Document:

Exhibit 10.3

 

EXECUTION VERSION

 

REGISTRATION RIGHTS AGREEMENT

 

BY AND AMONG

 

HALCÓN RESOURCES CORPORATION

 

AND

 

THE INVESTORS PARTY HERETO

 

DATED AS OF OCTOBER 8, 2019

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
REGISTRATION
    	
5
    
	
 
    	
 
    	
 
    
	
3.
    	
RELATED OBLIGATIONS
    	
9
    
	
 
    	
 
    	
 
    
	
4.
    	
OBLIGATIONS OF THE   INVESTORS
    	
16
    
	
 
    	
 
    	
 
    
	
5.
    	
EXPENSES OF   REGISTRATION
    	
17
    
	
 
    	
 
    	
 
    
	
6.
    	
INDEMNIFICATION
    	
17
    
	
 
    	
 
    	
 
    
	
7.
    	
CONTRIBUTION
    	
19
    
	
 
    	
 
    	
 
    
	
8.
    	
REPORTS UNDER THE   EXCHANGE ACT
    	
20
    
	
 
    	
 
    	
 
    
	
9.
    	
ASSIGNMENT OF   REGISTRATION RIGHTS
    	
20
    
	
 
    	
 
    	
 
    
	
10.
    	
AMENDMENT OF   REGISTRATION RIGHTS
    	
21
    
	
 
    	
 
    	
 
    
	
11.
    	
MISCELLANEOUS
    	
21
    

 

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of October 8, 2019, by and among Halcón Resources Corporation, a Delaware corporation (the “Company”), and each of the parties identified on the signature pages hereto (collectively, the “Investors”, and each an “Investor”).

 

RECITALS

 

A.                                    The Company and certain affiliated debtors (collectively, the “Debtors”) commenced, on August 7, 2019, cases under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of Texas, jointly administered under Case No. 19-34446 (DRJ).

 

B.                                    The Debtors filed the Joint Prepackaged Chapter 11 Plan of Halcón Corporation and its Affiliated Debtors Docket No. 20 on August 7, 2019 which, as hereto amended or modified, was confirmed by the United States Bankruptcy Court for the Southern District of Texas on September 24, 2019 Docket No. 321 (including all exhibits, schedules and supplements thereto and as amended from time to time, the “Plan”).

 

C.                                    The Company proposes to issue the Common Stock (as defined below) pursuant to, and upon the terms set forth in, the Plan.

 

D.                                    The Company and the Investors have agreed to enter into this Agreement pursuant to which the Company shall grant the Investors registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder (the “Securities Act”) with respect to the Registrable Securities (as defined below) in furtherance of the foregoing.

 

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 Investors hereby agree as follows:

 

AGREEMENT

 

1.                                      DEFINITIONS.

 

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

 

“Alternative Transaction” has the meaning ascribed to such term in Section 2(e).

 

“Blue Sky Filing” has the meaning ascribed to such term in Section 6(a).

 

“Business Day” means any day other than Saturday, Sunday or any other day on which either commercial banks in the City of New York are authorized or required by Law to remain closed or the New York Stock Exchange LLC is not open for a full business day.

 

 

“Claims” has the meaning ascribed to such term in Section 6(a).

 

“Common Stock” means the common stock of the Company, par value $0.0001 per share, as it exists on the date of this Agreement following the effectiveness of the Plan and any shares of any class or series of capital stock of the Company resulting from any reclassification or reclassifications thereof, or, in the event of a merger, consolidation or other similar transaction involving the Company that is otherwise permitted hereunder in which the Company is not the surviving corporation, the common stock, common equity interests, ordinary shares or depositary shares or other certificates representing common equity interests of such surviving corporation or its direct or indirect parent corporation, and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which are not subject to redemption by the Company.

 

“Company” has the meaning ascribed to such term in the preamble.

 

“Effective Date” means the date that a Registration Statement is declared effective by the SEC.

 

“Eligible Market” means The New York Stock Exchange, The NYSE MKT LLC, The NASDAQ Global Select, or The NASDAQ Global Market.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

 

“Filing Deadline” means the date which is the later of (i) 90 days after the effective date of the Plan and (ii) the date specified in a written notice to the Company by the Required Holders.

 

“Filing Determination Date” has the meaning ascribed to such term in Section 2(a).

 

“Governmental Authority” means the government of any nation, state, city, locality or other political subdivision thereof, any entity or self-regulatory organization exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

 

“Indemnified Damages” has the meaning ascribed to such term in Section 6(a).

 

“Indemnified Party” has the meaning ascribed to such term in Section 6(b).

 

“Indemnified Person” has the meaning ascribed to such term in Section 6(a).

 

“Inspectors” has the meaning ascribed to such term in Section 3(h).

 

“Law” means any United States federal, state or local or foreign law, rule, regulation, statute, Order or other legally enforceable requirement (including common law)

 

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issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Authority.

 

“Legal Counsel” has the meaning ascribed to such term in Section 2(b).

 

“Maximum Offering Size” has the meaning ascribed to such term in Section 2(e).

 

“New Registration Rights Agreement” means a new registration rights agreement, providing the Investors with registration rights that are customary for investors in a company that is not subject to the reporting requirements of Section 12(b), 12(g) or 15(d) of the Exchange Act (including initial public offering demand registration rights at the request of the Investors holding a customary percentage of the outstanding Common Stock and seeking to register a customary minimum threshold amount of Common Stock and, after completion of an initial public offering of Common Stock, demand registration rights, shelf registration rights and piggyback registration rights customary for investors in a company that is not subject to the reporting requirements of Section 12(b), 12(g) or 15(d) of the Exchange Act), as shall be reasonably agreed among the Company and the Investors holding Registrable Securities at the time such registration rights agreement is entered into.

 

“Order” means any judgment, decision, writ, order, injunction, award, decree or other determination of or by any Governmental Authority.

 

“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an estate, an unincorporated organization or other entity and a government or any department or agency thereof.

 

“Plan” means the Debtors’ Joint Prepackaged Chapter 11 Plan of Halcón Corporation and its Affiliated Debtors Docket No. 20, filed in the Debtors’ chapter 11 cases in the United States Bankruptcy Court for the Southern District of Texas, Case No. 19-34446 (DRJ) (as it may be amended, modified or supplemented from time to time).

 

“Records” has the meaning ascribed to such term in Section 3(h).

 

“register,” “registered,” and “registration” refer to a registration effected by preparing and filing one or more Registration Statements in compliance with the Securities Act and pursuant to Rule 415, and the declaration or ordering of effectiveness of such Registration Statement(s) by the SEC.

 

“Registrable Securities” means (i) any shares of Common Stock, whether now owned or hereafter acquired by the Investors (including shares of Common Stock issued pursuant to the Plan) and (ii) any shares of capital stock of the Company issued or issuable with respect to the Common Stock described in clause (i), as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise; provided, that any Registrable Securities beneficially owned by an Investor shall cease to be Registrable Securities to the extent such securities may be sold pursuant to Rule 144 (or any similar provisions in force) without regard to volume or manner of sale limitations.

 

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“Registration Actions” has the meaning ascribed to such term in Section 2(f).

 

“Registration Period” has the meaning ascribed to such term in Section 3(a).

 

“Registration Statement” means a registration statement or registration statements of the Company filed under the Securities Act covering the resale of the Registrable Securities.

 

“Requested Shelf Registered Securities” has the meaning ascribed to such term in Section 2(e).

 

“Required Holders” means the holders of at least a majority of the Registrable Securities.

 

“Rule 144” has the meaning ascribed to such term in Section 8.

 

“Rule 415” means Rule 415 promulgated under the Securities Act or any successor rule providing for offering securities on a delayed or continuous basis.

 

“SEC” means the United States Securities and Exchange Commission.

 

“SEC Guidance” means (i) any publicly available written or oral interpretations, questions and answers, guidance and forms of the SEC, (ii) any oral or written comments, requirements or requests of the SEC or its staff, (iii) the Securities Act and the Exchange Act and (iv) any other rules, bulletins, releases, manuals and regulations of the SEC.

 

“Securities Act” has the meaning ascribed to such term in the recitals.

 

“Shelf Registered Securities” means any Registrable Securities whose resale is covered by an effective Registration Statement filed pursuant to this Agreement.

 

“Suspension Notice” has the meaning ascribed to such term in Section 2(f).

 

“Suspension Period” has the meaning ascribed to such term in Section 2(f).

 

“Underwritten Offering” has the meaning ascribed to such term in Section 2(e).

 

“Underwritten Offering Notice” has the meaning ascribed to such term in Section 2(e).

 

“Underwritten Offering Request” has the meaning ascribed to such term in Section 2(e).

 

“Underwritten Offering Requesting Holder” has the meaning ascribed to such term in Section 2(e).

 

“Violations” has the meaning ascribed to such term in Section 6(a).

 

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2.                                      REGISTRATION.

 

(a)                                 Mandatory Registration.  The Company shall prepare, and, as soon as reasonably practicable but in no event later than the Filing Deadline, file with the SEC a Registration Statement on Form S-3 covering the resale of all of the Registrable Securities. In the event that Form S-3 is unavailable for such a registration in accordance with SEC Guidance, the Company shall use such other appropriate form as is available for such a registration in accordance with SEC Guidance, subject to the provisions of Section 2(c). The Registration Statement prepared pursuant hereto shall register for resale the number of Registrable Securities determined as of the Business Day prior to the date the Registration Statement is initially filed with the SEC (the “Filing Determination Date”), subject to adjustment as provided in Section 2(d). Not later than five Business Days prior to the anticipated Filing Determination Date, the Company shall provide written notice to the Investors of such anticipated Filing Determination Date.  Each Investor shall provide such information as is required by Section 4(a) not later than the third Business Day after receipt of such notice from the Company.  The Company shall use its commercially reasonable best efforts to have the Registration Statement declared effective by the SEC as soon as reasonably practicable, provided however, that if a Registration Statement shall be required to include financial statements or pro forma financial information that includes “fresh start” accounting financial information, the Company shall not be required to cause such Registration Statement to become effective until  such financial statements or pro forma financial information, or both, as the case may be, are available and included in such Registration Statement. For the avoidance of doubt, the Company shall use its commercially reasonable efforts to cause such “fresh start” financial statements or “fresh start” pro forma financial information, as the case may be, to be available and included in such Registration Statement as soon as reasonably practicable.  By the end of the Business Day following the Effective Date, the Company shall file with the SEC, in accordance with SEC Guidance, a final prospectus to be used in connection with sales pursuant to such Registration Statement.  From time to time, the Investors may, by written notice to the Company, request that an amount of additional Registrable Securities be registered on a Registration Statement.  Upon receipt of such notice, the Company shall prepare, and, as soon as reasonably practicable, file with the SEC a post-effective amendment to the Registration Statement on Form S-3 covering the resale of all of such additional Registrable Securities.

 

(b)                                 Legal Counsel.  Subject to Section 5 hereof, the Required Holders shall have the right to select one legal counsel to review and oversee any registration pursuant to this Section 2 (“Legal Counsel”), which shall be Paul, Weiss, Rifkind, Wharton & Garrison LLP or such other counsel as thereafter designated by the Required Holders.  The Company and Legal Counsel shall reasonably cooperate with each other in performing the Company’s obligations under this Agreement. For the avoidance of doubt, the Company shall be entitled to select separate legal counsel to represent the Company in connection with fulfilling its obligations under this Agreement.

