Document:

Exhibit 10.11

 

EMPLOYMENT AGREEMENT

 

BY AND BETWEEN

 

TORRENT ENERGY SERVICES, LLC AND

 

LANCE PERRYMAN

 

Dated as of September 16, 2014

 

 

TABLE OF CONTENTS

 

	
A.
    	
Terms of Employment
    	
1
    
	
1.
    	
Term
    	
1
    
	
2.
    	
Duties and Related Matters
    	
1
    
	
3.
    	
Compensation and Benefits
    	
2
    
	
4.
    	
Termination of Employment
    	
4
    
	
5.
    	
Fiduciary Duty
    	
7
    
	
 
    	
 
    	
 
    
	
B.
    	
Confidentiality
    	
7
    
	
1.
    	
Torrent’s Promise to Provide   Confidential Information
    	
7
    
	
2.
    	
The Value of Confidential   Information
    	
8
    
	
3.
    	
Perryman’s Promise Not to Use or   Disclose Torrent’s Confidential Information
    	
8
    
	
4.
    	
Perryman’s Agreement Not to   Remove Confidential Information
    	
9
    
	
5.
    	
Perryman’s Agreement to Return   Confidential Information and Property
    	
9
    
	
6.
    	
Torrent’s Right to Inspect
    	
10
    
	
 
    	
 
    	
 
    
	
C.
    	
Works
    	
10
    
	
1.
    	
Assignment of Work Product
    	
10
    
	
2.
    	
Patent and Copyright   Registrations
    	
11
    
	
 
    	
 
    	
 
    
	
D.
    	
Protective Covenants
    	
11
    
	
1.
    	
Non-Interference;   Non-Solicitation
    	
11
    
	
2.
    	
Non-Competition
    	
12
    
	
3.
    	
No-Recruitment
    	
12
    
	
4.
    	
Non-Disparagement
    	
12
    
	
5.
    	
Nature of the Restrictions
    	
13
    
	
6.
    	
Survival of Covenants
    	
13
    
	
7.
    	
Injunctive Relief
    	
13
    
	
 
    	
 
    	
 
    
	
E.
    	
Miscellaneous
    	
14
    
	
1.
    	
Notification of Subsequent   Employers
    	
14
    
	
2.
    	
Governing Law and Venue
    	
14
    
	
3.
    	
Severability and Reform
    	
14
    
	
4.
    	
Successors and Assigns
    	
14
    
	
5.
    	
Cooperation
    	
15
    
	
6.
    	
Waiver
    	
15
    
	
7.
    	
Counterparts
    	
15
    
	
8.
    	
Ambiguities
    	
15
    
	
9.
    	
Headings
    	
15
    
	
10.
    	
Notices
    	
15
    
	
11.
    	
Entire Agreement and Amendment
    	
16
    
	
12.
    	
Understand Agreement
    	
16
    
	
13.
    	
Modification of Agreement
    	
16
    
	
14.
    	
Compliance with Section 409A
    	
16
    

 

i

 

	
Exhibit A
    	
Disclosure of Board Service
    
	
Exhibit B
    	
Disclosure of Permitted   Activities
    
	
Exhibit C
    	
Termination Certificate
    

 

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (“Agreement”) is entered into effective as of September 16, 2014 (the “Effective Date”), by and between Torrent Energy Services, LLC (“Torrent”) (f/k/a Torrent Acquisition, LLC) a Delaware limited liability company with its principal place of business at 5950 Berkshire Lane, Suite 1401, Dallas, Texas 75225, and Lance Perryman (“Perryman”). Perryman and Torrent are collectively referred to in this Agreement as the “Parties” and individually, a “Party.”

 

RECITALS

 

WHEREAS, Torrent desires to employ Perryman, and Perryman desires to be employed by Torrent;

 

WHEREAS, Torrent desires that Perryman be employed by Torrent to carry out the duties and responsibilities described below, all on the terms and conditions hereinafter set forth, and Perryman desires to accept such employment on such terms and conditions; and

 

WHEREAS, Torrent and Perryman desire to set forth in writing the terms and conditions of their agreement and understandings with respect to the employment of Perryman.

 

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

 

AGREEMENT

 

A.            Terms of Employment.

 

1.             Term.  As of the Effective Date, Torrent hereby employs Perryman as Chief Executive Officer (“CEO”) and Perryman hereby accepts such employment, according to the terms and conditions set forth in this Agreement. Perryman’s employment shall be for a term of two (2) years, commencing on the Effective Date (the “Initial Term”), unless earlier terminated in accordance with Section A.4. Thereafter, this Agreement shall be renewed automatically for an additional one (1) year term (the “First Extended Term”) unless (a) either party, at least sixty (60) days prior to the end of the Initial Term, delivers to the other party written notice of its election not to renew this Agreement or (b) this Agreement is otherwise terminated by either party in accordance with Section A.4. At the end of the First Extended Term, this Agreement shall be renewed automatically for an additional one (1) year term (the “Second Extended Term”) unless (a) either party, at least sixty (60) days prior to the end of the First Extended Term, delivers to the other party written notice of its election not to renew this Agreement or (b) this Agreement is otherwise terminated by either party in accordance with Section A.4. The period during which Perryman is employed under this Agreement (including the First Extended Term and Second Extended Term) will be referred to as the “Employment Period.”

 

 

2.             Duties and Related Matters.

 

(a)           Duties. Perryman agrees to discharge faithfully, diligently, and to the best of his ability during the Employment Period the duties normally incidental to the position of CEO, subject to the direction and control of the Board of Managers of Torrent Energy Holdings, LLC (“Parent”), other than Perryman (the “Board”). Perryman agrees to serve in such other capacities and perform such other duties not inconsistent with the position of CEO of Torrent and the LLC Agreement of Parent, as the Board may reasonably direct from time to time. Perryman agrees that, during the Employment Period, he will devote his entire business time, skills, energy, knowledge, and best efforts to the business and affairs of Torrent and that he will not engage, directly or indirectly, in any other business interests or activities, whether or not similar to that of Torrent, other than (i) to monitor, direct and otherwise participate as he deems necessary to address outstanding or new litigation in which he or TES Windup, LLC, f/k/a Torrent Energy Services LLC, a Texas limited liability company (“TES”) or TES’ equity owners are or may become a party and to handle the winding up and termination of TES, (ii) Permitted Activities on Exhibit B or (iii) with the express consent of the Board. This does not apply to personal or family affairs, including passive interests and/or investments, hobbies, or recreation, except to the extent that such activities are constrained by this Agreement. Perryman shall be permitted to serve on any profit or non-profit Board of Directors disclosed on the attached Exhibit A. Any positions not set forth on Exhibit A must be approved by the Board. Perryman shall disclose on the attached Exhibit B any private energy-related company (other than Torrent and Parent), in which Perryman has an interest or investment, and such Permitted Activities listed on Exhibit B shall be permitted activities of Perryman not in breach of this Agreement. Notwithstanding anything in this Agreement to the contrary, Perryman may invest in mutual funds for which Perryman does not control the investment decisions of the manager thereof or hold equity in any publicly-held entity listed on a Recognized Stock Exchange (as defined in the LLC Agreement of Parent), whether or not such publicly-held entity competes with the Company so long as he owns less than 1% of any class of securities thereof. Torrent agrees to provide the staff, facilities, computer equipment, office space, reasonable secretarial support, cell phone and tools which are reasonably necessary for Perryman to perform his duties.

 

3.             Compensation and Benefits.  The Board shall determine any increases in Perryman’s Base Salary (which may not be decreased without his written consent) and any increases or decreases in Additional Retirement Benefits, Incentive Compensation, notice of termination of the Employment Period, the establishment, modification and termination of benefit plans and programs for employees and management of Torrent, and those Torrent policies, procedures and other practices relating to Perryman’s employment as referred to in this Agreement.

 

(a)           Base Salary. Perryman shall receive a gross monthly base salary of $15,416.67 (the “Base Salary”), less applicable deductions and tax withholdings. Torrent shall pay the Base Salary in accordance with its usual and customary payroll practices but no less frequently than biweekly.

 

(b)           Signing Bonus. Torrent shall pay Perryman a signing bonus in the amount of $49,359.00, less applicable deductions and tax withholdings, payable in a lump sum within fourteen (14) days of the Effective Date of this Agreement.

 

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(c)           Benefits. Perryman shall  be  entitled  to  the  following  benefits (the “Benefits”):

 

(i)            A car allowance in the amount of $625.00 per pay period;

 

(ii)           Eligible for any medical and dental plan adopted by Torrent in which executive officers or employees of Torrent are generally eligible to participate subject to generally applicable terms thereof, including full payment of medical, dental and vision insurance premiums by Torrent for Perryman.

 

(iii)          Eligible to participate in pension and welfare benefit plans which are adopted by Torrent in which executive officers or employees of Torrent are generally eligible to participate. Torrent reserves the right to modify or discontinue these benefits upon reasonable notice and provided that Perryman receives benefits at least equal to the other members of management.

 

(iv)          Eligible for all other benefit plans and programs, including, but not limited to, life insurance, accidental death and dismemberment insurance, and short-term and long-term disability coverage, profit sharing plans, incentive compensation plans, fringe benefit plans and other benefit plans which are made available from time to time to other management personnel of Torrent, on a basis consistent with such participation and subject to the terms of the plan documents. Torrent reserves the right to modify or discontinue these benefits upon reasonable notice and provided that Perryman receives benefits at least equal to the other members of management.

 

(d)           Additional Retirement Benefits. Torrent may establish, at its discretion, an additional retirement plan for Perryman (the “Additional Retirement Benefits”). The amount of Torrent’s annual contributions, if any, shall be determined annually by the Board. The terms of the retirement plan established shall control and provide that the annual contributions, if any, will be made during the first quarter of each year of the Employment Period and that Perryman shall be paid the deferred benefit upon separation from Torrent in a manner required by or exempt from Section 409A of the Internal Revenue Code of 1986, as amended, or any regulations or Treasury guidance promulgated thereunder (“Section 409A”).

 

(e)           Incentive Compensation. Perryman shall be eligible at the end of each fiscal year for an incentive compensation payment in any such amount as may be determined by the Board, in its sole discretion (the “Incentive Compensation”). The Incentive Compensation shall be based solely on the Board’s assessment of Perryman’s achievement of the strategic and operating priorities set out for Perryman at the beginning of the fiscal year. The Board retains sole discretion to determine the propriety and amount of the Incentive Compensation, as well as when the Incentive Compensation shall be paid, if so awarded. If any Incentive Compensation is awarded, it shall be paid no later than March 15 of the calendar year following the calendar year in which it was earned.

 

(f)            Vacation, Sick Leave, and Holidays. Perryman shall be entitled to three (3) weeks, or fifteen (15) days, of paid vacation each year, which shall roll over to the next succeeding year if not used, provided that Perryman may not accrue more than four (4) weeks of

 

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paid vacation at any given time. Perryman additionally shall be entitled to paid sick leave and holidays as Torrent may provide in its policies and procedures applicable to management personnel.

 

(g)           Reimbursement of Business Related Expenses. Perryman may from time to time incur reasonable business expenses in the performance of his duties under this Agreement. Following submission and approval of accurately documented business related expenses in accordance with Torrent’s policies, Torrent shall reimburse Perryman in accordance with Torrent’s established policies and procedures. Request for reimbursement of business related expenses must be submitted to a Manager of Torrent within sixty (60) days of Perryman incurring the expenses.

 

(h)           Proration. The Base Salary and perquisites payable to Perryman hereunder in respect of any calendar year during which Perryman is employed by Torrent for less than the entire year shall be prorated in accordance with the number of days in such calendar year during which Perryman is so employed.

 

4.             Termination of Employment.

 

(a)           Definitions.

 

(1)           “Cause” shall mean:

 

(i)            Perryman’s failure or refusal to perform substantially all of his material duties, responsibilities, and obligations (other than a failure resulting from a Disability), as determined in good faith by the Board;

 

(ii)           Perryman’s repeated failure or refusal to implement, perform, or adhere to reasonable directives, orders, or written policies of the Board as determined in good faith by the Board;

 

(iii)          any act by Perryman involving gross misconduct or malfeasance in performance of such Perryman’s duties, as determined in good faith by the Board;

 

(iv)          any act involving fraud, misrepresentation, theft, embezzlement, dishonesty, or moral turpitude (“Fraud”), as determined in good faith by the Board;

 

(v)           conviction of (or a plea of nolo contendere to) an offense which is a felony in the jurisdiction involved, or which is a misdemeanor in the jurisdiction involved but which involves Fraud;

 

(vi)          a material breach of this Agreement or any non- competition, non-solicitation, non-interference or confidentiality agreement between Perryman and Parent or Torrent, including, without limitation, any breach of the non-competition, non-solicitation, non- recruitment, or confidentiality provisions of this Agreement; or

 

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(vii)         Perryman’s gross negligence in discharging any material part of his duties or obligations, as determined in good faith by the Board.

 

Provided that in the event that any of the foregoing events is capable of being cured, as determined in good faith by the Board, the Board shall provide written notice to Perryman describing the nature of such event, and Perryman shall thereafter have ten (10) business days to cure such event to the satisfaction of the Board. This time to cure may be extended if agreed to by the Parties in writing.

 

(2)           A “Disability” shall mean the physical or mental inability of Perryman, with reasonable accommodation, to perform in all material respects the duties of CEO of Torrent based upon an examination and determination of a physician (medical doctor licensed to practice medicine in the State of Texas) reasonably acceptable to the Board, which physical or mental inability or impairment has continued for more than one hundred eighty (180) consecutive days, and is expected by the physician to continue indefinitely. Perryman shall be considered to have a Disability (i) if he is determined to be totally disabled by the Social Security Administration, or (ii) if he is determined to be disabled under Torrent’s long-term disability plan in which Perryman participates and if such plan defines “disability” in a manner that is consistent with the immediately preceding sentence.

