Document:

Exhibit 10.5

 

ASSET REPRESENTATIONS REVIEW AGREEMENT

 

among

 

HONDA AUTO RECEIVABLES 2019-3 OWNER TRUST,

as Issuer,

 

AMERICAN HONDA FINANCE CORPORATION,

as Sponsor and Servicer

 

and

 

CLAYTON FIXED INCOME SERVICES LLC,

 

as Asset Representations Reviewer

 

Dated as of August 27, 2019

 

     

     

    

 

Table
of Contents

 

	 	 	Page
	 	 	 
	ARTICLE I	USAGE AND DEFINITIONS	1
	Section 1.1.	Usage and Definitions	1
	Section 1.2.	Additional Definitions	2
	ARTICLE II	ENGAGEMENT OF ASSET REPRESENTATIONS REVIEWER	2
	Section 2.1.	Engagement; Acceptance	2
	Section 2.2.	Confirmation of Scope	2
	ARTICLE III	ASSET REPRESENTATIONS REVIEW PROCESS	3
	Section 3.1.	Review Notices	3
	Section 3.2.	Identification of Subject Receivables	3
	Section 3.3.	Review Materials	3
	Section 3.4.	Performance of Reviews	3
	Section 3.5.	Review Reports	4
	Section 3.6.	Limitations on Review Obligations	5
	ARTICLE IV	ASSET REPRESENTATIONS REVIEWER	5
	Section 4.1.	Representations and Warranties	5
	Section 4.2.	Covenants	6
	Section 4.3.	Fees, Expenses and Indemnities	7
	Section 4.4.	Limitation on Liability	8
	Section 4.5.	Indemnification by Asset Representations Reviewer	8
	Section 4.6.	Indemnification of Asset Representations Reviewer	8
	Section 4.7.	Inspections of Asset Representations Reviewer	9
	Section 4.8.	Delegation of Obligations	9
	Section 4.9.	Confidential Information	9
	Section 4.10.	Personally Identifiable Information	11
	ARTICLE V	RESIGNATION AND REMOVAL; SUCCESSOR ASSET REPRESENTATIONS REVIEWER	13
	Section 5.1.	Eligibility Requirements for Asset Representations Reviewer	13
	Section 5.2.	Resignation and Removal of Asset Representations Reviewer	13
	Section 5.3.	Successor Asset Representations Reviewer	13
	Section 5.4.	Merger, Consolidation or Succession	14
	ARTICLE VI	OTHER AGREEMENTS	14
	Section 6.1.	Independence of Asset Representations Reviewer	14
	Section 6.2.	No Petition	15
	Section 6.3.	Limitation of Liability of Owner Trustee	15

 

    	 	i	 

     

    

 

Table
of Contents

(continued)

 

	 	 	Page
	 	 	 
	Section 6.4.	Termination of Agreement	15
	ARTICLE VII	MISCELLANEOUS PROVISIONS	15
	Section 7.1.	Amendments	15
	Section 7.2.	Assignment; Benefit of Agreement; Third Party Beneficiaries	15
	Section 7.3.	Notices	16
	Section 7.4.	Governing Law; Submission to Jurisdiction; Waiver of Jury Trial	16
	Section 7.5.	No Waiver; Remedies	17
	Section 7.6.	Severability	17
	Section 7.7.	Headings	17
	Section 7.8.	Counterparts	17
	 	 	 
	Schedule A	Representations and Warranties, Review Materials and Tests	 

 

    	 	ii	 

     

    

 

ASSET REPRESENTATIONS REVIEW AGREEMENT, dated
as of August 27, 2019 (this “Agreement”), among HONDA AUTO RECEIVABLES 2019-3 OWNER TRUST, a Delaware statutory
trust, as Issuer (the “Issuer”), AMERICAN HONDA FINANCE CORPORATION, a California Corporation (“AHFC”),
as Sponsor and Servicer, and CLAYTON FIXED INCOME SERVICES LLC, a Delaware limited liability company, as Asset Representations
Reviewer (the “Asset Representations Reviewer”).

 

BACKGROUND

 

WHEREAS, in the regular course of its business,
AHFC acquires certain motor vehicle retail installment sale contracts secured by new and used automobiles (including light-duty
trucks) from motor vehicle dealers.

 

WHEREAS, in connection with a securitization
transaction sponsored by AHFC, AHFC sold a pool of Receivables consisting of retail installment sale contracts to American Honda
Receivables, LLC (the “Depositor”), who sold them to the Issuer.

 

WHEREAS, the Issuer has granted a security interest
in the pool of Receivables to the Indenture Trustee, for the benefit of the Holders of Notes, as security for the Notes issued
by the Issuer under the Indenture.

 

WHEREAS, the Issuer desires to engage the Asset
Representations Reviewer to perform reviews of certain Receivables for compliance with the representations and warranties made
by AHFC about the Receivables in the pool.

 

NOW, THEREFORE, in consideration of the foregoing,
other good and valuable consideration, and the mutual terms and conditions contained herein, the parties hereto agree as follows.

 

ARTICLE
I

USAGE AND DEFINITIONS

 

Section 1.1.          Usage
and Definitions. (a) Except as otherwise specified herein or if the context may otherwise require, capitalized terms not defined
in this Agreement shall have the respective meanings assigned such terms set forth in Appendix A to the Sale and Servicing Agreement,
dated as of the date hereof (the “Sale and Servicing Agreement”), by and among the Depositor, as seller, AHFC,
as servicer, RPA seller and sponsor, and Honda Auto Receivables 2019-3 Owner Trust, as issuer.

 

(b)          With
respect to all terms in this Agreement, the singular includes the plural and the plural the singular; words importing any gender
include the other genders; references to “writing” include printing, typing, lithography and other means of reproducing
words in a visible form; references to agreements and other contractual instruments include all subsequent amendments, amendments
and restatements, and supplements thereto or changes therein entered into in accordance with their respective terms and not prohibited
by this Agreement; references to Persons include their permitted successors and assigns; references to laws include their amendments
and supplements, the rules and regulations thereunder and any successors thereto; the term “including” means “including
without limitation;” and the term “or” is not exclusive.

 

     

     

    

 

Section 1.2.          Additional
Definitions. The following terms have the meanings given below:

 

“Asset Review” means the
performance by the Asset Representations Reviewer of the testing procedures for each Test and each Subject Receivable according
to Section 3.4.

 

“Confidential Information”
has the meaning stated in Section 4.9(b).

 

“Information Recipients”
has the meaning stated in Section 4.9(a).

 

“Issuer PII” has the meaning
stated in Section 4.10(a).

 

“Personally Identifiable Information”
or “PII” has the meaning stated in Section 4.10(a).

 

“Review Fee” has the meaning
stated in Section 4.3(b).

 

“Review Materials” means,
for an Asset Review and a Subject Receivable, the documents and other materials for each Test listed under “Review Materials”
in Schedule A.

 

“Review Report” means, for
an Asset Review, the report of the Asset Representations Reviewer prepared according to Section 3.5.

 

“Test” has the meaning stated
in Section 3.4(a).

 

“Test Complete” has the meaning
stated in Section 3.4(c).

 

“Test Fail” has the meaning
stated in Section 3.4(a).

 

“Test Incomplete” has the
meaning stated in Section 3.4(a).

 

“Test Pass” has the meaning
stated in Section 3.4(a).

 

ARTICLE
II

ENGAGEMENT OF ASSET REPRESENTATIONS REVIEWER

 

Section 2.1.          Engagement;
Acceptance. The Issuer engages Clayton Fixed Income Services LLC to act as the Asset Representations Reviewer for the Issuer.
Clayton Fixed Income Services LLC accepts the engagement and agrees to perform the obligations of the Asset Representations Reviewer
on the terms in this Agreement.

 

Section 2.2.          Confirmation
of Scope. The parties confirm that the Asset Representations Reviewer is not responsible for determining whether noncompliance
with the representations or warranties constitutes a breach of the Basic Documents.

    	 	2	 

     

    

 

 

ARTICLE
III

ASSET REPRESENTATIONS REVIEW PROCESS

 

Section 3.1.          Review
Notices. On receipt of a review notice from the Indenture Trustee in accordance with Section 7.05 of the Indenture, the Asset
Representations Reviewer will start an Asset Review. The Asset Representations Reviewer will have no obligation to start an Asset
Review until a review notice is received.

 

Section 3.2.          Identification
of Subject Receivables. Within ten (10) Business Days after receipt of a review notice, the Servicer will deliver to the Asset
Representations Reviewer a list of the Subject Receivables.

 

Section 3.3.          Review
Materials.

 

(a)          Access
to Review Materials. The Servicer will give the Asset Representations Reviewer access to the Review Materials for all of the
Subject Receivables within sixty (60) calendar days after receipt of the review notice in one or more of the following ways in
the Servicer’s reasonable discretion: (i) by electronic posting of Review Materials to a password-protected website to which
the Asset Representations Reviewer has access, (ii) by providing originals or photocopies of documents relating to the Subject
Receivables at one of the properties of the Servicer or (iii) in another manner agreed by the Servicer and the Asset Representations
Reviewer. The Servicer may redact or remove PII from the Review Materials so long as all information in the Review Materials necessary
for the Asset Representations Reviewer to complete the Asset Review remains intact and unchanged.

 

(b)          Missing
or Insufficient Review Materials. The Asset Representations Reviewer will review the Review Materials to determine if any Review
Materials are missing or insufficient for the Asset Representations Reviewer to perform any Test. If the Asset Representations
Reviewer reasonably determines that any of the Review Materials are missing or insufficient for the Asset Representations Reviewer
to perform any Test, the Asset Representations Reviewer will notify the Servicer promptly, and in any event no less than twenty
(20) calendar days before completing the Review, and the Servicer will use reasonable efforts to provide the Asset Representations
Reviewer access to such missing Review Materials or other documents or information to correct the insufficiency within fifteen
(15) calendar days. If the missing or insufficient Review Materials have not been provided by the Servicer within sixty (60) calendar
days, the parties agree that the Subject Receivable will have a Test Incomplete for the related Test(s) and the Review Report will
indicate the reason for the Test Incomplete.

 

Section 3.4.          Performance
of Reviews.

 

(a)          Test
Procedures. For an Asset Review, the Asset Representations Reviewer will perform for each Subject Receivable the procedures
listed under “Tests” in Schedule A for each representation and warranty (each, a “Test”),
using the Review Materials listed for each such Test in Schedule A. For each Test and Subject Receivable, the Asset Representations
Reviewer will determine in its reasonable judgment if the Test has been satisfied (a “Test Pass”), or if the
Test has not been satisfied (a “Test Fail”), or if the Test could not be concluded as a result of missing or
incomplete Review Materials (a “Test Incomplete”). The Asset Representations Reviewer will use such determination
for all Subject Receivables that are subject to the same Test.

 

    	 	3	 

     

    

 

(b)          Review
Period. The Asset Representations Reviewer will complete the Review of all of the Subject Receivables within sixty (60) calendar
days after receiving access to the Review Materials under Section 3.3(a). However, if missing or additional Review Materials
are provided to the Asset Representations Reviewer under Section 3.3(b), the review period will be extended for an additional
thirty (30) calendar days.

 

(c)          Completion
of Review for Certain Subject Receivables. Following the delivery of the list of the Subject Receivables and before the delivery
of the Review Report by the Asset Representations Reviewer, the Servicer may notify the Asset Representations Reviewer if a Subject
Receivable is paid in full by the Obligor or purchased from the Issuer by the Sponsor, the Depositor or the Servicer according
to the applicable Basic Document. On receipt of notice, the Asset Representations Reviewer will immediately terminate all Tests
of such Receivables and the Review of such Receivables will be considered complete (a “Test Complete”). In this
case, the Review Report will indicate a Test Complete for the Receivables and the related reason.

 

(d)          Previously
Reviewed Receivable: Duplicative Tests. If any Subject Receivable was included in a prior Asset Review, the Asset Representations
Reviewer will not perform the same Tests on it, but will include the results of the previous Tests in the Review Report for the
current Asset Review.

 

(e)          Duplicative
Tests. If the same Test is required for more than one representation or warranty listed on Schedule A, the Asset Representations
Reviewer will only perform the Test once for each Review Receivable but will report the results of the Test for each applicable
representation or warranty on the Review Report.

 

(f)          Termination
of Review. If an Asset Review is in process and the Notes will be paid in full on the next Distribution Date, the Servicer
will notify the Asset Representations Reviewer and the Indenture Trustee no less than ten (10) calendar days before that Distribution
Date. On receipt of notice, the Asset Representations Reviewer will terminate the Asset Review immediately and will have no obligation
to deliver a Review Report.

