Document:

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT
(this “Agreement”), dated as of January 31,
2012, by and between Energetic Energy, Inc. a Michigan corporation (the “Company”), and Auctus
Private Equity Fund, LLC, Massachusetts corporation (the “Investor”).

 

WHEREAS:

 

A.             
In connection with the Drawdown Equity Financing Agreement, by and between the parties hereto, of even date herewith (the “Drawdown
Equity Financing Agreement”), the Company has agreed, upon the terms and subject to the conditions of the Drawdown Equity
Financing Agreement, to issue and sell to the Investor that number of shares of the Company’s common stock, par value $0.0001
per share (the “Common Stock”), which can be purchased pursuant to the terms of the Drawdown Equity Financing
Agreement for an aggregate purchase price of up to Ten Million Dollars ($10,000,000).  Capitalized terms not defined
herein shall have the meaning ascribed to them in the Drawdown Equity Financing Agreement.

 

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

 

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

 

1.                          
DEFINITIONS.

 

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

 

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

 

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

 

	Exergetic Energy, Inc. XNGR.OB RRA	1	2/10/2012

 

    	 

    	 

    

 

c.                           
“Registrable Securities” have the meaning provided in definition 1.34 of the Drawdown Equity Financing Agreement.

 

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

 

2.                          
REGISTRATION.

 

a.                          
Mandatory Registration.  The Company shall prepare and file with the SEC a Registration Statement on Form S-1, or on
such other form as is available, no later than  thirty (30) calendar days from the date hereof (the “Scheduled Filing
Deadline”). The Company shall use all commercially reasonable efforts to have the Registration Statement(s) declared
effective by the SEC within one hundred and twenty (120) calendar days.  The Company shall cause the Registration Statement
to remain effective until the full completion of the Commitment Period (as such term is defined in the Drawdown Equity Financing
Agreement).

 

b.                          
Sufficient Number of Shares Registered.  In the event the number of shares available under a Registration Statement
filed pursuant to Section 2(a) is insufficient to cover all of the Registrable Securities pursuant to the Drawdown Equity Financing
Agreement as result of the limitations imposed by the SEC pursuant to Rule 415 of the Securities Act, the Company shall amend the
Registration Statement, or file a new Registration Statement (on the short form available therefore, if applicable), or both, so
as to cover all of such Registrable Securities pursuant to the Drawdown Equity Financing Agreement as soon as practicable, but
in any event no later than fifteen (15) days after the necessity therefore arises.  The Company shall use it best efforts
to cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof. 
For purposes of the foregoing provision, the number of shares available under a Registration Statement shall be deemed “insufficient
to cover all of the Registrable Securities” if at any time the number of Registrable Securities issuable on an Advance Notice
Date is greater than the number of shares available for resale under such Registration Statement.

 

3.                          
RELATED OBLIGATIONS.

 

a.                          
The Company shall keep the Registration Statement effective pursuant to Rule 415 at all times until the completion of the Commitment
Period (as such term is defined in the Drawdown Equity Financing Agreement) (the “Registration Period”), which
Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading.

 

	Exergetic Energy, Inc. XNGR.OB RRA	2	2/10/2012

 

    	 

    	 

    

 

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

 

c.                           
To the extent such documents are unavailable via the SEC's live EDGAR website, the Company shall furnish to the Investor without
charge, (i) at least one copy of such Registration Statement as declared effective by the SEC and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by reference, all exhibits and each preliminary prospectus,
(ii) ten (10) copies of the final prospectus included in such Registration Statement and all amendments and supplements thereto
(or such other number of copies as such Investor may reasonably request) and (iii) such other documents as such Investor may reasonably
request from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor.

 

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

 

	Exergetic Energy, Inc. XNGR.OB RRA	3	2/10/2012

 

    	 

    	 

    

 

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

 

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

 

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

 

	Exergetic Energy, Inc. XNGR.OB RRA	4	2/10/2012

 

    	 

    	 

    

 

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

 

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

 

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

 

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

 

	Exergetic Energy, Inc. XNGR.OB RRA	5	2/10/2012

 

    	 

    	 

    

 

l.                             The Company shall, every quarter make generally available to its security holders as soon as practical, but not later than ninety
(90) days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158
under the Securities Act) covering a twelve-month period.  This obligation shall begin no later than the first day of the
Company’s fiscal quarter next following the effective date of the Registration Statement.

