION.

     With respect to Registrable Securities which are included in a Registration Statement under
this Agreement:

          a. To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold
harmless and defend the Investor, the directors, officers, partners, employees, agents,
representatives of, and each Person, if any, who controls the Investor within the meaning of the
Securities Act or the Exchange Act (each, an “Indemnified Person”), against any losses,
claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’
fees, amounts paid in settlement or expenses, joint or several (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or governmental,
administrative or other regulatory agency, body or the SEC, whether pending or threatened, whether
or not an indemnified party is or may be a party thereto (“Indemnified Damages”), to which
any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of a material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of the offering under
the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are
offered (“Blue Sky Filing”), or the omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not misleading; (ii) any
untrue statement or alleged untrue statement of a material fact contained in any final prospectus
(as amended or supplemented, if the Company files any amendment thereof or supplement thereto with
the SEC) or the omission or alleged omission to state therein any material fact necessary to make
the statements made therein, in light of the circumstances under which the statements therein were
made, not misleading; or (iii) any violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any other law, including, without limitation, any state securities law, or
any rule or regulation there under relating to the offer or sale of the Registrable Securities
pursuant to a Registration Statement (the matters in the foregoing clauses (i) through (iii) being,
collectively, “Violations”). The Company shall reimburse the Investor and each such
controlling person promptly as such expenses are incurred and are due and payable, for any legal
fees or disbursements or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the contrary contained

 

 

herein, the indemnification agreement contained in this Section 6(a): (x) shall not apply to a
Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance
upon and in conformity with information furnished in writing to the Company by such Indemnified
Person expressly for use in connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto; (y) shall not be available to the extent such Claim
is based on a failure of the Investor to deliver or to cause to be delivered the prospectus made
available by the Company, if such prospectus was timely made available by the Company pursuant to
Section 3(e); and (z) shall not apply to amounts paid in settlement of any Claim if such settlement
is effected without the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person.

          b. In connection with a Registration Statement, the Investor agrees to indemnify, hold
harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the
Company, each of its directors, each of its officers who signs the Registration Statement and each
Person, if any, who controls the Company within the meaning of the Securities Act or the Exchange
Act (each an “Indemnified Party”), against any Claim or Indemnified Damages to which any of
them may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such
Claim or Indemnified Damages arise out of or is based upon any Violation, in each case to the
extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by the Investor expressly for use in connection with
such Registration Statement; and, subject to Section 6(d), the Investor will reimburse any legal or
other expenses reasonably incurred by them in connection with investigating or defending any such
Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the
agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written consent of the
Investor, which consent shall not be unreasonably withheld; provided, further, however, that the
Investor shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to the Investor as a result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Indemnified Party.
Notwithstanding anything to the contrary contained herein, the indemnification agreement contained
in this Section 6(b) with respect to any prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained in the prospectus
was corrected and such new prospectus was delivered to the Investor prior to the Investor’s use of
the prospectus to which the Claim relates.

          c. Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any governmental action or
proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the defense thereof with
counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the
Indemnified Party, as the case may be; provided, however, that an

 

 

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

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

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

     7. CONTRIBUTION.

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

 

 

     8. REPORTS UNDER THE EXCHANGE ACT.

     With a view to making available to the Investor the benefits of Rule 144 promulgated under the
Securities Act or any similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration (“Rule 144”)
the Company agrees to:

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

          b. file with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act so long as the Company remains subject to
such requirements (it being understood that nothing herein shall limit the Company’s obligations
under Section 6.3 of the Standby Equity Distribution Agreement) and the filing of such reports and
other documents is required for the applicable provisions of Rule 144; and

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

     9. AMENDMENT OF REGISTRATION RIGHTS.

     Provisions of this Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively), only by a written
agreement between the Company and the Investor. Any amendment or waiver effected in accordance
with this Section 9 shall be binding upon the Investor and the Company. No consideration shall be
offered or paid to any Person to amend or consent to a waiver or modification of any provision of
any of this Agreement unless the same consideration also is offered to all of the parties to this
Agreement.

     10. MISCELLANEOUS.

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

          b. Any notices, consents, waivers or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be deemed

 

 

to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when
sent by facsimile (provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one business day after deposit with a
nationally recognized overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications shall be:

	 	 	 
	If to the Company, to:

	 	Colorado Goldfields Inc.
	 

