Document:

trilinc-ex104_158.htm

 

Exhibit 10.4

Equitable Mortgage Over Shares

7 August 2017

TriLinc Global Impact Fund Cayman, Ltd.

(as Company)

 

 

 

 

This Equitable Mortgage is made on 7 day of August 2017

By:

	
(1)
	
TriLinc Global Impact Fund Cayman, Ltd., an exempted company incorporated with limited liability under laws of the Cayman Islands, the registered office of which is at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (the "Company").

In favour of:

	
(2)
	
the persons from time to time registered as the holders (the "Noteholders") of the Notes (as defined below) as specified in the Company's applicable register of holders of the Notes (as defined below).

Whereas:

	
(A)
	
Company is the parent of the Cayman Subsidiaries (as defined below).

	
(B)
	
Company intends to issue $25 million of Series 1 Senior Secured Promissory Notes (and may issue additional notes from time to time) as further described in the Private Placement Memorandum, (all such notes issued by the Company as contemplated by the Private Placement Memorandum, the "Notes").

	
(C)
	
As security for the Notes, the Company wishes to execute this Mortgage as a deed poll and secure the Mortgaged Shares (as defined below).

It is agreed as follows:

	
1
	
Definitions and Interpretation

	
1.1
	
In this Mortgage (except where the context otherwise requires) words and expressions shall have the same meanings assigned to them as defined in the Notes. The following words and expressions shall have the following meanings:

		
	
"Business Day"
	
means any day which is not a Saturday or Sunday or a public holiday in the place or at which the notice is left or sent;

	
"Cayman Subsidiaries"
	
means the entities set out in Schedule 1;

	
"Electronic Transactions Law" 
	
means the Electronic Transactions Law (2003 Revision) of the Cayman Islands;

	
"Event of Default"
	
means the failure to pay any amount due under the Notes within 30 days after written demand from the Noteholders;

	
"Gross Negligence"
	
in relation to a person means a standard of conduct beyond negligence whereby that person acts with reckless disregard for the consequences of a breach of a duty of care owed to another;

 

		
	
"Indebtedness"
	
means any obligation for the payment or repayment of money in any currency, whether present or future, actual or contingent, joint or several, whether incurred as principal or surety or in any other way whatever, and including principal, interest, commission, fees and other charges;

	
"Liability"
	
means any liability, damage, loss, cost, claim or expense of any kind or nature, whether direct, indirect, special, consequential or otherwise;

	
"Mortgaged Shares"
	
means the securities listed in Schedule 1 which are all registered in the name of the Company and any additional securities issued to the Company pursuant to Clause 3.8;

	
"Net Asset Value"
	
has the meaning given to it in the Private Placement Memorandum;

	
"Nominee"
	
means the nominee appointed by the Noteholders;

	
"Private Placement Memorandum"
	
means the confidential private placement memorandum dated April 7, 2017 of the Company issued in connection with the Notes;

	
"Receiver"
	
has the meaning given to it in Clause 8;

	
"Secured Obligations"
	
means all and any amounts of any kind now or in the future, actual or contingent, due or payable (or expressed to be due or payable) by the Company  to the Noteholders in any currency, actually or contingently, solely and/or jointly and/or severally with another or others as principal or surety on any account whatsoever under or in connection with the Notes or as a consequence of any breach, non-performance, disclaimer or repudiation by the Company  of any of the Company's obligations under this Mortgage or the Notes and references to the Secured Obligations include references to any part of them;

	
"Security Interest"
	
means any mortgage, charge, pledge, lien, encumbrance, right of set off or any security interest, howsoever created or arising;

	
1.2
	
In this Mortgage:

	
 
	
(a)
	
any reference to a Recital, Clause or Schedule is to the relevant Recital, Clause or Schedule of or to this Mortgage;

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(b)
	
the clause headings are included for convenience only and shall not affect the interpretation of this Mortgage;

	
 
	
(c)
	
use of the singular includes the plural and vice versa;

	
 
	
(d)
	
use of any gender includes the other gender;

	
 
	
(e)
	
any phrase introduced by the terms "including", "include", "in particular" or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms; and

	
 
	
(f)
	
references to this Mortgage or any other document (including any Notes) or agreement are to be construed as references to this Mortgage or such other document as varied in any manner from time to time, even if changes are made to the composition of the parties to this Mortgage or such other document or to the nature or amount of any facilities made available under such other document; 

	
 
	
(g)
	
indebtedness due, owing or incurred under the Notes shall include all moneys, obligations and liabilities due, owing or incurred in respect of any variations or increases in the amount or composition of the facilities provided for therein or the obligations and liabilities imposed thereunder however fundamental; 

	
 
	
(h)
	
sections 8 and 19(3) of the Electronic Transactions Law shall not apply; and 

	
 
	
(i)
	
no person shall be found to have committed actual fraud or wilful default under this Mortgage unless or until a court of competent jurisdiction shall have made a finding to that effect.

	
1.3
	
If any conflict arises between the covenants and undertakings in this Mortgage and the corresponding covenants and undertakings in the Notes, the covenants and undertakings given in the Notes shall prevail.

	
1.4
	
Expressions defined in the Companies Law of the Cayman Islands as in effect from time to time (and not redefined in this Mortgage) shall have the same meanings in this Mortgage, except that the expression "company" shall include a body corporate established outside the Cayman Islands.

	
1.5
	
The Recitals and Schedule form part of this Mortgage and shall have effect as if set out in full in the body of this Mortgage and any reference to this Mortgage includes the Recitals and Schedule.

	
1.6
	
References to the Noteholders shall be construed as references to the Noteholders acting as a  whole or in accordance with such consent or voting provisions set out in the Notes.

	
2
	
Security

	
2.1
	
The Company hereby mortgages to the Noteholders by way of a first equitable mortgage as a continuing security for the payment and discharge of the Secured Obligations, the Mortgaged Shares.

	
2.2
	
The Company hereby charges to the Noteholders by way of first fixed charge as a continuing security for the payment and discharge of the Secured Obligations, all its right, title, interest and benefit present and future in, to and under the Mortgaged Shares.

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2.3
	
Any receipt, release or discharge of any security interest created by this or of any Liability arising under this may be given by the Noteholders in accordance with the provisions of this Mortgage and shall not release or discharge the Company from any Liability owed to the Noteholders for the same or any other monies which may exist independently of this Mortgage or the Notes.  Where such receipt, release or discharge relates to only part of the Secured Obligations such receipt, release or discharge shall not prejudice or affect any other part of the Secured Obligations nor any of the rights and remedies of the Noteholders under this Mortgage or under the Notes nor any of the obligations of the Company under this Mortgage or the Notes.

	
2.4
	
Upon the unconditional and irrevocable payment or discharge of all Secured Obligations, the security interests created by this Mortgage shall automatically be released and the obligations of the Company shall automatically be discharged.  Such release shall not prejudice the rights of the Noteholders under Clause 13.

	
2.5
	
Any release, discharge or settlement between the Company and the Noteholders shall be conditional upon no security, disposition or payment to the Noteholders being void, set aside or ordered to be refunded pursuant to any enactment or law relating to liquidation or insolvency or for any other reason whatsoever and if such condition is not fulfilled the Noteholders shall be entitled to enforce this Mortgage as if such release, discharge or settlement had not occurred and any such payment not been made, provided that any release, discharge or settlement between the Company and the Noteholders shall become unconditional six months and a day after the date of any such release, discharge or settlement.