 

m.                        
The Company shall otherwise use its commercially reasonable best efforts to comply with all applicable rules and regulations of
the SEC in connection with any registration hereunder.  The Investor shall provide the Company with all information and agreements
that the Company needs to include in the Registration Statement or provide to the SEC regarding Investor or its disposition of
Registrable Securities in order to cause the SEC to declare the Registration Statement(s) effective.

 

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

 

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

 

4.                          
OBLIGATIONS OF THE INVESTOR.

 

The Investor agrees that, upon receipt
of any notice from the Company of the happening of any event of the kind described in Section 3(f) or the first sentence of 3(e),
the Investor will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering
such Registrable Securities until the Investor’s receipt of the copies of the supplemented or amended prospectus contemplated
by Section 3(e) or receipt of notice that no supplement or amendment is required.  Notwithstanding anything to the contrary,
the Company shall cause its transfer agent to deliver unlegended certificates for shares of Common Stock to a transferee of the
Investor in accordance with the terms of the Drawdown Equity Financing Agreement in connection with any sale of Registrable Securities
with respect to which the Investor has entered into a contract for sale prior to the Investor’s receipt of a notice from
the Company of the happening of any event of the kind described in Section 3(f) or the first sentence of 3(e) and for which the
Investor has not yet settled.

 

	Exergetic Energy, Inc. XNGR.OB RRA	6	2/10/2012

 

    	 

    	 

    

 

5.                          
EXPENSES OF REGISTRATION.

 

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

 

6.                          
INDEMNIFICATION.

 

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

 

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

 

	Exergetic Energy, Inc. XNGR.OB RRA	7	2/10/2012

 

    	 

    	 

    

 

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

 

	Exergetic Energy, Inc. XNGR.OB RRA	8	2/10/2012

 

    	 

    	 

    

 

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

 

	Exergetic Energy, Inc. XNGR.OB RRA	9	2/10/2012

 

    	 

    	 

    

 

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

 

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

 

7.                          
CONTRIBUTION.

 

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

 

8.                          
REPORTS UNDER THE EXCHANGE ACT.

 

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

 

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

 

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

 

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

 

	Exergetic Energy, Inc. XNGR.OB RRA	10	2/10/2012

 

    	 

    	 

    

 

9.                           
AMENDMENT OF REGISTRATION RIGHTS.

 

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

 

10.                        
MISCELLANEOUS.

 

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

 

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

 

	If to the Company, to:	
        Exergetic Energy, Inc.

        440 Burroughs Suite 386,

        Detroit, MI, 48202

        Telephone: (313) 309-4169

        Facsimile: (313)
216-1777

	 	 
	If to the Investor, to:	Auctus Private Equity Fund, LLC
	 	101 Arch Street, Suite 2010
	 	Boston, MA 02110
	 	Attention: Lou Posner
	 	Telephone: 617-532-6408
	 	Facsimile:  617-532-6420
	 	 

 

	Exergetic Energy, Inc. XNGR.OB RRA	11	2/10/2012

 

    	 

    	 

    

 

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

 

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

 

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

 

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

 

	Exergetic Energy, Inc. XNGR.OB RRA	12	2/10/2012

 

    	 

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

	Exergetic Energy, Inc. XNGR.OB RRA	13	2/10/2012

 

    	 

    	 

    

 

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

 

 

	 	Exergetic Energy, Inc.
	 	 
	 	By:	 
	 	Name: C.B. McCollum
	 	Title:  CEO      
	 	 
	 	Auctus Private Equity Fund, LLC
	 	 
	 	By: 	 
	 	Name: Lou Posner
	 	Title: Managing Director

 

	Exergetic Energy, Inc. XNGR.OB RRA	14	2/10/2012

 

    	 

    	 

    

  

EXHIBIT A

 

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

 

Attention:             

 

Re:    Exergetic
Energy, Inc.