	 	10920 W. Alameda Avenue, Suite 207
	 

	 	Lakewood, Colorado 80226
	 

	 	Attention: Chief Executive Officer
	 

	 	Telephone: (303) 984-5324
	 

	 	Facsimile: (303) 484-2935
	 
	 	 
	With a copy to:
	 	 
	 

	 	David A. Thayer
	 

	 	Jackson Kelly, Attorneys at Law
	 

	 	1099 18th St Ste 2150
	 

	 	Denver, CO 80202-1958
	 
	 	 
	If to the Investor, to:

	 	YA Global Investments, L.P.
	 

	 	101 Hudson Street — Suite 3700
	 

	 	Jersey City, New Jersey 07302
	 

	 	Attention: Mark Angelo
	 

	 	                 Portfolio Manager
	 

	 	Telephone: (201) 985-8300
	 

	 	Facsimile: (201) 985-8266
	 
	 	 
	With a copy to:

	 	David Gonzalez, Esq.
	 

	 	101 Hudson Street — Suite 3700
	 

	 	Jersey City, NJ 07302
	 

	 	Telephone: (201) 985-8300
	 

	 	Facsimile: (201) 985-8266

Any party may change its address by providing written notice to the other parties hereto at least
five days prior to the effectiveness of such change. Written confirmation of receipt (A) given by
the recipient of such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C) provided by a courier
or overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.

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

 

 

          d. The corporate laws of the State of Nevada shall govern all issues concerning the relative
rights of the Company and the Investor. All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the internal laws of the
State of New Jersey, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New Jersey or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New Jersey. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the Superior Courts of the State of New
Jersey, sitting in Hudson County, New Jersey and the Federal District Court for the District of New
Jersey sitting in Newark, New Jersey, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding
is improper. Each party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy thereof to such party
at the address for such notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law. If
any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability of the remainder of
this Agreement in that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE,
AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

          e. This Agreement shall inure to the benefit of and be binding upon the permitted successors
and assigns of each of the parties hereto.

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

          g. This Agreement may be executed in identical counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this Agreement.

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

 

 

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

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

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

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

	 	 	 	 	 
	 	Colorado Goldfields Inc.

 	 
	 	By:  	/s/ C. Stephen Guyer
 	 
	 	Name:  	C. Stephen Guyer 	 
	 	Title:  	Chief Financial Officer 	 
	 
	 	YA Global Investments, L.P.

By: Yorkville Advisors, LLC

Its: Investment Manager

 	 
	 	By:  	/s/ Mark Angelo
 	 
	 	Name:  	Mark Angelo 	 
	 	Title:  	Portfolio Manager 	 
	 

 

 

EXHIBIT A

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

Attention:

          Re:     COLORADO GOLDFIELDS INC.

Ladies and Gentlemen:

     We are counsel to Colorado Goldfields Inc. (the “Company”), and have represented the
Company in connection with that certain Standby Equity Distribution Agreement (the “Standby
Equity Distribution Agreement”) entered into by and between the Company and YA Global
Investments, LP (the “Investor”) pursuant to which the Company issued to the Investor
shares of its Common Stock, par value $0.001 per share (the “Common Stock”). Pursuant to
the Standby Equity Distribution Agreement, the Company also has entered into a Registration Rights
Agreement with the Investor (the “Registration Rights Agreement”) pursuant to which the
Company agreed, among other things, to register the Registrable Securities (as defined in the
Registration Rights Agreement) under the Securities Act of 1933, as amended (the “Securities
Act”). In connection with the Company’s obligations under the Registration Rights Agreement,
on                      ___, the Company filed a Registration Statement on Form                      (File No.
333-                    ) (the “Registration Statement”) with the Securities and Exchange
Commission (the “SEC”) relating to the Registrable Securities which names the Investor as a
selling stockholder thereunder.

     In connection with the foregoing, we advise you that a member of the SEC’s staff has advised
us by telephone that the SEC has entered an order declaring the Registration Statement effective
under the Securities Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we
have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that purpose are pending
before, or threatened by, the SEC and the Registrable Securities are available for resale under the
Securities Act pursuant to the Registration Statement.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	By:  	 	 

cc:      YA Global Investments, L.P.Exhibit 10.35

 

AMERICAN HOME
BANK, NATIONAL ASSOCIATION

 

2001 STOCK OPTION INCENTIVE PLAN

 

As adopted by the Board of Directors on August 20, 2001

 