	
3
	
Covenants by the Company

The Company covenants that, for so long as any Secured Obligations remain outstanding:

	
3.1
	
it shall promptly pay (and shall indemnify the Noteholders on demand) against all calls, instalments and other payments which may be made or become due in respect of the Mortgaged Shares and, in the event of default by the Company, the Noteholders may do so on behalf of the Company;

	
3.2
	
it shall not, except with the prior written consent of the Noteholders:

	
 
	
(a)
	
create, or agree or attempt to create, or permit to subsist over all or part of the Mortgaged Shares (or any interest therein) any Security Interest (except as may be created under this Mortgage or a lien arising by operation of law in the ordinary course of the Company's business) or any trust over any the Mortgaged Shares whether ranking prior to, pari passu with or behind the security contained in this Mortgage;

	
 
	
(b)
	
sell, assign, lease, license or sub-license, grant any interest in the Mortgaged Shares or any interest therein or attempt or agree to surrender or so dispose (other than in accordance with this Mortgage);

	
 
	
(c)
	
permit any person other than the Nominee to be registered as, or become the holder of, the Mortgaged Shares;

	
 
	
(d)
	
vote in favour of a resolution to amend, modify or change the memorandum and articles of association of the Cayman Subsidiaries in any material way such that the Mortgaged Shares are consolidated, sub-divided or converted or any rights attached to them being varied; or

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(e)
	
exercise any voting or other rights in a way which may prejudice the value of its the Mortgaged Shares or otherwise jeopardise the security constituted by this Mortgage over them.

	
3.3
	
it shall procure that the Register of Members of each Cayman Subsidiary is located and maintained at the registered office of such Cayman Subsidiary in the Cayman Islands.

	
3.4
	
at any time after the occurrence of an Event of Default it shall exercise all voting and other rights and powers which may at any time be exercisable by the holder of the Mortgaged Shares as the Noteholders may direct;

	
3.5
	
it shall not take or accept any Security Interest from the Cayman Subsidiaries or, in relation to the Secured Obligations, from any third party, without first obtaining all the Noteholders written consent;

	
3.6
	
unless directed in writing to do so by the Noteholders it shall not prove in a liquidation or winding up of the Cayman Subsidiaries until all the Secured Obligations are paid in full and if directed to prove by the Noteholders (or if the Company otherwise receives any payment or other benefit in breach of this Clause 3.6 or Clause 3.7) the Company shall hold all monies received by it on trust for the Noteholders to satisfy the Secured Obligations;

	
3.7
	
until all of the Secured Obligations have been paid in full or otherwise discharged, it shall not claim payment whether directly or by set-off, lien, counterclaim or otherwise of any amount which may be or has become due to the Company by the Cayman Subsidiaries; and

	
3.8
	
the aggregate Net Asset Value of the Mortgaged Shares is not less than the outstanding amount of principal and interest due and payable on the Notes and in the event that the aggregate Net Asset Value is less than such amount, the Company shall provide additional security by procuring that the Cayman Subsidiaries issue further shares to the Company at such time,

in each case described in this Clause 3, other than as contemplated and/or expressly permitted by the Notes or the Private Placement Memorandum.

	
4
	
Representations and Warranties

The Company represents and warrants to the Noteholders and undertakes that:

	
4.1
	
the Company is the absolute sole legal and beneficial owner of all of the Mortgaged Shares free of all Security Interests, encumbrances, trusts, equities and claims whatsoever (save those under this Mortgage) and that all of the Mortgaged Shares are fully paid up;

	
4.2
	
the Mortgaged Shares represent the required proportion of the shares issued by each Cayman Subsidiary to satisfy the provisions of Clause 3.8 above;

	
4.3
	
the Register of Members of each Cayman Subsidiary is located and maintained at the registered office of such Cayman Subsidiary in the Cayman Islands;

	
4.4
	
it is duly incorporated and in good standing under the laws of the jurisdiction in which it is incorporated and has and will at all times have the necessary power to enter into and perform its obligations under this Mortgage and has duly authorised the execution and delivery of this Mortgage and the performance of its obligations hereunder;

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4.5
	
this Mortgage constitutes its legal, valid, binding and enforceable obligation and is a first priority security interest over the Mortgaged Shares effective in accordance with its terms;

	
4.6
	
the execution, delivery, observance and performance by the Company of this Mortgage will not require the Company to obtain any licences, consents or approvals and will not result in any violation to the best of the Company's knowledge, of any law, statute, ordinance, rule or regulation applicable to it;

	
4.7
	
it has obtained all the necessary authorisations and consents to enable it to enter into this Mortgage and the necessary authorisations and consents will remain in full force and effect at all times during the subsistence of the security constituted by this Mortgage; and

	
4.8
	
the execution, delivery, observance and performance by the Company of the Mortgage will not constitute an event of default or trigger any enforcement under any Security Interest in the Company's assets nor will it result in the creation of any Security Interest over or in respect of the present or future assets of the Cayman Subsidiaries.

	
5
	
Power of Attorney

	
5.1
	
The Company, by way of security for the payment of the Secured Obligations and the performance of its obligations under this Mortgage and the Notes, hereby irrevocably appoints any Receiver separately to be its attorney (with full power to appoint substitutes and to delegate) with power in its name and on its behalf, and as its act and deed or otherwise at any time and from time to time, to:

	
 
	
(a)
	
sign, seal, execute, deliver and complete all transfers, renunciations, proxies, mandates, assignments, deeds and documents and do all acts and things which the Noteholders consider to be necessary or advisable to perfect or improve the security over the Mortgaged Shares; or

	
 
	
(b)
	
give proper effect to the intent and purposes of this Mortgage;

	
 
	
(c)
	
give any instruction under the rules and practices of any relevant system;

	
 
	
(d)
	
enable or assist in any way in the exercise of any right or the enforcement thereof including any power of sale of the Mortgaged Shares (whether arising under this Mortgage or implied by statute or otherwise); and

	
 
	
(e)
	
perform any other act of any description,

which may be required of the Company under this Mortgage or may be deemed by such attorney necessary or desirable for any purpose of this Mortgage or to constitute, enhance or perfect the security intended to be constituted by it or to convey or transfer legal ownership of any Mortgaged Shares, provided that unless and until the occurrence of an Event of Default, a Receiver may not do anything pursuant to this appointment.

	
5.2
	
The Company ratifies and confirms whatever any attorney does or purports to do pursuant to its appointment under this Clause.

	
5.3
	
All sums expended by any Receiver under this Clause shall be recoverable from the Company in accordance with the terms of this Mortgage.

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6
	
Enforcement 

	
6.1
	
Unless and until the occurrence of an Event of Default:

	
 
	
(a)
	
the Company shall be entitled to exercise all voting rights attaching to the Mortgaged Shares or any thereof for all purposes not inconsistent with the purposes of this Mortgage, any of the Secured Obligations, the Private Placement Memorandum and of the Notes; and

	
 
	
(b)
	
the Company shall be entitled to receive and retain any and all dividends paid in respect of the Mortgaged Shares or any thereof.

	
6.2
	
The Company shall forthwith following the occurrence of an Event of Default sign, seal, deliver and complete all transfers, renunciations, proxies, mandates, assignments, deeds and documents and do all acts and things which the Noteholders may, in their absolute discretion (acting as a whole), at any time and from time to time specify for enabling or assisting the Noteholders:

	
 
	
(a)
	
to perfect or improve title to and security over the Mortgaged Shares;

	
 
	
(b)
	
to vest the Mortgaged Shares in the name of the Nominee;

	
 
	
(c)
	
to procure that the Nominee is registered in the Register of Members of the Cayman Subsidiaries in respect of the Mortgaged Shares;

	
 
	
(d)
	
to exercise (or enable the Nominee to exercise) any rights or powers attaching to the Mortgaged Shares;

	
 
	
(e)
	
to sell or dispose of the Mortgaged Shares; and/or

	
 
	
(f)
	
otherwise to enforce any of the rights of the Noteholders under or in connection with this Mortgage.

