Document:

Worldstar Energy Inc. - Exhibit 10.6 - Filed by newsfilecorp.com

 

 

SHARE PURCHASE AGREEMENT 

 

by and among 

ONG WAN BING (ALIAS KIE TJHAN), 

WORLDSTAR ENERGY, CORP., 

and 

NATIONAL BASE INVESTMENT LIMITED 

 

 

Dated as of September 6, 2011 

TABLE OF CONTENTS 

	PART
      1 SALE AND PURCHASE OF THE SHARE 	1 
	     SALE
      AND PURCHASE OF THE SHARES 	1 
	     CLOSING 	2 
	 	 
	PART
      2 REPRESENTATIONS AND WARRANTIES OF SELLER 	2 
	     CORPORATE
      STATUS 	2 
	     AUTHORIZATION,
      ETC 	2 
	     TITLE
      TO SHARES 	3 
	     NO
      CONFLICTS, ETC 	3 
	     CONSENTS 	3 
	     SURVIVAL
      OF REPRESENTATIONS AND WARRANTIES OF THE SELLER 	3 
	 	 
	PART
      3 REPRESENTATIONS AND WARRANTIES OF PURCHASER 	3 
	     CORPORATE
      STATUS 	4 
	     AUTHORIZATION,
      ETC 	4
	     NO
      CONFLICTS, ETC 	4 
	     CONSENTS 	4 
	     SURVIVAL
      OF REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 	4 
	 	 
	PART
      4 FURTHER ACTIONS 	4 
	     FURTHER
      ACTIONS 	4 
	 	 
	PART
      5 PUBLICITY 	5 
	     PUBLICITY 	5 
	 	 
	PART
      6 CONDITION PRECEDENT 	5 
	     CONDITION
      TO OBLIGATIONS OF EACH PARTY 	5 
	 	 
	PART
      7 TERMINATION 	5 
	     TERMINATION 	5 
	     EFFECT
      OF TERMINATION 	5 
	 	 
	PART
      8 DEFINITIONS 	6 
	     TERMS
      GENERALLY 	6 
	     CERTAIN
      TERMS 	6 
	 	 
	PART
      9 MISCELLANEOUS 	8 
	     EXPENSES 	8 
	     NOTICES 	8 
	     GOVERNING
      LAW 	9 
	     BINDING
      EFFECT 	9 
	     ASSIGNMENT 	9 
	     AMENDMENT;
      WAIVERS, ETC. 	9 
	     ENTIRE
      AGREEMENT 	9 
	     SEVERABILITY 	9 
	     HEADINGS 	9 
	     COUNTERPARTS 	10 

SHARE PURCHASE AGREEMENT 

This SHARE PURCHASE AGREEMENT (this "Agreement"), dated as of
September 6, 2011, is entered into by and among Ong Wan Bing (alias Kie Tjhan)
(the "Purchaser"), businessman, and Worldstar Energy, Corp. (the "Seller"), a
Nevada corporation. 

W I T N E S S E T H: 

WHEREAS the Seller holds one issued and outstanding ordinary
share (the “Share”) of National Base Investment Limited (“National”), a British
Virgin Islands company and a wholly-owned subsidiary of the Seller, and the
Purchaser has agreed to buy and the Seller has agreed to sell the Share to the
Purchaser, on the terms and conditions and for the consideration described in
this Agreement; NOW, THEREFORE, in consideration of the mutual promises,
covenants, representations and warranties made herein and of the mutual benefits
to be derived herefrom, the parties hereto agree as follows: 

PART 1 

SALE AND PURCHASE OF THE SHARE 

Sale and Purchase of the Shares 

1.1                      
Subject to the terms and conditions hereof, the Seller will sell to the
Purchaser, and the Purchaser will purchase from the Seller, the Share at a price
of $10.00 (the "Purchase Price") payable in immediately available funds
at the Closing in the manner set forth in §1.3, and in consideration of the
Purchaser's agreement in §1.2. 

Indemnification 

1.2                      
The Purchaser will indemnify, defend, and hold harmless the Seller and each of
its successors, assigns, owners, members, managers, employees, representatives,
and other agents and affiliates (collectively, the “Indemnified Affiliates”)
for, from, and against any and all manner of action and actions, causes of
action, claims, demands, debts, reimbursements, accounts, judgments,
liabilities, costs, expenses, and damages (collectively, a “Claim”) whether
presently known or unknown, suspected or unsuspected, or primary or derivative,
to which the Seller or any of its Indemnified Affiliates may become subject
under applicable Law or otherwise, arising out of, directly or indirectly
relating to, or otherwise in connection with National (other than for any Tax
that may be payable by the Seller in connection with the sale and purchase of
the Share contemplated by this Agreement). The Purchaser will promptly pay, and
in no event later than fifteen (15) calendar days after written demand from the
Seller or its Indemnified Affiliates, as applicable, all amounts required to be
paid to or on behalf of the Seller or its Indemnified Affiliates, as applicable,
under this Agreement, for any legal or other expense 

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incurred by the Seller or its Indemnified Affiliates, as
applicable, in connection with investigating or defending any legal actions,
whether or not resulting in any liability, insofar as such legal actions arise
out of or are based upon any Claim. The foregoing indemnification obligation
will apply even if the applicable Claim is caused or alleged to have been caused
in whole or in part by any negligent or improper act or omission of the Seller
or its Indemnified Affiliates, as applicable, but will not apply to the extent
of the amount of any Claim which is attributable to the gross negligence of the
Seller or any of its Indemnified Affiliates. 