 

Section 3.5.          Review
Reports. (a) Within ten (10) calendar days after the end of the Asset Review period under Section 3.4(b), the Asset
Representations Reviewer will deliver to the Issuer, the Sponsor, the Servicer and the Indenture Trustee a Review Report indicating
for each Subject Receivable whether there was a Test Pass or a Test Fail for each Test, or whether the Subject Receivable was a
Test Complete and the related reason. The Review Report will contain a summary of the findings and conclusions of the Asset Representations
Reviewer with respect to the Asset Review to be included in the Issuer’s Form 10-D report for the Collection Period in which
the Review Report is received. The Asset Representations Reviewer will ensure that the Review Report does not contain any Issuer
PII. On the reasonable request of the Servicer or the Indenture Trustee, acting solely on behalf of the Noteholders, the Asset
Representations Reviewer will provide additional details on the Test results.

 

(b)          Questions
About Review. The Asset Representations Reviewer will make appropriate personnel available to respond in writing to written
questions or requests for clarification of any Review Report from the Servicer or the Indenture Trustee, acting solely on behalf
of the Noteholders, until the earlier of (i) payment in full of the Notes and (ii) one year after the delivery of the Review Report.
The Asset Representations Reviewer will have no obligation to respond to questions or requests for clarification from Noteholders
or any Person other than the Servicer or the Indenture Trustee, acting solely on behalf of the Noteholders, and will direct such
Persons to submit written requests to the Servicer.

 

    	 	4	 

     

    

 

Section 3.6.          Limitations
on Review Obligations.

 

(a)          Review
Process Limitations. The Asset Representations Reviewer will have no obligation:

 

(i)          to
determine whether a Delinquency Trigger has occurred or whether the required percentage of Noteholders has voted to direct an Asset
Review under the Indenture, and may rely on the information in any review notice delivered by the Indenture Trustee;

 

(ii)         to
determine which Receivables are subject to an Asset Review, and may rely on the lists of Subject Receivables provided by the Servicer;

 

(iii)        to
obtain or confirm the validity of the Review Materials and no liability for any errors in the Review Materials and may rely on
the accuracy and completeness of the Review Materials;

 

(iv)        to
obtain missing or insufficient Review Materials from any party or any other source; or

 

(v)         to
take any action or cause any other party to take any action under any of the Basic Documents or otherwise to enforce any remedies
against any Person for breaches of representations or warranties about the Subject Receivables.

 

ARTICLE
IV

ASSET REPRESENTATIONS REVIEWER

 

Section 4.1.          Representations
and Warranties. The Asset Representations Reviewer represents and warrants to the Issuer as of the Closing Date:

 

(a)          Organization
and Qualification. The Asset Representations Reviewer is duly organized and validly existing as a limited liability company
in good standing under the laws of the State of Delaware. The Asset Representations Reviewer is qualified as a foreign limited
liability company in good standing and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership
or lease of its properties or the conduct of its activities requires the qualification, license or approval, unless the failure
to obtain the qualifications, licenses or approvals would not reasonably be expected to have a material adverse effect on the Asset
Representations Reviewer’s ability to perform its obligations under this Agreement.

 

(b)          Power,
Authority and Enforceability. The Asset Representations Reviewer has the power and authority to execute, deliver and perform
its obligations under this Agreement. The Asset Representations Reviewer has authorized the execution, delivery and performance
of this Agreement. This Agreement is the legal, valid and binding obligation of the Asset Representations Reviewer enforceable
against the Asset Representations Reviewer, except as may be limited by insolvency, bankruptcy, reorganization or other laws relating
to the enforcement of creditors’ rights or by general equitable principles.

 

    	 	5	 

     

    

 

(c)          No
Conflicts and No Violation. The completion of the transactions contemplated by this Agreement and the performance of the Asset
Representations Reviewer’s obligations under this Agreement will not (A) conflict with, or be a breach or default under,
any indenture, loan agreement, guarantee or other agreement or instrument under which the Asset Representations Reviewer is a debtor
or guarantor, (B) result in the creation or imposition of any Lien on any of the properties or assets of the Asset Representations
Reviewer under the terms of any indenture, loan agreement, guarantee or other agreement or instrument, (C) violate the organizational
documents of the Asset Representations Reviewer or (D) violate any law or any order, rule or regulation of a federal or State court,
regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Asset Representations
Reviewer or its properties that applies to the Asset Representations Reviewer, which, in each case, would reasonably be expected
to have a material adverse effect on the Asset Representations Reviewer’s ability to perform its obligations under this Agreement.

 

(d)          No
Proceedings. There are no proceedings or investigations pending or, to the knowledge of the Asset Representations Reviewer,
threatened in writing before a federal or State court, regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Asset Representations Reviewer or its properties (A) asserting the invalidity of this Agreement, (B)
seeking to prevent the completion of the transactions contemplated by this Agreement or (C) seeking any determination or ruling
that would reasonably be expected to have a material adverse effect on the Asset Representations Reviewer’s ability to perform
its obligations under, or the validity or enforceability of, this Agreement.

 

(e)          Eligibility.
The Asset Representations Reviewer meets the eligibility requirements in Section 5.1 and will notify the Issuer and the
Servicer promptly if it no longer meets, or reasonably expects that it will no longer meet, the eligibility requirements in Section
5.1.

 

Section 4.2.          Covenants.
The Asset Representations Reviewer covenants and agrees that:

 

(a)          Eligibility.
It will notify the Issuer and the Servicer promptly if it no longer meets the eligibility requirements in Section 5.1.

 

(b)          Review
Systems; Personnel. It will maintain business process management and/or other systems necessary to ensure that it can perform
each Test and, on execution of this Agreement, will load each Test into these systems. The Asset Representations Reviewer will
ensure that these systems allow for each Subject Receivable and the related Review Materials to be individually tracked and stored
as contemplated by this Agreement. The Asset Representations Reviewer will maintain adequate staff that is properly trained to
conduct Asset Reviews as required by this Agreement.

 

    	 	6	 

     

    

 

(c)          Maintenance
of Review Materials. It will maintain copies of any Review Materials, Review Reports and other documents relating to an Asset
Review, including internal correspondence and work papers, for a period of two years after the termination of this Agreement or
repayment of the Notes in full, whichever comes first.

 

Section 4.3.          Fees,
Expenses and Indemnities.

 

(a)          Annual
Fee. The Sponsor will pay the Asset Representations Reviewer, as compensation for agreeing to act as the Asset Representations
Reviewer under this Agreement, an annual fee equal to $5,000. The annual fee will be paid as agreed in Section 4.3(d) by
the Sponsor until this Agreement is terminated; provided, that in the year in which all Notes are paid in full, the annual
fee shall be reduced pro rata by an amount equal to the days of the year in which the Notes are no longer outstanding.

 

(b)          Review
Fee. Following the completion of an Asset Review and the delivery to the Indenture Trustee, the Sponsor and the Servicer of
the Review Report, or the termination of an Asset Review according to Section 3.4(e), and the delivery to the Sponsor of
a detailed invoice, the Asset Representations Reviewer will be entitled to a fee of up to $250 for each Account containing a Subject
Receivable (the “Review Fee”). However, no Review Fee will be charged for any Tests that were performed in a
prior Asset Representations Review or for any Asset Representations Review in which no Tests were completed prior to the Asset
Representations Reviewer being notified of a termination of the Asset Representations Review in accordance with Section 3.4(e).
The Sponsor will pay the Review Fee to the Asset Representations Reviewer in accordance with the terms of Section 4.3(d)
of this Agreement. If an Asset Review is terminated according to Section 3.4(e), the Asset Representations Reviewer must
submit its invoice for the Review Fee for the terminated Asset Review no later than five Business Days before the final Payment
Date to be reimbursed no later than the final Payment Date.

 

(c)          Reimbursement
of Travel Expenses. If the Servicer provides access to the Review Materials at one of its properties, the Sponsor will reimburse
the Asset Representations Reviewer for its reasonable travel expenses incurred in connection with the Asset Review upon receipt
of a detailed invoice.

 

(d)          Payment
of Fees and Indemnities. The Asset Representations Reviewer shall submit reasonably detailed invoices to the Sponsor for any
amounts owed to it under this Agreement. To the extent not paid by the Sponsor within sixty (60) calendar days following the receipt
of a detailed invoice, the fees provided for in this Section 4.3 and the indemnities provided for in Section 4.6(a)
shall be paid by the Issuer pursuant to Section 4.06(c) of the Sale and Servicing Agreement; provided, that prior to any
such payment pursuant to the Sale and Servicing Agreement, the Asset Representations Reviewer shall notify the Sponsor in writing
that such payments have been outstanding for at least sixty (60) calendar days. For the avoidance of doubt, to the extent that
such owed amounts are not paid in full by the Sponsor or any other party, upon receipt of a detailed invoice, the Asset Representations
Reviewer shall be entitled to payment by the Sponsor of incurred but otherwise unpaid amounts.

 

    	 	7	 

     

    

 

Section 4.4.          Limitation
on Liability. The Asset Representations Reviewer will not be liable to any Person for any action taken, or not taken, in good
faith under this Agreement or for errors in judgment. However, the Asset Representations Reviewer will be liable for its willful
misconduct, bad faith, breach of this Agreement or negligence in performing its obligations under this Agreement. In no event will
the Asset Representations Reviewer be liable for special, indirect or consequential losses or damages (including lost profit),
even if the Asset Representations Reviewer has been advised of the likelihood of the loss or damage and regardless of the form
of action.

 

Section 4.5.          Indemnification
by Asset Representations Reviewer. The Asset Representations Reviewer will indemnify each of the Issuer, the Depositor, the
Servicer, the Sponsor, the Owner Trustee and the Indenture Trustee (each, an “Indemnified Party”) and their
respective directors, officers, employees and agents for all costs, expenses, losses, damages and liabilities (including any reasonable
legal fees and expenses incurred by an Indemnified Party in connection with the enforcement of any indemnification or other obligation
of the Asset Representations Reviewer) resulting from (a) the willful misconduct, bad faith or negligence of the Asset Representations
Reviewer in performing its obligations under this Agreement, (b) the Asset Representations Reviewer’s failure to comply with
the requirements of applicable federal, state or local laws and regulations in the performance of its duties hereunder or (c) the
Asset Representations Reviewer’s breach of any of its representations, warranties, covenants or other obligations in this
Agreement. The Asset Representations Reviewer’s obligations under this Section 4.5 will survive the termination of
this Agreement, the termination of the Issuer and the permitted resignation or removal of the Asset Representations Reviewer.

 

Section 4.6.          Indemnification
of Asset Representations Reviewer.

 

(a)          Indemnification.
The Sponsor will indemnify the Asset Representations Reviewer and its officers, directors, employees and agents (each, an “Indemnified
Person”), for all costs, expenses, losses, damages and liabilities resulting from the performance of the Asset Representations
Reviewer’s obligations under this Agreement (including the costs and expenses of defending itself against any loss, damage
or liability), but excluding any cost, expense, loss, damage or liability resulting from (i) the Asset Representations Reviewer’s
willful misconduct, bad faith or negligence, (ii) the Asset Representations Reviewer’s failure to comply with the requirements
of applicable federal, state and local laws and regulations in the performance of its duties hereunder or (iii) the Asset Representations
Reviewer’s breach of any of its representations, warranties, covenants or other obligations in this Agreement.

 

(b)          Proceedings.
Promptly on receipt by an Indemnified Person of notice of a Proceeding against it, the Indemnified Person will, if a claim is to
be made under Section 4.6(a), notify the Sponsor of the Proceeding. The Sponsor may participate in and assume the defense
and settlement of a Proceeding at its expense. If the Sponsor notifies the Indemnified Person of its intention to assume the defense
of the Proceeding with counsel reasonably satisfactory to the Indemnified Person, and the Sponsor will not be liable for legal
expenses of counsel to the Indemnified Person unless there is a conflict between the interests of the Sponsor, and an Indemnified
Person. If there is a conflict, the Sponsor will pay for the reasonable fees and expenses of separate counsel to the Indemnified
Person. No settlement of a Proceeding may be made without the approval of the Sponsor and the Indemnified Person, which approval
will not be unreasonably withheld.

 

    	 	8	 

     

    

 

(c)          Survival
of Obligations. The Issuer’s obligations under this Section 4.6 will survive the permitted resignation or removal
of the Asset Representations Reviewer and the termination of this Agreement.

 

(d)          Repayment.
If the Sponsor makes any payment under this Section 4.6 and the Indemnified Person later collects any of the amounts for
which the payments were made to it from others, the Indemnified Person will promptly repay the amounts to the Sponsor.