1.                                       Purpose. American Home Bank, N.A., a national banking association (“Bank”),
has adopted this 2001 Stock Option Incentive Plan (the “Plan”). The Plan is
intended to recognize the contributions made to Bank by employees (including
employees who are members of the Board of Directors) of Bank or any Affiliate,
to provide such persons with additional incentive to devote themselves to the
future success of Bank or an Affiliate, and to improve the ability of Bank or
an Affiliate to attract, retain and motivate individuals upon whom Bank’s
sustained growth and financial success depend. Through the Plan, Bank will provide
such persons with an opportunity to acquire or increase their proprietary
interest in Bank, and to align their interest with the interests of
shareholders, through receipt of rights to acquire Bank’s Common Stock, par
value $1.00 per Share (the “Common Stock”), and through the transfer or
issuance of Common Stock or other Awards. In addition, the Plan is intended as
an additional incentive to directors of Bank who are not employees of Bank or
an Affiliate to serve on the Board of Directors and to devote themselves to the
future success of Bank by providing them with an opportunity to acquire or
increase their proprietary interest in Bank through the receipt of rights to
acquire Common Stock. Furthermore, the Plan may be used to encourage
consultants and advisors of Bank to further the success of Bank.

 

2.                                       Definitions. Unless the context clearly indicates otherwise, the following terms
shall have the following meanings:

 

“Affiliate” shall mean a corporation which is a parent corporation or a
subsidiary corporation with respect to Bank within the meaning of Section 424(e) or
(f) of the Code, or any successor provision.

 

“Award” shall mean a transfer of Common Stock made pursuant to the
terms of the Plan or the grant to a person of performance units or other rights
containing such terms, benefits or restrictions as the Committee shall specify
in the Award Agreement.

 

“Award Agreement” shall mean the agreement between Bank and a Grantee
with respect to an Award made pursuant to the Plan.

 

“Bank” shall mean American Home Bank, N.A., a national banking
association.

 

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

 

“Change of Control” shall have the meaning as set forth in Section 9
of the Plan.

 

 

“Code” shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, and the rules and regulations issued pursuant to that
statute or any successor statute.

 

“Committee” shall have the meaning set forth in Section 3 of the
Plan.

 

“Common Stock” shall have the meaning set forth in Section 1 of
the Plan.

 

“Disability” shall mean the inability of an Optionee or Award holder to
perform the essential duties of his or her position with Bank, as determined in
good faith by the Committee.

 

“Employee” shall mean an employee of Bank or an Affiliate.

 

“Fair Market Value” shall have the meaning set forth in Subsection 8(b) of
the Plan.

 

“Grantee” shall mean a person to whom an Award has been granted
pursuant to the Plan.

 

“ISO” shall mean an Option granted under the Plan which qualifies and
is intended to qualify as an “incentive stock option” within the meaning of Section 422(b) of
the Code.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations issued
pursuant to that statute or any successor statute.

 

“Non-Employee Director” shall mean a member of the Board who is a “non-employee
director”, as that term is defined in paragraph (b)(3) of Rule 16b-3,
and an “outside director”, as that term is defined in Treasury Regulations Section 1.162-27
promulgated under the Code.

 

“Non-qualified Stock Option” shall mean an Option granted under the
Plan which is not intended to qualify, or otherwise does not qualify, as an
ISO.

 

“Option” shall mean either an ISO or a Non-qualified Stock Option granted
under the Plan.

 

“Optionee” shall mean a person to whom an Option has been granted under
the Plan, which Option has not been exercised and has not expired or
terminated.

 

2

 

“Option Document” shall mean the document described in Section 8
of the Plan, which sets forth the terms and conditions of each grant of
Options.

 

“Option Price” shall mean the price at which Shares may be purchased
upon exercise of an Option, as calculated pursuant to Subsection 8(b) of
the Plan.

 

“Rule 16b-3” shall mean Rule 16b-3 promulgated under the
Exchange Act, or any successor rule.

 

“Section 16 Officers” shall mean any person who is an “officer”
within the meaning of Rule 16a-1(f) promulgated under the Exchange
Act or any successor rule, and who is subject to the reporting requirements
under Section 16 of the Exchange Act with respect to Bank’s Common Stock.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, or
any successor statute, and the rules and regulations issued pursuant to
that statute or any successor statute.

 

“Shares” shall mean the shares of Common Stock of Bank which are the
subject of Options or granted as Awards under the Plan.

 

3.                                       Administration of the Plan. The Board may administer the Plan and/or it
may, in its discretion, designate a committee composed of two or more directors
to operate and administer the Plan with respect to all or a designated portion
of the participants. To the extent that the Committee is empowered to grant
Options to Section 16 Officers or persons whose compensation might have
limits on deductibility under Code Section 162(m), each member of the
Committee designated by the Board shall be a Non-Employee Director. Any such
committee designated by the Board, and the Board itself in its administrative
capacity with respect to the Plan, is referred to as the “Committee.”

 

(a)                                  Meetings. The Committee shall hold meetings at such times and places as it may
determine and shall keep minutes of its meetings. The Committee may take action
only upon the agreement of a majority of the whole Committee. Any action which
the Committee shall take through a written instrument signed by all of its
members shall be as effective as though it had been taken at a meeting duly
called and held.