 

Ladies and Gentlemen:

 

We are counsel to Exergetic Energy,
Inc. (the “Company”), and have represented the Company in connection with that certain Drawdown Equity Financing
Agreement (the “Drawdown Equity Financing Agreement”) entered into by and between the Company and Auctus
Private Equity Fund, LLC (the “Investor”), pursuant to which the Company issued to the Investor shares
of its common stock, par value $0.0001 per share (the “Common Stock”).  Pursuant to the Drawdown Equity
Financing Agreement, the Company also has entered into a Registration Rights Agreement with the Investor (the “Registration
Rights Agreement”) pursuant to which the Company agreed, among other things, to register the Registrable Securities (as
defined in the Registration Rights Agreement) under the Securities Act of 1933, as amended (the “Securities Act”). 
In connection with the Company’s obligations under the Registration Rights Agreement, on              
                           
the Company filed a Registration Statement on Form ________ (File No. 333-_____________) (the “Registration Statement”)
with the Securities and Exchange Commission (the “SEC”) relating to the Registrable Securities which names the
Investor as a selling stockholder thereunder.

 

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

 

	Exergetic Energy, Inc. XNGR.OB RRA	15	2/10/2012exh_101.htm

Exhibit 10.1

 

EXIDE TECHNOLOGIES

CHANGE IN CONTROL

EXECUTIVE SEVERANCE PLAN

 

Effective February 5, 2012

 

INTRODUCTION

 

            The purpose of the Plan is to enable Exide Technologies (the “Company,”) to offer certain protections to employees if their employment with the Company or a Subsidiary is terminated without Cause or for Good Reason in connection with a Change in Control.   Accordingly, to accomplish this purpose, the Board of Directors has adopted the Plan, effective as of February 5, 2012 (the “Effective Date”).

 

            Unless otherwise expressly provided in Section 2.3 or unless otherwise agreed to between the Company and a Participant on or after the date hereof, Participants covered by the Plan shall not be eligible to participate in any other severance or termination plan, policy or practice of the Company that would otherwise apply under the circumstances described herein. The Plan is intended to constitute a “top hat” plan under ERISA for the benefit of a select group of highly compensated or management employees. Capitalized terms and phrases used herein shall have the meanings ascribed thereto in Article I.

 

ARTICLE I

DEFINITIONS

For purposes of the Plan, capitalized terms and phrases used herein shall have the meanings ascribed in this Article.

 

“Accounting Firm” shall have the meaning set forth in Section 2.6 below.

 

“Applicable Percentage” shall mean (i) for the Company’s Chief Executive Officer, 250%, (ii) for the Company’s Executive Vice Presidents and Regional Presidents, 200%, and (iii) for any other employees designated as Participants by the Board, 150%.

 

“Base Salary” shall mean a Participant’s annual base compensation rate for services paid by the Company to the Participant at the time immediately prior to the Participant’s termination of employment, as reflected in the Company’s payroll records.  Base Salary shall not include commissions, bonuses, overtime pay, incentive compensation, benefits paid under any qualified or non-qualified plan, any group medical, dental or other welfare benefit plan, non-cash compensation or any other additional compensation.

 

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

  

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“Bonus Target” shall mean the Participant’s target short-term annual incentive for the fiscal year in which the Participant’s termination of employment occurs, as set forth under the Participant’s individual employment agreement with the Company or in any written bonus plan, program or arrangement approved by the Board or the Compensation Committee of the Board.

 

“Cause” shall have the meaning in a Participant’s employment or similar services agreement, or if none (or in the absence of any definition of “Cause” contained in such an agreement), (i) the Participant’s commission of, conviction for, plea of guilty or nolo contendere to a felony or a crime involving moral turpitude, or other material act or omission involving dishonesty or fraud, (ii) the Participant’s conduct that results in or is reasonably likely to result in harm to the reputation or business of the Company or any of its affiliates in any material way, (iii) the Participant’s failure to perform duties as reasonably directed by the Company or the Participant’s material violation of any rule, regulation, policy or plan for the conduct of any service provider to the Company or its affiliates or its or their business (which, if curable, is not cured within 5 days after notice thereof is provided to the Participant) or (iv) the Participant’s gross negligence, willful malfeasance or material act of disloyalty with respect to the Company or its affiliates (which, if curable, is not cured within 5 days after notice thereof is provided to the Participant).  Any determination of whether Cause exists shall be made by the Committee in its sole discretion. 

 

“Change in Control” shall mean the occurrence of any of the following events: (i)the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any “Person” or “Group” of related persons (as such terms are used in Section 13(d)(3) of the Securities Exchange Act of 1934), (ii) the adoption of a plan relating to the liquidation or dissolution of the Company, (iii) the consummation of any transaction (including, without limitation, any purchase, sale, acquisition, disposition, merger or consolidation) the result of which is that any Person or Group becomes the “beneficial owner” (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Securities Exchange Act of 1934, but excluding, for this purpose, any options to purchase equity securities of the Company held by such Person or Group) of more than 50% of the aggregate voting power of all classes of capital stock of the Company having the right to elect directors under ordinary circumstances,  (iv) the first day on which a majority of the members of the Board are not Continuing Directors, or  (v) such other event as the Board may determine by express resolution to constitute a Change in Control for purposes of this Plan.