 

(c)                                  Ineligibility for Form S-3.  In the event that Form S-3 is not available for the registration of the resale of Registrable Securities hereunder in accordance with SEC Guidance, the Company shall (i) register the resale of the Registrable Securities on Form S-1 or another appropriate form in accordance with SEC Guidance and (ii) undertake to register the Registrable Securities on Form S-3 as soon as such form is available for secondary sales in accordance with SEC Guidance, provided that the Company shall use its commercially reasonable efforts to maintain the effectiveness of the Registration Statement then in effect until such time as a

 

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Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the SEC.

 

(d)                                 Termination of Exchange Act Registration.  Notwithstanding anything to the contrary in this Section 2, if the Company expects that it will no longer be subject to the reporting requirements of Section 12(b), 12(g) or 15(d) of the Exchange Act after completion of its reporting obligations under the Exchange Act for its fiscal year ending December 31, 2019, subject to the condition precedent that the Company shall have used its commercially reasonable best efforts to enter into a New Registration Rights Agreement with the Investors holding Registrable Securities at such time, the Company and the Investors shall not be required to comply with their respective obligations under this Agreement and, for the avoidance of doubt, the Company shall not be required to file or maintain the effectiveness of any Registration Statements filed under this Agreement or perform any Registration Actions (as defined below) and may withdraw any such Registration Statements in accordance with SEC Guidance.  The New Registration Rights Agreement to which at least the Required Holders are party shall provide that it supersedes this Agreement in its entirety.

 

(e)                                  Conduct of Underwritten Offerings and Alternative Transactions.

 

(i)                                     Upon written request by an Investor holding Shelf Registered Securities (the “Underwritten Offering Requesting Holder”), which request (the “Underwritten Offering Request”) shall specify the class or series and amount of such Underwritten Offering Requesting Holder’s Shelf Registered Securities to be sold (the “Requested Shelf Registered Securities”), the Company shall perform its obligations hereunder with respect to the sale of such Requested Shelf Registered Securities in the form of a firm commitment underwritten public offering (unless otherwise consented to by the Underwritten Offering Requesting Holder) (an “Underwritten Offering”) if the aggregate proceeds reasonably anticipated to be generated, net of underwriting discounts and commissions, from the sale of the Requested Shelf Registered Securities equals or exceeds $25.0 million (as determined by the Company in good faith, as of the date the Company receives the Underwritten Offering Request), unless such Underwritten Offering shall include all of the Registrable Securities then owned by the Underwritten Offering Requesting Holder(s).  Promptly upon receipt of an Underwritten Offering Request, the Company shall provide notice (the “Underwritten Offering Notice”) of such proposed Underwritten Offering (which notice shall state the material terms of such proposed Underwritten Offering, to the extent known, as well as the identity of the Underwritten Offering Requesting Holder) to the other Investors holding Shelf Registered Securities.  Such other Investors may, by written request to the Company and the Underwritten Offering Requesting Holders, within three Business Days after receipt of such Underwritten Offering Notice, offer and sell up to all of their Shelf Registered Securities of the same class or series as the Requested Shelf Registered Securities in such proposed Underwritten Offering.  No Investor shall be entitled to include any of its Registrable Securities in an Underwritten Offering unless such Investor has complied with clause (iv), below.  The lead managing underwriter or underwriters selected for such Underwritten Offering shall be an investment bank of national reputation selected by the Underwritten Offering Requesting Holder(s) and shall be reasonably acceptable to the Company.  The terms and conditions of any customary underwriting or purchase arrangements pursuant to which Registrable Securities shall be sold in an Underwritten Offering

 

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shall be approved by the Underwritten Offering Requesting Holder(s) and shall be reasonably acceptable to the Company.

 

(ii)                                  In an Underwritten Offering, if the lead managing underwriter advises the Company and the Underwritten Offering Requesting Holder that, in its view, the number of Registrable Securities requested to be included in such Underwritten Offering (including any securities that the Company proposes to be included that are not Registrable Securities) exceeds the number of Registrable Securities that may be sold without having a material and adverse effect on such Underwritten Offering (the “Maximum Offering Size”), the Company shall include in such Underwritten Offering the following securities, in the priority listed below, up to the Maximum Offering Size:

 

(A)                               first, Shelf Registered Securities that are requested to be included in such Underwritten Offering by the Underwritten Offering Requesting Holder(s);

 

(B)                               second, Shelf Registered Securities that are requested to be included in such Underwritten Offering by Investors other than the Underwritten Offering Requesting Holder(s); and

 

(C)                               third, all securities that are registered on the applicable Registration Statement and are requested to be included in such Underwritten Offering by the Company (including securities to be included pursuant to other applicable registration rights agreements or provisions).

 

(iii)                               The Company shall use its commercially reasonable efforts to cooperate in a timely manner with any request of the Investors holding Shelf Registered Securities in respect of any block trade, hedging transaction, derivatives transaction, short sale, stock loan or pledge or other transaction that is registered under a Registration Statement that is not a firm commitment Underwritten Offering (each, an “Alternative Transaction”), including entering into customary agreements with respect to such Alternative Transactions (and providing customary representations, warranties, covenants and indemnities in such agreements) as well as providing other reasonable assistance in respect of such Alternative Transactions of the type applicable to a transaction registered on a Registration Statement, subject to Section 3 hereof, to the extent customary for such transactions.

 

(iv)                              Notwithstanding anything herein to the contrary, no Investor may participate in any Underwritten Offering hereunder unless such Investor accurately completes and executes in a timely manner all questionnaires, powers of attorney, indemnities, custody agreements, underwriting agreements (as approved in accordance with the terms of this Agreement), and other documents reasonably requested under the terms of such underwriting arrangements; provided, that all Persons participating in such Underwritten Offering shall be required to complete and execute, on the same terms and conditions, such questionnaires, powers of attorney, indemnities, custody agreements, underwriting agreements, and other documents (if applicable).  The right of an Investor to register and sell Registrable Securities in an Underwritten Offering shall also be subject to any restrictions, limitations or prohibitions on the sale of Registrable Securities as may be required by the underwriters in the interests of the

 

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offering (and, without limiting the foregoing, each Registration Rights Holder shall in connection therewith agree to be bound by (and if requested, execute and deliver) a lock-up agreement with the underwriter(s) of any such Underwritten Offering as provided in clause (v), below).

 

(v)                                 In connection with an Underwritten Offering:

 

(A)                               Each Investor hereby agrees that, except for sales in such Underwritten Offering:  (1) it will not effect any public sale or distribution (including sales pursuant to Rule 144 and through derivative transactions) of Common Stock during (x) the period from the date of the Underwritten Offering Notice until the end of the 60-day period beginning on the date of commencement of such Underwritten Offering (which period may be extended to the extent required by applicable Law or SEC Guidance) or (y) such shorter period as the underwriters participating in such Underwritten Offering may require; provided, that the duration of the restrictions described in this subclause (1) shall be no longer than the duration of the shortest restriction generally imposed by the underwriters on the chief executive officer and the chief financial officer of the Company (or persons in substantially equivalent positions) in connection with such Underwritten Offering; and (2) it will execute a lock-up agreement in favor of the underwriters in form and substance reasonably acceptable to the Company and the underwriters to such effect.

 

(B)                               The Company agrees that (1) it shall not effect any public sale or distribution (including through derivative transactions) of Common Stock (except pursuant to registrations on Form S-8 or Form S-4 or any similar or successor form under the Securities Act) during (x) the period from the date of the Underwritten Offering Notice until the end of the 60-day period beginning on the date of commencement of such Underwritten Offering (which period may be extended to the extent required by applicable Law or SEC Guidance) or (y) such shorter period as the underwriters participating in such Underwritten Offering may require; and (2) to the extent requested by the underwriters participating in such Underwritten Offering, it shall agree to include provisions in the relevant underwriting or other similar agreement giving effect to the restrictions described in the preceding subclause (1), in form and substance reasonably acceptable to such underwriters.

 

(vi)                              Notwithstanding any other provision of this Agreement, in no event shall the Company be required to undertake more than three Underwritten Offerings with respect to Underwritten Offering Requests in any calendar year.

 

(f)                                   Suspension.  Notwithstanding anything to the contrary contained in this Agreement, but subject to the limitations set forth in this Section 2(f), the Company shall be entitled to suspend its obligation to (i) file or submit (but not to prepare) any Registration Statement, (ii) file or submit any amendment to such a Registration Statement, (iii) file, submit or furnish any supplement or amendment to a prospectus included in such a Registration Statement, (iv) make any other filing with the SEC, (v) cause such a Registration Statement or other filing with the SEC to become or remain effective or (vi) take any similar actions or actions

 

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related thereto (including entering into agreements and actions related to the marketing of securities) (collectively, “Registration Actions”) upon (1) the issuance by the SEC of a stop order suspending the effectiveness of any such Registration Statement or the initiation of proceedings with respect to such a Registration Statement under Section 8(d) or 8(e) of the Securities Act, (2) the determination of the Company’s board of directors that any such Registration Action should not be taken because it would reasonably be expected to materially interfere with or require the public disclosure of any material corporate development or plan, including any material financing, securities offering, acquisition, disposition, corporate reorganization or merger or other transaction involving the Company or any of its subsidiaries or (3) the Company possessing material non-public information the disclosure of which its board of directors determines would reasonably be expected to not be in the best interests of the Company.  Upon the occurrence of any of the conditions described in clause (1), (2) or (3) above in connection with undertaking a Registration Action, the Company shall give prompt notice of such suspension (and whether such action is being taken pursuant to clause (1), (2) or (3) above) (a “Suspension Notice”) to the Investors.  Upon the termination of such condition, the Company shall give prompt notice thereof to the Investors and shall promptly proceed with all Registration Actions that were suspended pursuant to this Section 2(f).  The Company may only suspend Registration Actions pursuant to clause (2) or (3) above on three occasions during any period of 12 consecutive months for a reasonable time specified in the Suspension Notice but not exceeding an aggregate of 90 days (which period may not be extended or renewed) during such 12 consecutive month period (each such occasion, a “Suspension Period”).  Each Suspension Period shall be deemed to begin on the date the relevant Suspension Notice is given to the Investors and shall be deemed to end on the earlier to occur of (x) the date on which the Company gives the Investors a notice that the Suspension Period has terminated and (y) the date on which the number of days during which a Suspension Period has been in effect exceeds the 90-day limit.  Notwithstanding anything to the contrary in this Agreement, the Company shall not be in breach of, or have failed to comply with, any obligation under this Agreement where the Company acts or omits to take any action in order to comply with applicable Law, any SEC Guidance or any Order.  Each Investor shall keep confidential the fact that a Suspension Period is in effect unless otherwise notified by the Company, except (a) for disclosure to the Investors and any underwriters or counterparties in Alternative Transactions, and their employees, agents and professional advisers who reasonably need to know such information, (b) for disclosures to the extent required in order to comply with reporting obligations to its limited partners or other direct or indirect investors who are subject to confidentiality arrangements with such Investor, (c) if and to the extent such matters are publicly disclosed by the Company or any of its subsidiaries or any other Person that, to the actual knowledge of such Investor, was not subject to an obligation or duty of confidentiality to the Company or any of its subsidiaries, (d) as required by applicable Law (provided, that the Investor gives prior written notice to the Company of such requirement and the contents of the proposed disclosure to the extent it is permitted to do so under applicable Law), and (e) for disclosure to any other Investor who is subject to the foregoing confidentiality requirement.