Closing 

1.3                
        The closing of the sale and purchase of the Share
  contemplated by §1.1 (the "Closing") shall take place
  on or before September 20, 2011 (the "Closing Date") at
  a location to be agreed upon by the Purchaser and the Seller subject to the
  satisfaction or waiver of the conditions precedent set forth in Part 6 of this
  Agreement. At the Closing: 

(a)          the
Seller will deliver or cause to be delivered to the Purchaser, free and clear of
any Lien, a certificate representing the Share, duly endorsed or accompanied by
a stock power or other instrument of transfer duly executed for transfer to the
Purchaser together with any other documents or actions necessary to accomplish
the foregoing; 

(b)          the
Purchaser will pay to the Seller an amount equal to the Purchase Price by check,
banker’s draft or cash. 

PART 2 

REPRESENTATIONS AND WARRANTIES OF SELLER 

The Seller hereby represents and warrants to the Purchaser as
follows, as of the date hereof and as of the Closing Date: 

Corporate Status 

	2.1 	
      (a)       
       Seller. The Seller is a corporation duly incorporated and
      validly existing under the laws of the State of Nevada, and has full power
      and authority to, conduct its business and to own or lease and to operate
      its properties as and in the places where such business is conducted and
      such properties are owned, leased or operated.

(b)          National.
National is a British Virgin Islands limited liability company, duly organized,
validly existing and in good standing under the laws of British Virgin Islands.
National is a wholly owned Subsidiary of the Seller, and has full power and
authority to, conduct its business and to own or lease and to operate its
properties as and in the places where such business is conducted and such
properties are owned, leased or operated. 

Authorization, etc. 

2.2                      
The Seller has full power, authority and capacity to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the sale and
purchase of the 

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Share contemplated hereby. The execution, delivery and
performance of this Agreement by the Seller, and the consummation of the sale
and purchase of the Share contemplated hereby, have been duly authorized by all
requisite corporate action of the Seller and National. The Seller and National
have duly executed and delivered this Agreement. This Agreement constitutes the
legal, valid and binding obligation of the Seller and National enforceable
against each party in accordance with its terms. 

Title to Share 

2.3                     
 The Seller owns, legally and beneficially, the Share. Upon the delivery of
and payment for the Share at the Closing as provided for in this Agreement, the
Seller will acquire good and valid title to the Share free and clear of any
Lien. 

No Conflicts, etc. 

2.4                      
The execution, delivery and performance of this Agreement by the Seller, and the
consummation of the sale and purchase of the Share contemplated hereby, do not
and will not conflict with, contravene, result in a violation or breach of or
default under (with or without the giving of notice or the lapse of time, or
both), create in any other Person a right or claim of termination or amendment,
or require modification, acceleration or cancellation of, or result in or
require the creation of any Lien (or any obligation to create any Lien) upon any
of the properties or assets of the Seller under (a) any Law applicable to the
Seller or any of its properties or assets, (b) any provision of any of the
Organizational Documents of the Seller, or (c) any Contract, or any other
agreement or instrument to which the Seller is a party or by which its
properties or assets may be bound except, in the case of each of clauses (a),
(b) and (c), as would not reasonably be expected to prevent or materially impair
or delay the ability of the Seller to sell the Share and otherwise fulfill its
obligations under this Agreement. 

Consents 

2.5                      
No Governmental Approvals or other Consents are required to be obtained by the
Seller in connection with the execution and delivery of this Agreement, and the
consummation of the sale and purchase of Share contemplated. 

Survival of Representations and Warranties of the Seller

2.6                      
Each of the representations and warranties of the Seller in this Agreement or in
any schedule, instrument or other document delivered pursuant to this Agreement
shall survive the Closing Date and shall continue in force thereafter. 

PART 3 

REPRESENTATIONS AND WARRANTIES OF PURCHASER 

The Purchaser represents and warrants to the Seller as follows,
as of the date hereof and as of the Closing Date: 

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Corporate Status 

3.1                      
The Purchaser has duly executed and delivered this Agreement. This Agreement
constitutes the legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms. 

No Conflicts, etc. 

3.2                     
 The execution, delivery and performance of this Agreement by the
Purchaser, and the consummation of the sale and purchase of the Share
contemplated hereby, do not and will not conflict with, contravene, result in a
violation or breach of or default under (with or without the giving of notice or
the lapse of time, or both), create in any other Person a right or claim of
termination or amendment, or require modification, acceleration or cancellation
of, or result in or require the creation of any Lien (or any obligation to
create any Lien) upon any of the properties or assets of the Purchaser under (a)
any Law applicable to the Purchaser or any of his properties or assets, or (b)
any Contract, or any other agreement or instrument to which the Purchaser is a
party or by which his properties or assets may be bound except, in the case of
each of clauses (a), and (b), as would not reasonably be expected to prevent or
materially impair or delay the ability of the Purchaser to purchase the Share
and otherwise fulfill his obligations under this Agreement. 

Consents 

3.3                      
No Governmental Approvals or other Consents are required to be obtained by the
Purchaser in connection with the execution and delivery of this Agreement and
the consummation of the sale and purchase of Share contemplated hereby. 

Survival of Representations and Warranties of the Purchaser

3.4                      
Each of the representations and warranties of the Purchaser in this Agreement or
in any schedule, instrument or other document delivered pursuant to this
Agreement shall survive the Closing Date and shall continue in force thereafter.

PART 4 

FURTHER ACTIONS 

Further Actions 

4.1                      
Each Party shall use reasonable efforts to take or cause to be taken all
actions, and to do or cause to be done all other things, necessary, proper or
advisable in order for the such Party to fulfill and perform its obligations in
respect of this Agreement, or otherwise to consummate and make effective the
sale and purchase of the Share contemplated hereby. 

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PART 5 

PUBLICITY 

Publicity 

5.1                     
 The Purchaser acknowledges and agrees that the Seller’s common stock is
registered as a class under section 12(g) of the Exchange Act, and that the
Seller may therefore be required to disclose this Agreement (including, without
limitation, the terms and conditions hereof, and the identity of the Purchaser)
in its public filings with the United States Securities and Exchange Commission
pursuant to section 13(a) of the Exchange Act. 

