Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”), dated as of October 19, 2015 (the “Effective Date”), is between Volt Information Sciences, Inc., a New York corporation (the “Company”), and Michael Dean (the “Executive”) (collectively, the “Parties” and each, a “Party”).  As of the Effective Date, this Agreement shall supersede and replace, in its entirety, that certain employment agreement, dated June 25, 2015, by and between the Parties (the “Prior Agreement”) and the Executive shall no longer have any rights, benefits or obligations thereunder; provided that the Executive shall remain entitled to any unpaid salary and benefits accrued under the Prior Agreement prior to the Effective Date.  In addition to the terms defined elsewhere herein, initial capitalized terms have the meanings given to them in Section 26.

 

1.           Term.  Subject to Section 7, the Executive’s employment will be for an initial term of three years commencing upon the Effective Date (the “Initial Employment Term”).  At the end of the Initial Employment Term and on each succeeding anniversary of the Effective Date, the Employment Term will be automatically extended by one additional year (each, a “Renewal Term”), unless, not less than 60 days prior to the end of the Initial Employment Term or any Renewal Term, either the Executive or the Company has given the other written notice of nonrenewal.  Without limiting the generality or effect of the foregoing, the Executive may terminate his employment with the Company at any time without Good Reason, subject to 60 days’ prior written notice to the Company.  For purposes of this Agreement, any reference to the “Employment Term” of this Agreement shall include the Initial Employment Term and any Renewal Term(s).

 

2.           Employment.  (a) During the Employment Term, the Executive will serve as the President and Chief Executive Officer of the Company.  At all appropriate times during the Employment Term, the Company will nominate the Executive for election to the Company’s Board of Directors (the “Board”).  The Executive will also serve as an officer, director or employee of any other member of the Company Group, as may be applicable, on the terms and conditions set forth herein, and without any additional compensation, including for service as a member of the Board.

 

(b)           The employment relationship between the Company and the Executive will be governed by the applicable general employment policies and practices of the Company Group, including those relating to ethics and business conduct, confidential information, harassment and discrimination, expense reimbursement and avoidance of conflicts (together, the “Company Policies”), except that when any express term of this Agreement is in conflict with the Company Policies, such term of this Agreement will control.

 

3.           Position and Duties of the Executive.  (a) The Executive will report directly to the Board, and have duties, responsibilities and authorities customary for the Executive’s title and position, and such duties, responsibilities and authority as may be assigned to the Executive from time to time by the Board consistent with his title and position.  Except as otherwise required by applicable law or regulation or any applicable securities exchange, during the Employment Term, the Executive shall be the most senior executive officer of the Company and all employees of the Company shall report directly or indirectly to the Executive.

 

(b)           During the Employment Term, the Executive will devote the Executive’s best efforts, full attention and energies during normal working time to the business(es) of the Company Group and the performance of any of the Executive’s duties as set forth herein.

   

  

 

  

   

(c)           So long as such activities do not involve a breach of this Agreement and do not interfere with the performance of the Executive’s duties hereunder, the Executive may participate in any governmental, educational, charitable or other community affairs during the Employment Term and, subject to the prior approval of the Board in the Board’s discretion, serve as a member of the governing board of any such organization (with such approval being deemed given with respect to any such governing board service in effect as of the Effective Date and of which the Executive previously notified the Board).  Notwithstanding anything herein to the contrary, the Executive may not accept any position during the Employment Term with a for-profit enterprise without the prior written approval of the Board in the Board’s discretion.

 

4.           Compensation.  (a) Base Salary.  During the Employment Term, the Company will pay to the Executive a base salary per annum equal to $650,000 (as in effect from time to time, the “Base Salary”).  The Base Salary will be payable at the times and in accordance with the Company’s normal payroll practice, but in no event less frequently than monthly.  During the Employment Term, the Company shall annually review the Executive’s Base Salary.

 

(b)           Annual Bonus.  During the Employment Term, the Executive will be eligible to receive an annual cash incentive bonus in accordance with, and subject to, the terms and conditions of the Company’s applicable annual incentive bonus program (the “Annual Bonus”).  During the Employment Term, the Executive’s target Annual Bonus will be 100% of the Executive’s Base Salary, with potential for a lesser or larger Annual Bonus (up to the maximum Annual Bonus established by the Board), in all cases subject to the achievement of applicable performance objectives as set forth by the Board or a committee thereof.  Payment of the Annual Bonus for the Company’s 2015 fiscal year will be prorated based on the number of calendar days the Executive is employed by the Company following the Effective Date as a portion of the Company’s full 2015 fiscal year; provided that such pro-rated 2015 Annual Bonus shall not be less than $100,000.  The Annual Bonus in respect of any fiscal year shall be paid by the 15th day of the third month following the end of such fiscal year.

 

(c)           Initial Equity Grant.  On the Effective Date, the Executive will be granted the following equity-based awards (the “Initial Grant”), provided that the Initial Grant will be subject to the Company’s  shareholder approval of the Company’s 2015 equity incentive plan (the “Equity Plan”) at the Company’s annual meeting of shareholders following the Effective Date (the “Annual Meeting”):

 

(i)           An option to acquire 182,050 shares of the Company’s common stock, with a per-share exercise price equal to the closing price of one share of the Company’s common stock on the Effective Date (the “Option”).  The Option will vest ratably over three years on each of the first three anniversaries of the Effective Date, subject to the Executive’s continuous employment with the Company through each applicable vesting date, and will be subject to such terms and conditions as set forth in the Equity Plan and the applicable award agreement governing the grant of the Option attached hereto as Exhibit A; and

 

(ii)           40,016 restricted stock units (the “RSUs”), with such RSUs vesting ratably over three years on each of the first three anniversaries of the Effective Date, subject to the Executive’s continuous employment with the Company through each applicable vesting date, and will be subject to such terms and conditions set forth in the Equity Plan and the applicable award agreement governing the grant of the RSUs attached hereto as Exhibit B.

   

  

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The Parties hereby agree that, in the event the Company’s shareholders fail to approve the Equity Plan at the Annual Meeting, the Initial Grant award shall be immediately cancelled (the “Cancellation”) and the Company and the Executive will work together in good faith to implement a mutually agreeable long-term incentive arrangement providing the Executive with substantially similar economic opportunity, value, vesting and performance conditions (the “Replacement Arrangement”), including with respect to the period commencing on the Effective Date and ending on the date the Replacement Arrangement is effective.  In all events, the Replacement Arrangement shall become effective within four months following the Cancellation.

 

(d)           Change in Control Prior to Effectiveness of Initial Equity Grant.  If, while the Executive remains employed by the Company, a Change in Control occurs prior to the Initial Grant awards becoming effective (including following the Cancellation) and at such time as the Company has not yet implemented a Replacement Plan, then Sections 7(b)(vii) and 7(c)(iii) shall thereafter be null and void and:

 

(i)           If the acquiring or surviving entity in the Change in Control transaction agrees to assume, convert or replace outstanding Company equity awards held by other Company employees, then the Option and the RSUs shall be cancelled and in lieu thereof the Executive shall be entitled to receive an amount of cash equal to the sum of (A) the per-share value of the property into which the Company’s other equity awards are converted or adjusted in connection with the Change in Control (valued at the applicable time of payment to the Executive) (the “Per Share Value”) less the per-share exercise price of the Option (to the extent such difference is positive) multiplied by the number of shares subject to the Option and (B) the Per Share Value multiplied by the number of RSUs, in each instance payable at the time the respective original Initial Grant awards would have vested in accordance with their original terms (including by virtue of Section 7(b)(v) or 7(c)(iv)); or

 

(ii)           If the acquiring or surviving entity in the Change in Control transaction does not agree to assume, convert or replace outstanding Company equity awards held by other Company employees, then the Option and the RSUs shall be cancelled and the Company shall pay to the Executive a lump sum cash amount, within 30 days following the date of the Change in Control, equal to the sum of (A) the number of RSUs multiplied by the cash value of the per-share consideration received by the Company’s shareholders at the time of the Change in Control, plus (B) the number of shares subject to the Option multiplied by the positive difference, if any, between the cash value of the per-share consideration received by the Company’s shareholders at the time of the Change in Control minus the per-share exercise price of the Option.

 

(e)           Prior Equity Grants.

 

(i)           Options.  On June 29, 2015, the Executive received a grant of an option to acquire 100,000 shares of the Company’s common stock, with a per-share exercise price of $9.28 (the “Prior Option Grant”).  Under the applicable award agreement, the Prior Option Grant was scheduled to vest in equal monthly installments on the first day of each month for six consecutive months, beginning on August 1, 2015.  The Parties hereby agree that the portion of the Prior Option Grant which remains unvested as of the Effective Date (i.e., 50,000 options) will instead vest on the first anniversary of the Effective Date.  The Prior Option Grant will continue to be subject to all other terms and conditions of the award agreement governing the Prior Option Grant.

   

  

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(ii)           Restricted Stock Units.  On June 29, 2015, the Executive received a grant of 42,000 restricted stock units (the “Prior RSU Grant”).  Under the applicable award agreement, the Prior RSU Grant is scheduled to vest on the six-month anniversary of the grant date.  The Parties hereby acknowledge that, in accordance with the applicable award agreement, the Prior RSU Grant will vest on December 25, 2015 and will be settled within five days thereof.

 

For the avoidance of doubt, except as otherwise contemplated by this Section 4(e), the Parties hereby acknowledge and agree that the Executive’s transition from the role of Interim Chief Executive Officer of the Company to the role of Chief Executive Officer of the Company (as contemplated herein) will not result in the accelerated vesting of either the Prior Option Grant or the Prior RSU Grant.

 

(f)           Long-Term Incentive Compensation.  The Company intends, but is not obligated, to annually provide the Executive with long-term incentive compensation opportunity with a target value at grant of not less than $1,600,000 (based on the valuation method used by the Company for financial reporting purposes) through a combination of stock option grants, restricted stock units or other equity-based awards, cash-based long-term plans or other components, and in such proportions and subject to such conditions, as may be determined by the Company from time to time in its sole discretion and in good faith.

 

5.           Benefits.  (a) Employee Plans.  During the Employment Term, subject to the terms and conditions of the applicable plans, the Executive will be eligible to participate in the Company-sponsored group health, major medical, dental, vision, life insurance, 401(k) and other employee welfare benefit plans (the “Employee Plans”).  The Executive acknowledges that the Company reserves the right to amend or terminate any Employee Plan(s) at any time in its discretion, subject to the terms of such Employee Plan(s) and applicable law.

 

(b)           Vacation.  During the Employment Term, the Executive will be eligible to participate in the Company’s vacation, holiday and sick, personal and other leave policies as are provided under the Company’s policies applicable to executives generally.

 

6.           Expenses.  From and after the Effective Date, the Company will pay or reimburse the Executive for reasonable and necessary business expenses incurred by the Executive during the Employment Term in connection with the Executive’s duties on behalf of the Company Group in accordance with the Company’s travel and expense policy, as it may be amended from time to time, or any successor policy applicable to executives of the Company, and in accordance with Section 22, following submission by the Executive of reimbursement expense forms in a form consistent with such expense policies.

 

7.           Termination.  (a) Termination by the Company for Cause or Resignation by the Executive Without Good Reason.  If, during the Employment Term, the Executive’s employment is terminated by the Company for Cause or the Executive resigns without Good Reason (including after the Executive provided the Company with a written notice of nonrenewal pursuant to Section 1), the Executive will not be eligible to receive Base Salary, to receive an Annual Bonus or to participate in any Employee Plans with respect to future periods after the date of such termination or resignation, except for the right to receive (i) accrued but unpaid Base Salary through the date of termination of employment, to be paid in accordance with the Company’s normal payroll practice; (ii) any accrued unused vacation time, to be paid in accordance with the Company’s normal payroll practice; (iii) any unreimbursed business expenses incurred by the Executive prior to the date of termination, to be paid in accordance with the provisions of Section 6; and (iv) any compensation and benefits payable to the Executive under the terms of the Employee Plans or the Company’s incentive arrangements in which the Executive participated prior to the date of termination of employment, in accordance with the terms of such Employee Plans and incentive arrangements (together, the “Accrued Compensation and Benefits”).

   

  

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(b)           Termination by the Company Without Cause, Resignation by the Executive for Good Reason or Nonrenewal Resignation.  Except as otherwise set forth in Section 7(c), if (and in all events other than due to the Executive’s death or Disability), (A) the Executive’s employment is terminated during the Employment Term by the Company without Cause, (B) the Executive terminates employment during the Employment Term for Good Reason or (C) after the Company provides the Executive with a written notice of nonrenewal pursuant to Section 1, the Executive terminates employment without Good Reason no later than 30 days following the expiration of the Employment Term (any termination pursuant to this clause (C), a “Nonrenewal Resignation”), then the Executive will be entitled to receive from the Company, in full satisfaction of the Executive’s rights and any benefits the Executive is entitled to under this Agreement, any other employment arrangement with the Company Group or otherwise, the following, subject to Section 7(e):

 

(i)           The Accrued Compensation and Benefits;

 

(ii)           (A) an amount equal to any earned but unpaid Annual Bonus with respect to a year prior to the year in which the termination occurred and (B) a pro-rated Annual Bonus for the year in which the termination occurred (based on the actual achievement of applicable performance criteria, and based on the number of days the Executive was employed by the Company as a portion of the applicable performance period); provided that such amounts shall be determined without regard to any otherwise-applicable individual performance criteria, and any discretionary reduction in the amount shall not exceed the amount of the average of the discretionary reductions applied to the Company’s other named executive officers for the applicable year, and in all cases payable when Annual Bonuses are ordinarily paid to similarly situated executives of the Company for the applicable year;

 

(iii)           An amount equal to two times the sum of (A) the Base Salary plus (B) target Annual Bonus, to be paid in accordance with the Company’s normal payroll practice for a period of 24 months following the date of termination of employment, provided that, in the event of a Nonrenewal Resignation, the amount payable shall instead be equal to one times the sum of (A) Base Salary plus (B) target Annual Bonus, and shall instead be payable in accordance with the Company’s normal payroll practice for a period of 12 months following the date of termination of employment;

 

(iv)           The Prior Option Grant and Prior RSU Grant shall immediately vest and all outstanding options under such the Prior Option Grant shall continue to be exercisable for 12 months following the date of termination (but in no event later than the date of expiration of the original term of the Prior Option Grant);

 

(v)           Any unvested time-vested Company options to acquire Company stock (other than the Prior Option Grant) and other unvested time-vested Company equity awards (other than the Prior RSU Grant), in all cases that would vest within 12 months following the date of termination, shall immediately vest and all outstanding time-vested Company options and stock appreciation rights shall continue to be exercisable for 12 months following the date of termination (but in no event later than the date of expiration of the original term of such awards), and with all such awards to be settled in accordance with the terms of the applicable equity incentive plan and/or the applicable award agreement;

   

  

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(vi)           Any unvested performance-vested Company options to acquire Company stock and other unvested performance-vested Company equity awards, in all cases that would vest within 12 months following the date of termination if specified performance goals or criteria are satisfied, shall remain outstanding and shall vest if, and at the time that, such goals or criteria are satisfied (and all outstanding performance-vested Company options and stock appreciation rights shall continue to be exercisable for 12 months following the date of termination, but in no event later than the date of expiration of the original term of such awards), and with all such awards to be settled in accordance with the terms of the applicable equity incentive plan and/or the applicable award agreement;

 

(vii)           Subject to Section 4(d), if the Executive’s termination of employment occurs prior to the Initial Grant awards becoming effective (including following the Cancellation) and at such time as the Company has not yet granted the Executive awards under the Replacement Plan, an amount, payable in a lump sum on the 60th day following the date of termination of employment, equal to one-third of the sum of (A) the number of RSUs multiplied by the fair market value of a share of Company stock on the date of termination, plus (B) the number of shares subject to the Option multiplied by the positive difference, if any, between the fair market value of a share of Company stock on the date of termination minus the per-share exercise price of the Option; and

 

(viii)           Reimbursement for the employer portion of the monthly cost of maintaining health benefits for the Executive (and the Executive’s spouse and eligible dependents) as of the date of termination of employment under a group health plan of the Company for purposes of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), excluding any short-term or long-term disability insurance benefits, for a period of 18 months following the date of the termination of employment, to the extent the Executive properly elects COBRA coverage.  Such reimbursements shall be paid in accordance with Sections 6 and 22 of this Agreement.  The benefits described in clauses (ii) through (viii) of this Section 7(b) are collectively referred to herein as the “Severance Benefits.”

 

(c)           Termination by the Company Without Cause, Resignation by the Executive for Good Reason or Nonrenewal Resignation During the Change in Control Period.  If, during the Change in Control Period (and in all events other than due to the Executive’s death or Disability), (A) the Executive’s employment is terminated during the Employment Term by the Company without Cause, (B) the Executive terminates employment during the Employment Term for Good Reason or (C) there is a Nonrenewal Resignation, then Executive will be entitled to receive from the Company, in full satisfaction of the Executive’s rights and any benefits the Executive is entitled to under this Agreement, any other employment arrangement with the Company Group or otherwise, the following, subject to Section 7(e) and in lieu of any amounts otherwise payable in accordance with Section 7(b):

 

(i)           The Accrued Compensation and Benefits;

 

(ii)           The Severance Benefits (other than the benefits described in clauses (iv), (v), (vi) and (vii) of Section 7(b)), provided that the amount described in clause (iii) of Section 7(b) shall instead be payable in a lump sum on the 60th day following the date of termination of employment if (A) the Executive’s termination of employment occurs following a Change in Control and (B) such Change in Control constitutes a “change in control event” for purposes of Section 409A;

   

  

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(iii)           Subject to Section 4(d), if the Executive’s termination of employment occurs prior to the Initial Grant awards becoming effective (including following the Cancellation) and at such time as the Company has not yet granted the Executive awards under the Replacement Plan, an amount, payable in a lump sum on the 60th day following the date of termination of employment, equal to the sum of (A) the number of RSUs multiplied by the fair market value of a share of Company stock on the date of termination, plus (B) the number of shares subject to the Option multiplied by the positive difference, if any, between the fair market value of a share of Company stock on the date of termination minus the per-share exercise price of the Option; and

 

(iv)           Notwithstanding the terms of any equity agreement, all of the Executive’s outstanding equity awards will fully vest and become non-forfeitable, with (A) any such outstanding stock options and stock appreciation rights becoming fully exercisable, subject to any applicable performance conditions (and with all such stock options and stock appreciation rights remaining exercisable for 12 months following the date of termination of employment (but in no event later than the date of expiration of the original term of such award)); and (B) the restriction period on any such restricted stock and any such restricted stock units held by the Executive lapsing and any other requirements or conditions with respect to the foregoing or other such equity-based awards held by the Executive lapsing and being disregarded, and all equity awards accelerated pursuant to this paragraph will be settled in accordance with the terms of the applicable equity incentive plan and/or the applicable award agreement.

 

(d)           Termination by death or Disability.  If the Executive becomes Disabled or dies during the Employment Term, the Executive’s employment will terminate and the Executive (or in the case of death, the Executive’s beneficiary or, if none, the Executive’s estate), will be entitled to receive from the Company, in full satisfaction of the Executive’s rights and any benefits the Executive is entitled to under this Agreement, any other employment arrangement with the Company Group or otherwise, the following:

 

(i)           The Accrued Compensation and Benefits; and

 

(ii)           The benefits described in clauses (ii) and (iv) of Section 7(b).

 

(e)           Payment Timing & Release Requirement.  Any obligation of the Company to make any payment pursuant to Section 7(b) or (c) (other than the payment of Accrued Compensation and Benefits) is conditioned upon the Executive first executing and delivering to the Company an effective release, substantially in the form attached hereto as Exhibit C (the “Release”), within 59 days after the date of termination of employment, with all periods for revocation therein having expired.  Subject to the Executive’s compliance with the preceding sentence, all amounts payable, or other benefits set forth in Section 7(b) or (c) (other than the payment of Accrued Compensation and Benefits) otherwise due before the 60th day following the date of the Executive’s termination of employment will instead accumulate and will be paid or provided on the 60th day following the date of termination of employment.

 

(f)           Forfeiture.  Notwithstanding the foregoing, any right of the Executive to receive termination payments and benefits hereunder will be forfeited if the Executive breaches Section 8, 9 or 11; provided that, before invoking this paragraph, the Company will provide the Executive a reasonable time (not to exceed 30 days) to respond to such assertion and, to the extent curable, a right to cure such breach within such time.

   

  

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(g)           No Mitigation; No Offset.  The Executive shall be under no obligation to seek other employment, and there shall be no offset against amounts due to him on account of any remuneration or benefits provided by any subsequent employment he may have.

 

8.           Duty of Loyalty.  During the course, and as a result, of the Executive’s employment with the Company, the Executive will have access to Confidential Information; the opportunity to gain close knowledge of, and possible influence over, customers, suppliers, independent contractors and employees of the Company Group; possess in some measure the goodwill of the Company Group; and come to possess an intimate knowledge of the business of the Company Group, including all of its policies, methods, personnel and operations.

 

(a)           Confidentiality.  (i) The Executive acknowledges that, in the course of the Executive’s employment, the Executive will become familiar with the trade secrets, confidential information and other proprietary information concerning the Company Group, including projects, promotions, marketing plans and strategies, business plans or practices, business operations, employees, employment pay information and data, research and development, intellectual property, trademarks, customer lists, pricing information, production and cost data, compensation and fee information, accounting and financing data, and methods of design, distribution, marketing, service or procurement, regardless of whether such information has been reduced to documentary form, which the Company and/or an Affiliate treats as confidential or proprietary (collectively, the “Confidential Information”).

