Document:

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  Exhibit
10.1

DRIVEN DELIVERIES, INC.

2018 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN

 

1. DEFINITIONS.

 

Unless
otherwise specified or unless the context otherwise requires, the
following terms, as used in this Driven Deliveries, Inc. 2018
Employee, Director and Consultant Stock Plan, have the following
meanings:

 

	

(a) “Administrator” means the
Board, unless it has delegated power to act on its behalf to the
Committee, in which case the Administrator means the
Committee.

 

	

(b)
“Affiliate” means a
corporation or other entity controlled by the Company and
designated by the Administrator as such.

 

	

(c)
“Award” means a Stock
Appreciation Right, Stock Option or Stock Award.

 

	

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

 

	
(e)
“Cause” shall include (and
is not limited to) dishonesty with respect to the Company or any
Affiliate, insubordination, substantial malfeasance or non-feasance
of duty, unauthorized disclosure of confidential information,
breach by the Participant of any provision of any employment,
consulting, advisory, nondisclosure, non-competition or similar
agreement between the Participant and the Company or any Affiliate,
and conduct substantially prejudicial to the business of the
Company or any Affiliate. The determination of Cause shall be made
by the Administrator in its sole discretion. Cause is not limited
to events which have occurred prior to a Participant’s
termination of employment or services, nor is it necessary that the
Administrator’s finding of Cause occur prior to the
termination of employment or services. If the Administrator
determines, subsequent to a Participant’s termination of
employment or services but prior to the vesting of a Stock Option,
Stock Appreciation Right or Stock Award or exercise of a Stock
Option or Stock Appreciation Right, that either prior or subsequent
to the Participant’s termination of employment or services
the Participant engaged in conduct which would constitute Cause,
then the unvested Stock Option, Stock Appreciation Right or Stock
Award, as applicable, is immediately cancelled and any vested Stock
Options or Stock Appreciation Rights cease to be exercisable.
Notwithstanding the foregoing, if the Participant and the Company
or an Affiliate have entered into an employment or services
agreement which defines the term “Cause” (or a similar
term) which is in effect at the time of termination, such
definition shall govern for purposes of determining whether such
Participant has been terminated for Cause for purposes of this
Plan.

 

	

(f)
“Code” means the Internal
Revenue Code of 1986, as amended from time to time, and any
successor thereto.

 

	

(g)
“Commission” means the
Securities and Exchange Commission or any successor
agency.

 

	

(h)
“Committee” means a
committee of Directors appointed by the Board to administer this
Plan. With respect to Stock Options granted at the time the Company
is publicly held, if any, insofar as the Committee is responsible
for granting Stock Options to Participants hereunder, it shall
consist solely of two or more directors, each of whom is a
“Non-Employee Director” within the meaning of Rule
16b-3 and each of whom is also an “outside director”
under Section 162(m) of the Code.

 

	

(i)
“Company” means Driven
Deliveries, Inc., a Delaware corporation.

 

	

(j)
“Director” means a member of the
Company’s Board of Directors.

 

	
(k)
“Disability” or
“Disabled”
means mental or physical illness that entitles the Participant to
receive benefits under the long-term disability plan of the Company
or an Affiliate, or if the Participant is not covered by such a
plan or the Participant is not an employee of the Company or an
Affiliate, a medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve
months, and which renders the Participant unable to engage in any
substantial gainful activity; provided, however, that a Disability
shall not qualify under this Plan if it is the result of (i) a
willfully self-inflicted injury or willfully self-induced sickness;
or (ii) an injury or disease contracted, suffered or incurred
while participating in a criminal offense.  

 

Notwithstanding the
foregoing, if the Participant and the Company or an Affiliate have
entered into an employment or services agreement which defines the
term “Disability” (or a similar term), such definition
shall govern for purposes of determining whether such Participant
suffers a Disability for purposes of this Plan. The Administrator
shall make the determination both of whether Disability has
occurred and the date of its occurrence (unless a procedure for
such determination is set forth in another agreement between the
Company and such Participant, in which case such procedure shall be
used for such determination). If requested, the Participant shall
be examined by a physician selected or approved by the
Administrator, the cost of which examination shall be paid for by
the Company. The determination of Disability for purposes of this
Plan shall not be construed to be an admission of disability for
any other purpose.

 

 

1

 

 

 

	

(l)
“Effective Time” means the date of
adoption of the Plan by the Company’s Board, March ,
2019

 

	

(m)
“Eligible Individual” means
any officer, employee or director of the Company or an Affiliate,
or any consultant or advisor providing services to the Company or
an Affiliate.

 

	

(n)
“Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time, and
any successor thereto.

 

	

(o)
“Fair Market Value” means,
as of any given date, the fair market value of the Stock as
determined by the Administrator or under procedures established by
the Administrator and in accordance with Section 409A of the
Code.

 

	
(p)
“Family Member” means any
child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or
sister-in-law of a Participant (including adoptive relationships);
any person sharing the Participant’s household (other than a
tenant or employee); any trust in which the Participant and any of
these persons have substantially all of the beneficial interest;
any foundation in which the Participant and any of these persons
control the management of the assets; any corporation, partnership,
limited liability company or other entity in which the Participant
and any of these other persons are the direct and beneficial owners
of substantially all of the equity interests (provided the
Participant and these other persons agree in writing to remain the
direct and beneficial owners of all such equity interests); and any
personal representative of the Participant upon the
Participant’s death for purposes of administration of the
Participant’s estate or upon the Participant’s
incompetency for purposes of the protection and management of the
assets of the Participant.

 

	

(q)
“Incentive Stock Option”
means any Stock Option intended to be and designated as an
“incentive stock option” within the meaning of
Section 422 of the Code.

 

	

(r)
“Non-Employee Director”
means a Director who is not an officer or employee of the Company
or any Affiliate.

 

	

(s)
“Non-Qualified Stock
Option” means any Stock Option that is not an
Incentive Stock Option.

 

	

(t)
“Optionee” means a person
who holds a Stock Option.

 

	

(u)
“Participant” means a
person granted an Award.

 

	

(v)
“Plan” means this Driven
Deliveries, Inc. 2018 Employee, Director and Consultant Stock
Plan.

 

	
 (w)
“Representative” means
(i) the person or entity acting as the executor or
administrator of a Participant’s estate pursuant to the last
will and testament of a Participant or pursuant to the laws of the
jurisdiction in which the Participant had his or her primary
residence at the date of the Participant’s death;
(ii) the person or entity acting as the guardian or temporary
guardian of a Participant; (iii) the person or entity which is
the beneficiary of the Participant upon or following the
Participant’s death; or (iv) any person to whom a Stock
Option has been transferred with the permission of the
Administrator or by operation of law; provided that only one of the
foregoing shall be the Representative at any point in time as
determined under applicable law and recognized by the
Administrator.

 

	

(x)
“Stock” means shares of the
Company’s common stock, par value $.001 per
share.

 

 

2

 

 

 

	

(y)
“Stock Appreciation Right”
means a right granted under Section 6.

 

	

(z)
“Stock Award” means an
Award, other than a Stock Option or Stock Appreciation Right, made
in Stock or denominated in shares of Stock. A Stock Award may be
settled in Stock or cash, as determined in the discretion of the
Administrator.

 

	

(aa)
“Stock Option” means an
option granted under Section 5.

 

	

(bb)
“Subsidiary” means any
company during any period in which it is a “subsidiary
corporation” (as such term is defined in Section 424(f)
of the Code) with respect to the Company.

 

	

(cc)
“Ten Percent Holder” means
an individual who owns, or is deemed to own, stock possessing more
than 10% of the total combined voting power of all classes of Stock
of the Company or of any parent or subsidiary corporation of the
Company determined pursuant to the rules applicable to
Section 422(b)(6) of the Code.

 

2. ESTABLISHMENT AND PURPOSE.

 

The
Plan is established by the Company to attract and retain persons
eligible to participate in the Plan, motivate Participants to
achieve long-term Company goals, and further align
Participants’ interests with those of the Company’s
other stockholders. The Plan is adopted as of the Effective Time,
subject to approval by the Company’s stockholders within 12
months before or after such adoption date. Unless the Plan is
discontinued earlier by the Board as provided herein, no Award
shall be granted hereunder on or after the date 10 years after the
effective date.

 

3. ADMINISTRATION; ELIGIBILITY.

 

The
Plan shall be administered by the Administrator; provided, however,
that, if at any time no Committee shall be in office, the Plan
shall be administered by the Board. The Plan may be administered by
different Committees with respect to different groups of Eligible
Individuals.

 

The
Administrator shall have plenary authority to grant Awards pursuant
to the terms of the Plan to Eligible Individuals; provided, however, that each Eligible
Individual must be an officer, employee, director or consultant of
the Company or of an Affiliate at the time the Award is granted.
Notwithstanding the foregoing, the Administrator may authorize the
grant of an Award to a person not then an officer, employee,
director or consultant of the Company or of an Affiliate; provided,
however, that the actual grant of such Award shall be conditioned
upon such person becoming an Eligible Individual at or prior to the
time the Award is granted. Participation shall be limited to
such persons as are selected by the Administrator. The granting of
any Award to any individual shall neither entitle that individual
to, nor disqualify such individual from, participation in any other
Awards.

 

Awards
may be granted as alternatives to, in exchange or substitution for,
or replacement of, awards outstanding under the Plan or any other
plan or arrangement of the Company or an Affiliate (including a
plan or arrangement of a business or entity, all or a portion of
which is acquired by the Company or an Affiliate). The provisions
of Awards need not be the same with respect to each
Participant.

 

 

3

 

 

Among
other things, the Administrator shall have the authority, subject
to the terms of the Plan:

 

	

(a) to select the Eligible Individuals to whom
Awards may from time to time be granted;

 

	

(b)
to
determine whether and to what extent Stock Options, Stock
Appreciation Rights, Stock Awards or any combination thereof are to
be granted hereunder;

 

	

(c)
to
determine the number of shares of Stock to be covered by each Award
granted hereunder;

 

	

(d)
to
approve forms of agreement for use under the Plan;

 

	

(e)
to
determine the terms and conditions, not inconsistent with the terms
of this Plan, of any Award granted hereunder (including, but not
limited to, the option price, any vesting restriction or
limitation, any vesting acceleration or forfeiture waiver and any
right of repurchase, right of first refusal or other transfer
restriction regarding any Award and the shares of Stock relating
thereto, based on such factors or criteria as the Administrator
shall determine);

 

	

(f)
subject
to Section 8(a), to modify, amend or adjust the terms and
conditions of any Award, at any time or from time to time,
including, but not limited to, with respect to (i) performance
goals and targets applicable to performance-based Awards pursuant
to the terms of the Plan and (ii) extension of the
post-termination exercisability period of Stock
Options;

 

	

(g)
to
determine to what extent and under what circumstances Stock and
other amounts payable with respect to an Award shall be
deferred;

 

	

(h)
to
adopt any sub-plans applicable to residents of any specified
jurisdiction as it deems necessary or appropriate in order to
comply with or take advantage of any tax laws applicable to the
Company or to Participants or to otherwise facilitate the
administration of the Plan, which sub-plans may include additional
restrictions or conditions applicable to Stock Options or Shares
acquired upon the exercise of Stock Options;

 

	

(i) to determine the Fair Market Value;
and

 

	

(j)
to
determine the type and amount of consideration to be received by
the Company for any Stock Award issued under
Section 7.

