Document:

Digirad Corporation 8-K

 

Exhibit 4.3

 

WARRANT AGENT AGREEMENT

 

WARRANT AGENT AGREEMENT (this “Warrant Agreement”) dated as of May 28, 2020 (the “Issuance Date”) between Digirad Corporation, a company incorporated under the laws of the State of Delaware (the “Company”), and American Stock Transfer & Trust Company, LLC, a New York limited liability trust company (the “Warrant Agent”).

 

WHEREAS, pursuant to the terms of that certain Underwriting Agreement (“Underwriting Agreement”), dated May 26, 2020, by and between the Company and Maxim Group LLC, as representative of the several underwriters set forth therein, the Company is engaged in a public offering (the “Offering”) of up to 2,450,000 shares (the “Shares”) of common stock of the Company, par value $0.0001 per share (the “Common Stock”), and common stock purchase warrants (the “Warrants”) to purchase up to 1,225,000 shares of Common Stock (the “Warrant Shares”), including Shares and Warrants issuable pursuant to the underwriters’ over-allotment option;

 

WHEREAS, the Company has filed with the Securities and Exchange Commission (the “Commission”) a Registration Statement on Form S-1 (File No. 333-237928)(as the same may be amended from time to time, the “Registration Statement”), for the registration under the Securities Act of 1933, as amended (the “Securities Act”), of the Shares, the Warrants and the Warrant Shares, and such Registration Statement was declared effective on May 26, 2020;

 

WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in accordance with the terms set forth in this Warrant Agreement in connection with the issuance, registration, transfer, exchange and exercise of the Warrants;

 

WHEREAS, the Company desires to provide for the provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective rights, limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants; and

 

WHEREAS, all acts and things have been done and performed which are necessary to make the Warrants the valid, binding and legal obligations of the Company, and to authorize the execution and delivery of this Warrant Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

 

1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company with respect to the Warrants, and the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the express terms and conditions set forth in this Warrant Agreement (and no implied terms or conditions).

 

     

     

    

 

2. Warrants. The Warrants shall be registered securities and shall initially be evidenced by a global certificate (“Global Certificate”) in the form of Exhibit A to this Warrant Agreement, which shall be deposited on behalf of the Company with a custodian for The Depository Trust Company (“DTC”) and registered in the name of Cede & Co., a nominee of DTC. If DTC subsequently ceases to make its book-entry settlement system available for the Warrants, the Company shall instruct the Warrant Agent regarding making other arrangements for book-entry settlement. In the event that the Warrants are not eligible for, or it is no longer necessary to have the Warrants available in, book-entry form, the Company shall instruct the Warrant Agent to provide written instructions to DTC to deliver to the Warrant Agent for cancellation the Global Certificate or Certificates, and the Company shall instruct the Warrant Agent to deliver to DTC separate certificates evidencing Warrants (“Definitive Certificates”and, together with the Global Certificate, “Warrant Certificates”) registered as requested through the DTC system. The Warrants, together with the form of election to purchase Common Stock (the “Notice of Election”) and the form of assignment to be printed on the reverse thereof, whether a Definitive Certificate or a Global Certificate, shall be substantially in the form of Exhibit A.

 

2.1. Issuance and Registration of Warrants.

 

2.1.1. Warrant Register. The Warrant Agent shall maintain books (“Warrant Register”) for the registration of original issuance and the registration of transfer of the Warrants.

 

2.1.2. Issuance of Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall issue the Global Certificates and deliver the Warrants in the DTC book-entry settlement system in accordance with written instructions delivered to the Warrant Agent by the Company. Ownership of security entitlements in the Warrants shall be shown on, and the transfer of such ownership shall be effected through, records maintained (i) by DTC and (ii) by institutions that have accounts with DTC (each, a “Participant”). A Holder has the right to elect at any time or from time to time a Warrant Exchange (as defined below) pursuant to a Warrant Certificate Request Notice (as defined below). Upon written notice by a Holder to the Warrant Agent and the Company for the exchange of some or all of such Holder’s Warrants held in book entry form for a Definitive Certificate evidencing the same number of Warrants, which request shall be in the form attached hereto as Annex A (a “Warrant Certificate Request Notice“and the date of delivery of such Warrant Certificate Request Notice by the Holder, the “Warrant Certificate Request Notice Date”and the actual surrender upon delivery by the Holder of a number of Warrants for the same number of Warrants evidenced by a Definitive Certificate, a “Warrant Exchange”), the Warrant Agent shall promptly effect the Warrant Exchange and shall promptly issue and deliver to the Holder a Definitive Certificate for such number of Warrants in the name set forth in the Warrant Certificate Request Notice. Such Definitive Certificate shall be dated the original issue date of the Warrants and shall be manually executed by an authorized signatory of the Warrant Agent. In connection with a Warrant Exchange, the Company agrees to deliver, or to direct the Warrant Agent to deliver, the Definitive Certificate to the Holder within two (2) Business Days of the Warrant Certificate Request Notice pursuant to the delivery instructions in the Warrant Certificate Request Notice (“Warrant Certificate Delivery Date”). If the Company fails for any reason to deliver to the Holder the Definitive Certificate subject to the Warrant Certificate Request Notice by the Warrant Certificate Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of shares of common stock underlying the Warrants evidenced by such Definitive Certificate (based on the VWAP (as defined in the Warrant) of the Common Stock on the Warrant Certificate Request Notice Date), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Certificate Delivery Date until such Definitive Certificate is delivered or, prior to delivery of such Warrant Certificate, the Holder rescinds such Warrant Exchange. Notwithstanding the forgoing, the Warrant Agent shall not, in any event, be subject to, or responsible for, liquidated damages or any “buy-in” penalties contemplated in connection with the Warrants. The Company covenants and agrees that, upon the date of delivery of the Warrant Certificate Request Notice, the Holder shall be deemed to be the holder of the Definitive Certificate and, notwithstanding anything to the contrary set forth herein, the Definitive Certificate shall be deemed for all purposes to contain all of the terms and conditions of the Warrants evidenced by such Definitive Certificate and the terms of this Agreement. In the event a beneficial owner requests a Warrant Exchange, upon issuance of the paper Definitive Certificate, the Warrant Agent shall continue to act as warrant agent and the terms of the paper Definitive Certificate so issued shall exclusively govern in respect thereof.

 

 

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2.1.3. Beneficial Owner; Holder. Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent shall deem and treat the person in whose name that Warrant shall be registered on the Warrant Register (the “Holder”) as the absolute owner of such Warrant for purposes of any exercise thereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Warrant Agent or any agent of the Company or the Warrant Agent from giving effect to any written certification, proxy or other authorization furnished by DTC governing the exercise of the rights of a holder of a beneficial interest in any Warrant. The rights of beneficial owners in a Warrant evidenced by the Global Certificate shall be exercised by the Holder or a Participant through the DTC system, except to the extent set forth herein or in the Global Certificate.

 

2.1.4. Execution. The Warrant Certificates shall be executed on behalf of the Company by any authorized officer of the Company (an “Authorized Officer”), which need not be the same authorized signatory for all of the Warrant Certificates, either manually or by facsimile signature. The Warrant Certificates shall be countersigned by an authorized signatory of the Warrant Agent, which need not be the same signatory for all of the Warrant Certificates, and no Warrant Certificate shall be valid for any purpose unless so countersigned. In case any Authorized Officer of the Company that signed any of the Warrant Certificates ceases to be an Authorized Officer of the Company before countersignature by the Warrant Agent and issuance and delivery by the Company, such Warrant Certificates, nevertheless, may be countersigned by the Warrant Agent, issued and delivered with the same force and effect as though the person who signed such Warrant Certificates had not ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Warrant Certificate, shall be an Authorized Officer of the Company authorized to sign such Warrant Certificate, although at the date of the execution of this Warrant Agreement any such person was not such an Authorized Officer.

 

2.1.5. Registration of Transfer. Subject to the provisions of the Warrants, at any time at or prior to the Expiration Date (as defined below), a transfer of any Warrants may be registered and any Warrant Certificate or Warrant Certificates may be split up, combined or exchanged for another Warrant Certificate or Warrant Certificates evidencing the same number of Warrants as the Warrant Certificate or Warrant Certificates surrendered. Any Holder desiring to register the transfer of Warrants or to split up, combine or exchange any Warrant Certificate shall make such request in writing delivered to the Warrant Agent, and shall surrender to the Warrant Agent the Warrant Certificate or Warrant Certificates evidencing the Warrants the transfer of which is to be registered or that is or are to be split up, combined or exchanged and, in the case of registration of transfer, shall provide a signature guarantee. Thereupon, the Warrant Agent shall countersign and deliver to the person entitled thereto a Warrant Certificate or Warrant Certificates, as the case may be, as so requested. The Company and the Warrant Agent may require payment, by the Holder requesting a registration of transfer of Warrants or a split-up, combination or exchange of a Warrant Certificate (but, for purposes of clarity, not upon the exercise of the Warrants and issuance of Warrant Shares to the Holder), of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with such registration of transfer, split-up, combination or exchange, together with reimbursement to the Company and the Warrant Agent of all reasonable expenses incidental thereto.