 

Section 4.7.          Inspections
of Asset Representations Reviewer. The Asset Representations Reviewer agrees that, with reasonable prior notice not more than
once during any year, it will permit authorized representatives of the Issuer, the Servicer or the Sponsor, during the Asset Representations
Reviewer’s normal business hours, to examine and review the books of account, records, reports and other documents and materials
of the Asset Representations Reviewer relating to (a) the performance of the Asset Representations Reviewer’s obligations
under this Agreement, (b) payments of fees and expenses of the Asset Representations Reviewer for its performance and (c) a claim
made by the Asset Representations Reviewer under this Agreement. In addition, the Asset Representations Reviewer will permit the
Issuer’s, the Servicer’s or the Sponsor’s representatives to make copies and extracts of any of those documents
and to discuss them with the Asset Representations Reviewer’s officers and employees. Each of the Issuer, the Servicer and
the Sponsor will, and will cause its authorized representatives to, hold in confidence any proprietary confidential information
of the Asset Representations Reviewer except if disclosure may be required by law or if the Issuer, the Servicer or the Sponsor
reasonably determines that it is required to make the disclosure under this Agreement or the other Basic Documents. Except as described
in Section 4.2(c), the Asset Representations Reviewer will maintain all relevant books, records, reports and other documents
and materials for a period of at least two years after the termination of its obligations under this Agreement.

 

Section 4.8.          Delegation
of Obligations. The Asset Representations Reviewer may not delegate or subcontract its obligations under this Agreement to
any Person without the consent of the parties to this Agreement.

 

Section 4.9.          Confidential
Information.

 

(a)          Treatment.
The Asset Representations Reviewer agrees to hold and treat Confidential Information given to it under this Agreement in confidence
and under the terms and conditions of this Section 4.9, and will implement and maintain safeguards to further assure the
confidentiality of the Confidential Information. The Confidential Information will not, without the prior consent of the Issuer,
the Sponsor and the Servicer, be disclosed or used by the Asset Representations Reviewer, or its officers, directors, employees,
agents, representatives or affiliates, including legal counsel (collectively, the “Information Recipients”)
other than for the purposes of performing Asset Reviews of Subject Receivables or performing its obligations under this Agreement.
The Asset Representations Reviewer agrees that it will not, and will cause its Affiliates to not (i) purchase or sell securities
issued by AHFC or its Affiliates or special purpose entities on the basis of Confidential Information or (ii) use the Confidential
Information for the preparation of research reports, newsletters or other publications or similar communications.

 

    	 	9	 

     

    

 

(b)          Definition.
“Confidential Information” means oral, written and electronic materials (irrespective of its source or form
of communication) furnished before, on or after the date of this Agreement to the Asset Representations Reviewer for the purposes
contemplated by this Agreement, including:

 

(i)          lists
of Subject Receivables and any related Review Materials;

 

(ii)         origination
and servicing guidelines, policies and procedures and form contracts; and

 

(iii)        notes,
analyses, compilations, studies or other documents or records prepared by the Sponsor or the Servicer, which contain information
supplied by or on behalf of the Sponsor or the Servicer or their representatives.

 

However, Confidential Information will not include information that
(A) is or becomes generally available to the public other than as a result of disclosure by the Information Recipients, (B) was
available to, or becomes available to, the Information Recipients on a non-confidential basis from a Person or entity other than
the Issuer, the Sponsor or the Servicer before its disclosure to the Information Recipients who, to the knowledge of the Information
Recipient is not bound by a confidentiality agreement with the Issuer, the Sponsor or the Servicer and is not prohibited from transmitting
the information to the Information Recipients, (C) is independently developed by the Information Recipients without the use of
the Confidential Information, as shown by the Information Recipients’ files and records or other evidence in the Information
Recipients’ possession or (D) the Issuer, the Sponsor or the Servicer provides permission to the applicable Information Recipients
to release.

 

(c)          Protection.
The Asset Representations Reviewer will use reasonable measures to protect the secrecy of and avoid disclosure and unauthorized
use of Confidential Information, including those measures that it takes to protect its own confidential information and not less
than a reasonable standard of care. The Asset Representations Reviewer acknowledges that Personally Identifiable Information is
also subject to the additional requirements in Section 4.9.

 

(d)          Disclosure.
If the Asset Representations Reviewer is required by applicable law, regulation, rule or order issued by an administrative, governmental,
regulatory or judicial authority to disclose part of the Confidential Information, it may disclose the Confidential Information.
However, before a required disclosure, the Asset Representations Reviewer, if permitted by law, regulation, rule or order, will
use its reasonable efforts to provide the Issuer, the Sponsor and the Servicer with notice of the requirement and will cooperate,
at the Sponsor’s expense, in the Issuer’s and the Sponsor’s pursuit of a proper protective order or other relief
for the disclosure of the Confidential Information. If the Issuer or the Sponsor is unable to obtain a protective order or other
proper remedy by the date that the information is required to be disclosed, the Asset Representations Reviewer will disclose only
that part of the Confidential Information that it is advised by its legal counsel it is legally required to disclose.

 

(e)          Responsibility
for Information Recipients. The Asset Representations Reviewer will be responsible for a breach of this Section 4.9
by its Information Recipients.

 

    	 	10	 

     

    

 

(f)          Violation.
The Asset Representations Reviewer agrees that a violation of this Agreement may cause irreparable injury to the Issuer, the Sponsor
and the Servicer and the Issuer, the Sponsor and the Servicer may seek injunctive relief in addition to legal remedies. If an action
is initiated by the Issuer or the Servicer to enforce this Section 4.9, the prevailing party will be reimbursed for its
fees and expenses, including reasonable attorney’s fees, incurred for the enforcement.

 

Section 4.10.         Personally
Identifiable Information.

 

(a)          Definitions.
“Personally Identifiable Information” or “PII” means information in any format about an identifiable
individual, including, name, address, phone number, e-mail address, account number(s), identification number(s), vehicle identification
number(s) or “VIN(s)”, any other actual or assigned attribute associated with or identifiable to an individual and
any information that when used separately or in combination with other information could identify an individual. “Issuer
PII” means PII furnished by the Issuer, the Servicer or their Affiliates to the Asset Representations Reviewer and PII
developed or otherwise collected or acquired by the Asset Representations Reviewer in performing its obligations under this Agreement.

 

(b)          Use
of Issuer PII. The Issuer does not grant the Asset Representations Reviewer any rights to Issuer PII. None of the Issuer, the
Sponsor or the Servicer intend to share, provide or supply any Issuer PII to the Asset Representations Reviewer. However, if the
Asset Representations Reviewer receives any Issuer PII, the Asset Representations Reviewer will promptly (i) notify the Servicer
and (ii) delete and destroy such Issuer PII in accordance with Section 4.10(c). Notwithstanding the foregoing, the Asset
Representations Reviewer must comply with all laws applicable to PII, Issuer PII and the Asset Representations Reviewer’s
business, including any legally required codes of conduct, including those relating to privacy, security and data protection. The
Asset Representations Reviewer will implement and maintain reasonable and appropriate practices, procedures and systems, including
administrative, technical and physical safeguards designed to (i) protect the security, confidentiality and integrity of Issuer
PII, (ii) ensure against anticipated threats or hazards to the security or integrity of Issuer PII, (iii) protect against unauthorized
access to or use of Issuer PII and (iv) otherwise comply with its obligations under this Agreement. These safeguards include a
written data security plan, employee training, information access controls, restricted disclosures, systems protections (e.g.,
intrusion protection, data storage protection and data transmission protection) and physical security measures.

 

(c)          Additional
Limitations. In addition to the use and protection requirements described in Section 4.10(b), the Asset Representations
Reviewer’s disclosure of Issuer PII is also subject to the following requirements:

 

(i)          The
Asset Representations Reviewer will not disclose Issuer PII to its personnel or allow its personnel access to Issuer PII except
(A) for the Asset Representations Reviewer personnel who require Issuer PII to perform an Asset Review, (B) with the prior consent
of the Issuer or (C) as required by applicable law. When permitted, the disclosure of or access to Issuer PII will be limited to
the specific information necessary for the individual to complete the assigned task. The Asset Representations Reviewer will inform
personnel with access to Issuer PII of the confidentiality requirements in this Agreement and train its personnel with access to
Issuer PII on the proper use and protection of Issuer PII.

 

    	 	11	 

     

    

 

(ii)         The
Asset Representations Reviewer will not sell, disclose, provide or exchange Issuer PII with or to any third party without the prior
consent of the Issuer.

 

(d)          Notice
of Breach. The Asset Representations Reviewer will notify the Issuer promptly in the event of an actual or reasonably suspected
security breach, unauthorized access, misappropriation or other compromise of the security, confidentiality or integrity of Issuer
PII and, where applicable, immediately take action to prevent any further breach.

 

(e)          Return
or Disposal of Issuer PII. Except where return or disposal is prohibited by applicable law, promptly on the earlier of the
completion of the Asset Review or the request of the Issuer, all Issuer PII in any medium in the Asset Representations Reviewer’s
possession or under its control will be (i) destroyed in a manner that prevents its recovery or restoration or (ii) if so directed
by the Issuer, returned to the Issuer without the Asset Representations Reviewer retaining any actual or recoverable copies, in
both cases, without charge to the Issuer. Where the Asset Representations Reviewer retains Issuer PII, the Asset Representations
Reviewer will limit the Asset Representations Reviewer’s further use or disclosure of Issuer PII to that required by applicable
law.

 

(f)          Compliance;
Modification. The Asset Representations Reviewer will cooperate with and provide information to the Issuer regarding the Asset
Representations Reviewer’s compliance with this Section 4.10. The Asset Representations Reviewer and the Issuer agree
to modify this Section 4.10 as necessary from time to time for either party to comply with applicable law.

 

(g)          Affiliates
and Third Parties. If the Asset Representations Reviewer processes the PII of the Issuer’s Affiliates or a third party
when performing an Asset Review, and if such Affiliate or third party is identified to the Asset Representations Reviewer, such
Affiliate or third party is an intended third-party beneficiary of this Section 4.10, and this Agreement is intended to
benefit the Affiliate or third party. The Affiliate or third party will be entitled to enforce the PII related terms of this Section
4.10 against the Asset Representations Reviewer as if each were a signatory to this Agreement.

 

(h)          Audit
of Asset Representations Reviewer. The Asset Representations Reviewer will permit the Issuer and its authorized representatives
to audit the Asset Representations Reviewer’s compliance with this Agreement during the Asset Representations Reviewer’s
normal business hours on reasonable advance notice to the Asset Representations Reviewer, and not more than once during any year
unless circumstances necessitate additional audits. The Issuer agrees to make reasonable efforts to schedule any audit described
in this Section 4.10 with the inspections described in Section 4.7. The Asset Representations Reviewer will also
permit the Issuer and its authorized representatives during normal business hours on reasonable advance written notice to audit
any service providers used by the Asset Representations Reviewer with the Sponsor’s prior written consent to fulfill the
Asset Representations Reviewer’s obligations under this Agreement.

 

    	 	12	 

     

    

 

ARTICLE
V

RESIGNATION AND REMOVAL;

SUCCESSOR ASSET REPRESENTATIONS REVIEWER

 

Section 5.1.          Eligibility
Requirements for Asset Representations Reviewer. The Asset Representations Reviewer must be a Person who (a) is not Affiliated
with the Sponsor, the Depositor, the Servicer, the Indenture Trustee, the Owner Trustee or any of their Affiliates and (b) was
not, and is not Affiliated with a Person that was, engaged by the Sponsor or any Underwriter to perform any due diligence on the
Receivables prior to the Closing Date.

 

Section 5.2.          Resignation
and Removal of Asset Representations Reviewer.

 

(a)          No
Resignation of Asset Representations Reviewer. The Asset Representations Reviewer will not resign as Asset Representations
Reviewer unless (a) the Asset Representations Reviewer no longer meets the eligibility requirements in Section 5.1 or (b)
upon determination that the performance of its duties under this Agreement is no longer permissible under applicable law. The Asset
Representations Reviewer will notify the Issuer and the Servicer of its resignation as soon as practicable after it determines
it is required to resign and stating the resignation date and including an Opinion of Counsel supporting its determination.

 

(b)          Removal
of Asset Representations Reviewer. If any of the following events occur, the Sponsor, by notice to the Asset Representations
Reviewer, may remove the Asset Representations Reviewer and terminate its rights and obligations under this Agreement:

 

(i)          the
Asset Representations Reviewer no longer meets the eligibility requirements in Section 5.1;

 

(ii)         the
Asset Representations Reviewer breaches of any of its representations, warranties, covenants or obligations in this Agreement;
or

 

(iii)        an
Insolvency Event of the Asset Representations Reviewer occurs.

 

(c)          Notice
of Resignation or Removal. The Sponsor will notify the Issuer, the Owner Trustee and the Indenture Trustee of any resignation
or removal of the Asset Representations Reviewer.