 

        “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

  

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            “Code Section 409A” shall mean Section 409A of the Code together with the treasury regulations and other official published guidance promulgated thereunder.

 

            “Committee” shall mean the Compensation Committee of the Board or such other committee appointed by the Board from time to time to administer the Plan.

 

            “Company” shall have the meaning set forth in the Introduction above.

 

“Continuation Period” shall mean a period commencing on the date of a Participant’s termination of employment until the earliest of:  (A) eighteen (18) months following the date of termination; (B) the date the Participant becomes eligible for coverage under the health insurance plan of a subsequent employer; or (C) the date the Participant or the Participant’s eligible dependents, as the case may be, cease to be eligible under COBRA.

 

            “Continued Health Coverage” shall mean the benefit set forth in Section 2.2(b) below.

 

“Continuing Directors” shall mean, as of any date of determination, any member of the Board who (i) was a member of the Board on the date this plan is approved by the Company’s stockholders or (ii) was nominated for election or elected to the Board with the approval of (a) a majority of the Continuing Directors who were members of the Board at the time of such nomination or election or (b) a majority of those Directors who were previously approved by Continuing Directors.

 

             “Delay Period” shall mean the period commencing on the date the Participant incurs a Separation from Service from the Company until the earlier of (A) the six (6)-month anniversary of the date of such Separation from Service and (B) the date of the Participant’s death.

 

             “Disability” shall mean a Participant’s disability that would qualify as such under the Company’s long-term disability plan without regard to any waiting periods set forth in such plan.

 

             “Effective Date” shall have the meaning set forth in the Introduction above.

 

             “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

 

             “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

             “Good Reason” shall have the meaning in a Participant’s employment or similar services agreement, or if none (or in the absence of any definition of “Good Reason” contained in such an agreement), shall mean the occurrence of any of the following events on or following a Change in Control without the Participant’s express written consent, provided, that, the Participant gives notice to the Company of the Good Reason event within ninety (90) days after the initial occurrence of the Good Reason event and such event is not corrected in all 

  

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material respects by the Company within thirty (30) days following receipt of the Participant’s written notification:  (a) a reduction in the Participant’s Base Salary, (b) a relocation of the Participant’s principal business location to an area outside a 50 mile radius of the Participant’s principal business location immediately prior to the Change in Control, (c) the Company’s failure to pay amounts to the Participant when due or (d) the assignment of the Participant to duties materially inconsistent with the Participant’s authorities, duties, responsibilities, and status as an executive and/or officer of the Company, or a material reduction or alteration in the nature or status of the Participant’s authorities, duties, or responsibilities from those in effect as of ninety (90) calendar days prior to the Change in Control, other than (i) a reduction or alteration resulting from the Company’s no longer being a public company due to a Change in Control or (ii) an insubstantial and inadvertent act that is remedied by the Company promptly after receipt of notice thereof given by the Participant.

 

“Net After Tax Benefit” shall have the meaning set forth in Section 2.6 below.

 

            “Participant” shall mean any individual that is designated in writing by the Board or the Committee for participation in the Plan.

 

             “Plan” shall mean the Exide Technologies Change in Control Executive Severance Plan.

 

“Plan Administrator” shall have the meaning set forth in Section 4.1 below.

 

“Qualifying Event” shall have the meaning set forth in Section 2.1 below.

 

“Release” shall mean the general release of claims contemplated by Section 2.5 below.

 

            “Separation from Service” shall mean termination of a Participant’s employment with the Company, provided, that, such termination constitutes a separation from service within the meaning of Code Section 409A and the default presumptions set forth in the Treasury Regulations promulgated under Code Section 409A.  All references in the Plan to a “resignation,” “termination,” “termination of employment” or like terms shall mean Separation from Service.

 

            “Severance Benefits” shall mean collectively, the Severance Payments and the Continued Health Coverage.

 

            “Severance Payments” shall mean the payments set forth in Section 2.2(a) below.