 

(b)                                 Exculpation. No member of the Committee shall be personally liable for monetary
damages for any action taken or any failure to take any action in connection
with the administration of the Plan or the granting of Options or Awards under
the Plan, unless (i) the member has breached or failed to perform the
duties of such member’s office under Subchapter B of Chapter 17 of the
Pennsylvania Business Corporation Law, and (ii) the breach or failure to
perform constitutes self-dealing, wilful misconduct or

 

3

 

recklessness;
provided, however, that the provisions of this Subsection 3(b) shall not
apply to the responsibility or liability of a member pursuant to any criminal
statute, or to the liability of a member for the payment of taxes pursuant to
local, Pennsylvania or federal law.

 

(c)                                  Indemnification. Service on the Committee shall constitute
service as a member of the Board. Each member of the Committee shall be
entitled, without further act on the member’s part, to indemnity from Bank and
to limitation of liability, to the fullest extent provided by applicable law
and by Bank’s Articles of Association and/or Bylaws, in connection with or
arising out of any action, suit or proceeding with respect to the administration
of the Plan or the granting of Options or Awards thereunder in which the member
may be involved by reason of the member being or having been a member of the
Committee, whether or not the member continues to be a member of the Committee
at the time of the action, suit or proceeding.

 

(d)                                 Interpretation. The Committee shall have the power and
authority to (i) interpret the Plan, (ii) adopt, amend and revoke rules and
regulations for its administration that are not inconsistent with the express
terms of the Plan including, without limitation, rules and interpretations
to determine the number of Shares remaining available for issuance under the
Plan, and (iii) waive requirements relating to formalities or other
matters that do not either modify the substance of the rights intended to be
granted by Options and Awards or constitute a material amendment for any
purpose under the Code. Any such actions by the Committee shall be final,
binding and conclusive on all parties in interest.

 

(e)                                  Amendment of Options and Awards. Subject to the provisions of the Plan, the
Committee shall have the right to amend any Option Document or Award Agreement
issued to an Optionee or Award holder, subject to the Optionee’s or Award
holder’s consent, if such amendment is not favorable to the Optionee or Award
holder or if such amendment has the effect of changing an ISO to a
Non-Qualified Stock Option; provided, however, that the consent of the Optionee
or Award holder shall not be required for any amendment made pursuant to Subsection
8(e)(i)(C) or Section 9 of the Plan, as applicable.

 

4.                                       Grants of Options under the Plan. Grants of Options under the Plan may be in
the form of a Non-qualified Stock Option, an ISO or a combination thereof, at
the discretion of the Committee.

 

5.                                       Eligibility. All Employees, members of the Board and consultants and advisors to
Bank shall be eligible to receive Options and Awards hereunder. Consultants and
advisors shall be eligible only if they render bona fide services to Bank
unrelated to the offer or sale of securities. The Committee, in its sole
discretion, shall determine whether an individual qualifies as an Employee. Notwithstanding
the foregoing, only

 

4

 

individuals
who qualify as employees of Bank or an Affiliate under Treasury Regulations Section 1.421-7(h) shall
be eligible to receive an ISO.

 

6.                                       Shares Subject to Plan. The aggregate maximum number of Shares for
which Awards or Options may be granted pursuant to the Plan is 260,000*. The
number of Shares which may be issued under the Plan shall be subject to
adjustment in accordance with Section 10. The Shares shall be issued from
authorized and unissued Common Stock or Common Stock held in or hereafter
acquired for the treasury of Bank. If an Option terminates or expires without
having been fully exercised for any reason or if Shares subject to an Award
have been conveyed back to Bank pursuant to the terms of an Award Agreement,
the Shares for which the Option was not exercised or the Shares that were
conveyed back to Bank (in either case, as the number of such Shares may have
been adjusted pursuant to Section 10 of the Plan or otherwise) shall again
be available for issuance pursuant to the terms of one or more Options, or one
or more Awards, granted pursuant to the Plan.

 

7.                                       Term of the Plan. The Plan is effective as of August 20,
2001, the date on which it was adopted by the Board. No ISO may be granted
under the Plan after August 19, 2001.

 

8.                                       Option Documents and Terms. Each Option granted under the Plan shall be
a Non-qualified Stock Option unless the Option shall be specifically designated
at the time of grant to be an ISO. If any Option designated an ISO is
determined for any reason not to qualify as an incentive stock option within
the meaning of Section 422 of the Code, such Option shall be treated as a
Non-qualified Stock Option for all purposes under the provisions of the Plan. Options
granted pursuant to the Plan shall be evidenced by the Option Documents in such
form as the Committee shall approve from time to time, which Option Documents
shall comply with and be subject to the following terms and conditions and such
other terms and conditions as the Committee shall require from time to time
which are not inconsistent with the terms of the Plan.