 

(d)          Continue
to Perform After Resignation or Removal. No resignation or removal of the Asset Representations Reviewer will be effective,
and the Asset Representations Reviewer will continue to perform its obligations under this Agreement, until a successor Asset Representations
Reviewer has accepted its engagement according to Section 5.3(b).

 

Section 5.3.          Successor
Asset Representations Reviewer.

 

(a)          Engagement
of Successor Asset Representations Reviewer. Following the resignation or removal of the Asset Representations Reviewer, the
Sponsor will appoint a successor Asset Representations Reviewer who meets the eligibility requirements of Section 5.1.

 

    	 	13	 

     

    

 

(b)          Effectiveness
of Resignation or Removal. No resignation or removal of the Asset Representations Reviewer will be effective until the successor
Asset Representations Reviewer has executed and delivered to the Issuer and the Servicer an agreement accepting its engagement
and agreeing to perform the obligations of the Asset Representations Reviewer under this Agreement or entered into a new agreement
with the Issuer on substantially the same terms as this Agreement.

 

(c)          Transition
and Expenses. If the Asset Representations Reviewer resigns or is removed, the Asset Representations Reviewer will cooperate
with the Issuer and take all actions reasonably requested to assist the Issuer in making an orderly transition of the Asset Representations
Reviewer’s rights and obligations under this Agreement to the successor Asset Representations Reviewer. The Asset Representations
Reviewer will pay the reasonable expenses (including the fees and expenses of counsel) of transitioning the Asset Representations
Reviewer’s obligations under this Agreement and preparing the successor Asset Representations Reviewer to take on such obligations
on receipt of an invoice with reasonable detail of the expenses from the Issuer or the successor Asset Representations Reviewer.

 

Section 5.4.          Merger,
Consolidation or Succession. Any Person (a) into which the Asset Representations Reviewer is merged or consolidated, (b) resulting
from any merger or consolidation to which the Asset Representations Reviewer is a party or (c) succeeding to the business of the
Asset Representations Reviewer, if that Person meets the eligibility requirements in Section 5.1, will be the successor
to the Asset Representations Reviewer under this Agreement. Such Person will execute and deliver to the Issuer and the Servicer
an agreement to assume the Asset Representations Reviewer’s obligations under this Agreement (unless the assumption happens
by operation of law).

 

ARTICLE
VI

OTHER AGREEMENTS

 

Section 6.1.          Independence
of Asset Representations Reviewer. The Asset Representations Reviewer will be an independent contractor and will not be subject
to the supervision of the Issuer, the Owner Trustee or the Indenture Trustee for the manner in which it accomplishes the performance
of its obligations under this Agreement. Unless authorized by the Issuer, the Owner Trustee, or the Indenture Trustee, respectively,
the Asset Representations Reviewer will have no authority to act for or represent the Issuer, the Owner Trustee or the Indenture
Trustee and will not be considered an agent of the Issuer, the Owner Trustee or the Indenture Trustee. None of the Issuer, the
Owner Trustee or the Indenture Trustee will be responsible for monitoring the performance of the Asset Representations Reviewer
or liable to any Person for the failure of the Asset Representations Reviewer to perform its obligations hereunder. Nothing in
this Agreement will make the Asset Representations Reviewer and any of the Issuer, the Owner Trustee or the Indenture Trustee members
of any partnership, joint venture or other separate entity or impose any liability as such on any of them.

 

    	 	14	 

     

    

 

Section 6.2.          No
Petition. Each of the parties, by entering into this Agreement, agrees that, before the date that is one year and one day (or,
if longer, any applicable preference period) after payment in full of (a) all securities issued by the Depositor or by a trust
for which the Depositor was a depositor (including, without limitation, the Issuer) or (b) the Notes, it will not start or pursue
against, or join any other Person in starting or pursuing against (i) the Depositor or (ii) the Issuer, respectively, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other proceedings under any bankruptcy or similar law. This
Section 6.2 will survive the termination of this Agreement.

 

Section 6.3.          Limitation
of Liability of Owner Trustee. This Agreement has been signed on behalf of the Issuer by The Bank of New York Mellon not in
its individual capacity but solely in its capacity as Owner Trustee of the Issuer. In no event will The Bank of New York Mellon
in its individual capacity be liable for the Issuer’s obligations under this Agreement. For all purposes under this Agreement,
the Owner Trustee will be subject to, and entitled to the benefits of, the Trust Agreement.

 

Section 6.4.          Termination
of Agreement. This Agreement will terminate, except for the obligations under Section 4.5 or as otherwise stated in
this Agreement, on the earlier of (a) the payment in full of all outstanding Notes and the satisfaction and discharge of the Indenture
and (b) the date the Issuer is terminated under the Trust Agreement.

 

ARTICLE
VII

MISCELLANEOUS PROVISIONS

 

Section 7.1.          Amendments.

 

(a)          This
Agreement can be modified in a written document executed by the parties hereto without the consent of the Noteholders or any other
Person; provided, that, except with respect to amendments (i) to clarify an ambiguity, correct an error or correct or supplement
any term of this Agreement that may be defective or inconsistent with the other terms of this Agreement or to provide for, or facilitate
the acceptance of this Agreement by, a successor Asset Representations Reviewer or (ii) to convert or supplement any provision
in a manner consistent with the intent of this Agreement, either (a) such amendment shall not, as evidenced by an opinion of counsel
or officer’s certificate, materially and adversely affect the interests of the holders of any outstanding Note or (b) the
Rating Agency Condition is satisfied with respect to such amendment. With respect to any amendment for which clauses (a) or (b)
of the immediately preceding sentence cannot be satisfied, this Agreement can be amended with the consent of the Noteholders of
a majority of the Outstanding Principal Balance of the Notes of each adversely affected Series.

 

(b)          Notice
of Amendments. The Servicer will notify the Rating Agencies in advance of any amendment. Promptly after the execution of an
amendment, the Servicer will deliver a copy of the amendment to the Rating Agencies and the Indenture Trustee.

 

Section 7.2.          Assignment;
Benefit of Agreement; Third Party Beneficiaries.

 

(a)          Assignment.
Except as stated in Section 5.4, this Agreement may not be assigned by the Asset Representations Reviewer without the consent
of the parties to this Agreement.

 

    	 	15	 

     

    

 

(b)          Benefit
of Agreement; Third-Party Beneficiaries. This Agreement is for the benefit of and will be binding on the parties and their
permitted successors and assigns. The Owner Trustee and the Indenture Trustee, for the benefit of the Noteholders, will be third-party
beneficiaries of this Agreement and entitled to enforce this Agreement against the Asset Representations Reviewer. No other Person
will have any right or obligation under this Agreement.

 

Section 7.3.          Notices.

 

(a)          Delivery
of Notices. All notices, requests, demands, consents, waivers or other communications to or from the parties must be in writing
and will be considered given:

 

(i)          For
overnight mail, on delivery or, for a letter mailed by registered first class mail, postage prepaid, three days after deposit in
the mail;

 

(ii)         for
a fax, when receipt is confirmed by telephone, reply email or reply fax from the recipient;

 

(iii)        for
an email, when receipt is confirmed by telephone or reply email from the recipient; and

 

(iv)        for
an electronic posting to a password-protected website to which the recipient has access, on delivery (without the requirement of
confirmation of receipt) of an email to that recipient stating that the electronic posting has occurred.

 

(b)          Notice
Addresses. Any notice, request, demand, consent, waiver or other communication will be delivered or addressed to: (i) (a) in
the case of the Sponsor and the Servicer, to American Honda Finance Corporation, 20800 Madrona Avenue, Torrance, CA 90503, Attention:
Treasury Capital Markets, (b) in the case of the Issuer or the Owner Trustee, to Honda Auto Receivables 2019-3 Owner Trust, c/o
The Bank of New York Mellon, 101 Barclay Street, Floor 7 West, New York, NY 10286, Attention: Asset Backed Securities Unit –
Honda Auto Receivables 2019-3, (c) in the case of the Indenture Trustee, to U.S. Bank National Association, 190 South LaSalle Street,
7th Floor, Chicago, Illinois, 60603, Attention: Corporate Trust Services Honda Auto Receivables 2019-3, and (d) in the
case of the Asset Representations Reviewer via electronic mail to ARRNotices@clayton.com, and to Clayton Fixed Income Services
LLC, 2638 South Falkenburg Road, Riverview, FL 33578, Attention: SVP; with a copy to Clayton Fixed Income Services LLC, c/o Clayton
Holdings LLC, 1500 Market Street, West Tower Suite 2050, Philadelphia, PA 19102, Attention: General Counsel or, (ii) as to each
party, at such other address or email as shall be designated by such party in a written notice to each other party.

 

Section 7.4.          Governing
Law; Submission to Jurisdiction; Waiver of Jury Trial. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

    	 	16	 

     

    

 

Each
of the parties hereto hereby submits to the exclusive jurisdiction of the United States District Court for the Southern District
of New York and of any New York State court sitting in New York City for purposes of all legal proceedings arising out of or relating
to this Agreement or the transactions contemplated hereby. Each of the parties hereto hereby further irrevocably waives any claim
that any such courts lack jurisdiction over such party, and agrees not to plead or claim, in any legal action or proceeding with
respect to this Agreement in any of the aforesaid courts, that any such court lacks jurisdiction over such party. Each of the parties
hereto irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.

 

Each
party hereto hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect
of any litigation directly or indirectly arising out of, under or in connection with this agreement.

 

Section 7.5.          No
Waiver; Remedies. No party’s failure or delay in exercising a power, right or remedy under this Agreement will operate
as a waiver. No single or partial exercise of a power, right or remedy will preclude any other or further exercise of the power,
right or remedy or the exercise of any other power, right or remedy. The powers, rights and remedies under this Agreement are in
addition to any powers, rights and remedies under law.

 

Section 7.6.          Severability.
If a part of this Agreement is held invalid, illegal or unenforceable, then it will be deemed severable from the remaining Agreement
and will not affect the validity, legality or enforceability of the remaining Agreement.

 

Section 7.7.          Headings.
The headings in this Agreement are included for convenience and will not affect the meaning
or interpretation of this Agreement.

 

Section 7.8.          Counterparts.
This Agreement may be executed in multiple counterparts. Each counterpart will be an original and all counterparts will together
be one document.

 

[Remainder of Page Left Blank]

 

    	 	17	 

     

    

 

EXECUTED BY:

 

	 	HONDA AUTO RECEIVABLES 2019-3 OWNER TRUST,
	 	as Issuer
	 	 	 	 
	 	By:	The Bank of New York Mellon, not in its  individual capacity, but solely as Owner Trustee
	 	 	 	 
	 	By:	/s/ Esther Antoine
	 	 	Name:  	Esther Antoine
	 	 	Title:  	Vice President
	 	 	 	 
	 	AMERICAN HONDA FINANCE CORPORATION,
	 	as Sponsor and Servicer
	 	 	 	 
	 	By:	/s/ Paul C. Honda
	 	 	Name:  	Paul C. Honda
	 	 	Title:	Vice President and Assistant Secretary
	 	 	 	 
	 	CLAYTON FIXED INCOME SERVICES LLC,
	 	as Asset Representations Reviewer
	 	 	 	 
	 	By:	/s/ Robert Harris
	 	 	Name:  	Robert Harris
	 	 	Title:  	Secretary

 

ARR Agreement

 

     

     

    

 

Schedule A

 

Representations and Warranties, Review Materials
and Tests

 

	
        Representations and Warranty
	 	
        Review
        Materials and Tests

	
        (i)         Characteristics
        of Receivables. Each Receivable

        (a)  was
        originated by a Dealer located in the United States for the sale of the related Financed Vehicle, fully executed by the Obligor
        thereto, purchased by AHFC from such Dealer under an existing agreement with AHFC, assigned by such Dealer to the RPA Seller and
        subsequently sold by the RPA Seller to the Purchaser pursuant to the Receivables Purchase Agreement,

        (b)  has
        created or shall create a first priority security interest in favor of the RPA Seller in the related Financed Vehicle, which security
        interest has been assigned by the RPA Seller to the Purchaser and shall be assignable, and shall be so assigned, by the Purchaser
        to the Issuer,

        (c)  contains
        provisions that permit the repossession and sale of the Financed Vehicle upon a default under the Receivable by the Obligor,

        (d)  except
        as otherwise provided in this Agreement, provides, at the time of origination, for level Monthly Payments (provided that the first
        and last payments in the life of the Receivable may be different from but in no event more than two times the level payment) that
        fully amortize the Amount Financed over its original term,

        (e)  allows
        for prepayment,

        (f)   is
        not listed on the Servicer’s records as a federal, state or local governmental entity and

        (g)  is
        a retail installment sales contract.
	 	