 

             “Specified Employee” shall mean a Participant who, as of the date of his or her Separation from Service, is deemed to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code and using the identification methodology selected by the Company from time to time in accordance therewith, or if none, the default methodology set forth therein.

  

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“Subsidiary” shall mean a corporation, company or other entity (i) more than 50 percent of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but more than 50 percent of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company.

 

“Underpayment” shall have the meaning set forth in Section 2.6 below.

 

 

ARTICLE II

SEVERANCE BENEFITS

 

2.1 Eligibility for Severance Benefits.

 

(a) Qualifying Event for Participants.  In the event that during the period commencing on the date of the consummation of a Change in Control and ending twenty-four (24) months thereafter, the employment of a Participant is terminated by the Company or a Subsidiary without Cause or by the Participant for Good Reason (each a “Qualifying Event”), then the Company shall pay or provide the Participant with the Severance Benefits.

 

(b) Non-Qualifying Events.  A Participant shall not be entitled to Severance Benefits under the Plan if the Participant’s employment is terminated by the Company or a Subsidiary for any reason other than a Qualifying Event, including, without limitation, (i) by the Company or a Subsidiary for Cause, (ii) by the Participant for any reason other than for Good Reason, or (iii) on account of the Participant’s death or Disability.

 

            2.2 Amount of Severance Benefits.  Unless otherwise determined by the Committee at the time of termination, in the event that a Participant becomes entitled to benefits pursuant to Section 2.1 hereof, the Company shall pay or provide the Participant with the Severance Benefits as follows: 

 

(a) Severance Payment.  Subject to the provisions of Sections 2.3 through 2.6, and 6.8, as applicable, the Company (or as applicable, a Subsidiary) shall pay to the Participant an amount equal to the product of (i) the Applicable Percentage, multiplied by (ii) the sum of (x) the Participant’s Base Salary and (y) the Participant’s Bonus Target, if any.  Any such Severance Payment shall be payable in a lump sum on the first payroll after the sixtieth (60th) day following a Qualifying Event, so long as the conditions therefor have been fully satisfied.

  

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(b) Continued Health Coverage.  Subject to the provisions of Sections 2.3 through 2.6, and subject to a timely election pursuant to COBRA by a Participant, during the applicable Continuation Period the Company shall pay the full cost for continued coverage pursuant to COBRA, for the Participant and the Participant’s eligible dependents, under the Company’s group health plans in which the Participant participated immediately prior to the date of termination of the Participant’s employment.  Following the applicable Continuation Period, the Participant shall be entitled to such continued coverage for the remainder of the COBRA period on a full self-pay basis to the extent eligible under COBRA.  For the avoidance of doubt, nothing in this Plan shall prohibit the Company from amending or terminating any group health plan.  Notwithstanding anything in this Plan to the contrary, in the event that the payment of amounts payable hereunder this clause (b) shall result in adverse tax consequences under Chapter 100 of the Code, Code Section 4980D or otherwise to the Company, the parties shall undertake commercially reasonable efforts to restructure such benefit in an economically equivalent manner to avoid the imposition of such taxes on the Company, provided, however, that, should the Company’s auditors determine in good faith that no such alternative arrangement is achievable, the Participant shall not be entitled to his rights to payment under this clause (b).  Further, the Company’s and the Participant shall undertake commercially reasonable efforts to structure the benefits under this clause (b) in a manner that is most tax efficient for the parties (i.e., on an after-tax basis), although neither the Company nor any of its employees, directors, managers, board members, affiliates, parents, stakeholders, equityholders, agents, successors, predecessors or related parties guarantees the tax treatment of any benefit under this clause (b) and no such party shall have liability to the Participant or his beneficiaries with respect to the taxation of such benefits or amounts payable in respect thereof.  Notwithstanding any other rights of this Section 2.3 or the definition of Continuation Period, health coverage for Participants residing outside the United States shall be limited to such Participant’s health insurance premiums for eighteen months calculated as of the date of termination.

 

(c)           Outplacement.  Notwithstanding the provisions Section 2.3 hereof to the contrary, but subject to the provisions of Sections 2.4 through 2.6, a Participant shall be entitled to any outplacement services or outplacement reimbursement to which the Participant would have been entitled in connection with the Participant’s termination of employment under any plan, program or arrangement of the Company immediately prior to a Change in Control.