	
7
	
Nominee's Rights as to Shares

At any time after the occurrence of an Event of Default, the Nominee shall, without prejudice to any other right or remedy available hereunder or under applicable law, forthwith become entitled:

	
7.1
	
solely and exclusively to exercise all voting rights attaching to the Mortgaged Shares or any thereof and shall exercise such rights in such manner as the Nominee in its absolute discretion determine; and/or

	
7.2
	
solely and exclusively to exercise all other rights and/or powers and/or discretions of the Company in, to and under the Mortgaged Shares pursuant to the memorandum and articles of association of the Cayman Subsidiaries; and/or

	
7.3
	
to receive and retain all dividends and other distributions made on or in respect of the Mortgaged Shares or any thereof and any such dividends and other distributions received by the Company after such time shall be held in trust by the Company for the Noteholders and be paid or transferred to the Nominee or, if so directed by the Noteholders, to be applied towards the discharge of the Secured Obligations subject to and in accordance with the repayment provisions of the Notes; and/or

8

 

	
7.4
	
without notice to, or further consent or concurrence by, the Company to sell the Mortgaged Shares or any part thereof by such method, at such place and upon such terms as the Nominee, or the Noteholders, may determine, with power to postpone any such sale and in any such case the Nominee, or Noteholders, may exercise any and all rights attaching to the Mortgaged Shares 

	
7.5
	
\as the Nominee, or the Noteholders, in their discretion may determine and without being answerable for any loss occasioned by such sale or resulting from postponement thereof or the exercise of such rights; and/or

	
7.6
	
to take all steps to register the Mortgaged Shares in the name of the Nominee and to assume control as registered owner of the Mortgaged Shares.

	
8
	
Receiver

	
8.1
	
At any time after the occurrence of an Event of Default, the Noteholders may by writing without notice to the Company appoint one or more person or persons as the Noteholders thinks fit to be a receiver (the "Receiver") in relation to the Mortgaged Shares. Where the Noteholders appoint two or more persons as Receiver, the Receivers may act jointly or independently.

	
8.2
	
The Noteholders may remove any Receiver it appoints, and appoint another person or other persons as Receiver or Receivers, either in the place of a Receiver it has removed, or who has otherwise ceased to act, or to act jointly with a Receiver or Receivers.

	
8.3
	
If at any time any two or more persons hold office as Receivers of the same assets or income, such Receivers may act jointly and/or severally so that each one of such Receivers shall be entitled (unless the contrary is stated in any instrument(s) appointing them) to exercise all the powers and discretions hereby conferred on Receivers individually and to the exclusion of the other or others of them.

	
8.4
	
Every such appointment or removal, and every delegation, appointment or removal by the Noteholders in the exercise of any right to delegate its powers or to remove delegates, may be made in writing by the Noteholders.

	
8.5
	
Every Receiver shall have all the powers of the Noteholders in this Mortgage and, without prejudice to the foregoing, shall have the following powers:

	
 
	
(a)
	
power to take possession of, collect and get in any of the Mortgaged Shares and, for that purpose, to take such proceedings as may seem to him to be expedient;

	
 
	
(b)
	
without notice to, or further consent or concurrence by, any Company to sell or otherwise dispose of any of the Mortgaged Shares by such method, at such place and upon such terms as a Receiver may in its absolute discretion determine, with power to postpone any such sale and in any such case a Receiver may exercise any and all rights attaching to the Mortgaged Shares as the Receiver in its absolute discretion may determine and without being answerable for any loss occasioned by such sale or resulting from postponement thereof or the exercise of such rights;

	
 
	
(c)
	
power to raise or borrow money and grant security over any of the Mortgaged Shares;

	
 
	
(d)
	
power to appoint attorneys or accountants or other professionally qualified persons to assist him in the performance of his functions;

9

 

	
 
	
(e)
	
power to bring or defend any action or other legal proceedings in the name of and on behalf of the Company in respect of the Mortgaged Shares;

	
 
	
(f)
	
power to do all acts and execute in the name and on behalf of the Company any document or deed in respect of the Mortgaged Shares;

	
 
	
(g)
	
power to make any payment which is necessary or incidental to the performance of his functions;

	
 
	
(h)
	
power to make any arrangement or compromise on behalf of the Company in respect of the Mortgaged Shares;

	
 
	
(i)
	
power to rank and claim in the insolvency or liquidation of a Cayman Subsidiary and to receive dividends and to accede to trust deeds for the creditors of such Cayman Subsidiary;

	
 
	
(j)
	
power to present or defend a petition for the winding up of a Cayman Subsidiary; and

	
 
	
(k)
	
power to do all other things incidental to the exercise of the foregoing powers.

	
8.6
	
The Receiver shall be the agent of the Company and the Company shall be jointly responsible for his acts and defaults and jointly liable on any contracts made, entered into or adopted by the Receiver.  The Noteholders shall not be liable for the Receiver's acts, omissions, negligence or default, nor be liable on contracts entered into or adopted by the Receiver.

	
8.7
	
In making any sale or other disposal of any of the Mortgaged Shares in the exercise of their respective powers, the Receiver or Noteholders may accept by way of consideration for such sale or other disposal, cash, shares, loan capital or other obligations including, without limitation, consideration fluctuating according to or dependent upon a profit or turnover and consideration the amount of which is to be determined by a third party.  Any such consideration may be receivable in a lump sum or by instalments.

	
8.8
	
Every Receiver shall be entitled to remuneration for his services at a rate to be fixed by agreement between him and the Noteholders (as a whole) commensurate with the work and responsibilities involved upon the basis of charging from time to time adopted in accordance with the current practice of such Receiver or his firm.

	
8.9
	
To the fullest extent permissible under law, the Noteholders may exercise any right or power that the Receiver may exercise in relation to the enforcement of this Mortgage.

	
9
	
Application of Monies by the Noteholders or a Receiver

	
9.1
	
The Receiver shall apply the monies received by it as a result of the enforcement of the security:

	
 
	
(a)
	
firstly, in payment or satisfaction of the expenses related to enforcement of this security (including without limitation the fees and expenses of the Receiver);

	
 
	
(b)
	
secondly, in meeting claims of the Noteholders, on a pro rata and pari passu basis, in respect of the Secured Obligations; and

	
 
	
(c)
	
thirdly, in payment of the balance (if any) to the Company or persons entitled to it.

10

 

	
9.2
	
No Noteholder shall not be liable for any loss or damage occasioned by:

	
 
	
(a)
	
any sale or disposal of the Mortgaged Shares or an interest in the Mortgaged Shares; or

	
 
	
(b)
	
arising out of the exercise, or failure to exercise, any of its powers under this Mortgage; or

	
 
	
(c)
	
any neglect or default to pay any instalment or accept any offer or notify the Company of any such neglect or default; or

	
 
	
(d)
	
any other loss of whatever nature in connection with the Mortgaged Shares.

	
9.3
	
Without prejudice to Clause 10.1, a Noteholder may, at any time after demand and until the irrevocable and unconditional payment to such Noteholders of all Secured Obligations, place and keep to the credit of a suspense account any money received or realised by such individual Noteholder by virtue of this Mortgage.  No Noteholder shall have an intermediate obligation to apply such money in or towards the discharge of any Secured Obligations.

	
10
	
Protection of the Receiver

	
10.1
	
A Receiver shall not be liable in respect of any Liability which arises out of the exercise or the attempted or purported exercise of, or the failure to exercise, any of their respective powers under or by virtue of this Mortgage, except if and insofar as such Liability results from its or his own Gross Negligence, actual fraud or wilful default.

	
10.2
	
Without prejudice to the generality of Clause 10.1, neither the Noteholders nor any Receiver shall be liable to account as mortgagee in possession or otherwise for any sum not actually received by it or him respectively.

	
11
	
Payment to Holder Good Discharge

	
11.1
	
Each Noteholder is entitled to receive payment of all the amounts due in respect of its Notes and of all other sums referable to such Notes in accordance with the terms thereof to the exclusion of any other person and payment in full by the Company to such Noteholder shall discharge the Company from all obligations in respect of such Notes.

	
12
	
Protection of Purchasers

	
12.1
	
No purchaser from, or other person dealing with, the Noteholders or a Receiver shall be concerned to enquire whether any of the powers which the Noteholders  exercised or purported to exercise, or whether this Mortgage has become enforceable, or whether any Receiver has been validly appointed, or whether any event or cause has happened to authorise a Receiver to act or as to the propriety or validity of the exercise or purported exercise of any such power, and the title of such a purchaser and the position of such a person shall not be impeachable by reference to any of those matters.

	
13
	
Continuing Security and Non-Merger

	
13.1
	
The security constituted by this Mortgage shall be continuing and shall not be considered as satisfied or discharged by any intermediate payment or settlement of the whole or any part of the Secured Obligations or any other matter or thing whatsoever and shall be binding until all the Secured Obligations have been unconditionally and irrevocably paid and discharged in full.

