Document:

Exhibit 10.33 Amended and Restated Employment Agreement with Andrew Dahl, dated as of November 29, 2019

 

Exhibit 10.33

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of November 15, 2019 (the “Effective Date”), by and between ZIVO Bioscience Inc., a Nevada corporation (the “Company”), and Andrew A. Dahl (“Employee”).

Recitals:

 

A. The Company desires to employ Employee as its President and Chief Executive Officer and desires to enter into an agreement with Employee setting forth the terms of that relationship and Employee desires to accept such employment with the Company on the terms and conditions set forth below. 

 

B. Employee is in possession of and may come into possession of, or have access to, Confidential Information (defined below) with respect to the Business (defined below). 

 

C. The Company and Employee are parties to an Amended and Restated Employment Agreement dated as of August 11, 2016 (the “Prior Agreement”). 

 

Agreements:

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree that the Prior Agreement is hereby amended and restated to read in its entirety as follows:

 

1. Term. Subject to the termination provisions set forth in Section 10 below, Employee shall be employed by the Company under this Agreement beginning on the Effective Date and continuing thereafter for a period of three years (3) years (the “Initial Term”); provided, however, that following the Initial Term, the term of this Agreement shall be automatically extended for successive terms of one (1) year each (each a “Renewal Term”), unless either party notifies the other party in writing of its desire to terminate this Agreement at least sixty (60) days before the end of the Initial Term or a Renewal Term then in effect. Collectively, the Initial Term and any subsequent Renewal Term(s) (or any portion thereof) shall be referred to herein as the “Employment Term.” 

 

2. Employment. Throughout the Employment Term, Employee shall serve as President & Chief Executive Officer of the Company and shall diligently perform all such services, acts and things as are customarily done and performed by individuals holding such offices of companies in similar businesses and in similar size to the Company, together with such other duties as may reasonably be requested from time to time by the Board of Directors of the Company or its designee (the “Board”). Employee shall periodically and regularly report to the Board. As of the date hereof, Employee is employed through Sequoia Trusted Advisors, Inc., a professional employer organization (“Sequoia”). The Company acknowledges and agrees that it is responsible for making the payments due the Employee pursuant to the terms of this Agreement whether through Sequoia (or a successor professional employer organization) or directly by the Company if it no longer employs the Employee through Sequoia (or a successor professional employer organization). For the avoidance of doubt, all references to employment by the Company shall apply to any employment through Sequoia (or a successor professional employer organization). 

 

3. Base Salary. Effective as of June 1, 2019, the Company shall pay to Employee an annual base salary of four hundred forty thousand dollars ($440,000.00) per year, less required withholdings (such amount, as amended from time to time, the “Base Salary”). The Base Salary shall be subject to annual review and increase (but not decrease) by the Board during the Employment Term. Three hundred and fifty thousand dollars ($350,000.00) of the Base Salary per year shall be payable during the Employment Term in accordance with Company’s usual pay practices (and in any event no less frequently than monthly). The remaining ninety thousand dollars ($90,000.00) of the Base Salary per year (the “Deferred Salary”) shall accrue during the Employment Term but not become due and payable unless and until one of the conditions in this paragraph are satisfied. The Deferred Salary shall become due and payable upon the earlier to occur of the following: (i) within five (5) years after the Effective Date the Company enters into a term sheet to receive at least twenty five million dollars ($25,000,000.00) in equity or other form of investment or debt on terms satisfactory to the Board including funding at closing on such terms of at least $10 million; or (ii) within 12 months after the Effective Date the Company receives revenue of at least $10 million. If neither metric is met, Employee shall not be entitled to the Deferred Salary. The Deferred Salary, if earned, shall be paid to Employee within 14 business days after the date the applicable metric is satisfied. Following any condition that triggers payment of the Deferred Salary, the Company shall pay to Employee an annual base salary of four hundred forty thousand dollars ($440,000.00) per year, less required withholdings. The Base Salary shall be subject to annual review and increase (but not decrease) by the Board during the Employment Term with minimum annual increases of 4% over the previous year’s Base Salary. 

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4. Revenue Bonus. Employee shall receive a cash bonus representing two percent (2%) of revenue contribution collected by the Company resulting from contracts or arrangements (collectively, the “Revenue Contracts”) initiated, developed and closed (the “Revenue Bonus”).  

 

(a) The formula determining the Revenue Bonus is as follows: 

 

(i) For revenue generated from licenses, the product of (A) Gross Sales – External Selling Expense (if any), multiplied by (B) 2.00%; and 

 

(ii) For revenue generated from the sale of products, the product of (A) Gross Sales – COGS – External Selling Expense (if any), multiplied by (B) 2.00%. 

 

(b) As used herein, the following terms have the indicated meanings: 

 

(i) “Gross Sales” means the grand total of all sale transactions reported by the Company, without any deductions included within the figure. 

 

(ii) “External Selling Expense” means the actual, out-of-pocket expenses incurred by the Company directly related to the Gross Sales in question from third parties for legal, valuation, IP protection, project level subcontracted costs, consulting and other fees. For the avoidance of doubt, External Selling Expense does not include research and development expenses or other enterprise operating expenses of the Company. 

 

(iii) “COGS” means the accumulated total of all costs used to create a product or service with respect to the Gross Sales in question. 

 

In no event shall Company expenses be imputed or assigned to this formula in any cost accounting manner whatsoever.

 

(c) No Revenue Bonus is payable in any year where there is an Operating Net Loss. An “Operating Net Loss” is defined as a loss of income shown on the Company’s income statement for that fiscal year prior to any extraordinary adjustments, write downs, accelerated losses or non-cash adjustments other than standard depreciation and amortization.  

 

(d) The Revenue Bonus, if earned, shall be paid on an annual basis, in arrears, no later than March 15 following the end of the Company’s fiscal year to which the Revenue Bonus relates. Should the Company experience a loss as defined above, any Revenue Bonus for that fiscal year is forfeited. The Revenue Bonus for each Revenue Contract shall he payable to Employee for the Employment Term plus five years after Employee is no longer employed by the Company, regardless of the reason for the termination of the Employee’s employment. Revenue Bonus is only payable on Revenue Contracts initiated during the term of Employee’s employment. Employee and Company shall maintain a record of Revenue Contracts initiated during the Employee’s employment. Employee shall have the right to inspect the Company’s books and records for any period covered under this agreement with reasonable notice. Should any discrepancy be discovered resulting in Employee having been underpaid, Employee is entitled to recovery of the underpaid amount plus reasonable costs of collections including any audit costs and damages equaling the amount that was underpaid, including any Code Section 409A penalties incurred by Employee due to late payment.  

 

(e) The Revenue Bonus shall be payable regardless of (i) any Change of Control (as defined under Section 10(h) below) or any acquisitions by the Company, or (ii) whether the Employee is employed by the Company and, if not employed, regardless of the reason for the termination of Employee’s employment; provided that Employee complies with the provisions of Section 11(f).  

 

(f) The Company shall disclose this Agreement to any proposed purchasers. 

 

(g) For the 2020 fiscal year (January 1, 2020 to December 31, 2020) (“Year One”), the Company shall pay the Employee a bonus equal to 50% of the Base Salary if the Company achieves revenues for Year One which are (w) at least $500,000; and (x) greater than that for the 12-month period immediately preceding Year One. In addition, for 2021 fiscal year (January 1, 2021 through December 31, 2021) (“Year Two”), the Company shall pay the Employee a bonus equal to 50% of the Base Salary if the Company achieves revenues for Year Two which are (y) at least $500,000; and (z) greater than that for Year One. Any bonus related to Year One or Year Two shall be payable no later 45 days following the end of Year One and Year Two, as the case may be, with the Revenue Bonus to be reduced by the payment of any such bonus contemplated by this subparagraph (g). 

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5. Stock Options. The options described in this Section 5 and in Section 11(b)(iii) shall be granted pursuant to and treated subject to the terms of that certain ZIVO Bioscience 2019 Omnibus Long-Term Incentive Plan (the “Plan”). For the avoidance of doubt, once any of the options described herein vest, Employee will not be required to exercise such options before the natural expiration of such option regardless of whether Employee is still employed by the Company and, if Employee is no longer employed by the Company, regardless of the reason for the termination of his employment.  

 

(a) Stock Option Grant. Employee is hereby awarded a non-qualified option to purchase 28 million shares of the Company’s common stock at a price equal to the greater of $0.10 per share and the Fair Market Value (as defined in the Plan) of a share on the date of grant. The date of grant shall be the Effective Date, the entirety of the 28 million shares subject to such grant shall be fully vested as of the Effective Date and shall expire on the tenth (10th) anniversary of the Effective Date. 

 

(b) Performance-Based Options. Employee is also eligible to earn the following stock options (collectively, “Performance-Based Options”) in each case subject to and consistent with the terms of the Plan: 

 

(i) Employee is hereby awarded a non-qualified option to purchase 1,000,000 common shares, exercisable at the greater of $0.10 per share and the Fair Market Value of a share on the date of grant. The date of grant shall be the Effective Date and the entirety of the 1,000,000 million shares subject to such grant shall be fully vested upon identification of any bioactive agents and submission of a patent application by the Company with respect thereto, with which Employee shall assist the Company. 

 

(ii) Employee is hereby awarded a non-qualified option to purchase 1,500,000 common shares, exercisable at the greater of $0.10 per share and the Fair Market Value of a share on the date of grant. The date of grant shall be the Effective Date and the entirety of the 1,500,000 million shares subject to such grant shall be fully vested upon the Company entering into an agreement and receiving at least $500,000 in payments from the contracting party pursuant to and during the term of such agreement. 

 

(iii) Employee is hereby awarded a non-qualified option to purchase 1,500,000 common shares, exercisable at the greater of $0.10 per share and the Fair Market Value of a share on the date of grant. The date of grant shall be the Effective Date and the entirety of the 1,500,000 million shares subject to such grant shall be fully vested if the Company enters into a co-development partnership with a contract research organization to develop medicinal or pharmaceutical applications of any type during the Employment Term and such co-development partnership exceeds $2 million in actual cash or payment-in-kind outlay on the part of the co-development partner. The stock options would vest and remain eligible for exercise if the contract research firm, an intermediary, its venture fund or other investment firm instead acquired the Company. 

 

(iv) Employee is hereby awarded a non-qualified option to purchase 1,500,000 common shares, exercisable at the greater of $0.10 per share and the Fair Market Value of a share on the date of grant. The date of grant shall be the Effective Date and the entirety of the 1,500,000 million shares subject to such grant shall be fully vested if the Company enters into a nutraceutical or dietary supplement co-development partnership, remarketing or production arrangement during the Employment Term and such co-development, production or remarketing arrangement exceeds $2 million in actual cash or payment-in-kind outlay by the partner or client. The stock options would vest and remain eligible for exercise if the partner company, intermediary or an investment firm instead acquired the Company. 

 

(v) Employee is hereby awarded a non-qualified option to purchase 1,500,000 common shares, exercisable at the greater of $0.10 per share and the Fair Market Value of a share on the date of grant. The date of grant shall be the Effective Date and the entirety of the 1,500,000 million shares subject to such grant shall be fully vested if the Company enters into a pharmaceutical development arrangement with a pharmaceutical company or a recognized pharmaceutical intermediary company such as a pharma venture fund or lead compound licensing entity owned or controlled by a pharma, foundation, contract research organization or investment consortium. The stock options would vest and remain eligible if the pharmaceutical company, an intermediary or investment firm instead acquired the Company. 

 

The options described in this Section 5(b), shall expire on the tenth (10th) anniversary of the grant date. If Employee’s employment is terminated by Employee for Good Reason (as defined below) or by the Company without Cause (as defined below) before any of the options described above in Section 5(b) have vested, then each such option shall nevertheless vest as of the satisfaction of such vesting requirement.

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6. Equity Warrant in WellMetrix. If and when at least $2 million in equity capital is raised from a third party and invested in WellMetrix in an arms-length transaction, Employee shall be granted a warrant to purchase an equity interest in WellMetrix that is equal to the equity interest in WellMetrix owned by the Company at the time of the first tranche of any such capital raise (the “WellMetrix Warrant”). The WellMetrix Warrant shall be fully vested as of the date it is granted and shall expire on the tenth (10th) anniversary of the grant date. Once granted, the WellMetrix Warrant may be exercised from time to time in whole or in part, with the Employee retaining any unexercised portion. The exercise price for the WellMetrix Warrant shall be equal to the fair market value of the interest in WellMetrix implied by the pricing of the first tranche of any such capital raise; for example, if $10 million is invested in WellMetrix by a third party investor for 50% of WellMetrix (calculated as if the WellMetrix Warrant has been exercised), and if the outstanding interests in WellMetrix at such time are owned 50% by the third party investor, 25% by the Company and 25% by the Employee (calculated as if the WellMetrix Warrant has then been exercised), then the exercise price for the WellMetrix warrant shall be $5 million. 

 

7. Expenses. The Company shall reimburse Employee for all necessary and reasonable business expenses incurred by him in the performance of his duties under this Agreement, upon presentation of expense accounts and appropriate documentation in accordance with the Company’s standard policies, as they may be amended from time to time. 

 

8. Benefits. Employee, at his election, may participate, during the Employment Term, in all retirement plans, savings plans, health or medical plans and any other benefit plans of the Company generally available from time to time to other management employees of the Company and for which Employee qualifies under the terms of the plans. 

 

9. Services. Employee shall perform his duties under this Agreement faithfully, diligently and to the best of his ability. He shall serve subject to the policies and instruction of the Board to the extent consistent with the terms of this Agreement, and shall devote all of his business time, attention, energies and loyalty to the Company, provided, however, that the expenditure of reasonable amounts of time by Employee for personal, charitable, professional or other business activities, such as an outside director position, shall not be deemed a breach of this Agreement, so long as such activities do not materially interfere with the services required to be rendered by Employee under this Agreement and are not contrary to the interests of the Company. On reasonable notice, Employee shall make himself available to perform his duties under this Agreement at such times and at such places as the Company reasonably deems necessary, proper, convenient or desirable. 

 

10. Termination. Employee or the Company may terminate Employee’s employment as follows: 

 

(a) Death or Disability. Employee's employment under this Agreement shall terminate automatically upon Employee’s death or Disability. For purposes of this Agreement, “Disability” means that (i) Employee has been unable, for 180 days or more in any 360-day period, to perform Employee’s duties and responsibilities under this Agreement even with reasonable accommodation, as a result of physical or mental illness or injury, and (ii) a physician selected by the Company or its insurers, and acceptable to Employee or Employee’s legal representative, has determined that Employee is so disabled. As part of this decision-making on disability, Employee and the Company agree to engage in discussion about possible reasonable accommodations, as such concept is contemplated by the Americans with Disabilities Act, as amended (the “ADA”). A termination of Employee’s employment by the Company for “disability” shall be communicated to Employee by written notice, and shall be effective on the thirtieth (30th) day after receipt of such notice by Employee (such day, the “Disability Confirmation Date”), unless Employee returns to full-time performance of Employee’s duties before the Disability Confirmation Date. 

 

(b) By the Company “for Cause.” During the Employment Term, the Company may immediately terminate Employee’s employment for “Cause”. For purposes of this Agreement, “Cause” shall mean, in each case as determined by the Board: 

 

(i) Employee’s conviction of a felony or other crime involving moral turpitude (but not automobile related matters); 

 

(ii) Employee’s commission of and conviction for any act or omission involving dishonesty, fraud, embezzlement, theft, substance abuse or sexual misconduct with respect to the Company, any subsidiary of the Company or any of their respective employees, vendors, suppliers or customers, the specific nature of which shall be set forth in a written notice by the Company to Employee; 

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(iii) Employee’s substantial and continued neglect of or failure to perform his duties, or failure to follow a “reasonable directive of the Board” which, after written notice from the Board of such neglect or failure, has not been cured within thirty (30) days after he receives such notice. For purposes of this Agreement, “reasonable directive of the Board,” shall mean a directive that is applied equitably among the management employees of the Company and that is not inconsistent with the terms of this Agreement; provided, however, that the foregoing shall not include any directive of the Board which (x) upon advice of counsel, could reasonably be a violation of applicable law, the rules and regulations governing the listing and/or trading of the Company’s securities, or any material agreement to which the Company is a party or its assets are subject, or (y) is contrary to the customary operations of similarly situated businesses in the industries and markets in which the Company is engaged or expected to be engaged within one (1) year and; 

 

(iv) Employee’s gross negligence or willful misconduct in the performance of his duties which results in material harm to the Company; or 

 

(v) Employee’s conviction of a misappropriation of funds or assets of the Company or any subsidiary of the Company. 