 

The
Administrator shall have the authority to adopt, alter and repeal
such administrative rules, guidelines and practices governing the
Plan as it shall, from time to time, deem advisable, to interpret
the terms and provisions of the Plan and any Award issued under the
Plan (and any agreement relating thereto) and to otherwise
supervise the administration of the Plan.

 

Except
to the extent prohibited by applicable law, the Administrator may
allocate all or any portion of its responsibilities and powers to
any one or more of its members and may delegate all or any portion
of its responsibilities and powers to any other person or persons
selected by it. Any such allocation or delegation may be revoked by
the Administrator at any time. The Administrator may authorize any
one or more of their members or any officer of the Company to
execute and deliver documents on behalf of the
Administrator.

 

Any
determination made by the Administrator or pursuant to delegated
authority pursuant to the provisions of the Plan with respect to
any Award shall be made in the sole discretion of the Administrator
or such delegate at the time of the grant of the Award or, unless
in contravention of any express term of the Plan, at any time
thereafter. All decisions made by the Administrator or any
appropriately delegated officer pursuant to the provisions of the
Plan shall be final and binding on all persons, including the
Company and Participants, unless otherwise determined by the Board
if the Administrator is the Committee.

 

No
member of the Administrator, and no officer of the Company, shall
be liable for any action taken or omitted to be taken by such
individual or by any other member of the Administrator or officer
of the Company in connection with the performance of duties under
this Plan, except for such individual’s own willful
misconduct or as expressly provided by law.

 

 

4

 

 

4. STOCK SUBJECT TO PLAN.

 

Subject
to adjustment as provided in this Section 4, the aggregate
number of shares of Stock which may be delivered under the Plan
shall not exceed a number equal to 15% of the total number of
shares of Stock outstanding immediately following the Effective
Time, assuming for this purpose the conversion into Stock of all
outstanding securities that are convertible by their terms
(directly or indirectly) into Stock; provided, however, that, as of
January 1 of each calendar year, commencing with the year
2019, the maximum number of shares of Stock which may be delivered
under the Plan shall automatically increase by a number sufficient
to cause the number of shares of Stock covered by the Plan to equal
15% of the total number of shares of Stock then outstanding,
assuming for this purpose the conversion into Stock of all
outstanding securities that are convertible by their terms
(directly or indirectly) into Stock.

 

To the
extent any shares of Stock covered by an Award are not delivered to
a Participant or beneficiary thereof because the Award expires, is
forfeited, canceled or otherwise terminated, or the shares of Stock
are not delivered because the Award is settled in cash or used to
satisfy the applicable tax withholding obligation, such shares
shall not be deemed to have been delivered for purposes of
determining the maximum number of shares of Stock available for
delivery under the Plan.

 

In the
event of any Company stock dividend, stock split, combination or
exchange of shares, recapitalization or other change in the capital
structure of the Company, corporate separation or division of the
Company (including, but not limited to, a split-up, spin-off,
split-off or distribution to Company stockholders other than a
normal cash dividend), sale by the Company of all or a substantial
portion of its assets (measured on either a stand-alone or
consolidated basis), reorganization, rights offering, partial or
complete liquidation, or any other corporate transaction, Company
share offering or other event involving the Company and having an
effect similar to any of the foregoing, the Administrator may make
such substitution or adjustments in the (A) number and kind of
shares that may be delivered under the Plan, (B) additional
maximums imposed in the immediately preceding paragraph,
(C) number and kind of shares subject to outstanding Awards,
(D) exercise price of outstanding Stock Options and Stock
Appreciation Rights and (E) other characteristics or terms of
the Awards as it may determine appropriate in its sole discretion
to equitably reflect such corporate transaction, share offering or
other event; provided, however, that the number of shares subject
to any Award shall always be a whole number.

 

5. STOCK OPTIONS.

 

Stock
Options may be granted alone or in addition to other Awards granted
under the Plan and may be of two types: Incentive Stock Options and
Non-Qualified Stock Options. Any Stock Option granted under the
Plan shall be in such form as the Administrator may from time to
time approve.

 

The
Administrator shall have the authority to grant any Participant
Incentive Stock Options, Non-Qualified Stock Options or both types
of Stock Options (in each case with or without Stock Appreciation
Rights). Incentive Stock Options may be granted only to employees
of the Company and its Subsidiaries. To the extent that any Stock
Option is not designated as an Incentive Stock Option or, even if
so designated, does not qualify as an Incentive Stock Option, it
shall constitute a Non-Qualified Stock Option. Incentive Stock
Options may be granted only within 10 years from the date the Plan
is adopted, or the date the Plan is approved by the Company’s
stockholders, whichever is earlier.

 

Stock
Options shall be evidenced by option agreements, each in a form
approved by the Administrator. An option agreement shall indicate
on its face whether it is intended to be an agreement for an
Incentive Stock Option or a Non-Qualified Stock Option. The grant
of a Stock Option shall occur as of the date the Administrator
determines.

 

Anything in the
Plan to the contrary notwithstanding, no term of the Plan relating
to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the
Plan be exercised, so as to disqualify the Plan under
Section 422 of the Code or, without the consent of the
Optionee affected, to disqualify any Incentive Stock Option under
Section 422 of the Code.

 

 

5

 

 

Stock
Options granted under this Section 5 shall be subject to the
following terms and conditions and shall contain such additional
terms and conditions as the Administrator shall deem
desirable.

 

	

(a)
Exercise Price. The exercise price per
share of Stock purchasable under a Stock Option shall be determined
by the Administrator; provided, however, that the exercise price
per share shall be not less than the Fair Market Value per share on
the date the Stock Option is granted, or if the Stock Option is
intended to qualify as an Incentive Stock Option and is granted to
an individual who is a Ten Percent Holder, not less than 110% of
such Fair Market Value per share.

 

	

(b)
Shares. Each option agreement shall
state the number of shares to which it pertains.

 

	

(c)
Option Term. The term of each Stock
Option shall be fixed by the Administrator, but no Incentive Stock
Option shall be exercisable more than 10 years (or five years in
the case of an individual who is a Ten Percent Holder) after the
date the Incentive Stock Option is granted.

 

	
(d)
Exercisability. Except as otherwise
provided herein, Stock Options shall be exercisable at such time or
times, and subject to such terms and conditions, as shall be
determined by the Administrator. If the Administrator provides that
any Stock Option is exercisable only in installments, the
Administrator may at any time waive such installment exercise
provisions, in whole or in part, based on such factors as the
Administrator may determine. In addition, the Administrator may at
any time, in whole or in part, accelerate the exercisability of any
Stock Option, provided that
the Administrator shall not accelerate the exercise date of any
installment of any Incentive Stock Option (and not previously
converted into a Non-Qualified Stock Option pursuant to
Section 9(g)) if such acceleration would violate the annual
exercisability limitation contained in Section 422(d) of the
Code, as described in subsection (f) below.

 

	

(e)
Method of Exercise. Subject to the
provisions of this Section 4, Stock Options may be exercised,
in whole or in part, at any time during the option term by giving
written notice of exercise to the Company or its designee
specifying the number of shares of Stock subject to the Stock
Option to be purchased and by complying with any other condition(s)
set forth in the option agreement.

 

The
option price of any Stock Option shall be paid in full in cash (by
certified or bank check or such other instrument as the Company may
accept) or, unless otherwise provided in the applicable option
agreement, by one or more of the following: (i) in the form of
unrestricted Stock already owned by the Optionee (or, in the case
of the exercise of a Non-Qualified Stock Option, Restricted Stock
subject to a Stock Award hereunder) held for at least 6 months
based in any such instance on the Fair Market Value of the Stock on
the date the Stock Option is exercised; (ii) by certifying
ownership of shares of Stock owned by the Optionee to the
satisfaction of the Administrator for later delivery to the Company
as specified by the Company; (iii) unless otherwise prohibited
by law for either the Company or the Optionee, by irrevocably
authorizing a third party to sell shares of Stock (or a sufficient
portion of the shares) acquired upon exercise of the Stock Option
and remit to the Company a sufficient portion of the sale proceeds
to pay the entire exercise price and any tax withholding resulting
from such exercise; or (iv) by any combination of cash and/or
any one or more of the methods specified in clauses (i),
(ii) and (iii). Notwithstanding the foregoing, the
Administrator shall accept only such payment on exercise of an
Incentive Stock Option as is permitted by Section 422 of the
Code, and a form of payment shall not be permitted to the extent it
would cause the Company to recognize a compensation expense (or
additional compensation expense) with respect to the Stock Option
for financial reporting purposes.

 

If
payment of the option exercise price of a Non-Qualified Stock
Option is made in whole or in part in the form of Restricted Stock,
the number of shares of Stock to be received upon such exercise
equal to the number of shares of Restricted Stock used for payment
of the option exercise price shall be subject to the same
forfeiture restrictions to which such Restricted Stock was subject,
unless otherwise determined by the Administrator.

 

No
shares of Stock shall be issued upon exercise of a Stock Option
until full payment therefor has been made. Upon exercise of a Stock
Option (or a portion thereof), the Company shall have a reasonable
time to issue the Stock for which the Stock Option has been
exercised, and the Optionee shall not be treated as a stockholder
for any purposes whatsoever prior to such issuance. No adjustment
shall be made for cash dividends or other rights for which the
record date is prior to the date such Stock is recorded as issued
and transferred in the Company’s official stockholder
records, except as otherwise provided herein or in the applicable
option agreement.

 

 

6

 

 

 

	

(f)
Limitation on Yearly Exercise for Incentive
Stock Options. The option agreements shall restrict the
amount of Incentive Stock Options which may become exercisable in
any calendar year (under this or any other Incentive Stock Option
plan of the Company or an Affiliate) so that the aggregate Fair
Market Value (determined at the time each Incentive Stock Option is
granted) of the Stock with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee in any calendar
year does not exceed $500,000.