 

(3)           A “Good Reason” shall mean any of the following (without Perryman’s express written consent):

 

(i)            a material diminution in Perryman’s Base Salary;

 

(ii)           requiring Perryman to perform his duties hereunder at a principal location which is more than 25 miles from the location where Perryman performs services for Torrent as of the date of this Agreement, which is 1304 Langham Creek, Suite 212, Houston, Texas 77084;

 

(iii)          a material reduction in Perryman’s functions, duties, title, or responsibilities hereunder; or

 

(iv)          material breach by Torrent of any material provision of this Agreement, the LLC Agreement or any other agreement between the Company and Perryman.

 

However, Good Reason shall exist with respect to an above specified matter only if such matter is not corrected, or begun to be corrected, by Torrent within ninety (90) days after the receipt by the Board of written notice of such matter from Perryman. Any such notice from Perryman must be provided within ninety (90) days after Perryman learns of the specified event. In no event shall a termination by Perryman occurring more than ninety (90) days following the initial date of the event described to be a termination for Good Reason due to such event, whether that event is corrected or not.

 

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(4)           “Termination Date” shall mean the date Perryman’s employment with Torrent terminates or is terminated for any reason pursuant to this Agreement, and which constitutes a “separation from service” for purposes of Section 409A.

 

(b)           Termination by Torrent Without Cause or by Perryman for Good Reason: Benefits. In the event Torrent terminates Perryman’s employment with Torrent without Cause, or if Perryman terminates his employment with Torrent for Good Reason, this Agreement shall terminate and Perryman shall be entitled to (1) payment of accrued Base Salary, accrued but unused vacation, and unreimbursed business expenses through the Termination Date (the “Accrued Obligations”), payable in a lump sum within fourteen (14) days following the Termination Date or earlier if required by law, and (2) provided that Perryman executes and returns a release of claims, in a form and substance mutually agreed, and such release becomes irrevocable on or prior to the sixtieth (60th) day following the termination of Perryman’s employment, and subject to Perryman’s continued compliance with Sections, B, C and D in this Agreement (i) an amount equal to nine (9) months of Perryman’s Base Salary less applicable taxes and withholdings (the “Severance Payments”), payable in equal biweekly payments over a period of nine (9) months, with the first installment commencing on the sixtieth (60th) day following the termination of Perryman’s employment, and (ii) in the Board’s sole discretion, the Incentive Compensation amount Perryman would have earned had Perryman remained employed with the Company, pro-rated by the number of days Perryman worked for the Company for the applicable bonus year (“Severance Incentive Compensation”), payable at the time bonuses are ordinarily paid. In the event Perryman fails to comply with Sections, B, C and D in this Agreement or does not timely execute and return (or otherwise revokes) a release of claims in the form and substance mutually agreed, Perryman shall not be entitled to the Severance Payments or the Severance Incentive Compensation. Perryman understands that in the event of a termination by Torrent without Cause or by Perryman for Good Reason, Perryman will be subject to Sections, B, C and D of this Agreement and Perryman will not be compensated in any manner for these covenants other than the Severance Payments provided he executes a release of claims.

 

(c)           Termination in the Event of Death: Benefits. If Perryman’s employment with Torrent is terminated by reason of Perryman’s death during the Employment Period, this Agreement shall terminate without further obligation to Perryman’s legal representatives under this Agreement, other than for payment of the Accrued Obligations and any benefits under an applicable benefit plan. The Accrued Obligations shall be paid to Perryman’s estate in a lump sum in cash within thirty (30) days after the Termination Date, or earlier as required by law. In the event of a termination by reason of death, Perryman will not be entitled to any Incentive Compensation.

 

(d)           Termination in the Event of Disability: Benefits. If Perryman’s employment with Torrent is terminated by reason of Perryman’s Disability during the Employment Period, this Agreement shall terminate without further obligation to Perryman under this Agreement, other than for payment of the Accrued Obligations and any benefits under an applicable benefit plan. The Accrued Obligations shall be paid to Perryman in a lump sum in cash within thirty (30) days after the Termination Date, or earlier as required by law. Perryman understands that in the event of a termination by reason of Perryman’s Disability, Perryman will be subject to the Protective Covenants described in Section D of this Agreement and Perryman

 

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will not be compensated in any manner for these Protective Covenants. In addition, Perryman will not be entitled to any Incentive Compensation.

 

(e)           Voluntary Termination by Perryman without Good Reason and Termination by Torrent for Cause: Benefits. Perryman may voluntarily terminate his employment with Torrent without Good Reason by giving written notice of his intent and stating an effective Termination Date at least ninety (90) days after the date of such notice; provided, however, that this notice period may be waived by the Board if done so upon a recorded majority vote of the Board. Upon a voluntary termination by Perryman without Good Reason or termination of Perryman’s employment by Torrent for Cause, this Agreement shall terminate without further obligation to Perryman under this Agreement, other than for payment of the Accrued Obligations and any benefits due under an applicable benefit plan. The Accrued Obligations shall be paid to Perryman in a lump sum in cash within thirty (30) days after the Termination Date, or earlier as required by law. Perryman understands that in the event of a voluntary termination by Perryman without Good Reason or termination for Cause by Torrent, Perryman will be subject to Sections, B, C and D of this Agreement and Perryman will not be compensated in any manner for these covenants. In addition, Perryman understands that in the event of a voluntary termination by Perryman without Good Reason or termination for Cause by Torrent, Perryman will not be entitled to any Incentive Compensation.

 

5.             Fiduciary Duty. The Parties agree that Perryman’s employment as CEO of Torrent, as specified in this Agreement, gives rise to the fiduciary duties that a Chief Executive Officer of a Delaware corporation would have to that corporation and its stockholders.

 

B.            Confidentiality.

 

1.             Torrent’s Promise to Provide Confidential Information. During Perryman’s employment, Torrent agrees to provide Perryman access to Torrent’s Confidential Information (defined below), to which Perryman has not previously had access or knowledge, which is not known to Torrent’s competitors or within Torrent’s industry generally, which was developed by Torrent over a long period of time and/or at its substantial expense, and which is of great competitive value to Torrent, and access to Torrent’s customers and clients. For purposes of this Agreement, “Confidential Information” means any trade secrets or confidential or proprietary information of Torrent, whether disclosed directly or indirectly, in writing, orally, electronically, or by inspection of tangible objects, including, without limitation, all ideas, materials, documents, information, data, methods, strategies, equipment or plans, in any format, location, or media, which are developed or used by or in the possession of Torrent, whether pertaining to or belonging to Torrent, its Affiliates, clients, customers, business partners, consultants, or vendors, and which is not generally known to the public and outside of Torrent, but in all cases relates to Torrent’s business, assets, equity owners or operations. Confidential Information specifically includes, without limitation, Torrent’s and its Affiliates’ information regarding the following: client and potential client identity and history; current or potential business opportunities; business partners and potential business partners’ identity and history; business proposals; methods and practices of doing business and strategic growth plans; pricing formulas, structures, or practices; calculations, rates, costs, and gross and net profit margins; funding sources; finances, budgets, advertising, sales/services plans, forecasts, strategies, statistics, reports and data; routing information; design plans, models, drawings, specifications, experiments, technical

 

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data, software, know-how, and research data; marketing methods; personnel information, including compensation data; and any other information, materials, documents, data, or other intellectual property of any kind whatsoever that Torrent, its Affiliates, clients, customers, business partners, consultants, or vendors designate or treat as confidential. “Affiliate,” as used in this Agreement, means any parent or subsidiary company of Torrent, or any other entity in any form, of which Torrent has any controlling ownership interest or management control in the operation of its business, or vice-versa, as determined by Torrent. “Confidential Information” does not include information which (i) was or becomes generally available to the public other than as a result of a breach of this Agreement by Perryman; (ii) was or becomes available to Perryman on a non-confidential basis prior to disclosure to Perryman by Torrent, its subsidiaries or any of their respective representatives; (iii) was or becomes lawfully available to Perryman on a non-confidential basis from sources other than Torrent, its subsidiaries or any of their respective representatives, provided, however, that Perryman does not know that such sources are prohibited by contractual, legal or fiduciary obligation from transmitting the information; (iv) is independently developed by Perryman without the use of any such information received under this Agreement, or (v) is disclosed in connection with litigation to the extent necessary to enforce Perryman’s rights under this Agreement.

 

2.             The Value of Confidential Information. By executing this Agreement, Perryman agrees that the Confidential Information constitutes valuable, special, and unique assets of Torrent, developed at great expense by Torrent, the unauthorized use or disclosure of which would cause irreparable harm to Torrent. Perryman acknowledges that the Confidential Information is Torrent’s exclusive property and is to be held by Perryman in trust and solely for Torrent’s benefit. Perryman further acknowledges that the Confidential Information may include “trade secrets” under Texas or other applicable laws and, in addition to the other protections provided in this Agreement, all trade secrets shall be provided the protections and benefits under Texas and any other applicable law.

 

3.             Perryman’s Promise Not to Use or Disclose Torrent’s Confidential Information. Perryman acknowledges and agrees that Torrent owns the Confidential Information. Perryman agrees not to dispute, contest, or deny any such ownership rights either during or after Perryman’s employment with Torrent. Perryman agrees to preserve and protect the confidentiality of all Confidential Information except that Confidential Information may be used and disclosed by Perryman in the ordinary course of carrying out his duties and employment under this Agreement, to file his taxes and to enforce his rights hereunder without Perryman being in breach of this Agreement. Perryman agrees that during the period of Perryman’s employment with Torrent and after his termination from employment for any reason, Perryman shall not directly or indirectly, disclose to any unauthorized person or use for Perryman’s own account any Confidential Information without Torrent’s consent except as set forth above. Throughout Perryman’s employment with Torrent and thereafter: (i) Perryman shall hold all Confidential Information in the strictest confidence, take all reasonable precautions to prevent its inadvertent disclosure to any unauthorized person, and follow all Torrent policies protecting the Confidential Information; and (ii) Perryman shall not, directly or indirectly, utilize, disclose or make available to any other person or entity, any of the Confidential Information, other than in the ordinary course of the performance of Perryman’s duties. Further, Perryman shall not, directly or indirectly, use Torrent’s Confidential Information to: (1) call upon, solicit business from, attempt to conduct business with, conduct business with, interfere

 

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with or divert business away from any customer, client, vendor or supplier of Torrent with whom or which Torrent conducted business; and/or (2) recruit, solicit, hire or attempt to recruit, solicit, or hire, directly or by assisting others, any persons employed by Torrent. During Perryman’s employment, Torrent will receive from third parties their confidential and/or proprietary information, subject to a duty on Torrent’s part to maintain the confidentiality of and to use such information only for certain limited purposes. Perryman agrees to hold all such confidential or proprietary information in strictest confidence and not to disclose it to any person or organization or to use it except as necessary in the course of Perryman’s employment with Torrent and in accordance with Torrent’s agreement with such third party. If Perryman learns that any person or entity is taking or threatening to take any actions which would compromise the confidentiality of any Confidential Information, Perryman shall promptly advise Torrent of all facts concerning such action or threatened action. Perryman shall advise all persons to whom any Confidential Information shall be disclosed by Perryman hereunder of the confidentiality of such Confidential Information. Perryman understands that he may be compelled by law to disclose Confidential Information in response to a subpoena or court order. Perryman agrees, however, to provide Torrent notice before responding to any subpoena, court order, or similar request.

 

4.             Perryman’s Agreement Not to Remove Confidential Information. Perryman agrees that in the course of Perryman’s employment with Torrent, Perryman will not remove, other than to take with him to his home or on business meetings or business travel for use in conducting Torrent’s business, from any Torrent office or property any documents, electronically stored information, or related items that contain Confidential Information, including, without limitation, computer discs, recordings, or other storage or archival systems or devices, including copies, except as may be desirable or required in the performance of Perryman’s duties as CEO. In the performance of Perryman’s duties, if Perryman removes Confidential Information from Torrent’s office, Perryman agrees to promptly return it upon termination of his employment for any reason (except as provided in paragraph 5 below). All Confidential Information, and all memoranda, notes, records, drawings, documents, or other writings whatsoever made, compiled, acquired, or received by Perryman at any time during his employment with Torrent or thereafter shall continue to be Torrent’s sole and exclusive property.

 

5.             Perryman’s Agreement to Return Confidential Information and Property. When Perryman’s employment with Torrent terminates or Perryman resigns, regardless of the reason for the employment termination or resignation: (i) Perryman will not take, destroy, or delete any files, documents, or other materials embodying or recording any Confidential Information, including copies, without obtaining in advance the written consent of an authorized Torrent representative (Torrent alone may designate who constitutes an authorized representative under this Agreement); provided that Perryman may retain a copy of documents needed to enforce his rights under this Agreement or the LLC Agreement or as needed to document and pay income and other taxes; and (ii) except as provided in clause (i) of this sentence, Perryman will promptly return to Torrent all Confidential Information, documents, files, records, tapes, data, and similar information (written or electronically stored) that are in Perryman’s possession or control regarding Torrent, and Perryman will not use or disclose such materials in any way or in any format, including written information in any form, information stored by electronic means, and any copies of these materials. Perryman further agrees that at the termination or resignation of his employment with Torrent, regardless of the reason for the employment termination or resignation, or upon Torrent’s request, Perryman will return to Torrent

 

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immediately all Torrent property, including, without limitation, keys, access cards, equipment, computer(s) and computer equipment, drives and electronic storage devices, hand-held electronic devices, Torrent cellular phones, Torrent credit cards, data, lists, electronically stored information, correspondence, notes, memos, reports, or other writings prepared by Torrent or Perryman on Torrent’s behalf. If at any time after the termination or resignation of Perryman’s employment for any reason, Perryman determines that he has any Confidential Information or Company property in his possession or control, Perryman shall immediately return it to Torrent, including all copies and portions of the information or property. To document Perryman’s return of Torrent Confidential Information and property, Perryman agrees to execute Exhibit C of this Agreement at the termination or resignation of his Torrent employment for any reason. Notwithstanding the foregoing or anything in this Agreement to the contrary, Perryman may retain a copy of Confidential Information to the extent needed to enforce his rights under this Agreement or the LLC Agreement or to document his compensation or benefits.