 

An act or failure to act will be considered “gross or willful” for this purpose only if done, or omitted to be done, by Employee in bad faith and without reasonable belief that it was in, or not opposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board (or a committee thereof) or based upon the advice of counsel for the Company will be conclusively presumed to be done, or omitted to be done, by Employee in good faith and in the best interests of the Company. Notwithstanding the foregoing, Employee may not be terminated for Cause pursuant to clauses (iii) or (iv) above unless and until there has been delivered to Employee a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board (and not a committee thereof) at a meeting of the Board called and held for the purpose (after reasonable notice to Employee and an opportunity for Employee to be heard before the Board), finding that in the good faith opinion of the Board Employee were guilty of the conduct set forth above in clauses (iii) or (iv) of this definition and specifying the particulars thereof in detail.

 

(c) By the Company without Cause. During the Employment Term, the Company may terminate Employee’s employment upon thirty (30) days’ advance written notice to Employee. 

 

(d) By Employee. During the Employment Term, Employee may voluntarily terminate Employee’s employment for any reason or no reason whatsoever upon thirty (30) days’ advance written notice to the Company. 

 

(e) By Employee with “Good Reason.” During the Employment Term, Employee may terminate his employment for “Good Reason.” For purposes of this Agreement, “Good Reason” shall mean, without Employee’s prior written consent, any of the following: 

 

(i) a material diminution in Employee’s authorities, duties, titles or responsibilities; 

 

(ii) the location of the facility at which Employee is required to perform his duties is more than fifty (50) miles from the then current Company headquarters; 

 

(iii) a material reduction of Employee’s then Base Salary; or 

 

(iv) the Company’s failure to pay or make available any material payment or benefit due Employee under this Agreement or any other material breach by the Company of this Agreement. 

 

However, the foregoing events or conditions will constitute Good Reason only if Employee provides the Company with written objection to the event or condition within ninety (90) days following the occurrence thereof, the Company does not reverse or otherwise cure the event or condition within thirty (30) days of receiving that written objection and Employee resigns his employment within thirty (30) days following the expiration of that cure period.

 

(f) Based on Non-Renewal. Employee’s employment will automatically terminate as of the end of the Initial Term or Renewal Term then in effect, as applicable, if either party notifies the other party in writing of its desire not to renew this Agreement at the end of such Initial Term or then-current Renewal Term at least sixty (60) days before the end of such Initial Term or Renewal Term. 

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11. Payments Following Termination. 

 

(a) Accrued Obligations. Upon the termination of Employee’s employment for any reason outlined in Section 10, above, Employee shall be entitled to and the Company shall provide the following payments and benefits (collectively, the “Accrued Obligations”): 

 

(i) Any accrued and unpaid Base Salary covering the period of employment prior to the effective date of termination, payable on the next regularly scheduled payroll date after the effective date of Employee’s termination; 

 

(ii) Reimbursement for any expenses properly incurred by Employee in accordance with Section 7 through the effective date of Employee’s termination, payable within thirty (30) days after the effective date of Employee’s termination, provided Employee has submitted all requisite expense reimbursement documentation; and 

 

(iii) Employee benefits, if any, to which Employee may be entitled under the Company's employee benefit plans as of the effective date of Employee’s termination; provided, that, in no event shall Employee be entitled to any payments in the nature of severance or termination payments except as expressly provided in this Section 11. 

 

Notwithstanding anything to the contrary in this Agreement, the Company shall remain obligated to continue paying all Revenue Bonuses in accordance with Section 4, regardless of the reason for the termination of Employee’s employment; provided that, in all cases of termination to continue to receive the Revenue Bonus after the end of the Employment Period, Employee must comply with Section 11(f).

 

(b) Severance Benefits Following a Termination by the Company without Cause or by Employee for Good Reason. Upon the termination Employee’s employment by the Company without Cause or by Employee for Good Reason only, and subject to Section 11(f), in addition to the Accrued Obligations, Employee shall be entitled to: 

 

(i) Employee shall be entitled to severance pay equal to twenty-four (24) months’ of his Base Salary. For purposes of this subparagraph, Base Salary shall be determined based on Employee’s current Base Salary as of the date of termination. Provided that Employee has complied with Section 11(f) by such date, the first installment of this salary continuation shall be payable to Employee on the sixtieth (60th) day after the effective date of the termination and shall include a catch-up payment covering amounts that would otherwise have been paid during such sixty (60) day period. Thereafter, the salary continuation payments shall be payable in regular installments in accordance with the Company’s general payroll practices. 

 

(ii) Employee shall be entitled to a lump sum cash payment equal to three (3) times the total amount of Revenue Bonus paid to Employee during the trailing twelve month period immediately preceding the date of termination, with this amount to be paid in a lump sum, on the sixtieth (60th) day after the effective date of the termination, provided that Employee has complied with Section 11(f) by such date, plus the continuation of any Revenue Bonus in accordance with the terms of Section 4; provided that Employee has complied with Section 11(f) as of each such payment date. 

 

(iii) If Employee’s employment is terminated within the Initial Term, the Company shall grant Employee a non-qualified option to purchase 1,000,000 common shares, exercisable at the greater of $0.10 per share and the Fair Market Value of a share on the date of grant. This grant shall be made on the sixtieth (60th) day after the effective date of the termination, provided that Employee has complied with Section 11(f) by such date. Upon the date of grant, the entirety of the 1,000,000 shares subject to such grant shall be fully vested as of such date and shall expire on the tenth (10th) anniversary thereof. These options shall be granted under and treated subject to and consistent with the terms of the Plan. 

 

(iv) A lump sum cash payment in the amount of $20,000, to be used for the purchase of medical coverage or for any other purpose, to be paid on the sixtieth (60th) day after the effective date of the termination, provided that Employee has complied with Section 11(f) by such date. 

 

(c) Severance Benefits Following a Change of Control. If Employee’s employment with the Company ceases within the twenty-four (24) month period following the date of a Change of Control (defined below) due to Employee’s death or Disability under Section 10(a), as a result of a termination by the Company without Cause under Section 10(c), or as a result of a resignation by Employee for Good Reason under Section 10(e), then, subject to Section 11(f), Employee will be entitled to: 

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(i) The Accrued Obligations; 

 

(ii) A lump sum cash payment equal to 300% of the Base Salary as in effect on such date; provided, however, that in the case of a resignation by Employee for Good Reason, the Base Salary used to calculate this amount shall mean the Base Salary payable to Employee by the Company, as in effect immediately prior to the reduction giving rise to the Good Reason. This amount will be paid in a lump sum, on the sixtieth (60th) day after the effective date of the termination, provided that Employee has complied with Section 11(f) by such date. 

 

(iii) A lump sum cash payment equal to two (2) times the total amount of Revenue Bonus paid to Employee during the trailing twelve month period immediately preceding a Change in Control, with this amount to be paid in a lump sum, on the sixtieth (60th) day after the effective date of the termination, provided that Employee has complied with Section 11(f) by such date, plus the continuation of any Revenue Bonus in accordance with the terms of Section 4, provided that Employee has complied with Section 11(f) as of each such payment date. 

 

(iv) A lump sum cash payment in the amount of $20,000, to be used for the purchase of medical coverage or for any other purpose, to be paid on the sixtieth (60th) day after the effective date of the termination, provided that Employee has complied with Section 11(f) by such date. 

 

(v) Severance pay equal to twenty-four (24) months of Employee’s Base Salary. For purposes of this subparagraph, Base Salary shall be determined based on Employee’s current Base Salary as of the date of termination. Provided that Employee has complied with Section 11(f) by such date, the first installment of this salary continuation shall be payable to Employee on the sixtieth (60th) day after the effective date of the termination and shall include a catch-up payment covering amounts that would otherwise have been paid during such sixty (60) day period. Thereafter, the salary continuation payments shall be payable in regular installments in accordance with the Company’s general payroll practices. 

 

(vi) All outstanding and contingent non-qualified options owned directly or beneficially by Employee shall be converted immediately into vested options, with terms as specified in the Award Agreement, but in no case with an expiration date longer than the original option expiration date. This conversion shall take place on the sixtieth (60th) day after the effective date of the termination, provided that Employee has complied with Section 11(f) by such date. 

 

(d) Severance Events Preceding a Change of Control. If Employee’s employment with the Company ceases during the sixty (60) days immediately preceding the date of a Change of Control (defined below) due to Employee’s death or termination due to Disability under Section 10(a), as a result of a termination by the Company without Cause under Section 10(c), or as a result of a resignation by Employee for Good Reason under Section 10(e), then, subject to Section 11(f), Employee will be entitled to: 

 

(i) The Accrued Obligations; 

 

(ii) The Company will make a lump sum cash payment to Employee equal to 300% of the Base Salary as in effect on such date; provided, however, that in the case of a resignation by Employee for Good Reason, the Base Salary used to calculate this amount shall mean the Base Salary payable to Employee by the Company, as in effect immediately prior to the reduction giving rise to the Good Reason. This amount will be paid in a lump sum, on the sixtieth (60th) day after the effective date of the termination, provided that Employee has complied with Section 11(f) by such date; 

 

(iii) A lump sum cash payment equal to two (2) times the total amount of Revenue Bonus paid to Employee during the trailing twelve month period immediately preceding a Change in Control, with this amount to be paid in a lump sum, on the sixtieth (60th) day after the effective date of the termination, provided that Employee has complied with Section 11(f) by such date, plus the continuation of any Revenue Bonus in accordance with the terms of Section 4; provided that Employee has complied with Section 11(f) as of each such payment date; 

 

(iv) A lump sum cash payment in the amount of $20,000, to be used for the purchase of medical coverage or for any other purpose, to be paid on the sixtieth (60th) day after the effective date of Employee’s employment termination, provided that Employee has complied with Section 11(f) by such date; 

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(v) Severance pay equal to twenty-four (24) months of Employee’s Base Salary. For purposes of this subparagraph, Base Salary shall be determined based on Employee’s current Base Salary as of the date of termination. Provided that Employee has complied with Section 11(f) by such date, the first installment of this salary continuation shall be payable to Employee on the sixtieth (60th) day after the effective date of the termination and shall include a catch-up payment covering amounts that would otherwise have been paid during such sixty (60) day period. Thereafter, the salary continuation payments shall be payable in regular installments in accordance with the Company’s general payroll practices. 

 

(vi) All outstanding and contingent non-qualified options owned directly or beneficially by Employee shall be converted immediately into vested options, with terms as specified in the Award Agreement, but in no case with an expiration date longer than the original option expiration date. This conversion shall take place on the sixtieth (60th) day after the effective date of the termination, provided that Employee has complied with Section 11(f) by such date. 

 

In an effort to be prepared for a potential Change of Control occurring within such sixty (60)-day period, the Company shall deliver to the Employee the form of Release required hereunder promptly after Employee’s employment with the Company ceases so that the Employee can execute and deliver to the Company such Release and allow for the revocation and other time periods to lapse, provided, however, that, in the event a Change of Control does not occur within sixty (60) days after Employee’s employment with the Company ceases, any such Release delivered to the Company (x) shall be void and without force or effect as it relates to this Section 11(d), but (y) if applicable, shall be effective as it relates to Section 11(b).

 

(e) Reduction of Severance Benefits. Notwithstanding the foregoing, if the Company’s obligation to make the payments provided for in Sections 11(c)(ii) and 11(c)(iii) or Sections 11(d)(ii) and 11(d)(iii) arises due to Employee’s death or termination due to Disability, the cash payments described in such sections, as applicable, will be reduced by the amount of benefits paid or payable to Employee (or Employee’s representative(s), heirs, estate or beneficiaries) pursuant to the life insurance or disability plans, policies or arrangements of the Company by virtue of Employee’s death or termination due to Disability (including, for this purpose, only that portion of such life insurance or disability benefits funded solely by the Company or by premium payments made by the Company and not including the portion of such benefits paid for by Employee); provided that such offset does not violate Code Section 409A. 

 

(f) Conditions to Severance Benefits; Payment Timing. Notwithstanding any provision of this Agreement, the payments and benefits described in this Section 11 (other than any Accrued Obligations) shall be provided if and only if: (i) Employee has been and remains in strict compliance with his post-employment obligations to the Company, including, without limitation, those outlined in Section 12 through Section 15 of this Agreement, provided that noncompliance shall be determined only pursuant to a final, non-appealable decision by a court of competent jurisdiction; and (ii) Employee has executed and delivered to the Company a general release of claims satisfactory to the Company in the form attached hereto as Exhibit A (the “Release”) and such Release becomes effective and irrevocable in a manner consistent with applicable law within sixty (60) days after the date Employee’s employment is terminated. Notwithstanding any provision of this Agreement to the contrary, in no event shall the timing of Employee’s execution of the Release, directly or indirectly, result in Employee designating the calendar year of payment, and if a payment that is subject to execution of the Release could be made in more than one taxable year, payment shall be made in the later taxable year. 

 

(g) No Other/Duplication of Benefits. Except as specifically provided herein and subject to Code Section 409A, Employee shall not accrue or be entitled to any salary, compensation (Including under any severance plan, fund, agreement, or other arrangement maintained by the Company), or benefits after the date Employee’s employment is terminated, except as provided in this Section 11 or expressly required by applicable law. Further, and for the avoidance of doubt, the payments and benefits described in Section 11(c) and Section 11(d) are in lieu of (and not in addition to) each other and of the benefits set forth in Section 11(b). 

 

(h) Change in Control Definition. As used in this Agreement, “Change of Control” means the happening of an event, which shall be deemed to have occurred upon the earliest to occur of the following events: 

 

(i) The dissolution or liquidation of the Company; 

 

(ii) The sale or other disposition of all or substantially all of the assets of the Company; 

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(iii) The merger or consolidation of the Company with or into another corporation or other entity, other than, in either case, a merger or consolidation of the Company in which holders of shares of the Company’s voting securities immediately prior to the merger or consolidation will have more than 50% of the ownership of voting capital stock of the surviving corporation immediately after the merger or consolidation (on a fully diluted basis), which voting securities are to be held in the same proportion (on a fully diluted basis) as such holders ownership of voting capital stock of the Company immediately before the merger or consolidation; 

 

(iv) The date any entity, Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act), other than (i) the Company, or (ii) any of its Subsidiaries, or (iii) any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Subsidiaries, or (iv) any Affiliate (as such term is defined in Rule 405 promulgated under the Securities Act) of any of the foregoing, shall have acquired beneficial ownership of, or shall have acquired voting control over, 50% or more of the outstanding shares of the Company’s voting capital stock (on a fully diluted basis), unless the transaction pursuant to which such Person, entity or group acquired such beneficial ownership or control resulted from the original issuance by the Company of shares of its voting capital stock and was approved by at least a majority of Directors who were either members of the Board on the date that this Agreement was originally adopted by the Board or members of the Board for at least twelve (12) months before the date of such approval; or 

 

(v) The first day after the date of this Agreement when Directors are elected such that there is a change in the composition of the Board such that a majority of Directors have been members of the Board for less than twelve (12) months, unless the nomination for election of each new Director who was not a Director at the beginning of such twelve (12) month period was approved by a vote of at least sixty percent (60%) of the Directors then still in office who were Directors at the beginning of such period. 

 

Notwithstanding the foregoing, the Board may provide for a different definition of a Change of Control in an Award Agreement if such Award is subject to the requirements of Code Section 409A and the Award will become payable on a Change of Control. Notwithstanding the foregoing, to the extent “Change of Control” is a payment trigger and not merely a vesting trigger for any payment provided hereunder that is not exempt from Code Section 409A, “Change of Control” means a change in the ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, as described in Treas, Reg. Section 1.409A-3(i)(5), but replacing the term “Company” for the term “corporation” in such regulation.

 

12. Cooperation. During the Employment Term and for the one (1) year period after Employee’s employment with the Company ends for any reason other than death, Employee agrees to give his assistance and cooperation, upon reasonable advance notice, in any matter relating to his position with the Company, or his knowledge as a result thereof as the Company may reasonably request, including his attendance and truthful testimony where reasonably deemed appropriate by the Company, with respect to any investigation or the Company’s defense or prosecution of any existing or future claims or litigation or other proceeding relating to matters in which Employee was involved or has knowledge by virtue of his employment with the Company. The Company shall reasonably endeavor to schedule such cooperation at times not conflicting with the reasonable requirements of any employer or third party with whom Employee has a business relationship permitted hereunder that provides remuneration to Employee and shall promptly reimburse Employee for all reasonable costs and expenses incurred in connection therewith and shall promptly pay Employee $220 per hour for his time expended in connection therewith, in accordance with Company policy and upon the submission of the appropriate documentation to the Company. 