 

	
(g)
Transferability of Stock Options.
Except as otherwise provided in the applicable option agreement, a
Non-Qualified Stock Option (i) shall be transferable by the
Optionee to a Family Member of the Optionee, provided that
(A) any such transfer shall be by gift with no consideration
and (B) no subsequent transfer of such Stock Option shall be
permitted other than by will or the laws of descent and
distribution, and (ii) shall not otherwise be transferable
except by will or the laws of descent and distribution. An
Incentive Stock Option shall not be transferable except by will or
the laws of descent and distribution. A Stock Option shall be
exercisable, during the Optionee’s lifetime, only by the
Optionee or by the guardian or legal representative of the
Optionee, it being understood that the terms “holder”
and “Optionee” include the guardian and legal
representative of the Optionee named in the applicable option
agreement and any person to whom the Stock Option is transferred
(X) pursuant to the first sentence of this Section 4(e)
or pursuant to the applicable option agreement or (Y) by will
or the laws of descent and distribution. Notwithstanding the
foregoing, references herein to the termination of an
Optionee’s employment or provision of services shall mean the
termination of employment or provision of services of the person to
whom the Stock Option was originally granted.

 

	
(h)
Termination by Death. Unless otherwise
provided in the applicable option agreement, if an Optionee’s
employment or provision of services terminates by reason of death,
any Stock Option held by such Optionee may thereafter be exercised
by the Participant’s Representative (i) to the extent
that the Stock Option has become exercisable but has not been
exercised on the date of death and (ii) in the event rights to
exercise the Stock Option accrue periodically, to the extent of a
pro-rata portion through the date of death of any additional
vesting rights that would have accrued on the next vesting date had
the Participant not died. The proration shall be based upon the
number of days accrued in the current vesting period prior to the
Participant’s date of death. If the Participant’s
Representative wishes to exercise the Stock Option, the
Representative must take all necessary steps to exercise the Option
within one year after the date of death of such Participant,
notwithstanding that the Participant might have been able to
exercise the Option as to some or all of the shares on a later date
if the Participant had not died and had continued to be an officer,
employee, director or consultant or, if earlier, within the
originally prescribed term of the Stock Option. In the event of
termination of employment or provision of services due to death, if
an Incentive Stock Option is exercised after the expiration of the
exercise periods that apply for purposes of Section 422 of the
Code, such Stock Option will thereafter be treated as a
Non-Qualified Stock Option.

 

	
 (i)
Termination by Reason of Disability.
Unless otherwise provided in the applicable option agreement, if an
Optionee’s employment or provision of services terminates by
reason of Disability, any Stock Option held by such Optionee may
thereafter be exercised by the Optionee (i) to the extent that
the Stock Option has become exercisable but has not been exercised
on the date of Disability; and (ii) in the event rights to
exercise the Stock Option accrue periodically, to the extent of a
pro rata portion through the date of Disability of any additional
vesting rights that would have accrued on the next vesting date had
the Participant not become Disabled. The proration shall be based
upon the number of days accrued in the current vesting period prior
to the date of Disability. A Disabled Participant may exercise such
rights only within the period ending one year after the date of the
Participant’s termination of employment, directorship or
consultancy, as the case may be, notwithstanding that the
Participant might have been able to exercise the Option as to some
or all of the shares on a later date if the Participant has not
become Disabled and had continued to be an officer, employee,
director or consultant or, if earlier, within the originally
prescribed term of the Stock Option. In the event of termination of
employment or provision of services by reason of Disability, if an
Incentive Stock Option is exercised after the expiration of the
exercise periods that apply for purposes of Section 422 of the
Code, such Stock Option will thereafter be treated as a
Non-Qualified Stock Option.

 

	

(j)
Termination for Cause. Unless otherwise
provided in the applicable option agreement, if an Optionee’s
employment or services terminate for Cause, all outstanding and
unexercised Stock Options as of the time the Optionee is notified
that such Optionee’s employment or services are terminated
for Cause will immediately be cancelled.

 

	
(k)
Other Termination. Unless otherwise
provided in the applicable option agreement, if an Optionee’s
employment or provision of services terminates for any reason other
than death, Disability or Cause, the Optionee may exercise any
Stock Option granted to the Optionee to the extent that the Stock
Option is exercisable on the date of such termination, but only
within such term as the Administrator has designated in the
Optionee’s option agreement. The provisions of this
Section 5(k), and not the provisions of Sections 5(h) and
5(i), shall apply to an Optionee who subsequently becomes Disabled
or dies after the termination of employment or service; provided,
however, that in the case of an Optionee’s Disability or
death within three months after the termination of service, the
Optionee or the Optionee’s survivors may exercise the Stock
Option within one year after the date of the Optionee’s
termination of service, but in no event after the date of
expiration of the term of the Stock Option. Notwithstanding
anything in this Section 5(k) to the contrary, if subsequent
to an Optionee’s termination of employment or services, but
prior to the exercise of a Stock Option, the Administrator
determines that, either prior to subsequent to the Optionee’s
termination of employment or services, the Optionee engaged in
conduct that would constitute Cause, then such Optionee shall cease
to have any right to exercise such Stock Option. An Optionee who is
absent from work with the Company or an Affiliate because of
temporary disability (any disability other than a permanent and
total Disability), or who is on leave of absence for any purpose,
shall not, during the period of any such absence, be deemed, by
virtue of such absence alone, to have terminated such
Optionee’s service with the Company or with an Affiliate,
except as the Administrator may otherwise expressly provide. Except
as required by law or as set forth in the Optionee’s option
agreement, Stock Options granted under the Plan shall not be
affected by any change of an Optionee’s status within or
among the Company and any Affiliates, so long as the Optionee
continues to be an officer, employee, director or consultant of the
Company or any Affiliate. In the event of termination of
services for any reason other than death, Disability or Cause, if
an Incentive Stock Option is exercised after the expiration of the
exercise periods that apply for purposes of Section 422 of the
Code, such Stock Option will thereafter be treated as a
Non-Qualified Stock Option.

 

 

7

 

 

 

	

(l)
Participant Loans. Unless otherwise
prohibited by law for either the Company or the Optionee, the
Administrator may in its discretion authorize the Company
to.

 

	

(i)
lend to
an Optionee an amount equal to such portion of the exercise price
of a Stock Option as the Administrator may determine;
or

 

	

(ii)
guarantee a loan
obtained by an Optionee from a third-party for the purpose of
tendering such exercise price.

 

The
terms and conditions of any loan or guarantee, including the term,
interest rate, whether the loan is with recourse against the
Optionee and any security interest thereunder, shall be determined
by the Administrator, except that no extension of credit or
guarantee shall obligate the Company for an amount to exceed the
lesser of (i) the aggregate Fair Market Value on the date of
exercise, less the par value, of the shares of Stock to be
purchased upon the exercise of the Stock Option, and (ii) the
amount permitted under applicable laws or the regulations and rules
of the Federal Reserve Board and any other governmental agency
having jurisdiction.

 

6. STOCK APPRECIATION RIGHTS.

 

Stock
Appreciation Rights may be granted either on a stand-alone basis or
in conjunction with all or part of any Stock Option granted under
the Plan. In the case of a Non-Qualified Stock Option, such rights
may be granted either at or after the time of grant of such Stock
Option. In the case of an Incentive Stock Option, such rights may
be granted only at the time of grant of such Stock Option. A Stock
Appreciation Right shall terminate and no longer be exercisable as
determined by the Administrator, or, if granted in conjunction with
all or part of any Stock Option, upon the termination or exercise
of the related Stock Option.

 

A Stock
Appreciation Right may be exercised by a Participant as determined
by the Administrator in accordance with this Section 6, and,
if granted in conjunction with all or part of any Stock Option, by
surrendering the applicable portion of the related Stock Option in
accordance with procedures established by the Administrator. Upon
such exercise and surrender, the Participant shall be entitled to
receive an amount determined in the manner prescribed in this
Section 6. Stock Options which have been so surrendered, if
any, shall no longer be exercisable to the extent the related Stock
Appreciation Rights have been exercised.

 

Stock
Appreciation Rights shall be subject to such terms and conditions
as shall be determined by the Administrator, including the
following:

 

	

(a) Stock Appreciation Rights granted on a
stand-alone basis shall be exercisable only at such time or times
and to such extent as determined by the Administrator. Stock
Appreciation Rights granted in conjunction with all or part of any
Stock Option shall be exercisable only at the time or times and to
the extent that the Stock Options to which they relate are
exercisable in accordance with the provisions of Section 5 and
this Section 6.

 

	

(b)
Upon
the exercise of a Stock Appreciation Right, a Participant shall be
entitled to receive an amount in cash, shares of Stock or both,
which in the aggregate are equal in value to the excess of the Fair
Market Value of one share of Stock over (i) such Fair Market
Value per share of Stock as shall be determined by the
Administrator at the time of grant (if the Stock Appreciation Right
is granted on a stand-alone basis), or (ii) the exercise price
per share specified in the related Stock Option (if the Stock
Appreciation Right is granted in conjunction with all or part of
any Stock Option), multiplied by the number of shares in respect of
which the Stock Appreciation Right shall have been exercised, with
the Administrator having the right to determine the form of
payment.

 

	

(c)
A Stock
Appreciation Right shall be transferable only to, and shall be
exercisable only by, such persons permitted in accordance with
Section 5(g).

 

 

8

 

 

 

7. STOCK AWARDS OTHER THAN OPTIONS.

 

Stock
Awards may be directly issued under the Plan (without any
intervening options), subject to such terms, conditions,
performance requirements, restrictions, forfeiture provisions,
contingencies and limitations as the Administrator shall determine.
Stock Awards may be issued which are fully and immediately vested
upon issuance or which vest in one or more installments over the
Participant’s period of employment or other service to the
Company or upon the attainment of specified performance objectives,
or the Company may issue Stock Awards which entitle the Participant
to receive a specified number of vested shares of Stock or cash, as
determined by the Administrator, upon the attainment of one or more
performance goals or service requirements established by the
Administrator.

 

The
principal terms of each Stock Award shall be set forth in a stock
grant agreement, which shall be in a form approved by the
Administrator and shall contain the terms and conditions which the
Administrator determines to be appropriate and in the best
interests of the Company, including the number of shares to which
the Stock Award relates.