 

(ii)           The Executive acknowledges and agrees that any and all Confidential Information will be received and held by the Executive in a confidential capacity.  The Executive will not, during the Employment Term and/or at any time thereafter, in any manner, whether directly or indirectly, knowingly use for the Executive’s own benefit or the benefit of any other Person, or disclose, divulge, render or offer, any Confidential Information, except on behalf of the Company in the course of the proper performance of the Executive’s duties hereunder.

 

(b)           Effect of Competition or Solicitation.  (i) The Executive acknowledges that (A) the Executive’s services are of special, unique and extraordinary value to the Company Group and (B) the Company Group’s ability to accomplish its purposes and to successfully compete in the marketplace depends substantially on the skills and expertise of the Executive.  The Executive acknowledges and agrees that the Company Group would be irreparably damaged if the Executive were to not devote substantially all of the Executive’s business time and efforts to the business and affairs of the Company Group during the Employment Term, or were to provide services to any business (whether a corporation or a division of a corporation or similar business unit) which competes with any member of the Company Group.

 

Therefore the Executive Agrees that, in the event that, during the Executive’s employment with the Company or during a period of 24 months thereafter (or 12 months thereafter in the event of a Nonrenewal Resignation or a termination of the Executive’s employment pursuant to Section 7(c), but in all events other than due to the Executive’s death or Disability) (collectively and as applicable, the “Restricted Period”), the Executive engages in any of the activity set forth below, then, subject to Section 7(f), the Executive shall immediately forfeit his right to receive any payments or benefits pursuant to Section 7(b), (c) or (d) (other than the payment of Accrued Compensation and Benefits) in addition to any other remedies available to the Company:

   

  

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(ii)           directly or indirectly, engage in, own or control any interest in, or act as an officer, director, partner, employee of, or consultant or advisor to, any firm, institution or other entity directly or indirectly engaged in a business that is substantially similar to that in which the Executive was engaged during the Executive’s employment with the Company or which competes with the Company Group, within the geographical area that is co-extensive with the scope of the Executive’s responsibilities for the Company Group during the last 12 months of the Executive’s employment with the Company.  Notwithstanding the foregoing, it will not be a violation of this Section 8(b)(ii) for the Executive to directly or indirectly own less than two percent (2%) of the outstanding public equity or debt of a publicly owned corporation engaged in the same or similar business to that of the Company Group, provided that the Executive is not in a control position with respect to such corporation;

 

(iii)           hire, solicit, encourage or otherwise induce any employee, consultant or independent contractor of any member of the Company Group, who provided services to any member of the Company Group within the preceding six months, to terminate his or her employment or other contractual relationship with any member of the Company Group; or

 

(iv)           induce or attempt to induce any Person which is a supplier, distributor, customer or otherwise a contracting party of any member of the Company Group at any time during the applicable Restricted Period, to terminate or modify any written or oral agreement or understanding with any member of the Company Group.

 

(c)           Company Property.  All notes, lists, records, files, documents and other papers and other like items (and all copies, extracts and summaries thereof), advertising, sales, manufacturers’ and other materials or articles or information, including data processing reports, computer programs, software, customer information and records, business records, price lists or information, samples, or any other materials or data of any kind furnished to the Executive by the Company Group or developed, made or compiled by the Executive on behalf of the Company Group or at the Company Group’s direction or for the Company Group’s use or otherwise in connection with the Executive’s employment hereunder, are and will remain the sole property of the Company Group, including in each case all copies thereof in any medium, including computer tapes and other forms of information storage, but excluding materials relating directly to the terms and conditions of the Executive’s employment and the Executive’s performance as an employee of the Company Group (the “Company Property”).  If any member of the Company Group requests the return of any Company Property at any time during or at or after the date of termination of employment, the Executive will deliver all such Company Property, including all copies of the same, to the Company as soon as practicable.  The provisions of this paragraph apply during and after the period when the Executive is an employee of the Company Group and will be in addition to (and not a limitation of) any legally applicable protections of the Company Group’s interest in Confidential Information, trade secrets and the like.

 

(d)           Non-Disparagement.  At no time during or after the Employment Term will the Executive utter, issue or circulate publicly any false or disparaging statements, remarks or rumors about any member of the Company Group and/or any of their respective businesses, or any of their respective officers, employees or directors.  Similarly, at no point during or after the Employment Term will the Company directly or indirectly utter, issue or circulate publicly any false or disparaging statements, remarks or rumors about the Executive.  In addition, the Company will instruct its executive officers not to utter, issue or circulate publicly any false or disparaging statements, remarks or rumors about the Executive.  Nothing in this Section 8(d) shall prohibit the Company or the Executive from providing truthful and accurate facts about the other party where required to do so by law.  If any member of the Company Group or any of their respective officers, employees or directors utters, issues or circulates publicly any false or disparaging statements, remarks or rumors about the Executive, the Executive may appropriately respond without being in violation of this Section 8(d).

   

  

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(e)           The Executive’s obligation of confidentiality will survive, regardless of any other breach of this Agreement or any other agreement, by any Party, until and unless such Confidential Information has become, through no fault of the Executive, generally known to the public.  For purposes of this paragraph, “generally known” means known throughout the domestic U.S. industry or the appropriate foreign country’s or countries’ industry.  In the event that the Executive is required by law, regulation, or court order to disclose any of the Confidential Information, the Executive will promptly notify the Company prior to making any such disclosure to facilitate the Company Group seeking a protective order or other appropriate remedy from the proper authority at its sole cost and expense.  The Executive further agrees to cooperate with the Company in seeking such order or other remedy and that, if the Company is not successful in precluding the requesting legal body from requiring the disclosure of the Confidential Information, the Executive will furnish only that portion of the Confidential Information that is legally required, and the Executive will, at the Company’s expense, exercise all reasonable legal efforts to obtain reliable assurances that confidential treatment will be accorded to the Confidential Information.

 

(f)           The Executive’s obligations under this Section 8 are in addition to, and not in limitation of, all other obligations of confidentiality under the Company Group’s policies and applicable law and regulatory guidance.

 

9.           Developments.  (a) The Executive will make full and prompt disclosure to the Company Group of all inventions, improvements, discoveries, methods, developments, software, mask works and works of authorship, whether patentable or copyrightable or not, (i) which relate to the business(es) of the Company Group and have heretofore been created, made, conceived or reduced to practice by the Executive or under the Executive’s direction or jointly with others, and not assigned to prior employers, or (ii) which have utility in or relate to the Company Group’s business(es) and are created, made, conceived or reduced to practice by the Executive or under the Executive’s direction or jointly with others during the Executive’s employment with the Company Group, whether or not during normal working hours or on the premises of the Company Group (all of the foregoing of which are collectively referred to in this Agreement as “Developments”).

 

(b)           The Executive agrees to assign and hereby assigns to the Company Group (or any Person designated by the Company Group) all of the Executive’s rights, title and interest worldwide in and to all Developments and all related patents, patent applications, copyrights and copyright applications, and any other applications for registration of a proprietary right.  This paragraph will not apply to Developments that the Executive developed entirely on the Executive’s own time without using the Company Group’s equipment, supplies, facilities or Confidential Information and that does not, at the time of conception or reduction to practice, have utility in or relate to the Company Group’s business(es), or actual or demonstrably anticipated research or development.  To the extent this Agreement is construed in accordance with the laws of any jurisdiction which precludes a requirement in an employee agreement to assign certain classes of inventions made by an employee, this paragraph will be interpreted not to apply to any invention which a court rules or the Company agrees falls within such classes but will be interpreted to apply thereto to the maximum extent legally permissible.

   

  

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(c)           The Executive will cooperate fully with the Company Group, both during and after the Executive’s employment with the Company Group, with respect to the procurement, maintenance and enforcement of copyrights, patents and other intellectual property rights (both in the United States and other countries) relating to Developments.  The Executive will not be required to incur or pay any costs or expenses in connection with the rendering of such cooperation.  The Executive will sign all papers, including copyright applications, patent applications, declarations, oaths, formal assignments, assignments of priority rights, and powers of attorney, and do all things that the Company Group may deem necessary or desirable in order to protect its rights and interests in any Development.  If any member of the Company Group is unable, after reasonable effort, to secure the Executive’s signature on any such papers, any executive officer of the Company is expressly authorized to execute any such papers as the Executive’s agent and attorney-in-fact, coupled with interest, and the Executive hereby irrevocably designates and appoints each executive officer of the Company as the Executive’s agent and attorney-in-fact to execute any such papers on the Executive’s behalf and to take any and all other actions as the Company Group may deem necessary or desirable in order to protect its rights and interests in any Development, under the conditions described in this sentence.

 

(d)           Exception.  This Section 9 does not apply to any invention that qualifies fully under the provisions of California Labor Code Section 2870.  The Executive hereby acknowledges that he has received written notice of the provisions of California Labor Code Section 2870, which provides as follows:

 

“(a)           Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies facilities, or trade secret information, except for those inventions that either: (1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or (2) Result from any work performed by the employee for the employer.

 

(b)           To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of the state and is unenforceable.”

 

10.           Remedies.  The Executive and the Company acknowledge that the covenants contained in Sections 8 and 9 are reasonable under the circumstances.  Accordingly, if, in the opinion of any court of competent jurisdiction, any such covenant is not reasonable in any respect, such court will have the right, power and authority to sever or modify any provision or provisions of such covenants as to the court will appear not reasonable and to enforce the remainder of the covenants as so amended.  The Executive further acknowledges that the remedy at law available to the Company Group for breach of any of the Executive’s obligations under Sections 8 and 9 would be inadequate and that damages flowing from such a breach may not readily be susceptible to being measured in monetary terms.  Accordingly, in addition to any other rights or remedies that the Company Group may have at law, in equity or under this Agreement, upon proof of the Executive’s violation of any such provision of this Agreement, the Company Group will be entitled to immediate injunctive relief and may obtain a temporary order restraining any threatened or further breach, without the necessity of proof of actual damage or the posting of any bond.

   

  

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11.           Continued Availability and Cooperation.  (a) Following termination of the Executive’s employment, the Executive will reasonably cooperate with the Company Group and with the Company Group members’ counsel in connection with any present or future actual or threatened litigation, administrative proceeding or investigation involving any member of the Company Group that relates to events, occurrences or conduct occurring (or claimed to have occurred) during the period of the Executive’s employment by the Company Group.  Cooperation will include:

 

(i)           Being reasonably available for interviews and discussions with the Company Group members’ counsel, as well as for depositions and trial testimony;

 

(ii)           If depositions or trial testimony are to occur, being reasonably available and cooperating in the preparation therefor, as and to the extent that the Company Group or any Company Group member’s counsel reasonably requests;

 

(iii)           Refraining from impeding in any way the Company Group’s prosecution or defense of such litigation or administrative proceeding; and

 

(iv)           Reasonably cooperating fully in the development and presentation of the Company Group’s prosecution or defense of such litigation or administrative proceeding.

 

(b)           The Company will reimburse the Executive for reasonable travel, lodging, telephone and similar expenses, as well as reasonable attorneys’ fees (if independent legal counsel is authorized in advance in writing by the Company), incurred in connection with any such cooperation, consultation and advice rendered under this Agreement after the Executive’s termination of employment.  However, the Executive will not be entitled to any separate compensation for any matter referred to in this Section 11.

 

12.           Dispute Resolution.  (a) In the event that the Parties are unable to resolve any controversy or claim arising out of or in connection with this Agreement or breach thereof, any Party may refer the dispute to binding arbitration, which, except as expressly provided hereafter, will be the exclusive forum for resolving such claims.  Such arbitration will be administered by the American Arbitration Association (the “AAA”) and governed by New York law.  The arbitration will be conducted by a single arbitrator selected by the Executive and the Company according to the rules of the AAA.  In the event that the Parties fail to agree on the selection of the arbitrator within 30 days after either the Executive’s or the Company’s request for arbitration, the arbitrator will be chosen by the AAA.  The arbitration proceeding will commence on a mutually agreeable date within 90 days after the request for arbitration.  The forum for arbitration will be agreed on by the Parties or, in the absence of any agreement, will be in a venue located in New York County, New York.

 

(b)           The Parties agree that each will bear its own costs and attorneys’ fees in any arbitration hereunder.  The arbitrator will not have authority to award attorneys’ fees or costs to any Party.

 

(c)           The arbitrator will have no power or authority to make awards or orders granting relief that would not be available to a Party in a court of law.  The arbitrator’s award is limited by and must comply with this Agreement and applicable federal, state and local laws.  The decision of the arbitrator will be final and binding on the Parties.

 

(d)           Notwithstanding the foregoing, no claim or controversy for injunctive or equitable relief contemplated by or allowed under applicable law pursuant to Sections 8 and 9 will be subject to arbitration under this Section 12, but will instead be subject to determination as provided in Section 17.

   

  

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13.           Other Agreements, Entire Agreement, Etc.  No agreement, representation or warranty, oral or otherwise, express or implied, with respect to the subject matter hereof has been made by any Party which is not expressly set forth in this Agreement.  This Agreement contains the entire agreement of the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to the subject matter hereof, including but not limited to the Prior Agreement.  Nothing herein will be deemed to provide the Executive a right to remain an officer or employee of any member of the Company Group.

 

14.           Withholding of Taxes.  The Company will have the right to withhold from any amount payable hereunder any federal, state, city, local or other taxes in order for the Company Group to satisfy any withholding tax obligation it may have under any applicable law, regulation or ruling.

 

15.           Successors and Binding Agreement.  (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no such succession had taken place.  This Agreement will be binding upon and inure to the benefit of the Company and any successor to the Company, including any Person acquiring directly or indirectly all or substantially all of the business or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise (and such successor will thereafter be deemed “the Company” for purposes of this Agreement), but will not otherwise be assignable or delegable by the Company, except that the Company may assign this Agreement, or may assign its rights and delegate its duties hereunder, to any Person who acquires all of the voting stock of the Company (or to any parent entity thereof).

 

(b)           This Agreement will inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees and legatees.  If the Executive dies while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, will be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

 

(c)           This Agreement is personal in nature and neither the Company nor the Executive may, without the consent of the other, assign or delegate this Agreement or any rights or obligations hereunder, except as expressly provided in Sections 15(a) and 15(b).  Without limiting the generality or effect of the foregoing, the Executive’s right to receive payments hereunder will not be assignable, transferable or delegable, whether by pledge, creation of a security interest, or otherwise, other than by a transfer by the Executive’s will or by the laws of descent and distribution and, in the event of any attempted assignment or transfer contrary to this paragraph, the Company will have no liability to pay any amount so attempted to be assigned, transferred or delegated.

 

16.           Notices.  Any notice, demand, claim or other communication under this Agreement will be in writing and will be deemed to have been given (a) on delivery if delivered personally; (b) on the date on which delivery thereof is guaranteed by the carrier if delivered by a national courier guaranteeing delivery within a fixed number of days of sending; or (c) on the date of transmission thereof if delivery is confirmed, but, in each case, only if addressed to the Parties in the following manner at the following addresses (or at the other address as a Party may specify by notice to the other) to the Company, to the attention of the General Counsel at its principal executive offices, and to the Executive, at the Executive’s principal residence as set forth in the employment records of the Company.

    

  

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17.           Governing Law and Choice of Forum.  (a) This Agreement will be construed and enforced according to the laws of the State of New York, other than the choice of law provisions thereof.

 

(b)           To the extent not otherwise provided for by Section 12, the Parties consent to the exclusive jurisdiction of all state and federal courts located in New York County, New York, as well as to the jurisdiction of all courts of which an appeal may be taken from such courts, for the purpose of any suit, action or other proceeding arising out of, or in connection with, this Agreement or that otherwise arise out of the employment relationship.  Each Party hereby expressly waives (i) any and all rights to bring any suit, action or other proceeding in or before any court or tribunal other than the courts described above, and covenants that it will not seek in any manner to resolve any dispute other than as set forth in this paragraph, and (ii) any and all objections either may have to venue, including the inconvenience of such forum, in any of such courts.  In addition, each Party consents to the service of process by personal service or any manner in which notices may be delivered hereunder in accordance with this Agreement.

 

18.           Validity/Severability.  The Parties agree that (a) the provisions of this Agreement will be severable in the event that for any reason whatsoever any of the provisions hereof are invalid, void or otherwise unenforceable, (b) any such invalid, void or otherwise unenforceable provisions will be replaced by other provisions which are as similar as possible in terms to such invalid, void or otherwise unenforceable provisions but are valid and enforceable, and (c) the remaining provisions will remain valid and enforceable to the fullest extent permitted by applicable law.

 

19.           Survival.  The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration or termination of the Employment Term or this Agreement (including those under Sections 8, 9, 10 and 11) will survive any termination or expiration of this Agreement.

 

20.           Subsequent Employment.  During the Restricted Period, if the Executive is offered employment or the opportunity to enter into any business activity, whether as owner, investor, executive, manager, employee, independent consultant, contractor, advisor or otherwise, the Executive will inform the offeror of the existence of Sections 8 and 9 of this Agreement and provide the offeror a copy thereof.  The Executive authorizes the Company to provide a copy of the relevant provisions of this Agreement to any of the Persons described in this paragraph and to make such Persons aware of the Executive’s obligations under this Agreement.

 

21.           Excise Tax.  (a) Notwithstanding any other provisions in this Agreement, in the event that any payment or benefit received or to be received by the Executive (including any payment or benefit received in connection with a change in control of the Company or the termination of the Executive’s employment, whether pursuant to the terms of this Agreement or any other plan, program, arrangement or agreement) (all such payments and benefits, together, the “Total Payments”) would be subject (in whole or part), to any excise tax imposed under Section 4999 of the Code, or any successor provision thereto (the “Excise Tax”), then, after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, program, arrangement or agreement, the Company will reduce the Total Payments to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax (but in no event to less than zero); provided, however, that the Total Payments will only be reduced if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state, municipal and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state, municipal and local income taxes on such Total Payments and the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).

   

  

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(b)           In the case of a reduction in the Total Payments, the Total Payments will be reduced in the following order:  (i) payments that are payable in cash that are valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a) will be reduced (if necessary, to zero), with amounts that are payable last reduced first; (ii) payments and benefits due in respect of any equity valued at full value under Treasury Regulation Section 1.280G-1, Q&A 24(a), with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; (iii) payments that are payable in cash that are valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with amounts that are payable last reduced first, will next be reduced; (iv) payments and benefits due in respect of any equity valued at less than full value under Treasury Regulation Section 1.280G-1, Q&A 24, with the highest values reduced first (as such values are determined under Treasury Regulation Section 1.280G-1, Q&A 24) will next be reduced; and (v) all other non-cash benefits not otherwise described in clauses (ii) or (iv) will be next reduced pro-rata.  Any reductions made pursuant to each of clauses (i)-(v) above will be made in the following manner: first, a pro-rata reduction of cash payment and payments and benefits due in respect of any equity not subject to Section 409A, and second, a pro-rata reduction of cash payments and payments and benefits due in respect of any equity subject to Section 409A as deferred compensation.

 

(c)           For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax:  (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of the Code will be taken into account; (ii) no portion of the Total Payments will be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm which was, immediately prior to the change in control, the Company’s independent auditor (the “Auditor”), does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments will be taken into account which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as set forth in Section 280G(b)(3) of the Code) that is allocable to such reasonable compensation; and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments will be determined by the Auditor in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.

 

(d)           At the time that payments are made under this Agreement, the Company will provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations, including any opinions or other advice the Company received from Tax Counsel, the Auditor, or other advisors or consultants (and any such opinions or advice which are in writing will be attached to the statement).  If the Executive objects to the Company’s calculations, the Company will pay to the Executive such portion of the Total Payments (up to 100% thereof) as the Executive determines is necessary to result in the proper application of this Section 21.  All determinations required by this Section 21 (or requested by either the Executive or the Company in connection with this Section 21) will be at the expense of the Company.  The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 21 will not of itself limit or otherwise affect any other rights of the Executive under this Agreement.

   

  

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22.           Compliance with Section 409A.  (a) The Parties intend that any amounts payable under this Agreement, and the Company’s and the Executive’s exercise of authority or discretion hereunder, comply with the provisions of Section 409A of the Code, along with the rules, regulations and guidance promulgated thereunder by the Department of the Treasury or the Internal Revenue Service (collectively, “Section 409A”) so as not to subject the Executive to the payment of the additional tax, interest or penalty which may be imposed under Section 409A.  In furtherance thereof, to the extent that any provision of this Agreement would result in the Executive being subject to payment of additional tax, interest or penalty under Section 409A, the Parties agree to amend this Agreement if permitted under Section 409A in a manner which does not impose any additional taxes, interest or penalties on Executive in order to bring this Agreement into compliance with Section 409A, without materially changing the economic value of the arrangements under this Agreement to any Party, and thereafter the Parties will interpret its provisions in a manner that complies with Section 409A.  Notwithstanding the foregoing, no particular tax result for the Executive with respect to any income recognized by the Executive in connection with this Agreement is guaranteed.

 

(b)           Notwithstanding any provisions of this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of Section 409A and determined pursuant to any policies adopted by the Company consistent with Section 409A), at the time of the Executive’s “Separation From Service” (within the meaning of Section 409A) and if any portion of the payments or benefits to be received by the Executive upon Separation From Service would be considered deferred compensation under Section 409A and cannot be paid or provided to the Executive without the Executive incurring taxes, interest or penalties under Section 409A, amounts that would otherwise be payable pursuant to this Agreement and benefits that would otherwise be provided pursuant to this Agreement, in each case, during the six-month period immediately following the Executive’s Separation From Service will instead be paid or made available on the earlier of (i) the first business day of the seventh month following the date of Executive’s Separation From Service or (ii) the Executive’s death.