 

3.                                      RELATED OBLIGATIONS.

 

At such time as the Company is obligated to file a Registration Statement with the SEC pursuant to Section 2, the Company will use its commercially reasonable efforts to effect

 

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the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:

 

(a)                                 The Company shall promptly prepare and file with the SEC a Registration Statement with respect to the Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement relating to the Registrable Securities to become effective as soon as reasonably practicable after such filing. The Company shall keep each Registration Statement effective pursuant to Rule 415 at all times until the earlier of (i) the date on which there are no longer any Registrable Securities and (ii) the date on which the Investors shall have sold all of the Registrable Securities covered by such Registration Statement (the “Registration Period”).  Each Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which they were made) not misleading.  The term “commercially reasonable efforts” shall mean, among other things, that the Company shall submit to the SEC, within five Business Days after the later of the date that (i) the Company is advised by the SEC that no review of a particular Registration Statement will be made by the staff of the SEC or that the staff has no further comments on a particular Registration Statement, as the case may be, and (ii) the approval of Legal Counsel pursuant to Section 3(c) (which approval is immediately sought), a request for acceleration of effectiveness of such Registration Statement to a time and date not later than two Business Days after the submission of such request.  The Company shall use its commercially reasonable efforts to respond in writing to comments made by the SEC in respect of a Registration Statement as soon as reasonably practicable.

 

(b)                                 In accordance with SEC Guidance, 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.  The “Plan of Distribution” section of each Registration Statement shall permit, subject to the SEC Guidance, all customary means of disposition of Registrable Securities, including firm-commitment underwritten public offerings, block trades, agented transactions, sales directly into the market, purchases or sales by brokers, derivative transactions, short sales, stock loan or stock pledge transactions and sales not involving a public offering.  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 filing a report on Form 10-K, Form 10-Q, Form 8-K or any analogous report under the Exchange Act, the Company shall have incorporated such report by reference into such 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 such Registration Statement.

 

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(c)                                  The Company shall (A) permit Legal Counsel to review and comment upon (i) a Registration Statement at least two Business Days prior to its filing with the SEC and (ii) all amendments and supplements to all Registration Statements (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any similar or successor reports) within a reasonable number of days prior to their filing with the SEC, and (B) not file any Registration Statement or any such amendment or supplement thereto in a form to which Legal Counsel reasonably objects.  The Company shall not submit a request for acceleration of the effectiveness of a Registration Statement or any amendment or supplement thereto without the prior approval of Legal Counsel, which approval shall not be unreasonably withheld.  The Company shall furnish to Legal Counsel, without charge, (i) copies of any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to any Registration Statement, (ii) promptly after the same is prepared and filed with the SEC, one copy of any Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, if requested by an Investor, and all exhibits and (iii) upon the effectiveness of any Registration Statement, one copy of the prospectus included in such Registration Statement and all amendments and supplements thereto.  The Company shall reasonably cooperate with Legal Counsel in performing the Company’s obligations pursuant to this Section 3.

 

(d)                                 The Company shall upon request furnish to each Investor whose Registrable Securities are included in any Registration Statement, without charge, (i) promptly after the same is prepared and filed with the SEC, at least one copy of such Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference, if requested by an Investor, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of any Registration Statement, 10 copies of the 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, including copies of any preliminary or final prospectus, as such Investor may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor; provided, that any such item which is available on the SEC’s EDGAR System (or successor thereto) need not be furnished in physical form.

 

(e)                                  The Company shall use its commercially reasonable efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale by Investors of 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 Required Holders may reasonably request, (ii) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(e), (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 Legal Counsel and each Investor who holds Registrable Securities of the receipt by the

 

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Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” Laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

 

(f)                                   The Company shall notify Legal Counsel and each Investor in writing (which may be by email) of the happening of any event, as promptly as reasonably practicable after becoming aware of such 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 the 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, subject to Section 3(q) hereof, promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement or omission, and upon request deliver 10 copies of such supplement or amendment to Legal Counsel and each Investor (or such other number of copies as Legal Counsel or such Investor may reasonably request) provided, that any such item which is available on the SEC’s EDGAR System (or successor thereto) need not be furnished in physical form.  The Company shall also promptly notify Legal Counsel in writing (which may be by email) (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 Legal Counsel by facsimile or email 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.  By the end of the Business Day following the date any post-effective amendment has become effective, the Company shall file with the SEC in accordance with Rule 424 under the Securities Act the final prospectus to be used in connection with sales pursuant to such Registration Statement.

 

(g)                                  The Company shall use its commercially reasonable 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 and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension as early as is reasonably practicable and to notify Legal Counsel and each Investor who holds Registrable Securities being sold 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.

 

(h)                                 Subject to customary confidentiality arrangements in form and substance reasonably satisfactory to the Company, the Company shall make available for inspection (upon reasonable notice and during normal business hours) by any Investor and any underwriter or counterparty in an Alternative Transaction participating in any disposition pursuant to a Registration Statement and any attorney (including Legal Counsel), any accountant or any other professional retained by any such Registration Rights Holder, underwriter or counterparty (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”) as shall be reasonably necessary or desirable to enable them to exercise their due diligence responsibility and comply with SEC

 

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Guidance, and cause the officers and the employees of the Company to supply all information reasonably requested by any Inspectors in connection with such Registration Statement.  Records that the Company determines, in good faith, to be confidential and that it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in such Registration Statement or related prospectus, (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, (iii) disclosure of such Records is necessary to comply with SEC Guidance, federal or state securities Laws or the rules of any securities exchange or trading market on which any Common Stock is listed or traded or is otherwise required by applicable Law, SEC Guidance or administrative or legal process, (iv) the information in such Records was known to the Inspectors on a non-confidential basis prior to its disclosure by the Company or has been made generally available to the public other than as a result of a violation of this paragraph (h) or any other agreement or duty of confidentiality, (v) the information in such Records is or becomes available to the public other than as a result of disclosure by any Inspector in violation of the confidentiality agreements or (vi) is or was independently developed by any Inspector without the benefit of the information in such Records. Each Inspector agrees that, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, it shall, to the extent permitted by applicable Law, give notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential.  Nothing in this paragraph (h) (or in any other confidentiality agreement between the Company and any Inspector) shall be deemed to limit the Investors’ ability to sell Registrable Securities in a manner which is otherwise consistent with applicable Law.

 

(i)                                     The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i) the disclosure of such information is necessary to avoid or correct a misstatement or omission in such Registration Statement or related prospectus, (ii) the release of such information is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, (iii) disclosure of such information is necessary to comply with SEC Guidance, federal or state securities Laws or the rules of any securities exchange or trading market on which any Common Stock is listed or traded or is otherwise required by applicable Law, SEC Guidance or administrative or legal process, (iv) the information in such information was known to the Company on a non-confidential basis prior to its disclosure by the Investors or has been made generally available to the public other than as a result of a violation of this paragraph (i) or any other agreement or duty of confidentiality, (v) such information is or becomes available to the public other than as a result of disclosure by the Company in violation of the confidentiality agreements or (vi) is or was independently developed by the Company. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or other Governmental Authority of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

 

(j)                                    The Company shall use its commercially reasonable efforts to cause all of the Registrable Securities covered by a Registration Statement 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

 

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exchange.  The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(j).

 

(k)                                 The Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend if such shares are sold pursuant to a Registration Statement to a person who is not an affiliate of the Company) 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 Investors may reasonably request and registered in such names as the Investors may request.

 

(l)                                     If requested by an Investor, the Company shall as soon as reasonably practicable (i) incorporate in a prospectus supplement or post-effective amendment such information as an Investor reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being offered or sold, the manner of such sale and distribution, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) make all required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement if reasonably requested by an Investor holding any Registrable Securities.

 

(m)                             The Company shall use its commercially reasonable efforts to cause the Registrable Securities covered by a Registration Statement to be registered with or approved by such other Governmental Authorities as may be necessary to consummate the disposition of such Registrable Securities as contemplated by the Registration Statement.

 

(n)                                 The Company shall make generally available to its security holders as soon as practical, but not later than 90 days after the close of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, 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 applicable Effective Date of a Registration Statement.

 

(o)                                 The Company shall otherwise use its commercially reasonable efforts to comply with all SEC Guidance in connection with any Registration Statement.

 

(p)                                 Within two 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 Investors whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement has been declared effective by the SEC.  The Company shall provide such confirmation to any underwriters or counterparties in Alternative Transactions covered by such Registration Statement.

 

(q)                                  In connection with any Underwritten Offering or Alternative Transaction:

 

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(i)                                     The Company shall enter into any underwriting or other agreements that are reasonably necessary to complete transactions of such type, which agreements shall provide for representations, warranties, covenants and indemnities that are customary for transactions of such type;

 

(ii)                                  The Company shall furnish to each Investor and to each underwriter in an Underwritten Offering or counterparty in an Alternative Transaction, if any, a signed counterpart, addressed to such underwriter or counterparty, of (A) an opinion or opinions of counsel to the Company and (B) a comfort letter or comfort letters from the Company’s independent public accountants, each in customary form and covering such matters of the kind customarily covered by opinions or comfort letters, as the case may be, any Investor or the lead managing underwriter (or lead counterparty, as the case may be) therefor reasonably requests;

 

(iii)                               Prior to filing or submitting to the SEC or any other Governmental Authority or distributing publicly any materials (including free writing prospectuses, prospectus supplements, materials to be incorporated by reference in the relevant Registration Statement and amendments or supplements to the relevant Registration Statement) related to such Underwritten Offering or Alternative Transaction, the Company shall afford counsel to any underwriter or counterparty in such Alternative Transaction a reasonable opportunity to review and comment on any such materials, and the Company shall use commercially reasonable efforts to address any such comments; and

 

(iv)                              The Company shall take all other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities in any such Underwritten Offering or Alternative Transaction, including, if required, (A) engaging a “qualified independent underwriter” in connection with the qualification of the underwriting arrangements with FINRA, (B) providing reasonable cooperation to any underwriters or counterparties in Alternative Transactions in their filings with FINRA, (C) causing its senior management, upon reasonable request and at reasonable times to prepare and make presentations at any “road shows” in connection with Underwritten Offerings and Alternative Transactions and otherwise cooperate as requested by the underwriters or counterparties in an Alternative Transaction in the offering, marketing or selling of the Registrable Securities, (D) including in such Registration Statement such additional information for marketing purposes as the managing underwriter or counterparty in an Alternative Transaction reasonably requests (which information may be provided by means of a prospectus supplement if permitted by SEC Guidance), (E) furnishing the underwriters or counterparties in Alternative Transactions such number of copies of such Registration Statement, each amendment and supplement thereto filed with the SEC (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such Registration Statement (including each preliminary prospectus and any summary prospectus) and any other prospectus filed under Rule 424, Rule 430A, Rule 430B or Rule 430C under the Securities Act and such other documents as such underwriters or counterparties may reasonably request in order to facilitate the disposition of the Registrable Securities.