        Review Materials:

        (a)    Title
        documents

        (b)    Installment
        sales contract

        (c)    Receivable
        Files

        (d)    Servicer’s
        Records/Data file

        Tests:

        (a)    Origination

        i.     Review
        the contract and confirm that the Dealer address is a United States address.

        ii.    Review
        the contract and confirm that it was signed by the Obligor.

        iii.   Review
        the contract and confirm that AHFC (or an acceptable variation of the name) is listed as an assignee within the assignment section.

        iv.    Review
        the contract and confirm the Vehicle Identification Number (VIN) on the contract matches the VIN on the Certificate of Title or
        Application for Title.

        v.    Confirm
        the Dealer signed the assignment section of the contract.

        (b)   Security
        Interest Enforcement

        i.     Review
        the Receivable File and confirm that the security interest has not been subordinated and the Receivable maintains an enforceable
        security interest in favor of AHFC for the Financed Vehicle.

        (c)    Repossession

        i.     Review
        the contract and confirm that it contains language permitting the repossession and sale of the Financed Vehicle upon default by
        the Obligor.

        (d)   Fully
        Amortizing Payment Schedule

        i.     Review
        the contract and confirm that all payments are equivalent with the possible exception of the first and last payments, which may
        be two times the level payment.

        ii.    Review
        the Truth-in-Lending section of the contract and calculate the product of the Amount of Payments with the Number of Payments and
        confirm that this amount is equal to the Total of Payments.

        (e)   Prepayments

        i.     Review
        the contract and confirm that the terms conform to the representation.

        (f)    No
        governmental obligors

        i.     Review
        the contract and confirm that the Obligor does not appear to be a governmental entity and that the Servicer’s records do
        not otherwise indicate that the Obligor is a governmental entity.

 

     

     

    

 

	 	 	
        (g)   Retail
        installment sale contract

        i.    Review
        the contract and confirm that the contract terms conform to the representation.

        (h)   If (a) through (g)
        are confirmed, then Test Pass.

	(ii)      Compliance with Law.  At the time it was originated, the Receivable complied in all material respects with all requirements of law in effect at the time and applicable to such Receivable.	 	
        Review Materials:

        (a)   Installment
        sales contract

        (b)   AHFC’s
        list of approved contract forms.

        Tests:

        (a)   Review
        the contract form number and revision date and confirm that they are both on AHFC’s list of approved contract forms.

        (b)   If
        (a) is confirmed, then Test Pass.

	(iii)      Binding Obligation.  Each Receivable is on a form contract that includes the legal and binding payment obligation in writing of the related Obligor, enforceable by the holder thereof, except as enforceability may be subject to or limited by bankruptcy, insolvency, reorganization, moratorium, liquidation or other laws affecting the enforcement of creditors’ rights and by general principles of equity, consumer protection laws and the Servicemembers Civil Relief Act.	 	
        Review Materials:

        (a)   Installment
        sales contract

        (b)   AHFC’s
        list of approved contract forms.

        Tests:

        (a)   Review
        the contract form number and revision date and confirm that they are both on AHFC’s list of approved contract forms.

        (b)   Confirm
        the Obligor signed the contract.

        (c)   If
        (a) and (b) are confirmed, then Test Pass.

	(iv)     Receivables in Force.  According to the Servicer’s Receivables system, the Receivable shall not have been satisfied, subordinated or rescinded, nor shall the Financed Vehicle have been released in whole or in part from the lien granted by the related Receivable on the Cutoff Date.	 	
        Review Materials:

        (a)   Receivable
        Files

        (b)   Title
        documents

        (c)   Servicer’s
        Records/Data file

        Tests:

        (a)   Confirm
        that there is no indication in the Servicer’s Records or Receivable Files that the Receivable was subordinated or rescinded.

        (b)   Confirm
        that there is no indication in the Servicer’s Records or Receivable Files that the Receivable was satisfied prior to the
        Cut-off Date.

        (c)   Confirm
        that there is no indication in the Servicer’s Records or Receivable Files that the Financed Vehicle has been released from
        the lien in whole or in part.

        (d)   If
        (a) through (c) are confirmed, then Test Pass.

	(v)      No Defenses.  To the RPA Seller’s knowledge, no right of rescission, setoff, counterclaim or defense has been asserted or threatened in writing by any Obligor against the Receivable.	 	
        Review Materials:

        (a)    Receivable
        Files

        (b)    Receivable
        system

        Tests:

        (a)   Review
        the Receivable Files and confirm that there is no indication the Receivable is subject to rescission, setoff, counterclaim or defense
        that would cause the Receivable to become invalid, or, if so, confirm such indications were not present as of the Cut-off Date.

        (b)   If
        (a) is confirmed, then Test Pass.

	(vi)      No Defaults.  Except for payment delinquencies that, as of the Cutoff Date, were not more than thirty (30) days, according to the accounting records of the RPA Seller, no payment default existed under the terms of any Receivable as of the Cutoff Date.	 	
        Review Materials:

        (a)   Servicer’s
        Records/Data file

        Tests:

        (a)   Confirm
        that there is no indication of a payment default, other than payment delinquencies of not more than thirty (30) days, or if so,
        confirm such defaults were not present as of the Cut-off Date.

        (b)   If
        (a) is confirmed, then Test Pass.

 

     

     

    

 

	(vii)    Insurance.  Each Obligor of a Receivable has been required to obtain physical damage insurance covering the related Financed Vehicle and is required under the terms of the related Receivable to maintain such insurance.	 	
        Review Materials:

        (a)   Installment
        sale contract

        Tests:

        (a)   Confirm
        that the contract contains language that requires the Obligor to obtain and maintain insurance against physical damage to the Financed
        Vehicle.

        (b)   If
        (a) is confirmed, then Test Pass.

         

	(viii)   Lawful Assignment.  The terms of the Receivable do not limit the right of the owner of the Receivable to sell the Receivable.	 	
        Review Materials:

        (a)   Installment
        sale contract

        Tests:

        (a)   Review
        the contract and confirm that there is no language present that limits the rights of the owner of the Receivable to sell the Receivable.

        (b)   If
        (a) is confirmed, then Test Pass.

	(ix)     Chattel Paper.  The Receivable is either “tangible chattel paper” or “electronic chattel paper” within the meaning of the applicable UCC and there is only one original authenticated copy of the Receivable.	 	
        Review Materials:

        (a)   Installment
        sale contract

        (b)   AHFC’s
        list of approved contract forms

        (c)   Title
        documents

        Tests:

        (a)   Review
        the contract form number and revision date and confirm that it is on AHFC’s list of approved contract forms.

        (b)   Confirm
        there is a signature under the each of the Obligor’s and seller’s name within the contract.

        (c)   Confirm
        there is no indication the contract was voided or is otherwise not the original authenticated copy.

        (d)   If
        (a) through (c) are confirmed, then Test Pass.

	(x)      Security Interest.  The RPA Seller has, or the Servicer has, started procedures that will result in the RPA Seller having a perfected, first priority security interest in the Financed Vehicle within then (10) days of the Closing Date, which security interest was validly created and is assignable by the RPA Seller to the Purchaser.	 	
        Review Materials:

        (a)   Installment
        sales contract

        (b)   Title
        documents

        Tests:

        (a)   Confirm
        the Title documents report AHFC (or an acceptable variation of the name) as the first lien holder.

        (b)   Confirm
        that the Obligor name on the contract matches the name on the title documents.

        (c)   Confirm
        that the Vehicle Identification Number (VIN) on the contract matches the vehicle identification number as reported on the title
        documents.

        (d)   If
        (a) through (c) are confirmed, then Test Pass.

	
        (xi)      Individual Characteristics.
        Each Receivable has the following individual characteristics as of the Cutoff Date:

        (a)   is
        not listed on the Servicer’s records as the subject of a pending bankruptcy proceeding;

        (b)   had
        an original maturity of not greater than 72 payments;

        (c)   provides
        for the payment of a finance charge or shall yield interest calculated on the basis of a Contract Rate of at least 0.50%;

        (d)   has
        a Scheduled Payment that is not more than thirty (30) days past due;

        (e)   the
        Financed Vehicle to which the Receivable relates is a new or used Honda or Acura automobile or light-duty truck; and
	 	
        Review Materials:

        (a)   Installment
        sales contract

        (b)   Servicer’s
        Records/Data file

        (c)   Receivable
        Files

        Tests:

        (a)   Bankruptcy

        i.     Review
        the Servicer’s records and confirm that the Obligor was not the subject of a bankruptcy proceeding as of the Cutoff Date.

        (b)   Original
        Maturity

        i.     Confirm
        that the number of payments as stated within the contract does not exceed 72 payments.

        (c)   Contract
        Rate

        i.     Confirm
        that the Contract Rate stated within the contract is greater than or equal to 0.50% as of the Cutoff Date.

         

	(f)   the Obligor under each Receivable had a billing address in the United States or its territories or possessions, according to the records of the Servicer.	 	
        (d)   Past
        Due

        i.     Review
        the Servicer’s records and confirm that the Receivable was not more than thirty (30) days past due as of the Cutoff Date.

        (e)   New
        or Used Honda or Acura

        i.     Confirm
        the Financed Vehicle is a new or used automobile or light-duty truck as stated within the New/Used section of the contract.

        (f)    Billing
        Address

        i.     Confirm
        the Receivable Files indicate that the Obligor’s address is located within the United States or its territories or possessions
        as of the Cutoff Date.

        (g)   If (a) through (f)
        are confirmed, then Test Pass.Blueprint

  Exhibit 4.1

PEDEVCO CORP.

 

2012 EQUITY INCENTIVE PLAN

(As Amended)

 

1. Purposes
of the Plan. PEDEVCO Corp., a Texas corporation (the
“Company”)
hereby establishes the PEDEVCO CORP. 2012 EQUITY INCENTIVE PLAN
(the “Plan”).
The purposes of this Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to
provide additional incentive to Employees, Directors and
Consultants, and to promote the long-term growth and profitability
of the Company. The Plan permits the grant of Incentive Stock
Options, Nonstatutory Stock Options, Restricted Stock, Restricted
Stock Units, Stock Appreciation Rights, Performance Units and
Performance Shares as the Administrator may
determine.

 

2. Definitions. The
following definitions will apply to the terms in the
Plan:

 

“Administrator”
means the Board or any of its Committees as will be administering
the Plan, in accordance with Section 4.

 

“Applicable
Laws” means the
requirements relating to the administration of equity-based awards
under U.S. state corporate laws, U.S. federal and state securities
laws, the Code, any stock exchange or quotation system on which the
Common Stock is listed or quoted and the applicable laws of any
foreign country or jurisdiction where Awards are, or will be,
granted under the Plan.

 

“Award”
means, individually or collectively, a grant under the Plan of
Options, SARs, Restricted Stock, Restricted Stock Units,
Performance Units or Performance Shares.

 

“Award
Agreement” means the
written or electronic agreement setting forth the terms and
provisions applicable to each Award granted under the Plan. The
Award Agreement is subject to the terms and conditions of the
Plan.

 

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

 

“Change in
Control” means the
occurrence of any of the following events:

 

(i) Any “person”
(as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) becomes the “beneficial
owner” (as defined in
Rule 13d-3 of the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more
of the total voting power represented by the Company’s then
outstanding voting securities; provided however, that for purposes
of this subsection (i) any acquisition of securities directly from
the Company shall not constitute a Change in
Control;

 

(ii) The
consummation of the sale or disposition by the Company of all or
substantially all of the Company’s assets;

 

(iii) A change in the composition of the
Board occurring within a two-year period, as a result of which
fewer than a majority of the directors are Incumbent Directors.
“Incumbent
Directors” means
directors who either (A) are Directors as of the effective date of
the Plan, or (B) are elected, or nominated for election, to the
Board with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but
will not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to
the election of directors to the Company); or

 

(iv) The
consummation of a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity or its parent) at least fifty percent (50%)
of the total voting power represented by the voting securities of
the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation.

 

 

1

 

 

For
avoidance of doubt, a transaction will not constitute a Change in
Control if: (i) its sole purpose is to change the state of the
Company’s incorporation, or (ii) its sole purpose is to
create a holding company that will be owned in substantially the
same proportions by the persons who held the Company’s
securities immediately before such transaction.

 

“Code”
means the Internal Revenue Code of 1986, as amended. Any reference
in the Plan to a section of the Code will be a reference to any
successor or amended section of the Code.

 

“Committee”
means a committee of Directors or of other individuals satisfying
Applicable Laws appointed by the Board in accordance with Section 4
hereof.

 

“Common
Stock” means the common
stock of the Company.

 

“Company”
means PEDEVCO Corp., a Texas corporation, or any successor
thereto.