 

(c)           With respect to any amount of expenses eligible for reimbursement or the provision of any in-kind benefits under this Agreement, to the extent such payment or benefit would be considered deferred compensation under Section 409A or is required to be included in the Executive’s gross income for federal income tax purposes, such expenses (including expenses associated with in-kind benefits) will be reimbursed by the Executive no later than December 31st of the year following the year in which the Executive incurs the related expenses.  In no event will the reimbursements or in-kind benefits to be provided by the Company in one taxable year affect the amount of reimbursements or in-kind benefits to be provided in any other taxable year, nor will the Executive’s right to reimbursement or in-kind benefits be subject to liquidation or exchange for another benefit.

 

(d)           Each payment under this Agreement is intended to be a “separate payment” and not one of a series of payments for purposes of Section 409A.

 

(e)           A termination of employment will not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits subject to Section 409A upon or following a termination of employment unless such termination is also a Separation From Service, and notwithstanding anything contained herein to the contrary, the date on which such Separation From Service takes place will be the termination date.

   

  

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23.           Amendment; Waiver.  (a) This Agreement may be amended and any provision of this Agreement may be waived, provided that any such amendment or waiver will be binding upon a Party only if such amendment or waiver is set forth in a writing executed by such Party.  No course of dealing between the Parties will be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any Party under or by reason of this Agreement.

 

(b)           No delay or failure in exercising any right, power or remedy hereunder will affect or operate as a waiver thereof; nor will any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power or remedy preclude any further exercise thereof or of any other right, power or remedy.

 

24.           Counterparts.  This Agreement may be executed in multiple counterparts (any one of which need not contain the signatures of more than one Party), each of which will be deemed to be an original but all of which taken together will constitute one and the same agreement.  This Agreement, and any amendments hereto, to the extent signed and delivered by means of a facsimile machine or other electronic transmission, will be treated in all manner and respects as an original agreement and will be considered to have the same binding legal effects as if it were the original signed version thereof delivered in person.  At the request of any Party, the Parties will re-execute original forms thereof and deliver them to the requesting Party.  No Party will raise the use of a facsimile machine or other electronic means to deliver a signature or the fact that any signature was transmitted or communicated through the use of facsimile machine or other electronic means as a defense to the formation of a contract and each Party forever waives any such defense.

 

25.           Headings; Interpretation.  (a) The descriptive headings herein are inserted for convenience of reference only and are not intended to be a substantive part of or to affect the meaning or interpretation of this Agreement.

 

(b)           Reference to any agreement, document, or instrument means such agreement, document, or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof.  Unless otherwise indicated, any reference to a “Section” means a Section of this Agreement.

 

(c)           In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties, and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

 

(d)           The word “including” (in its various forms) means including without limitation.  All references in this Agreement to “days” refer to “calendar days” unless otherwise specified.

 

26.           Defined Terms.  In addition to the terms defined elsewhere herein, the following terms will have the following meanings when used herein with initial capital letters:

 

(a)           “Affiliate” means, as to any Person, any other Person that directly or indirectly controls, or is controlled by, or is under common control with, such Person.  For this purpose, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) will mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person, whether through ownership of securities or partnership or other ownership interests, by contract or otherwise.  Unless otherwise indicated, an Affiliate refers to an Affiliate of the Company.

   

  

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(b)           “Cause” means:

 

(i)           Any act or omission constituting a material breach by the Executive of any provisions of this Agreement or constituting a material violation of the Company Policies;

 

(ii)           The willful failure by the Executive to perform the Executive’s duties hereunder (other than any such failure resulting from the Executive’s Disability), after demand for performance is delivered by the Company that identifies in reasonable detail the manner in which the Company believes the Executive has not performed the Executive’s duties, if, within 30 days of such demand, the Executive fails to cure any such failure that is capable of being cured;

 

(iii)           Any misconduct by the Executive that is materially injurious to any member of the Company Group, financial or otherwise, or any act of misappropriation, fraud including with respect to any member of the Company Group’s accounting and financial statements, embezzlement or conversion by the Executive of the property of any member of the Company Group;

 

(iv)          The conviction (or plea of no contest) of the Executive for any felony;

 

(v)           The Executive’s gross negligence, gross neglect of duties or gross insubordination;

 

(vi)          The Executive’s commission of any violation of any antifraud provision of federal or state securities laws; or

 

(vii)         The Executive’s alcohol or prescription or other drug abuse substantially affecting work performance.

 

(c)           “Change in Control” has the meaning ascribed to such term in the Volt Information Sciences, Inc. 2015 Equity Incentive Plan (as in effect as of the Effective Date).

 

(d)           “Change in Control Period” means (i) any period during which the Company is party to a definitive agreement with any other Person, the consummation of the transactions contemplated by which would result in a Change in Control, and (ii) the period commencing on the date a Change in Control occurs and ending on the second anniversary of such date.

 

(e)           “Code” means the Internal Revenue Code of 1986, as amended.

 

(f)           “Company Group” means the Company and its Affiliates.

 

(g)           “Disability” or “Disabled” means:

 

(i)           The Executive’s incapacity due to physical or mental illness to substantially perform the Executive’s duties and the essential functions of the Executive’s position, with or without reasonable accommodation, on a full-time basis for six months; or

 

(ii)           The Executive becomes eligible to receive benefits under the Company’s applicable long-term disability plan;

  

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except that, if the Executive does not agree with a determination to terminate the Executive’s employment because of Disability, the question of the Executive’s Disability will be subject to the certification of a qualified medical doctor reasonably agreed upon by the Company and the Executive.  The costs of such qualified medical doctor will be paid by the Company.

 

(h)           “Good Reason” means, without the Executive’s consent:

 

(i)           A diminution in the Executive’s Base Salary or target Annual Bonus, other than as a result of a general reduction in Base Salary and/or target Annual Bonus that affects all senior executives of the Company in substantially the same proportions (but in no event shall the Executive’s (A) Base Salary be less than 80% of the Executive’s highest Base Salary during the Employment Term or (B) target Annual Bonus be less than 80% of the Executive’s highest target Annual Bonus during the Employment Term);

 

(ii)           A material diminution in the Executive’s authority, duties, or responsibilities (other than temporarily while the Executive is physically or mentally incapacitated or as required by applicable law);

 

(iii)           The Executive ceases to be a member of the Board (other than due to the Executive’s resignation from the Board or his voluntary failure to stand for election to the Board), provided that Cause does not exist;

 

(iv)           A relocation of the Executive’s principal place of employment by more than 50 miles from the Executive’s principal place of employment as of the Effective Date;

 

(v)           The Company’s failure to provide the Executive during any year of the Employment Term with long-term incentive compensation opportunity with a target value at grant of at least $1,600,000 (based on the valuation method used by the Company for financial reporting purposes) through a combination of stock option grants, restricted stock units or other equity-based awards, cash-based long-term plans or other components, and in such proportions and subject to such conditions, as may be determined by the Company from time to time in its sole discretion and in good faith; or

 

(vi)           The Company’s material breach of this Agreement.

 

provided, however, that the foregoing conditions will constitute Good Reason only if (A) the Executive provides written notice to the Company within 90 days of the initial existence of the condition(s) constituting Good Reason and (2) the Company fails to cure such condition(s) within 30 days after receipt from the Executive of such notice; and provided further, that Good Reason will cease to exist with respect to a condition 180 days following the initial existence of such condition.

 

(i)           “Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture or an unincorporated organization.

 

27.           Certain Costs.  Each Party will pay and be fully responsible for its own costs and expenses (including costs of professional advisors) in connection with any future disputes under, or the interpretation and enforcement of, this Agreement.

  

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28.           Clawback Provisions.  Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, or any other compensation, paid to the Executive pursuant to this Agreement or any other agreement or arrangement with any member of the Company Group, which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by any member of the Company Group pursuant to any such law, government regulation or stock exchange listing requirement).

 

29.           Acknowledgements.  The Executive acknowledges and agrees that (i) the Executive has read this Agreement carefully and in its entirety, (ii) the Executive understands the terms and conditions contained herein, (iii) the Executive has had the opportunity to review this Agreement with legal counsel of the Executive’s own choosing and has not relied on any statements made by the Company or its legal counsel as to the meaning of any term or condition contained herein or in deciding whether to enter into this Agreement, and (iv) the Executive is entering into this Agreement knowingly and voluntarily.  The Executive acknowledges and agrees that each member of the Company Group is an intended third party beneficiary of this Agreement and, as such, will be entitled to all of the benefits, and will be permitted to enforce its rights, under this Agreement as if such third party were an original party hereto.  As an inducement to enter into this Agreement, the Executive represents and warrants as follows:  (A) the Executive is not a party to any other agreement or obligation for personal services; (B) there exist no impediments or restraints, contractual or otherwise on the Executive’s power, right or ability to enter into this Agreement and to perform the Executive’s duties and obligations hereunder; and (C) the performance of the Executive’s obligations under this Agreement do not and will not violate or conflict with any agreement relating to confidentiality, non-competition or exclusive employment to which the Executive is or was subject.

 

30.           Resignations.  Following the termination of the Executive’s employment for any reason, if and to the extent requested by the Board, the Executive agrees to resign from the Board, all fiduciary positions (including as trustee) and all other offices and positions the Executive holds with the Company Group; provided, however, that if the Executive fails to tender the Executive’s resignation after the Board has made such request, then the Executive will be deemed to have resigned from such offices and positions.

 

[Remainder of Page Intentionally Left Blank]

 

 

 

 

 

 

 

  

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IN WITNESS WHEREOF, this Agreement is duly executed as of the Effective Date.

 

	 	Volt Information Sciences, Inc.	 
	 	 	 	 	 
	 	 	 	 	 
	 	By: 	 /s/ Laurie Siegel	 
	 	 	 	 	 
	 	Name: 	Laurie Siegel	 
	 	Title: 	
Chair of the Compensation Committee, 

as authorized by the Compensation Committee

	 
	 	 	 	 	 

    

	 	Executive	 
	 	 	 	 	 
	 	 	 	 	 
	 	 /s/ Michael Dean	 
	 	Michael Dean	 	 
	
 

	 	 	 	 

 

 

 

 

 

 

 

 

  

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EXHIBIT A

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

 

VOLT INFORMATION SCIENCES, INC.

2015 Equity Incentive Plan

 

This NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (this “Agreement”), is made as of October 19, 2015 (the “Grant Date”) between Volt Information Sciences, Inc., a New York corporation (the “Company”), and Michael Dean (the “Participant”), and is made pursuant to the terms of the Company’s 2015 Equity Incentive Plan (the “Plan”).  Capitalized terms used herein but not defined shall have the meanings set forth in the Plan.

 

Section 1.     Option.  The Company hereby grants to the Participant, as of the Date of Grant, the right and option (this “Option”) to purchase 182,050 Shares, at a price per Share equal to $8.33 (the “Exercise Price”), subject to such vesting, transfer and other restrictions and conditions as set forth in this Agreement (the “Award”).  This Option is not intended to qualify as an Incentive Stock Option.  The Award is granted subject to approval of the Plan by the shareholders of the Company.  No portion of this Award may become exercisable prior to shareholder approval of the Plan.  In the event that the Plan is not approved by the Company’s shareholders within 12 months of the Effective Date, the Award shall be null and void ab initio.

 

Section 2.     Vesting Requirements.

 

(a)           Generally. Except as otherwise provided herein, 1/3 (one-third) of this Option shall vest and become exercisable on each of the first three anniversaries of the Grant Date (each, a “Vesting Date”), subject to the Participant’s continuous service or employment with the Company or its Affiliates (“Service”) from the Grant Date through the applicable Vesting Date.

 

(b)           Termination of Service Without Cause, for Good Reason or Nonrenewal Resignation.  Notwithstanding Section 2(a) hereof, in the event of the Participant’s termination of Service prior to an applicable Vesting Date by the Company without Cause, by the Participant for Good Reason or if there is a Nonrenewal Resignation (and in all events other than due to the Participant’s death or Disability), any unvested portion of this Option that would vest within 12 months following the date of such termination of Service (the “Termination Date”), shall immediately become fully vested and exercisable on the Termination Date (subject to the requirement that the Participant execute a release of claims as contemplated by the Employment Agreement, dated October 19, 2015, between the Company and the Participant (the “Employment Agreement”)). As used in this Agreement, the terms “Cause,” “Disability,” “Good Reason” and “Nonrenewal Resignation” shall have the respective meanings set forth in the Employment Agreement.

 

(c)           Termination of Service Without Cause, for Good Reason or Nonrenewal Resignation during the Change in Control Period. Notwithstanding Section 2(a) or (b) hereof, in the event of the Participant’s termination of Service prior to an applicable Vesting Date by the Company without Cause, by the Participant for Good Reason or if there is a Nonrenewal Resignation, in each case during the Change in Control Period (and in all events other than due to the Participant’s death or Disability), 100% of the unvested portion of this Option shall immediately become fully vested and exercisable on the Termination Date (subject to the requirement that the Participant execute a release of claims as contemplated by the Employment Agreement).  As used in this Agreement, the term “Change in Control Period” shall have the meaning set forth in the Employment Agreement.

   

  

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(d)           Other Terminations of Service.  Upon the occurrence of a termination of the Participant’s Service for any reason other than as contemplated by Section 2(b) or (c) hereof, the unvested portion of this Option shall immediately be forfeited and cancelled, and the Participant shall not be entitled to any compensation or other amount with respect thereto.

 

Section 3.     Term.  This Option shall terminate upon the earliest to occur of the following:

 

(a)           Expiration. This Option shall terminate immediately upon the tenth anniversary of the Grant Date (the “Expiration Date”).

 

(b)           Death; Disability.  If the Participant’s Service is terminated due to the Participant’s death or Disability, then the vested portion of this Option shall remain exercisable until the one-year anniversary of such termination (at which time this Option shall be cancelled), but not later than the Expiration Date.

 

(c)           Termination of Service Without Cause, for Good Reason or Nonrenewal Resignation.  In the event of the Participant’s termination of Service by the Company without Cause, by the Participant for Good Reason or if there is a Nonrenewal Resignation (and in all events other than due to the Participant’s death or Disability), the vested portion of this Option shall remain exercisable until the 12-month anniversary of such termination (at which time this Option shall be cancelled), but not later than the Expiration Date.

 

(d)           Cause.  If the Participant’s Service is terminated for Cause, then this Option (both the vested and unvested portions) shall be cancelled immediately upon the occurrence of such termination.

 

(e)           Other Terminations of Service.  If the Participant’s Service is terminated in a manner that is not otherwise specified in this Section 3, then the vested portion of this Option shall remain exercisable until the three-month anniversary of such termination (at which time this Option shall be cancelled), but not later than the Expiration Date.

 

Section 4.     Exercise.  Subject to the terms of this Agreement and the Plan, the vested portion of this Option may be exercised, in whole or in part, in cash or in any other form of legal consideration that may be acceptable to the Committee in accordance with the terms of the Plan (including, without limitation, in the discretion of the Participant (and with any necessary Committee consent deemed satisfied hereby), pursuant to Section 6(d)(i)(D) of the Plan (pertaining to net settlement for exercise price)).

 

Section 5.     Restrictions on Transfer.  No portion of this Option (nor any interest therein) may be sold, assigned, alienated, pledged, attached or otherwise transferred or encumbered by the Participant otherwise than by will or by the laws of descent and distribution, and any such purported sale, assignment, alienation, pledge, attachment, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary shall not constitute a sale, assignment, alienation, pledge, attachment, transfer or encumbrance.  Notwithstanding the foregoing, at the discretion of the Committee, this Option may be transferred by the Participant solely to the Participant’s spouse, siblings, parents, children and grandchildren or trusts for the benefit of such persons or partnerships, corporations, limited liability companies or other entities owned solely by such persons, including, but not limited to, trusts for such persons.

   

  

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Section 6.     Investment Representation.  Upon acquisition of Shares pursuant to this Option at a time when there is not in effect a registration statement under the Securities Act of 1933, as amended (the “Securities Act”) relating to the Shares, the Participant hereby represents and warrants, and by virtue of such acquisition shall be deemed to represent and warrant, to the Company that the Shares shall be acquired for investment and not with a view to the distribution thereof, and not with any present intention of distributing the same, and the Participant shall provide the Company with such further representations and warranties as the Company may require in order to ensure compliance with applicable federal and state securities, blue sky and other laws.  No Shares shall be acquired unless and until the Company and/or the Participant shall have complied with all applicable federal or state registration, listing and/or qualification requirements and all other requirements of law or of any regulatory agencies having jurisdiction, unless the Committee has received evidence satisfactory to it that the Participant may acquire such shares pursuant to an exemption from registration under the applicable securities laws.  Any determination in this connection by the Committee shall be final, binding and conclusive.  The Company reserves the right to legend any certificate or book entry representation of the Shares, conditioning sales of such shares upon compliance with applicable federal and state securities laws and regulations.

 

Section 7.     Securities Laws/Legend on Certificates.  The issuance and delivery of certificates representing Shares acquired pursuant to this Option shall comply with all applicable requirements of law, including without limitation the Securities Act, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded.  If the Company deems it necessary to ensure that the issuance of securities under the Plan is not required to be registered under any applicable securities laws, each Participant to whom such security would be issued shall deliver to the Company an agreement or certificate containing such representations, warranties and covenants as the Company which satisfies such requirements. The certificates representing the Shares acquired pursuant to this Option shall be subject to such stop transfer orders and other restrictions as the Committee may deem reasonably advisable, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

 

Section 8.     Adjustments.  The Award granted hereunder shall be subject to the adjustment as provided in Section 4(b) of the Plan.

 

Section 9.     No Right of Continued Service.  Nothing in the Plan or this Agreement shall confer upon the Participant any right to continued Service.

   

  

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Section 10.     Tax Withholding.  This Agreement and the Award shall be subject to tax and/or other withholding in accordance with Section 17(e) of the Plan (including, without limitation, in the discretion of the Participant (and with any necessary Committee consent deemed satisfied hereby), pursuant to Section 17(e)(ii) of the Plan (pertaining to net settlement for taxes)).

 

Section 11.     No Rights as a Stockholder; No Dividends.  The Participant shall not have any privileges of a stockholder of the Company with respect to this Option, including without limitation any right to vote any Shares underlying this Option or to receive dividends or other distributions in respect thereof, unless and until Shares underlying this Option are delivered to the Participant following the exercise of this Option in accordance with Section 4 hereof.

 

Section 12.     Clawback.  The Award will be subject to recoupment in accordance with any existing clawback policy or clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law.  In addition, the Board may impose such other clawback, recovery or recoupment provisions as the Board determines necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired Shares or other cash or property upon the occurrence of Cause.  The implementation of any clawback policy will not be deemed a triggering event for purposes of any definition of “good reason” for resignation or “constructive termination.”

 

Section 13.     Amendment and Termination.  Subject to the terms of the Plan, any amendment to this Agreement shall be in writing and signed by the parties hereto.  Notwithstanding the immediately-preceding sentence, subject to the terms of the Plan, the Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, this Agreement and/or the Award; provided that, subject to the terms of the Plan, any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially impair the rights of the Participant or any holder or beneficiary of the Award shall not be effective without the written consent of the Participant, holder or beneficiary.

 

Section 14.     Construction.  The Award granted hereunder is granted by the Company pursuant to the Plan and is in all respects subject to the terms and conditions of the Plan.  The Participant hereby acknowledges that a copy of the Plan has been delivered to the Participant and accepts the Award hereunder subject to all terms and provisions of the Plan, which are incorporated herein by reference.  In the event of a conflict or ambiguity between any term or provision contained herein and a term or provision of the Plan, the Plan will govern and prevail.  The construction of and decisions under the Plan and this Agreement are vested in the Committee, whose determinations shall be final, conclusive and binding upon the Participant.

 

Section 15.     Governing Law.  This Agreement shall be construed and enforced in accordance with the laws of the State of New York, without giving effect to the choice of law principles thereof.

   

  

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Section 16.     Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

 

Section 17.     Binding Effect.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns.

 

Section 18.     Entire Agreement.  This Agreement and the Plan constitute the entire agreement between the parties with respect to the subject matter hereof and thereof, merging any and all prior agreements.

 

[SIGNATURES ON FOLLOWING PAGE]

 

 

 

 

 

 

 

 

 

 

  

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the Grant Date.

 

	 	VOLT INFORMATION SCIENCES, INC.	 
	 	 	 	 	 
	 	 	 	 	 
	 	By: 	 	 
	 	 	 	 	 
	 	Name: 	Laurie Siegel	 
	 	Title: 	
Chair of the Compensation Committee, 

as authorized by the Compensation Committee

	 
	 	 	 	 	 

    

	 	PARTICIPANT	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	Participant’s Signature	Date	 
	 	 	 	 	 
	 	Name: 	 	 
	 	 	 	 	 
	 	Address:	 	 
	 	 	 	 	 
	 	Address:	 	 
	 	 	 	 	 

 

 

 

 

 

 

 

 

  

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EXHIBIT B

RESTRICTED STOCK UNIT AWARD AGREEMENT

 

VOLT INFORMATION SCIENCES, INC.

2015 Equity Incentive Plan

 

This RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”), is made as of the 19th day of October, 2015 between Volt Information Sciences, Inc., a New York corporation (the “Company”), and Michael Dean (the “Participant”), and is made pursuant to the terms of the Company’s 2015 Equity Incentive Plan (the “Plan”).  Capitalized terms used herein but not defined shall have the meanings set forth in the Plan.

 

Section 1.     Restricted Stock Units.  The Company hereby issues to the Participant, as of the Date of Grant, 40,016 restricted stock units (the “RSUs”), subject to such vesting, transfer and other restrictions and conditions as set forth in this Agreement (the “Award”).  Each RSU represents the right to receive one Share, subject to the terms and conditions set forth in this Agreement and the Plan.  For purposes of this Agreement, the “Grant Date” shall be October 19, 2015.  The Award is granted subject to approval of the Plan by the shareholders of the Company.  No portion of the Award may be settled prior to shareholder approval of the Plan.  In the event that the Plan is not approved by the Company’s shareholders within 12 months of the Effective Date, the Award shall be null and void ab initio.

