Document:

ex1010513.htm

Exhibit 10.1

INFINITY PROPERTY AND CASUALTY CORPORATION

AMENDED AND RESTATED 2013 STOCK INCENTIVE PLAN

 

1.           Purposes

 

The purposes of the Plan are to provide long-term incentives to those persons with significant responsibility for the success and growth of the Company, to align the interests of such persons with those of the Company’s shareholders, to assist the Company in recruiting, retaining and motivating employees, directors and consultants on a competitive basis and to link compensation to performance.

 

2.           Definitions

 

For purposes of the Plan, the following capitalized terms shall have the meanings specified below:

 

(a)           “Affiliate” has the meaning set forth in Rule 12b-2 under the Exchange Act.

 

(b)           “Award” means a grant of Stock Options, Stock Appreciation Rights, Restricted Shares or Restricted Share Units, Performance Shares or Performance Units, or any or all of them, to a Participant.

 

(c)           “Award Agreement” means an agreement, either in written or electronic format, between the Company and a Participant setting forth the terms and conditions of an Award granted to the Participant.

 

(d)           “Award Value” means the number of Common Shares to be distributed to a Participant who has received an Award of Performance Shares or Performance Units following the Termination Date of such Award.

 

(e)           “Beneficial Owner” has the meaning given in Rule 13d-3 under the Exchange Act.

 

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

 

(g)           “Cause” means, unless otherwise provided in the Participant’s Award Agreement, (i) the Participant’s failure or refusal to materially perform his/her duties; (ii) the Participant’s failure or refusal to follow material lawful directions of the Board or any other act of material insubordination on the part of Participant; (iii) the engaging by the Participant in misconduct, including but not limited to any type of conduct which is materially and demonstrably injurious to the Company or any of its divisions, Subsidiaries or Affiliates, monetarily or otherwise; (iv) any conviction of, or plea of guilty or nolo contendere, by the Participant to a felony (other than a traffic violation); or (v) the commission (or attempted commission) of any act of fraud or dishonesty by the Participant which is materially detrimental to the business or reputation of the Company or any of its divisions, Subsidiaries or Affiliates.

 

(h)           “Change in Control” means the occurrence of one or more of the following events:

 

(i)           Any Person or group of Persons becomes both a Beneficial Owner (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) directly or indirectly of securities representing 30% or more of the total number of votes that may be cast for the election of directors of the Company, whether by open market purchases, by tender offer or exchange offer, through issuance of new shares by the Company or by merger or consolidation;

 

(ii)           Within two (2) years after a merger, consolidation, liquidation or sale of assets involving the Company, or a contested election of a Company director or directors, or any combination of the foregoing, the individuals who were directors of the Company immediately prior to the merger, consolidation, liquidation, sale of assets or contested election shall cease to constitute a majority of the Board; or

 

(iii)           Within two (2) years after a tender offer or exchange offer for voting securities of the Company, the individuals who were directors of the Company immediately prior to the commencement of the tender offer or exchange offer shall cease to constitute a majority of the Board.

  

  

  

 

(i)           “Code” means the Internal Revenue Code of 1986, as amended, and any rules, regulations or guidance promulgated thereunder. Any reference to the Code or a section thereof shall also refer to any successor Code or section.

 

(j)           “Committee” means a committee appointed by the Board consisting of at least three members of the Board, all meeting the definitions of “outside director” set forth in Code Section 162(m), “independent director” set forth in The Nasdaq Stock Market rules, and “non-employee director” set forth in Rule 16b-3 of the Exchange Act, or any successor definitions adopted for a similar purpose by the Internal Revenue Service, any national securities exchange on which the Common Shares are listed or the Securities and Exchange Commission.

 

(k)           “Common Share” or “Common Shares” means one or more of the common shares, without par value, of the Company.

 

(l)           “Company” means Infinity Property & Casualty Corporation, a corporation organized under the laws of the State of Ohio, its subsidiaries, divisions and affiliated businesses.

 

(m)           “Commencement Date” means January 1 of any year in which an Award of Performance Shares or Performance Units is made.

 

(n)           “Date of Grant” means the date on which the Committee authorizes the grant of an Award or such later date as may be specified by the Committee in such authorization.

 

(o)           “Disability” means the failure of the Participant to render services to the Company for a continuous period of six (6)months because of the Participant’s physical or mental disability or illness. The Committee may substitute a different definition for the term “Disability” in its discretion as it deems appropriate.

 

(p)           “Effective Date” has the meaning set forth in Section 13(a).

 

(q)           “Exchange Act” means the Securities Exchange Act of 1934, as amended, and any rules, regulations, schedules or guidance promulgated thereunder. Any reference to the Exchange Act or a section thereof shall also refer to any successor Exchange Act or section.

 

(r)           “Exercise Price” means the purchase price of a Common Share covered by a Stock Option or SAR, as applicable.

 

(s)           “Fair Market Value” on any date means the closing price of the Common Shares as reported on The Nasdaq Stock Market or, if applicable, any other national securities exchange on which the Common Shares are principally traded, or, if there were no sales of Common Shares on such date, then on the immediately preceding date on which there were any sales of Common Shares. If the Common Shares cease to be traded on a national securities exchange, the Fair Market Value shall be determined pursuant to a reasonable valuation method prescribed by the Committee. In the case of an ISO (or Tandem SAR), Fair Market Value shall be determined by the Committee in accordance with Code Section 422. For Awards intended to be exempt from Code Section 409A, Fair Market Value shall be determined by the Committee in accordance with Code Section 409A.

 

(t)           “Full-Value Award” means Restricted Shares, Restricted Share Units, Performance Shares, Performance Share Units or unrestricted Common Shares.

 

(u)           “ISO” means an Incentive Stock Option satisfying the requirements of Code Section 422 and designated as an ISO by the Committee.

 

(v)           “Non-Employee Director” means a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act.

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(w)               “NQSO” means a non-qualified Stock Option that does not satisfy the requirements of Code Section 422 or that is not designated as an ISO by the Committee.

 

(x)               “Participant” means a person eligible to receive an Award under the Plan, as set forth in Section 4, and designated by the Committee to receive an Award subject to the conditions set forth in the Plan and any Award Agreement.

 

(y)               “Performance-Based Exception” means the performance-based exception to the deductibility limitations of Code Section 162(m), as set forth in Code Section 162(m)(4)(C).

 

(z)               “Performance Goals” means the goals established by the Committee, as described in Section 6(e)(ii).

 

(aa)               “Performance Measures” means the criteria set out in Section 6(e)(iii) that may be used by the Committee as the basis for a Performance Goal.

 

(bb)               “Performance Period” means the period established by the Committee during which the achievement of Performance Goals is assessed in order to determine whether and to what extent an Award that is conditioned on attaining Performance Goals has been earned.

 

(cc)               “Performance Share” means an Award granted to a Participant pursuant to Section 6(d).

 

(dd)               “Performance Unit” means an Award granted to a Participant pursuant to Section 6(d).

 

(ee)               “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, except that such term shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of Company securities.