 

6.             Torrent’s Right to Inspect. Perryman agrees that, to ensure compliance with the terms of this Agreement, Torrent shall have the right to retain, access, and inspect all property of Torrent’s of any kind in Perryman’s office, Torrent’s work area, or on the premises of Torrent at the termination or resignation of Perryman’s employment for any reason and at any time during Perryman’s employment with Torrent.

 

C.            Works.

 

1.             Assignment of Work Product. For the purposes of this Agreement, the term “Work Product” shall mean, collectively, all work product, information, inventions, original works of authorship, ideas, know-how, processes, designs, computer programs, photographs, illustrations, developments, trade secrets and discoveries, including improvements thereto, and all other intellectual property, including patents, trademarks, copyrights and trade secrets, that Perryman conceives, creates, develops, makes, reduces to practice, or fixes in a tangible medium of expression, either alone or with others, which relate to Torrent’s business. During Perryman’s employment with Torrent, Perryman agrees that Perryman shall promptly make full written disclosure to Torrent of all Work Product conceived, created, developed, made, reduced to practice, or fixed in a tangible medium of expression during the period of Perryman’s employment with Torrent. Perryman hereby assigns and shall be deemed to have assigned to Torrent or its designee, all of Perryman’s right, title, and interest in and to any and all Work Product conceived, created, developed, made, reduced to practice, or fixed in a tangible medium of expression during the period of Perryman’s employment with Torrent that (a) relates in any manner to the previous, existing or contemplated business, work, or investigations of Torrent or any of its affiliates or subsidiaries; (b) is or was suggested by, has resulted or will result from, or has arisen or will arise out of any work that Perryman has done or may do for or on behalf of Torrent; (c) has resulted or will result from or has arisen or will arise out of any materials or information that may have been disclosed or otherwise made available to Perryman as a result of duties assigned to Perryman by Torrent; or (d) has been or will be otherwise made through the use of Torrent’s time, information, facilities, or materials, even if conceived, created, developed, made, reduced to practice, or fixed during other than working hours. Perryman further acknowledges that all original works of authorship that have been or will be made or fixed in a tangible medium of expression by Perryman (solely or jointly with others) within the scope of Perryman’s employment and during the term thereof with Torrent that are protectable by

 

10

 

copyright are “Works Made for Hire,” as that term is defined in the United States Copyright Act. Perryman understands and agrees that the decision whether or not to commercialize or market any Work Product is within Torrent’s sole discretion and for Torrent’s sole benefit, and that no royalty will be due to Perryman as a result of Torrent’s efforts to commercialize or market any such Work Product.

 

2.             Patent and Copyright Registrations. Perryman agrees to assist Torrent, or its designee, at Torrent’s expense, in every reasonable way to secure Torrent’s rights in Work Product in any and all countries, including the disclosure to Torrent of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments, affidavits, and all other instruments which Torrent shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to Torrent, its successors, assigns, and nominees the sole and exclusive rights, title and interest in and to such Work Product. Perryman further agrees that Perryman’s obligation to execute or cause to be executed, when it is in Perryman’s power to do so, any such instrument or papers shall continue after the termination of this Agreement.

 

D.            Protective Covenants.

 

In consideration for (i) Torrent’s promise to provide Confidential Information to Perryman, (ii) the substantial economic investment made by Torrent in the Confidential Information and goodwill of Torrent, and/or the business opportunities disclosed or entrusted to Perryman, (iii) access to Torrent’s customers and clients, and (iv) Torrent’s employment of Perryman pursuant to this Agreement and the compensation and other benefits provided by Torrent to Perryman, to protect Torrent’s Confidential Information and business goodwill of Torrent, Perryman agrees to the following protective covenants (the “Protective Covenants”), which are ancillary to the enforceable promises between Torrent and Perryman in this Agreement.

 

1.             Non-Interference; Non-Solicitation. Perryman agrees that during his employment with Torrent, and for a period of eighteen (18) months following the termination or resignation of his employment with Torrent for any reason (“Non-Competition Period”), except for Permitted Activities listed on Exhibit B, Perryman, individually or as a principal, partner, stockholder, member, manager, agent, consultant, contractor, employee, lender, investor, or as a director or officer of any corporation or association, or in any other manner or capacity whatsoever, will not, directly or indirectly (i) interfere with an ongoing relationship between the Company and one of its customers by providing or offering to provide a product or service to that customer which is in competition with or a substitute for a product or service provided by the Company or its subsidiaries, or (ii) except in his capacity of carrying out his duties as the Chief Executive Officer of Torrent, solely with respect to activities substantially similar to the Business, solicit business from, attempt to conduct business with, or conduct business with any client or customer of the Company or its subsidiaries with whom the Company or its subsidiaries conducted business within the prior forty-eight (48) months and who or which: (1) Perryman contacted, called on, serviced or did business with during Perryman’s employment with Torrent; (2) Perryman learned of as a result of Perryman’s employment with Torrent; or (3) about whom Perryman received Confidential Information.

 

11

 

2.                                      Non-Competition. Perryman agrees that during the Non-Competition Period, Perryman, individually or as a principal, owner, partner, agent, representative, consultant, contractor, employee, or as a director or officer of any company, corporation, partnership or association, or in any other manner or capacity whatsoever, except on behalf of Torrent, will not, directly or indirectly, become employed by, control, manage, carry on, join, lend money for, operate, engage in, establish, take steps to establish, perform services for, invest in, solicit investors for, consult for, do business with or otherwise engage in any Business (defined in this Section D.2) in the Restricted Area (defined in this Section D.2) other than Permitted Activities listed on Exhibit B. Accordingly, other than Permitted Activities listed on Exhibit B, Perryman, without the prior written consent of Torrent, agrees not to during the Non-Competition Period (i) establish, engage in, invest in or provide services to any Business in the Restricted Area; (ii) solicit business for or on behalf of any person, business entity, or endeavor operating, or preparing to operate, a Business in the Restricted Area; or (iii) engage in or contribute his knowledge to any employment, work, business, or endeavor which would require Perryman to use or disclose Torrent’s Confidential Information. The term “Business” means (i) renting equipment and provisions of services to upstream operators and producers of hydrocarbons and midstream processors and transporters of hydrocarbons relating to mobile skid-mounted mechanical refrigeration units, natural gas liquids stabilizer units, natural gas liquids storage tanks, and glycol dehydration units for natural gas liquids recovery and storage, emission reduction for flare gas, hydrocarbon dew point control, and fuel gas conditioning, (ii) renting equipment and provisions of services for well-site electricity generation, and (iii) any other businesses the Company may undertake with the approval of the Board. The term “Restricted Area” means (i) the following shale areas: Bakken Shale region, Permian Basin region, Eagle Ford Shale region, Niobrara Shale region, Monterey Shale region, Utica Shale region, and Mississippi Lime Shale region, and (ii) a 100-mile radius of any other area in or for which (a) Perryman performed services for Torrent or (b) Torrent took substantial steps to begin operations while Perryman was employed and about which Perryman had knowledge.

 

3.                                      No-Recruitment. Perryman agrees that during the Non-Competition Period, Perryman, individually or as a principal, partner, stockholder, member, manager, agent, consultant, contractor, employee, lender, investor, or as a director or officer of any corporation or association, or in any other manner or capacity whatsoever, will not, directly or indirectly, hire, solicit, induce, recruit, encourage to leave or cease their employment with the Company or a subsidiary of the Company or leave or cease their contract for services with the Company or a subsidiary of the Company, any person Perryman knows is an employee of the Company or a subsidiary of the Company, or any former employee or service provider of the Company or a subsidiary of the Company whose employment with or services to the Company or any such subsidiary ceased within the prior twelve (12) months.

 

4.                                      Non-Disparagement. Perryman, individually or as a principal, partner, stockholder, member, manager, agent, consultant, contractor, employee, lender, investor, or as a director or officer of any corporation or association, or in any other manner or capacity whatsoever, shall refrain, both during and after his employment with the Company terminates for any reason, from publishing any oral or written statements about the Company or any of the Company’s directors, managers, officers, employees, consultants, agents, representatives or Affiliates that (i) are slanderous, libelous or defamatory; or (ii) would be reasonably anticipated to cause material economic damages or lost material business opportunities to the Company or

 

12

 

its subsidiaries. A violation or threatened violation of this prohibition may be enjoined by the courts. The rights afforded Torrent under this provision are in addition to any and all rights and remedies otherwise afforded by law.

 

5.                                      Nature of the Restrictions. Perryman agrees and stipulates that the time, geographical area, and scope of restrained activities for the Protective Covenants in Section D of this Agreement are reasonable and enforceable under Texas law, including Texas Business and Commerce Code §§15.50-15.52. The terms and provisions of Section D of this Agreement are intended to be separate and divisible provisions and if, for any reason, any one or more of them is held to be invalid or unenforceable, neither the validity nor the enforceability of any other provision of this Agreement will be affected. As further described in Section E.3 of this Agreement, if a court concludes that any time period, geographical area, or scope of restrained activities specified in Section D of this Agreement is unenforceable, the court is vested with the authority to reduce the time period, geographical area, or scope of restrained activities, and to enforce the Protective Covenants in Section D of this Agreement to the fullest extent the law permits. Additionally, if Perryman violates any of the Protective Covenants contained in Section D of this Agreement, the Non-Competition Period shall be suspended and will not run in favor of Perryman from the time of the commencement of any violation until the time when Perryman ceases the activities causing the violation. Moreover, any subsequent change(s) in the terms or conditions of Perryman’s employment with Torrent will not affect the validity or scope of these Protective Covenants.

 

6.                                      Survival of Covenants. The Protective Covenants, obligations, and agreements set forth in Sections B, C and D of this Agreement shall survive the termination of this Agreement for any reason, or the termination or resignation of Perryman for any reason, and shall be construed as an agreement independent of any other provision of this Agreement. The existence of any claim or cause of action Perryman may have against Torrent, whether predicated on this Agreement or otherwise, shall not constitute a defense to Torrent’s enforcement of the Protective Covenants, obligations, and agreements set forth in Sections B, C and D of this Agreement. No modification or waiver of any Protective Covenant, obligation, or agreement contained in Sections B, C and D of this Agreement shall be valid unless the Board approves the waiver or modification in writing.

 

7.                                      Injunctive Relief. Perryman acknowledges and agrees that the Protective Covenants, obligations, and agreements contained in Sections B, C and D of this Agreement concern special, unique, and extraordinary matters and that a violation of any of the terms of these Protective Covenants will cause Torrent irreparable injury for which adequate remedies at law are not available. Therefore, Perryman agrees that Torrent will be entitled to an injunction, restraining order, or all other equitable relief (without the requirement to post bond) as a court of competent jurisdiction may deem necessary or appropriate to restrain Perryman from committing any violation of the Protective Covenants referred to in Sections B, C and D of this Agreement. These injunctive remedies are cumulative and in addition to any other rights and remedies Torrent may have against Perryman. Torrent and Perryman irrevocably submit to the exclusive jurisdiction of the state courts and federal courts outlined in Section E.2 regarding the injunctive remedies set forth in this Section D.7 and the interpretation and enforcement of Sections B, C and D insofar as the interpretation and enforcement relate to an application for injunctive relief

 

13

 

in accordance with the provisions of this Section D.7. Breach of this Agreement by Torrent shall not preclude injunctive relief for a breach by Perryman.

 

E.                                    Miscellaneous.

 

1.                                      Notification of Subsequent Employers. If Perryman in the future seeks or is offered employment by any other company, firm, or person during the Employment Period, Perryman shall provide a copy of this Agreement to the prospective employer before accepting employment with that prospective employer.

 

2.                                      Governing Law and Venue. This Agreement shall, in all respects, be interpreted, enforced, and governed under the laws of the State of Texas, without regard to conflict of law principles. The Parties agree that the language of this Agreement shall, in all cases, be construed as a whole, according to its fair meaning, and not strictly for, or against, any of the parties. Venue of any litigation arising from this Agreement or any disputes relating to Perryman’s employment shall be in the United States District Court for the Northern District of Texas, or a state district court of competent jurisdiction in Dallas, County, Texas. Perryman consents to personal jurisdiction of the United States District Court for the Northern District of Texas, or a state district court of competent jurisdiction in Dallas County, Texas for any dispute relating to or arising out of this Agreement or Perryman’s employment, and Perryman agrees that Perryman shall not challenge personal or subject matter jurisdiction in such courts.

 

3.                                      Severability and Reform. The Parties intend all provisions of this Agreement to be enforced to the fullest extent permitted by law. If, however, any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future law, such provision shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision was never a part hereof, and the remaining provisions shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance. In lieu of such illegal, invalid, or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid, and enforceable provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible, and Torrent and Perryman hereby request the court to whom disputes relating to this Agreement are submitted to reform the otherwise unenforceable covenant in accordance with this Section E.3.