 

13. Fair Competition. The Company and Employee acknowledge and agree that for Employee to compete with the Company during the Employment Term and for a limited time after the end of the Employment Term would be contrary to the purposes for which the parties entered into this Agreement. In order to induce the Company to enter into this Agreement, Employee covenants, warrants and agrees, for the benefit of the Company, and its respective current and future Subsidiaries, successors and assigns (collectively, the “Protected Parties” and each a “Protected Party”), that, during the Covenant Period (as defined below), Employee, for himself or for any other Person, either as a principal, agent, employee, contractor, director, officer or in any other capacity, shall not, without first obtaining the express written consent of the Company (except in his capacity as an employee of the Company), either directly or indirectly: 

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(a) Own, manage, operate, join, control, finance or participate in the ownership, management, operation, control or financing of, or be connected as an officer, director, employee, partner, principal, agent, representative, stockholder, consultant, investor or otherwise with, or use or permit his name to be used in connection with, any Person which directly or indirectly engages in the development, marketing or sale of products or compounds that are competitive with: (i) those products being marketed by the Protected Parties with respect to the Business at the time of Employee’s termination; (ii) those products, product candidates or compounds in clinical development or a clinical research program by the Company at the time of Employee’s termination; or (iii) those products, product candidates or compounds that Employee was aware were under pre-clinical development with respect to the Business by Protected Parties and expected to be in clinical development or in a clinical research program within six (6) months of Employee’s termination (collectively, the “Company’s Business”); 

 

(b) (x) Solicit, entice or induce any customer to (i) become a customer of any other Person with respect to the Company’s Business; (ii) refrain from or cease doing business with the Protected Parties with respect to the Company’s Business; or (iii) reduce its business with the Protected Parties with respect to the Company’s Business, and (y) Employee will not approach any such Person for such purpose described in clauses (i), (ii) or (iii) or authorize or knowingly approve, encourage or assist the taking of such actions by any other Person; 

 

(c) Solicit, recruit or hire any part-time or full-time employee, representative or consultant of any Protected Party to (1) leave the employment of or terminate his, her or its contractual relationship with such Protected Party; or (2) enter into an employment or a contractual relationship with any third party, including Employee or any Person in which Employee has any interest whatsoever, and Employee shall not engage in any activity that would cause any employee, representative or consultant to violate any agreement with any Protected Party, provided that the foregoing covenant shall not apply to any Person after twelve (12) months have elapsed after the date on which such person’s employment by a Protected Party has terminated, and provided further that nothing contained herein shall prevent Employee from employing or engaging any Person who, without any encouragement by Employee or his representatives, (x) responds to a general media advertisement or non-directed search inquiry (including the use of employment agencies provided no direction was given to target a Protected Party’s employees or third party contractors), or (x) makes an unsolicited contact for employment or engagement as a third party contractor. 

 

(d) Notwithstanding the foregoing, during the Covenant Period, Employee is free to conduct the affairs of Great Northern & Reserve Partners, LLC, a privately held consulting and investment firm wholly owned and controlled by Employee, and to serve on boards of other companies when such opportunities are offered; provided that, in each case, such activities do not otherwise breach or materially interfere with Employee’s obligations under this Agreement. The foregoing restrictions in this Section 13 shall also not be construed to prohibit Employee’s ownership of less than five percent of any class of securities of any corporation or other entity which is engaged in any of the foregoing businesses with which Employee is restricted hereunder from being affiliated with and has a class of securities registered pursuant to the Securities Exchange Act of 1934, as amended, provided that such ownership represents a passive investment and that neither Employee nor any group of persons including Employee in any way, either directly or indirectly, manages or exercises control of any such corporation, guarantees any of its financial obligations, otherwise takes any part in its business, other than exercising Employee’s rights as a stockholder, or seeks to do any of the foregoing. 

 

(e) For purposes of this Agreement, the following terms shall have mean: 

 

(i) “Affiliate” means, as to any specified Person, any other Person controlling or controlled by or under common control with such specified Person; 

 

(ii) “Business” means the business of selling or licensing the specific intellectual property, products and processes developed and owned by the Company during the Employment Term in any market or application specifically as they relate to cholesterol regulation and non-steroidal anti-inflammatory agents unique to the Company and protected by patents or patents in application held by the Company. 

 

(iii) “Covenant Period” means during the Employment Term and continuing for a period of one (1) year after the date that Employee’s employment with the Company ends for any reason, including, but not limited to, as the result of any of the reasons set forth in Section 10, above; provided, however, that in the event there is a Change of Control and related termination that triggers Employee’s eligibility for the benefits outlined in Section 11(c) or 11(d), above, “Covenant Period” shall mean during the Employment Term and continuing for a period of three (3) years after the date that Employee’s employment with the Company ends. The Parties acknowledge and agree that this extended period is reasonable and is a specifically negotiated for term being provided in exchange for the significant consideration to be provided to Employee following a Change in Control as provided in Section 11(c) or 11(d).  

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The parties further agree that should Employee be asked to provide continuing consulting services to the Company following a Change of Control and related termination, such provision of services to the Company (or its successor) shall not violate the provisions of this Section 13.

 

(iv) “Person” means an individual, corporation, partnership, limited liability company, association, trust, joint venture, unincorporated organization, other entity or group, or a governmental authority. 

 

(v) “Subsidiary” means any entity in which the Company owns more than fifty percent (50%) of the voting securities. 

 

14. Intellectual Property Rights. Employee recognizes that he may, individually or jointly with others, discover, conceive, make, perfect or develop inventions, discoveries, new contributions, concepts, ideas, developments, processes, formulas, methods, compositions, techniques, articles, machines and improvements, and all original works of authorship and all related know-how, whether or not patentable, copyrightable or protectable as trade secrets for and on behalf of the Company pursuant to this Agreement (“Inventions”). Employee agrees that all such Inventions are the sole and exclusive property of the Company. EMPLOYEE AGREES THAT ANY PARTICIPATION BY HIM IN THE DESIGN, DISCOVERY, CONCEPTION, PRODUCTION, PERFECTION, DEVELOPMENT OR IMPROVEMENT OF AN INVENTION IS WORK MADE FOR HIRE, AS DEFINED IN TITLE 17, UNITED STATES CODE, FOR THE SOLE AND EXCLUSIVE BENEFIT OF THE COMPANY AND EMPLOYEE HEREBY ASSIGNS TO THE COMPANY ALL OF HIS RIGHTS IN AND TO SUCH INVENTIONS. Employee shall maintain adequate and current written records of all Inventions, which shall remain the property of the Company and be available to the Company at all times. At the Company’s request, Employee shall promptly sign and deliver all documents necessary to vest in the Company all right, title and interest in and to any Inventions. If the Company is unable, after reasonable effort, to secure Employee’s signature on any document needed to vest in the Company all right, title and interest in and to any Inventions, whether because of Employee’s physical or mental incapacity or for any other reason whatsoever, Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Employee’s agent and attorney-in-fact, to act for and in Employee’s behalf and stead to execute and file any such document and to do all other lawfully permitted acts to further the prosecution and enforcement of patents, copyrights or similar protections with the same legal force and effect as if executed by Employee. 

 

15. Confidentiality. 

 

(a) Employee acknowledges and agrees that he shall treat all Confidential Information (as defined below) in a confidential manner, not use any Confidential Information for his own or a third party’s benefit and not communicate or disclose, orally or in writing, any Confidential Information to any person, either directly or indirectly, under any circumstances without the prior written consent of the Company. Employee further agrees that he shall not utilize or make available any Confidential Information, either directly or indirectly, in connection with his solicitation of employment or acceptance of employment with any third party. Employee further agrees that he will promptly return (or destroy if it cannot be returned) to Company all written or other tangible evidence of any Confidential Information and any memoranda with respect thereto which are in his possession or under his control upon Company’s request for the return of such items. 

 

(b) For the purposes of this Agreement, the term “Confidential Information” shall include all proprietary information related to the Business, including, but not limited to, processes, ideas, techniques, Inventions, methods, products, services, research, purchasing, marketing, selling, customers, suppliers or trade secrets. All information which Employee has a reasonable basis to believe to be Confidential Information, or which Employee has a reasonable basis to believe the Company or any of its Affiliates treat as Confidential Information, shall be deemed to be Confidential Information. Notwithstanding the foregoing, information shall not be deemed to be Confidential Information if it is generally known and publicly available, without the fault of Employee and without the violation by any person of a duty of confidentiality or any other duty owed to any Protected Party. 

 

(c) Nothing in this Agreement shall be construed to prevent disclosure of Confidential Information or the making of statements, as may be required by applicable law or regulation, or pursuant to the valid order of a court of competent jurisdiction or an authorized government agency, provided that such disclosure or statements will be limited to the extent and only in the instances Employee is so compelled and, subject to the requirements of applicable law, Employee agrees to give the Company prior written notice of his intent to so disclose such Confidential Information or make any such statements and to cooperate with the Company (at the Company’s sole cost and expense) in seeking confidentiality protections or resisting such compulsion as requested by the Company.  

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Employee further understands and agrees that this Agreement does not prohibit Employee from reporting possible violations of federal law or regulation to any governmental agency or entity or making other disclosures that are protected under the whistleblower provisions of federal law or regulation and that Employee does not need the Company’s prior authorization to make any such reports or disclosures and is not required to notify the Company that he has made such reports or disclosures.

 

(d) Further, notwithstanding any other provision of this Agreement: (i) Employee is advised that an individual will not be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade secret that is made: (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney and solely for the purpose of reporting or investigating a suspected violation of law; or (2) in a complaint or other document that is filed under seal in a lawsuit or other proceeding; and (ii) if a person files a lawsuit for retaliation by the Company for reporting a suspected violation of law, that person may disclose the Company’s trade secrets to his or her attorney and use the trade secret information in the court proceeding if that person (1) files any document containing the trade secret under seal; and (2) does not disclose the trade secret, except pursuant to court order. 

 

16. Enforceability; Remedies. 

 

(a) Employee acknowledges and agrees that the covenants set forth in Section 13 through Section 15 above (collectively, the “Restrictive Covenants” and each a “Restrictive Covenant”) are reasonable and valid in geographical and temporal scope and in all other respects and are necessary to protect the legitimate interests of the Company and its Affiliates, that the Company would not have entered into this Agreement in the absence of such restrictions, and that any violation of Restrictive Covenant could result in irreparable injury to the Company. Employee further represents and acknowledges that (i) he has been advised by the Company to consult his own legal counsel in respect of this Agreement, and (ii) that he has had full opportunity, prior to execution of this Agreement, to review thoroughly this Agreement with his counsel. 

 

(b) The parties intend that the Restrictive Covenants shall be deemed to be a series of separate covenants, one for each and every political subdivision of each country, state, province and county, as applicable in the world. If any court determines that any Restrictive Covenant, or any portion thereof, is invalid or unenforceable, the remainder of the Restrictive Covenants shall not be affected and shall be given full force and effect, without regard to the invalid covenant or the invalid portion. If any court determines that any Restrictive Covenant, or any portion of any such covenant, is unenforceable because of its duration or geographic scope, such court shall have the power to reduce such duration or scope, as the case may be, and enforce such covenant or portion in such reduced form. The parties intend to and hereby confer jurisdiction to enforce the Restrictive Covenants upon the courts of any jurisdiction in which Employee is alleged to have committed an act in violation of any of the covenants contained here. If the courts of any one or more of such jurisdictions hold the Restrictive Covenants, or any portion thereof, unenforceable, it is the intention of the parties that such determination not bar or in any way affect the right of the Company to the relief provided above in the courts of any other jurisdiction within the geographical scope of such Restrictive Covenants as to breaches of such Restrictive Covenants in such other respective jurisdictions. 

 

(c) In the event of a breach or attempted breach of any of the Restrictive Covenants, in addition to any and all legal and equitable remedies immediately available, such Restrictive Covenants may be enforced by a temporary and/or permanent injunction to secure the specific performance of such Restrictive Covenants, and to prevent a breach or contemplated breach of such Restrictive Covenants, without the need to post any bond or other security of any kind. Employee acknowledges and agrees that the remedy at law for a breach or threatened breach of any of the Restrictive Covenants would be inadequate. Employee acknowledges and agrees that the remedies provided for in this Agreement are cumulative and are intended to be and are in addition to any other remedies available to the Company, either at law or in equity. In addition, Employee agrees that, in the event of a breach of the Restrictive Covenants by Employee as determined pursuant to a final, non-appealable decision by a court of competent jurisdiction, he shall be liable, and shall reimburse the Company, for all fees, costs and expenses (including reasonable attorneys’ fees and other professional fees) arising out of or in any way related to the enforcement of such Restrictive Covenants. The Company agrees that in the event of a dispute or breach in which Employee prevails pursuant to a final, non-appealable decision by a court of competent jurisdiction, the Company shall be liable, and shall reimburse Employee, for all fees, costs and expenses (including reasonable attorneys’ fees and other professional fees) arising out of or in any way related to the enforcement of the Restrictive Covenants. 

 

17. Notices. All notices, requests, consents and other communications, required or permitted to be given under this Agreement shall be personally delivered in writing or shall have been deemed duly given when received after it is posted in the United States mail, postage prepaid, registered or certified, return receipt requested addressed as set forth below. In addition, a party may deliver a notice via another reasonable means that results in the recipient party receiving actual notice, as conclusively demonstrated by the party giving such notice. 

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If to the Company:

 

Phillip M. Rice II, Chief Financial Officer

ZIVO Bioscience, Inc.

2804 Orchard Lake Road, Suite 202

Keego Harbor, MI 48320

Cell: 586 665 9000

Fax: 248 869 6006

price@zivobioscience.com

 

With a required copy to:

 

Honigman LLP

2290 First National Building

660 Woodward Avenue

Detroit, MI 48226

Attn: Donald J. Kunz

dkunz@honigman.com

 

If to Employee:

 

Andrew A Dahl

7 West Square Lake Road

Bloomfield Hills, Michigan USA 48302

Cell: 248 978 3911 Fax: (248) 341-3411

adahl@greatnorthreserve.com

 

With a required copy to:

 

Dykema Gossett PLLC

400 Renaissance Center

Detroit, MI 48234

Attn: J. Michael Bernard

jbernard@dykema.com

 

18. Taxes. 

 

(a) Any payments provided for in this Agreement shall be paid net of any applicable income tax withholding required under federal, state or local law. 

 

(b) This Agreement shall be interpreted to avoid any penalty sanctions under Section 409A of the Code. If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under Section 409A, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. All payments to be made upon a termination of employment under this Agreement will be made upon a “separation from service” under Section 409A of the Code. For purposes of Section 409A of the Code, each payment made under this Agreement shall be treated as a separate payment. In no event may Employee, directly or indirectly, designate the calendar year of payment. To the maximum extent permitted under Section 409A of the Code and its corresponding regulations, the cash severance benefits payable under this Agreement are intended to meet the requirements of the short-term deferral exemption under Section 409A of the Code and the “separation pay exception” under Treas. Reg. §1.409A-1(b)(9)(iii). However, if such severance benefits do not qualify for such exemptions at the time of Employee’s termination of employment and therefore are deemed as deferred compensation subject to the requirements of Section 409A of the Code, then if Employee is a “specified employee” under Section 409A of the Code on the date of Employee’s termination of employment, notwithstanding any other provision of this Agreement, payment of severance under this Agreement shall be delayed for a period of six (6) months from the date of Employee’s termination of employment if required by Section 409A of the Code. The accumulated postponed amount shall be paid in a lump sum payment within ten (10) days after the end of the six (6) month period. If Employee dies during the postponement period prior to payment of the postponed amount, the amounts withheld on account of Section 409A of the Code shall be paid to Employee’s estate within sixty (60) days after the date of Employee’s death.  

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All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement shall be for expenses incurred during Employee’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement, or in kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred and (iv) the right to reimbursement or in kind benefits is not subject to liquidation or exchange for another benefit.