 

(r)                                    Neither the Company nor any subsidiary or affiliate thereof shall identify any Investor as an “underwriter” in any public disclosure or filing with the SEC or any Eligible Market without the prior written consent of such Investor (it being understood, that if the

 

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Company is required to name such Investor as an “underwriter” in such Registration Statement by the SEC (after a good faith discussion with the SEC to lift such requirement, including, without limitation, any reduction in the number of Registrable Securities of such Investor to be registered on such Registration Statement (to the extent necessary to lift such requirement)), such Investor shall have the option of electing to exclude all such Registrable Securities from such Registration Statement or to be named as an “underwriter” in such Registration Statement”).

 

(s)                                   Neither the Company nor any of its subsidiaries has entered, as of the date hereof, nor shall the Company or any of its subsidiaries, on or after the date of this Agreement, except with respect to the New Registration Rights Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Investor in this Agreement or otherwise conflicts with the provisions hereof.

 

4.                                      OBLIGATIONS OF THE INVESTORS.

 

(a)                                 At least five Business Days prior to the first anticipated filing date of a Registration Statement, the Company shall notify each Investor in writing (which may be by email) of the information the Company requires from each such Investor if such Investor elects to have any of such Investor’s Registrable Securities included in such Registration Statement.  It shall be a condition precedent to the obligations of the Company to complete any registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect and maintain the effectiveness of the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request.

 

(b)                                 Each Investor, by such Investor’s acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless such Investor has notified the Company in writing (which may be by email) of such Investor’s election to exclude all of such Investor’s Registrable Securities from such Registration Statement.

 

(c)                                  Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of Section 3(f), such Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until such Investor’s receipt of copies of the supplemented or amended prospectus as contemplated by Section 3(g) or the first sentence of Section 3(f) 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 shares of Common Stock to a transferee of an Investor in connection with any sale of Registrable Securities with respect to which an Investor has entered into a contract for sale prior to the Investor’s receipt of a notice from the Company of the happening of any event of the kind described in Section 3(g) or the first sentence of Section 3(f) and for which the Investor has not yet settled.

 

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(d)                                 Each Investor covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it or an exemption therefrom in connection with sales of Registrable Securities pursuant to the Registration Statement.

 

5.                                      EXPENSES OF REGISTRATION.  All reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, and fees and disbursements of counsel for the Company shall be paid by the Company.  In connection with each registration pursuant to Section 2, the Company shall reimburse the Required Holders for the reasonable fees and disbursements of the Legal Counsel, which reimbursement amount shall not exceed $100,000 per registration without the prior approval of the Company

 

6.                                      INDEMNIFICATION.

 

In the event any Registrable Securities 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 each Investor, the directors, officers, partners, members, employees, agents, representatives of, and each Person, if any, who controls any 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 other Governmental Authority, 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 or (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading (the matters in the foregoing clauses (i) and (ii) being, collectively, “Violations”).  Subject to Section 6(c) hereof, the Company shall reimburse the Indemnified Persons, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim.  Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with

 

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information furnished in writing to the Company by such Indemnified Person for such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(d); (ii) shall not apply to expenses or damages which arise out of an Indemnified Person’s failure to send or give a copy of the final prospectus, as the same may be then supplemented or amended, within the time required by the Securities Act to the Person asserting the existence of an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of Registrable Securities to such Person if such statement or omission was corrected in such final prospectus or an amendment or supplement thereto; and (iii) 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 or delayed.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of any of the Registrable Securities by any of the Investors pursuant to Section 9.

 

(b)                                 In connection with any Registration Statement in which an Investor is participating, each such Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement 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 are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and, subject to Section 6(c), such Investor shall reimburse the Indemnified Party for any legal or other expenses reasonably incurred by an Indemnified Party in connection with investigating or defending any such Claim; provided, 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 such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9.

 

(c)                                  Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for all such Indemnified Person or Indemnified

 

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Party to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the Indemnified Person or Indemnified Party, as applicable, 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.  In the case of an Indemnified Person, legal counsel referred to in the immediately preceding sentence shall be selected by the Investors holding at least a majority in interest of the Registrable Securities included in the Registration Statement to which the Claim relates.  The Indemnified Party or Indemnified Person shall reasonably cooperate 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 and such settlement shall not include any admission as to fault on the part of the Indemnified Party.  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 Person involved in the sale of Registrable Securities which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with such sale shall be entitled to contribution from any

 

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Person involved in such sale 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 amount of net proceeds received by such seller from the sale of such Registrable Securities pursuant to such Registration Statement.

 

8.                                      REPORTS UNDER THE EXCHANGE ACT.

 

With a view to making available to the Investors the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the 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 and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and

 

(c)                                  furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company, if true, 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 Investors to sell such securities pursuant to Rule 144 without registration; provided, that any such item which is available on the SEC’s EDGAR System (or successor thereto) need not be furnished in physical form.

 

9.                                      ASSIGNMENT OF REGISTRATION RIGHTS.

 

The rights and obligations under this Agreement shall be automatically assignable by the Investors to any transferee of all or any portion of such Investor’s Registrable Securities if: (i) the Investor agrees in writing with the transferee or assignee to assign such rights and obligations and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, (b) the securities with respect to which such registration rights and obligations hereunder are being transferred or assigned and (c) any other information which the Company requests in order to reflect such transferee as a selling stockholder in the Registration Statement; (iii) immediately following such transfer or assignment the further disposition of such securities by the transferee or assignee is restricted under the Securities Act or applicable state securities Laws; and (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein.

 

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10.                               AMENDMENT OF REGISTRATION RIGHTS.

 

Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Required Holders; provided that any such amendment or waiver that complies with the foregoing but that disproportionately, materially and adversely affects the rights and obligations of any Investor relative to the comparable rights and obligations of the other Investors shall require the prior written consent of such adversely affected Investor.  Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company.  No such amendment shall be effective to the extent that it applies to less than all of the holders of the Registrable Securities. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration (other than the reimbursement of legal fees) also is offered to all of the parties to this Agreement.

 

11.                               MISCELLANEOUS.

 

(a)                                 Entire Agreement.  This Agreement supersedes all other prior oral or written agreements between the Investors, the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and, except as specifically set forth herein, neither the Company nor any Investor makes any representation, warranty, covenant or undertaking with respect to such matters.

 

(b)                                 Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective permitted successors and assigns, including any transferees of Registrable Securities permitted under Section 9.  The Company shall not assign this Agreement or any rights or obligations hereunder, including by way of a fundamental change, without the prior written consent of the Required Holders.  No purchaser of any of the Common Stock from an Investor shall be deemed a successor or assign by reason merely of such purchase; provided, however, that an Investor may assign some or all of its rights hereunder without the consent of the Company to any permitted assignee, in which event such assignee shall be deemed to be an Investor hereunder with respect to such assigned rights. For the avoidance of doubt, and without limiting the rights of a permitted assignee hereunder, the assignment of this Agreement to a permitted assignee shall not relieve the Company of any obligations to an Investor for any fees, reimbursement of expenses, indemnification or any other payments hereunder.

 

(c)                                  No Third Party Beneficiaries.  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, except that each Indemnified Person shall have the right to enforce the obligations of the Company with respect to Section 6.

 

(d)                                 Notices.  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 transmission, when delivered by email or facsimile; or (iii) one Business Day after deposit with an overnight courier

 

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service, in each case properly addressed to the party to receive the same.  The addresses, facsimile numbers and e-mail addresses for such communications shall be:

 

If to the Company:

 

Halcón Resources Corporation

1000 Louisiana St., Suite 6600

Houston, Texas 77002
 Attention:  Ragan T. Altizer

Executive Vice President and Chief Financial Officer and Treasurer

(raltizer@halconresources.com)

 

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

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

 

Attn.:                 Gary Holtzer, Esq.

(Gary.Holtzer@weil.com)

Alfredo R. Pérez, Esq.

(Alfredo.Perez@weil.com)

Frank R. Adams, Esq.

(Frank.Adams@weil.com)

Lauren Tauro, Esq.

(Lauren.Tauro@weil.com)

 

If to an Investor:

 

To the individual named on the Investor’s signature page 
 With a copy (which shall not constitute notice) to:

 

Paul, Weiss, Rifkind, Wharton & Garrison LLP
 1285 Avenue of the Americas New York, NY 10019-6064
 Attention: Andrew N. Rosenberg, David S. Huntington, and Robert A. Britton
 E-mail addresses: arosenberg@paulweiss.com; dhuntington@paulweiss.com; and rbritton@paulweiss.com

 

Any party to this Agreement may change such address for notices by sending to the parties to this Agreement written notice of a new address for such purpose.

 

(e)                                  Specific Performance.  The parties acknowledge that money damages are not an adequate remedy for violations of this Agreement and that any party may, in its sole discretion, apply to a court of competent jurisdiction for specific performance or injunctive or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extent permitted by applicable Law, each party waives any objection to the imposition of such relief, this being in addition to any other remedy to which such party is entitled at law or in equity.

 

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(f)                                   Governing Law; Jurisdiction; Jury Trial.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal Laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the Laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan, 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. 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 WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(g)                                  Headings.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

(h)                                 Extensions; Waivers.  Any party may, for itself only, (a) extend the time for the performance of any of the obligations of any other party under this Agreement, (b) waive any inaccuracies in the representations and warranties of any other party contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions for the benefit of such party contained herein.  Any such extension or waiver will be valid only if set forth in a writing signed by the party to be bound thereby.  No waiver by any party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising because of any prior or subsequent such occurrence.  Neither the failure nor any delay on the part of any party to exercise any right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise of the same or of any other right or remedy.

 

(i)                                     Severability.  If any provision of this Agreement is prohibited by Law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair

 

23

 

the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

(j)                                    Counterparts.  This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.  Executed copies of the signature pages of this Agreement sent by facsimile or transmitted electronically in Portable Document Format shall be treated as originals, fully binding and with full legal force and effect, and the parties waive any rights they may have to object to such treatment.

 

(k)                                 No Strict Construction.  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.

 

(l)                                     Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any 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.

 

(m)                             Several and not Joint.  Notwithstanding any other provision of this Agreement, the rights, duties, and obligations of each Investor hereunder are several and not joint, and no Investor shall be liable hereunder for the duties or obligations of any other Investor.  No Investor makes any representation or warranty hereunder to or for the benefit of any other Investor.