 

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2.1.6. Loss, Theft and Mutilation of Warrant Certificates. Upon receipt by the Company and the Warrant Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Warrant Certificate, and, in case of loss, theft or destruction, of indemnity or security in customary form and amount, and reimbursement to the Company and the Warrant Agent of all reasonable expenses incidental thereto, and upon surrender to the Warrant Agent and cancellation of the Warrant Certificate if mutilated, the Warrant Agent shall, on behalf of the Company, countersign and deliver a new Warrant Certificate of like tenor to the Holder in lieu of the Warrant Certificate so lost, stolen, destroyed or mutilated. The Warrant Agent may charge the Holder an administrative fee for processing the replacement of lost Warrant Certificates, which shall be charged only once in instances where a single surety bond obtained covers multiple certificates. The Warrant Agent may receive compensation from the surety companies or surety agents for administrative services provided to them.

 

2.1.7. Proxies. The Holder of a Warrant may grant proxies or otherwise authorize any person, including the Participants and beneficial holders that may own interests through the Participants, to take any action that a Holder is entitled to take under this Agreement or the Warrants; provided, however, that at all times that Warrants are evidenced by a Global Certificate, exercise of those Warrants shall be effected on their behalf by Participants through DTC in accordance the procedures administered by DTC.

 

3. Terms and Exercise of Warrants.

 

3.1. Exercise Price. Each Warrant shall entitle the Holder, subject to the provisions of the applicable Warrant Certificate and of this Warrant Agreement, to purchase from the Company the number of shares of Common Stock stated therein, at the price of $2.25 per whole share, subject to the subsequent adjustments provided by Section 3 of the Warrant Certificates. The term “Exercise Price”as used in this Warrant Agreement refers to the price per share at which shares of Common Stock may be purchased at the time a Warrant is exercised.

 

3.2. Duration of Warrants. The Warrants may be exercised only during the period (“Exercise Period”) commencing on the Issuance Date and terminating at 5:00 P.M., Eastern Standard Time (the “close of business”) on May 28, 2025 (“Expiration Date”). Each Warrant not exercised on or before their respective Expiration Date shall become void, and all rights thereunder and all rights in respect thereof under this Warrant Agreement shall cease at the close of business on the respective Expiration Date.

 

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3.3. Exercise of Warrants.

 

3.3.1. Exercise and Payment. (a) Subject to the provisions of this Warrant Agreement, a Holder (or a Participant or a designee of a Participant acting on behalf of a Holder) may exercise Warrants by delivering to the Warrant Agent, a duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed to the Warrant Certificate. In the case of the Holder of a Global Certificate, the Holder shall deliver the executed Notice of Exercise and payment of the Exercise Price pursuant to Section 2(a) and Section 2(b) of the Warrant Certificates (other than in the case of a Cashless Exercise). Notwithstanding any other provision in this Agreement, a holder whose interest in a Global Warrant is a beneficial interest in a Global Certificate held in book-entry form through the DTC (or another established clearing corporation performing similar functions), shall effect exercises by delivering to the DTC (or such other clearing corporation, as applicable) the appropriate instruction form for exercise, complying with the procedures to effect exercise that are required by the DTC (or such other clearing corporation, as applicable). The Company acknowledges that the bank accounts maintained by the Warrant Agent in connection with the services provided under this Agreement will be in its name and that the Warrant Agent may receive investment earnings in connection with the investment at Warrant Agent risk and for its benefit of funds held in those accounts from time to time. Neither the Company nor the Holders will receive interest on any deposits or Exercise Price. The “Exercise Date”will be the date on which the materials in the foregoing sentence are received by the Warrant Agent (if by 5:00 P.M., New York City time), or the following Trading Day (if after 5:00 P.M., New York City time), regardless of any earlier date written on the materials. If the materials discussed in this Section 3.3.1 are received or deemed to be received after the Expiration Date, the exercise thereof will be null and void and any funds delivered to the Company will be returned to the Holder or Participant, as the case may be, as soon as practicable. In no event will interest accrue on any funds deposited with the Company in respect of an exercise or attempted exercise of the Warrants.

 

3.3.2. Issuance of Warrant Shares.

 

(a) The Warrant Agent shall, by 11:00 a.m., New York City time, on the Trading Day following the date of exercise of any Warrant, advise the Company, the transfer agent and registrar for the Company’s Common Stock, in respect of (i) the number of Warrant Shares indicated on the Notice of Exercise as issuable upon such exercise with respect to such exercised Warrants, (ii) the instructions of the Holder or Participant, as the case may be, provided to the Warrant Agent with respect to the delivery of the Warrant Shares and the number of Warrants that remain outstanding after such exercise and (iii) such other information as the Company or such transfer agent and registrar shall reasonably request.

 

(b) Upon the Warrant Agent’s receipt, at or prior to the Close of Business on the Termination Date set forth in a Warrant Certificate, of the executed Notice of Exercise, accompanied by payment of the Exercise Price pursuant to Section 2(b) of the Warrant Certificate (other than in the case of a Cashless Exercise) , the Warrant Agent shall cause the Warrant Shares underlying such Warrant to be delivered to or upon the order of the Holder of such Warrant, registered in such name or names as may be designated by such Holder, no later than the Warrant Share Delivery Date. If the Company is then a participant in the DWAC system of the Depositary and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) the Warrant is being exercised via Cashless Exercise, then the certificates for Warrant Shares shall be transmitted by the Warrant Agent to the Holder.

 

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3.3.3. Valid Issuance. All Warrant Shares issued by the Company upon the proper exercise of a Warrant in conformity with this Warrant Agreement shall be validly issued, fully paid and non-assessable.

 

3.3.4. No Fractional Shares or Scrip. No fractional Warrant Shares or scrip representing fractional shares shall be issued upon the exercise of the Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

3.3.5. Charges, Taxes, and Expenses. Issuance of Warrant Shares shall be made without charge to a Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of a Holder or in such name or names as may be directed by a Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of a Holder, the Warrant, when surrendered for exercise, shall be accompanied by the Assignment Form attached to the Warrant duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to DTC (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

3.3.6. Date of Issuance. The Company will treat an exercising Holder as a beneficial owner of the Warrant Shares as of the date of exercise of any Warrant, except that, if such date of exercise is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the open of business on the next succeeding date on which the stock transfer books are open.

 

3.3.7. Cashless Exercise Under Certain Circumstances. The Company shall provide to the Warrant Agent and each Holder prompt written notice of any time that there is no effective registration statement covering the Warrants and the Warrant Shares thereunder. Subject to Section 2(c) of the Warrant, a Holder may be entitled to cashless exercise of the Warrant. Upon receipt of a Notice of Exercise for a cashless exercise in accordance with Section 2(c) of the Warrant, the Warrant Agent will promptly deliver a copy of the Notice of Exercise to the Company to confirm the number of Warrant Shares issuable in connection with the cashless exercise. The Company shall promptly calculate and transmit to the Warrant Agent in a written notice, and the Warrant Agent shall have no duty, responsibility or obligation under this section to calculate, the number of Warrant Shares issuable in connection with any cashless exercise. The Warrant Agent shall be entitled to rely conclusively on any such written notice provided by the Company, and the Warrant Agent shall not be liable for any action taken, suffered or omitted to be taken by it in accordance with such written instructions or pursuant to this Warrant Agreement.

 

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3.3.8. Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of Warrant Shares issuable in connection with any exercise, the Company shall promptly deliver to the Holder the number of Warrant Shares that are not disputed.

 

3.3.9. Beneficial Ownership Limitation. A Holder shall not have the right to exercise any Warrants to the extent that after giving effect to the issuance of Warrant Shares after exercise as set forth on the applicable Notice of Exercise, such Holder or a person holding through such Holder, and any other persons acting as a group together with that Holder or person or any of that Holder’s or person’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as that term is defined in the Warrant) pursuant to Section 2(e) of the Warrant Certificates.

 

4. Adjustments. The Exercise Price, the number of shares covered by each Warrant and the number of Warrants outstanding are subject to adjustment from time to time as provided in Section 3 of the Warrant Certificate. All Warrants originally issued by the Company subsequent to any adjustment made to the Exercise Price pursuant to the Warrant shall evidence the right to purchase, at the adjusted Exercise Price, the number of shares of Common Stock purchasable from time to time hereunder upon exercise of the Warrants, all subject to further adjustment as provided herein. Whenever the Exercise Price or the number of shares of Common Stock issuable upon the exercise of each Warrant is adjusted as provided in this Section 4, the Company shall (a) promptly prepare a certificate setting forth the Exercise Price of each Warrant as so adjusted, and a brief statement of the facts accounting for such adjustment, (b) promptly file with the Warrant Agent and with each transfer agent for the Common Stock a copy of such certificate and (c) instruct the Warrant Agent to send a brief summary thereof to each Holder of a Warrant.

 

5. Restrictive Legends; Fractional Warrants. In the event that a Warrant Certificate surrendered for transfer bears a restrictive legend, the Warrant Agent shall not register that transfer until the Warrant Agent has received an opinion of counsel for the Company in form and substance reasonably satisfactory to the Warrant Agent stating that such transfer may be made and indicating whether the Warrants must also bear a restrictive legend upon that transfer. The Company shall not issue fractions of Warrants or distribute a Global Warrant or Warrant Certificates that evidence fractional Warrants. Whenever any fractional Warrant would otherwise be required to be issued or distributed, the actual issuance or distribution shall reflect a rounding of such fraction either up or down to the nearest whole Warrant. The Warrant Agent shall not be required to effect any registration of transfer or exchange which will result in the transfer of or delivery of a Warrant Certificate for a fraction of a Warrant. The Company shall not issue fractions of shares of Common Stock upon exercise of Warrants or distribute stock certificates that evidence fractional shares of Common Stock. Whenever any fraction of a share of Common Stock would otherwise be required to be issued or distributed, the actual issuance or distribution in respect thereof shall be made in accordance with Section 2(d)(v) of the Warrant Certificates.