 

(ff)               “Plan” means the Infinity Property and Casualty Corporation Amended and Restated 2013 Stock Incentive Plan, as may be further amended and restated from time to time.

 

(gg)               “Prior Plans” mean each of the Company’s 2002 Restricted Stock Plan (as amended and restated effective July 31, 2007), Amended and Restated 2002 Stock Option Plan, Non-Employee Director’s Stock Ownership Plan and Second Amended and Restated 2008 Performance Share Plan.

 

(hh)               “Restricted Shares” means Common Shares that are subject to restrictions, as described in Section 6(c).

 

(ii)               “Restricted Share Units” means a right, as described in Section 6(c), denominated in Common Shares to receive an amount, payable in either cash, Common Shares, Restricted Shares, or a combination thereof, equal to the value of a specified number of Common Shares.

 

(jj)               “Restriction Period” means, with respect to any Full-Value Award (other than an Award to a Non-Employee Director), the period during which any risk of forfeiture or other restrictions set by the Committee, including performance restrictions, remain in effect until such time as they have lapsed under the terms and conditions of the Full-Value Award or as otherwise determined by the Committee, including the Performance Period for Full-Value Awards intended to qualify for the Performance-Based Exception.

 

(kk)               “Retirement” means retirement with the Company at or after age 65 or at or after the later of age 55 and ten years of service.

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(ll)               “Securities Act” means the Securities Act of 1933, as amended, and any rules, regulations, schedules or guidance promulgated thereunder. Any reference to the Securities Act or a section thereof shall also refer to any successor Securities Act or section.

 

(mm)               “Stock Appreciation Right” or “SAR” means the right, as described in Section 6(b), to receive a payment equal to the excess of the Fair Market Value of a Common Share on the date the SAR is exercised over the Exercise Price established for that SAR at the time of grant, multiplied by the number of Common Shares with respect to which the SAR is exercised.

 

(nn)               “Stock Option” means the right, as described in Section 6(a), to purchase Common Shares at a specified price for a specified period of time. Stock Options include ISOs and NQSOs.

 

(oo)               “Subsidiary” has the meaning set forth in Section 424(f) of the Code.

 

(pp)               “Tandem SAR” means a SAR granted in tandem with a Stock Option.

 

(qq)               “Termination Date” means the date on which the term of an Award of Performance Shares or Performance Units expires.

 

3.           Administration of the Plan

 

(a)           Authority of Committee. The Plan shall be administered by the Committee. Unless otherwise determined by the Board, the Compensation Committee of the Board shall serve as the Committee, except that with respect to Awards to Non-Employee Directors, the Nominating and Corporate Governance Committee of the Board shall serve as the Committee. The Committee shall have all the powers vested in it by the terms of the Plan, such powers to include the sole and exclusive authority to (within the limitations described in the Plan):

 

(i)           select Participants to be granted Awards under the Plan and grant Awards pursuant to the terms of the Plan;

 

(ii)           determine the type, size and terms of the Awards to be granted to each Participant;

 

(iii)           determine the time when Awards are to be granted and any conditions that must be satisfied before an Award is granted;

 

(iv)           establish objectives and conditions for earning an Award;

 

(v)           determine all other terms and conditions, not inconsistent with the terms of the Plan and any operative employment or other agreement, of any Award granted under the Plan, and determine the appropriate Award Agreement evidencing the Award;

 

(vi)           determine whether the terms, conditions, and objectives for earning an Award have been met, including, without limitation, any such determination or certification, as the case may be, required for compliance with Code Section 162(m);

 

(vii)           modify or waive the terms and conditions of Awards granted under the Plan, in a manner not inconsistent with the terms of the Plan and any operative employment or other agreement, accelerate the vesting, exercise or payment of an Award or cancel or suspend an Award;

 

(viii)           determine whether the amount or payment of an Award should be reduced or eliminated, and determine if, when and under what conditions payment of all or any part of any Award may be deferred;

 

(ix)           determine the guidelines and/or procedures for the payment or exercise of Awards;

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(x)           determine whether an Award may be intended to qualify, regardless of its amount, as deductible in its entirety for federal income tax purposes, including whether any Awards granted to an employee should qualify for the Performance-Based Exception;

 

(xi)           adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan;

 

(xii)           construe, interpret, administer and implement the Plan, any Award Agreements or related documents and correct any defect, supply an omission or reconcile any inconsistency in or between the Plan, any Award Agreement or related documents; and

 

(xiii)           make factual determinations with respect to the Plan and any Awards and otherwise supervise the administration of the Plan.

 

(b)           Binding Authority. The Committee’s interpretations of the Plan, and all actions taken and determinations made by the Committee pursuant to the powers vested in it under the Plan, shall be conclusive and binding on all parties, including the Company, its shareholders and all Participants.

 

(c)           Delegation of Authority. To the extent not prohibited by law or the rules of the national securities exchange on which the Company’s Common Shares are listed, the Committee may allocate its authority hereunder to one or more of its members or delegate its authority hereunder to one or more Non-Employee Directors or one or more officers of the Company, except that no such allocation or delegation shall be permitted with respect to Awards intended to qualify for the Performance-Based Exception, and may grant authority to employees of the Company to execute documents on behalf of the Committee or to otherwise assist in the administration and operation of the Plan. When the Committee delegates its authority hereunder to one or more officers of the Company, it shall specify the total number of Awards that the officer or officers may award and the terms on which any Awards may be issued, offered or sold. In no event shall the Committee authorize any officer to designate such officer as a recipient of any Awards.

 

4.            Eligibility

 

Subject to the terms and conditions of the Plan, the Committee may select, from all eligible persons, Participants to whom Awards shall be granted under the Plan and shall determine the nature and amount of each Award. Eligible persons include any of the following individuals: (i) any officer or key employee of the Company, (ii) any consultant (as defined in the General Instructions to the Form S-8 registration statement under the Securities Act) to the Company, and (iii) any Non-Employee Director. All Awards shall be evidenced by an Award Agreement, and Awards may be conditioned upon the Participant’s execution of an Award Agreement.

 

5.           Common Shares Subject to the Plan

 

(a)           Authorized Number of Common Shares. Unless otherwise authorized by the Company’s shareholders and subject to this Section 5 and Section 8, the maximum aggregate number of Common Shares available for issuance under the Plan is 750,000. Upon the Effective Date, the Prior Plans will terminate and no further Awards shall be granted thereunder; provided that all outstanding awards under the Prior Plans as of the Effective Date shall remain outstanding and shall be administered and settled in accordance with the provisions of the Prior Plans, as applicable.

 

(i)           The maximum number of Common Shares available for grant with respect to Full-Value Awards is 750,000.

 

(ii)           The maximum number of Common Shares available for issuance with respect to ISOs is 750,000.

 

(b)           Share Counting. The following rules shall apply in determining the number of Common Shares available for grant under the Plan:

 

(i)           Common Shares subject to any Award shall be counted against the maximum share limitation as one Common Share for every Common Share subject thereto.