 

Shares
representing a Stock Award shall be evidenced in such manner as the
Administrator may deem appropriate, including book-entry
registration or issuance of one or more certificates (which may
bear appropriate legends referring to the terms, conditions and
restrictions applicable to such Award). The Administrator may
require that any such certificates be held in custody by the
Company until any restrictions thereon shall have lapsed and that
the Participant deliver a stock power, endorsed in blank, relating
to the Stock covered by such Award.

 

A Stock
Award may be issued in exchange for any consideration which the
Administrator may deem appropriate in each individual instance,
including, without limitation:

 

	

(a)
cash or
cash equivalents;

 

	

(b)
past
services rendered to the Company or any Affiliate; or

 

	

(c)
future
services to be rendered to the Company or any Affiliate (provided
that, in such case, the par value of the Stock subject to such
Stock Award shall be paid in cash or cash equivalents, unless the
Administrator provides otherwise).

 

A Stock
Award that is subject to restrictions on transfer and/or forfeiture
provisions may be referred to as an award of “Restricted
Stock” or “Restricted Stock Units.”

 

8. CHANGE IN CONTROL PROVISIONS.

 

	

(a)
Impact of Event. Notwithstanding any
other provision of the Plan to the contrary, in the event of a
Change in Control:

 

	

(i)
Any
Stock Options and Stock Appreciation Rights outstanding as of the
date such Change in Control is determined to have occurred and not
then exercisable and vested shall become fully exercisable and
vested to the full extent of the original grant;

 

	

(ii)
The
restrictions applicable to any outstanding Stock Award shall lapse,
and the Stock relating to such Award shall become free of all
restrictions and become fully vested and transferable to the full
extent of the original grant;

 

	

(iii)
All
outstanding repurchase rights of the Company with respect to any
outstanding Awards shall terminate; and

 

	

(iv)
Outstanding Awards
shall be subject to any agreement of merger or reorganization that
effects such Change in Control, which agreement shall provide
for:

 

	

(A)
The
continuation of the outstanding Awards by the Company, if the
Company is a surviving corporation,

 

	

(B)
The
assumption of the outstanding awards by the surviving corporation
or its parent or subsidiary;

 

 

9

 

 

 

	

(C)
The
substitution by the surviving corporation or its parent or
subsidiary of equivalent awards for the outstanding Awards;
or

 

	

(D)
Settlement of each
share of Stock subject to an outstanding Award for the Change in
Control Price (less, to the extent applicable, the per share
exercise price).

 

	

(v)
In the
absence of any agreement of merger or reorganization effecting such
Change in Control, each share of Stock subject to an outstanding
Award shall be settled for the Change in Control Price (less, to
the extent applicable, the per share exercise price), or, if the
per share exercise price equals or exceeds the Change in Control
Price, the outstanding Award shall terminate and be
canceled.

 

	

 (b)
Definition of Change in Control. For
purposes of the Plan, a “Change in Control” shall mean
the happening of any of the following events:

 

	
(i)
An
acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
“Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of
either (1) the then outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or
(2) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting
Securities”); excluding, however, the following: (1) any
acquisition directly from the Company, other than an acquisition by
virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired directly from the
Company, (2) any acquisition by the Company; (3) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company; or (4) any acquisition by any
Person pursuant to a transaction which complies with clauses (1),
(2) and (3) of subsection (iii) of this
Section 8(b); or

 

	

(ii)
Within
any period of 24 consecutive months, a change in the composition of
the Board such that the individuals who, immediately prior to such
period, constituted the Board (such Board shall be hereinafter
referred to as the “Incumbent Board”) cease for any
reason to constitute at least a majority of the Board; provided,
however, for purposes of this Section 8(b), that any
individual who becomes a member of the Board during such period,
whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of
those individuals who are members of the Board and who were also
members of the Incumbent Board (or deemed to be such pursuant to
this proviso) shall be considered as though such individual were a
member of the Incumbent Board; but, provided further, that any such
individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board shall
not be so considered as a member of the Incumbent Board;
or

 

	
(iii)
The
consummation by the Company of a reorganization, merger or
consolidation or sale or other disposition of all or substantially
all of the assets of the Company (“Corporate
Transaction”); excluding, however, such a Corporate
Transaction pursuant to which (1) all or substantially all of
the individuals and entities who are the beneficial owners,
respectively, of the outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Corporate Transaction will beneficially own, directly or
indirectly, more than 50% of, respectively, the outstanding shares
of common stock, and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company’s
assets, either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately
prior to such Corporate Transaction, of the outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case
may be, (2) no Person (other than the Company; any employee
benefit plan (or related trust) sponsored or maintained by the
Company, by any corporation controlled by the Company, or by such
corporation resulting from such Corporate Transaction) will
beneficially own, directly or indirectly, more than 50% of,
respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding voting securities of such
corporation entitled to vote generally in the election of
directors, except to the extent that such ownership existed with
respect to the Company prior to the Corporate Transaction, and
(3) individuals who were members of the Board immediately
prior to the approval by the stockholders of the Corporation of
such Corporate Transaction will constitute at least a majority of
the members of the board of directors of the corporation resulting
from such Corporate Transaction; or

 

 

10

 

 

 

	

(iv)
The
approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company, other than to a
corporation pursuant to a transaction which would comply with
clauses (1), (2) and (3) of subsection (iii) of this
Section 8(b), assuming for this purpose that such transaction
were a Corporate Transaction.

 

	

(c)
Change in Control Price. For purposes
of the Plan, “Change in Control Price” means the higher
of (i) the highest reported sales price, regular way, of a
share of Stock in any transaction reported on a national securities
exchange on which such shares are listed or listing service (such
as an OTC market), as applicable, during the 60-day period prior to
and including the date of a Change in Control, or if the Stock is
not publicly quoted, the Fair Market Value determined by the
Administrator and (ii) if the Change in Control is the result
of a tender or exchange offer or a Corporate Transaction, the
highest price per share of Stock paid in such tender or exchange
offer or Corporate Transaction. To the extent that the
consideration paid in any such transaction described above consists
all or in part of securities or other non-cash consideration, the
value of such securities or other non-cash consideration shall be
determined in the sole discretion of the Board.

 

9. MISCELLANEOUS.

 

	
(a)
Amendment. The Board may amend or alter
the Plan or any Award, but no amendment or alteration shall be made
which would adversely affect the rights of a Participant under an
Award theretofore granted without the Participant’s consent,
except such an amendment (i) made to avoid an expense charge
to the Company or an Affiliate, or (ii) made to permit the
Company or an Affiliate to claim a deduction under, or otherwise
comply with, the Code (including, but not limited to,
Section 409A of the Code). No such amendment shall be made
without the approval of the Company’s stockholders to the
extent such approval is required by law, agreement or the rules of
any stock exchange or market on which the Stock is
listed.

 

The
Administrator may amend the terms of any Stock Option or other
Award theretofore granted, prospectively or retroactively, but no
such amendment shall adversely affect the rights of the holder
thereof without the holder’s consent.

 

Notwithstanding
anything in the Plan to the contrary, neither the Board nor a
Committee may (i) amend a Stock Option to reduce its option
price, (ii) cancel a stock option and re-grant a Stock Option
with a lower option price that the option price of the cancelled
Stock option or (iii) take any other action (whether in the
form of an amendment, cancellation or replacement grant) that has
the effect of repricing a Stock Option.

 

	

(b)
Termination of the Plan. The Plan will
terminate on the date which is 10 years from the earlier of the
date of its adoption by the Board and the date of its approval by
the stockholders. The Plan may be terminated at an earlier date by
vote of the stockholders or the Board; provided, however, that any
such earlier termination shall not affect any option agreements,
Stock Appreciation Right agreements or Stock Award agreements
executed prior to the effective date of such
termination.

 

	

(c)
Unfunded Status of Plan. It is intended
that this Plan be an “unfunded” plan for incentive and
deferred compensation. The Administrator may authorize the creation
of trusts or other arrangements to meet the obligations created
under this Plan to deliver Common Stock or make payments, provided
that, unless the Administrator otherwise determines, the existence
of such trusts or other arrangements is consistent with the
“unfunded” status of this Plan.

 

	

(d)
Rights as a Shareholder: No Participant
to whom an Award has been granted shall have rights as a
shareholder with respect to any shares covered by such Award,
except after due exercise of the Stock Option or Stock Appreciation
Right or vesting of the Stock Award and tender of the full purchase
price, if any, for the shares being purchased pursuant to such
exercise or award and registration of the shares in the
Company’s share register in the name of the
Participant.

 

	

(e)
Issuance of Securities: Except as
expressly provided herein, no issuance by the Company of shares of
Stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares
subject to Awards. Except as expressly provided herein, no
adjustments shall be made for dividends paid in cash or in property
(including without limitation, securities) of the Company prior to
any issuance of shares pursuant to an Award.  

 

	

(f)
Fractional Shares: No fractional shares
shall be issued under the Plan and the Company shall pay cash in
lieu of fractional shares equal to the Fair Market Value of such
fractional shares.

 

 

11

 

 

 

	
(g)
Conversion of Incentive Stock Options into
Non-Qualified Stock Options; Termination of Incentive Stock
Options: The Administrator, at the written request of any
Participant, may in its discretion take such actions as may be
necessary to convert such Participant’s Incentive Stock
Options (or any portions thereof) that have not been exercised on
the date of conversion into Non-Qualified Stock Options at any time
prior to the expiration of such Incentive Stock Options, regardless
of whether the Participant is an employee of the Company or a
Subsidiary at the time of such conversion. At the time of such
conversion, the Administrator (with the consent of the Participant)
may impose such conditions on the exercise of the resulting
Non-Qualified Stock Options as the Administrator, in its discretion
may determine, provided that such conditions shall not be
inconsistent with this Plan. Nothing in the Plan shall be deemed to
give any Participant the right to have such Participant’s
Incentive Stock Options converted into Non-Qualified Stock Options,
and no such conversion shall occur until and unless the
Administrator takes appropriate action. The Administrator, with the
consent of the Participant, may also terminate any portion of any
Incentive Stock Option that has not been exercised at the time of
such conversion.

 

	
(h)
Notice to Company of Disqualifying
Disposition: Each employee who receives an Incentive Stock
Option must agree to notify the Company in writing immediately
after the employee makes a “Disqualifying Disposition”
of any shares acquired pursuant to the exercise of an Incentive
Stock Option. A “Disqualifying Disposition” is defined
in Section 424(c) of the Code and includes any disposition
(including any sale or gift) of such shares before the later of
(i) two years after the date the employee was granted the
Incentive Stock Option, or (ii) one year after the date the
employee acquired shares by exercising the Incentive Stock Option,
except as otherwise provided in Section 424(c) of the Code. If
the employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition
can occur thereafter.