PART 6 

CONDITION PRECEDENT 

Condition to Obligations of Each Party 

6.1                     
 The obligations of each party to consummate the sale and purchase of the
Share contemplated hereby shall be subject to the condition that consummation of
the sale and purchase of the Share contemplated hereby shall not have been
restrained, enjoined or otherwise prohibited or made illegal by any applicable
Law, including any order, injunction, decree or judgment of any court or other
Governmental Authority in any material respect; and no such Law that would have
such an effect shall have been promulgated, entered, issued or determined by any
court or other Governmental Authority to be applicable to this Agreement. No
action or proceeding shall be pending or threatened by any Governmental
Authority on the Closing Date before any court or other Governmental Authority
to restrain, enjoin or otherwise prevent the consummation of the sale and
purchase of the Share contemplated hereby in any material respect. 

PART 7 

TERMINATION 

Termination 

7.1                     
 This Agreement may be terminated at any time on or prior to the Closing
Date by the Purchaser or the Seller, as the case may be, by written notice to
the other party if the condition precedent to Closing set forth in §6.1 would
not be satisfied as of the Closing Date. 

Effect of Termination 

7.2                      
In the event of the termination of this Agreement pursuant to the provisions of
§7.1, this Agreement shall become void and have no effect, without any liability
to any Person in respect hereof or of the sale and purchase of the Share
contemplated hereby on the part of any party hereto, or any of its directors,
officers, representatives, stockholders or Affiliates, except as 

- 6 - 

specified in §9.1, and except for any liability resulting from
such party's breach of this Agreement prior thereto. 

PART 8 

DEFINITIONS 

Terms Generally 

8.1                     
 The words "hereby," "herein," "hereof,"; "hereunder"; and words of
similar import refer to this Agreement as a whole and not merely to the specific
section, paragraph or clause in which such word appears. All references herein
to Sections shall be deemed references to Sections of this Agreement unless the
context shall otherwise require. The words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation." The
definitions given for terms in this Part 8 and elsewhere in this Agreement shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. Except as otherwise expressly provided
herein, all references to "dollars" or "$" shall be deemed references to the
lawful money of the United States of America. 

Certain Terms 

8.2                      
Whenever used in this Agreement, the following terms shall have the respective
meanings given to them below or in the Sections indicated below: 

Affiliate: of a Person means a Person that directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, the first Person, including but not limited to a
Subsidiary of the first Person, a Person of which the first Person is a
Subsidiary, or another Subsidiary of a Person of which the first Person is also
a Subsidiary. 

Agreement: means this Agreement with all Schedules. 

Business Day: any day that is not a Saturday, Sunday or
other day on which banks are required or authorized by Law to be closed in
Nevada or the Republic of Indonesia. 

Closing Date: as defined in §1.3. 

Closing: as defined in §1.3. 

Consent: any consent, approval, authorization, waiver,
permit, grant, franchise, concession, agreement, license, certificate,
exemption, order, registration, declaration, filing, report or notice of, with
or to any Person. 

Contract: all loan agreements, indentures, letters of
credit (including related letter of credit applications and reimbursement
obligations), mortgages, security agreements, pledge agreements, deeds of trust,
bonds, notes, guarantees, surety obligations, warranties, licenses, 

- 7 - 

franchises, permits, powers of attorney, purchase orders,
leases, and other agreements, contracts, instruments, obligations, offers,
commitments, arrangements and understandings, written or oral. Control
(including the terms “controlled by” and “under common control with”): means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the ownership
of voting securities, by contract or credit arrangement, as trustee or executor,
or otherwise. 

Governmental Approval: any Consent of, with or to any
Governmental Authority. 

Governmental Authority: any nation or government, any
state or other political subdivision thereof; any entity, authority or body
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including, without limitation, any
government authority, agency, department, board, commission or instrumentality
of any nation or any political subdivision thereof; any court, tribunal or
arbitrator; and any self-regulatory organization. 

Law: all applicable provisions of all (a) constitutions,
treaties, statutes, laws, codes, rules, regulations, ordinances or orders of any
Governmental Authority, (b) Governmental Approvals and (c) orders, decisions,
injunctions, judgments, awards and decrees of or agreements with any
Governmental Authority. 

Lien: any mortgage, pledge, deed of trust,
hypothecation, right of others, claim, security interest, encumbrance, burden,
title defect, title retention agreement, lease, sublease, license, occupancy
agreement, easement, covenant, condition, encroachment, voting trust agreement,
interest, option, right of first offer, negotiation or refusal, proxy, lien,
charge or other restrictions or limitations of any nature whatsoever, including
but not limited to such Liens as may arise under any Contract. 

National Base: means National Base Investment Limited.

Organizational Documents: as to any Person, its
certificate or articles of incorporation, bylaws and other organizational
documents. 

Person: any natural person, firm, partnership,
association, corporation, company, trust, business trust, Governmental Authority
or other entity. 

Purchase Price: as defined in §1.1. 

Share: as defined in the recitals of this Agreement.

Subsidiaries: each corporation or other Person in which
a Person owns or controls, directly or indirectly, share capital or other equity
interests representing more than 50% of the outstanding voting stock or other
equity interests. 

Tax: any federal, state, local or foreign income,
alternative, minimum, accumulated earnings, personal holding company, franchise,
share capital, profits, windfall profits, gross receipts, sales, use, value
added, transfer, registration, stamp, premium, excise, customs duties,
severance, 

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environmental, real property, personal property, ad valorem,
occupancy, license, occupation, employment, payroll, social security,
disability, unemployment, workers&rsquo; compensation, withholding,
estimated or other similar tax, duty, fee, assessment or other governmental
charge or deficiencies thereof (including all interest and penalties thereon and
additions thereto).