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(ii)           To the extent that any Award is forfeited, cancelled, settled in cash, returned to the Company for failure to satisfy vesting requirements or other conditions of the Award or otherwise terminates without an issuance of Common Shares being made, the maximum share limitation shall be credited with one Common Share for each Common Share subject to such Award, and such number of credited Common Shares may again be made subject to Awards under the Plan.

 

(iii)           Any Common Shares underlying Awards granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who become employees of the Company as a result of a merger, consolidation, acquisition or other corporate transaction shall not, unless required by law or regulation, count against the reserve of available Common Shares under the Plan.

 

(c)           Award Limitations. Subject to the adjustment provisions of Section 8, the following limits shall apply with respect to Awards intended to quality for the Performance-Based Exception:

 

(i)           The maximum aggregate number of Common Shares that may be subject to Stock Options or SARs granted in any calendar year to any one Participant shall be 300,000 Common Shares.

 

(ii)           The maximum aggregate number of Common Shares that may be subject to Full-Value Awards granted in any calendar year to any one Participant shall be 100,000 Common Shares.

 

(d)           Shares to be Delivered. Common Shares to be delivered by the Company under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

 

6.           Awards to Participants

 

(a)           Stock Options.

 

(i)           Grants. Subject to the terms and conditions of the Plan, Stock Options may be granted to Participants, in such number and upon such terms and conditions as the Committee determines, and may consist of ISOs or NQSOs. Stock options may be granted alone or with Tandem SARs. With respect to Stock Options granted with Tandem SARs, the exercise of either such Stock Options or Tandem SARs will result in the simultaneous cancellation of the same number of Stock Options or Tandem SARs, as the case may be.

 

(ii)           Exercise Price. The Exercise Price shall be equal to or, at the Committee’s discretion, greater than the Fair Market Value on the date the Stock Option is granted, unless the Stock Option was granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who became employees of the Company as a result of a merger, consolidation, acquisition or other corporate transaction, in which case the assumption or substitution shall be accomplished in a manner that permits the Stock Option to be exempt from Code Section 409A.

 

(iii)           Term. The term of Stock Options shall be determined by the Committee in its sole discretion, but in no event shall the term exceed ten years from the Date of Grant.

 

(iv)           ISO Limits. ISOs may be granted only to Participants who are employees of the Company (or of any parent or Subsidiary) on the Date of Grant, and may only be granted to an employee who, at the time the Stock Option is granted, does not own more than ten percent of the total combined voting power of all classes of stock of the Company (or of any parent or Subsidiary), unless (A) the Exercise Price is at least 110% percent of the Fair Market Value on the Date of Grant, and (B) the ISO is not exercisable after five years from the Date of Grant. The aggregate Fair Market Value of all Common Shares, determined at the time the ISOs are granted, with respect to which ISOs are exercisable by a Participant for the first time during any calendar year (under all plans of the Company) shall not exceed $100,000 or such other amount as may subsequently be specified by the Code. If such Fair Market Value exceeds the $100,000 limit, the ISOs exceeding the limit shall be treated as NQSOs, taking the Stock Options in the order each was granted. The terms of all ISOs shall be consistent with and contain or be deemed to contain all provisions required to qualify as an “incentive stock option” under Code Section 422.

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(v)           No Repricing. Subject to the adjustment provisions of Section 8, without the approval of the Company’s shareholders, (A) the Exercise Price for any outstanding Stock Option may not be decreased after the Date of Grant, (B) no outstanding Stock Option may be surrendered to the Company as consideration for the grant of a new Stock Option with a lower Exercise Price, and (C) no other modifications to any outstanding Stock Option may be made that would be treated as a “repricing” under the then applicable rules, regulations or listing requirements adopted by the national securities exchange on which the Common Shares are listed.

 

(vi)           Form of Payment. Vested Stock Options may be exercised in whole or in part, and the Exercise Price shall be paid to the Company at the time of exercise, subject to any applicable rules or regulations adopted by the Committee:

 

	
  

	
(A)

	
to the extent permitted by applicable law, pursuant to cashless exercise procedures that are approved by the Committee;

 

	
  

	
(B)

	
through the tender of unrestricted Common Shares owned by the Participant (or by delivering a certification or attestation of ownership of such Common Shares) valued at their Fair Market Value on the date of exercise;

 

	
  

	
(C)

	
in cash or its equivalent; or

 

	
  

	
(D)

	
by any combination of (A), (B), and (C) above.

 

(vii)           No Dividends or Shareholder Rights. No dividends or dividend equivalents may be paid on Stock Options. Except as otherwise provided herein, a Participant shall have no rights as a holder of Common Shares covered by a Stock Option unless and until such Common Shares have been registered to the Participant as the owner.

 

(b)           Stock Appreciation Rights.

 

(i)           Grants. Subject to the terms and provisions of the Plan, SARs may be granted to Participants, in such number and upon such terms and conditions as the Committee determines, and may be granted alone or as Tandem SARs. With respect to Tandem SARs, the exercise of either such Stock Options or SARs will result in the simultaneous cancellation of the same number of Tandem SARs or Stock Options, as the case may be.

 

(ii)           Exercise Price. The Exercise Price shall be equal to or, at the Committee’s discretion, greater than Fair Market Value on the date the SAR is granted, unless the SAR was granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who became employees of the Company as a result of a merger, consolidation, acquisition or other corporate transaction involving the Company, in which case the assumption or substitution shall be accomplished in a manner that permits the SAR to be exempt from Code Section 409A.

 

(iii)           Term. The term of a SAR shall be determined by the Committee in its sole discretion, but in no event shall the term exceed ten years from the Date of Grant; provided that, each SAR granted in tandem with a Stock Option shall terminate upon the termination or exercise of the related Stock Option.

 

(iv)           No Repricing. Subject to the adjustment provisions of Section 8, without the approval of the Company’s shareholders, (A) the Exercise Price for any outstanding SAR may not be decreased after the Date of Grant, (B) no outstanding SAR may be surrendered to the Company as consideration for the grant of a new SAR with a lower Exercise Price, and (C) no other modifications to any outstanding SAR may be made that would be treated as a “repricing” under the then applicable rules, regulations or listing requirements adopted by the national securities exchange on which the Common Shares are listed.

 

(v)           Form of Payment. Vested SARs may be exercised in whole or in part, and the Committee may authorize payment of a SAR in the form of cash, Common Shares valued at its Fair Market Value on the date of the exercise or a combination thereof, or by any other method as the Committee may determine.

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(vi)           Tandem SARs. Tandem SARs may be exercised for all or part of the Common Shares subject to the related Stock Option upon the surrender of the right to exercise the equivalent portion of the related Stock Option. A Tandem SAR may be exercised only with respect to the Common Shares for which its related Stock Option is then exercisable. Notwithstanding any other provision of the Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (A) the Tandem SAR will expire no later than the expiration of the underlying ISO; (B) the value of the payout with respect to the Tandem SAR may be for no more than 100% of the excess of the Fair Market Value of the Common Shares subject to the underlying ISO at the time the Tandem SAR is exercised over the Exercise Price of the underlying ISO; and (C) the Tandem SAR may be exercised only when the Fair Market Value of the Common Shares subject to the ISO exceeds the Exercise Price of the ISO.