 

4.                                      Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the Parties hereto and their respective successors, heirs, legal representatives, and permitted assigns (if any). In entering into this Agreement, Torrent is relying on the unique personal services of Perryman; services from another person will not be an acceptable substitute. Except as provided in this Agreement, Perryman may not assign this Agreement or any of the rights or obligations set forth in this Agreement. Any attempted assignment by Perryman in violation of this Section E.4 shall be void. Except as provided in this Agreement, nothing in this Agreement entitles any person other than the Parties to the Agreement to any claim, cause of action, remedy, or right of any kind, including, without limitation, the right to continued employment. Torrent shall not assign its obligations or rights under this Agreement without Perryman’s written consent, provided that Torrent may assign this Agreement to a successor to all or substantially all of the assets of Torrent without Perryman’s consent.

 

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5.                                      Cooperation. During the Employment Period and following the termination of Perryman’s employment for any reason, Perryman agrees to cooperate with Torrent at Torrent’s expense in connection with: (i) any internal investigation or administrative, regulatory, or judicial proceeding as reasonably requested by Torrent (including, without limitation, Perryman being available to Torrent upon reasonable notice for interviews and factual investigations, appearing at Torrent’s request to give testimony without requiring service of a subpoena or other legal process, volunteering to Torrent all pertinent information, and turning over to Torrent all relevant documents which are or may come into Perryman’s possession, all at times and on schedules that are reasonably consistent with Perryman’s other permitted activities and commitments); and (ii) all matters relating to the winding up of Perryman’s pending work on behalf of Torrent and the orderly transfer of any such pending work as designated by Torrent. Such services will be without additional compensation if Perryman is then employed by Torrent and for an hourly rate, based on Perryman’s Base Salary in effect at the time of his separation from employment, if Perryman is not then employed by Torrent.

 

6.                                      Waiver. No waiver by either Party to this Agreement of any right to enforce any term or condition of this Agreement, or of any breach hereof, shall be deemed a waiver of such right in the future or of any other right or remedy available under this Agreement.

 

7.                                      Counterparts. This Agreement and amendments thereto shall be in writing and may be executed in counterparts and delivered by electronic transmission. Each such counterpart shall be deemed an original, but both counterparts together shall constitute one and the same instrument.

 

8.                                      Ambiguities. Any rule of construction to the effect that ambiguities shall be resolved against the drafting party shall not apply to the interpretation of this Agreement.

 

9.                                      Headings. The headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement.

 

10.                               Notices. Any notice or other communication required, permitted, or desired to be given under this Agreement must be in writing and shall be deemed delivered when personally delivered; the next business day, if delivered by overnight courier; the same day, if transmitted by facsimile on a business day before noon, CST; the next business day, if otherwise transmitted by facsimile; and the third business day after mailing, if mailed by prepaid certified mail, return receipt requested, as addressed or transmitted as follows (as applicable):

 

	
If to Perryman:
    	
 
    	
Lance Perryman
    
	
 
    	
 
    	
P.O. Box 1768
    
	
 
    	
 
    	
Wimberley, Texas 78676
    
	
 
    	
 
    	
 
    
	
With a copy to:
    	
 
    	
Andrews Kurth LLP
    
	
 
    	
 
    	
600 Travis Street, 42nd Floor
    
	
 
    	
 
    	
Houston, TX 77002
    
	
 
    	
 
    	
Attention: Nancy B. Bostic
    
	
 
    	
 
    	
Facsimile: (713) 238-7215
    
	
 
    	
 
    	
E-mail: nbostic@akllp.com
    

 

15

 

	
If to Torrent:
    	
 
    	
Torrent Energy Services, LLC
    
	
 
    	
 
    	
Attn: Chris Czuppon
    
	
 
    	
 
    	
5950 Berkshire Lane, Suite 1401
    
	
 
    	
 
    	
Dallas, Texas 75225
    
	
 
    	
 
    	
Fax: (214) 758-0333
    
	
 
    	
 
    	
 
    
	
With a copy to:
    	
 
    	
Matthew Kondratowicz
    
	
 
    	
 
    	
CSL Capital Management, LLC
    
	
 
    	
 
    	
411 West Putnam Ave., Suite 109
    
	
 
    	
 
    	
Greenwich, CT 06830
    
	
 
    	
 
    	
Fax: (203) 862-8680
    

 

11.                               Entire Agreement and Amendment. This Agreement constitutes the entire agreement between the Parties concerning the subject matter in this Agreement. No oral statements or prior written material not specifically incorporated into this Agreement shall be of any force and effect, and no changes in or additions to this Agreement shall be recognized, unless incorporated into this Agreement by written amendment, such amendment to become effective on the date stipulated in it. Perryman acknowledges and represents that in executing this Agreement, he does not rely, has not relied, and specifically disavows any reliance on any communications, promises, statements, inducements, or representation(s), oral or written, by Torrent, except as expressly contained in this Agreement. Any amendment to this Agreement must be signed by all Parties to this Agreement. This Agreement supersedes any prior agreements between Perryman and Torrent concerning the subject matter of this Agreement. The Parties represent that they relied on their own judgment in entering into this Agreement.

 

12.                               Understand Agreement. Perryman represents and warrants that he has read and understood each and every provision of this Agreement, and he understands that he has the right to obtain advice from legal counsel of his choice, if necessary and desired, in order to interpret any and all provisions of this Agreement, and that he has freely and voluntarily entered into this Agreement.

 

13.                               Modification of Agreement. This Agreement may not be changed or modified or released or discharged or abandoned or otherwise terminated, in whole or in part, except by an instrument in writing signed by Perryman and a Manager of Torrent other than Perryman and approved in writing by the Board.

 

14.                               Compliance with Section 409A.

 

(a)                                 Delay in Payments. Notwithstanding anything to the contrary in this Agreement, if upon the Termination Date, Perryman is a “specified employee” within the meaning of Section 409A and the deferral of any amounts otherwise payable under this Agreement as a result of Perryman’s termination of employment is necessary in order to prevent any accelerated or additional tax to Perryman under Section 409A, then Torrent will defer the payment of any such amounts hereunder until the earlier of: (i) the date that is six (6) months following the date of Perryman’s termination of employment with Torrent, or (ii) the date of Perryman’s death, at which time any such delayed amounts will be paid to Perryman in a single lump sum, with interest from the date otherwise payable at the United States prime rate as

 

16

 

published in the “Money Rates” section of The Wall Street Journal on the first publication date coincident with or immediately following the Termination Date.

 

(b)                                 Overall Compliance. In the event that it is reasonably determined by Torrent or Perryman that, as a result of Section 409A, any of the payments that Perryman is entitled to under the terms of this Agreement or any nonqualified deferred compensation plan (as defined under Section 409A) may not be made at the time contemplated by the terms hereof or thereof, as the case may be, without causing Perryman to be subject to an income tax penalty and interest as a result of failure to comply with or otherwise be exempt from Section 409A, Torrent will make such payment (with interest thereon) on the first day that would not result in Perryman incurring any tax liability under Section 409A; provided, however, that if there is no date upon which such payment could be made without Perryman incurring any tax liability under Section 409A, such payment shall be made as soon as practicable following the determination that Perryman shall incur such tax liability. In addition, other provisions of this Agreement or any other plan notwithstanding, Torrent shall have no right to accelerate any such payment or to make any such payment as the result of an event if such payment would, as a result, be subject to the tax imposed by Section 409A. For purposes of Section 409A, the right to any series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

 

(c)                                  Reimbursements. To the extent that any reimbursement or benefit in kind hereunder constitutes “nonqualified deferred compensation” under Section 409A, such reimbursement or benefit in kind shall be administered in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv). Specifically, (A) the applicable reimbursements and benefits in kind shall be such reimbursements and benefits in kind allowable pursuant to Torrent’s standard policies and procedures as apply to Torrent’s executive employees generally, (B) the amounts reimbursed and in-kind benefits under this Agreement during Perryman’s taxable year may not affect the amounts reimbursed or in-kind benefits provided in any other taxable year, (C) the reimbursement of an eligible expense shall be made on or before the last day of Perryman’s taxable year following the taxable year in which the expense was incurred, (D) the right to reimbursement or an in-kind benefit is not subject to liquidation or exchange for another benefit, and (E) the right to reimbursement of a specific expense incurred shall terminate one year from the date Perryman incurred such expense.

 

(d)                                 Interpretation and Reformation. This Agreement shall be interpreted in a manner consistent with the requirements of Section 409A, to the extent applicable. Without limiting the foregoing, where necessary to ensure compliance with Section 409A, the term “terminate employment” and similar terms shall be interpreted to mean “separation from service” within the meaning of Section 409A. If any provision of this Agreement would cause Perryman to incur any additional tax under Section 409A, the Parties will in good faith attempt to reform the provision in a manner that maintains, to the extent possible, the original intent of the applicable provision without violating the provision of Section 409A.

 

(e)                                  Consultation with Tax Advisor. Perryman is hereby advised to consult immediately with his own tax advisor regarding the tax consequences of this Agreement, including the consequences of Section 409A.

 

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[SIGNATURE PAGE FOLLOWS]

 

18

 

IN WITNESS WHEREOF, Torrent and Perryman hereby execute this Agreement effective as of the Effective Date.

 

	
TORRENT ENERGY   SERVICES, LLC
    	
 
    
	
 
    	
 
    
	
By:   Torrent Energy Holdings, LLC, its Manager
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ John   Griggs
    	
 
    
	
 
    	
John   Griggs, Manager
    	
 
    
	
 
    	
 
    
	
09/15/2014
    	
 
    
	
Date
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
LANCE PERRYMAN:
    	
 
    
	
 
    	
 
    
	
/s/ Lance   Perryman
    	
 
    
	
Signed
    	
 
    
	
 
    	
 
    
	
Lance   Perryman
    	
 
    
	
Print   name
    	
 
    
	
 
    	
 
    
	
9/12/2014
    	
 
    
	
Date
    	
 
    

 

 

EXHIBIT A

 

DISCLOSURE OF BOARD SERVICE

 

I certify that as of the Effective Date of my Employment Agreement, I serve on the following non-Torrent Boards:

 

 

	
/s/ Lance Perryman
    	
 
    	
9/12/2014
    
	
Signed
    	
 
    	
Date
    
	
 
    	
 
    	
 
    
	
Lance   Perryman
    	
 
    	
 
    
	
Print   Name
    	
 
    	
 
    

 

EXHIBIT A TO EMPLOYMENT AGREEMENT

 

 

EXHIBIT B

 

PERMITTED ACTIVITIES

 

I certify that as of the Effective Date of my Employment Agreement, other than investments in Torrent, I have investments or interests in the following private energy-related companies:

 

I hold an interest in GNC Midstream, a private equity fund which invests in other entities. This interest is approximately a 3% passive interest in GNC Midstream. I am not a manager, officer, director, advisor or consultant to GNC Midstream. I have invested approximately $27,000 in GNC Midstream and have capital commitment obligations in the aggregate of $100,000. GNC Midstream therefore has the right to make capital calls to me of $73,000, and I am obligated to satisfy such capital calls by contributing cash up to such amount to GNC Midstream’s capital. I shall not become a manager, officer, director, advisor or consultant to GNC Midstream nor materially increase its percentage ownership in GNC Midstream through any additional investments other than as noted in the previous sentence without the consent of Torrent’s Board in its sole discretion. I shall also promptly inform the Torrent’s Board if my investment in GNC Midstream creates a conflict of interest with Torrent or Parent.

 

	
/s/ Lance   Perryman
    	
 
    	
9/12/2014
    
	
Signed
    	
 
    	
Date
    
	
 
    	
 
    	
 
    
	
Lance   Perryman
    	
 
    	
 
    
	
Print   Name
    	
 
    	
 
    

 

EXHIBIT B TO EMPLOYMENT AGREEMENT

 

 

EXHIBIT C

 

TERMINATION CERTIFICATION

 

I certify that I do not have in my possession, nor have I failed to return to Torrent Energy Services, LLC (“TORRENT”), any Confidential Information, as defined in the Employment Agreement between myself and TORRENT (the “Agreement”), or any other property of TORRENT, its subsidiaries, affiliates, successors, or assigns except as expressly permitted by the Employment Agreement, dated as of September   , 2014, entered into between Torrent and the undersigned.

 

I further certify that I have complied with all the terms of the Agreement regarding return of Confidential Information.

 

	
 
    	
 
    	
 
    
	
Signed
    	
 
    	
Date
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Print   Name
    	
 
    	
 
    

 

EXHIBIT C TO EMPLOYMENT AGREEMENTExhibit 4.1

 

HealthLynked
Corporation

2016
EQUITY INCENTIVE PLAN

 

	1.	PURPOSE
    OF PLAN

 

1.1
The purpose of this 2016 Equity Incentive Plan (this “Plan”) of HealthLynked Corporation, a Nevada corporation
(the “Corporation”), is to promote the success of the Corporation and to increase stockholder value by providing
an additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible
persons.

 

	2.	ELIGIBILITY

 

2.1
The Administrator (as such term is defined in Section 3.1) may grant awards under this Plan only to those persons that the
Administrator determines to be Eligible Persons. An “Eligible Person” is any person who is either: (a) an officer
(whether or not a director) or employee of the Corporation or one of its Subsidiaries; (b) a director of the Corporation or one
of its Subsidiaries; or (c) a consultant who renders bona fide services (other than services in connection with the offering or
sale of securities of the Corporation or one of its Subsidiaries in a capital-raising transaction or as a market maker or promoter
of securities of the Corporation or one of its Subsidiaries) to the Corporation or one of its Subsidiaries and who is selected
to participate in this Plan by the Administrator; provided, however, that a person who is otherwise an Eligible Person
under clause (c) above may participate in this Plan only if such participation would not adversely affect either the Corporation’s
eligibility to use Form S-8 to register under the Securities Act of 1933, as amended (the “Securities Act”),
the offering and sale of shares issuable under this Plan by the Corporation, or the Corporation’s compliance with any other
applicable laws. An Eligible Person who has been granted an award (a “Participant”) may, if otherwise eligible,
be granted additional awards if the Administrator shall so determine. As used herein, “Subsidiary” means any
corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly
by the Corporation; and “Board” means the Board of Directors of the Corporation.