 

(c) The payments and benefits provided under Section 10 shall be made without regard to whether such payments and benefits, either alone or in conjunction with any other payments or benefits made available to Employee by the Company and its affiliates, will result in Employee being subject to an excise tax under Section 4999 of the Code (the “Excise Tax”) or whether the deductibility of such payments and benefits would be limited or precluded by Section 280G of the Code; provided, however, that if the Total After-Tax Payments (as defined below) would be increased by limitation or elimination of payments or benefits provided under Section 11, then the amounts and benefits payable under Section 11 will be reduced to the minimum extent necessary to maximize the Total After-Tax Payments. For purposes of this Section 17, “Total After-Tax Payments” means the total of all “parachute payments” (as that term is defined in Section 280G(b)(2) of the Code) made to or for the benefit of Employee (whether made under this Agreement or otherwise), after reduction for all applicable taxes (including, without limitation, the Excise Tax). If a reduction to the payments or benefits provided under Section 11 is required pursuant to this Section 18, such reduction shall be determined in the following order and priority: first, there shall be reduced or eliminated any such right, payment or benefit that is excluded from the coverage of Code Section 409A, and then there shall be reduced or eliminated any such right, payment or benefit that is subject to Code Section 409A (with the reduction in rights, payments or benefits subject to Code Section 409A occurring in the reverse chronological order in which such rights, payments or benefits would otherwise be or become vested, exercisable or settled). For the avoidance of doubt, the parties expressly agree that this Section 17(c) shall prevail over any inconsistent or conflicting terms in Section 14 of the Plan. 

 

(d) All determinations to be made under this Section 18 shall be made by the Company’s independent public accountant (the “Accounting Firm”) immediately prior to the Change of Control. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, Employee may appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and Employee, except as described in the next paragraph. 

 

(e) As a result of the uncertainty in the application of Section 280G and Section 4999 of the Code at the time of the Change of Control, it is possible that payments and benefits which will not have been made or provided by the Company should have been made (“Underpayment”) or payments and benefits are made or provided by the Company which should not have been made (“Overpayment”), consistent with the calculations required to be made hereunder. In the event that there is a final determination by the Internal Revenue Service, or a final determination by a court of competent jurisdiction, that an Overpayment has been made, any such Overpayment shall repaid to the Company by Employee within thirty (30) days of such determination, with interest at the applicable Federal rate provided for in Section 7872(f)(2). In the event that there is a final determination by the Internal Revenue Service, or a final determination by a court of competent jurisdiction, any such Underpayment shall be promptly paid by the Company to or for the benefit of Employee together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code, within thirty (30) days of such determination. 

 

(f) Employee shall take such action (other than waiving Employee’s right to any payments or benefits) as the Company reasonably requests under the circumstances to mitigate or challenge any tax contemplated by this Section 18. If the Company reasonably requests that Employee take action to mitigate or challenge, or to mitigate and challenge, any such tax or assessment and Employee complies with such request, the Company shall provide Employee with such information and such expert advice and assistance from the Company’s accountants, lawyers and other advisors as Employee may reasonably request and shall pay for all expenses incurred in effecting such compliance and any related fines, penalties, interest and other assessments. 

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19. Miscellaneous. 

 

(a) The failure of any party to enforce any provision or protections of this Agreement shall not in any way be construed as a waiver of any such provision or provisions as to any future violations thereof, nor prevent that party thereafter from enforcing each and every other provision of this Agreement. The rights granted the parties herein are cumulative and the waiver of any single remedy shall not constitute a waiver of such party's right to assert all other legal remedies available to it under the circumstances. 

 

(b) This Agreement has been executed in, and shall be construed and enforced in accordance with the laws of, the State of Michigan. 

 

(c) Any legal proceeding arising out of or relating to this Agreement will be instituted in the United States District Court for the Eastern District of Michigan, or if that court does not have or will not accept jurisdiction, in any court of general jurisdiction in Oakland County, Michigan, and Employee and the Company hereby consent to the personal and exclusive jurisdiction of such court(s) and hereby waive any objection(s) that they may have to personal jurisdiction, the laying of venue of any such proceeding and any claim or defense of inconvenient forum. 

 

(d) The provisions of this Agreement are severable and if any one or more provisions may be determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions and any partially unenforceable provision to the extent enforceable in any jurisdiction nevertheless shall be binding and enforceable. 

 

(e) This Agreement, inclusive of the above recitals, sets forth the entire understanding and agreement of Employee and the Company with respect to its subject matter and supersedes all prior understandings and agreements, whether written or oral, in respect thereof. For the avoidance of doubt, the parties acknowledge and agree that this Agreement replaces and supersedes that certain Amended and Restated Employment Agreement between the Company and Employee and that certain Amended and Restated Change in Control Agreement. No modification, termination or attempted waiver of this Agreement shall be valid unless in writing and signed by the party against whom the same is sought to be enforced. 

 

(f) The rights and obligations of Company under this Agreement shall inure to the benefit of, and shall be binding on, Company and its successors and assigns. This Agreement is personal to Employee and he may not assign his obligations under this Agreement in any manner whatsoever and any purported assignment shall be void. The Company, however, may assign this Agreement in connection with a sale of all or substantially all of its equity interests or assets. 

 

(g) The parties acknowledge that each of them has equally participated in the final wording of this Agreement. Accordingly, the parties agree that this Agreement shall be construed equally against each party and shall not be more harshly construed against a party by reason of the fact that a particular party's counsel may have prepared this Agreement. 

 

(h) The headings and captions used in this Agreement are for convenience of reference only and shall not be considered in interpreting this Agreement. 

 

(i) This Agreement may be executed, including execution by electronic signature, in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same agreement. 

 

(j) Employee shall not be required to mitigate damages or the amount of any payments provided for under this Agreement by seeking other employment or otherwise. 

 

(k) Employee agrees that Employee will be subject to any compensation clawback or recoupment policies that may be applicable to Employee as an executive of the Company, as in effect from time to time and as approved by the Board or a duly authorized committee thereof, whether or not approved before or after the effective date of this Agreement. 

 

(l) The parties’ obligations as set forth in Sections 4 through 7 and in Sections 10 through this Section 19 of this Agreement will survive and not be affected by (i) the termination or expiration of this Agreement, (ii) the termination of Employee’s employment or (iii) the execution of the Release. 

 

[Signatures on next page]

15

 

 

IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the day and year first above written.

 

	EMPLOYEE:

	 

	By:

	/s/ Andrew A. Dahl

	 

	Andrew A. Dahl

	 

	ZIVO BIOSCIENCE, INC.

	 (the “COMPANY”)

	 

	By:

	/s/ Philip M. Rice II

	 

	Philip M. Rice, II, CFO

16

 

 

EXHIBIT A

Form of Release

EMPLOYMENT AGREEMENT RELEASE

 

THIS RELEASE AGREEMENT (the “Release”) is made as of the ____ day of _______, 20__, by and between ZIVO Bioscience Inc. (the “Company”), and Andrew A. Dahl (the “Employee”) (in the aggregate, the “Parties”).

 

WHEREAS, the Company and Employee have entered into an Amended and Restated Employment Agreement dated as of November __, 2019 (the “Employment Agreement”), pursuant to which Employee is entitled to receive certain additional compensation upon Employee’s termination of employment with the Company Without Cause or for Good Reason (all as defined in the Employment Agreement); and

 

WHEREAS, Employee’s receipt of the additional compensation under the Employment Agreement is conditioned upon the execution of this Release; and

 

WHEREAS, Employee’s employment with the Company has been/shall be terminated effective ______________ __, 20__ [without Cause] [due to Good Reason by Employee] [due to Employee’s death] [due to Employee’s Disability];

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is agreed between the Parties as follows:

 

1. Severance Benefits. In consideration for the promises set forth in this Release, and provided this release becomes effective and irrevocable, the Company shall pay Employee the additional compensation set forth in Section 11(b), 11(c), or 11(d) of the Employment Agreement, as applicable, of the Employment Agreement, in accordance with the terms of such applicable section. 

 

2. Release. 

 

(a)In exchange for the good and valuable consideration set forth herein, Employee (or, in the event of Employee’s death, Employee’s legally authorized representative) agrees for himself, his heirs, administrators, representatives, executors, successors and assigns (“Releasors”), to irrevocably and unconditionally release, waive and forever discharge any and all manner of action, causes of action, claims, rights, promises, charges, suits, damages, debts, lawsuits, liabilities, rights, due controversies, charges, complaints, remedies, losses, demands, obligations, costs, expenses, fees (including, without limitation attorneys’ fees), or any and all other liabilities or claims of whatsoever nature, whether arising in contract, tort, or any other theory of action, whether arising in law or in equity, whether known or unknown, choate or inchoate, matured or unmatured, contingent or fixed, liquidated or unliquidated, accrued or unaccrued, asserted or unasserted, including, but not limited to, any claim and/or claim of damages or other relief for tort, breach of contract, personal injury, negligence, age discrimination under The Age Discrimination In Employment Act of 1967 (as amended), employment discrimination prohibited by other federal, state or local laws including sex, race, national origin, marital status, age, handicap, height, weight, or religious discrimination, and any other claims of unlawful employment practices or any other unlawful criterion or circumstance which Employee and Releasors had, now have, or may have in the future against each or any of the Company, its parent, divisions, affiliates and related companies or entities, regardless of its or their form of business organization (the “Company Entities”), any predecessors, successors, joint ventures, and parents of any Company Entity, and any and all of their respective past or present directors, officers, shareholders, partners, employees, consultants, independent contractors, trustees, administrators, insurers, agents, attorneys, representative and fiduciaries, successors and assigns including without limitation all persons acting by, through, under or in concert with any of them (all collectively, the “Released Parties”) arising out of or relating to her employment relationship with the Company, its predecessors, successors or affiliates and the termination thereof. Employee understands that he does not waive rights or claims that may arise after the date of this Release. 

 

(b)Notwithstanding anything to the contrary in this Release, Employee is not waiving any rights Employee may have to: (i) claims for earned and Base Salary and unreimbursed expenses; (i) his own vested accrued employee benefits under the Company’s health, welfare, or retirement benefit plans; (iii) benefits and/or the right to seek benefits under applicable workers’ compensation and/or unemployment compensation statutes; (iv) pursue claims which by law cannot be waived by signing this Release; and (v) enforce the terms and provisions of the Employment Agreement with respect to payments due to Employee upon the execution and delivery of this Release and with respect to future payments due to Employee pursuant to the terms of the Employment Agreement.  

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In addition, nothing in this Release prohibits Employee from filing a charge with or participating, testifying, or assisting in any investigation, hearing, whistleblower proceeding or other proceeding before any federal, state, or local government agency nor does this Release affect Employee’s rights and abilities to contact, communicate with, report matters to, or otherwise participate in any whistleblower program administered by any such agencies. However, to the maximum extent permitted by law, Employee agrees that, if such an administrative claim is made, Employee shall not be entitled to recover any individual monetary relief or other individual remedies.

 

(c)Employee acknowledges that Employee has read this Release carefully and understands all of its terms. 

 

(d)Employee understands and agrees that Employee has been advised to consult with an attorney prior to executing this Release. 

 

(e)Employee understands that Employee is entitled to consider this Release for at least twenty-one (21) days before signing the Release. However, after due deliberation, Employee may elect to sign this Release without availing himself of the opportunity to consider its provisions for at least twenty-one (21) days. Employee hereby acknowledges that any decision to shorten the time for considering this Release prior to signing it is voluntary, and such decision is not induced by or through fraud, misrepresentation, or a threat to withdraw or alter the provisions set forth in this Release in the event Employee elected to consider this Release for at least twenty-one (21) days prior to signing the Release. 

 

(f)Employee understands that Employee may revoke this Release as it relates to any potential claim that could be brought or filed under the Age Discrimination in Employment Act 29 U.S.C. §§ 621-634, within seven (7) days after the date on which he signs this Release, and that this Release as it relates to such a claim does not become effective until the expiration of the seven (7) day period. In the event that Employee wishes to revoke this Release within the seven (7) day period, Employee understands that Employee must provide such revocation in writing to the then Chief Financial Officer of the Company at the address set forth below. 

 

(g)In agreeing to sign this Release, Employee is doing so voluntarily and agrees that Employee has not relied on any oral statements or explanations made by the Company or its representatives. 

 

(h)This Release shall not be construed as an admission of wrongdoing by either Employee or the Company. 

 

(i)Notwithstanding anything to the contrary in this Release, in the event a Change of Control does not occur within sixty (60) days after Employee’s employment with the Company ceases, any such Release delivered to the Company (x) shall be void and without force or effect as it relates to Section 11(d) of the Employment Agreement, but (y) if applicable, shall be effective as it relates to Section 11(b) of the Employment Agreement. 

 

3. Notices. Every notice relating to this Release shall be in writing and if given by mail shall be given by registered or certified mail with return receipt requested. All notices to the Company shall be delivered to the Company’s Chief Financial Officer at ZIVO Bioscience Inc., 2804 Orchard Lake Rd., Suite 202, Keego Harbor, MI 48320. All notices by the Company to Employee shall be delivered to Employee personally or addressed to Employee at Employee’s last residence address as then contained in the Company’s records, or such other address as Employee may designate. Either party by notice to the other may designate a different address to which notices shall be addressed. Any notice given by the Company to Employee at Employee’s last designated address shall be effective to bind any other person who shall acquire rights hereunder. 

 

4. Governing Law. To the extent not preempted by Federal law, this Release shall be governed by and construed in accordance with the laws of the State of Michigan, without giving effect to conflicts of laws. 

 

5. Counterparts. This Release may be executed in two (2) or more counterparts, all of which when taken together shall be considered one (1), and the same Release and shall become effective when the counterparts have been signed by each party and delivered to the other party; it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. 

 

6. Entire Agreement. This Release, when aggregated with the Employment Agreement, contains the entire understanding of the parties with respect to the subject matter hereof and together supersedes all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into this Release. 

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IN WITNESS WHEREOF, the parties hereto have executed this Release as of the day and year first written above.

 

	Andrew A. Dahl, Employee

	ZIVO Bioscience Inc.

	 

	By:

	/s/

	Its:

	 

19

 

 

WAIVER OF 21 DAY NOTICE PERIOD

 

I have been provided with the Employment Agreement Release (“Release”) between ZIVO Bioscience Inc. (the “Company”) and Andrew A. Dahl.

 

I understand that I have twenty-one (21) days from the date the Release was presented to me to consider whether or not to sign the Release. I further understand that I have the right to seek counsel prior to signing the Release.

 

I am knowingly and voluntarily signing and returning the Release prior to the expiration of the twenty-one (21)-day consideration period. I understand that I have seven (7) days from signing the Release to revoke the Release, by delivering a written notice of revocation to the Company’s Chief Financial Officer at ZIVO Bioscience Inc., 2804 Orchard Lake Rd., Suite 202, Keego Harbor, MI 48320.

 

	/s/ Andrew A. Dahl

	Andrew A. Dahl

	 

	Dated: 

20Exhibit 10.34 2019 Omnibus Long-Term Incentive Plan

 

Exhibit 10.34

ZIVO BIOSCIENCE, INC.

2019 OMNIBUS LONG-TERM INCENTIVE PLAN

 

ZIVO Bioscience, Inc., a Nevada corporation (the “Company”), sets forth herein the terms of its 2019 Omnibus Long-Term Incentive Plan (the “Plan”), as follows:

 

Section 1 PURPOSE  

 

The Plan is intended to enhance the ability of the Company and the Subsidiaries and Affiliates to attract and retain highly qualified Directors, officers, key employees and other persons and to motivate such persons to serve the Company and the Subsidiaries of each of them and to improve the business results and earnings of the Company, by providing to such persons an opportunity to acquire or increase a direct proprietary interest in the operations and future success of the Company. To this end, the Plan provides for the grant of options, share appreciation rights, restricted shares, restricted share units, unrestricted shares and dividend equivalent rights. Any of these awards may, but need not, be made as performance incentives to reward attainment of performance goals in accordance with the terms hereof. Share options granted under the Plan may be incentive stock options or non-qualified options, as provided herein. 

 

Section 2 DEFINITIONS  

 

For purposes of interpreting the Plan and related documents (including Award Agreements and definitions in a Participant’s written employment agreement), the following definitions shall apply:

 

2.1 “Affiliate” means a person or entity which controls, is controlled by, or is under common control with the Company. 

 

2.2 “Award” means a grant of an Option, Share Appreciation Right, Restricted Shares, Restricted Share Units, Unrestricted Shares, Dividend Equivalent Rights or cash-based award under the Plan. 

 

2.3 “Award Agreement” means a written or electronic agreement or other instrument that evidences and sets out the terms and conditions of an Award. 

 

2.4 “Benefit Arrangement” shall have the meaning set forth in Section 14 hereof. 

 

2.5 “Board” means the Board of Directors of the Company. 