 

(vii)           No Dividends or Shareholder Rights. No dividends or dividend equivalents may be paid on SARs. Except as otherwise provided herein, a Participant shall have no rights as a holder of Common Shares covered by a SAR unless and until such Common Shares have been registered to the Participant as the owner.

 

(c)           Restricted Shares and Restricted Share Units.

 

(i)           Grants. Subject to the terms and provisions of the Plan, Restricted Shares and Restricted Share Units may be granted to Participants in such number and upon such terms and conditions as the Committee determines. Restricted Shares will be registered in the name of the Participant and deposited with the Company or its agent in certificated or book-entry form.

 

(ii)           Restrictions. Restricted Shares or Restricted Share Units may be granted at no cost or at a purchase price determined by the Committee, which may be less than the Fair Market Value, but subject to such terms and conditions as the Committee determines, including, without limitation: forfeiture conditions, transfer restrictions, restrictions based upon the achievement of specific performance goals (Company-wide, divisional and/or individual), which may be based on one or more Performance Measures, time-based restrictions on vesting and/or restrictions under applicable federal or state securities laws. Subject to Sections 9 and 10, for Awards to employees, no Restricted Shares or Restricted Share Units conditioned upon the achievement of performance shall be based on a Restriction Period of less than one year, and, except as may be determined by the Committee, any Restriction Period based solely on continued employment or service (time-based) shall be for a minimum of three years, subject to (A) pro rata or graded vesting prior to the expiration of such time-based Restriction Period, and (B) acceleration due to the Participant’s death, Disability or Retirement, in each case as specified in the applicable Award Agreement; provided that the Restriction Period applicable to the first vesting date of an Award subject to pro rata or graded vesting (as referenced in (A) above) may be for less than one year, provided the first vesting date is no earlier than the fiscal year-end date of the fiscal year during which the Award was granted. To the extent the Restricted Shares or Restricted Share Units are intended to qualify for the Performance-Based Exception, except as may be determined by the Committee, the applicable restrictions shall be based on the achievement of Performance Goals over a Performance Period, as described in Section 6(e).

 

(iii)           Transfer Restrictions. During the Restriction Period, Restricted Shares and Restricted Share Units may not be sold, assigned, transferred or otherwise disposed of, or mortgaged, pledged or otherwise encumbered. In order to enforce the limitations imposed upon the Restricted Shares, the Committee may (A) cause a legend or legends to be placed on any certificates evidencing such Restricted Shares, and/or (B) cause “stop transfer” instructions to be issued, as it deems necessary or appropriate.

 

(iv)           Dividends and Voting Rights. Unless otherwise determined by the Committee, during the Restriction Period, Participants who hold Restricted Shares shall have the right to receive dividends in cash or other property or other distribution or rights in respect of the Restricted Shares but shall not have the right to vote the Restricted Shares as the record owners; provided that, unless otherwise determined by the Committee, any dividends or other property payable to a Participant during the Restriction Period shall be distributed to the Participant only if and when the restrictions imposed on the applicable Restricted Shares lapse. Unless otherwise

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determined by the Committee, during the Restriction Period, Participants who hold Restricted Shares Units shall be credited with dividend equivalents in respect of such Restricted Share Units; provided that, unless otherwise determined by the Committee, such dividend equivalents shall be distributed (without interest) to the Participant only if and when the restrictions imposed on the applicable Restricted Share Units lapse. Participants shall have no other rights as a shareholder with respect to Restricted Share Units unless otherwise determined by the Committee. Notwithstanding the forgoing, no Restricted Shares or Restricted Share Units conditioned upon the achievement of performance shall provide the Participant with dividend or shareholder rights unless otherwise determined by the Committee; provided that an Award Agreement may provide for payment (in money or shares) equal to the dividends paid on the number of Common Shares payable upon vesting of such Restricted Shares or Restricted Share Units or at any time prior thereto.

 

(v)           Payment of Restricted Share Units. Restricted Share Units that become payable in accordance with their terms and conditions shall be settled in cash, Common Shares, Restricted Shares, or a combination thereof, as determined by the Committee.

 

(vi)           Ownership. Restricted Shares shall be registered in the name of the Participant on the books and records of the Company or its designee (or by one or more physical certificates if physical certificates are issued) subject to the applicable restrictions imposed by the Plan. At the end of the Restriction Period that applies to Restricted Shares, the number of shares to which the Participant is entitled shall be delivered to the Participant free and clear of the restrictions, either in certificated or book-entry form. No Common Shares shall be registered in the name of the Participant with respect to Restricted Share Units, and Participants shall have no ownership interest in the Common Shares to which the Restricted Share Units relate, unless and until payment is made in Common Shares.

 

(vii)           Forfeiture. If a Participant who holds Restricted Shares or Restricted Share Units fails to satisfy the restrictions, terms or conditions applicable to the Award, except as otherwise determined by the Committee, the Participant shall forfeit the Restricted Shares or Restricted Share Units. The Committee may at any time waive such restrictions or accelerate the date or dates on which the restrictions will lapse; however, to the extent the Restricted Shares or Restricted Share Units are intended to qualify for the Performance-Based Exception, the provisions of Section 6(e)(iv) will apply.

 

(d)           Performance Shares and Performance Units.

 

(i)           Grants. Subject to the terms and provisions of the Plan, Performance Shares and Performance Units may be granted to Participants in such number and upon such terms and conditions as the Committee determines.

 

(ii)           Award Value of Performance Shares/Units. The Award Value of each Performance Share and Performance Unit shall be calculated immediately following the Termination Date, unless the Committee designates a different day for such calculation at the time of grant.

 

(iii)           Term. Performance Shares and Performance Units shall terminate on a Termination Date to be determined by the Committee in its sole discretion.

 

(iv)           Vesting. Performance Shares and Performance Units shall vest as of the Termination Date, but only if the Participant is actively employed on a full-time basis with the Company through the Termination Date.

 

(v)           Forfeiture. All unvested Performance Shares and Performance Units shall be forfeited on Termination Date or such other date as may be set forth in the Award Agreement or determined by the Committee at the time of grant in its sole discretion.

 

(e)           Performance-Based Exception.

 

(i)           Grants. Subject to the provisions of the Plan, Full-Value Awards granted in a manner that is intended to qualify for the Performance-Based Exception shall be conditioned upon the achievement of Performance Goals as the Committee shall determine, in its sole discretion.

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(ii)           Performance Goals. Performance Goals shall be based on one or more Performance Measures, over a Performance Period, as to be determined by the Committee.