 

	3.	PLAN
    ADMINISTRATION

 

3.1
The Administrator. This Plan shall be administered by and all awards under this Plan shall be authorized by the Administrator.
The “Administrator” means the Board or one or more committees appointed by the Board or another committee (within
its delegated authority) to administer all or certain aspects of this Plan. Any such committee shall be comprised solely of one
or more directors or such number of directors as may be required under applicable law. A committee may delegate some or all of
its authority to another committee so constituted. The Board or a committee comprised solely of directors may also delegate, to
the extent permitted by Section 78.200 of the Nevada Revised Statutes and any other applicable law, to one or more officers of
the Corporation, its powers under this Plan (a) to designate Eligible Persons who will receive grants of awards under this Plan,
and (b) to determine the number of shares subject to, and the other terms and conditions of, such awards. The Board may delegate
different levels of authority to different committees with administrative and grant authority under this Plan. Unless otherwise
provided in the bylaws of the Corporation or the applicable charter of any Administrator: (a) a majority of the members of the
acting Administrator shall constitute a quorum, and (b) the affirmative vote of a majority of the members present assuming the
presence of a quorum or the unanimous written consent of the members of the Administrator shall constitute due authorization of
an action by the acting Administrator.

 

With
respect to awards intended to satisfy the requirements for performance-based compensation under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “Code”), this Plan shall be administered by a committee consisting solely
of two or more outside directors (as this requirement is applied under Section 162(m) of the Code); provided, however,
that the failure to satisfy such requirement shall not affect the validity of the action of any committee otherwise duly authorized
and acting in the matter. Award grants, and transactions in or involving awards, intended to be exempt under Rule 16b-3 under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), must be duly and timely authorized by
the Board or a committee consisting solely of two or more non-employee directors (as this requirement is applied under Rule 16b-3
promulgated under the Exchange Act). To the extent required by any applicable stock exchange, this Plan shall be administered
by a committee composed entirely of independent directors (within the meaning of the applicable stock exchange). Awards granted
to non-employee directors shall not be subject to the discretion of any officer or employee of the Corporation and shall be administered
exclusively by a committee consisting solely of independent directors. 

 

     

     

    

 

3.2
Powers of the Administrator. Subject to the express provisions of this Plan, the Administrator is authorized and empowered
to do all things necessary or desirable in connection with the authorization of awards and the administration of this Plan (in
the case of a committee or delegation to one or more officers, within the authority delegated to that committee or person(s)),
including, without limitation, the authority to:

 

(a)
determine eligibility and, from among those persons determined to be eligible, the particular Eligible Persons who will receive
awards under this Plan;

 

(b)
grant awards to Eligible Persons, determine the price at which securities will be offered or awarded and the number of securities
to be offered or awarded to any of such persons, determine the other specific terms and conditions of such awards consistent with
the express limits of this Plan, establish the installments (if any) in which such awards shall become exercisable or shall vest
(which may include, without limitation, performance and/or time-based schedules), or determine that no delayed exercisability
or vesting is required, establish any applicable performance targets, and establish the events of termination or reversion of
such awards;

 

(c)
approve the forms of award agreements (which need not be identical either as to type of award or among participants);

 

(d)
construe and interpret this Plan and any agreements defining the rights and obligations of the Corporation, its Subsidiaries,
and participants under this Plan, further define the terms used in this Plan, and prescribe, amend and rescind rules and regulations
relating to the administration of this Plan or the awards granted under this Plan;

 

(e)
cancel, modify, or waive the Corporation’s rights with respect to, or modify, discontinue, suspend, or terminate any or
all outstanding awards, subject to any required consent under Section 8.6.5;

 

(f)
accelerate or extend the vesting or exercisability or extend the term of any or all such outstanding awards (in the case of options
or stock appreciation rights, within the maximum ten-year term of such awards) in such circumstances as the Administrator may
deem appropriate (including, without limitation, in connection with a termination of employment or services or other events of
a personal nature) subject to any required consent under Section 8.6.5;

 

(g)
adjust the number of shares of Common Stock subject to any award, adjust the price of any or all outstanding awards or otherwise
change previously imposed terms and conditions, in such circumstances as the Administrator may deem appropriate, in each case
subject to compliance with applicable stock exchange requirements, Sections 4 and 8.6 and the applicable requirements of Code
Section 162(m) and treasury regulations thereunder with respect to awards that are intended to satisfy the requirements for performance-based
compensation under Section 162(m), and provided that in no case (except due to an adjustment contemplated by Section 7 or any
repricing that may be approved by stockholders) shall such an adjustment constitute a repricing (by amendment, cancellation and
regrant, exchange or other means) of the per share exercise or base price of any stock option or stock appreciation right or other
award granted under this Plan, and further provided that any adjustment or change in terms made pursuant to this Section 3.2(g)
shall be made in a manner that, in the good faith determination of the Administrator will not likely result in the imposition
of additional taxes or interest under Section 409A of the Code;

 

(h)
determine the date of grant of an award, which may be a designated date after but not before the date of the Administrator’s
action (unless otherwise designated by the Administrator, the date of grant of an award shall be the date upon which the Administrator
took the action granting an award);

 

(i)
determine whether, and the extent to which, adjustments are required pursuant to Section 7 hereof and authorize the termination,
conversion, substitution, acceleration or succession of awards upon the occurrence of an event of the type described in Section
7;

 

    	 	2	 

     

    

 

(j)
acquire or settle (subject to Sections 7 and 8.6) rights under awards in cash, stock of equivalent value, or other consideration;
and

 

(k)
determine the Fair Market Value (as defined in Section 5.6) of the Common Stock or awards under this Plan from time to time and/or
the manner in which such value will be determined.

 

3.3
Binding Determinations. Any action taken by, or inaction of, the Corporation, any Subsidiary, or the Administrator
relating or pursuant to this Plan and within its authority hereunder or under applicable law shall be within the absolute discretion
of that entity or body and shall be conclusive and binding upon all persons. Neither the Board, the Administrator, nor any Board
committee, nor any member thereof or person acting at the direction thereof, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with this Plan (or any award made under this Plan), and all such
persons shall be entitled to indemnification and reimbursement by the Corporation in respect of any claim, loss, damage or expense
(including, without limitation, legal fees) arising or resulting therefrom to the fullest extent permitted by law and/or under
any directors and officers liability insurance coverage that may be in effect from time to time.

 

3.4
Reliance on Experts. In making any determination or in taking or not taking any action under this Plan, the Administrator
may obtain and may rely upon the advice of experts, including professional advisors to the Corporation. The Administrator shall
not be liable for any such action or determination taken or made or omitted in good faith based upon such advice.

 

3.5
Delegation of Non-Discretionary Functions. In addition to the ability to delegate certain grant authority to officers
of the Corporation as set forth in Section 3.1, the Administrator may also delegate ministerial, non-discretionary functions to
individuals who are officers or employees of the Corporation or any of its Subsidiaries or to third parties.

 

	4.	SHARES
    OF COMMON STOCK SUBJECT TO THE PLAN; SHARE LIMIT

 

4.1
Shares Available. Subject to the provisions of Section 7.1, the capital stock available for issuance under this Plan
shall be shares of the Corporation’s authorized but unissued Common Stock. For purposes of this Plan, “Common Stock”
shall mean the common stock of the Corporation and such other securities or property as may become the subject of awards under
this Plan, or may become subject to such awards, pursuant to an adjustment made under Section 7.1.

 

4.2
Share Limit. The maximum number of shares of Common Stock that may be delivered pursuant to awards granted to Eligible
Persons under this Plan may not exceed 15,503,680 shares of Common Stock  (the “Share Limit”).

 

The
foregoing Share Limit is subject to adjustment as contemplated by Section 4.3, Section 7.1, and Section 8.10.

 

4.3
Awards Settled in Cash, Reissue of Awards and Shares. The Administrator may adopt reasonable counting procedures to
ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments
in accordance with this Section 4.3. Shares shall be counted against those reserved to the extent such shares have been delivered
and are no longer subject to a substantial risk of forfeiture. Accordingly, (i) to the extent that an award under the Plan, in
whole or in part, is canceled, expired, forfeited, settled in cash, settled by delivery of fewer shares than the number of shares
underlying the award, or otherwise terminated without delivery of shares to the participant, the shares retained by or returned
to the Corporation will not be deemed to have been delivered under the Plan and will be deemed to remain or to become available
under this Plan; and (ii) shares that are withheld from such an award or separately surrendered by the participant in payment
of the exercise price or taxes relating to such an award shall be deemed to constitute shares not delivered and will be deemed
to remain or to become available under the Plan. The foregoing adjustments to the Share Limit of this Plan are subject to any
applicable limitations under Section 162(m) of the Code with respect to awards intended as performance-based compensation thereunder.

 

    	 	3	 

     

    

 

4.4
Reservation of Shares; No Fractional Shares. The Corporation shall at all times reserve a number of shares of Common
Stock sufficient to cover the Corporation’s obligations and contingent obligations to deliver shares with respect to awards
then outstanding under this Plan (exclusive of any dividend equivalent obligations to the extent the Corporation has the right
to settle such rights in cash). No fractional shares shall be delivered under this Plan. The Administrator may pay cash in lieu
of any fractional shares in settlements of awards under this Plan.

 

	5.	AWARDS

 

5.1
Type and Form of Awards. The Administrator shall determine the type or types of award(s) to be made to each selected
Eligible Person. Awards may be granted singly, in combination or in tandem. Awards also may be made in combination or in tandem
with, in replacement of, as alternatives to, or as the payment form for grants or rights under any other employee or compensation
plan of the Corporation or one of its Subsidiaries. The types of awards that may be granted under this Plan are:

 

5.1.1
Stock Options. A stock option is the grant of a right to purchase a specified number of shares of Common Stock during
a specified period as determined by the Administrator. An option may be intended as an incentive stock option within the meaning
of Section 422 of the Code (an “ISO”) or a nonqualified stock option (an option not intended to be an ISO).
The award agreement for an option will indicate if the option is intended as an ISO; otherwise it will be deemed to be a nonqualified
stock option. The maximum term of each option (ISO or nonqualified) shall be ten (10) years. The per share exercise price for
each option shall be not less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of the option.
When an option is exercised, the exercise price for the shares to be purchased shall be paid in full in cash or such other method
permitted by the Administrator consistent with Section 5.5.

 

5.1.2
Additional Rules Applicable to ISOs. To the extent that the aggregate Fair Market Value (determined at the time of
grant of the applicable option) of stock with respect to which ISOs first become exercisable by a participant in any calendar
year exceeds $100,000, taking into account both Common Stock subject to ISOs under this Plan and stock subject to ISOs under all
other plans of the Corporation or one of its Subsidiaries (or any parent or predecessor corporation to the extent required by
and within the meaning of Section 422 of the Code and the regulations promulgated thereunder), such options shall be treated as
nonqualified stock options. In reducing the number of options treated as ISOs to meet the $100,000 limit, the most recently granted
options shall be reduced first. To the extent a reduction of simultaneously granted options is necessary to meet the $100,000
limit, the Administrator may, in the manner and to the extent permitted by law, designate which shares of Common Stock are to
be treated as shares acquired pursuant to the exercise of an ISO. ISOs may only be granted to employees of the Corporation or
one of its subsidiaries (for this purpose, the term “subsidiary” is used as defined in Section 424(f) of the Code,
which generally requires an unbroken chain of ownership of at least 50% of the total combined voting power of all classes of stock
of each subsidiary in the chain beginning with the Corporation and ending with the subsidiary in question). There shall be imposed
in any award agreement relating to ISOs such other terms and conditions as from time to time are required in order that the option
be an “incentive stock option” as that term is defined in Section 422 of the Code. No ISO may be granted to any person
who, at the time the option is granted, owns (or is deemed to own under Section 424(d) of the Code) shares of outstanding Common
Stock possessing more than 10% of the total combined voting power of all classes of stock of the Corporation, unless the exercise
price of such option is at least 110% of the Fair Market Value of the stock subject to the option and such option by its terms
is not exercisable after the expiration of five years from the date such option is granted.

 

 5.1.3 Stock Appreciation Rights. A stock appreciation right or “SAR” is a right to receive a payment,
in cash and/or Common Stock, equal to the number of shares of Common Stock being exercised multiplied by the excess of (i) the
Fair Market Value of a share of Common Stock on the date the SAR is exercised, over (ii) the Fair Market Value of a share of Common
Stock on the date the SAR was granted as specified in the applicable award agreement (the “base price”). The
maximum term of a SAR shall be ten (10) years.

 

    	 	4	 

     

    

 

5.1.4
Restricted Shares.

 

(a)
Restrictions. Restricted shares are shares of Common Stock subject to such restrictions on transferability, risk of forfeiture
and other restrictions, if any, as the Administrator may impose, which restrictions may lapse separately or in combination at
such times, under such circumstances (including based on achievement of performance goals and/or future service requirements),
in such installments or otherwise, as the Administrator may determine at the date of grant or thereafter. Except to the extent
restricted under the terms of this Plan and the applicable award agreement relating to the restricted stock, a participant granted
restricted stock shall have all of the rights of a shareholder, including the right to vote the restricted stock and the right
to receive dividends thereon (subject to any mandatory reinvestment or other requirement imposed by the Administrator).