 

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6. Other Provisions Relating to Rights of Holders of Warrants.

 

6.1. No Rights as Stockholder. Except as otherwise specifically provided herein and in accordance with Section 5(a) of the Warrant Certificates, a Holder, solely in its capacity as a holder of Warrants, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant Agreement be construed to confer upon a Holder, solely in its capacity as the registered holder of Warrants, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of share capital, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights or rights to participate in new issues of shares, or otherwise, prior to the issuance to the Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of Warrants.

 

6.2. Reservation of Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued shares of Common Stock pursuant to Section 5(d) of the Warrant Certificates.

 

7. Concerning the Warrant Agent and Other Matters.

 

7.1. Any instructions given to the Warrant Agent orally, as permitted by any provision of this Warrant Agreement, shall be confirmed in writing by the Company as soon as practicable. The Warrant Agent shall not be liable or responsible and shall be fully authorized and protected for acting, or failing to act, in accordance with any oral instructions which do not conform with the written confirmation received in accordance with this Section 7.1.

 

7.2. (a) Whether or not any Warrants are exercised, for the Warrant Agent’s services as agent for the Company hereunder, the Company shall pay to the Warrant Agent such fees as may be separately agreed between the Company and Warrant Agent and the Warrant Agent’s out of pocket expenses in connection with this Warrant Agreement, including, without limitation, the reasonable fees and expenses of the Warrant Agent’s counsel. While the Warrant Agent endeavors to maintain out-of-pocket charges (both internal and external) at competitive rates, these charges may not reflect actual out-of-pocket costs, and may include handling charges to cover internal processing and use of the Warrant Agent’s billing systems.

 

(b) All amounts owed by the Company to the Warrant Agent under this Warrant Agreement are due within 30 days of the invoice date. Delinquent payments are subject to a late payment charge of one and one-half percent (1.5%) per month commencing 45 days from the invoice date. The Company agrees to reimburse the Warrant Agent for any reasonable attorney’s fees and any other costs associated with collecting delinquent payments. (c) No provision of this Warrant Agreement shall require Warrant Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties under this Warrant Agreement or in the exercise of its rights.

 

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7.3. As agent for the Company hereunder the Warrant Agent: (a) shall have no duties or obligations other than those specifically set forth herein or as may subsequently be agreed to in writing by the Warrant Agent and the Company; (b) shall be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value, or genuineness of the Warrants or any Warrant Shares; (c) shall not be obligated to take any legal action hereunder; if, however, the Warrant Agent determines to take any legal action hereunder, and where the taking of such action might, in its judgment, subject or expose it to any expense or liability it shall not be required to act unless it has been furnished with an indemnity reasonably satisfactory to it; (e) may rely on and shall be fully authorized and protected in acting or failing to act upon any certificate, instrument, opinion, notice, letter, telegram, telex, facsimile transmission or other document or security delivered to the Warrant Agent and believed by it to be genuine and to have been signed by the proper party or parties; (f) shall not be liable or responsible for any recital or statement contained in the Registration Statement or any other documents relating thereto; (g) shall not be liable or responsible for any failure on the part of the Company to comply with any of its covenants and obligations relating to the Warrants, including without limitation obligations under applicable securities laws; (h) may rely on and shall be fully authorized and protected in acting or failing to act upon the written, telephonic or oral instructions with respect to any matter relating to its duties as Warrant Agent covered by this Warrant Agreement (or supplementing or qualifying any such actions) of officers of the Company, and is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from the Company or counsel to the Company, and may apply to the Company, for advice or instructions in connection with the Warrant Agent’s duties hereunder, and the Warrant Agent shall not be liable for any delay in acting while waiting for those instructions; any applications by the Warrant Agent for written instructions from the Company may, at the option of the Agent, set forth in writing any action proposed to be taken or omitted by the Warrant Agent under this Warrant Agreement and the date on or after which such action shall be taken or such omission shall be effective; the Warrant Agent shall not be liable for any action taken by, or omission of, the Warrant Agent in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than five (5) Business Days after the date such application is sent to the Company, unless the Company shall have consented in writing to any earlier date) unless prior to taking any such action, the Warrant Agent shall have received written instructions in response to such application specifying the action to be taken or omitted; (i) may consult with counsel satisfactory to the Warrant Agent, including its in-house counsel, and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered, or omitted by it hereunder in good faith and in accordance with the advice of such counsel; (j) may perform any of its duties hereunder either directly or by or through nominees, correspondents, designees, or subagents, and it shall not be liable or responsible for any misconduct or negligence on the part of any nominee, correspondent, designee, or subagent appointed with reasonable care by it in connection with this Warrant Agreement; (k) is not authorized, and shall have no obligation, to pay any brokers, dealers, or soliciting fees to any person; and (l) shall not be required hereunder to comply with the laws or regulations of any country other than the United States of America or any political subdivision thereof.

 

 

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7.4. (a) In the absence of gross negligence or willful or illegal misconduct on its part (as determined by a court of competent jurisdiction in a final and non-appealable judgment), the Warrant Agent shall not be liable for any action taken, suffered, or omitted by it or for any error of judgment made by it in the performance of its duties under this Warrant Agreement. Anything in this Warrant Agreement to the contrary notwithstanding, in no event shall Warrant Agent be liable for special, indirect, incidental, consequential or punitive losses or damages of any kind whatsoever (including but not limited to lost profits), even if the Warrant Agent has been advised of the possibility of such losses or damages and regardless of the form of action. Any liability of the Warrant Agent will be limited in the aggregate to the amount of fees paid by the Company hereunder. The Warrant Agent shall not be liable for any failures, delays or losses, arising directly or indirectly out of conditions beyond its reasonable control including, but not limited to, acts of government, exchange or market ruling, suspension of trading, work stoppages or labor disputes, fires, civil disobedience, riots, rebellions, storms, electrical or mechanical failure, computer hardware or software failure, communications facilities failures including telephone failure, war, terrorism, insurrection, earthquakes, floods, acts of God or similar occurrences. (b) In the event any question or dispute arises with respect to the proper interpretation of the Warrants or the Warrant Agent’s duties under this Warrant Agreement or the rights of the Company or of any Holder, the Warrant Agent shall not be required to act and shall not be held liable or responsible for its refusal to act until the question or dispute has been judicially settled (and, if appropriate, it may file a suit in interpleader or for a declaratory judgment for such purpose) by final judgment rendered by a court of competent jurisdiction, binding on all persons interested in the matter which is no longer subject to review or appeal, or settled by a written document in form and substance satisfactory to Warrant Agent and executed by the Company and each such Holder. In addition, the Warrant Agent may require for such purpose, but shall not be obligated to require, the execution of such written settlement by all the Holders and all other persons that may have an interest in the settlement.

 

7.5. The Company covenants to indemnify the Warrant Agent and hold it, its employees and officers harmless from and against any loss, liability, claim or expense (“Loss”) arising out of or in connection with the Warrant Agent’s duties under this Warrant Agreement, including the costs and expenses of defending itself against any Loss, unless such Loss shall have been determined by a court of competent jurisdiction to be a result of the Warrant Agent’s gross negligence or willful misconduct.

 

7.6. Unless terminated earlier by the parties hereto, this Agreement shall terminate 90 days after the earlier of the Expiration Date and the date on which no Warrants remain outstanding (the “Termination Date”). On the Business Day following the Termination Date, the Agent shall deliver to the Company any entitlements, if any, held by the Warrant Agent under this Warrant Agreement. The Agent’s right to be reimbursed for fees, charges and out-of-pocket expenses as provided in this Section 7 shall survive the termination of this Warrant Agreement.

 

7.7. If any provision of this Warrant Agreement shall be held illegal, invalid, or unenforceable by any court, this Warrant Agreement shall be construed and enforced as if such provision had not been contained herein and shall be deemed an Agreement among the parties to it to the full extent permitted by applicable law.

 

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7.8. The Company represents and warrants that: (a) it is duly incorporated and validly existing under the laws of its jurisdiction of incorporation; (b) the offer and sale of the Warrants and the execution, delivery and performance of all transactions contemplated thereby (including this Warrant Agreement) have been duly authorized by all necessary corporate action and will not result in a breach of or constitute a default under the articles of association, bylaws or any similar document of the Company or any indenture, agreement or instrument to which it is a party or is bound; (c) this Warrant Agreement has been duly executed and delivered by the Company and constitutes the legal, valid, binding and enforceable obligation of the Company; (d) the Warrants will comply in all material respects with all applicable requirements of law; and (e) to the best of its knowledge, there is no litigation pending or threatened as of the date hereof in connection with the offering of the Warrants.

 

7.9. In the event of inconsistency between this Warrant Agreement and the descriptions in the Registration Statement, as they may from time to time be amended, the terms of this Warrant Agreement shall control.

 

7.10. Set forth in Exhibit B hereto is a list of the names and specimen signatures of the persons authorized to act for the Company under this Warrant Agreement (the “Authorized Representatives”). The Company shall, from time to time, certify to you the names and signatures of any other persons authorized to act for the Company under this Warrant Agreement.

 

7.11. Except as expressly set forth elsewhere in this Warrant Agreement, all notices, instructions and communications under this Agreement shall be in writing, shall be effective upon receipt and shall be addressed, if to the Company, to its address set forth beneath its signature to this Agreement, or, if to the Warrant Agent, to American Stock Transfer & Trust Company with a mailing address of 6201 15th Avenue, Brooklyn, NY 11219, or to such other address of which a party hereto has notified the other party.