 

(iii)           Performance Measures. The Performance Measure(s) may be described in terms of objectives that are related to the individual Participant or objectives that are Company-wide or related to a subsidiary, division, department, region, function or business unit of the Company, and shall consist of one or more or any combination of the following criteria: combined ratio, premium growth, including growth within certain specific geographical areas, cash flow, profit, revenue, stock price, market share, sales, net income, operating income, return ratios, earnings per share, earnings (which may include an add back for taxes, interest, and/or depreciation and amortization), operating earnings, profit margins, earnings per Common Share, favorable comparison to established budgets, return on equity or shareholders’ equity, return on assets, attainment of strategic and operational initiatives, comparisons with various stock market indices, reduction in costs or a combination of such factors, personal performance measures, working capital, total assets, net assets, return on sales, return on invested capital, gross margin, costs, shareholders’ equity, shareholder return and/or productivity or productivity improvement. The Performance Goals based on these Performance Measures may be expressed in absolute terms, before or after taxes, or relative to the performance of other entities.

 

(iv)           Treatment of Awards. With respect to any Full-Value Award that is intended to qualify for the Performance-Based Exception: (A) the Committee shall interpret the Plan and this Section 6(e) in light of Code Section 162(m), (B) the Committee shall not amend the Full-Value Award in any way that would adversely affect the treatment of the Full-Value Award under Code Section 162(m), and (C) such Full-Value Award shall not vest or be paid until the Committee shall first have certified that the Performance Goals have been achieved.

 

(f)           Unrestricted Share Awards.

 

Subject to the terms and provisions of the Plan, the Committee may grant awards of unrestricted Common Shares to Participants in such number and upon such terms and conditions as the Committee determines in recognition of outstanding achievements or contributions by such Participants or otherwise. Unrestricted Common Shares issued on a bonus basis may be issued for no cash consideration.

 

(g)           Provisions Applicable to Non-Employee Directors.

 

(i)           Full-Value Awards. The Committee shall have authority to grant to Non-Employee Directors, on or about June 1 of each year during which a Non-Employee Director is a member of the Company’s Board and is serving on the Board as of June 1, a Full Value Award determined by dividing $55,000 (the “Equity Grant Value”) by the average of the per share Fair Market Value of Common Shares for the five (5) trading days ending on the last business day prior to June 1 of the applicable year; the resulting number shall then be rounded up to the nearest share. The Committee may change the Equity Grant Value from time to time, or may determine that a fixed number of shares be granted in lieu of using the “Equity Grant Value” method described above, in each case without shareholder approval. Full-Value Awards granted to Non-Employee Directors pursuant to this Section 6(g)(i) shall not be transferrable by Non-Employee Directors for a period of six (6) months from the Date of Grant. Notwithstanding the foregoing, the Committee may grant to Non-Employee Directors Stock Options in lieu of or in addition to Restricted Shares.

 

(ii)           Additional Payment in Common Stock in Lieu of Cash. On or prior to January 1 of any calendar year, any Non-Employee Director may notify the Company that he or she is electing to receive unrestricted Common Shares in lieu of a specified percentage (not to exceed 50%) of cash compensation scheduled to be received in the upcoming calendar year; provided, however, that this amount shall exclude such cash compensation to be earned for attending Board and/or committee meetings. Such additionally issued Common Shares shall be governed by the terms and provisions of Section 6(g)(i) above and the additional terms and provisions of this Plan.

 

(iii)           Additional Transfer Restrictions. No Non-Employee Director may dispose of any shares received pursuant to an Award under Section 6(g)(i) of this Plan until such Non-Employee Director beneficially owns the

- 10 -  

  

  

target amount of Common Shares required by stock ownership guidelines adopted by the Company (the “Share Ownership Target”). Thereafter, no Non-Employee Director shall dispose of any shares received pursuant to an Award under Section 6(g)(i) of this Plan such that such Non-Employee Director’s direct or indirect ownership of Common Shares would be less than the Share Ownership Target.

 

7.           Deferred Payment

 

Subject to the terms of the Plan, the Committee may determine that all or a portion of any Award to a Participant, whether it is to be paid in cash, Common Shares or a combination thereof, shall be deferred or may, in its sole discretion, approve deferral elections made by Participants. Deferrals shall be for such periods and upon such terms as the Committee may determine in its sole discretion, which terms shall comply with Code Section 409A.

 

8.           Dilution and Other Adjustments

 

In the event of any merger, reorganization, consolidation, liquidation, recapitalization, reclassification, redesignation, stock dividend, other distribution (whether in the form of cash, shares or otherwise), stock split, reverse stock split, spin off, combination, repurchase or exchange of shares or issuance of warrants or rights to purchase shares or other securities, or other change in corporate structure affecting the Common Shares, the Committee shall make such adjustments in the aggregate number and type of Common Shares which may be delivered and the individual award maximums as set forth in Section 5, the number and type of Common Shares subject to outstanding Awards and the Exercise Price or other price of Common Shares subject to outstanding Awards (provided the number of Common Shares subject to any Award shall always be a whole number), as may be and to the extent determined to be appropriate and equitable by the Committee to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. Such adjustment shall be conclusive and binding for all purposes of the Plan. Any such adjustment of an ISO or SAR shall be made in compliance with Code Sections 422 and 424, and no such adjustment shall be made that would cause any Award which is or becomes subject to Code Section 409A to fail to comply with the requirements of Code Section 409A or is exempt from Code Section 409A to become subject to Code Section 409A.

 

9.           Change in Control

 

Notwithstanding any other provision of the Plan to the contrary, immediately upon the occurrence of a Change in Control, the following provisions of this Section 9 shall apply except to the extent an Award Agreement provides for a different treatment (in which case the Award Agreement shall govern):

 

(a)           all outstanding Stock Options and SARs vest and become fully exercisable; and

 

(b)           all Full-Value Awards (including Performance Shares and Performance Units) become fully vested.

 

10.           Termination

 

(a)           Termination by Death, Disability, or Retirement. Unless otherwise provided in the Participant’s Award Agreement, the vesting of an Award shall be immediately accelerated upon a Participant’s death, Disability, or Retirement; provided that the vesting of Performance Shares and Performance Units in connection with Retirement shall only be accelerated on a pro-rata basis based upon the amount of days that have passed since the Commencement Date and; provided further that for Full-Value Awards intended to qualify for the Performance-Based Exception, in the case of Retirement no vesting may occur or no distribution may be made prior to the attainment of the Performance Goals. Stock Options and SARs may thereafter be exercised for a period of one year following such termination, in the case of death or Disability, and 90 days in the case of Retirement (or such other period as the Committee may specify at or after the time of grant) or until the expiration of the stated term of such Stock Option, whichever period is shorter.

- 11 -  

  

  

 

(b)           Termination for Cause. Unless otherwise provided in the Participant’s Award Agreement, if a Participant’s employment or service terminates for Cause, (i) all Stock Options and SARs (or portions thereof) which have not been exercised, whether vested or not, and (ii) all Full-Value Awards, shall immediately be forfeited upon termination, including such Awards that are subject to performance conditions (or unearned portions thereof).

 

(c)           Other Terminations.