 

2.6 “Cause” means, unless otherwise provided in an applicable written employment agreement between a Participant and the Company, a Subsidiary or an Affiliate (in which case such other definition shall apply to this Plan for such Participant), (i) actual dishonesty intended to result in substantial personal enrichment at the expense of the Company or of any subsidiary of the Company, (ii) the conviction of a felony, or (iii) repeated willful and deliberate failure or refusal to perform the duties normally associated with a Participant’s position which is not remedied in a reasonable period of time after receipt of written notice from the Company 

 

2.7 “Change in Control” means, unless otherwise provided in an applicable written employment agreement between a Participant and the Company, a Subsidiary or an Affiliate (in which case such other definition shall apply to this Plan for such Participant), the happening of an event, which shall be deemed to have occurred upon the earliest to occur of the following events: 

 

(i)The dissolution or liquidation of the Company;  

 

(ii)The sale or other disposition of all or substantially all of the assets of the Company;  

 

(iii)The merger or consolidation of the Company with or into another corporation or other entity, other than, in either case, a merger or consolidation of the Company in which holders of shares of the Company’s voting securities immediately prior to the merger or consolidation will have more than 50% of the ownership of voting capital stock of the surviving corporation immediately after the merger or consolidation (on a fully diluted basis), which voting securities are to be held in the same proportion (on a fully diluted basis) as such holders ownership of voting capital stock of the Company immediately before the merger or consolidation;  

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(iv)The date any entity, Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act), other than (i) the Company, or (ii) any of its Subsidiaries, or (iii) any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Subsidiaries, or (iv) any Affiliate (as such term is defined in Rule 405 promulgated under the Securities Act) of any of the foregoing, shall have acquired beneficial ownership of, or shall have acquired voting control over, 50% or more of the outstanding shares of the Company’s voting capital stock (on a fully diluted basis), unless the transaction pursuant to which such Person, entity or group acquired such beneficial ownership or control resulted from the original issuance by the Company of shares of its voting capital stock and was approved by at least a majority of Directors who were either members of the Board on the date that this Plan was originally adopted by the Board or members of the Board for at least twelve (12) months before the date of such approval; or  

 

(v)The first day after the date of this Plan when Directors are elected such that there is a change in the composition of the Board such that a majority of Directors have been members of the Board for less than twelve (12) months, unless the nomination for election of each new Director who was not a Director at the beginning of such twelve (12) month period was approved by a vote of at least sixty percent (60%) of the Directors then still in office who were Directors at the beginning of such period.  

 

Notwithstanding the foregoing, the Board may provide for a different definition of a Change of Control in an Award Agreement if such Award is subject to the requirements of Code Section 409A and the Award will become payable on a Change of Control. Notwithstanding the foregoing, to the extent “Change of Control” is a payment trigger and not merely a vesting trigger for any payment provided hereunder that is not exempt from Code Section 409A, “Change of Control” means a change in the ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, as described in Treas, Reg. Section 1.409A-3(i)(5), but replacing the term “Company” for the term “corporation” in such regulation.

 

2.8 “Code” means the Internal Revenue Code of 1986, as now in effect or as hereafter amended, and the rules and regulations promulgated thereunder. 

 

2.9 “Committee” means the Compensation Committee of the Board, or, if the Board so elects, a different committee of, and designated from time to time by resolution of, the Board, which shall be constituted as provided in Section 3.1. 

 

2.10 “Disability” means, unless otherwise provided in an applicable written employment agreement between a Participant and the Company, a Subsidiary or an Affiliate (in which case such other definition shall apply to this Plan for such Participant), a Participant’s physical or mental condition resulting from any medically determinable physical or mental impairment that renders such Participant incapable of engaging in any substantial gainful employment and that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than 365 days. Notwithstanding the foregoing, a Participant shall not be deemed to be Disabled as a result of any condition that: 

 

(a)Was contracted, suffered, or incurred while such Participant was engaged in, or resulted from such Participant having engaged in, a felonious activity; 

 

(b)Resulted from an intentionally self-inflicted injury or an addiction to drugs, alcohol, or substances which are not administered under the direction of a licensed physician as part of a medical treatment plan; or 

 

(c)Resulted from service in the Armed Forces of the United States for which such Participant received or is receiving a disability benefit or pension from the United States, or from service in the armed forces of any other country irrespective of any disability benefit or pension. 

 

The Disability of a Participant and the date on which a Participant ceases to be employed by reason of Disability shall be determined by the Company, in accordance with uniform principles consistently applied, on the basis of such evidence as the Committee and the Company deem necessary and desirable, and its good faith determination shall be conclusive for all purposes of the Plan. The Committee or the Company shall have the right to require a Participant to submit to an examination by a physician or physicians and to submit to such reexaminations as the Committee or the Company shall require in order to make a determination concerning the Participant’s physical or mental condition; provided, however, that a Participant may not be required to undergo a medical examination more often than once each 180 days, nor at any time after the normal date of the Participant’s Retirement. 

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If any Participant engages in any occupation or employment (except for rehabilitation as determined by the Committee) for remuneration or profit, which activity would be inconsistent with the finding of Disability, or if the Committee, on the recommendation of the Company, determines on the basis of a medical examination that a Participant no longer has a Disability, or if a Participant refuses to submit to any medical examination properly requested by the Committee or the Company, then in any such event, the Participant shall be deemed to have recovered from such Disability. The Committee in its discretion may revise this definition of “Disability” for any grant, except to the extent that the Disability is a payment event under a 409A Award.

 

2.11 “Dividend Equivalent Right” means a right, granted to a Participant under Section 12 hereof, to receive cash, Shares, other Awards or other property equal in value to dividends paid with respect to a specified number of Shares, or other periodic payments. 

 

2.12 “Effective Date” means the date that the Plan is approved by the Board. 

 

2.13 “Exchange Act” means the Securities Exchange Act of 1934, as now in effect or as hereafter amended. 

 

2.14 “Fair Market Value” means the value of a Share, determined as follows: if on the Grant Date or other determination date the Shares are listed on an established national or regional share exchange, is admitted to quotation on the New York Stock Exchange (“NYSE”) or is publicly traded on an established securities market, the Fair Market Value of a Share shall be the closing price of the Shares on such exchange or in such market (if there is more than one such exchange or market the Committee shall determine the appropriate exchange or market) on the Grant Date or such other determination date (or if there is no such reported closing price, the Fair Market Value shall be the mean between the highest bid and lowest asked prices or between the high and low sale prices on such trading day) or, if no sale of Shares is reported for such trading day, on the next preceding day on which any sale shall have been reported. If the Shares are not listed on such an exchange, quoted on such system or traded on such a market, Fair Market Value shall be the value of the Shares as determined by the Committee in good faith; provided that such valuation with respect to any Award that the Company intends to be a stock right not providing for the deferral of compensation under Treas. Reg. Section 1.409A-1(b)(5)(i) (Non-Qualified Options) shall be determined by the reasonable application of a reasonable valuation method, as described in Treas. Reg Section 1.409A-1(b)(5)(iv)(B). 

 

2.15 “Family Member” means a person who is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including adoptive relationships, of the Participant, any person sharing the Participant’s household (other than a tenant or employee), a trust in which any one or more of these persons have more than fifty percent of the beneficial interest, a foundation in which any one or more of these persons (or the Participant) control the management of assets, and any other entity in which one or more of these persons (or the Participant) own more than fifty percent of the voting interests. 

 

2.16 “409A Award” means any Award that is treated as a deferral of compensation subject to the requirements of Code Section 409A. 

 

2.17 “Good Reason” shall mean, unless otherwise provided in an applicable written employment agreement between a Participant and the Company, a Subsidiary or an Affiliate (in which case such other definition shall apply to this Plan for such Participant), the initial existence of one or more of the following conditions arising without the consent of a Participant provided that such Participant provides notice to the Company of the existence of such condition within 90 days of the initial existence of the condition, the Company does not remedy the condition within 30 days after receiving notice, and such Participant actually terminates employment with the Company within 30 days following the Company’s failure to remedy the condition: 

 

(a)A material diminution in a Participant’s base salary in effect immediately before the date of the Change in Control or as increased from time to time thereafter; 

 

(b)A material diminution in a Participant’s authority, duties, or responsibilities; 

 

(c)A material diminution in the authority, duties, or responsibilities of the supervisor to whom a Participant is required to report, including a requirement that a Participant report to a corporate officer or employee instead of reporting directly to the Board; 

 

(d)A material diminution in the budget over which a Participant retains authority; 

 

(e)A material change in the geographic location at which a Participant must perform the services related to his or her position; or 

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(f)Any other action or inaction that constitutes a material breach by the Company of any agreement under which a Participant provides services to the Company. 

 

2.18 “Grant Date” means the date on which the Committee approves an Award or such later date as may be specified by the Committee. 

 

2.19 “Incentive Stock Option” means an “incentive stock option” within the meaning of Section 422 of the Code, or the corresponding provision of any subsequently enacted tax statute, as amended from time to time. 

 

2.20 “Non-Qualified Option” means an Option that is not an Incentive Stock Option. 

 

2.21 “Option” means an option to purchase Shares pursuant to the Plan, which may either be an Incentive Stock Option or a Non-Qualified Option. 

 

2.22 “Option Price” means the exercise price for each Share subject to an Option. 

 

2.23 “Other Agreement” shall have the meaning set forth in Section 14 hereof. 

 

2.24 “Outside Director” means a member of the Board who is not an officer or employee of the Company, or of any Affiliate. 

 

2.25 “Participant” means a person who receives or holds an Award under the Plan. 

 

2.26 “Performance Award” means an Award made subject to the attainment of performance goals (as described in Section 13) over a performance period of up to 10 years. 

 

2.27 “Plan” means the Zivo Bioscience, Inc. 2019 Omnibus Long-Term Incentive Plan. 

 

2.28 “Reorganization” means any reorganization, merger or consolidation of the Company with one or more other entities which does not constitute a Change in Control. 

 

2.29 “Restricted Share” means a Share awarded to a Participant pursuant to Section 10 hereof. 

 

2.30 “Restricted Share Unit” means a bookkeeping entry representing the equivalent of a Share awarded to a Participant pursuant to Section 10 hereof. 

 

2.31 “Retirement” means termination of Service with consent of the Committee on or after age 62, or any other definition established by the Committee, in its discretion, either in any Award Agreement or in writing after the grant of any Award, provided that the definition of Retirement with respect to the timing of payment (and not merely vesting) of any 409A Award cannot be changed after the Award is granted. 

 

2.32 “SAR Exercise Price” means the per share exercise price of an SAR granted to a Participant under Section 9 hereof. 

 

2.33 “Securities Act” means the Securities Act of 1933, as now in effect or as hereafter amended. 

 

2.34 “Service” means service as a Service Provider to the Company or a Subsidiary or Affiliate. Unless otherwise stated in the applicable Award Agreement, a Participant’s change in position or duties shall not result in interrupted or terminated Service, so long as such Participant continues to be a Service Provider to the Company or a Subsidiary or Affiliate. Subject to the preceding sentence, whether a termination of Service shall have occurred for purposes of the Plan shall be determined by the Committee, which determination shall be final, binding and conclusive. With respect to the timing of payment (and not merely vesting) of any 409A Award, whether a termination of Service shall have occurred shall be determined in accordance with the definition of “Separation from Service” under Treas. Reg. Section 1.409(A)-1(h). 

 

2.35 “Service Provider” means an employee, officer or Director of the Company or a Subsidiary or Affiliate, or a consultant or adviser providing services to the Company or a Subsidiary or Affiliate. 

 

2.36 “Share” or “Shares” means the common shares of the Company. 

 

2.37 “Share Appreciation Right” or “SAR” means a right granted to a Participant under Section 9 hereof. 

 

2.38 “Subsidiary” means any “subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code. 

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2.39 “Substitute Awards” means Awards granted upon assumption of, or in substitution for, outstanding awards previously granted by a company or other entity acquired by the Company or a Subsidiary or Affiliate or with which the Company or a Subsidiary or Affiliate combines. 

 

2.40 “Ten Percent Shareholder” means an individual who owns more than ten percent (10%) of the total combined voting power of all classes of outstanding shares of the Company or any Subsidiary. In determining share ownership, the attribution rules of Section 424(d) of the Code shall be applied. 

 

2.41 “Termination Date” means the date upon which an Option shall terminate or expire, as set forth in Section 8.3 hereof. 

 

2.42 “Company” means Zivo Bioscience, Inc., a Nevada corporation. 

 

2.43 “Unrestricted Share Award” means an Award pursuant to Section 11 hereof. 

 

Section 3 ADMINISTRATION OF THE PLAN 

 

3.1 Committee. The Plan shall be administered by or pursuant to the direction of the Committee. The Committee shall have such powers and authorities related to the administration of the Plan as are consistent with the governing documents of the Company and applicable law. The Committee shall have full power and authority to take all actions and to make all determinations required or provided for under the Plan, any Award or any Award Agreement and shall have full power and authority to take all such other actions and make all such other determinations not inconsistent with the specific terms and provisions of the Plan that the Committee deems to be necessary or appropriate to the administration of the Plan, any Award or any Award Agreement. Subject to the governing documents of the Company and applicable law, the Committee may delegate all or any portion of its authority under the Plan to a subcommittee of Directors and/or officers of the Company for the purposes of determining or administering Awards granted to persons who are not then subject to the reporting requirements of Section 16 of the Exchange Act. The interpretation and construction by the Committee of any provision of the Plan, any Award or any Award Agreement shall be final, binding and conclusive. The Committee shall consist of not less than two (2) members of the Board, which members shall be “Non-Employee Directors” as defined in Rule 16b-3 under the Exchange Act (or such greater number of members which may be required by said Rule 16b-3) and which members shall qualify as “independent” under any applicable stock exchange rules. 

 

3.2 Terms of Awards. Subject to the other terms and conditions of the Plan, the Committee shall have full and final authority to: 

 

(i) Designate Participants, 

 

(ii) Determine the type or types of Awards to be made to a Participant, 

 

(iii) Determine the number of Shares to be subject to an Award, 

 

(iv) establish the terms and conditions of each Award (including, but not limited to, the exercise price of any Option, the nature and duration of any restriction or condition (or provision for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture of an Award or the Shares subject thereto, and any terms or conditions that may be necessary to qualify Options as Incentive Stock Options) or to ensure exemption from or compliance with Code Section 409A, 

 

(v)Prescribe the form of each Award Agreement evidencing an Award, and 

 

(vi)Amend, modify, or supplement the terms of any outstanding Award. Notwithstanding the foregoing, no amendment, modification or supplement of any Award shall, without the consent of the Participant, impair the Participant’s rights under such Award, or subject to the requirements of Code Section 409A any Award that was excluded from Code Section 409A coverage upon grant, and no amendment, modification or supplement of any Award that would be treated as repricing under the rules of the stock exchange or market on which the Shares are listed or quoted shall be made without approval of the Company’s shareholders. 

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The Company may retain the right in an Award Agreement to cause a forfeiture of the gain realized by a Participant on account of actions taken by the Participant in violation or breach of or in conflict with any employment agreement, non-competition agreement, any agreement prohibiting solicitation of employees or others of the Company or a Subsidiary or Affiliate or any confidentiality obligation with respect to the Company or a Subsidiary or Affiliate or otherwise in competition with the Company or a Subsidiary or Affiliate, to the extent specified in such Award Agreement applicable to the Participant. Furthermore, unless the Committee provides otherwise in the applicable Award Agreement, the Company may annul an Award if the Participant is an employee of the Company or a Subsidiary or Affiliate and is terminated for Cause as defined in the applicable Award Agreement or the Plan, as applicable.

 

Notwithstanding the foregoing, no amendment or modification may be made to an outstanding Option or SAR which reduces the Option Price or SAR Exercise Price, either by lowering the Option Price or SAR Exercise Price or by canceling the outstanding Option or SAR and granting a replacement or substitute Option or SAR with a lower exercise price, or exchange any outstanding Option or SAR with cash or other awards, in each case, without the approval of Company’s shareholders, provided, that, appropriate adjustments may be made to outstanding Options and SARs pursuant to Section 16.

 

3.3 Deferral Arrangement. The Committee may permit or require the deferral of any award payment into a deferred compensation arrangement, subject to compliance with the provisions of Section 17, Code Section 409A, in each case, where applicable, and such other rules and procedures as it may establish, which may include provisions for the payment or crediting of interest or dividend equivalents, including converting such credits into deferred Share equivalents and restricting deferrals to comply with hardship or unforeseeable emergency distribution rules affecting 401(k) plans and 409A Awards. Notwithstanding the foregoing, no deferral shall be allowed if the deferral opportunity would violate Code Section 409A. 