 

7.12. (a) This Warrant Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to its conflicts of law principles. All actions and proceedings relating to or arising from, directly or indirectly, this Warrant Agreement may be litigated in courts located within the Borough of Manhattan in the City and State of New York. The Company hereby submits to the personal jurisdiction of such courts and consents that any service of process may be made by certified or registered mail, return receipt requested, directed to the Company at its address last specified for notices hereunder. Each of the parties hereto hereby waives the right to a trial by jury in any action or proceeding arising out of or relating to this Warrant Agreement. (b) This Warrant Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties hereto. This Warrant Agreement may not be assigned, or otherwise transferred, in whole or in part, by either party without the prior written consent of the other party, which the other party will not unreasonably withhold, condition or delay; except that (i) consent is not required for an assignment or delegation of duties by Warrant Agent to any affiliate of Warrant Agent and (ii) any reorganization, merger, consolidation, sale of assets or other form of business combination by Warrant Agent or the Company shall not be deemed to constitute an assignment of this Warrant Agreement. (c) No provision of this Warrant Agreement may be amended, modified or waived, except in a written document signed by both parties. The Company and the Warrant Agent may amend or supplement this Warrant Agreement without the consent of any Holder for the purpose of curing any ambiguity, or curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions with respect to matters or questions arising under this Agreement as the parties may deem necessary or desirable and that the parties determine, in good faith, shall not adversely affect the interest of the Holders. All other amendments and supplements shall require the vote or written consent of Holders of at least 50.1% of the then outstanding Warrants, provided that adjustments may be made to the Warrant terms and rights in accordance with Section 4 without the consent of the Holders.

 

     11

     

    

 

7.13. Payment of Taxes. The Company will from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant Agent in respect of the issuance or delivery of Warrant Shares upon the exercise of Warrants, but the Company may, pursuant to the terms of the Warrant, require the Holders to pay any transfer taxes in respect of the Warrants or such shares. The Warrant Agent may refrain from registering any transfer of Warrants or any delivery of any Warrant Shares unless or until the persons requesting the registration or issuance shall have paid to the Warrant Agent for the account of the Company the amount of such tax or charge, if any, or shall have established to the reasonable satisfaction of the Company and the Warrant Agent that such tax or charge, if any, has been paid.

 

7.14. Resignation of Warrant Agent.

 

7.14.1. Appointment of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder after giving thirty (30) days’ notice in writing to the Company and the Holders of the Warrants, or such shorter period of time agreed to by the Company. The Company may terminate the services of the Warrant Agent, or any successor Warrant Agent, after giving thirty (30) days’ notice in writing to the Warrant Agent or successor Warrant Agent and the Holders of the Warrants, or such shorter period of time as agreed. If the office of the Warrant Agent becomes vacant by resignation, termination or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of 30 days after it has been notified in writing of such resignation or incapacity by the Warrant Agent, then the Warrant Agent or any Holder may apply to any court of competent jurisdiction for the appointment of a successor Warrant Agent at the Company’s cost. Pending appointment of a successor to such Warrant Agent, either by the Company or by such a court, the duties of the Warrant Agent shall be carried out by the Company. Any successor Warrant Agent (but not including the initial Warrant Agent), whether appointed by the Company or by such court, shall be a person organized and existing under the laws of any state of the United States of America, in good standing, and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. After appointment, any successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties, and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any further act or deed, and except for executing and delivering documents as provided in the sentence that follows, the predecessor Warrant Agent shall have no further duties, obligations, responsibilities or liabilities hereunder, but shall be entitled to all rights that survive the termination of this Warrant Agreement and the resignation or removal of the Warrant Agent, including but not limited to its right to indemnity hereunder. If for any reason it becomes necessary or appropriate or at the request of the Company, the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.

 

 

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7.14.2. Notice of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof to the predecessor Warrant Agent and the transfer agent for the Common Stock not later than the effective date of any such appointment.

 

7.14.3. Merger or Consolidation of Warrant Agent. Any person into which the Warrant Agent may be merged or converted or with which it may be consolidated or any person resulting from any merger, conversion or consolidation to which the Warrant Agent shall be a party or any person succeeding to the shareowner services business of the Warrant Agent or any successor Warrant Agent shall be the successor Warrant Agent under this Warrant Agreement, without any further act or deed. For purposes of this Warrant Agreement, “person” shall mean any individual, firm, corporation, partnership, limited liability company, joint venture, association, trust or other entity, and shall include any successor (by merger or otherwise) thereof or thereto.

 

8. Miscellaneous Provisions.

 

8.1. Persons Having Rights under this Warrant Agreement. Nothing in this Warrant Agreement expressed and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the parties hereto and the Holders any right, remedy, or claim under or by reason of this Warrant Agreement or of any covenant, condition, stipulation, promise, or agreement hereof.

 

8.2. Examination of the Warrant Agreement. A copy of this Warrant Agreement shall be available at all reasonable times at the office of the Warrant Agent designated for such purpose for inspection by any Holder. Prior to such inspection, the Warrant Agent may require any such holder to provide reasonable evidence of its interest in the Warrants.

 

8.3. Counterparts. This Warrant Agreement may be executed in any number of original, facsimile or electronic counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

8.4. Effect of Headings. The Section headings herein are for convenience only and are not part of this Warrant Agreement and shall not affect the interpretation thereof.

 

8.5. Conflict. To the extent any provision of this Warrant Agreement conflicts with any provision contained in a Definitive Certificate, the provision in such Definitive Certificate shall govern and be controlling.

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9. Certain Definitions. As used herein, the following terms shall have the following meanings:

 

(a) “Business Day”means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

(b) “Standard Settlement Period”means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

 

(c) “Trading Day”means any day on which the Common Stock is traded on the Trading Market.

 

(d) “Trading Market”means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).

 

(e) “Warrant Share Delivery Date”means the date that is the earliest of: (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise, all subject to receipt of any cash payments required by the Holder.

 

[Signature Page to Follow]

 

 

     14

     

    

 

IN WITNESS WHEREOF, this Warrant Agent Agreement has been duly executed by the parties hereto as of the day and year first above written.

 

	
 

	
DIGIRAD CORPORATION

	
 

	
 

	
 

	
 

	
By:

	
/s/ Matthew G. Molchan

	
 

	
Name:

	
 Matthew G. Molchan

	
 

	
Title:

	
 President and Chief Executive Officer

 

	
 

	
AMERICAN STOCK TRANSFER & TRUST COMPANY. LLC

	
 

	
 

	
 

	
 

	
By:

	
/s/ Michael Legregin

	
 

	
Name:

	
 Michael Legregin

	
 

	
Title:

	
 Senior Vice President

 

 

     15

     

    

 

ANNEX A

 

WARRANT CERTIFICATE REQUEST NOTICE

 

To: American Stock Transfer & Trust Company, LLC, as Warrant Agent for Digirad Corporation (the “Company”)

 

The undersigned Holder of Common Stock Purchase Warrants (“Warrants”) in the form of Global Warrants issued by the Company hereby elects to receive a Definitive Certificate evidencing the Warrants held by the Holder as specified below:

 

	
 

	
1.

	
Name of Holder of Warrants in form of Global Warrants:

______________________________________________________________

	
 

	
2.

	
Name of Holder in Definitive Certificate (if different from name of Holder of Warrants in form of Global Warrants): ________________________________

	
 

	
3.

	
Number of Warrants in name of Holder in form of Global Warrants:

______________________________________________________________

	
 

	
4.

	
Number of Warrants for which Definitive Certificate shall be issued:

______________________________________________________________

	
 

	
5.

	
Number of Warrants in name of Holder in form of Global Warrants after issuance of Definitive Certificate, if any: ___________

 

	
 

	
6.

	
Definitive Certificate shall be delivered to the following address:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

 

The undersigned hereby acknowledges and agrees that, in connection with this Warrant Exchange and the issuance of the Definitive Certificate, the Holder is deemed to have surrendered the number of Warrants in form of Global Warrants in the name of the Holder equal to the number of Warrants evidenced by the Definitive Certificate.

 

[SIGNATURE OF HOLDER]

 

 

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Name of Investing Entity:

	
____________________________________________________

	
 

	
Signature of Authorized Signatory of Investing Entity:

	
____________________________________________________

	
 

	
Name of Authorized Signatory:

	
____________________________________________________

	
 

	
Title of Authorized Signatory:

	
____________________________________________________

	
 

	
Date: ____________________________________________________

 

 

     17

     

    

 

EXHIBIT A

 

[FORM OF GLOBAL WARRANT CERTIFICATE]

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE 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 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.

 

	
Certificate No.:

	
CUSIP No.: 253827 125

	
Number of Warrants:

	
Issue Date: May 28, 2020

 

(SEE ATTACHED WARRANT)

 

 

     18

     

    

 

EXHIBIT B

 

AUTHORIZED REPRESENTATIVES

 

 

	Name

	 

	Title

	 

	Signature

	
Matthew Molchan

	
 

	
Chief Executive Officer

	
 

	
 

	
David Noble

	
 

	
Chief Financial Officer and Chief Operating Officer

	
 

	
 

     19EXHIBIT 10.1

 

NI HOLDINGS, INC.