 

(i)           By the Company. Unless otherwise provided in the Participant’s Award Agreement, if a Participant’s employment or service is terminated by the Company for any reason other than Cause, (x) any unvested portion of Stock Options or SARs held by the Participant at the time of termination shall become vested and such Stock Options and SARs may be exercised for a period of three months (or such other period as the Committee may specify at or after the time of grant) from the termination date, or until the expiration of the original term of the Stock Option or SAR, whichever period is shorter; provided that, for Stock Options and SARs intended to qualify for the Performance-Based Exception, no vesting may occur or no distribution may be made prior to the attainment of the Performance Goals and (y) all Full-Value Awards shall become fully-vested upon termination; provided that, the vesting of Performance Shares and Performance Units shall only be accelerated on a pro-rata basis based upon the amount of days that have passed since the Commencement Date and; provided further that, for Full-Value Awards intended to qualify for the Performance-Based Exception, no vesting may occur or no distribution may be made prior to the attainment of the Performance Goals. If a Participant dies during the three month period referred to in clause (x) above, any unexercised Stock Option or SAR held by the Participant or transferred pursuant to the provisions of this Plan, shall be exercisable, to the full extent that such Stock Option was exercisable at the time of death, for a period of one year after the date of death of the Participant or until the expiration of the stated term of such Stock Option, whichever period is shorter.

 

(ii)           By the Participant. Unless otherwise provided in the Participant’s Award Agreement, if a Participant’s employment or service is terminated by the Participant for any reason other than death, Disability or Retirement, (x) any vested portion of Stock Options or SARs held by the Participant at the time of termination may be exercised for a period of three months (or such other period as the Committee may specify at or after the time of grant) from the termination date, or until the expiration of the original term of the Stock Option or SAR, whichever period is shorter, (y) no unvested portion of any Stock Option or SAR shall become vested, including such Awards that are subject to performance conditions (or unearned portions thereof), and (z) all Full-Value Awards, including such Awards that are subject to performance conditions (or unearned portions thereof), shall immediately be forfeited upon termination. If a Participant dies during the three month period referred to in clause (x) above, any unexercised Stock Option or SAR held by the Participant or transferred pursuant to the provisions of this Plan, shall be exercisable, to the full extent that such Stock Option was exercisable at the time of death, for a period of one year after the date of death of the Participant or until the expiration of the stated term of such Stock Option, whichever period is shorter.

 

(d)           Limitation for ISOs. No ISO may be exercised more than three months following termination of employment for any reason (including Retirement) other than death or Disability, nor more than one year following termination of employment for the reason of death or Disability (as defined in Code Section 422), or such Award will no longer qualify as an ISO and shall thereafter be, and receive the tax treatment applicable to, a NQSO. For this purpose, a termination of employment is cessation of employment, under the rules applicable to ISOs, such that no employment relationship exists between the Participant and the Company.

 

(e)           Transfers and Leaves of Absence. The transfer of a Participant within the Company shall not be deemed a termination of employment except as required by Code Sections 422 and 409A, and other applicable laws. The following leaves of absences are not deemed to be a termination of employment:

 

(i)           if approved in writing by the Company, for military service, sickness or any other purpose approved by the Company, and the period of absence does not exceed 90 days;

- 12 -  

  

  

 

(ii)           if in excess of 90 days, if approved in writing by the Company, but only if the Participant’s right to reemployment is guaranteed by statute or contract and provided that the Participant returns to work within 30 days after the end of such absence; and

 

(iii)           subject to the restrictions of Code Section 409A and to the extent that such discretion is permitted by law, if the Committee determines in its discretion that the absence is not a termination of employment.

 

11.           Recoupment or Recovery Policy

 

Any Award shall be subject to forfeiture or repayment pursuant to the terms of any applicable compensation recoupment or recovery policy adopted by the Company, Committee or Board, as thereafter amended, including any policy adopted to comply with the rules of any stock exchange on which the Common Shares are traded or the Securities and Exchange Commission.

 

12.           Miscellaneous Provisions

 

(a)           Rights as a Shareholder. Except as otherwise provided herein, a Participant shall have no rights as a shareholder with respect to Awards hereunder, unless and until the Common Shares have been registered to the Participant as the owner.

 

(b)           No Loans. No loans from the Company to Participants shall be permitted in connection with the Plan.

 

(c)           Assignment or Transfer. Except as otherwise provided under the Plan, no Award or any rights or interests therein shall be transferable other than by will or the laws of descent and distribution. The Committee may, in its discretion, provide that an Award (other than an ISO) is transferable without the payment of any consideration to a Participant’s family member, subject to such terms and conditions as the Committee may impose. For this purpose, “family member” has the meaning given to such term in the General Instructions to the Form S-8 registration statement under the Securities Act. All Awards shall be exercisable, during the Participant’s lifetime, only by the Participant or a person who is a permitted transferee pursuant to this Section 12(c). Once awarded, the Common Shares (other than Restricted Shares) received by Participants may be freely transferred, assigned, pledged or otherwise subjected to lien, subject to the restrictions imposed by the Securities Act, Section 16 of the Exchange Act and the Company’s Insider Trading Policy, each as amended.

 

(d)           Withholding Taxes. The Company shall have the right to deduct from all Awards paid in cash to a Participant any taxes required by law to be withheld with respect to such Awards. All statutory applicable withholding taxes arising with respect to Awards paid in Common Shares to a Participant shall be satisfied by the Company retaining Common Shares having a Fair Market Value on the date the tax is to be determined that is equal to the amount of such statutory applicable withholding tax (rounded, if necessary, to the next lowest whole number of Common Shares); provided, however, that, subject to any restrictions or limitations that the Company deems appropriate, a Participant may elect to satisfy applicable withholding tax through cash or cash proceeds.

 

(e)           No Rights to Awards. Neither the Plan nor any action taken hereunder shall be construed as giving any person any right to be retained in the employ or service of the Company, and the Plan shall not interfere with or limit in any way the right of the Company to terminate any person’s employment or service at any time. Except as set forth herein, no employee or other person shall have any claim or right to be granted an Award under the Plan. By accepting an Award, the Participant acknowledges and agrees that (i) the Award will be exclusively governed by the Plan, including the right of the Company to amend or cancel the Plan at any time without the Company incurring liability to the Participant (except, to the extent the terms of the Award so provide, for Awards already granted under the Plan), (ii) the Participant is not entitled to future award grants under the Plan or any other plan, and (iii) the value of any Awards received shall be excluded from the calculation of termination or other severance payments or benefits.

- 13 -  

  

  

 

(f)           Beneficiary Designation. To the extent allowed by the Committee, each Participant under the Plan may name any beneficiary or beneficiaries to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives all of such benefit. Unless the Committee determines otherwise, each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee and shall be effective only when received in writing by the Company during the Participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

 

(g)           Fractional Shares. Fractional Common Shares shall not be issued or transferred under an Award, but the Committee may direct that cash be paid in lieu of fractional shares or may round off fractional shares, in its discretion.

 

(h)           Unfunded Plan. The Plan shall be unfunded and any benefits under the Plan shall represent an unsecured promise to pay by the Company. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general unsecured creditor of the Company.