11

 

	
13.2
	
This Mortgage is in addition to and shall not merge with or otherwise prejudice or affect any banker's lien, right to combine and consolidate accounts, right of set-off or any other contractual or other right or remedy or any guarantee, lien, pledge, bill, note, charge or other security now or hereafter held by or available to the Noteholders.

	
14
	
Ruling Off Account

	
14.1
	
On receiving notice that the Company has created a Security Interest over or otherwise encumbered or disposed of any of the Mortgaged Shares, a Noteholder may rule off all its accounts and open new accounts with the Company.

	
14.2
	
If a Noteholder does not open a new account immediately on receipt of such notice, it shall nevertheless be treated as if it had done so on that day. From that day, all payments made by the Company to a Noteholder shall be treated as having been credited to a new account and shall not operate to reduce the amount owing from the Company to such Noteholder at the time when it received such notice.

	
15
	
Currency

	
15.1
	
For the purpose of, or pending the discharge of, any of the Secured Obligations the Noteholders may, in their sole discretion, convert any moneys received, recovered or realised in any currency under this Mortgage (including the proceeds of any previous conversion under this Clause) from their existing currency of denomination into any other currency at such rate or rates of exchange and at such time as such Noteholder thinks fit.

	
15.2
	
No payment to the Noteholders (whether under any judgment or court order or otherwise) shall discharge the Secured Obligations in respect of which it was made unless and until the Noteholders shall have received payment in full in the currency in which such Secured Obligations were incurred and, to the extent that the amount of any such payment shall on actual conversion into such currency fall short of such Secured Obligations expressed in that currency, the Noteholders shall have a further separate cause of action against the Company and shall be entitled to enforce this Mortgage to recover the amount of the shortfall.

	
16
	
Costs

The Company shall on demand pay to the Noteholders the amount of all reasonable costs and expenses and other liabilities (including stamp duty, and reasonable legal and out of pocket expenses) which the Noteholders incur in connection with:

	
 
	
(a)
	
the preservation or exercise (or attempted preservation or exercise) of any rights under or in connection with and the enforcement (or attempted enforcement) of this Mortgage; or

	
 
	
(b)
	
dealing with or obtaining advice about any matter or question arising out of or in connection with enforcing a Noteholder's exercise of its rights under this Mortgage.

	
17
	
Variation and Amendment

This Mortgage shall remain in full force and effect notwithstanding any amendments or variations from time to time of the Notes and no variation of this Mortgage shall be valid unless it is in writing and signed by or on behalf of the Company and consented to in writing by the Noteholders.

12

 

	
18
	
Currency Indemnity

If, for any reason, any amount payable to the Noteholders by the Company under this Mortgage is paid or recovered in a currency other than that in which it is required to be paid (the "contractual currency"), then, to the extent that the payment to the Noteholders (when converted into the contractual currency at its then applicable rate of exchange) falls short of the amount payable in the contractual currency, the Company shall, as a separate and independent obligation, fully indemnify the Noteholders on demand against the amount of the shortfall.

	
19
	
Forbearance, severability and consents

	
19.1
	
All rights, powers and privileges under this Mortgage shall continue in full force and effect, regardless of the Noteholders exercising, delaying in exercising or omitting to exercise any of them.

	
19.2
	
No provision of this Mortgage shall be avoided or invalidated by reason only of one or more other provisions being invalid or unenforceable.

	
19.3
	
Save as otherwise expressly specified in this Mortgage, any consent of the Noteholders may be given absolutely or on any terms and subject to any conditions as the Noteholders may determine in its entire discretion.

	
20
	
Entire Agreement

This Mortgage and the Notes constitutes the entire agreement and understanding of the parties and supersedes any previous agreement between the parties relating to the subject matter of this Mortgage.

	
21
	
Further Assurance

The Company shall promptly execute all documents and do all things that the Noteholders may reasonably specify for the purpose of:

	
 
	
(a)
	
securing and perfecting its security over or title to all or any of the Mortgaged Shares; and/or

	
 
	
(b)
	
enabling the Noteholders to vest all or part of the Mortgaged Shares in its name or in the names of its nominee(s), agent or any purchaser,

including the execution and delivery of all assignments, transfers, mortgages, charges, notices, instructions and such other documents as the Noteholders may in its discretion think fit.

	
22
	
Notices

	
22.1
	
Without prejudice to any other method of service of notices and communications provided by law, a demand or notice under this Mortgage shall be in writing signed by an officer or agent of the Noteholders or the Company, as the case may be, and may be served on the Company or the Noteholders, as the case may be, by hand, by post, or by facsimile transmission. Any such notice or communication shall be sent to the address or number of the relevant party as set out below:

Company:

TriLinc Global Impact Fund Cayman, Ltd.

PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands

Facsimile Number:  1 (440) 247-3709

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For the attention of:  Amy McCance

	
22.2
	
Any such notice or communication given by a Noteholder shall be deemed to have been received:

	
 
	
(a)
	
if sent by facsimile transmission, at the time of transmission, or the following Business Day if transmitted after normal business hours;

	
 
	
(b)
	
if delivered personally (including being sent by courier), at the time of delivery, or the following Business Day if delivered after normal business hours; and

	
 
	
(c)
	
if posted, on the fifth Business Day following the day on which it was properly despatched by mail courier.

	
22.3
	
Any notice given to a Noteholder shall be deemed to have been given only on actual receipt by the Noteholder in accordance with, and in the manner specified in, the Notes.

	
23
	
Miscellaneous

	
23.1
	
All sums payable by the Company under this Mortgage shall be paid without any set off, counterclaim, withholding or deduction whatsoever unless required by law in which event the Company will simultaneously with making the relevant payment under this Mortgage pay to the relevant Noteholders such additional amount as will result in the receipt by such Noteholder of the full amount which would otherwise have been receivable and will supply such Noteholder promptly with evidence satisfactory to such Noteholder that the Company has accounted to the relevant authority for the sum withheld or deducted.

	
23.2
	
A certificate signed (or, where reliance is being placed on it by any third party, appearing to be signed) by an officer of a Noteholder as to the Secured Obligations for the time being due or owing from the Company to such Noteholder shall be treated, in favour such Noteholder or any person to whom such certificate is issued, as conclusive evidence for all purposes against the Company and binding on it (save in the case of manifest error) and such certificate may be relied upon by such Noteholder and any other such person in all circumstances without further enquiry.

	
23.3
	
No delay or omission on the part of the Noteholders in exercising any right or remedy under this Mortgage shall impair that right or remedy or operate as or be taken to be a waiver of it nor shall any single, partial or defective exercise of any such right or remedy preclude any other or further exercise under this Mortgage of that or any other right or remedy.

	
23.4
	
The Noteholders' rights powers and remedies under this Mortgage are cumulative and are not, nor are they to be construed as, exclusive of any rights, powers or remedies provided by law or otherwise and may be exercised from time to time and as often as Noteholders deem expedient.

	
23.5
	
Any waiver by the Noteholders of any terms of this Mortgage or any consent or approval given by the Noteholders under it shall be effective only if given in writing and then only for the purpose and upon the terms and conditions (if any) on which it is given.

	
23.6
	
If at any time any one or more of the provisions of this Mortgage is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction neither the legality, validity or enforceability of the remaining provisions of this Mortgage nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall be in any way affected or impaired as a result.

14

 

	
23.7
	
Any statement, certificate or determination of the Noteholders as to the Secured Obligations or (without limitation) any other matter provided for in this Mortgage shall, in the absence of manifest error, be conclusive and binding on the Company.

	
23.8
	
Waiver of Defences: The Company shall be deemed to be a principal debtor and the sole, original and independent obligor for the Secured Obligations and the Security Interest created by this Mortgage shall be deemed to be a principal security for the Secured Obligations.  The Liability of the Company under this Mortgage shall not be discharged, impaired or otherwise affected by any circumstance, act, omission, matter or thing which but for this provision might operate to reduce, release, prejudice or otherwise exonerate the Company from its obligations under the Notes in whole or in part, including without limitation and whether or not known to the Company, the Noteholders or any other person any variation (however fundamental and whether or not involving any increase in the Liability of the Company) or replacement of any Notes or any other document or security so that the Company's obligations under this Mortgage remain in full force and effect and that this Mortgage shall be construed accordingly as if there were no such circumstance, act, omission, matter or thing.