 

“Consultant”
means any person, including an advisor, engaged by the Company or a
Parent or Subsidiary to render services to such
entity.

 

“Director”
means a member of the Board.

 

“Disability”
means a medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, and that either (1)
renders a Participant unable to engage in any substantial gainful
activity or (2) results in a Participant receiving income
replacement benefits for a period of not less than three months
under an employee accident and health plan covering the
Participant.

 

“Employee”
means any person, including Officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company. Neither service
as a Director nor payment of a director’s fee by the Company
will be sufficient to constitute “employment”
by the Company.

 

“Exchange
Act” means the Securities
Exchange Act of 1934, as amended.

 

“Fair Market
Value” means, as of any
date, the value of Common Stock determined as
follows:

 

(i) If
the Common Stock is listed on any established stock exchange or a
national market system, including without limitation any division
or subdivision of the Nasdaq Stock Market, its Fair Market Value
will be the closing sales price for such stock (or the closing bid,
if no sales were reported) as quoted on such exchange or system on
the day of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;

 

(ii) If the Common Stock is regularly quoted
by a recognized securities dealer but selling prices are not
reported, including without limitation quotation through the over
the counter bulletin board (“OTCQB®”)
quotation service administered by the Financial Industry Regulatory
Authority (“FINRA”),
the Fair Market Value of a Share will be the closing price for the
Common Stock on the day of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems
reliable; or

 

 (iii) In the absence of an established
market for the Common Stock, the Fair Market Value will be
determined in good faith by the Administrator, and to the
extent Section
15 applies (a) with
respect to ISOs, the Fair Market Value shall be determined in a
manner consistent with Code section 422 or (b) with respect to NSOs
or SARs, the Fair Market Value shall be determined in a manner
consistent with Code section 409A.

 

 

2

 

 

“Fiscal
Year” means the fiscal
year of the Company.

 

“Grant
Date” means, for all
purposes, the date on which the Administrator determines to grant
an Award, or such other later date as is determined by the
Administrator, provided that the Administrator cannot grant an
Award prior to the date the material terms of the Award are
established. Notice of the Administrator’s determination to
grant an Award will be provided to each Participant within a
reasonable time after the Grant Date.

 

“Incentive Stock
Option” or
“ISO” means an Option that by its terms
qualifies and is otherwise intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

 

“Nonstatutory Stock
Option” or
“NSO” means an Option that by its terms does not
qualify or is not intended to qualify as an
ISO.

 

“Officer”
means a person who is an officer of the Company within the meaning
of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

 

“Option”
means a stock option granted pursuant to the
Plan.

 

“Optioned
Shares” means the Common
Stock subject to an Option.

 

“Optionee”
means the holder of an outstanding Option.

 

“Parent”
means a “parent
corporation,” whether now
or hereafter existing, as defined in Section 424(e) of the
Code.

 

“Participant”
means the holder of an outstanding Award.

 

“Performance
Share” means an Award
denominated in Shares which may vest in whole or in part upon
attainment of performance goals or other vesting criteria as the
Administrator may determine pursuant to Section
10.

 

“Performance
Unit” means an Award
which may vest in whole or in part upon attainment of performance
goals or other vesting criteria as the Administrator may determine
and which may be settled for cash, Shares or other securities or a
combination of the foregoing pursuant to Section
10.

 

“Period of
Restriction” means the
period during which Shares of Restricted Stock are subject to
forfeiture or restrictions on transfer pursuant to Section
7.

 

“Plan”
means this 2012 Equity Incentive Plan.

 

“Restricted
Stock” means Shares
awarded to a Participant which are subject to forfeiture and
restrictions on transferability in accordance with Section
7.

 

“Restricted Stock
Unit” means the right to
receive one Share at the end of a specified period of time, which
right is subject to forfeiture in accordance with Section 8 of the
Plan.

 

“Rule
16b-3” means Rule 16b-3
of the Exchange Act or any successor to Rule
16b-3.

 

“Section”
means a paragraph or section of this Plan.

 

“Section
16(b)” means Section
16(b) of the Exchange Act.

 

“Service
Provider” means an
Employee, Director or Consultant.

 

“Share”
means a share of the Common Stock, as adjusted in accordance with
Section 13.

 

“Stock Appreciation
Right” or
“SAR” means the right to receive payment from
the Company in an amount no greater than the excess of the Fair
Market Value of a Share at the date the SAR is exercised over a
specified price fixed by the Administrator in the Award Agreement,
which shall not be less than the Fair Market Value of a Share on
the Grant Date. In the case of a SAR which is granted in connection
with an Option, the specified price shall be the Option exercise
price.

 

“Subsidiary”
means a “subsidiary
corporation,” whether now
or hereafter existing, as defined in Section 424(f) of the
Code.

 

“Ten Percent
Owner” means any Service
Provider who is, on the grant date of an ISO, the owner of Shares
(determined with application of ownership attribution rules of Code
Section 424(d)) possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any of its
Subsidiaries.

 

 

3

 

 

3. Stock Subject to the
Plan.

 

(a) Stock Subject to the
Plan. Subject to the provisions
of Section 13, the maximum aggregate number of Shares that may be
issued under the Plan is eight million (8,000,000) Shares. The
Shares may be authorized but unissued, or reacquired Common
Stock.

 

(b) Lapsed
Awards. If an Award expires or
becomes unexercisable without having been exercised in full or,
with respect to Restricted Stock, Restricted Stock Units,
Performance Shares or Performance Units, is forfeited in whole or
in part to the Company, the unpurchased Shares (or for Awards other
than Options and SARs, the forfeited or unissued Shares) which were
subject to the Award will become available for future grant or sale
under the Plan (unless the Plan has terminated). With respect to
SARs, only Shares actually issued pursuant to a SAR will cease to
be available under the Plan; all remaining Shares subject to the
SARs will remain available for future grant or sale under the Plan
(unless the Plan has terminated). Shares that have actually been
issued under the Plan under any Award will not be returned to the
Plan and will not become available for future distribution under
the Plan; provided, however, that if Shares issued pursuant to
Awards of Restricted Stock, Restricted Stock Units, Performance
Shares or Performance Units are forfeited to the Company, such
Shares will become available for future grant under the Plan.
Shares withheld by the Company to pay the exercise price of an
Award or to satisfy tax withholding obligations with respect to an
Award will become available for future grant or sale under the
Plan. To the extent an Award under the Plan is paid out in cash
rather than Shares, such cash payment will not result in reducing
the number of Shares available for issuance under the
Plan.

 

(c) Share
Reserve. The Company, during
the term of this Plan, will at all times reserve and keep available
such number of Shares as will be sufficient to satisfy the
requirements of the Plan.

 

4. Administration of the
Plan.

 

(a) Procedure.
The Plan shall be administered by the Board or a Committee (or
Committees) appointed by the Board, which Committee shall be
constituted to comply with Applicable Laws. If and so long as the
Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act, the Board shall consider in selecting the
Administrator and the membership of any committee acting as
Administrator the requirements regarding: (i)
“nonemployee
directors” within the
meaning of Rule 16b-3 under the Exchange Act; (ii)
“independent
directors” as described
in the listing requirements for any stock exchange on which Shares
are listed; and (iii) Section
15(b)(i) of the Plan, if
the Company pays salaries for which it claims deductions that are
subject to the Code section 162(m) limitation on its U.S. tax
returns. The Board may delegate the responsibility for
administering the Plan with respect to designated classes of
eligible Participants to different committees consisting of two or
more members of the Board, subject to such limitations as the Board
or the Administrator deems appropriate. Committee members shall
serve for such term as the Board may determine, subject to removal
by the Board at any time.

 

(b) Powers of the
Administrator. Subject to the
provisions of the Plan and the approval of any relevant
authorities, and in the case of a Committee, subject to the
specific duties delegated by the Board to such Committee, the
Administrator will have the authority, in its
discretion:

 

(i) to
determine the Fair Market Value;

 

(ii) to
select the Service Providers to whom Awards may be granted
hereunder;

  

(iii) to
determine the number of Shares to be covered by each Award granted
hereunder;

 

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

 

(v) to
determine the terms and conditions, not inconsistent with the terms
of the Plan, of any Award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the
time or times when Awards may be exercised (which may be based on
continued employment, continued service or performance criteria),
any vesting acceleration (whether by reason of a Change of Control
or otherwise) or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Award or the Shares
relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, will determine;

 

(vi) to
construe and interpret the terms of the Plan and Awards granted
pursuant to the Plan, including the right to construe disputed or
doubtful Plan and Award provisions;

 

(vii) to
prescribe, amend and rescind rules and regulations relating to the
Plan;

 

(viii) to
modify or amend each Award (subject to Section 19(c)) to the extent
any modification or amendment is consistent with the terms of the
Plan. The Administrator shall have the discretion to extend the
exercise period of Options generally provided the exercise period
is not extended beyond the earlier of the original term of the
Option or 10 years from the original grant date, or specifically
(1) if the exercise period of an Option is extended (but to no more
than 10 years from the original grant date) at a time when the
exercise price equals or exceeds the fair market value of the
Optioned Shares or (2) an Option cannot be exercised because such
exercise would violate Applicable Laws, provided that the exercise
period is not extended more than 30 days after the exercise of the
Option would no longer violate Applicable Laws.

 

 

4

 

 

(ix) to
allow Participants to satisfy withholding tax obligations in such
manner as prescribed in Section 14;

 

(x) to
authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Award previously
granted by the Administrator;

 

(xi) to
delay issuance of Shares or suspend Participant’s right to
exercise an Award as deemed necessary to comply with Applicable
Laws; and

 

(xii) to
make all other determinations deemed necessary or advisable for
administering the Plan.

 

(c) Effect of
Administrator’s Decision.
The Administrator’s decisions, determinations and
interpretations will be final and binding on all Participants and
any other holders of Awards. Any decision or action taken or to be
taken by the Administrator, arising out of or in connection with
the construction, administration, interpretation and effect of the
Plan and of its rules and regulations, shall, to the maximum extent
permitted by Applicable Laws, be within its absolute discretion
(except as otherwise specifically provided in the Plan) and shall
be final, binding and conclusive upon the Company, all Participants
and any person claiming under or through any
Participant.

   

5. Eligibility.
NSOs, Restricted Stock, Restricted Stock Units, SARs, Performance
Units and Performance Shares may be granted to Service Providers.
ISOs may be granted as specified in Section
15(a).

 

6. Stock
Options.

 

(a) Grant of
Options. Subject to the terms
and conditions of the Plan, the Administrator, at any time and from
time to time, may grant Options to Service Providers in such
amounts as the Administrator will determine in its sole discretion.
For purposes of the foregoing sentence, Service Providers shall
include prospective employees or consultants to whom Options are
granted in connection with written offers of employment or
engagement of services, respectively, with the Company; provided
that no Option granted to a prospective employee or consultant may
be exercised prior to the commencement of employment or services
with the Company. The Administrator may grant NSOs, ISOs, or any
combination of the two. ISOs shall be granted in accordance
with Section
15(a) of the
Plan.

  

(b) Option Award
Agreement. Each Option shall be
evidenced by an Award Agreement that shall specify the type of
Option granted, the Option price, the exercise date, the term of
the Option, the number of Shares to which the Option pertains, and
such other terms and conditions (which need not be identical among
Participants) as the Administrator shall determine in its sole
discretion. If the Award Agreement does not specify that the Option
is to be treated as an ISO, the Option shall be deemed a
NSO.

 

(c) Exercise
Price. The per Share exercise
price for the Shares to be issued pursuant to exercise of an Option
will be no less than the Fair Market Value per Share on the Grant
Date.

 

(d) Term of
Options. The term of each
Option will be stated in the Award Agreement. Unless terminated
sooner in accordance with the remaining provisions of this Section
6, each Option shall expire either ten (10) years after the Grant
Date, or after a shorter term as may be fixed by the
Board.

 

(e) Time and Form of
Payment.

 

(i) Exercise
Date. Each Award Agreement
shall specify how and when Shares covered by an Option may be
purchased. The Award Agreement may specify waiting periods, the
dates on which Options become exercisable or
“vested”
and, subject to the termination provisions of this section,
exercise periods. The Administrator may accelerate the
exercisability of any Option or portion
thereof.