 

(a)                                  Number of Option Shares. Each Option Document shall state the number
of Shares to which it pertains. An Optionee may receive more than one Option,
which may include Options which are intended to be ISOs and Options which are
not intended to be ISOs, but only on the terms and subject to the conditions
and restrictions of the Plan. Notwithstanding anything herein to the contrary,
no Optionee shall be granted Options during one fiscal year of Bank for more
than 35,000 Shares (such number to be subject to adjustment in accordance with Section 10).

 

* As
originally adopted, the aggregate maximum number of Shares for which Awards or
Options may be granted pursuant to the plan equaled 160,000. Bank shareholders
adopted an amendment to the Plan that increased the maximum number of Shares
for which Awards or Options may be granted pursuant to the Plan to 260,000 on
April 21, 2003.

 

5

 

(b)                                 Option Price. Each Option Document shall state the Option
Price, which, for a Non-qualified Stock Option, need not be the Fair Market
Value of the Shares on the date the Option is granted and, for an ISO, shall be
at least 100% of the Fair Market Value of the Shares on the date the Option is
granted, as determined by the Committee in accordance with this Subsection
8(b); provided, however, that if an ISO is granted to an Optionee who then
owns, directly or by attribution under Section 424(d) of the Code, Shares
possessing more than ten percent of the total combined voting power of all
classes of stock of Bank or an Affiliate, then, to the extent required by Section
424(d) of the Code, the Option Price shall be at least 110% of the Fair Market
Value of the Shares on the date the Option is granted. If the Common Stock is
traded in a public market, then the Fair Market Value per Share shall be: (i) if
the Common Stock is listed on a national securities exchange or included in the
NASDAQ System, the last reported sale price thereof on the relevant date, (ii) if
the Common Stock is not so listed or included, the mean between the last
reported “bid” and “asked” prices thereof on the relevant date, as reported on
NASDAQ, or (iii) if not so reported, as reported by the National Daily
Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Committee determines. If the Common Stock is
not traded in a public market, then the Fair Market Value per Share shall be
determined in good faith by the Committee in accordance with Section 422(c)(1) of
the Code and the rules and principles of valuation set forth in Treasury
Regulations Section 20.2031-2(f) relating to the valuation of stocks and
bonds not actively traded. Subject to the foregoing, the Committee shall have
full authority and discretion and may rely on the opinion of a qualified
business valuation consultant.

 

(c)                                  Exercise. No Option shall be deemed to have been exercised prior to the receipt
by Bank of written notice of such exercise and, unless arrangements
satisfactory to Bank have been made for payment through a broker in accordance
with procedures permitted by rules or regulations of the Federal Reserve
Board, receipt of payment in full of the Option Price for the Shares to be
purchased. Each such notice shall specify the number of Shares to be purchased
and contain such other information as the Committee may require.

 

(d)                                 Medium of Payment. Subject to the terms of the applicable
Option Document, an Optionee shall pay for Shares (i) in cash, (ii) by
certified or cashier’s check payable to the order of Bank, or (iii) by
such other mode of payment as the Committee may approve, including, without
limitation, the Optionee’s note in form approved by the Committee and payment
through a broker in accordance with procedures permitted by rules or
regulations of the Federal Reserve Board.

 

(e)                                  Termination of Options.

 

(i)                                     No Option shall be exercisable after the
first to occur of the following:

 

6

 

(A)                              Expiration of the Option term specified in the
Option Document, which, in the case of an ISO, shall not occur after (1) ten
years from the date of grant, or (2) five years from the date of grant if
the Optionee on the date of grant owns, directly or by attribution under Section 424(d) of
the Code, shares possessing more than ten percent of the total combined voting
power of all classes of stock of Bank or of an Affiliate;

 

(B)                                Except to the extent otherwise provided in an
Optionee’s Option Document, a finding by the Committee, after full consideration
of the facts presented on behalf of both Bank and the Optionee, that the
Optionee has been engaged in disloyalty to Bank or an Affiliate, including,
without limitation, fraud, embezzlement, theft, commission of a felony or
proven dishonesty in the course of employment or service, or has disclosed
trade secrets or confidential information of Bank or an Affiliate. In such
event, in addition to immediate termination of the Option, the Optionee shall
automatically forfeit all Shares for which Bank has not yet delivered the share
certificates upon refund by Bank of the Option Price. Notwithstanding anything
herein to the contrary, Bank may withhold delivery of share certificates
pending the resolution of any inquiry that could lead to a finding resulting in
a forfeiture;