 

3.4 No Liability. No member of the Board or of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award or Award Agreement. 

 

3.5 Book Entry. Notwithstanding any other provision of this Plan to the contrary, the Company or a Subsidiary or Affiliate may elect to satisfy any requirement under this Plan for the delivery of Share certificates through the use of book-entry. 

 

3.6 Minimum Vesting. Except as otherwise provided in a Participant’s Award Agreement or employment agreement, subject to Section 16.3, any Award (or portion thereof) shall have a minimum vesting period of one year from the Grant Date; provided, however, that Awards (including any Unrestricted Share Award) with respect to 5% of the total Shares authorized to be issued under the Plan pursuant to Section 4 may have a vesting period of less than one year. For the avoidance of doubt, except as otherwise provided in a Participant’s Award Agreement or employment agreement, subject to Section 16.3, no installment or portion of any Award may vest earlier than one year from the Grant Date. 

 

Section 4 SHARES SUBJECT TO THE PLAN 

 

Subject to adjustment as provided in Section 16 hereof, the aggregate number of Shares available for issuance under the Plan shall be Fifty-Two Million (52,000,000) to cover two initial grants to two Participants, plus an additional Fifty Million (50,000,000). Such One Hundred Two Million (102,000,000) Shares shall also be the aggregate number of Shares in respect of which Incentive Stock Options may be granted under the Plan. The aggregate number of Shares available under this Section 4 shall be reduced by one Share for every one Share subject to an Award under this Plan. Shares issued or to be issued under the Plan shall be authorized but unissued Shares or issued Shares that have been reacquired by the Company or a Subsidiary or Affiliate. If any Shares covered by an Award are not purchased or are forfeited, or if an Award is settled in cash in lieu of Shares or otherwise terminates without delivery of Shares subject thereto, then the number of Shares related to such Award and subject to such forfeiture or termination shall not be counted against the limit set forth above, but shall again be available for making Awards under the Plan. If an Award (other than a Dividend Equivalent Right) is denominated in Shares, the number of Shares covered by such Award, or to which such Award relates, shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan as provided above. Notwithstanding the foregoing, the following Shares shall not be available for future grant: (a) Shares tendered or withheld in payment of the exercise price of an Option and (b) Shares withheld by the Company or otherwise received by the Company to satisfy tax withholding obligations in connection with an Award. In addition, all Shares covered by a SAR that were issued under the net settlement or net exercise of such SAR shall be counted against the number Shares available for issuance under the Plan and Shares purchased in the open market using Option proceeds shall not be available for future grant under the Plan.

 

The Committee shall have the right to substitute or assume Awards in connection with mergers, reorganizations, separations, or other transactions to which Section 424(a) of the Code or Section 1.409A-1(b)(5)(v)(D) of the Treasury Regulations applies. The number of Shares reserved pursuant to Section 4 may be increased by the corresponding number of Awards assumed and, in the case of a substitution, by the net increase in the number of Shares subject to Awards before and after the substitution.

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Section 5 EFFECTIVE DATE, DURATION AND AMENDMENTS 

 

5.1 Effective Date. The Plan shall be effective as of the Effective Date. 

 

5.2 Term. The Plan shall terminate automatically ten (10) years after the Effective Date and may be terminated on any earlier date as provided in Section 5.3. The termination of the Plan shall not affect any Award outstanding on the date of such termination. 

 

5.3 Amendment and Termination of the Plan. The Board may, at any time and from time to time, amend, suspend, or terminate the Plan as to any Shares as to which Awards have not been made. An amendment shall be contingent on approval of the Company’s shareholders to the extent stated by the Board, required by applicable law or required by applicable stock exchange listing requirements. No Awards shall be made after termination of the Plan. No amendment, suspension or termination of the Plan shall (i) without the consent of the Participant, impair rights or obligations under any Award theretofore awarded under the Plan, nor (ii) accelerate any payment under any 409A Award except as otherwise permitted by the regulations under Section 409A of the Code. No Awards shall be granted until the Plan has been approved by the Board, and no Incentive Stock Options shall be granted until the Plan has been approved by shareholders in accordance with Code Section 422. 

 

Section 6 AWARD ELIGIBILITY AND LIMITATIONS 

 

6.1 Service Providers and Other Persons. Subject to this Section 6, Awards may be made under the Plan to: (i) any Service Provider to the Company or a Subsidiary or Affiliate, including any Service Provider who is an officer or Director of the Company or a Subsidiary or Affiliate, as the Committee shall determine and designate from time to time, (ii) any Outside Director and (iii) any other individual whose participation in the Plan is determined to be in the best interests of the Company by the Committee. 

 

6.2 Successive Awards and Substitute Awards. An eligible person may receive more than one Award, subject to such restrictions as are provided herein. Notwithstanding Sections 8.1 and 9.1, the Option Price of an Option or the grant price of an SAR that is a Substitute Award may be less than 100% of the Fair Market Value of a Share on the date of grant of the Substitute Award provided that the Option Price or grant price is determined in accordance with the principles of Code Section 424 and the regulations thereunder or the principles of Treasury Regulation Section 1.409A-1(b)(5)(v)(D). 

 

6.3 Limitation on Shares Subject to Awards. During any time when the Company has a class of equity security registered under Section 12 of the Exchange Act: 

 

(i) The maximum number of Shares subject to Options or SARs that can be awarded under the Plan to any person eligible for an Award under this Section 6 is Thirty Five Million (35,000,000) per calendar year; and 

 

(ii) The maximum number of Shares that can be awarded under the Plan, other than pursuant to an Option or SARs, to any person eligible for an Award under this Section 6 is Five Million (5,000,000) per calendar year. 

 

The preceding limitations in this Section 6.3 are subject to adjustment as provided in Section 16 hereof.

 

Section 7 AWARD AGREEMENT 

 

Each Award granted pursuant to the Plan shall be evidenced by an Award Agreement, in such form or forms as the Committee shall from time to time determine. Award Agreements granted from time to time or at the same time need not contain similar provisions but shall be consistent with the terms of the Plan. Each Award Agreement evidencing an Award of Options shall specify whether such Options are intended to be Non-Qualified Options or Incentive Stock Options, and in the absence of such specification such options shall be deemed Non-Qualified Options.

 

Section 8 TERMS AND CONDITIONS OF OPTIONS 

 

8.1 Option Price. The Option Price of each Option shall be fixed by the Committee and stated in the Award Agreement evidencing such Option. The Option Price of each Option shall be at least the Fair Market Value on the Grant Date of a Share; provided, however, that in the event that a Participant is a Ten Percent Shareholder, the Option Price of an Option granted to such Participant that is intended to be an Incentive Stock Option shall be not less than 110% of the Fair Market Value of a Share on the Grant Date. 

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8.2 Vesting. Subject to Sections 8.3, 8.4, 8.5 and 16.3 hereof, each Option granted under the Plan shall become exercisable at such times and under such conditions (including based on achievement of performance goals and/or future service requirements) as shall be determined by the Committee and stated in the Award Agreement. For purposes of this Section 8.2, fractional numbers of Shares subject to an Option shall be rounded to the next nearest whole number. 

 

8.3 Term. Each Option granted under the Plan shall terminate, and all rights to purchase Shares thereunder shall cease, upon the expiration of ten years from the date such Option is granted, or under such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Committee and stated in the Award Agreement relating to such Option (the “Termination Date”); provided, however, that in the event that the Participant is a Ten Percent Shareholder, an Option granted to such Participant that is intended to be an Incentive Stock Option shall not be exercisable after the expiration of five years from its Grant Date. 

 

8.4 Termination of Service.  

 

(a) Unless the Committee otherwise provides in an Award Agreement or in a written employment or other agreement with the Participant, upon the termination of a Participant’s Service, except to the extent that such termination is due to death, Disability, or Retirement, any Option held by such Participant that has not vested shall immediately be deemed forfeited and any otherwise vested Option or unexercised portion thereof shall terminate three (3) months after the date of such termination of Service, but in no event later than the date of expiration of the Option.  

 

(b) Unless the Committee otherwise provides in an Award Agreement or in a written employment or other agreement with the Participant, if a Participant’s Service is terminated for Cause, the Option or unexercised portion thereof shall terminate as of the date of such termination.  

 

(c) Unless the Committee otherwise provides in an Award Agreement or in a written employment agreement with the Participant, if a Participant’s Service is terminated (i) due to Retirement, any Option held by such Participant that has not vested shall immediately be deemed forfeited, subject to the Committee’s discretion to accelerate the vesting of all or part of such Option, and any vested Option or Option that vests upon the Committee’s exercise of its discretion shall continue in accordance with its terms and shall expire upon its normal date of expiration (except that an Incentive Stock Option shall cease to be an Incentive Stock Option upon the expiration of three (3) months from the date of the Participant’s Retirement and thereafter shall be a Non-Qualified Option), (ii) due to Disability, the Option shall become fully vested and shall continue in accordance with its terms and shall expire upon its normal date of expiration (except that an Incentive Stock Option shall cease to be an Incentive Stock Option upon the expiration of twelve (12) months from the termination of the Participant’s service due to Disability and thereafter shall be a Non-Qualified Option) or (iii) due to death, any Option of the deceased Participant shall become fully vested and shall continue in accordance with its terms and shall expire on its normal date of expiration (except that an Incentive Stock Option shall cease to be an Incentive Stock Option upon the expiration of twelve (12) months from the date of the Participant’s death and thereafter shall be a Non-Qualified Option). Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service. 

 

8.5 Limitations on Exercise of Option. Notwithstanding any other provision of the Plan, in no event may any Option be exercised, in whole or in part, after the occurrence of an event referred to in Section 16 hereof which results in termination of the Option. 

 

8.6 Method of Exercise. An Option that is exercisable may be exercised by the Participant’s delivery to the Company of written notice of exercise on any business day, at the Company’s principal office, on the form specified by the Committee. Such notice shall specify the number of Shares with respect to which the Option is being exercised and, except to the extent provided in Section 8.12.3, Section 8.12.4 or Section 18.3, shall be accompanied by payment in full of the Option Price of the Shares for which the Option is being exercised, plus the amount (if any) of federal and/or other taxes which the Company or an Affiliate may, in its judgment, be required to withhold with respect to an Award. The minimum number of Shares with respect to which an Option may be exercised, in whole or in part, at any time shall be the lesser of (i) 100 Shares or such lesser number set forth in the applicable Award Agreement and (ii) the maximum number of Shares available for purchase under the Option at the time of exercise. 

 

8.7 Rights of Holders of Options. A Participant holding or exercising an Option shall have none of the rights of a shareholder (for example, the right to receive cash or dividend payments or distributions attributable to the subject Shares or to direct the voting of the subject Shares) until the Shares covered thereby are fully paid and issued to the Participant. Except as provided in Section 16 hereof, no adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date of such issuance. 

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8.8 Delivery of Share Certificates. Promptly after the exercise of an Option to purchase Shares by a Participant and the payment in full of the Option Price, unless the Company shall then have uncertificated Shares, such Participant shall be entitled to the issuance of a Share certificate or certificates evidencing his/her ownership of the Shares purchased upon such exercise. 

 

8.9 Transferability of Options. Except as provided in Section 8.10, during the lifetime of a Participant, only the Participant (or, in the event of legal incapacity or incompetency, the Participant’s guardian or legal representative) may exercise an Option. Except as provided in Section 8.10, no Option shall be assignable or transferable by the Participant to whom it is granted, other than by will or the laws of descent and distribution. Any attempt to transfer an Option in violation of this Plan shall render such Option null and void. 

 

8.10 Family Transfers. Unless expressly prohibited in the applicable Award Agreement, a Participant may transfer, not for value, all or part of an Option which is not an Incentive Stock Option to any Family Members. For the purpose of this Section 8.10, a “not for value” transfer is a transfer which is (i) a gift to a trust for the benefit of the participant and/or one or more Family Members, or (ii) a transfer under a domestic relations order in settlement of marital property rights. Following a transfer under this Section 8.10, any such Option shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer. Subsequent transfers of transferred Options are prohibited except in accordance with this Section 8.10 or by will or the laws of descent and distribution. The events of termination of Service of Section 8.4 hereof shall continue to be applied with respect to the original Participant, following which the Option shall be exercisable by the transferee only to the extent, and for the periods specified, in Section 8.4. 

 

8.11 Limitations on Incentive Stock Options. An Option shall constitute an Incentive Stock Option only (i) if the Participant granted such Option is an employee of the Company or any Subsidiary of the Company; (ii) to the extent specifically provided in the related Award Agreement; (iii) to the extent that the aggregate Fair Market Value (determined at the time the Option is granted) of the Shares with respect to which all Incentive Stock Options held by such Participant become exercisable for the first time during any calendar year (under the Plan and all other plans of the Participant’s employer and its Affiliates) does not exceed $100,000; and (iv) the Company’s shareholders approve the Plan within one year of the date of its approval by the Board. This limitation shall be applied by taking Options into account in the order in which they were granted. Notwithstanding anything to the contrary contained herein, any Option designated as an Incentive Stock Option that fails to meet the requirements of Code Section 422 shall be a Non-Qualified Option. 

 

8.12 Form of Payment. 

 

8.12.1 General Rule. Payment of the Option Price for the Shares purchased pursuant to the exercise of an Option shall be made in cash or in cash equivalents acceptable to the Company. 

 

8.12.2 Surrender of Shares. Payment of the Option Price for Shares purchased pursuant to the exercise of an Option may be made all or in part through the tender to the Company of Shares, which shall be valued, for purposes of determining the extent to which the Option Price has been paid thereby, at their Fair Market Value on the date of exercise or surrender. 

 

8.12.3 Cashless Exercise. To the extent permitted by law, payment of the Option Price for Shares purchased pursuant to the exercise of an Option and the applicable tax withholding requirements may be made all or in part by delivery (on a form acceptable to the Committee) of an irrevocable direction to a registered securities broker acceptable to the Company to sell Shares and to deliver all or part of the sales proceeds to the Company in payment of the Option Price and any withholding taxes described in Section 18.3. 

 

8.12.4 Other Forms of Payment. To the extent permitted by the Committee in its sole discretion, payment of the Option Price for Shares purchased pursuant to exercise of an Option may be made in any other form that is consistent with applicable laws, regulations and rules. 

 

Section 9 TERMS AND CONDITIONS OF SHARE APPRECIATION RIGHTS 

 

9.1 Right to Payment and Grant Price. An SAR shall confer on the Participant to whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one Share on the date of exercise over (B) the grant price of the SAR as determined by the Committee. The Award Agreement for an SAR shall specify the grant price of the SAR, which shall be at least the Fair Market Value of a Share on the Grant Date. SARs may be granted in conjunction with all or part of an Option granted under the Plan or at any subsequent time during the term of such Option, in conjunction with all or part of any other Award or without regard to any Option or other Award. 

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9.2 Other Terms. The Committee shall determine at the Grant Date or thereafter, the time or times at which and the conditions under which an SAR may be exercised (including based on achievement of performance goals and/or future service requirements), the time or times at which SARs shall cease to be or become exercisable following termination of Service or upon other conditions (provided that no SAR shall be exercisable following the tenth anniversary of its Grant Date), the method of exercise, method of settlement, form of consideration payable in settlement, method by or forms in which Shares will be delivered or deemed to be delivered to Participants, whether or not an SAR shall be in tandem or in combination with any other Award, and any other terms and conditions of any SAR. 

 

9.3 Transferability of SARs. Unless the Committee otherwise provides in an Award Agreement or any amendment or modification thereof, no SAR may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, otherwise than by will or by the laws of descent and distribution. Further, all SARs granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant. Any attempt to transfer a SAR in violation of this Plan shall render such SAR null and void. 

 

Section 10 TERMS AND CONDITIONS OF RESTRICTED SHARES AND RESTRICTED SHARE UNITS 

 

10.1 Grant of Restricted Shares or Restricted Share Units. Awards of Restricted Shares or Restricted Share Units may be made to eligible persons. Restricted Shares or Restricted Share Units may also be referred to as performance shares or performance share units. If so indicated in the Award Agreement at the time of grant, a Participant may vest in more than 100% of the number of Restricted Share Units awarded to the Participant. 