 

Section 2.     Vesting Requirements.

 

(a)           Generally. Except as otherwise provided herein, the RSUs shall vest ratably over three years on each of the first three anniversaries of the Grant Date (each, a “Vesting Date”), subject to the Participant’s continuous service or employment with the Company or its Affiliates (“Service”) from the Grant Date through the applicable Vesting Date.

 

(b)            Termination of Service Without Cause, for Good Reason or Nonrenewal Resignation.  Notwithstanding Section 2(a) hereof, in the event of the Participant’s termination of Service prior to an applicable Vesting Date by the Company without Cause, by the Participant for Good Reason or if there is a Nonrenewal Resignation (and in all events other than due to the Participant’s death or Disability), any unvested RSUs that would vest within 12 months following the date of such termination of Service (the “Termination Date”), shall immediately become fully vested on the Termination Date (subject to the requirement that the Participant execute a release of claims as contemplated by the Employment Agreement, dated October 19, 2015, between the Company and the Participant (the “Employment Agreement”)). As used in this Agreement, the terms “Cause,” “Disability,” “Good Reason” and “Nonrenewal Resignation” shall have the respective meanings set forth in the Employment Agreement.

 

(c)           Termination of Service Without Cause, for Good Reason or Nonrenewal Resignation during the Change in Control Period. Notwithstanding Section 2(a) or (b) hereof, in the event of the Participant’s termination of Service prior to an applicable Vesting Date by the Company without Cause, by the Participant for Good Reason or if there is a Nonrenewal Resignation, in each case during the Change in Control Period (and in all events other than due to the Participant’s death or Disability), 100% of the unvested RSUs shall immediately become fully vested on the Termination Date (subject to the requirement that the Participant execute a release of claims as contemplated by the Employment Agreement).  As used in this Agreement, the term “Change in Control Period” shall have the meaning set forth in the Employment Agreement.

   

  

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(d)           Other Terminations of Service.  Upon the occurrence of a termination of the Participant’s Service for any reason other than as contemplated by Section 2(b) or (c) hereof, all outstanding and unvested RSUs shall immediately be forfeited and cancelled, and the Participant shall not be entitled to any compensation or other amount with respect thereto.  Notwithstanding anything to the contrary herein, upon a termination of the Participant’s Service for Cause, all RSUs, whether vested or unvested, shall immediately be forfeited and cancelled, and the Participant shall not be entitled to any compensation or other amount with respect thereto.

 

Section 3.     Settlement.  As soon as reasonably practicable following the Vesting Date or Termination Date (as applicable, but in any event, within 10 days following the Vesting Date or Termination Date), any RSUs that become vested and non-forfeitable shall be settled, unless otherwise determined by the Committee, by the Company through the delivery to the Participant of a number of Shares equal to the number of RSUs that vested and became non-forfeitable pursuant to Section 2 hereof.

 

Section 4.     Restrictions on Transfer.  No RSUs (nor any interest therein) may be sold, assigned, alienated, pledged, attached or otherwise transferred or encumbered by the Participant otherwise than by will or by the laws of descent and distribution, and any such purported sale, assignment, alienation, pledge, attachment, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary shall not constitute a sale, assignment, alienation, pledge, attachment, transfer or encumbrance.  Notwithstanding the foregoing, at the discretion of the Committee, RSUs may be transferred by the Participant solely to the Participant’s spouse, siblings, parents, children and grandchildren or trusts for the benefit of such persons or partnerships, corporations, limited liability companies or other entities owned solely by such persons, including, but not limited to, trusts for such persons.

 

Section 5.     Investment Representation.  The Participant is acquiring the RSUs for investment purposes only and not with a view to, or in connection with, the public distribution thereof in violation of the Securities Act of 1933, as amended (the “Securities Act”).  No Shares shall be acquired unless and until the Company and/or the Participant shall have complied with all applicable federal or state registration, listing and/or qualification requirements and all other requirements of law or of any regulatory agencies having jurisdiction, unless the Committee has received evidence satisfactory to it that the Participant may acquire such shares pursuant to an exemption from registration under the applicable securities laws.  The Participant understands and agrees that none of the RSUs may be offered, sold, assigned, transferred, pledged, hypothecated or otherwise disposed of except in compliance with this Agreement and the Securities Act pursuant to an effective registration statement or applicable exemption from the registration requirements of the Securities Act and applicable state securities or “blue sky” laws.   Notwithstanding anything herein to the contrary, the Company shall have no obligation to deliver any Shares hereunder or make any other distribution of benefits under hereunder unless such delivery or distribution would comply with all applicable laws (including, without limitation, the Securities Act), and the applicable requirements of any securities exchange or similar entity.

   

  

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Section 6.     Adjustments.  The Award granted hereunder shall be subject to the adjustment as provided in Section 4(b) of the Plan.

 

Section 7.     No Right of Continued Service.  Nothing in the Plan or this Agreement shall confer upon the Participant any right to continued Service.

 

Section 8.     Tax Withholding.  This Agreement and the Award shall be subject to tax and/or other withholding in accordance with Section 17(e) of the Plan (including, without limitation, in the discretion of the Participant (and with any necessary Committee consent deemed satisfied hereby), pursuant to Section 17(e)(ii) of the Plan (pertaining to net settlement for taxes)).

 

Section 9.     No Rights as a Stockholder; Dividends.  The Participant shall not have any privileges of a stockholder of the Company with respect to any RSUs, including without limitation any right to vote any Shares underlying such RSUs or to receive dividends or other distributions in respect thereof, unless and until Shares underlying the RSUs are delivered to the Participant in accordance with Section 3 hereof.  Notwithstanding the foregoing, any dividends payable with respect to the RSUs underlying the Award during the Period from the Grant Date through the date the applicable RSUs are settled in accordance with Section 3 hereof will accumulate in cash and be payable to the Participant on a deferred basis, but only to the extent that the Award vests in accordance with Section 2 hereof.  In no event shall the Participant be entitled to any payments relating to dividends paid after the earlier to occur of the settlement or forfeiture of the applicable RSUs underlying the Award and, for the avoidance of doubt, all accumulated dividends shall be forfeited immediately upon the forfeiture or cancellation of the Award or applicable portion thereof.

 

Section 10.     Clawback.  The Award will be subject to recoupment in accordance with any existing clawback policy or clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law.  In addition, the Board may impose such other clawback, recovery or recoupment provisions as the Board determines necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired Shares or other cash or property upon the occurrence of Cause.  The implementation of any clawback policy will not be deemed a triggering event for purposes of any definition of “good reason” for resignation or “constructive termination.”

 

Section 11.     Amendment and Termination.  Subject to the terms of the Plan, any amendment to this Agreement shall be in writing and signed by the parties hereto.  Notwithstanding the immediately-preceding sentence, subject to the terms of the Plan, the Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, this Agreement and/or the Award; provided that, subject to the terms of the Plan, any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially impair the rights of the Participant or any holder or beneficiary of the Award shall not be effective without the written consent of the Participant, holder or beneficiary.

   

  

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Section 12.     Construction.  The Award granted hereunder is granted by the Company pursuant to the Plan and is in all respects subject to the terms and conditions of the Plan.  The Participant hereby acknowledges that a copy of the Plan has been delivered to the Participant and accepts the Award hereunder subject to all terms and provisions of the Plan, which are incorporated herein by reference.  In the event of a conflict or ambiguity between any term or provision contained herein and a term or provision of the Plan, the Plan will govern and prevail.  The construction of and decisions under the Plan and this Agreement are vested in the Committee, whose determinations shall be final, conclusive and binding upon the Participant.

 

Section 13.     Governing Law.  This Agreement shall be construed and enforced in accordance with the laws of the State of New York, without giving effect to the choice of law principles thereof.

 

Section 14.     Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

 

Section 15.     Binding Effect.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns.

 

Section 16.     Entire Agreement.  This Agreement and the Plan constitute the entire agreement between the parties with respect to the subject matter hereof and thereof.

 

[SIGNATURES ON FOLLOWING PAGE]

 

 

 

 

 

   

  

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

     

	 	VOLT INFORMATION SCIENCES, INC.	 
	 	 	 	 	 
	 	 	 	 	 
	 	By: 	 	 
	 	 	 	 	 
	 	Name: 	Laurie Siegel	 
	 	Title: 	
Chair of the Compensation Committee, 

as authorized by the Compensation Committee

	 
	 	 	 	 	 

     

	 	PARTICIPANT	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	Participant’s Signature	Date	 
	 	 	 	 	 
	 	Name: 	 	 
	 	 	 	 	 
	 	Address:	 	 
	 	 	 	 	 
	 	 	 	 	 

 

 

 

 

 

 

 

  

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EXHIBIT C

 

WAIVER AND RELEASE OF CLAIMS AGREEMENT

 

Michael Dean (“Employee”) hereby acknowledges that Volt Information Sciences, Inc. (“Employer”) is offering Employee certain payments in connection with Employee’s termination of employment pursuant to the employment agreement entered into between Employer and Employee, as amended (the “Employment Agreement”), in exchange for Employee’s promises in this Waiver and Release of Claims Agreement (this “Agreement”).  If not otherwise defined herein, initial capitalized terms have the meanings given to them in the Employment Agreement.

 

Severance Payments

 

1.           Employee agrees that Employee will be entitled to receive the applicable severance payments under Section 7(b) or (c) of the Employment Agreement (other than the Accrued Compensation and Benefits) (the “Severance Payments”) only if Employee accepts and does not revoke this Agreement, which requires Employee to release both known and unknown claims.

 

2.           Employee agrees that the Severance Payments tendered under the Employment Agreement constitute fair and adequate consideration for the execution of this Agreement.  Employee further agrees that Employee has been fully compensated for all wages and fringe benefits, including, but not limited to, paid and unpaid leave, due and owing, and that the Severance Payments are in addition to payments and benefits to which Employee is otherwise entitled.

 

Claims That Are Being Released

 

3.           Employee agrees that this Agreement constitutes a full and final release by Employee and Employee’s descendants, dependents, heirs, executors, administrators, assigns, and successors, of any and all claims, charges, and complaints, whether known or unknown, that Employee has or may have to date against Employer and any of its parents, subsidiaries, or affiliated entities and their respective officers, directors, shareholders, partners, joint venturers, employees, consultants, insurers, agents, predecessors, successors, and assigns, arising out of or related to Employee’s employment or the termination thereof, to the extent based upon acts or events that occurred on or before the date on which Employee signs this Agreement.  To the fullest extent allowed by law, Employee hereby waives and releases any and all such claims, charges, and complaints in return for the Severance Payments.  This release of claims is intended to be as broad as the law allows, and includes, but is not limited to, rights arising out of alleged violations of any contracts, express or implied, any covenant of good faith or fair dealing, express or implied, any tort or common law claims, any legal restrictions on Employer’s right to terminate employees, and any claims under any federal, state, municipal, local, or other governmental statute, regulation, or ordinance, including, without limitation:

 

	
  

	
(a)

	
claims of discrimination, harassment, or retaliation under equal employment laws such as Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Rehabilitation Act of 1973, and any and all other federal, state, municipal, local, or foreign equal opportunity laws;

 

	
  

	
(b)

	
if applicable, claims of wrongful termination of employment; statutory, regulatory, and common law “whistleblower” claims, and claims for wrongful termination in violation of public policy;

   

  

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(c)

	
claims arising under the Employee Retirement Income Security Act of 1974, except for any claims relating to vested benefits under Employer’s employee benefit plans;

 

	
  

	
(d)

	
claims of violation of wage and hour laws, including, but not limited to, claims for overtime pay, meal and rest period violations, and recordkeeping violations; and

 

	
  

	
(e)

	
claims of violation of federal, state, municipal, local, or foreign laws concerning leaves of absence, such as the Family and Medical Leave Act.

 

4.           If Employee has worked or is working in California, Employee expressly agrees to waive the protection of Section 1542 of the California Civil Code, which provides:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR

 

Claims That Are Not Being Released

 

5.           This release does not include any claims that may not be released as a matter of law, and this release does not waive claims or rights that arise after Employee signs this Agreement.  Further, this release will not prevent Employee from doing any of the following:

 

	
  

	
(a)

	
obtaining unemployment compensation, state disability insurance, or workers’ compensation benefits from the appropriate agency of the state in which Employee lives and works, provided Employee satisfies the legal requirements for such benefits (nothing in this Agreement, however, guarantees or otherwise constitutes a representation of any kind that Employee is entitled to such benefits);

 

	
  

	
(b)

	
asserting any right that is created or preserved by this Agreement, such as Employee’s right to receive the Severance Payments;

 

	
  

	
(c)

	
asserting any right to the Accrued Compensation and Benefits (as defined in the Employment Agreement);

 

	
  

	
(d)

	
asserting any rights Employee may have to indemnification under any agreement, arrangement or governing document of Employer or any of its affiliates, and/or coverage under any applicable policy of directors’ and officers’ liability insurance maintained by Employer or any of its affiliates;

 

	
  

	
(e)

	
filing a charge, giving testimony or participating in any investigation conducted by the Equal Employment Opportunity Commission (the “EEOC”) or any duly authorized agency of the United States or any state (however, Employee is hereby waiving the right to any personal monetary recovery or other personal relief should the EEOC (or any similarly authorized agency) pursue any class or individual charges in part or entirely on Employee’s behalf); or

   

  

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(f)

	
challenging or seeking determination in good faith of the validity of this waiver under the Age Discrimination in Employment Act (nor does this release impose any condition precedent, penalties, or costs for doing so, unless specifically authorized by federal law).

 

Additional Employee Covenants

 

6.           To the extent applicable, Employee confirms and agrees to Employee’s continuing obligations under the Employment Agreement, including, without limitation, following termination of Employee’s employment with Employer.  This includes, without limitation, Employee’s continuing obligations under Sections 9-12 of the Employment Agreement.

 

Voluntary Agreement And Effective Date

 

7.           Employee understands and acknowledges that, by signing this Agreement, Employee is agreeing to all of the provisions stated in this Agreement, and has read and understood each provision.

 

8.           The parties understand and agree that:

 

	
  

	
(a)

	
Employee will have a period of 45 calendar days in which to decide whether or not to sign this Agreement, and an additional period of seven calendar days after signing in which to revoke this Agreement.  If Employee signs this Agreement before the end of such 45-day period, Employee certifies and agrees that the decision is knowing and voluntary and is not induced by Employer through (i) fraud, misrepresentation, or a threat to withdraw or alter the offer before the end of such 45-day period or (ii) an offer to provide different terms in exchange for signing this Agreement before the end of such 45-day period.

 

	
  

	
(b)

	
In order to exercise this revocation right, Employee must deliver written notice of revocation to [INSERT COMPANY CONTACT] on or before the seventh calendar day after Employee executes this Agreement.  Employee understands that, upon delivery of such notice, this Agreement will terminate and become null and void.

 

	
  

	
(c)

	
The terms of this Agreement will not take effect or become binding, and Employee will not become entitled to receive the Severance Payments, until that seven-day period has lapsed without revocation by Employee.  If Employee elects not to sign this Agreement or revokes it within seven calendar days of signing, Employee will not receive the Severance Payments.

 

	
  

	
(d)

	
All amounts payable hereunder will be paid in accordance with the applicable terms of the Employment Agreement.

 

Governing Law

9.           This Agreement will be governed by the substantive laws of the State of New York, without regard to conflicts of law, and by federal law where applicable.

 

10.           If any part of this Agreement is held to be invalid or unenforceable, the remaining provisions of this Agreement will not be affected in any way.

 

Consultation With Attorney

 

11.           Employee is hereby encouraged and advised to confer with an attorney regarding this Agreement.  By signing this Agreement, Employee acknowledges that Employee has consulted, or had an opportunity to consult with, an attorney or a representative of Employee’s choosing, if any, and that Employee is not relying on any advice from Employer or its agents or attorneys in executing this Agreement.

   

  

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12.           This Agreement was provided to Employee for consideration on [INSERT DATE THIS AGREEMENT PROVIDED TO EMPLOYEE].

 

PLEASE READ THIS AGREEMENT CAREFULLY; IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

Employee certifies that Employee has read this Agreement and fully and completely understands and comprehends its meaning, purpose, and effect.  Employee further states and confirms that Employee has signed this Agreement knowingly and voluntarily and of Employee’s own free will, and not as a result of any threat, intimidation or coercion on the part of Employer or its representatives or agents.

 

	 	 	 	MICHAEL DEAN	 
	 	 	 	 	 
	 	 	 	 	 
	Date:	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

 

 

 

 

 

36Exhibit 4.1

 

 

 

 

 

 

 

 

 

ZION OIL & GAS, INC.

 

as Issuer

 

AND

 

AMERICAN STOCK TRANSFER & TRUST
COMPANY, LLC

 

as Trustee

 

 

 

 

 

SUPPLEMENTAL INDENTURE

Dated as of October 21, 2015

$72,000,000

10% Convertible Senior Note due 2021

 

 

 

 

 

 

 

    	 	 	 

     

    

 

TABLE OF CONTENTS

			
        Page

	ARTICLE I
 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
	 
	Section 1.01.	Scope of Supplemental Indenture	2
	Section 1.02.	Definitions	2
	Section 1.03.	Rules of Construction	7
	 	 	 
	ARTICLE II 
 THE SECURITIES
	 
	Section 2.01.	Title and Terms; Payments	7
	Section 2.02.	Book-Entry Provisions for Global Notes	9
	Section 2.03.	Reporting Requirement	9
	Section 2.04.	Redemption	9
	 	 	 
	ARTICLE III
 FUNDAMENTAL CHANGES AND REPURCHASES THEREUPON
	 
	Section 3.01.	Repurchase at Option of Holders Upon a Fundamental Change	10
	Section 3.02.	Effect of Fundamental Change Purchase Notice	12
	Section 3.03.	Withdrawal of Fundamental Change Purchase Notice	13
	Section 3.04.	Deposit of Fundamental Change Purchase Price	13
	Section 3.05.	Notes Repurchased 	13
	Section 3.06.	Covenant to Comply With Applicable Laws Upon Repurchase of Notes	14
	Section 3.07.	Repayment to the Company	14
	 	 	 
	ARTICLE IV
  CONVERSION
	 
	Section 4.01.	Right to Convert	14
	Section 4.02.	Conversion Procedures	14
	Section 4.03.	Settlement Upon Conversion	16
	Section 4.04.	Adjustment of Conversion Rate	17
	Section 4.05.	Exchange in Lieu of Conversion	21
	Section 4.06.	Adjustments Upon Certain Fundamental Changes	21

 

    i

     

    

 

	Section 4.07.	Effect of Recapitalization, Reclassification, Consolidation, Merger or Sale	22
	Section 4.08.	Taxes on Shares Issued	23
	Section 4.09.	Reservation of Shares; Shares to be Fully Paid; Compliance With Governmental Requirements; Listing of Common Stock	23
	Section 4.10.	Responsibility of Trustee	24
	 	 	 
	ARTICLE V
 REMEDIES
	 
	Section 5.01.	Events of Default	24
	Section 5.02.	Additional Interest	26
	Section 5.03.	Acceleration	26
	 	 	 
	ARTICLE VI
 SATISFACTION AND DISCHARGE
	 
	Section 6.01.	Satisfaction and Discharge of the Supplemental Indenture	27
	 	 	 
	ARTICLE VII
 SUPPLEMENTAL INDENTURES
	 
	Section 7.01.	Amendments or Supplements Without Consent of Holders	28
	Section 7.02.	Amendments, Supplements or Waivers With Consent of Holders	29
	Section 7.03.	Notice of Amendment or Supplement	29
	 	 	 
	ARTICLE VIII
 INAPPLICABLE PROVISIONS OF THE ORIGINAL INDENTURE
	 
	Section 8.01.	Legend	29
	Section 8.02.	Legal Defeasance and Covenant Defeasance	29
	Section 8.03.	Subordination	30
	Section 8.04.	Sinking Funds	30
	 	 	 
	ARTICLE IX
 MISCELLANEOUS
	 
	Section 9.01.	Governing Law	30
	Section 9.02.	Payments on Business Days	30

 

    ii

     

    

 

	Section 9.03.	No Security Interest Created	30
	Section 9.04.	Trust Indenture Act	30
	Section 9.05.	Benefits of Indenture	30
	Section 9.06.	Calculations	31
	Section 9.07.	Table of Contents, Headings, Etc	31
	Section 9.08.	Execution in Counterparts	31
	Section 9.09.	Severability	31
	Section 9.10.	Notices	31
	 	 	 
	EXHIBITS	 	 
	 	 	 
	Exhibit A	Form of Note	A-1
	Exhibit B	Form of Notice of Conversion	B-1
	Exhibit C	Form of Fundamental Change Purchase Notice	C-1
	Exhibit D	Form of Assignment and Transfer	D-1

    iii

     

    

 

SUPPLEMENTAL
INDENTURE, dated as of October 21, 2015, between Zion Oil & Gas, Inc., a Delaware corporation (the “Company”),
and American Stock Transfer & Trust Company, LLC, as trustee (the “Trustee”) under the Indenture dated as of October
21, 2015, between the Company and the Trustee (as amended or supplemented from time to time in accordance with the terms thereof,
the “Original Indenture”).