 

[Signature Page Follows]

 

24

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
HALCÓN RESOURCES CORPORATION
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ David S. Elkouri
    
	
 
    	
 
    	
Name:
    	
David S. Elkouri
    
	
 
    	
 
    	
Title:
    	
Executive Vice President and Chief Legal   Officer
    

 

[Signature Page to Registration Rights Agreement]

 

 

	
 
    	
INVESTORS:
    
	
 
    	
 
    
	
 
    	
LION POINT MASTER, LP
    
	
 
    	
 
    
	
 
    	
By: Lion Point Capital GP, LLC, its general   partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James Murphy
    
	
 
    	
 
    	
Name:
    	
James Murphy
    
	
 
    	
 
    	
Title:
    	
Authorized Signatory
    
					

 

[Signature Page to Registration Rights Agreement]

 

 

	
 
    	
LUMINUS ENERGY PARTNERS MASTER FUND, LTD
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Shawn R. Singh
    
	
 
    	
 
    	
Name:
    	
Shawn R. Singh
    
	
 
    	
 
    	
Title:
    	
Authorized Signatory
    

 

[Signature Page to Registration Rights Agreement]

 

 

	
 
    	
OAKTREE OPPORTUNITIES FUND X HOLDINGS   (DELAWARE), L.P.
    
	
 
    	
 
    
	
 
    	
By: Oaktree Fund GP, LLC, its General Partner
    
	
 
    	
By: Oaktree Fund GP I, L.P., its Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Allen Li
    
	
 
    	
 
    	
Name:
    	
Allen Li
    
	
 
    	
 
    	
Title:
    	
Authorized Signatory
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Emily Stephens
    
	
 
    	
 
    	
Name:
    	
Emily Stephens
    
	
 
    	
 
    	
Title:
    	
Authorized Signatory
    

 

[Signature Page to Registration Rights Agreement]

 

 

	
 
    	
OAKTREE OPPS XB HOLDCO LTD.
    
	
 
    	
 
    
	
 
    	
By: Oaktree Capital Management, L.P., its   Director
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Allen Li
    
	
 
    	
 
    	
Name:
    	
Allen Li
    
	
 
    	
 
    	
Title:
    	
Vice President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Emily Stephens
    
	
 
    	
 
    	
Name:
    	
Emily Stephens
    
	
 
    	
 
    	
Title:
    	
Managing Director
    

 

[Signature Page to Registration Rights Agreement]

 

 

	
 
    	
OAKTREE OPPORTUNITIES FUND XB HOLDINGS   (DELAWARE), L.P.
    
	
 
    	
 
    
	
 
    	
By: Oaktree Fund GP, LLC, its General Partner
    
	
 
    	
By: Oaktree Fund GP I, L.P., its Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Allen Li
    
	
 
    	
 
    	
Name:
    	
Allen Li
    
	
 
    	
 
    	
Title:
    	
Vice President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Emily Stephens
    
	
 
    	
 
    	
Name:
    	
Emily Stephens
    
	
 
    	
 
    	
Title:
    	
Managing Director
    

 

[Signature Page to Registration Rights Agreement]

 

 

	
 
    	
OAKTREE VALUE OPPORTUNITIES FUND HOLDINGS, L.P.
    
	
 
    	
 
    
	
 
    	
By: Oaktree Value Opportunities Fund GP, L.P.,   its General Partner
    
	
 
    	
By: Oaktree Value Opportunities Fund GP Ltd.,   its General Partner
    
	
 
    	
By: Oaktree Capital Management, L.P., its   Director
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Allen Li
    
	
 
    	
 
    	
Name:
    	
Allen Li
    
	
 
    	
 
    	
Title:
    	
Vice President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Emily Stephens
    
	
 
    	
 
    	
Name:
    	
Emily Stephens
    
	
 
    	
 
    	
Title:
    	
Managing Director
    

 

[Signature Page to Registration Rights Agreement]

 

 

	
 
    	
GEN IV INVESTMENT OPPORTUNITIES, LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Paul Segal
    
	
 
    	
 
    	
Name:
    	
Paul Segal
    
	
 
    	
 
    	
Title:
    	
President
    

 

[Signature Page to Registration Rights Agreement]Exhibit
10.1

 

 

KAYA HOLDINGS,
INC.

2011 INCENTIVE
STOCK PLAN, as amended

 

This Kaya
Holdings, Inc. 2011 Incentive Stock Plan, as amended (the “Plan”) is designed to retain directors, executives
and selected employees and consultants and reward them for making contributions to the success of the Company. These objectives
are accomplished by making long-term incentive awards under the Plan thereby providing Participants with a proprietary interest
in the growth and performance of the Company.

 

	 	1.	Definitions.

 

“Board”
– The Board of Directors of the Company.

 

“Cause”
- means:

 

	 	(i)	A
    material breach committed by the Participant of the Participant’s service or fiduciary obligations to the Company (other
    than mental illness), which is not remedied in a reasonable period of time after receipt of written notice from the Company
    specifying such breach; or

 

	 	(ii)	The
Participant terminating his services with the Company other than for “Good Reason” (as such term is set forth
in any employment, consulting, Grant or other agreement between the Company and the Participant); or

 

	 	(iii)	The
    conviction of the Participant of a felony based upon a violent crime or a sexual crime involving baseness, vileness or depravity;
    or

 

	 	(iv)	Substance
    abuse by the Participant in a manner which materially affects the performance of the Participant's obligations hereunder;
    or

 

	 	(v)	Any
    act or omission of the Participant which is materially contrary to the business interests, representations or goodwill of
    the Company; or

 

	 	(vi)	Such
    other definition as set forth in any employment, consulting, Grant or other agreement between the Company and the Participant,
    which agreement shall control.

“Change
in Control” - means, and shall be deemed to have occurred upon the occurrence of, any one of the following events:

 

	 	(i)	The
acquisition in one transaction by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13(d)(3) promulgated under the Exchange
Act) of shares or other securities (as defined in Section 3(a)(10) of the Exchange Act) representing fifty-one percent (51%) or
more of outstanding Stock of the Company; provided, however, that a Change in Control as defined in this clause (1) shall not
be deemed to occur in connection with any acquisition by the Company, an employee benefit plan of the Company or any Person who
immediately prior to the effective date of this Plan is a holder of Stock (a “Current Shareholder”) so long
as such acquisition does not result in any Person other than the Company, such employee benefit plan or such Current Shareholder
beneficially owning shares or securities representing fifty-one percent (51%) or more of the outstanding Stock; or

 

    	 

    	 

    

 

	 	(ii)	On
    the date that, during any 12-month period, an election occurs of persons as directors of the Company that causes two-thirds
    or more of the Board to consist of persons other than (A) persons who, were members of the Board on the effective date of
    this Plan; and (B) persons who were nominated by the Board for election as members of the Board at a time when at least two-thirds
    of the Board consisted of persons who were members of the Board on the effective date of this Plan; provided, however, that
    any person nominated for election by the Board when at least two-thirds of the members of the Board are persons described
    in subclause (A) or (B) and persons who were themselves previously nominated in accordance with this clause (ii)
    shall, for this purpose, be deemed to have been nominated by a Board composed of persons described in subclause (B)
    ; or

 

	 	(iii)	Closing
of a reorganization, merger, consolidation or similar transaction of the Company (a “Reorganization Transaction”),
in each case, unless, immediately following such Reorganization Transaction, more than fifty percent (50%) of, respectively, the
outstanding shares of common stock (or similar equity security) of the corporation or other entity resulting from or surviving
such Reorganization Transaction and the combined voting power of the securities of such corporation or other entity entitled to
vote generally in the election of directors, is then beneficially owned, directly or indirectly, by the individuals and entities
who were the respective beneficial owners of the outstanding Stock immediately prior to such Reorganization Transaction in substantially
the same proportions as their ownership of the outstanding Stock immediately prior to such Reorganization Transaction; or

 

	 	(iv)	The
    Company Closing of (A) a complete liquidation or dissolution of the Company; or (B) the sale or other disposition of all or
    substantially all of the assets of the Company to a corporation or other entity, unless, with respect to such corporation
    or other entity, immediately following such sale or other disposition more than 50% of, respectively, the outstanding shares
    of common stock (or similar equity security) of such corporation or other entity and the combined voting power of the securities
    of such corporation or other entity entitled to vote generally in the election of directors, is then beneficially owned, directly
    or indirectly, by the individuals and entities who were the respective beneficial owners of the outstanding Stock immediately
    prior to such sale or disposition in substantially the same proportions as their ownership of the outstanding Stock immediately
    prior to such sale or disposition.

 

“Code”
– The Internal Revenue Code of 1986, as amended from time to time.

 

“Committee”
– The Compensation Committee of the Company's Board, or such other committee of the Board that is designated by the Board
to administer the Plan, composed of not less than two members of the Board who are disinterested persons, as contemplated by Rule
16b-3 (“Rule 16b-3”) promulgated under the Securities Exchange Act of 1934.

 

“Company”
– Kaya Holdings, Inc., a Delaware corporation and its direct and indirect subsidiaries.

 

“Disability”
- means, and a Participant shall be considered disabled, if the Participant meets one of the following requirements:

 

	 	(i)	The
    Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental
    impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve
    (12) months; or

 

 

    	 	2	 

     

    

 

	 
	 	(ii)	The
    Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death
    or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits
    for a period of not less than three months under an accident and health plan covering employees of the Participant's employer;
    or

 

	 	(iii)	Such
    other definition of Disability as provided in an employment, consulting, Grant or other agreement between the Company and
    the Participants, the provisions of which agreement shall control.

“Exchange
Act” - The Securities Exchange Act of 1934, as amended from time to time.

 

“Fair
Market Value” - The fair market value of the Company's issued and outstanding Stock as determined in good faith by the
Board or Committee, which determination shall be conclusive and binding; provided however, that if there is a public market for
such Stock, the Fair Market Value per share shall be the average of the bid and asked prices on the date of grant of the Option,
or if listed on Nasdaq or a stock exchange, the closing price on Nasdaq or such exchange on such date of grant.

 

“Grant”
- The grant of any form of stock option, stock award, or stock purchase offer, whether granted singly, in combination, or in tandem,
to a Participant pursuant to such terms, conditions and limitations as the Committee may establish in order to fulfill the objectives
of the Plan.

 

“Grant
Agreement” - An agreement between the Company and a Participant that sets forth the terms, conditions and limitations
applicable to a Grant.

 

“Incentive
Stock Option” – An employee stock option that meets the requirements of Section 422 of Code when granted and at
all times beginning from the grant until its exercise.

 

“Nonstatutory
Option” – Defined in Section 3 of the Plan.

 

“Option” - Either an Incentive Stock Option, in accordance with Section 422 of Code, or a Nonstatutory Option, to purchase
the Company's Stock that may be awarded to a Participant under the Plan. A Participant who receives an award of an Option shall
be referred to as an “ Optionee .”

 

“Participant”
- A director, advisory board member, officer, employee or consultant of the Company to whom an Award has been made under the Plan.

 

“Restricted
Stock” – Defined in Section 6 of the Plan.

 

“Restricted
Stock Award” – A grant made under the Plan in Restricted Stock.

 

“Restricted
Stock Unit” - A Grant made under the Plan denominated in units of Restricted Stock.

 

“Securities
Act” - The Securities Act of 1933, as amended from time to time.

 

“Stock”
- Authorized and issued or unissued shares of common stock of the Company.

 

“Stock
Award” - A Grant made under the Plan in Restricted Stock or denominated in units of Restricted Stock.

 

“Ten
Percent Holder” – Defined in Section 3 of the Plan.