 

(C)                                The date, if any, set by the Committee as an
accelerated expiration date in the event of the liquidation or dissolution of
Bank;

 

(D)                               The occurrence of such other event or events
as may be set forth in the Plan or the Option Document as causing an
accelerated expiration of the Option; or

 

(E)                                 Except as otherwise set forth in the Option
Document and subject to the foregoing provisions of this Subsection 8(e),
immediately upon termination of the Optionee’s employment or service with Bank
or its Affiliates for any reason other than Disability or death or six months
after such termination due to Optionee’s Disability or death. With respect to
this Subsection 8(e)(i)(E), the only Options that may be exercised during the
six-month period are Options which were exercisable on the last date of such
employment or service and not Options which, if the Optionee were still
employed or rendering service during such six-month period, would become
exercisable, unless the Option Document specifically provides to the contrary
or the Committee otherwise approves. The terms of an executive severance
agreement or other agreement between Bank and an Optionee, approved by the
Committee or the Board, whether entered into prior or subsequent to the grant
of an Option, which provide for Option exercise dates later than those set
forth in Subsection 8(e)(i) shall be deemed to be Option terms approved by
the Committee and consented to by the Optionee.

 

7

 

(ii)                                  Notwithstanding
the foregoing, the Committee may extend the period during which all or any
portion of an Option may be exercised, provided that any change pursuant to
this Subsection 8(e)(ii) which would cause an ISO to become a
Non-qualified Stock Option may be made only with the consent of the Optionee.

 

(iii)                               Notwithstanding anything to the contrary
contained in the Plan or an Option Document, an ISO shall be treated as a
Non-qualified Stock Option to the extent such ISO is exercised at any time after
the expiration of the time period permitted under the Code for the exercise of
an ISO.

 

(f)                                    Transfers. Except as otherwise provided in this Subsection 8(f), no Option
granted under the Plan may be transferred, except by will or by the laws of
descent and distribution, and, during the lifetime of the person to whom an
Option is granted, such Option may be exercised only by the Optionee. Notwithstanding
the foregoing, an Option, other than an ISO, shall be transferable pursuant to
a “domestic relations order” as defined in the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder, and also shall be
transferable, without payment of consideration, to (i) immediate family
members of the holder (i.e.,
spouse or former spouse, parents, issue, including adopted and “step” issue, or
siblings), (ii) trusts for the benefit of immediate family members, (iii) partnerships
whose only partners are such family members, and (iv) to any transferee
permitted by a rule adopted by the Committee or approved by the Committee
in an individual case. Any transferee will be subject to all of the conditions
set forth in the Option prior to its transfer.

 

(g)                                 Limitation on ISO Grants. To the extent that the aggregate Fair
Market Value of the Shares of Common Stock (determined at the time the ISO is
granted) with respect to which ISOs under all incentive stock option plans of
Bank or its Affiliates are exercisable for the first time by the Optionee
during any calendar year exceeds $100,000, such ISOs shall, to the extent of
such excess, be treated as Non-qualified Stock Options.

 

(h)                                 Other Provisions. Subject to the provisions of the Plan, the
Option Document shall contain such other provisions, including, without
limitation, provisions authorizing the Committee to accelerate the
exercisability of all or any portion of an Option granted pursuant to the Plan,
additional restrictions upon the exercise of the Option or additional
limitations upon the term of the Option, as the Committee deems advisable.

 

9.                                       Change of Control. In the event of a Change of Control, the
Committee may take whatever actions it deems necessary or desirable with
respect to any of the Options outstanding or Award Shares not yet fully vested
or paid for, all of which need not be treated identically, including, without
limitation, accelerating (a) the expiration or termination date in the
respective Option Documents to a date no earlier than 30 days

 

8

 

after
notice of such acceleration is given to the Optionees, or (b) the
exercisability of the Option. Notwithstanding the foregoing, in the event of a
Change of Control, Options granted pursuant to the Plan will become
automatically exercisable in full.