 

RECITALS
OF THE COMPANY

 

WHEREAS,
the Original Indenture provides, among other things, for the issuance, from time to time, of the Company’s Senior Securities,
in an unlimited aggregate principal amount, in one or more series to be established by the Company under, and authenticated and
delivered as provided in, the Original Indenture;

 

WHEREAS,
Section 9.1 of the Original Indenture provides for the Company and the Trustee to enter into an indenture supplemental to the
Original Indenture to establish the form and terms of Securities of any series as contemplated by Section 2 of the Original Indenture;

 

WHEREAS,
the Board of Directors has duly adopted resolutions authorizing the Company to execute and deliver this Supplemental Indenture;

 

WHEREAS,
pursuant to the terms of the Original Indenture, the Company desires to establish a new series of its Securities to be known as
its “10% Convertible Senior Notes due 2021” (the “Notes”), the form and substance of such Notes and the
terms, provisions and conditions thereof to be set forth as provided in the Original Indenture and this Supplemental Indenture;

 

WHEREAS,
the Form of Note, the certificate of authentication to be borne by each Note and the Form of Notice of Conversion, Form of Fundamental
Change Purchase Notice and Form of Assignment and Transfer contemplated under the terms of the Notes are to be substantially in
the forms hereinafter provided; and

 

WHEREAS,
the Company has requested that the Trustee execute and deliver this Supplemental Indenture, and all requirements necessary to
make (i) this Supplemental Indenture a valid instrument in accordance with its terms, and (ii) the Notes, when executed by the
Company and authenticated and delivered by the Trustee, the valid obligations of the Company, have been performed, and the execution
and delivery of this Supplemental Indenture have been duly authorized in all respects.

 

NOW,
THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH, for and in consideration of the premises and the purchases of the Notes by
the Holders thereof, it is mutually agreed, for the benefit of the Company and the equal and proportionate benefit of all Holders
of the Notes, as follows:

 

    	 	 	 

     

    

 

Article
I

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

 

Section
1.01. Scope of Supplemental Indenture.

 

The
changes, modifications and supplements to the Original Indenture effected by this Supplemental Indenture shall be applicable only
with respect to, and shall only govern the terms of, the Notes, which may be issued from time to time, and shall not apply to
any other Securities that may be issued under the Original Indenture unless a supplemental indenture with respect to such other
Securities specifically incorporates such changes, modifications and supplements. The provisions of this Supplemental Indenture
shall supersede any corresponding provisions in the Original Indenture.

 

Section
1.02. Definitions.

 

Except
as otherwise provided in this Supplemental Indenture, all words, terms and phrases defined in the Original Indenture (but not
otherwise defined herein) shall have the same meaning herein as in the Original Indenture. To the extent terms defined herein
differ from terms defined in the Original Indenture the terms defined herein will govern for purposes of this Supplemental Indenture
and the Notes. For all purposes of this Supplemental Indenture and the Notes, except as otherwise expressly provided or unless
the context otherwise requires:

 

“Additional
Interest” has the meaning specified in Section 5.02.

 

“Additional
Notes” has the meaning specified in Section 2.01.

 

“Additional
Shares” has the meaning specified in Section 4.06(a).

 

“Business
Day” means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which the banking institutions in New
York City are authorized or obligated by law or executive order to close or be closed.

 

“Capital
Stock” means (a) in the case of a corporation, corporate stock, (b) in the case of an association or business entity, shares,
interests, participations, rights or other equivalents (however designated) of corporate stock, (c) in the case of a partnership
or limited liability company, partnership or membership interests (whether general or limited) and (d) any other interest or participation
that confers on a person the right to receive a share of the profits and losses of, or distribution of the assets of, the issuing
person.

 

“close
of business” means 5:00 p.m. (New York City time).

 

“Common
Stock” means the shares of common stock, par value $0.01 per share, of the Company as such shares of common stock exist
on the date of this Supplemental Indenture, subject to Section 4.07, or such other Capital Stock into which the Company’s
common stock may be reclassified, converted or otherwise changed pursuant to Section 4.07.

 

    2

     

    

 

“Conversion
Agent” means the Trustee or such other office or agency designated by the Company where Notes may be presented for conversion.
The Conversion Agent shall initially be the Trustee.

 

“Conversion
Date” has the meaning specified in Section 4.02(b).

 

“Conversion
Notice” has the meaning specified in Section 4.02(b)(i).

 

“Conversion
Price” means the average of the closing prices of the Company’s Common Stock as reported by Bloomberg L.P. for the
Principal Trading Market for the thirty (30) trading days preceding the date of issuance of the Convertible Bond, plus a 30% issuance
premium.

 

“Conversion
Rate” means number of shares of Common Stock per the $100 principal amount of the Note, which is equal to $100 divided by
the Conversion Price with any final fractional share rounded up to the next whole share.

 

“Custodian”
has the meaning specified in Section 5.01.

 

“Definitive
Notes” means certificated Notes registered in the name of the Holder thereof.

 

“Depositary”
or “Depository” has the meaning set forth in the Original Indenture, which shall initially be DTC until a successor
Depositary shall have become such pursuant to the applicable provisions of the Indenture, and thereafter “Depositary”
shall mean such successor Depositary.

 

“Designated
Institution” has the meaning specified in Section 4.05.

 

“effective
date” has the meaning specified in Section 4.06(b).

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Ex-Dividend
Date” means, in respect of any issuance, dividend or distribution, the first date on which the shares of Common Stock trade
on the applicable exchange or in the applicable market, regular way, without the right to receive such issuance, dividend or distribution
from the Company, whether directly or indirectly by due bills or otherwise.

 

“Event
of Default” has the meaning specified in Section 5.01.

 

“Fundamental
Change” means the occurrence of any of the following at any time after the Notes are originally issued:

 

(1)       any
“person” or “group” (within the meaning of Section 13(d) of the Exchange Act) other than the Company or
its Subsidiaries files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group
has become the direct or indirect ultimate “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of
the Company’s common equity representing more than 50% of the voting power of the Company’s common equity;

 

    3

     

    

 

(2)       consummation
of any binding share exchange, exchange offer, tender offer, consolidation or merger of the Company pursuant to which all or substantially
all of the Common Stock will be converted into cash, securities or other property or any sale, lease or other transfer in one
transaction or a series of related transactions of all or substantially all of the consolidated assets of the Company and its
Subsidiaries, taken as a whole, to any Person other than one or more of the Company’s Subsidiaries; (any such exchange,
offer, consolidation, merger, transaction or series of transactions being referred to in this definition as an “event”);
provided, however, that any such event where the holders of more than 50% of the outstanding shares of Common Stock
immediately prior to such event, own, directly or indirectly, more than 50% of all classes of the common equity of the continuing
or surviving person or transferee or the parent thereof immediately after such event, with such holders’ proportional voting
power immediately after such event being in substantially the same proportions as their respective voting power before such event,
shall not be a Fundamental Change;

 

(3)       the
stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or

 

(4)       the
Common Stock (or other common stock into which the Notes are then convertible) ceases to be listed on at least one U. S. national
securities exchange,

 

provided,
however, in the case of an event described in clause (2) above, if (a) at least 50% of the consideration, excluding cash
payments for fractional shares, in the transaction or event that would otherwise have constituted a Fundamental Change consists
of shares of Publicly Traded Securities, and (b) as a result of the event, the Notes become convertible into such Publicly Traded
Securities, excluding cash payments for fractional shares (subject to the provisions of Section 4.03), such event shall not be
a Fundamental Change; provided, further, if any transaction in which the Common Stock is replaced by the securities
of another entity shall occur, following completion of any related Make-Whole Fundamental Change period and any related Fundamental
Change Purchase Date, references to the Company in this definition shall instead apply to such other entity; and provided,
further, that any filing that would otherwise constitute a Fundamental Change under clause (1) above shall not constitute
a Fundamental Change if (x) the filing occurs in connection with a transaction in which the Common Stock is replaced by the securities
of another entity (including a parent entity) and (y) no filing of Schedule TO (or any schedule, form or report) is made or is
in effect with respect to common equity representing more than 50% of the voting power of such other entity.

 

“Fundamental
Change Company Notice” has the meaning specified in Section 3.01(b).

 

“Fundamental
Change Purchase Date” has the meaning specified in Section 3.01(a).

 

“Fundamental
Change Purchase Notice” has the meaning specified in Section 3.01(a)(i).

 

“Fundamental
Change Purchase Price” has the meaning specified in Section 3.01(a).

 

“Global
Note” means any Note that is a Registered Global Security.

 

    4

     

    

 

“Indenture”
means the Original Indenture, as originally executed and as amended or supplemented from time to time by one or more indentures
supplemental thereto applicable to the Notes, including this Supplemental Indenture, entered into pursuant to the applicable provisions
of the Indenture, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust
Indenture Act that are deemed to be a part of and govern the Original Indenture, this Supplemental Indenture and any other such
supplemental indenture, respectively.

 

“Initial
Notes” has the meaning specified in Section 2.01.

 

“Interest
Payment Date” means, with respect to the payment of interest on the Notes, each February 15, or the next immediate Business
Day, of each year.

 

“Last
Reported Sale Price” of the Common Stock on any date means the closing sale price per share of Common Stock (or if no closing
sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average
bid and the average ask prices) on that date as reported in composite transactions for the principal U.S. securities exchange
on which the Common Stock is listed for trading. The Last Reported Sale Price shall be determined without reference to after-hours
or extended market trading. If the Common Stock is not listed for trading on a U.S. securities exchange on the relevant date,
the “Last Reported Sale Price” shall be the last quoted bid price for the Common Stock in the over-the-counter market
on the relevant date as reported by OTC Markets Group, Inc. or a similar organization. If the Common Stock is not so quoted, the
“Last Reported Sale Price” will be determined by a U.S. nationally recognized independent investment banking firms
selected by the Company for this purpose.

 

“Make-Whole
Fundamental Change” means any transaction or event that constitutes a Fundamental Change under clause (1) or (2) of the
definition of Fundamental Change thereof (in the case of any Fundamental Change described in clause (2) of the definition thereof,
determined without regard to the proviso in such definition, but subject to the clauses (a) and (b) immediately following clause
(4) of the definition thereof).

 

“Market
Disruption Event” means (i) a failure by the primary exchange or quotation system on which the Common Stock trades or is
quoted to open for trading during its regular trading session on any Trading Day or (ii) the occurrence or existence, prior to
1:00 p.m., New York City time, on any Trading Day for the Common Stock, for more than a one half-hour period in the aggregate,
of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the stock exchange
or otherwise) in the Common Stock or in any options, contracts or future contracts relating to the Common Stock.

 

“Merger
Event” has the meaning specified in Section 4.07(a).

 

“Note”
or “Notes” has the meaning specified in the fourth paragraph of the recitals of this Supplemental Indenture, and shall
include any Additional Notes issued pursuant to Section 2.01 hereof.

 

“open
of business” means 9:00 a.m. (New York City time).

 

“Original
Indenture” has the meaning specified in the first paragraph of this Supplemental Indenture.

 

    5

     

    

 

“Paying
Agent” has the meaning set forth in the Original Indenture, which shall initially be the Trustee, and shall be the Person
authorized by the Company to pay the principal amount of, interest on, or Fundamental Change Purchase Price of, any Notes on behalf
of the Company.

 

“Principal
Repayment Date” means the trading day immediately prior to the 30 day period preceding the maturity date.

 

“Principal
Trading Market” means the principal trading exchange or market for the securities of the Company at such time.

 

“Prospectus”
means the prospectus dated March 27, 2014 as supplemented by the prospectus supplement dated October 21, 2015 relating to the
offering and sale of the Notes.

 

“Publicly
Traded Securities” means, in respect of a transaction described in clause (3) of the definition of Fundamental Change, shares
of common stock traded on a U.S. national securities exchange, or which shall be so traded immediately following the transaction
or transactions in connection with which this definition is applied.

 

“Regular
Record Date” means, with respect to the payment of interest on the Notes, December 31 or the prior next Business Day, being
at least 10 business days prior to the Interest Payment Date.

 

“Reference
Property” has the meaning specified in Section 4.07(a).

 

“Scheduled
Trading Day” means a day that is scheduled to be a Trading Day. If the Common Stock is not listed or admitted for trading,
“Scheduled Trading Day” means a Business Day.

 

“Settlement
Amount” has the meaning specified in Section 4.03(a).

 

“Significant
Subsidiary” means, at any date of determination, any Subsidiary that would constitute a “significant subsidiary”
within the meaning of Article 1 of Regulation S-X promulgated under the Securities Act as in effect on the date of this Supplemental
Indenture.

 

“Stated
Maturity” means, with respect to any Note and the payment of the principal amount thereof, February 15, 2021.

 

“Stock
Price” has the meaning specified in Section 4.06(b).

 

“Trading
Day” means a day on which (i) trading in the Common Stock generally occurs on the primary exchange or quotation system on
which the Common Stock then trades or is quoted, and (ii) there is no Market Disruption Event. If the Common Stock (or other security
for which a Last Reported Sale Price must be determined) is not listed or traded, “Trading Day” means a Business Day.

 

“U.S.”
means the United States of America.

 

    6

     

    

  

Section
1.03. Rules of Construction.

 

Unless
the context otherwise requires:

 

(1)       a
term has the meaning assigned to it herein and all terms defined in the Original Indenture (but not otherwise defined herein)
have the meanings assigned to them therein;

 

(2)       an
accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP and all accounting determinations
shall be made in accordance with GAAP;

 

(3)       “or”
is not exclusive and “including” means “including without limitation”;

 

(4)       words
in the singular include the plural, and in the plural include the singular;

 

(5)       “herein,”
“hereof” and “hereunder,” and other words of similar import, refer to this Supplemental Indenture as a
whole (including any Board Resolution or supplemental indenture relating to the relevant Series) and not to any particular Article,
Section or other subdivision;

 

(6)       all
exhibits are incorporated by reference herein and expressly made a part of this Indenture; and

 

(7)       any
transaction or event shall be considered “permitted by” or made “in accordance with” or “in compliance
with” this Indenture or any particular provision thereof if such transaction or event is not expressly prohibited by this
Indenture or such provision, as the case may be.

 

Article
II

THE SECURITIES

 

Section
2.01. Title and Terms; Payments.

 

There
is hereby established pursuant to Sections 2.01, 2.02 and 2.03 of the Original Indenture a series of Securities designated
the “10% Senior Convertible Notes due 2021” in an initial aggregate principal amount of $72,000,000 (as increased
by the aggregate principal amount of any Additional Notes issued pursuant to this section 2.01), except for Notes authenticated
and delivered upon registration or transfer of, or in exchange for, or in lieu of other Notes pursuant to this Indenture. The
Notes shall be issued in minimum denominations of $100 and integral multiples of $100 in excess thereof. No conversion or repurchase
shall be permitted, if it would result in the issuance of a Note with a minimum denomination of less than $100.

 

The
principal amount of Notes then outstanding shall be payable at Stated Maturity. The Notes shall bear interest at a rate of 10%
per annum. Interest shall accrue from the initial issuance date of the Notes, and shall be payable annually in arrears on February
15 of each year or the next business day, beginning February 15, 2017.

 

    7

     

    

 

The
Company may, without the consent of the Holders of the Notes, hereafter issue additional notes (“Additional Notes”)
under the Indenture with the same terms and with the same CUSIP numbers as the Notes issued on the date of this Supplemental Indenture
(the “Initial Notes”) in an unlimited aggregate principal amount; provided that, no such Additional Notes may
be issued unless they will be fungible with the Initial Notes for United States federal income tax and securities law purposes.
Any such Additional Notes shall constitute a single series together with the Initial Notes for all purposes hereunder, including,
without limitation, for purposes of any waivers, supplements or amendments to the Indenture requiring the approval of Holders
of the Notes and any offers to purchase the Notes. Holders of such Additional Notes shall vote together with the Holders of the
Notes as one class. The Form of Note, the Form of Notice of Conversion, the Form of Fundamental Change Purchase Notice and the
Form of Assignment and Transfer shall be substantially as set forth in Exhibits A, B, C and D, respectively, hereto, which are
incorporated into and shall be deemed a part of this Supplemental Indenture, in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by the Indenture, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities
exchange or as may, consistently herewith, be determined to be necessary or appropriate by the officers of the Company executing
such Notes, as evidenced by their execution of the Notes.

 

The
Company shall pay the principal of and interest on any Global Note in immediately available funds to the Depositary or its nominee,
as the case may be, as the registered Holder of such Global Note. However, the Company has the sole discretion to repay the principal
and any interest payments on any Global Note in cash or by payment-in-kind of the Company’s common stock. The Company shall
pay the principal of any Definitive Notes at the office or agency designated by the Company for that purpose. The Company has
initially designated the Trustee as its Paying Agent and Registrar in respect of the Notes and its agency in New York, New York
as a place where Notes may be presented for payment or for registration of transfer. The Company may, however, change the Paying
Agent or Registrar for the Notes without prior notice to the Holders thereof, and the Company may act as Paying Agent or Registrar
for the Notes. Interest on any Definitive Notes shall be payable to Holders of Definitive Notes either by check mailed to each
Holder at its address in the Register or, upon application by a Holder to the Registrar not later than the relevant Regular Record
Date, by wire transfer in immediately available funds to that Holder’s account within the United States, which application
shall remain in effect until that Holder notifies, in writing, the Registrar to the contrary.

 

The
payment-in-kind repayment of principal by common stock at maturity would be determined by the average of the closing prices of
the common stock as reported by Bloomberg L.P. for the Principal Trading Market for the thirty (30) trading days preceding the
Principal Repayment Date, with the final number of shares of common stock rounded up to the next whole share. Fractional shares
shall not be issued. The Principal Repayment Date means the trading day immediately prior to the 30 day period preceding the maturity
date.

 

The
payment-in-kind payment of interest at any time would be determined by the average of the closing prices of the common stock as
reported by Bloomberg L.P. for the Principal Trading Market for the thirty (30) trading days preceding the Regular Record Date
with the final number of shares of common stock rounded up to the next whole share. Fractional shares shall not be issued.

 

    8

     

    

 

Notwithstanding
anything to the contrary in the Original Indenture, the provisions of the Original Indenture relating to the Service Agent shall
not apply to the Notes.

 

Section
2.02. Book-Entry Provisions for Global Notes.

 

(a)       The
Notes initially shall be issued in the form of one or more Global Notes without interest coupons (i) registered in the name of
Cede & Co., as nominee of the Depositary and (ii) delivered to the Trustee as custodian for the Depositary.

 

(b)       Definitive
Notes shall be transferred to all beneficial owners in exchange for their beneficial interests in a Global Note only if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as Depositary for the Global Note and a successor depository
is not appointed by the Company within 90 days of such notice, (ii) the Depositary ceases to be registered as a clearing agency
under the Exchange Act and a successor depository is not appointed by the Company within 90 days of such cessation, or (iii) an
Event of Default has occurred and is continuing. Definitive Notes shall not be otherwise issuable. For the avoidance of doubt,
this Section 2.02 supersedes the provisions of Section 2.09 of the Original Indenture to the extent inconsistent therewith.

 

Section
2.03. Reporting Requirement.

 

(a)       The
Company shall furnish to the Trustee within 15 days after the same is required to be filed with the SEC (giving effect to any
grace period provided by Rule 12b-25 under the Exchange Act), copies of the quarterly and annual reports and of the information,
documents and other reports, if any, that the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act. Any quarterly or annual report or other information, document or other report that the Company files with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act on the SEC’s EDGAR system (or any successor system thereto) shall be
deemed furnished as of the time of such filing. The Trustee does not have the duty to review such information, documents or reports,
is not considered to have notice of the content of such information, documents or reports and does not have a duty to verify the
accuracy of such information, documents or reports.

 

(b)       For
the avoidance of doubt, this Section 2.03 supersedes the provisions of Section 4.02 of the Original Indenture.

 

Section
2.04. Redemption.

 

This
Note is subject to redemption at the option of the Company after 2 years from the issue date at principal or par plus any accrued
interest, if any, in addition to a call premium of 10 percent of the principal until the Maturity Date. The Company shall give
notice to the Trustee and the Depositary at least 35 days before the redemption date. The Note is non-callable for the first two
(2) years following and is subject to the provisions of Article 3 of the Original Indenture. The receipt of the notice of redemption
by the Trustee and the Depositary terminates the holder’s right of conversion.

 

    9

     

    

 

Article
III

FUNDAMENTAL CHANGES AND REPURCHASES THEREUPON

 

Section
3.01. Repurchase at Option of Holders Upon a Fundamental Change.

 

(a)       Generally.
If a Fundamental Change occurs at any time, then each Holder of Notes shall have the right, at such Holder’s option, to
require the Company to purchase for cash any or all of such Holder’s Notes, or any portion of the principal amount thereof,
that is equal to an integral multiple of $100, on a date specified by the Company that is not less than 20 Business Days after
the date of and no later than the 35th Business Day following the date of delivery of the Fundamental Change Company Notice (such
date, the “Fundamental Change Purchase Date”), at a purchase price equal to 100% of the principal amount thereof,
together with accrued and unpaid interest thereon, including any Additional Interest, to, but not including, the Fundamental Change
Purchase Date (the “Fundamental Change Purchase Price”); provided, however, that if a Fundamental Change
Purchase Date is after a Regular Record Date and on or prior to the Interest Payment Date to which such Regular Record Date relates,
the interest payable in respect of such Interest Payment Date shall be payable to the Holders of record as of the corresponding
Regular Record Date and the Fundamental Change Purchase Price shall be equal to 100% of the principal amount of the Notes to be
repurchased pursuant to this Article 3 and shall not include any accrued and unpaid interest, including any Additional Interest.
The requirement for the Company to repurchase any Notes on the Fundamental Change Purchase Date shall be subject to Section 3.06.