 

10.2 Restrictions. Subject to Section 3.6, at the time an Award of Restricted Shares or Restricted Share Units is made, the Committee may, in its sole discretion, establish a period of time (a “Restricted Period”) applicable to such Restricted Shares or Restricted Share Units, during which a portion of the Shares related to such Award shall become nonforfeitable or vest, on each anniversary of the Grant Date or otherwise, as the Committee may deem appropriate. Each Award of Restricted Shares or Restricted Share Units may be subject to a different Restricted Period. The Committee may, in its sole discretion, at the time a grant of Restricted Shares or Restricted Share Units is made, prescribe restrictions in addition to or other than the expiration of the Restricted Period, including the satisfaction of corporate or individual performance conditions, which may be applicable to all or any portion of the Restricted Shares or Restricted Share Units in accordance with Section 13.1 and 13.2. Neither Restricted Shares nor Restricted Share Units may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the Restricted Period or prior to the satisfaction of any other restrictions prescribed by the Committee with respect to such Restricted Shares or Restricted Share Units. Each Participant may designate a beneficiary upon his or her death for the Restricted Shares or Restricted Share Units awarded to him or her under the Plan. If a Participant fails to designate a beneficiary, the Participant shall be deemed to have designated his or her estate as his or her beneficiary. Any attempt to transfer an Award of Restricted Shares or Restricted Share Units in violation of this Plan shall render such Award null and void. 

 

10.3 Restricted Shares Certificates. The Company shall issue, in the name of each Participant to whom Restricted Shares have been granted, Share certificates representing the total number of Restricted Shares granted to the Participant, as soon as reasonably practicable after the Grant Date. The Committee may provide in an Award Agreement that either (i) the Company shall hold such certificates for the Participant’s benefit until such time as the Restricted Shares are forfeited to the Company or the restrictions lapse, or (ii) such certificates shall be delivered to the Participant, provided, however, that such certificates shall bear a legend or legends that comply with the applicable securities laws and regulations and makes appropriate reference to the restrictions imposed under the Plan and the Award Agreement. 

 

10.4 Rights of Holders of Restricted Shares. Unless the Committee otherwise provides in an Award Agreement, holders of Restricted Shares shall have the right to vote such Shares and the right to receive any dividends or distributions declared or paid with respect to such Shares. All distributions, if any, received by a Participant with respect to Restricted Shares as a result of any share split, share dividend, combination of shares, or other similar transaction shall be subject to the restrictions applicable to the original Award. If any such dividends or distributions are paid in cash, unless otherwise specified in the Award Agreement, the right to receive such cash payments shall be subject to the same restrictions on transferability as the Restricted Shares with respect to which they are paid, and shall be accumulated during the Restricted Period and paid or forfeited when the Restricted Shares vest or are forfeited. In no event shall any cash dividend or distribution be paid later than 21⁄2 months after the end of the tax year in which the applicable Restricted Period ends. 

 

10.5 Rights of Holders of Restricted Share Units. 

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10.5.1 Dividend Equivalent Rights. Unless the Committee otherwise provides in an Award Agreement, holders of Restricted Share Units shall have no rights as shareholders of the Company including the right to direct the voting of the subject Shares underlying a Restricted Share Unit Award. A holder of a Restricted Share Units shall not have the right to receive Dividend Equivalent Rights to the extent such Restricted Share Units are not vested.  

 

10.5.2 Creditor’s Rights. A holder of Restricted Share Units shall have no rights other than those of a general creditor of the Company. Restricted Share Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Award Agreement. 

 

10.6 Termination of Service. Unless the Committee otherwise provides in an Award Agreement or in a written agreement with the Participant after the Award Agreement is issued, upon the termination of a Participant’s Service, any Restricted Shares or Restricted Share Units held by such Participant that have not vested, or with respect to which all applicable restrictions and conditions have not lapsed, shall immediately be deemed forfeited, except to the extent that such termination is due to death, Disability, or Retirement. Further, the Award Agreement may specify that the vested portion of the Award shall continue to be subject to the terms of any applicable transfer or other restriction. Unless the Committee otherwise provides in an Award Agreement or in a written agreement with the Participant after the Award Agreement is issued, if a Participant’s Service is terminated due to (i) death or Disability, any outstanding Award of Restricted Shares or Restricted Share Units shall be fully vested, and the Shares subject to such Awards shall be delivered in accordance with the terms of Section 10.7 below; or (ii) due to Retirement, any outstanding Award of Restricted Shares or Restricted Share Units shall be forfeited, subject to the Committee’s discretion to accelerate all or part of such Award, and the Shares subject to such Awards that are not forfeited shall be delivered in accordance with the terms of Section 10.7 below; provided, however, in the case of any Award relating to Restricted Share Units, the Shares subject to such Award shall be delivered in accordance with their original vesting schedule. Upon forfeiture of any Restricted Shares or Restricted Share Units, a Participant shall have no further rights with respect to such Award, including but not limited to any right to vote Restricted Shares or any right to receive dividends with respect to Restricted Shares or Restricted Share Units. 

 

10.7 Delivery of Shares. Except as otherwise specified in an Award Agreement with respect to a particular Award of Restricted Shares or unless the Company shall then have uncertificated Shares, within thirty (30) days of the expiration or termination of the Restricted Period, a certificate or certificates representing all Shares relating to such Award which have not been forfeited shall be delivered to the Participant or to the Participant’s beneficiary or estate, as the case may be. Except as otherwise specified with respect to a particular Award of Restricted Share Units or unless the Company shall then have uncertificated Shares, within thirty (30) days of the satisfaction of the vesting criterion applicable to such Award, a certificate or certificates representing all Shares relating to such Award which have vested shall be issued or transferred to the Participant. 

 

Section 11 TERMS AND CONDITIONS OF UNRESTRICTED SHARE AWARDS 

 

The Committee may, in its sole discretion, grant (or sell at such purchase price determined by the Committee) an Unrestricted Share Award to any Participant pursuant to which such Participant may receive Shares free of any restrictions (“Unrestricted Shares”) under the Plan. Unrestricted Share Awards may be granted or sold as described in the preceding sentence in respect of past services and other valid consideration, or in lieu of, or in addition to, any cash compensation due to such Participant.

 

Section 12 TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS 

 

12.1 Dividend Equivalent Rights. A Dividend Equivalent Right is an Award entitling the recipient to receive credits based on cash distributions that would have been paid on the Shares specified in the Dividend Equivalent Right (or other Award to which it relates) if such Shares had been issued to and held by the recipient. A Dividend Equivalent Right may be granted hereunder to any Participant, provided that any Award of Dividend Equivalent Rights shall comply with, or be exempt from, Code Section 409A. Dividend Equivalent Rights may not be granted hereunder relating to Shares which are subject to Options or Share Appreciation Rights. Notwithstanding any other provision of the Plan, no dividend or Dividend Equivalent Right shall provide for any crediting or payment on any Award or portion of an Award that is not vested. The terms and conditions of Dividend Equivalent Rights shall be specified in the Award. Dividend Equivalent Rights may be settled in cash or Shares or a combination thereof, in a single installment or installments, all determined in the sole discretion of the Committee. A Dividend Equivalent Right granted as a component of another Award may provide that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other Award, unless such settlement would cause an Award that is otherwise exempt from Code Section 409A to become subject to and not in compliance with Code Section 409A (e.g., in the case of a Non-Qualified Option). Such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other Award. A Dividend Equivalent Right granted as a component of another Award may also contain terms and conditions different from such other Award. 

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12.2 Termination of Service. Except as may otherwise be provided by the Committee either in the Award Agreement or in a written agreement with the Participant after the Award Agreement is issued, a Participant’s rights in all Dividend Equivalent Rights shall automatically terminate upon the Participant’s termination of Service for any reason. 

 

Section 13 TERMS AND CONDITIONS OF PERFORMANCE AWARDS 

 

13.1 Performance Conditions. The right of a Participant to exercise or receive a grant or settlement of any Performance Award, and the timing thereof, may be subject to such corporate or individual performance conditions as may be specified by the Committee. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions, and may exercise its discretion to reduce the amounts payable under any Award subject to performance conditions. 

 

13.2 Performance Awards. If and to the extent that the Committee determines to grant a Performance Award to a Participant, the grant, exercise and/or settlement of such Performance Award may be contingent upon achievement of pre-established performance goals and other terms set forth in this Section 13.2. 

 

13.2.1 Performance Goals Generally. The performance goals for such Performance Awards may consist of one or more business criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by the Committee consistent with this Section 13.2. Performance goals may be objective and may require that the level or levels of performance targeted by the Committee result in the achievement of performance goals that are “substantially uncertain.” The Committee may determine that such Performance Awards shall be granted, exercised and/or settled upon achievement of any one performance goal or that two or more of the performance goals must be achieved as a condition to grant, exercise and/or settlement of such Performance Awards. Performance goals may differ for Performance Awards granted to any one Participant or to different Participants. 

 

13.2.2 Business Criteria. One or more of the business criteria for the Company, on a consolidated basis, and/or specified Subsidiaries or business units of the Company or the Company (except with respect to the total shareholder return and earnings per share criteria), may be used by the Committee in establishing performance goals for such Performance Awards, including without limitation: (1) total shareholder return (share price appreciation plus dividends), (2) net income, (3) earnings per share, (4) return on equity, (5) return on assets, (6) return on invested capital, (7) increase in the market price of Shares or other securities, (8) revenues, (9) net operating income, (10) operating margin (operating income divided by revenues), (11) earnings before interest, taxes, depreciation and amortization (EBITDA) or adjusted EBITDA, (12) the performance of the Company in any one or more of the items mentioned in clauses (1) through (11) in comparison to the average performance of the companies used in a self-constructed peer group for measuring performance under an Award, or (13) the performance of the Company in any one or more of the items mentioned in clauses (1) through (11) in comparison to a budget or target for measuring performance under an Award. Business criteria may be measured on an absolute basis or on a relative basis (i.e., performance relative to peer companies) and on a GAAP or non-GAAP basis. 

 

13.2.3 Timing For Establishing Performance Goals. Performance goals shall be established, in writing, not later than 90 days or such later time after the beginning of any performance period applicable to such Performance Awards. 

 

13.2.4 Settlement of Performance Awards; Other Terms. Settlement of such Performance Awards shall be in cash, Shares, other Awards or other property, in the discretion of the Committee. The Committee may, in its discretion, reduce the amount of a settlement otherwise to be made in connection with such Performance Awards. The Committee shall specify in the Award Agreement the circumstances in which such Performance Awards shall be paid or forfeited in the event of termination of Service by the Participant prior to the end of a performance period or settlement of Performance Awards. Notwithstanding the foregoing, unless the Committee otherwise provides in an Award Agreement, if a Participant’s service is terminated (i) for any reason other than death, Disability or Retirement, any unvested and unearned portion of such Award shall be immediately forfeited; (ii) due to a Participant’s death or Disability, the Award shall be fully vested and settled at the end of the applicable performance period based on and if required by the Committee in its discretion following, certification by the Committee regarding the achievement of the performance goals applicable to such Award; and (iii) due to a Participant’s Retirement, any unvested and unearned portion of such Award shall be immediately forfeited subject to the Committee’s discretion to accelerate the vesting of such Award based on the actual achievement of any applicable performance goals. 

 

13.3 Committee Determinations. All determinations as to the establishment of performance goals, the amount of any Performance Award pool or potential individual Performance Awards and as to the achievement of performance goals relating to Performance Awards shall be made by the Committee. 

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13.4 Dividends or Dividend Equivalent Rights for Performance Awards. Notwithstanding anything to the foregoing, the right to receive dividends, Dividend Equivalent Rights or distributions with respect to a Performance Award shall only be granted to a Participant if and to the extent that the underlying Award is vested and earned by the Participant. 

 

Section 14 PARACHUTE LIMITATIONS.  

 

Notwithstanding any other provision of this Plan or of any other agreement, contract, or understanding heretofore or hereafter entered into by a Participant with the Company or a Subsidiary or affiliate, except an agreement, contract, policy or understanding entered into that expressly references and modifies or excludes application of this paragraph (an “Other Agreement”), and notwithstanding any formal or informal plan or other arrangement for the direct or indirect provision of compensation to the Participant (including groups or classes of Participants or beneficiaries of which the Participant is a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for the Participant (a “Benefit Arrangement”), if the Participant is a “disqualified individual,” as defined in Section 280G(c) of the Code, any Option, Restricted Shares, Restricted Share Units or Performance Award held by that Participant and any right to receive any payment or other benefit under this Plan shall not become exercisable or vested and shall not be settled (i) to the extent that such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for the Participant under this Plan, all Other Agreements, and all Benefit Arrangements, would cause any payment or benefit to the Participant under this Plan to be considered a “parachute payment” within the meaning of Section 280G(b)(2) of the Code as then in effect (a “Parachute Payment”) and (ii) if, as a result of receiving a Parachute Payment, the aggregate after-tax amounts received by the Participant from the Company under this Plan, all Other Agreements, and all Benefit Arrangements would be less than the maximum after-tax amount that could be received by the Participant without causing any such payment or benefit to be considered a Parachute Payment. In the event that the receipt of any such right to exercise, vesting, payment, or benefit under this Plan, in conjunction with all other rights, payments, or benefits to or for the Participant under any Other Agreement or any Benefit Arrangement would cause the Participant to be considered to have received a Parachute Payment under this Plan that would have the effect of decreasing the after-tax amount received by the Participant as described in clause (ii) of the preceding sentence those rights, payments, or benefits under this Plan, any Other Agreements, and any Benefit Arrangements that are to be reduced or eliminated so as to avoid having the payment or benefit to the Participant under this Plan be deemed to be a Parachute Payment shall be determined in the following order and priority: first, there shall be reduced or eliminated any such right, payment or benefit that is excluded from the coverage of Code Section 409A, and then there shall be reduced or eliminated any right, payment or benefit that is subject to Code Section 409A (with the reduction in rights, payments or benefits subject to Code Section 409A occurring in the reverse chronological order in which such rights, payments or benefits would otherwise be or become vested, exercisable or settled).

 

Section 15 REQUIREMENTS OF LAW 

 

15.1 General. The Company shall not be required to sell, deliver or cause to be issued any Shares under any Award if the sale or issuance of such Shares would constitute a violation by the Participant, any other individual exercising an Option or receiving the benefit of an Award, or the Company of any provision of any law or regulation of any governmental authority, including without limitation any federal or state securities laws or regulations. If at any time the Company shall determine, in its discretion, that the listing, registration or qualification of any Shares subject to an Award upon any securities exchange or under any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance or purchase of shares hereunder, no Shares may be issued or sold to the Participant or any other individual exercising an Option pursuant to such Award unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company, and any delay caused thereby shall in no way affect the date of termination of the Award. Any determination in this connection by the Company shall be final, binding, and conclusive. The Company may, but shall in no event be obligated to, cause to be registered any securities covered hereby pursuant to the Securities Act. The Company shall not be obligated to take any affirmative action in order to cause the exercise of an Option or the issuance of Shares pursuant to the Plan to comply with any law or regulation of any governmental authority. 

 

15.2 Rule 16b-3. During any time when the Company has a class of equity security registered under Section 12 of the Exchange Act, it is the intent of the Company that Awards pursuant to the Plan and the exercise of Options granted hereunder will qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the extent that any provision of the Plan or action by the Committee does not comply with the requirements of Rule 16b-3, it shall be deemed inoperative to the extent permitted by law and deemed advisable by the Committee and shall not affect the validity of the Plan. In the event that Rule 16b-3 is revised or replaced, the Board may exercise its discretion to modify this Plan in any respect necessary to satisfy the requirements of, or to take advantage of any features of, the revised exemption or its replacement. 

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Section 16 EFFECT OF CHANGES IN CAPITALIZATION 

 

16.1 Changes in Shares. If the number of outstanding Shares is increased or decreased or the Shares are changed into or exchanged for a different number or kind of shares or other securities of the Company on account of any recapitalization, reclassification, share split, reverse split, combination of shares, exchange of shares, share dividend or other distribution payable in capital stock, or other increase or decrease in such Shares effected without receipt of consideration by the Company, occurring after the Effective Date, the number and kinds of Shares for which grants of Options and other Awards may be made under the Plan shall be adjusted proportionately and accordingly by the Company. In addition, the number and kind of Shares for which Awards are outstanding shall be adjusted proportionately and accordingly so that the proportionate interest of the Participant immediately following such event shall, to the extent practicable, be the same as immediately before such event. Any such adjustment in outstanding Options or SARs shall not change the aggregate Option Price or SAR Exercise Price payable with respect to Shares that are subject to the unexercised portion of an outstanding Option or SAR, as applicable, but shall include a corresponding proportionate adjustment in the Option Price or SAR Exercise Price per Share; provided, however, that all adjustments shall be made in compliance with Code Section 409A or Code Section 422, as applicable. The conversion of any convertible securities of the Company shall not be treated as an increase in Shares effected without receipt of consideration. Notwithstanding the foregoing, in the event of any distribution to the Company’s shareholders of securities of any other entity or other assets (including an extraordinary cash dividend but excluding a non-extraordinary dividend payable in cash or in shares of the Company) without receipt of consideration by the Company, the Company may, in such manner as the Company deems appropriate, adjust (i) the number and kind of Shares subject to outstanding Awards and/or (ii) the exercise price of outstanding Options and Share Appreciation Rights to reflect such distribution. 