 

(i)           Severability. If any provision of the Plan is deemed illegal or invalid, the illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

 

(j)           Limitation of Liability. Members of the Board and the Committee and officers and employees of the Company who are their designees acting under the Plan shall be fully protected in relying in good faith upon the advice of counsel and shall incur no liability except for gross or willful misconduct in the performance of their duties hereunder.

 

(k)           Successors . All obligations of the Company with respect to Awards granted under the Plan shall be binding on any successor to the Company, whether as a result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

 

(l)           Code Section 409A Compliance. Each Award granted under the Plan is intended to be either exempt from or in compliance with the requirements of Code Section 409A and any regulations or guidance that may be adopted thereunder, including any transition relief available under applicable guidance. The Plan may be amended or interpreted by the Committee as it determines appropriate in accordance with Code Section 409A and to avoid a plan failure under Code Section 409A(a)(1). If a Participant is a “specified employee” as defined in Code Section 409A at the time of the Participant’s separation from service with the Company, then solely to the extent necessary to avoid the imposition of any additional tax under Code Section 409A, the commencement of any payments or benefits under an Award shall be deferred until the date that is six months following the Participant’s separation from service (or such other period as required to comply with Code Section 409A).

 

13.           Effective Date, Amendments, Governing Law and Plan Termination

 

(a)           Effective Date. The Effective Date of the Plan is the date on which the Company’s shareholders approve the Plan at a duly held shareholder meeting.

 

(b)           Amendments .

 

(i)           Amendment of the Plan. The Committee or the Board may at any time terminate or amend the Plan in whole or in part, but no such action shall materially and adversely affect any rights or obligations with respect to any Awards granted prior to the date of such termination or amendment without the consent of the affected Participant, except to the extent that the Committee reasonably determines that such termination or amendment is necessary or appropriate to comply with applicable law or the rules and regulations of any stock exchange on

- 14 -  

  

  

which the Common Shares are traded or to preserve any intended favorable, or avoid any unintended unfavorable, tax effects for the Company, Plan or Participants. Notwithstanding the foregoing, unless the Company’s shareholders shall have first approved the amendment, no amendment of the Plan shall be effective if the amendment would: (A) increase the maximum number of Common Shares that may be delivered under the Plan or to any one individual (except to the extent made pursuant to Section 8 hereof), (B) extend the maximum period during which Awards may be granted under the Plan, (C) add to the types of awards that can be made under the Plan, (D) modify the requirements as to eligibility for participation in the Plan, (E) permit a repricing or decrease the Exercise Price to less than the Fair Market Value on the Date of Grant of any Stock Option or SAR, except for adjustments made pursuant to Section 8, (F) materially increase benefits to Participants, or (G) otherwise require shareholder approval pursuant to the Plan or applicable law or the rules of the principal securities exchange on which Common Shares are traded.

 

(ii)           Amendment of Awards. The Committee may amend, prospectively or retroactively, the terms of an Award, provided that no such amendment is inconsistent with the terms of the Plan or would materially and adversely affect the rights of any Participant without his or her written consent.

 

(c)           Governing Law. To the extent not preempted by Federal law, the Plan and all Award Agreements are construed in accordance with and governed by the laws of the State of Ohio. The Plan is not intended to be governed by the Employment Retirement Income Security Act of 1974, and shall be so construed and administered.

 

(d)           Plan Termination. No Awards shall be made under the Plan after the tenth anniversary of the Effective Date.

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- 15 -Exhibit 10.4

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF CERTAIN STATES AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, OFFERED, PLEDGED OR OTHERWISE DISTRIBUTED FOR VALUE UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH
SECURITIES.

WARRANT

TO PURCHASE

SHARES OF COMMON STOCK

OF

DAKOTA PLAINS HOLDINGS, INC.

	shares of Common Stock	          , 20      

 

Dakota Plains Holdings,
Inc., a Nevada corporation (the “Company”), hereby agrees that, for value received,                  (the
“Holder”) or its assigns, is entitled, subject to the terms set forth below, to purchase from the Company
at any time or from time to time on or prior to          , 20 (the “Expiration
Date”), up to          shares of the Company’s common stock,
par value $0.001 per share (the “Shares”), at a purchase price equal to $          
per share.

This Warrant has been issued
to                     as approved
by the Company’s Board of Directors.

1.Exercise of Warrant.

(a) No Vesting.
The rights represented by this Warrant are immediately exercisable.

(b) Cashless Conversion
Option. In lieu of the payment of cash for the exercise of this Warrant, the Holder shall have the right (but not the obligation),
to require the Company to convert this Warrant into Shares on a “cashless basis” as provided for in this Subsection
1(b) (the “Conversion Right”). Upon exercise of the Conversion Right, the Company shall deliver to Holder
(without payment by the Holder of any cash) that number of Shares (the “Conversion Shares”) equal to
the quotient obtained by dividing (x) the value of this Warrant at the time the Conversion Right is exercised (determined by subtracting
the aggregate Warrant exercise price in effect immediately prior to the exercise of the Conversion Right from the aggregate current
market price of all of the Shares immediately prior to the exercise of the Conversion Right) by (y) the current market price of
one (1) share of the Company’s common stock immediately prior to the exercise of the Conversion Right. The current market
price of the Company’s common stock shall be the last sale price on such date as quoted on the principal securities exchange,
market, electronic communication network or other similar system quoting bid, asked and/or sales prices for the Company’s
common stock. If no sale takes place on such day, the current market price of the Company’s common stock shall be the average
of the last reported closing bid and asked prices quoted on such exchange, market, network or system. If there are no last reported
closing bid and asked prices, the current market price shall be the price at which the Company most recently issued shares of its
common stock for consideration of any kind prior to the date of conversion under this Subsection 1(b). Any cashless conversion
of this Warrant is intended to be a recapitalization under Internal Revenue Code §368(a)(1)(E) and Treasury Regulation (Reg.)
1.368-2(e) and a tax-free exchange under Internal Revenue Code 1036.

    	 

    	 

    

 

(c) Exercise Procedures.
The party exercising this Warrant shall deliver hand-written notice of any exercise to the Company (i) at least three (3) days
prior to the intended date of exercise in the case of an exercise for cash and (ii) no later than the close of business on the
intended date of conversion in the case of a conversion of this Warrant under Subsection 1(b) above, and by the surrender of this
Warrant at the principal office of the Company and upon payment (if applicable) to the Company of the purchase price for the Shares.
Certificates for the Shares so purchased, bearing the restrictive legend shall be delivered to the address requested by the Holder
within three (3) days after the rights represented by this Warrant have been so exercised or converted, and, unless this Warrant
has expired, a new Warrant representing the number of Shares, if any, with respect to which this Warrant has not been exercised
or converted shall also be delivered to the Holder within such time. No fractional shares shall be issued upon the exercise or
conversion of this Warrant.