 

Repurchases
of Notes under this Section 3.01 shall be made, at the option of the Holder thereof, upon:

 

		(i)	delivery
                                         to the Paying Agent by a Holder of a duly completed notice (the “Fundamental Change
                                         Purchase Notice”) in the form set forth on the reverse of the Note as Exhibit C
                                         thereto, if the Notes are Definitive Notes, or in compliance with the Depositary’s
                                         procedures for tendering interests in Global Notes, if the Notes are not Definitive Notes,
                                         in each case prior to the close of business on the Business Day immediately preceding
                                         the Fundamental Change Purchase Date; and

 

		(ii)	delivery
                                         of the Notes, in the case of Definitive Notes, to the Paying Agent appointed by the Company
                                         (together with all necessary endorsements for transfer), or book-entry transfer of the
                                         Notes, in compliance with the procedures of the Depositary, such delivery or transfer
                                         being a condition to receipt by the Holder of the Fundamental Change Purchase Price therefor.

 

The
Fundamental Change Purchase Notice in respect of any Notes to be repurchased shall state:

 

		(i)	if
                                         such Notes are Definitive Notes, the certificate numbers of such Notes;

 

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		(ii)	the
                                         portion of the principal amount of such Notes to be repurchased, which must be $100 or
                                         an integral multiple thereof; and

 

		(iii)	that
                                         such Notes are to be repurchased by the Company pursuant to the applicable provisions
                                         of the Notes and the Indenture;

 

provided,
however, that if such Notes are in global form, the Fundamental Change Purchase Notice must also comply with appropriate
procedures of the Depositary.

 

Notwithstanding
anything herein to the contrary, any Holder delivering to the Paying Agent the Fundamental Change Purchase Notice contemplated
by this Section 3.01 shall have the right to withdraw, in whole or in part, such Fundamental Change Purchase Notice at any time
prior to the close of business on the Business Day immediately preceding the Fundamental Change Purchase Date by delivery of a
written notice of withdrawal to the Paying Agent in accordance with Section 3.03.

 

Notwithstanding
the foregoing, the Company shall not be required to repurchase the Notes in accordance with this Section 3.01 if a third party
makes an offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture and purchases
all Notes validly tendered and not withdrawn under such fundamental change repurchase offer.

 

The
Paying Agent shall promptly notify the Company of the receipt by it of any Fundamental Change Purchase Notice or written notice
of withdrawal thereof.

 

(b)       Fundamental
Change Company Notice. On or before the 20th day after the date on which Fundamental Change becomes effective, which Fundamental
Change results in Holders of Notes having the right to cause the Company to repurchase their Notes (the “effective date”),
the Company shall provide to all Holders of record of the Notes, the Trustee and the Paying Agent (in the case of any Paying Agent
other than the Trustee) a notice (the “Fundamental Change Company Notice”) of the occurrence of such Fundamental Change
and of the Repurchase right at the option of the Holders arising as a result thereof. Such notice shall be given pursuant to Section
9.10, in the case of any Global Notes, in accordance with the procedures of the Depositary for providing notices. Simultaneously
with providing such Fundamental Change Company Notice, the Company shall issue a press release (and make the press release available
on the Company’s website) and shall publish such press release through a public medium customary for such press releases.

 

Each
Fundamental Change Company Notice shall specify:

 

(i)       the
events causing a Fundamental Change;

 

(ii)      the
effective date of the Fundamental Change;

 

(iii)     whether
such Fundamental Change is a Make-Whole Fundamental Change, in which case the adjustments in Section 4.06 shall be applicable;

 

(iv)     the
last date on which a Holder of Notes may exercise the repurchase right pursuant to this Article 3;

 

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(v)      the
Fundamental Change Purchase Price;

 

(vi)     the
Fundamental Change Purchase Date;

 

(vii)    if
applicable, the name and address of the Paying Agent and the Conversion Agent;

 

(viii)   if
applicable, the applicable Conversion Rate and any adjustments to the applicable Conversion Rate;

 

(ix)     if
applicable, that the Notes with respect to which a Fundamental Change Purchase Notice has been delivered by a Holder may be converted
only if the Holder withdraws the Fundamental Change Purchase Notice in accordance with the Indenture; and

 

(x)      the
procedures that Holders must follow to require the Company to purchase their Notes.

 

No
failure of the Company to give the foregoing notices and no defect therein shall limit the repurchase rights of the Holders of
Notes or affect the validity of the proceedings for the repurchase of the Notes pursuant to this Section 3.01.

 

(c)       No
Payment During Events of Default. There shall be no repurchase of any Notes pursuant to this Section 3.01 if there has occurred
and is continuing an Event of Default with respect to the Notes where the payment of the principal amount of the Notes has been
accelerated, and such acceleration has not been rescinded (other than an Event of Default that is cured by the payment of the
Fundamental Change Purchase Price of the Notes). The Paying Agent shall promptly return to the respective Holders thereof any
Definitive Notes held by it during the continuance of such an Event of Default (other than an Event of Default that is cured by
the payment of the Fundamental Change Purchase Price with respect to the Notes) and shall deem canceled any instructions for book-entry
transfer of the Notes in compliance with the procedures of the Depositary, in which case, upon such return and cancellation, the
Fundamental Change Purchase Notice with respect thereto shall be deemed to have been withdrawn.

 

Section
3.02. Effect of Fundamental Change Purchase Notice.

 

Upon
receipt by the Paying Agent of the Fundamental Change Purchase Notice specified in Section 3.01 hereof, the Holder of the Note
in respect of which such Fundamental Change Purchase Notice was given shall (unless such Fundamental Change Purchase Notice is
withdrawn in accordance with Section 3.03 hereof) thereafter be entitled to receive solely the Fundamental Change Purchase Price
in cash with respect to such Note. Such Fundamental Change Purchase Price shall be paid to such Holder, subject to receipt of
funds by the Paying Agent, on the later of (x) the Fundamental Change Purchase Date with respect to such Note (provided the conditions
in Section 3.01 hereof have been satisfied) and (y) the time of delivery or book-entry transfer of such Note to the Paying Agent
by the Holder thereof in the manner required by Section 3.01 hereof.

 

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Section
3.03. Withdrawal of Fundamental Change Purchase Notice.

 

A
Fundamental Change Purchase Notice may be withdrawn (in whole or in part) by means of a written notice of withdrawal delivered
to the Paying Agent in accordance with the provisions of Section 3.02, specifying:

 

(i)       if
Definitive Notes have been issued, the certificate numbers of the withdrawn Notes;

 

(ii)      the
principal amount of the Notes with respect to which such notice of withdrawal is being submitted; and

 

(iii)     the
principal amount, if any, of such Notes that remains subject to the original Fundamental Change Purchase Notice, which portion
must be in principal amounts of an integral multiple of $100;

 

provided,
however, that if such Notes are in global form, the notice must also comply with appropriate procedures of the Depositary.

 

The
Paying Agent shall promptly return to the respective Holders thereof any Definitive Notes with respect to which a Fundamental
Change Purchase Notice has been withdrawn in compliance with the provisions of this Section 3.03.

 

Section
3.04. Deposit of Fundamental Change Purchase Price.

 

Prior
to 11:00 a.m. (local time in The City of New York) on the Fundamental Change Purchase Date, the Company shall deposit with the
Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate
and hold in trust as provided herein) an amount of money (in immediately available funds if deposited on such Business Day) sufficient
to pay the Fundamental Change Purchase Price of all the Notes or portions thereof that are to be repurchased as of the Fundamental
Change Purchase Date. If the Paying Agent holds money or securities sufficient to pay the Fundamental Change Purchase Price of
the Notes on the Business Day following the Fundamental Change Purchase Date for which a Fundamental Change Purchase Notice has
been tendered and not withdrawn in accordance with this Supplemental Indenture on the Fundamental Change Purchase Date, then as
of such Fundamental Change Purchase Date, (a) such Notes shall cease to be outstanding and interest (including any Additional
Interest) shall cease to accrue thereon (whether or not book-entry transfer of such Notes is made or such Notes have been delivered
to the Paying Agent) and (b) all other rights of the Holders in respect thereof shall terminate (other than the right to receive
the Fundamental Change Purchase Price and previously accrued and unpaid interest (including any Additional Interest) upon delivery
or book-entry transfer of such Notes).

 

Section
3.05. Notes Repurchased.

 

Any
Note that is to be repurchased shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so
requires in the case of Definitive Notes, due endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing) and the
Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Note, without service charge, a new
Note or Notes, of any authorized denomination as requested by such Holder in aggregate principal amount equal to, and in exchange
for, the portion of the principal amount of the Note so surrendered that is not repurchased.

 

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Section
3.06. Covenant to Comply With Applicable Laws Upon Repurchase of Notes.

 

In
connection with any offer to repurchase Notes under Section 3.01 hereof, the Company shall, in each case if required, (i) comply
with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act that may then be applicable,
(ii) file a Schedule TO or any successor or similar schedule, if required, under the Exchange Act and (iii) otherwise comply
with all federal and state securities laws so as to permit the rights and obligations under Section 3.01 to be exercised in the
time and in the manner specified in Section 3.01.

 

Section
3.07. Repayment to the Company.

 

To
the extent that the aggregate amount of cash deposited by the Company pursuant to Section 3.04 exceeds the aggregate Fundamental
Change Purchase Price of the Notes or portions thereof that the Company is obligated to repurchase as of the Fundamental Change
Purchase Date, then, following the Fundamental Change Purchase Date, the Paying Agent shall promptly return any such excess to
the Company.

 

Article
IV

CONVERSION

 

Section
4.01. Right to Convert.

 

Subject
to and upon compliance with the provisions of this Supplemental Indenture, each Holder shall have the right, at such Holder’s
option, to convert the principal amount of any such Notes at the Conversion Rate in effect on the Conversion Date for such Notes,
prior to the close of business on the Business Day immediately preceding 30 days before February 15, 2021, the Maturity Date.
This right to convert would terminate prior to the Maturity Date upon the receipt of notice of redemption by the Trustee and the
Depositary. The right to convert does not include any right for any partial conversion of a note.

 

Section
4.02. Conversion Procedures.

 

(a)       Each
Note shall be convertible at the office of the Conversion Agent and, if applicable, in accordance with the procedures of the Depositary.

 

(b)       In
order to exercise the conversion privilege with respect to any interest in a Global Note, the Holder must complete the appropriate
instruction form for conversion pursuant to the Depositary’s book-entry conversion program, furnish appropriate endorsements
and transfer documents if required by the Company or the Conversion Agent, and pay the funds, if any, required by Section 4.03(b)
and all transfer or similar taxes if required pursuant to Section 4.08, and the Conversion Agent must be informed of the conversion
in accordance with the customary practice of the Depositary. In order to exercise the conversion privilege with respect to any
Definitive Notes, the Holder of any such Notes to be converted shall:

 

(i)       complete
and manually sign the conversion notice provided on the back of the Note (the “Conversion Notice”) or a facsimile
of the Conversion Notice;

 

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(ii)      deliver
the Conversion Notice, which is irrevocable, and the Note to the Conversion Agent;

 

(iii)     if
required, furnish appropriate endorsements and transfer documents,

 

(iv)     if
required, pay all transfer or similar taxes as set forth in Section 4.08, and

 

(v)      pay
the funds, if any, required under Section 4.03(b).

 

The
date on which the Holder satisfies all of the applicable requirements set forth in this Section 4.02(b) is the “Conversion
Date.” The Conversion Agent shall, as promptly as possible, and in any event within two (2) Business Days of the receipt
thereof, provide the Company with notice of any conversion by a Holder of the Notes.

 

(c)       Each
Conversion Notice shall state the name or names (with address or addresses) in which any certificate or certificates for shares
of Common Stock which shall be issuable on such conversion shall be issued. All such Notes surrendered for conversion shall, unless
the shares issuable on conversion are to be issued in the same name as the registration of such Notes, be duly endorsed by, or
be accompanied by instruments of transfer in form satisfactory to the Company duly executed by, the Holder or his duly authorized
attorney.

 

Each
conversion shall be deemed to have been effected as to any such Notes surrendered for conversion immediately prior to the close
of business on the relevant Conversion Date; provided, however, that the person in whose name the certificate or
certificates for the number of shares of Common Stock, if any, that shall be issuable upon such conversion in respect of any Trading
Day shall become the holder of record of such shares of Common Stock as of the close of business on the last Trading Day.

 

(d)       Upon
the conversion of an interest in Global Notes, the Trustee (or other Conversion Agent appointed by the Company) shall make a notation
on such Global Notes as to the reduction in the principal amount represented thereby. The Company shall notify the Trustee in
writing of any conversions of Notes effected through any Conversion Agent other than the Trustee.

 

(e)       Notwithstanding
the foregoing, a Note in respect of which a Holder has delivered a Fundamental Change Purchase Notice exercising such Holder’s
option to require the Company to repurchase such Note may be converted only if such notice of exercise is withdrawn in accordance
with Article 3 hereof and duly submitted such Note for conversion.

 

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Section
4.03. Settlement Upon Conversion.

 

(a)       Subject
to this Section 4.03(a), upon any conversion of any Note, the Company shall deliver to converting Holders, in respect of each
$100 principal amount of Notes being converted solely shares of Common Stock (the “Settlement Amount”), as set forth
in this Section 4.03(a).

 

(i)       The
Settlement Amount in respect of any conversion of Notes shall be computed as follows:

 

(A)       the
Company will deliver to the converting Holder a number of shares of Common Stock equal to (1)(i) the aggregate principal amount
of Notes to be converted, divided by (ii) $100, multiplied by (2) the then-applicable Conversion Rate on the Conversion
Date;

 

(B)       Subject
to Section 4.03(b), upon conversion, Holders shall not receive any separate cash payment for accrued and unpaid interest or Additional
Interest, if any, unless such conversion occurs between a Regular Record Date and the Interest Payment Date to which it relates,
in which case such interest shall be paid on such Interest Payment Date to the Holders of record on such Regular Record Date.
The Company has the sole discretion to pay any interest payments in cash or by payment-in-kind of the Company’s common stock.
The payment-in-kind of interest with common stock would be determined by the average of the closing prices of the common stock
as reported by Bloomberg L.P. for the Principal Trading Market for the thirty (30) trading days preceding the Regular Record Date
with the final number of shares of common stock rounded up to the next whole share. Fractional shares shall not be issued.

 

(b)       Upon
the conversion of any Notes, the Holder shall not be entitled to receive any additional cash payment for accrued and unpaid interest
or Additional Interest, if any, except to the extent specified below. The Company’s delivery to the Holder Common Stock,
into which a Note is convertible shall be deemed to satisfy in full the Company’s obligation to pay the principal amount
of the Notes so converted and accrued and unpaid interest and Additional Interest, if any, to, but not including, the Conversion
Date. As a result, accrued and unpaid interest and Additional Interest, if any, to, but not including, the Conversion Date shall
be deemed to be paid in full rather than cancelled, extinguished or forfeited. Notwithstanding the foregoing, if Notes are converted
between close of business on a Regular Record Date for the payment of interest and the open of business on the next Interest Payment
Date, Holders of such Notes at the close of business on such Regular Record Date shall receive the interest and Additional Interest,
if any, payable on such Notes on the corresponding Interest Payment Date notwithstanding the conversion. Notes surrendered for
conversion during the period from the close of business on any Regular Record Date to the open of business on the immediately
following Interest Payment Date must be accompanied by funds equal to the amount of interest and Additional Interest, if any,
payable on the next Interest Payment Date on the Notes so converted; provided that no such payment need be made (i) for
conversions following the Regular Record Date immediately preceding February 15, 2021, (ii) if the Company has specified a Fundamental
Change Purchase Date that is after a Regular Record Date and on or prior to the corresponding Interest Payment Date, or (iii)
to the extent of any overdue interest, if any overdue interest exists at the time of conversion with respect to such Note. If
any additional payment for accrued and unpaid interest or Additional Interest, if any, is due upon the conversion of any Notes,
the Company has the discretion to satisfy the additional payment in cash or by payment-in-kind of common stock, based upon the
payment-in-kind for interest determined by the average of the closing prices of the common stock as reported by Bloomberg L.P.
for the Principal Trading Market for the thirty (30) trading days preceding the Regular Record Date with the final number rounded
up to the next whole share.

 

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(c)       The
Company shall not issue fractional shares of Common Stock upon conversion of Notes. If multiple Notes shall be surrendered for
conversion at one time by the same Holder, the number of full shares which shall be issuable upon conversion shall be computed
on the basis of the aggregate principal amount of the Notes so surrendered. If any fractional share of stock would be issuable
upon the conversion of any Notes, the Company shall round up to the next whole share.

 

(d)       The
last full paragraph of Section 4.01 of the Original Indenture shall be deemed to apply to the Conversion Agent with references
to “money” being deemed references to “money, securities or a combination thereof.”

 

Section
4.04. Adjustment of Conversion Rate.

 

The
Conversion Rate shall be adjusted from time to time by the Company if any of the events set forth in this Section 4.04 occurs,
without duplication, except that the Company shall not make any adjustment to the Conversion Rate if Holders of Notes participate,
as a result of holding the Notes, in any of the transactions described under Section 4.04(a) and Section 4.04(b), at the same
time as holders of the Common Stock participate, without having to convert their Notes, as if such Holders held a number of shares
of Common Stock equal to the Conversion Rate in effect for such Notes immediately prior to the Ex-Dividend Date for such event
multiplied by the principal amount of Notes held by such Holder.

 

Except
as set forth in this Section 4.04 and in Section 4.06, the Company shall not adjust the Conversion Rate.

 

(a)       If
the Company, at any time or from time to time while any of the Notes are outstanding, issues solely shares of its Common Stock
as a dividend or distribution on all or substantially all of its shares of Common Stock, or if the Company effects a share split
or share combination on its Common Stock, then the Conversion Rate shall be adjusted based on the following formula:

 

 

 

where

 

CR0       =     The
Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date of such dividend or distribution,
or immediately prior to the open of business on the Business Day immediately following the effective date of such share split
or share combination, as the case may be;

 

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CR       =       The
Conversion Rate in effect immediately after the open of business on the Ex-Dividend Date for such dividend or distribution, or
immediately after the open of business on the Business Day immediately following the effective date of such share split or share
combination, as the case may be;

 

OS0       =     The
number of shares of Common Stock outstanding immediately prior to such dividend, distribution, share split or share combination,
as the case may be; and

 

OS        =      The
number of shares of Common Stock outstanding immediately after such dividend, distribution, share split or share combination,
as the case may be.

 

Any
adjustment made pursuant to this Section 4.04(a) shall become effective immediately after the open of business on the Ex-Dividend
Date for such dividend or distribution or immediately after the open of business on the effective date for such share split or
share combination. If any dividend or distribution of the type described in this Section 4.04(a) is declared but not so paid or
made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors determines not to pay
such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been
declared. As used in this Section 4.04(a), “effective date” means, in respect of any transaction, the first date
on which the shares of the Common Stock trade on the applicable exchange or in the applicable market (used to determine the Last
Reported Sale Price), regular way, reflecting the transaction.

 

(b)       (i)
If the Company makes or pays any cash dividend or distribution made to all or substantially all holders of Common Stock, the Conversion
Rate shall be increased based on the following formula:

 

 

 

where

 

CR0       =    The
Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution;

 

CR        =     The
Conversion Rate in effect immediately after the open of business on the Ex-Dividend Date for such distribution;

 

SP0       =     The
average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including,
the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and

 

C           =     The
amount in cash per share the Company pays or distributes to holders of the Common Stock.

 

    18

     

    

 

In
the case of an adjustment pursuant to this Section 4.04(b), such adjustment shall become effective immediately after the open
of business on the Ex-Dividend Date for the relevant dividend or distribution. If any dividend or distribution described in this
Section 4.04(b) is declared but not so paid or made, the new Conversion Rate shall be readjusted to the Conversion Rate that would
then be in effect if such distribution had not been declared.

 

(c)       The
Company is permitted (but not required) to increase the Conversion Rate by any amount for a period of time of at least 20 Business
Days if the Board of Directors determines that such increase would be in the best interests of the Company. The Company shall
not take any action that would result in adjustment of the Conversion Rate, in such a manner as to result in the reduction of
the Conversion Price to less than the par value per share of the Common Stock.

 

(d)       The
Company may (but shall not be required to) increase the Conversion Rate, in addition to any adjustments pursuant to Section 4.04(a),
to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock in connection with a dividend
or distribution of shares (or rights to acquire shares) or similar event.

 

(e)       Adjustments
to the Conversion Rate shall be calculated to the nearest one ten-thousandth of a share. No adjustment to the Conversion Rate
shall be required to be made for the Company’s issuance of Common Stock or any securities convertible into or exchangeable
for shares of Common Stock or the right, option or warrant to purchase shares of Common Stock or such convertible or exchangeable
securities, other than as provided in this Section 4.04.

 

(f)       Whenever
the Conversion Rate is adjusted as provided in this Section 4.04, the Company shall promptly file with the Trustee and any Conversion
Agent an Officers’ Certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement
of the facts requiring such adjustment. Unless and until a Trust Officer of the Trustee shall have received such Officers’
Certificate, the Trustee shall not be deemed to have knowledge of any adjustment of the Conversion Rate and may assume without
inquiry that the last Conversion Rate of which it has knowledge is still in effect. As soon as practicable following the adjustment,
the Company shall notify the Holders of the Notes of such adjustment of the Conversion Rate setting forth the adjusted Conversion
Rate and the date on which each adjustment becomes effective, and will issue a press release containing the relevant information
(and make such press release available on the Company’s website). Failure to deliver such notice shall not affect the legality
or validity of any such adjustment.

 

(g)       For
purposes of this Section 4.04, the number of shares of Common Stock at any time outstanding shall not include shares held in the
treasury of the Company so long as the Company does not pay any dividend or make any distribution on shares of Common Stock held
in the treasury of the Company, but shall include shares issuable in respect of scrip certificates issued in lieu of fractions
of shares of Common Stock.