	
23.9
	
This Mortgage shall take effect as a deed poll for the benefit of the Noteholders from time to time.

	
24
	
Law and Jurisdiction

	
24.1
	
This Mortgage is governed by, and shall be construed in accordance with, the laws of the Cayman Islands.

	
24.2
	
The Company irrevocably agrees for the exclusive benefit of the Noteholders that the courts of the Cayman Islands shall have jurisdiction to hear and determine any suit, action or proceeding and to settle any dispute which may arise out of or in connection with this Mortgage and for such purposes irrevocably submits to the jurisdiction of such courts.

	
25
	
Third Party Rights

	
25.1
	
Each Receiver, the Nominee and the Noteholders have the right under the Contracts (Rights of Third Parties) Law, 2014, as amended, modified, re-enacted or replaced (the "Third Party Rights Law"), to enforce, in its own right, its rights pursuant to Clauses 5, 8, 9 and 10 of this Mortgage subject to and in accordance with the provisions of the Third Party Rights Law.

	
25.2
	
Notwithstanding any other term of this Mortgage save for Clause 17, the consent of any person who is not a party to this Mortgage (including, without limitation, any Receiver) is not required for any amendment to, or variation, release, rescission or termination of this Mortgage. 

 

15

 

This Mortgage has been executed as a deed poll by the Company and is intended to be and is hereby delivered on the date first before written.

 

The Company

 

EXECUTED as a deed poll by)

TriLinc Global Impact Fund Cayman, Ltd.)

acting by:)

in the presence of:)

 

 

Witness Name:        )

Witness Signature: )

Witness Address:     )

 

16

 

Schedule 1

 

			
	
Amount or number of Mortgaged Shares
	
Description of Shares

 
	
Certificate Number

	
5
	
Ordinary shares of US$1.00 par value in TriLinc Global Impact Fund – Africa, Ltd., a Cayman Islands exempted company of PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

 
	
003

	
5
	
Ordinary shares of US$1.00 par value in TriLinc Global Impact Fund – African Trade Finance II, Ltd., a Cayman Islands exempted company of PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

 
	
003

	
5
	
Ordinary shares of US$1.00 par value in TriLinc Global Impact Fund - African Trade Finance, Ltd., a Cayman Islands exempted company of PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

 
	
003

	
5
	
Ordinary shares of US$1.00 par value in TriLinc Global Impact Fund - Asia, Ltd., a Cayman Islands exempted company of PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

 
	
003

17

 

			
	
5
	
Ordinary shares of US$1.00 par value in TriLinc Global Impact Fund – Latin America II, Ltd., a Cayman Islands exempted company of PO Box 309, Ugland House, Grand 

Cayman, KY1-1104, Cayman Islands.

 
	
003

	
5
	
Ordinary shares of US$1.00 par value in TriLinc Global Impact Fund – Latin America III, Ltd., a Cayman Islands exempted company of PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

 
	
003

	
5
	
Ordinary shares of US$1.00 par value in TriLinc Global Impact Fund - Latin America, Ltd., a Cayman Islands exempted company of PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

 
	
003

	
5
	
Ordinary shares of US$1.00 par value in TriLinc Global Impact Fund - Trade Finance, Ltd., a Cayman Islands exempted company of PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

 
	
003

	
5
	
Ordinary shares of US$1.00 par value in TriLinc Global Impact Fund – Asia II, Ltd., a Cayman Islands exempted company of PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

 
	
003

 

18Exhibit

ELEVATE CREDIT, INC.
2016 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED
The following constitute the provisions of the 2016 Employee Stock Purchase Plan of Elevate Credit, Inc.
1.Purpose.  The purpose of the Plan (as defined below) is to provide Employees (as defined below) of the Company (as defined below) and its Designated Parents (as defined below) or Subsidiaries (as defined below) with an opportunity to purchase Common Stock (as defined below) of the Company through accumulated payroll deductions.  It is the intention of the Company to have the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code (as defined below) and the applicable regulations thereunder.  The provisions of the Plan, accordingly, will be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code.
2.Definitions.  As used herein, the following definitions apply:
(a)“Administrator” means either the Board or a committee of the Board that is responsible for the administration of the Plan as is designated from time to time by resolution of the Board.
(b)“Applicable Laws” means the legal requirements relating to the administration of employee stock purchase plans, if any, under applicable provisions of federal securities laws, state corporate and securities laws, the Code and the applicable regulations thereunder, the rules of any applicable stock exchange or national market system, and the rules of any foreign jurisdiction applicable to participation in the Plan by residents therein.  
(c)“Board” means the Board of Directors of the Company.
(d)“Code” means the Internal Revenue Code of 1986, as amended.
(e)“Common Stock” means the common stock of the Company.
(f)“Company” means Elevate Credit, Inc., a Delaware corporation.
(g)“Compensation” means, unless otherwise determined by the Administrator, an Employee’s base salary from the Company or one or more Designated Parents or Subsidiaries, including such amounts of base salary as are deferred by the Employee: (i) under a qualified cash or deferred arrangement described in Section 401(k) of the Code; or (ii) to a plan qualified under Section 125 of the Code.  Unless otherwise determined by the Administrator, “Compensation” does not include overtime, bonuses, annual awards, other incentive payments, reimbursements or other expense allowances, fringe benefits (cash or non-cash), moving expenses, deferred compensation, contributions (other than contributions described in the first sentence) made on the Employee’s behalf by the Company or one or more Designated Parents or Subsidiaries under any employee benefit or welfare plan now or hereafter established, and any other payments not specifically referenced in the first sentence.
(h)“Corporate Transaction” means any of the following transactions, provided, however, that the Administrator will determine under parts (iv) and (v) whether multiple transactions are related, and its determination is final, binding and conclusive: 
(i)a merger or consolidation of the Company in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the Company is incorporated; 
(ii)the sale, transfer or other disposition of all or substantially all of the assets of the Company; 
(iii)the complete liquidation or dissolution of the Company;
(iv)any reverse merger or series of related transactions culminating in a reverse merger (including, but not limited to, a tender offer followed by a reverse merger) in which the Company 

1

is the surviving entity but (A) the shares of Common Stock outstanding immediately prior to such merger are converted or exchanged by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger or the initial transaction culminating in such merger, but excluding any such transaction or series of related transactions that the Administrator determines is not a Corporate Transaction; or 
(v)acquisition in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities but excluding any such transaction or series of related transactions that the Administrator determines is not a Corporate Transaction. 
(i)“Designated Parents or Subsidiaries” means the Parents or Subsidiaries, which have been designated by the Administrator from time to time as eligible to participate in the Plan. Unless otherwise determined by the Administrator, Elevate Credit Services, LLC, is a Designated Subsidiary under this Plan.
(j)“Effective Date” means the Registration Date.  However, should any Parent or Subsidiary become a Designated Parent or Subsidiary after such date, then the Administrator, in its discretion, will designate a separate Effective Date with respect to the employee-participants of such Designated Parent or Subsidiary.
(k)“Employee” means any individual, including an officer or director, who is an employee of the Company or a Designated Parent or Subsidiary for purposes of Section 423 of the Code.  For purposes of the Plan, the employment relationship will be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the individual’s employer.  Where the period of leave exceeds three (3) months and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated on the day that is three (3) months and one (1) day following the start of such leave, for purposes of determining eligibility to participate in the Plan.
(l)“Exchange Act” means the Securities Exchange Act of 1934, as amended.
(m)“Exercise Date” means the last day of each Purchase Period. 
(n)“Fair Market Value” means, as of any date, the value of Common Stock determined as follows:
(i)If the Common Stock is listed on one or more established stock exchanges, including without limitation, the New York Stock Exchange, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on the principal exchange or system on which the Common Stock is listed (as determined by the Administrator) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(ii)If the Common Stock is regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, but selling prices are not reported, its Fair Market Value will be the mean between the high bid and low asked prices for the Common Stock on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or
(iii)In the absence of an established market for the Common Stock of the type described in (i) and (ii), above, its Fair Market Value thereof will be determined by the Administrator in good faith.