 

A “Change of Control” shall be deemed to have occurred upon the
earliest to occur of any of the following events, each of which shall be
determined independently of the others:

 

(i)                                     any Person (as defined below) becomes a “beneficial
owner,” as such term is used in Rule 13d-3 promulgated under the Exchange
Act, of fifty percent or more (as determined by the Committee) of Bank’s stock
entitled to vote in the election of directors. For purposes of the Plan, the
term “Person” is used as such term is used in Sections 13(d) and 14(d) of
the Exchange Act; provided, however, that, unless the Committee determines to
the contrary, the term shall not include Bank, any trustee or other fiduciary
holding securities under an employee benefit plan of Bank, or any corporation
owned, directly or indirectly, by the shareholders of Bank in substantially the
same proportions as their ownership of stock of Bank;

 

(ii)                                  individuals who are Continuing Directors
cease to constitute a majority of the members of the Board (“Continuing
Directors” for this purpose being the members of the Board on the date of
adoption of the Plan, provided that any person becoming a member of the Board
subsequent to such date whose election or nomination for election was supported
by two-thirds of the directors who then comprised the Continuing Directors
shall be considered to be a Continuing Director);

 

(iii)                               shareholders of Bank adopt a plan of complete
or substantial liquidation or an agreement providing for the distribution
of all or substantially all of its assets;

 

(iv)                              Bank is party to a merger, consolidation,
other form of business combination or a sale of all or substantially all of its
assets, unless the business of Bank is continued following any such transaction
by a resulting entity (which may be, but need not be, Bank) and the
shareholders of Bank immediately prior to such transaction (the “Prior
Shareholders”) hold, directly or indirectly, at least two-thirds of the voting
power of the resulting entity (there being excluded from the voting power held
by the Prior Shareholders, but not from the total voting power of the resulting
entity, any voting power received by Affiliates of a party to the transaction
(other than Bank) in their capacities as shareholders of Bank);

 

(v)                                 there is a Change of Control of Bank of a
nature that would be required to be reported in response to item 1(a) of
Current Report on Form 8-K or item 6(e) of Schedule 14A of Regulation
14A or any similar item, schedule or form under the Exchange Act, as in effect
at the time of the change, whether or not Bank is then subject to such
reporting requirement;

 

9

 

(vi)                              the Bank is a subject of a “Rule 13e-3
transaction” as that term is defined in Exchange Act Rule 13e-3; or

 

(vii)                           there has occurred a “change of control,” as
such term (or any term of like import) is defined in any of the following
documents which is in effect with respect to Bank at the time in question:  any note, evidence of indebtedness or
agreement to lend funds to Bank, any option, incentive or employee benefit plan
of Bank or any employment, severance, termination or similar agreement with any
person who is then an employee of Bank.

 

10.                                 Adjustments on Changes in Capitalization.

 

(a)                                  In the event that the outstanding Shares are
changed by reason of a reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination or exchange of Shares and the
like (not including the issuance of Common Stock on the conversion of other
securities of Bank which are convertible into Common Stock) or dividends
payable in Shares, an equitable adjustment may be made by the Committee as it
deems appropriate in the aggregate number of Shares available under the Plan
and in the number of Shares and price per Share subject to outstanding Options.
Unless the Committee makes other provisions for the equitable settlement of
outstanding Options, if Bank shall be reorganized, consolidated, or merged with
another corporation, or if all or substantially all of the assets of Bank shall
be sold or exchanged, an Optionee shall at the time of issuance of the stock
under such corporate event be entitled to receive, upon the exercise of his or
her Option, the same number and kind of Shares of stock or the same amount of
property, cash or securities as the Optionee would have been entitled to
receive upon the occurrence of any such corporate event as if the Optionee had
been, immediately prior to such event, the holder of the number of Shares
covered by his or her Option.

 

(b)                                 Any adjustment under this Section 10 in
the number of Shares subject to Options shall apply proportionately to only the
unexercised portion of any Option granted hereunder. If a fraction of a Share
would result from any such adjustment, the fraction shall be eliminated, unless
the Committee otherwise determines.

 

(c)                                  The Committee shall have authority to
determine the adjustments to be made under this Section 10, and any such
determination by the Committee shall be final, binding and conclusive.

 

11.                                 Terms and Conditions of Awards. Awards granted pursuant to the Plan shall
be evidenced by written Award Agreements in such form as the Committee shall
approve from time to time, which Award Agreements shall comply with and be
subject to the following terms and conditions and such other terms and
conditions which the

 

10

 

Committee
shall require from time to time which are not inconsistent with the terms of
the Plan.

 

(a)                                  Number of Shares. Each Award Agreement shall state the number
of Shares or other units or rights to which it pertains.

 

(b)                                 Purchase Price. Each Award Agreement shall specify the
purchase price, if any, which applies to the Award. If the Board specifies a
purchase price, the Grantee shall be required to make payment on or before the
payment date specified in the Award Agreement. A Grantee shall make payment (i) in
cash, (ii) by certified check payable to the order of Bank, or (iii) by
such other mode of payment as the Committee may approve.