 

16.2 Reorganization. 

 

16.2.1 Company is the Surviving Entity. Subject to Section 16.3 hereof, if the Company shall be the surviving entity in any Reorganization, any then outstanding Option or SAR shall pertain to and apply to the securities to which a holder of the number of Shares subject to such Option or SAR would have been entitled immediately following such Reorganization, with a corresponding proportionate adjustment of the Option Price or SAR Exercise Price per share so that the aggregate Option Price or SAR Exercise Price thereafter shall be the same as the aggregate Option Price or SAR Exercise Price of the Shares remaining subject to the Option or SAR immediately prior to such Reorganization; provided, however, that all adjustments shall be made in compliance with Code Section 409A. Subject to any contrary language in an Award Agreement, any restrictions applicable to such Award shall apply as well to any replacement securities received by the Participant as a result of the Reorganization. In the event of a Reorganization described in the preceding sentence, any outstanding Restricted Share Units shall be adjusted so as to apply to the securities that a holder of the number of Shares subject to the Restricted Share Units would have been entitled to receive immediately following such transaction; provided, however, that all adjustments shall be made in compliance with Code Section 409A. 

 

16.2.2 Company is not the Surviving Entity. Subject to Section 16.3 hereof, if the Company shall not be the surviving entity in the event of any Reorganization, the Committee in its discretion may provide for the assumption or continuation of any outstanding Options, SARs, Restricted Shares and Restricted Share Units, or for the substitution for such Options, SARs, Restricted Shares and Restricted Share Units of new options, share appreciation rights, restricted shares and restricted shares units relating to the shares of stock of a successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to the number of shares (disregarding any consideration that is not common shares) and option and share appreciation right exercise prices, in which event the outstanding Options, SARs, Restricted Shares and Restricted Share Units shall continue in the manner and under the terms (assumption or substitution) so provided. Appropriate adjustments shall be made in compliance with Code Section 409A, including the provisions of Treas. Reg. Section 1.409A-1(b)(5)(v)(D) regarding substitutions and assumptions of stock rights by reason of a corporate transaction. Notwithstanding the foregoing, in the event such successor entity (or a parent or subsidiary thereof) refuses to assume or substitute Awards as provided above, pursuant to a Reorganization described in this Section 16.2.2, such nonassumed or nonsubstituted Awards shall have their vesting accelerate as to all shares subject to such Award, with any Performance Awards being deemed to have vested at their target levels. 

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16.3 Change in Control. 

 

16.3.1 Accelerated Vesting and Payment. Subject to the provisions of Section 16.3.2 below and except as otherwise provided for in an Award Agreement, in the event of a Change in Control in which the successor/acquirer company does not issue Alternative Awards (as defined below) within the meaning of Section 16.3.2, all outstanding Awards shall immediately become vested, with any Performance Awards being deemed to have vested at their target levels. Notwithstanding anything to the contrary contained in this Section 16.3, the treatment of any 409A Award in connection with a Change in Control shall be governed by Section 17 and the requirements of Code Section 409A. 

 

16.3.2 Alternative Awards. Notwithstanding Section 16.3.1, no cancellation, acceleration of exercisability, vesting, cash settlement or other payment shall occur with respect to any Option, Share Appreciation Right, Restricted Share or Restricted Share Unit if the Committee reasonably determines in good faith prior to the occurrence of a Change in Control that such Award shall be honored or assumed, or new rights substituted therefor (such honored, assumed or substituted award hereinafter called an “Alternative Award”), by a Participant’s employer (or the parent or an affiliate of such employer) immediately following the Change in Control; provided that any such Alternative Award must: 

 

(a) Be based on stock which is traded on an established securities market; 

 

(b) Provide such Participant with rights and entitlements substantially equivalent to or better than the rights, terms and conditions applicable under such award, including, but not limited to, an identical or better exercise or vesting schedule and identical or better timing and methods of payment; 

 

(c) Have substantially equivalent economic value to such award (determined at the time of the Change in Control in accordance with principles applicable under Section 424 of the Internal Revenue Code); 

 

(d) Have terms and conditions which provide that in the event that a Participant’s Service is involuntarily terminated by the successor employer without Cause or by a Participant for Good Reason, in either case within the one-year period following the Change in Control, all of such Participant’s Option and/or SARs shall be deemed immediately and fully exercisable, the Restricted Period shall lapse as to each of such Participant’s outstanding Restricted Share or Restricted Share Unit Awards, and each such Alternative Award shall be settled for a payment per each share of stock subject to the Alternative Award in cash, in immediately transferable, publicly traded securities or in a combination thereof, in an amount equal to, in the case of an Option or SAR, the excess of the Fair Market Value of such stock on the date of the Participant’s termination of Service over the corresponding exercise or base price per share and, in the case of any Restricted Shares or Restricted Share Unit award, the Fair Market Value of the number of shares of Common Stock subject or related thereto; and 

 

(e) Solely with respect to any Performance Awards, be converted into restricted share awards at the target levels, with any new “restricted period” based on the remaining performance period previously applicable to such Performance Awards. 

 

16.3.3 No Amendment. Notwithstanding Section 5.3, the provisions of this Section 16.3 may not be amended in any respect for two years following a Change in Control. 

 

16.4 Adjustments. Adjustments under this Section 16 related to Shares or other securities of the Company shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. No fractional Shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding down to the nearest whole Share. The Committee shall determine the effect of a Change in Control upon Awards other than Options, SARs, Restricted Shares and Restricted Share Units and such effect shall be set forth in the appropriate Award Agreement. The Committee may provide in the Award Agreements at the Grant Date, or any time thereafter with the consent of the Participant, for different provisions to apply to an Award in place of those described in Sections 16.1, 16.2 and 16.3. 

 

16.5 No Limitations on Company. The making of Awards pursuant to the Plan shall not affect or limit in any way the right or power of the Company or a Subsidiary or Affiliate to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or transfer all or any part of its business or assets. 

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Section 17 CODE SECTION 409A 

 

17.1 Generally. This Plan and any Award granted hereunder is intended to comply with, or be exempt from, the provisions of Code Section 409A, and shall be interpreted and administered in a manner consistent with that intention. 

 

17.2 409A Awards. The provisions of this Section 17 shall apply to any 409A Award or any portion an Award that is or becomes subject to Code Section 409A, notwithstanding any provision to the contrary contained in the Plan or the Award Agreement applicable to such Award. 409A Awards include, without limitation: 

 

17.2.1 Any Non-Qualified Option or SAR that permits the deferral of compensation other than the deferral of recognition of income until the exercise of the Award; and 

 

17.2.2 Any other Award that either (i) provides by its terms for settlement of all or any portion of the Award on one or more dates following the Short-Term Deferral Period (as defined below), or (ii) permits or requires the Participant to elect one or more dates on which the Award will be settled. 

 

Subject to any applicable U.S. Treasury Regulations promulgated pursuant to Section 409A or other applicable guidance, the term “Short-Term Deferral Period” means the period ending on the later of (i) the date that is 2 1⁄2 months from the end of the Company’s fiscal year in which the applicable portion of the Award is no longer subject to a “substantial risk of forfeiture”, or (ii) the date that is 2 1⁄2 months from the end of the Participant’s taxable year in which the applicable portion of the Award is no longer subject to a substantial risk of forfeiture. For this purpose, the term “substantial risk of forfeiture” shall have the meaning set forth in any applicable U.S. Treasury Regulations promulgated pursuant to Code Section 409A or other applicable guidance.

 

17.3 Deferral and/or Payment Elections. Except as otherwise permitted or required by Section 409A or any applicable Treasury Regulations promulgated pursuant to Code Section 409A or other applicable guidance, the following rules shall apply to any deferral and/or payment elections (each, an “Election”) that may be permitted or required by the Committee pursuant to a 409A Award: 

 

17.3.1 All Elections must be in writing and specify the amount of the payment in settlement of an Award being deferred, as well as the time and form of payment as permitted by this Plan; 

 

17.3.2 All Elections shall be made by the end of the Participant’s taxable year prior to the year in which services commence for which an Award may be granted to such Participant; provided, however, that if the Award qualifies as “performance-based compensation” for purposes of Code Section 409A and is based on services performed over a period of at least twelve (12) months, then the Election may be made no later than six (6) months prior to the end of such period; and 

 

17.3.3 Elections shall continue in effect until a written election to revoke or change such Election is received by the Company, except that a written election to revoke or change such Election must be made prior to the last day for making an Election determined in accordance with Section 17.3.2 above or as permitted by Section 17.4. 

 

17.4 Subsequent Elections. Any 409A Award in respects to which the Committee permits a subsequent Election to delay the payment or change the form of payment in settlement of such Award shall comply with the following requirements: 

 

17.4.1 No subsequent Election may take effect until at least twelve (12) months after the date on which the subsequent Election is made; 

 

17.4.2 Each subsequent Election related to a payment in settlement of an Award not described in Section 17.5.2, 17.5.3 or 17.5.6 must result in a delay of the payment for a period of not less than five (5) years from the date such payment would otherwise have been made; and 

 

17.4.3 No subsequent Election related to a payment pursuant to Section 17.5.4 shall be made less than twelve (12) months prior to the date of the first scheduled installment relating to such payment. 

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17.5 Payments Pursuant to Deferral Elections. No payment in settlement of a 409A Award may commence earlier than: 

 

17.5.1 Separation from service (as determined pursuant to Treasury Regulations or other applicable guidance); 

 

17.5.2 The date the Participant’s Service terminates due to Disability; 

 

17.5.3 Death; 

 

17.5.4 A specified time (or pursuant to a fixed schedule) that is either (i) specified by the Committee upon the grant of an Award and set forth in the Award Agreement evidencing such Award, or (ii) specified by the Participant in an Election complying with the requirements of Section 17.3 and/or 17.4, as applicable; 

 

17.5.5 To the extent provided by Treasury Regulations promulgated pursuant to Code Section 409A or other applicable guidance, a change in the ownership or effective control or the Company or in the ownership of a substantial portion of the assets of the Company; or 

 

17.5.6 The occurrence of an Unforeseeable Emergency. 

 

Notwithstanding anything else herein to the contrary, to the extent that a Participant is a “Specified Employee” (as determined in accordance with the requirements of Code Section 409A), no payment pursuant to Section 17.5.1 in settlement of a 409A Award may be made before the date which is six (6) months after such Participant’s date of Separation from Service, or, if earlier, the date of the Participant's death.

 

17.6 Unforeseeable Emergency. The Committee shall have the authority to provide in the Award Agreement evidencing any 409A Award for payment in settlement of all or a portion of such Award in the event that a Participant establishes, to the satisfaction of the Committee, the occurrence of an Unforeseeable Emergency (as defined in Code Section 409A). In such event, the amount(s) distributed with respect to such Unforeseeable Emergency cannot exceed the amounts necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of such payment(s), after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise, by cancellation of any deferral election previously made by the Participant or by liquidation of the Participant's assets (to the extent the liquidation of such assets would not itself cause severe financial hardship). All payments with respect to an Unforeseeable Emergency shall be made in a lump sum as soon as practicable following the Committee’s determination that an Unforeseeable Emergency has occurred. The occurrence of an Unforeseeable Emergency shall be judged and determined by the Committee. The Committee’s decision with respect to whether an Unforeseeable Emergency has occurred and the manner in which, if at all, the payment in settlement of an Award shall be altered or modified, shall be final, conclusive, and not subject to approval or appeal. 

 

17.7 No Acceleration of Payments. Notwithstanding anything to the contrary herein, this Plan does not permit the acceleration of the time or schedule of any payment under this Plan in settlement of a 409A Award, except as permitted by Code Section 409A and/or Treasury Regulations promulgated pursuant to Code Section 409A or other applicable guidance. 

 

Section 18 GENERAL PROVISIONS 

 

18.1 Disclaimer of Rights. No provision in the Plan or in any Award or Award Agreement shall be construed to confer upon any individual the right to remain in the employ or service of the Company or a Subsidiary or Affiliate, or to interfere in any way with any contractual or other right or authority of the Company or a Subsidiary or Affiliate either to increase or decrease the compensation or other payments to any individual at any time, or to terminate any employment or other relationship between any individual and the Company or a Subsidiary or Affiliate. In addition, notwithstanding anything contained in the Plan to the contrary, unless otherwise stated in the applicable Award Agreement, no Award granted under the Plan shall be affected by any change of duties or position of the Participant, so long as such Participant continues to be a Director, officer, consultant or employee of the Company or a Subsidiary or Affiliate. The obligation of the Company to pay any benefits pursuant to this Plan shall be interpreted as a contractual obligation to pay only those amounts described herein, in the manner and under the conditions prescribed herein. The Plan shall in no way be interpreted to require the Company to transfer any amounts to a third party or otherwise hold any amounts in trust or escrow for payment to any Participant or beneficiary under the terms of the Plan. 

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18.2 Nonexclusivity of the Plan. Neither the adoption of the Plan nor the submission of the Plan to the Company’s shareholders for approval shall be construed as creating any limitations upon the right and authority of the Board to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class or classes of individuals or specifically to a particular individual or particular individuals) as the Board in its discretion determines desirable, including, without limitation, the granting of options otherwise than under the Plan. 

 

18.3 Withholding Taxes. The Company or a Subsidiary or Affiliate, as the case may be, shall have the right to deduct from payments of any kind otherwise due to a Participant (or require a Participant to pay) any federal, state, or local taxes of any kind required by law to be withheld with respect to the vesting of or other lapse of restrictions applicable to an Award or upon the issuance of any Shares upon the exercise of an Option or pursuant to an Award. At the time of such vesting, lapse, or exercise, the Participant shall pay to the Company or a Subsidiary or Affiliate, as the case may be, any amount that the Company or a Subsidiary or Affiliate may reasonably determine to be necessary to satisfy such withholding obligation. A Participant may elect to use the cashless exercise procedure described in Section 8.12.3 to satisfy the applicable withholding obligation, or the Company may elect to, or may cause a Subsidiary or Affiliate to withhold Shares otherwise issuable to the Participant in satisfaction of a Participant’s withholding obligations not to exceed the statutory maximum withholding rate. The Participant may elect to satisfy such obligations, in whole or in part, by delivering to the Company or a Subsidiary or Affiliate Shares already owned by the Participant. Any Shares so delivered or withheld shall have an aggregate Fair Market Value equal to such withholding obligations not to exceed the statutory maximum withholding rate. The Fair Market Value of the Shares used to satisfy such withholding obligation shall be determined by the Company as of the date that the Shares are withheld. A Participant who is permitted to make and who has made an election pursuant to this Section 18.3 to deliver Shares may satisfy his/her withholding obligation only with Shares that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements. 

 

18.4 Captions. The use of captions in this Plan or any Award Agreement is for the convenience of reference only and shall not affect the meaning of any provision of the Plan or such Award Agreement. 

 

18.5 Other Provisions. Each Award granted under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Committee, in its sole discretion. 

 

18.6 Number and Gender. With respect to words used in this Plan, the singular form shall include the plural form, the masculine gender shall include the feminine gender, etc., as the context requires. 

 

18.7 Severability. If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction. 

 

18.8 Governing Law. The validity and construction of this Plan and the instruments evidencing the Awards hereunder shall be governed by the laws of the State of Michigan, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan and the instruments evidencing the Awards granted hereunder to the substantive laws of any other jurisdiction. 

 

18.9 Compensation Recoupment Policy. Notwithstanding any provision in the Plan, in any Award, or in any employment, consulting or severance agreement with the Company or any Subsidiary, all Awards under this Plan shall be subject to any compensation recoupment, other compensation recovery, or clawback policy of the Company that may be applicable to any Participant, as in effect from time to time and as approved by the Committee or the Board. 

 

18.10 Complete Statement of Plan. This document is a complete statement of the Plan.  

 

As adopted by the Board as of November 20, 2019.

 

 

	ZIVO Bioscience, Inc.

	 

	By:

	/s/ Philip M. Rice II

	 

	Philip M. Rice II

	Its:

	Chief Financial Officer

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