 

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(h)       Notwithstanding
anything to the contrary in this Article 4, no adjustment to the Conversion Rate shall be made:

 

(i)      upon
the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends
or interest payable on the Company’s securities and the investment of additional optional amounts in shares of Common Stock
under any plan;

 

(ii)     upon
the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee,
director or consultant benefit plan or program of or assumed by the Company or any of its Subsidiaries;

 

(iii)    upon
the issuance of any shares of Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible
security not described in clause (ii) above;

 

(iv)    for
a change in the par value of the Common Stock; or

 

(v)     for
accrued and unpaid interest and Additional Interest, if any, on the Notes.

 

(i)       The
Company shall not be required to make an adjustment in the Conversion Rate unless the adjustment would require a change of at
least 1% in the Conversion Rate. However, the Company shall carry forward and take into account in any future adjustment any adjustments
that are less than 1% of the Conversion Rate and make such carried forward adjustment, regardless of whether the aggregate adjustment
is less than 1% upon any Conversion Date of Notes, if applicable.

 

(j)       Since:

 

(i)      the
Company elects to satisfy the conversion obligation in shares of Common Stock;

 

(ii)     any
event that requires an adjustment to the Conversion Rate in Section 4.04(a) or Section 4.04(b) made prior to the settlement date
has not resulted in an adjustment to the Conversion Rate as of the Conversion Date; and

 

(iii)     the
shares of Common Stock the converting Holder will receive on settlement are not entitled to participate in the distribution or
transaction giving rise to such adjustment event because such shares were not held by such Holder on the record date for such
distribution or transaction or otherwise;

 

then the
Company shall adjust the number of shares of Common Stock deliverable to reflect the relevant distribution or transaction.

 

Notwithstanding
anything in this Section 4.04, if (i) a Conversion Rate adjustment pursuant to this Section 4.04 becomes effective on any Ex-Dividend
Date as described above and (ii) a Holder converting its Notes on or after such Ex-Dividend Date and on or prior to the close
of business on the related record date would be treated as the record holder of shares of Common Stock as of the related Conversion
Date as described in Section 4.02 based on an adjusted Conversion Rate for such Ex-Dividend Date, then, notwithstanding the foregoing
Conversion Rate adjustment provisions, the Conversion Rate adjustment relating to such Ex-Dividend Date will not be made for any
Holder converting Notes on or after such Ex-Dividend Date and on or prior to the close of business on the related record date.
Instead, such Holder will be treated as if such Holder were the record owner of the shares of Common Stock on an unadjusted basis
and participate in the related dividend, distribution or other event giving rise to such adjustment.

 

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Section
4.05. Exchange in Lieu of Conversion.

 

When
a Holder surrenders its Notes for conversion, the Company may, at its election, direct the Conversion Agent to surrender, on or
prior to the second Business Day following the relevant Conversion Date, such Notes to a financial institution designated by the
Company (the “Designated Institution”) for exchange in lieu of conversion. In order to accept any Notes surrendered
for conversion for exchange in lieu of conversion, the Designated Institution must agree to timely deliver to the Conversion Agent
for delivery to the Holder, in exchange for such Notes, the shares of Common Stock, cash or any combination thereof that would
otherwise be due upon conversion pursuant to Section 4.02 and in respect of which the Company has notified converting Holders.
If the Company makes the election provided for in this Section 4.05, the Company shall, by the close of business on the second
Business Day following the relevant Conversion Date notify the Holder surrendering its Notes for conversion that the Company has
made such election. In addition, the Company shall concurrently notify the Designated Institution of the method of settlement
that the Company has elected with respect to such conversion and the relevant deadline for delivery of the consideration due upon
conversion. Any Notes exchanged by the Designated Institution will remain outstanding.

 

If
the Designated Institution agrees to accept any Notes for exchange but does not timely deliver the related consideration due upon
conversion to the Conversion Agent, or if the Designated Institution does not accept such Notes for exchange, the Company shall,
as promptly as practical thereafter, convert such Notes into cash, shares of Common Stock or any combination thereof, as applicable
in accordance with the provisions of Section 4.02

 

For
the avoidance of doubt, in no event will the Company’s designation of a Designated Institution pursuant to this Section
4.05 require the Designated Institution to accept any Notes for exchange.

 

Section
4.06. Adjustments Upon Certain Fundamental Changes.

 

(a)       If
a Make-Whole Fundamental Change occurs and a Holder elects to convert its Notes in connection with such Make-Whole Fundamental
Change at any time from, and including the Effective Date (as defined below) of such Make-Whole Fundamental Change to, and including
the Business Day immediately preceding the related Fundamental Change Purchase Date, or if a Make-Whole Fundamental Change does
not also constitute a Fundamental Change, the 25th Trading Day immediately following the Effective Date of such Make-Whole
Fundamental Change, the Company shall increase the Conversion Rate for the Notes so surrendered for conversion by a number of
additional shares of Common Stock (the “Additional Shares”) as set forth in this Section 4.06.

 

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(b)       The
number of Additional Shares, if any, shall be determined by reference to the date on which the Make-Whole Fundamental Change occurs
or becomes effective (the “Effective Date”) and the price (the “Stock Price”) paid or deemed paid per
share of the Common Stock in the Make-Whole Fundamental Change. If the holders of the Common Stock receive only cash in a Make-Whole
Fundamental Change described in clause (2) of the definition of Fundamental Change, the Stock Price shall be the cash amount paid
per share of the Common Stock. Otherwise, the Stock Price shall be the average of the Last Reported Sale Prices of the Common
Stock on each of the five consecutive Trading Day periods ending on the Trading Day immediately preceding the Effective Date.

 

(c)       The
Stock Price set forth in Section 4.06(b) shall represent the Make-Whole Fundamental Change Conversion Price of the price per share
of Common Stock with respect to the number of shares per conversion of each $100 principal amount of Note. If the Make-Whole Fundamental
Change Conversion Price is less than the Conversion Price, then the difference between the two defined stock prices shall determine
the number of Additional Shares to be received per $100 principal amount of Note upon a Make-Whole Fundamental Change conversion
with any fractional share rounded up to the next whole share. If the Make-Whole Fundamental Change Conversion Price is equal to
or more than the Conversion Price, there shall not be any Additional Shares upon a Make-Whole Fundamental Change conversion.

 

(d)       The
Company shall notify the Holders of Notes of the Effective Date of any Make-Whole Fundamental Change by issuing a press release
(and make the press release available on the Company’s website) announcing such Effective Date as soon as practicable after
the Company first determines the anticipated Effective Date of such Make-Whole Fundamental Change. The Company will use commercially
reasonable efforts to make such determination in time to deliver such notice no later than 40 Business Days in advance of such
anticipated Effective Date, and will update the notice promptly if the anticipated Effective Date subsequently changes. Notwithstanding
the foregoing, in no event will the Company be required to provide such notice to the Holders and the Trustee before the earlier
of such time as the Company publicly discloses or acknowledges the circumstances giving rise to such Make-Whole Fundamental Change
or is required to publicly disclose under applicable law or the rules of any stock exchange on which the Company’s equity
is then listed the circumstances giving rise to such anticipated Make-Whole Fundamental Change.

 

Section
4.07. Effect of Recapitalization, Reclassification, Consolidation, Merger or Sale.

 

(a)       If
any of the following events occur:

 

(i)      any
reclassification of the Common Stock;

 

(ii)     a
consolidation, merger, combination or binding share exchange involving the Company; or

 

(iii)    a
sale or conveyance to another Person of all or substantially all of the Company’s property and assets;

 

    22

     

    

 

(any event
as set forth in clauses (i), (ii), or (iii) above a “Merger Event”) in each case, in which holders of the Common Stock
would be entitled to receive cash, securities or other property for their shares of the Common Stock (“Reference Property”),
the Holders shall be entitled thereafter to convert their Notes into the kind and amount of shares of stock, other securities
or other property or assets (including cash or any combination thereof) that a holder of a number of shares of the Common Stock
equal to the Conversion Rate immediately prior to such transaction would have owned or been entitled to receive upon such transaction;
provided, however, that at and after the effective time of the Merger Event the Settlement Amount shall be calculated
and settled in accordance with Section 4.03 (including the Company’s right to elect a settlement method as described therein)
such that (i) any amount payable in cash upon conversion of the Notes as set forth under Section 4.03 shall continue to be payable
as set forth in Section 4.03, (ii) the number of shares of Common Stock deliverable upon conversion of the Notes under Section
4.03, if any, shall be instead deliverable in the amount and type of Reference Property that a holder of that number of shares
of Common Stock would have been entitled to receive in such Merger Event.

 

If,
as a result of the Merger Event, each share of Common Stock is converted into the right to receive more than a single type of
consideration (determined based in part upon any form of stockholder election), then (x) the Reference Property into which the
Notes shall be convertible shall be deemed to be the weighted average of the types and amounts of consideration received by the
holders of Common Stock that affirmatively make such an election, and (y) the unit of Reference Property for purposes of this
Section 4.07 shall refer to the consideration referred to in clause (x) attributable to one share of Common Stock. The Company
shall notify Holders of such weighted average as soon as practicable after such determination is made.

 

(b)       The
Company shall not become a party to any such Merger Event unless its terms are consistent with this Section 4.07.

 

Section
4.08. Taxes on Shares Issued.

 

The
Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue or delivery of shares of Common Stock
on conversion of Notes pursuant hereto; provided, however, that if such documentary, stamp or similar issue or transfer
tax is due because the Holder of such Notes has requested that shares of Common Stock be issued in a name other than that of the
Holder of the Notes converted, then such taxes shall be paid by the Holder, and the Company shall not be required to issue or
deliver any stock certificate evidencing such shares unless and until the Holder shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such tax has been paid. Nothing herein shall preclude
any tax withholding required by law or regulations.

 

Section
4.09. Reservation of Shares; Shares to be Fully Paid; Compliance With Governmental Requirements; Listing of Common Stock.

 

The
Company shall reserve, out of its authorized but unissued shares or shares held in treasury, sufficient shares of Common Stock
to satisfy conversion of the Notes from time to time as such Notes are presented for conversion (assuming that, at the time of
the computation of such number of shares or securities, all such Notes would be converted by a single Holder).

 

    23

     

    

 

The
Company covenants that all shares of Common Stock that may be issued upon conversion of Notes shall be newly issued shares or
treasury shares, shall be duly authorized, validly issued, fully paid and non-assessable and shall be free from preemptive rights
and free from any tax, lien or charge (other than those created by the Holder).

 

Section
4.10. Responsibility of Trustee.

 

The
Trustee and any Conversion Agent shall not at any time be under any duty or responsibility to any Holder of Notes to determine
or calculate the Conversion Rate, to determine whether any facts exist which may require any adjustment of the Conversion Rate,
or to confirm the accuracy of any such adjustment when made or the appropriateness of the method employed, or herein or in any
supplemental indenture provided to be employed, in making the same. The Trustee and any other Conversion Agent shall not be accountable
with respect to the validity or value (or the kind or amount) of any shares of Common Stock or of any other securities or property
that may at any time be issued or delivered upon the conversion of any Notes; and the Trustee and the Conversion Agent make no
representations with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the
Company to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or cash
upon the surrender of any Notes for the purpose of conversion or to comply with any of the duties, responsibilities or covenants
of the Company contained in this Article 4. The rights, privileges, protections, immunities and benefits given to the Trustee,
including without limitation its right to be compensated, reimbursed, and indemnified, are extended to, and shall be enforceable
by, the Trustee in each of its capacities hereunder, including its capacity as Conversion Agent.

 

Article
V

REMEDIES

 

Section
5.01. Events of Default.

 

The
Notes shall not be subject to Section 6.01 of the Original Indenture. In lieu thereof, the Notes shall be subject to the following
provisions of this Section 5.01.

 

An
“Event of Default” on the Notes occurs if, voluntarily or involuntarily, whether by operation of law or otherwise,
any of the following shall occur:

 

(a)       default
in the payment in respect of the principal of any Note at its maturity upon required repurchase, upon declaration of acceleration
or otherwise;

 

(b)       default
in the payment of any interest (including Additional Interest, if any) upon any Note when it becomes due and payable, and continuance
of such default for a period of 60 days;

 

    24

     

    

  

(c)       material
default in the performance, or breach, of any covenant or agreement of the Company in this Indenture (other than a covenant or
agreement a default in whose performance or whose breach is specifically dealt with in clauses (a) or (b) of this Section 5.01),
and continuance of such material default or breach for a period of 90 days after written notice thereof has been given to the
Company by the Trustee or to the Company and the Trustee by the holders of at least 50% in aggregate principal amount of the outstanding
Notes;

 

(d)       the
Company or any Subsidiary that is a Significant Subsidiary (or any group of subsidiaries that, taken together, would constitute
a Significant Subsidiary) pursuant to or within the meaning of any Bankruptcy Law:

 

(i)      commences
a voluntary case,

 

(ii)     consents
to the entry of an order for relief against it in an involuntary case,

 

(iii)    consents
to the appointment of a Custodian of it or for all or substantially all of its property, or

 

(iv)    makes
a general assignment for the benefit of its creditors;

 

(v)     generally
is unable to pay its debts as the same become due; or

 

(e)       a
court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

 

(i)       is
for relief against the Company or any Subsidiary that is a Significant Subsidiary (or any group of subsidiaries that, taken together,
would constitute a Significant Subsidiary) in an involuntary case,

 

(ii)     appoints
a Custodian of the Company or any Significant Subsidiary (or any group of subsidiaries that, taken together, would constitute
a Significant Subsidiary) or a Custodian for all or substantially all of the property of the Company, or

 

(iii)    orders
the liquidation of the Company or any Significant Subsidiary (or any group of subsidiaries that, taken together, would constitute
a Significant Subsidiary),

 

and the
order or decree remains unstayed and in effect for 60 days.

 

The
term “Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy
Law.

 

The
Company is required to deliver to the Trustee, with 60 days after the occurrence thereof, written notice of any events which would
constitute a Default, the status of such events and the actions the Company is taking or proposes to take in respect thereof.

 

    25

     

    

 

Section
5.02. Additional Interest.

 

Notwithstanding
anything in this Indenture or in the Notes to the contrary, if the Company so elects, the sole remedy of Holders for an Event
of Default relating to any obligation either to file reports as required under Section 314(a) of the Trust Indenture Act, or Section 2.03
of this Supplemental Indenture, shall, for the first 365 days after the occurrence of such an Event of Default (which will be
the 60th day after written notice is provided to the Company in accordance with Section 5.01(c)), consist exclusively of the right
to receive Additional Interest on the Notes at an annual rate equal to (x) 0.25% of the outstanding principal amount of the Notes
for the first 180 days an Event of Default is continuing in such 365-day period and (y) 0.50% of the outstanding principal amount
of the Notes for the remaining 185 days an Event of Default is continuing in such 365-day period. Additional Interest shall be
payable in arrears on each Interest Payment Date following the occurrence of such Event of Default in the same manner as regular
interest on the Notes. The Company may elect to pay Additional Interest as the sole remedy under this Section 5.02 by giving notice
to the Holders, the Trustee and Paying Agent of such election on or before the close of business on the 15th Business Day after
the date on which such Event of Default otherwise would occur. If the Company fails to timely give such notice or pay Additional
Interest, the Notes shall be immediately subject to acceleration as provided in Section 5.03. On the 366th day after such Event
of Default (if such violation is not cured or waived prior to such 366th day), the Notes shall be subject to acceleration as provided
in Section 5.03. This Section 5.02 shall not affect the rights of the Holders in the event of the occurrence of any other Event
of Default. In the event the Company does not elect to pay Additional Interest upon an Event of Default in accordance with this
Section 5.02, the Notes shall be subject to acceleration as provided in Section 5.03. Whenever in the Original Indenture there
is mentioned, in any context, the payment of interest on, or in respect of, any Note, such mention shall be deemed to include
mention of the payment of “Additional Interest” provided for in this Section 5.02 to the extent that, in such context,
Additional Interest is, was or would be payable in respect thereof pursuant to the provisions of such sections, and express mention
of the payment of Additional Interest (if applicable) in any provision shall not be construed as excluding Additional Interest
in those provisions where such express mention is not made.

 

Section
5.03. Acceleration.

 

If
an Event of Default occurs and is continuing, then, and in each and every such case, the Holders of a majority in aggregate principal
amount of all of the Notes then outstanding (treated as one class) by notice in writing to the Company and to the Trustee, may
declare the entire principal of all of the Notes then outstanding, and the interest accrued thereon, including any Additional
Interest, if any, to be due and payable immediately, and upon such declaration, the same shall become immediately due and payable.
If an Event of Default described in clause Section 5.01(h) or (i) occurs and is continuing, then the principal amount of all the
Notes then outstanding, and the interest accrued thereon, including any Additional Interest, if any, shall become and be immediately
due and payable without any declaration or other act on the part of any Holder.

 

    26

     

    

  

The
Holders of a majority in aggregate principal amount of the Notes then outstanding, by written notice to the Company and to the
Trustee, may waive all past Defaults or Events of Default with respect to the Notes (other than a Default or an Event of Default
resulting from (i) nonpayment of principal or interest, including any Additional Interest, (ii) failure to repurchase any Notes
when required upon a Fundamental Change or (iii) a failure to deliver, upon conversion, cash, shares of Common Stock or a combination
of cash and shares of Common Stock, as applicable, due upon conversion) and rescind any such acceleration with respect to the
Notes and its consequences if (A) rescission would not conflict with any judgment or decree of a court of competent jurisdiction
and (B) all existing Events of Default, other than the nonpayment of the principal of and interest, including any Additional Interest,
on the Notes that have become due solely by such declaration of acceleration have been cured or waived.

 

For
the avoidance of doubt, this Section 5.03 supersedes the provisions of Section 6.02 and Section 6.04 of the Original Indenture.

 

Article
VI

 

SATISFACTION
AND DISCHARGE

 

Section
6.01. Satisfaction and Discharge of the Supplemental Indenture.

 

(a)       The
satisfaction and discharge provisions set forth in this Section 6.01 shall, with respect to the Notes, supersede in their entirety
those in Section 8.03 of the Original Indenture, and all references in the Original Indenture to Section 8.03 thereof and satisfaction
and discharge provisions therein, as the case may be, shall, with respect to the Notes, be deemed to be references to this Section
6.01 and the satisfaction and discharge provisions set forth in this Section 6.01, respectively. When (i) the Company shall deliver
to the Registrar for cancellation all Notes theretofore authenticated (other than any Notes that have been destroyed, lost or
stolen and in lieu of or in substitution for which other Notes shall have been authenticated and delivered) and not theretofore
canceled, or (ii) all the Notes not theretofore canceled or delivered to the Trustee for cancellation shall have become due and
payable (whether at Stated Maturity for the payment of the principal amount thereof, on any Fundamental Change Purchase Date or
following the last day of the applicable Cash Settlement Averaging Period upon conversion or otherwise) and the Company shall
deposit with the Trustee, in trust, or deliver to the Holders, as applicable, cash funds and shares of Common Stock, as applicable,
sufficient to pay all amounts due (and shares of Common Stock deliverable following conversion, if applicable) on all of such
Notes (other than any Notes that shall have been mutilated, destroyed, lost or stolen and in lieu of or in substitution for which
other Notes shall have been authenticated and delivered) not theretofore canceled or delivered to the Trustee for cancellation,
including principal and interest due, accompanied by a verification report as to the sufficiency of the deposited amount from
an independent certified accountant or other financial professional reasonably satisfactory to the Trustee, and if the Company
shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Supplemental Indenture shall cease
to be of further effect (except as to (A) rights hereunder of Holders of the Notes to receive all amounts owing upon the Notes
and the other rights, duties and obligations of Holders of the Notes, as beneficiaries hereof with respect to the amounts, if
any, so deposited with the Trustee and (B) the rights, obligations and immunities of the Trustee hereunder), and the Trustee,
on written demand of the Company accompanied by an Officers’ Certificate and an Opinion of Counsel as required by Section
7.02(b) of the Original Indenture and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction
and discharge of this Supplemental Indenture; the Company, however, hereby agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred by the Trustee, including the fees and expenses of its counsel, and to compensate
the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Supplemental Indenture
or the Notes.

 

    27

     

    

 

Article
VII

SUPPLEMENTAL INDENTURES

 

Section
7.01. Amendments or Supplements Without Consent of Holders.

 

(a)       The
provisions set forth in this Section 7.01 shall, with respect to the Notes, supersede in their entirety those in Section 9.01
of the Original Indenture. The Company and the Trustee may amend or supplement the Indenture or the Notes without notice to or
the consent of any Holder of the Notes:

 

(i)      to
cure any ambiguity, inconsistency or omission in this Indenture or the Notes in a manner that does not adversely affect the rights
of any Holder;

 

(ii)     to
cure any defect or error in the Indenture or the Notes or to conform the terms of the Indenture or the Notes to the description
thereof in the Prospectus;

 

(iii)    to
provide for the assumption by a successor Company of the obligations of the Company under this Indenture as provided in Article
5 of the Original Indenture;

 

(iv)    to
add guarantees with respect to the Notes;

 

(v)    to
secure the Notes;

 

(vi)   to
add to the covenants of the Company such further covenants, restrictions or conditions for the benefit of the Noteholders or surrender
any right or power conferred upon the Company;

 

(vii)  
to make any change that does not materially adversely affect the rights of any holder of Notes;

 

(viii)  to
appoint a successor Trustee with respect to the Notes; or

 

(ix)    to
comply with any requirements of the Trust Indenture Act.

 

    28

     

    

 

Section
7.02. Amendments or Supplements with Consent of Holders.