PART 9 

MISCELLANEOUS 

Expenses 

9.1                      Except
as set forth in this §9.1 or as otherwise specifically provided for in this
Agreement, each of the Purchaser and the Seller shall bear their respective
expenses, costs and fees (including attorneys’ fees) in connection with the sale
and purchase of the Share contemplated hereby, including the preparation,
execution and delivery of this Agreement and compliance herewith, whether or not
the sale and purchase of the Share contemplated hereby shall be consummated;
provided that for the avoidance of doubt, any Tax associated with the transfer
of the Share contemplated hereby shall be borne solely by the Seller. 

Notices 

9.2                      All
notices, requests, demands, waivers and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally, sent by next-day or
overnight mail or delivery, or sent by email, as follows: 

	 	(i) 	
      if to the Seller,

	 	 	 
	 		
      Rm 803, 8/F, Jubilee Centre 
No. 42 Gloucester Road
      
Wanchai, Hong Kong, China

	 	 	 
	 		
      Attention: Rudijanto Azali, President and CEO

	 	 	 
	 		
      Email: rudiazali@gmail.com

	 	 	 
	 	(ii) 	
      if to the Purchaser,

	 	 	 
	 		
      No. 33 Jln

	 		
      Usj 20/18 Subang Jaya 
Selangor, Indonesia

	 	 	 
	 		
      Email:

(or, in each case, at such other address as may be specified in
writing to the other parties hereto in accordance with this §9.2. ) 

- 9 - 

All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (i) if by personal delivery
on the day after such delivery, (ii) if by next-day or overnight mail or
delivery, on the day delivered, (iii) if by facsimile, on the next day following
the day on which such facsimile was sent, provided that a copy is also sent by
another method described herein. 

Governing Law 

9.3                    
This Agreement shall be governed in all respects, including as to validity,
interpretation and effect, by the laws of the State of Nevada. 

Binding Effect 

9.4                    
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, successors and permitted assigns. 

Assignment 

9.5                    
This Agreement shall not be assignable or otherwise transferable by any party
hereto without the prior written consent of the other parties hereto, and any
purported assignment or other transfer without such consent shall be void and
unenforceable. 

Amendment; Waivers, etc. 

9.6                    
No amendment, modification or discharge of this Agreement, and no waiver
hereunder, shall be valid or binding unless set forth in writing and duly
executed by the party against whom enforcement of the amendment, modification,
discharge or waiver is sought.

Entire Agreement 

9.7                    
This Agreement constitutes the entire agreement and supersede all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof. 

Severability 

9.8                    
If any provision, including any phrase, sentence, clause, section or subsection,
of this Agreement is invalid, inoperative or unenforceable for any reason, such
circumstances shall not have the effect of rendering such provision in question
invalid, inoperative or unenforceable in any other case or circumstance, or of
rendering any other provision herein contained invalid, inoperative, or
unenforceable to any extent whatsoever. 

Headings 

9.9                    
The headings contained in this Agreement are for purposes of convenience only
and shall not affect the meaning or interpretation of this Agreement. 

- 10 - 

Counterparts 

9.10                    This
Agreement may be executed in several counterparts, each of which shall be deemed
an original and all of which shall together constitute one and the same
instrument. 

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

	Signed, Sealed and Delivered by Mr. Ong 	) 	 
	Wan Bing (alias Kie Tjhan) in the presence 	) 	 
	of: 	) 	 
	  	) 	
	  	) 	"signed by Ong Wan Bing" 
	Witness (Signature) 	) 	ONG WAN BING
  
	  	) 	(ALIAS KIE
      TJHAN) 
		) 	 
	Name (please print) 	) 	 
	  	) 	 
	 	)	 
	Address 	) 	 
	  	) 	 
	 	)	 
	City, State/Province 	  	 
	  	  	 
	  	  	 
	Country 	  	 

 

 

WORLDSTAR ENERGY CORP. 

	By: 	"signed by Rudi Azali" 	 
	  	Name:    Rudijanto
      Azali 	 
	  	Title:      President and Chief
      Executive Officerex107_2011plan.htm

 

The Common Stock Purchase Options represented by this Certificate have not been registered under the Securities Act of 1933, as amended, and may not be transferred in the absence of a registration statement covering said Options or an opinion of counsel satisfactory to the Company that such registration is not required.

HIGHLAND BUSINESS SERVICES, INC.

2011 STOCK INCENTIVE PLAN

This 2011 STOCK INCENTIVE PLAN (the "Plan") is hereby established by Highland Business Services, Inc. May 6, 2011 (the "Effective Date").

ARTICLE 1.

PURPOSES OF THE PLAN

1.1           Purposes. The purposes of the Plan are (a) to enhance the Company's ability to attract and retain the services of qualified employees, officers and directors (including non-employee officers and directors), and consultants and other service providers upon whose judgment, initiative and efforts the successful conduct and development of the Company's business largely depends, and (b) to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment of the Company, by providing them an opportunity to participate in the ownership of the Company and thereby have an interest in the success and increased value of the Company.

ARTICLE 2.

DEFINITIONS

For purposes of this Plan, the following terms shall have the meanings indicated:

2.1           Administrator. "Administrator" means the Board or, if the Board delegates responsibility for any matter to the Committee, the term Administrator shall mean the Committee.

2.2           Affiliated Company. "Affiliated Company" means any "parent corporation" or "subsidiary corporation" of the Company, whether now existing or hereafter created or acquired, as those terms are defined in Sections 424(e) and 424(1) of the Code, respectively.

2.3           Board. "Board" means the Board of Directors of the Company.

2.4           Change in Control. "Change in Control" shall mean:

(a) The acquisition, directly or indirectly, in one transaction or a series of related transactions, by any person or group (within the meaning of Section 13(d)(3) of the Exchange Act) of the beneficial ownership of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of all outstanding securities of the Company;

  

1

  

 

 

(b) A merger or consolidation in which the Company is not the surviving entity, except for a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such merger or consolidation hold as a result of holding Company securities prior to such transaction, in the aggregate, securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the surviving entity (or the parent of the surviving entity) immediately after such merger or consolidation;

(c) A reverse merger in which the Company is the surviving entity but in which the holders of the outstanding voting securities of the Company immediately prior to such merger hold, in the aggregate, securities possessing less than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the Company or of the acquiring entity immediately after such merger;

(d) The sale, transfer or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company, except for a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such transaction(s) receive as a distribution with respect to securities of the Company, in the aggregate, securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the acquiring entity immediately after such transaction(s); or

(e) The approval by the shareholders of a plan or proposal for the liquidation or dissolution of the Company.