 

    	 	3	 

     

    

  

	 	2.	Administration.

 

The Plan
shall be administered by the Board, provided however, that the Board may delegate such administration to the Committee. Subject
to the provisions of the Plan, the Board and/or the Committee shall have authority to (a) grant, in its discretion, Incentive
Stock Options in accordance with Section 422 of the Code, or Nonstatutory Options, Stock Awards; (b) determine in good faith the
fair market value of the Stock covered by any Grant; (c) determine which eligible persons shall receive Grants and the number
of shares, restrictions, terms and conditions to be included in such Grants; (d) construe and interpret the Plan; (e) promulgate,
amend and rescind rules and regulations relating to its administration, and correct defects, omissions and inconsistencies in
the Plan or any Grant; (f) consistent with the Plan and with the consent of the Participant, as appropriate, amend any outstanding
Grant or amend the vesting date or dates thereof; (g) determine the duration and purpose of leaves of absence which may be granted
to Participants without constituting termination of their employment for the purpose of the Plan or any Grant; and (h) make all
other determinations necessary or advisable for the Plan's administration. The interpretation and construction by the Board of
any provisions of the Plan or selection of Participants shall be conclusive and final. No member of the Board or the Committee
shall be liable for any action or determination made in good faith with respect to the Plan or any Grant made thereunder. The
Board shall have the power to add or remove members of the Committee, from time to time, and to fill vacancies thereon arising
by resignation, death, removal, or otherwise. Meetings shall be held at such times and places as shall be determined by the Committee.
A majority of the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority
of those members present at any meeting shall decide any question brought before that meeting.

 

	 	3.	Eligibility.

 

General:
The persons who shall be eligible to receive Grants shall be directors, advisory board members, officers and employees of
or consultants to the Company. The term consultant shall mean any person, other than an employee, who is engaged by the Company
to render services and is compensated for such services. An Optionee may hold more than one Option.

 

Incentive
Stock Options: Incentive Stock Options may only be issued to employees of the Company. Incentive Stock Options may be granted
to officers or directors, provided they are also employees of the Company. Payment of a director's fee shall not be sufficient
to constitute employment by the Company.

 

The Company
shall not grant an Incentive Stock Option under the Plan to any employee if such Grant would result in such employee holding the
right to exercise for the first time in any one calendar year, under all Incentive Stock Options granted under the Plan or any
other plan maintained by the Company, with respect to shares of Stock having an aggregate fair market value, determined as of
the date the Option is granted, in excess of $100,000. Should it be determined that an Incentive Stock Option granted under the
Plan exceeds such maximum for any reason other than a failure in good faith to value the Stock subject to such option, the excess
portion of such option shall be considered a “Nonstatutory Option”. To the extent the employee holds two (2)
or more such Options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability
of such Option as Incentive Stock Options under the Federal tax laws shall be applied on the basis of the order in which such
Options are granted. If, for any reason, an entire Option does not qualify as an Incentive Stock Option by reason of exceeding
such maximum, such Option shall be considered a Nonstatutory Option.

 

Nonstatutory
Options: The provisions of the foregoing Section 3 shall not apply to any Option designated as a “Nonstatutory
Option” or sets forth the intention of the parties that the Option be a Nonstatutory Option.

 

Stock Awards:
The provisions of this Section 3 shall not apply to any Stock Award under the Plan.

 

    	 	4	 

     

    

  

	 	4.	Stock.

 

Authorized
Stock: Stock subject to Grants may be either unissued or reacquired Stock.

 

Number
of Shares: Subject to adjustment as provided in Sections 5 and 9 of the Plan, the total number of shares of
Stock which may be purchased or granted directly by Options or Stock Awards, or purchased indirectly through exercise of Options
granted under the Plan shall not exceed Forty Million (40,000,000) shares of Stock. If any Grant shall for any reason terminate
or expire, any shares allocated thereto but remaining unpurchased upon such expiration or termination shall again be available
for Grants with respect thereto under the Plan as though no Grant had previously occurred with respect to such shares. Any shares
of Stock issued pursuant to a Grant and repurchased pursuant to the terms thereof shall be available for future Grants as though
not previously covered by a Grant.

 

Reservation
of Shares: The Company shall reserve and keep available at all times during the term of the Plan such number of shares as
shall be sufficient to satisfy the requirements of the Plan. If, after reasonable efforts, which efforts shall not include the
registration of the Plan or Grants under the Securities Act, the Company is unable to obtain authority from any applicable regulatory
body, which authorization is deemed necessary by legal counsel for the Company for the lawful issuance of shares hereunder, the
Company shall be relieved of any liability with respect to its failure to issue and sell the shares for which such requisite authority
was so deemed necessary unless and until such authority is obtained.

 

Application
of Funds: The proceeds received by the Company from the sale of Stock pursuant to the exercise of Options or rights under
Stock Purchase Agreements will be used for general corporate purposes.

 

No Obligation
to Exercise: The issuance of a Grant shall not impose any obligation upon the Participant to exercise any rights under such
Grant.

 

	 	5.	Terms
    and Conditions of Options.

 

Options
granted hereunder shall be evidenced by agreements between the Company and the respective Optionees, in the form approved by the
Board or Committee. Option agreements need not be identical, and in each case may include such provisions as the Board or Committee
may determine, but all such agreements shall be subject to and limited by the following terms and conditions:

Number
of Shares: Each Option shall state the number of shares to which it pertains.

 

Exercise
Price: Each Option shall state the exercise price, which shall be determined as follows:

 

	 	(i)	Any
    Incentive Stock Option granted to a person who at the time the Option is granted owns (or is deemed to own pursuant to Section
    424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power or value of all classes
    of stock of the Company (a “Ten Percent Holder”) shall have an exercise price of no less than one hundred
    ten percent (110%) of the Fair Market Value of the Stock as of the date of grant; and

 

	 	(ii)	Incentive
    Stock Options granted to a person who at the time the Option is granted is not a Ten Percent Holder shall have an exercise
    price of no less than 100% of the Fair Market Value of the Stock as of the date of grant.

 

	 	(iii)	In
    no event shall an Option’s exercise price be less than fair market value of the underlying Stock on the date of grant.

 

 

    	 	5	 

     

    

Medium
and Time of Payment: The exercise price shall become immediately due upon exercise of the Option and shall be paid in cash
or check made payable to the Company. Should the Company's outstanding Stock be registered under Section 12(g) of the Exchange
Act at the time the Option is exercised, then the exercise price may also be paid as follows:

 

	 	(i)	In
    shares of Stock held by the Optionee for the requisite period necessary to avoid a charge to the Company's earnings for financial
    reporting purposes and valued at Fair Market Value on the exercise date, or

 

	 	(ii)	Through
    a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable written instructions
    to (A) to a Company designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Company,
    out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable
    for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld
    by the Company by reason of such purchase; and (B) the Company to deliver the certificates for the purchased shares directly
    to such brokerage firm in order to complete the sale transaction.

 

At
the discretion of the Board or the Committee, exercisable either at the time of Option grant or of Option exercise, the exercise
price may also be paid in such other form of consideration permitted by the Delaware corporations law as may be acceptable to
the Board, or the Committee, including, without limitation, a promissory note or by means of a “cashless”
exercise.

 

Term and
Exercise of Options: Any Option granted hereunder shall become exercisable over a period of no longer than five (5) years,
subject to such other conditions imposed by the Board or the Committee in its sole discretion, provided however, to the extent
the right to exercise any Option(s) pursuant to an agreement between the Company and a Participant is based upon an event. In
no event shall any Option be exercisable after the expiration of ten (10) years from the date it is granted, and no Incentive
Stock Option granted to a Ten Percent Holder shall, by its terms, be exercisable after the expiration of five (5) years from the
date of the Option. Unless otherwise specified by the Board or the Committee in the resolution authorizing such Option, the date
of grant of an Option shall be deemed to be the date upon which the Board or the Committee authorizes the granting of such Option.

 

Each Option
shall be exercisable to the nearest whole share, in installments or otherwise, as the respective Option agreements may provide.
During the lifetime of an Optionee, the Option shall be exercisable only by the Optionee and shall not be assignable or transferable
by the Optionee, and no other person shall acquire any rights therein. To the extent not exercised, installments (if more than
one) shall accumulate, but shall be exercisable, in whole or in part, only during the period for exercise as stated in the Option
agreement, whether or not other installments are then exercisable.

 

Termination
of Status as Employee, Director or Advisory Board Member or Consultants: If the services of an employee, director, advisory
board member or consultant are terminated, the Board may specify the period during which Options granted to such Participants
may be exercised after termination of Optionee’s employment or services, which shall not be less than thirty (30) days nor
more than one year after such termination, but in no event more than the remaining term of the Option. Notwithstanding the foregoing,
in the case of termination for “Cause ,” the Option shall automatically terminate as of the termination of
employment or services. The Option may be exercised only with respect to installments that the Optionee could have exercised at
the date of termination of employment or services. Nothing contained herein or in any Option granted pursuant hereto shall be
construed to affect or restrict in any way the right of the Company to terminate the employment or services of an Optionee with
or without cause.

 

    	 	6	 

     

    

 
 

Disability
of Optionee: If an Optionee is disabled (within the meaning of this Plan) at the time of termination, the portion of such
Optionee’s Option which was exercisable at the date of termination may be exercised in whole or in part, for such period,
as determined by the Board and set forth in the Option, of not less than six (6) months nor more than one year after such termination,
but in no event more than the remaining term of the Option. The Option may be so exercised only with respect to installments exercisable
at the time of Optionee’s Disability and not previously exercised by Optionee.

 

Death of
Optionee: If an Optionee dies while employed by, engaged as a consultant to, or serving as a Director of the Company, the
portion of such Optionee's Option which was exercisable at the date of death may be exercised, in whole or in part, by the estate
of the decedent or by a person succeeding to the right to exercise such Option at any time within (i) a period, as determined
by the Board and set forth in the Option, of not less than six (6) months nor more than one (1) year after Optionee's death, which
period shall not be more, in the case of a Nonstatutory Option, than the period for exercise following termination of employment
or services; or (ii) during the remaining term of the Option, whichever is the lesser. The Option may be so exercised only with
respect to installments exercisable at the time of Optionee's death and not previously exercised by Optionee.

 

Nontransferability
of Options or other Awards: No Option or other Award shall be transferable by the Optionee, except, to the extent permitted
by the Code, (i) by will or by the laws of descent and distribution; (ii) to immediate family members (spouse, child, grandchild,
parent or sibling) of an Optionee or trusts for the benefit of an Optionee or an Optionee’s immediate family members; or
(iii) a business entity in which Optionee is at least a twenty-five percent (25%) equity owner.

 

Recapitalization:
Subject to any required action of shareholders, the number of shares of Stock covered by each outstanding Option, and the
exercise price per share thereof set forth in each such Option, shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Stock of the Company resulting from a stock split, stock dividend, combination, subdivision
or reclassification of shares, or the payment of a stock dividend, or any other increase or decrease in the number of such shares
affected without receipt of consideration by the Company; provided, however, the conversion of any convertible securities of the
Company shall not be deemed to have been “effected without receipt of consideration” by the Company.