 

(b)
Certificates for Shares. Restricted shares granted under this Plan may be evidenced in such manner as the Administrator
shall determine. If certificates representing restricted stock are registered in the name of the participant, the Administrator
may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to
such restricted stock, that the Corporation retain physical possession of the certificates, and that the participant deliver a
stock power to the Corporation, endorsed in blank, relating to the restricted stock. The Administrator may require that restricted
shares are held in escrow until all restrictions lapse

 

(c)
Dividends and Splits. As a condition to the grant of an award of restricted stock, subject to applicable law, the Administrator
may require or permit a participant to elect that any cash dividends paid on a share of restricted stock be automatically reinvested
in additional shares of restricted stock or applied to the purchase of additional awards under this Plan. Unless otherwise determined
by the Administrator, stock distributed in connection with a stock split or stock dividend, and other property distributed as
a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the restricted stock with respect
to which such stock or other property has been distributed.

 

5.1.5
Restricted Share Units.

 

(a)
Grant of Restricted Share Units. A restricted share unit, or “RSU”, represents the right to receive
from the Corporation on the respective scheduled vesting or payment date for such RSU, one Common Share. An award of RSUs may
be subject to the attainment of specified performance goals or targets, forfeitability provisions and such other terms and conditions
as the Administrator may determine, subject to the provisions of this Plan. At the time an award of RSUs is made, the Administrator
shall establish a period of time during which the restricted share units shall vest and the timing for settlement of the RSU.

 

(b)
Dividend Equivalent Accounts. Subject to the terms and conditions of the Plan and the applicable award agreement, as well
as any procedures established by the Administrator, prior to the expiration of the applicable vesting period of an RSU, the Administrator
may determine to pay dividend equivalent rights with respect to RSUs, in which case, the Corporation shall establish an account
for the participant and reflect in that account any securities, cash or other property comprising any dividend or property distribution
with respect to the shares of Common Stock underlying each RSU. Each amount or other property credited to any such account shall
be subject to the same vesting conditions as the RSU to which it relates. The participant shall have the right to be paid the
amounts or other property credited to such account upon vesting of the subject RSU.

    

(c) Rights as a Shareholder.
Subject to the restrictions imposed under the terms and conditions of this Plan and the applicable award agreement, each participant
receiving RSUs shall have no rights as a shareholder with respect to such RSUs until such time as shares of Common Stock are issued
to the participant. No shares of Common Stock shall be issued at the time a RSU is granted, and the Company will not be required
to set aside a fund for the payment of any such award. Except as otherwise provided in the applicable award agreement, shares
of Common Stock issuable under an RSU shall be treated as issued on the first date that the holder of the RSU is no longer subject
to a substantial risk of forfeiture as determined for purposes of Section 409A of the Code, and the holder shall be the owner
of such shares of Common Stock on such date. An award agreement may provide that issuance of shares of Common Stock under an RSU
may be deferred beyond the first date that the RSU is no longer subject to a substantial risk of forfeiture, provided that such
deferral is structured in a manner that is intended to comply with the requirements of Section 409A of the Code.

 

    	 	5	 

     

    

 

5.1.6
Cash Awards. The Administrator may, from time to time, subject to the provisions of the Plan and such other terms and
conditions as it may determine, grant cash bonuses (including without limitation, discretionary awards, awards based on objective
or subjective performance criteria, awards subject to other vesting criteria or awards granted consistent with Section 5.2 below).
Cash awards shall be awarded in such amount and at such times during the term of the Plan as the Administrator shall determine.

 

5.1.7
Other Awards. The other types of awards that may be granted under this Plan include: (a) stock bonuses, performance
stock, performance units, dividend equivalents, or similar rights to purchase or acquire shares, whether at a fixed or variable
price or ratio related to the Common Stock (subject to the requirements of Section 5.1.1 and in compliance with applicable laws),
upon the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions,
or any combination thereof; or (b) any similar securities with a value derived from the value of or related to the Common Stock
and/or returns thereon. 

 

5.2
Section 162(m) Performance-Based Awards. Without limiting the generality of the foregoing, any of the types of awards
listed in Sections 5.1.4 through 5.1.7 above may be, and options and SARs granted with an exercise or base price not less than
the Fair Market Value of a share of Common Stock at the date of grant (“Qualifying Options” and “Qualifying
SARs,” respectively) typically will be, granted as awards intended to satisfy the requirements for “performance-based
compensation” within the meaning of Section 162(m) of the Code (“Performance-Based Awards”). The grant,
vesting, exercisability or payment of Performance-Based Awards may depend (or, in the case of Qualifying Options or Qualifying
SARs, may also depend) on the degree of achievement of one or more performance goals relative to a pre-established targeted level
or levels using the Business Criteria provided for below for the Corporation on a consolidated basis or for one or more of the
Corporation’s subsidiaries, segments, divisions or business units, or any combination of the foregoing. Such criteria may
be evaluated on an absolute basis or relative to prior periods, industry peers, or stock market indices. Any Qualifying Option
or Qualifying SAR shall be subject to the requirements of Section 5.2.1 and 5.2.3 in order for such award to satisfy the requirements
for “performance-based compensation” under Section 162(m) of the Code. Any other Performance-Based Award shall be
subject to all of the following provisions of this Section 5.2.

 

5.2.1
Class; Administrator. The eligible class of persons for Performance-Based Awards under this Section 5.2 shall be officers
and employees of the Corporation or one of its Subsidiaries. The Administrator approving Performance-Based Awards or making any
certification required pursuant to Section 5.2.4 must be constituted as provided in Section 3.1 for awards that are intended as
performance-based compensation under Section 162(m) of the Code.

 

5.2.2
Performance Goals. The specific performance goals for Performance-Based Awards (other than Qualifying Options and Qualifying
SARs) shall be, on an absolute or relative basis, established based on such business criteria as selected by the Administrator
in its sole discretion (“Business Criteria”), including the following: (1) earnings per share, (2) cash flow
(which means cash and cash equivalents derived from either (i) net cash flow from operations or (ii) net cash flow from operations,
financing and investing activities), (3) total stockholder return, (4) price per share of Common Stock, (5) gross revenue, (6)
revenue growth, (7) operating income (before or after taxes), (8) net earnings (before or after interest, taxes, depreciation
and/or amortization), (9) return on equity, (10) capital employed, or on assets or on net investment, (11) cost containment or
reduction, (12) cash cost per ounce of production, (13) operating margin, (14) debt reduction, (15) resource amounts, (16) production
or production growth, (17) resource replacement or resource growth, (18) successful completion of financings, or (19) any combination
of the foregoing. To qualify awards as performance-based under Section 162(m), the applicable Business Criterion (or Business
Criteria, as the case may be) and specific performance goal or goals (“targets”) must be established and approved
by the Administrator during the first 90 days of the performance period (and, in the case of performance periods of less than
one year, in no event after 25% or more of the performance period has elapsed) and while performance relating to such target(s)
remains substantially uncertain within the meaning of Section 162(m) of the Code. Performance targets shall be adjusted to mitigate
the unbudgeted impact of material, unusual or nonrecurring gains and losses, accounting changes or other extraordinary events
not foreseen at the time the targets were set unless the Administrator provides otherwise at the time of establishing the targets;
provided that the Administrator may not make any adjustment to the extent it would adversely affect the qualification of any compensation
payable under such performance targets as “performance-based compensation” under Section 162(m) of Code. The applicable
performance measurement period may not be less than 3 months nor more than 10 years.

 

    	 	6	 

     

    

 

5.2.3
Form of Payment. Grants or awards intended to qualify under this Section 5.2 may be paid in cash or shares of Common
Stock or any combination thereof.

 

5.2.4
Certification of Payment. Before any Performance-Based Award under this Section 5.2 (other than Qualifying Options
and Qualifying SARs) is paid and to the extent required to qualify the award as performance-based compensation within the meaning
of Section 162(m) of the Code, the Administrator must certify in writing that the performance target(s) and any other material
terms of the Performance-Based Award were in fact timely satisfied.

 

5.2.5
Reservation of Discretion. The Administrator will have the discretion to determine the restrictions or other limitations
of the individual awards granted under this Section 5.2 including the authority to reduce awards, payouts or vesting or to pay
no awards, in its sole discretion, if the Administrator preserves such authority at the time of grant by language to this effect
in its authorizing resolutions or otherwise.

 

5.2.6
Expiration of Grant Authority. As required pursuant to Section 162(m) of the Code and the regulations promulgated thereunder,
the Administrator’s authority to grant new awards that are intended to qualify as performance-based compensation within
the meaning of Section 162(m) of the Code (other than Qualifying Options and Qualifying SARs) shall terminate upon the first meeting
of the Corporation’s stockholders that occurs in the fifth year following the year in which the Corporation’s stockholders
first approve this Plan (the “162(m) Term”).

 

5.2.7
Compensation Limitations. The maximum aggregate number of shares of Common Stock that may be issued to any Eligible
Person during the term of this Plan pursuant to Qualifying Options and Qualifying SARs may not exceed the Share Limit. The maximum
aggregate number of shares of Common Stock that may be issued to any Eligible Person pursuant to Performance-Based Awards granted
during the 162(m) Term (other than cash awards granted pursuant to Section 5.1.6 and Qualifying Options or Qualifying SARs) may
not exceed the Share Limit. The maximum amount that may be paid to any Eligible Person pursuant to Performance-Based Awards granted
pursuant to Sections 5.1.6 (cash awards) during the 162(m) Term may not exceed $1,000,000. The limitations set forth in this Section
5.2.7 shall be proportionally adjusted upon the occurrence of a Plan Increase Event as described in Section 4.2 herein.

 

5.3
Award Agreements. Each award shall be evidenced by a written or electronic award agreement in the form approved by
the Administrator and, if required by the Administrator, executed by the recipient of the award. The Administrator may authorize
any officer of the Corporation (other than the particular award recipient) to execute any or all award agreements on behalf of
the Corporation (electronically or otherwise). The award agreement shall set forth the material terms and conditions of the award
as established by the Administrator consistent with the express limitations of this Plan.

 

5.4
Deferrals and Settlements. Payment of awards may be in the form of cash, Common Stock, other awards or combinations
thereof as the Administrator shall determine, and with such restrictions as it may impose. The Administrator may also require
or permit participants to elect to defer the issuance of shares of Common Stock or the settlement of awards in cash under such
rules and procedures as it may establish under this Plan. The Administrator may also provide that deferred settlements include
the payment or crediting of interest or other earnings on the deferral amounts, or the payment or crediting of dividend equivalents
where the deferred amounts are denominated in shares. All mandatory or elective deferrals of the issuance of shares of Common
Stock or the settlement of cash awards shall be structured in a manner that is intended to comply with the requirements of Section
409A of the Code.

 

5.5
Consideration for Common Stock or Awards. The purchase price for any award granted under this Plan or the Common Stock
to be delivered pursuant to an award, as applicable, may be paid by means of any lawful consideration as determined by the Administrator
and subject to compliance with applicable laws, including, without limitation, one or a combination of the following methods:

 

	 	●	services
    rendered by the recipient of such award;

 

    	 	7	 

     

    

 

	 	●	cash,
    check payable to the order of the Corporation, or electronic funds transfer;

 

	 	●	notice
    and third party payment in such manner as may be authorized by the Administrator;

 

	 	●	the
    delivery of previously owned shares of Common Stock that are fully vested and unencumbered;
	 	 	 
	 	●	by
    a reduction in the number of shares otherwise deliverable pursuant to the award; or

 

	 	●	subject
    to such procedures as the Administrator may adopt, pursuant to a “cashless exercise” with a third party who provides
    financing for the purposes of (or who otherwise facilitates) the purchase or exercise of awards.

 

In
the event that the Administrator allows a participant to exercise an award by delivering shares of Common Stock previously owned
by such participant and unless otherwise expressly provided by the Administrator, any shares delivered which were initially acquired
by the participant from the Corporation (upon exercise of a stock option or otherwise) must have been owned by the participant
at least six months as of the date of delivery (or such other period as may be required by the Administrator in order to avoid
adverse accounting treatment). Shares of Common Stock used to satisfy the exercise price of an option shall be valued at their
Fair Market Value on the date of exercise. The Corporation will not be obligated to deliver any shares unless and until it receives
full payment of the exercise or purchase price therefor and any related withholding obligations under Section 8.5 and any other
conditions to exercise or purchase, as established from time to time by the Administrator, have been satisfied. Unless otherwise
expressly provided in the applicable award agreement, the Administrator may at any time eliminate or limit a participant’s
ability to pay the purchase or exercise price of any award by any method other than cash payment to the Corporation.

 

5.6
Definition of Fair Market Value. For purposes of this Plan “Fair Market Value” shall mean, unless
otherwise determined or provided by the Administrator in the circumstances, the closing price for a share of Common Stock on the
trading day immediately before the grant date, as furnished by the NASDAQ Stock Market or other principal stock exchange on which
the Common Stock is then listed for the date in question, or if the Common Stock is not listed on a principal stock exchange,
then by the Over-the-Counter Bulletin Board or OTC Markets. If the Common Stock is not listed on the NASDAQ Capital Market or
listed on a principal stock exchange or is no longer actively traded on the Over-the-Counter Bulletin Board or OTC Markets as
of the applicable date, the Fair Market Value of the Common Stock shall be the value as reasonably determined by the Administrator
for purposes of the award in the circumstances.

 

5.7
Transfer Restrictions.

 

5.7.1
Limitations on Exercise and Transfer. Unless otherwise expressly provided in (or pursuant to) this Section 5.7, by
applicable law and by the award agreement, as the same may be amended, (a) all awards are non-transferable and shall not be subject
in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance or charge; (b) awards shall be exercised
only by the participant; and (c) amounts payable or shares issuable pursuant to any award shall be delivered only to (or for the
account of) the participant. 