2.5           Code. "Code" means the Internal Revenue Code of 1986, as amended from time to time.

2.6           Committee. "Committee" means a committee of two or more members of the Board appointed to administer the Plan, as set forth in Section 7.1 hereof.

2.7           Common Stock. "Common Stock" means the Common Stock of the Company, subject to adjustment pursuant to Section 4.2 hereof.

2.8           Consultant. "Consultant" means any consultant or advisor if: (i) the consultant or advisor renders bona fide services to the Company or any Affiliated Company; (ii) the services rendered by the consultant or advisor are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company's securities; and (iii) the consultant or advisor is a natural person who has contracted directly with the Company or any Affiliated Company to render such services.

2.9           Covered Employee. "Covered Employee" means the chief executive officer of the Company (or the individual acting in such capacity) and the four (4) other individuals that are the highest compensated officers of the Company for the relevant taxable year for whom total compensation is required to be reported to shareholders under the Exchange Act.

2.10           Disability. "Disability" means permanent and total disability as defined in Section 22(e)(3) of the Code. The Administrator's determination of a Disability or the absence thereof shall be conclusive and binding on all interested parties.

  

2

  

 

 

2.11           Effective Date. "Effective Date" means the date on which the Plan is adopted by the Board, as set forth on the first page hereof.

2.12           Exchange Act. "Exchange Act" means the Securities and Exchange Act of 1934, as amended.

2.13           Exercise Price. "Exercise Price" means the purchase price per share of Common Stock payable upon exercise of an Option.

2.14           Fair Market Value. "Fair Market Value" on any given date means the value of one share of Common Stock, determined as follows:

(a) If the Common Stock is then listed or admitted to trading on a Nasdaq or NYSE market system or a stock exchange which reports closing sale prices, the Fair Market Value shall be the closing sale price on the date of grant on such market system or principal stock exchange on which the Common Stock is then listed or admitted to trading or, if no closing sale price is quoted on such day, then the Fair Market Value shall be the closing sale price of the Common Stock on such Nasdaq or NYSE market system or such exchange on the next preceding day for which a closing sale price is reported.

(b) If the Common Stock is not then listed or admitted to trading on a Nasdaq or NYSE market system or a stock exchange which reports closing sale prices, the Fair Market Value shall be the closing market prices of the Common Stock in the over-the-counter market on the date of grant.

(c) If neither (a) nor (b) is applicable as of the date of valuation, then the Fair Market Value shall be determined by the Administrator in good faith using any reasonable method of evaluation, which determination shall be conclusive and binding on all interested parties.

2.15           Incentive Option. "Incentive Option" means any Option designated and qualified as an "incentive stock option" as defined in Section 422 of the Code.

2.16           Incentive Option Agreement. "Incentive Option Agreement" means an Option Agreement with respect to an Incentive Option.

2.17           FINRA Dealer. "FINRA Dealer" means a broker-dealer that is a member of the Financial Industry Regulatory Authority, Inc.

2.18           Nonqualified Option. "Nonqualified Option" means any Option that is not an Incentive Option. To the extent that any Option designated as an Incentive Option fails in whole or in part to qualify as an Incentive Option, including, without limitation, for failure to meet the limitations applicable to a 10% Shareholder or because it exceeds the annual limit provided for in Section 5.6 below, it shall to that extent constitute a Nonqualified Option.

2.19           Nonqualified Option Agreement. "Nonqualified Option Agreement" means an Option Agreement with respect to a Nonqualified Option.

  

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2.20           Option. "Option" means any option to purchase Common Stock granted pursuant to the Plan.

2.21           Option Agreement. "Option Agreement" means the written agreement entered into between the Company and the Optionee with respect to an Option granted under the Plan.

2.22           Optionee. "Optionee" means a Participant who holds an Option.

2.23           Participant. "Participant" means an individual or entity who holds an Option or Restricted Stock under the Plan.

2.24           Purchase Price. "Purchase Price" means the purchase price per share of Restricted Stock.

2.25           Restricted Stock. "Restricted Stock" means shares of Common Stock issued pursuant to Article 6 hereof, subject to any restrictions and conditions as are established pursuant to such Article 6.

2.26           Service Provider. "Service Provider" means a Consultant or other natural person the Administrator authorizes to become a Participant in the Plan and who provides services to (i) the Company, (ii) an Affiliated Company, or (iii) any other business venture designated by the Administrator in which the Company (or any entity that is a successor to the Company) or an Affiliated Company has a significant ownership interest.

2.27           Stock Purchase Agreement. "Stock Purchase Agreement" means the written agreement entered into between the Company and a Participant with respect to the purchase of Restricted Stock under the Plan.

2.28           10% Shareholder. "10% Shareholder" means a person who, as of a relevant date, owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of an Affiliated Company.

ARTICLE 3.

ELIGIBILITY

3.1           Incentive Options. Only employees of the Company or of an Affiliated Company (including officers of the Company and members of the Board if they are employees of the Company or of an Affiliated Company) are eligible to receive Incentive Options under the Plan.

3.2           Nonqualified Options and Restricted Stock. Employees of the Company or of an Affiliated Company, officers of the Company and members of the Board (whether or not employed by the Company or an Affiliated Company), and Service Providers are eligible to receive Nonqualified Options or acquire Restricted Stock under the Plan.