 

(d)           Equity.               Subject to the provisions of Sections 2.3 through 2.6, an immediate full vesting and lapse of all restrictions on any and all outstanding equity-based long-term incentives, including but not limited to stock options, restricted stock, performance unit and performance share awards held by the Executive. For purposes of the performance unit and performance share awards, target goals will be assumed to have been achieved for purposes of determining the number of shares and/or units earned under such awards.  This 

  

6

  

provision shall override any conflicting language contained in the participant’s respective long-term incentive plan award agreements.

 

 2.3 No Other Entitlements.  Subject to the provision of Section 2.2(c) hereof, Participants hereunder shall not be entitled to severance amounts under any other plan, program or policy of the Company and any amounts required to be paid to Participant as a matter of law or contract shall offset amounts payable hereunder in a manner that does not result in adverse tax consequences to the Participant under Code Section 409A as determined by the Plan Administrator. 

 

2.4 No Duty to Mitigate/Set-off.  No Participant entitled to receive Severance Benefits hereunder shall be required to seek other employment or to attempt in any way to reduce any amounts payable to the Participant by the Company pursuant to the Plan and, except as provided in Sections 2.2(b) hereof, there shall be no offset against any amounts due to the Participant under the Plan on account of any remuneration attributable to any subsequent employment that the Participant may obtain or otherwise.   The amounts payable hereunder may be subject to setoff, counterclaim, recoupment, defense or other right which the Company may have against the Participant, except as the Plan Administrator determines would result in adverse tax consequences to the Participant under Code Section 409A.

 

2.5 Release Required.  Any amounts payable pursuant to the Plan shall be conditioned upon the Participant’s execution and non-revocation, within sixty (60) days following the effective date of termination, of a general release of claims against the Company, its affiliates, and related parties thereto, in a form reasonably satisfactory to the Company.  The Company shall provide the release to the Participant within five (5) calendar days following the Participant’s date of termination.   The Release will contain customary confidentiality and non-disparagement provisions, a non-compete clause consistent with past practices and not to exceed fifty-two (52) weeks, and contain customary carveouts for the payment of consideration payable hereunder (which shall serve as consideration for such Release), vested benefits under the Company qualified plans, directors’ and officers’ insurance and indemnification and such other carveouts as the Plan Administrator determines in its sole and absolute discretion.   In the event that the Release is not executed or is revoked by the Participant in accordance with its terms, and benefits have been provided by the Company to the Participant (including, without limitation, benefits under Section 2.2(b), the Participant shall be required (and the Company will be entitled to setoff amounts owed to Participant) to immediately reimburse the Company for the cost of benefits provided to Participant and his/her beneficiaries thereunder as reasonably determined by the Plan Administrator.

 

2.6 Code Section 280G.    Notwithstanding any other provision of this Plan or any other agreement to which the Participant is a party to the contrary, if payments made pursuant to this Plan (when taken together with other payments to such Participant) are considered “excess parachute payments” under Section 280G of the Code, then such excess parachute 

  

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payments plus any other payments made by the Company and its affiliates to such Participant which are considered excess parachute payments shall be limited (cash first then stock compensation) to the greatest amount which may be paid to such Participant under Section 280G of the Code without causing any loss of deduction to the Company under such Code Section, but only if, by reason of such reduction, the “Net After Tax Benefit” (as defined below) to the Participant shall exceed the net after tax benefit if such reduction was not made.  “Net After Tax Benefit” for purposes of this Plan shall mean the sum of (i) the total amounts payable to the Participant under this Plan, plus (ii) all other payments and benefits which the Executive receives or then is entitled to receive from the Company and its affiliates that would constitute an “excess parachute payment” within the meaning of Section 280G of the Code, less (iii) the amount of federal and state income taxes payable with respect to the foregoing calculated at the maximum marginal income tax rate for each year in which the foregoing shall be paid to the Participant (based upon the rate in effect for such year as set forth in the Code at the time of termination of the Participant’s employment), less (iv) the amount of excise taxes imposed with respect to the payments and benefits described in (i) and (ii) above by Section 4999 of the Code.  The determination of whether payments would be considered excess parachute payments and the calculation of all the amounts referred to in this Plan shall be made by the Company’s regular independent accounting firm at the expense of the Company (the “Accounting Firm”), which shall provide detailed supporting calculations.  Any determination by the Accounting Firm shall be binding upon the Company and the Participants.  As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that payments to which Participant was entitled, but that he or she did not receive pursuant to this Section, could have been made without the imposition of the excise tax imposed by Section 4999 of the Code (“Underpayment”).  In such event, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Participant.