 

(ii) Exercise of
Option. Any Option granted
hereunder will be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the
Administrator and set forth in the Award Agreement. An Option may
not be exercised for a fraction of a Share. An Option will be
deemed exercised when the Company receives: (1) notice of exercise
(in such form as the Administrator shall specify from time to time)
from the person entitled to exercise the Option, and (2) full
payment for the Shares with respect to which the Option is
exercised (together with all applicable withholding taxes). Full
payment may consist of any consideration and method of payment
authorized by the Administrator and permitted by the Award
Agreement and the Plan (together with all applicable withholding
taxes). Shares issued upon exercise of an Option will be issued in
the name of the Optionee or, if requested by the Optionee, in the
name of the Optionee and his or her spouse. Until the Shares are
issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no
right to vote or receive dividends or any other rights as a
stockholder will exist with respect to the Optioned Shares,
notwithstanding the exercise of the Option. The Company will issue
(or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are
issued, except as provided in Section 13.

  

 

5

 

 

(iii) Payment.
The Administrator will determine the acceptable form of
consideration for exercising an Option, including the method of
payment. Such consideration may consist entirely
of:

 

(1) cash;

 

(2) check;

 

(3) to
the extent not prohibited by Section 402 of the Sarbanes-Oxley Act
of 2002, a promissory note;

 

(4) other
Shares, provided Shares have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to
which said Option will be exercised;

 

(5) to
the extent not prohibited by Section 402 of the Sarbanes-Oxley Act
of 2002, in accordance with any broker-assisted cashless exercise
procedures approved by the Company and as in effect from time to
time;

 

(6) by
asking the Company to withhold Shares from the total Shares to be
delivered upon exercise equal to the number of Shares having a
value equal to the aggregate Exercise Price of the Shares being
acquired;

 

(7) any
combination of the foregoing methods of payment; or

 

(8) such
other consideration and method of payment for the issuance of
Shares to the extent permitted by Applicable Laws.

 

(f) Forfeiture of
Options. All unexercised
Options shall be forfeited to the Company in accordance with the
terms and conditions set forth in the Award Agreement and again
will become available for grant under the Plan.

 

7. Restricted
Stock.

 

(a) Grant of Restricted
Stock. Subject to the terms and
conditions of the Plan, the Administrator, at any time and from
time to time, may grant Shares of Restricted Stock to Service
Providers in such amounts as the Administrator will determine in
its sole discretion.

 

(b) Restricted Stock Award
Agreement. Each Award of
Restricted Stock will be evidenced by an Award Agreement that will
specify the Period of Restriction, the number of Shares granted,
and such other terms and conditions (which need not be identical
among Participants) as the Administrator will determine in its sole
discretion. Unless the Administrator determines otherwise, the
Company as escrow agent will hold Shares of Restricted Stock until
the restrictions on such Shares have lapsed.

 

(c) Vesting Conditions and
Other Terms.

 

(i) Vesting
Conditions. The Administrator,
in its sole discretion, may impose such conditions on the vesting
of Shares of Restricted Stock as it may deem advisable or
appropriate, including but not limited to, achievement of
Company-wide, business unit, or individual goals (including, but
not limited to, continued employment or service), or any other
basis determined by the Administrator in its discretion. The
Administrator, in its discretion, may accelerate the time at which
any restrictions will lapse or be removed. The Administrator may,
in its discretion, also provide for such complete or partial
exceptions to an employment or service restriction as it deems
equitable.

   

(ii) Voting
Rights. During the Period of
Restriction, Service Providers holding Shares of Restricted Stock
granted hereunder may exercise full voting rights with respect to
those Shares, unless the Administrator determines
otherwise.

 

(iii) Dividends and Other
Distributions. During the
Period of Restriction, Service Providers holding Shares of
Restricted Stock will be entitled to receive all dividends and
other distributions paid with respect to such Shares, unless the
Administrator determines otherwise. If any such dividends or
distributions are paid in Shares, the Shares will be subject to the
same restrictions on transferability and forfeitability as the
Shares of Restricted Stock with respect to which they were
paid.

 

(iv) Transferability.
Except as provided in this Section, Shares of Restricted Stock may
not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated until the end of the applicable Period of
Restriction.

 

(d) Removal of
Restrictions. All restrictions
imposed on Shares of Restricted Stock shall lapse and the Period of
Restriction shall end upon the satisfaction of the vesting
conditions imposed by the Administrator. Vested Shares of
Restricted Stock will be released from escrow as soon as
practicable after the last day of the Period of Restriction or at
such other time as the Administrator may determine, but in no event
later than the 30th day following the date on which vesting
occurred.

 

(e) Forfeiture of
Restricted Stock. On the date
set forth in the Award Agreement, the Shares of Restricted Stock
for which restrictions have not lapsed will be forfeited and revert
to the Company and again will become available for grant under the
Plan.

 

 

6

 

 

8. Restricted Stock
Units.

 

(a) Grant of Restricted
Stock Units. Subject to the
terms and conditions of the Plan, the Administrator, at any time
and from time to time, may grant Restricted Stock Units to Service
Providers in such amounts as the Administrator will determine in
its sole discretion.

 

(b) Restricted Stock Units
Award Agreement. Each Award of
Restricted Stock Units will be evidenced by an Award Agreement that
will specify the number of Restricted Stock Units granted, vesting
criteria, form of payout, and such other terms and conditions
(which need not be identical among Participants) as the
Administrator will determine in its sole
discretion.

 

(c) Vesting
Conditions. The Administrator
shall set vesting criteria in its discretion, which, depending on
the extent to which the criteria are met, will determine the number
of Restricted Stock Units that will be paid out to the Participant.
The Administrator may set vesting criteria based upon the
achievement of Company-wide, business unit, or individual goals
(including, but not limited to, continued employment or service),
or any other basis determined by the Administrator in its
discretion. At any time after the grant of Restricted Stock Units,
the Administrator, in its sole discretion, may reduce or waive any
vesting criteria that must be met to receive a
payout.

 

(d) Time and Form of
Payment. Upon satisfaction of
the applicable vesting conditions, payment of vested Restricted
Stock Units shall occur in the manner and at the time provided in
the Award Agreement, but in no event later than the 15th day of the
third month following the end of the year in which vesting
occurred. Except as otherwise provided in the Award Agreement,
Restricted Stock Units may be paid in cash, Shares, or a
combination thereof at the sole discretion of the Administrator.
Restricted Stock Units that are fully paid in cash will not reduce
the number of Shares available for issuance under the
Plan.

 

(e) Forfeiture of
Restricted Stock Units. All
unvested Restricted Stock Units shall be forfeited to the Company
on the date set forth in the Award Agreement and again will become
available for grant under the Plan.

 

9. Stock Appreciation
Rights.

 

(a) Grant of
SARs. Subject to the terms and
conditions of the Plan, the Administrator, at any time and from
time to time, may grant SARs to Service Providers in such amounts
as the Administrator will determine in its sole
discretion.

 

(b) Award
Agreement. Each SAR grant will
be evidenced by an Award Agreement that will specify the exercise
price, the number of Shares underlying the SAR grant, the term of
the SAR, the conditions of exercise, and such other terms and
conditions (which need not be identical among Participants) as the
Administrator will determine in its sole
discretion.

  

(c) Exercise Price and
Other Terms. The per Share
exercise price for the exercise of an SAR will be no less than the
Fair Market Value per Share on the Grant Date.

 

(d) Time and Form of
Payment of SAR Amount. Upon
exercise of a SAR, a Participant will be entitled to receive
payment from the Company in an amount no greater than: (i) the
difference between the Fair Market Value of a Share on the date of
exercise over the exercise price; times (ii) the number of Shares
with respect to which the SAR is exercised. An Award Agreement may
provide for a SAR to be paid in cash, Shares of equivalent value,
or a combination thereof.

 

(e) Forfeiture of
SARs. All unexercised SARs
shall be forfeited to the Company in accordance with the terms and
conditions set forth in the Award Agreement and again will become
available for grant under the Plan.

 

10. Performance Units and
Performance Shares.

 

(a) Grant of Performance
Units and Performance Shares.
Performance Units or Performance Shares may be granted to Service
Providers at any time and from time to time, as will be determined
by the Administrator, in its sole discretion. The Administrator
will have complete discretion in determining the number of
Performance Units and Performance Shares granted to each
Participant.

 

(b) Award
Agreement. Each Award of
Performance Units and Shares will be evidenced by an Award
Agreement that will specify the initial value, the Performance
Period, the number of Performance Units or Performance Shares
granted, and such other terms and conditions (which need not be
identical among Participants) as the Administrator will determine
in its sole discretion.

 

(c) Value of Performance
Units and Performance Shares.
Each Performance Unit will have an initial value that is
established by the Administrator on or before the Grant Date. Each
Performance Share will have an initial value equal to the Fair
Market Value of a Share on the Grant Date.

 

(d) Vesting Conditions and
Performance Period. The
Administrator will set performance objectives or other vesting
provisions (including, without limitation, continued status as a
Service Provider) in its discretion which, depending on the extent
to which they are met, will determine the number or value of
Performance Units or Performance Shares that will be paid out to
the Service Providers. The time period during which the performance
objectives or other vesting provisions must be met will be called
the “Performance
Period.” The
Administrator may set performance objectives based upon the
achievement of Company-wide, divisional, or individual goals or any
other basis determined by the Administrator in its
discretion.

  

 

7

 

 

(e) Time and Form of
Payment. After the applicable
Performance Period has ended, the holder of Performance Units or
Performance Shares will be entitled to receive a payout of the
number of vested Performance Units or Performance Shares by the
Participant over the Performance Period, to be determined as a
function of the extent to which the corresponding performance
objectives or other vesting provisions have been achieved. Vested
Performance Units or Performance Shares will be paid as soon as
practicable after the expiration of the applicable Performance
Period, but in no event later than the 15th day of the third month
following the end of the year the applicable Performance Period
expired. An Award Agreement may provide for the satisfaction of
Performance Unit or Performance Share Awards in cash or Shares
(which have an aggregate Fair Market Value equal to the value of
the vested Performance Units or Performance Shares at the close of
the applicable Performance Period) or in a combination
thereof.

 

(f) Forfeiture of
Performance Units and Performance Shares. All unvested Performance Units or Performance
Shares will be forfeited to the Company on the date set forth in
the Award Agreement, and again will become available for grant
under the Plan.

 

11. Leaves of
Absence/Transfer Between Locations. Unless the Administrator provides otherwise
or as required by Applicable Laws, vesting of Awards will be
suspended during any unpaid leave of absence. An Employee will not
cease to be an Employee in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, or any
Subsidiary. 

  

12. Transferability of
Awards. Unless determined
otherwise by the Administrator, an Award may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and
may be exercised, during the lifetime of the Participant, only by
the Participant. If the Administrator makes an Award transferable,
such Award will contain such additional terms and conditions as the
Administrator deems appropriate. 

 

13. Adjustments;
Dissolution or Liquidation; Merger or Change in
Control.

  

(a) Adjustments.
In the event that any 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, or other
change in the corporate structure of the Company affecting the
Shares occurs, the Administrator, in order to prevent diminution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan, shall appropriately adjust the
number and class of Shares that may be delivered under the Plan
and/or the number, class, and price of Shares covered by each
outstanding Award.

 

(b) Dissolution or
Liquidation. In the event of
the proposed dissolution or liquidation of the Company, the
Administrator will notify each Participant as soon as practicable
prior to the effective date of such proposed transaction. To the
extent it has not been previously exercised, an Award will
terminate immediately prior to the consummation of such proposed
action.

 

(c) Change in
Control. In the event of a
merger or Change in Control, any or all outstanding Awards may be
assumed by the successor corporation, which assumption shall be
binding on all Participants. In the alternative, the successor
corporation may substitute equivalent Awards (after taking into
account the existing provisions of the Awards). The successor
corporation may also issue, in place of outstanding Shares of the
Company held by the Participant, substantially similar shares or
other property subject to vesting requirements and repurchase
restrictions no less favorable to the Participant than those in
effect prior to the merger or Change in
Control.

 

In
the event that the successor corporation does not assume or
substitute for the Award, unless the Administrator provides
otherwise, the Participant will fully vest in and have the right to
exercise all of his or her outstanding Options and SARs, including
Shares as to which such Awards would not otherwise be vested or
exercisable, all restrictions on Restricted Stock and Restricted
Stock Units will lapse, and, with respect to Performance Shares and
Performance Units, all Performance Goals or other vesting criteria
will be deemed achieved at target levels and all other terms and
conditions met. In addition, if an Option or SAR is not assumed or
substituted in the event of a Change in Control, the Administrator
will notify the Participant in writing or electronically that the
Option or SAR will be exercisable for a period of time determined
by the Administrator in its sole discretion, and the Option or SAR
will terminate upon the expiration of such period.