  

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3.3           Section 162(m) Limitation. Subject to the provisions of Section 4.2, no employee of the Company or of an Affiliated Company shall be eligible to be granted Options covering more than 2,000,000 shares of Common Stock during any calendar year.

ARTICLE 4.

PLAN SHARES

4.1           Shares Subject to the Plan. A total of 10,000,000 shares of Common Stock may be issued under the Plan, subject to adjustment as to the number and kind of shares pursuant to Section 4.2 hereof. Of this total, 10,000,000 shares are available for issuance pursuant to Incentive Options. For purposes of this Section 4.1, in the event that (a) all or any portion of any Option or Restricted Stock granted or offered under the Plan can no longer under any circumstances be exercised or otherwise become vested, or (b) any shares of Common Stock are reacquired by the Company which were initially the subject of an Incentive Option Agreement, Nonqualified Option Agreement or Stock Purchase Agreement, the shares of Common Stock allocable to the unexercised portion of such Option or such Stock Purchase Agreement, or the shares so reacquired, shall again be available for grant or issuance under the Plan.

4.2           Changes in Capital Structure. In the event that the outstanding shares of Common Stock are hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of a recapitalization, stock split, reverse stock split, combination of shares, reclassification, stock dividend, or other similar change in the capital structure of the Company, then appropriate adjustments shall be made by the Administrator to the aggregate number and kind of shares subject to this Plan, the number and kind of shares and the price per share subject to outstanding Option Agreements and Stock Purchase Agreements and the limit on the number of shares under Section 3.3, all in order to preserve, as nearly as practical, but not to increase, the benefits to Participants.

ARTICLE 5.

OPTIONS

5.1           Option Agreement. Each Option granted pursuant to this Plan shall be evidenced by an Option Agreement that shall specify the number of shares subject thereto, the Exercise Price per share, and whether the Option is an Incentive Option or Nonqualified Option. As soon as is practical following the grant of an Option, an Option Agreement shall be duly executed and delivered by or on behalf of the Company to the Optionee to whom such Option was granted. Each Option Agreement shall be in such form and contain such additional terms and conditions, not inconsistent with the provisions of this Plan, as the Administrator shall, from time to time, deem desirable, including, without limitation, the imposition of any rights of first refusal and resale obligations upon any shares of Common Stock acquired pursuant to an Option Agreement. Each Option Agreement may be different from each other Option Agreement.

  

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5.2           Exercise Price. The Exercise Price per share of Common Stock covered by each Option shall be determined by the Administrator, subject to the following: (a) the Exercise Price of an Incentive Option shall not be less than 100% of Fair Market Value on the date the Incentive Option is granted, (b) the Exercise Price of a Nonqualified Option shall not be less than 100% of Fair Market Value on the date the Nonqualified Option is granted, and (c) if the person to whom an Option is granted is a 10% Shareholder on the date of grant, the Exercise Price shall not be less than 110% of Fair Market Value on the date the Option is granted. However, an Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424 of the Code.

5.3           Payment of Exercise Price. Payment of the Exercise Price shall be made upon exercise of an Option and may be made, in the discretion of the Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c) the surrender of shares of Common Stock held by the Optionee (provided that shares acquired pursuant to the exercise of options granted by the Company must have been held by the Optionee for the requisite period necessary to avoid a charge to the Company's earnings for financial reporting purposes), which surrendered shares shall be valued at Fair Market Value as of the date of such exercise; (d) the Optionee's promissory note in a form and on terms acceptable to the Administrator; (e) the cancellation of indebtedness of the Company to the Optionee; (f) the waiver of compensation due or accrued to the Optionee for services rendered; (g) provided that a public market for the Common Stock exists, a "same day sale" commitment from the Optionee and an FINRA Dealer whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the shares so purchased to pay for the Exercise Price and whereby the FINRA Dealer irrevocably commits upon receipt of such shares to forward the Exercise Price directly to the Company; (h) provided that a public market for the Common Stock exists, a "margin" commitment from the Optionee and an FINRA Dealer whereby the Optionee irrevocably elects to exercise the Option and to pledge the shares so purchased to the FINRA Dealer in a margin account as security for a loan from the FINRA Dealer in the amount of the Exercise Price, and whereby the FINRA Dealer irrevocably commits upon receipt of such shares to forward the Exercise Price directly to the Company; or (i) any combination of the foregoing methods of payment or any other consideration or method of payment as shall be permitted by applicable law.

5.4           Term and Termination of Options. The term and provisions for termination of each Option shall be as fixed by the Administrator, but no Option may be exercisable more than ten (10) years after the date it is granted. An Incentive Option granted to a person who is a 10% Shareholder on the date of grant shall not be exercisable more than five (5) years after the date it is granted.

  

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5.5           Vesting and Exercise of Options. Each Option shall vest and become exercisable in one or more installments at such time or times and subject to such conditions, including without limitation the achievement of specified performance goals or objectives, as shall be determined by the Administrator. An Option granted to an employee who is not an officer, a director or Consultant of the Company must vest at a rate of at least 20% per year over a period of five years from the date of grant, subject to reasonable conditions such as continued employment. Notwithstanding the foregoing, to the extent required by applicable law, each Option shall provide that the Optionee shall have the right to exercise the vested portion of any Option held at termination for at least 30 days following termination for any reason other than "Cause" as defined in any Option Agreement, and that the Optionee shall have the right to exercise the Option for at least six months if such termination was due to the death or Disability of the Optionee.

5.6           Annual Limit on Incentive Options. To the extent required for "incentive stock option" treatment under Section 422 of the IRS Code, the aggregate Fair Market Value (determined as of the time of grant) of the Common Stock with respect to which Incentive Options granted under this Plan and any other plan of the Company or any Affiliated Company become exercisable for the first time by an Optionee during any calendar year shall not exceed $100,000.

5.7           Nontransferability of Options. Except as otherwise provided by the Administrator in an Option Agreement and as permissible under applicable law, no Option shall be assignable or transferable except by will or the laws of descent and distribution, and during the life of the Optionee shall be exercisable only by such Optionee.