2020 STOCK AND INCENTIVE PLAN

Section 1.       Purpose

The purpose of the Plan is to promote the interests
of the Company and its shareholders by aiding the Company in attracting and retaining employees, officers, consultants, independent
contractors, advisors and non-employee Directors capable of assuring the future success of the Company, to offer such persons incentives
to put forth maximum efforts for the success of the Company’s business and to afford such persons an opportunity to acquire
an ownership interest in the Company, thereby aligning the interests of such persons with the Company’s shareholders.

Section 2.       Definitions

As used in the Plan, the following terms shall
have the meanings set forth below:

(a)       “Affiliate”
shall mean any entity that, directly or indirectly through one or more intermediaries, is controlled by the Company.

(b)       “Award”
shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Dividend Equivalent or Other Stock-Based
Award granted under the Plan.

(c)       “Award
Agreement” shall mean any written agreement, contract or other instrument or document evidencing an Award granted under
the Plan (including a document in an electronic medium) executed in accordance with the requirements of Section 9(b).

(d)       “Board”
shall mean the Board of Directors of the Company.

(e)       “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.

(f)       “Committee”
shall mean the Compensation Committee of the Board or such other committee designated by the Board to administer the Plan. The
Committee shall be comprised of not less than such number of Directors as shall be required to permit Awards granted under the
Plan to qualify under Rule 16b-3.

(g)       “Company”
shall mean NI Holdings, Inc. and any successor corporation.

(h)       “Director”
shall mean a member of the Board.

(i)       “Dividend
Equivalent” shall mean any right granted under Section 6(e) of the Plan.

(j)       “Eligible
Person” shall mean any employee, officer, non-employee Director, consultant, independent contractor, or advisor providing
services to the Company or any Affiliate, or any such person to whom an offer of employment or engagement with the Company or any
Affiliate is extended. An Eligible Person must be a natural person.

(k)       “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

     

     

    

(l)       “Fair
Market Value” with respect to one Share as of any date shall mean (a) if the Share is listed on any established
stock exchange, the price of one Share at the close of the regular trading session of such market or exchange on such date, as
reported by The Wall Street Journal or a comparable reporting service, or, if no sale of Shares shall have occurred on such date,
on the next preceding date on which there was a sale of Shares; (b) if the Shares are not so listed on any established stock
exchange, the average of the closing “bid” and “asked” prices quoted by the OTC Bulletin Board, the National
Quotation Bureau, or any comparable reporting service on such date or, if there are no quoted “bid” and “asked”
prices on such date, on the next preceding date for which there are such quotes for a Share; or (c) if the Shares are not
publicly traded as of such date, the per share value of a Share, as determined by the Board, or any duly authorized Committee of
the Board, in its sole discretion, by applying principles of valuation with respect thereto.

(m)       “Incentive
Stock Option” shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements
of Section 422 of the Code or any successor provision.

(n)       “Non-Qualified
Stock Option” shall mean an option granted under Section 6(a) of the Plan that is not intended to be an Incentive
Stock Option.

(o)       “Option”
shall mean an Incentive Stock Option or a Non-Qualified Stock Option to purchase shares of the Company.

(p)       “Other
Stock-Based Award” shall mean any right granted under Section 6(e) of the Plan.

(q)       “Participant”
shall mean an Eligible Person designated to be granted an Award under the Plan.

(r)       “Plan”
shall mean the NI Holdings, Inc. 2020 Stock and Incentive Plan, as amended from time to time.

(s)       “Prior
Plan” shall mean the NI Holdings, Inc. 2017 Stock and Incentive Plan.

(t)       “Restricted
Stock” shall mean any Share granted under Section 6(c) of the Plan.

(u)       “Restricted
Stock Unit” shall mean any unit granted under Section 6(c) of the Plan evidencing the right to receive a Share (or
a cash payment equal to the Fair Market Value of a Share) at some future date.

(v)       “Rule
16b-3” shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, or any successor rule or regulation.

(w)       “Section
409A” shall mean Section 409A of the Code, or any successor provision, and applicable Treasury Regulations and other
applicable guidance thereunder.

(x)       “Securities
Act” shall mean the Securities Act of 1933, as amended.

     

     

    

(y)       “Share”
or “Shares” shall mean common shares with $0.01 par value in the capital of the Company (or such other securities
or property as may become subject to Awards pursuant to an adjustment made under Section 4(c) of the Plan).

(z)       “Specified
Employee” shall mean a specified employee as defined in Section 409A(a)(2)(B) of the Code or applicable proposed
or final regulations under Section 409A, determined in accordance with procedures established by the Company and applied uniformly
with respect to all plans maintained by the Company that are subject to Section 409A.

(aa)       “Stock Appreciation
Right” shall mean any right granted under Section 6(b) of the Plan.

Section 3.       Administration

(a)       Power
and Authority of the Committee. The Plan shall be administered by the Committee. Subject to the express provisions of the Plan
and to applicable law, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine
the type or types of Awards to be granted to each Participant under the Plan; (iii) determine the number of Shares to be covered
by (or the method by which payments or other rights are to be calculated in connection with) each Award; (iv) determine the
terms and conditions of any Award or Award Agreement, including any terms relating to the forfeiture of any Award and the forfeiture,
recapture or disgorgement of any cash, Shares or other amounts payable with respect to any Award; (v) amend the terms and
conditions of any Award or Award Agreement, subject to the limitations under Sections 6 and 7; (vi) accelerate the exercisability
of any Award or the lapse of any restrictions relating to any Award, subject to the limitations of Sections 6 and 7; (vii) determine
whether, to what extent and under what circumstances Awards may be exercised or settled in cash, Shares or a combination thereof,
or canceled, forfeited or suspended; (viii) determine whether, to what extent and under what circumstances amounts payable
with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or the
Committee, subject to the requirements of Section 409A; (ix) interpret and administer the Plan and any instrument or
agreement, including an Award Agreement, relating to the Plan; (x) establish, amend, suspend or waive such rules and regulations
and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (xi) make any other determination
and take any other action that the Committee deems necessary or desirable for the administration of the Plan; and (xii) adopt
such modifications, rules, procedures and sub-plans as may be necessary or desirable to comply with provisions of the laws of non-U.S.
jurisdictions in which the Company or an Affiliate may operate, including, without limitation, establishing any special rules for
Affiliates, Eligible Persons or Participants located in any particular country, in order to meet the objectives of the Plan and
to ensure the viability of the intended benefits of Awards granted to Participants located in such non-U.S. jurisdictions. Unless
otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect
to the Plan or any Award or Award Agreement shall be within the sole discretion of the Committee, may be made at any time and shall
be final, conclusive and binding upon any Participant, any holder or beneficiary of any Award or Award Agreement, and any employee
of the Company or any Affiliate.

     

     

    

(b)       Delegation.
The Committee may delegate to one or more officers or Directors of the Company, subject to such terms, conditions and limitations
as the Committee may establish in its sole discretion, the authority to grant Awards; provided, however, that the Committee
shall not delegate such authority (i) with regard to grants of Awards to be made to officers of the Company or any Affiliate
who are subject to Section 16 of the Exchange Act or (ii) in such a manner as would cause the Plan not to comply with
the requirements of applicable exchange rules or applicable law.

(c)       Power
and Authority of the Board. Notwithstanding anything to the contrary contained herein, (i) the Board may, at any time
and from time to time, without any further action of the Committee, exercise the powers and duties of the Committee under the Plan,
unless the exercise of such powers and duties by the Board would cause the Plan not to comply with the requirements of Rule 16b-3;
and (ii) only the Committee (or another committee of the Board comprised of directors who qualify as independent directors
within the meaning of the independence rules of any applicable securities exchange where the Shares are then listed) may grant
Awards to Directors who are not also employees of the Company or an Affiliate.

(d)       Indemnification.
To the full extent permitted by law, (i) no member of the Board, the Committee or any person to whom the Committee delegates
authority under the Plan shall be liable for any action or determination taken or made in good faith with respect to the Plan or
any Award made under the Plan, and (ii) the members of the Board, the Committee and each person to whom the Committee delegates
authority under the Plan shall be entitled to indemnification by the Company with regard to such actions and determinations. The
provisions of this paragraph shall be in addition to such other rights of indemnification as a member of the Board, the Committee
or any other person may have by virtue of such person’s position with the Company.

Section 4.       Shares Available for
Awards

(a)       Shares
Available.

		(i)	Subject to adjustment as provided in Section 4(c) of the Plan, the aggregate number of Shares that may be issued under
all Awards under the Plan shall equal 1,000,000 (the authorized net increase of Shares in connection with the adoption of the Plan),
plus any Shares subject to any outstanding award under the Prior Plan that, after May 27, 2020, are not purchased or are forfeited
or reacquired by the Company, or otherwise not delivered to the Participant due to termination or cancellation of such award, subject
to the share counting provisions of Section 4(b) below.

		(ii)	On and after stockholder approval of this Plan, no awards shall be granted under the Prior Plan, but all outstanding awards
previously granted under the Prior Plan shall remain outstanding and subject to the terms of the Prior Plan.

The aggregate number of Shares that may be issued
under all Awards under the Plan shall be reduced by Shares subject to Awards issued under the Plan in accordance with the Share
counting rules described in Section 4(b) below. When determining the Shares added to and subtracted from the aggregate reserve
above, the number of Shares added or subtracted shall be also determined in accordance with the Share counting rules described
in Section 4(b) below.

     

     

    

(b)       Counting
Shares. Except as set forth in this Section 4(b) below, if an Award entitles the holder thereof to receive or purchase
Shares, the number of Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such
Award against the aggregate number of Shares available for granting Awards under the Plan.