2

(o)“New Exercise Date” has the meaning set forth in Section 18(b).  
(p)“Offer Period” means an Offer Period established pursuant to Section 4 hereof.
(q)“Offering” means an offer under this Plan of an Option that may be exercised during an Offer Period.  For purposes of the Plan, all Employees eligible to participate pursuant to Section 3 will be deemed to participate in the same Offering unless the Administrator otherwise determines that Employees of the Company or one or more Designated Parents or Subsidiaries will be deemed to participate in separate Offerings, in which case the Offerings will be considered separate even if the dates of each such Offering are identical and the provisions of the Plan will separately apply to each Offering.  To the extent permitted by Section 1.423-2(a)(1) of the Treasury regulations issued under Section 423 of the Code, the terms of each Offering need not be identical provided that the terms of the Plan and the Offering together satisfy Sections 1.423-2(a)(2) and (a)(3) of such Treasury regulations.
(r)“Offering Date” means the first day of each Offer Period.
(s) “Option” means, with respect to each Purchase Period, a right to purchase shares of Common Stock on the Exercise Date for such Purchase Period in accordance with the terms and conditions of the Plan.
(t)“Parent” means a “parent corporation” of the Company, whether now or hereafter existing, as defined in Section 424(e) of the Code.
(u)“Participant” means an Employee of the Company or Designated Parent or Subsidiary who has enrolled in the Plan as set forth in Section 5(a).
(v)“Plan” means this Employee Stock Purchase Plan. 
(w)“Purchase Period” means, unless otherwise determined by the Administrator, a period of approximately six months. 
(x)“Purchase Price” means an amount equal to eighty-five percent (85%) of the Fair Market Value of a share of Common Stock (i) on the Exercise Date or, if applicable, (ii) on the Offering Date or on the Exercise Date, whichever is lower.  Unless determined otherwise by the Administrator, the Purchase Price will be eighty-five percent (85%) of the Fair Market Value of a share of Common Stock on the Offering Date or on the Exercise Date, whichever is lower.
(y)“Registration Date” means the closing of the first sale to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, of the Common Stock.
(z)“Reserves” means, as of any date, the sum of: (1) the number of shares of Common Stock covered by each then outstanding Option under the Plan which has not yet been exercised; and (2) the number of shares of Common Stock which have been authorized for issuance under the Plan but not then subject to an outstanding Option.
(aa)“Subsidiary” means a “subsidiary corporation” of the Company, whether now or hereafter existing, as defined in Section 424(f) of the Code.
3.Eligibility.
(a)General.  Subject to the further limitations in Sections 3(b) and 3(c), any individual who is an Employee on a given Offering Date will be eligible to participate in the Plan for the Offer Period commencing with such Offering Date.  No individual who is not an Employee will be eligible to participate in the Plan.
(b)Limitations on Grant and Accrual.  Notwithstanding any provisions of the Plan to the contrary, no Employee will be granted an Option under the Plan: (i) if, immediately after the grant, such Employee (taking into account stock owned by any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own stock and/or hold outstanding options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any Parent or Subsidiary; or (ii) which permits the Employee’s rights to purchase stock under all employee stock purchase plans of the Company and its Parents or Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars (US$25,000) worth of stock 

3

(determined at the Fair Market Value of the shares at the time such Option is granted) for each calendar year in which such Option is outstanding at any time.  The determination of the accrual of the right to purchase stock will be made in accordance with Section 423(b)(8) of the Code and the regulations thereunder.     
(c)Other Limits on Eligibility.  Notwithstanding Subsection (a), above, unless otherwise determined prior to the applicable Offer Date, the following Employees will not be eligible to participate in the Plan for any relevant Offer Period: (i) Employees whose customary employment is 20 hours or less per week; (ii) Employees whose customary employment is for not more than 5 months in any calendar year; (iii) Employees who have not been employed for such continuous period preceding the Offering Date as the Administrator may require, but in no event will the required period of continuous employment be equal to or greater than 2 years; and (iv) Employees who are citizens or residents of a non-U.S. jurisdiction (without regard to whether he or she is also a citizen of the United States or a resident alien (within the meaning of Section 7701(b)(1)(A) of the Code)) if his or her participation is prohibited under the laws of the applicable non-U.S. jurisdiction or if complying with the laws of the applicable non-U.S. jurisdiction would cause the Plan or an Offering to violate Section 423 of the Code.  Unless determined otherwise by the Administrator, Employees who have not been employed continuously for the one (1) month period preceding an Offering Date will not be eligible to participate in the Plan for the Offer Period corresponding to such Offering Date.
4.Offer Periods.  
(a)The Plan will be implemented through overlapping or consecutive Offer Periods until such time as (i) the maximum number of shares of Common Stock available for issuance under the Plan have been purchased or (ii) the Plan has been sooner terminated in accordance with Section 19 hereof.  The maximum duration of an Offer Period is twenty-seven (27) months. Unless otherwise determined by the Administrator, the Plan will initially be implemented through successive Offer Periods of six (6) months’ duration.  
(b)A Participant will be granted a separate Option for each Offer Period in which he or she participates.  The Option will be granted on the Offering Date and will be automatically exercised in successive installments on the Exercise Dates ending within the Offer Period. 
(c)If on the first day of any Purchase Period in an Offer Period in which an Employee is a Participant, the Fair Market Value of the Common Stock is less than the Fair Market Value of the Common Stock on the Offering Date of the Offer Period (after taking into account any adjustment during the Offer Period pursuant to Section 18(a)), the Offer Period will be terminated automatically and the Participant will be enrolled automatically in the new Offer Period which has its first Purchase Period commencing on that date, provided the Employee is eligible to participate in the Plan on that date and has not elected to terminate participation in the Plan.  
(d)Except as specifically provided herein, the acquisition of Common Stock through participation in the Plan for any Offer Period will neither limit nor require the acquisition of Common Stock by a Participant in any subsequent Offer Period.
5.Participation.
(a)An eligible Employee may become a Participant in the Plan by submitting an authorization of payroll deduction (using such form or method (including electronic forms) as the Administrator may designate from time to time) as of a date in advance of the Offering Date for the Offer Period in which such participation will commence, as required by the Administrator for all eligible Employees with respect to a given Offer Period.
(b)Payroll deductions for a Participant will commence with the first partial or full payroll period beginning on the Offering Date and will end on the last complete payroll period during the Offer Period, unless sooner terminated by the Participant as provided in Section 10.