5.8           Rights as Shareholder. An Optionee or permitted transferee of an Option shall have no rights or privileges as a shareholder with respect to any shares covered by an Option until such Option has been duly exercised and certificates representing shares purchased upon such exercise have been issued to such person.

ARTICLE 6.

RESTRICTED STOCK

6.1           Issuance and Sale of Restricted Stock. The Administrator shall have the right to issue shares of Common Stock subject to such terms, restrictions and conditions as the Administrator may determine at the time of grant ("Restricted Stock"). Such conditions may include, but are not limited to, continued employment or the achievement of specified performance goals or objectives. The Purchase Price of Restricted Stock shall be determined by the Administrator, provided that (a) the Purchase Price shall not be less than 100% of Fair Market Value of the stock on the date the Restricted Stock is granted or at the time the purchase is consummated, or (b) if the person to whom a right to purchase Restricted Stock is granted is a 10% Shareholder on the date of grant, the Purchase Price shall not be less than 100% of Fair Market Value of the stock on the date the Restricted Stock is granted or at the time the purchase is consummated.

  

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6.2           Restricted Stock Purchase Agreements. A Participant shall have no rights with respect to the shares of Restricted Stock covered by a Stock Purchase Agreement until the Participant has paid the full Purchase Price to the Company in the manner set forth in Section 6.3 hereof and has executed and delivered to the Company the Stock Purchase Agreement. Each Stock Purchase Agreement shall be in such form, and shall set forth the Purchase Price and such other terms, conditions and restrictions of the Restricted Stock, not inconsistent with the provisions of this Plan, as the Administrator shall, from time to time, deem desirable. Each Stock Purchase Agreement may be different from each other Stock Purchase Agreement.

6.3           Payment of Purchase Price. Subject to any legal restrictions, payment of the Purchase Price may be made, in the discretion of the Administrator, by: (a) cash; (b) check; (c) the surrender of shares of Common Stock owned by the Participant that have been held by the Participant for the requisite period necessary to avoid a charge to the Company's earnings for financial reporting purposes, which surrendered shares shall be valued at Fair Market Value as of the date of such acceptance; (d) the Participant's promissory note in a form and on terms acceptable to the Administrator; (e) the cancellation of indebtedness of the Company to the Participant; (f) the waiver of compensation due or accrued to the Participant for services rendered; or (g) any combination of the foregoing methods of payment or any other consideration or method of payment as shall be permitted by applicable corporate law.

6.4           Rights as a Shareholder. Upon complying with the provisions of Section 6.2 hereof, a Participant shall have the rights of a shareholder with respect to the Restricted Stock purchased pursuant to a Stock Purchase Agreement, including voting and dividend rights, subject to the terms, restrictions and conditions as are set forth in such Stock Purchase Agreement. Unless the Administrator shall determine otherwise, certificates evidencing shares of Restricted Stock shall remain in the possession of the Company until such shares have vested in accordance with the terms of the Stock Purchase Agreement.

6.5           Restrictions. Shares of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided in the Stock Purchase Agreement. In the event of termination of a Participant's employment, service as a director of the Company or Service Provider status for any reason whatsoever (including death or disability), the Stock Purchase Agreement may provide, in the discretion of the Administrator, that the Company shall have the right, exercisable at the discretion of the Administrator, to repurchase (i) at the original Purchase Price, any shares of Restricted Stock which have not vested as of the date of termination (provided that the right to repurchase at the original Purchase Price shall lapse at the rate of at least 20% per year over five (5) years from the date of the Stock Purchase Agreement for Participants other than directors, officers and Consultants of the Company), and (ii) at Fair Market Value, any shares of Restricted Stock which have vested as of such date, on such terms as may be provided in the Stock Purchase Agreement.

In any event, the right to repurchase must be exercised within sixty (60) days of the termination of Participant's Continuous Service, and may be paid by the Company or its assignee by cash, check, or cancellation of indebtedness within thirty (30) days of the expiration of the right to exercise.

  

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6.6           Vesting of Restricted Stock. Subject to Section 6.5 above, the Stock Purchase Agreement shall specify the date or dates, the performance goals or objectives which must be achieved, and any other conditions on which the Restricted Stock may vest.

6.7           Dividends. If payment for shares of Restricted Stock is made by promissory note, any cash dividends paid with respect to the Restricted Stock may be applied, in the discretion of the Administrator, to repayment of such note.

ARTICLE 7.

ADMINISTRATION OF THE PLAN

7.1           Administrator. Authority to control and manage the operation and administration of the Plan shall be vested in the Board, which may delegate such responsibilities in whole or in part to a committee consisting of two (2) or more members of the Board (the "Committee"). Members of the Committee may be appointed from time to time by, and shall serve at the pleasure of, the Board. The Board may limit the composition of the Committee to those persons necessary to comply with the requirements of Section 162(m) of the Code and Section 16 of the Exchange Act. As used herein, the term "Administrator" means the Board or, with respect to any matter as to which responsibility has been delegated to the Committee, the term Administrator shall mean the Committee.