 

	

(i) General
Provisions.

 

	

(i)
The
Administrator may require each person purchasing or receiving
shares pursuant to an Award to represent to and agree with the
Company in writing that such person is acquiring the shares without
a view to the distribution thereof. The certificates for such
shares may include any legend which the Administrator deems
appropriate to reflect any restrictions on transfer.

 

All
certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stock transfer orders and
other restrictions as the Administrator may deem advisable under
the rules, regulations and other requirements of the Commission,
any stock exchange or market on which the Stock is then listed and
any applicable Federal or state securities law, and the
Administrator may cause a legend or legends to be put on any such
certificates to make appropriate reference to such
restrictions.

 

	

(ii)
Nothing
contained in the Plan shall prevent the Company or any Affiliate
from adopting other or additional compensation arrangements for its
employees.

 

	

(iii)
The
adoption of the Plan shall not confer upon any employee, director
consultant or advisor any right to continued employment,
directorship or service, nor shall it interfere in any way with the
right of the Company or any Affiliate to terminate the employment
or service of any employee, consultant or advisor at any
time.

 

	
(iv)
No
later than the date as of which an amount first becomes includible
in the gross income of the Participant for Federal income tax
purposes with respect to any Award under the Plan, the Participant
shall pay to the Company, or make arrangements satisfactory to the
Company regarding the payment of, any Federal, state, local or
foreign taxes of any kind required by law to be withheld with
respect to such amount. Unless otherwise determined by the
Administrator, withholding obligations may be settled with Stock,
including Stock that is part of the Award that gives rise to the
withholding requirement. The obligations of the Company under the
Plan shall be conditional on such payment or arrangements, and the
Company, its Subsidiaries and its Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the Participant. The Administrator may
establish such procedures as it deems appropriate for the
settlement of withholding obligations with Stock.
 

 

 

	

(v)
The
Administrator shall establish such procedures as it deems
appropriate for a Participant to designate a beneficiary to whom
any amounts payable in the event of the Participant’s death
are to be paid.

 

	
(vi)
Any
amounts owed to the Company or an Affiliate by the Participant of
whatever nature may be offset by the Company from the value of any
shares of Common Stock, cash or other thing of value under this
Plan or an agreement to be transferred to the Participant, and no
shares of Common Stock, cash or other thing of value under this
Plan or an agreement shall be transferred unless and until all
disputes between the Company and the Participant have been fully
and finally resolved and the Participant has waived all claims to
such against the Company or an Affiliate.

 

 

12

 

 

 

	

(vii)
The
grant of an Award shall in no way affect the right of the Company
to adjust, reclassify, reorganize or otherwise change its capital
or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or
assets.

 

	
(viii)
If any
payment or right accruing to a Participant under this Plan (without
the application of this Section (9)(c)(viii)), either alone or
together with other payments or rights accruing to the Participant
from the Company or an Affiliate (“Total Payments”)
would constitute a “parachute payment” (as defined in
Section 280G of the Code and regulations thereunder), such
payment or right shall be reduced to the largest amount or greatest
right that will result in no portion of the amount payable or right
accruing under this Plan being subject to an excise tax under
Section 4999 of the Code or being disallowed as a deduction
under Section 280G of the Code; provided, however, that the
foregoing shall not apply to the extent provided otherwise in an
Award or in the event the Participant is party to an agreement with
the Company or an Affiliate that explicitly provides for an
alternate treatment of payments or rights that would constitute
“parachute payments.” The determination of whether any
reduction in the rights or payments under this Plan is to apply
shall be made by the Administrator in good faith after consultation
with the Participant, and such determination shall be conclusive
and binding on the Participant. The Participant shall cooperate in
good faith with the Administrator in making such determination and
providing the necessary information for this purpose. The foregoing
provisions of this Section 9(c)(viii) shall apply with respect
to any person only if, after reduction for any applicable Federal
excise tax imposed by Section 4999 of the Code and Federal
income tax imposed by the Code, the Total Payments accruing to such
person would be less than the amount of the Total Payments as
reduced, if applicable, under the foregoing provisions of this Plan
and after reduction for only Federal income taxes.

 

	

(ix)
To the
extent that the Administrator determines that the restrictions
imposed by the Plan preclude the achievement of the material
purposes of the Awards in jurisdictions outside the United States,
the Administrator in its discretion may modify those restrictions
as it determines to be necessary or appropriate to conform to
applicable requirements or practices of jurisdictions outside of
the United States.

 

	

(x)
The
headings contained in this Plan are for reference purposes only and
shall not affect the meaning or interpretation of this
Plan.

 

	

(xi)
If any
provision of this Plan shall for any reason be held to be invalid
or unenforceable, such invalidity or unenforceability shall not
affect any other provision hereby, and this Plan shall be construed
as if such invalid or unenforceable provision were
omitted.

 

	

(xii)
This
Plan shall inure to the benefit of and be binding upon each
successor and assign of the Company. All obligations imposed upon a
Participant, and all rights granted to the Company hereunder, shall
be binding upon the Participant’s heirs, legal
representatives and successors

 

	

(xiii)
This
Plan and each agreement granting an Award constitute the entire
agreement with respect to the subject matter hereof and thereof,
provided that in the event of any inconsistency between this Plan
and such agreement, the terms and conditions of the Plan shall
control

 

	

(xiv)
In the
event there is an effective registration statement under the
Securities Act pursuant to which shares of Stock shall be offered
for sale in an underwritten offering, a Participant shall not,
during the period requested by the underwriters managing the
registered public offering, effect any public sale or distribution
of shares of Stock received, directly or indirectly, as an Award or
pursuant to the exercise or settlement of an Award.

 

	

(xv)
None of
the Company, an Affiliate or the Administrator shall have any duty
or obligation to disclose affirmatively to a record or beneficial
holder of Stock or an Award, and such holder shall have no right to
be advised of, any material information regarding the Company or
any Affiliate at any time prior to, upon or in connection with
receipt or the exercise of an Award or the Company’s purchase
of Stock or an Award from such holder in accordance with the terms
hereof.

 

	

(xvi)
This
Plan, and all Awards, agreements and actions hereunder, shall be
governed by, and construed in accordance with, the laws of the
state of Delaware (other than its law respecting choice of
law).

 

	

(j)
Compliance with Section 409A of the
Code. The Plan is intended to comply with Section 409A
of the Code, and official guidance issued thereunder, to the extent
applicable. Notwithstanding any provision of the Plan to the
contrary, the Plan shall be interpreted, operated, and administered
consistently with this intent.  

 

ADOPTED
BY THE BOARD OF DIRECTORS ON MARCH 4, 2019

 

 

 

13Amended
and Restated

Committed Line Of Credit Note

(Multi-Rate Options)

 

 

	$48,000,000.00	February 19, 2019

 

 

FOR VALUE RECEIVED, MIDDLESEX WATER
COMPANY, PINELANDS WASTEWATER COMPANY, PINELANDS WATER COMPANY, TIDEWATER ENVIRONMENTAL SERVICES, INC., TIDEWATER UTILITIES, INC.,
UTILITY SERVICE AFFILIATES (PERTH AMBOY) INC., UTILITY SERVICE AFFILIATES INC., and WHITE MARSH ENVIRONMENTAL SYSTEMS, INC.
(individually and collectively, the “Borrower”), with an address at 1500 Ronson Road, Iselin, NJ 08330-3020,
jointly and severally, promise to pay to the order of PNC BANK, NATIONAL ASSOCIATION (the “Bank”), in
lawful money of the United States of America in immediately available funds at its offices located at Two Tower Center Boulevard,
East Brunswick, New Jersey 08816, or at such other location as the Bank may designate from time to time, the principal sum of FORTY
EIGHT MILLION AND 00/100 DOLLARS ($48,000,000.00) (the “Facility”) or such lesser amount as may be
advanced to or for the benefit of the Borrower hereunder, together with interest accruing on the outstanding principal balance
from the date hereof, all as provided below.

 

1.       Advances.
The Borrower may request advances, repay and request additional advances hereunder until the Expiration Date, subject to the
terms and conditions of this Note and the Loan Documents (as hereinafter defined). The “Expiration Date” shall
mean January 31, 2021, or such later date as may be designated by the Bank by written notice from the Bank to the Borrower.
The Borrower acknowledges and agrees that in no event will the Bank be under any obligation to extend or renew the Facility or
this Note beyond the Expiration Date. The Borrower may request advances hereunder upon giving oral or written notice to the Bank
by 11:00 a.m. (Eastern, Standard time) East Brunswick, New Jersey (a) on the day of the proposed advance, in the case of advances
to bear interest under the Base Rate Option (as hereinafter defined) and (b) three (3) Business Days prior to the proposed
advance, in the case of advances to bear interest under the LIBOR Option (as hereinafter defined), followed promptly thereafter
by the Borrower’s written confirmation to the Bank of any oral notice. The aggregate unpaid principal amount of advances
under this Note shall not exceed the face amount of this Note.

 

2.       Rate
of Interest. Each advance outstanding under this Note will bear interest at a rate or rates per annum as may be selected
by the Borrower from the interest rate options set forth below (each, an “Option”):

 

(i)       Base
Rate Option. A rate of interest per annum which is at all times equal to the Base Rate. If and when the Base Rate (or any
component thereof) changes, the rate of interest with respect to any advance to which the Base Rate Option applies will change
automatically without notice to the Borrower, effective on the date of any such change. There are no required minimum interest
periods for advances bearing interest under the Base Rate Option.

 

(ii)       LIBOR
Option. A rate per annum equal to (A) LIBOR plus (B) ninety (90) basis points (0.90%), for the applicable LIBOR
Interest Period.

 

For purposes hereof, the following terms shall
have the following meanings:

 

“Base Rate” shall
mean the highest of (A) the Prime Rate, and (B) the sum of the Overnight Bank Funding Rate plus fifty (50) basis points
(0.50%), and (C) the sum of the Daily LIBOR Rate plus one hundred (100) basis points (1.0%), so long as a Daily LIBOR Rate
is offered, ascertainable and not unlawful.

 

     

     

    

“Business Day”
shall mean any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required by law
to be closed for business in East Brunswick, New Jersey.

 

“Daily LIBOR Rate”
shall mean, for any day, the rate per annum determined by the Bank by dividing (x) the Published Rate by (y) a number equal to
1.00 minus the LIBOR Reserve Percentage; provided, however, if the Daily LIBOR Rate determined as provided
above would be less than zero, then such rate shall be deemed to be zero.