 

ARTICLE III

UNFUNDED PLAN; ERISA

 

3.1 Unfunded Status. The Plan shall be “unfunded” for the purposes of ERISA and the Code and Severance Payments shall be paid out of the general assets of the Company as and when Severance Payments are payable under the Plan. All Participants shall be solely unsecured general creditors of the Company. If the Company decides in its sole discretion to establish any advance accrued reserve on its books against the future expense of the Severance Payments payable hereunder, or if the Company decides in its sole discretion to fund a trust under the Plan, such reserve or trust shall not under any circumstances be deemed to be an asset of the Plan.

  

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3.2 ERISA.  The Plan is intended to constitute a “top hat” plan under ERISA for the benefit of a select group of highly compensated or management employees.

 

ARTICLE IV

ADMINISTRATION OF THE PLAN

            4.1 Plan Administrator. The general administration of the Plan on behalf of the Company shall be placed with the Committee, or if none the Board (the “Plan Administrator”).

 

            4.2 Reimbursement of Expenses of Plan Administrator. The Company may, in its sole discretion, pay or reimburse the members of the Plan Administrator for all reasonable expenses incurred in connection with their duties hereunder, including, without limitation, expenses of outside legal counsel. 

 

4.3 Retention of Professional Assistance. The Plan Administrator may employ such legal counsel, accountants and other persons as may be reasonably required in carrying out its work in connection with the Plan. 

 

4.4 Books and Records. The Plan Administrator shall maintain such books and records regarding the fiscal and other transactions of the Plan and such other data as may be required to carry out its functions under the Plan and to comply with all applicable laws.

 

4.5 Indemnification. The Plan Administrator and its members shall not be liable for any action or determination made in good faith with respect to the Plan. The Company shall, to the fullest extent permitted by law, indemnify and hold harmless each member of the Plan Administrator for liabilities or expenses they and each of them incur in carrying out their respective duties under the Plan, other than for any liabilities or expenses arising out of such individual’s willful misconduct or fraud.

 

ARTICLE V

AMENDMENT AND TERMINATION

 

The Company reserves the right to amend or terminate, in whole or in part, any or all of the provisions of the Plan by action of the Board (or a duly authorized committee thereof) at any time.  This Plan shall automatically terminate on the second anniversary following the first Change in Control to occur hereunder, provided, that, in no event shall any amendment reducing the Severance Benefits provided hereunder or any Plan termination be effective prior to the twelve (12) month anniversary of the Effective Date, and further provided that the Company shall not amend or terminate the Plan at any time after (i) the occurrence of a Change in Control or (ii) the date the Company enters into a definitive agreement which, if consummated, would result in a Change in Control, unless the potential Change in Control is abandoned (as publicly announced by the Company), in either case until twenty-four (24)

  

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months after the occurrence of a Change in Control, provided, that, all Severance Benefits under the Plan have been paid.

 

ARTICLE VI

SUCCESSORS

For purposes of the Plan, the Company shall include any and all successors or assignees, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company (or its members, as the case may be) and such successors and assignees shall perform the Company’s obligations under the Plan, in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place. In the event the surviving corporation in any transaction to which the Company is a party is a subsidiary of another corporation, then the ultimate parent corporation of such surviving corporation shall cause the surviving corporation to perform the Plan in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place.  In such event, the term “Company,” as used in the Plan, shall mean the Company, as hereinbefore defined and any successor or assignee (including the ultimate parent corporation) to the business or assets which by reason hereof becomes bound by the terms and provisions of the Plan.

 

ARTICLE VII

MISCELLANEOUS

 

            7.1 Minors and Incompetents.  If the Plan Administrator shall find that any person to whom Severance Benefits are payable under the Plan is unable to care for his or her affairs because of illness or accident, or is a minor, any Severance Benefits due (unless a prior claim therefore shall have been made by a duly appointed guardian, committee or other legal representative) may be paid to the spouse, child, parent, or brother or sister, or to any person deemed by the Plan Administrator to have incurred expense for such person otherwise entitled to the Benefits, in such manner and proportions as the Plan Administrator may determine in its sole discretion. Any such Severance Benefits shall be a complete discharge of the liabilities of the Company, the Plan Administrator and the Board under the Plan.