7.2           Powers of the Administrator. In addition to any other powers or authority conferred upon the Administrator elsewhere in the Plan or by law, the Administrator shall have full power and authority: (a) to determine the persons to whom, and the time or times at which, Incentive Options or Nonqualified Options or rights to purchase Restricted Stock shall be granted, the number of shares to be represented by each Option and the number of shares of Restricted Stock to be offered, and the consideration to be received by the Company upon the exercise of such Options or sale of such Restricted Stock; (b) to interpret the Plan; (c) to create, amend or rescind rules and regulations relating to the Plan; (d) to determine the terms, conditions and restrictions contained in, and the form of; Option Agreements and Stock Purchase Agreements; (e) to determine the identity or capacity of any persons who may be entitled to exercise a Participant's rights under any Option or Stock Purchase Agreement under the Plan; (f) to correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Option Agreement or Stock Purchase Agreement; (g) to accelerate the vesting of any Option or release or waive any repurchase rights of the Company with respect to Restricted Stock; (h) to extend the exercise date of any Option or acceptance date of any Restricted Stock; (i) to provide for rights of first refusal and/or repurchase rights in any Option Agreement or Stock Purchase Agreement; (t) to amend outstanding Option Agreements and Stock Purchase Agreements to provide for, among other things, any change or modification which the Administrator could have included in the original Agreement or in furtherance of the powers provided for herein; and (k) to make all other determinations necessary or advisable for the administration of the Plan, but only to the extent not contrary to the express provisions of the Plan. Any action, decision, interpretation or determination made in good faith by the Administrator in the exercise of its authority conferred upon it under the Plan shall be final and binding on the Company and all Participants.

  

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7.3           Limitation on Liability. No employee of the Company or member of the Board or Committee shall be subject to any liability with respect to duties under the Plan unless the person acts fraudulently or in bad faith. To the extent permitted by law, the Company shall indemnify each member of the Board or Committee, and any employee of the Company with duties under the Plan, who was or is a party, or is threatened to be made a party, to any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, by reason of such person's conduct in the performance of duties under the Plan.

ARTICLE 8.

CHANGE IN CONTROL

8.1           Change in Control. In order to preserve a Participant's rights in the event of a Change in Control of the Company:

(a) The Administrator shall have the discretion to provide in each Option Agreement or Stock Purchase Agreement the terms and conditions that relate to (i) vesting of such Option or Restricted Stock in the event of a Change in Control, and (ii) assumption of such Options or Stock Purchase Agreements or issuance of comparable securities under an incentive program in the event of a Change in Control. The aforementioned terms and conditions may vary in each Option Agreement and Stock Purchase Agreement.

(b) If the terms of an outstanding Option Agreement provide for accelerated vesting in the event of a Change in Control, or to the extent that an Option is vested and not yet exercised, the Administrator in its discretion may provide, in connection with the Change in Control transaction, for the purchase or exchange of each Option for an amount of cash or other property having a value equal to the difference (or "spread") between: (x) the value of the cash or other property that the Participant would have received pursuant to the Change in Control transaction in exchange for the shares issuable upon exercise of the Option had the Option been exercised immediately prior to the Change in Control, and (y) the Exercise Price of the Option.

(c) Outstanding Options shall terminate and cease to be exercisable upon consummation of a Change in Control except to the extent that the Options are assumed by the successor entity (or parent thereof) pursuant to the terms of the Change in Control transaction.

(d) The Administrator shall cause written notice of a proposed Change in Control transaction to be given to Participants not less than fifteen (15) days prior to the anticipated effective date of the proposed transaction.

  

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ARTICLE 9.

AMENDMENT AND TERMINATION OF PLAN

9.1           Amendments. The Board may from time to time alter, amend, suspend or terminate the Plan in such respects as the Board may deem advisable. No such alteration, amendment, suspension or termination shall be made which shall substantially affect or impair the rights of any Participant under an outstanding Option Agreement or Stock Purchase Agreement without such Participant's consent. The Board may alter or amend the Plan to comply with requirements under the Code relating to Incentive Options or other types of options which give Optionees more favorable tax treatment than that applicable to Options granted under this Plan as of the date of its adoption. Upon any such alteration or amendment, any outstanding Option granted hereunder may, if the Administrator so determines and if permitted by applicable law, be subject to the more favorable tax treatment afforded to an Optionee pursuant to such terms and conditions.

9.2           Plan Termination. Unless the Plan shall theretofore have been terminated, the Plan shall terminate on the tenth (10th) anniversary of the Effective Date and no Options or Restricted Stock may be granted under the Plan thereafter, but Option Agreements and Stock Purchase Agreements then outstanding shall continue in effect in accordance with their respective terms.

ARTICLE 10.

TAX WITHHOLDING

10.1           Withholding. The Company shall have the power to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any applicable Federal, state, and local tax withholding requirements with respect to any Options exercised or Restricted Stock issued under the Plan. To the extent permissible under applicable tax, securities and other laws, the Administrator may, in its sole discretion and upon such terms and conditions as it may deem appropriate, permit a Participant to satisfy his or her obligation to pay any such tax, in whole or in part, up to an amount determined on the basis of the highest marginal tax rate applicable to such Participant, by (a) directing the Company to apply shares of Common Stock to which the Participant is entitled as a result of the exercise of an Option or as a result of the purchase of or lapse of restrictions on Restricted Stock or (b) delivering to the Company shares of Common Stock owned by the Participant. The shares of Common Stock so applied or delivered in satisfaction of the Participant's tax withholding obligation shall be valued at their Fair Market Value as of the date of measurement of the amount of income subject to withholding.

ARTICLE 11.

MISCELLANEOUS

11.1           Benefits Not Alienable. Other than as provided above, benefits under the Plan may not be assigned or alienated, whether voluntarily or involuntarily. Any unauthorized attempt at assignment, transfer, pledge or other disposition shall be without effect.

  

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11.2           No Enlargement of Employee Rights. This Plan is strictly a voluntary undertaking on the part of the Company and shall not be deemed to constitute a contract between the Company and any Participant to be consideration for, or an inducement to, or a condition of, the employment of any Participant. Nothing contained in the Plan shall be deemed to give the right to any Participant to be retained as an employee of the Company or any Affiliated Company or to limit the right of the Company or any Affiliated Company to discharge any Participant at any time.

11.3           Application of Funds. The proceeds received by the Company from the sale of Common Stock pursuant to Option Agreements and Stock Purchase Agreements, except as otherwise provided herein, will be used for general corporate purposes.

11.4           Shareholder Approval. The Company shall obtain shareholder approval of the Plan within twelve (12) months before or after the adoption of the Plan by the Board of Directors.

  

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