 

“LIBOR” shall
mean, with respect to any advance to which the LIBOR Option applies for the applicable LIBOR Interest Period, the interest rate
per annum determined by the Bank by dividing (the resulting quotient rounded upwards, at the Bank’s discretion, to the nearest
1/100th of 1%) (i) the rate of interest determined by the Bank in accordance with its usual procedures (which determination shall
be conclusive absent manifest error) to be the eurodollar rate two (2) Business Days prior to the first day of such LIBOR Interest
Period for an amount comparable to such advance and having a borrowing date and a maturity comparable to such LIBOR Interest Period
by (ii) a number equal to 1.00 minus the LIBOR Reserve Percentage; provided, however, if LIBOR, determined as provided
above, would be less than zero, then LIBOR shall be deemed to be zero.

 

“LIBOR Interest Period”
shall mean, as to any advance to which the LIBOR Option applies, the period of one (1), two (2), or three (3) months as selected
by the Borrower in its notice of borrowing or notice of conversion, as the case may be, commencing on the date of disbursement
of an advance (or the date of conversion of an advance to the LIBOR Option, as the case may be) and each successive period selected
by the Borrower thereafter; provided that, (i) if a LIBOR Interest Period would end on a day which is not a Business Day,
it shall end on the next succeeding Business Day unless such day falls in the next succeeding calendar month in which case the
LIBOR Interest Period shall end on the next preceding Business Day, (ii) the Borrower may not select a LIBOR Interest Period that
would end on a day after the Expiration Date, and (iii) any LIBOR Interest Period that begins on the last Business Day of a calendar
month (or a day for which there is no numerically corresponding day in the last calendar month of such LIBOR Interest Period) shall
end on the last Business Day of the last calendar month of such LIBOR Interest Period.

 

“LIBOR Reserve Percentage”
shall mean the maximum effective percentage in effect on such day as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the reserve requirements (including, without limitation, supplemental, marginal and emergency
reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency liabilities”).

 

“Overnight Bank Funding
Rate” shall mean, for any day, the rate comprised of both overnight federal funds and overnight Eurocurrency borrowings
by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the Federal Reserve Bank
of New York (“NYFRB”), as set forth on its public website from time to time, and as published on the next succeeding
Business Day as the overnight bank funding rate by the NYFRB (or by such other recognized electronic source (such as Bloomberg)
selected by the Bank for the purpose of displaying such rate); provided, that if such day is not a Business Day, the Overnight
Bank Funding Rate for such day shall be such rate on the immediately preceding Business Day; provided, further, that if such rate
shall at any time, for any reason, no longer exist, a comparable replacement rate determined by the Bank at such time (which determination
shall be conclusive absent manifest error).  If the Overnight Bank Funding Rate determined as above would be less than zero,
then such rate shall be deemed to be zero. The rate of interest charged shall be adjusted as of each Business Day based on changes
in the Overnight Bank Funding Rate without notice to the Borrower.

 

“Prime Rate” shall
mean the rate publicly announced by the Bank from time to time as its prime rate. The Prime Rate is determined from time to time
by the Bank as a means of pricing some loans to its borrowers. The Prime Rate is not tied to any external rate of interest or index,
and does not necessarily

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reflect the lowest rate of interest
actually charged by the Bank to any particular class or category of customers.

 

“Published Rate”
shall mean the rate of interest published each Business Day in the Wall Street Journal “Money Rates” listing under
the caption “London Interbank Offered Rates” for a one month period (or, if no such rate is published therein for any
reason, then the Published Rate shall be the eurodollar rate for a one month period as published in another publication selected
by the Bank).

 

LIBOR and the Daily LIBOR Rate shall be adjusted
with respect to any advance to which the LIBOR Option or Base Rate Option applies, as applicable, on and as of the effective date
of any change in the LIBOR Reserve Percentage. The Bank shall give prompt notice to the Borrower of LIBOR or the Daily LIBOR Rate
as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.

 

If the Bank determines (which determination
shall be final and conclusive) that, by reason of circumstances affecting the eurodollar market generally, deposits in dollars
(in the applicable amounts) are not being offered to banks in the eurodollar market for the selected term, or adequate means do
not exist for ascertaining LIBOR, then the Bank shall give notice thereof to the Borrower. Thereafter, until the Bank notifies
the Borrower that the circumstances giving rise to such suspension no longer exist, (a) the availability of the LIBOR Option shall
be suspended, and (b) the interest rate for all advances then bearing interest under the LIBOR Option shall be converted at the
expiration of the then current LIBOR Interest Period(s) to the Base Rate Option.

 

In addition, if, after the date of this Note,
the Bank shall determine (which determination shall be final and conclusive) that any enactment, promulgation or adoption of or
any change in any applicable law, rule or regulation, or any change in the interpretation or administration thereof by a governmental
authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Bank
with any guideline, request or directive (whether or not having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for the Bank to make or maintain or fund loans based on LIBOR, the Bank shall notify
the Borrower. Upon receipt of such notice, until the Bank notifies the Borrower that the circumstances giving rise to such determination
no longer apply, (a) the availability of the LIBOR Option shall be suspended, and (b) the interest rate on all advances then bearing
interest under the LIBOR Option shall be converted to the Base Rate Option either (i) on the last day of the then current LIBOR
Interest Period(s) if the Bank may lawfully continue to maintain advances based on LIBOR to such day, or (ii) immediately
if the Bank may not lawfully continue to maintain advances based on LIBOR.

 

The foregoing notwithstanding, it is understood
that the Borrower may select different Options to apply simultaneously to different portions of the advances and may select up
to three (3) different interest periods to apply simultaneously to different portions of the advances bearing interest under the
LIBOR Option. Interest hereunder will be calculated based on the actual number of days that principal is outstanding over a year
of 360 days. In no event will the rate of interest hereunder exceed the maximum rate allowed by law.

 

3.       Interest
Rate Election. Subject to the terms and conditions of this Note, at the end of each interest period applicable to any advance,
the Borrower may renew the Option applicable to such advance or convert such advance to a different Option; provided that,
during any period in which any Event of Default (as hereinafter defined) has occurred and is continuing, any advances bearing interest
under the LIBOR Option shall, at the Bank’s sole discretion, be converted at the end of the applicable LIBOR Interest Period
to the Base Rate Option and the LIBOR Option will not be available to Borrower with respect to any new advances (or with respect
to the conversion or renewal of any existing advances) until such Event of Default has been cured by the Borrower or waived by
the Bank. The Borrower shall notify the Bank of each election of an Option, each conversion from one Option to another, the amount
of the advances then outstanding to be allocated to each Option and where relevant the interest periods therefor. In the case of
converting to the LIBOR Option, such notice shall be given at least three (3) Business Days prior to the commencement of any LIBOR
Interest Period. If no interest period is specified in any such notice for which the resulting advance is to bear interest under
the LIBOR Option, the Borrower shall be deemed to have selected a LIBOR Interest Period of one month’s duration. If no notice
of election, conversion or renewal is timely received by the Bank with respect to any advance, the Borrower shall be

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deemed to have elected the Base Rate Option.
Any such election shall be promptly confirmed in writing by such method as the Bank may require.

 

 

4.       Advance
Procedures. If permitted by the Bank, a request for advance may be made by telephone or electronic mail, with such confirmation
or verification (if any) as the Bank may require in its discretion from time to time. A request for advance by any Borrower shall
be binding upon Borrower, jointly and severally. The Borrower authorizes the Bank to accept telephonic and electronic requests
for advances, and the Bank shall be entitled to rely upon the authority of any person providing such instructions. The Borrower
hereby indemnifies and holds the Bank harmless from and against any and all damages, losses, liabilities, costs and expenses (including
reasonable attorneys’ fees and expenses) which may arise or be created by the acceptance of such telephonic and electronic
requests or by the making of such advances. The Bank will enter on its books and records, which entry when made will be presumed
correct, the date and amount of each advance, as well as the date and amount of each payment made by the Borrower.

 

5.       Payment
Terms. The Borrower shall pay accrued interest on the unpaid principal balance of this Note in arrears: (a) for the portion
of advances bearing interest under the Base Rate Option, on the first day of each month during the term hereof, (b) for the portion
of advances bearing interest under the LIBOR Option, on the last day of the respective LIBOR Interest Period for such advance,
(c) if any LIBOR Interest Period is longer than three (3) months, then also on the three (3) month anniversary of such interest
period and every three (3) months thereafter, and (d) for all advances, at maturity, whether by acceleration of this Note or otherwise,
and after maturity, on demand until paid in full. All outstanding principal and accrued interest hereunder shall be due and payable
in full on the Expiration Date.

 

If any payment under this Note shall become
due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time
shall be included in computing interest in connection with such payment. The Borrower hereby authorizes the Bank to charge the
Borrower’s deposit account at the Bank for any payment when due hereunder. Payments received will be applied to charges,
fees and expenses (including attorneys’ fees), accrued interest and principal in any order the Bank may choose, in its sole
discretion.

 

6.       Late
Payments; Default Rate. If the Borrower fails to make any payment of principal, interest or other amount coming due pursuant
to the provisions of this Note within fifteen (15) calendar days of the date due and payable, the Borrower also shall pay to the
Bank a late charge equal to the lesser of five percent (5%) of the amount of such payment or $100.00 (the “Late Charge”).
Such fifteen (15) day period shall not be construed in any way to extend the due date of any such payment. Upon maturity, whether
by acceleration, demand or otherwise, and at the Bank’s option upon the occurrence of any Event of Default (as hereinafter
defined) and during the continuance thereof, each advance outstanding under this Note shall bear interest at a rate per annum (based
on the actual number of days that principal is outstanding over a year of 360 days) which shall be three percentage points
(3%) in excess of the interest rate in effect from time to time under this Note but not more than the maximum rate allowed by law
(the “Default Rate”). The Default Rate shall continue to apply whether or not judgment shall be entered on this
Note. Both the Late Charge and the Default Rate are imposed as liquidated damages for the purpose of defraying the Bank’s
expenses incident to the handling of delinquent payments, but are in addition to, and not in lieu of, the Bank’s exercise
of any rights and remedies hereunder, under the other Loan Documents or under applicable law, and any fees and expenses of any
agents or attorneys which the Bank may employ. In addition, the Default Rate reflects the increased credit risk to the Bank of
carrying a loan that is in default. The Borrower agrees that the Late Charge and Default Rate are reasonable forecasts of just
compensation for anticipated and actual harm incurred by the Bank, and that the actual harm incurred by the Bank cannot be estimated
with certainty and without difficulty.