4

6.Payroll Deductions.
(a)At the time a Participant enrolls in the Plan, the Participant will elect to have payroll deductions made during the Offer Period in amounts between one percent (1%) and not exceeding fifteen percent (15%) of the Compensation which the Participant receives during the Offer Period.
(b)All payroll deductions made for a Participant will be credited to the Participant’s account under the Plan and will be withheld in whole percentages only.  A Participant may not make any additional payments into such account.
(c)A Participant may discontinue participation in the Plan as provided in Section 10, or may increase or decrease the rate of payroll deductions during the Offer Period by submitting notice of a change of status (using such form or method (including electronic forms) as the Administrator may designate from time to time) authorizing an increase or decrease in the payroll deduction rate.  Any increase or decrease in the rate of a Participant’s payroll deductions will be effective as soon as administratively practicable following the date of the request.  A Participant’s payroll deduction authorization (as modified by any change of status notice) will remain in effect for successive Offer Periods unless terminated as provided in Section 10.  The Administrator will be authorized to limit the number of payroll deduction rate changes during any Offer Period. Notwithstanding anything to the contrary in this Plan, the Administrator may permit purchases on the Exercise Date of the initial Purchase Period to be made by a lump sum cash payment.
(d)Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Sections 3(b) and 7 herein, a Participant’s payroll deductions will be decreased to zero percent (0%).  Payroll deductions will recommence at the rate provided in such Participant’s payroll deduction authorization, as amended, when permitted under Section 423(b)(8) of the Code and Section 3(b), unless such participation is sooner terminated by the Participant as provided in Section 10.
7.Grant of Option.  On the Offering Date, each Participant will be granted an Option to purchase (at the applicable Purchase Price) shares of Common Stock; provided: (i) that such Option is subject to the limitations set forth in Sections 3(b), 6 and 12; (ii) until otherwise determined by the Administrator, the maximum number of shares of Common Stock a Participant will be permitted to purchase in any Offer Period is 1,250 shares, subject to adjustment as provided in Section 18; and (iii) that such Option is subject to such other terms and conditions (applied on a uniform and nondiscriminatory basis), as the Administrator determines from time to time.  Exercise of the Option will occur as provided in Section 8, unless the Participant has withdrawn pursuant to Section 10, and the Option, to the extent not exercised, will expire on the last day of the Offer Period with respect to which such Option was granted.  Notwithstanding the foregoing, shares subject to the Option may only be purchased with accumulated payroll deductions credited to a Participant’s account in accordance with Section 6.  In addition, to the extent an Option is not exercised on each Exercise Date, the Option will lapse and thereafter cease to be exercisable.
8.Exercise of Option.  Unless a Participant withdraws from the Plan as provided in Section 10, the Participant’s Option for the purchase of shares of Common Stock will be exercised automatically on each Exercise Date, by applying the accumulated payroll deductions in the Participant’s account to purchase the number of full shares subject to the Option by dividing such Participant’s payroll deductions accumulated prior to such Exercise Date and retained in the Participant’s account as of the Exercise Date by the applicable Purchase Price.  No fractional shares will be purchased; any payroll deductions accumulated in a Participant’s account which are not sufficient to purchase a full share will be carried over to the next Purchase Period or Offer Period, whichever applies, or returned to the Participant, if the Participant withdraws from the Plan.  In addition, any amount remaining in a Participant’s account following the purchase of shares on the Exercise Date due to the application of Section 423(b)(8) of the Code, or Sections 3 or 7, will be returned to the Participant and will not be carried over to the next Offer Period or Purchase Period.  During a Participant’s lifetime, a Participant’s Option to purchase shares hereunder is exercisable only by the Participant.

5

9.Delivery.  Upon receipt of a request from a Participant after each Exercise Date on which a purchase of shares occurs, the Company will arrange for the delivery to such Participant, as soon as administratively practicable, of the shares purchased upon exercise of the Participant’s Option.  
10.Withdrawal; Termination of Employment.
(a)A Participant may, by giving notice to the Company (using such form or method (including electronic forms) as the Administrator may designate from time to time), either: (i) withdraw all but not less than all the payroll deductions credited to the Participant’s account and not yet used to exercise the Participant’s Option under the Plan; or (ii) terminate future payroll deductions, but allow accumulated payroll deductions to be used to exercise the Participant’s Option under the Plan at any time.  If the Participant elects withdrawal alternative (i) described above, all of the Participant’s payroll deductions credited to the Participant’s account will be paid to such Participant as soon as administratively practicable after receipt of notice of withdrawal, such Participant’s Option for the Offer Period will be automatically terminated, and no further payroll deductions for the purchase of shares will be made during the Offer Period.  If the Participant elects withdrawal alternative (ii) described above, no further payroll deductions for the purchase of shares will be made during the Offer Period, all of the Participant’s payroll deductions credited to the Participant’s account will be applied to the exercise of the Participant’s Option on the next Exercise Date (subject to Sections 3(b), 6, 7 and 12), and after such Exercise Date, such Participant’s Option for the Offer Period will be automatically terminated and all remaining accumulated payroll deduction amounts will be returned to the Participant.  If a Participant withdraws from an Offer Period, payroll deductions will not resume at the beginning of the succeeding Offer Period unless the Participant enrolls in such succeeding Offer Period.  The Administrator may, in its discretion and on a uniform and nondiscriminatory basis, specify further procedures for withdrawal.
(b)Upon termination of a Participant’s employment relationship (as described in Section 2(k)) prior to the next scheduled Exercise Date, the payroll deductions credited to such Participant’s account during the Offer Period but not yet used to exercise the Option will be returned to such Participant or, in the case of his/her death, to the person or persons entitled thereto under Section 14, and such Participant’s Option will be automatically terminated without exercise of any portion of such Option.
11.Interest.  No interest will accrue on the payroll deductions credited to a Participant’s account under the Plan.
12.Stock.
(a)Subject to adjustment upon changes in capitalization of the Company as provided in Section 18, the maximum number of shares of Common Stock which will be made available for sale under the Plan is 525,000 shares, plus an annual increase to be added on the first business day of the calendar year beginning with the calendar year following the calendar year in which the Plan becomes effective equal to the least of: (i) 700,000 shares; (ii) 1 percent of the outstanding shares of Common Stock on the last day of the immediately preceding calendar year; or (iii) a lesser number of shares determined by the Administrator.  If the Administrator determines that on a given Exercise Date the number of shares with respect to which Options are to be exercised may exceed: (x) the number of shares then available for sale under the Plan; or (y) the number of shares available for sale under the Plan on the Offering Date(s) of one or more of the Offer Periods in which such Exercise Date is to occur, the Administrator may make a pro rata allocation of the shares remaining available for purchase on such Offering Dates or Exercise Date, as applicable, and will either continue the Offer Period then in effect or terminate any one or more Offer Periods then in effect pursuant to Section 19, below. Such allocation method will be “bottom up,” with the result that all Option exercises for one (1) share will be satisfied first, followed by all exercises for two (2) shares, and so on, until all available shares have been exhausted.  Any amount remaining in a Participant’s payroll account following such allocation will be returned to the Participant and will not be carried over to any future Purchase Period or Offer Period, as determined by the Administrator.

6

(b)A Participant will have no interest or voting right in shares covered by the Participant’s Option until such shares are actually purchased on the Participant’s behalf in accordance with the applicable provisions of the Plan.  No adjustment will be made for dividends, distributions or other rights for which the record date is prior to the date of such purchase.
(c)Shares to be delivered to a Participant under the Plan will be registered in the name of the Participant.
13.Administration.  The Plan will be administered by the Administrator, which will have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility, to determine, with respect to each Offer Period, whether the Purchase Price will be determined as of (i) the Exercise Date or (ii) as of the Offering Date or the Exercise Date (whichever is lower), to adjudicate all disputed claims filed under the Plan, and to designate separate Offerings for the eligible Employees of the Company and one or more Designated Parents or Subsidiaries, in which case the Offerings will be considered separate even if the dates of each such Offering are identical and the provisions of the Plan will separately apply to each Offering.  Every finding, decision and determination made by the Administrator will, to the full extent permitted by Applicable Law, be final and binding upon all persons.  
14.Designation of Beneficiary.
(a)Each Participant will file a designation (using such form or method (including electronic forms) as the Administrator may designate from time to time) of a beneficiary who is to receive any shares and cash, if any, from the Participant’s account under the Plan in the event of such Participant’s death.  If a Participant is married and the designated beneficiary is not the spouse, spousal consent will be required for such designation to be effective.
(b)Such designation of beneficiary may be changed by the Participant (and the Participant’s spouse, if any) at any time by written notice.  In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living (or in existence) at the time of such Participant’s death, the Company will deliver such shares and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Administrator), the Administrator will deliver such shares and/or cash to the spouse (or domestic partner, as determined by the Administrator) of the Participant, or if no spouse (or domestic partner) is known to the Administrator, then to the issue of the Participant, such distribution to be made per stirpes (by right of representation), or if no issue are known to the Administrator, then to the heirs at law of the Participant determined in accordance with Section 27.  
15.Transferability.  No payroll deductions credited to a Participant’s account, Options granted hereunder, or any rights with regard to the exercise of an Option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution, or as provided in Section 14) by the Participant.  Any such attempt at assignment, transfer, pledge or other disposition will be without effect, except that the Administrator may, in its sole discretion, treat such act as an election to withdraw funds from an Offer Period in accordance with Section 10.
16.Use of Funds.  All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company will not be obligated to segregate such payroll deductions or hold them exclusively for the benefit of Participants.  All payroll deductions received or held by the Company may be subject to the claims of the Company’s general creditors. Participants will have the status of general unsecured creditors of the Company.  Any amounts payable to Participants pursuant to the Plan will be unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974, as amended.  The Company will retain at all times beneficial ownership of any investments which the Company may make to fulfill its payment obligations hereunder.  Any investments or the creation or maintenance of any trust or any Participant account will not create or constitute a trust or fiduciary relationship between the 