 

5.7.2
Exceptions. The Administrator may permit awards to be exercised by and paid to, or otherwise transferred to, other
persons or entities pursuant to such conditions and procedures, including limitations on subsequent transfers, as the Administrator
may, in its sole discretion, establish in writing (provided that any such transfers of ISOs shall be limited to the extent permitted
under the federal tax laws governing ISOs). Any permitted transfer shall be subject to compliance with applicable federal and
state securities laws.

 

5.7.3
Further Exceptions to Limits on Transfer. The exercise and transfer restrictions in Section 5.7.1 shall not apply to:

 

(a)
transfers to the Corporation,

 

    	 	8	 

     

    

 

(b)
the designation of a beneficiary to receive benefits in the event of the participant’s death or, if the participant has
died, transfers to or exercise by the participant’s beneficiary, or, in the absence of a validly designated beneficiary,
transfers by will or the laws of descent and distribution,

 

(c)
subject to any applicable limitations on ISOs, transfers to a family member (or former family member) pursuant to a domestic relations
order if approved or ratified by the Administrator,

 

(d)
subject to any applicable limitations on ISOs, if the participant has suffered a disability, permitted transfers or exercises
on behalf of the participant by his or her legal representative, or

 

(e)
the authorization by the Administrator of “cashless exercise” procedures with third parties who provide financing
for the purpose of (or who otherwise facilitate) the exercise of awards consistent with applicable laws and the express authorization
of the Administrator.

 

     
5.8 International Awards. One or more awards may be granted to Eligible Persons who provide services to the Corporation
or one of its Subsidiaries outside of the United States. Any awards granted to such persons may, if deemed necessary or advisable
by the Administrator, be granted pursuant to the terms and conditions of any applicable sub-plans, if any, appended to this Plan
and approved by the Administrator.

 

5.9
Vesting. Subject to Section 5.1.2 hereof, awards shall vest at such time or times and subject to such terms and conditions
as shall be determined by the Administrator at the time of grant; provided, however, that in the absence of any award vesting
periods designated by the Administrator at the time of grant in the applicable award agreement, awards shall vest as to one-third
of the total number of shares subject to the award on each of the first, second and third anniversaries of the date of grant.

 

	6.	EFFECT
    OF TERMINATION OF SERVICE ON AWARDS

 

6.1
Termination of Employment.

 

6.1.1
The Administrator shall establish the effect of a termination of employment or service on the rights and benefits under each
award under this Plan and in so doing may make distinctions based upon, inter alia, the cause of termination and type of award.
If the participant is not an employee of the Corporation or one of its Subsidiaries and provides other services to the Corporation
or one of its Subsidiaries, the Administrator shall be the sole judge for purposes of this Plan (unless a contract or the award
agreement otherwise provides) of whether the participant continues to render services to the Corporation or one of its Subsidiaries
and the date, if any, upon which such services shall be deemed to have terminated.

 

6.1.2
For awards of stock options or SARs, unless the award agreement provides otherwise, the exercise period of such options or
SARs shall expire: (1) three months after the last day that the participant is employed by or provides services to the Corporation
or a Subsidiary (provided; however, that in the event of the participant’s death during this period, those persons entitled
to exercise the option or SAR pursuant to the laws of descent and distribution shall have one year following the date of death
within which to exercise such option or SAR); (2) in the case of a participant whose termination of employment is due to death
or disability (as defined in the applicable award agreement), 12 months after the last day that the participant is employed by
or provides services to the Corporation or a Subsidiary; and (3) immediately upon a participant’s termination for “cause”.
The Administrator will, in its absolute discretion, determine the effect of all matters and questions relating to a termination
of employment, including, but not by way of limitation, the question of whether a leave of absence constitutes a termination of
employment and whether a participant’s termination is for “cause.”

 

    	 	9	 

     

    

 

If
not defined in the applicable award agreement, “Cause” shall mean:

 

(i)
conviction of a felony or a crime involving fraud or moral turpitude; or

 

(ii)
theft, material act of dishonesty or fraud, intentional falsification of any employment or Company records, or commission of any
criminal act which impairs participant’s ability to perform appropriate employment duties for the Corporation; or

 

(iii)
intentional or reckless conduct or gross negligence materially harmful to the Company or the successor to the Corporation after
a Change in Control , including violation of a non-competition or confidentiality agreement; or

 

(iv)
willful failure to follow lawful instructions of the person or body to which participant reports; or

 

(v)
gross negligence or willful misconduct in the performance of participant’s assigned duties. Cause shall not include
mere unsatisfactory performance in the achievement of participant’s job objectives.

 

6.1.3
For awards of restricted shares, unless the award agreement provides otherwise, restricted shares that are subject to restrictions
at the time that a participant whose employment or service is terminated shall be forfeited and reacquired by the Corporation;
provided that, the Administrator may provide, by rule or regulation or in any award agreement, or may determine in any
individual case, that restrictions or forfeiture conditions relating to restricted shares shall be waived in whole or in part
in the event of terminations resulting from specified causes, and the Administrator may in other cases waive in whole or in part
the forfeiture of restricted shares. Similar rules shall apply in respect of RSUs.

 

6.2
Events Not Deemed Terminations of Service. Unless the express policy of the Corporation or one of its Subsidiaries,
or the Administrator, otherwise provides, the employment relationship shall not be considered terminated in the case of (a) sick
leave, (b) military leave, or (c) any other leave of absence authorized by the Corporation or one of its Subsidiaries, or the
Administrator; provided that unless reemployment upon the expiration of such leave is guaranteed by contract or law, such leave
is for a period of not more than 3 months. In the case of any employee of the Corporation or one of its Subsidiaries on an approved
leave of absence, continued vesting of the award while on leave from the employ of the Corporation or one of its Subsidiaries
may be suspended until the employee returns to service, unless the Administrator otherwise provides or applicable law otherwise
requires. In no event shall an award be exercised after the expiration of the term set forth in the award agreement.

 

6.3
Effect of Change of Subsidiary Status. For purposes of this Plan and any award, if an entity ceases to be a Subsidiary
of the Corporation, a termination of employment or service shall be deemed to have occurred with respect to each Eligible Person
in respect of such Subsidiary who does not continue as an Eligible Person in respect of another entity within the Corporation
or another Subsidiary that continues as such after giving effect to the transaction or other event giving rise to the change in
status.

 

7.
ADJUSTMENTS; ACCELERATION

 

7.1
Adjustments. Upon or in contemplation of any of the following events described in this Section 7.1,: any reclassification,
recapitalization, stock split (including a stock split in the form of a stock dividend) or reverse stock split (“stock
split”); any merger, arrangement, combination, consolidation, or other reorganization; any spin-off, split-up, or similar
extraordinary dividend distribution in respect of the Common Stock (whether in the form of securities or property); any exchange
of Common Stock or other securities of the Corporation, or any similar, unusual or extraordinary corporate transaction in respect
of the Common Stock; then the Administrator shall in such manner, to such extent and at such time as it deems appropriate and
equitable in the circumstances (but subject to compliance with applicable laws and stock exchange requirements) proportionately
adjust any or all of (1) the number and type of shares of Common Stock (or other securities) that thereafter may be made the subject
of awards (including the number of shares provided for in this Plan), (2) the number, amount and type of shares of Common Stock
(or other securities or property) subject to any or all outstanding awards, (3) the grant, purchase, or exercise price (which
term includes the base price of any SAR or similar right) of any or all outstanding awards, (4) the securities, cash or other
property deliverable upon exercise or payment of any outstanding awards, and (5) the 162(m) compensation limitations set forth
in Section 5.2.7 and (subject to Section 8.8.3(a)) the performance standards applicable to any outstanding awards (provided that
no adjustment shall be allowed to the extent inconsistent with the requirements of Code section 162(m)). Any adjustment made pursuant
to this Section 7.1 shall be made in a manner that, in the good faith determination of the Administrator, will not likely result
in the imposition of additional taxes or interest under Section 409A of the Code. With respect to any award of an ISO, the Administrator
may make such an adjustment that causes the option to cease to qualify as an ISO without the consent of the affected participant.

 

    	 	10	 

     

    

 

7.2
Change in Control. Upon a Change in Control, each then-outstanding option and SAR shall automatically become fully
vested, all restricted shares then outstanding shall automatically fully vest free of restrictions, and each other award granted
under this Plan that is then outstanding shall automatically become vested and payable to the holder of such award unless
the Administrator has made appropriate provision for the substitution, assumption, exchange or other continuation of the
award pursuant to the Change in Control. Notwithstanding the foregoing, the Administrator, in its sole and absolute discretion,
may choose (in an award agreement or otherwise) to provide for full or partial accelerated vesting of any award upon a Change
In Control (or upon any other event or other circumstance related to the Change in Control, such as an involuntary termination
of employment occurring after such Change in Control, as the Administrator may determine), irrespective of whether such any such
award has been substituted, assumed, exchanged or otherwise continued pursuant to the Change in Control.

 

For
purposes of this Plan, “Change in Control” shall be deemed to have occurred if:

 

(i)
a tender offer (or series of related offers) shall be made and consummated for the ownership of 50% or more of the outstanding
voting securities of the Corporation, unless as a result of such tender offer more than 50% of the outstanding voting securities
of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Corporation (as of the time
immediately prior to the commencement of such offer), any employee benefit plan of the Corporation or its Subsidiaries, and their
affiliates;

 

(ii)
the Corporation shall be merged or consolidated with another entity, unless as a result of such merger or consolidation more than
50% of the outstanding voting securities of the surviving or resulting entity shall be owned in the aggregate by the stockholders
of the Corporation (as of the time immediately prior to such transaction), any employee benefit plan of the Corporation or its
Subsidiaries, and their affiliates;

 

(iii)
the Corporation shall sell substantially all of its assets to another entity that is not wholly owned by the Corporation, unless
as a result of such sale more than 50% of such assets shall be owned in the aggregate by the stockholders of the Corporation (as
of the time immediately prior to such transaction), any employee benefit plan of the Corporation or its Subsidiaries and their
affiliates; or

 

(iv)
a Person (as defined below) shall acquire 50% or more of the outstanding voting securities of the Corporation (whether directly,
indirectly, beneficially or of record), unless as a result of such acquisition more than 50% of the outstanding voting securities
of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Corporation (as of the time
immediately prior to the first acquisition of such securities by such Person), any employee benefit plan of the Corporation or
its Subsidiaries, and their affiliates.

 

For
purposes of this Section 5(c), ownership of voting securities shall take into account and shall include ownership as determined
by applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the Exchange Act. In addition, for such
purposes, “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof; provided, however, that a Person shall not include (A) the Company or any of its Subsidiaries;
(B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries;
(C) an underwriter temporarily holding securities pursuant to an offering of such securities; or (D) a corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company.

 

Notwithstanding
the foregoing, (1) the Administrator may waive the requirement described in paragraph (iv) above that a Person must acquire more
than 50% of the outstanding voting securities of the Corporation for a Change in Control to have occurred if the Administrator
determines that the percentage acquired by a person is significant (as determined by the Administrator in its discretion) and
that waiving such condition is appropriate in light of all facts and circumstances, and (2) no compensation that has been deferred
for purposes of Section 409A of the Code shall be payable as a result of a Change in Control unless the Change in Control qualifies
as a change in ownership or effective control of the Corporation within the meaning of Section 409A of the Code.

 

    	 	11	 

     

    

 

7.3
Early Termination of Awards. Any award that has been accelerated as required or permitted by Section 7.2 upon a Change
in Control (or would have been so accelerated but for Section 7.4 or 7.5) shall terminate upon such event, subject to any provision
that has been expressly made by the Administrator, through a plan of reorganization or otherwise, for the survival, substitution,
assumption, exchange or other continuation of such award and provided that, in the case of options and SARs that will not survive,
be substituted for, assumed, exchanged, or otherwise continued in the transaction, the holder of such award shall be given reasonable
advance notice of the impending termination and a reasonable opportunity to exercise his or her outstanding options and SARs in
accordance with their terms before the termination of such awards (except that in no case shall more than ten days’ notice
of accelerated vesting and the impending termination be required and any acceleration may be made contingent upon the actual occurrence
of the event).

 

The
Administrator may make provision for payment in cash or property (or both) in respect of awards terminated pursuant to this section
as a result of the Change in Control and may adopt such valuation methodologies for outstanding awards as it deems reasonable
and, in the case of options, SARs or similar rights, and without limiting other methodologies, may base such settlement solely
upon the excess if any of the per share amount payable upon or in respect of such event over the exercise or base price of the
award.

 

7.4
Other Acceleration Rules. Any acceleration of awards pursuant to this Section 7 shall comply with applicable legal
and stock exchange requirements and, if necessary to accomplish the purposes of the acceleration or if the circumstances require,
may be deemed by the Administrator to occur a limited period of time not greater than 30 days before the event. Without limiting
the generality of the foregoing, the Administrator may deem an acceleration to occur immediately prior to the applicable event
and/or reinstate the original terms of an award if an event giving rise to the acceleration does not occur. Notwithstanding any
other provision of the Plan to the contrary, the Administrator may override the provisions of Section 7.2, 7.3, and/or 7.5 by
express provision in the award agreement or otherwise. The portion of any ISO accelerated pursuant to Section 7.2 or any other
action permitted hereunder shall remain exercisable as an ISO only to the extent the applicable $100,000 limitation on ISOs is
not exceeded. To the extent exceeded, the accelerated portion of the option shall be exercisable as a nonqualified stock option
under the Code.