 

7.       Prepayment.
The Borrower shall have the right to prepay any advance hereunder at any time and from time to time, in whole or in part; subject,
however, to payment of any break funding indemnification amounts owing pursuant to paragraph 9 below.

 

    -4- 

     

    

8.       Increased
Costs; Yield Protection. On written demand, together with written evidence of the justification therefor, the Borrower
agrees to pay the Bank all direct costs incurred, any losses suffered or payments made by the Bank as a result of any Change in
Law (hereinafter defined), imposing any reserve, deposit, allocation of capital or similar requirement (including without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) on the Bank, its holding company or any of their respective
assets relative to the Facility. “Change in Law” means the occurrence, after the date of this Note, of any of
the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation
or treaty or in the administration, interpretation, implementation or application thereof by any governmental authority or (c)
the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any governmental
authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection
Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules,
guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or
any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III,
shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

9.       Break
Funding Indemnification. The Borrower agrees to indemnify the Bank against any liabilities, losses or expenses (including,
without limitation, loss of margin, any loss or expense sustained or incurred in liquidating or employing deposits from third parties,
and any loss or expense incurred in connection with funds acquired to effect, fund or maintain any advance (or any part thereof)
bearing interest under the LIBOR Option) which the Bank sustains or incurs as a consequence of either (i) the Borrower’s
failure to make a payment on the due date thereof, (ii) the Borrower’s revocation (expressly, by later inconsistent notices
or otherwise) in whole or in part of any notice given to Bank to request, convert, renew or prepay any advance bearing interest
under the LIBOR Option, or (iii) the Borrower’s payment or prepayment (whether voluntary, after acceleration of the maturity
of this Note or otherwise) or conversion of any advance bearing interest under the LIBOR Option on a day other than the last day
of the applicable LIBOR Interest Period. A notice as to any amounts payable pursuant to this paragraph given to the Borrower by
the Bank shall, in the absence of manifest error, be conclusive and shall be payable upon demand. The Borrower’s indemnification
obligations hereunder shall survive the payment in full of the advances and all other amounts payable hereunder.

 

10.       Other
Loan Documents.  This Note is issued in connection with an Amended and Restated Loan Agreement between the Borrower and
the Bank, dated April 29, 2015, and the other agreements and documents executed and/or delivered in connection therewith or referred
to therein, the terms of which are incorporated herein by reference (as amended, modified or renewed from time to time, collectively
the “Loan Documents”), and is secured by the property (if any) described in the Loan Documents and by such other
collateral as previously may have been or may in the future be granted to the Bank to secure this Note.

 

11.       Events
of Default. The occurrence of any of the following events will be deemed to be an “Event of Default”
under this Note: (i) the nonpayment of any principal, interest or other indebtedness under this Note when due; (ii) the occurrence
of any event of default or any default and the lapse of any notice or cure period, or any Obligor’s failure to observe or
perform any covenant or other agreement, under or contained in any Loan Document or any other document now or in the future evidencing
or securing any debt, liability or obligation of any Obligor to the Bank; (iii) the filing by or against any Obligor of any proceeding
in bankruptcy, receivership, insolvency, reorganization, liquidation, conservatorship or similar proceeding (and, in the case of
any such proceeding instituted against any Obligor, such proceeding is not dismissed or stayed within 30 days of the commencement
thereof, provided that the Bank shall not be obligated to advance additional funds hereunder during such period); (iv) any assignment
by any Obligor for the benefit of creditors, or any levy, garnishment, attachment or similar proceeding is instituted against any
property of any Obligor held by or deposited with the Bank; (v) a default with respect to any other indebtedness of any Obligor
for borrowed money, if the effect of such default is to cause or permit the acceleration of such debt; (vi) the commencement of
any foreclosure or forfeiture proceeding, execution or attachment against any collateral securing the obligations of any Obligor
to the Bank; (vii) the entry of a final judgment against any Obligor and the failure of such Obligor to discharge the judgment
within ten (10) days of the entry thereof; (viii) any change in any Obligor’s business, assets, operations, financial condition
or results of operations that has or could reasonably be expected to have any material adverse

    -5- 

     

    

effect on any Obligor; (ix) any Obligor ceases
doing business as a going concern; (x) any representation or warranty made by any Obligor to the Bank in any Loan Document or any
other documents now or in the future evidencing or securing the obligations of any Obligor to the Bank, is false, erroneous or
misleading in any material respect; (xi) if this Note or any guarantee executed by any Obligor is secured, the failure of any Obligor
to provide the Bank with additional collateral if in the Bank’s opinion at any time or times, the market value of any of
the collateral securing this Note or any guarantee has depreciated below that required pursuant to the Loan Documents or, if no
specific value is so required, then in an amount deemed material by the Bank; (xii) the revocation or attempted revocation, in
whole or in part, of any guarantee by any Obligor; or (xiii) the death, incarceration, indictment or legal incompetency of any
individual Obligor or, if any Obligor is a partnership or limited liability company, the death, incarceration, indictment or legal
incompetency of any individual general partner or member. As used herein, the term “Obligor” means any Borrower
and any guarantor of, or any pledgor, mortgagor or other person or entity providing collateral support for, the Borrower’s
obligations to the Bank existing on the date of this Note or arising in the future.

 

Upon the occurrence of an Event of Default:
(a) the Bank shall be under no further obligation to make advances hereunder; (b) if an Event of Default specified in clause (iii)
or (iv) above shall occur, the outstanding principal balance and accrued interest hereunder together with any additional amounts
payable hereunder shall be immediately due and payable without demand or notice of any kind; (c) if any other Event of Default
shall occur, the outstanding principal balance and accrued interest hereunder together with any additional amounts payable hereunder,
at the Bank’s option and without demand or notice of any kind, may be accelerated and become immediately due and payable;
(d) at the Bank’s option, this Note will bear interest at the Default Rate from the date of the occurrence of the Event
of Default; and (e) the Bank may exercise from time to time any of the rights and remedies available under the Loan Documents
or under applicable law.

 

12.       Right
of Setoff. In addition to all liens upon and rights of setoff against the Borrower’s money, securities or other property
given to the Bank by law, the Bank shall have, with respect to the Borrower’s obligations to the Bank under this Note and
to the extent permitted by law, a contractual possessory security interest in and a contractual right of setoff against, and the
Borrower hereby grants the Bank a security interest in, and hereby assigns, conveys, delivers, pledges and transfers to the Bank,
all of the Borrower’s right, title and interest in and to, all of the Borrower’s deposits, moneys, securities and other
property now or hereafter in the possession of or on deposit with, or in transit to, the Bank or any other direct or indirect subsidiary
of The PNC Financial Services Group, Inc., whether held in a general or special account or deposit, whether held jointly with someone
else, or whether held for safekeeping or otherwise, excluding, however, all IRA, Keogh, and trust accounts. Every such security
interest and right of setoff may be exercised without demand upon or notice to the Borrower. Every such right of setoff shall be
deemed to have been exercised immediately upon the occurrence of an Event of Default hereunder without any action of the Bank,
although the Bank may enter such setoff on its books and records at a later time.

 

13.       Anti-Money
Laundering/International Trade Law Compliance. The Borrower represents and warrants to the Bank, as of the date of this
Note, the date of each advance of proceeds under the Facility, the date of any renewal, extension or modification of the Facility,
and at all times until the Facility has been terminated and all amounts thereunder have been indefeasibly paid in full, that: (a)
no Covered Entity (i) is a Sanctioned Person; (ii) has any of its assets in a Sanctioned Country or in the possession, custody
or control of a Sanctioned Person; or (iii) does business in or with, or derives any of its operating income from investments in
or transactions with, any Sanctioned Country or Sanctioned Person in violation of any law, regulation, order or directive enforced
by any Compliance Authority; (b) the proceeds of the Facility will not be used to fund any operations in, finance any investments
or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person in violation of any law, regulation, order
or directive enforced by any Compliance Authority; (c) the funds used to repay the Facility are not derived from any unlawful activity;
and (d) each Covered Entity is in compliance with, and no Covered Entity engages in any dealings or transactions prohibited by,
any laws of the United States, including but not limited to any Anti-Terrorism Laws. Borrower covenants and agrees that it shall
immediately notify the Bank in writing upon the occurrence of a Reportable Compliance Event.

 

    -6- 

     

    

As used herein: “Anti-Terrorism
Laws” means any laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering,
or bribery, all as amended, supplemented or replaced from time to time; “Compliance Authority” means each and
all of the (a) U.S. Treasury Department/Office of Foreign Assets Control, (b) U.S. Treasury Department/Financial Crimes Enforcement
Network, (c) U.S. State Department/Directorate of Defense Trade Controls, (d) U.S. Commerce Department/Bureau of Industry and Security,
(e) U.S. Internal Revenue Service, (f) U.S. Justice Department, and (g) U.S. Securities and Exchange Commission; “Covered
Entity” means the Borrower, its affiliates and subsidiaries, all guarantors, pledgors of collateral, all owners of the
foregoing, and all brokers or other agents of the Borrower acting in any capacity in connection with the Facility; “Reportable
Compliance Event” means that any Covered Entity becomes a Sanctioned Person, or is indicted, arraigned, investigated
or custodially detained, or receives an inquiry from regulatory or law enforcement officials, in connection with any Anti-Terrorism
Law or any predicate crime to any Anti-Terrorism Law, or self-discovers facts or circumstances implicating any aspect of its operations
with the actual or possible violation of any Anti-Terrorism Law; “Sanctioned Country” means a country subject
to a sanctions program maintained by any Compliance Authority; and “Sanctioned Person” means any individual
person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred
person or entity, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection
of transactions), under any order or directive of any Compliance Authority or otherwise subject to, or specially designated under,
any sanctions program maintained by any Compliance Authority.

 

14.       Indemnity.
The Borrower agrees to indemnify each of the Bank, each legal entity, if any, who controls, is controlled by or is under common
control with the Bank, and each of their respective directors, officers and employees (the “Indemnified Parties”),
and to defend and hold each Indemnified Party harmless from and against any and all claims, damages, losses, liabilities and expenses
(including all fees and charges of internal or external counsel with whom any Indemnified Party may consult and all expenses of
litigation and preparation therefor) which any Indemnified Party may incur or which may be asserted against any Indemnified Party
by any person, entity or governmental authority (including any person or entity claiming derivatively on behalf of the Borrower),
in connection with or arising out of or relating to the matters referred to in this Note or in the other Loan Documents or the
use of any advance hereunder, whether (a) arising from or incurred in connection with any breach of a representation, warranty
or covenant by the Borrower, or (b) arising out of or resulting from any suit, action, claim, proceeding or governmental investigation,
pending or threatened, whether based on statute, regulation or order, or tort, or contract or otherwise, before any court or governmental
authority; provided, however, that the foregoing indemnity agreement shall not apply to any claims, damages, losses,
liabilities and expenses solely attributable to an Indemnified Party's gross negligence or willful misconduct. The indemnity agreement
contained in this Section shall survive the termination of this Note, payment of any advance hereunder and the assignment of any
rights hereunder. The Borrower may participate at its expense in the defense of any such action or claim.