 

(c)                                  Grant. In the case of an Award which provides for a grant of Shares without
any payment by the Grantee, the grant shall take place on the date specified in
the Award Agreement. In the case of an Award which provides for a payment, the
grant shall take place on the date the initial payment is delivered to Bank,
unless the Committee or the Award Agreement otherwise specifies. Notwithstanding
the foregoing, as a precondition to a grant, Bank may require an acknowledgment
by the Grantee as required with respect to Options under Subsection 8(c).

 

(d)                                 Conditions. The Committee may specify in an Award Agreement any conditions under
which the Grantee of that Award shall be required to convey to Bank the Shares
covered by the Award. Upon the occurrence of any such specified condition, the
Grantee shall forthwith surrender and deliver to Bank the certificates
evidencing such Shares as well as completely executed instruments of conveyance.
The Committee, in its discretion, may provide that certificates for Shares
transferred pursuant to an Award be held in escrow by Bank or its designee
until such time as every condition has lapsed and that the Grantee be required,
as a condition of the Award, to deliver to such escrow agent or Bank officer
stock transfer powers covering the Award Shares duly endorsed by the Grantee. Unless
otherwise provided in the Award Agreement or determined by the Committee,
dividends and other distributions made on Shares held in escrow shall be
deposited in escrow, to be distributed to the party becoming entitled to the
Shares on which the distribution was made. Stock certificates evidencing Shares
subject to conditions shall bear a legend to the effect that the Shares
evidenced thereby are subject to repurchase by, or conveyance to, Bank in
accordance with the terms applicable to such Shares under an Award made
pursuant to the Plan, and that the Shares may not be sold or otherwise
transferred.

 

(e)                                  Lapse of Conditions. Upon termination or lapse of all forfeiture
conditions, Bank shall cause certificates without the legend referring to Bank’s
repurchase or acquisition right (but with any other legends that may be
appropriate) evidencing the

 

11

 

Shares
covered by the Award to be issued to the Grantee upon the Grantee’s surrender
to Bank of the legended certificates held by the Grantee.

 

(f)                                    Rights as Shareholder. Upon payment of the purchase price, if any,
for Shares covered by an Award and compliance with the acknowledgment
requirement of Subsection 11(c), the Grantee shall have all of the rights of a
shareholder with respect to the Shares covered thereby, including the right to
vote the Shares and (subject to the provisions of Subsection 11(d)) receive all
dividends and other distributions paid or made with respect thereto, except to
the extent otherwise provided by the Committee or in the Award Agreement.

 

12.                                 Amendment of the Plan. The Board may amend the Plan from time to
time in such manner as it may deem advisable. Nevertheless, the Board may not
change the class of persons eligible to receive an ISO or increase the maximum
number of Shares as to which Options may be granted under the Plan, or to any
individual under the Plan in any year, without obtaining approval, within
twelve months before or after such action, by the shareholders in the manner
required by state law. No amendment to the Plan shall adversely affect any
outstanding Option or Award, however, without the consent of the Optionee or
Grantee, as the case may be.

 

13.                                 No Commitment to Retain. The grant of an Option or Award pursuant to
the Plan shall not be construed to imply or to constitute evidence of any
agreement, express or implied, on the part of Bank or any Affiliate to retain
the Optionee or Grantee as an employee, director, consultant or advisor of Bank
or any Affiliate, or in any other capacity.

 

14.                                 Withholding of Taxes. In connection with any event relating to an
Option or Award, Bank shall have the right to (a) require the recipient to
remit or otherwise make available to Bank an amount sufficient to satisfy any
federal, state and/or local withholding tax requirements prior to the delivery
or transfer of any certificates for such Shares, or (b) take whatever
other action it deems necessary to protect its interests with respect to tax
liabilities, including, without limitation, withholding any Shares, funds or
other property otherwise due to the Optionee or Grantee. The Bank’s obligations
under the Plan shall be conditioned on the Optionee’s or Grantee’s compliance,
to Bank’s satisfaction, with any withholding requirement.

 

15.                                 Forfeiture of Rights. Notwithstanding anything to the contrary
contained in the Plan or any Option Document or Award Agreement, if directed to
do so by Bank’s primary federal regulator in the event that Bank’s capital
falls below certain minimum requirements, Bank will notify all Optionees and
Award holders that they must exercise all of their rights under such documents
within 30 days after receipt of such notice (or such longer or shorter period
as such regulator may prescribe) or forfeit such rights after

 

12

 

the
expiration of such period. To the extent not timely exercised prior to the
expiration of such period, all such rights shall become void.

 

16.                                 Governing Law. The validity, construction, interpretation
and effect of the Plan shall be governed exclusively by and determined in
accordance with the law of the Commonwealth of Pennsylvania, except to the
extent preempted by federal law, which under such circumstances shall govern.

 

13

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