		(i)	Shares Added Back to Reserve. Subject to the limitations in Section 4(b)(ii) below, if any Shares covered by an
Award or to which an Award relates are not purchased or are forfeited or are reacquired by the Company, or if an Award otherwise
terminates or is cancelled without delivery of any Shares, then the number of Shares counted against the aggregate number of Shares
available under the Plan with respect to such Award, to the extent of any such forfeiture, reacquisition by the Company, termination
or cancellation, shall again be available for granting Awards under the Plan.

		(ii)	Shares Not Added Back to Reserve. Notwithstanding anything to the contrary in Section 4(b)(i) above, the following
Shares will not again become available for issuance under the Plan: (A) any Shares which would have been issued upon any exercise
of an Option but for the fact that the exercise price was paid by a “net exercise” pursuant to Section 6(a)(iii)(B)
or any Shares tendered in payment of the exercise price of an Option; (B) any Shares withheld by the Company or Shares tendered
to satisfy any tax withholding obligation with respect to an Award; (C) Shares covered by a stock settled Stock Appreciation
Right issued under the Plan that are not issued in connection with settlement in Shares upon exercise; or (D) Shares that
are repurchased by the Company using Option exercise proceeds.

		(iii)	Cash-Only Awards. Awards that do not entitle the holder thereof to receive or purchase Shares shall not be counted against
the aggregate number of Shares available for Awards under the Plan.

		(iv)	Substitute Awards Relating to Acquired Entities. Shares issued under Awards granted in substitution for awards previously
granted by an entity that is acquired by or merged with the Company or an Affiliate shall not be counted against the aggregate
number of Shares available for Awards under the Plan.

(c)       Adjustments.
In the event that any dividend (other than a regular cash dividend) or other distribution (whether in the form of cash, Shares,
other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the Shares
such that an adjustment is necessary in order to prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the
number and type of Shares (or other securities or other property) that thereafter may be made the subject of Awards, (ii) the
number and type of Shares (or other securities or other property) subject to outstanding Awards, (iii) the purchase price
or exercise price with respect to any Award and (iv) the limitations contained in Section 4(d)(i) below; provided,
however, that the number of Shares covered by any Award or to which such Award relates shall always be a whole number. Such
adjustment shall be made by the Committee or the Board, whose determination in that respect shall be final, binding and conclusive.

     

     

    

(d)       Award
Limitations Under the Plan.

		(i)	Annual Limitations for Awards Granted to Eligible Persons Other Than Non-Employee Directors. No Eligible Person who
is an employee, officer, consultant, independent contractor or advisor may be granted any Award or Awards for more than 100,000
Shares (subject to adjustment as provided for in Section 4(c) of the Plan), in the aggregate in any calendar year.

		(ii)	Limitation for Awards Granted to Non-Employee Directors. No Director who is not also an employee of the Company or an
Affiliate may be granted any Award or Awards denominated in Shares that exceed in the aggregate $150,000 (such value computed as
of the date of grant in accordance with applicable financial accounting rules) in any calendar year. The foregoing limit shall
not apply to any Award made pursuant to any election by the Director to receive an Award in lieu of all or a portion of annual
and committee retainers and annual meeting fees.

Section 5.       Eligibility

Any Eligible Person shall be eligible
to be designated as a Participant. In determining which Eligible Persons shall receive an Award and the terms of any Award, the
Committee may take into account the nature of the services rendered by the respective Eligible Persons, their present and potential
contributions to the success of the Company or such other factors as the Committee, in its discretion, shall deem relevant. Notwithstanding
the foregoing, an Incentive Stock Option may only be granted to full-time or part-time employees (which term as used herein includes,
without limitation, officers and Directors who are also employees), and an Incentive Stock Option shall not be granted to an employee
of an Affiliate unless such Affiliate is also a “subsidiary corporation” of the Company within the meaning of Section 424(f)
of the Code or any successor provision.

Section 6.       Awards

(a)       Options.
The Committee is hereby authorized to grant Options to Eligible Persons with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine:

		(i)	Exercise Price. The purchase price per Share purchasable under an Option shall be determined by the Committee and shall
not be less than one hundred percent (100%) of the Fair Market Value of a Share on the date of grant of such Option; provided,
however, that the Committee may designate a purchase price below Fair Market Value on the date of grant if the Option is granted
in substitution for a stock option previously granted by an entity that is acquired by or merged with the Company or an Affiliate.

     

     

    
		(ii)	Option Term. The term of each Option shall be fixed by the Committee at the date of grant but shall not be longer than
10 years from the date of grant. Notwithstanding the foregoing, the Committee may provide in the terms of an Option (either
at grant or by subsequent modification) that, to the extent consistent with Section 409A, in the event that on the last business
day of the term of an Option (other than an Incentive Stock Option) (i) the exercise of the Option is prohibited by applicable
law or (ii) Shares may not be purchased or sold by certain employees or directors of the Company due to the “black-out
period” of a Company policy or a “lock-up” agreement undertaken in connection with an issuance of securities
by the Company, the term of the Option shall be extended for a period of not more than thirty (30) days following the end
of the legal prohibition, black-out period or lock-up agreement.

		(iii)	Time and Method of Exercise. The Committee shall determine the time or times at which an Option may be exercised within
the Option term, either in whole or in part, and the method of exercise, except that any exercise price tendered shall be in either
cash, Shares having a Fair Market Value on the exercise date equal to the applicable exercise price or a combination thereof, as
determined by the Committee.

		(A)	Promissory Notes. For avoidance of doubt, the Committee may not accept a promissory note as consideration.

		(B)	Net Exercises. The terms of any Option may be written to permit the Option to be exercised by delivering to the Participant
a number of Shares having an aggregate Fair Market Value (determined as of the date of exercise) equal to the excess, if any, of
the Fair Market Value of the Shares underlying the Option being exercised, on the date of exercise, over the exercise price of
the Option for such Shares.

(iv)       Incentive
Stock Options. Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to the
grant of stock options which are intended to qualify as Incentive Stock Options:

		(A)	The aggregate number of Shares that may be issued under all Incentive Stock Options under the Plan shall be 1,000,000 Shares.

		(B)	The Committee will not grant Incentive Stock Options in which the aggregate Fair Market Value (determined as of the time the
Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any Participant
during any calendar year (under this Plan and all other plans of the Company and its Affiliates) shall exceed $100,000.

		(C)	All Incentive Stock Options must be granted within ten (10) years from the earlier of the date on which this Plan was
adopted by the Board or the date this Plan was approved by the shareholders of the Company.

		(D)	Unless sooner exercised, all Incentive Stock Options shall expire and no longer be exercisable no later than ten (10)
years after the date of grant; provided, however, that in the case of a grant of an Incentive Stock Option to a Participant
who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the Company or of its Affiliates, such Incentive Stock
Option shall expire and no longer be exercisable no later than five (5) years from the date of grant.

		(E)	The purchase price per Share for an Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market
Value of a Share on the date of grant of the Incentive Stock Option; provided, however, that, in the case of the grant of
an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422
of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company
or of its Affiliates, the purchase price per Share purchasable under an Incentive Stock Option shall be not less than one hundred
ten percent (110%) of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option.

		(F)	Any Incentive Stock Option authorized under the Plan shall contain such other provisions as the Committee shall deem advisable,
but shall in all events be consistent with and contain all provisions required in order to qualify the Option as an Incentive Stock
Option.

(b)       Stock
Appreciation Rights. The Committee is hereby authorized to grant Stock Appreciation Rights to Eligible Persons subject to the
terms of the Plan and any applicable Award Agreement. A Stock Appreciation Right granted under the Plan shall confer on the holder
thereof a right to receive upon exercise thereof the excess of (i) the Fair Market Value of one Share on the date of exercise
over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, which price shall not be less than
one hundred percent (100%) of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right; provided,
however, that the Committee may designate a grant price below Fair Market Value on the date of grant if the Stock Appreciation
Right is granted in substitution for a stock appreciation right previously granted by an entity that is acquired by or merged with
the Company or an Affiliate. Subject to the terms of the Plan and any applicable Award Agreement, the grant price, term, methods
of exercise, dates of exercise, methods of settlement and any other terms and conditions of any Stock Appreciation Right shall
be as determined by the Committee (except that the term of each Stock Appreciation Right shall be subject to the term limitation
in Section 6(a)(ii) applicable to Options). The Committee may impose such conditions or restrictions on the exercise of any
Stock Appreciation Right as it may deem appropriate.

     

     

    

(c)       Restricted
Stock and Restricted Stock Units. The Committee is hereby authorized to grant an Award of Restricted Stock and Restricted Stock
Units to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent
with the provisions of the Plan as the Committee shall determine:

		(i)	Restrictions. Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee
may impose when granting Awards (including, without limitation, any limitation on the right to vote a Share of Restricted Stock
or the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately
or in combination at such time or times, in such installments or otherwise as the Committee may deem appropriate. (Notwithstanding
the foregoing, rights to dividend or Dividend Equivalent payments shall be subject to the limitations described in Section 6(d)).
For purposes of clarity and without limiting the Committee’s general authority under Section 3(a), vesting of such Awards
may, at the Committee’s discretion, be conditioned upon the Participant’s completion of a specified period of service
with the Company or an Affiliate, or upon the achievement of one or more performance goals established by the Committee, or upon
any combination of service-based and performance-based conditions (subject to the minimum requirements in Section 6).