 

7.5
Possible Rescission of Acceleration. If the vesting of an award has been accelerated expressly in anticipation of an
event and the Administrator later determines that the event will not occur, the Administrator may rescind the effect of the acceleration
as to any then outstanding and unexercised or otherwise unvested awards; provided, that, in the case of any compensation
that has been deferred for purposes of Section 409A of the Code, the Administrator determines that such rescission will not likely
result in the imposition of additional tax or interest under Code Section 409A.

 

	8.	OTHER
    PROVISIONS

 

8.1
Compliance with Laws. This Plan, the granting and vesting of awards under this Plan, the offer, issuance and delivery
of shares of Common Stock, the acceptance of promissory notes and/or the payment of money under this Plan or under awards are
subject to compliance with all applicable federal and state laws, rules and regulations (including but not limited to state and
federal securities law, federal margin requirements) and to such approvals by any applicable stock exchange listing, regulatory
or governmental authority as may, in the opinion of counsel for the Corporation, be necessary or advisable in connection therewith.
The person acquiring any securities under this Plan will, if requested by the Corporation or one of its Subsidiaries, provide
such assurances and representations to the Corporation or one of its Subsidiaries as the Administrator may deem necessary or desirable
to assure compliance with all applicable legal and accounting requirements.

 

8.2
Future Awards/Other Rights. No person shall have any claim or rights to be granted an award (or additional awards,
as the case may be) under this Plan, subject to any express contractual rights (set forth in a document other than this Plan)
to the contrary.

 

    	 	12	 

     

    

 

8.3
No Employment/Service Contract. Nothing contained in this Plan (or in any other documents under this Plan or in any
award) shall confer upon any Eligible Person or other participant any right to continue in the employ or other service of the
Corporation or one of its Subsidiaries, constitute any contract or agreement of employment or other service or affect an employee’s
status as an employee at will, nor shall interfere in any way with the right of the Corporation or one of its Subsidiaries to
change a person’s compensation or other benefits, or to terminate his or her employment or other service, with or without
cause. Nothing in this Section 8.3, however, is intended to adversely affect any express independent right of such person under
a separate employment or service contract other than an award agreement.

 

8.4
Plan Not Funded. Awards payable under this Plan shall be payable in shares or from the general assets of the Corporation,
and no special or separate reserve, fund or deposit shall be made to assure payment of such awards. No participant, beneficiary
or other person shall have any right, title or interest in any fund or in any specific asset (including shares of Common Stock,
except as expressly otherwise provided) of the Corporation or one of its Subsidiaries by reason of any award hereunder. Neither
the provisions of this Plan (or of any related documents), nor the creation or adoption of this Plan, nor any action taken pursuant
to the provisions of this Plan shall create, or be construed to create, a trust of any kind or a fiduciary relationship between
the Corporation or one of its Subsidiaries and any participant, beneficiary or other person. To the extent that a participant,
beneficiary or other person acquires a right to receive payment pursuant to any award hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Corporation.

 

8.5
Tax Withholding. Upon any exercise, vesting, or payment of any award, the Corporation or one of its Subsidiaries shall
have the right at its option to:

 

(a)
require the participant (or the participant’s personal representative or beneficiary, as the case may be) to pay or provide
for payment of at least the minimum amount of any taxes which the Corporation or one of its Subsidiaries may be required to withhold
with respect to such award event or payment; or

 

(b)
deduct from any amount otherwise payable in cash to the participant (or the participant’s personal representative or beneficiary,
as the case may be) the minimum amount of any taxes which the Corporation or one of its Subsidiaries may be required to withhold
with respect to such cash payment.

 

In
any case where a tax is required to be withheld in connection with the delivery of shares of Common Stock under this Plan, the
Administrator may in its sole discretion (subject to Section 8.1) grant (either at the time of the award or thereafter) to the
participant the right to elect, pursuant to such rules and subject to such conditions as the Administrator may establish, to have
the Corporation reduce the number of shares to be delivered by (or otherwise reacquire) the appropriate number of shares, valued
in a consistent manner at their Fair Market Value or at the sales price in accordance with authorized procedures for cashless
exercises, necessary to satisfy the minimum applicable withholding obligation on exercise, vesting or payment. In no event shall
the shares withheld exceed the minimum whole number of shares required for tax withholding under applicable law. 

 

8.6
Effective Date, Termination and Suspension, Amendments.

 

8.6.1
Effective Date and Termination. This Plan was approved by the Board and became effective on January 1, 2016. Unless
earlier terminated by the Board, this Plan shall terminate at the close of business on December 31, 2020. After the termination
of this Plan either upon such stated expiration date or its earlier termination by the Board, no additional awards may be granted
under this Plan, but previously granted awards (and the authority of the Administrator with respect thereto, including the authority
to amend such awards) shall remain outstanding in accordance with their applicable terms and conditions and the terms and conditions
of this Plan.

 

8.6.2
Board Authorization. The Board may, at any time, terminate or, from time to time, amend, modify or suspend this Plan,
in whole or in part. No awards may be granted during any period that the Board suspends this Plan.

 

8.6.3
Stockholder Approval. To the extent then required by applicable law or any applicable stock exchange or required under
Sections 162, 422 or 424 of the Code to preserve the intended tax consequences of this Plan, or deemed necessary or advisable
by the Board, this Plan and any amendment to this Plan shall be subject to stockholder approval.

 

    	 	13	 

     

    

 

8.6.4
Amendments to Awards. Without limiting any other express authority of the Administrator under (but subject to) the
express limits of this Plan, the Administrator by agreement or resolution may waive conditions of or limitations on awards to
participants that the Administrator in the prior exercise of its discretion has imposed, without the consent of a participant,
and (subject to the requirements of Sections 3.2 and 8.6.5) may make other changes to the terms and conditions of awards. Any
amendment or other action that would constitute a repricing of an award is subject to the limitations set forth in Section 3.2(g).

 

8.6.5
Limitations on Amendments to Plan and Awards. No amendment, suspension or termination of this Plan or change of or
affecting any outstanding award shall, without written consent of the participant, affect in any manner materially adverse to
the participant any rights or benefits of the participant or obligations of the Corporation under any award granted under this
Plan prior to the effective date of such change. Changes, settlements and other actions contemplated by Section 7 shall not be
deemed to constitute changes or amendments for purposes of this Section 8.6.

 

8.7
Privileges of Stock Ownership. Except as otherwise expressly authorized by the Administrator or this Plan, a participant
shall not be entitled to any privilege of stock ownership as to any shares of Common Stock not actually delivered to and held
of record by the participant. No adjustment will be made for dividends or other rights as a stockholder for which a record date
is prior to such date of delivery.

 

8.8
Governing Law; Construction; Severability.

 

8.8.1
Choice of Law. This Plan, the awards, all documents evidencing awards and all other related documents shall be governed
by, and construed in accordance with the laws of the State of Nevada.

 

8.8.2
Severability. If a court of competent jurisdiction holds any provision invalid and unenforceable, the remaining provisions
of this Plan shall continue in effect.

 

8.8.3
Plan Construction.

 

(a)
Rule 16b-3. It is the intent of the Corporation that the awards and transactions permitted by awards be interpreted in
a manner that, in the case of participants who are or may be subject to Section 16 of the Exchange Act, qualify, to the maximum
extent compatible with the express terms of the award, for exemption from matching liability under Rule 16b-3 promulgated under
the Exchange Act. Notwithstanding the foregoing, the Corporation shall have no liability to any participant for Section 16 consequences
of awards or events under awards if an award or event does not so qualify.

 

(b)
Section 162(m). Awards under Sections 5.1.4 through 5.1.7 to persons described in Section 5.2 that are either granted or
become vested, exercisable or payable based on attainment of one or more performance goals related to the Business Criteria, as
well as Qualifying Options and Qualifying SARs granted to persons described in Section 5.2, that are approved by a committee composed
solely of two or more outside directors (as this requirement is applied under Section 162(m) of the Code) shall be deemed to be
intended as performance-based compensation within the meaning of Section 162(m) of the Code unless such committee provides otherwise
at the time of grant of the award. It is the further intent of the Corporation that (to the extent the Corporation or one of its
Subsidiaries or awards under this Plan may be or become subject to limitations on deductibility under Section 162(m) of the Code)
any such awards and any other Performance-Based Awards under Section 5.2 that are granted to or held by a person subject to Section
162(m) will qualify as performance-based compensation or otherwise be exempt from deductibility limitations under Section 162(m).

 

    	 	14	 

     

    

 

(c)
Code Section 409A Compliance. The Board intends that, except as may be otherwise determined by the Administrator, any awards
under the Plan are either exempt from or satisfy the requirements of Section 409A of the Code and related regulations and Treasury
pronouncements (“Section 409A”) to avoid the imposition of any taxes, including additional income or penalty
taxes, thereunder. If the Administrator determines that an award, award agreement, acceleration, adjustment to the terms of an
award, payment, distribution, deferral election, transaction or any other action or arrangement contemplated by the provisions
of the Plan would, if undertaken, cause a participant’s award to become subject to Section 409A, unless the Administrator
expressly determines otherwise, such award, award agreement, payment, acceleration, adjustment, distribution, deferral election,
transaction or other action or arrangement shall not be undertaken and the related provisions of the Plan and/or award agreement
will be deemed modified or, if necessary, rescinded in order to comply with the requirements of Section 409A to the extent determined
by the Administrator without the content or notice to the participant. Notwithstanding the foregoing, neither the Company nor
the Administrator shall have any obligation to take any action to prevent the assessment of any excise tax or penalty on any participant
under Section 409A and neither the Company nor the Administrator will have any liability to any participant for such tax or penalty.

 

(d)
No Guarantee of Favorable Tax Treatment. Although the Company intends that awards under the Plan will be exempt from, or
will comply with, the requirements of Section 409A of the Code, the Company does not warrant that any award under the Plan will
qualify for favorable tax treatment under Section 409A of the Code or any other provision of federal, state, local or foreign
law. The Company shall not be liable to any participant for any tax, interest or penalties the participant might owe as a result
of the grant, holding, vesting, exercise or payment of any award under the Plan

 

8.9
Captions. Captions and headings are given to the sections and subsections of this Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Plan
or any provision thereof.

 

8.10
Stock-Based Awards in Substitution for Stock Options or Awards Granted by Other Corporation. Awards may be granted
to Eligible Persons in substitution for or in connection with an assumption of employee stock options, SARs, restricted stock
or other stock-based awards granted by other entities to persons who are or who will become Eligible Persons in respect of the
Corporation or one of its Subsidiaries, in connection with a distribution, arrangement, business combination, merger or other
reorganization by or with the granting entity or an affiliated entity, or the acquisition by the Corporation or one of its Subsidiaries,
directly or indirectly, of all or a substantial part of the stock or assets of the employing entity. The awards so granted need
not comply with other specific terms of this Plan, provided the awards reflect only adjustments giving effect to the assumption
or substitution consistent with the conversion applicable to the Common Stock in the transaction and any change in the issuer
of the security. Any shares that are delivered and any awards that are granted by, or become obligations of, the Corporation,
as a result of the assumption by the Corporation of, or in substitution for, outstanding awards previously granted by an acquired
company (or previously granted by a predecessor employer (or direct or indirect parent thereof) in the case of persons that become
employed by the Corporation or one of its Subsidiaries in connection with a business or asset acquisition or similar transaction)
shall not be counted against the Share Limit or other limits on the number of shares available for issuance under this Plan, except
as may otherwise be provided by the Administrator at the time of such assumption or substitution or as may be required to comply
with the requirements of any applicable stock exchange.

 

8.11
Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed to limit the authority of the Board or the Administrator
to grant awards or authorize any other compensation, with or without reference to the Common Stock, under any other plan or authority.

 

8.12
No Corporate Action Restriction. The existence of this Plan, the award agreements and the awards granted hereunder
shall not limit, affect or restrict in any way the right or power of the Board or the stockholders of the Corporation to make
or authorize: (a) any adjustment, recapitalization, reorganization or other change in the capital structure or business of the
Corporation or any Subsidiary, (b) any merger, arrangement, business combination, amalgamation, consolidation or change in the
ownership of the Corporation or any Subsidiary, (c) any issue of bonds, debentures, capital, preferred or prior preference stock
ahead of or affecting the capital stock (or the rights thereof) of the Corporation or any Subsidiary, (d) any dissolution or liquidation
of the Corporation or any Subsidiary, (e) any sale or transfer of all or any part of the assets or business of the Corporation
or any Subsidiary, or (f) any other corporate act or proceeding by the Corporation or any Subsidiary. No participant, beneficiary
or any other person shall have any claim under any award or award agreement against any member of the Board or the Administrator,
or the Corporation or any employees, officers or agents of the Corporation or any Subsidiary, as a result of any such action.

 

8.13
Other Corporation Benefit and Compensation Programs. Payments and other benefits received by a participant under an
award made pursuant to this Plan shall not be deemed a part of a participant’s compensation for purposes of the determination
of benefits under any other employee welfare or benefit plans or arrangements, if any, provided by the Corporation or any Subsidiary,
except where the Administrator expressly otherwise provides or authorizes in writing or except as otherwise specifically set forth
in the terms and conditions of such other employee welfare or benefit plan or arrangement. Awards under this Plan may be made
in addition to, in combination with, as alternatives to or in payment of grants, awards or commitments under any other plans or
arrangements of the Corporation or its Subsidiaries.

 

8.14
Prohibition on Repricing. Subject to Section 4, the Administrator shall not, without the approval of the stockholders
of the Corporation (i) reduce the exercise price, or cancel and reissue options so as to in effect reduce the exercise price or
(ii) change the manner of determining the exercise price so that the exercise price is less than the fair market value per share
of Common Stock.

 

As
adopted by the Board of Directors of HealthLynked Corporation effective January 1, 2016.

 

 

15

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