 

15.       Miscellaneous.
All notices, demands, requests, consents, approvals and other communications required or permitted hereunder (“Notices”)
must be in writing (except as may be agreed otherwise above with respect to borrowing requests or as otherwise provided in this
Note) and will be effective upon receipt. Notices may be given in any manner to which the parties may agree. Without limiting the
foregoing, first-class mail, postage prepaid, facsimile transmission and commercial courier service are hereby agreed to as acceptable
methods for giving Notices. In addition, the parties agree that Notices may be sent electronically to any electronic address provided
by a party from time to time. Notices may be sent to a party’s address as set forth above or to such other address as any
party may give to the other for such purpose in accordance with this paragraph. No delay or omission on the Bank’s part to
exercise any right or power arising hereunder will impair any such right or power or be considered a waiver of any such right or
power, nor will the Bank’s action or inaction impair any such right or power. The Bank’s rights and remedies hereunder
are cumulative and not exclusive of any other rights or remedies which the Bank may have under other agreements, at law or in equity.
No modification, amendment or waiver of, or consent to any departure by the Borrower from, any provision of this Note will be effective
unless made in a writing signed by the Bank, and then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. Notwithstanding the foregoing, the Bank may modify this Note for the purposes of completing missing
content or correcting erroneous content, without the need for a written

    -7- 

     

    

amendment, provided that the Bank shall send
a copy of any such modification to the Borrower (which notice may be given by electronic mail). The Borrower agrees to pay on demand,
to the extent permitted by law, all costs and expenses incurred by the Bank in the enforcement of its rights in this Note and in
any security therefor, including without limitation reasonable fees and expenses of the Bank’s counsel. If any provision
of this Note is found to be invalid, illegal or unenforceable in any respect by a court, all the other provisions of this Note
will remain in full force and effect. The Borrower and all other makers and indorsers of this Note hereby forever waive presentment,
protest, notice of dishonor and notice of non-payment. The Borrower also waives all defenses based on suretyship or impairment
of collateral. If this Note is executed by more than one Borrower, the obligations of such persons or entities hereunder will be
joint and several. This Note shall bind the Borrower and its heirs, executors, administrators, successors and assigns, and the
benefits hereof shall inure to the benefit of the Bank and its successors and assigns; provided, however, that the
Borrower may not assign this Note in whole or in part without the Bank’s written consent and the Bank at any time may assign
this Note in whole or in part.

 

This Note has been delivered to and accepted
by the Bank and will be deemed to be made in the State where the Bank’s office indicated above is located. This
Note will be interpreted and the rights and liabilities of the Bank and the Borrower determined in accordance with the laws of
the state where the Bank’s office indicated above is located, excluding its conflict of laws rules, including without limitation
the Electronic Transactions Act (or equivalent) in effect in the state where the Bank’s office indicated above is located
(or, to the extent controlling, the laws of the United States Of America, including without limitation the Electronic Signatures
in Global and National Commerce Act). The Borrower hereby irrevocably consents to the exclusive jurisdiction of any
state or federal court in the county or judicial district where the Bank’s office indicated above is located; provided that
nothing contained in this Note will prevent the Bank from bringing any action, enforcing any award or judgment or exercising any
rights against the Borrower individually, against any security or against any property of the Borrower within any other county,
state or other foreign or domestic jurisdiction. The Borrower acknowledges and agrees that the venue provided above is the most
convenient forum for both the Bank and the Borrower. The Borrower waives any objection to venue and any objection based on a more
convenient forum in any action instituted under this Note.

 

16.       Amendment
and Restatement. This Note amends and restates, and is in substitution for, that certain Amended and Restated Committed
Line of Credit Note in the original principal amount of $40,000,000.00 payable to the order of the Bank and dated September 26,
2017 (the “Existing Note”). However, without duplication, this Note shall in no way extinguish, cancel or satisfy
Borrower’s unconditional obligation to repay all indebtedness evidenced by the Existing Note or constitute a novation of
the Existing Note. Nothing herein is intended to extinguish, cancel or impair the lien priority or effect of any security agreement,
pledge agreement or mortgage with respect to any Obligor’s obligations hereunder and under any other document relating hereto.

 

17.       Commercial
Purpose. The Borrower represents that the indebtedness evidenced by this Note is being incurred by the Borrower solely
for the purpose of acquiring or carrying on a business, professional or commercial activity, and not for personal, family or household
purposes.

 

18.       USA
PATRIOT Act Notice. To help the government fight the funding of terrorism and money laundering activities, Federal law
requires all financial institutions to obtain, verify and record information that identifies each Borrower that opens an account.
What this means: when the Borrower opens an account, the Bank will ask for the business name, business address, taxpayer identifying
number and other information that will allow the Bank to identify the Borrower, such as organizational documents. For some businesses
and organizations, the Bank may also need to ask for identifying information and documentation relating to certain individuals
associated with the business or organization.

 

19.       Authorization
to Obtain Credit Reports. By signing below, each Borrower who is an individual provides written authorization to the Bank
or its designee (and any assignee or potential assignee hereof) to obtain the Borrower’s personal credit profile from one
or more national credit bureaus. Such authorization shall extend to obtaining a credit profile in considering this Note and subsequently
for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting
account.

    -8- 

     

    

 

20.       Electronic
Signatures and Records. Notwithstanding any other provision herein, the Borrower agrees that this Note, the Loan Documents,
any amendments thereto, and any other information, notice, signature card, agreement or authorization related thereto (each, a
“Communication”) may, at the Bank’s option, be in the form of an electronic record. Any Communication
may, at the Bank’s option, be signed or executed using electronic signatures. For the avoidance of doubt, the authorization
under this paragraph may include, without limitation, use or acceptance by the Bank of a manually signed paper Communication which
has been converted into electronic form (such as scanned into PDF format) for transmission, delivery and/or retention.

 

 

 

 

21.       WAIVER
OF JURY TRIAL. The Borrower irrevocably waives any and all rights the Borrower may have
to a trial by jury in any action, proceeding or claim of any nature relating to this Note, any documents executed in connection
with this Note or any transaction contemplated in any of such documents. The Borrower acknowledges that the foregoing waiver is
knowing and voluntary.

 

The Borrower acknowledges that it has read
and understands all the provisions of this Note, including the waiver of jury trial, and has been advised by counsel as necessary
or appropriate.

 

WITNESS the due execution hereof as
a document under seal, as of the date first written above, with the intent to be legally bound hereby.

 

	WITNESS / ATTEST:	MIDDLESEX WATER COMPANY
	 	 
	/s/ Jay Kooper	By: /s/ A. Bruce O’Connor
	 	 (SEAL)
	Print Name:  Jay Kooper	A. Bruce O’Connor
	Title: Vice President, General Counsel & Secretary	Senior Vice President & Treasurer
	(Include title only if an officer of entity signing to the right)	 
	
         

         

        WITNESS / ATTEST:
	
         

         

        PINELANDS WASTEWATER
        COMPANY

	 	 
	/s/ Jay Kooper	By: /s/ A. Bruce O’Connor
	 	(SEAL)
	Print Name: Jay Kooper	A. Bruce O’Connor
	Title: General Counsel & Secretary	Vice President & Treasurer
	(Include title only if an officer of entity signing to the right)	 
	
         

         

        WITNESS / ATTEST:
	
         

         

        PINELANDS WATER COMPANY

	 	 
	/s/ Jay Kooper	By: /s/ A. Bruce O’Connor
	 	 (SEAL)
	Print Name: Jay Kooper	A. Bruce O’Connor
	Title: General Counsel & Secretary	Vice President &
Treasurer
	
(Include title only if an officer of entity
        signing to the right)
	 
	
         

         

        

        WITNESS / ATTEST:
	
         

         

        TIDEWATER UTILITIES, INC.

	 	 
	/s/ Jay Kooper	By: /s/ A. Bruce O’Connor
	 	 (SEAL)
	Print Name: Jay Kooper	A. Bruce O’Connor
	Title: General Counsel & Secretary	President & Treasurer
	(Include title only if an officer of entity signing to the right)	 

 

 

[SIGNATURES CONTINUE ON NEXT PAGE]

    -9- 

     

    

 

 

	
         

        WITNESS / ATTEST:
	
         

        UTILITY SERVICE AFFILIATES (PERTH AMBOY) INC.

	 	 
	/s/ Jay Kooper	By: /s/ A. Bruce O’Connor
	 	 (SEAL)
	Print Name: Jay Kooper	A. Bruce O’Connor
	Title: General Counsel & Secretary	Vice President & Treasurer
	(Include title only if an officer of entity signing to the right)	 
	
         

         

        WITNESS / ATTEST:
	
         

         

        UTILITY SERVICE AFFILIATES INC. 

	 	 
	/s/ Jay Kooper	By: /s/ A. Bruce O’Connor
	 	 (SEAL)
	Print Name: Jay Kooper	A. Bruce O’Connor
	Title: General Counsel & Secretary	Treasurer                 
	
        (Include title only if an officer of entity
        signing to the right)

         

         

         

        WITNESS / ATTEST:
	
         

         

         

        TIDEWATER ENVIRONMENTAL SERVICES, INC.

         

	/s/ Jay Kooper	By: /s/ A. Bruce O’Connor
	 	 (SEAL)
	Print Name: Jay Kooper	A. Bruce O’Connor
	Title: General Counsel & Secretary	President & Treasurer
	
        (Include title only if an officer of entity
        signing to the right)

         

         

        WITNESS / ATTEST:
	
         

         

         

        WHITE MARSH ENVIRONMENTAL SYSTEMS, INC.

         

	/s/ Jay Kooper	By: /s/ A. Bruce O’Connor
	 	 (SEAL)
	Print Name: Jay Kooper	A. Bruce O’Connor
	Title: General Counsel & Secretary	President & Treasurer
	(Include title only if an officer of entity signing to the right)	 

 

    -10-

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