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Administrator, the Company or any Designated Parent or Subsidiary and a Participant, or otherwise create any vested or beneficial interest in any Participant or the Participant’s creditors in any assets of the Company or a Designated Parent or Subsidiary. The Participants will have no claim against the Company or any Designated Parent or Subsidiary for any changes in the value of any assets that may be invested or reinvested by the Company with respect to the Plan.
17.Reports.  Individual accounts will be maintained for each Participant in the Plan.  Statements of account will be given to Participants at least annually, which statements will set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any.
18.Adjustments Upon Changes in Capitalization; Corporate Transactions.
(a)Adjustments Upon Changes in Capitalization.  Subject to any required action by the stockholders of the Company, the Administrator, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will, in such manner as it may deem equitable, adjust the Reserves, the Purchase Price, the maximum number of shares that may be purchased in any Offer Period or Purchase Period, as well as any other terms that the Administrator determines require adjustment, for: (i) any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock; (ii) any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; or (iii) as the Administrator may determine in its discretion, any other transaction with respect to Common Stock, including a corporate merger, consolidation, acquisition of property or stock, separation (including a spin-off or other distribution of stock or property), reorganization, liquidation (whether partial or complete) or any similar transaction; provided, however, that conversion of any convertible securities of the Company will not be deemed to have been “effected without receipt of consideration.”  Such adjustment, if any, will be made by the Administrator and its determination will be final, binding and conclusive.  Except as the Administrator determines, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, will affect, and no adjustment by reason hereof will be made with respect to, the Reserves and the Purchase Price.  
(b)Corporate Transactions.  In the event of a proposed Corporate Transaction, each Option under the Plan will be assumed by such successor corporation or a parent or subsidiary of such successor corporation, unless the Administrator, in the exercise of its sole discretion and in lieu of such assumption, determines to shorten the Offer Period then in progress by setting a new Exercise Date (the “New Exercise Date”).  If the Administrator shortens the Offer Period then in progress in lieu of assumption in the event of a Corporate Transaction, the Administrator will notify each Participant in writing at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the Participant’s Option has been changed to the New Exercise Date and that either: 
(i)the Participant’s Option will be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offer Period as provided in Section 10; or
(ii)the Company will pay to the Participant on the New Exercise Date an amount in cash, cash equivalents, or property as determined by the Administrator that is equal to the excess, if any, of (x) the Fair Market Value of the shares subject to the Option over (y) the Purchase Price due had the Participant’s Option been exercised automatically under Subsection (b)(i) above.  In addition, all remaining accumulated payroll deduction amounts will be returned to the Participant.
(c)For purposes of Section 18(b), an Option granted under the Plan will be deemed to be assumed if, in connection with the Corporate Transaction, the Option is replaced with a comparable Option with respect to shares of capital stock of the successor corporation or Parent thereof.  The determination of Option comparability will be made by the Administrator prior to the Corporate Transaction and its determination will be final, binding and conclusive on all persons.

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19.Amendment or Termination.
(a)The Administrator may at any time and for any reason terminate or amend the Plan.  Except as provided in Section 18, no such termination can adversely affect Options previously granted, provided that the Plan or any one or more Offer Periods then in effect may be terminated by the Administrator on any Exercise Date or by the Administrator establishing a new Exercise Date with respect to any Offer Period and/or Purchase Period then in progress if the Administrator determines that the termination of the Plan or one or more Offer Periods is in the best interests of the Company and its stockholders.  Except as provided in Section 18 and this Section 19, no amendment may make any change in any Option theretofore granted which adversely affects the rights of any Participant without the consent of affected Participants.  To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision or any other Applicable Law), the Company will obtain stockholder approval of any amendment in such a manner and to such a degree as required.
(b)Without stockholder consent and without regard to whether any Participant rights may be considered to have been “adversely affected,” the Administrator will be entitled to limit the frequency and/or number of changes in the amount withheld during Offer Periods, change the length of Purchase Periods within any Offer Period, determine the length of any future Offer Period, determine whether future Offer Periods will be consecutive or overlapping, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, establish or change Plan or per Participant limits on share purchases, establish additional terms, conditions, rules or procedures to accommodate the rules or laws of applicable foreign jurisdictions, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable and which are consistent with the Plan, in each case to the extent consistent with the requirements of Code Section 423 and other Applicable Laws.
20.Notices.  All notices or other communications by a Participant to the Company under or in connection with the Plan will be deemed to have been duly given when received in the form specified by the Administrator at the location, or by the person, designated by the Administrator for the receipt thereof.
21.Conditions Upon Issuance of Shares.  Shares will not be issued with respect to an Option unless the exercise of such Option and the issuance and delivery of such shares pursuant thereto will comply with all Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.  As a condition to the exercise of an Option, the Company may require the Participant to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned Applicable Laws or is otherwise advisable.  In addition, no Options will be exercised or shares issued hereunder before the Plan has been approved by stockholders of the Company as provided in Section 23.
22.Term of Plan.  The Plan will become effective upon the earlier to occur of its adoption by the Board or its approval by the stockholders of the Company.  It will continue in effect for a term of ten (10) years unless sooner terminated under Section 19.
23.Stockholder Approval.  Continuance of the Plan will be subject to approval by the stockholders of the Company within twelve (12) months before or after the date the Plan is adopted.  Such stockholder approval will be obtained in the degree and manner required under Applicable Laws.  
24.No Employment Rights.  The Plan does not, directly or indirectly, create any right for the benefit of any employee or class of employees to purchase any shares under the Plan, or create in any employee or class of employees any right with respect to continuation of employment by the Company or 

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a Designated Parent or Subsidiary, and it will not be deemed to interfere in any way with such employer’s right to terminate, or otherwise modify, an employee’s employment at any time.
25.No Effect on Retirement and Other Benefit Plans.  Except as specifically provided in a retirement or other benefit plan of the Company or a Designated Parent or Subsidiary, participation in the Plan will not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or a Designated Parent or Subsidiary, and will not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of compensation.  The Plan is not a “Retirement Plan” or “Welfare Plan” under the Employee Retirement Income Security Act of 1974, as amended.
26.Effect of Plan.  The provisions of the Plan will, in accordance with its terms, be binding upon, and inure to the benefit of, all successors of each Participant, including, without limitation, such Participant’s estate and the executors, administrators or trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of such Participant.
27.Governing Law.  The Plan is to be construed in accordance with and governed by the internal laws of the State of Delaware without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Delaware to the rights and duties of the parties, except to the extent the internal laws of the State of Delaware are superseded by the laws of the United States.  Should any provision of the Plan be determined by a court of law to be illegal or unenforceable, the other provisions will nevertheless remain effective and will remain enforceable.  
28.Dispute Resolution.  The provisions of this Section 28 will be the exclusive means of resolving disputes arising out of or relating to the Plan.  The Company and the Participant, or their respective successors (the “parties”), will attempt in good faith to resolve any disputes arising out of or relating to the Plan by negotiation between individuals who have authority to settle the controversy.  Negotiations will be commenced by either party by notice of a written statement of the party’s position and the name and title of the individual who will represent the party.  Within thirty (30) days of the written notification, the parties will meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to resolve the dispute.  If the dispute has not been resolved by negotiation, the parties agree that any suit, action, or proceeding arising out of or relating to the Plan must be brought in the United States District Court for Delaware (or should such court lack jurisdiction to hear such action, suit or proceeding, in a Delaware state court) and that the parties will submit to the jurisdiction of such court.  The parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the laying of venue for any such suit, action or proceeding brought in such court.  THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING.  If any one or more provisions of this Section 28 is for any reason held invalid or unenforceable, it is the specific intent of the parties that such provisions be modified to the minimum extent necessary to make it or its application valid and enforceable. 

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