 

            7.2 Limitation of Rights.  Nothing contained herein shall be construed as conferring upon a Participant the right to continue in the employ of the Company as an employee in any other capacity or to interfere with the Company’s right to discharge him or her at any time for any reason whatsoever. 

 

7.3 Payment Not Salary. Any Severance Benefits payable under the Plan shall not be deemed salary or other compensation to the Participant for the purposes of computing 

  

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benefits to which he or she may be entitled under any pension plan or other arrangement of the Company maintained for the benefit of its employees, unless such plan or arrangement provides otherwise.

 

            7.4 Severability.  In case any provision of the Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but the Plan shall be construed and enforced as if such illegal and invalid provision never existed.

 

            7.5 Withholding. The Company shall have the right to make such provisions as it deems necessary or appropriate to satisfy any obligations it may have to withhold federal, state or local income or other taxes incurred by reason of payments pursuant to the Plan. In lieu thereof, the Company and/or the Company shall have the right to withhold the amounts of such taxes from any other sums due or to become due from the Company and/or the Company to the Participant upon such terms and conditions as the Plan Administrator may prescribe.

 

            7.6 Non-Alienation of Benefits. The Severance Benefits payable under the Plan shall not be subject to alienation, transfer, assignment, garnishment, execution or levy of any kind, and any attempt to cause any Severance Benefits to be so subjected shall not be recognized.

 

            7.7 Governing Law. To the extent legally required, the Code and ERISA shall govern the Plan and, if any provision hereof is in violation of any applicable requirement thereof, the Company reserves the right to retroactively amend the Plan to comply therewith. To the extent not governed by the Code and ERISA, the Plan shall be governed by the laws of the State of Georgia without reference to rules relating to conflicts of law.

 

            78 Code Section 409A.

 

(a) General. Neither the Company nor any employee, director, manager, board member, affiliate, parent, stakeholder, equityholder, agent, successor, predecessor or related party makes a guarantee with respect to the tax treatment of payments hereunder and no such party shall be responsible in any event with regard to non-compliance with or failure to be exempt from Code Section 409A.  The Plan is intended to either comply with, or be exempt from, the requirements of Code Section 409A.  To the extent that the Plan is not exempt from the requirements of Code Section 409A, the Plan is intended to comply with the requirements of Code Section 409A and shall be limited, construed and interpreted in accordance with such intent.  Notwithstanding the foregoing, in no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on a Participant by Code Section 409A or any damages for failing to comply with Code Section 409A.

 

(b) Separation from Service; Specified Employees. A termination of employment shall not be deemed to have occurred for purposes of any provision of the Plan 

  

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providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a Separation from Service.  If a Participant is deemed on the date of termination to be a Specified Employee, then with regard to any payment hereunder that is nonqualified deferred compensation subject to Section 409A and that is specified as subject to this Section, such payment shall be delayed and not be made prior to the expiration of the Delay Period.  All payments delayed pursuant to this Section 8.8(b) (whether they would have otherwise been payable in a single lump sum or in installments in the absence of such delay) shall be paid to the Participant in a single lump sum on the first payroll date on or following the first day following the expiration of the Delay Period, and any remaining payments and benefits due under the Plan shall be paid or provided in accordance with the normal payment dates specified for them herein.

 

            7.9 Non-Exclusivity.  The adoption of the Plan shall not be construed as creating any limitations on the power of the Company to adopt such other termination or benefits arrangements as it deems desirable, and such arrangements may be either generally applicable or limited in application.

 

7.10 Headings and Captions. The headings and captions herein are provided for reference and convenience only. They shall not be considered part of the Plan and shall not be employed in the construction of the Plan.

 

            7.11 Gender and Number. Whenever used in the Plan, the masculine shall be deemed to include the feminine and the singular shall be deemed to include the plural, unless the context clearly indicates otherwise.

 

            7.12 Communications. All announcements, notices and other communications regarding the Plan will be made by the Company in writing.

 

 

The Plan Administrator keeps records of the Plan and is responsible for the administration of the Plan.  The Plan Administrator will also answer any questions a Participant may have about the Plan.  Service of legal process may be made upon the Plan Administrator or the Company’s General Counsel.

 

No individual may, in any case, become entitled to additional benefits or other rights under the Plan after the Plan is terminated. Under no circumstances, will any benefit under the Plan ever vest or become nonforfeitable prior to a change in control.

 

 

Adopted by the Board of Directors: February 5 2012

 

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