 

In the event
of a proposed dissolution or liquidation of the Company, a merger or consolidation in which the Company is not the surviving entity,
or a sale of all or substantially all of the assets or capital stock of the Company (collectively, a “Reorganization”),
unless otherwise provided by the Board, this Option shall terminate immediately prior to such date as is determined by the Board,
which date shall be no later than the consummation of such Reorganization. In such event, if the entity which shall be the surviving
entity does not tender to Optionee an offer, for which it has no obligation to do so, to substitute for any unexercised Option
a stock option or capital stock of such surviving entity, as applicable, which on an equitable basis shall provide the Optionee
with substantially the same economic benefit as such unexercised Option, then the Board may grant to such Optionee, in its sole
and absolute discretion and without obligation, the right for a period commencing thirty (30) days prior to and ending immediately
prior to the date determined by the Board pursuant hereto for termination of the Option or during the remaining term of the Option,
whichever is the lesser, to exercise any unexpired Option or Options without regard to the installment provisions of Section
6 of the Plan; provided, that any such right granted shall be granted to all Optionees not receiving an offer to receive substitute
options on a consistent basis, and provided further, that any such exercise shall be subject to the consummation of such Reorganization.

 

Subject to
any required action of shareholders, if the Company shall be the surviving entity in any merger or consolidation, each outstanding
Option thereafter shall pertain to and apply to the securities to which a holder of shares of Stock equal to the shares subject
to the Option would have been entitled by reason of such merger or consolidation.

 

In the event
of a change in the Stock of the Company as presently constituted, which is limited to a change of all of its authorized shares
without par value into the same number of shares with a par value, the shares resulting from any such change shall be deemed to
be the Stock within the meaning of the Plan.

 

    	 	7	 

     

    

  

To
the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the
Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided in this Section
5 , the Optionee shall have no rights by reason of any subdivision or consolidation of shares of stock of any class or the
payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class, and the number
or price of shares of Stock subject to any Option shall not be affected by, and no adjustment shall be made by reason of, any
dissolution, liquidation, merger, consolidation or sale of assets or capital stock, or any issue by the Company of shares of stock
of any class or securities convertible into shares of stock of any class.

 

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

 

Rights
as a Shareholder: An Optionee shall have no rights as a shareholder with respect to any shares covered by an Option until
the effective date of the exercise of such Option by Optionee. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as expressly provided in this Section 5 .

 

Modification,
Acceleration, and Renewal of Options: Subject to the terms and conditions and within the limitations of the Plan, the Board
may modify an Option, or, once an Option is exercisable, accelerate the rate at which it may be exercised, or accept the surrender
of outstanding Options (to the extent not theretofore exercised) and authorize the granting of new Options in substitution for
such Options, provided such action is permissible under Section 422 of the Code and applicable state securities laws. Notwithstanding
the provisions of this Section 5 , however, no modification of an Option shall, (i) extend beyond its original term; and
(ii) without the consent of the Optionee, alter to the Optionee's detriment or impair any rights or obligations under any Option
theretofore granted under the Plan.

 

Other Provisions:
The Option agreements authorized under the Plan shall contain such other provisions, including, without limitation, restrictions
upon the exercise of the Options, as the Board or the Committee shall deem advisable. Shares shall not be issued pursuant to the
exercise of an Option, if the exercise of such Option or the issuance of shares thereunder would violate, in the opinion of legal
counsel for the Company, the provisions of any applicable law or the rules or regulations of any applicable governmental or administrative
agency or body, such as the Code, the Securities Act, the Exchange Act, applicable state securities laws, Delaware corporation
law, and the rules promulgated under the foregoing or the rules and regulations of any exchange upon which the shares of the Company
are listed. Without limiting the generality of the foregoing, the exercise of each Option shall be subject to the condition that
if at any time the Company shall determine that (i) the satisfaction of withholding tax or other similar liabilities; (ii) the
listing, registration or qualification of any shares covered by such exercise upon any securities exchange or under any state
or federal law; or (iii) the consent or approval of any regulatory body; or (iv) the perfection of any exemption from any such
withholding, listing, registration, qualification, consent or approval is necessary or desirable in connection with such exercise
or the issuance of shares thereunder, then in any such event, such exercise shall not be effective unless such withholding, listing
registration, qualification, consent, approval or exemption shall have been effected, obtained or perfected free of any conditions
not acceptable to the Company. Notwithstanding the foregoing, the Company shall take all commercially reasonable efforts to ensure
that the shares may be issuable upon exercise of an Option.

 

	 	6.	Stock
    Awards.

 

	 		Types
    of Grants. 

 

Restricted Stock
Awards: Restricted Stock Awards may be granted to any eligible Participant selected by the Board or the Committee in such
amounts and subject to such terms and conditions as determined by the Board or the Committee. The Board or the
Committee shall specify the purchase price, if any, to be paid by an eligible Participant to the Company with respect to any
Restricted Stock Award; provided, however, that value of the consideration shall not be less than the par value of Stock,
unless otherwise permitted by applicable law. All Restricted Stock Awards will be made pursuant to the execution of a
Restricted Stock Award Agreement in the form approved by the Board or Committee.

 

    	 	8	 

     

    

 

Vesting
of Restricted Stock Awards: At the time of grant, the Board or the Committee shall specify the date(s) on which the
Restricted Stock Award shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems
appropriate, including, without limitation, vesting based upon duration of employment or directorship with the Company or any
affiliate, one or more performance criteria, Company performance, individual performance or other specific criteria, in each
case on a specified date or dates or over any period or periods, as determined by the Board or the Committee.

 

Restricted
Stock Units: Restricted Stock Units may be granted to any eligible Participant selected by the Board or the Committee in
such amounts and subject to such terms and conditions as determined by the Board or the Committee. Except as otherwise provided
herein, the term of a Restricted Stock Unit award shall be set by the Board or the Committee in its sole discretion. The Board
or the Committee shall specify the purchase price, if any, to be paid by to the Company with respect to any Restricted Stock Unit
award; provided, however, that value of the consideration shall not be less than the par value of Stock, unless otherwise permitted
by applicable law. All Restricted Stock Units will be made pursuant to the execution of a Restricted Stock Units Agreement in
the form approved by the Board or Committee.

 

Vesting of Restricted
Stock Units: At the time of grant, the Board or the Committee shall specify the date(s) on which the Restricted Stock
Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems
appropriate, including, without limitation, vesting based upon duration of employment or directorship with the Company or any
affiliate, one or more performance criteria, Company performance, individual performance or other specific criteria, in each
case on a specified date or dates or over any period or periods, as determined by the Board or the Committee.

 

Maturity and Payment:
At the time of grant, the Board or the Committee shall specify the maturity date applicable to each grant of Restricted Stock
Units which shall be no earlier than the vesting date(s) of the award and may be determined at the election of the
Participant; provided that, except as otherwise determined by the Board or the Committee, set forth in any applicable
Stock Award Agreement, and subject to compliance with Section 409A of the Code, in no event shall the maturity date relating
to each Restricted Stock Unit occur following the later of (i) the 15th day of the third month following the end of calendar
year in which the Restricted Stock Unit vests; or (ii) the 15 th day of the third month following the end of the
Company’s fiscal year in which the Restricted Stock Unit vests. On the maturity date, the Company shall transfer to the
Participant one unrestricted, fully transferable share of Stock for each Restricted Stock Unit scheduled to be paid out on
such date and not previously forfeited, or in the sole discretion of the Board or the Committee, an amount in cash equal to
the Fair Market Value of such shares on the maturity date or a combination of cash and Stock as determined by the Board or
the Committee.

 

Payment upon Termination
of Service: An award of Restricted Stock Units shall only be payable while the Participant is an employee or member of
the Board, as applicable; provided, however, that the Board or the Committee, in its sole and absolute discretion may provide
(in a Stock Award Agreement or otherwise) that a Restricted Stock Unit award may be paid subsequent to a termination of
service in certain events, including a Change in Control, the Participant’s death, retirement or disability or any
other specified termination of service.

 

No
Rights as a Shareholder: Unless otherwise determined by the Board or the Committee, a Participant who is awarded
Restricted Stock Units shall possess no incidents of ownership with respect to the shares represented by such Restricted
Stock Units, unless and until the same are transferred to the Participant pursuant to the terms of this Plan and the Stock
Award Agreement.

 

Conditions
and Restrictions: Shares of Stock which Participants may receive as a Stock Award under a Stock Award Agreement may include
such restrictions as the Board or Committee, as applicable, shall determine, including restrictions on transfer, repurchase rights,
right of first refusal, and forfeiture provisions. When transfer of Stock is so restricted or subject to forfeiture provisions
it is referred to as “Restricted Stock.” Further, with Board or Committee approval, Stock Awards may be deferred,
either in the form of installments or a future lump sum distribution. The Board or Committee may permit selected Participants
to elect to defer distributions of Stock Awards in accordance with procedures established by the Board or Committee to assure
that such deferrals comply with applicable requirements of the Code including, at the choice of Participants, the capability to
make further deferrals for distribution after retirement. Any deferred distribution, whether elected by the Participant or specified
by the Stock Award Agreement or by the Board or Committee, may require the payment be forfeited in accordance with the provisions
of Section 6 . Dividends or dividend equivalent rights may be extended to and made part of any Stock Award denominated
in Stock or units of Stock, subject to such terms, conditions and restrictions as the Board or Committee may establish.

 

	 	7.	Cancellation
    and Rescission of Grants.

 

Unless the Stock Award Agreement specifies otherwise, the Board or Committee, as
applicable, may cancel any unexpired, unpaid, or deferred Grants at any time if the Participant is not in compliance with all
other applicable provisions of the Stock Award Agreement, the Plan and with the following conditions:

 

 

    	 	9	 

     

    

 

 

   

	 	(a)	A
    Participant shall not render services for any organization or engage directly or indirectly in any business which, in the
    judgment of the chief executive officer of the Company or other senior officer designated by the Board or Committee, is or
    becomes competitive with the Company, or which organization or business, or the rendering of services to such organization
    or business, is or becomes otherwise prejudicial to or in conflict with the interests of the Company. For Participants whose
    employment has terminated, the judgment of the chief executive officer shall be based on the Participant's position and responsibilities
    while employed by the Company, the Participant's post-employment responsibilities and position with the other organization
    or business, the extent of past, current and potential competition or conflict between the Company and the other organization
    or business, the effect on the Company's customers, suppliers and competitors and such other considerations as are deemed
    relevant given the applicable facts and circumstances. A Participant who has retired shall be free, however, to purchase as
    an investment or otherwise, stock or other securities of such organization or business so long as they are listed upon a recognized
    securities exchange or traded over-the-counter, and such investment does not represent a substantial investment to the Participant
    or a greater than ten percent (10%) equity interest in the organization or business.

 

	 	(b)	A
    Participant shall not, without prior written authorization from the Company, disclose to anyone outside the Company, or use
    in other than the Company's business, any confidential information or material, as defined in a Company agreement regarding
    confidential information and intellectual property, relating to the business of the Company, acquired by the Participant either
    during or after employment with the Company.