 

The
provisions set forth in this Section 7.02 shall, with respect to the Notes, supersede in their entirety those in Section 9.02
of the Original Indenture. Without the consent of the majority of the Holders of the outstanding Note affected thereby, no amendment
may:

 

(a)       reduce
the percentage in aggregate principal amount of Notes whose Holders must consent to an amendment of the Indenture or to waive
any past Event of Default;

 

(b)       reduce
the rate of or extend the stated time for payment of interest, including any Additional Interest, on any Note;

 

(c)       reduce
the principal amount or extend the Stated Maturity of any Note;

 

(d)       make
any change that impairs or otherwise adversely affects the conversion rights of any Notes;

 

(e)       reduce
any repurchase price or the Fundamental Change Purchase Price of any Note or amend or modify in any manner adverse to the Holders
of Notes the Company’s obligation to make such payments whether through an amendment or waiver of provisions in the covenants,
definitions or otherwise;

 

(f)       make
any Note payable in a currency other than that stated in the Note;

 

(g)       change
the ranking of the Notes;

 

(h)       impair
the right of any Holder to receive payment of principal of and interest, including any Additional Interest, on such Holder’s
Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s
Notes; or

 

(i)       make
any change in the amendment or waiver provisions of the Indenture.

 

Section
7.03. Notice of Amendment or Supplement.

 

After
any amendment or supplement to the Indenture or the Notes becomes effective, the Company shall provide to Holders, pursuant to
the procedures set forth in Section 12.02 of the Original Indenture, a notice briefly describing such amendment or supplement
and shall make such notice available on the Company's website, provided that any failure to give such notice to all the Holders,
or any defect in such notice, shall not impair or affect the validity of such amendment or supplement.

 

Article
VIII

INAPPLICABLE PROVISIONS OF THE ORIGINAL INDENTURE

 

Section
8.01. Legend.

 

The
provisions of Section 2 of the Original Indenture shall not apply to the Notes. Instead, any Global Note shall bear the legend
set forth in the Exhibit A hereto.

 

Section
8.02. Legal Defeasance and Covenant Defeasance.

 

The
provisions of Section 8 of the Original Indenture shall not apply to the Notes.

 

    29

     

    

 

Section
8.03. Subordination. 

 

The
provisions of Section 8 and Article 10 of the Original Indenture shall not apply to the Notes.

 

Section
8.04. Sinking Funds.

 

The
provisions of Section 3.08 of the Original Indenture shall not apply to the Notes.

 

Article
IX

 

MISCELLANEOUS

 

Section
9.01. Governing Law.

 

THE
LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS SUPPLEMENTAL INDENTURE AND EACH OF THE NOTES.

 

Section
9.02. Payments on Business Days.

 

If
any Interest Payment Date or the Stated Maturity of the Notes or any Fundamental Change Purchase Date would fall on a day that
is not a Business Day, the required payment shall be made on the next succeeding Business Day and no interest on such payment
shall accrue in respect of the delay.

 

Section
9.03. No Security Interest Created.

 

Nothing
in this Supplemental Indenture or in the Notes, expressed or implied, shall be construed to constitute a security interest under
the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect, in any jurisdiction.

 

Section
9.04. Trust Indenture Act.

 

This
Supplemental Indenture is hereby made subject to, and shall be governed by, the provisions of the Trust Indenture Act required
to be part of and to govern indentures qualified under the Trust Indenture Act. If any provision hereof limits, qualifies or conflicts
with another provision hereof or the Original Indenture that is required to be included in an indenture qualified under the Trust
Indenture Act, such required provision shall control.

 

Section
9.05. Benefits of Indenture.

 

Nothing
in this Supplemental Indenture or in the Notes, expressed or implied, shall give to any Person, other than the parties hereto,
any Paying Agent, any Conversion Agent, any authenticating agent, any Registrar and their successors hereunder or the Holders
of the Notes, any benefit or any legal or equitable right, remedy or claim under this Supplemental Indenture.

 

    30

     

    

 

Section
9.06. Calculations.

 

Except
as otherwise expressly provided in this Supplemental Indenture, the Company shall be responsible for making all calculations called
for under this Supplemental Indenture and the Notes. These calculations include, but are not limited to, determinations of any
Last Reported Sale Price of the Common Stock, accrued interest payable on the Notes and the Conversion Rate. The Company shall
make all these calculations in good faith and, absent manifest error, the Company’s calculations shall be final and binding
on Holders of Notes. The Company shall provide a schedule of its calculations to each of the Trustee and the Conversion Agent
(if different than the Trustee), and each of the Trustee and Conversion Agent (if different than the Trustee) is entitled to rely
conclusively upon the accuracy of the Company’s calculations without independent verification. The Trustee shall forward
the Company’s calculations to any Holder of Notes upon the request of that Holder at the sole cost and expense of the Company.
Neither the Trustee nor the Conversion Agent shall be responsible for making any calculations for determining amounts to be paid
or for monitoring any stock price.

 

Section
9.07. Table of Contents, Headings, Etc.

 

The
table of contents and the titles and headings of the articles and sections of this Supplemental Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms
or provisions hereof.

 

Section
9.08. Execution in Counterparts.

 

This
Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts
shall together constitute but one and the same instrument.

 

Section
9.09. Severability.

 

In
the event any provision of this Supplemental Indenture or in the Notes shall be invalid, illegal or unenforceable, then (to the
extent permitted by law) the validity, legality or enforceability of the remaining provisions shall not in any way be affected
or impaired.

 

Section
9.10. Notices.

 

Any
notice or communication by the Company or the Trustee to the other hereunder is duly given if in writing and delivered in person
or mailed by overnight courier:

 

if
to the Company:

 

	 	Zion
Oil & Gas, Inc.

        6510
        Abrams Road, Suite 300

        

        Dallas,
Texas 75231 

        Attention:
        Martin M. van Brauman

 

if
to the Trustee:

 

	 	American
Stock Transfer & Trust Company, LLC

        6201
        15th Avenue

        

        Brooklyn,
NY 11219 

        Attention:
        General Counsel

 

[Remainder
of the page intentionally left blank]

 

    31

     

    

 

IN
WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the day and year first above
written.

  

	 	ZION
                                         OIL & GAS, INC.
	 	 
	 	By:	/s/
                                         Martin M. van Brauman
		Name:	Martin
                                         M. van Brauman
	 	Title:	Senior
                                         Vice President, Treasurer and
	 	 	Corporate
                                         Secretary, Director
	 	 	 
	 	AMERICAN
                                         STOCK TRANSFER & TRUST COMPANY, LLC, as Trustee
	 	 	 
	 	By:	s/
                                         Paul Kim
	 	 	Name:
                                         Paul Kim
	 	 	Title:
                                         Assistant General Counsel

 

    	 	 	 

     

    

 

EXHIBIT
A

 

[FORM
OF FACE OF NOTE]

 

THIS
NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE OF A DEPOSITARY. THIS NOTE IS EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY
OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER
OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

 

UNLESS
THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”),
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.

 

    	 	Sc. A - 1	 

     

    

 

ZION
OIL & GAS, INC.

10% Senior Convertible Note due 2021

 

	No. [     ]	$72,000,000.00

 

CUSIP No.
989696 AA7

 

Zion
Oil & Gas, Inc., a Delaware corporation (herein called the “Company”, which term includes any successor Person
under the Indenture hereinafter referred to), for value received, hereby promises to pay CEDE & CO., or registered assigns,
[ ] ($[ ]) (or such lesser principal amount as shall be specified in the “Schedule of Exchanges of Securities”) on
February 15, 2021 unless earlier converted or repurchased, and to pay interest thereon as set forth in the manner, at the rates
and to the Persons set forth in the Indenture.

 

Interest
Payment Dates: February 15, or the next Business Day, payable annually, commencing February 15, 2017.

 

Regular
Record Dates: January 31, or the prior next Business Day, being at least 10 business days prior to the Interest Payment Date.

 

Reference
is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

 

[Remainder
of page intentionally left blank]

 

    	 	Sc. A - 2	 

     

    

 

IN
WITNESS WHEREOF, ZION OIL & GAS, INC. has caused this instrument to be signed manually or by facsimile by its duly authorized
officers.

 

Dated:

 

	 	ZION OIL & GAS, INC.
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

CERTIFICATE
OF AUTHENTICATION

 

This
is one of the Securities of the series designated herein referred to in the within-mentioned Indenture.

 

Dated:

 

	 	AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, as Trustee
	 	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

    	 	Sc. A - 3	 

     

    

 

[FORM
OF REVERSE OF NOTE]

ZION OIL & GAS, INC.

 

10%
Convertible Senior Note due 2021

 

This
Note is one of a duly authorized issue of Securities of the Company (herein called the “Notes”), issued under an Indenture
dated as of October 21, 2015, as amended and supplemented from time to time in accordance with the terms thereof (herein called
the “Original Indenture”) and as further supplemented by the Supplemental Indenture dated as of October 21, 2015 (herein
called the “Supplemental Indenture” and the Original Indenture, as supplemented by the Supplemental Indenture, the
“Indenture”) by and between the Company and American Stock Transfer & Trust Company, LLC, herein called the “Trustee”,
and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered. Additional Notes may be issued in an unlimited aggregate principal amount, subject to conditions
specified in the Indenture.

 

		1.	INTEREST

 

This
Note shall bear interest at a rate of 10% per annum from February 15, 2016 or from the most recent date to which interest had
been paid or provided to, but excluding, the next scheduled Interest Payment Date, until the principal hereof shall be repaid.
Interest on this Note shall be computed on the basis of a 360-day year composed of twelve 30-day months. Interest is payable annually
in arrears on February 15, or the next Business Day, commencing on February 15, 2017, to the Person in whose name this Note (or
one or more predecessor securities) is registered at the close of business on the Regular Record Date for such interest. The Regular
Record Date shall be at least 10 business days prior to the Interest Payment Date. Additional Interest shall be payable at the
option of the Company on the terms set forth in Section 5.02 of the within-mentioned Supplemental Indenture.

 

The
Company shall pay interest on overdue principal, and, to the extent lawful, on overdue interest, in each case at a rate of 10%
per annum. Interest not paid when due and any interest on principal or interest not paid when due will be paid to Holders on a
special record date, which will be the 15th day preceding the date fixed by the Company for the payment of such interest, whether
or not such day is a Business Day. At least 15 days before a special record date, the Company will send to each Holder and to
the Trustee a notice that sets forth the special record date, the payment date and the amount of interest to be paid.

 

		2.	MATURITY
                                         DATE

 

The
Notes shall mature on February 15, 2021.

 

    	 	Sc. A - 4	 

     

    

 

		3.	METHOD
                                         OF PAYMENT

 

The
Company shall pay the principal of and interest on any Global Note to the Depositary or its nominee, as the case may be, as the
registered Holder of such Global Note. However, the Company has the sole discretion to repay the principal and pay any interest
payments on any Global Note in cash or by payment-in-kind of the Company’s common stock. The Company shall pay the principal
of any Definitive Notes at the office or agency designated by the Company for that purpose. The Company has initially designated
the Trustee as its Paying Agent and Registrar in respect of the Notes and its agency in New York, New York as a place where Notes
may be presented for payment or for registration of transfer. The Company may, however, change the Paying Agent or Registrar for
the Notes without prior notice to the Holders thereof, and the Company may act as Paying Agent or Registrar for the Notes. If
the interest payment is not by payment-in-kind of common stock, interest on any Definitive Notes shall be payable to Holders of
Definitive Notes either by check mailed to each Holder at its address in the Register or, upon application by a Holder to the
Registrar not later than the relevant Regular Record Date, by wire transfer in immediately available funds to that Holder’s
account within the United States, which application shall remain in effect until that Holder notifies, in writing, the Registrar
to the contrary.

 

As
provided in and subject to the provisions of the Indenture, the Company shall make all payments and deliveries in respect of the
Fundamental Change Purchase Price and the principal amount on the Stated Maturity thereof, as the case may be, to the holder who
surrenders a Note to the Paying Agent to collect such payments in respect of the Note. If the interest payment is not by payment-in-kind
of common stock, the Company shall pay cash amounts in money of the United States that at the time of payment is legal tender
for payment of public and private debts.

 

The
payment-in-kind repayment of principal by common stock at maturity would be determined by the average of the closing prices of
the common stock as reported by Bloomberg L.P. for the Principal Trading Market for the thirty (30) days trading preceding the
Principal Repayment Date, with the final number of shares of common stock rounded up to the next whole share. Fractional shares
shall not be issued. The Principal Repayment Date means the trading day immediately prior to the 30 day period preceding the maturity
date. The payment-in-kind payment of interest at any time would be determined by the average of the closing prices of the common
stock as reported by Bloomberg L.P. for the Principal Trading Market for the thirty (30) trading days preceding the Regular Record
Date with the final number of shares of common stock rounded up to the next whole share. Fractional shares shall not be issued.

 

		4.	PAYING
                                         AGENT, REGISTRAR, CONVERSION AGENT.

 

Initially,
American Stock Transfer & Trust Company, LLC shall act as Paying Agent, Registrar and Conversion Agent. The Company may change
the Paying Agent, Registrar or Conversion Agent without prior notice.

 

		5.	REDEMPTION

 

This
Note is subject to redemption at the option of the Company after 2 years from the issue date at par plus any accrued interest,
if any, in addition to a call premium of 10% of the principal until the Maturity Date. The Company shall give notice to the Trustee
and Depositary at least 35 days before the redemption date. The Note is non-callable for the first two (2) years following and
is subject to the provisions of Article 3 of the Original Indenture. The receipt of the notice of redemption by the Trustee and
the Depositary terminates the holder’s right of conversion.

 

    	 	Sc. A - 5	 

     

    

 

		6.	FUNDAMENTAL
                                         CHANGES AND REPURCHASES THEREUPON

 

Upon
the occurrence of a Fundamental Change, the Holder has the right, at such Holder’s option, to require the Company to repurchase
all of such Holder’s Notes or any portion thereof (in principal amounts of $100 or integral multiples thereof) on the Fundamental
Change Purchase Date at a price equal to the Fundamental Change Purchase Price.

 

		7.	CONVERSION

 

As
provided in and subject to the provisions of the Indenture, the Holder hereof has the right, at its option, during periods and
upon the occurrence of conditions specified in the Supplemental Indenture, prior to the close of business on a Trading Day 30
days before the Maturity Date of February 15, 2021, to convert this Note into shares of Common Stock at the Conversion Rate specified
in the Supplemental Indenture as provided in the Indenture. This right to convert would terminate prior to the Maturity Date upon
the receipt of notice of redemption by the Trustee and the Depositary. The right to convert does not include any right for any
partial conversion of a note.

 

		8.	SATISFACTION
                                         AND DISCHARGE

 

The
provisions in Section 6.01 of the Supplemental Indenture supersede the entirety of Section 8.03 of the Original Indenture with
respect to this Note.

 

		9.	DENOMINATIONS,
                                         TRANSFER, EXCHANGE

 

As
provided in the Indenture and subject to limitations therein set forth, the transfer of this Note is registrable in the Register,
upon surrender of this Note for registration of transfer at the office or agency of the Company in any place where the principal
of and interest on this Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory
to the Company and the Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon
one or more new Notes of this series and of like tenor, of authorized denominations and for the same aggregate principal amount,
shall be issued to the designated transferee or transferees.

 

The
Notes are issuable only in registered form without coupons in denominations of $100 and in integral multiples of $100 in excess
thereof. As provided in the Indenture and subject to limitations therein set forth, the Notes are exchangeable for a like aggregate
principal amount of Notes and of like tenor of a different authorized denomination, as requested by the Holder surrendering the
same.

 

No
service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.

 

    	 	Sc. A - 6	 

     

    

 

		10.	DEFAULTS
                                         AND REMEDIES

 

As
provided in and subject to the provisions of the Indenture, in case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of and interest on all Notes may be declared due and payable, by the Holders of a majority
in aggregate principal amount of Notes then outstanding, and upon said declaration shall become due and payable, in the manner,
with the effect and subject to the conditions provided in the Indenture; provided that upon the occurrence of an Event
of Default specified in Section 5.01 of the Supplemental Indenture, the principal amount of, and interest on, all the Notes shall
automatically become due and payable.

 

No
reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Note at the time, place
and rate, and in the coin and currency, herein prescribed.

 

		11.	AMENDMENT,
                                         SUPPLEMENT AND WAIVER

 

The
Indenture permits, with exceptions as therein provided, the amendment thereof and the modification of the rights and obligations
of the Company and the rights of the Holders of the Notes to be effected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of a majority in principal amount of the Notes at the time outstanding. The Indenture
also contains provisions permitting the Holders of the majority in principal amount of the Notes at the time outstanding, on behalf
of the Holders of all Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

 

		12.	PERSONS
                                         DEEMED OWNERS

 

The
Holder of a Note may be treated as the owner of it for all purposes.

 

		13.	DEFINITIONS

 

All
defined terms used in this Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

 

		14.	AUTHENTICATION

 

Unless
the certificate of authentication hereon has been executed by the Trustee or an authenticating agent by manual signature, this
Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

		15.	INDENTURE
                                         TO CONTROL; GOVERNING LAW

 

In
the case of any conflict between this Note and the Indenture, the provisions of the Indenture shall control. This Note, for all
purposes, shall be governed by and construed in accordance with the laws of the State of New York.

 

    	 	Sc. A - 7	 

     

    

 

		16.	ABBREVIATIONS

 

The
following abbreviations, when used in the inscription of the face of this Note, shall be construed as though they were written
out in full according to applicable laws or regulations:

 

TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= as joint tenants with right of Survivorship and not as
tenants in common), UGMA (= Uniform Gifts to Minors Act), CUST (= Custodian).

 

Additional
abbreviations may also be used though not in the above list.

 

    	 	Sc. A - 8	 

     

    

 

EXHIBIT
B

[FORM OF NOTICE OF CONVERSION]

 

To: Zion
Oil & Gas, Inc.

 

The
undersigned owner of this Note hereby irrevocably exercises the option to convert this Note (which is $100 or an integral multiple
hereof) below designated, into shares of Common Stock, in accordance with the terms of the Indenture referred to in this Note,
and directs that any shares of Common Stock issuable and deliverable upon conversion, together with a rounding up to the next
whole share to avoid any payment for fractional shares of Common Stock. Subject to exceptions set forth in the Indenture, if this
notice is being delivered on a date after the close of business on a Regular Record Date and prior to the opening of business
on the related Interest Payment Date, this notice is accompanied by payment of an amount equal to the interest payable on such
Interest Payment Date of the principal of this Note to be converted by a payment-in-kind of common stock, rounded up to the next
whole share. If any shares of Common Stock are to be issued in the name of a Person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect hereto. Any amount required to be paid by the undersigned on account of interest
accompanies this Note. There is no partial conversion of a Note held by the undersigned owner.

 

Principal
amount to be converted:

 

Date:
___________________________       Your Signature: ____________________________

(Sign exactly as your name appears on the   other side of this
Security)

 

* Signature
guaranteed by:

 

By:
______________________________

   

 

 

*        This
signature must be guaranteed by an institution which is a member of one of the following recognized signature guaranty programs:
(i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the
Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee.

 

    	 	Ex. B - 1	 

     

    

  

Signature
Guarantee

 

 

    	 	Page 2 of 14	 

     

    

 

 

 

Signature
Guarantee

 

Fill in
for registration of any shares of Common Stock and Notes if to be issued otherwise than to the registered Holder.

 

 

 

       ________________________________________________________________________________________

Agent to transfer this Security on the books of the Company. The Agent may substitute another to act for him or her.

       ________________________________________________________________________________________

(Name)

       ________________________________________________________________________________________

(Address)

 

       ________________________________________________________________________________________

Please print Name and Address

(including zip code number)

 

       ________________________________________________________________________________________

Social Security or other Taxpayer

Identifying Number

 

    	 	Ex. B - 3	 

     

    

 

EXHIBIT
C

[FORM OF FUNDAMENTAL CHANGE PURCHASE NOTICE]

 

To: Zion
Oil & Gas, Inc.

 

The
undersigned registered owner of this Note hereby acknowledges receipt of a notice from Zion Oil & Gas, Inc. (the “Company”)
as to the occurrence of a Fundamental Change with respect to the Company and specifying the Fundamental Change Purchase Date and
requests and instructs the Company to repay to the registered holder hereof in accordance with the applicable provisions of this
Note and the Indenture referred to in this Note (1) the entire principal amount of this Note below designated, and (2) if such
Fundamental Change Purchase Date does not fall during the period after a Regular Record Date and on or prior to the corresponding
Interest Payment Date, accrued and unpaid interest thereon to, but excluding, such Fundamental Change Purchase Date.

 

In
the case of certificated Notes, the certificate numbers of the Notes to be repurchased are as set forth below:

 

Dated:

 

________________________________________________________________________________________

Signature(s)

 

Signature(s)
must be guaranteed by a qualified guarantor institution with membership in an approved signature guarantee program pursuant to
Rule 17Ad-15 under the Securities Exchange Act of 1934.

 

________________________________________________________________________________________

Signature Guaranty

  

 

Social
Security or Other Taxpayer Identification Number

 

Principal
amount to be repurchased:

 

$__________00

 

NOTICE:
The signature on the Fundamental Change Purchase Notice must correspond with the name as written upon the face of the Note in
every particular without alteration or enlargement or any change whatever.

 

    	 	Ex. C - 1	 

     

    

 

EXHIBIT
D

[FORM OF ASSIGNMENT AND TRANSFER]

 

For
value received             hereby sell(s), assign(s) and transfer(s) unto               (Please insert social security or Taxpayer Identification Number
of assignee) the within Note, and hereby irrevocably constitutes and appoints        to transfer the said Note on the books of the
Company, with full power of substitution in the premises.

 

	Date:
    ___________________________	Your Signature: ____________________________

	 	(Sign
    exactly as your name appears on the   other side of this Security)

 

*Signature
guaranteed by:

 

By:
______________________________

 

 

 

 *
       This signature must be guaranteed by an institution which is a member of one of
the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New
York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program
acceptable to the Trustee.

 

 

Ex. D - 1

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