		(ii)	Issuance and Delivery of Shares. Any Restricted Stock granted under the Plan shall be issued at the time such Awards
are granted and may be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance
of a stock certificate or certificates, which certificate or certificates shall be held by the Company or held in nominee name
by the stock transfer agent or brokerage service selected by the Company to provide such services for the Plan. Shares representing
Restricted Stock that are no longer subject to restrictions shall be delivered (including by updating the book-entry registration)
to the Participant promptly after the applicable restrictions lapse or are waived. In the case of Restricted Stock Units, no Shares
shall be issued at the time such Awards are granted. Upon the lapse or waiver of restrictions and the restricted period relating
to Restricted Stock Units evidencing the right to receive Shares, such Shares shall be issued and delivered to the holder of the
Restricted Stock Units.

(d)       Dividends
and Dividend Equivalents. The Committee is hereby authorized to grant Dividend Equivalents to Eligible Persons under which
the Participant shall be entitled to receive payments (in cash, Shares, other securities, other Awards or other property as determined
in the discretion of the Committee) equivalent to the amount of cash dividends paid by the Company to holders of Shares with respect
to a number of Shares determined by the Committee. Subject to the terms of the Plan and any applicable Award Agreement, such Dividend
Equivalents may have such terms and conditions as the Committee shall determine. Notwithstanding the foregoing, (i) the Committee
may not grant Dividend Equivalents to Eligible Persons in connection with grants of Options, Stock Appreciation Rights or other
Awards the value of which is based solely on an increase in the value of the Shares after the grant of such Award, and (ii) dividend
and Dividend Equivalent amounts with respect to any Share underlying any other Award may be accrued but not paid to a Participant
until all conditions or restrictions relating to such Share have been satisfied, waived or lapsed.

(e)       Other
Stock-Based Awards. The Committee is hereby authorized to grant to Eligible Persons such other Awards that are denominated
or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation,
securities convertible into Shares), as are deemed by the Committee to be consistent with the purpose of the Plan. The Committee
shall determine the terms and conditions of such Awards, subject to the terms of the Plan and any applicable Award Agreement. No
Award issued under this Section 6(f) shall contain a purchase right or an option-like exercise feature.

(f)       General.

		(i)	Consideration for Awards. Awards may be granted for no cash consideration or for any cash or other consideration as
may be determined by the Committee or required by applicable law.

		(ii)	Awards May Be Granted Separately or Together. Awards may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with or in substitution for any other Award or any award granted under any other plan of the Company
or any Affiliate. Awards granted in addition to or in tandem with other Awards or in addition to or in tandem with awards granted
under any other plan of the Company or any Affiliate may be granted either at the same time as or at a different time from the
grant of such other Awards or awards.

		(iii)	Limits on Transfer of Awards. No Award (other than fully vested and unrestricted Shares issued pursuant to any Award)
and no right under any such Award shall be transferable by a Participant other than by will or by the laws of descent and distribution,
and no Award (other than fully vested and unrestricted Shares issued pursuant to any Award) or right under any such Award may be
pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall
be void and unenforceable against the Company or any Affiliate. Notwithstanding the foregoing, the Committee may permit the transfer
of an Award to family members if such transfer is for no value and in accordance with the rules of Form S-8. The Committee
may also establish procedures as it deems appropriate for a Participant to designate a person or persons, as beneficiary or beneficiaries,
to exercise the rights of the Participant and receive any property distributable with respect to any Award in the event of the
Participant’s death.

     

     

    
		(iv)	Restrictions; Securities Exchange Listing. All Shares or other securities delivered under the Plan pursuant to any Award
or the exercise thereof shall be subject to such restrictions as the Committee may deem advisable under the Plan, applicable federal
or state securities laws and regulatory requirements, and the Committee may cause appropriate entries to be made with respect to,
or legends to be placed on the certificates for, such Shares or other securities to reflect such restrictions. The Company shall
not be required to deliver any Shares or other securities covered by an Award unless and until the requirements of any federal
or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by
the Company to be applicable are satisfied.

		(v)	Prohibition on Option and Stock Appreciation Right Repricing. Except as provided in Section 4(c) hereof, the Committee
may not, without prior approval of the Company’s shareholders, seek to effect any re-pricing of any previously granted, “underwater”
Option or Stock Appreciation Right by: (i) amending or modifying the terms of the Option or Stock Appreciation Right to lower
the exercise price; (ii) canceling the underwater Option or Stock Appreciation Right and granting either (A) replacement
Options or Stock Appreciation Rights having a lower exercise price; or (B) Restricted Stock, Restricted Stock Units or Other
Stock-Based Award in exchange; or (iii) cancelling or repurchasing the underwater Option or Stock Appreciation Right for cash
or other securities. An Option or Stock Appreciation Right will be deemed to be “underwater” at any time when the Fair
Market Value of the Shares covered by such Option or Stock Appreciation Right is less than the exercise price.

		(vi)	Section 409A Provisions. Notwithstanding anything in the Plan or any Award Agreement to the contrary, to the extent
that any amount or benefit that constitutes “deferred compensation” to a Participant under Section 409A and applicable
guidance thereunder is otherwise payable or distributable to a Participant under the Plan or any Award Agreement solely by reason
of the occurrence of a change in control or due to the Participant’s disability or “separation from service”
(as such term is defined under Section 409A), such amount or benefit will not be payable or distributable to the Participant
by reason of such circumstance unless the Committee determines in good faith that (i) the circumstances giving rise to such
change in control event, disability or separation from service meet the definition of a change in control event, disability, or
separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable proposed or final regulations,
or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by
reason of the short-term deferral exemption or otherwise. Any payment or distribution that otherwise would be made to a Participant
who is a Specified Employee (as determined by the Committee in good faith) on account of separation from service may not be made
before the date which is six months after the date of the Specified Employee’s separation from service (or if earlier, upon
the Specified Employee’s death) unless the payment or distribution is exempt from the application of Section 409A by
reason of the short-term deferral exemption or otherwise.

     

     

    
		(vii)	Minimum Vesting. Except as provided below, in the case of any Award granted to an Eligible Person other than a non-employee
Director, no Award shall be granted with terms providing for any right of exercise or lapse of any vesting obligations earlier
than a date that is at least one year following the date of grant (or, in the case of vesting based upon performance based objectives,
exercise and vesting restrictions cannot lapse earlier than the one-year anniversary measured from the commencement of the period
over which performance is evaluated). In the case of any Award granted to a non-employee Director, no Award shall be granted with
terms providing for any right of exercise or lapse of any vesting obligations earlier than the date of the Company’s next
annual shareholder meeting. Notwithstanding the foregoing, the following Awards that do not comply with the foregoing minimum exercise
and vesting requirements may be issued:

		(A)	substitute Awards granted in connection with awards that are assumed, converted or substituted pursuant to a merger, acquisition
or similar transaction entered into by the Company or any of its subsidiaries;

 

		(B)	shares delivered in lieu of fully vested cash Awards or any cash incentive compensation earned by a Participant, provided that
the performance period for such incentive compensation was at least one fiscal year; and

 

		(C)	any additional Awards the Committee may grant, up to a maximum of five percent (5%) of the aggregate number of Shares available
for issuance under this Plan. For purposes of counting Shares against the five percent (5%) limitation, the Share counting rules
under Section 4 of the Plan apply.

Nothing in this Section 6 shall limit the authority
of the Committee to provide for the acceleration of the exercisability of any Award or the lapse of any restrictions relating to
any Award except where expressly limited in Section 6(f)(viii).

     

     

    

		(viii)	Acceleration of Vesting or Exercisability. No Award Agreement shall accelerate the exercisability of any Award or the
lapse of restrictions relating to any Award in connection with a change-in-control event unless such acceleration occurs upon the
consummation of (or effective immediately prior to the consummation of, provided that the consummation subsequently occurs) such
change-in-control event.

Section 7.       Amendment and Termination;
Corrections

(a)       Amendments
to the Plan and Awards. The Board may from time to time amend, suspend or terminate this Plan, and the Committee may amend
the terms of any previously granted Award, provided that no amendment to the terms of any previously granted Award may (except
as expressly provided in the Plan) materially and adversely alter or impair the terms or conditions of the Award previously granted
to a Participant under this Plan without the written consent of the Participant or holder thereof. Any amendment to this Plan,
or to the terms of any Award previously granted, is subject to compliance with all applicable laws, rules, regulations and policies
of any applicable governmental entity or securities exchange, including receipt of any required approval from the governmental
entity or stock exchange. For greater certainty and without limiting the foregoing, the Board may amend, suspend, terminate or
discontinue the Plan, and the Committee may amend or alter any previously granted Award, as applicable, without obtaining the approval
of shareholders of the Company in order to:

		(i)	amend the eligibility for, and limitations or conditions imposed upon, participation in the Plan;

		(ii)	subject to the limitations in Section 6, amend any terms relating to the granting or exercise of Awards, including but
not limited to terms relating to the amount and payment of the exercise price, or the vesting, expiry, assignment or adjustment
of Awards, or otherwise waive any conditions of or rights of the Company under any outstanding Award, prospectively or retroactively;

		(iii)	make changes that are necessary or desirable to comply with applicable laws, rules, regulations and policies of any applicable
governmental entity or stock exchange (including amendments to Awards necessary or desirable to maximize any available tax deduction
or to avoid any adverse tax results, and no action taken to comply with such laws, rules, regulations and policies shall be deemed
to impair or otherwise adversely alter or impair the rights of any holder of an Award or beneficiary thereof); or

		(iv)	amend any terms relating to the administration of the Plan, including the terms of any administrative guidelines or other rules
related to the Plan.