 

	 	(c)	A
    Participant shall disclose promptly and assign to the Company all right, title and interest in any invention or idea, patentable
    or not, made or conceived by the Participant during employment by the Company, relating in any manner to the actual or anticipated
    business, research or development work of the Company and shall do anything reasonably necessary to enable the Company to
    secure a patent where appropriate in the United States and in foreign countries.

 

	 	(d)	Upon
    exercise, payment or delivery pursuant to a Grant, the Participant shall certify on a form acceptable to the Committee that
    he or she is in compliance with the terms and conditions of the Plan. Failure to comply with all of the provisions of this
    Section 7 prior to, or during the six months after, any exercise, payment or delivery pursuant to a Grant shall cause
    such exercise, payment or delivery to be rescinded. The Company shall notify the Participant in writing of any such rescission
    within two (2) years after such exercise, payment or delivery. Within ten (10) days after receiving such a notice from the
    Company, the Participant shall pay to the Company the amount of any gain realized or payment received as a result of the rescinded
    exercise, payment or delivery pursuant to a Grant. Such payment shall be made either in cash or by returning to the Company
    the number of shares of Stock that the Participant received in connection with the rescinded exercise, payment or delivery.

Nonassignability.

 

	 	(i)	Except
    pursuant to Section 5 , no Grant or any other benefit under the Plan shall be assignable or transferable, or payable
    to or exercisable by, anyone other than the Participant to whom it was granted.

 

	 	(ii)	Where
    a Participant terminates employment and retains a Grant pursuant to Section 5 in order to assume a position with a
    governmental, charitable or educational institution, the Board or Committee, in its discretion and to the extent permitted
    by law, may authorize a third party (including but not limited to the trustee of a “blind” trust), acceptable
    to the applicable governmental or institutional authorities, the Participant and the Board or Committee, to act on behalf
    of the Participant with regard to such Stock Awards.

 

 

    	 	10	 

     

    

 

 

Termination
of Employment. If the employment or service to the Company of a Participant terminates, other than pursuant to any of the
following provisions under this Section 7, all unexercised, deferred and unpaid Stock Awards shall be cancelled immediately,
unless the Stock Award Agreement provides otherwise:

 

	 	(i)	Retirement
    Under a Company Retirement Plan. When a Participant's employment terminates as a result of retirement in accordance with
    the terms of a Company retirement plan, the Board or Committee may permit Stock Awards to continue in effect beyond the date
    of retirement in accordance with the applicable Grant Agreement and the exercisability and vesting of any such Grants may
    be accelerated.

 

	 	(ii)	Rights
    in the Best Interests of the Company. When a Participant resigns from the Company or terminates providing its services
    to the Company and, in the judgment of the Board or Committee, the acceleration and/or continuation of outstanding Stock Awards
    would be in the best interests of the Company, the Board or Committee may (i) authorize, where appropriate, the acceleration
    and/or continuation of all or any part of Grants issued prior to such termination and (ii) permit the exercise, vesting and
    payment of such Grants for such period as may be set forth in the applicable Grant Agreement, subject to earlier cancellation
    pursuant to Section 10 or at such time as the Board or Committee shall deem the continuation of all or any part of
    the Participant's Grants are not in the Company's best interest.

 

	 	(iii)	Death
    or Disability of a Participant.

 

	 	(1)	In
    the event of a Participant's death, the Participant's estate or beneficiaries shall have a period up to the expiration date
    specified in the Grant Agreement within which to receive or exercise any outstanding Grant held by the Participant under such
    terms as may be specified in the applicable Grant Agreement. Rights to any such outstanding Grants shall pass by will or the
    laws of descent and distribution in the following order: (a) to beneficiaries so designated by the Participant; if none, then
    (b) to a legal representative of the Participant; if none, then (c) to the persons entitled thereto as determined by a court
    of competent jurisdiction. Grants so passing shall be made at such times and in such manner as if the Participant were living.

 

	 	(2)	In
    the event a Participant is deemed by the Board or Committee to be disabled, Grants and rights to any such Grants may be paid
    to or exercised by the Participant, if legally competent, or a committee or other legally designated guardian or representative
    if the Participant is legally incompetent by virtue of such disability.

 

	 	(3)	After
    the death or disability of a Participant, the Board or Committee may in its sole discretion at any time (i) terminate restrictions
    in Grant Agreement; (ii) accelerate any or all installments and rights; and (iii) instruct the Company to pay the total of
    any accelerated payments in a lump sum to the Participant, the Participant's estate, beneficiaries or representative; notwithstanding
    that, in the absence of such termination of restrictions or acceleration of payments, any or all of the payments due under
    the Grant might ultimately have become payable to other beneficiaries.

 

	 	(4)	In
    the event of uncertainty as to interpretation of or controversies concerning this Section 7, the determinations of
    the Board or Committee, as applicable, shall be binding and conclusive.

 

 

    	 	11	 

     

    

 

	 	8.	Change
    in Control.

   

Unless
otherwise provided in the applicable Grant Agreement, in the event of a Change in Control, one hundred percent (100%) of the vesting
restrictions applicable to each Participant's Grant(s) shall terminate fully and the Participant shall immediately have the right
to the delivery of share certificates or exercise of Options, to the extent that a Participant's Option(s) are unvested, one hundred
percent (100%) of such unvested portion shall vest.

 

	 	9.	Investment
    Intent.

 

All Grants
under the Plan are intended to be exempt from registration under the Securities Act provided by Rule 701 thereunder. Unless and
until the granting of Options or sale and issuance of Stock subject to the Plan are registered under the Securities Act or shall
be exempt pursuant to the rules promulgated thereunder, each Grant under the Plan shall provide that the purchases or other acquisitions
of Stock thereunder shall be for investment purposes and not with a view to, or for resale in connection with, any distribution
thereof. Further, unless the issuance and sale of the Stock have been registered under the Securities Act, each Grant shall provide
that no shares shall be purchased upon the exercise of the rights under such Grant unless and until (i) all then applicable requirements
of state and federal laws and regulatory agencies shall have been fully complied with to the satisfaction of the Company and its
counsel, and (ii) if requested to do so by the Company, the person exercising the rights under the Grant shall (A) give written
assurances as to knowledge and experience of such person (or a representative employed by such person) in financial and business
matters and the ability of such person (or representative) to evaluate the merits and risks of exercising the Option, and (B)
execute and deliver to the Company a letter of investment intent and/or such other form related to applicable exemptions from
registration, all in such form and substance as the Company may require. If shares are issued upon exercise of any rights under
a Grant without registration under the Securities Act, subsequent registration of such shares shall relieve the purchaser thereof
of any investment restrictions or representations made upon the exercise of such rights.

 

	 	10.	Amendment,
    Modification, Suspension or Discontinuance of the Plan.

 

The Board
may, insofar as permitted by law, from time to time, with respect to any shares at the time not subject to outstanding Grants,
suspend or terminate the Plan or revise or amend it in any respect whatsoever, except that without the approval of the shareholders
of the Company, no such revision or amendment shall (i) increase the number of shares subject to the Plan, (ii) decrease the price
at which Grants may be granted, (iii) materially increase the benefits to Participants, or (iv) change the class of persons eligible
to receive Grants under the Plan; provided, however, no such action shall alter or impair the rights and obligations under any
Option, or Stock Award, outstanding as of the date thereof without the written consent of the Participant thereunder. No Grant
may be issued while the Plan is suspended or after it is terminated, but the rights and obligations under any Grant issued while
the Plan is in effect shall not be impaired by suspension or termination of the Plan.   In the event of any change in the
outstanding Stock by reason of a stock split, stock dividend, combination or reclassification of shares, recapitalization, merger,
or similar event, the Board or the Committee may adjust proportionally (a) the number of shares of Stock (i) reserved under the
Plan, (ii) available for Incentive Stock Options and Nonstatutory Options and (iii) covered by outstanding Stock Awards; (b) the
Stock prices related to outstanding Grants; and (c) the appropriate Fair Market Value and other price determinations for such
Grants. In the event of any other change affecting the Stock or any distribution (other than normal cash dividends) to holders
of Stock, such adjustments as may be deemed equitable by the Board or the Committee, including adjustments to avoid fractional
shares, shall be made to give proper effect to such event. In the event of a corporate merger, consolidation, acquisition of property
or stock, separation, reorganization or liquidation, the Board or the Committee shall be authorized to issue or assume stock options,
whether or not in a transaction to which Section 424(a) of the Code applies, and other Grants by means of substitution of new
Grant Agreements for previously issued Grants or an assumption of previously issued Grants.

 

 

    	 	12	 

     

    

 

	 	11.	Tax
    Withholding.

 

The Company shall have the right to deduct applicable taxes from any Grant payment
and withhold, at the time of delivery or exercise of Options, Stock Awards or vesting of shares under such Grants, an appropriate
number of shares for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company
to satisfy all obligations for withholding of such taxes. If Stock is used to satisfy tax withholding, such stock shall be valued
based on the Fair Market Value when the tax withholding is required to be made.

 

	 	12.	Availability
    of Information.

  

During the term of the Plan and any additional period during which a Grant granted
pursuant to the Plan shall be exercisable, the Company shall make available, not later than one hundred and twenty (120) days
following the close of each of its fiscal years, such financial and other information regarding the Company as is required by
the bylaws of the Company and applicable law to be furnished in an annual report to the shareholders of the Company.

 

	 	13.	Notice.

 

Any written
notice to the Company required by any of the provisions of the Plan shall be addressed to the chief personnel officer or to the
chief executive officer of the Company, and shall become effective when it is received by the office of the chief personnel officer
or the chief executive officer.

 

	 	14.	Indemnification
    of Board.

  

In addition
to such other rights or indemnifications as they may have as directors or otherwise, and to the extent allowed by applicable law,
the members of the Board and the Committee shall be indemnified by the Company against the reasonable expenses, including attorneys'
fees, actually and necessarily incurred in connection with the defense of any claim, action, suit or proceeding, or in connection
with any appeal thereof, to which they or any of them may be a party by reason of any action taken, or failure to act, under or
in connection with the Plan or any Grant granted thereunder, and against all amounts paid by them in settlement thereof (provided
such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such claim, action, suit or proceeding, except in any case in relation to matters as to which it shall be adjudged in such
claim, action, suit or proceeding that such Board or Committee member is liable for negligence or misconduct in the performance
of his or her duties; provided that within sixty (60) days after institution of any such action, suit or Board proceeding the
member involved shall offer the Company, in writing, the opportunity, at its own expense, to handle and defend the same.

 

	 	15.	Governing
    Law.

 

The Plan and all determinations made and actions taken pursuant hereto, to the
extent not otherwise governed by the Code or the securities laws of the United States, shall be governed by the laws of the State
of Delaware and construed accordingly.

 

	 	16.	Effective
    and Termination Dates.

 

The Plan
shall become effective on the date it is initially approved by the Board. The Plan shall terminate ten years later, subject to
earlier termination by the Board pursuant to Section 10 .

 

This
2011 Incentive Stock Plan was duly adopted and approved by the Board effective October 1, 2011 and was amended on November
24, 2014, September 22, 2016, May 1, 2018 and September 23, 2019.

 

    	 	13

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