 

For
the purposes of this Section 13(c), an Award will be considered
assumed if, following the Change in Control, the Award confers the
right to purchase or receive, for each Share subject to the Award
immediately prior to the Change in Control, the consideration
(whether stock, cash, or other securities or property) or, in the
case of a SAR upon the exercise of which the Administrator
determines to pay cash or a Performance Share or Performance Unit
which the Administrator can determine to pay in cash, the fair
market value of the consideration received in the merger or Change
in Control by holders of Common Stock for each Share held on the
effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the Change in
Control is not solely common stock of the successor corporation or
its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received
upon the exercise of an Option or SAR or upon the payout of a
Restricted Stock Unit, Performance Share or Performance Unit, for
each Share subject to such Award (or in the case of Restricted
Stock Units and Performance Units, the number of implied shares
determined by dividing the value of the Restricted Stock Units and
Performance Units, as applicable, by the per share consideration
received by holders of Common Stock in the Change in Control), to
be solely common stock of the successor corporation or its Parent
equal in fair market value to the per share consideration received
by holders of Common Stock in the Change in Control.

  

Notwithstanding
anything in this Section 13(c) to the contrary, an Award that
vests, is earned or paid-out upon the satisfaction of one or more
performance goals will not be considered assumed if the Company or
its successor modifies any of such performance goals without the
Participant’s consent; provided, however, a modification to
such performance goals only to reflect the successor
corporation’s post-Change in Control corporate structure will
not be deemed to invalidate an otherwise valid Award
assumption.

 

 

8

 

 

14. Tax
Withholding.

  

(a) Withholding
Requirements. Prior to the
delivery of any Shares or cash pursuant to an Award (or exercise
thereof), the Company will have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, an
amount sufficient to satisfy federal, state, local, foreign or
other taxes required by Applicable Laws to be withheld with respect
to such Award (or exercise thereof).

 

(b) Withholding
Arrangements. The
Administrator, in its sole discretion and pursuant to such
procedures as it may specify from time to time, may permit a
Participant to satisfy such tax withholding obligation, in whole or
in part by (without limitation) (i) paying cash, (ii) electing to
have the Company withhold otherwise deliverable Shares having a
Fair Market Value equal to the amount required to be withheld, or
(iii) delivering to the Company already-owned Shares having a Fair
Market Value equal to the amount required to be withheld. The
amount of the withholding requirement will be deemed to include any
amount which the Administrator agrees may be withheld at the time
the election is made. The Fair Market Value of the Shares to be
withheld or delivered will be determined as of the date that the
taxes are required to be withheld.

 

15. Provisions Applicable
In the Event the Company or the Service Provider is Subject to U.S.
Taxation.

 

(a) Grant of Incentive
Stock Options. If the
Administrator grants Options to Employees subject to U.S. taxation,
the Administrator may grant such Employee an ISO and the following
terms shall also apply:

 

(i) Maximum
Amount. Subject to the
provisions of Section 13, to the extent consistent with Section 422
of the Code, not more than an aggregate of eight million
(8,000,000) Shares may be issued as ISOs under the
Plan.

 

(ii) General
Rule. Only Employees shall be
eligible for the grant of ISOs.

 

(iii) Continuous
Employment. The Optionee must
remain in the continuous employ of the Company or its Subsidiaries
from the date the ISO is granted until not more than three months
before the date on which it is exercised. A leave of absence
approved by the Company may exceed ninety (90) days if reemployment
upon expiration of such leave is guaranteed by statute or contract.
If reemployment upon expiration of a leave of absence approved by
the Company is not so guaranteed, then three (3) months following
the ninety-first (91st) day of such leave any ISO held by the
Optionee will cease to be treated as an ISO.

 

(iv) Award
Agreement.

 

(1) The
Administrator shall designate Options granted as ISOs in the Award
Agreement. Notwithstanding such designation, to the extent that the
aggregate Fair Market Value of the Shares with respect to which
ISOs are exercisable for the first time by the Optionee during any
calendar year (under all plans of the Company and any Parent or
Subsidiary) exceeds one hundred thousand dollars ($100,000),
Options will not qualify as an ISO. For purposes of this section,
ISOs will be taken into account in the order in which they were
granted. The Fair Market Value of the Shares will be determined as
of the time the Option with respect to such Shares is
granted.

 

(2) The
Award Agreement shall specify the term of the ISO. The term shall
not exceed ten (10) years from the Grant Date or five (5) years
from the Grant Date for Ten Percent Owners.

 

(3) The
Award Agreement shall specify an exercise price of not less than
the Fair Market Value per Share on the Grant Date or one hundred
ten percent (110%) of the Fair Market Value per Share on the Grant
Date for Ten Percent Owners.

 

(4) The
Award Agreement shall specify that an ISO is not transferable
except by will, beneficiary designation or the laws of descent and
distribution.

 

(v) Form of
Payment. The consideration to
be paid for the Shares to be issued upon exercise of an ISO,
including the method of payment, shall be determined by the
Administrator at the time of grant in accordance with Section
6(e)(iii).

  

(vi) “Disability,”
for purposes of an ISO, means total and permanent disability as
defined in Section 22(e)(3) of the Code. 

 

(vii) Notice.
In the event of any disposition of the Shares acquired pursuant to
the exercise of an ISO within two years from the Grant Date or one
year from the exercise date, the Optionee will notify the Company
thereof in writing within thirty (30) days after such disposition.
In addition, the Optionee shall provide the Company with such
information as the Company shall reasonably request in connection
with determining the amount and character of Optionee’s
income, the Company’s deduction, and the Company’s
obligation to withhold taxes or other amounts incurred by reason of
a disqualifying disposition, including the amount
thereof.

 

 

9

 

 

(b) Performance-based
Compensation. If the Company
pays salaries for which it claims deductions that are subject to
the Code section 162(m) limitation on its U.S. tax returns, then
the following terms shall be applied in a manner consistent with
the requirements of, and only to the extent required for compliance
with, the exclusion from the limitation on deductibility of
compensation under Code Section 162(m):

 

(i) Outside
Directors. The Board shall
consider in selecting the Administrator and the membership of any
committee acting as Administrator the provisions regarding
“outside
directors” within the
meaning of Code Section 162(m).

 

(ii) Maximum
Amount.

 

(1) Subject
to the provisions of Section 13, the maximum number of Shares that
can be awarded to any individual Participant in the aggregate in
any one fiscal year of the Company is eight million (8,000,000)
Shares;

 

 

(2) For
Awards denominated in Shares and satisfied in cash, the maximum
Award to any individual Participant in the aggregate in any one
fiscal year of the Company is the Fair Market Value of eight
million (8,000,000) Shares on the Grant Date; and

 

(3) The
maximum amount payable pursuant to any cash Awards to any
individual Participant in the aggregate in any one fiscal year of
the Company is the Fair Market Value of eight million (8,000,000)
Shares on the Grant Date.

 

(iii) Performance
Criteria. All performance
criteria must be objective and be established in writing prior to
the beginning of the performance period or at later time as
permitted by Code Section 162(m). Performance criteria may include
alternative and multiple performance goals and may be based on one
or more business and/or financial criteria. In establishing the
performance goals, the Committee in its discretion may include one
or any combination of the following criteria in either absolute or
relative terms, for the Company or any
Subsidiary:

  

(1) Increased
revenue;

 

(2) Net
income measures (including but not limited to income after capital
costs and income before or after taxes);

 

(3) Stock
price measures (including but not limited to growth measures and
total stockholder return);

 

(4) Market
share;

 

(5) Earnings
per Share (actual or targeted growth);

 

(6) Earnings before interest, taxes,
depreciation, and amortization (“EBITDA”);

 

(7) Cash
flow measures (including but not limited to net cash flow and net
cash flow before financing activities);

 

(8) Return
measures (including but not limited to return on equity, return on
average assets, return on capital, risk-adjusted return on capital,
return on investors’ capital and return on average
equity);

 

(9) Operating
measures (including operating income, funds from operations, cash
from operations, after-tax operating income, sales volumes,
production volumes, and production efficiency);

 

(10) Expense
measures (including but not limited to overhead cost and general
and administrative expense);

 

(11) Margins;

 

(12) Stockholder
value;

 

(13) Total
stockholder return;

 

(14) Proceeds
from dispositions;

 

(15) Production
volumes;

 

(16) Total
market value; and

 

(17) Corporate
values measures (including but not limited to ethics compliance,
environmental, and safety).

  

 

10

 

 

(c) Stock Options and SARs
Exempt from Code section 409A.
If the Administrator grants Options or SARs to Employees subject to
U.S. taxation the Administrator may not modify or amend the Options
or SARs to the extent that the modification or amendment adds a
feature allowing for additional deferral within the meaning of Code
section 409A.

 

16. No Effect on
Employment or Service. Neither
the Plan nor any Award will confer upon any Participant any right
with respect to continuing the Participant’s relationship as
a Service Provider with the Company or any Parent or Subsidiary of
the Company, nor will they interfere in any way with the
Participant’s right or the Company’s or its
Parent’s or Subsidiary’s right to terminate such
relationship at any time, with or without cause, to the extent
permitted by Applicable Laws.

 

17. Effective
Date. The Plan’s
effective date is the date on which it is adopted by the Board, so
long as it is approved by the Company’s stockholders at any
time within twelve (12) months of such adoption. Upon approval of
the Plan by the stockholders of the Company, all Awards issued
pursuant to the Plan on or after the Effective Date shall be fully
effective as if the stockholders of the Company had approved the
Plan on the Effective Date. If the stockholders fail to approve the
Plan within one year after the Effective Date, any Awards made
hereunder shall be null and void and of no
effect. 

 

18. Term of
Plan. The Plan will terminate
10 years following the earlier of (i) the date it was adopted by
the Board or (ii) the date it became effective upon approval by
stockholders of the Company, unless sooner terminated by the Board
pursuant to Section 19. 

 

19. Amendment and
Termination of the Plan.

 

(a) Amendment and
Termination. The Board may at
any time amend, alter, suspend or terminate the
Plan.

 

(b) Stockholder
Approval. The Company will
obtain stockholder approval of any Plan amendment to the extent
necessary and desirable to comply with Applicable
Laws.

 

(c) Effect of Amendment or
Termination. No amendment,
alteration, suspension or termination of the Plan will impair the
rights of any Participant, unless mutually agreed otherwise between
the Participant and the Administrator, which agreement must be in
writing and signed by the Participant and the Company. Termination
of the Plan will not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to Awards
granted under the Plan prior to the date of such
termination.

  

20. Conditions Upon
Issuance of Shares.

 

(a) Legal
Compliance. The Administrator
may delay or suspend the issuance and delivery of Shares, suspend
the exercise of Options or SARs, or suspend the Plan as necessary
to comply with Applicable Laws. Shares will not be issued pursuant
to the exercise of an Award unless the exercise of such Award and
the issuance and delivery of such Shares will comply with
Applicable Laws and will be further subject to the approval of
counsel for the Company with respect to such
compliance.

 

(b) Investment
Representations. As a condition
to the exercise of an Award, the Company may require the person
exercising such Award to represent and warrant at the time of any
such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute
such Shares if, in the opinion of counsel for the Company, such a
representation is required.

 

21. Inability to Obtain
Authority. The inability of the
Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any
Shares hereunder, will relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which
such requisite authority will not have been
obtained. 

 

22. Repricing Prohibited;
Exchange And Buyout of Awards. The repricing of Options or SARs is
prohibited without prior stockholder approval. The Administrator
may authorize the Company, with prior stockholder approval and the
consent of the respective Participants, to issue new Option or SAR
Awards in exchange for the surrender and cancellation of any or all
outstanding Awards. The Administrator may at any time repurchase
Options with payment in cash, Shares or other consideration, based
on such terms and conditions as the Administrator and the
Participant shall agree.

 

23. Substitution and
Assumption of Awards. The
Administrator may make Awards under the Plan by assumption,
substitution or replacement of performance shares, phantom shares,
stock awards, stock options, stock appreciation rights or similar
awards granted by another entity (including a Parent or
Subsidiary), if such assumption, substitution or replacement is in
connection with an asset acquisition, stock acquisition, merger,
consolidation or similar transaction involving the Company (and/or
its Parent or Subsidiary) and such other entity (and/or its
affiliate). The Administrator may also make Awards under the Plan
by assumption, substitution or replacement of a similar type of
award granted by the Company prior to the adoption and approval of
the Plan. Notwithstanding any provision of the Plan (other than the
maximum number of shares of Common Stock that may be issued under
the Plan), the terms of such assumed, substituted or replaced
Awards shall be as the Administrator, in its discretion, determines
is appropriate.

 

24. Governing
Law. The Plan and all
Agreements shall be construed in accordance with and governed by
the laws of the State of Texas. 

  

Adopted
by the Board of Directors on June 26, 2012.

 

Amended
by the stockholders of the Company on June 27, 2014, October 7,
2015, December 28, 2016, December 28, 2017, September 27, 2018 and
August 28, 2019.

11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00299-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00299-of-00352.parquet"}]]