For greater certainty and except as provided
in Section 4(c), prior approval of the shareholders of the Company shall be required for any amendment to the Plan or an Award
that would:

     

     

    

		(I)	require shareholder approval under the rules or regulations of the Securities and Exchange Commission, the NASDAQ or any other
securities exchange that are applicable to the Company;

		(II)	increase the number of shares authorized under the Plan as specified in Section 4(a) of the Plan;

		(III)	permit repricing of Options or Stock Appreciation Rights, which is currently prohibited by Section 6 of the Plan;

		(IV)	permit the award of Options or Stock Appreciation Rights at a price less than one hundred percent (100%) of the Fair Market
Value of a Share on the date of grant of such Option or Stock Appreciation Right, contrary to the provisions of Section 6(a)
and Section 6(b) of the Plan;

		(V)	increase the maximum term permitted for Options and Stock Appreciation Rights as specified in Section 6(a) and Section 6(b);
or

		(VI)	increase the number of shares subject to the annual limitations contained in Section 4(d) of the Plan.

(b)       Corporate
Transactions. In the event of any reorganization, merger, consolidation, split-up, spin-off, combination, plan of arrangement,
take-over bid or tender offer, repurchase or exchange of Shares or other securities of the Company or any other similar corporate
transaction or event involving the Company (or the Company shall enter into a written agreement to undergo such a transaction or
event), the Committee or the Board may, in its sole discretion but subject to the limitations in Section 6 (e.g., limitations
on re-pricing and waiver of vesting restrictions), provide for any of the following to be effective upon the consummation of the
event (or effective immediately prior to the consummation of the event, provided that the consummation of the event subsequently
occurs), and no action taken under this Section 7(b) shall be deemed to impair or otherwise adversely alter or impair the
rights of any holder of an Award or beneficiary thereof:

		(i)	either (A) termination of any Award, whether or not vested, in exchange for an amount of cash and/or other property, if
any, equal to the amount that would have been attained upon the exercise of the vested portion of the Award or realization of the
Participant’s vested rights (and, for the avoidance of doubt, if, as of the date of the occurrence of the transaction or
event described in this Section 7(b)(i)(A), the Committee or the Board determines in good faith that no amount would have
been attained upon the exercise of the Award or realization of the Participant’s rights, then the Award may be terminated
by the Company without any payment) or (B) the replacement of the Award with other rights or property selected by the Committee
or the Board, in its sole discretion;

		(ii)	that the Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted
for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kind of shares and prices;

     

     

    
		(iii)	that the Award shall be exercisable or payable or fully vested with respect to all Shares covered thereby, notwithstanding
anything to the contrary in the applicable Award Agreement; or

		(iv)	that the Award cannot vest, be exercised or become payable after a date certain in the future, which may be the effective date
of the event.

(c)       Correction
of Defects, Omissions and Inconsistencies. The Committee may, without prior approval of the shareholders of the Company, correct
any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award or Award Agreement in the manner and
to the extent it shall deem desirable to implement or maintain the effectiveness of the Plan.

Section 8.       Income Tax Withholding

In order to comply with all applicable
federal, state, local or foreign income tax laws or regulations, the Company may take such action as it deems appropriate to ensure
that all applicable federal, state, local or foreign payroll, withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant, are withheld or collected from such Participant. Without limiting the foregoing, for avoidance
of doubt, the Committee, in its discretion and subject to such additional terms and conditions as it may adopt, may permit the
Participant to satisfy such tax obligation by (a) electing to have the Company withhold a portion of the Shares otherwise
to be delivered upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal
to the amount of such taxes (subject to any limitations required by ASC Topic 718 to avoid adverse accounting treatment);
(b) delivering to the Company Shares other than Shares issuable upon exercise or receipt of (or the lapse of restrictions
relating to) such Award with a Fair Market Value equal to the amount of such taxes or (c) by any other means set forth in
the applicable Award Agreement.

Section 9.       General Provisions

(a)       No
Rights to Awards. No Eligible Person, Participant or other person shall have any claim to be granted any Award under the Plan,
and there is no obligation for uniformity of treatment of Eligible Persons, Participants or holders or beneficiaries of Awards
under the Plan. The terms and conditions of Awards need not be the same with respect to any Participant or with respect to different
Participants.

(b)       Award
Agreements. No Participant shall have rights under an Award granted to such Participant unless and until an Award Agreement
shall have been signed by the Participant (if requested by the Company), or until such Award Agreement is delivered and accepted
through an electronic medium in accordance with procedures established by the Company. An Award Agreement need not be signed by
a representative of the Company unless required by the Committee. Each Award Agreement shall be subject to the applicable terms
and conditions of the Plan and any other terms and conditions (not inconsistent with the Plan) determined by the Committee.

     

     

    

(c)       Plan
Provisions Control. In the event that any provision of an Award Agreement conflicts with or is inconsistent in any respect
with the terms of the Plan as set forth herein or subsequently amended, the terms of the Plan shall control.

(d)       No
Rights of Shareholders. Except with respect to Shares issued under Awards (and subject to such conditions as the Committee
may impose on such Awards), neither a Participant nor the Participant’s legal representative shall be, or have any of the
rights and privileges of, a shareholder of the Company with respect to any Shares issuable upon the exercise or payment of any
Award, in whole or in part, unless and until such Shares have been issued.

(e)       No
Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting
or continuing in effect other or additional compensation plans or arrangements, and such plans or arrangements may be either generally
applicable or applicable only in specific cases.

(f)       No
Right to Employment or Directorship. The grant of an Award shall not be construed as giving a Participant the right to be retained
as an employee of the Company or any Affiliate, or the right to be retained as a Director, nor will it affect in any way the right
of the Company or an Affiliate to terminate a Participant’s employment at any time, with or without cause, or remove a Director
in accordance with applicable law. In addition, the Company or an Affiliate may at any time dismiss a Participant from employment,
or remove a Director who is a Participant, free from any liability or any claim under the Plan or any Award, unless otherwise expressly
provided in the Plan or in any Award Agreement. Nothing in this Plan shall confer on any person any legal or equitable right against
the Company or any Affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company
or an Affiliate. Under no circumstances shall any person ceasing to be an employee or Director of the Company or any Affiliate
be entitled to any compensation for any loss of any right or benefit under the Plan which such employee or Director might otherwise
have enjoyed but for termination of employment or directorship, whether such compensation is claimed by way of damages for wrongful
or unfair dismissal, breach of contract or otherwise. By participating in the Plan, each Participant shall be deemed to have accepted
all the conditions of the Plan and the terms and conditions of any rules and regulations adopted by the Committee and shall be
fully bound thereby.

(g)       Governing
Law. The internal law, and not the law of conflicts, of the State of North Dakota shall govern all questions concerning the
validity, construction and effect of the Plan or any Award, and any rules and regulations relating to the Plan or any Award.

(h)       Severability.
If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of
the Committee, materially altering the purpose or intent of the Plan or the Award, such provision shall be stricken as to such
jurisdiction or Award, and the remainder of the Plan or any such Award shall remain in full force and effect.

     

     

    

(i)       No
Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other person. To the extent that
any person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any Affiliate.

(j)       Other
Benefits. No compensation or benefit awarded to or realized by any Participant under the Plan shall be included for the purpose
of computing such Participant’s compensation or benefits under any pension, retirement, savings, profit sharing, group insurance,
disability, severance, termination pay, welfare or other benefit plan of the Company, unless required by law or otherwise provided
by such other plan.

(k)       No
Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash shall be paid in lieu of any fractional Share or whether such fractional Share or any rights thereto shall
be canceled, terminated or otherwise eliminated.

(l)       Headings.
Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

Section 10.       Clawback or Recoupment

All Awards under this Plan shall be subject
to recovery or other penalties pursuant to (i) any Company clawback policy, as may be adopted or amended from time to time,
or (ii) any applicable law, rule or regulation or applicable stock exchange rule, including, without limitation, Section 304
of the Sarbanes-Oxley Act of 2002, Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any applicable
stock exchange listing rule adopted pursuant thereto.

Section 11.       Effective Date of the Plan

The Plan was adopted by the Board at
the NI Holdings, Inc. Board meeting on February 25, 2020. The Plan shall be subject to approval by the shareholders of the Company
at the annual meeting of shareholders of the Company to be held on May 27, 2020, and the Plan shall be effective as of the
date of such shareholder approval. On and after shareholder approval of the Plan, no awards shall be granted under the Prior Plan,
but all outstanding awards previously granted under the Prior Plan shall remain outstanding and subject to the terms of the Prior
Plan.

Section 12.       Term of the Plan

No Award shall be granted under the Plan,
and the Plan shall terminate on February 25, 2030 or any earlier date of discontinuation or termination established pursuant to
Section 7(a) of the Plan. Unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore
granted may extend beyond such dates, and the authority of the Committee provided for hereunder with respect to the Plan and any
Awards, and the authority of the Board to amend the Plan, shall extend beyond the termination of the Plan.

 

     

     

    

The foregoing is hereby acknowledged as being the NI Holdings, Inc.
2020 Stock and Incentive Plan as adopted by the Board of Directors on February 25, 2020 and by the shareholders on May 27, 2020.

 

	 	NI Holdings, Inc.
	 	 
	 	 
	 	By:	/s/ Michael J. Alexander
	 	 	Michael J. Alexander
	 	 	President and Chief Executive Officer

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