(d) The Company covenants
and agrees that all Shares that may be issued upon the exercise or conversion of the rights represented by this Warrant shall,
upon issuance, be duly authorized and issued, fully paid and non-assessable shares of common stock. The Company further covenants
and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved for the purposes of issue or transfer upon exercise of the rights evidenced by this Warrant
a sufficient number of shares of common stock to provide for the exercise of the rights represented by this Warrant. The Company
may require that such certificate or certificates contain on the face thereof a legend indicating that such shares must be sold
under appropriate federal and state laws.

2.    Adjustment
of Purchase Price, Reorganization, etc. In the event the Company shall at any time hereafter subdivide or combine its outstanding
shares of common stock, or declare a stock dividend, the exercise price and number of Shares into which this Warrant may convert
in effect immediately prior to the subdivision, combination or dividend shall be adjusted to maintain the pro rata amounts
for this Warrant. In the event of any capital reorganization or any reclassification of the shares of common stock of the Company,
or in the case of any consolidation with or merger of the Company into or with another corporation, or the sale of all or a majority
of its assets to another corporation effected in such a manner that the holders of common stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for common stock, then, as a part of such reorganization, reclassification,
consolidation, merger or sale, as the case may be, lawful provision shall be made so that the Holder of the Warrant shall have
the right thereafter to receive, upon the exercise hereof, the kind and amount of stock, securities or assets which the Holder
would have been entitled to receive if, immediately prior to such reorganization, reclassification, consolidation, merger or sale,
the Holder had held the number of Shares which were purchasable upon the exercise of the Warrant. In any such event, an appropriate
adjustment (as determined in good faith by the Board of Directors of the Company) shall be made in the application of the provisions
set forth herein with respect to the rights and interest thereafter of the Holder of the Warrant, such that the provisions set
forth herein (including provisions with respect to adjustments of the exercise price) shall thereafter be applicable, as nearly
as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the exercise of the Warrant.

[3.    Piggyback
Registration Right.

(a) Whenever the Company
proposes to register any shares of its common stock under the Securities Act of 1933, as amended (the “Securities Act”)
(other than a registration effected solely to implement an employee benefit plan or a transaction to which Rule 145 of
the Securities Act is applicable, or a registration statement on Form S-4, S-8 or any successor form thereto or another
form not available for registering the Shares for sale to the public), whether for its own account or for the account of one or
more shareholders of the Company, and the form of registration statement to be used may be used for any registration of
the Shares (a “Piggyback Registration”), the Company shall give prompt written notice to the Holder
of its intention to effect such a registration and, subject to Subsections 3(b) and 3(c) below, shall include in
such registration all Shares with respect to which the Company has received a written request for inclusion from the Holder
promptly after the Company’s notice has been given to the Holder. The Company may postpone or withdraw the filing or the
effectiveness of a Piggyback Registration at any time in its sole discretion.

    	2

    	 

    

 

(b)  If
a Piggyback Registration is initiated as a primary underwritten offering on behalf of the Company and the managing
underwriter advises the Company and the Holder (if the Holder has elected to include Shares in such Piggyback Registration)
in writing that in its opinion the number of shares of common stock proposed to be included in such registration, including
all Shares and all other shares of common stock proposed to be included in such underwritten offering, exceeds the number of shares
of common stock which can be sold in such offering or that the number of shares of common stock proposed to be included in any
such registration would adversely affect the price per share of the common stock to be sold in such offering, the Company
shall include in such registration (i) first, the number of shares of common stock that the Company proposes to sell;
(ii) second, the number of Shares requested to be included therein by the Holder; and (iii) third, the number of shares of common
stock requested to be included therein by holders of common stock other than the Holder, allocated among such holders in such manner
as they may agree.

(c)  If
a Piggyback Registration is initiated as an underwritten offering on behalf of a holder of common stock other than
the Holder, and the managing underwriter advises the Company in writing that in its opinion the number of shares of common stock
proposed to be included in such registration, including all Shares and all other shares of common stock proposed to be included
in such underwritten offering, exceeds the number of shares of common stock which can be sold in such offering or that the number
of shares of common stock proposed to be included in any such registration would adversely affect the price per share
of the common stock to be sold in such offering, the Company shall include in such registration (i) first, the number
of shares of common stock and the number of Shares requested to be included therein by the holder(s) requesting such registration and
by the Holder, allocated pro rata among such holders on the basis of the number of shares of common stock (on a fully diluted,
as converted basis) and the number of Shares, as applicable, owned by the Holder or in such manner as they may otherwise agree;
and (ii) second, the number of shares of common stock requested to be included therein by other holders of common stock, allocated
among such holders in such manner as they may agree.

(d)  If
any Piggyback Registration is initiated as a primary underwritten offering on behalf of the Company, the Company
shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering.]

[4.]    Transferability.
This Warrant and all rights hereunder are nontransferable without the Company’s express written consent, which consent may
not be unreasonably withheld.

[5.]    Voting.
This Warrant shall not entitle the Holder hereof through the use of this Warrant to any voting rights or other rights as a shareholder
of the Company.

    	3

    	 

    

 

[6.]    Reservation
of Common Stock. A number of shares of common stock sufficient to provide for the exercise of this Warrant upon the basis herein
set forth shall at all times be reserved for the exercise thereof.

[7.]    Miscellaneous.
The Company will not by amendment of its Articles of Incorporation or through reorganization, consolidation, merger, dissolution
or sale, or by any other voluntary act or deed, avoid or seek to avoid the observance or performance of any of the conditions to
be observed or performed hereunder by the Company, but will at all times in good faith assist, insofar as it is able, in the carrying
out of all provisions hereof and in the taking of all other action which may be necessary in order to protect the rights of the
Holder hereof.

The representations, warranties
and agreements herein contained shall survive the exercise of this Warrant. All shares of common stock or other securities issued
upon the exercise of the Warrant shall be validly issued, fully paid and non-assessable.

IN WITNESS WHEREOF, this Warrant
has been duly executed by the undersigned, as of the            day of           ,
20    .

 

	 	DAKOTA PLAINS HOLDINGS, INC.
	 	 
	 	 
	 	 
	 	By	 
	 	Its	 

 

 

 

 

 

 

 

 

    	4

    	 

    

 

WARRANT EXERCISE

(To be signed upon exercise of Warrant)

The undersigned, the holder
of the foregoing Warrant, hereby irrevocably elects to exercise the purchase right represented by such Warrant for, and to purchase
thereunder _____________ shares of common stock of Dakota Plains Holdings, Inc., to which such Warrant relates and herewith makes
payment of $____________ therefore in cash or by certified check and requests that the certificate for such share be issued in
the name of, and be delivered to ____________, whose address is set forth below the signature of the undersigned.

	Dated: __________________, 20______	 
	 	(Entity Name)
	 	 
	 	 
	 	(Signature)
	 	 
	 	 
	 	(Print Name)
	 	 
	 	 
	 	(Print Title)
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	(Address)
	 	 
	 	 
	 	(Tax Identification No.)

 

Accepted this _____ day of _________________, 20______

DAKOTA PLAINS HOLDINGS, INC.

	 
	By	 
	Its

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